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00:00Being here it's always good to have you on the show. First of all you just got out of a long meeting with Secretary Carter . He's been having many of these meetings over the last year with you know people in Silicon Valley like you. Much progress has been made when it comes to the relationship between the Pentagon and Silicon Valley and Silicon Valley. Where does more progress need to be made. Yeah. So I think we're still at the start but I think things are starting to snowball and the big thing is he's actually set up down the street here he's set up a unit of diodes that's specifically assigned to build more bridges into the specialty that early stage companies in Silicon Valley you know Department of Defense 50 years ago was the first customer of all the new technology companies but over the last twenty five years the Defense Department focused much more on the large federal you know large federal contractors. There's a much bigger focus from DOJ now on working with early stage companies and that's starting to work now. So in your view how can Silicon Valley help national defense as well. Well so I think national national defense has become synonymous with with technology with technological sophistication. Cybersecurity is a perfect example of that. But even conventional warfare is now heavily influenced. And you know the future of it is being heavily shaped by new technology. And so at least my belief is early stage companies and new technologies can play a fundamental role in national defense and I know Secretary Carter certainly believes that. What's your ask from Secretary Carter . What's your number. What's the big thing is a tech startup is the smallest high performance organization the world's DOJ is the largest high performance organization in the world. And so it's very hard. There's no natural fit between organizations that small in that big and so developing pathways where young companies can engage and to get results in a timeframe that makes sense for young companies and radio. You can get the benefit of the new thinking in the new technologies you know without fundamentally changing how does procurement. But having a way to basically get involved early is really really critical and that's what this new unit of yours is set up to do. What's the biggest risk to our cybersecurity right now. I mean are we being outspent by other governments other private sectors . China Yeah well so the biggest risk I'd say two things one is just we're not used to defending against nation states you know 20 years ago defenses were all against you know literally teenage kids. Right. Ten years ago defenses were against organized crime criminal gangs and now the defenses are against nation states. And so the threat profile has changed dramatically. And then cybersecurity like other kinds of security it's inherently asymmetrical right. So the defender has to be correct 100 percent of the time but the attacker the attack continues to work once and so defense is always going to be a bigger challenge than attack. And so if you make the attacks more sophisticated the defense has to get much more sophisticated. And think I we as an industry are still in the process frankly of catching up for that. Mark Zuckerberg called U.S. surveillance the biggest threat to the Internet. What do you think. So I think I will comment on that specifically and I would never I would never contradict market anything he says. I think there is an issue globally. I think the reality is every country in the world either does the kind of surveillance that it turns out you know the Snowden revelations have shown the US does. Every other country either does all that or wishes they could and is trying to figure out how to do it. And so this is an issue in every single country around the world. And then if you're a company if you're a U.S. company or another another international technology company you're trying to operate globally you have to figure out how to operate in a world in which every country is either during this or trying to do it . And so it's become a very complicated messy situation . Cybersecurity has become such a crowded space there are so many companies are very very niche. Do you think we're in a cybersecurity bubble. I mean how do you think some of these valuations are unsustainable. Because I was speaking with Ternium co-founder earlier who said I think a lot of these companies are not going to be around. Well we certainly placed our vote on tape so I'm completely in favor of it Tidjane Thiam David Westin the entire field. I would just tell you like look we're living it we're living in an online world we're living in a lonely world we're all going to have connected devices around us all the time. I mean the fact that we don't have this new topic of how to protect cars from cyber hacking like that's a brand new thing. And so there's going to be a new generation of companies that just do that. And so I think it's prime time for this kind of entrepreneurship and this kind of innovation. Now speaking about the markets the markets have rebounded as you've been documenting on Twitter but it's been a really volatile week . What concerns you most still about the recent volatility here and in China. Yes I'm really worried the volatility doesn't really that worried about anything happening here right now . The big thing is just I think the markets have been trying to adapt no one to the new economic data coming out of China about issues in the Chinese economy. And then the other thing is American companies and you guys have covered this extensively . Global currencies have really moved against American multinationals in the just in the last six months. And I think frankly I think Wall Street was slow to adapt to the reality now that the dollar is much stronger versus the currencies. And you know when when a big company comes and says we missed our numbers because of currency changes the presumption for investors is it's an excuse. In the last six months a lot of that has actually been true. And so I think people are adjusting to this new currency world. I think though the currency shift has reflected the U.S. is doing really well . There are issues in many other countries in the rest of the world if the U.S. is doing really well and I think from the U.S. standpoint things are going pretty well. So Bill Gurley is warning startups to prioritize profitability over growth. Marc Benioff told me earlier this week he thinks there's going to be a lot of dead unicorns ahead. How do you think the shakeout Lux when it comes to private what does it look like on your side of the equation. Well look so these are starting I guess I would say that I think situation normal. These are start ups. Some of them are going to work really well some of them are going to not work at all in some environments it's easier to raise money it makes sense to prepare for environments in which is not as easy to raise money. To me that doesn't translate into a call for everybody to panic. I think each company should figure out its own strategy and execute its own strategy and that's what we work with our companies to do. So last question if Sequoia. If the head of the headline on Sequoia slide back in 2008 is RFP . Good times. What is Andreessen Horowitz right now. Well that's that's reflected Sequoia is extremely smart firm but that's reflective which just 2008 was not a peak times. And so our general attitude I don't know if we have a headline but it's it's it's be measured be cautious be careful but also invest in growth and we have companies that are growing fast. We don't tell them to pull back because the stock market blips. In fact if anything we tell them to push forward and go take it on the market. So for the companies that are doing well I think they're going to do really well. You're big on founders CEOs . What do you think should happen at Twitter. So I'm reflexively in favor of the founders running these companies whenever possible and so I think if Jack or EV or some combination of the two ended up in leaders you know back in leadership at Twitter I think they'll be great. All right. Marc Andreessen thank you so much for joining us. Always great to have you here on the show. Good thank you .

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Andreessen: Pentagon Wants to Work With Silicon Startups

After meeting with Defense Secretary Ash Carter to talk cybersecurity, Marc Andreessen, co-founder of Andreessen Horowitz, discussed Silicon Valley's relationship with the Pentagon, market volatility in China and Twitter's search for a new CEO with Bloomberg's Emily Chang at the Moffett Federal Airfield/NSA Ames Research Center on Friday. (Bloomberg LP, the parent company of Bloomberg Television, is an investor in Andreessen Horowitz.) (Source: Bloomberg)

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