http://www.siliconbeat.com/2009/07/06/the-curious-case-of-marc-andreessen-part-2/

First off, thanks for this thoughtful conversation. I was off the grid for a few days so I’m little tardy in jumping back in.

I think this comes through, but let me clarify a couple things on my feelings about Andreessen. First, although I’m not sure that Opsware would have been profitable as a sthand alone, there are a couple of notable things about it. First, Andreessen and Ben HOrowitz took a disaster and turned it around to the point where any initial investor in the stock would have made money. That’s not nothing. And in essence, they spotted the whole “cloud” trend much earlier than most, maybe a little too early for their own good.

I do agree with @Mike Brunt on the Amazon example. In that case, they were trying to achieve scale to the point where the margins kicked in in their favor. In a sense, Oracle has been doing this with its acquisition strategy, and now sees its margins just exploding. Of course, Amazon had trouble transferring this success beyond books (thus, the Kindle). Margins on other products have never really scaled.

But to @dave mcclure’s point: Twitter and Facebook are awesome, game changing companies in my opinion. I continue to impressed by FBook’s evolution, but also dumfounded at how terrible their ads are. Has anyone ever clicked on a FB ad? I’m not sure what’s going on over there, but I do know they have real revenues, and are investing in a lot of infrastructure. So I think there is some parallel in that sense with Amazon. I think FB is going to conquer the world, and if it ever makes it possible to actually search within FB, then we may just forget Google ever existed.

Twitter, I love. But I fear that what makes them great (open ness) will make it impossible for it to ever become a success. Twitter’s success seems almost like a wonderful accident, and I think the best outcome is likely a big acquisition by a benevolent owner.

For me, both Twitter and Facebook do raise the overall failure of online advertising as a business model (not just because of the downturn). I think Google will prove to be the last, great ad-supported business.

That means everyone else needs to get a lot more creative on the business side. I’m not condemning VCs for all of this. But I think there’s still way too many of them out there, and there’s going to be a big contraction. But the best will survive, angels will play a larger role, and it’s absolutely critical that the valley continue to have a healthy supply of capital from investors who understand big risks, get excited by them, and understand the entrepreneurs’ world.

check back in 3 years on Facebook, 5 years on Twitter. they’ll both be turning a handsome profit (at scale). and you’ll owe me a beer.

@numbersix: um, right… quoting Hunter S Thompson at me as a guide on how to fix the VC industry. blogga, please. you need to cut back on the peyote my friend.

as stated previously: the industry is full of idiots on both the investor and entrepreneur sides, and returns have been crap for a decade… but without VC we would not have Google, Yahoo, Amazon, Cisco, etc etc. the excesses of the late 90s have largely NOT been duplicated (retail-fueled crazy IPOs, insane Mktg budgets, growth at all costs) even though some may draw parallels.

VC is dead. Long live VC.