Netscape: Lessons from the Rise and Fall of the Internet’s First Start-up
How many of us have heard of Google Chrome? Mozilla Firefox? And of course, the much-maligned Internet Explorer, now reincarnated as Microsoft Edge? These are the browsers we use every single day, and there’s a reasonable chance that you’re using one of them to view this article right now. Internet browsers are the tool we use to escape into the infinite stream of information that we call the World Wide Web. However, twenty years ago, the picture was quite different. Twenty-two years ago, over 90% of Internet users used only one browser. The Netscape Navigator.
Netscape has often been described as the “first internet start-up that actually mattered”. Its place in internet history is ubiquitous. It is often described as the first company to attempt to capitalize on the nascent World Wide Web. It was originally founded under the name Mosaic Communications Corporation on April 4, 1994, by Mark Andreessen, with ex-Stanford Professor Jim Clark as the majority shareholder. Netscape developed the world’s first graphical browser, Netscape Mosaic 0.9. This essentially meant that the browser had buttons which the user could click, instead of using text based commands. Mosaic was an overnight success. Sensing the potential in this uncharted new market, Netscape released the Netscape Navigator 1.0 in December 1994. It was a huge success, with millions of downloads within hours of its release. In 1995, the company went public on the New York Stock Exchange, a little over a year after it was founded. Its initial stocks were valued at $28. By the end of the day, the stock values closed at $58.25, giving Netscape a was value of $2.9 billion. Netscape’s rise was so dramatic, that people referred to using the World Wide Web, as “using Netscape”!
Success invariably draws attention. And in this case, it drew the attention of Microsoft, the Emperor of the software world. Microsoft had long had a reputation in which it squashed its competitors, to ensure that it had a monopoly over the software market. Lotus, WordPerfect and the mighty IBM were just some of its competitors which had been ruthlessly destroyed along the way. Its sights were now trained on Netscape.
Well, amongst several other meandering topics, start-ups were also high on the agenda. In what will come as a welcome boost for both Indian and Israeli entrepreneurs:
Microsoft’s success had been based on monopoly over the software platform. 90% of the world’s desktop computers ran Windows. Any software company had to ensure that its product ran on Windows, or risk being cast into irrelevance. But Netscape belied this trend. The internet was a whole new world, and the access to it was being controlled not by Microsoft, but by Netscape. The years of monopoly that Microsoft held over the software world was now at risk.
Netscape had the upper hand over Microsoft, but they were plagued by something else: arrogance. They thought they were invincible, and not only treated their allies with indifference, but took pot-shots at Microsoft. Mark Andreessen repeatedly targeted Microsoft by saying that “Windows is dead”, and referring to Windows as a “poorly debugged set of device drivers”, which in geek world, is the equivalent of a slur against your opponent’s family. This only catalyzed Microsoft to work harder and gave them an incentive to build a product which would wipe out Netscape.
In 1995, Windows launched Windows 95, and bundled along with the software came the Internet Explorer. What followed was a series of browser launches from both companies. This period in the history of the Internet is often referred to the First Browser War, an epic battle to control the gateway to the Internet.
Microsoft viewed the Internet as a highway, and for them, the Internet Explorer was the toll gate which would control access to the highway. Their years of controlled monopoly over every software hinged on their ability to win the browser war. And such was the desperation to win, that unethical means were propounded by the Microsoft hierarchy. They used a league of shadowy salesmen who would target PC manufacturers and compel them to install Internet Explorer on the computer, or else have their Microsoft license cancelled. One of the biggest reasons for Netscape’s decline was the four-year brain drain. After four years of the company’s growth, most of Netscape’s lead software engineers were millionaires, with no incentive to work harder. Microsoft however, was determined to destroy Netscape, to maintain its monopoly. The ball was now in Microsoft’s court. With their superior financial strength, Microsoft took the one move that destroyed Netscape. It released Internet Explorer 4 in 1997 as a free software. The First Browser War was over. Microsoft had won. By 1998, Netscape Navigator 3.0 had a market share of only 8%. Internet Explorer 4 had a market share of 90%.
In 1998, AOL, perceived as a boring company bought Netscape. The end was nigh. The last Netscape browser, Netscape Navigator 7, was released in 2003.
This is the story of Netscape, the small college start-up which went toe to toe with the giant of the software industry. It may have failed, but its legacy lives on today, as a guiding light for young entrepreneurs who wish to make it big in the software world today, because in the internet, empires can rise and fall with the click of a button.