Note: We don’t really have an appropriate e-Forum for our exchanges on ICT
and sustainable development, yet, so for the moment I will just lodge this
very good overview piece from Fortune here in The Commons
(http://ecoplan.org <http://ecoplan.org/> ) and hope that it will be
interesting for at least a few of you as food for thought. For the original
source: http://www.fortune.com/fortune/print/0,15935,1081456,00.html

*********************************************************





TECHNOLOGY SPECIAL REPORT: AN ORAL HISTORY
Remembering Netscape: The Birth of the Web
For the tenth anniversary of its IPO, FORTUNE recruited dozens of players to
tell, in their own words, the story of the startup brought us into the
Internet era.
FORTUNE
Tuesday, July 12, 2005
By Adam Lashinsky

Picture a world without Google, without eBay or Amazon or broadband, where
few people have even heard of IPOs. That was reality just a decade ago. The
company that changed it—bringing us into the Internet age—was a brilliant
flash in the pan called Netscape. For the tenth anniversary of its IPO,
FORTUNE recruited dozens of players to tell the story of the startup in
their own words...

It was the spark that touched off the Internet boom. On Wednesday, Aug. 9,
1995, a 16-month-old Silicon Valley startup called Netscape tried to go
public, but demand for the shares was so high that for almost two hours that
morning, trading couldn't open. The stock, which had been priced at $28 a
share, zoomed as high as $75 that day and closed at $58. Measured against
the market frenzies that came later, its rise might have seemed predictable.
But it blew the minds of people in the tech world like Sun Microsystems
co-founders Andy Bechtolsheim (now back at Sun) and Bill Joy (now a venture
capitalist).

Until then, Silicon Valley was just a place where microchips were made, not
the fountainhead of global commerce. The public was oblivious to the
Internet; "surfing" meant catching a wave in the ocean or mindlessly
flicking the TV's remote control.

But Netscape mesmerized investors and captured America's imagination. More
than any other company, it set the technological, social, and financial tone
of the Internet age. Its founders, Marc Andreessen and Jim Clark—a
baby-faced 24-year-old programmer from the Midwest and a restless
middle-aged tech pioneer who badly wanted to strike gold again—inspired a
generation of entrepreneurs to try to become tech millionaires. Executives
with old-economy experience thought they could stake a claim to startup
riches by quitting their jobs and following the example of Jim Barksdale,
the former McCaw Communications chief who came in as Netscape's CEO. And
Netscape's practice of openly sharing technology so that other programmers
and their companies could build upon its ideas helped give rise to a global
technology community, the open-source movement.

All that happened just ten years ago. In the following pages, we capture the
voices of the IPO's primary players as well as those of people who had bit
parts. They reveal how Netscape founder Jim Clark initially was focused on
anything but the Internet; the unique blend of Gen X technologists and
seasoned managers that became a template for so many of the dot-coms that
followed; and the surprise of the IPO itself—even Netscape's
investment-banking firm, Morgan Stanley, didn't appreciate what it had
wrought.

As engineer John Giannandrea (employee No. 18) memorably observes, Netscape
brought the world Internet time, which whirls much faster than reality's
clock. Iconic and brilliant, yet deeply confused as a business, the company
rocketed from birth to huge acclaim to oblivion in fewer than five years ...

Next: Boredom
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-2,00.htm
l> Begets the Web Browser

Boredom Begets the Web Browser

So let's step back in time to the early 1990s. The Internet is a hodgepodge
of mostly government and academic networks. The World Wide Web is a nascent
system of onscreen pages that are viewable—if you know a lot of tech mumbo
jumbo—on the Internet. Software to make web surfing easy is only now being
written in computer labs by students like Lou Montulli at the University of
Kansas. Montulli is destined to become one of Netscape's first engineers.

Lou Montulli: I started working on software for the web back in the early
'90s. It came out of a project to do a campuswide information system. I was
doing another job at the University of Kansas computer center that was
essentially PC support. It was boring. So I started writing this software.

Montulli's interests bring him into contact with Marc Andreessen at the
University of Illinois, who by then is working on Mosaic, a browser to help
navigate the web. At this point, interactive TV is being ballyhooed as the
consumer-technology application of tomorrow.

Marc Andreessen: Interactive TV was going to be right now. I'd read that in
the Times and the Journal, and then Wired magazine started coming out. We
were working on Mosaic, and I went down to the corner store at two in the
morning to buy food. I bought Wired and walked back to my office in the
shivering cold in a snowstorm, and I'm like, "There's all this stuff going
on, and what we're doing isn't part of it!" The Internet was, like, not in
the magazine.

At Illinois, Andreessen persuades Eric Bina, a quiet, intense programmer
eight years his senior, to help build a browser.

Eric Bina: I was bored with my current project, and Marc's really good at
getting people psyched. He showed me web pages and was talking the whole
time about the potential this had for changing the way people access
information [if browsers could be improved]. He said, "Well, this would
probably be too difficult or impossible, right?" He knew the best way to get
me to do something is to call it impossible.

Next: Clark
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-3,00.htm
l> in Search of the New New Thing

Clark in Search of the New New Thing

A major proponent of interactive TV is Jim Clark, a onetime Stanford
University professor who is founder and chairman of Silicon Graphics. SGI
has become a billion-dollar-plus company by bringing 3-D computing to the
engineering world; it is also a primary supplier to an ambitious
interactive-TV trial in Florida.

Jim Clark: I had advocated using cable-TV systems for all kinds of media
distribution, for movies on demand and things like that. We did a contract
for Time Warner [FORTUNE's parent company] in Orlando that used a computer
that was equivalent to the set-top box. All that stuff was expensive—$5,000
per set.

Students and researchers at work on various aspects of the web know one
another primarily via e-mail. A conference in Boston in 1993 is the first
time that Montulli meets Andreessen, engineer Aleks Totic, and others from
Illinois in person.

Montulli: We'd all known each other's e-mail personalities and had long,
drawn-out design sessions and arguments over e-mail. But it's very different
over e-mail vs. face-to-face. Aleks Totic almost killed all of us that week.
Aleks is quirky, and he drives quirky. There were four of us packed in this
tiny deathtrap of a car one night, and we came to the top of this rise, and
there was a lane shift and this huge Mack truck. He swerved at the last
moment. The web would have been very different had we actually impacted with
that truck.

In December 1993, Andreessen, who by now has graduated and is working for
$6.85 an hour at the university's National Center for Supercomputing
Applications (NCSA), leaves Illinois. The code for Mosaic stays behind.

Andreessen: I lined up interviews and took a programming job at a company in
Palo Alto. I liked the idea of moving someplace that wasn't so cold. The
Valley was kind of dormant then. Apple Computer was the walking dead.

Next: VCs
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-4,00.htm
l> Awaken to the Web

VCs Awaken to the Web

But West Coast technologists and businesspeople are starting to notice
Mosaic and other browsers such as Erwise from Helsinki University of
Technology and Viola from the University of California at Berkeley. One is
Danny Rimer, an analyst at Hambrecht & Quist (H&Q), a San Francisco
investment bank; another is John Doerr, a venture capitalist at Kleiner
Perkins, who listens to his friend Bill Joy. Jim Clark has his sources too.

Danny Rimer: I started playing with the browser at H&Q—we were trying to
find every website that was being created. One of the most popular was the
Internet Underground Music Archive, which is pretty funny, given what's
happened with Kazaa and Napster and iTunes. It took about 22 hours to
download a song, but it was cool.

John Doerr: Bill Joy had said to me, "John, this Internet is going to be
enormous. It is moving very, very rapidly. When you see an opportunity, just
dive in." He didn't put it this way, but it was the equivalent of "Trust the
Force." So I was prepared when I saw the Mosaic browser in '94.

Jeff Treuhaft: I worked at Silicon Graphics, and my role was to demo the
technology to key customers. Jim Clark was on the same floor, and he would
constantly come and ask to see what was going on in terms of new products.
One thing he was shown by somebody I was working with was an early version
of the Mosaic browser.

Clark has been sidelined from active management at SGI and is preparing to
leave. In search of another big idea to commercialize, he consults with
venture capitalists New Enterprise Associates (NEA) in Menlo Park, Calif.
Alex Slusky, a junior-level VC, is assigned to help.

Alex Slusky: One day Jim was very excited. He'd downloaded this product—I
don't know that he called it a browser, but that's of course what it was. He
had spent half the day playing with it. He was fascinated. He had sent
e-mails to its creators wanting to meet them.

Andreessen: He contacted me out of the blue. The first time we got together
he wanted to meet for breakfast, and we met at Café Verona in Palo Alto at 7
a.m. It was the first time I'd woken up at 7 a.m., as opposed to having
still been up at 7 a.m., in about four years. I remember mostly being tired.
He said, "I want to start a new thing. I don't know what it is yet. But I
want to figure it out, and I'm looking for people to do it with me." Jim was
probably talking to a dozen people at that point.

Next: Red,
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-5,00.htm
l> Red Wine

Red, Red Wine

Clark and Andreessen begin meeting regularly to discuss ideas. They talk at
his Atherton home as well as at Il Fornaio, another Palo Alto restaurant.

Andreessen: We had a couple of big dinners. Jim really likes red wine, and I
don't know if I'd ever drunk red wine in my life. So I'm sitting around the
table with guys who'd worked at places like Macromedia, and I'm drinking red
wine and thinking, Wow, this tastes pretty good. And I went out to the
parking garage across the street and got in my new red Mustang, the car that
I'd bought when I came to California, and I ripped the entire bumper off on
a steel beam that I'd parked next to. I drove home very slowly. That was the
last time I did that. It was a learning experience about red wine.

Clark: Marc and I wrote a business plan for an interactive online gaming
company. We were talking to Nintendo, and they were going to fund us. But we
weren't going to get anything out of it. They wanted to own the whole thing.
So in the end we gave up on that.

Finally, after about three months, we were sitting in my living room. Marc
said, "I don't know what we're going to do, but we've got to do something,
because all my friends back at Illinois are graduating soon." I said, "What
do think we should do?" And he said, "Well, we could always go hire them and
create a Mosaic killer." And I said, "I don't know how we're going to make
money at that, but okay. I'll fund it. Let's hire them." Two days later we
were on a plane. I almost canceled because of a really bad storm, but Marc
persuaded me to get on the plane.

Next: The
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-6,00.htm
l> Jedi Mind Trick

The Jedi Mind Trick

In March 1994, Clark and Andreessen recruit many of Andreessen's former
cohorts, including Mosaic co-author Bina, who telecommutes from Illinois.
They also enlist Lou Montulli from Kansas.

Montulli: I was still a student, and I get this voicemail from Jim's
secretary. She says, "You need to be in Illinois tomorrow." And I'm like,
Oh, shit, that means I have to buy an airline ticket now, which is real
expensive, and I can't afford that. So I called her back and said, "Am I
going to get reimbursed? Because it's like 600 bucks, and it's like my whole
monthly salary." And she said, "Yeah, just go." I was on the way to the
airport half an hour later.

I beat Jim and Marc to Illinois because they got delayed by a snowstorm. We
had individual meetings with Jim, essentially so he could give each of us
the pep talk. We all came away with the impression he could talk us into
anything. We called it the Jedi Mind Trick. He'd walk in and say, "These are
not the droids you were looking for," and we'd go for it. He filled our
heads with giant numbers of how we were going to make riches and be the most
important people on the planet.

Clark also sets out to hire veteran Silicon Valley engineers. He and
Andreessen christen the company Mosaic Communications, after the Mosaic
browser they aim to upstage.

John Giannandrea: I was employee No. 18. I joined very early on with a bunch
of people from Silicon Graphics. Jim had hired what we called the NCSA kids,
so basically all the people who ever worked on a web browser were hired in
like one week. Then he hired an equal number of seasoned SGI engineers. They
hired all these young kids who had never shipped a product before. And then
they hired a bunch of people who worked at SGI and had shipped very
complicated products to FORTUNE 500 companies and defense contractors many
times over. And that was the first 30 employees or so of Netscape.

Word about Clark's new startup gets around Silicon Valley fast. Clark hires
a band of young businesspeople to craft financial and marketing plans. Greg
Sands, a newly minted MBA, becomes Netscape's first product manager.

Greg Sands: I applied for business school at Stanford, and I showed up out
here in the fall of '92 pretty much knowing no one in the Bay Area. I used
every opportunity to get to know people in both the entrepreneur community
and the venture community. A friend of mine at NEA, Alex Slusky, called and
said, "We've been working with a Silicon Valley legend. Are you interested
in meeting him? He's going to start a company. If so, fax me a copy of your
résumé, and I'll send it to him." And 36 hours later Jim Clark called me.

Next: Mary
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-7,00.htm
l> Meeker Takes Note

Mary Meeker Takes Note

The world beyond Silicon Valley learns of Mosaic from a May 1994 article in
the New York Times headlined new venture in cyberspace by silicon graphics
founder. It starts the Netscape buzz. Mary Meeker, a tech stock analyst at
Morgan Stanley, notices the uptick in interest.

Mary Meeker: The article was not the first time I'd heard of Mosaic, but it
was the first time I thought about the company as a business. I called our
banker, Frank Quattrone, and said, "You know Jim Clark. I'd love to spend
some time with these guys."

As the banker who took Silicon Graphics public in the early '80s, Quattrone
remembers Clark's presentations to investors on the multicity tour known as
the road show and believes he is worth betting on.

Frank Quattrone: On the Silicon Graphics road show he became known as the
Carl Sagan of the company because he could convince investors—most of whom
didn't even know why you needed 2-D technology—why you needed 3-D technology
and why it was so hard to pull off. He would very persuasively, not in an
overly brainiac way, explain how you needed billions and billions of
operations per second in order to make a 3-D image come to life.

That summer FORTUNE names Mosaic Communications one of its 25 Cool Companies
(July 11, 1994). Even non-Californians take notice, including former FedEx
executive Jim Barksdale, president of McCaw Communications, a Seattle
company that is being acquired by AT&T.

Jim Barksdale: I was reading FORTUNE. I didn't read it religiously, although
I'm now on the board of the company that publishes it. Anyway, there was an
article on, like, 25 hot companies, and it opened with a big picture of Jim
Clark and Marc Andreessen sitting on computer terminals.

I thought they had a heck of an idea. I had been involved for years in the
building and installing of information systems. I knew the frustration of
trying to interconnect networks. The browser used as a generic interface
struck me as a hell of an idea.

Next: Sleeping
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-8,00.htm
l> on the Job

Sleeping on the Job

Inside the startup, the young turks and grown-up engineers are together
writing code, and a handful of businesspeople are trying to figure out how
to sell the software.

Sands: The world was just exploding around us. It was extraordinary energy.
We were working like crazy. For the browser engineers, what they were
working on was crystal clear, but for the rest of us it was very unclear
what we were doing, where we were headed, and ultimately, how we were going
to make money.

Giannandrea: [We decided on a business model, which] was basically to give
away the browsers and sell server software. Silicon Graphics and Sun were
building server computers, of course, but there was no such thing as
web-server software. So we hired a bunch of server people who wrote the
first web servers.

Among the engineers, what will become the dot-com boom's hypercaffeinated
startup culture is taking shape.

Giannandrea: It was a race to ship something as fast as humanly possible.
Jim Clark was in a hurry because he wanted to ship the first commercial web
browser. Mosaic wasn't the only company trying to do that. There was another
startup called Spyglass and a whole bunch of others all trying to do it. The
whole concept of Internet time was invented that summer.

Montulli: We had a really nice office in downtown Mountain View. It had
balconies and beautiful views out onto the Santa Cruz Mountains. There were
all these restaurants and all this exotic food, like sushi. I'd never had
sushi before. From a living-the-California-dream perspective, it was over
the top. It was really cool.

With all this work in front of us, you could literally work 16, 18 hours a
day and there'd still be more to do. We would sleep at the office. There
were conference rooms that had futons, and you could catch a nap for three
or four hours and go back to work. My routine would be come to work, work
till three or four in the morning, sleep for three or four hours on the cot,
then work through the next day till about midnight or two, and then go home
and sleep for like 13, 14 hours straight. And then come back.

The atmosphere is like a college dorm during finals—not surprisingly, since
their technology chief is Andreessen, who has just turned 23.

Giannandrea: Marc's way of working was to be in meetings or doing whatever
business things during the day, being the face of the company with Clark.
Then in the late afternoon or early evening, he would dive into technical
stuff. He'd send out e-mails like at three in the morning, saying, Change
these 27 things. So then by the next morning people would be working on
those things.

Next: Life
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-9,00.htm
l> Is Like High School

Life Is Like High School

Clark has Andreessen vet all hires. It is important that the young company's
technical visionary feel comfortable with employees, especially the "
adults" who are about to join. Among them are Mike Homer, an ex-Apple
executive who eventually becomes VP of marketing, and Todd Rulon-Miller, an
ex-IBMer who becomes VP of sales.

Todd Rulon-Miller: Marc was like 23, and the sky had no limits, and
domination of the world was his potential, and he was going to go do it.
There wasn't a lot of wisdom, but he couldn't have had it at that age. When
I interviewed with him, he was on a workstation staring intently into the
screen. I don't think he looked at me. I sat in a chair next to him. He was
playing Doom.

And I didn't even know what Doom was.

Quattrone: Andreessen looked like a high school student on steroids. He's a
great guy. He was calm and quiet—not flashy—but you could tell there was
genius lurking beneath the surface.

As Andreessen's celebrity grows, Bina, now over 30, avoids the limelight.

Bina: I was too old. The press really needed a young guy to be the face of
this new thing. It had to be something brought out by this new generation.
Not to mention that Marc is good at speaking and I am not.

In August, four months after founding the company, Clark begins talking to
venture capitalists about funding. Netscape needs money: It is eating
through the $3 million he has put up out of his own pocket. Clark approaches
New Enterprise Associates, which had helped fund SGI, though he is still
bitter that VCs made far more money on SGI than he did. He badly wants to
reverse the equation this time around.

Clark: I brought the venture community in out of fear that I'd be out there
alone and that I was squandering my entire net worth, which at that time was
around $15 million, on a pipe dream.

Slusky: NEA had the opportunity to fund this business. But Jim asked for the
then unheard-of valuation for a startup of around $18 million, and NEA just
could not see its way to a valuation that high. Startups were being funded
at valuations of $2 million to $4 million. Saying no was the safe answer.

So NEA introduced the deal to Kleiner Perkins. I sat in John Doerr's office
and described the situation to him. NEA's hope was that Kleiner Perkins
would talk some sense into Jim and get the valuation lower. Instead they
funded him—they were willing to take risks that NEA was not.

Doerr: It was very clear that this point-and-click, graphical way of
directing people around the Internet was going to be an enormous
opportunity.

Next: Wooing
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-10,00.ht
ml> Barksdale

Wooing Barksdale

In September, Kleiner Perkins invests $5 million (at a $21 million
valuation); Doerr joins the board and assumes the role of player-coach that
VCs often perform at a critical stage of a startup. One of his first
missions is to recruit senior executives.

Rulon-Miller: On a Saturday night my wife and I had been out for dinner, and
we got home and the message light was blinking on the phone. We sat on the
edge of the bed, and we're taking off our shoes and trying to relax, and I
hit the message button and the voicemail goes something like "Hello, Todd,
John Doerr, Kleiner Perkins. Kevin Compton [another Kleiner partner] tells
me you can sell ice to Eskimos. I need to meet you." My wife looks at me,
and I look at her, and he goes on, "Jim Clark and I are flying in on Flight
blah, blah, blah Delta, 9:05 Tuesday evening, be there." The message ended.
My wife looked at me and said, "What was that?" And I said, "I think it's
Mission: Impossible.

The wooing of Barksdale, who was head of technology at Federal Express
before running McCaw, proceeds throughout the fall.

Barksdale: One night I got a call after hours, and I answered, and it was a
headhunter. If he'd called during hours, I wouldn't have talked to him. We
had recently sold McCaw Communications to AT&T, and the deal was supposed to
close anytime, but it took longer than we expected. The headhunter is named
David Beirne, and he's fast-talking and aggressive. He starts by saying,
"I've got a client at Microsoft. They're looking for a chief operating
officer." And I tell him, "I'm not interested." And he says, "Well, I've got
another company, a startup, Mosaic Communications." And I say, "I just read
an article about them." I didn't want to go to Microsoft to be the fourth
man in a one-man outfit, particularly when the one man was Bill Gates—he's
ten years younger than me, and an icon. But it tickled my fancy that this
Mosaic Communications might be a third bite at the apple. FedEx to McCaw,
and now this thing. Three great startups. Then I took a call from John Doerr
and Jim Clark. Doerr was the venture capitalist in Netscape. I'd never heard
of him.

As all this is going on, Microsoft is scratching its head. Sam Jadallah has
just signed on as an aide to Steve Ballmer, the software giant's head of
sales (and future CEO).

Sam Jadallah: There was definitely a buzz at Microsoft about the Internet—we
were trying to understand why everybody was getting all hyped up. Certainly
for us up in the Northwest, we didn't know what to make of it. It seemed
pretty cool, pretty exciting, but really what were you going to do with it?
How was it going to change your day-to-day work?

Next: The
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-11,00.ht
ml> Beta Takes a Bow

The Beta Takes a Bow

Netscape has buzz but also faces perils. The University of Illinois is
alleging that Clark and Andreessen have stolen the intellectual property for
the browser and the Mosaic name, and is threatening to sue.

Rulon-Miller: Success was not a given in fall 1994. We were getting sued by
the University of Illinois, and we were hours away from being shut down [if
the university prevailed]. There were subpoenas going. Those were very
intense times.

On Oct. 15, Mosaic Communications releases the beta, or test, version of its
browser. The finished product is many weeks from being ready, but the team's
agility and speed derive in part from a willingness to enlist the help of
outside programmers.

Giannandrea: The concept that was unusual was doing a beta—the idea that you
could ship the thing before it was ready and invite people to download it,
and then they'd let you know what the bugs were. It was like saying, "Here's
a beta version. It's free. Please help us test it." This was part of what
attracted people to the whole Internet concept. It was more open. It was
faster moving. It was more democratic. Our idea was that the more people
participate, the better the product will be.

To appease the university, the company needs a new name.

Sands: One morning Jim grabbed me and Paul Koontz, who was VP of marketing,
and Marc, and pulled us into Marc's office, which was not particularly large
and was very chaotic—papers stacked everywhere and boxes of Honeycomb cereal
everywhere where there weren't papers. Jim said, "We've got to make progress
on [renaming the company]." And I said, "We've got a couple of ideas, but
they're not great." Then it just kind of popped into my head, and I said,
"How about Netscape?" Everyone kind of looked around, saying, "Hey, that's
pretty good. That's better than these other things." It gave a sense of
trying to visualize the Net and of being able to view what's out there.

Mosaic adopts the name, initially for the browser, and on Nov. 14 for the
company. The engineers frenetically fix bugs for the browser's commercial
release, and the businesspeople fret about how to price it.

Mike Homer: We put out the beta on Oct. 15. Then we put out Version 1.0
around Dec. 15. In the meantime all these other things had to get decided,
especially the free browser and issues like How do you do licensing? What's
the pricing?

Treuhaft: We all felt there was something big happening. We proved month
after month that the idea we had was big, and that, for all the right
reasons, we were playing our own role in trying to hype it and make it even
bigger and create the opportunity for ourselves and for partners and for
other folks.

Sands: Right about the end of 1994, we actually did trim back 15 or 20
people. It just wasn't clear exactly where the money was going to come from
or how quickly it was going to ramp up.

Next: Literally,
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-12,00.ht
ml> Business is Booming

Literally, Business is Booming

On Dec. 15, 1994, the company launches Version 1.0 of its browser, Netscape
Navigator. Netscape is nine months old, has burned through much of the $9
million that's been invested so far, and has yet to record a single dollar
of sales.

Giannandrea: We put this thing up, and it's midnight, and somebody broke out
some beers, and we were like, "Okay, we've shipped it, for better or worse
it's gone." And we sat and watched. We had servers rigged so that every time
somebody downloaded the browser, you'd hear a cannon go off. It started to
go off just after midnight. All the first downloads were from Japan and
Australia, because they were awake. By the next morning, I don't remember
the exact numbers, but tens of thousands of copies had been downloaded. Now
people take for granted that they'll put out a version of something and a
million copies will be downloaded in a week. But nothing like that had ever
happened before.

The browser launch is the end of Netscape's infancy. The arrival of Jim
Barksdale soon after starts the company growing into a real business.

Barksdale: In December we went skiing in Aspen. My children were all there,
and I had my laptop with my dial-up connection at the house, and I brought
up the Mosaic browser. And I said, "Let me show you this thing." They were
pretty intrigued by it. They were computer literate. I said, "Ask me a
question." So my daughter Susan asked about some law case that she was
studying, and I pulled it right up. My daughter Betsy asked if I could find
a third-grade lesson plan, and I told her there were only four billion of
them, even back then. My son David, who was a big fan of the Grateful Dead,
wanted to know when they were going to be in New Orleans. And I pulled that
up. They were all dumbfounded. It was that easy to find things.

We played with it the rest of the weekend, and I was back and forth on the
phone with Doerr and Clark. That's when we decided to do it, and I went to
work in January. Before I did, I flew over to see [AT&T CEO] Bob Allen in
New Jersey, in Basking Ridge, and gave him my resignation. He was aghast. He
asked where I was going, and I said, "Netscape Communications," and he said,
"Who?" I said, "They do this Internet browser thing," and he was not
pleased. But within a year AT&T was all over Netscape trying to be partners.


Next: The
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-13,00.ht
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The Rule of Snakes

Sands: When Barksdale came, the place really did calm down. Clark introduced
him to the company and said, "Jim is the CEO. He's the decision-maker. If
you disagree with him, go talk with him. Don't come to me." That was also
when we started generating revenue and started seeing how quickly things
were taking off—selling browsers to corporations. Sometimes companies would
call and say, "Hey, I just realized I've got 1,000 people who are using this
product, and I want to make sure I'm in compliance."

Barksdale: I was very reserved about being a big-company guy. I didn't want
to give the appearance of telling them what to do. I remember holding back
on things I knew needed doing, whether it was in structure or governance or
sales, because I didn't want to subtract from their magic. Clark hired me to
run the place, and then he stepped back. I tried to apply the lessons I had
learned in past jobs so we could continue to move quickly without making
mistakes. I didn't want to do anything to slow this down, yet I was mindful
it could become a train wreck if it grew too fast.

Quattrone: The two things that happened that got us to take Netscape very
seriously were, one, when they got John Doerr as an investor, and two, when
they brought in Barksdale. That's when we knew we would have to pay
attention, because Barksdale was the real deal.

Homer: I actually have a little book of Barksdale sayings. Things like "If
you see a snake, kill the snake, but don't play with dead snakes." That
means that if it's an important issue, discuss it. Resolve it. But once
you've discussed it and resolved it, don't bring it up again. We called that
the Rule of Snakes. He was a calming influence, yet with a sense of urgency
about the business, which is extremely difficult to have in one person. I
have a sense of urgency, but no one would ever accuse me of being a calming
influence.

Next: The
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-14,00.ht
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The IPO That Changed Everything

As Barksdale gets established, Clark is busy courting media companies to
become customers of and investors in Netscape. In April 1995, Knight-Ridder,
Hearst, Times Mirror, and TCI all invest. Barksdale also recruits a
major-league CFO—Peter Currie, an ex-Morgan Stanley banker and Stanford
Business School classmate of Frank Quattrone. Currie arrives not a moment
too soon. Through the first half of the year, Netscape is seeing rapid
revenue growth from corporate licenses on web browsers. Sales jump from $5
million in the first quarter to $12 million in the second. Headcount grows
to more than 250 by mid-1995.

Homer: We put this browser out on Oct. 15 and by Jan. 1 we've got a few
million of them out there. It looked as though the dogs were eating the dog
food. We wanted more money because we were starting to formulate realistic
plans about what the business over the course of that year would be.

By June, Clark is agitating for an IPO.

Clark: I viewed the IPO as a marketing event. Frank Quattrone was our
banker. I knew him from when we went on the road show at Silicon Graphics.
Morgan Stanley and Frank understood the process really well. I kind of
stacked the deck a little bit. I wanted us to go public, because I thought
it'd be good for us from a PR standpoint, and I did go into this thing to
make money, so I was looking for a reward as well. I got the lawyers and
Frank and his team to come give a pitch. After that, the management kind of
reluctantly decided it would be a good thing to do.

Peter Currie: Spyglass had just filed [in mid-May], and that got Jim Clark
thinking. He came to the June board meeting and said, "We ought to file to
go public." John Doerr right away said, "Put the puck on the ice!" I was the
only fool in the room who said, "Boy, it's awful early." But I do remember
saying in the same sentence, "But we can market the heck out of this thing."


Quattrone: There was debate in the company about when to go public, which
culminated in a board meeting in June. Barksdale and Currie were more
conservative. They wanted to make sure the company was using a lot of
traditional metrics and had been there long enough to feel comfortable with
the business before going public. Clark was more aggressive. Then we talked
about risks. The big risk was that Microsoft would bundle a browser in the
next version of its Windows operating system. We thought that could happen
as early as September. The looming competition is what got the more
conservative board members over the hump.

No company can go public in August. That's conventional wisdom. But my
judgment was that with Jim Clark and John Doerr and Jim Barksdale and Peter
Currie and Marc Andreessen and Morgan Stanley all involved, people would
show up for this one in August.

Next: Early
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-15,00.ht
ml> to Market

Early to Market

Yet another factor helps convince the board and its advisors. They know they
are onto something big—the Internet—and it isn't that large a leap of faith
to try to cash in. Besides, Netscape's revenue is doubling every quarter,
and by its second quarter of actually selling software licenses, the company
is on the threshold of profitability.

Andreessen: Kleiner's Law No. 6, or whatever, is, "If you're standing at a
party and they're passing around hors d'oeuvres, take some." Jim Clark made
a really, really, really solid read of the markets and said, "We can
definitely do it now."

Meeker: Was it early for the company to go public? Sure. There has been a
rule of thumb that a company should have three quarters of obviously robust
revenue growth. And you also traditionally wanted to see three quarters of
profitability—improving profitability, for newer companies. Netscape was not
profitable at the time, so that was certainly a new idea. But the market was
ready for a new set of technology innovations, and Netscape was the right
company in the right place at the right time with the right team.

Netscape files to go public on June 23, 1994. The reception it gets on its
road show is the first sign that a bubble psychology is gripping the
investment community. The Internet is about to become the flavor of the
decade.

Currie: When we went from city to city, instead of meeting with three or
four analysts in a given institutional investment firm, we'd have 50 or 75.
And it wasn't all people who were going to buy the stock. They wanted to
know about the Internet. Many of the questions we got had more to do with
the Internet as a cultural phenomenon and as an approximate but not
immediate commercial opportunity.

Quattrone: A lot of people had missed out on the Microsoft IPO because they
didn't believe in PCs and they didn't believe in software. They thought the
stock was too expensive all along the way until Microsoft was worth $10
billion. Man, were they wrong. There had been enough talk about the
Internet, and John Doerr had done a good job evangelizing it. People were
looking for the next platform. Where am I going to be able to find the next
Microsoft? Who's the next Bill Gates? What's the next high-margin
opportunity that's going to change the entire landscape of technology? So it
was the opportunity to be the standard-bearer, the Microsoft of this new
era.

Next: Big
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-16,00.ht
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Big Names, No Profits

The myth of the golden management team starts here too. Later IPOs (think
Webvan) will have almost nothing to offer but big-name leadership.

Homer: I did everything I could to package Marc and Clark. We had this cool
guy, and the other guy is like Yoda. It's so good as a story for the press.
Then you throw Barksdale into it, and it was like, Oh, man, this is a whole
new toy. As a PR and marketing person, it's like, holy mackerel, I've got a
Jedi Council here. So I packaged those guys as the face of the company, and
on the road show it just made total sense. You talk about a marketing
event—it was about as big a marketing event as we could make.

Meeker: The reason the market was ready, willing, and able to accept a
company that didn't have three quarters of profitability is that the growth
trajectory was quite high. People got that the market opportunity was quite
high, and the management team had all the elements of being the kind of
stuff that people liked.

Not that there isn't skepticism.

Currie: Remember, Netscape gave away the beta version of the browser. In the
financial world, that got translated into "You're giving all your stuff away
free." There was one guy from Wellington, and I loved the way he
characterized it. He had a New England accent and he said, "I'm trying to
figure out if you are a Roman candle, a wave runner, or a hardy perennial."

Quattrone: Morgan Stanley, which had not yet acquired Dean Witter, was not a
retail shop. And what I heard from the salespeople was that the number of
incoming phone calls was so great that they had to install an additional PBX
to handle the volume. The closest thing to it that Morgan Stanley had seen
was Apple's IPO in 1980. Everyone wanted this one. It was a trophy, the
thing you had to get to be able to talk at cocktail parties. No one wanted
to tell their grandchildren that they missed out on this one.

Next: Day
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-17,00.ht
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Day (One) Trading

Netscape goes public on Aug. 9. Its frenzied first day of trading
foreshadows the market mania that will follow. (That day also brings a sad
event: Grateful Dead leader Jerry Garcia dies. The next morning's San Jose
Mercury News played both stories on the front page; Garcia got much more
space.)

Currie: This might have been a mistake that Jim and I made, but we had the
opportunity to price the stock higher. We knew there was institutional
interest, we knew there was retail interest. We didn't have hard, factual,
analytical data about who was willing to buy at what price. Our fear—naive,
as it turned out—was that if we pushed too much, we were being greedy. So we
said $28 a share. Now, what turned out the next morning was they couldn't
open the stock. The order imbalance came about because retail investors—and
these turned out to be Netscape browser users—were putting in orders with
their brokers for the stock, and they weren't market-limit orders. So these
were presumably people who were naive about the capital markets, and they
just said, "I want to buy the stock," without saying at what price.

Quattrone: Despite how groundbreaking a transaction this was, it wasn't the
largest deal in Morgan Stanley that week. Morgan Stanley was doing a deal
for J.I. Case, the tractor company, raising, I don't know, $200, $400, $500
million. It was much bigger than the Netscape IPO. And they were having a
tough time getting that sold. So even though this event was maybe one of the
most important events in the history of the technology industry, at Morgan
Stanley it wasn't even the most important offering that day. It was, "Yeah,
that one is easy, so let's get it out. What we really need to focus on is
selling tractors, baby."

Next: For
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-18,00.ht
ml> the Netscape IPO, Press One

For the Netscape IPO, Press One

Back in California, the employees, all of whom have stock options, wait.

Sands: We had doughnuts and bagels laid out that morning, and we all knew
that stocks started trading at 6:30 in the morning California time, and so a
bunch of people showed up early. We sat around for an hour or an hour and a
half, and nothing was happening. We didn't know what to make of it. So we
all just went back to work. Someone grabbed me during the day and said,
"Dial Charles Schwab, 1-800-SCHWAB," and a voice said, "Welcome to Charles
Schwab. If you're interested in the Netscape IPO, press one." That was when
it was clear to me that this was really a big deal.

Doerr: The stock started trading while I was driving to my office. It was a
warm day in California, but when I checked the price, I was numb. I had to
walk around the building.

Andreessen: I woke up at about nine, logged in to find out how the stock had
performed, and went back to sleep. My view was that we could not let
ourselves be distracted by the euphoria. It's a temporary phenomenon. It
could be gone tomorrow. We either deliver or we don't. It's probably a
Midwestern kind of thing.

Chris Hempel: When the stock opened, it was $71 a share. People were giddy
with excitement and dazed, walking around the parking lot. I was in the PR
department and I thought, "This is going to be total mayhem. I've got to get
back to my desk." There was this eerie silence for an hour, and then all
hell broke loose. All the local stations were in the parking lot, running
around trying to interview people as they left the building. How do you
control something like that?

Barksdale: I'd made a rule that no one would discuss the stock price at
work—which had been the rule at Federal Express. But when I came in that
morning, my own secretary had set up a stock ticker above her desk. I said,
"What on earth are you doing?" And she said, "I thought you were joking." I
told her to take it down.

Clark: My 20% stake in Netscape was worth $663 million on the day of the
IPO. I remember because later I needed to come up with a tail number for an
airplane I bought. I told them to use 663, because that meant something to
me.

Next: Tube
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-19,00.ht
ml> Socks and Megadeth T-shirts

Tube Socks and Megadeth T-shirts

The big celebration was that night.

Treuhaft: We went down to Sunnyvale, to a bar, for an event planned for that
night, good or bad. John Doerr was there and Jim and Marc and Jim Barksdale.
It was surreal. Everybody was just walking around. The guy who wrote the
server software, Rob McCool, basically dropped out of college, and he would
show up for work in shorts and tube socks and a Megadeth T-shirt. We all
think of it as just the way the Valley is now. But I'd been in the Valley
for a while, and I hadn't seen that. At SGI, which wasn't a buttoned-up
place, we had quirky people, but this was a whole different level of
surrealness. And fun—I mean, you just had perma-smile. Some people went out
and bought $2,000 suits and started dressing up nice. And other people just
put on their tube socks and Megadeth T-shirts and kept going.

Rulon-Miller: I was on vacation in Lake Tahoe, and I got a phone call at
seven in the morning from one of my friends saying, "Netscape didn't open."
I said, "Oh, shit, what happened?" And he said, "They can't get the first
price." I said, "Well, what's that mean?" He said the bids are overwhelming
the asks, and it's going up.

There was no Internet that could tell you online stock prices at the time.
So I got phone calls during the day from friends. I remember my wife saying,
"What's going on?" and I just muted myself and said, "Nothing." I ended that
day at 58 bucks a share times my stock pile, and I looked in the mirror and
said, "I wish my mom and dad were alive. They wouldn't believe this."

Bina: The day that we went public I was not there. My daughter was due to be
born. [But] oh, yes, they did make me rich. That's why I can comfortably be
a stay-at-home dad. I left Netscape when AOL bought the business, and quit
programming cold turkey. I'm very big into gardening. I got into rose
breeding.

Next: The
<http://www.fortune.com/fortune/technology/articles/0,15114,1081456-20,00.ht
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The Flameout

Netscape's fire burned brilliantly after the IPO. The engineers raced to
perfect the Navigator browser, and when Version 2.0 debuted in February
1996, it was a technological triumph. It incorporated JavaScript, software
that let designers build in many of the lively features we take for granted
on web pages today, like interactive forms that enable us to buy things
online. Navigator 2.0 also made it far easier for nonprofessionals to create
web pages and build their own sites.

Netscape and the Internet supercharged each other. Thousands of websites
emerged in 1996; by October users had downloaded 45 million Netscape
browsers. The hottest real estate in cyberspace was the Netscape home page,
which automatically appeared onscreen when you launched the browser.
"Everybody wanted to be in Netscape," recalls engineer Giannandrea. "It gave
you a business advantage." Netscape's revenue soared from $85 million in
1995 to $346 million in 1996, and then to $534 million the next year. But
the stock never surpassed its December 1995 peak of $171 a share.

If the IPO was the beginning, it was also the beginning of the end.
Netscape's businesspeople and engineers often seemed on different planets as
the company wrestled with runaway growth and the vertigo of overnight
wealth. Just weeks after the IPO, a popular trade publication attributed to
Marc Andreessen the boast that Netscape would reduce Microsoft's Windows
operating system to a "mundane collection of not entirely debugged device
drivers." That helped further sensitize Microsoft to the Netscape threat as
well as to the potential of the Internet, and touched off what would become
the browser wars.

In August 1996, Microsoft launched Internet Explorer 3.0, a free browser
that not only was a technological match to Navigator but also was bundled
with every new Windows PC. (A federal court labeled the tactic monopolistic
in a case that was ultimately settled.) The onslaught crippled Netscape,
which that year suffered operating losses of $132 million. Although the
dot-com boom roared on, and although AOL acquired Netscape in March 1999 for
an impressive $4 billion in stock (the deal was worth $10 billion by the
time it closed), Netscape was already well on its way to becoming a ghost.

_____

Reporter Associates Oliver Ryan and Patricia Neering
Feedback alashinsky@...



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