Tom Chanter

@tomchanter

Is Software Eating The Useless Class?

The story of Marc Andreessen

Tom Chanter

The Internet Evangelist

“He’s not great at the basics of daily life: directions confound him, because roadways aren’t logical, and he’s so absent-minded about sunglasses that he keeps a “reload station” with nine pairs on his hall table,” wrote Tad Friend in a profile for the New Yorker magazine.

He grew up in New Lisbon, Wisconsin. The population? 1,500. At the age of 8 he taught himself the BASIC programming language. Yet his small town lacked the resources to quench his curiosity. “We had a very small public library, and the nearest bookstore was an hour away. So I came from an environment where I was starved for information, starved for connection,” he said in an interview with tech magazine Wired.

In his New Yorker profile, he described his family as “Scandinavian, hard-core, very self-denying people who go through life never expecting to be happy.” One winter, with money tight, his father decided to stop paying for gas, heating, “… and we spent a great deal of time chopping fucking wood.”

His colleague, Ben Horowitz, has said of him, “He reminds me of Kanye, that level of emotional intensity — his childhood was so intensely bad he just won’t go there.”

Time Magazine

As a senior at the University of Illinois he took a $6.85-per-hour programming job at high-tech think tank, the National Center for Supercomputing Applications. He was introduced to the internet.

He immediately saw the need for an easy-to-use internet browser. He hacked together a prototype. His browser idea later became the influential Mosaic browser, and his company Netscape.

In August of 1995, Netscape went public. At 23, he was worth $53 million and coined the “Golden Geek” and “Internet Evangelist.” By December, his stock was worth $174 million. And by 1998 Netscape was sold to AOL for $4.2 billion. But he isn’t known today just as someone who got rich from the internet, thanks to his browser, he’s recognized as someone who helped build it.

“Netscape was based on my beloved’s own inability, as a child, to access knowledge in a small town.”

His wife attributes his success to his childhood, “Netscape was based on my beloved’s own inability, as a child, to access knowledge in a small town.” Yet his success may have come at the cost of the working class people like those in New Lisbon.

Financial Times

This is the story of how a boy from Wisconsin became an elite tech entrepreneur and venture capitalist. It’s the story of his software eating the useless class. It’s the story of whether that boy, who is now 6 ft 5 with the physique of a linebacker, can save the growing useless class, and if he even cares enough to try. This is the story of Marc Andreessen.

Something Ain’t Quite Right

New Yorker

“With a cranium so large, bald, and oblong that you can’t help but think of words like ‘jumbo’ and ‘Grade A’,” writes The New Yorker. It’s a shallow criticism for a man with such depth. As Andreessen himself say, “Great CEOs are not just born with shiny hair and a tie.”

Yet, there are criticisms of Andreessen and his tech-elite compariates that have substance. MIT Technology review published the article How Technology Is Destroying Jobs, while TechCrunch published Technology is killing jobs, and only technology can save them. These articles are two of many that criticize the tech industry for killing people’s jobs.

In 2017, Andreessen responded to that criticism;

“It’s the lump of labour fallacy. It’s the luddite fallacy. This recurring panic happens every 25 to 50 years. People get all amped up about machines that are going to take all the jobs and it never happens.”

Indeed, as the graph show the unemployment rate has remained consistent over the past 50 years:

Forecast Chart

Yet despite the self-evident data and Andreessen’s confidence that he’s creating jobs, as they say in Wisconsin, something ain’t quite right. But what?

Software Is Eating The Useless Class

Bandaequals

Barack Obama agreed with Andreessen, in an interview with Wired, that jobs may be replaced. But Obama describes a deeper issue:

“High skilled people do well in these systems. They can leverage their talents with machines to extend their reach, their sales, their products, their services. Low wage, low skill individuals become more and more redundant and their jobs may not be replaced, but wages are suppressed.” [Emphasis mine]

Remember that TechCrunch article mentioned above, How Technology Is Destroying Jobs? It shows how the US economy has become much more productive in the past 50 years, yet wages have hardly risen:

MIT Technology Review

In 2013, the economics professor Tyler Cowen published the best-selling book Average Is Over. Cowen concludes with, “It might be called the age of genius machines, and it will be the people who work with them that will rise. One day soon we will look back and see that we produced two nations, a fantastically successful nation, working in the technologically dynamic sectors, and everyone else. Average is over.” [Emphasis mine.]

This “useless class” will not merely be unemployed — it will be unemployable.

In 2017, the best-selling author, historian and professor in the Department of History at the Hebrew University of Jerusalem, Yuval Noah Harari, explored what would happen to ‘everyone else.’ Here are two of his predictions:

1. “99 percent of human qualities and abilities are simply redundant for the performance of most modern jobs.”

2. “In the 21st century we might witness the creation of a massive new unworking class: people devoid of any economic, political or even artistic value, who contribute nothing to the prosperity, power and glory of society. This “useless class” will not merely be unemployed — it will be unemployable.” [Emphasis mine.]

Technology isn’t killing jobs (for now). But it is suppressing wages. And as the ordinary worker contributes less and less as elite tech workers produce more and more, ordinary workers wages will continue to fall. In time, wages will fall to zero. In time, technology will kill their jobs.

This sounds dark. But remember, there’s the other side of the Bitcoin. For the people who can leverage technology, there is a enormous opportunity. Marc Andreessen already leveraged his tech prowess to build a billion dollar company. Could he leverage technology to create more powerful changes?

How A Boy From Wisconsin Became Yoda

Deviant Art

Andreessen said, “My own theory is that we are in the middle of a dramatic and broad technological and economic shift in which software companies are poised to take over large swathes of the economy.”

If like Andreessen, you believed software was eating the world, what would you do?

Andreessen’s own career shows us five strategies to choose from:

1. The Sucker Strategy

This strategy is to put your hands over your ears and ignore the technology revolution. This is the only strategy that isn’t named after someone famous. Why? Because history forgets suckers.

Many boys from Wisconsin grow up to be suckers. They “just stay there,” says Andreessen. He left.

2. The Marcus Tullius Tiro Strategy

Marcus Tullius Tiro was a faithful servant to Cicero. After a lifetime of service he was freed. This strategy is finding a job in the tech sector and faithfully slaving away until you reach retirement.

Marc Andreessen was following this strategy when he took the $6.85-per-hour programming job in college. But as he learned about the internet, he evolved his strategy.

3. The Edison Strategy

The Thomas Edison strategy is building better technologies and owning the company. His company General Electric still thrives. It’s entrepreneurship.

We know Andreessen built Netscape. But in 1998 he started another company called Loudcloud. It provided hosting and software services to consumer facing internet and e-commerce companies. In 2003 Loudcloud sold their hosting business and changed their name to Opsware. In 2007, Opsware was acquired by Hewlett-Packard for $1.6 billion.

Yet the Edison strategy didn’t last long. Andreessen outgrew this strategy too. As Mark Zuckerberg said, “When Marc started Andreessen Horowitz, I asked him why he didn’t start another company instead, and he said, ‘It would be like going back to kindergarten.’ ”

4. The King Ferdinand Strategy

Columbus discovered America. But Spain’s King Ferdinand And Queen Isabella financed his voyage. The King Ferdinand Strategy is raising money and then giving it to a bunch of potential Columbus’s who might discover something valuable. It’s venture capital.

In 2005 Andreessen began investing in other people’s startups. And so did fellow netscape employee and Loudcloud founder Ben Horowitz. By 2009 they had invested in 45 startups, including Twitter. Most successful individual businessmen who invest in startups are known as angels. But Andreessen and Horrowitz were known as super angels.

In 2009 their partnership was made official when they started the venture capital firm Andreessen Horowitz. They raised $300 million.

Their firm nickname is a16z (it’s even their web address www.a16z.com). a16z is a numeronym — the first and last letter of the firm name (Andreessen Horowitz) with the character count in-between. Numeronyms are an insider’s joke for developers. These are the type of guys Andreessen and Horowitz are. And people who get the joke without needing to Google it are the type of people a16z invests in.

Those techies they’ve invested in have built Instagram, Reddit, Skype, Box, GitHub, Oculus, and Business Insider.

As of September 2018, a16z have raised $6.6 billion. Their rapid success prompted rival venture capital firms to give them another nickname, AHo.

Despite their initial success, long term success for venture capitalists is rare. Most firms don’t beat the NASDAQ. Andreessen’s wouldn’t let his firm be one of them. Again, Andreessen reinvented his strategy.

5. The Yoda Strategy

Yoda from Star Wars was a legendary Jedi Master. He was stronger and wiser than most. He trained Jedi for 800 years. He mentored Luke Skywalker. This strategy goes beyond that of King Ferdinand. It’s not only providing financial resources like most venture capitalists, but actively helps them grow their company and market. It’s Marc Andreessen.

J6 Design

Most venture capital firms have a small team of employees. The partners throw money at startups and leave them to fend for themselves. a16z isn’t like most venture capitalist firms. They’re more like the Hollywood talent agency Creative Artists Agency (C.A.A.).

C.A.A. came to Hollywood in the mid 1970s. “For 60 years, the studios really took advantage of the creative talent,” said C.A.A. founder Michael Ovitz. “We tried to change the entire curve.” Ovitz fought for his star’s careers. He hired coaches and publicists to help them. He focused on the talent, not the studios. Stars flocked to his agency.

Andreessen designed a16z on the C.A.A. model. As Andreessen explained in his New Yorker profile, “We give our founders the networking superpower, hyper-accelerating someone into a fully functional C.E.O. in five years.”

How do they do it? They have a team of over 145 people and a network of 20,000 people. They don’t only invest in startups; they actively support them with executive talent, PR, tech talent, marketing, and market development.

In the early days of Airbnb they faced a PR debacle. One of their renters homes in San Francisco had been trashed. Airbnb is an a16z investment.

SYFY Wire

Here is Airbnb’s founder Brian Chesky describing what happened, “Marc came to our office at midnight and read the letter I’d written to our community about the Airbnb Guarantee, and the two changes he made changed the company forever. I’d said we guarantee five thousand dollars for property damage, and he added a zero, which seemed crazy. And he told me to add my personal email address. He gave us permission to be bold.”

He gave us permission to be bold.

Andreessen is so committed to his startups he goes to their office at midnight just to proofread an email. Startups flock to his firm. Having been an innovator in the tech start-up game, Andreessen is now an innovator in the tech venture capital game. He is a jedi that has become the master.

Monopolists Lie To Protect Themselves

Wordpress

Remember Yuval Noah Harari who is predicting the rise of the useless class? It’s not the only new class he’s predicting;

“As algorithms push humans out of the job market, wealth and power might become concentrated in the hands of the tiny elite that owns the all-powerful algorithms, creating unprecedented social and political inequality.”

Harari isn’t alone. University Professor and President Emeritus at Harvard University, Larry Summers, said:

“The rise of the top 1 percent is likely very tied up with technology. When George Eastman had a fantastic idea for photography, he got quite rich, and the city of Rochester became a flourishing city for generations, supporting thousands of middle-class workers. When Steve Jobs had remarkable ideas, he and his colleagues made a very large fortune, but there was much less left over — there was no flourishing middle class that followed in their wake.” [Emphasis mine]

Yale

But do the numbers support Harari and Summers hypothesis? A paper in the The Quarterly Journal Of Economics, by two economists at University Of California Berkeley, discovered that in the U.S.:

“The share of overall wealth held by the top 1% has increased from around 25% in 1980 to over 40% today; for the top 0.1% it has increased from less than 10% to over 20% over the same time period.”

Marc Andreessen is at the epicenter of this phenomenon. He’s the top 1%.

So remember what Andreessen said when asked about tech killing jobs?

“It’s the lump of labour fallacy. It’s the luddite fallacy. This recurring panic happens every 25 to 50 years. People get all amped up about machines that are going to take all the jobs and it never happens.”

He’s focused on the number of jobs, rather than the transfer of wealth from the middle-class to the tech elite. Why?

Monopolists lie to protect themselves.

Perhaps Peter Thiel’s famous quote explains it, “Monopolists lie to protect themselves.”

But if Andreessen was lying to protect himself, how’s he doing it? After all, the luddite fallacy is technically true — jobs are being replaced.

Perhaps they lie using a Russell Conjugation (or Emotive Conjugation). You probably guessed it’s named after the philosopher Bertrand Russell.

Eric Weinstein, who received a Ph. D in mathematical physics from Harvard University, explains;

“In order to understand the concept properly you have to appreciate that most words and phrases are actually defined not by a single dictionary description, but rather two distinct attributes:

I) The factual content of the word or phrase.

II) The emotional content of the construction.

Where words can be considered “synonyms” if they carry the same factual content (I) regardless of the emotional content (II). This however leads to the peculiar effect that the synonyms for a positive word like “whistle-blower” cannot be used in its place as they are almost universally negative (with “snitch,” “fink,” “tattletale” being representative examples). This is our first clue that something is wrong, or at least incomplete with our concept of synonym requiring an upgrade to distinguish words that may be content synonyms but emotional antonyms.”

Here’s an example Bertrand Russell gave;

> I am firm,

> You are obstinate,

> He is a pig-headed fool.

“In all three cases, Russell was describing people who did not readily change their minds. Yet by putting these descriptions so close together and without further factual information to separate the individual cases, we were forced to confront the fact that most of us feel positively towards the steadfast narrator and negatively towards the pig-headed fool, all without any basis in fact,” writes Eric Weinstein.

In other words, we can use emotive language to disguise important facts. Monopolists don’t need to lie when they can use a Russell Conjugation.

So let’s dissect Marc Andreessen’s use of a Russel Conjugation.

Remember what Andreessen said, “It’s the lump of labour fallacy. It’s the luddite fallacy. This recurring panic happens every 25 to 50 years. People get all amped up about machines that are going to take all the jobs and it never happens.”

You can see the Russell Conjugation: ‘Luddite.’ The fact is true; technology hasn’t taken peoples’ jobs. The emotional manipulation is calling the idea the ‘luddite fallacy’, which connotes images of backward thinking fools. The facts are true, the news is fake. Monopolists use Russell Conjugations to protect themselves.

In Marc Andreessen’s case, the monopoly is the tech industry which is receiving proportionally more and more of the wealth created. The attack could come from the suffering middle-class who could vote to tax the top 1%. Is Andreessen is exaggerating the economic power of the middle class by focusing on their stable employment rate so his monopoly profits continue unmolested?

Tech isn’t killing jobs. That fact is true. Marc Andreessen isn’t lying. But he’s using a Russell Conjugation to divert the focus away from the real problem of a growing wealth gap. His facts are true, his story is bullsh*t.

That is, unless, we’re missing something. Another explanation. Maybe the boy from Wisconsin cares as much for people as profits.

Screw The Independent Bookstore

Pinterest

“Ordinary people love the iPhone, Facebook, Google Search, Airbnb, and Lyft. It’s only the intellectuals who worry,” said Andreessen in his New Yorker profile.

Maybe those intellectuals like Bertrand Russell and Eric Weinstein worry too much. They’re men of theory, Andreessen is a man of action. But what are the effects of his action?

In 2011, Marc Andreessen published an article in the Wall Street Journal titled, Why Software Is Eating The World. He wrote, “Over the next 10 years, the battles between incumbents and software-powered insurgents will be epic. Joseph Schumpeter, the economist who coined the term “creative destruction,” would be proud.”

7 years later, it’s clear Andreessen was correct. Lyft has destroyed taxi jobs. Airbnb has destroyed hotel jobs. Amazon destroyed independent bookstores.

“Screw the independent bookstores,” he said in his New Yorker profile. “There weren’t any near where I grew up. There were only ones in college towns. The rest of us could go pound sand.”

How does Andreessen feel about that? “Screw the independent bookstores,” he said in his New Yorker profile. “There weren’t any near where I grew up. There were only ones in college towns. The rest of us could go pound sand.”

So far the software-powered insurgents have destroyed many blue-collar jobs. Many former taxi drivers and hotel receptionists are falling into the useless class.

Many people in the upper middle-class, doctors, accountants, lawyers, sympathize with these people. But they don’t empathize. They think their jobs are safe.

Those people might be interested to learn about Atrium Legal. Thanks to a $65 million investment from a16z, they’re automating expensive legal labour. Machine learning is replacing lawyers. The useless class is eating away at white-collar jobs too.

This idea of a ‘useless class’ feels abstract. Who actually is the useless class? Let’s take two people in normal non-tech jobs, a married couple, and see how their jobs will be affected by technology.

Our first person is Pat. She works in customer service at a clothing chain called Lands’ End. It is likely that robotics and personal point of sale machines, like those currently being implemented in McDonalds, will make her job role redundant. Software is eating the world and Pat’s job is on the menu.

Our second person is Lowell. He’s a sales manager for a seed company called Pioneer Hi-Bred. Sales might seem like something a computer can’t do, but as Andreessen said, “More and more major businesses and industries are being run on software and delivered as online services — from movies to agriculture to national defense.” Andreessen mentions Lowell’s industry directly; agriculture. Lowell’s job will be replaced by an online store.

While these examples are illustrative of what could happen to today’s non-tech working class, in reality Pat and Lowell won’t be affected by these changes. They’re real people. And by now, Pat and Lowell Andreessen, Marc Andreessen’s parents, are likely happily retired in Wisconsin.

Yuval Noah Harari sees the problem clearly, “The most important question in 21st-century economics may well be: What should we do with all the superfluous people, once we have highly intelligent non-conscious algorithms that can do almost everything better than humans?”

Harari is focused on the problem. What about Marc Andreessen? Does he worry about ordinary workers like his parents?

Maybe, maybe not.

BGR

The tagline of his firm, a16z, is Software Is Eating The World. He seems proud of his creative destruction. After all, would someone who was ashamed of their wealth keep a Victrola in his office that was used on the TV show Mad Men?

And then there’s what the New Yorker said, “A friend who knows Andreessen well told me, “We’ve never had a conversation about his parents or his brother — all he said was ‘They didn’t like me, and I didn’t like them all that much, either.”

Only Technology Can Save Them

Fine Art America

It sounds harsh to hear Andreessen say, “Screw the independent bookstore,” and “ I didn’t like them all that much.” But we can understand his sentiment. Here is this intellectually gifted and insatiably curious young boy in Wisconsin, “Starved for information, starved for connection”. If, instead of independent bookstores, Amazon had existed when he was a boy, he could have had the world’s knowledge delivered to his doorstep. If the companies he funded existed, Reddit and Skype, he could have found intellectual connections online from his small town in Wisconsin. If technology is hurting people now, a lack of technology hurt Andreessen when he was a boy. But like the boy who escaped Wisconsin, there’s an escape for the useless class.

In his New Yorker interview with Andreessen, Tad Friend, brought up the wealth gap issue, “Andreessen rerouted the conversation, saying that such gaps were “a skills problem,” and that “As robots ate the old, boring jobs humanity should simply retool.”

So it seems Andreessen has an answer to Harari’s ‘most important question in the 21st-century’: What should we do with all the superfluous people, once we have highly intelligent non-conscious algorithms that can do almost everything better than humans?

It’s “A skills problem.”

Remember that article by TechCrunch, Technology is killing jobs, and only technology can save them. They agree with Andreessen that it’s a skills problem. As the title says, they also posit that technology can help solve the problem;

“In order to move forward, we need to embrace technology both as a means of production and a method for producing new roles. But pulling off such a coup is going to require some massive investments in education, both on the part of the corporations looking to move valued employees into new roles and an education system preparing workers for the real world. Failure to do so will only accelerate the growing rift between so-called low- and high-skilled workers, and the whole of our economy — and future — will suffer as a result.”

Bryan Mathers

In short, the widening wealth gap highlights the need for a new educational system built on better technology. Only technology can save the useless class.

I’m Going To Teach Him How To Take Over That World!

Like Bill Gates, Andreessen has pledged that during his lifetime he will be donating at least 50% of his income to charitable causes. And like Gates, Marc Andreessen is doing much more than just donating to charity.

“Posit a world in which all material needs are provided free, by robots and material synthesizers. . . . Imagine six, or 10 billion people doing nothing but arts and sciences, culture and exploring and learning. What a world that would be,” particularly as “technological progress is precisely what makes a strong, rigorous social safety net affordable,” tweeted Andreesen.

In 2011, a company named Udacity was founded. They’re using technology to do education differently. Better.

As co-founder Sebastian Thrun said to TechCrunch, “Students are bombarded with questions and puzzles and quizzes, rather than lectures. We shunned the lecture entirely. We believe that learning by doing is more important than learning by listening.”

In 2012, Andreessen’s firm, a16z, invested in Udacity.

By 2018, Forbes reported that Udacity has over 50,000 students enrolled in Nanodegree programs at any given time, and over ten million students worldwide who have registered with the site.

Udacity

Stuart Frye is the Vice President of Business Development and Partnerships said, “As the tech skills gap continues to grow, more and more of our industry partners are investing broadly in the talent ecosystem to ensure there are diverse pipelines of talent. Those partnerships have resulted in outcomes like ‘Grow with Google’ funding over 100,000 scholarships across the world, Lyft sponsoring a scholarship program to get more under-represented groups into the field of autonomous systems, and Accenture sponsoring a veterans program that helps transitioning service members find jobs in tech.”

Earlier we discussed how Lyft had killed taxi drivers job, and replaced them with less-secure driving jobs for Lyft. But here we see new, lucrative tech jobs within Lyft that anyone with internet can train for. Other hiring partners include IBM, BMW, Mercedes Benz, iRobot, Uber, and Lockheed Martin.

Udacity is too late to prevent Marc Andreessen’s frustrating childhood. But it’s not too late to prevent a useless class.

As Udacity’s mission statement says, “Virtually anyone on the planet with an internet connection and a commitment to self-empowerment through learning can come to Udacity, master a suite of job-ready skills, and pursue rewarding employment.”

We can see Marc Andreessen working to save the working class from becoming the useless class. But does he really care about these people, or is he only in it for the profits?

It was true Marc Andreessen’s use of a Russell Conjugation, the luddite fallacy, focuses the conversation on employment levels rather than the wealth gap. But is it because he’s a monopolist using a Russell Conjugation to protect himself? Marc’s character has shown him to be a hard-charging creator, not a crony capitalist. His Russell Conjugation deserves another explanation.

The point of a Russell Conjugation is to show that we choose words based on their emotional sentiment. Marc Andreessen doesn’t use the Luddite Fallacy because he’s intentionally misleading, he uses it because he’s genuinely optimistic about the future of technology, as opposed to a luddite who is pessimistic.

His facts remain true. But his story isn’t bullsh*t. It’s optimistic.

And why shouldn’t he be optimistic? He’s a boy from Wisconsin who once starved for information and has become one of Silicon Valley’s greatest tech entrepreneurs and venture capitalists. Why would he settle for a future filled with a useless class when he has a greater vision?

Above we saw that the wealth gap in the U.S. is increasing, but how about globally? “The world is becoming more equal with more technology. Global income inequality is dropping not rising,” said Andreessen in an interview with Fortune magazine.

He has seen technology transform his own life, and has seen how technology has bridged the global wealth gap. Why shouldn’t he be optimistic about the future of America’s working class?

We want everybody to be able to take care of their kids.

As Andressen said, “What we want is equality of opportunity. We want everybody to have a chance to participate. We want everyone to have a chance to get educated. We want everyone to have a chance to get a great job. We want everybody to be able to take care of their kids. To do that, we need to open up opportunity, and then the other thing we need, we just need more growth.”

With Udacity he’s creating the opportunity. He sees the problem. He’s building a solution.

Kintsugi is the Japanese art of repairing broken pottery with lacquer dusted or mixed with powdered gold, silver, or platinum. It represents a philosophy of embracing what’s broken to create something even more valuable. Marc Andreessen and the tech elites live Kintsugi.

Right now, because of the creative destruction of companies like Lyft, Airbnb, and Amazon, the employment model for the working class is the broken pottery. But with companies like Udacity, Andreessen and other tech elites are applying a gold coated lacquer. In time, the working class will not become the useless class. They’ll become the creative class.

“Imagine six, or 10 billion people doing nothing but arts and sciences, culture and exploring and learning. What a world that would be.”

Marc Andreessen takes what is broken and gives it a gold coating. Remember what his wife said, “Netscape was based on my beloved’s own inability, as a child, to access knowledge in a small town.”

So does Marc Andreessen care?

As a boy in Wisconsin he was starved for information. He has created an education institution accessible from Wisconsin to Africa.

As a boy in Wisconsin he was starved for connection. He has married an innovative philanthropist and author, Laura Arrillaga-Andreessen. They have a son named John.

Stanford, Eliot Holtzman

Andreessen is optimistic for both the working class and the future tech elite. In his New Yorker profile he says of his son, “He’ll come of age in a world where ten or a hundred times more people will be able to contribute in science and medicine and the arts, a more peaceful and prosperous world.” He added, tongue in cheek, “I’m going to teach him how to take over that world!”

More by Tom Chanter

Topics of interest

More Related Stories