Game On: Marc Andreessen & Andrew Chen Talk Creative Computers

19:29So I think a lot of the issues mark that you mentioned in the manifest are actually quite close as issues in the industry. It's not like a far away thing. Yeah, and there are gaming companies that have hit this stuff directly in the past. The social media companies all thought that they were creating fun things for people to play. It was like Twitter, it's like Twitter, it's like Twitter, it's like Twitter, it's like like, wow, it's great to be able to talk about my cat head for breakfast. And if you thought otherwise, you just thought Twitter was stupid and didn't matter. And it was irrelevant.

19:52My favorite example is Facebook, Facebook got just tons of, you know, just like, this is the most trivial, stupid, useless thing that doesn't matter. Why are these people doing this instead of something important? And there was almost a deal for Facebook to get bought by Yahoo early on. And I remember a certain, very prominent tech journalist, I'd be swapping a book right now, said at the time she said, Perksuckerburg should take the billion dollar Yahoo deal. You know, on Facebook they were like 1 .2 trillion. So she said Facebook should take the billion dollar Yahoo acquisition quote and run away as fastest his little flip flops can carry him It was just like her just like absolute dismissal that this stuff would ever matter and then basically within five years It was like Facebook is like the living demon incarnate on earth and destroying everything right it went from like useless to evil One step right you know headlight never gets never just like oh, this is kind of cool Right that's never the story.

20:35It's kind of useful some people like it. It's either pointless or fucking evil And look there is a history of games like this and gaming companies in the past have been through this and so it's worth at least paying attention Awesome. For your whole career up to this, you've been a founder and entrepreneur, then starting a 16z. If you were hypothetically exiled for a few years and you had a team of a couple dozen people to work on any problem of your choosing, what area would you end up focusing? And if you say AI, I'll have to drill in deeper into that obviously since it's such a big space. Yeah.

21:03So I should start by saying I have not pressured tested the following idea at all. I haven't done any of the things that require our founders to do before we fund them in terms of actually thinking anything through. So this is just me speculating because I'm not going to do it. There is something I think super, super fascinating at the convergence point of let's just say immersive entertainment or experiences. And I think VR AR is one version of that, but also just like immersive worlds, untraditional screens. The intersection of that and then the intersection with AI, we're doing a lot of work in AI, a lot of work in gaming, a lot of work in media.

21:30So I spent a fair amount of time talking to folks in gaming, thinking about AI and games. I spent also a fair amount of time talking to people in the entertainment industry about AI in movies and TV and things like that. Of course, that's It's quite controversial already. But it's okay as the assumption in a lot of these conversations is just, oh, AI's a new way to create game assets, or AI's a new way to do special effects in movies. I kind of wonder is there actually a new art form here, that's actually not a game and not a movie, but it's something in the middle, and it's something that's like an experience that's like totally tailored to the user and experience that never ends.

21:58Everything is generated on the fly, with a level of sort of synergy, but this interjustic kind of feedback loop between the user and the system, the metaphor some people have used for this is dreams. Is there like a new medium here, which is basically creating dreams. On one hand, you might say it seems kind of obvious because if an AI can basically learn and generate content, then that seems like a straightforward thing. But what's interesting is that's not a movie. It's very different than a movie because by the way, it might go for 5 ,000 hours. And it might be seeded by a human creative, but it might then be very related to specific user.

22:25Movies aren't like that. It might be like a game, but it's also not quite a game because maybe you're not playing it. Maybe you're experiencing it, or maybe it's some other kind of you react to it or live in it in a different way. And there's no precedent for this. There's no model. There's no company that does this. The movie studios aren't going to do it because they just make movies. Game studio companies aren't gonna do it because they make games. So I think there might be something new. And then of course, there's a single player version, but then there's of course the mind blowing ones, which are the best of the multiplayer dreams.

22:48Like what is that? Right. I think the new formats are definitely interesting always because you could imagine when user generated content and getting content online, when YouTube gets popular in 2005, 2006, you might have thought, oh, well, one day all the content creators are gonna make movies and put them on YouTube. But that's actually not what happened. They actually ended up making all these vlogs and all these shows, and all these sort of new native formats that exist only on YouTube. And then it turns out that watching an hour of 10 -second video clips is actually more engaging than the Hollywood format of that.

23:20And so I think in the same way, just as it might be easy to think about just cost savings for gaming for AI that doing something that's completely a new format, like what you're talking about. It sort of feels like that's the new category. I used to ask, you want to go through a watch movie, and I could see in his head, I could see him doing the math of 90 minutes of movie versus 45 YouTube videos. No. So I finally created a movie club, daddy movie club, which is Sunday at lunch where we watch movies. And he likes it once we start them, but like it's always on the way into the living room. He's got to bring my laptop into the movie with me.

23:53And so yeah, I think there's a lot of signals that things are headed in this direction. Yes, yes. Let's talk about AI now and something that obviously, the whole firm and yourself are spending a lot of time on. So people often compare AI to just these big general technologies that have emerged over the last few decades, whether it's mobile or internet. You've obviously watched several of these from the front seat. To what extent does AI and everything that's been happening remind you of some of the prior waves versus what ways they completely knew and different? For me, it was happening with AI right now.

24:22It doesn't matter any of those. And the reason is because when I look at AI, what I see is sort of a new kind of computer, a fundamentally new kind of computer. and the way I would describe that, this goes to all the controversial issues around AI also, which is for 80 years, we've had a model of a computer, which is sort of this super literal thing that can do math, but it trillions of cycles a second, but you have to tell it specifically what to do every single time. You know, and we call these deterministic computers where you tell it exactly what to do. It always gives you the same answer.

24:45By the way, if it doesn't give you the right answer on something, it's because you screwed up, right? You programmed it wrong. When I use LLMs or diffusion models or these things, it's no, I'm dealing with a different kind of computer, right? There's input, there's output. It's doing things for me. But it's a probabilistic computer and it starts with you know, you have the same question twice it gives you different answers Which is just in and of itself a pretty mind blowing thing And then there's the hallucination thing the hallucination thing is it's this incredible thing because like engineers look at the hallucination thing And they're like wow, this is like a crippling problem.

25:12I can't believe this thing is like making up answers It doesn't know what the truth is But if you put your kind of creative hat on or talk to creative people they're like well, it's creating right? It's like you have a computer that's creating things right and you get an always philosophical debates about what the nature creation is an and originality and all that, but like it's creating things. And sometimes the things that creates are pretty funny. And pretty irritating. These are creative computers. They've seen all these examples recently, but I think it was Alaska Airlines put one of these online as a customer support bot.

25:38A lot of airlines have some breamant policy where you can get free flights to go to Funeral or something. And turns out Alaska Airlines didn't have a breamant policy, but the LOM felt sorry for the customer. So it made up a breamant policy. And promised him a refund on his ticket. And then there was another case where the GM dealership put up a sales chat bot, and it talked the customer and buying a Tesla. And so, and I see it's like, that Tesla's a really great car. Much more environmentally friendly. If you're literal minded, you look at that you're horrified, but if you put your creative hat on you're like, wow, this is like the coolest thing I've ever seen.

26:07I get excited, I love on Twitter, and it's all these academics now trying to figure out how to jailbreak these things. And I just get so excited, and I'm just sharing on the jail breaks. I'm just so excited. The last thing I want is these things locked down. Like I want these things to be out there, like doing all kinds of crazy stuff. I think it's absolutely fantastic. And point is like I think the metaphor Before if anything, as to the creation of the microprocessor or something, it's the birth of a new kind of computer. By the way, if you go back in history, there's a great book on neural network, which is the foundational technology behind all this, was actually invented 80 years ago in 1943.

26:35It was the first neural network paper that basically all of our work today has still derived from that. There was actually a debate in the nascent computer world in the 30s and early 40s when they were just getting stuff to start to work. There was a whole school of thought that said this, what they call Von Neumann machines, the sort of linear kind of model was actually the wrong model. and that basically the entire computer should have been built from scratch on a model of the human brain. And they had basically this exact discussion back then, sort of a very crude and simple form. And sort of history went one way, and now history's going to come back around, and now we have both the truth from.

27:03So I think now we're going to live in a world where basically you're going to have a proliferation of AI's in the same way that you've had microchips. And by the way, they're going to be paired. Basically, I think anything with a chip is going to have an AI, and you're just going to assume that everything has an AI. And there's going to be many billions of tiny models running everywhere. There's going to be a few big god models in the sky, and then there's going to be a lot of stuff in the middle being customized and tailored for all kinds of things. To what extent do you think that when the web was created and when mobile apps were created, because there is this rush to redesign the user interface, that sort of allowed new startups to be able to come in new existence with the mobile native way of doing things as opposed to the prior version?

27:40In this it's interesting because the platforms are still kind of the same. And so to what extent do you think incumbents just have the upper hand by just integrating AI features into their existing products versus startups being able to do something scratch. Yeah, so this is the big thing that we always think about in our day jobs in venture capital, which is like, okay, there's certain technology shifts where the incumbents can just add the new thing, and then there's really not an opportunity for startups. And then the scenario here would be Photoshop just adds AI, photo editing, and you're done, right?

28:06It's just, it's done. They just added it and they're done. And the role keeps going with Adobe is the big company. By the way, that's true for a lot of new technologies. I like that, you just kind of add the new thing. And by the way, even mobile, like there were some some new mobile companies like Uber and Lyft and Airbnb. But look Google and Facebook adapted to mobile just fine. There was no mobile search engine that took over. One of the reasons Instagram is so big is because Facebook deliberately made it big by transferring over a lot of the usage. And so it turned out there wasn't an independent startup opportunity there.

28:30But every once in a while, you get a platform shift that's dramatic enough where it basically means that you both can and have to reinvent from scratch the whole idea of what the thing is in the first place. And so that would be like mid -Journey. So Photoshop plus AI editing versus mid -Journey or Dolly. And so in the full version of the platform shift, basically the whole idea of Photoshop plus AI image editing is just at some point just becomes completely irrelevant. Can you believe people used to do that? People used to fiddle with pixels like seriously. Because you'll live in this new world and in the new world you'll just tell the machine what you want for a photo, for an image, and it'll generate you as many options as you want.

29:05And it's generating you something that's better than you would have been able to do anyway. And you're totally happy. And the whole idea of fiddling with image pixels is like writing a machine code. People still write horses. It's just like for rich fancy people, like for fun, right? And so, you know, in this scenario, some day people will still do image editing, but it'll be like three like weirdo designers in our way or something that, you know, will still be able to this kind of thing. The graphic designers in their retirement, there's just be a new way of doing things, right? And then basically our bat always is like, when we make mistakes, it's because we kind of overestimate the degree to which this is gonna happen.

29:34But our whole thing is to basically try to get in front of this and try to basically make the assumption that you're gonna have complete turnover. And look, this has happened before, There was an entire generation of main -ferm software companies that turned over that didn't exist anymore. Basically, once the PC came out, a lot of the PC software companies never adapt to the web. A lot of those companies just went away. These kinds of shifts do happen. They are radical. The key question though is, can you reinvent the entire product? Can you imagine the old rules don't apply anymore? There's a completely different way of doing the thing.

29:58This certainly feels like that. Talking a little bit more about incumbents. There's sort of this thought that there's a world in which the AI models are owned by a small number of companies. the God models and the sky versus the version where there are lots and lots of little things. And I know we've talked quite a bit about the role of open source, potentially in AI. It would be great to hear you expand on that and the importance of that. Look, if you listen to the big companies and this is sort of what we call the sort of incumbents, big tech companies doing AI, and then what we call the new incumbents, which are like the companies that have raised billions of dollars, they're new AI companies, but they're already incumbents.

30:30If you listen to them, you basically hear two things. Number one is, obviously everybody's only ever going to use the big models. And the reason for that, by the way, is a very good argument in that direction, which is they're just always gonna have the best answers. Right, and what they basically say is, look, this market's gonna be like the search market was like, which is, of course, you're always just gonna ask Google, like, there's no market for vertical search engines in all these different domains. Google just always gives you the best search answer on practically everything. It turned out there was no startup opportunity to build smaller search engines.

30:54And so it's just obviously that everybody's just gonna run and everybody's gonna tap into a chat GPT or a clot or something or a Gemini through an API and pay by the drink, and that's the way it's gonna work. And then of course, the other thing you hear from those companies is AI is scary and evil, when he's to be regulated, and we need this regulatory wall so that startups can't function anyway, and by the way, we should probably ban open source while we're at it, because that's also evil and scary. So it's sort of interesting how those statements go together. We're big believers in the exact opposite, like I said.

31:19We're big believers that there's just going to be such a giant number of use cases. Specifically, there's going to be a giant number of like local use cases. Your door knob is going to have an LLM in it that's going to control whether or not people get through the door, right? And are you really going to do a round trip up to the supercomputer in the cloud to do that? Right. By the way, do you want to? because do you want the super computer in the cloud knowing who's coming in out of your house? And then just the cost associated with that is going to be very expensive relative to what you could do with a small model in the door knob and by extension can everything else.

31:45And then yeah, open source is clearly a way to kind of give people the flexibility to be able to implement AI and basically everything. And we're very fired up about that. And as one example, we're the major investors in this draw, which is at least right now the leading AI open source company. Yeah. And we're going to fight hard to help them succeed and have this model succeed. Yeah. I mean, it's been so impressive to go from, I remember, being at a point where we were all just sending articles around and screenshots of things that we were doing on Chatchy BT to all of a sudden this being really the primary focus of the firm and a ton of hiring, a ton of new efforts, everything kind of around that.

32:17Yeah, I was just out in the car before this trying to close a deal. We're gonna shoot out for a hot deal. And it's a very related video. And it's just like, wow, the implications of this, like the entire nature of what video is could change, right? Just like the entire assumption of what's in a video and how it reacts to users, like the whole thing, you know, one of these things where you get a Imagine looking back in a decade and being like, I can't believe people used to watch static videos at all. It just doesn't make any sense. It's like watching a silent movie. Obviously videos should be like responsive in real time.

32:40It's this kind of thing where it's an entire world and everything involving video might just like completely change. Awesome. Well, I'll wrap up with one or two kind of final questions. One is talk to us about how when we began doing more investing in games, and actually before I even showed up at the firm, I think we had invested in Zinga and Oculus and a couple others, I think, and critics and had pioneered a lot of it. But what was it that gave you personally the conviction to take on games as one of the main areas for A16Z? Yeah, there's a classic argument you'll hear in venture. If you talk to VCs, there's a classic argument you'll hear as to why VCs shouldn't invest in games.

33:13Basically an artifact in my view of Florida the 80s, 90s, 2000s, period in which it actually was pretty dangerous to invest in games. And the reason for it was just number one games are sort of viewed as like classic hit -driven business like a movie or something. And then there was just economics that flowed from that that basically said, the movie studios make most the money in movies, the platform publishing companies, like EA, make most of the money in games. And even if you started a new startup studio and you build a new game franchise, it'll just get bought by one of the platform companies and there's not really much upside to it because of the industrial logic of distribution and all those things.

33:42And so it was not considered kind of a viable area for venture investment for a long time. Our assessment is basically that the world has changed and the world has changed is changing and we're going to try to change it further. And I guess I'd say several things. So one is game as package software that looks like a movie versus game as sort of permanent platform Foundation that then you end up building 20 or 30 or 40 years of experiences on top of now This is getting more obvious because you know, I need to go right through Minecraft Roblox There's more and more examples where clearly this is exactly what's happening basically from a business standpoint Assets they can actually grow in value for decades and they can keep adding users and keep adding content keep adding experiences and keep broadening out, that's totally venture -investable, but those are great businesses.

34:21So that's one, two is look like all these other technologies kicking in, and so the traditional game industry was an artifact historically of basically not being online. Right? And even still today, a lot of games that you buy, they may have multiplayer mode, but they're not really built. It's like full online experiences, but now you can build it's like full online experiences and you can take advantage. You can have real economies. You can have user -generated content platforms. You can use many ways to make these just fundamentally more sophisticated experience. And so you sort of get the benefit of all these technology innovations.

34:48And then I would say third is just founders. This is sort of the thing in the past, it's like a lot of the great game designers of the past. And a little bit like movie directors. I want to build a game, they want to get paid in cash. We're building this game, I want to build another game. It's probably a different game. And fundamentally they kind of want to work for a studio because that's where they get that deal. Our kind of founder is not that. Our kind of founder wants to build a product, but then wants to build a business and wants to build a company and wants to build something that's going to be enduring and expansive and have enormous vision and become very big and important in the world.

35:14and have a giant R &D agenda and a very aggressive product roadmap and so forth. And then run their own thing and then actually being controlled the whole thing. We've been very encouraged by the number of smart people coming out of gaming who want that. That's right. Because they see that in other sectors of software and tech and they want to do that. And then we're also trying to help encourage that. Yeah. And that's personally been one of the most interesting things about building the speedrun program is just being able to use a marketing motion to just discover all the founders that want to work in.

35:39and game studios, or they're building infrastructure, or they're building AI, and just the enormous number of them. Many of you know that last year, when we put this out there, it was nearly 6 ,000 companies actually applied to be part of the speedrun program, and we anticipate this continuing to grow. And so there's just a fantastic amount of talent. The other thing is very exciting for me is, I think games is entertainment are fantastic, and are very socially positive and productive, and I love them and it's great. But also, when we mentioned earlier, games are always around the cutting edge of applying new technology.

36:05Yes. I also think like the skill set of what it takes to make great games, I think also more or more, it's just gonna apply in many other domains. And so, people have tried this for like some day, there's gonna be a great educational experience, a great online educational experience, and it's gonna look and feel like a game. Like that just seems like crystal clear, right? And the great health problems of our time, if you just look at the numbers, the health problems of our time are not like random things that just happen to us. The great health problems of our time are the consequences of our own behavior, right?

36:29And so they call metabolic diseases. So you're fat, you're lazy, you don't get enough sleep, right, and then it's all this downstream diabetes and cancer and everything that's not hard to tax, it's downstream from that. It's very clear that the whole world of healthcare is not, oh, something's wrong. I need to go to the doctor and get it fixed. Health care has to be transformed into, I'm healthy my entire life because I'm making myself healthy. And that's a hard thing to do. And the system that supports you in doing that is going to feel like a game. Because it has to be engaging. It has to be something that you enjoy dealing with.

36:54And so there's no question like that's going to happen. There's all of these other areas of life and business, I think, that are going to get transformed by this kind of mentality and skill set. And riffing on something that you said in the past is, we're willing to spend a billion dollars building Grand Theft Auto, and we're willing to spend hundreds of millions of dollars to create a movie. But when it comes to what is the most amazing computer science 101 class, how much money are we willing to put into that versus how much amazing output do we get from potentially building something at that quality for something like that?

37:26Yeah, it's amazing. You got the best university in the world. You guys all, but through this, most of you don't think, not in college, at least for one day before you dropped out. But the moves that I made this like super clear, right, is just okay. MITCS101, like whatever that is, it's just, oh, it's after whatever, 200, whatever amount of time they put in to try to figure out. It's just still dude in front of chalkboard, right? It's just like really? Right. And so yeah, so the thought experiment I'm always proposing in the firm is, what's the model where you hire Steven Spielberg to make CS101, right?

37:50And it's a $200 million production. And it's like the most like fantastically entertaining thing you've ever seen. Right. And that's like the movie version or you hire, I don't know, you know, John Carmack or somebody to make it. That sounds like it would be fun to make the game version of it, right? And look, it's just, could you afford to do that? It's like, well, look, you just take the total number of kids in the world that need to learn computer science. At least in theory, the numbers there, you can make the economics work. Yeah, so yeah, people have taken swings at this. There have been some early successes, but nobody's done the big thing yet.

38:13I think somebody will. Yeah, absolutely. Yeah, I hope so. Talk about what you hope A16Z and then also just, honestly, this broader community of founders is able to accomplish in the games industry and kind of the adjacent sectors. What does success look like for you? What's your aspiration for what happens in the industry? There's a lot of ways to think about it. We talked a lot about technological transformation. We talked a lot about new business models. We talked a lot about applying game methods, instead of gaming. I think those are all great. And then again, I think entertainment. It's always like, oh, this entertainment is trivial.

38:40I mean, entertainment is not trivial. We're not supposed to go through life to press, like being like drudge. Oh God, whoo. Right? Like we're supposed to have fun. Like life is supposed to be fun. It's supposed to be enjoyable. We're supposed to have like games and movies and things that we like to do. It's great, right? So the single biggest one, we would just love for there to be, just to be crystal clear, the primary opportunity for the best people in this field is they can build companies. And they can build companies that are able to be independent, they're able to have very distinct visions, very radical ideas, they're able to build teams to execute against that.

39:10And then really, crucially, based on their early success, they're then able to build themselves into institutions that can really endure for a long time and then have extremely expansive product roadmaps. Right, and now I'll do the example of this Facebook, I told you, the flip -flop story earlier. Facebook's spending on the order of $20 billion a year on Mark has worked himself into position where he's able to do that. And the Google guys have been able to do that in other areas, like self -driving cars and now AI. And so when these companies get in position, where they've got that kind of, basically, vision at the helm, the sort of founders and founding teams at the best of these companies, then they have their early win.

39:42They can get in position where they can start to really do really big and vicious things. And so I think my hope would be that companies that all of you are doing, that the result of that is going to be a set of companies that are going to be really world -defining in the decades ahead. Amazing. Let's give Mark a hand.

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