a16z Podcast: The Business of Continual Change

Every large company — especially ones that have been around for a long time — goes through multiple cycles of change. But how do you know where to go next, and when, and how? The management literature is full of …

Are the Most Innovative Companies Just the Ones With the Most Data?

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Do you still use Yahoo? Do you still remember MySpace? Compaq? Kodak? The cases of startups with superior ideas dethroning well-established incumbents are legion. This is the beauty of “creative destruction” – the term coined by innovation prophet Joseph Schumpeter almost a century ago. Incumbents have to keep innovating, lest they be overtaken by a new, more creative competitor. Arguably, at least in sectors shaped by technical change, entrepreneurial innovation has kept markets competitive far better than antitrust legislation ever could. For decades, creative destruction ensured competitive markets and a constant stream of new innovation. But what if that is no longer the case?

The trouble is that the source of innovation is shifting – from human ingenuity to data-driven machine-learning. Google’s self-driving cars are getting better through the analysis of billions of data points collected as Google’s self-driving cars roam the street. IBM Watson detects skin cancer

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What U.S. CEOs Should Do with the Money from Corporate Tax Cuts

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The new U.S. tax law is likely to increase after-tax cash flows for U.S.-based companies by anywhere from 10% to 20%, depending on their current tax position. As we approach earnings season, investors should listen carefully to what CEOs plan to do with the money. There’s a strong argument that they should invest in growth, and the newly available cash offers them a unique chance to do so. Unfortunately, too many are likely to squander the opportunity.

The size of this windfall is remarkable, and it comes from several sources. The new law reduces the statutory corporate rate from 35% to 21%. It permits immediate expensing of many capital investments. It treats pass-through entities more favorably than in the past, and it increases the incentive to repatriate off-shore cash. In a world already awash in investable capital, these changes should

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The Question with AI Isn’t Whether We’ll Lose Our Jobs — It’s How Much We’ll Get Paid

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The basic fact is that technology eliminates jobs, not work. It is the continuous obligation of economic policy to match increases in productive potential with increases in purchasing power and demand. Otherwise the potential created by technical progress runs to waste in idle capacity, unemployment, and deprivation. —National Commission on Technology, Automation and Economic Progress, Technology and the American Economy, Volume 1, February 1966, pg. 9.

The fear that machines will replace human labor is a durable one in the public mind, from the time of the Luddites in the early 19th century. Yet most economists have viewed “the end of humans in jobs” as a groundless fear, inconsistent with the evidence. The standard view of technical change is that some jobs are displaced by the substitution of machines for labor, but that the fear of total displacement is misplaced because new jobs are created, largely due

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Why the Pessimists Are Wrong About the New U.S. Tax Law

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The new U.S. tax law is surprisingly unpopular. According to a New York Times survey, only one-third of Americans think their taxes will go down in 2018 as a result of the new tax law.  These pessimists are wrong. Almost every household will pay less in tax.  And over time the corporate tax reforms will lead to more capital accumulation, higher productivity, and higher real wages, raising pre-tax incomes as well as lowering the share of incomes taken in taxes.

Before the tax bill passed, critics said that the Congressional Republicans would not be able to cooperate enough to pass legislation and that, if they did, it would be just a tax cut and not tax reform. When it passed the critics said it was written in secret at the last minute. All of that affected the public’s attitude about the tax

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How to Persuade the Young and the Healthy to Sign Up for Health Insurance

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One of the big challenges in both expanding the number of Americans with health care coverage and keeping premiums affordable for people with chronic or serious illnesses has been persuading young and healthy adults to obtain policies. Critics argue that the new U.S. tax law has made this task even harder with its elimination of the individual mandate for health insurance, a part of the Affordable Care Act that requires individuals to buy insurance or risk having to pay a tax penalty. But the effect of the mandate on coverage was never particularly impressive.

In 2014 only 28% of exchange members were between 18 and 34 years of age. That percentage stayed level into 2016, and with a shorter enrollment period in 2017, this year’s percentage may be lower. These numbers are well below the 40% enrollment rate that actuaries estimated was needed to allow for stable premiums.

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Do Soda Taxes Work? Not Unless Retailers Raise Prices

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Soda’s empty calories are public enemy number one in the fight against obesity, and taxes on sugary drinks are an increasingly popular tool among local governments hoping to curb consumption.

State and federal taxes on tobacco and alcohol have helped reduce consumption; local governments are simply assuming a soda tax will work in the same way. The idea is that making soda cost more will encourage consumers to drink less of it. But that only happens if retailers pass along the added cost to their customers — something that doesn’t always happen.

For instance, Berkeley, California, was the first city in the U.S. to approve a soda tax on distributors, a one-cent-per-ounce tax that was instituted in March 2015. But our research estimated that this tax reduced calorie intake among Berkeley soda drinkers by only a few calories per day. We found that much of the cost of the tax is not being

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What the Future of U.S. Antitrust Should Look Like

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Market concentration is rising while economic competition — the bedrock of a dynamic, free market economy — is under threat. No wonder the framework that has guided antitrust enforcement for the last four decades is coming under intense scrutiny.

There are at least three schools of thought about the future of antitrust, each of which deserves consideration. To determine which one is best — and we do have a view — it’s helpful to review the growing evidence on why market concentration is so dangerous to the economy.

The Perils of Industry Concentration

A comprehensive study of recent mergers found that product prices rose post-merger in nearly two-thirds of cases. Price increases are particularly burdensome for individuals and families on the lower end of the income distribution.


The Economy in 2018

Not only does economic consolidation exacerbate economic inequality among consumers, it also

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Is Overregulation Really Holding Back the U.S. Economy?

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With tax cuts now a done deal, Republicans are turning to regulatory reform to give economic growth a further boost. There, they may find more bipartisan support. Past reforms of airlines, rail, and trucking regulation were, after all, set in motion by Democrats. Today there is significant Democratic support for reform of financial regulation, especially for smaller community banks. Overregulated small businesses can be found in every congressional district, red or blue.

But while regulatory reform could provide a big boost if it is done right, indiscriminate deregulation could do more harm than good.

Blanket Deregulation Won’t Help

Many conservatives and libertarians seem to think the only good regulation is a dead regulation. If that were true, it should be possible to quantify regulation and measure the harm it does. However, attempts to do so have not been particularly successful.

Consider the regulatory freedom indexes published

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What Happened In 2017

As has become my practice, I celebrate the end of a year and the start of a new one here at AVC with back to back posts focusing on what happened and then thinking about what might happen.

Today, we focus on what happened in 2017.


I went back and looked at my predictions for 2017 and I completely whiffed on the breakout year for crypto. I did not even mention it in my post on New Year’s Day 2017.

Maybe I got tired of predicting a breakout year for crypto as I had mentioned it in my 2015 and 2016 predictions, but whatever the cause, I completely missed the biggest story of the year in tech.

If you look at the Carlota Perez technology surge cycle chart, which is a framework I like to use when thinking about new technologies, you will see that a frenzy develops when

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Breaking Down the New U.S. Corporate Tax Law

Mihir Desai, a professor of finance at Harvard Business School, breaks down the brand-new U.S. tax law. He says it will affect everything from how corporate assets are financed to how business are structured. He predicts many individuals will lower their tax burdens by setting themselves up as corporations. And he discusses how the law shifts U.S. tax policy toward a territorial system of corporate taxes, one that will affect multinationals and national competitiveness. Finally, Desai explains what he would have done differently with the $1.5 trillion the tax cut is projected to cost.

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The Top 16 Tech Policy Developments of 2017

This year, we saw a transition of presidential administrations — and all of the accompanying policy and bureaucratic reshuffling that inevitably comes with such a change. Issues of innovation and tech policy have remained front and center, with the Trump …

Why Cutting Taxes Won’t Make America More Innovative

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As the U.S. Congress considers the tax proposal put forward by Republicans, there has been plenty of debate over how it would affect innovation. Proponents argue that lower taxes would increase corporate investment; critics contend that the bill would hurt research universities and that the bills as written would neutralize the R&D tax credit for businesses.

But the tax bill’s effect on innovation won’t depend solely on the provisions dedicated to universities or corporate R&D. As two recent studies remind us, the likelihood that would-be inventors live up to their potential depends on many other factors — not just their abilities but also the environment they grow up in; the incomes of their parents; the quality of the public services they receive, particularly education in science and math; and the health of their communities. And those things depend on public policy, including taxes. The weight of

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The Rise, Fall, and Rebirth of the U.S. Antitrust Movement

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What happened to the antitrust movement? This was the question asked by Richard Hofstadter in the mid-1960s. Antitrust, observed the historian, once was the subject of a progressive movement in the U.S. that stirred public agitation and imagination, despite few antitrust prosecutions. By the 1960s, there were many antitrust prosecutions (by both Democratic and Republican administrations), but without any antitrust movement. Fifty years later, the U.S. has neither an antitrust movement nor much enforcement. That needs to change.

To understand the current moment in antitrust and what should come next, let’s take a historical perspective. U.S. antitrust policy and enforcement have waxed and waned over four cycles:

a16z Podcast: Taking the Pulse on Bio

This conversation between the members of a16z’s bio team — including general partners Jorge Conde and Vijay Pande; Malinka Walaliyadde; and Jeffrey Low (the interviewer) — takes a quick pulse on where we are with when bio becomes more like …

What Workers and Companies Should Know About the Republican Tax Bills

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The House and Senate have passed somewhat different versions of major legislation to restructure the federal income tax. A House-Senate conference committee still needs to reconcile the two bills, with the goal of finishing before Christmas. Both bills would significantly overhaul the corporate income tax, increase the federal budget deficit, and disproportionately benefit upper-income taxpayers. And the bills include many provisions that are poorly understood and may have unintended consequences.

The legislation would dramatically change how both companies and individuals pay taxes. Here are the broad strokes of the bills, as of this writing, some of which are more positive than others.

Corporate Tax Reform

The bills would reduce the federal statutory corporate tax rate to 20% (which translates to about 25% including state corporate income taxes), putting the U.S. statutory corporate rate more in line with our major trading partners and reducing many of the

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Why the WTO Should Constrain the Power of China’s State-Owned Enterprises


The Trump Administration has a chance to start working with 164 other countries to create “rules of the road” to stop China building national champions with government funding. Such state-owned enterprises or state-supported industries (SOEs) — think steel, aluminum and solar panels — have flooded global markets, depressed prices, and literally shut down hundreds of U.S. solar-panel startups.

Trade ministers of the World Trade Organization (WTO) will meet December 11-13 in Buenos Aires for their eleventh conference to review progress and set the agenda for global trade negotiations. The United States will ask the 163 other Member nations to begin talks on new “transparency” provisions — targeted at China but applicable to all members — that are intended to shed light on the murky business of government subsidies. Existing WTO rules require all members to notify the WTO when they establish subsidies that favor domestic industries (e.g., loans

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