>> 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 >> let's talk about the next the boards of facebook, hp, and, generation. you sounded the alarm about until recently, ebay. startups. another tweet storm. his venture capital firm there are a few here so bear with me. new founders in the last 10 andreessen-horowitz backs some years have only been in the of the hottest companies, like environment where money is easy twitter, airbnb, and pinterest. to raise in higher valuations. that will not last. i sit down with marc andreessen at salesforce's dreamforce in all caps. conference in this special edition of "studio 1.0." when the market turns, and it >> i wanted to start with a word will turn, we will find out who has been swimming without trunks on.

many high burn rate companies will vaporize. there are exceptions to all this. if you're reading this, you are of congratulations, because 20 almost certainly not one. years ago, netscape, which you and a single word, worry. co-founded, launched. what are you worried about? can we get some applause for that? [applause] ushering in the web as we know it. how does that feel? >> generally, for 10 years, off >> it is fantastic. a very low base it has gotten it is so extraordinary. , easier to raise money. we had a little bit of a glimmer as a consequence, you get used to being able to raise money. that something might happen, you get used to be able to raise that it might matter, that this money at a higher valuation. internet thing might work out ok. maybe you cannot raise anymore in the u.s., but if you fly to europe, you can raise it. if you fly to asia, you can raise it. and it turned out it has. then you find yourself in >> you have been incredibly antarctica looking for investors productive since. you started a little venture capital firm, further out on the fringe. andreessen-horowitz. it gets harder and harder. you have also tweeted 33,000 times. >> in? >> in one year. >> thank you. basically, if you are a high burn company and you can't raise >> which is more than all three founders of twitter combined. >> yes. that is true. financing, you literally go bankrupt. >> since twitter started, by the or you have to do a down round, way. >> i really think the stock in which could be very damaging to a company's moral. the company should be >> why stop short of using the rebalanced. word bubble? [laughter] >> we don't think it is a bubble. first of all, every bubble in >> we are going to reference some of your tweets throughout this conversation, and i wanted to start with this one, given human history that has been the anniversary of netscape. called a bubble by historians this is true, when i came to always had widespread participation. you always had a frenzy. silicon valley in 1994, i you had the shoeshine boys or the taxi drivers hyper enthusiastic about putting every thought i had missed all the spare penny in the stocks. opportunity, fun, and there is none of that today.

excitement. it felt post-apocalyptic. valuations are running hot. when did you realize you were wrong? but i do not think there is some >> it really took the internet massive crisis here. taking off. silicon valley had been on fire i think it has more to do with cash burn. in the late 1970's and 1980's how much money you are raising and spending. >> how does this play out in your portfolio? with the pc, and with software, with companies like oracle taking off, and microsoft, obviously, you have companies adobe, and apple, and all these you think are the exception. you are an investor in airbnb, local companies. 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 and then the valley crashed really hard in the late 1980's. being careful? >> to be clear, all of our companies are the exception. what i learned is, the talent, [laughter] just to be clear. one of the reasons i said what i the latent talent, the number of people in the valley who were talented and qualified and skilled, who had been through said publicly is that this is the pc revolution, who had been through the early days of the same conversation i have software, there was no real with all our ceo's. thing for them to do. like i said it is a cautionary the minute there was something to do, they all stood up and , conversation. it is not a conversation that says stop spending, have smaller goals. said, i want to be a part of that. for me it was a lesson in how the valley and technology or anything like that. industry more broadly is self it is a conversation that says be aware. , learn from history. have an appropriate sense of renewing, self revitalizing. risk. have good discipline. airbnb is an example that is a >> so for someone who comes to silicon valley today, have they commercial success. missed all the excitement? the business is growing fast. 20 years later?

>> this is my big learning. it is really big. it is going to be gigantic. there is no way. it feels today like 20 years of there are other companies where progress with the internet. it is a little bit of a balance. it feels like we are starting to the other thing i will get the payoff from all the hard work we have done over the last two decades. highlight, and we harangue them >> ebay and hp recently decided about this, extravagance is a to split up. little bit over the top. you said they made those when you are burning $50 million decisions independently. a quarter as a startup, maybe symantec is doing it as well. not having bruno mars play at a concert. [laughter] why is this happening? maybe we can have regular water >> i think, my view is there and not coconut water. , will be more fundamental [laughter] structural industry change in the next five years than there has been in the last 20 years. i think that every technology >> they all have coconut water company that is more than 20 now. years old will almost certainly >> we all love the coconut break up. water. coconut water is a basic human will almost certainly break up, right in san francisco. [laughter] like literally split apart. maybe the masseuse can come in >> define every. on just wednesdays and fridays, >> i think, basically, every. maybe not five days a week. it has gotten to be a bit much. it will take time. there is a high correlation between building a fancy but i think you can go down the headquarters and falling off the list. cliff. >> you mentioned oracle. >> there are two big reasons. and collapsing as a business. right? the alternate model is the amazon model, the jeff bezos model. two big reasons. if you want a desk, it is a one, they are super cheap. recycled door on two sawhorses. this is something that is widely go crazy. misunderstood, which is this conventional view that there are we are much more on the side of these tech bubbles. even google and apple are trading at low pe's. , let's get out the sawhorse like single-digit, low double-digit pes, price to desks. let's tamp down on the spending. >> you had a spirited earning ratios. the really big ones like oracle back-and-forth with the activist investor, carl icahn. last week you called him evil

and others are trading at single digit price-earnings. , captain kirk. he said some things. if you are one of these big sort i wonder though, do some of of technology conglomerates and these activist investors actually have the same concerns you are in all in these different types of business, you have competition from all these you do? new startups. >> would apple, google, amazon, microsoft fall into the category >> i think they are a result, of "every?" not a cause. they are a consequence of companies being very cheap on the stock market. >> obviously, some of the new they are a consequence of companies needing to companies, including salesforce, restructure. google, facebook, and others, or needing to react to market changes. are growing very fast. the activist is a little bit of i think a lot of companies will get larger in this period. if they are more than 20 years old, they would benefit from to the core question breaking up. many of them will be forced to do it. of, how is the company being run. >> is there a disconnect between wall street and silicon valley? if they don't do it voluntarily. >> it is not a sign of defeat? is there a fundamental it's not a sign that innovation misunderstanding? is dead or lost? >> it is a sign of change, >> i think in the long run -- i evolution. the industry is changing. do not think in the long run it is a sign that the technology there is a misunderstanding. >> i'm curious about your is changing. thoughts on payments. it is a sign that there is the opportunity to do more and it is an area that is wide open. better if you are smaller and now you have apple pay, google wallet, paypal, bitcoin. more nimble. how do you see the digital the real test for technology payments and mobile payments companies is, how do they make race playing out? sure that they stay on the leading edge, that they constantly have a product >> this is another really big thing. the system has not changed in 20 pipeline that will result in any years. this is another area where there more attractive products? will be more change in the next five years than there were in >> from a leadership the previous 20.

there are two big drivers. one is apple pay. and the other is bitcoin. perspective, we saw marc benioff. is there a changing of the guard happening? >> i think nothing changed at oracle. [laughter] apple pay is the thing that is i think that might have had to freaking out all the financial do with the number of papers services companies. that larry has to sign. the number of meetings he has to go to. right now apple showing up to , the party and saying we will but he does still have -- now be in the center of payments . it has caused a collective heart product development still works for larry. it will be similar for quite a attack. while. >> how do you see the digital there are payments companies payments and mobile payments that are aligned with apple that are like, "yeah, we figured it out." there are payment companies that race playing out? are not, that are having a >> what we see from our stroke in real time trying to standpoint is it is by far the figure out the implications of , most innovative and radical apple pay. thing. it's the thing that will have a big impact over 20 years. everybody assumes that google apple pay is the thing that will have an impact on the next three years. will respond to apple pay with a google pay that will work the and the combination of those two same way with android. >> google wallet has not worked is going to cause enormous out. change. ♪ 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. it does not require -- 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. it's very -- i acknowledge what i just said. it's very clever. it is cleverly done. if everyone has a way to pay and all the merchants take it, then it is all great. but until you have universal acceptance on both sides nobody , uses it. it is a network effects problem. apple pay is calibrated to skip through that to be in line with the status quo of payments. credit card companies -- 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 exact inverse of that. bitcoin is truly radical. crypto currency more broadly is truly revolutionary. a fundamental breakthrough in computer science. a different way to do transaction processing.

potentially a replacement for a very large amount of the status quo. bitcoin is by far and away the most innovative and radical thing. it will have the most impact over the next 20 years. 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. look, bitcoin for us is very much -- the saving grace about the venture -- 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. frankly, i do not think anybody knows one way or the other. but 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. but even if it is not, it will be something else. i think netflix could have a billion subscribers in the early 2020's.

i do not think there is any 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 are an investor in. you recently tweeted, "perhaps the single, biggest key enabler for the sharing gig 1099 economy is the affordable care act." a.k.a. obamacare. 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. it turns out even if you hate , obamacare as a government takeover of the health care system, you should still love it because it makes possible for people to pursue their own dreams as opposed to getting tied to one job. >> there has been a conversation in san francisco going on about inequality and responsibility in -- of the tech community. you mentioned tech 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?

>> i think that is basically -- that is basically right. i think that is basically true. a lot of the new startups are brand-new. but a big part of this is what the big companies do. and the sort of maturation of companies when they go from being startups to being big companies, they got to step up on their responsibilities. 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 to include as many people as possible. the reason i am so confident about that is because of the --redible coverage that 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. they should. 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 particular, 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. which is just simply 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. both the pipeline part and the access part. 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. and i work in television. so 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 -- there we go. see? [applause] i always maintain -- 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. right? so i think in the future, if you want to watch something, you go straight to it. you just google it and go straight to it. or you go to youtube 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. like i don't think there is any , reason why it cannot be absolutely gigantic. and then amazon will be very big, i think, and hulu.

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. you know the iphone 6 is a huge , hit. and is going to be extremely successful. apple is gaining strength. you can kind of feel it. is a company gaining strategic strength or losing it? 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. and 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. i think what apple figured out is the upgrade cycle for tvs is five years or 10 years. -- the tv, effectively, is fated. the tv will become a dumb

peripheral for the smartphone. beamill use chromecast and to the tv. 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. [laughter] so he has some work to do between here and there. there is basic inventions he still has to master. 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. marc is certainly one of those. peter teel, elon musk, and larry page -- you talk to them and listen to what they say or read the stuff they write, and their

ambitions and aspirations are another step up from the rest of us. and so the audacity -- look at elon's career -- to start a car car company.c people not forget that the one thing you knew in 2005 is you should never start a new car company. the other kind of company you knew you should never start would be a rocket ship company. and he is just getting started. he is in his mid-40's. he has another, who knows. here on earth, he has another 30 years. [applause] >> if peter thiel can discover the cure for immortality. you said on twitter, your startup is not the next whatsapp. what is great is that you actually write back to people. somebody wrote to you, and you wrote back, what is something new? what is something new? >> we are trying our best to find it.

peter thiel 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. it is the same thing -- people look to whatsapp. 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. it will be out on the fringe. it will be considered bizarre. it will be software as a service in 1999. everybody is going to be like, there is no way. like him and could never possibly work. 10-years later that is the thing. >> marc andreessen, everybody. ♪

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