The debate over whether the Facebook IPO was or wasn’t a disaster is probably getting a bit tired, but at Fortune’s Brainstorm Tech conference in Aspen, the magazine’s managing editor Andy Serwer couldn’t resist asking venture capitalist Marc Andreessen, albeit indirectly.
Andreessen is on Facebook’s board of directors, which makes it irresistible to ask him about the IPO, but also means that he can’t talk about it specifically. Instead, he talked about the general IPO market, offering an argument that should be familiar to TechCrunch readers. He said there’s a conundrum with IPOs, because if you price them so that there’s a 100 percent pop in the price on the first day, it gets a lot of positive attention, but “the company has left an enormous amount of money on the table.”
The best approach, Andreessen suggested, is to price things so that companies “get a little bit of a first-day pop,” rather than a dramatic increase. He admitted there are investors now who believe they have a “right” to double their money on day one, but he argued that discouraging those expectations is “probably a good thing.”
But might that chill the IPO market? Andreessen countered that the market was “pretty chilled to start with” — especially on the tech side, where he said tech stocks are trading at a 30-year low compared to industrials.
“The public market hates tech stocks,” Andreessen said.
The IPO discussion also served as an explanation of sorts for his firm Andreessen Horowitz’s large investments (most recently a $100 million round for GitHub). Given the hostile IPO market, Andreessen said “many of the best new companies don’t want to go public,” which means they stay private longer, and they take big, private investments while waiting things out.
At the same time, Andreessen said his firm’s reputation for big rounds at big valuations may be exaggerated, especially on the valuation side. In fact, he said that for the 12 months after July 2011, Andreessen Horowitz did not participate in any rounds with a valuation “north of $200 million.”
Andreessen didn’t just talk about his investment strategy. He also praised Yahoo’s decision to recruit Googler Marissa Mayer as its new CEO.
And he mentioned that he had passed up a chance to attend the premiere of The Dark Knight Rises to attend Brainstorm Tech instead: “Instead, I’m going to dress up like Batman and run around Aspen fighting crime.”