Carl Icahn, March 5 2014, on CNBC: “Don’t tell me that Microsoft suddenly had an epiphany … and decided only a year and a half later, ‘Wow, we’re only going to pay $6 billion more.'” (1)

Carl Icahn has repeatedly alleged both in interviews (1) and in letters (3) that I had some kind of secret information that Microsoft wanted to or intended to buy Skype, and that I improperly usurped that information for my own benefit against the interests of eBay shareholders.

I categorically deny these allegations.

Mr. Icahn is making up a fake conspiracy theory out of thin air.

––––

Wall Street Journal, March 5, 2014:

Microsoft Passed on Skype Before Silver Lake’s Deal

Before a group of investors bought a majority of Skype from eBay, Microsoft had discussions about acquiring Skype but passed on bidding over concerns about lawsuits Skype was facing from its founders, according to a court document and people familiar with the matter.

Microsoft’s interest, while not strong enough for it to bid, could dispel some concerns activist investor Carl Icahn has raised about the Skype deal. …

Mr. Icahn, who owns about 2.2% of eBay, has alleged eBay director Marc Andreessen didn’t fulfill his duty to eBay shareholders when he participated in the group buying 70% of Skype in 2009. Mr. Andreessen and eBay have said Mr. Andreessen recused himself from the discussions and added his firm only had a small position in the buyout group.

Mr. Andreessen’s venture-capital firm, Andreessen Horowitz, invested $50 million into the deal that was led by Silver Lake and other investment firms. The 2009 deal valued Skype at $2.75 billion and left eBay with a 30% stake.

Less than two years later, after settling the lawsuits that had spooked Microsoft and others, Silver Lake’s group sold Skype to Microsoft for $8.5 billion.

Mr. Icahn says the dramatic increase in price, in less than two years, shows eBay’s board, and CEO John Donahoe, sold it on the cheap to a group that included a board member. Mr. Icahn has also questioned whether Mr. Andreessen shared with the eBay board his impression that Microsoft would be a potential bidder.

The fact that Microsoft looked but walked away from bidding in 2009 shows that eBay was aware of Microsoft’s potential interest.

Mr. Donahoe also said Wednesday morning on Fox Business that eBay “looked at other bidders” and there were, in the end, two bidders and that eBay selected the highest offer.

Amid the 2009 sales process, the founders of Skype and eBay were embroiled in a messy lawsuit about whether eBay had improperly used the technology that Skype ran on. When eBay purchased Skype, the founders retained ownership of the technology.

After the Silver Lake deal, Skype’s founders filed more lawsuits seeking to stop the deal, including one that said Microsoft had declined to bid on Skype after concerns about the patents. …

Between the first sale of Skype and Microsoft’s purchase, the lawsuits were settled and the founders were given a stake in Skype. Because of soured relationships, such a settlement would have been far harder for eBay, the people said …

(1) http://www.cnbc.com/id/101467290
(2) http://blogs.wsj.com/moneybeat/2014/03/05/microsoft-passed-on-skype-before-silver-lakes-deal/
(3) http://www.shareholderssquaretable.com/ebay_letter_5/

Important Additional Information
eBay Inc., its directors and certain of its executive officers are participants in the solicitation of proxies from stockholders in connection with eBay’s 2014 Annual Meeting of Stockholders.  eBay intends to file a proxy statement and WHITE proxy card with the U.S. Securities and Exchange Commission (the “SEC”) in connection with such solicitation.  EBAY STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ ANY SUCH PROXY STATEMENT (INCLUDING ANY AMENDMENTS AND SUPPLEMENTS) AND ACCOMPANYING WHITE PROXY CARD WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION.

Information regarding the names of eBay’s directors and executive officers and their respective interests in eBay by security holdings or otherwise is set forth in eBay’s proxy statement for the 2013 Annual Meeting of Stockholders, filed with the SEC on March 18, 2013.  To the extent holdings of such participants in eBay’s securities have changed since the amounts described in the 2013 proxy statement, such changes have been reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC. Additional information can also be found in eBay’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on January 31, 2014.  

These documents, including any proxy statement (and amendments or supplements thereto) and other documents filed by eBay with the SEC, are available for no charge at the SEC’s website at http://www.sec.gov and at eBay’s investor relations website at http://investor.ebayinc.com.  Copies may also be obtained by contacting eBay Investor Relations by mail at 2065 Hamilton Avenue, San Jose, California 95125 or by telephone at 866-696-3229.

ON THE TECHNOLOGY INDUSTRY, EXPERIENCED DIRECTORS, AND CONFLICTS:

Carl Icahn 2014: “Marc Andreessen and Scott Cook… are two of the most respected, accomplished and value-driven leaders in Silicon Valley. And I sort of agree. I think they’re respected. I think they’re accomplished. And I agree mostly they’re value-driven leaders. The trouble is they’re value-driver leaders for themselves, not for eBay and not for the shareholders they have a fiduciary obligation to.” (e)

Carl Icahn 2011: “Potential conflicts of interest are by no means rare, though, and seem to be especially frequent among technology and biotech companies.  Each of those fields tends to be intensely technical by nature, and corporations involved in those areas often find that it is useful to have a board of directors with significant experience in those areas, which means that at least minor conflicts of interest often arise. (1)

ON VENTURE CAPITALISTS AND CONFLICTS:

Carl Icahn 2014: “eBay states the conflicts regarding Mr. Andreessen’s investments are acceptable. Mr. Andreessen has funded… and advises no less than five competitors, four of which directly compete with PayPal – all the while potentially having access to nonpublic information regarding PayPal’s operating performance… We do not consider [Andreessen’s actions] even close to satisfying the ‘world-class’ standards that eBay claims to have established for its board.” (c)

Carl Icahn 2011: “These [technology] firms are frequently funded by venture capital; the venture capital firms invariably put their own directors on the boards; and those directors or their firms often have direct and material conflicts of interest because they usually fund/control potentially competitive corporations as well.” (1)

ON CONFLICTS, DISCLOSURE, AND RECUSAL:

Carl Icahn 2014: “However, Mr. Andreessen attempted to defend himself, telling the Wall Street Journal that ‘he recuses himself from boardroom discussions that could involve companies his firm is backing.” Seriously? Mr. Andreessen expects eBay stockholders to be comforted by the fact that he self-polices himself? Excuse me if I do not find that nearly sufficient.” (a)

Carl Icahn 2011: “The first, and perhaps most important measure is that the existence of the potential conflict needs to be disclosed by the director to the board.” (1)

Carl Icahn 2011: “The biopharma industry has standard practices on how to deal with potential director conflicts regarding business development opportunities.  Directors simply recuse themselves in the event of a vote or decision that may present a conflict.” (2)

ON SERVICE ON MULTIPLE BOARDS AND RECUSAL:

Carl Icahn 2014: “eBay has previously stated that Mr. Cook’s company, Intuit, and PayPal are not competitors. However, to state they are not competitors is absurd…. In our opinion, having Mr. Cook on the board while planning PayPal’s future is akin to having Pete Carroll, coach of the Seattle Seahawks, sitting in when the Denver Broncos were constructing their game plan for the Super Bowl.” (c)

Carl Icahn 2011: “The benefit of drawing upon knowledge and experience from shared, collective service on multiple biopharma boards heavily outweighs the potential conflict in these rare situations which are easily managed through recusal.” (2)

Carl Icahn 2011: “The directors should determine, on a case by case basis, whether they should wall themselves off from conflicted directors when making a decision with respect to a conflicted transaction.” (1)

ON BEST PRACTICES FOR DEALING WITH CONFLICTS:

Carl Icahn 2014: “The point is not whether processes may have been put in place or whether directors may have recused themselves from portions of meetings… The point is that because of the multiple hats they wear and a number of their actions, we believe that eBay directors Andreessen and Cook have clear conflicts which call into question whether they can adequately fulfill the duty of loyalty that every director owes to ALL eBay stockholders.” (b)

Carl Icahn 2011: “A general set of ‘best practices’ has evolved for dealing with [conflicts of interest],” and can “be dealt with by the methods used by thousands of other public and private corporations” and handled “with professionalism and very little fuss and bother…” (1)

ON THE UBIQUITY OF SUCH CONFLICTS:

Carl Icahn 2014: “And – and they say that – and they go and then they – and they say that Mr. Andreessen, Scott Cook, extraordinary insight, expertise, leadership, which is scrupulous in its governance practices. And eBay’s board – eBay’s board – hey, I don’t even blame Andreessen and Cook… Scrupulous in governance practices and fully transparent with regard to its directors. Hey, if they’re fully transparent, I guess these guys are sort of blind. I just don’t understand how – how people – how – how they get away with it.” (e)

Carl Icahn 2011: “Given the ubiquity of such conflicts, as well as similar situations in which directors or senior management might have conflicting interests, a general set of ‘best practices’ has evolved for dealing with them.” (1)

ON THE ROUTINE NATURE OF SUCH CONFLICTS:

Carl Icahn 2014: “During Mr. Andreessen’s time on the eBay Board – a time when he has been privy to nonpublic eBay Board information – he has made investments in and actively advised, no less than five direct competitors of eBay… How can Mr. Donahoe and the eBay Board allow Mr. Andreessen to advise these competitors while he simultaneously possesses not only nonpublic eBay Board information but also intimate proprietary information about PayPal’s operations?” (d)

Carl Icahn 2011: “To the extent these potential conflicts of interest actually exist, they are routine matters with which corporate boards of directors normally deal and pose no significant issues.” (1)

ON THE ROUTINE NATURE OF INFORMATION-SHARING CONCERNS:

Carl Icahn 2014: “Does eBay director Marc Andreessen understand that if he entered into a confidentiality agreement with a third party that prevented him from fully discharging the duties he owed to eBay – that the mere act of entering into such an agreement may have been a breach of duty in and of itself?” (a)

Carl Icahn 2011: “An appropriate conflicts and recusal policy similarly could ameliorate any information-sharing concerns that might theoretically arise from interlocking board members.” (1)

SOURCES:
(a) http://www.shareholderssquaretable.com/ebay_letter_5/
(b) http://www.shareholderssquaretable.com/ebay_letter_4/
(c) http://www.shareholderssquaretable.com/ebay_letter_3/
(d) http://www.shareholderssquaretable.com/open-letter-to-ebay-stockholders/
(e) Bloomberg Feb 24 television interview with Carl Icahn

(1) Mr. Icahn and his affiliates filed two opinions of legal counsel as supporting proxy materials in his proxy fight for Forest Laboratories:

Letter from Ashby & Geddes, Counsel to Icahn Capital LP, 8/7/2011
http://www.sec.gov/Archives/edgar/data/38074/000092847511000188/frxdfan14a081111.txt

Letter from Arnold & Porter LLP, Antitrust Counsel to Icahn Capital LP, 8/7/2011
http://www.sec.gov/Archives/edgar/data/38074/000092847511000179/frxdfan14a080811ap.txt

(2) Open Letter from the Icahn Group to Forest Laboratories Shareholders, 4/7/ 2011
http://www.sec.gov/Archives/edgar/data/38074/000092847511000174/frxdfan14a080811.txt

Important Additional Information

eBay Inc., its directors and certain of its executive officers are participants in the solicitation of proxies from stockholders in connection with eBay’s 2014 Annual Meeting of Stockholders.  eBay intends to file a proxy statement and WHITE proxy card with the U.S. Securities and Exchange Commission (the “SEC”) in connection with such solicitation.  EBAY STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ ANY SUCH PROXY STATEMENT (INCLUDING ANY AMENDMENTS AND SUPPLEMENTS) AND ACCOMPANYING WHITE PROXY CARD WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION.

Information regarding the names of eBay’s directors and executive officers and their respective interests in eBay by security holdings or otherwise is set forth in eBay’s proxy statement for the 2013 Annual Meeting of Stockholders, filed with the SEC on March 18, 2013.  To the extent holdings of such participants in eBay’s securities have changed since the amounts described in the 2013 proxy statement, such changes have been reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC. Additional information can also be found in eBay’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on January 31, 2014.  

These documents, including any proxy statement (and amendments or supplements thereto) and other documents filed by eBay with the SEC, are available for no charge at the SEC’s website at http://www.sec.gov and at eBay’s investor relations website at http://investor.ebayinc.com.  Copies may also be obtained by contacting eBay Investor Relations by mail at 2065 Hamilton Avenue, San Jose, California 95125 or by telephone at 866-696-3229.

According to Carl Icahn, venture capital board members are fine for Carl Icahn in 2011 but not fine for eBay in 2014.

When Carl Icahn’s board nominees’ business activities created conflicts, Mr. Icahn has argued forcefully that a board should and could manage those conflicts if his nominees were elected by shareholders.

Contrary to Mr. Icahn’s theory today – that a venture capital director cannot be “trusted to objectively advise” a board if he or she has potential conflicts – Mr. Icahn, in 2011, provided the following information to shareholders of another company, Forest Laboratories, in response to questions raised about whether his director nominees were conflicted:

In defense of his own nominees: “Potential conflicts of interest are by no means rare, though, and seem to be especially frequent among technology and biotech companies.  Each of those fields tends to be intensely technical by nature, and corporations involved in those areas often find that it is useful to have a board of directors with significant experience in those areas, which means that at least minor conflicts of interest often arise.  In addition, these firms are frequently funded by venture capital; the venture capital firms invariably put their own directors on the boards; and those directors or their firms often have direct and material conflicts of interest because they usually fund/control potentially competitive corporations as well.” (1)

On his own nominees’ potential conflicts: “The biopharma industry has standard practices on how to deal with potential director conflicts regarding business development opportunities.  Directors simply recuse themselves in the event of a vote or decision that may present a conflict.  The benefit of drawing upon knowledge and experience from shared, collective service on multiple biopharma boards heavily outweighs the potential conflict in these rare situations which are easily managed through recusal.” (2)

Mr. Icahn also approved walling off directors as a sufficient way to address a conflict: “A general set of ‘best practices’ has evolved for dealing with [conflicts of interest],” and can “be dealt with by the methods used by thousands of other public and private corporations” and handled “with professionalism and very little fuss and bother… Given the ubiquity of such conflicts, as well as similar situations in which directors or senior management might have conflicting interests, a general set of ‘best practices’ has evolved for dealing with them. The first, and perhaps most important measure is that the existence of the potential conflict needs to be disclosed by the director to the board.  Here, of course, that has already been done. Second, the directors should determine, on a case by case basis, whether they should wall themselves off from conflicted directors when making a decision with respect to a conflicted transaction.” (1)

“To the extent these potential conflicts of interest actually exist, they are routine matters with which corporate boards of directors normally deal and pose no significant issues.” (1)

“An appropriate conflicts and recusal policy similarly could ameliorate any information-sharing concerns that might theoretically arise from interlocking board members.” (1)

Why does Carl Icahn in 2014 think that Carl Icahn in 2011 was so obviously and blatantly engaged in terrible corporate governance?

Sources:

(1) Mr. Icahn and his affiliates filed two opinions of legal counsel as supporting proxy materials in his proxy fight for Forest Laboratories:

Letter from Ashby & Geddes, Counsel to Icahn Capital LP, 8/7/2011
http://www.sec.gov/Archives/edgar/data/38074/000092847511000188/frxdfan14a081111.txt

Letter from Arnold & Porter LLP, Antitrust Counsel to Icahn Capital LP, 8/7/2011
http://www.sec.gov/Archives/edgar/data/38074/000092847511000179/frxdfan14a080811ap.txt

2) Open Letter from the Icahn Group to Forest Laboratories Shareholders, 4/7/ 2011
http://www.sec.gov/Archives/edgar/data/38074/000092847511000174/frxdfan14a080811.txt

Important Additional Information
eBay Inc., its directors and certain of its executive officers are participants in the solicitation of proxies from stockholders in connection with eBay’s 2014 Annual Meeting of Stockholders.  eBay intends to file a proxy statement and WHITE proxy card with the U.S. Securities and Exchange Commission (the “SEC”) in connection with such solicitation.  EBAY STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ ANY SUCH PROXY STATEMENT (INCLUDING ANY AMENDMENTS AND SUPPLEMENTS) AND ACCOMPANYING WHITE PROXY CARD WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION.

Information regarding the names of eBay’s directors and executive officers and their respective interests in eBay by security holdings or otherwise is set forth in eBay’s proxy statement for the 2013 Annual Meeting of Stockholders, filed with the SEC on March 18, 2013.  To the extent holdings of such participants in eBay’s securities have changed since the amounts described in the 2013 proxy statement, such changes have been reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC. Additional information can also be found in eBay’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on January 31, 2014.  

These documents, including any proxy statement (and amendments or supplements thereto) and other documents filed by eBay with the SEC, are available for no charge at the SEC’s website at http://www.sec.gov and at eBay’s investor relations website at http://investor.ebayinc.com.  Copies may also be obtained by contacting eBay Investor Relations by mail at 2065 Hamilton Avenue, San Jose, California 95125 or by telephone at 866-696-3229.

False and misleading accusations have been made against eBay and against me in my role as an eBay director. This post provides my perspective on those accusations and their surrounding context.

On the accusations:

I dispute all accusations that I have violated any of my duties to eBay shareholders.

Specifically:

* Throughout the eBay board’s process of divesting Skype, I fully disclosed my potential interest and recused myself from all deliberations on the transaction, including all discussions, negotiations, and decisions. I was uninvolved in eBay’s decision to spin off Skype and in eBay’s decision to choose to partner with the Silver Lake syndicate.

* eBay’s retained ownership in the Skype spinoff was 30% vs. Andreessen Horowitz’s approximately 3%. That much larger ownership gave eBay a far bigger role in decision making on Skype after the spinoff than Andreessen Horowitz, as well as a far bigger economic payoff on the sale to Microsoft.

* Subsequent to the Skype transaction, I was re-elected to the eBay board in 2012 with virtually unanimous support — 99.7% of votes — of eBay shareholders. The Skype transaction received a high degree of public scrutiny when it happened; all of the facts around my role in the Skype transaction were fully public at that time; eBay has a very sophisticated body of shareholders; and if any of them saw any problem with my conduct around the Skype transaction, I am confident that they would have brought it up by 2012.

* Andreessen Horowitz’s minority investment in Fanatics was made over a year after eBay divested that business as a part of eBay’s acquisition of GSI Commerce; there was no possible conflict at that point. Further, there was no contemplation of Andreessen Horowitz investing in Fanatics at any time during eBay’s negotiation and purchase of GSI Commerce or eBay’s divestiture of Fanatics.

* I do not serve on the board of any company with any significant competitive overlap with eBay.

* I disclose any situation where I believe I may have a potential conflict and recuse myself from any eBay board deliberation when I believe I may have a potential conflict due to an investment in another company.

On the context:

Directors of all companies owe shareholders several duties, including the duty of loyalty. This duty focuses on avoidance or appropriate handling of conflicts of interest, and requires fair dealing by directors involved in transactions that could result in personal gain or financial conflicts with the company. To strengthen this duty and to further protect public company shareholders from potential conflicts of interest, directors are restricted in several different ways. These restrictions include:

(1) Prohibitions on one director serving on multiple company boards when those companies have any significant competitive overlap.

(2) Requirements that a director of a company disclose potential conflicts and recuse him/herself from board discussions and decisions when that director has potential conflicts, such as but not limited to an investment stake in another company.

(3) Restrictions on use of company confidential information by any director for any purpose other than that company’s benefit.

These protections are enforced by several layers of oversight and accountability, including:

(a) Each company’s legal counsel and broader board of directors.

(b) Regulatory agencies such as the SEC, as well as stock exchange rules.

(c) Shareholder votes, in which shareholders can vote directors in whom they lose confidence off the board.

(d) Shareholder litigation, which is very common and which is omnipresent on directors’ minds during board meetings.

All of these protections apply to directors of public companies in every industry and every field, including directors who are venture capitalists, hedge fund activists, private equity investors, operating executives, and independent board members.

Some people have floated a theory that today’s technology industry is more prone to potential conflicts because of the rapidly shifting nature of software. I don’t think that’s true. For example, in prior decades the conglomerate business model, in which companies would choose to acquire and operate in many unrelated industries, was more common — a dynamic that would easily lead to unpredictable potential conflicts among boards and directors.

Some people have also floated a theory that venture capitalists are more prone to potential conflicts than other kinds of directors due to their investments in multiple companies at once. I also don’t think that’s true. For example, activist hedge fund managers also tend to hold equity stakes in many companies at the same time, creating the exact same kind of potential conflict.

Important Additional Information

eBay Inc., its directors and certain of its executive officers are participants in the solicitation of proxies from stockholders in connection with eBay’s 2014 Annual Meeting of Stockholders. eBay intends to file a proxy statement and WHITE proxy card with the U.S. Securities and Exchange Commission (the “SEC”) in connection with such solicitation. EBAY STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ ANY SUCH PROXY STATEMENT (INCLUDING ANY AMENDMENTS AND SUPPLEMENTS) AND ACCOMPANYING WHITE PROXY CARD WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION.

Information regarding the names of eBay’s directors and executive officers and their respective interests in eBay by security holdings or otherwise is set forth in eBay’s proxy statement for the 2013 Annual Meeting of Stockholders, filed with the SEC on March 18, 2013. To the extent holdings of such participants in eBay’s securities have changed since the amounts described in the 2013 proxy statement, such changes have been reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC. Additional information can also be found in eBay’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on January 31, 2014.

These documents, including any proxy statement (and amendments or supplements thereto) and other documents filed by eBay with the SEC, are available for no charge at the SEC’s website at http://www.sec.gov and at eBay’s investor relations website at http://investor.ebayinc.com. Copies may also be obtained by contacting eBay Investor Relations by mail at 2065 Hamilton Avenue, San Jose, California 95125 or by telephone at 866-696-3229.

I am more bullish about the future of the news industry over the next 20 years than almost anyone I know. You are going to see it grow 10X to 100X from where it is today. That is my starting point for any discussion about the future of journalism. Here’s why I believe it, and how we will get there.

Journalism has changed

There has been a fascinating change in the traditional journalistic press over the last several years. Take corrections as an example. It used to be that corrections to printed news stories were a really big deal. There was a high bar to get a correction accepted in a newspaper or magazine. The story as printed was the permanent record.

That was then.

Now, even top print newspapers and magazines frequently revise stories online, sometimes dozens of times, often without tracking changes or acknowledging a change has been made. There are two ways to view this. The glass-half-full-view is that stories get better and better over time, vectoring ever closer to the truth. As a result, overall accuracy goes up over time. That is good for publications and journalists, and also good for their subjects.

The glass-half-empty-view is that the quality bar for an initial post can be lower. Sloppy stories get published since they can always be corrected later, as much or as often as needed. This gets us into deterministic “truth” versus probabilistic “truth” territory. In other words, from: Here it is, take it or leave it, to: Here it is, subject to arbitrary ongoing revision.

For better or worse (and maybe both), print journalism is converging in technique and quality towards blogs and Wikipedia. Ed Bott fully decoded this with his original NSA PRISM news stories. Given that change, and the easy slide into probabilistic “truth,” I am very interested to see how Journalism with a capital J can maintain its reputation for truth and accuracy versus upstart blogs and Wikipedia. For Journalism  – big J – the stakes  are very high if that reputation is lost.

But it may be that all journalism wins. Maybe we are entering into a new golden age of journalism, and we just haven’t recognized it yet.  We can have the best of all worlds, with both accuracy rising, and stories that hew closer to truth.

The news business should be run like a business

The news business is a business like any business. It can and should be analyzed and run like a business. Thinking of news as a business is not only NOT bad for quality, objective journalism, but is PRO quality, objective journalism. A healthy business is the foundation for being able to build high quality products, and to do so sustainably. That includes journalism. Analyzed as a business, the news industry is going through a fundamental restructuring and transformation, for worse and for better.

The main change is that news businesses from 1946-2005 were mostly monopolies and oligopolies. Now they aren’t. The monopoly/oligopoly structure of newspapers, magazines, and broadcast TV news pre-‘05 meant restricted choice and overly high prices. In other words, the key to the old businesses was control of distribution, way more than anyone ever wanted to admit. That’s wonderful while it lasts, but wrenching when that control goes away.

The end of monopolistic control doesn’t mean that great news businesses can’t get built in highly competitive markets. They just get built differently than before.

Now, with everyone on Internet, three things are happening simultaneously:

1. Distribution is going from locked down to completely open, anyone can create and distribute. There is no monetary premium for control of distribution.

2. Formerly separate industries are colliding on the Internet. It’s newspaper vs. magazine vs. broadcast TV vs. cable TV vs. wire service. Now they all compete.

Both No. 1 and No. 2 drive prices down.

3. At the same time, the market size is dramatically expanding—many more people consume news now vs. 10 or 20 years ago. Many more still will consume news in the next 10 to 20 years. Volume is being driven up, and that is a big, big deal.

Right now everyone is obsessed with slumping prices, but ultimately, the most important dynamic is No. 3 – increasing volume. Here’s why: Market size equals destiny. The big opportunity for the news industry in the next five to 10 years is to increase its market size 100x AND drop prices 10X. Become larger and much more important in the process.

How to make money

Some of the best news about the news business is the gigantic expansion of the addressable market, a function of the rise of the developing world plus the Internet. So how big is it? If you extrapolate from the number of smartphones globally, the total addressable market for news by 2020 is around 5 billion people worldwide. However, we all have to get more sophisticated about defining and segmenting markets. It is critical to really understand the who, where, when, and why to serve that massive market effectively.

For example, many evolving markets are seeing the “death of the middle.” The winners in these markets either offer the broadest breadth or the deepest depth. In evolving markets neither the broadest nor deepest is in trouble, but the middle market is withering. So it is logical to expect the big winners in the news business to either be the broadest or the deepest: To go maximum mass, or maximum specific.

With that as a backdrop, here are eight obvious business models for news now, and in the future. This isn’t a pick one model and stick with it prospect, news businesses should mix and match as relevant.

Advertising: Advertising is still central for many news businesses. But they need to get out of the “race to bottom” dynamic of bad content, bad advertisers, and bad ads. Quality journalism businesses need to either take responsibility for their own high-quality advertisers and ads, or work with partners who do. There is no excuse for crappy network-served teeth whitening come-ons and one weird trick ads served against high quality content. Disastrous.

Subscriptions: Many consumers pay money for things they value much of the time. If they’re unwilling to pay for a news product, it begs the question, are they really valuing it?

Premium content: A paid tier on top of free, ad-supported content. This goes after the high-end news junkies reading the likes of Bloomberg & Reuters. It will work for more and more new outlets. Again, value equals people paying money for something.

Conferences and events: Bits are increasingly abundant, and human presence is becoming scarce. So charge for that scarcity, and use bits to drive demand for human presence.

Cross-media: Tina Brown was right but too early with Talk. News is a key source of material for books, TV, and film—which happen also to be growth businesses.

Crowdfunding: This is a GIGANTIC opportunity especially for investigative journalism. Match people with interest in a topic to the reporters on the ground telling the stories. Click = vote = $. (Helpful hint: Start today with Crowdtilt. Easy-as-pie.)

Bitcoin for micropayments: Easy to get started now (checkout Coinbase). As the consumer use of Bitcoin scales up for transactions, it becomes easy to ask for small amounts of money on a per-story or per-view basis with low or no fees. (A lot more of my thinking on the subject of Bitcoin here.)

Philanthropy: Today the examples are Pro Publica and First Look Media, tomorrow the could be many more examples. There is around $300 billion per year in philanthropic activity in the U.S. alone. It’s WAY underutilized in the news business.

If we look at the specific example of investigative journalism, believed to be least commercially viable type or news, you start to see how these models can play together. The so-called “investigative journalism problem” is straightforward: How does it get funded in this new world? I have two responses.

The first is that the total global expense budget of all investigative journalism is tiny —  in the neighborhood of tens of millions of dollars annually. That’s the good news, small money problems are easier to solve than big money nightmares.

How we might solve this small money problem is via a combination of crowdfunding, philanthropy and subsidization by otherwise healthy news businesses. The combination should easily cover the global tab of investigative journalism, and even increase the money available.  The same solution can address the “Baghdad bureau problem.” Conflict-zone reporting of all kinds is super-important, and relative to other kinds of reporting, expensive, but again, it’s not much money in total.

A last thought on business models. As my friend Jim Barksdale says, “There are two ways to make money in business: You can unbundle, or you can bundle.” Or, rebundle. We already see the rise of new kinds of news aggregators in the wake of the great unbundling of newspapers and magazines. This is another thread to pull on.

As business models get re-engineered and this brave new world of news comes to pass, there is this fear that oceans of crap will drive out quality content. I don’t think that happens. In fact, I believe the opposite will occur.

On the Internet, there is no limitation to the number of outlets or voices in the news chorus. Therefore, quality can easily coexist with crap. All can thrive in their respective markets. And, the more noise, confusion, and crap — the more there is an increase of, and corresponding need for, trusted guides, respected experts, and quality brands. Remember: Most great businesses are not big businesses. This market is plenty big enough for thousands of high-margin, small to medium-sized businesses.

Growing fast with quality. People and companies that are doing it right.

The following are some examples (in alphabetical order). There are many others, and I would encourage additions. Not every experiment will work, and maybe even some of these won’t work. That’s not the point. Experiments are needed for creation, and ultimately success – especially in the news business.

AnandTech: Monstrously competent technical coverage of the computing industry. Anand’s team provides unprecedented depth and detail. As a result, it wields big influence in industry.

The Atlantic: Bob Cohn is taking a long-lived and respected brand, and blowing it out worldwide. The Atlantic is a daily presence now, and has a growing audience thanks to digital distribution.

Buzzfeed: Jonah Peretti built the Buzzfeed fire hose with listicles. He’s leveraging that to do amazing in-depth long-form journalism. And growing like a banshee.

The Guardian: The Guardian is a  particularly great example of print crossing into online. Thanks to digital the Guardian brand is more global and reaches more readers than ever before.

Politico: The political junkie’s favorite place on the Internet. Politico has taken over as the first thing D.C. reads every morning. It demonstrates the virtues of aggressive focus online.

Search Engine Land: Danny Sullivan has created a place for all the search news, all the time. He’s leveraged all those interesting bits into live events and even lead generation. It’s  a new model for a digital news business.

The Verge: Josh Topolsky and his crew provide full coverage of tech industry news. It’s become a daily must-read for both in-the weeds tech folks and consumer audiences. Expect Verge and its parent Vox to be 10X larger in the next five years.

Vice: From online Do’s and Don’ts, and now to the Vice media empire. Vice shifted from print to rapid growth and increasing presence via online stories and especially video.

Wirecutter: A mini gadget news empire skippered by Brian Lam from various beachside locales. Lam is pioneering a new style of tech journalism, a side effect of which is great data.

Wired: Scott Dadich and the Wired gang are blending print and digital with amazing breadth and depth. More than half of revenue comes from digital, and it’s growing.

I’ll also highlight three personal investments of mine, all growing fast with quality:

Talking Points Memo led by Josh Marshall. Henry Blodget and Business Insider. Sarah Lacy and PandoDaily.

A hat tip to the new entrants from tech and their massive investment in the future of news.

Jeff Bezos and his $250 million purchase of The Washington Post. Pierre Omidyar and his $250 million commitment First Look Media, and their first digital magazine The Intercept.

And finally, The New York Times.

It’s great to great to see The Times has evidently cracked code on the transition from print to digital after extremely hard effort.

What’s holding the future of news back

There are some artifacts and ideas in the journalism business that arguably are  counterproductive to the growth of both quality journalism and quality businesses. It’s why some organizations are finding it so hard to move forward.

An obvious one is the bloated cost structure left over from the news industry’s monopoly/oligopoly days. Nobody promised every news outfit a shiny headquarters tower, big expense accounts, and lots of secretaries!

Unions and pensions are another holdover. Both were useful once, but now impose a structural rigidity in a rapidly changing environment. They make it hard to respond to a changing financial environment and to nimbler competition. The better model for incentivizing employees is sharing equity in the company.

Those are the key structural issues holding some news businesses back, but there is an approach to how the news is created that also prevents progress. It’s the notion that “objectivity” is the only model worth pursuing.

The practice of  gathering all sides of an issue, and keeping an editorial voice out of it is still relevant for some, but the broad journalism opportunity includes many variations of subjectivity. Pre-World War II, subjectivity was the dominant model in the news business – lots of points of view battling it out in marketplace of ideas. As with people and opinions, there were many approaches to writing or broadcasting  on the same topic.

My take is that the rise of objectivity journalism post-World War II was an artifact of the new monopoly/oligopoly structures news organizations had constructed for themselves. Introducing so-called objective news coverage was necessary to ward off antitrust allegations, and ultimately, reporters embraced it. So it stuck.

But the objective approach is only one way to tell stories and get at truth. Many stories don’t have “two sides.” Indeed, presenting an event or an issue with a point of view can have even more impact, and reach an audience otherwise left out of the conversation.

The good news

The opportunity for leadership in the journalism business, just happens to be same leadership opportunity as in all businesses. Leaders just need to start leading.

One start would be to tear down, or at least modify the “Chinese wall” between content and the business side. No other non-monopoly industry lets product creators off the hook on how the business works.

Before the journalistic purists burst a fountain pen, consider that there are intermediate points between “holier than holy” and “hopelessly corrupt” when it comes to editorial content. Paying attention to the business doesn’t equal warped coverage. It does equal a growing business. There are many businesses that balance incentives and conflicts all day long. Those businesses are able to hold the line on quality, and make great products. The point is, there isn’t just one way, but ought to be many ways to skin the cat in news.

All of this requires abandoning the past, something that admittedly is very hard but necessary to move forward. Today’s news organizations are spending 90% of their effort and resources on playing defense. They are protecting the old artifacts and business model, rather than going on the offense and making the future. Even newspapers and other media outlets that are just now making it across the digital chasm would be much better off today if leadership had shifted resources and focus harder and sooner. Without a strong offense, and a view forward rather than back, a bad result is inevitable in the long run.

The best approach is to think like a 100% owner of your company with long-term time horizon. Then you work backward to the present and see what makes sense and what remains. Versus, here is what we have now, how do we carry it forward?

That is a tough exercise, and an even tougher mind shift. As we have already seen in the demise of scads of newspapers and other periodicals, not every news organization will make it. And that is OK. Further consolidation will be required. The U.S. alone has 15 full-scale national news organizations, plus more from international markets and all the online news organizations cropping up, That’s too many general news outfits.

The good news is those that would survive and thrive are in control of their own destiny. The challenges and opportunities that these news businesses face can be rethought, addressed, and fixed. It’s similar to what any successful business goes through. The guidelines and the characteristics for winning are the same.

It requires the following.

Vision: The difference between vision and hallucination is others can see vision. It is critical to articulate a bright future with clarity that everyone can see.

Scrappiness: Tough challenges call for resourcefulness and pragmatism. You need to stay close to the ground, wallowing in every detail and all over any opportunity that arises.

Experimentation: You may not have all the right answers up front, but running many experiments changes the battle for the right way forward from arguments to tests. You get data, which leads to correctness and ultimately finding the right answers.

Adaptability: Ask yourself, would you rather be right or successful? That needs to be top of mind at all times because times change and we change. You want strong views weakly held.

Focus: Once you gain clarity from experiments and adaptation, then it’s time to focus on a small number of ultra-clear goals. When those are defined then it’s all-hands-on-deck.

Deferral of gratification: You need the stomach (and resources!) to reject near-term rewards for enduring success. In journalism this means refusing to participate in the race to the bottom.

An entrepreneurial mindset: This is true both for new companies and existing companies. It’s a bit of a mantra. We own the company. We make the business. We control our future. It’s on us.

Remember, I am very bullish on the future of the news business. But as Tommy Lasorda said:  “Nobody said this fucking job would be all that fucking easy.” But while hard, it can be done, and it is worth doing.

A mysterious new technology emerges, seemingly out of nowhere, but actually the result of two decades of intense research and development by nearly anonymous researchers.

Political idealists project visions of liberation and revolution onto it; establishment elites heap contempt and scorn on it.

On the other hand, technologists – nerds – are transfixed by it. They see within it enormous potential and spend their nights and weekends tinkering with it.

Eventually mainstream products, companies and industries emerge to commercialize it; its effects become profound; and later, many people wonder why its powerful promise wasn’t more obvious from the start.

What technology am I talking about? Personal computers in 1975, the Internet in 1993, and – I believe – Bitcoin in 2014.

One can hardly accuse Bitcoin of being an uncovered topic, yet the gulf between what the press and many regular people believe Bitcoin is, and what a growing critical mass of technologists believe Bitcoin is, remains enormous. In this post, I will explain why Bitcoin has so many Silicon Valley programmers and entrepreneurs all lathered up, and what I think Bitcoin’s future potential is.

First, Bitcoin at its most fundamental level is a breakthrough in computer science – one that builds on 20 years of research into cryptographic currency, and 40 years of research in cryptography, by thousands of researchers around the world.

Bitcoin is the first practical solution to a longstanding problem in computer science called the Byzantine Generals Problem. To quote from the original paper defining the B.G.P.: “[Imagine] a group of generals of the Byzantine army camped with their troops around an enemy city. Communicating only by messenger, the generals must agree upon a common battle plan. However, one or more of them may be traitors who will try to confuse the others. The problem is to find an algorithm to ensure that the loyal generals will reach agreement.”

More generally, the B.G.P. poses the question of how to establish trust between otherwise unrelated parties over an untrusted network like the Internet.

The practical consequence of solving this problem is that Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate.

What kinds of digital property might be transferred in this way? Think about digital signatures, digital contracts, digital keys (to physical locks, or to online lockers), digital ownership of physical assets such as cars and houses, digital stocks and bonds … and digital money.

All these are exchanged through a distributed network of trust that does not require or rely upon a central intermediary like a bank or broker. And all in a way where only the owner of an asset can send it, only the intended recipient can receive it, the asset can only exist in one place at a time, and everyone can validate transactions and ownership of all assets anytime they want.

How does this work?

Bitcoin is an Internet-wide distributed ledger. You buy into the ledger by purchasing one of a fixed number of slots, either with cash or by selling a product and service for Bitcoin. You sell out of the ledger by trading your Bitcoin to someone else who wants to buy into the ledger. Anyone in the world can buy into or sell out of the ledger any time they want – with no approval needed, and with no or very low fees. The Bitcoin “coins” themselves are simply slots in the ledger, analogous in some ways to seats on a stock exchange, except much more broadly applicable to real world transactions.

The Bitcoin ledger is a new kind of payment system. Anyone in the world can pay anyone else in the world any amount of value of Bitcoin by simply transferring ownership of the corresponding slot in the ledger. Put value in, transfer it, the recipient gets value out, no authorization required, and in many cases, no fees.

That last part is enormously important. Bitcoin is the first Internetwide payment system where transactions either happen with no fees or very low fees (down to fractions of pennies). Existing payment systems charge fees of about 2 to 3 percent – and that’s in the developed world. In lots of other places, there either are no modern payment systems or the rates are significantly higher. We’ll come back to that.

Bitcoin is a digital bearer instrument. It is a way to exchange money or assets between parties with no pre-existing trust: A string of numbers is sent over email or text message in the simplest case. The sender doesn’t need to know or trust the receiver or vice versa. Related, there are no chargebacks – this is the part that is literally like cash – if you have the money or the asset, you can pay with it; if you don’t, you can’t. This is brand new. This has never existed in digital form before.

Bitcoin is a digital currency, whose value is based directly on two things: use of the payment system today – volume and velocity of payments running through the ledger – and speculation on future use of the payment system. This is one part that is confusing people. It’s not as much that the Bitcoin currency has some arbitrary value and then people are trading with it; it’s more that people can trade with Bitcoin (anywhere, everywhere, with no fraud and no or very low fees) and as a result it has value.

It is perhaps true right at this moment that the value of Bitcoin currency is based more on speculation than actual payment volume, but it is equally true that that speculation is establishing a sufficiently high price for the currency that payments have become practically possible. The Bitcoin currency had to be worth something before it could bear any amount of real-world payment volume. This is the classic “chicken and egg” problem with new technology: new technology is not worth much until it’s worth a lot. And so the fact that Bitcoin has risen in value in part because of speculation is making the reality of its usefulness arrive much faster than it would have otherwise.

Critics of Bitcoin point to limited usage by ordinary consumers and merchants, but that same criticism was leveled against PCs and the Internet at the same stage. Every day, more and more consumers and merchants are buying, using and selling Bitcoin, all around the world. The overall numbers are still small, but they are growing quickly. And ease of use for all participants is rapidly increasing as Bitcoin tools and technologies are improved. Remember, it used to be technically challenging to even get on the Internet. Now it’s not.

The criticism that merchants will not accept Bitcoin because of its volatility is also incorrect. Bitcoin can be used entirely as a payment system; merchants do not need to hold any Bitcoin currency or be exposed to Bitcoin volatility at any time. Any consumer or merchant can trade in and out of Bitcoin and other currencies any time they want.

Why would any merchant – online or in the real world – want to accept Bitcoin as payment, given the currently small number of consumers who want to pay with it? My partner Chris Dixon recently gave this example:

“Let’s say you sell electronics online. Profit margins in those businesses are usually under 5 percent, which means conventional 2.5 percent payment fees consume half the margin. That’s money that could be reinvested in the business, passed back to consumers or taxed by the government. Of all of those choices, handing 2.5 percent to banks to move bits around the Internet is the worst possible choice. Another challenge merchants have with payments is accepting international payments. If you are wondering why your favorite product or service isn’t available in your country, the answer is often payments.”

In addition, merchants are highly attracted to Bitcoin because it eliminates the risk of credit card fraud. This is the form of fraud that motivates so many criminals to put so much work into stealing personal customer information and credit card numbers.

Since Bitcoin is a digital bearer instrument, the receiver of a payment does not get any information from the sender that can be used to steal money from the sender in the future, either by that merchant or by a criminal who steals that information from the merchant.

Credit card fraud is such a big deal for merchants, credit card processors and banks that online fraud detection systems are hair-trigger wired to stop transactions that look even slightly suspicious, whether or not they are actually fraudulent. As a result, many online merchants are forced to turn away 5 to 10 percent of incoming orders that they could take without fear if the customers were paying with Bitcoin, where such fraud would not be possible. Since these are orders that were coming in already, they are inherently the highest margin orders a merchant can get, and so being able to take them will drastically increase many merchants’ profit margins.

Bitcoin’s antifraud properties even extend into the physical world of retail stores and shoppers.

For example, with Bitcoin, the huge hack that recently stole 70 million consumers’ credit card information from the Target department store chain would not have been possible. Here’s how that would work:

You fill your cart and go to the checkout station like you do now. But instead of handing over your credit card to pay, you pull out your smartphone and take a snapshot of a QR code displayed by the cash register. The QR code contains all the information required for you to send Bitcoin to Target, including the amount. You click “Confirm” on your phone and the transaction is done (including converting dollars from your account into Bitcoin, if you did not own any Bitcoin).

Target is happy because it has the money in the form of Bitcoin, which it can immediately turn into dollars if it wants, and it paid no or very low payment processing fees; you are happy because there is no way for hackers to steal any of your personal information; and organized crime is unhappy. (Well, maybe criminals are still happy: They can try to steal money directly from poorly-secured merchant computer systems. But even if they succeed, consumers bear no risk of loss, fraud or identity theft.)

Finally, I’d like to address the claim made by some critics that Bitcoin is a haven for bad behavior, for criminals and terrorists to transfer money anonymously with impunity. This is a myth, fostered mostly by sensationalistic press coverage and an incomplete understanding of the technology. Much like email, which is quite traceable, Bitcoin is pseudonymous, not anonymous. Further, every transaction in the Bitcoin network is tracked and logged forever in the Bitcoin blockchain, or permanent record, available for all to see. As a result, Bitcoin is considerably easier for law enforcement to trace than cash, gold or diamonds.

What’s the future of Bitcoin?

Bitcoin is a classic network effect, a positive feedback loop. The more people who use Bitcoin, the more valuable Bitcoin is for everyone who uses it, and the higher the incentive for the next user to start using the technology. Bitcoin shares this network effect property with the telephone system, the web, and popular Internet services like eBay and Facebook.

In fact, Bitcoin is a four-sided network effect. There are four constituencies that participate in expanding the value of Bitcoin as a consequence of their own self-interested participation. Those constituencies are (1) consumers who pay with Bitcoin, (2) merchants who accept Bitcoin, (3) “miners” who run the computers that process and validate all the transactions and enable the distributed trust network to exist, and (4) developers and entrepreneurs who are building new products and services with and on top of Bitcoin.

All four sides of the network effect are playing a valuable part in expanding the value of the overall system, but the fourth is particularly important.

All over Silicon Valley and around the world, many thousands of programmers are using Bitcoin as a building block for a kaleidoscope of new product and service ideas that were not possible before. And at our venture capital firm, Andreessen Horowitz, we are seeing a rapidly increasing number of outstanding entrepreneurs – not a few with highly respected track records in the financial industry – building companies on top of Bitcoin.

For this reason alone, new challengers to Bitcoin face a hard uphill battle. If something is to displace Bitcoin now, it will have to have sizable improvements and it will have to happen quickly. Otherwise, this network effect will carry Bitcoin to dominance.

One immediately obvious and enormous area for Bitcoin-based innovation is international remittance. Every day, hundreds of millions of low-income people go to work in hard jobs in foreign countries to make money to send back to their families in their home countries – over $400 billion in total annually, according to the World Bank. Every day, banks and payment companies extract mind-boggling fees, up to 10 percent and sometimes even higher, to send this money.

Switching to Bitcoin, which charges no or very low fees, for these remittance payments will therefore raise the quality of life of migrant workers and their families significantly. In fact, it is hard to think of any one thing that would have a faster and more positive effect on so many people in the world’s poorest countries.

Moreover, Bitcoin generally can be a powerful force to bring a much larger number of people around the world into the modern economic system. Only about 20 countries around the world have what we would consider to be fully modern banking and payment systems; the other roughly 175 have a long way to go. As a result, many people in many countries are excluded from products and services that we in the West take for granted. Even Netflix, a completely virtual service, is only available in about 40 countries. Bitcoin, as a global payment system anyone can use from anywhere at any time, can be a powerful catalyst to extend the benefits of the modern economic system to virtually everyone on the planet.

And even here in the United States, a long-recognized problem is the extremely high fees that the “unbanked” — people without conventional bank accounts – pay for even basic financial services. Bitcoin can be used to go straight at that problem, by making it easy to offer extremely low-fee services to people outside of the traditional financial system.

A third fascinating use case for Bitcoin is micropayments, or ultrasmall payments. Micropayments have never been feasible, despite 20 years of attempts, because it is not cost effective to run small payments (think $1 and below, down to pennies or fractions of a penny) through the existing credit/debit and banking systems. The fee structure of those systems makes that nonviable.

All of a sudden, with Bitcoin, that’s trivially easy. Bitcoins have the nifty property of infinite divisibility: currently down to eight decimal places after the dot, but more in the future. So you can specify an arbitrarily small amount of money, like a thousandth of a penny, and send it to anyone in the world for free or near-free.

Think about content monetization, for example. One reason media businesses such as newspapers struggle to charge for content is because they need to charge either all (pay the entire subscription fee for all the content) or nothing (which then results in all those terrible banner ads everywhere on the web). All of a sudden, with Bitcoin, there is an economically viable way to charge arbitrarily small amounts of money per article, or per section, or per hour, or per video play, or per archive access, or per news alert.

Another potential use of Bitcoin micropayments is to fight spam. Future email systems and social networks could refuse to accept incoming messages unless they were accompanied with tiny amounts of Bitcoin – tiny enough to not matter to the sender, but large enough to deter spammers, who today can send uncounted billions of spam messages for free with impunity.

Finally, a fourth interesting use case is public payments. This idea first came to my attention in a news article a few months ago. A random spectator at a televised sports event held up a placard with a QR code and the text “Send me Bitcoin!” He received $25,000 in Bitcoin in the first 24 hours, all from people he had never met. This was the first time in history that you could see someone holding up a sign, in person or on TV or in a photo, and then send them money with two clicks on your smartphone: take the photo of the QR code on the sign, and click to send the money.

Think about the implications for protest movements. Today protesters want to get on TV so people learn about their cause. Tomorrow they’ll want to get on TV because that’s how they’ll raise money, by literally holding up signs that let people anywhere in the world who sympathize with them send them money on the spot. Bitcoin is a financial technology dream come true for even the most hardened anticapitalist political organizer.

The coming years will be a period of great drama and excitement revolving around this new technology.

For example, some prominent economists are deeply skeptical of Bitcoin, even though Ben S. Bernanke, formerly Federal Reserve chairman, recently wrote that digital currencies like Bitcoin “may hold long-term promise, particularly if they promote a faster, more secure and more efficient payment system.” And in 1999, the legendary economist Milton Friedman said: “One thing that’s missing but will soon be developed is a reliable e-cash, a method whereby on the Internet you can transfer funds from A to B without A knowing B or B knowing A – the way I can take a $20 bill and hand it over to you, and you may get that without knowing who I am.”

Economists who attack Bitcoin today might be correct, but I’m with Ben and Milton.

Further, there is no shortage of regulatory topics and issues that will have to be addressed, since almost no country’s regulatory framework for banking and payments anticipated a technology like Bitcoin.

But I hope that I have given you a sense of the enormous promise of Bitcoin. Far from a mere libertarian fairy tale or a simple Silicon Valley exercise in hype, Bitcoin offers a sweeping vista of opportunity to reimagine how the financial system can and should work in the Internet era, and a catalyst to reshape that system in ways that are more powerful for individuals and businesses alike.

NOTE: Our firm Andreessen Horowitz, has invested just under $50 million in Bitcoin-related start-ups. The firm is actively searching for more Bitcoin-based investment opportunities. I personally own no more than a de minimis amount of Bitcoin. This post originally appeared in The New York Times.