Andreessen on What to Build & How

This past April venture capitalist Marc Andreessen posted a passionate jeremiad called It’s Time to Build that launched a thousand takes across the web (my favorite critical response to the essay, by the way, was two episodes of the Track Changes podcast by Paul Ford and Rich Ziade, the second of which lays out an interesting vision of digital public goods. See here and here.)

In a recent interview for The Observer Effect, Andreessen elaborates on his initial essay. When asked to pick the one thing that he wishes people would go out and start building he comes back three:

Well, I will pick three! It’s kind of the holy trinity of our modern dilemma. It’s health care, it’s education and it’s housing. It’s the big three. So basically, what’s happened is the industries in which we build like crazy, they have crashing prices. And so we build TVs like crazy, we build cars like crazy, we make food like crazy. The price on all that stuff has really fallen dramatically over the last 20 years which is an incredibly good thing for ordinary people. Falling prices are really, really good for people because you can buy more for every dollar.

There are two ways here: you get paid more or everything you buy is cheaper. And people always really underestimate, I think, the benefits of everything getting cheaper. And so the stuff that we actually build is getting cheaper all the time. And that’s fantastic. The stuff we *don’t* build, and very specifically, we don’t have housing, we’re not building schools, and we’re not building anything close to the health care system that we should have – for those things the prices just are skyrocketing. That’s where you get this zero sum politics. I think people have a very keen level of awareness. They can’t put it into formal economic terms but they have a keen awareness of the markers of a modern western lifestyle. It’s things like – I want to be able to own a house, I want to live in a nice neighborhood and I want to be able to send my kids to a really good school and I want to have really good health care. 

And those are the three things where the price levels are increasingly out of reach. However we built those systems in the past, it’s failing us. And so we need to rethink. Quite literally, it’s like, okay, where are the schools? Where are the hospitals? Where are the houses?

Andreessen frames this as a failure of price signaling: in a healthy free market high prices incentivize the creation (or, to use Silicon Valley’s favorite word, the “building”) of more supply. The reason it is so hard to build more housing, schools and health care services is in large part the myriad regulations and government-imposed processes at all layers of government that impose high costs and slow innovation to a dribble.

Silicon Valley’s typical approach to disruption is to act first and ask for forgiveness (and pay the requisite fines) later. That worked pretty well for taxi and hospitality startups, which were peripheral concerns for elected officials and the bureaucratic class. But the regulatory moat surrounding the three sectors Andreessen highlights are a horse of a different color. It’s the difference between knocking over your local bank and robbing Fort Knox.

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