According to Andreessen, Paypal's spin off from eBay could be the first of many large technology institutions that will be forced to find ways to become smaller, faster and more nimble. With new start-ups constantly looking to steal market share the incumbents will have to adapt.
He calls these breakups "a sign of evolution, the industry is changing ... there is the opportunity to do more and better if you're smaller and more nimble." Large multinational companies have so much technology in so many industries, all being targeted by startups, many of them funded by his superpowerful venture firm, Andreessen Horowitz. "Your ability to fight five- or six-front wars at the same time is just really challenging," he explains. Splitting up means "having smaller, more-independent companies" that are "able to get more aggressive." But there's a second reason why so many activist investors are circling the waters. These huge companies are "all supercheap. And this is something that's widely misunderstood, there's a conventional view that there's this little tech bubble," he says, but the big companies are trading at what he says is a low price/earnings ratio. "The really big ones like Oracle, Cisco, and some of these others, many of them are trading at single digits price/earnings. And a lot of these companies have tons of cash on the balance sheet. That's what's attracting all these activists."