The Lessons Learned From the Andeson Camp

Listen to a16z live: https://a16z-live.simplecast.com/episodes/one-on-one-with-a-and-z-11-how-much-rare-knowledge-is-there-4aF0UbP7

- rarely wrong just early
- pets.com, diapers.com
- hadoop -> databricks
- Nycira -> central control plane - 2b revenue company
- rare knowledge - what do you believe that nobody else believes
- 2 kinds - super secret, or in plain sight
- airbnb - history of hotels
- new ideas nobody else has
- take seriously things that nobody else believes
- history gets rewritten to be both obvious and inevitable
- bill gates the road ahead

Transcript
 

[00:00:00] Hey everyone today, I'm sharing a clip from the Andreessen Horowitz podcast from both Marc Andreessen and Ben Horowitz. Which is them talking about rare knowledge basically the secrets that you believe that no one else does as well as how to develop a view of the future which is important obviously for vcs but i think generally important as well 

[00:00:19] Marc Andreesen: How much rare knowledge is there in the world in your experience or concretely, how often does it happen that there are less than 10 people you can think of? No. I could do something and you'd be skeptical you can find anybody else that can, and then a huge, no asks. How can I develop a view for the future, which I think is actually a very related question.  

[00:00:38] Ben Horowitz: So way more than you would think. There's a lot of very knowledge and, mark and I like experienced this on our job. Every single day. There's just, the world is really dynamic. Now, in fact, it's probably never been more dynamic, I think, by any measure. And so what we see all the time is the old conventional wisdom just ceases to be true. 

[00:01:02] And we've seen this here. One of our favorite examples is just. All the dot bombs that everybody made, hysterical fun of during the early two thousands, all the idiotic ridiculous, stupid ideas that people had for the future, which were just so obviously. All eventually worked. And and it was a matter of the underpinnings of the internet and other things changing to the point where those really bad ideas, Pets.com or diapers.com or any of these kinds of things, they all work fantastically later, as world changed. And that all was super rare knowledge because the conventional knowledge was of course, those things are all the stupidest things ever, and you'd have to be some kind of moron to leave your high-paying consulting job to do that. 

[00:01:54] But we continually see this and in the firm, we even have kind of a rule. Which is, if you know too much about something you got to back off, because you know what, particularly, if historically what did not work that can be dangerous knowledge in our business because you can miss it the next time when it actually does work. 

[00:02:14] And w we just hit all the time on. Favorite investments that I've made was it was common knowledge in Silicon valley that Hadoop had one big data, like architecturally, like that was the thing. It had one open source that had hearts and minds, blah, blah, blah. It was going to be the. 

[00:02:30] And I think, probably the best, for sure one of the best investments I ever made was that wasn't true. And so it's just like a small piece of rare investing knowledge, but a big piece of rare knowledge for the entrepreneurs who invented spark. And then, later turned that into Databricks. 

[00:02:46] Marc Andreesen: Yeah. Ben, do you remember? So for we invested in a company called Nycira early on in the life of the firm, like nine, 2010. And then do you remember the we shouldn't name him, but we had a meeting with a a I believe the CTO of one of the really big networking companies at the time in our diligence literally said it was  

[00:03:01] Ben Horowitz: against the laws of physics. 

[00:03:02] It wasn't possible. They had already like steady. At length this very large, important networking company and you could not have a central control plane and the way that the Sierra proposed to do. And of course, now in the Sierra inside, VMware is like a $2 billion a year revenue. 

[00:03:21] Marc Andreesen: Yup. Yup. And then of course, a classic essence on the consumer side of course, is that everybody knew right up until 2004, that consumers would never put their real identities online. That was the one thing that would never happen. Never. And then of course Facebook like completely blew that open. 

[00:03:32] So the twist that I want, there's a couple of twists that I wanted to put on. This are circuit aspects of this very important question that I want it to get a little deeper into. For those of you who like, think about these things you will have, some of you will have at least read Peter Teal's kind of famous book zero to one, he talks a lot in that book about, what he calls the secret, which is this idea of the were knowledge that other people don't use. And then he has this famous question that he asks he had kind of dinner parties where he asked this question of what, what is the thing that, that nobody else knows. Or he asks a, there's a sort of a related verse and the question is just, what do you believe that nobody else believes? 

[00:04:03] And of course what's interesting is those are not necessarily the same thing. And then on top of that there's this question of okay, it's the rare knowledge, something that is actually not known. Like it's actually a piece of information that's like invisible. And so for example, rare knowledge, let's take a hypothetical case, rare knowledge of a chemical. 

[00:04:20] That has been invented in a lab and only the people who worked in that lab know that formula exists and only they know what the formula is, right. Or maybe the formula for KFC seasoning might be something that's, a formula it's literally locked  

[00:04:34] Ben Horowitz: 11 herbs and spices, but we do not know what they are. 

[00:04:38] Marc Andreesen: We do not know which one. So there's literally the rare knowledge is any knowledge, literally like you can't get to it. There's this other kind of rare knowledge which goes to the second version of Peter's question of what do you believe that nobody else believes her fear that people believe, which is like the rare knowledge of something that is actually like a fact that is actually completely like, basically in, in public view. 

[00:04:59] It's like a thing that anybody can walk up to or learn about or read about, or read on the internet and tout, or read an academic paper about or whatever. But it's just people just simply don't believe it. Like they just don't buy it. Like they're not having it. 

[00:05:11] They just, they, they found some reason to rule it out, by the way, they're often a ridiculing it. And so Ben, the question I always think about on this is. How many of the secrets, right? Or how much of the rare knowledge in the world, how much of it is literally the 11 herbs and spices that you can't go find out versus how much of it is the thing that's there in plain sight that everybody's just making fun of? 

[00:05:30] Yeah. The  

[00:05:30] Ben Horowitz: plane tech definitely seems much bigger. At least in, in artwork we see many more of the plain sight ones. One...