Perhaps the marquee billing at this week's Web 2.0 Conference in San Francisco was the face-off between two super VCs: John Doerr of Kleiner Perkins of California & Fred Wilson of Union Square Ventures, which is based in New York.
The conversation was facilitated by provocateur John Heilemann of NY Magazine, who is still just as interesting with his now less frequent tech coverage as he is with his current political analysis.
It was the first time the rival East and West coast VCs have appeared together for an interview, and the debate covered the hottest startups, current valuations, and overall technology trends.
Is There a Tech Bubble?
Facebook, unsurprisingly, received a lot of airtime during the conversation. In a controversial remark, Wilson referred to Facebook as simply “a photo sharing site with a chat feature". Both VCs agreed that there appears to be a “bubble" in private market valuations, which may be driven by Facebook's rumored $41 billion value.
Facebook's current value may be due in part to an insufficient supply of stock in the private secondary market where it is bought and sold. In other words, if Facebook were trading publicly right now it would be valued at less than $41 billion. But that's just half the bubble story. The two VCs didn't comment on how much of Facebook's valuation is due to the stratospheric market caps of some publicly traded tech companies. However, public and private tech valuations largely move in sync, so it could be wise for investors in tech stock market darlings such as Netflix, Amazon, Google, and Apple to heed the VC's "bubble" warning.
Shifting to the IPO market, fellow VC Bill Gurley recently argued that the current anti-IPO trend among private companies – spearheaded by Facebook – could pose long-term problems for the technology eco-system. There may be very good reasons for why Facebook shouldn't go public now (e.g., would shed unwelcome light on their confidential financials). However, Doerr argued that “the IPO window is currently open” and that more great companies should consider going public.
East Coast vs. West Coast
Of the two VCs, Wilson appeared to be the more insightful. He noted how APIs have obviated the need for startups to have a local biz dev presence. This and other trends help explain why tech innovation is dispersing geographically away from the once almighty Silicon Valley. In contrast to the stately Doerr, Wilson came across as still possessing fire in his belly and looking to disrupt the status quo. For example, Wilson argued that the open Android platform will ultimately come to dominate the currently higher profile iPhone platform.
When it comes to John Doerr, one always has to read between the lines of his legendary hyperbole. And to be blunt, Doerr came across as somewhat of a tech antique from the 90s. He makes repeated positive mention of that era's tech bubble promoter extraordinaire, Mary Meeker, as if the passing of a decade is enough to make everyone forget her disastrously overly bullish calls. When the subject of Apple's upopular iOS app gatekeeper protocols came up, Doerr sounded like a politician, delicately dancing around for fear of upsetting his Valley pal and neighbor, Steve Jobs.
Silicon Valley's Not As Bright Future?
Doerr's reluctance to publicly confront Apple's restrictive App Store is indicative of the dark cloud which has recently emerged over historically shiny, happy Silicon Valley. The innovation center of gravity may be shifting at least in part because Silicon Valley has become the land of entrenched oligarchs, fighting over fiefdoms and turf. The recent 'Angelgate' is perhaps yet another sign of this rather disturbing development.
Looking ahead, tech entrepreneurs seeking to disrupt may in fact be better off not automatically flocking to venerable Silicon Valley.
The conversation was facilitated by provocateur John Heilemann of NY Magazine, who is still just as interesting with his now less frequent tech coverage as he is with his current political analysis.
It was the first time the rival East and West coast VCs have appeared together for an interview, and the debate covered the hottest startups, current valuations, and overall technology trends.
Is There a Tech Bubble?
Facebook, unsurprisingly, received a lot of airtime during the conversation. In a controversial remark, Wilson referred to Facebook as simply “a photo sharing site with a chat feature". Both VCs agreed that there appears to be a “bubble" in private market valuations, which may be driven by Facebook's rumored $41 billion value.
Facebook's current value may be due in part to an insufficient supply of stock in the private secondary market where it is bought and sold. In other words, if Facebook were trading publicly right now it would be valued at less than $41 billion. But that's just half the bubble story. The two VCs didn't comment on how much of Facebook's valuation is due to the stratospheric market caps of some publicly traded tech companies. However, public and private tech valuations largely move in sync, so it could be wise for investors in tech stock market darlings such as Netflix, Amazon, Google, and Apple to heed the VC's "bubble" warning.
Shifting to the IPO market, fellow VC Bill Gurley recently argued that the current anti-IPO trend among private companies – spearheaded by Facebook – could pose long-term problems for the technology eco-system. There may be very good reasons for why Facebook shouldn't go public now (e.g., would shed unwelcome light on their confidential financials). However, Doerr argued that “the IPO window is currently open” and that more great companies should consider going public.
East Coast vs. West Coast
Of the two VCs, Wilson appeared to be the more insightful. He noted how APIs have obviated the need for startups to have a local biz dev presence. This and other trends help explain why tech innovation is dispersing geographically away from the once almighty Silicon Valley. In contrast to the stately Doerr, Wilson came across as still possessing fire in his belly and looking to disrupt the status quo. For example, Wilson argued that the open Android platform will ultimately come to dominate the currently higher profile iPhone platform.
When it comes to John Doerr, one always has to read between the lines of his legendary hyperbole. And to be blunt, Doerr came across as somewhat of a tech antique from the 90s. He makes repeated positive mention of that era's tech bubble promoter extraordinaire, Mary Meeker, as if the passing of a decade is enough to make everyone forget her disastrously overly bullish calls. When the subject of Apple's upopular iOS app gatekeeper protocols came up, Doerr sounded like a politician, delicately dancing around for fear of upsetting his Valley pal and neighbor, Steve Jobs.
Silicon Valley's Not As Bright Future?
Doerr's reluctance to publicly confront Apple's restrictive App Store is indicative of the dark cloud which has recently emerged over historically shiny, happy Silicon Valley. The innovation center of gravity may be shifting at least in part because Silicon Valley has become the land of entrenched oligarchs, fighting over fiefdoms and turf. The recent 'Angelgate' is perhaps yet another sign of this rather disturbing development.
Looking ahead, tech entrepreneurs seeking to disrupt may in fact be better off not automatically flocking to venerable Silicon Valley.
Well, well, I guess now we know why Doerr was singing Mary's praises: it was just announced that she's joining his VC firm.
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