SPIEGEL: Mr. Andreessen, does the idea of a huge Microsoft-Yahoo firm scare you?
Andreessen: No, not at all. If the merger happens, it will require two years of integration. In the end, it will be a combined company that will do some things good and other thinmgs badly. In the meantime, there is a tremendous amount of work to be done by other companies like us. And that means there will be lots of opportunities.
SPIEGEL: Do you think that would leave only two major players on the Internet -- Microsoft-Yahoo and Google -- who would dominate the industry?
Andreessen: It is totally impossible to predict the consequences of this merger, or to predict the position of the companies involved. And it is impossible to predict what start-ups will emerge during that time. And that is precisely what makes this industry so much fun.
SPIEGEL: What went wrong at Yahoo? Why did they keep losing market share to Google and thus allow themselves to become a takeover target?
Andreessen: One of the consequences of being a public company is that stuff like this happens. I started two companies and took them public, but my third, Ning, is not public. That's one of the nice things about my company, and I think Facebook is also enjoying this, is that nobody can attack you in that way. You also get to focus completely on what you are doing -- there are no earnings calls and no hostile takeovers. I enjoy not being a public company.
SPIEGEL: What trends have caused this sort of billion-dollar poker game in your industry?
Andreessen: First of all, the Internet is becoming real now in a way it has never been before. Itís becoming the main medium in which consumers engage to get information and to communicate. You can see this happening in advertising, you can see it happening in telecom, video with YouTube, with music, with newspapers and magazines. It is all shifting en masse, and all consumers are basically moving over to the Internet. We all talked about it in the 1990s, but it didnít happen then. Those were just experiments. But now it is really happening.
SPIEGEL: The amount of offline advertising is still much greater than the amount of online advertising.
Andreessen: You know that's going to migrate in the next five to 10 years. The big companies -- Google, Microsoft and Yahoo -- all have important roles to play in that transition. They are going to benefit a lot from it. But I also think there is a whole new generation of start-ups that are going to benefit from it.
SPIEGEL: But who is on to the next big thing? News Corp. bought MySpace, Google has invested in AOL, Microsoft purchased Facebook shares and is now fighting to acquire Yahoo. It looks like the pie will soon be cut up and distributed.
Andreesssen: No! If anything, I think this rate of change is accelerating. TV and the press have always functioned according to the same sets of rules and technical standards. But the Internet is based on software. And anybody can write a new piece of software on the Internet that years later a billion people are using. My theory is: Every year there is a new killer app. One year itís Ebay, the next year itís Craigslist, then itís Napster, then Paypal, YouTube, Facebook, MySpace and so on. I have invested in a whole series of start-ups that are all candidates to be one of these new big things -- take Digg, for example ...
SPIEGEL: ... an information portal in which editors are replaced by users who vote on articles, videos, podcasts and any other form of digital content to determine the placement of the news offerings on Digg's homepage.
Andreessen: Maybe in five years that will be the way we all are getting our news. Itís certainly possible, but maybe not. This continuous mutation and evolution basically means: I donít think there is a stable state. I donít think there is a point in time where we will be able to say: Okay, Google does this, Microsoft does that. In the past, when we spoke of TV in the US, we always had CBS, NBC and ABC. And the press was comprised of the New York Times, Washington Post and Los Angeles Times. I think those days are over.
SPIEGEL: And users will be creating all that content by themselves, as professional entertainment and classical journalism lose their significance?
Andreessen: We have a saying -- that and $3 will get you a cup of coffee at Starbucks. Newspapers with declining circulations can complain all they want about their readers and even say they have no taste. But you will still go out of business over time. A newspaper is not a public trust -- it has a business model that either works or it doesn't.
SPIEGEL: Well, it's not quite that simple. In truth, all the major media brands are on the Web, and many have far more readers and far greater revenues than a site like digg.com.
Andreessen: Take the New York Times. They are slow and they are in denial. After 15 years of the Internet, their online division -- though it has been very aggressive and well run compared to its peers -- still represents only about 10 percent of the company's total revenue. And itís not enough. The core of the business is collapsing. What's going to happen is that print subscriptions will decline to a point where it's no longer economically feasible to keep the printing plants operating. They will be shut down. So will the distribution networks. When that happens, the only thing left will be revenues from the online divisions. That won't be enough to cover newsroom costs. There is no way that they have a transition strategy from point A to point B.
SPIEGEL: What would you do differently?
Andreessen: Well, if the newspaper companies all self-destruct because they have failed to come to grips with this transition, then thatís their problem. The people who made horse carriages were not the ones who started car companies. But here's the point: There is an enormous market demand for information. It just has to be fulfilled in a way that fits with the technology of our times. It is also going to open up a lot of opportunities for a new generation of media companies, usually born on the Internet. Right now they are popping up all over the place -- like Talking Points Memo, a political blog from the left that is a bit of a throwback to pre-World War II journalism, when newspapers were expected to be partisan. None of them are huge, but that's how an industry gets created. We may be sitting here in 10 years and see major news organizations born out of experiements that are happening right now that have nothing to do with CNN.
SPIEGEL: Your youngest company, Ning, is a catchment basin for social networks. Users have created networks for fans of raw vegetables, baseball players or even Madonna fans. Aren't you a bit late to the starting gate?
Andreessen: MySpace and Facebook are doing great -- both are growing incredibly fast. But they are still largely walled garden concepts. We take the opposite position, which is to say: Get crazy, create whatever you want. There are tens of millions of people out there who are getting familiar with the concept of social networks. At some point they are going to want their own thing. And that's where we come in. Our site is just growing and compounding right now. For every person that joins a network, two more people will come in. A thousand users will become 3,000 users, 3,000 turns into 9,000 and so on. Our servers are just counting away tic, tic, tic.
SPIEGEL: Netscape's 1995 public offering was a smashing success. You were 24 at the time and earned millions of dollars. Ning is tiny by comparison. Why do you keep starting over from scratch?
Andreessen: I love Silicon Valley. I feel so lucky to be here. I grew up in the Midwest, where there are hardly any start-ups. This here is a magical place. Here a person with no business experience like me can create a new technology, start a company, watch it grow and become successful. It's just amazing.
SPIEGEL: Around two years ago, Web 2.0 became the new Internet catchphrase. In your opinion, what will Web 3.0 look like?
Andreessen: These are all empty expressions that attempt to group things. The Internet has always been, and always will be, a magic box. If somebody shows up and says he wants to start a Web 2.0 business, I say, "next, please!" Because he doesn't have a strong idea about what it is he is doing and he has no clear business model.
SPIEGEL: Around nine years ago, AOL paid billions of dollars for the Netscape browser that you developed. In early March, support for the browser will be permanently suspended. Are you disappointed?
Andreessen: It was really shut down in 1999! And from 1999 through 2008 it was a rolling catastrophe. It was part of the rolling catastrophe of AOL Time Warner.
SPIEGEL: The World Wide Web has existed for some 15 years now. Has any aspect of it become overwhelming?
Andreessen: Information. I certainly have too much information. It drives me bananas. that's why I have gone on an information diet.
Interview conducted by Frank Hornig.
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