This essay synthesizes responses to Marc Andreessen's recent piece: It's Time To Build. I'll explore "vetocracy" as a root cause problem in government and "diminishing bits space" as a fundamental constraint in tech. Finally, I'll highlight an under-appreciated, orthogonal opportunity for building—the creation of new paradigms.
Problems with Government:
Vetocracy, Tragedy of the Anti-Commons, and Law of the Intolerant Minority
"We need to want these things more than we want to prevent these things." — Marc Andreessen
How much progress is made in government? We can use a simple equation here. Is the cost for action less than the cost for veto? If so, we'll have progress.
Three different writers have expressed this in their responses:
- In Ezra Klein's response, he calls this a vetocracy: "where too many actors have veto rights over what gets built." This occurs on with both progressives and conservatives:
The problem not only progressives who are afraid of government power wielded too easily. The problem is also conservatives who want government to work poorly when it’s needed most.
The result is a system biased toward inaction. Absent some kind of crisis, paralysis is the rule.
2. In this piece for the American Mind, Mark Lutter uses another term for vetocracy—the tragedy of the anti-commons, which Larry Summers describes as "promiscuously distributing veto power".
3. There's a final aligned perspective here, on the outsized political power of small groups. Taleb highlights the Law of the Intolerant Minority, where a intolerant minority group can force the majority to conform. For example, even though only 0.3% of the US population is Kosher, many drinks are Kosher. If you're Kosher (the intolerant minority), you will only drink Kosher. If you aren't Kosher (the flexible majority), you will drink anything.
This is directly connected to Jerry Brito's response to Andreessen. Brito references the work of Mancur Olson: Incentivized Minorities, Indifferent Majorities.
Small groups (like energy incumbents) are easier to organize than large groups (all Americans who would benefit from nuclear energy) because their direct incentives are greater. Benefits are concentrated and costs are diffused, so by acting legitimately through democratic channels interest groups will secure protection even at the expense of the greater public. The result is that “society, acting collectively through its democratic institutions” sends a clear message: “We don’t want these things.”
Whatever the underlying mechanism, we need a government that runs on competence, rather than vetocracy.
Problems with Tech
Software Has Eaten The World, Now What?
In addition to government, tech is also responsible for our lack of current progress. Andreessen wrote Software is Eating the World in 2011—now what?
First, we're at the end of a technological S-curve. John Luttig explains the start of these tailwinds:
In the late 1990s, the tailwinds began when Internet usage surged from a nerdy hobby on the West Coast to a global household necessity. Since then, the Internet has consumed an ever-increasing percentage of consumers’ time and money. Smartphones and social networks became ubiquitous. When SaaS spend grew 50% per year, it was hard not to find green pastures as a new software startup.
And their decline:
But if you look at these supposed tailwinds today, a gloomier picture appears: they are not exponential functions, but logistic functions with plateauing growth rates. As we approach full online penetration, new companies will need to steal revenue and users from Internet incumbents to grow. For the first time in Internet history, startup growth will require a push from the company and not a pull from the market.
In a similar vein, Ben Thompson wrote about the dominance of GAFA (and the difficulty of new startups) in his article The End of the Beginning:
There may not be a significant paradigm shift on the horizon. And, to the extent there are evolutions, it really does seem like the incumbents have insurmountable advantages: the hyperscalers in the cloud are best placed to handle the torrent of data from the Internet of Things, while new I/O devices like augmented reality, wearables, or voice are natural extensions of the phone.
In other words, today’s cloud and mobile companies — Amazon, Microsoft, Apple, and Google — may very well be the GM, Ford, and Chrysler of the 21st century. The beginning era of technology, where new challengers were started every year, has come to an end.
Benedict Evans piles on to this perspective in his presentation here. Once you've connected everyone, what's next?
Both Evans and Thompson explain "what's next"—code as a systemically important part of society. First, Evans:
Software ate the world, so all the world's problems get expressed in software.
And also Thompson:
That does not mean the impact of technology is somehow diminished: it in fact means the impact is only getting started. Few companies are pure “tech” companies seeking to disrupt the dominant cloud and mobile players; rather, they take their presence as an assumption, and seek to transform society in ways that were previously impossible when computing was a destination, not a given. That is exactly what happened with the automobile: its existence stopped being interesting in its own right, while the implications of its existence changed everything.
This begs the question—if GAFA dominates and we no longer have tailwinds, what role should VCs play?
Software Has Eaten The World of Bits—Should VC's Role Still Be Black Swan Farming?
Let's look at the underlying incentives for VC and software. Ben Thompson writes about this in his response to Andreessen:
Software is perfectly suited to venture capital: it has significant capital costs, and mostly zero marginal costs, which means there is a big need for up-front investment combined with unlimited upside.
This perspective was strong in the 2010s, but Ben Thompson outlines the issue with this mindset now:
Tech too has chosen the easier path. Instead of fighting inertia or regulatory capture, it has been easier to retreat to Silicon Valley, justify the massive costs of doing so by pursuing infinite-upside outcomes predicated on zero marginal costs, which means relying almost exclusively on software as the means of innovation.
The black swan model may have issues. How can you build with atoms when bits have 90% gross margins? Thompson again:
VCs need to figure out an investing model that is suited to outcomes that have a higher likelihood of success along with a lower upside. The fundamental constraint has remained: the assumption of high costs, high risk, and grand slam outcomes. We should keep that model, but surely there is room for another?
What to Build?
If we have a government plagued by vetocracy and a tech industry that has run out of easy bits-based wins, what's next? What should we build?
First, we should ask—progress, to what end? Progress is not an end in and of itself. Would it be "progress" if we had more conspicuous consumption, more candy eaten, or more fossil fuels consumed? Of course not. We, as individuals and society, need to reflect on our needs, then make progress towards that. We need to zoom out from our Now Me needs and towards our Future Us needs of sustainability.
In a way, this is a cheat code for progress. Instead of continuing to try to mine the edges of bits-based social networks (Clubhouse!), we can move orthogonally and solve previously unmet needs.
Ezra Klein describes our Now Me focus as "capitalist vetocracy":
In practice, short-term shareholder capitalism acts as a kind of vetocracy on public companies: If the market thinks whatever you’re doing is going to cut quarterly earning for an uncertain payoff, it can punish you severely, and instantly, for trying.
Second, we should recognize that progress is not just the numerator (growth), but also has a denominator (per person). We should continue to urgently push the numerator. But we should also recognize when the progress for a single person is "enough"—when they have abundance and can exercise generosity. Once people get to Level 5 ($45k+/year), "progress" is helping them meet their Future Me needs for meaning by giving to Now Us and Future Us. (Which, per Egoistic Altruism / endogenous growth theory, eventually helps the initial giver.)
This may feel like decadence, but it's not. It's an active choice to optimize for Us instead of Me.
Progress is not just growth. It is growth in meeting humanity's needs.
Don't just build something people want. Build something that meets their needs.
Third, we should actively be aware that what we're building is not a product, but a paradigm. Our new paradigm is a values stack of morals, rules, and incentives:
Spreading a new mindset of collectivism and generosity may not feel like progress. It's difficult to measure. But it is a necessary re-alignment of our priorities towards what matters. "True progress" requires some reflection on what progress means.
We desperately need rallying cries like Andreessen's. We urgently need to increase the numerator of progress. In government, we should look at solving the root cause and "veto vetocracy". In tech, we should recognize GAFA's dominance and co-create a yes-and of the black swan model.
In addition, we should reflect on what progress means. We should zoom out to meet Future Us needs, recognize our Now Me abundance to trigger an Egoistic Altruism feedback loop, and actively commit to building a new paradigm.
A list of other "It's Time To Build" responses: