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Ben Brostoff

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08 Aug 2014
A Highly Entertaining Spat

Mommy and Daddy have been fighting lately in the Twitter equivalent of the Brostoff household. I woke up this morning to the following:

Before we go any further - there’s no actual animosity here I’m sure, and I think all this tweeting is in good jest. As background, the Epicurean Dealmaker and Marc Andreessen are two people I greatly admire and relate to as a former banker turned software engineer. I was a religious reader of EDM during my two years as an investment banker; I remember reading “Why Software Is Eating the World” in August 2011 in the WSJ, and Marc Andreeseen is at least part of the reason for the career change I recently made.

So, I’ve taken a rather large interest in their mildy heated (lukewarm?) Twitter exchanges of late. I actually was in the middle of one of them:

The particular feud I happened to get in the middle of started with a blogpost EDM wrote on 8/2. The post suggests that Trulia - a real estate website - was mistreated by its former advisor, Qatalyst Partners. Trulia had originally engaged Qatalyst three years ago to negotiate the sale of the company to Zillow, and failed to legally end the engagment when the sale fell through at the time. EDM’s claim to me seems to have merit, as Qatalyst (i) charged Trulia off-market fees and (ii) likely destroyed Trulia shareholder value (albeit created Qatalyst shareholder value).

In short, I read EDM’s argument on Qatalyst and found it to be extremely reasonable and well grounded. Because I agreed with the post, I by extension felt inclined to agree with EDM that two Qatalyst bankers - George Boutros and Frank Quattrone - perhaps did not have their clients’ best interests at heart. I ended up eating my words because I tried to comment on a subject I was not qualified to comment on. I do not personally know either banker; Marc Andreessen has known each for twenty years, and was right to put me in my place.

To my credit, however, I admitted my lack of knowledge on Frank Quattrone and George Boutros and earned some Twitter karma points:

My banking idol has yet to do so - in part because he is qualified to comment on what he writes on - and thus, the @pmarca v. @EpicureanDeal Twitter wars wage on. I find this spat interesting because I believe it has deep roots in the way certain types of people view technological progress, specifically in our social-media dominated age.

I think in general that people who do not work in a tech-related industry tend to believe that a large portion of the “value” tech contributes to the world economy is in the form of social media value. Social media is prevalent enough to annoy EDM:

Popular media contributes to the perception that social media is the bulk of tech, as most tech-related articles I read as a banker (meaning these articles generally derived from WSJ or the Financial Times) were about social media companies who raised funding or were acquired by larger companies.

One salient memory I have from banking is the day Facebook acquired WhatsApp. I recall that virtually every conversation I overhead involved someone suggesting that Facebook’s inflated shares were causing the company to pull the trigger on unwise acquisitions, and someone else agreeing. Then another person would talk about the pressure to compete with company X and acquire more users. Then another person would make a comment about a tech bubble and a vicious cycle. And so on and so forth.

That day serves as a decent example of how bankers (and perhaps others as well) perceive the tech space. The frequent articles emphasizing eye-popping purchase prices make a lot of people wary and suggest that the tech industry is out of sorts with the rest of the economy. EDM in some respects makes this point in the aforementioned post:

Now I understand that the technology world operates in its own reality distortion field, but I have to confess I was stunned by that fee percentage. In the normal business world, where industrial logic and economic pressures operate in place of the moonbeams and unicorn piss of tech land, a billion dollar sale mandate should earn the sell-side advisor flogging it significantly less than one percent of transaction value.

So, we have a number of data points now in EDM’s blog and tweets evidencing that he believes techies are out of touch with reality and even pigheaded. To be clear, I do not see this opinion as unfounded. At the same time, this opinion is not “true”, because it’s easy to find at least one exception to the claim: @pmarca.

The @pmarca feed is a frequent source of technological optimism that oftentimes has nothing to do with social media. Par for the course are tweets documenting groundbreaking work in tech:

Andreessen also has recently gone on double digit tweet-sprees about the practical applications of virtual reality and the societal benefits encompassed in Lyft Line. If you want proof that tech is not pigheaded and that progress is not superficial, but real and measurable, look no further than @pmarca’s twitter.

By the same token, I think @pmarca’s perception of finance may reflect a public perception that lacks basis in reality. Let’s look at a recent string of tweets:

Just as most people view social media as an inordinate proportion of the tech space, it’s my view that the public focuses far too much on the consequences of TARP and the bailouts of the last recession. When I say “focuses far too much”, I mean that people are incorrect to believe that these bailouts continue to have an enormous impact on employee behavior at banks. Even if I were to acknowledge the @pmarca argument that “bailouts are guaranteed”, I do not believe this guarantee has large consequences on how banks operate (hold on, let me explain).

Banks are under significantly stricter reporting, acccounting and capital standards - both from an S&T and i-banking perspecting - than pre-crisis, and cannot take outsize risks as a result. Even if banks are incentivized to take larger risks, Dodd-Frank and a slew of other types of legislation prevents them from doing so - I feel as though @pmarca should have acknowledged this in the tweet essay above. The banking sector is not growing nearly as fast as the tech sector in part because bankers have more hurdles in taking on risk, and therefore cannot realize as large rewards.

What I’m really getting at here is that the @pmarca - @EpicureanDeal spat is borne out of misunderstanding of the other’s craft. To my idols - Marc Andreessen and the man behind the Epicurean Dealmaker mask - I propose an end to your war. I think you have far more in common than you realize.


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