Illuminating the Web: Netscape’s IPO of August 1995

It was 19 years ago tomorrow when Netscape Communications illuminated the World Wide Web for millions of people and catalyzed what became the dot.com boom of the late 1990s.

Netscape did so with an IPO, the initial public offering of its shares; it proved to be a decisive moment of the watershed year that was 1995.

The company made the first widely popular Web browser, Netscape Navigator, through which millions of people found their way to the early Web. And Netscape, as I write in my forthcoming book, 1995: The Year the Future Began, epitomized the swagger and panache of Internet startups of the mid-1990s. It was founded in 1994 by James H. Clark, he of Silicon Graphics fame, and by Marc Andreessen, whom Newsweek magazine was to call the “uber-super-wunder whiz kid of cyberspace.”

The IPO took place August 9, 1995, following a multicity roadshow in which Clark, Andreessen, and James Barksdale, the gentlemanly CEO, pitched Netscape to would-be investors.

By conventional measures, Netscape hardly seemed a likely candidate for a robust IPO. The company was just 16-months-old and hadn’t turned a profit; indeed, its losses in the first two quarters of 1995 topped $4 million, and further losses were forecast. But it did have a commanding share of the then-emergent Web browser market and its principal figures — Clark, Andreessen, and Barksdale (or, as they were sometimes called, “Clark, Marc, and Bark”) — were engaging and colorful in disparate ways.

“I did everything I could to package Marc and Clark,” Mike Homer, Netscape’s vice president of marketing, recalled 10 years later in an interview with Fortune magazine. “We had this cool guy [Andreessen], and the other guy [Clark] is like Yoda. It’s so good as a story for the press.

Netscape principals: From left, Barksdale, Andreessen, Clark

“Then you throw Barksdale into it, and it was … 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.”

Clark, the company’s principal original investor, later said that he wanted Netscape “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.”

Even though August traditionally was not a time favorable for an IPO, Netscape pressed ahead. Its IPO, underwritten by Morgan Stanley and Hambrecht & Quist, was for 5 million shares, priced at $28 per share.

But for nearly two hours on the morning of August 9, an order imbalance kept Netscape shares from being traded: Demand for the stock was that heavy. Finally, Netscape opened — at $71 per share, and climbed as high as $74.75 a share before settling at day’s end at $58.25.

It was, I write in 1995, “a smashing debut by any measure.” The New York Times the next day called it “the best opening day for a stock in Wall Street history for an issue of its size.” The Wall Street Journal pointed out that it had taken General Dynamics 43 years to become a corporation worth $2.7 billion in the stock market; it had taken Netscape “about a minute.”

Inevitably, hyperbole surrounded the IPO. Newsweek said the offering of Netscape shares “produced an unprecedented stock frenzy–a gold rush not seen about northern California since Sutter’s Mill.” (On the other hand, Fortune said the IPO was “nutty” and “unquestionably the most hyped” IPO in history.)

In time, the 1995 IPO came to be known as the “Netscape Moment,” a blockbuster stock offering that captures wide attention and produces broad effects.

But really, there could be only one “Netscape Moment” for the Internet, only one IPO that would illuminate the Web and its commercial potential in unprecedented fashion. “If the World Wide Web had not yet gotten the public’s full attention,” Tim Berners-Lee, the father of the Web, later wrote, Netscape’s IPO “put it on center stage.”

Like no other single moment of the early digital age, Netscape’s IPO brought the Web into popular consciousness and, as I write in 1995, “demonstrated that the Internet could be a place to make fortunes fast.”

The “Netscape Moment” was not to last. Later in August 1995, Microsoft introduced the first, crude version of its Internet Explorer browser, signaling the start of the “browser war” that Netscape would lose. In 1998, Netscape was acquired by AOL in a stock transaction ultimately valued at $10 billion.

WJC

More from The 1995 blog:

• How important was Netscape?
• Recalling the ‘coolness’ of the early Web
• Anniversaries, controversies for Amazon.com
• What did the ’90s mean?
• The ’90s deserve better
• Why 1995?
• Talking 1995
• Welcome to The 1995 blog