Marc Andreessen, the cofounder of Andreessen Horowitz, is one of the most powerful Silicon Valley venture capitalists.
He’s invested in some of the most well-known Internet companies in the world, including Facebook, Foursquare, and Pinterest.
And despite warnings from investors like Benchmark partner Bill Gurley — who, incidentally, Marc Andreessen “can’t stand” — about the tech bubble and excessive Silicon Valley optimism, Marc Andreessen says he isn’t concerned about another tech bubble mirroring that of the late 1990s.
In a New Yorker profile, Andreessen says the burst tech bubble of 2000 was an isolated incident, referring to companies like the now-dead Webvan as “ghost stories,” which still scare investors to this day.
“The argument in favour of concern is cyclical. The counterargument is that stuff works now,” he says.
“In 2000, you had fifty million people on the Internet, and the number of smartphones was zero. Today, you have three billion Internet users and two billion smartphones. It’s Pong versus Nintendo. It’s Carlota Perez’s argument that technology is adopted on an S curve: the installation phase, the crash — because the technology isn’t ready yet — and then the deployment phase, when technology gets adopted by everyone and the real money gets made.”
However, he said on Twitter recently that startups’ burn rates are too high. “Nobody will want to buy your cash-incinerating startup. There will be no Plan B. VAPORISE,” he tweeted.
In addition, he doesn’t always necessarily think it’s wise to raise too much capital at one time. From the New Yorker:
In one pitch meeting where a portfolio company sought a billion-dollar growth round, Andreessen raised his arms overhead and made an explosive sound to warn of what can happen when your valuation vastly exceeds your revenues: “Thanks for playing — game over!” The company went on to secure its round, with only a token contribution from a16z. Andreessen later said that, as in an increasing number of deals, growth investors had paid one round ahead of progress — paid in other words, for the results they hoped to see in the following round. Though the company’s lofty valuation buoyed a16z’s portfolio, his body language suggested that buying at such valuations was maybe not smart — “but, as long as they’re sophisticated investors, it’s not our job to moralize on whether they’re overpaying.”
Disclosure: Marc Andreessen is an investor in Business Insider.