This New Internet Thing, Chapter 30

I wrote a book. The publication date is May 29, 2024 (if you’d rather not deal with Amazon, your bookstore can also order it from the distributor Ingram Spark, or print-on-demand if they have the equipment). You can read it for free here, although it’ll be in serial form. My fond hope is that you’ll find it so compelling that you just buy the book instead of waiting 8 months to see what happens. There will be a chapter each week, 33 in all.

In Chapter 29 (notes), Janet is at Netscape, her dad is helping a VC firm with its little Internet startup, and Microsoft is like the Eye of Sauron. In this chapter, it’s Netscape Day! They go public, despite having no profits, and the price explodes to $74! Janet’s going to be rich. Len must have done something right raising her.

Reading in serial form has a long and honorable history. My cover artist sent me this “Read Like a Victorian” website. Enjoy.

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Miriam was getting impatient about when she and Patrick were going to move to Seattle. Wasn’t that where everything was happening at Microsoft? How was he ever going to climb the corporate ladder down here?

Patrick had strict orders not to repeat company secrets, but eventually she wore him down.

“Look, you can’t repeat this, OK?”

“Of course.”

“Microsoft is developing their own Internet browser. I’m in charge of evangelizing it down here.”

“These techies and their stupid words!” she thought. “ ‘Evangelizing’ !”

“A ‘browser’? That’s for using the Internet, right?”

He nodded. “Chairman Bill is worried they’ll displace us with it, or something. He can’t convince anyone else up there, but he’s got a bug up his ass about it.”

“Displace Microsoft? Isn’t that ridiculous?”

“As I understand the concern, application writers could write to Netscape’s interfaces instead of ours, and then their apps will run anywhere, not just on Windows.”

Miriam didn’t follow this at all. When Matt used to explain his business to her, it sounded like voodoo half the time, and this definitely did.

“So what do you do about it? Tell people Microsoft’s browser is going to be better, or what?”

“That’s a big part of it. Also pressing on some other leverage points.”

This sounded mysterious to Miriam. “Leverage points? Like what?”

Patrick shifted in his seat. “Oh, different business deals and so forth.” He didn’t seem eager to get into the subject, so she dropped it.

* * *

Len was having his weekly meeting with Brad back at the VC in mid-June. Brad had some exciting news for him!

“Guess who’s going public?”

“No clue. Who?”

“Your daughter’s company, Netscape! We just heard on the grapevine.”

Len was incredulous. “Already? How can they do that? They’re not even profitable!”

Brad shrugged. “It’s a new world, Len. Profits are just so old-fashioned!”

“So instead of profits, what do you have?”

“Growth, my friend, growth. Their revenue growth is off the scale. Not to mention the future potential.”

Len tried to take this all in. His first thought was, “Does Janet know this yet? And if not, can I tell her?”

“Wow. What’s their valuation going to be?”

Brad said, “A lot. The underwriters are going to set the share price when they see what the market will bear.”

Len didn’t know how all that worked, so Brad explained the “road show” and how Morgan Stanley would go out with Barksdale, the CEO, talk to the big money guys, and see what their reaction was. He said,

“So your daughter’s going to be very rich, Len! Are you ready for that?”

“My little girl, a millionaire! It is hard to take in.”

“Well, you can be very proud, Len. You must have done something right raising her.”

Len teared up and excused himself. He went to the bathroom and wiped his eyes. All those nights driving 12-year-old Janet to the library to check out books. All those astronomy classes where she was the only girl. All that tuition for Kingswood and then MIT. Who ever thought?

What would she and Walt do if they suddenly didn’t have to work anymore for the rest of their lives? He honestly had no idea. “Don’t do anything rash!” was the only advice he was going to give them right now.

Janet of course already knew about the IPO. Word spreads fast in Silicon Valley. A company-wide email went out, reminding everyone that there was a “lockup period” for employees in an initial public offering like this, which was customary to prevent company insiders from dumping their stock and splitting. Not that anyone would really do that, heh, heh.

There was also a “vesting” period for stock options, which was usually four years, 1/48 each month. Until your stock was vested, it still belonged to the company. “Fully vested” was something a senior engineer might boast to emphasize that, hey, he could cash in his stock and quit anytime.

Since she’d only been there a few months, almost none of it was vested, and it would be mid-1999 before she had all of it. So: no sudden riches! She wondered if Dad or Walt knew all that. There’d be some interesting conversations tonight.

She was always hearing about people who’d made a bundle and quit working in high tech. There was a guy who’d cashed in from 3Com’s IPO and retired. He was now making music at his own studio up in Marin, pretty mediocre music as far as she could tell. Some other guys were hanging around in the Valley and goofing off all day, or else being junior philanthropists. One lady who’d retired was full-time in wine, that being her passion. She would set up a wine party for you and your friends, with some unusual wines from small vintners that you probably had never heard of. Janet thought, “Meh. How exciting would that be, after a while?”

Not having to work at all — that was everyone’s dream, or so they claimed. But for the vast majority of folks that was all it would ever be. Now it was going to be a reality for her, if the stock price held up long enough for her to sell it. Who knows how that would go over the next four years? Microsoft certainly wasn’t going to sit idly by while Netscape ate their lunch. Bill Gates was a mean, greedy bastard.

What would Walt think about it? He’d always done hard physical labor, so wasn’t he going to get tired of it eventually? The thought of him sitting around the house and drinking all day wasn’t a happy one, not that he was really a drinker now. Maybe it was really a good thing that she wasn’t going to get a big rush of money all at once; they’d have plenty of time to think about it.

* * *

Grant Avery heard about the IPO and called Janet to congratulate her. He got sent to her voicemail, which he figured must mean she was getting a lot of calls today. He thought of asking if he could borrow a quarter million dollars until next year, but thought better of it.

Grant was bravely struggling to stay abreast of all the management changes at Taligent. The computer press had turned on them, since Apple’s “next OS” story was becoming boring. John Sculley, who had pushed Steve Jobs out, had himself been ousted by the board, and Michael Spindler was now the CEO. How Apple’s operating system was going to evolve was a long-running soap opera. Jobs was off doing his NeXT Computer company, making this über-cool black cube that no one was buying. It wasn’t clear anymore if Apple would ever ship anything with Taligent’s software.

“Object-oriented” had been the computing industry gospel for so long that people were beginning to doubt that it meant anything, except maybe on a single machine. However, that was not the ballgame anymore. “Distributed objects”, where a program on one machine might have a “handle” to an object on another and be able to do things to it, was a whole other field of study. Legions of computer scientists and bureaucrats were working on that, and had been for years.

Still, IBM continued to put its massive weight behind Taligent, plus there was the Object Management Group (OMG), a multi-company consortium of Apple, IBM, Sun, Data General, HP, and some others, founded in 1989. OMG didn’t release any software, but periodically they’d release a “standard” and maybe — maybe — some companies would release “OMG-compliant” tools. Grant had been appointed Taligent’s representative to the OMG. It seemed inevitable that he would eventually be a fulltime employee of IBM. That seemed fine to Grant; IBM was a solid, lifetime company, their mainframes weren’t going anywhere, and neither were their big corporate customers. People used to joke that “IBM” stood for “I’ve Been Moved,” and he figured they might move him somewhere else in the country, which would be fine with him.

He’d tried before to interest Netscape in Taligent or the OMG, and he got nowhere at all. He didn’t know what these folks thought they were doing there, or how they expected to make any money from free software. “They’ll make it up on volume!” was the joke he liked to tell.

Grant was now a divorced guy in his 40’s, and wondered if he’d ever get married again. He still went bicycling with the Western Wheelers, and he even remembered some of the people from when he lived here before! But that was not a source of romantic attachments. He also went on hikes with the Sierra Club, something Janet and Dan had both told him about, back in the day. Once in a while he met someone and went out with her a few times.

* * *

That night, Janet and Walt were sitting on the couch when Len came home.

“Wow, do we ever have news for you!” she said.

“Netscape is going public?”

She snapped her fingers. “I should have known you’d hear.”

“Yeah, we vulture capitalists know everything. Anyhow, congratulations, you two! I bet you didn’t expect it so soon!”

“God, I’ll say. I figured it’d be years.”

They talked about how many shares she had, and about how vesting and lockups worked. What would the share price be when she could finally sell some? Len said all the VCs were trying to get some shares of the offering, so he didn’t know if he’d even be able to buy any.

Janet said, “We’re kinda discouraged from talking about it too much at work. People feel like it isn’t real.”

Walt said, “In my line of work, if this kind of thing happened everyone would disappear and never come back.”

Len said, “It’s a different world than we all grew up in, that’s for sure.”

No one felt like talking about it any more for now. They turned on the TV news for the latest in the O.J. Simpson trial. Len said, “He’s gonna walk. I know it!”

Walt chimed in, “You really think so? With all that evidence?”

“Doesn’t matter. He’s black, the victims are white, the prosecutor is white, and no one likes her. Case closed.”

* * *

The investment bankers, Jim Barksdale, and Marc Andreesen were off on the East Coast doing the “road show,” where they presented Netscape to rooms full of sober-minded financial types in suits. From what people back in Mountain View were hearing, it was shocking how enthusiastic they were. The offering price was in flux up until the last minute. Usually a new stock came out at around $15 a share or so, which was a delicate choice for the underwriters: you didn’t want it to drop right away because then the buyers would feel cheated. On the other hand, if you came out at $15 and it went to $25, that meant you could have gotten that extra $10 for the company. They had to gauge what was going to happen. The final offering price was set at $28.

August 9 was the magic day, and demand was so heavy that the opening of trading was delayed for two hours. People at Netscape were directed not to pay any attention to the stock price, but that was impossible. When the stock finally opened, the price was $71! It got as high as $74 before settling down for the day at $58. Janet knew she’d remember this day for the rest of her life.

If she multiplied the number of shares she had by $71, it was an unimaginably big number. What would she do with all that money? “Oh well, it’s not real. Yet.” she thought. All the TV news shows led with the Netscape IPO. No one had ever seen anything like this. People who’d never even heard of “the Internet” were now issuing breathless proclamations that “this changes everything.”

At work the next day, the excitement had worn off already, since no one had any cash in their accounts yet. The work schedule was harder than ever. Almost all of her tech friends were shaking their heads. The Internet had been around for years. Janet had gone to a conference about it almost four years ago. But now the world outside had heard about it, finally. Whereas before the joke had been, “How do you make money on the Internet? Porn!” now it was “How do you make money on the Internet? You start a company and include ‘.com’ in the name!”

* * *

Len was struck by the change in atmosphere at the VC firm. Before it was kind of Quiet Big Money, like you were in the inner sanctum of some global-scale bank. Now everyone had a crazed look in their eyes. Was it the IPO?

Brad was busy in a meeting, and he had to wait in the lobby until it was a half hour past his meeting time with him. He was beaming when he came out to get Len, apologizing profusely for his lateness. On the way back to his office, he said,

“It’s been absolutely crazy around here. We have random mom-and-pop investors calling and asking how they can get in on this Internet thing! Our receptionist has to tell them we’re not a retail brokerage.”

“Wow” said Len.

“Our chairman is asking us all to review our portfolios and see if we have anything we could take public, even if it’s not profitable yet! Maybe even, especially if it’s not profitable yet.”

“I hope NetsForAll isn’t one of them!”

“Well, actually… that’s one of the things we have to talk about, Len. There’s an old saying in investment circles: ‘when the ducks are quacking, feed them.’ “

“I take it that all those people calling on the phone would be considered ‘ducks’?”

“And everyone who bid up the price to $74 yesterday!”

Brad continued, “I have some friends who are in the retail brokerage business. They said they’ve never seen anything like this: customers they haven’t heard from in years, calling and asking if they can get some Netscape shares.”

“I think my daughter is kinda tired of talking about it, actually.”

“Yeah, I was wondering what it’s like inside Netscape!”

“Oh, I think you’d be disappointed. These are computer nerds, Brad.”

“God bless ‘em!” Brad said. “Now let’s figure out how to make money off them!” They sat down.