Marc Andreessen: The Man Behind Netscape

August 14, 1995

Right about now, I bet a lot of people are wishing they were Marc Andreessen. After all, to wake up one morning and suddenly be worth $72 million dollars is the American dream. And all the better to be 24 and young enough to enjoy it.

For some, admiration quickly becomes envy and in some places the envy machine is already in full gear. A recent Wall Street Journal profile, while acknowledging Andreessen's technical brilliance, tried to portray him as a typical techie lacking social skills and having no taste in cars, clothes, or food.

So who is Marc Andreessen and what in the world is going on on Wall Street, Silicon Valley, and the untamed frontier called the Internet?

First, let me dispense with the trivial stuff: the Wall Street journal account. I've had lunch with Marc Andreessen and I can assure you he does eat something other than "ketchup-drenched hamburgers."

Also, if you're looking for a "scruffy" and "fretful" young man (the Wall Street joumal's description), you won't have much success picking him out of a crowd. I have no idea what he looks like at work at 2 AM in the morning, but every time I've seen him in public he's well dressed. As for his being "fretful", he certainly feels a sense of urgency about his mission - and he has every reason to - but the dictionary definition of "fretful" is irritable. The times I've worked with him and seen him in action, he's been patient and polite to a fault.

In fact, one of the reasons for the spectacular Mosaic's original success was Marc's easy availability online to any and all who had questions about it. That's how I met him in the first place. Early last summer, when Netscape (then called Mosaic Communications) was still the process of forming itself, I got into a dialogue with on the question of how the Internet was going to pay for itself. I was amazed at how much thought he'd put into this subject and how well informed he was about all kinds of issues outside of computing. I quickly realized this was no ordinary techie.

Being deeply involved in the multimedia publishing world, I suggested it might be worthwhile for him to give a presentation to people in that industry about opportunities on the Internet and the World Wide Web. He quickly agreed to speak at a conference I was producing with Pacific Bell on the subject several months later.

As it turned out, our conference came just one week after Netscape launched its first product. Marc was a little overextended to say the least. Still, on three hours of sleep, he made the drive from Silicon Valley to San Francisco in the pouring rain on a Saturday morning and addressed our relatively small group of about 150 multimedia publishers and producers.

His presentation was superb. He not only gave us an interesting glimpse into how the original Mosaic browser came into being, but also laid out his medium- and long-term plans for how he intended to keep the Internet momentum going. His well thought out plans included an aggressive and creative plunge into the server business gradually improving the capacity of browsers and servers alike as greater bandwidth became available and Internet use became more common. Anyone who came to that meeting thinking Marc was a "one hit wonder" went home realizing he was only just getting warmed up.

After his talk, Marc fielded questions from the audience. Answering random questions from an audience with widely varying levels of experience and education is a challenge and I've seen many experienced executives blow it. Marc handled the crowd like a pro, giving each question, including some incredibly dumb ones, its due and keeping things moving along with grace and humor.

So Marc's a smart guy, but that still doesn't explain why Netscape, a little company with only $16 million in sales and no profits is valued at over $50 per share? The answer is very simple if you've ever worked on Wall Street which I did for two years. Just like Hollywood, Wall Street is a dream factory and nothing sells better on the Street than a good story. And Netscape has one of the best stories in years.

Let's look at the elements of the story: the Internet, the technical whiz, the "killer app", the proven entrepreneur, the savvy investment bank, the buttoned-up corporate insiders.

The Internet is hot. It's been a hot story for nearly two years. And unlike most stories, it just gets hotter and hotter with time. The spark that transformed the Internet into a raging fire of explosive growth was an interface called Mosaic that not only made the Internet easier to use, but also made it a lot more visually appealing as well. Marc Andreessen and his colleagues at the University of Illinois (now at Netscape) were the guys who lit the match.

While other "industry visionaries" were asleep at the wheel, Jim Clark, the co-founder of Silicon Graphics, and one of the most admired entrepreneurs in Silicon Valley, signed up the bulk of the original Mosaic team. He included in the mix some of Silicon Graphics' seasoned pros and set out to put a business foundation beneath the technical all-star team he assembled.

Clark learned a lot building Silicon Graphics into a Fortune 500 company and he applied his lessons well in launching Netscape. Instead of going it alone, he brought in a savvy partner, Kleiner, Perkins, Caufield, and Byers, a venture capital firm which not only put money into the deal, but helped him plan his strategy and recruit the kind of management Wall Street loves to see on a prospectus. Kleiner Perkins was instrumental in bringing in Jim Barksdale former head of AT&T wireless services and a number of other top drawer marketing and management executives. Thus, the stage was set for one of the most dramatic IPOs in Wall Street history.

Five million shares, the amount Netscape made available in its initial offering, is actually a small deal by Wall Street standards. There are institutional buyers who like to buy their stock in blocks of 1 million. Add that to millions of enthusiastic and affluent Netscape users and you had the makings of a frenzied auction in which emotion overcame common sense in pursuit of a short supply of a "sure thing."

Is Netscape really worth the price? I tend to be conservative in my own investing and since I didn't see Warren Buffet in the fray grabbing shares, I think the stock is a bit overpriced. Wall Street seems to think so too. The price of Netscape shares has fallen from its first day peak of $79 to around $50 (which means the value of Marc Andreessen's stake went down $29 million in just one week).

Being a public company and being listed on Wall Street is not all its cracked up to be. Helen Walton, matriarch of the world's richest family (they own about $25 billion worth of Wal-Mart stock), has been quoted as saying sometimes she wishes the company never went public. After all, how much money do you need to live well and how much do you give up when your private business becomes the front page of the business section? When your shares go public people who know little about your company and care even less about its long term future suddenly have a say in how it's run. If management is not careful, it's easy for a business to find itself being managed to produce short term numbers for Wall Street instead of pursuing the vision of the people who created it.

Is Netscape going to live up to the promise of its first day of trading? Only time will tell, but so far the company has already shown itself to be a solid performer in a number of key areas: the speed with which it has created products, the quality of its products, and its ability to market hard, for example the way it seized the dominant position in the browser market from a standing start in just six months.

In less than a year since releasing its first product, Netscape has established itself as the Internet company and the list of companies it has formed alliances with reads like a "Who's Who" of Corporate America: AT&T, Apple, DEC, MCI, Sun, Silicon Graphics, just to name a few. To my mind, the quality of Netscape's strategic planning, its ability to execute its plans so rapidly and attract powerful partners are much more impressive than the price performance of its stock.

The road ahead won't be easy. No doubt they are burning the midnight oil in Redmond trying to figure out how to displace this rash upstart. Meanwhile, as Marc Andreessen knows better than anyone else, the world is full of bright, hardworking people who right now are working on innovative applications that may pale Netscape and, who knows, even the Internet in comparison.

The risk from Microsoft is very real, but remember Clark and Andreessen built Netscape from scratch, developed its product line, and took over the browser market spending less money than Bill Gates did to licence a few bars of a Rolling Stones song for a Windows 95 TV commercial. Sometimes you can have too much money. As for the guys toiling away on the "next big thing," this is indeed a wild card, but my guess is we can only absorb one "big thing" per decade. If Netscape is smart, and they give every indication they are, they'll keep their doors and minds open and find room for the next Marc Andreessen. To Marc's credit, he'll probably be the first to recognize him and welcome him aboard. He's that kind of guy.