A conversation with entrepreneur and software engineer Marc Andreessen

A conversation with entrepreneur and software engineer Marc Andreessen

A conversation with Marc Andreessen, co-founder and chairman of Ning and an investor in several startups including Digg, Plazes, and Twitter. Best known as co-author of Mosaic, and founder of Netscape. He is on the Board of Directors of Facebook and eBay

CHARLIE ROSE: Marc Andreessen is here. He’s one of Silicon Valley’s
most respected entrepreneurs. He’s already founded and sold two companies,
each for over $1 billion. The first was Netscape. It revolutionized Web
browsing before it was sold to AOL in 1999. His second company, Opsware,
was bought by Hewlett-Packard in 2007. He has two new ventures, a social
networking site Ning and a brand new venture capital fund. We want to talk
about all of that. I am pleased to have him back on this show. Welcome.

MARC ANDREESSEN: Thank you.

CHARLIE ROSE: There is this sort of silly idea that Facebook is the
next Google and Google is the next Microsoft. You’ve heard that. Does any
of it resonate with you?

MARC ANDREESSEN: I don’t think there are nexts. Like, for example,
there’s IBM, and then people said who is the next IBM? And there never was
the next IBM. I don’t think -- Google is a totally different business than
Microsoft.

CHARLIE ROSE: IBM was not the next IBM.

MARC ANDREESSEN: IBM was not the next IBM. Microsoft was the next
IBM. Google -- Google is its own company. It’s a fantastic company. It’s
its own company with its own model. Facebook is a fantastically successful
company with a huge amount of potential. Google, you know, just a
gigantically successful business. You know, I think for anybody to
voluntarily step up and compare themselves to that I think would be --
would be hubris. I think that would be a bit much in general. But
Facebook’s got huge potential, and frankly I think it deserves to be
evaluated on its own.

CHARLIE ROSE: It is evaluated at $15 billion?

MARC ANDREESSEN: Well, there was an investment round at $15 billion
evaluation, which was the preferred stock...

CHARLIE ROSE: This was the Microsoft investment?

MARC ANDREESSEN: Microsoft investment and some other investors.
People are getting confused on that, by the way, because that’s preferred
stock. There was an internal assessment, a valuation, and people heard
lots of rumors about that was lower than that, which was for common stock.
So the people are getting the preferred and the common confused.

And of course, this is all abstract, right, because the company is
private. You know, some day the company will -- you know, at some point...

CHARLIE ROSE: And because at the time, they’re not making any money.

MARC ANDREESSEN: Well, company’s financials luckily are private, so
it gets to keep that to itself. But...

(CROSSTALK)

CHARLIE ROSE: You’re on the board of directors.

MARC ANDREESSEN: I am on the board.

CHARLIE ROSE: You could (inaudible) tell us.

MARC ANDREESSEN: I know. The company is doing very well. On its
internal goals, it’s doing very well. It passed 175 million active users.
Half of those users use it every day. A lot of those users use it 50 times
a day. It’s generating I think a substantial amount of revenue. I think
it could be doing a lot more revenue in the years to come.

CHARLIE ROSE: Have you read this story? “Fortune” has Mark on the
cover. “How Facebook has taken over our lives,” then, “but is it a real
business?”

MARC ANDREESSEN: Yes, sure. So I think people ask this about new
companies all the time...

CHARLIE ROSE: Can they monetize it?

MARC ANDREESSEN: Yes, can they monetize it. But look, it’s got 175
million active users. It’s the sixth most populated country in the world
right now, if you compare it to countries.

CHARLIE ROSE: Yeah.

MARC ANDREESSEN: It’s on its way to 500 million users. I mean, it’s
going to be a multibillion dollar business.

CHARLIE ROSE: So what’s going to be the trick to monetize it?

MARC ANDREESSEN: Oh, OK. So -- and this is where people are getting
confused, is Facebook is deliberately -- this is actually very
interesting...

CHARLIE ROSE: There’s a lot of confusion out there.

MARC ANDREESSEN: There is a lot of confusion out there. Facebook is
deliberately not taking a lot of the kind of normal brand advertising that
a lot of Web sites will take. So you go to a company like Yahoo, which is
another fantastic business, and they have got these, you know, banner ads
and brand ads all over the place. Facebook has made a strategic decision
to not take a lot of that business in favor of building its own sort of
more organic business model, and it’s still in the process of doing that.
And if they crack the code on that, which I think that they will -- we will
-- then I think it will be very successful and it will be very large.

The fallback position is to just take normal advertising. And if
Facebook just turned on the spigot for normal advertising today, it would
be doing over $1 billion in revenue. So it’s much more a matter of long-
term strategy. The company has got (INAUDIBLE) cash...

CHARLIE ROSE: So if they wanted to make a lot of money instantly, it
could.

MARC ANDREESSEN: Yes. Oh, very easily. It could sell out the home
page, and it would start making just a gigantic amount of money. Yes, so
there’s just tremendous potential in it, and it’s just a question of
exactly how they choose to exploit it.

What’s significant about that is Mark is very determined to build a
long-term company. And you know, as you know, there are people in the
Valley who like quick hits and like to sell companies quickly. And then
there are people -- Andy Grove, for example or Bill Gates -- and I think in
his own way now Mark, and obviously the Google guys are other examples of
this -- who want to build a long-term business. And so he’s got his eyes
way out on the horizon.

CHARLIE ROSE: So when others may have sold out to larger media
companies, Mark insisted he would remain independent and develop his own
company in his own way.

MARC ANDREESSEN: Yeah. And he had those turning points, right,
presented to him.

CHARLIE ROSE: Sure.

MARC ANDREESSEN: Any successful company in the Valley gets
acquisition offers, and has to decide whether or not to take them, and he’s
passed on some very lucrative offers. And has a very big vision. And...

CHARLIE ROSE: OK, so tell me what the big vision is.

MARC ANDREESSEN: Oh. So the big vision is basically, I mean, the way
I would articulate it is connect everybody on the planet, right? So I
mean, so, 175 million people...

CHARLIE ROSE: If you don’t think large, what the hell.

MARC ANDREESSEN: Exactly. 175 million on -- 175 million people on
the thing now. Adding a huge number of users every day. Six billion
people on the planet. Probably 3 billion of them with kind of modern grid
electricity and maybe telephones. So maybe the total addressable market
today is 3 billion people. 175 million to 3 billion is a big challenge, a
big opportunity.

CHARLIE ROSE: Let me remind you that you’re in the business of social
networking.

MARC ANDREESSEN: Of course. Of course.

CHARLIE ROSE: That’s what your Ning is all about.

MARC ANDREESSEN: Of course. My own company, Ning, is about to cross
20 million users.

CHARLIE ROSE: OK...

MARC ANDREESSEN: We’re adding 2 million -- we’re adding 2 million
users a month. And Ning is actually a business that lets you create your
own social network, and we have -- we’re about to cross a million social
networks on Ning that are all...

(CROSSTALK)

CHARLIE ROSE: So if you’re going to create a social network among all
your high school chums, then you can do that.

MARC ANDREESSEN: Right. You can do that. And there’s over a million
of those. It’s easy. It’s free. The advertising -- I mean, there’s all
kinds of ways we make money on that, and that’s growing very fast. MySpace
is doing very well for Newscorp. LinkedIn is another company I’m an angel
investor in that’s got, I don’t know, north of 20 million resumes on it
now. Basically everybody uses LinkedIn now to look for jobs and recruit,
which is a very hot topic these days.

CHARLIE ROSE: I would -- I would assume so.

(CROSSTALK)

CHARLIE ROSE: So social networking is here to stay.

MARC ANDREESSEN: Oh, yes.

CHARLIE ROSE: And its potential is just beginning.

MARC ANDREESSEN: Oh, it’s, yeah...

(CROSSTALK)

CHARLIE ROSE: If you can connect everybody, then you have a huge
opportunity to do a bunch of stuff.

MARC ANDREESSEN: Yeah. Yeah. Well, here’s the thing. If you can
get 50 or 100 or 150 million people to do something, then over time you’re
going to be able to get everybody to do it.

CHARLIE ROSE: Hello politics.

MARC ANDREESSEN: Yeah, everything, everybody. So there’s huge
potential. Huge upside.

CHARLIE ROSE: All right. It was -- the Obama campaign revolutionized
politics, didn’t it?

MARC ANDREESSEN: Excellent example, right. The Obama campaign by far
like the most aggressive state-of-the-art use of social networking
approaches, right, and philosophies. Now, primarily that was harnessed in
the form of fund-raising, right. It was an engine to be able to generate
just gigantic numbers of campaign contributions. So every new campaign is
going to use these technologies and these approaches. We have a lot of
politicians creating networks on Ning.

There will be a whole new wave of social networking in politics, right
-- oh, and also the Obama campaign was very good for volunteer coordination
over this. But there’s a whole aspect to this for getting the message out
and how the campaign gets covered and how the debates happen and how
communication happens...

CHARLIE ROSE: Exactly right.

MARC ANDREESSEN: ... which has yet to come, and that will be in ‘012
or ‘016.

CHARLIE ROSE: And in fact, I think Obama now speaks, rather than news
and the radio programs, speaks online.

MARC ANDREESSEN: On YouTube.

CHARLIE ROSE: On YouTube.

MARC ANDREESSEN: Right, he puts the video on YouTube, which then
spreads all over the Web. And in politics, right, that’s like -- that’s
amazing, right? In the rest of the world, that’s how things work today.

CHARLIE ROSE: Does YouTube make money?

MARC ANDREESSEN: I -- Google, I mean, that’s -- I don’t know
specifically. That’s a Google thing.

CHARLIE ROSE: You know.

MARC ANDREESSEN: Well, I mean, so, if they...

CHARLIE ROSE: You know.

MARC ANDREESSEN: I’ll give you actually the same answer as I do on
Facebook. If they’re not making money today, they easily could. These are
all -- these are all under-monetized assets. Give you an example. Every
video on YouTube -- Viacom -- Viacom is suing YouTube, suing YouTube, suing
Google for copyright infringement.

CHARLIE ROSE: Right, right, right.

MARC ANDREESSEN: 180 degree the wrong strategy.

CHARLIE ROSE: On the part of Viacom.

MARC ANDREESSEN: Viacom, on the part of Viacom, to sue YouTube. They
should be using YouTube as a distribution channel, right? They should let
all the videos go on to YouTube, and then every time there’s a Viacom video
on YouTube, there should be a “buy” button, right? And you’re driving
traffic directly back to the properties, you’re selling DVDs, you’re
selling music, you’re selling video games, you’re selling all this stuff
that Viacom sells. These are the distribution vehicles of all time. These
are nirvana (ph), right? It’s like Napster for the music industry.

CHARLIE ROSE: In other words, I should be count my lucky day that all
my programs are on YouTube?

MARC ANDREESSEN: Oh, yes, of course, because you want people to see
them.

CHARLIE ROSE: Right.

MARC ANDREESSEN: I mean, you want people to see them, and so you put
them out there. And then, like I say, there should be a “buy” button. I
mean, there should be an advertisement.

CHARLIE ROSE: Right.

MARC ANDREESSEN: It’s just like with Napster, with music, right?

CHARLIE ROSE: Right.

MARC ANDREESSEN: Twenty million people lined up in 1998 and decided they
wanted to start using Napster to listen to music. If there had been a “buy
the CD” button there or “buy the digital track,” it would been a gigantic
new source of revenue for the music industry, and the music industry would
be far healthier today. And so when you get huge numbers of people lining
up to do something, in my view, you figure out how to take advantage of
that.

CHARLIE ROSE: In my view, you have a market.

MARC ANDREESSEN: Right, yeah, it’s a market. I mean, you know, magic
markets don’t appear...

CHARLIE ROSE: No, that’s right.

MARC ANDREESSEN: ... all the time, so you take advantage of them.

CHARLIE ROSE: OK. So what about this other part of Facebook, taking
over our lives?

MARC ANDREESSEN: Right.

CHARLIE ROSE: Not so good.

MARC ANDREESSEN: Well, I don’t -- obviously I don’t think that that’s
the case. So everything on Facebook is put on Facebook, or any of these
other sites named -- LinkedIn is put on (ph) voluntarily. People have a
lot of control over who gets to see it and who don’t...

CHARLIE ROSE: But you don’t deny that, in fact, some employers go
first to Facebook, and therefore -- if they see something they don’t like,
they may not hire somebody.

MARC ANDREESSEN: I mean, people are going to check, people are going
to do Google searches. But I’ll tell you, it’s the other way around, also,
right? If you’re an employee, you get to learn a lot more about the
company you’re going to go to work for.

CHARLIE ROSE: So you find out about them too.

MARC ANDREESSEN: Sure, of course.

CHARLIE ROSE: On Facebook?

MARC ANDREESSEN: Find out, you know, on Facebook, on Google, on...

CHARLIE ROSE: All right, but there’s also this controversy just
erupted, which is the idea of who owns the user’s profile.

MARC ANDREESSEN: Yes. Yes. So there was confusion. Facebook put
out a new release to their so-called terms of service, and it was sort of
legalese, and it caused a lot of confusion. And so Mark has announced that
they’re actually pulling those -- pulling that off the site, reverting to
the previous version, and they’re going to write a new document, which is
in English.

CHARLIE ROSE: Back to Ning.

MARC ANDREESSEN: Yes.

CHARLIE ROSE: How many networks do I want to belong to? There’s
LinkedIn, there’s Facebook, there’s on and on and on and on.

MARC ANDREESSEN: I would say how many things do you care about in
your life?

CHARLIE ROSE: Oh, man.

MARC ANDREESSEN: How many things are you into, right?

CHARLIE ROSE: I don’t want to belong to that many social networks.

MARC ANDREESSEN: I mean, but I mean, that’s where it’s going, because
you’re going to be interconnected. You’re going to be interconnected into
a web of interests...

CHARLIE ROSE: All tennis players or whatever in your neighborhood.

MARC ANDREESSEN: Yes, exactly, people you grew up with, people you,
you know, shared...

(CROSSTALK)

CHARLIE ROSE: How many do you belong to?

MARC ANDREESSEN: Oh, I don’t know, dozens.

CHARLIE ROSE: Dozens? What kind are they? Tell me what they are.

MARC ANDREESSEN: Oh, they’re all kinds of things. I mean, there’s
you know, for music or for like crime fiction...

CHARLIE ROSE: Really? Well, just, you know...

MARC ANDREESSEN: ... or sports...

CHARLIE ROSE: Slow down. Did you create this on Ning, this crime
fiction...

MARC ANDREESSEN: No, no, no, no. In that case, I just -- somebody
else created it and so...

CHARLIE ROSE: And you joined it.

MARC ANDREESSEN: I’m watching it (INAUDIBLE).

CHARLIE ROSE: Have you created any of them yourself?

MARC ANDREESSEN: Well, I’ve created networks -- I hadn’t created
(INAUDIBLE), I haven’t created anything...