Netscape founder Marc Andreessen, who has quickly become one of the most influential Silicon Valley venture capitalists, made some waves last month when he declared that there’s no bubble in the startup community. And now the backer of companies such as Foursquare, Twitter and Facebook — some of the most wildly valued Internet companies around — is taking his theory even further. He tells The New York Times that some of the biggest tech companies on the planet, including Microsoft, Cisco, Google and Apple, are cheap when compared to industrial titans like GE.
“So not only is there no bubble — these prices are reflective of the fact that the market still hates tech,” Andreessen tells The Times. “This bubble talk is about everybody being unbelievably psychologically scarred from 10 years ago.”
That’s a reference to the last bubble, a period when technology stocks saw enormous gains despite little in actual business results. Andreessen doesn’t say it, but he’s certainly implying that things are different this time in part because the companies generating the massive valuations have actual business models which generate revenue and profits.
Nonetheless, there certainly are signs that things are heating up, and Andreessen himself notes a growing influx of MBAs arriving again in Silicon Valley to try to cash in on the boom. (Some say that this was a clear signal of the last tech boom).
Even though Apple is now valued at $329 billion, Andreessen may have a point about tech stocks. But there are other things going on in the market that indicate a bit of froth, including Microsoft’s proposed $8.5 billion purchase of Skype, Zynga’s $1 billion IPO filing and Twitter’s estimated $7 billion valuation.