Photo: Business Insider
We are in Aspen, Colorado where in a few minutes ago Fortune’s Brainstorm conference kicked off with an interview of Marc Andreessen.350 people have come to this event.
Andreessen is a Silicon Valley A-lister, known these days for his VC firms Andreessen Horowitz.
Some interesting things at this conference. We’re in a big white tent. Inside, everyone is sitting in swivel chairs with small monitors on tables (See below).
Marc passed up an invite to the premier of the new Batman Movie to be here.
Here’s a rundown of the coolest things he said:
- Yahoo’s hire of Marissa Mayer instead of Ross Levinsohn indicates that the company will be focusing on products instead of sales. What those products are, who knows?
- GitHub was worth $100 million — maybe an all time record for a Series A round — because it is like a “vertical-ized” LinkedIn.
- It’s become so hard to become a public company that startups don’t want to do it these days. The number of public companies are down by 1/2. This is creating problems for institutional investors.
- Hardware is coming back to the U.S. — not assembly work, but innovation.
Here are our full notes from his talk:
Right off the bat, we’re talking about the Marissa Mayer news. She’s taking over as CEO of Yahoo. She won’t be attending Brainstorm …
Marc says he’s a big Ross Levinsohn fan. But its a big statement to go with a product-centric CEO, not a sales centric CEO — Ross was the obvious choice [for that].
What kind of products should Yahoo make? Marc says he’s not sure — and there’s not a lot of great tech turnaround stories, beyond Apple with Steve Jobs.
We’re talking about the newest investment: Github, which A/H invested $100 million in.
He says its a fascinating company that does two things: a hosted environment for developers to provide software. It’s the main software repository for open source software — a lot of OS software lives on Github.
It’s a new generation product that feeds a multibillion business.
The other side is that it’s a social network for developers. Your account at Github correlates to all the work that you do. Programmers are building their reputations on GitHub. If you want to hire a programmer, that’s where you go. It’s a “vertical-ized” LinkedIn.
Also how it got built. Four guys came to the Valley when things were crashing. They had horrible experiences, so they built a company taking no outside capital. We did a $100 million Series A investment — a record for us and maybe a record for all [VCs] time.
We didn’t do any expensive rounds for July of last year until now — valuations of north of $200 million. More interesting is size. $100 million is a big investment for private company. Many best new companies built as private companies for a longer period of time.
It’s SO HARD and unfriendly to be a public company. Friendly at IPO, then absurd amount of regulation … number of public companies are down by 1/2 in U.S. — companies drop out and need IPO to replace them.
Number of investors can’t invest in public companies. Creating a two-tier market where there are public investors and private investors and these big investors can’t invest in these new companies, with healthy growth. It’s being choked off.
There’s a long, roundabout question about Facebook IPO … disguised as “about a soda pop company.” Was it a successful IPO? Marc answers … I don’t know. Room laughs.
Talking about a downside of an IPO that gets hot on first day — that means “left money on the table” because under-priced the stock.
LinkedIn vs. Groupon — LinkedIn did a very good job setting expectations and knocked it out of the park in performance.
Right now the public market hates tech stocks. Tech stocks trading at a 30-year low compared to Industrials — p/e. We are still living through the hangover of the 2000 crash. Just when looked like getting on feet again, financial crises of 2008/2009 hit.
The big thing we’re excited about, it feels like a lot of the work we put into to building the PC industry, Internet and now smartphone industry. It feels like NOW the game is beginning on what are the killer Internet apps, what are the big Internet businesses?
We talked about that in 1999, but we were too early. When everyone was excited it was too early, now that everyone is depressed it’s the right time.
We have a pattern of companies can go from zero to a billion revenue in a relatively short amount of time. That’s back to our theory that software eats the world. Airbnb, software eats travel, Github, software eats development.
What about hardware? I think that consumer electronics might be in the process of coming back to the U.S. One of great stories of our time is what is happening to Sony. It never became a great software company. Disconnect between Sony and Apple is about software.
American companies are better at software.
Will manufacture ring come back to the U.S.? This is the fallacy around China. Manufacturing is a very loaded word. It implies that something is being created. A lot are assembling components, based on American IP. Look at gross margin and follow profits, you get to who owns the IP.
As long as everything is being designed in the U.S., I don’t think it matters where it gets built. Plus there are very few American’s who would want to work in a China factory.
Machine learning might be one of the few things my friend Peter Thiel and I agree on. [Says Thiel is usually right]. Thiel says to go long on machine learning. A lot to do like a cloud. Not to get a computer to think of a person, but take big data sets and use the algorithm. Classic example is Google as a spell checker. Google doesn’t have a spell checker. It sees all the queries and sees people self-correcting, so it can assume that if you made this error, [you meant this other word].
Photo: Business Insider
Cloud: we’re still figuring out what the killer cloud apps can be. Cloud can go after bigger markets. Market for Salesforce.com is much bigger than the market for Oracle because Salesforce.com can go “downmarket” much more easily.One of fun things about venture capital is a bunch of new models — what YC is doing is a new model. If going to be in the business of funding innovation, might want to experiment [with innovation in our own business].
Big thing to us is a “network” we always wanted more connections with [potential customers, investors, media]. Big thing is systemize the network. When you work with us, get a GP and then plug, we’ll run 600 corporate briefings next months, if you want to meet with CEO of GE be here at this and this time.
With that, Marc has been ushered out of the room. We are now getting a lesson how to work our swivel chairs.