Pmarca on Flying Car

Those companies have to be run completely differently

A Snippet Of An Interview: Interview with Marc Andreessen

Sarah Lacy: You and Peter Thiel had a really interesting debate about whether or not Silicon Valley is doing enough, and is out there enough, and is pushing big ideas. Peter obviously has the whole “We want to fly in cars, and we got Twitter” manifesto.

In that debate, you were defending Silicon Valley. Do you really look at a lot of the things in your portfolio and look at a lot of things in the world, and think that you guys are funding most of things? Are you so hamstrung by regulators?

Is there a way Andreessen Horowitz could stop backing more apps and throw some of the money towards the next SpaceX?

Marc Andreessen: When I debate with Peter, he says, “We want to fly in cars, we got 140 characters,” so therefore I can’t resist. I attack flying cars and I defend Twitter, which grates him up to no end. In a sense, I very much disagree with what he says, and then in a sense, I very much agree with it. What I disagree with is I think the innovation that’s happening today in Silicon Valley is very important, profound, deep, and important. I’m completely unapologetic about the idea. For example, Uber and Lyft. Lyft is the company we work with, we’re very excited about. I think these companies are transformational for transportation. I think they’re fun. We can talk about that for a long time. I think Airbnb is transformational for real estate. I think Bitcoin, transformational for financial services.

The capital efficiency of having a small group of software programmers that build amazing software, who then go in and do something in an industry that’s 100 billion or trillion-dollar industry, existing venture capital structure and framework is very good at doing that.

It works very well when it works, and I think that’s very valuable. I always accuse Peter of dismissing all that stuff out of hand, which is probably an overstatement.

The part that I struggle with, and I’m on the verge of agreeing with, it’s SpaceX, it’s Tesla. The trenchant critique comes from Larry Page, Elon, and Peter. It’s like, “OK, software. Got it. What about electric cars? What about the Hyperloop? What about the SpaceX private rocketry?”

What about these bigger, more transformational things? In particular, what about the things that operate more in the real world? What about the things that are really going to affect natural resources, pollution, livability of cities, and all the things that are outside of whatever’s running on the screen?

I think that there’s a validity. Google is doing the self-driving car. The self-driving car is going to work. By the time it works, it will have cost hundreds of millions, and possibly billions of dollars to make work. The self-driving car is not a lean startup. Not in any way.

SpaceX and Tesla were not lean startups. They were very big, ambitious. They raised a lot of money. The big question, the question I’m noodling around, is what about the efforts where you have to say, “This thing is going to take $300 million?” It just is. There’s no shortcut and there’s no minimum viable product. It is going to take $300 million, and that $300 million has to be reserved ahead of time.

Those companies have to be run completely differently because the stakes are so much higher.

What kind of entrepreneur can do that? Elon has proven he can do it. There are not a lot of other people in the Valley today who have done things at that level of scale.

There’s a different kind of entrepreneur. There’s a different kind of idea. There’s a different kind of financing method. I think we’ll all collectively figure it out, but we don’t actually have it today.

What you get is you have a very special entrepreneur like Elon, and then he can do it. What I always say is, “OK, who is the next Elon? And then we’ll talk.”

Some Discussion on HN

Link

YC and their VCs are in it to make money by placing a number of small bets, knowing some will be losers. To go big like SpaceX requires you to be all in. Elon nearly went broke a couple times. He’s willing to take that risk because he’s in it for the results, not the money.

I used to wonder if it was just hype for employees and investors to say that SpaceX goal was to make humanity multi planetary. The last couple years have convinced me he’s for real. The man could retire now. SpaceX could just own the launch industry by cutting cost for a while, or sit back and enjoy higher profits from reusability. But starship and mass production of it? Nonsense unless the stated mission is for real.

People can do so much more if it’s about the mission and not the money, and that includes investors. -phkahler

A huge issue here is that venture capital’s classic business model isn’t compatible with SpaceX-scale ventures because they take way too long to return value to investors. SpaceX took 6 years just to complete a demonstration flight to LEO, for instance, whereas a VC is looking for a liquidation event in the ~7 year timeframe. - thisisbrians

Related Article:

The Upside of Creation

Lean Is for Mediocre Minds