Saturday, October 20, 2012

How Netscape changed the world

Netscape Time: The Making of the Billion-Dollar Start-Up That Took on MicrosoftNetscape Time: The Making of the Billion-Dollar Start-Up That Took on Microsoft by Jim Clark

The stock market flotation of Netscape in the summer of 1995 made all the front pages and network news shows, alerting anyone who hadn’t been paying attention, to the dot com boom. As a promising startup, Netscape Communications had it all: based in Silicon Valley, a few months old, its assets the work of a bunch of geeks straight from college, expanding fast, not making a profit and giving away its product to ordinary consumers. And its product was a browser – whatever that was.

In 1995, if you thought all that didn’t add up to a good investment prospect, it just showed you didn’t ‘get it’: those in the know would explain that the internet worked under different rules and if you were too concerned about a company’s balance sheet, you were going to lose out. On its first day on the stock market, Netscape shares doubled in price, valuing the company at $2.2 billion.

Microsoft was distracted by the launch of its new operating system, Windows 95, and had to play catch up in the browser market. But Bill Gates was soon ready to take on Netscape with Microsoft’s own Internet Explorer browser. The tactics used to do so led to a protracted case against the company brought by the Department of Justice – the one in which Bill Gates’ sulky videotaped deposition cast him and Microsoft in a new and less glamorous light. Along with Gates' brilliance and unimaginable wealth, there was anger and stubbornness too.

Jim Clark invented Netscape Communications. He had already founded the successful Silicon Graphics company (SGI). He had fallen out with its CEO and been left, bitterly, on the sidelines, disagreeing about the direction the business should take.

Netscape was his revenge on fate: this time he would fund the company himself so nobody could second guess him. He would hitch his wagon to the emerging internet and would sign up Marc Andreessen and a bunch of his student friends, and have them reproduce the Mosiac browser they had just written at the University of Illinois.

Netscape Time is Clark’s own account of all this. If you have read Michael Lewis’ The New, New Thing, about his encounter with Clark a few years later, you may be disappointed. The narrator of Netscape Time isn’t quite the colourful, extravagant character painted by Lewis. Here, Clark appears reasonable to the point of dullness. And he is disappointingly discreet about those around him. Andreesen, in Clark’s account, is a techy genius and full of good sense. Some of his fellow programmers have eccentric haircuts and a love of pizza and remote controlled cars, but somehow they don’t exactly come to life, except in an utterly stereotypical way.

And there isn’t much detail about what Netscape Communications was trying to do, or why, ultimately, it failed – except to say that Microsoft’s sharp practices made fair competition almost impossible.

I read the book after enjoying Charles Ferguson’s account of dealing with Netscape for his software business Vermeer Technologies (in his High Stakes, No Prisoners, which I wrote about here.)

Ferguson gives a convincing account of why he believes Netscape blew its early advantage over Microsoft through a series of technical mistakes and failures in software architecture. He had the impression that Andreesen and his fellow programmers weren’t properly managed by the more experienced people Clark had brought from Silicon Graphics. And he thought that Netscape’s CEO, Jim Barksdale, had no real interest in the details of technology, only in business.

But Clark’s book doesn’t throw much light on any of this. The only technical detail Clark shares with his readers - repeatedly - is that the browser Andreessen made for Netscape was “ten times faster” than the original Mosaic browser. As to how it would integrate with other software or how Netscape was making money from it, we’re left to guess (although he does describe the financial side of his negotiations with some big telecoms companies). It’s hard to say whether Clark or his publisher decided that anything vaguely technical would put readers off, or whether that really wasn’t Clark’s interest either.

The most vivid episode, because it’s described with enough detail to draw you into the story, is Clark’s battle with the University of Illinois and Spyglass, the company to which the university had licenced Mosaic. Through some fancy legal footwork, involving the closure of offices at different times in different time zones, Clark orchestrated his way out of being sued by Spyglass for unauthorised use of the intellectual property behind Mosaic (even though he had carefully made Andreessen and his colleagues rewrite the code from scratch at Netscape).

The battle with Microsoft, ultimately more important for the fate of Netscape, is less well covered, partly because the Department of Justice case was still being heard at the time of writing. As in Ferguson’s book, the figure of Gates is a huge force, slightly off stage in both accounts, but still influencing events, even if only because others were wondering what he’d do next. As Clark puts it, “Microsoft’s huge advantage changes the shape of the industry itself, in the way the gravitational pull of some huge celestial bodies actually warp space and time.”

Clark makes a good intellectual case for the breakup of Microsoft, which was being seriously discussed as part of the DoJ case. It never happened, but what did – just as the book was being finished, I’d guess – was the sale of Netscape to America Online in November 1998. Clark optimistically describes Netscape as now being a “portal company”, through its Netcenter. But unfortunately, no other software from Netscape ever matched the firework, both financially and technically, that its browser had been.

In the New York Times report of Netscape’s IPO, one can see just how much we now take for granted was still new: in August 1995, the Times still feels it necessary to refer to “the global computing web known as the Internet.” There was much important stuff that Clark was prescient about: he put the internet and business together to form a vision of a “revolutionary communication medium to grease the skids of consumerism and commerce”. He saw potential that others hadn’t yet recognised and acted upon it, with his own money.

Both Clark and Ferguson’s stories end on a downbeat note: they are both richer – much richer in the case of Clark – but their creations, software companies both, have failed to grow up as independent businesses (Ferguson’s was sold to Microsoft). But although we now know that Microsoft wasn’t broken up, the pessimism Clark and Ferguson feel about its inescapable dominance doesn’t hold any more. Apple, pretty much written off in both books, is resurgent, with a larger market cap than Microsoft (try telling that to anyone in 1998). And other internet businesses, notably Google, have shown that Microsoft can no longer exert the kind of “gravitational pull” that Clark describes.

Netscape did something big, pointing the way to our future, thanks to Clark. It was a firework worth building - however quickly it burnt - and worth remembering.

Here is a good, independent Netscape timeline.

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