The Next Stage of Net Evolution
In an industry whose management ranks swell with youthful prodigies, it can be hard to find someone with the business acumen and experience to channel the often-brilliant but sometimes goofy impulses of the twentysomething architects of the Internet.
Jim Barksdale, chief executive of Netscape Communications until its acquisition last month by America Online, and former CEO of AT&T; Wireless Services and COO of FedEx, is one such parental figure. I caught up with him recently for lunch during which he offered some insights about the Internet industry.
As star antitrust prosecution witness against Microsoft and head of a large Internet fish that gobbled up smaller ones about once per quarter only to eventually be gobbled itself, Barksdale seemed ideally qualified to explore food-chain dynamics. I asked whether the current orgy of consolidation might have pernicious effects on innovation.
AOL’s takeover, which included an alliance with Sun Microsystems, was not just a great deal for Netscape shareholders, Barksdale argues. “I’m convinced it’s best for the customers because it gives us the resources and the depth to compete against people like IBM and Microsoft,” he said. “I don’t know if you’ve noticed lately, but a lot of the independent software companies haven’t done too well.”
Predictable reasoning from a man who walked away from the deal with upward of $700 million?
Maybe, but he does have a point. Brute force often overcomes bright ideas, even on the Web. Netscape, a pioneering icon, fought the good fight for choice on the Web. But it faced an uphill battle competing not just against Microsoft, but Yahoo, Excite and Amazon.com, among other Web titans.
Still, there are already signs that the fertile environment that helped Netscape make pivotal contributions to Web browsing, communication and commerce may well be washing out of the building along with the flow of post-merger layoffs and opportunity seekers--including several key executives and technologists, Barksdale among them (though he remains on AOL’s board of directors). A growing number of those refugees have launched start-ups that they hope will parlay their talent--and clone Netscape’s magic--in new realms.
The more prominent ventures by ex-Netscapers include Passpoints.com, designed to build consumer loyalty for e-commerce merchants, and Tellme Networks, which has garnered considerable venture capital and attention for a still-secret business idea on the strength of the reputations of former Netscape technologists Michael McCue and Angus Davis.
Barksdale views this as the natural order of Net business: Innovative spinoffs break off from the bigger companies they perceive as sluggish, risk-averse or just, well, big.
The Internet allows such rapid experimentation that traditional companies with a small Internet division--and even some dedicated e-companies--fall behind because they can’t comprehend a process that runs counter to what business has always understood about careful product development.
Netscape’s Netcenter Web portal would routinely post half-built little gadgets or content nuggets just to see what happened. “If people hit on it, we called it a product. If they didn’t, we called it market research and went to something else,” Barksdale said. “How many businesses can innovate that way?”
Of course, the temptation to throw anything and everything on the Web means a lot of dreck is passed off as useful innovation. So I asked Barksdale when the Internet will mature from indiscriminate experimentation and proliferation to building brands with the credibility of, say, a FedEx--so trusted that people ship diamond rings in paper envelopes.
At FedEx, “the truck was our truck. The airplane our plane,” he said. “By building a closed loop, we could control quality. The Internet, by definition, will never be a closed loop. . . . The reason the Internet works is because it’s so open. As a result, it will always have sort of the chaos factor.”
So FedEx-level confidence in Web business won’t arrive soon. But it will ultimately come, he said, in part through the tricks learned from such models as virtual private networks--encrypted custom communications systems now gaining popularity.
Barksdale won’t be building that first trusted Internet brand. He claims to be finished with management, with the endless urgent imperatives that run the life of a chief executive. As if to lend credibility to the claim, he’s moving to Aspen, Colo., where he plans to raise money for Texas Gov. and presidential hopeful George W. Bush, and to become an angel capitalist--the first source of funds for fledgling firms.
“Some people want to be like Mike [Jordan], I want to be like Jim,” he said, referring to Jim Clark, who founded three multibillion-dollar companies from scratch: SGI, Netscape and Healtheon.
After our talk, I had the sense that the post-CEO Barksdale might prove more helpful to the future of the Web than he would have been at Netscape. He’s wildly rich, has nothing to prove and is finally liberated from the pressure of knowing that the livelihoods of thousands could depend on his every twitch.
A quip by Barksdale near the end of our talk seemed to capture it: “AOL is big. It’s the biggest media company in the world, traditional and nontraditional. Bigger than IBM today. I mean, who in the world would have thought of that? It may all change tomorrow, so let’s not get too excited.”
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Mea culpa: A number of readers say I sold short the Linux operating system in my last column. After more research, I have to agree. Linux is still far from ready for mainstream users, but it has made vast improvements in recent months. For ease of installation, software and hardware compatibility and tech support, Linux offers an increasingly credible alternative to Windows NT.
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Times staff writer Charles Piller can be reached via e-mail at [email protected].
