I think #1 is obviously a huge issue. I am less convinced about #2. A lot of the tech IPOs in the past few years (mod Zynga?) have done well since the IPO. I Andreesen's argument about shorts driving the price to zero is kind of silly. To cash out on a trade, the number of shares you buy has to match the number of shares you sell. So if you start the trade on the short leg and the stock goes down, why wouldn't you expect the price to be driven back up when you buy back to cover your position?

You can look at a tech company like Apple whose shares are some of the most frequently traded shares in the market, and you can see that in the long term, as the company has done better, the share price has gone up. The market still works even in the presence of all the short term trading.