The valuations of highflying technology companies can seem baffling to those not initiated in the ways of Silicon Valley.
Deals like Facebook’s $16 billion purchase of WhatsApp, a company that makes very little money, or its $2 billion acquisition of Oculus VR, a start-up that has not yet shipped a product to the public, can make a Wall Street banker’s head spin.
But mergers and acquisitions in technology follow a different set of rules, according to Marc Andreessen, a prominent venture capitalist who happens to sit on Facebook’s board. In a series of tweets on Thursday, Mr. Andreessen offered a framework for thinking about technology valuations â€" relying on metrics that hard-nosed financiers tend not to consider.
Here is a selection of his tweets.
One pseudonymous Twitter user from the world of investment banking, known as the Epicurean Dealmaker, nodded to Mr. Andreessen’s lesson.
