WHEN: Tuesday, May 27th
WHERE: CNBC's "Fast Money"
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Andreessen Horowitz Co-Founder Marc Andreessen today. Video from the interview is available on CNBC.com.
All references must be sourced to CNBC.
MELISSA LEE: MARC ANDREESSEN OF COURSE BEING ONE OF THE FOUNDERS OF ANDREESEN HOROWITZ JOIN US NOW. I WANTED TO START OFF WITH WHAT IS IN THE NEWS WHICH MANDY JUST TALKED ABOUT. THAT IS THE ESCALATING SITUATION BETWEEN THE UNITED STATES AND CHINA WHEN IT COMES TO CYBER WARFARE. TODAY CHINA ANNOUNCED IT'S GOING TO BE LOOKING AT THE SERVERS USED BY ITS DOMESTIC BANKS, POSSIBLY REPLACING THEM WITH LOCAL BRANDS AND THEN IT WAS ALSO ACCUSING CISCO WITH BEING COMPLICIT WITH THE UNITED STATES GOVERNMENT IN SURVEILLING. WHAT DO YOU THINK THE IMPACT IS ON AMERICAN TECHNOLOGY, THE INDUSTRY?
MARC ANDREESSEN: I THINK THERE'S TWO REALLY DANGEROUS SCENARIOS STARTING TO PLAY OUT. ONE IS THIS, WHICH IS AS A CONSEQUENCE AROUND THE ISSUES OF SNOWDEN AND NSA AND ALL THESE OTHER ISSUES, IS THE AMERICAN TECHNOLOGY INDUSTRY GOING TO BE ABLE TO BE DOMINATE GLOBALLY AND I THINK IT'S VERY BIG ISSUE FOR THE TECHNOLOGY INDUSTRY, FOR THE AMERICAN ECONOMY. AND ALSO BIG FOR AMERICAN NATIONAL SECURITY BECAUSE IT IS NOT ACTUALLY A GOOD THING IF AMERICAN TECH COMPANIES ARE NOT THE DOMINANT TECH COMPANIES. IT WOULDN'T BE GOOD FOR THE INTELLIGENCE AGENCIES EITHER. THAT'S ONE BAD THING. THE OTHER BAD THINGS THAT'S HAPPENING IS THE INCREASED MOVE TOWARDS THE BULKIZED INTERNET. SO DIFFERENT COUNTRIES RUSSIA, MANY OTHERS SORT OF WANTING TO BASICALLY SECTION OFF THE INTERNET AND TAKE MORE CONTROL OF IT IN THEIR OWN COUNTRY. BOTH OF THE THESE TRENDS ARE VERY CONCERNING. I'M VERY NERVOUS, UPSET, ANXIOUS ABOUT THIS. I WISH THE U.S. GOVERNMENT, I WISH THE OBAMACARE ADMINISTRATION WERE – OBAMA ADMINISTRATION WERE IN FRONT OF THESE ISSUES AND RIGHT NOW I JUST DON'T THINK THEY ARE.
LEE: RATE THE ADMINISTRATION AND THEIR REACTION TO THIS. DO YOU THINK THEY ARE HANDLING THIS WELL? WOULD THEY GET A B? C?
ANDREESSEN: UP UNTIL THIS INDICTMENT OF THESE CHINESE MILITARY OFFICERS YOU WOULD HAVE SAID D MINUS LARGELY ABSENTEE THEY ARE JUST LETTING THESE THINGS PLAY OUT LIKE NOT MUCH HAS BEEN HAPPENING AT ALL AND THERE' BEEN VERY LITTLE ENGAGEMENT WITH THE TECHNOLOGY COMMUNITY. YOU KNOW THERE HAVE BEEN PHOTO OPPS BUT THERE'S BEEN VERY LITTLE SUBSTANTIVE DISSCUSION THIS THING WHERE THEY INDICTED THE CHINESE OFFICIALS, MAYBE THAT'S A SMART THING TO DO. IT SEEMS TO HAVE JUST ENRAGED THE CHINESE TO NO END. I KEEP WONDERING ARE WE GOING TO DISPATCH SEAL TEAM SIX TO GO GET THESE GUYS. AND I DON'T THINK THE ANSWER IS YES. AND SO I AM NOT QUITE SURE WHAT HAPPENS NEXT.
LEE: WILL CHINA CONTINUE TO RETALIATE AND CONTINUE TO BLOCK TECHNOLOGY COMPANIES FROM THAT GROWING MARKET? AND ALREADY A LOT OF TECHNOLOGY COMPANIES ARE HAVING DIFFICULTY IN CHINA. IBM IT HAS NOT BEEN AN EASY ROAD THERE WHAT DO YOU THINK IS THE WORST CASE REALISTIC SCENARIO IN THIS SITUATION?
ANDREESSEN: THE WORST CASE SCENARIO SORT OF A JAPAN -- SORT OF WHAT HAPPENED IN THE CAR INDUSTRY WHICH IS THE AMERICAN COMPANIES CONTINUE TO SELL CARS IN THE U.S. AND MAYBE IN SOME OTHER COUNTRIES. MUCH LIKE THE JAPANESE CAR INDUSTRY WAS PROTECTED DOMESTICALLY IN JAPAN AND ABLE TO USE THAT AS A SPRING BOARD TO GO GLOBAL. THERE'S CERTAINLY MANY CHINESE TECHNOLOGY COMPANIES THAT ARE IN THE PROCESS OF GOING GLOBAL AND SO THEY ARE COMING INTO OUR MARKETS BY THE WAY, THEY SHOULD GO GLOBAL. THEY HAVE GOT IN SOME CASES. GREAT PRODUCTS. THEY SHOULD GO GLOBAL. THEY SHOULD SELL THEM EVERYWHERE. IT WOULD BE NICE IF COMING OUT OF THIS IF AMERICAN TECH COMPANIES STILL HAD A ROLE TO PLAY INTERNATIONALLY AND STILL HAD SIGNIFICANT MARKET SHARE INTERNATIONALLY. I THINK WE CERTAINLY NEED MORE POLITICAL LEADERSHIP. THE CURRENT TRENDS ARE HEADED IN THE WRONG DIRECTION.
LEE: I WANT TO UNPACK THIS NOTION OF A BULKINIZED INTERNET. WHAT EXACTLY DOES THAT MEAN PARTICULARLY FOR COMPANIES IN WHICH YOU INVEST THE TWITTERS OF THE WORLD, FACEBOOKS OF THE WORLD, ETC. WHAT DOES IT MEAN IF THERE ARE SEPARATE INTERNETS FOR DIFFERENT COUNTRIES WITH DIFFERENT RULES?
ANDREESSEN: SO MY THEORY ON IT BASICALLY IS THAT YOU HAVE A WHOLE SERIES OF COUNTRIES AND I WILL PICK ON RUSSIA BUT THERE ARE SEVERAL OTHERS LIKE THIS WHERE THEY HAVE HAD THE INTERNET COME INTO THEIR COUNTRY AND THE AMERICAN INTERNET COMPANIES COME IN AND THEY HAVEN'T BEEN THAT THRILLED BY IT AND THEN THEY LOOK AT THE CHINESE APPROACH AND THE GREAT FIREWALL OF CHINA AND ALL THE CONTROL THE CHINESE HAVE OVER INTERNET USE IN CHINA. AND THEY SAY WE WISH WE HAD THAT. IT'S HARD TO PUT THE INTERNET JEANIE BACK IN THE BOTTLE ONCE YOUR CITIZENS ARE USED TO USING THE OPEN INTERNET. SO ALONG COMES EDWARD SNOWDEN AND ALL THESE REVELATIONS AND ALL OF A SUDDEN YOU HAVE A DOMESTIC POLITICAL ISSUE IN YOUR OWN COUNTRY THAT YOU CAN USE AND YOU CAN SAY SEE, LOOK, THE EVIL AMERICANS ARE DOING ALL THIS STUFF TO PROTECT THEMSELVES. NEXT THING YOU KNOW YOU'LL HAVE THE EQUIVOLENT OF THE GREAT FIREWALL IN RUSSIA AND ALL THESE OTHER COUNTRIES YOU WILL HAVE CENSORSHIP, POLITICAL OPPRESSION AND PROTECTIONISM. AMERICAN INTERNET COMPANIES RUN THE RISK OF BEING BLOCKED OUT OF THESE MARKETS. AND THEN THE CHINESE INTERNET MODEL BECOMES MUCH MORE COMMON THE LARGE INTERNET COMPANIES WILL ACTUALLY PROBABLY DO OKAY WITH THAT BECAUSE ONE OF THE THINGS THESE COUNTRIES ARE TRYING TO GET THE BIG INTERNET COMPANIES TO DO IS PUT SERVERS IN EACH COUNTRY. AND THE BIG INTERNET COMPANIES CAN AFFORD TO DO THAT THE INTERNET STARTUPS WILL SUFFER A LOT MORE.
LEE: THE COMPANIES THAT YOU INVEST IN.
ANDREESSEN: THE COMPANIES THAT WE FUNNEL WILL PROBABLY SUFFER A LOT MORE. TODAY WE HAVE LOTS OF STARTUPS IN A 20 MILE RADIUS AROUND HERE. THEY START IT'S FOUR KIDS WITH THEIR LAPTOPS AND RAISE HALF A MILLION DOLLARS AND THEY LAUNCH AN INTERNET SERVICE AND THEY'LL HAVE FIRST USERS IN A YEAR IN 170 COUNTRIES. THE MORE THE INTERNET GETS BULKINIZED THE MORE THAT WON'T BE THE CASE. THEY'LL HAVE USERS IN THE U.S. AND WHATEVER OTHER COUNTRIES ALLOW THE FREE-FLOW OF INFORMATION. AND I JUST THINK IT'S GOING BACKWARDS FOR OUR INDUSTRY AND I ALSO THINK IT IS GOING BACKWARDS FOR THE INTERNET BROADLY AND IT IS GOING BACKWARDS FOR THE PEOPLE IN MANY OF THESE COUNTRIES. I DON'T KNOW THAT RUSSIAN CITIZENS ARE GOING TO BE BETTER OFF AT THE END OF THIS. THEY'LL PROBABLY BE WORSE OFF.
LEE: IF THEY ONLY HAVE A RUSSIAN INTERNET.
ANDREESSEN: IF THEY ONLY HAVE A RUSSIAN INTERNET WITH THE PUTIN ADMINISTRATION BEING ABLE TO CONTROL AND DICTATE WHAT THEY SEE AND WHAT THEY CAN DO. AND SO I THINK IT'S A STEP BACKWARDS IN TERMS OF POLITICAL FREEDOM AS WELL AS ECONOMIC FREEDOM AS WELL AS AMERICAN INDUSTRY AND I THINK IT'S A BAD THING.
LEE: HUGE CONSEQUENCES. MARC, STICK AROUND. WE'RE GOING TO TALK TO MARC ANDREESSEN ABOUT BITCOIN OF COURSE. AND TECH VALUATIONS WHERE THEY STAND NOW THE LAST TIME WE TALKED TO MARC WAS THREE MONTHS AGO AND AT THE TIME TECH VALUATIONS WERE OKAY. A COUPLE OF PORTFOLIO COMPANIES OF HIS DOWN AS MUCH AS 45% IN THAT PERIOD. WAS THERE A BUBBLE WE WILL ASK HIM WHEN "FAST MONEY" RETURNS.
LEE: WELCOME BACK TO "FAST MONEY." WE ARE LIVE HERE AT THE VMWARE CAMPUS IN PALO ALTO. WE ARE GOING TO CONTINUE OUR CONVERSATION WITH MARC ANDREESSEN, THE FOUNDER OF ANDREESSEN HOROWITZ. MARC, I WANT TO GET TO THE BUBBLE. WE SPOKE AND YOU'RE LAUGHING BECAUSE --
ANDREESSEN: I THOUGHT IT WAS OVER.
LEE: I DON'T KNOW. YOU TELL ME. BECAUSE WE'RE TAKING A LOOK AT YOUR PORTFOLIO COMPANIES, THE LAST TIME WE SPOKE WAS ABOUT THREE MONTHS AGO IN FEBRUARY. A NUMBER OF THE COMPANIES HAVE HAD SOME PRETTY PRECIPITOUS DECLINES. TWITTER IS DOWN 45%. ZULILY IS DOWN 50%. FACEBOOK IS DOWN 8. ZYNGA IS DOWN 35 AND SO ON. WHAT HAPPENED? WHAT WAS THAT IF – DOWN 45% AND TWITTER IS NOT A BUBBLE. WHAT WAS IT?
ANDREESSEN: WELL APPARENTLY THE BUBBLE IS OVER. GOOD NEWS.
LEE: WELL THEN YOU'RE ACKNOWLEDGING THAT THAT WAS A BUBBLE.
ANDREESSEN: SO A COUPLE OF THINGS. ONE IS I WOULD SAY THE NAME OF YOUR SHOW IS "FAST MONEY." I WOULD SAY WE'RE SLOW MONEY. AND SO OUR GOAL WHEN WE INVEST IN THESE COMPANIES IS TO HAVE A TEN-YEAR OUTLOOK. SO WHATEVER IS HAPPENING IN – THE GREAT SAVING GRACE OF VENTURE CAPITAL IS OUR MONEY IS LOCKED UP. FOR BETTER OR FOR WORSE, OUR MONEY IS LOCKED UP AND SO WE INVEST IN THESE COMPANIES WITH A TEN-YEAR OUTLOOK. AND SO IT DOESN'T AFFECT A LOT OF WHAT WE DO ONE WAY OR THE OTHER. WE'RE HOLDING A LOT OF THESE STOCKS. WE'RE ACTUALLY HOLDING OUR TWITTER STOCK LIKE WE ARE HOLDING IN OUR MAIN FUND. WE'RE PERFECTLY HAPPY TO HOLD. I'M HOLDING MY TWITTER STOCK. THERE ARE A LOT OF THINGS HAPPENING. PEOPLE ARGUE ABOUT THE VALUATIONS. I WOULD SAY, ONE OF THE THINGS I SAY IS IF YOU OVERVALUED STOCKS, DON'T MAKE A BUBBLE. STOCKS DO GET OVERVALUED, BY THE WAY, STOCKS DO GET UNDERVALUED. ANOTHER THING THAT HAPPENS, AND THIS ISN'T REFERRING TO A SPECIFIC COMPANY, BUT ANOTHER THING THAT HAPPENS IS LOCKUPS COME OFF. SO IF THESE COMPANIES GO PUBLIC, LOCKUPS COME OFF. A LOT OF STOCK COMES INTO THE MARKET. IT TAKES TIME FOR THE INSTITUTIONAL INVESTOR BASE TO BUILD THEIR POSITIONS. I DON'T THINK IT MATTERS THAT MUCH TO WHAT WE DO AND I DON'T THINK IT MATTERS THAT MUCH TO THE ULTIMATE FATE AND FUTURE OF THESE COMPANIES KIND OF WHAT HAPPENS TO THE STOCKS IN THE SHORT TERM.
LEE: WHEN IT COMES TO LOCKUP EXPIRATIONS, WE HAVE SEEN THE HAPPEN IN TERMS OF THE STOCKS RESPONDING TO THE ANTICIPATION OF A LOCKUP EXPIRATION, OF A BIG TRANCHE OF SHARES. WE HAVE SEEN THAT IN FIREEYE – WE JUST SPOKE TO THE CEO DAVE DEWALT. WE'VE SEEN THAT IN TWITTER AS WELL. I'M JUST WONDERING IF YOU'RE GETTING ANY PRESSURE OR ANY REQUESTS FROM COMPANY MANAGEMENT TO SAY, YOU KNOW WHAT, CAN YOU COME OUT AND VOW NOT TO SELL SHARES? BECAUSE THAT WILL HELP US?
ANDREESSEN: YEAH, THAT HASN'T HAPPENED WITH US. AND THAT HASN'T HAPPENED TO US, NOW IT'S MORE THAT WE MAKE THAT INVESTMENT BASED ON WHAT WE THINK IS GOOD FOR OUR INVESTORS. I GUESS I WOULD SAY MAYBE PEOPLE WHO WATCH THE MARKETS, IT IS IMPORTANT I THINK TO UNDERSTAND THE LEVEL OF SORT OF – I DON'T KNOW, ORGANIZED MAY BE THE WRONG TERM – BUT THE LEVEL OF SORT OF GROUP ACTIVITY ON THE PART OF SHORTS HEADING INTO A LOCKUP COMING OFF AND THEN CORRESPONDINGLY, THE LEVEL OF GROUP ACTIVITY THAT OFTEN HAPPENS WITH THE LONGS WHEN THE LOCKUP IS OVER, HAS VERY BIG IMPACT ON THESE PRICES AND IT'S VERY COMMON YOU LOOK AT THESE CHARTS AFTER THE FACT THERE'S THIS DEEP V PATTERN. AND I'M NOT SAYING YOU CAN PREDICT THAT IN EVERY SINGLE CASE, BUT IT DOES CONTRIBUTE. I MEAN IT MAKES SENSE. THESE STOCKS GO PUBLIC WITH A SMALL FLOAT AND THEN A MUCH LARGER AMOUNT OF STOCKS COMES IN THE MARKET AND THEN THESE STOCKS GO THROUGH THEIR GYRATIONS. AND SO I JUST DON'T THINK IT MEANS ANYTHING RELATIVE TO THE ACTUAL UNDERLYING STRENGTH OF THE COMPANY.
LEE: I'M GOING TO MOVE AWAY ENTIRELY FROM THE USE OF BUBBLE. BUT DO YOU SEE AREAS IN TECHNOLOGY THAT ARE OVERVALUED AT THIS POINT?
ANDREESSEN: YOU SEE HEAT – SO FOR EXAMPLE, ONE OF THE THINGS THAT'S HAPPENING IS THERE IS A LOT OF MONEY IN THE PUBLIC MARKET THAT IS LOOKING FOR GROWTH AND CAN'T FIND IT IN THE PUBLIC MARKET BECAUSE THERE ARE A RELATIVELY SMALL NUMBER OF HIGH-GROWTH IPOs THESE DAYS. AND SO THERE IS A LOT OF PUBLIC MONEY THAT HAS BEEN CROSSING OVER INTO THE PRIVATE SIDE AND SO YOU SEE THESE LATE STAGE FINANCINGS AT THESE HIGH VALUATIONS. BUT THE OTHER THING YOU SEE IS THAT A LOT OF THESE COMPANIES THAT PEOPLE TALK ABOUT HAVING THESE MULTI-BILLION DOLLAR LATE STAGE PRIVATE VALUATIONS. YOU LOOK INSIDE THESE COMPANIES THAT ARE DOING REALLY WELL. THEY ARE DOING INCREDIBLY WELL. THEIR BUSINESSES ARE GROWING VERY FAST, THEY ARE VERY IMPORTANT NEW COMPANIES. IN PRIOR GENERATIONS, THESE COMPANIES WOULD HAVE ALL GONE PUBLIC BY NOW. AND SO IT JUST HAPPENS THAT THEY'RE STILL PRIVATE. IT JUST HAPPENS THAT BECAUSE THEY'RE PRIVATE YOU CAN'T SEE THEIR FINANCIALS – IT IS RELATIVELY OPAQUE. WE LOOK AT IT AND WE SEE PLENTY OF OPPORTUNITIES TO INVEST. I THINK IT'S A MODERATELY HEALTHY SITUATION.
LEE: WE'RE IN THE VALLEY OBVIOUSLY. APPLE WAS VIEWED AS A LEADER IN INNOVATION HERE. IS IT STILL DO YOU THINK? HAS THAT CHANGED? WILL IT BE THE LEADER IN FIVE YEARS?
ANDREESSEN: WELL SO OVER A FIVE YEAR PERIOD, IT'S UP TO EXECUTION ON EVERYBODY'S PART. THE WAY I THINK ABOUT IT IS, EVERY COMPANY WE FUND, AND EVERY COMPANY IN THE VALLEY, THE ONE THING I KNOW ABOUT ALL OF THEIR PRODUCTS TODAY IS THAT THEY WILL ALL BE OBSOLETE IN FIVE YEARS. AND SO IT IS ALMOST 100% A QUESTION OF WHAT THEY ARE GOING TO BUILD IN THE NEXT FIVE YEARS THAT DETERMINES THE ANSWER TO THAT QUESTION.
LEE: OR BUY.
ANDREESSEN: OR BUY.
LEE: IS BUYING AS GOOD AS BUILDING?
ANDREESSEN: WELL IN MANY CASES IT IS. SO MANY OF THE GREAT SILICON VALLEY COMPANIES HAVE GOTTEN BUILT THROUGH THE PROCESS OF ACQUISITIONS. ACTUALLY, VMWARE, WE ARE HERE AT VMWARE – THEY BOUGHT ONE OF OUR COMPANIES CALLED NICIRA WHICH IS NOW A MAJOR NEW PRODUCT LINE OF THEIRS AND NETWORKING. CISCO, LEGENDARILY IS A COMPANY THAT GOT BUILT THROUGH A LOT OF ACQUISITIONS. ONE OF THE WAYS TO LOOK AT VENTURE CAPITAL IS THAT WE'RE OUTSOARED R&D FOR THE BIG COMPANIES BECAUSE WE FUND ALL THESE START UPS DOING ALL THESE NEW PRODUCTS AND THEN THE BIG COMPANIES BUY A LOT OF THEM. SO THERE'S A FAIRLY HEALTHY PROCESS IN ACQUISITION THAT TAKES PLACE. BUT ON THE OTHER HAND, LIKE APPLE HAS DONE A LOT OF ORGANIC DEVELOPMENT. THE THING ABOUT APPLE THAT WE JUST DON'T KNOW, IS WHAT DO THEY HAVE IN THE PIPELINE? YOU KNOW, THEY ARE SUCH A SECRETIVE COMPANY. BUT EVEN ME, I MEAN I TALK TO PEOPLE ALL THE TIME. I DON'T KNOW WHAT PRODUCTS THEY HAVE COMING OUT. AND I THINK THAT'S THE QUESTION. AND IF THE PAST IS ANY PREDICTION, THEY'LL HAVE A BUNCH OF SPECTACULAR PRODUCTS COMING OUT AND THEY WILL DO GREAT.
LEE: I WANT TO TALK ABOUT M&A. CERTAINLY A LOT OF IT HAS BEEN GOING ON. A LOT OF IT IN YOUR PORTFOLIO COMPANIES. IS IT A SIGN OF SOME SORT OF TOP IN ANY SENSE? FOR A COMPANY TO USE ITS STOCK AS CURRENCY? BECAUSE SOME WOULD SAY, YOU KNOW WHAT? THAT'S A SIGN THAT THE COMPANY REALLY HAS NOTHING ELSE TO DO AND IT SEES IT'S STOCK IS YOU KNOW A VALUABLE ASSET AND IT IS GOING TO USE IT RIGHT NOW?
ANDREESSEN: I MEAN, I THINK THAT WOULD BE THE CYNICAL WAY OF LOOKING AT IT. I WOULD JUST SAY THERE ARE A – LOOK I MEAN, M&A IS ONE OF THOSE THINGS. LIKE M&A IS COMPLICATED, THERE ARE BAD M&A DEALS. LIKE IT IS TRUE THAT THERE ARE M&A DEALS THAT DON'T WORK. BUT I AM JUST SAYING THAT THE BIG SILICON VALLEY TECHNOLOGY FRANCHISE COMPANIES – IF YOU LOOK AT THEIR HISTORIES, THEY TYPICALLY HAVE BEEN VERY AGGRESSIVE ACQUIRERS. APPLE HAS BOUGHT A LOT OF COMPANIES OVER THE YEARS. GOOGLE HAS CERTAINLY BOUGHT – I MEAN GOOGLE BOUGHT YOUTUBE, GOOGLE BOUGHT ANDROID. IN OTHER WORDS, WOULD YOU RATHER HAVING GOOGLE SITTING THERE TODAY HAVING NOT BOUGHT THE COMPANIES THAT IT BOUGHT. BECAUSE IT WAS TOO PRIDEFUL AND IT NEEDED TO BUILD EVERYTHING INTERNALLY. AND IF YOU'RE A GOOGLE SHAREHOLDER, YOU WOULD BE DEPRESSED TODAY HAD THEY TRIED TO DO THAT. AND SO I THINK IT PLAYS AN APPROPRIATE ROLE IN THESE COMPANIES AS THEY GROW THAT THEY CAN BASICALLY USE THE STARTUP COMMUNITY AS THE FARM TEAM FOR R&D.
LEE: SPEAKING OF THE START UP COMMUNITY, IS THERE A CERTAIN AMOUNT OF INCESTUOUSNESS IN THE VALLEY WHERE BIG VENTURE CAPITAL FIRMS TO BE UNNAMED HAVE INVESTMENTS OR SIT ON BOARDS OF COMPANIES AND THEN SELL THOSE COMPANIES TO OTHER COMPANIES ON WHICH THEY SIT ON BOARDS OR HAVE INVESTMENTS?
ANDREESSEN: YEAH, SO THAT REALLY SUGGESTS THE COMPANY MANAGEMENT AND BOARDS OF DIRECTORS AND SHAREHOLDERS OF COMPANIES DON'T MAKE THEIR OWN DECISIONS. AND SO MY FRIEND REID HOFFMAN REFERS TO THIS AS THE ASSUMPTION THAT VENTURE CAPITALISTS HAVE LEX LUTHER CALIBER MIND CONTROL POWERS.
LEE: YOU DON'T?
ANDREESSEN: NO. UNFORTUNATELY, I HAVE THE HAIR CUT, BUT NOT THE POWERS. AND SO EACH COMPANY, ESPECIALLY THESE BIG PUBLIC COMPANIES, THEY HAVE GOT VERY STRONG BOARDS, THEY HAVE GOT EXTENSIVE LEGAL TEAMS. THEY HAVE GOT EXCELLENT OUTSIDE COUNSEL. THEY KNOW THEY ARE UNDER UNBELIEVABLE SCRUTINY. LIKE WHEN I'M ON THE BOARD OF A COMPANY AND THAT COMPANY CONSIDERS BUYING ANOTHER COMPANY THAT I'M INVOLVED IN, I'M IMMEDIATELY RECUSED. I'M OUT OF THE ROOM. I'M NOT INVOLVED. I GET BROUGHT BACK IN THE ROOM WHEN THE DEAL IS OVER. SO I DON'T THINK THEY ARE CORRECT.
LEE: SO UNFOUNDED. THOSE ACCUSATIONS ARE UNFOUNDED.
ANDREESSEN: I THINK IT PRESUMES A MASSIVE BREAKDOWN OF CORPORATE GOVERNANCE. NOT ON THE PART OF VCs, BUT ON THE PART OF THE BIG COMPANIES. AND I JUST DON'T SEE IT.
LEE: LET'S SWITCH GEARS HERE AND TALK ABOUT BITCOIN. YOU'RE PROBABLY AN EVANGLIST. THAT IS A GOOD TERM TO USE I GUESS. ARE YOU SURPRISED THAT ITS ADOPTION IS NOT FARTHER ALONG THE PATH?
ANDREESSEN: NO. SO WE AGAIN VIEW THIS AS A LONG TERM. SO I VIEW BITCOIN AS A LONG TERM THING.
LEE: WHAT'S LONG TERM?
ANDREESSEN: 20 YEARS.
LEE: 20 YEARS?
ANDREESSEN: OH YEAH, YEAH. THIS IS A LONG TERM THING. IT IS LIKE, I COMPARE IT TO THE INTERNET. LIKE IN ALL SERIOUSNESS, I COMPARE IT TO THE INTERNET. WHICH IS THE INTERNET BASICALLY –
LEE: ITS '93 OR SO.
ANDREESSEN: YEAH. ITS LIKE '93, '94. THE INTERNET WAS A NEW WAY TO TRANSMIT DATA. BITCOIN IS THE NEW WAY TO TRANSMIT MONEY. IT'S GOING TO TAKE A LONG TIME. THE GOOD NEWS IS, IT'S A BIG OPPORTUNITY. MONEY IS A VERY BIG DEAL. AND SO IF YOU CAN BUILD A NEW WAY TO DEAL WITH MONEY, IT IS VERY IMPORTANT AND VALUABLE. IT JUST TAKES TIME. SO WE ARE STILL IN THE VERY –
LEE: IT'S NOT THAT IT'S SLOW, IT'S NOT THAT IT'S STUMBLING. IT'S JUST – IT TAKES TIME?
ANDREESSEN: WE ARE IN THE VERY EARLY STAGES. THE OTHER THING THAT IS HAPPENING IS THE NUMBER OF STARTUPS IN SILICON VALLEY THAT ARE RAMPING UP RIGHT NOW TO BUILD ALL KINDS OF APPLICATIONS AROUND BITCOIN IS STAGGERING. AND SO WE'RE SEEING A REALLY INTERESTING FLOW OF EARLY STAGE COMPANIES THAT HAVE ALL KINDS OF IDEAS FOR EVERYTHING. BITCOIN CONTRACTS, BITCOIN KEYS AND BITCOIN TITLES AND THEY CLAIM INSURANCE AND DERIVATIVES AND ON AND ON AND ON. AND ALL THESE DIFFERENT KINDS OF APPLICATIONS OF FINANCIAL SERVICES REBUILT WITH BITCOIN. AND THAT PROCESS IS JUST STARTING AND SO THAT'S A FIVE TO TEN-YEAR PROCESS JUST BY ITSELF. SO OUR PLAN IS TO INVEST FOR THE LONG RUN.
LEE: AND IS IT TRUE THAT YOU TWEET – I READ THIS TODAY. THAT YOU TWEET IN YOUR PAJAMAS DRINKING SCOTCH? BECAUSE YOU GO ON THESE MASSIVE TWITTER TIRADES WHICH YOU'RE INFAMOUS FOR. SO I'M JUST TRYING TO GET A VISUAL OF HOW A LEADER IN TECHNOLOGY USES TECHNOLOGY?
ANDREESSEN: I SAID HYPOTHETICALLY ONE MIGH TBE ABLE TO TWEET IN THEIR BOXER SHORTS DRINKING SCOTCH. I DIDN'T SAY SPECIFICALLY THAT I HAVE EVER DONE THAT.
LEE: OK. ALL RIGHT. MARC, THANKS SO MUCH FOR JOINING US. MARC ANDREESSEN A FOUNDER OF ANDREESSEN HOROWITZ. MANDY, BACK TO YOU. AND BY THE WAY, WE'RE GOING TO CONTINUE TALKING TO MARC AND WE'RE GOING TO GET HIS TOP THREE TREND/ INVESTMENTS IN TECH TODAY. THAT IS GOING TO BE ON THE WEB SO YOU ARE GOING TO WANT TO WATCH FOR THAT.
About CNBC:
With CNBC in the U.S., CNBC in Asia Pacific, CNBC in Europe, Middle East and Africa, CNBC World and CNBC HD , CNBC is the recognized world leader in business news and provides real-time financial market coverage and business information to approximately 371 million homes worldwide, including more than 100 million households in the United States and Canada. CNBC also provides daily business updates to 400 million households across China. The network's 15 live hours a day of business programming in North America (weekdays from 4:00 a.m. - 7:00 p.m. ET) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide. CNBC at night features a mix of new reality programming, CNBC's highly successful series produced exclusively for CNBC and a number of distinctive in-house documentaries.
CNBC also has a vast portfolio of digital products which deliver real-time financial market news and information across a variety of platforms. These include CNBC.com, the online destination for global business; CNBC PRO, the premium, integrated desktop/mobile service that provides real-time global market data and live access to CNBC global programming; and a suite of CNBC Mobile products including the CNBC Real-Time iPhone and iPad Apps.
Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://www.nbcumv.com/mediavillage/networks/cnbc/.