Silicon Valley Guru: What Bubble?
“We don’t think there is a bubble,” says Marc Andreeson as he fields interview questions at yesterday’s D9 conference. Why not? Andreeson continued, “A very large number of people think there’s a bubble, which makes us think there isn’t a bubble. A key characteristic of a bubble is that no one thinks its a bubble…I know people tend to revise their memories and they say in September 1999 everyone knew it was a bubble…but let me tell you I was there and people were euphoric, and like now all people I talk to are upset.”
Marc Andreeson is an computer programmer, inventor, investor, and software developer whose presence has been a mainstay in Silicon Valley in the past twenty. Andreeson created the first widely-used web browser “Mosiac,” c0-founded the Netscape Company, and now works in the Valley as a venture capitalist and serves on the board of a number of succesful companies such as eBay (NASDAQ:EBAY), HP (NYSE:HPQ), and Facebook.
Andreeson continued to rail against the notion that there is a bubble in the market right now. “A bubble is a psychological phenomenon, I hope everyone thinks there’s a bubble because then that’ll keep prices down. If there somehow is a bubble then it has…There has not been an equity bubble that has not affected the public markets in a major way. Calendar year 2011, Apple (NASDAQ:AAPL)’s P/E is 11, projected next year to be ten…Cisco (NASDAQ:CSCO) P/E of 7, next year projected 5.5…P/E’s in single digit’s are what steel mills trade at the day before they go out of business, these companies are tremendously undervalued.”
“The public markets hate tech…(they) are tremendously scarred of what happened ten years ago. The one company people have a case to make with [for the bubble] is LinkedIn (NYSE:LNKD), (Andreeson was an angel investor for LinkedIn), there was a lot more demand for institutional investors for LinkedIn than there was supply on the secondary market. For the first time in history we have an equity bubble that is affecting one stock.”
It seems as though Andreeson is deeply skeptical of the bubbly hype surrounding the current tech market, but will his cynicism continue unmitigated by forthcoming IPOs from web-stars Facebook, Zynga, Groupon, and others? Perhaps Andreeson, who sits on Facebook’s board, is looking to dispel some of the bubble-hype to clear the way for successful landings in the Facebook and GroupOn (a company for which he is also an angel investor) debuts. When asked about his expectations for the GroupOn IPO, Andreeson replied, “No comment.”