Speaker unverified: belief

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…you bring that up. In fact, I used to have an apartment right next to the Microsoft campus, that old campus, and I was working on interactive television. This was in ‘94. The information superhighway. That's right. In fact, there were multiple things that were stunning. My management chain was Rick Rashid who reported to Craig Mundie, who reported to Nathan Myhrvold, and there was Bill Gates and I was saying, “Man, that's a lot of IQ.” And of course we all miss the internet. That was the only thing that happened. But I had interactive television, switch ATM, to my home, to my apartment. So I remember doing this demo. One of the high stakes things I did as a young guy at Microsoft was a demo of our first redundant file system, which was a video server. John Malone was the one who came and Bill was sort of saying, “Hey, here's the future of interactive television, and guess what? It's even great because the disc can go haywired and still stream.” And so my job was to remove the disc drive and have the stream continue. But we built essentially a distributed file system and a streaming server and had an ATM switch network to the house, and I had five movies I could watch, and I watched them all multiple times. So I want to ask you about this, because I've thought a lot about this and you're the perfect person to ask. Which is, Microsoft saw the internet future that was coming in the nineties, and in particular the famous Bill Gates internet tidal wave memo said, “The internet is the one big thing Microsoft needs to focus on.” It wasn't like we're not thinking about the internet. It wasn't that it was priority number seven of 15. It was like, “Hey guys, listen up. The only thing Microsoft should be thinking about is the internet.” But the vision for the internet at the time was this information superhighway which was subtly different from the internet because the thinking was—and it was very sensible thinking—no one has internet to the computer in their home. A lot of people don't have a computer in their home. So what people do have is a TV and what they have is cable, which is a high-bandwidth connection. And so we're going to do these set top boxes on the TV and that is how people will use the internet. Paying a huge amount of attention to this coming wave, pretty sensible, well thought-out solution, and yet not the right approach. So obviously bring that up in the context of the giant AI… What should one take away from that? tention to this coming wave, pretty sensible, well thought-out solution, and yet not the right approach. So obviously bring that up in the context of the giant AI… What should one take away from that? It's a great one. See, if I look at even my interpretation, it'll be actually interesting. I've not spent as much time talking to Bill about that era, but I felt there were at least, as someone as a sort of an entry level employee at that time, even. My reading of history was that we kind of got the internet, but we didn't because we wanted to deliver… I don't think we believed that TCP/IP would work. I mean at some level the information highway, when I look at what we were trying to do was, man, this quality of service is a thing. This TCP/IP is just not going to work. And so therefore we were competing against AOL on dial-up. And even that sort of, you remember MSN was an X.25 network, the first version of it. But that's when Bill pivoted. So the thing that Bill did was in ‘95, I guess—in fact, it's funny that right as Windows 95 was launching he says, “You know what? It's all going to change.” So I feel between ‘92, which is when I think all of us maybe got our first demo, right? November ‘93 is when Mosaic— Yeah, that's right. I think something like that. And so we all were kind of dancing around it. So from ‘93 to ‘95, there was that two-year period where it was unclear whether this was going to be the protocol and the full stack. And the stack emerged, and by ‘95 it was clear and then we pivoted. Interesting. So just at that time, it wasn't actually clear that the open internet would win. Yes. And in fact, there's one more lesson. The interesting thing that I've always watched because I think we can parlay this into AI. One is to get the paradigm right. Then it's not clear. Even if you get the paradigm right, that you may not get what is the killer app or even the business model. That's always been the case, with the internet, who would've thought that for the open web, an organizing layer would be one network effect search engine, right? Because the organizing layer of the web, I always say there's no such thing as the open web. There's the Google web, and just because they dominated it. Should one reflect on the fact that maybe there was some motivated thinking around our proprietary solution, the Liberty Media-Microsoft joint venture will win. Whereas the open web is what won. And you should maybe caution organizations where, if they're following two possibilities, our information superhighway proprietary system or the open web, companies will somehow have happy thinking towards the proprietary solution. It's an interesting one. I think the way, when I look back again, it's interesting, right? So AOL and MSN kind of lost out, let's call it, to the open web. Except they were replaced by new forms of AOL and MSN. They're called search engines. They're called app stores. The mobile web, in fact, is fascinating. The open web was a moment in history. pen web. Except they were replaced by new forms of AOL and MSN. They're called search engines. They're called app stores. The mobile web, in fact, is fascinating. The open web was a moment in history. A moment in history. And so the thing that maybe—the meta thing for me is organizing layers will always emerge even in an open ecosystem. And a lot of the category power moves to that organizing layer, and it's always unclear, like the last paradigm of this… Last time at a search engine. Today it's chatbots. How long lasting is that? No one knows, but it's definitely today. I mean, ChatGPT’s success cannot be denied in terms of what it means as an aggregation point. Marketplaces slash app stores have been a thing. What comes next? What happens to e-commerce in an agentic marketplace or in agentic commerce? I think these are the interesting things that need to be litigated. Well, I want to talk about that and I want to talk about commerce. But actually first, while we're still in the nineties, everyone is making comparisons to the dotcom bubble right now. It's almost a cliché, and I think it's actually a reasonable comparison. It is a cliché for a reason, which is it is a very CapEx intensive buildout for a new paradigm that is in fact a big deal, and yet there's an awful lot of CapEx. You were there at Microsoft during the 2000 dotcom bubble, and it really was, Microsoft's share price peaked in the late nineties, early 2000s, and then didn't surpass it until 2016, I want to say. What did it feel like in 1999? In particular, did you know you were in a bubble or was it like, “Oh, this is the new this time it's different.” It's interesting. Yeah. In fact, I remember, I think we probably became the largest market cap company in 2000. We crossed GE. I remember that. Yeah, we were capital-light, let's say, right? I guess I was more like Sam at that time, which is somebody else's capital was being spent. It is, quite honestly, when I look back at it, at that time too, the financial cycle aside, it was clear. The secular trend was clear that this is going to—because even by then the business models were also emerging. Even for Microsoft, the biggest lesson at that time was, oh my god, even our first order of play—we’ve got to build a browser, we've got to build a web server, we've got to have internet protocols everywhere. We had a website builder inside the office with a front page. We did all the obvious things, but we realized that just doing the obvious things didn't make sense. We needed to reinvent what we were doing, plus what are the new business models was clear. So in an interesting way, that cycle kind of came out of nowhere. I mean, it came out of what was just whatever irrational exuberance or what have you, but the correction in some sense washed away a bunch of stuff. But I would say the ideas persisted, right? And so to me, I think about what's happening here. I mean there are two things. The infrastructure itself that's getting laid out, I think it's got a lot more immediate. It's not like even the gestation period of, okay, I built a dark fiber, which—and some internet company will first scale to a billion users and use.…

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