January 4th, 2012 // 11 Comments
Filed: Tech
Marc Andreessen tells the Wall Street Journal he has “taken a step back” from investing in tech startups because some deals are “definitely on the expensive side.” Turns out Andreessen hasn’t made any big investments since July. Which is weird because last July someone using the same name as Marc Andreessen told the New York Times that there was no bubble and that in fact tech stocks were dead cheap. And shortly before that the same person appeared at the AllThingsD conference and explained that there was no tech bubble because everybody was saying there was a bubble and if everyone was saying that there’s a tech bubble then by definition there wasn’t any bubble because there can only be a bubble if nobody is saying there’s a bubble.
No doubt the crap performance of companies like Zynga, Groupon, LinkedIn and Pandora in the public market is making VCs gun shy. The worst example is Zynga, whose late-stage investors Kleiner, Morgan Stanley, Fidelity and T. Rowe Price got burned when Zynga had to price its IPO below the price that those late-stage guys had paid in a private round last February.
No doubt we’ll see other deals where the public markets refuse to pay as much as loony private investors did. But how did we get here? How did valuations get so out of line? Could it be because a few devil-may-care VCs spent the past few years throwing money around like drunken sailors in a whorehouse and assuring everyone that this was all perfectly sane and reasonable behavior and there was no tech bubble? Nah, couldn’t be that.
[Update: A reader points out that LinkedIn doesn’t belong on the list of “crap performers” since it was initially priced at $45 and is still trading above $60. Whether that’s a disappointment depends somewhat on your point of view, since LinkedIn hit $90 on its first day of trading.]
Andreesen has always been full of it. He was full of it when he acted like he developed Mosaic when it was mostly his team. I was around at the time.
He screwed up Netscape royally and then became a VC based on what genius insights?
Seriously, what has Andreesen ever really done?
I wouldn’t call myself a financial mastermind, but I think VC’s just look at how many email addresses these startups collect and start drooling. It’s easy to see why these stocks are performing poorly in the open market when you consider Zynga’s business model is too convince people to buy fake money with real money, Groupon’s is to somehow make everyone in your city buy the same sandwich at the same time, it doesn’t make sense to spend a ton of time on your LinkedIn profile when no one is hiring, and Pandora wants to try to sell ad time on literally a BILLION different internet radio stations with one listener each.
Are you saying that Andreesen was just wildly uninformed in July and talking out of his ass, or that he was trying to calm the mood in the market until he could get himself in a safe place to tell the truth now?
Wow. That is not a man who is aging well.
I’m simply using the WSJ to send price signals to the market. When my investments are going IPO or a startup I funded needs a follow-on round from a bigger fool – there’s no bubble. When I want to make investments – things are too hot, overpriced. Peace. Out! Fake Marc
Darwin, you are very insightful. I was around NCSA shortly after Andreesen left and never thought of him as the golden boy that the press clearly desperately wanted him to be.
A VC talking out of both sides of his mouth? Why I’m shocked, I tell ya.
Another 50 pounds and he’ll be unable to pry his eyes open… his head will have become a perfect simulacrum of an ICBM nosecone.
Is Andreesen auditioning for the remake of Apocalypse Now? The horror, the horror.
amen, brother. amen.
amen brother. amen.
Ha ha! You tell him Dan! What a “slam dunk” hit this one is! Your nickname “SCO credibility” is a real testament to your prowess with understanding teknolegy! I know I follow all your stuff!