How the Internet Happened - a16z Podcast  ## Metadata - Author: **a16z Podcast** - Full Title: How the Internet Happened - Category: #podcasts - URL: https://share.snipd.com/episode/dc3dd6b2-5570-4dcb-9e77-ad571572543e ## Highlights - The Untold Story of How the Internet Went from a Cool Tool to a Huge Business Risk Key takeaways: (* The internet was a cool tool at the beginning, but it was a bad idea to think that it would never make money., * The internet changed the way people communicated and changed the way businesses operated., * The internet was a big factor in the development of the modern world.) Transcript: Speaker 2 And so how do you and your company and your idea survive that sort of a sit it's hard to describe to people who didn't live through it how the internet looked two thousand one tosay, four, like pregugleipo n you talk abot in the book, before people realize, like, and it was, you know, as clear pupil, like, it was an important thing. People would use it you know, although nothing like today, y didn't have smart phones and everything, it would be more like the singing, go home, you cha, rema, like, it's thi nice way to send pictures to your family. So as t cearly, like a useful thing to have money forbu but the assumption was it's one of these things, like the airline industry or something, that'll just never make money, right? It was a cool thing, cool tool. We're using it, but man, was that a bad idea from a business. And there tat was the sentiment. And then gugvergogl sort of there i po and then a bunt dor. You remember the first time you heard how much money gugo was making? Speaker 1 Cause i remember so many people's reaction that, because that was the thing, is that everyone had been conditioned to think that while the internet was fun, it was probably a niche, and you were never going to be able to build a truly eed company on top of it. And then all o the sudden, cause i kept it secret for so long, i remember people's reactions, just their jaws dropping. Speaker 2 And i think, as i recalled, iad joined the industry, and they were sort of all these other kind of green shoes you saw, you know, you were in the industry, you sort sa wait, that person there suposd to be a terrible thing. And they're making ove caterinn. Youain't one of o so fa ther lips, lt lyke flicker and delicious and e erealwys chool products. But also, they were zapos and papow and a bunch of other companies were actually still kind of going. And they weren't google, but they were mere theyr, real businesses. So u, let's got through some of the chapters of the book. So, i think wet patir othings, in the earliest stage of the internet, there was this kind of a thing, one thing people don't realize to day is the kind of bottom up, decentralized architecture of the web. There was an alternative to it known as the information super highway, being pushed by companies like, i believe, kno better com cast, isn't he? ([Time 0:05:38](https://share.snipd.com/snip/3eb37392-ad07-43fb-876b-5b4f87e576f3)) - The Google Effect on the Music Industry Key takeaways: • Google was able to convince the record companies to come to their platform, youtube, in order to fight piracy. • Once youtube was under google's wing, google had something to offer the record companies, in the form of ad revenue. Transcript: Speaker 2 And that then when when, you two benefli came along, the movie. And t b folks indu s had seen what happened to the music industry and were savier this time, right? Andtedof one just sort of saying, let's us fight it tooth and nail, maybe we can make it work for us. Speaker 1 Number one, they trust google to have the math to at least take down the piracy enough. Number two, google had already proven adwards and was making ino billions of dollars a year at these little contextural ads. And so google can come to table with them from day one, once they on yu tube, and say, there's money here. Do you want a piece of this? So, as opposed to napser, which didn't have that built out. So they're, they're begging the record companies to come to their platform that they're going to build. They haven't done it yet, but they don't have in place any montization. So from day one, once youtube is under gogle's wing, google has at least something. It wasn't what they wanted. It wasn't going to replace their existing business motes, but something was better than nothing. Speaker 2 S like gog a little bit. So i think, to me, there's many remarkable things about google, but perhapswhat th most remarkable is the business model, which kind of like the most serandipotous confluenceevents In history. R you create the most populer. I mean, you sort think w went ruman. Theyare brilliant, of course, and and invented al this amazing stuff. But they build this incredibly valuable search engine. ([Time 0:18:13](https://share.snipd.com/snip/b5eb13d6-e166-4835-a22b-c3987b8c4630)) - The Failure of Google Ventures Key takeaways: • Larry Page and Sergey Brin were very principled when it came to their business model and refused to change it even when their investors were getting impatient. • Their Google Box product was a success, and shows that they are not afraid to take risks. Transcript: Speaker 2 As all the pressure at the time was around so that everyone thught the only possible business bondl for search was ot of the portal modelas to have, you know, banner address and so surrounded By celebrity news. And also is the classic eyeballs at tale and so and so as all these famous stories in think it was was cite with george bell or something hat where, you knowandabout taking, i don't not Criticize anyns at all, because that was to business all the time. But the no, thank was, i don't want serchan tats too good, to get tem off my siht, because that e stoys my busines. I don't. So like the other brilliant things that larry and sirge did right beyond everything else, was stick to their principles with kind of crazily rank with no business mot at all. Nsi, as i point out, they we araiy to go against the entire industry, and we're going to just bet that a business model will come along that's going to work. Y. Everyone says it's not going to. Their investors have said publicly that we were starting to get a little itchy. Like, like, are you guys ever gon a, they had this whole real house crazy to day. But they had a real effort to do theyregong to sell google box, yes, where this enterprise searched, because everyone new consumer had no business model. And there's like, member o, the great business weg only two thousand ike, you know, awesome search ingine, how will the ever make money? You no, thes like pipe dream skan valley things. And they literally was like the ole selle box. At's a hundred thousand dollars. You put in your datus ander, it collects your corporate doc tey were still manufacturing those as recently as two years ago, about asa, right? Speaker 1 I think they only recently shut that bisiness. ([Time 0:21:27](https://share.snipd.com/snip/c6c8f487-a1ef-4442-9a76-d46daf1032e4)) - The Structural Dangers of Facebook's Acquisition of Instagram Key takeaways: • The danger for startups is that the big companies at the top will buy them and turn them into a feature of their existence. • The main way to protect startups is to have a strong distribution on the consumer side. Transcript: Speaker 1 Can i pose a question that literally posing this to you, because i wonder if, structurally, this is another thing en when you had web two point o flower, micr soft had already had the anti Trust thing, so they're not going to buy anybody, right? The dot com bubble had happened, so it had cleared the slate. So there was this decade long period for the face books and everybody to surface, and no one's going to take them out. So i'm almost asking you, like there's jahu who's drawing a littleb a little bit, but not, and not in the way that microsot could have, microsot could still have bought amazon when it Was a five dollar stock aid, like no. So maybe, are we, structurally in a situation where the danger is, is that because the big clars at the top are so big, and all they do is, every time there's a new crop coming through, they Just pick them up, incorporate them and turn them into a feature of their existengotiaance in sergamstory, snap would be exactn sod by them. Speaker 2 In that case, righthey, just at that's that'. The counteriman is the distribute on the consumer side. So if were an tis ormission is so strong that even it you have that great idea. Now, now, there also, but there are limits to this, right? Like, tir's only so many time facebook and add, keep adding features to instt you know, without like, the thing becoming, you know. Speaker 1 But what i li saying is is that, like, so then if i flicker comes around to day, that would just be, ouknow, it's the most obvious example, tagging photos, but that would just be something That would be immediately scooped up and incorporated into some one's existing product. So, like, are we in a lall? Because we almost got lucky 15 years ago, that we had this period where everyone could rise up and no one kneecaps them, they ly. Speaker 2 I mean, i think it hadit, like, look look at snap snap thats great example, right? That as, i mean, you know, they really invented sort of a new mediate rigt imean, that type of vena, whatever, the vertical, the vertical short video with stuff, a brand new idea. ([Time 0:37:27](https://share.snipd.com/snip/aecc7d77-5fed-4ab0-a3ac-b02d30626f6f))