Today, Explained - How Netscape created our tech world

Episode Date: December 17, 2020

In this episode of the Go for Broke podcast, host Julia Furlan travels back to the mid-’90s to explain how a bygone web browser set the stage for modern tech. Transcript at vox.com/todayexplained. Learn more about your ad choices. Visit podcastchoices.com/adchoices

It's Today Explained. I'm Sean Ramos-Verm. It's been a tough year for our politics in the United States. You seldom see the right happily working together with the left, but nothing unites politicians faster than big tech. Red states and blue states got together to sue Google today. 38 attorneys general led by Colorado and Nebraska are saying the company is violating antitrust laws with monopoly power in its search engine and ad sales. Up until today, Google hadn't seen an antitrust lawsuit since yesterday. The federal and state governments are making it rain

lawsuits on the big tech companies right now. They're also going after Facebook, apples in the crosshairs, Amazon too. We've explained why plenty for a nice overview. You can check out our episode from earlier this year titled Tim, Mark, Jeff, and Sunder. But we've never really explored how this all started, what it was like back in the mid to late 90s in Silicon Valley when all of this, I don't know, this entire tech universe was being built. But there's a new show from the Vox Media Podcast Network that does just that.

It's called Go For Broke. It's all about bubbles and the moments they pop. The first season, which you can listen to in full, is about the dot-com boom and bust of the late 90s, and one of the first episodes of the show focuses on Netscape Navigator. Remember Netscape? Amina, one of the producers of the show, does not. And it made me feel 10 years older than her, which I probably am. Anyway, Netscape was one of the first buzzy Silicon Valley startups, the first big IPO, and then one of the first big crashes and burns. Today, we're bringing you that story about Netscape Navigator and how it really set the stage for a lot of what we see in big tech

today. Once it's over, you can go find the entire first season of Go for Broke wherever you listen and subscribe for good measure. Download the app today your team, your favorite player, or your style. There's something every NBA fan will love about BetMGM. Download the app today and discover why BetMGM is your basketball home for the season. Raise your game to the next level this year with BetMGM, a sportsbook worth a slam dunk, and authorized gaming partner of the NBA. BetMGM.com for terms and conditions. Must be 19 years of age or older to wager Ontario only

Please play responsibly If you have any questions or concerns about your gambling or someone close to you Please contact Connex Ontario at 1-866-531-2600 To speak to an advisor free of charge BetMGM operates pursuant to an operating agreement with iGaming Ontario Let's go back to 1995, August 9th, 1995. It's a monumental day for the San Francisco Bay Area. There's no earthquake, no fire, but two things happen that will transform the city's culture forever. At the end of day one, Netscape had a market value of more than two billion dollars.

First, Netscape IPO'd, the startup that created the internet browser that everybody was using at the time. Its early investors made an amount of money that felt almost inconceivable before that day. Investors close to Morgan Stanley, which managed the public offering, got shares for $28. Analysts say they probably sold most of them after the stock opened at more than $70 and crept higher. Venture capitalists around the country are watching this financial moment very carefully. People like Roger McNamee.

His office is full of people jumping for joy, watching the Netscape price go up. But Roger isn't celebrating. The thing about it was that the day of the Netscape IPO was the most tragic day of my life subsequent to my father dying. That's the day Jerry died. Jerry Garcia, the grateful dead guitarist who kept the counterculture of the 1960s, rocking and rolling right into the 90s, died today in California. Mayor Frank Jordan had a tie-dyed flag flown at half-mast outside City Hall. If you've ever flipped on a classic rock station or been in the car with a boomer hippie, chances are you've heard The Grateful Dead.

Known for their appreciation of mind-altering substances and extremely long sets, The Grateful Dead were the original jam band. They were happy. A happy band singing happy music. To a lot of people, especially in San Francisco, the Dead represented a certain kind of tie-dyed optimism and the countercultural spirit of the Bay Area. It's a feeling of togetherness, love. It's all we've had. It's a sad feeling. Their legions of fans, called Deadheads, would follow follow them on tour attending hundreds of shows. It was a lifestyle and a community. So for Roger and the other Deadheads, Jerry's death was devastating news.

Meanwhile, the Netscape IPO was going off the same day. So I get a phone call from John Markoff. John Markoff was the tech reporter for the New York Times. And we spent, you know, four or five minutes talking about the significance of Netscape IPO. And then he goes, okay, enough of that crap. Let's talk about the important thing. Let's talk about Jerry. It's honestly kind of on the nose. A man who represents the spirit of the old San Francisco dies on the exact same day that a record-setting IPO kicks off the dot-com boom

that will give birth to a whole new Bay Area. The Netscape IPO is like that first fleck of gold that showed up in an old-timey prospector pan. The word is out, the gold rush is on, and the Bay Area and the internet will never be the same. Hi, this is Go For Broke, where we highlight moments when everybody loses the plot a little bit and the result is a big old crash. I'm Julia Furlan. Last episode, we looked at how the multi-million dollar marketing campaign behind a little sock puppet couldn't convince anyone to actually shop at pets.com.

Today, to figure out why anyone wanted to throw millions of dollars at the internet in the first place, we're going back to 1995. The chaos in downtown Oklahoma City did indeed resemble... It was the year of the Oklahoma City bombings, the year Michael Jordan returned to the Bulls. The best in the world is back. And of course, the year Seal topped the charts with this absolute banger off the Batman Forever soundtrack. Baby, I'd like to bring you to a kiss from a rose on the bay. Forever soundtrack. But before the dot-com bud hits full bloom, we're looking back on when Netscape IPO'd because this is, in a lot of ways, where the bubble began. Netscape's opening bell

on the stock exchange was essentially a dinner bell for investors that meant it was time to make money. Netscape wanted to make it easier for the average person to use the internet with their flagship product, an internet browser called Netscape Navigator. The icon was a little ship's wheel because their browser helped people navigate this new world of webp pages and hyperlinks. And it sounds ludicrous explaining this now, but before Netscape Navigator came along, every time you opened a website, you would just like stare at a completely blank screen. And it took like a minute just to look at Jerry and David's guide to the World Wide Web, which you now know as Yahoo. With Netscape, web pages loaded much faster. The company was

founded by two main guys, Mark Andreessen, a 24-year-old tech whiz kid straight out of college, and Jim Clark, an older businessman who some people referred to as the adult in the room. I knew Jim and I really trusted him having, you know, worked with him before. And I think mainly, you know, I met Andreessen and here's this young guy who was 20 at the time. And, you know, basically, I thought I can make this guy a star. That's Roseanne Cino. She was Netscape's VP of Communications and one of the first women executives there. She was in charge of getting Marc Andreessen's face on the cover of magazines. Roseanne worked alongside a bunch of dudes, a lot of whom were Marc's college buddies. I think, if anything, it was that these guys were so young. They ranged in age, I believe, from like

19 to, you know, maybe 24. They were really the nerdiest people you could meet. You know, they would sleep under their desks at night and they were smelly and they were goofy. And if you weren't hit by a Nerf bullet at some point during the day, you weren't at the offices. Fundamentally, what these kids with Nerf guns are doing is trying to build the homepage to the internet, a way for regular degular people to connect and learn and experience things that had never really been possible before. I was a fervent, fervent believer. I mean, we drank the Kool-Aid, if you will. It's like, we are going to enable free communication and sharing of ideas on a basis that had not been done before.

Tara Hernandez is one of the engineers. This is the second real job she's ever had, and she's not afraid of working 100-hour weeks. Everybody had that attitude of, we are trying to change the world here. And what we were trying to do was in some ways unreasonable, but we were going to do it anyway. There's a lot to be built, but it's a culture of experimentation and just getting things

done. Here's Roseanne again. It's also invigorating to have a sense where nothing is impossible. Nothing is impossible. Nobody said, oh, we can't do that. We just did it. And the full repercussions of that, no one thought about. Right. Who's got time to think about repercussions when everything's happening so fast? Mark Zuckerberg may have popularized the term move fast and break things, but he's not even in middle school in 1994. And the Netscape crew already has that mentality down pat. This idea that like you don't do things 100 percent, you do them as fast as you can. You do it to about 80 percent and you just shove it out there and you fix it as you go. You know, we always said at Netscape, you don't aim for 100%, you aim for 80%.

Tara and the other engineers are working so fast to maybe build a better world. But ultimately, the company exists for another reason, too. I didn't really understand yet what we were trying to do, but I knew that everybody around me was really passionate about it. What Tara doesn't realize, but the executive team at Netscape knows, is they're speeding towards an IPO. So the idea was, if we went public, we would have an infusion of cash where we could hire a bunch of people, we could do a lot more work, you know, grow faster.

So that was the positive. The negative, there were a lot of people. We could do a lot more work, you know, grow faster. So that was the positive. The negative, there were a lot of them. They want to grow, but like, let's just be real here. Netscape has yet to make any money. If we go public, everything we do is going to be scrutinized. So that's a big downside. But the story goes, the real reason Netscape is rushing its IPO is because co-founder Jim Clark wants to buy a boat. A big-ass boat to stunt on his rivals. I will admit, I didn't even know what an IPO was. Tara was hired just two weeks before IPO day.

In her new hire paperwork, she mistakenly skips the part about employee stock options because, you know, she doesn't want any more annoying paycheck deductions. I get that. Later that night, she gets a frantic call from the hiring manager. She's like, you need to come in right now. I'll meet you there. You need to sign this form tonight. And I'm like, why? She's like, I can't tell you. You just have to trust me. Had I not signed it, I would not have gotten access to the employee stock purchase for what at the time became the hottest IPO in the history of high-tech industry. So on August 9th, 1995, just hours after our man Jerry goes to that great jam band stage in the sky, Netscape IPOs to great success. Keep in mind, this is only nine months after

Navigator launched. Roseanne and the team are shocked. It kept going up and up and up and up and up and up and up and up and up and up. And the price was from, you know, it was supposed to be set at like 12 or 13 and it was up at like 28, the minute it opened. And so then by the end of the day, I mean, it had gone up to 60, and it was crazy. And they were like, oh, you know, it was a complete pandemonium. Netscape is the first big internet IPO. Microsoft, which IPO'd in the 80s, is swimming with millionaires, and Bill Gates is a billionaire. Microsoft is the tech firm right now,

but it's not dominating the internet. Yet. Back inside the Netscape offices, it's disbelief meets celebration. The phones are ringing off the hook. The engineers aren't supposed to be paying attention to it. You know, the idea was, oh, everybody, it's just business as usual. Don't pay attention to the stock price.

It's a little like, don't notice that there's a gigantic elephant trampling everything in your wake. And there's a lot of young people, you can't help but think, oh my God, I have what, like 10,000 shares of stock. I'm a millionaire. Like, it was just like, honestly, it was absolutely insane. Tara and all of her fresh-faced colleagues, who once built an eight-foot-high replica of the Golden Gate Bridge out of Coke cans, they're suddenly millionaires. On paper, at least.

They're like, wow, that number is amazing. That's an amazing number. I mean, how the hell did that happen? It's not just a special day for the Netscape crew. The IPO is the moment when basically everyone in and around the industry sat up and thought, whoa. It was kind of like when you saw the rocket go to the moon. Michael Moe was working in finance at the time at Lehman Brothers in New York. He saw the Netscape IPO and got so excited that he packed up and moved to Silicon Valley later that year to become a tech investor. Netscape, you know, I think frankly, in many respects, was a starting gun that went off

that said the future is happening here. Wall Street is psyched about Netscape's potential. After this moment, every dot-com company points at Netscape as an example of how and why they should go public. In under a year and a half, the company goes from not existing at all to an IPO valued at billions of dollars and their 20-something CEO sitting barefoot on a throne on the cover of Time magazine. Now, just to check in on the details here, Netscape still isn't profitable. It's planning to make money via licensing Navigator to big companies, but for consumers, it's free to use. There's still a lot about their business model that's unproven.

But that stock, though. And even though everybody tells you it doesn't count until it's in your bank account. You know that part in Roadrunner vs. Coyote where they run off a cliff and they're still running, but there's nothing beneath them? Tara and her colleagues, they think they're rich. Houses, cars, multiple cars, airplanes in some cases, boats, really, really fancy toys. One guy started showing up always wearing designer clothes and lots of bling, lots of bling, you know, diamond studded fingers. It feels like the sky's the limit. But if there's one thing I learned from that mix CD

my high school boyfriend made for me, it's that every silver lining has a touch of gray. Put on the curtains, I don't care Cause it's all right Is it all right? Because the money that's arriving in Silicon Valley is changing every single thing about it. Turns out the Grateful Dead was onto something

because it is even worse than it appears. Or it will be soon. Support for Today Explained comes from Aura. Aura believes that sharing pictures is a great way to keep up with family, and Aura says it's never been easier thanks to their digital picture frames. They were named the number one digital photo frame by Wirecutter. Aura frames make it easy to share unlimited photos and videos directly from your phone to the frame. When you give an Aura frame as a gift, you can personalize it, you can preload it with a thoughtful message, maybe your favorite photos. Our colleague Andrew tried an AuraFrame for himself.

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Hi, I'm Julia Furlan and this is Go For Broke. This episode, we're looking at how the excitement following the Netscape IPO is about to change the Bay Area. So I came to Silicon Valley in 1994. I had graduated from college. Rents were so low that my sister had a spare bedroom in San Francisco. Katerina Fake is a tech industry OG. She co-founded Flickr and was the chair of the board at Etsy. Now she's a venture capitalist. Katarina arrives in San Francisco with a college degree and no intention of working in tech. But that's fine because this was long before San Francisco had the most expensive rent in the country. It was like full of cafes. And you could actually support yourself as an artist working at a cafe.

Seriously, it was like the city that was like this was a magical place, right? After settling into the city, she starts to freelance, and eventually she gets hired by Netscape shortly after the IPO to be a host for their community boards, which were these chat rooms where people would hang out and shoot the shit about the things that they cared about. It's like a party. It's like you're having a party at your house. So people in these chat rooms are all excited about science fiction and literature, and Katarina feels like she's really helping cultivate actual community. You felt like you were, you know, at the start of something huge and miraculous and cool. You know, people were in it for the love of it.

But this group that Katarina is carefully building is ultimately part of Netscape, which means that these tender gatherings of human people discussing the Dune Chronicles and whatever else are a business. A business that Netscape might not see the value in. And then one day, it was gone. And we got an email that said like, by the way, you know, business decision, we have decided to shut down Nightscape communities. And they pulled the plug. And when I say pulled the plug, what I mean is they actually probably

went to the wall and pulled the plug of a server out of the wall, because I don't think anybody really gave that much thought to the fact that there was an actual community there where people were talking to each other and interacting and probably dating and having relationships. And right around this time, just as she's seeing her online communities being dismantled, she's also starting to see her physical community change. San Francisco was once an affordable, artsy utopia. And then... There was a sudden influx of 27-year-old dudes in khaki pants and blue shirts riding around in BMWs. And you're like, who is that asshole? The rents started to creep up faster and faster.

Suddenly, you started noticing all these people that were very different, that were kind of so-called working in tech. The people who came to work in technology, quote unquote, didn't come to build things. They came to make money. And those kinds of people are very different from the people who were around at the time. And it was very noticeable. They were there to strike it rich and like it felt like, was there like a community around it? Community. Community of people trying to make money. I don't know if that's really a community, I guess you could call it that. At this point, San Francisco is filling up with people who want that Netscape money,

and dot-com companies are all starting to act like stock prices are a sure thing. The entire town was swimming in parties and swag. There was a rumor that some internet startup had taken their launch budget and hired Van Halen to play at their launch party. Sometimes you would show up and your swag bag would contain a telephone, an Apple computer, walkie-talkies, and, you know, it was just part of attending a party. And then there would be these, like, ice sculptures with gin fountains and dancing girls. Like it was crazy. I'm not that kind of party girl. It's just not my scene. But I would just go frankly, because the swag bags were so good. And I was like, huh, I could actually use a new laptop. Getting free laptops and having wild parties is great. Like, I don't know too many

people who would turn down that amount of free shit. Me included. It was excessive. It was excessive and wrong. Like, you could feel how excessive and wrong it was. That was the beginning of the dot-com boom. That was it. Netscape IPO, I think you can trace it actually to that.

Meanwhile, back at Netscape, Roseanne, who was their head of communications that you heard from before, she was right when she said that going public was going to change things. Not only did they have more scrutiny from their investors, but when you're sitting on a throne on the cover of Time magazine, people notice.

There's also the increased spotlight put on, and that's when Microsoft starts to really pay attention. There's this video from this moment in time that you just have to see for yourself. It's Bill Gates and other Microsoft executives awkwardly dancing in their polo shirts and pleated khakis on a gigantic stage at the launch of Windows 95.

Billy G is dancing with the sublime knowledge that he has just become the wealthiest man in the world. In downtown Seattle, people are lined up outside computer stores trying to get their hot hands on a copy of Windows 95, an operating system that soon finds its way onto 90% of the world's personal computers. A bit after the launch, Roseanne gets a phone call from a woman on her team who's at this big developers conference. And I will never forget this. She said, you're not going to believe who is staring at our browser right now. And it was like, yeah, pretty obvious, right? It's Bill Gates. And he was just, you know, he was looking and he was, oh, you know, zero in on what it could do

and what we were doing and all of that. That was really a moment that was, you know, it was kind of shaking, you know, because it's like, wow, we are targeted now. And this, children, is the start of what was known as the browser wars. See, before Chrome or Safari were even a glimmer in their creators' eyes, it was all about the great battle between Netscape Navigator and its sworn enemy, Microsoft's Internet Explorer. The day Internet Explorer 4.0 launches in 1997, some Microsoft folks decide to play a little prank. Some Microsoft employees left a big physical version of the IE logo on Netscape's front lawn.

Tara Hernandez and her coder colleagues quickly find out and cover it up with their own logo, but they add a little extra seasoning so that they have the last word. They put up a sign that says, 72% market share. That was cool. That was powerful. That was worth more than anything Microsoft had. At its peak, Netscape had claimed 90% of the market. But Netscape's lead is slipping as Microsoft starts using its many advantages to bully its way to the top. Every computer that runs Windows 95 comes preloaded with Internet Explorer, allowing Bill Gates to chip away at Netscape's dominance.

The hardware vendors weren't putting Navigator on the computers anymore. There was no financial incentive to do so. I do remember that sensation of noticing that our market share had dropped, like, by half. Bill Gates and the Microsoft team have Netscape in a vice grip that begins to tighten and tighten. And Roseanne and her colleagues are feeling it.

A lot of our customers wouldn't go on record saying this, but they wouldn't buy from us because they were being threatened. If they bought from us or they bundled our browser or our software with their systems, they were going to lose their operating system. By 1998, Netscape loses majority market share and never gets it back. Internet Explorer is now the preferred browser. Netscape, which never made it to profitability before Microsoft got in the game, is suddenly a lot less popular, and its share price takes a dive.

Tara still remembers seeing her co-workers reckon with the harsh reality of their quote-unquote paper millions. People lost their houses, right? People got their cars recalled. Like, there was such a belief in the only positive outcome when it came to the stock. They literally banked their futures on it and it was devastating to many people. Not a lot of companies went up against Bill Gates in the 90s and lived to tell the tale. Looking back, Roger McNamee, the deadhead investment guy, feels that Microsoft had an unfair advantage. But there is one thing that I'm hopeful we do take away from it, which is that monopolies are bad. Microsoft was indisputably a monopoly.

The U.S. government eventually brings an antitrust case against Microsoft, which goes on for years. But in the end, Bill Gates and Microsoft get off with a slap on the wrist. We're in a fast-moving, competitive industry, but we will focus more on how our actions affect other companies. But it was too late for Netscape. Defeated and spiraling, it was bought by AOL in 98

and dismantled some years after that. Despite its slow march into obscurity and despite the fact that most people under the age of 30 have no idea what a Netscape even is, the company's legacy shifted the history of investing, of technology, and ultimately the internet we know today. Thanks to the IPO, once everybody figured out there was big money to be made, the rush was on. The United States has a culture that is unique in the world in embracing entrepreneurship as a lottery ticket. That we have a predilection in this country for mania. And, you know, we've had manias from the earliest days in the country

and financial bubbles that have built up around many of them. This bubble would set the stage for technology becoming a cultural and economic force in the world, you know, for better or worse. Roger, who made his fortune investing in tech, but is now one of the industry's loudest critics, thought that if his hero, Jerry Garcia, had been alive to see the tide starting to turn, that maybe he'd play us a song as a warning.

Ship of fools On a cool sea Grateful Dead's Ship of Fools. It encapsulates the fundamental problem in Silicon Valley, which is that the people leading the tech community are disconnected from the reality of the people that they touch. They are insensitive and unaware of the responsibility that comes with great power and they have essentially created an environment where

we are willing participants in our own demise. The question is, can we learn? Or are we a ship of fools? Next time on Gopher Broke, the ship of fools sets sail. We're going to take a closer look at the boom before the bust because nobody sees that iceberg yet. Especially the venture capitalists who truly do not get it. There were white investors who just didn't understand why would African-Americans want to socialize? Nobody's going to care about race in the future, so why would anybody want a social network that had some kind of ethnic or racial, you know, kind of watering hole? hole. Archival clips from MTV News, CBS News, C-SPAN, KTVU News, Nat Geo's docudrama Valley of the Boom, NBC Sports, and NBC News.

Special thanks to Epix, Malice Toussere. Charlotte Silver is our associate producer. Gopher Broke is produced by Bridget Armstrong, Megan Kinane, and Zach Mack. Isaac Kestenbaum is our editor. Anil Dash is our editorial consultant for the series. Gautam Shrikashen engineered this episode and composed our theme song. He's leaving Vox Media this week, and we're going to miss him a lot. Art Chung is our showrunner.

Our executive producers are Nishat Kerwa and Joshua Behrman. Go for Broke is a production of Epic and the Vox Media Podcast Network. If you liked this episode, and I really hope you did, please, please, please leave us a rating and a review on Apple Podcasts. It helps the show, and it helps me personally know who is on my side. Subscribe for free to the series on your favorite podcast app. I'm Julia Furlan, and, you know, just got to say, keep on truckin'.