Lindzon: Carl Icahn picked the wrong fight with Andreessen

By Michael Carney , written on March 21, 2014

From The News Desk

Carl Icahn is a bully. Few on Wall Street or in Silicon Valley would argue with that assessment. But as the iconic corporate raider gets up in age, and as the world – and to a lesser degree the public markets – moves further toward technology, he’s increasingly picking fights in fields beyond his area of expertise.

Icahn recently discovered Twitter and has used the platform as the megaphone to end all megaphones. He’s poked at Apple and eBay, among other public stocks, demanding a massive cash dividend from the former and the sale of PayPal by the latter.

The companies have stood firm, denying Icahn’s specific requests in both cases, but have nonetheless engaged publicly with a man many believe is out for nothing but a short term profit. Through a combination of increased visibility and bull market timing, both stocks have gone up in the time Icahn has owned them, making it look like a winning strategy.

“He’s a media guy now,” said hedge fund manager and venture capitalist Howard Lindzon at last night's PandoMonthly event in Santa Monica. “This is his moment again, he’s had many moments. People in America have short memories, but Marc Andreessen is doing a good job of reminding everyone what kind of guy this guy is. It’s all about the money, but that’s Wall Street.”

What many people don’t know about Icahn, Lindzon said, is that he has a public company too. His stock, IEP, was flat at approximately $75 when Icahn first engaged with Apple through Twitter in August 2013. By December, IEP reached an all-time high of $148 – it’s fallen since, but at $103 as of this morning, remains up more than 37 percent in the last seven months. On a scoreboard measuring ROI, Icahn is winning.

The current battle with eBay has been far uglier than Icahn’s dealings with Apple. He accused Silicon Valley icon Marc Andreessen* of having conflicts of interest and mis-serving shareholders in his duties as an eBay board director. Both Andreessen and eBay CEO John Donahoe have responded aggressively.

“I think this is an East/West thing, and I think Icahn overstepped,” Lindzon says. “He messed with the wrong guys in Silicon Valley. And I think this is a huge event because Icahn has been wrong a few times now.”

Icahn’s obsession with the tech sector, after years of raiding legacy industries like healthcare and airlines, began with a winning trade in Netflix. But it was Icahn’s son, apparently, who identified that opportunity.

“Carl doesn’t know the first thing about Netflix,” Lindzon says. He added, “He doesn’t know anything about the digital world, and he doesn’t care either.”

Lindzon believes that Icahn is in over his head at this point. With IEP up and the world’s eyes on him, he’s desperate to deliver the next big win.

“He played this perfectly,” Lindzon says. “IEP has gone up, he cashed out a lot of money, and he’s gotta find his next big thing. He has to come up with his next great Carl Icahn masterpiece and guess what – it’s getting harder. He’s picking battles outside of his base and I think he’s messed with the wrong people here.”

Conflicts are nothing new in the financial world, Lindzon points out, citing the famous John Doerr quote, “No conflict, no interest.” But conflicts are also in the eye of the beholder, Lindzon says. He withheld judgement on Andreessen’s actions specifically, but the one thing he’s certain about is that Andreessen and eBay are not going to back down on this.

“This for me is an epic battle,” Lindzon says. “It’s just a couple of guys going at it – they don’t give a shit – it’s a media war. And I think Icahn is gonna get his ass handed to him.”

The implications of this battle extend beyond the stocks of Apple and eBay. Icahn versus Silicon Valley extends into the broader war raging between the two power-centers of finance and technology – a war for talent, influence, and economic superiority.

“The fight over eBay is a misdirection,” Lindzon says. “This is a Wall Street / Silicon Valley thing. This is a turf war. Silicon Valley is coming for Wall Street, not because they want to but because they can. They have run out of stuff (to disrupt).”

He added, “It’s happening. I don’t know how long [Wall Street] can protect the moat over there but it’s not much longer.”

*Marc Andreessen is a personal investor in Pando

[Illustration by Hallie Bateman for Pando]