So, It Seems Like That Andreesen Dude Might Actually Know What He's Talking About, But I'll Still Spill His Secrets

I got into a Twitter debate with Marc Andreesen of Netscape (the inventor of the commercial web browser) and Andreesen Horowitz (the VC fund that financed Facebook, Twitter, Skype & Zynga) fame.

He spit out what was mostly common sense, yet still flew in the face of what is taught in school, most text books and by most B school teachers. Here's how it went down, first ten tweets are from Marc, the rest are from me or my followers...

Here's where I chimed in and started spilling the VC secret sauce beans.

When entrepeneurs get all happy because they're recieving what thier VC said was an $8 million valuation for their Series A found, of which they're giving up 20% for $1.6M (gross expenses), they are naively comparing this to the dollars recieved in a common stock financing. This is fallacious. The control premiums, dividend claims and liquidation preferences often built into the preferred offerings really bring the economic valuation way down. If anyone doesn't believe me, ask their VC to take common founders stock instead of preferred on VC steroids at the quoted valuation. Get back to me with those answers, I'll sit here and wait. 

Selling overpriced, negative real rate, Fed pumped up paper certificates in liue of cold hard cash basically does the same "price inflation thing" in the public markets. Now I know Marc invested in Facebook and made a ton of money, but the valuation that FB went to market at was simply a joke, see my mucho analytical rants - To wit:

pre-IPO - Facebook Registers The WHOLE WORLD! Or At Least They Would Have To In Order To Justify Goldman’s Pricing: Here’s What $2 Billion Or So Worth Of Goldman HNW Clients Probably Wish They Read This Time Last Week!

at the IPO - The World's First Phenomenally Forensic Facebook Analysis - This Is What You Need Before You Invest, Pt 1 as well as The Final Facebook Forensic IPO Analysis: the Good, the Bad & the Ugly

and post-IPO - On Top Of The 2x-10x Return Had Off Of BoomBustBlog Facebook Research, Our Models Show How Much More Is Available... as well as...

Now, that I've established how overvalued FB was (and how much money Marc made for his LPs), take a look at how much money FB really pays for a company like Whatsapp when it says it pays $19B...

I wrote on my blog...  The Man Who Correctly Anticipated Facebook's IPO Value Knows Why Whatsapp Was Purchased

So many people can't differentiate the difference between what amounts to a structural cost, or effectively a disguised fixed expense (like what is now much of Apple's marketing and sales expense) and true business investment and reinvestment (which is what you have seen in Google with YouTube, Android, Grand Central, Glass, Driverless cars, Fiber, balloons and drones). The academic use of DCF simply exacerbates this problem by compounding the smeared differences. 

Self expanatory...

Garbage in, garbage out! No?

To put it more verbosely - Most Accurate Apple Analysis Ever Pt 2, The Only Investor Accurately Calling To Short Apple Tells What's Next

Self explanatory...

And this goes back to that MBA education thing. Here's some more on the topic... 

Reggie Middleton Illustrates Pitfalls of American Education Using His 5 yr Old Daughter

  • How To Profit From The Impending Bursting Of The ...
    Jan 7, 2013 - Many do not think of their education as an actual investment, but if you put .... Academia is primarily interested in the first, Reggie Middleton is ...
    You +1'd this
  • How To Profit From The Impending Bursting Of The ...
    Jan 3, 2013 - You would have had a superior education and only been in the hole for $16,000, as well as having $160,000 .... Latest from Reggie Middleton.
    You +1'd this
  • Calculate The Value & ROI Of Your College Education Now ...
    Feb 12, 2013 - This is the 4th installment in the educationbubble series. This piece gets down to the ... About Knowledge How: College and University Education Valuation Software ..... By Reggie Middleton; Again, The Sell Side Analysts .
  • Which all brings us back to 
  • This debate all stemmed from my due diligence in deciding whether to approach venture capital firms for my UltraCoin "smart contract" startup. Since I plan to disintermediate the banking system, wholesale, I thought I better get some additional capital lined up. 
    That is a story in and of itself. I went to the crowdsourcing and Bitcoin community, and they really weren't feeling me. I then turned to my natural constituency, clients from my blog and of course we found Nirvana. 
    The board and the team that I'm building is outrageous, and I'm quite tempted to spill the beans right here. Alas, it's not quite time yet. As Marc said, its about... Who are the people, what are the products, and how big is the market. Well here 'ya go. 
    Contract and IP attorneys (all in one person) with over 15 years experience doing both!
    My team of financial analysts whom I've worked with for 7 years,
    The product - outrageous ZeroTrust, no counterparty risk, no credit risk, peer to peer financial asset trading with near real time settlement.
    A board of advisors containing some of the most successful people in politics, finance and technology!!!
    And how big is the market? Well...


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