tv Studio 1.0 Bloomberg November 8, 2014 12:30pm-1:01pm EST
>> he's behind one of the greatest innovations of our time. marc andreessen invented the world's first popular web browser and co-founded netscape, bringing the internet into our lives and changing our world forever. two decades later, he sits on the boards of facebook, hp, and, until recently, ebay. his venture capital firm andreessen-horowitz backs some of the hottest companies, like twitter, airbnb, and pinterest. i sit down with marc andreessen at salesforce's dreamforce conference in this special edition of "studio 1.0."
i wanted to start with a word of congratulations because, 20 years ago, netscape, which you co-founded, launched. can we get some applause for that? [applause] ushering in the web as we know it. how does that feel? >> it is fantastic. it is so extraordinary. we had a little bit of a glimmer that something might happen, that it might matter, that this internet thing might work out ok. it turned out it has. >> you have been incredibly productive since. you started a little venture capital firm, andreessen-horowitz. you have also tweeted 33,000 times. >> in? >> in one year. >> thank you. >> which is more than all three founders of twitter combined. >> yes. that is true. >> since twitter started, by the way. >> i really think the stock in the company should be rebalanced. [laughter] >> we are going to reference some of your tweets throughout
this conversation, and i wanted to start with this one, given the anniversary of netscape. this is true, when i came to silicon valley in 1994, i thought i had missed all the opportunity, fun, and excitement. it felt post-apocalyptic. when did you realize you were wrong? >> it really took the internet taking off. silicon valley had been on fire in the late 1970's and 1980's with pc, and with software, with companies like oracle taking off, and microsoft, adobe, and apple, and all these local companies. the valley crashed really hard in the late 1980's. the number of people in the valley who were talented and qualified and skilled, who had been through the pc revolution, who had been through the early days of software, there was no real thing for them to do. the minute there was something to do, they all stood up and said i want to be a part of that. for me it was a lesson in how the valley and technology industry more broadly is self revitalizing. >> so for someone who comes to silicon valley today, have they missed all the excitement?
>> there is no way. it feels today like 20 years of progress with the internet. it feels like we are starting to get the payoff from all the hard work we have done over the last two decades. >> ebay and hp recently decided to split up. you said they made those decisions independently. symantec is doing it as well. why is this happening? >> there will be more fundamental structural industry change in the next five years than there has been in the last 20 years. i think that every technology company that is more than 20 years old will almost certainly break up. they will literally split apart. >> define every. >> i think, basically, every. it will take time. you can go down the list. >> you mentioned oracle. >> there are two big reasons. one, they are super cheap. this is something that is widely misunderstood, which is this conventional view that there are these tech bubbles. even google and apple are trading at low pe's. the have low double-digit pe's. they have low double-digit pe's.
earnings. the really big ones like oracle and others are trading at single digit price-earnings. if you're a big technology conglomerate and you are in all in these different types of business, you have competition from all these new startups. >> would apple, google, amazon, microsoft fall into the category of "every?" >> some of the new companies are growing very fast. i think a lot of companies will get larger in this period. if they are more than 20 years old, they would benefit from breaking up. many of them will be forced to do it. if they don't do it voluntarily. >> it is not a sign of defeat? it's not a sign that innovation is dead or lost? >> it is a sign of change, evolution. it is a sign that there is the opportunity to do more and better if you are smaller and more nimble. the real test is how they make sure that they stay on the leading edge, that they constantly have a product pipeline.
>> from a leadership perspective, is there a changing of the guard happening? >> i think nothing changed at oracle. [laughter] that might have had to do with the number of papers that larry has to sign. the number of meetings he has to go to. it will be similar for quiet a while. >> how do you see the digital payments and mobile payments race playing out? >> it is by far the most innovative and radical thing. it's the thing that will have a big impact over 20 years. apple pay is the thing that will have an impact on the next three years. ♪
years have only been in the environment where money is always easily to raise in higher valuations. that will not last." all caps. "when the market turns, and it will turn, we will find out who has been swimming without trunks on. many companies will vaporize." "there are exceptions to all this. if you're reading this, you are not one." and a single word, "worry." what are you worried about? >> it has gotten easier to raise money. as a consequence, you get used to being able to raise money. you get used to be able to raise money at a higher valuation. maybe you can't raise it in the u.s., but if you fly to europe, you can raise it. if you fly to asia, you can raise it. then you find yourself in antarctica looking for investors on the fringe. it gets harder and harder. if you can't raise financing, you either literally go bankrupt. or you have to do a down round, which could be very damaging to
a company's morale. >> why stop short of using the word bubble? >> so, we don't think it's a bubble. every bubble that has been called a bubble always had widespread public participation. you always had a frenzy. you had the shoeshine boys or the taxi drivers hyper enthusiastic about putting every spare penny in the stocks. there is none of that today. valuations are running hot. i think it has more to do with cash burn. how much money you are raising and spending. >> how does this play out in your portfolio? you are an investor in airbnb, which has a $10 billion valuation. pinterest, a $5 billion valuation. how are you balancing -- making those investments and practicing what you tweet, scaling back or being careful? >> to be clear, all of our companies are the exception. [laughter] just to be clear. one of the reasons i said what i
said publicly is that this is the same conversation i have with all our ceo's. it is a cautionary conversation. it is not a conversation that says stop spending, have smaller goals. it says be aware. learn from history. have an appropriate sense of risk. have good discipline. airbnb is an example that is a commercial success. the business is growing fast. it will be gigantic. there are other companies where it is a little bit of a balance. the other thing i will highlight, extravagance is a little bit over the top. when you are burning $50 million a quarter as a startup, maybe not having bruno mars play at a concert. [laughter] maybe we can have regular water and not coconut water. we all love the coconut water. coconut water is a basic human right in san francisco. [laughter] maybe the masseuse can come in on just wednesdays and fridays, maybe not five days a week. it has gotten to be a bit much. there is a high correlation
between building a fancy headquarters and falling off the cliff. the alternate model is the amazon model, the jeff bezos model. if you want a desk, it is a recycled door on two sawhorses. go crazy. we are much more on the side of let's get out the sawhorse and maybe tamp down on the spending. >> you had a spirited back-and-forth with the activist investor, carl icahn. you called him evil captain kirk. he said some things. do some of these activist investors actually have the same concerns as you? >> they are a result, not a cause. they are a consequence of companies being very cheap on the stock market. they are a consequence of companies needing to restructure. needing to react to market changes. the activist is a little bit of a sideshow. >> is there a disconnect between wall street and silicon valley? is there a fundamental misunderstanding? >> in the long run, there is not a misunderstanding.
>> i'm curious about your thoughts on payments. it seems to be an area that is wide open. now you have apple pay, google wallet, paypal, bitcoin. how do you see the digital payments and mobile payments race playing out? >> this is a big thing. the system has not changed in 20 years. this is another area where there will be more change in the next five years than there were in the previous 20. there are two big drivers. one is apple pay. and the other is bitcoin. apple pay is the thing that is freaking out all the financial services companies. apple showing up to the party and saying we will now be in the center of payments has caused a collective heart attack. there are payments companies that are aligned with apple that are like, "yeah, we figured it out." there are payment companies that are not, that are having a stroke in real time trying to figure out the implications of apple pay. they figure google will respond to apple pay with a google pay that will work the same way with android.
>> google wallet has not worked out. why didn't it, and how optimistic are you that apple can get it right? >> this is what is interesting about apple pay. apple pay is viewed by the payments industry as revolutionary, but it is the most consistent with the existing payment system of any of these new systems. what is surprising is how many things don't change with apple pay. you put in your credit card. >> are you saying it's not that innovative? >> it's innovative but in a way that's consistent with the status quo. [laughter] >> it is very clever. i acknowledge what i just said. -- i acknowledge the disconnect of what i just said. it is cleverly done. if everyone has a way to pay and all the merchants take it, then it is all great. until you have universal acceptance, nobody uses it. is it a network effects problem? -- it is a network effects problem. apple pay is calibrated to skip through that to be in line with the status quo of payments. it plugs into the existing
system. it inserts apple in the middle of the existing system, which is why they are all so freaked out. bitcoin is the inverse of that. bitcoin is truly radical. crypto currency is truly revolutionary. a fundamental breakthrough in computer science. a different way to do transaction processing. a potential way to replace the status quo. bitcoin is by far and away the most innovative. apple pay is the thing that will have the impact in the next three years. the combination of those two will cause enormous change. >> you have been a big supporter of bitcoin. the price has plummeted. >> and come right back up. >> do you allow for the fact that you could be wrong about bitcoin? >> absolutely. we are venture capitalists. i think like a venture capitalist. the nature of venture capitalists is we make 10 bets. we assume that five will go straight to zero. no one knows one way or the other. if it does work, it could be profound and revolutionary and
gigantic. that said, underneath that, the thing i am quite condfident about, is that the crypto currency concept will become really vitally important. i think it will be in the form of bitcoin. even if it is not, it will be something else. i think netflix could have a billion subscribers in the early 2020's. there is no reason why it cannot be gigantic. ♪
>> a lot has been made about the power of the sharing economy, in companies like uber and lyft. which i know you're an investor in. you recently tweeted, "perhaps the single, biggest key enabler for the sharing gig 1099 economy is the affordable care act." aka obama care. i know you have been a republican donor, and some republicans want obamacare repealed. what would you say to them? >> if your health care is not tied to your employer, you can switch jobs anytime you want. even if you hate obama care as a government takeover, you should still love it because it makes it possible for people to pursue their own dreams as opposed to getting tied to one job.
>> there has been a conversation going on about inequality and responsibility in companies that are part of the stanford hospital project. mark benioff has been adamant that tech companies need to do more. what do you think? >> that is basically true. a lot of the new startups are just brand-new. a big part of this is what the big companies do. the maturation of companies from startups to big companies. i think that is a big deal. >> what about inclusion and diversity, something else that you and laura have been giving to. why is inclusion important in silicon valley? >> i believe tech is inherently inclusionary. tech wants to bring people in. tech wants include as many people as possible. the reason i am so confident about that is because of the
incredible people in silicon valley from the incredible number of countries. the challenge is, we are still underrepresented when it comes to women, and then in the u.s. when it comes to african-americans and latinos. >> should women ask for raises if they think they deserve one? [laughter] >> yes. [applause] i don't care what anybody says, i think women should ask for raises. i'm a fan. i think these are solvable problems in two different ways. one is pipeline. there are not -- women are only 15% of computer science graduates in the u.s. that is too low. we have to get more women into computer science. the other is access, network. the three organizations that we are funding are working on both sides of that. i think if we really bear down on both sides of that, we can move the needle pretty fast. >> i want to talk about the next five years to 10 years in silicon valley. i want to ask you a couple of "future of" questions. i wanted to start with television, because i know you
love watching television. i work in television. i'm selfishly interested in what you have to say. what is the future of television? >> you will now be able to subscribe to hbo without being a cable customer. which for those of us -- [applause] >> there we go, see. i always maintained that people wanted that. everyone in hollywood told me it would never happen. i think the media industry is going to grow a lot over the next ten years. i think video is going to grow tremendously. i think television in the form of everything from live television all the way through to nonfiction content, news, so forth, documentaries, fiction, drama, comedy, it will grow a lot. the reason i am so confident is that the number of people who can receive streaming video in the world is like two billion people, on its way to 5 billion people by the end of the decade. in the future, if you want to watch something, you go straight to it. you just google it and go straight to it. or, new bundles.
if you were ever going to buy netflix stock, i would never recommend buying it, but on a day it's dropped 25% it might be worthing thinking about. i think netflix could have a billion subscribers by sometime in the early 2020's. i don't think there is any reason why it cannot be absolutely gigantic. amazon will be very big. the new aggregators, the new bundlers, will be large. >> what is the future of apple under tim cook? will apple be a big player in television? >> it looks promising. it looks extremely promising. the iphone 6 is a huge hit. it will be extremely successful. apple is gaining strength. you can just feel that apple is gaining strength. i think they will do extraordinarily well. the interesting thing about apple tv is that apple keeps refusing to build the tv. everybody keeps predicting there will be an apple tv you put on your wall. they don't build it. i believe that why they don't
build the tv goes back to the power of the smartphone, which is a smart phone upgrade cycle is two years. apple figured out the upgrade cycle for tvs is five years or seven years or 10 years. the tv will become a dumb peripheral for the smartphone. the tv will be the dumb recipient of the content. i think they think that is a low margin business that other people can pursue. >> what is the future of elon musk? >> obviously he will build the iron man suit. [laughter] i think it is obvious. obviously, in the suit, he will fly to mars. he has some work to do between here and there. there are three guys, three founders who are really revolutionizing. we are a lucky industry. we have all these people who are incredibly well-known known and
built these amazing companies. he is one of those. peter teel, elon musk, and larry page -- you talk to them and their ambitions and aspirations are another step up from the rest of us. the audacity -- look at elon's career -- to start a car company. the one thing you knew in 2005 is you should never start a new car company. the one company you know you should never start in the united states is a car company. the other company you should never start is a rocket ship company. he is just getting started. he is in his mid-40's. he has another 30 years here on earth. [laughter] >> if peter teel can discover the cure for immortality. you said on twitter, your startup is not the next whatsapp. what is great is that you
actually right back to people. what is something new? >> we are trying our best to find it. peter teel talks about this. the point peter makes, and i agree with that, is there never is one. there will never be another microsoft. there will never be another google. there was just the one. we have founders come in all the time -- there will not be another whatsapp. there will be new things. what do we know about the new things? they will be viewed as completely crazy. the one thing we know is that nobody will think it's the next best thing. -- big thing. it will be out on the fringe. it will be considered bizarre. it will be software as a service in 1999. people will not think it will work. 10 years later that is the thing. >> marc andreessen, everybody. ♪
>> david einhorn, dan loeb, larry fink and more -- these iconic investors gather once a year to rub elbows and share strategies at the robin hood investors conference. billionaire activist carl icahn is perhaps the busiest of them all, stirring up conflict at at apple,ut value ebay, dell, and herbal life, to name a few. at this conference, icahn also addressed warren buffett, took jabs at silicon valley, and discussed the unintended consequences of the fed's monetary policy. carl, let's start with interest rates. in this low-interest-rate environment, how do se