Thrill and anticipation were sky-high. Momentum had been building up since the announcement, and the demand was so strong that when the markets opened at 9:30am ET on 9th August 1995, Netscape shares were still not trading. Even large brokerage firms, such as Charles Schwab, were overwhelmed with the influx of retail investors looking to make orders. Some retail investors bet their life savings or mortgage their houses to participate in one of the most anticipated initial public offerings (IPO), though some of them didn’t even know what Netscape was. They just wanted to be a part of this revolution. Investors also didn't want to miss out on the next big thing like they had on radio or computers (Microsoft).
Initially priced at $14 per share for its IPO, Netscape's price would be doubled at the last minute before opening due to the tremendous interest from investors. And when the first trade hit at 11 a.m., the price was already way up at $71—almost triple the offer price and more than five times the initial price. What was happening? Bankers couldn’t wrap their heads around it. Journalists couldn’t find the right words to explain it. And even after steadying at around $58 at the end of the first trading day, the price kept shooting up in the coming months. By the end of 1995, Netscape’s shares traded at about $174 (over six times its IPO price).
Arguably the most defining IPO of our time had just happened, igniting the beginning of a new wave of businesses, and, ultimately, new way of life. The internet had arrived.
The internet did not, of course, begin in the 1990s. As with many innovations and scientific developments, it is impossible to pinpoint when or who started it. However, early pioneers such as J.C.R. Licklider and Lawrence G. Roberts are often credited with developing the first proven method of linking computers to interact with one another as early as 1950s/60s when “digital library” was bourgeoning. But it was not until the development of the web (www) in 1990 by Tim Berners-Lee at CERN (in Switzerland) that the internet took form. Now computer users could not only exchange files but also link them into systems, click, access, and retrieve information from individuals all over the world. There was another problem though: the web was originally developed for information sharing among scientists and academic institutions, which means that it was still complicated to navigate and inaccessible to ordinary people.
On the other side of the world at the National Center for Supercomputer Applications (NCSA) in the United States, a 22-year-old Marc Andreessen, now a co-founder of one of the largest venture capital firms, Andreessen Horowitz (a16z), spotted an opportunity in the web and was about to transform the world. He and his friends were fascinated by the web and wanted to make it available to the public. In 1992 they developed Mosaic, the first public web browser. Mosaic essentially provided a user-friendly way to traverse the web—to scroll, click links, and even, for the first time, embed photos on the same page with text (I know, it seems obvious now that text and photos should be on the same page right!?).
After leaving NCSA in 1994, Marc co-founded Netscape, the first commercial browser, based on the idea of Mosaic. Its flagship product, Netscape Navigator, quickly rose to become the de facto standard browser and helped millions of people discover the internet. Marc also became popular on the web, radio and television. Journalists referred to the young Marc as the next Bill Gates and Netscape as Microsoft's replacement. But Netscape knew that if Microsoft joined the race, it would soon be over for them. Therefore, they realised that it was critical to list and secure public capital and increase market share before competitors caught up. At this point it was a mere one-and-half-year-old unprofitable company with two quarters of revenue.
One question was still lurking though: was Bill Gates ready to give up his throne? Or was it worth it for Microsoft to join the obscure internet war when they already dominated about 70%-90% of the computer operating systems market? Check part 2.
Comments