Maria Bartiromo interviews tech investor Ben Horowitz

— -- It's beginning to feel a lot like 1999 again in the technology business.

Facebook recently filed for an initial public offering that could value the company around $100 billion. Social networking is soaring, and upstarts such as Groupon and Zynga are going public with much fanfare. The leader, Apple, has become the world's most valuable company.

I caught up with one of the leading venture capitalists to find out what's behind the vibrancy in technology and how sustainable it is this time around. Ben Horowitz, who started Horowitz Andreessen with Internet billionaire and Facebook board member Marc Andreessen, says the Internet has undergone radical transformation, and the trends are just beginning to gain long-standing traction. Our interview follows, edited for clarity and length.

Q: You've invested in technology for many years. Now we see new energy and money moving into the sector. What's behind it? Where are the opportunities?

A: We are in a super special time in technology. The number of people on the Internet means you can reach a giant market very quickly, reaching 2 billion people much faster than ever before in the history of business. The number of people on the Internet with smartphones is set to double over the next four or five years. At the same time, there have been a number of platforms that have come out, such as mobile computing, cloud computing. Thirdly, there's social networking. With those three major platforms hitting all at the same time, it's nearly unprecedented. Technology is now working to the point where you can build very interesting things in a way that was hard before. As a result, technology companies are getting into and dominating other industries at a pretty rapid rate.

Q: What have you been investing in?

A: We see opportunities in everything from construction to toys to photography that is software driven and where technology companies have a real chance to become dominant in very large industries. Take toys and the amount of intelligence that you can apply to toys to make them much more interesting and real just with software and robotics technology. Another example we're invested in, Lytro, is changing photography. With Lytro, you can retake the picture after the fact, change the focus or lighting or change the perspective and look at it in 3-D. Another we're invested in is Jawbone, which makes a health bracelet that monitors your sleep, your activity, and tells you, 'Gee, you got a good night's rest last night,' or 'You only slept for a few hours and only got two hours of deep sleep and, as a result of that, you might want to drink a little more water today' and those kind of interactive things.

Q: Talk about the stool's three legs: mobility, the cloud and social networking.

A: With communication technology in general, there's a kind of certain critical mass of people. Once you get to 15% of the world's entire population using one communication technology, that's a big deal. It's beyond the theoretical at this point. The people who think it's a fad have probably not been paying that much attention.

Q: But how do we know it's not a bubble? A lot of things were real in 1999, but they were overpriced, right?

A: There's no question things were overpriced in 1999. However there are some real differences between today and 1999. In 1999, there were somewhere between maybe 70 million and 100 million people on the Internet, and probably half were on dial-up, so they could do very little. Today, there's over 2 billion people on the Internet. Second, operating a consumer Internet offering was over 100 times more expensive to get to a 40th of the audience. Although the promise was excellent in 1999, the businesses didn't actually work. That was really the problem. People who keep worrying about 1999 are fighting the last war. They're missing the point that the Internet is here now, it's a really big deal, and these businesses are working spectacularly.

Q: But at what price? Upstarts Zynga and Groupon had huge stock rallies when they went public last year. Is that warranted?

A: Both those companies are less than 5 or 6 years old, and both do more than a billion dollars a year in revenue. If you just go look at the entire history of business, you will be hard pressed to find two companies that went zero to a billion dollars in revenue in five years. Something has changed. This is not 1999. This is not your grandmother's Internet business anymore.

Q: How sustainable is mobility?

A: The important thing about mobile is, everybody has a computer in their pocket. The implications of so many people connected to the Internet all the time from the standpoint of education is incredible. Also incredible is people know their location, everybody's got a GPS in their pocket. Wherever they are, they can find out what to do very quickly and easily. There's a huge set of applications that come off of that. You always have your entertainment system in your pocket. What can you provide entertainment-wise? How can you enjoy that? To have a very powerful computer with you always is a really gigantic technology opportunity that companies are working hard to exploit. It's a real fundamental change in the technology landscape and a fundamental change in what's possible.

Q: Most people don't know you started what was considered the first cloud computing company, Loud Cloud, in 1999.

A: It was too early then, but in 1999, the idea was you had to have a big computer called a server, then you had to build a network, then you had to have fancy complicated storage. Then there's a software stack underneath that of databases and other technology. That worked OK, but when the Internet came along, and the number of people using something went from 100,000 at the high end in the largest companies to 800 million or a billion, then it became harder to keep the same infrastructure in place. Companies had to figure out how to get that scale themselves. What cloud computing says is, all that infrastructure is taken care of for you. The cloud handles all the complicated bits of how the hardware works, how to scale it, how to grow from very small to very big, and the price has dropped 100 fold in 10 years.

Bartiromo is anchor of CNBC's Closing Bell and anchor and managing editor of the nationally syndicated Wall Street Journal Report with Maria Bartiromo. Follow her on Twitter @mariabartiromo. To see previous columns, go to bartiromo.usatoday.com.