Yammer CEO David Sacks ruffled a lot of feathers in the tech industry when he wrote on his Facebook page that Silicon Valley as we know it may be coming to an end.
Today he dug in and explained his position at the TechCrunch Disrupt conference in San Francisco.
He believes that startups should stop trying to take out the big players.
It's worth pointing out that he recently became one of those big players when he sold Yammer to Microsoft for $1.2 billion this summer.
"I'm not saying innovation is coming to an end, but the Internet ecosystem is different now than it was in the late 1990s when I first got here," said Sacks, who was an early employee at PayPal, the online-payment company, where he served as COO.
"Companies that have giant assets—Microsoft, Apple, Amazon, Google, Facebook—I think of these as the redwoods in the forest with large canopies," said Sacks. "I suggest entrepreneurs go to the outskirts in the forest."
Sacks, who is also an angel investor, says he's looking for companies doing brand-new things. And that means disrupting old-school industries, not taking on the big Internet players. For instance, he's invested in Uber, who is taking on the taxi industry. He's also invested in Cherry, a mobile car-wash company where people can order service online. The car washer shows up where you are—all for $25.
Sacks argues that it's ridiculous to think that the big Internet companies are in danger.
"Hyperbulls always want to believe that tech companies are incredibly valuable and are also on the verge of being disrupted," Sacks said. "If you believe every company is going to be disrupted immensely, why invest in any of them? Are there no companies that have any durability?"
Representative of the response was venture capitalist Marc Andreessen, who vehemently disagreed with Sacks's original screed, posting about two dozen comments in response on Facebook.
"The transformative things often don't look transformative at the start," Andreessen wrote. "At any given time it's easy to look at the industry and say, why are the entrepreneurs building toys, why aren't they going after the big opportunities. It usually turns out that after the fact they were going after the big opportunities, they just didn't look big at the time."
