When Facebook bought a fledgling company called WhatsApp for $19 billion earlier this year, many analysts warned that Silicon Valley was in the midst of a bubble, not unlike the one that burst in the spring of 2000. Companies are wildly overvalued, they fretted, and the boom was bound to end soon.

Marc Andreessen, co-inventor of the world’s first commercial browser and co-founder of a leading venture capital firm, disagreed. Addressing Stanford Graduate School of Business students at a View From the Top event in March, he said that rather than being at risk of a bubble, the tech industry is "still in a bust." Here, Andreessen, who also co-founded Netscape, discussed what Silicon Valley’s new management style means for today’s MBA graduates, the entrepreneurial DNA, and why the "failure fetish" is nonsense. 

Seek companies with real products, markets, and customers.

At the height of the bubble in the '90s, Silicon Valley tech companies "were building products that weren’t very good, and they were on a bomb run to go public as quickly as possible. The engineers hated it because the companies were so sales driven. "You’d hear catchphrases like 'Build big or go home,' or my favorite: 'Forget details, do deals,'" Andreesen recalls. As a result, those companies vaporized.

Today some of the companies people point to as being overvalued have billions in revenue. Facebook went from zero to $10 billion in less than 10 years. And the market for tech products, especially apps, has only expanded. "You could take a position that a large-scale Internet service with a billion users isn’t going to be worth anything, but I wouldn’t recommend it," Andreessen says. "At the same time, many large tech companies sport low multiples and high cash balances, hardly characteristics of bubble-era operations."

Management styles have changed; the right fit matters.

In the '90s, venture capitalists pushed aside founders of tech startups and replaced them with professional managers. But those management pros put too much emphasis on sales and marketing, and not enough on engineering and product development. That single-minded focus on growth at all costs was another factor that led to the dot-com bust, says Andreessen. "Now we take for granted the tech genius founder as CEO. Mark Zuckerberg is the apotheosis. But we’ve lost the art of building a business, and in particular, we’ve lost the art of sales and marketing."

Two management models in Silicon Valley work well, Andreessen says. The first is at Facebook, where Mark Zuckerberg is CEO and Sheryl Sandberg is chief operations officer. "Everyone wants a Sheryl, the high-powered business person with deep capabilities in sales, marketing, and operations," he says. "They want that person as a No. 2--COO or president." 

The second is the Bill Campbell/Scott Cook partnership; which works well when companies don’t have a founder who's capable--or interested--in becoming CEO. (Cook is founder and former CEO of Intuit, while Campbell is chairman but also has been CEO). Campbell is not a technologist, but is highly skilled at operating a business, respects engineers, and is not threatened by them. The latter model is one that MBA students should personally consider. "If you’re going to be in the tech industry, the key question is, 'What is the partnership you are going to have with the technical visionary?'" Andreesen says. "If you can crack that code, there is an enormous opportunity to make one plus one equal three."

The odds of winning the tech startup game are still long.

There are about 4,000 tech startups each year that attempt to raise venture money, but his firm, Andreessen Horowitz, funds only about 20. The venture capital industry as a whole funds about 200 tech startups a year, but as few as 15 will generate approximately 95 percent of the returns.

Do you have the qualities of an entrepreneur?

"We are biased towards people who never give up," says Andreesen. "That’s something you can’t find on a resume. We look for courage, and we look for genius. There’s all this talk about how important failure is, which I call the failure fetish. 'Failure is wonderful, it teaches you so much, it is great to fail a lot,' people say. But we think failure sucks. Success is wonderful." 

Breakthrough ideas seem crazy at first.

"You don’t have to look hard to find wildly successful products and companies that initially seemed crazy," says Andreesen. "Thirty years ago, the idea that people would have a computer in their home seemed bizarre. Just a few years ago the concept that people would share their homes and their cars with strangers--think Airbnb and Uber--to make money seemed crazy. The real breakthrough ideas seem really nuts the first time you see them, and the fact that they seem nuts can be a positive signal, because that can explain why that thing isn’t being done by any existing company." 

This piece was originally published by Stanford Business, and is republished with permission. Follow Stanford GSB @StanfordBiz