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The transcript of a Morino
Institute Netpreneur Program event, held June 8, 1999, featuring
two business visionaries who grew their companies from the
garage into the 800-pound gorillas of their industries: Marc
Andreessen, former CTO of AOL and founder of Netscape
Communications, and Ted Leonsis, President of AOL Interactive
Properties Group and founder of Redgate Communications. The
event was moderated by Wall Street Journal reporter Kara Swisher
and included closing remarks by Mario Morino, Chairman, Morino
Institute and himself a software industry pioneer.
Institute. All rights reserved. Edited for length and clarity.
made at Netpreneur events and recorded here reflect solely the views of
the speakers and have not been reviewed or researched for accuracy or
truthfulness. These statements in no way reflect the opinions or beliefs
of the Morino Institute, Netpreneur.org or any of their affiliates,
agents, officers or directors. The transcript is provided "as
is" and your use is at your own risk.
table of contents
Mary MacPherson: it's
about what's possible
part 2: Kathy Bushkin: a vision shared
part 3: Kara Swisher: shut up and listen
part 4: Marc Andreessen: living on skittles and mountain dew
part 5: Kara Swisher: one of my favorite entrepreneurs
part 6: Ted Leonsis: why is this man smiling?
part 7: The audience: questions and answers
part 8: Mario Morino: a new wave of leadership
part 1: mary macpherson: it's about what's possible
Good evening. Im Mary
MacPherson, Executive Director of the Morino Institute Netpreneur Program (http://netpreneur.org).
Wow, this is incredible! There is nothing like a Netpreneur Program event to bring this
community out. But really, you are the event! Thanks so much for coming.
On behalf of this evenings sponsors, America Online (http://www.aol.com),
KPMGs Midatlantic Information, Communications and Entertainment (ICE) practice (http://www.kpmg.com) and the Morino Institute (http://www.morino.org), its my great pleasure to
welcome you to "Garage to Gorilla." We hope you enjoyed seeing the interviews
with netpreneurs on the screens. It's good practice for future media opportunities.
For those of you who are joining us on the webcast, were here in Washington, DC,
across the street from the National Zoo, where there are some other kinds of gorillas. For
those of you who have not been with us beforeand there are lots of youwe will
have a transcript and video (http://netpreneur.org/gorilla/)
of the event up on our Web site.
Tonight you are going to hear from some industry pioneers who will share their
remarkable stories and insights on Internet startup success. Given the makeup of our
audience of over 1500 people here and on the webcast, the topic is definitely on target.
Of the people in the room tonight, over 750 come from net-centric companies, and about
half of those are from startups. Over 5% of you are studentsyou are tomorrows
netpreneurs. Youre here because you want to talk about what it takes to start an
Internet business and grow it into an 800-pound gorilla.
For years, the business of Washington has been politics. As the capital of the United
States, there will always be politics here. But there is growing evidence that the
business of Washington is business and the explosion of entrepreneurship here is
Just over two years ago, the Netpreneur Program hosted its first event, attended by
some 40 people. That's hard to believe as I look around the room tonight. Today, thousands
of individuals and companies are engaged in whats become a vibrant online and
offline community where people connect, collaborate, share ideas, solve problems and grow
their businesses. Across the Greater Washington Region its all coming
togetherthe executive and creative talent, funding, technology expertise, support
resources and access to people who have "been there, done that."
Tonight, we have with us many netpreneur "gorillas in the making," companies
who are just starting to make headlines, such as AnnuityNet, Blackboard, WebMethods,
ImageCafe, Vastera, LifeMinders, TV onthe Web, Womenconnect.com and WisdomWare. The list
Garage to Gorilla is all about whats possible if you have the vision, the drive,
the stamina, the leadership, the timing and, yes, even the luck. In the time that
youre here tonight, we hope that youll be inspired by our speakers, that
youll take away knowledge you can use in your life and that youll make
connections with people who will help you realize your dreams.
Before I introduce our next speaker, Id like to take care of some thank yous.
First, Id like to thank the 25 netpreneurs who volunteered to help us with this
eventthey will receive the official Garage to Gorilla event t-shirt. Second,
Id like to thank CloPay and Capital Door for our garage door prop. And, last, but
certainly not least, I want to thank my colleagues from the Morino Institute Netpreneur
We are truly fortunate to have Marc Andreessen and Ted Leonsis with us tonight.
Youll be hearing from them in a moment. Following Marcs and Teds
remarks, Kara Swisher from The Wall Street Journal will moderate a discussion and
well take your questions for Ted and Marc. Well end the program with closing
remarks from a person who has inspired many of us in this room, Chairman of the Morino
Institute, Mario Morino.
Thanks very much to the AOL team and to Kara for working with us on this program.
Lets get started!
It is now my pleasure to introduce Kathy Bushkin, Chief Communications Officer of
America Online, to say a few words and to introduce tonights moderator. Kathy joined
AOL in November, 1997. Previously, she was the head of the national Media Relations
practice at Hill & Knowlton. Before that, she was the Director of Editorial
Administration for U.S. News & World Report for 12 years. She also served as
Senator Gary Hart's press secretary in his Senate office and 1984 Presidential campaign.
Kathy is a board member of the International Women's Media Foundation, the National Press
Foundation and Share Our Strength, a hunger relief foundation.
part 2: kathy
bushkin: a vision shared
Thank you very much. I don't know why
Gary Hart always gets a laugh.
I'm delighted to be here and I'm stunned at the size of this crowd. You know, size
matters, and I have to say, congratulations to Mario Morino. It is truly amazing what you
have done and what's happened in this regionall of it blossoming at the same time.
You have turned time-tellers into clockmakers, and it's very exciting. There is a
difference between having a vision and having a hallucination, and the difference is the
number of people who share it with you. Well, I'd have to say, looking at this crowd,
Mario, you have a vision, and we are glad to share it with you.
I'm happy to be here tonight because there are a lot of things going on in this region.
As one of the companies that has been able to move up from the garage and on its way to
gorilladom, we are excited about what's going on and, what happens to a company when it's
able to lift its nose a little bit above the grindstone. We look around the region and
figure out what we can do to give back a little bit.
There's a real opportunity here for all of us to share. We can share our money. We can
share our knowledge. We can share our resources. We can share it not only in terms of
helping businesses grow, but also helping social ventures grow. So AOL, as it's been
moving along in its path, is looking excitedly around to see how it can help in this area.
We are partnering with a number of you already, and we look forward to partnering with
more of you as we exercise not only the opportunity, but the responsibility to be an
active participant in our communitylocally, regionally and globally.
Companies like ours have to accept that responsibility head on, and we are. The AOL
Foundation, which was created just two years ago, is already doing some exciting things to
fulfill a mission that empowers people to use the medium to make their lives better and to
improve society. We have a partnership with Calvin Coolidge High School right here in
Washington, DC, to create "AOL Achievers." We have initiative grants for high
schools and grade schools that are doing exciting things to use the medium to find
innovative ways to teach. We are supporting our employees who want to do more to
communicate and contribute to partnerships in the community, and we are looking to do
something very exciting on the Web. We haven't announced it yet, but it's coming, to
create a Web site where charities and volunteers can find each other and use the medium in
a way that it really should be used. We are excited about those possibilities, and we hope
to see you in cyberspace fulfilling them with us.
Now, I want to talk to you a little bit about the moderator of tonight's program, Kara
Swisher. Kara is . . . how can I say this?
Let me start by telling you a story about a friend of mine named Frank Mankiewicz. He
is a well-known public relations maven around town, and he once said that the four
scariest words in the English language are, "Mike Wallace is holding." Well, if
you are in the technology business, sometimes hearing, "Kara Swisher is
holding," can be pretty scary.
Kara now covers technology companies from AOL to Silicon Valley for The Wall
Street Journal. She has been doing that for over a year, but before that she spent 17
years at The Washington Post. She created a technology beat by convincing her
editors there was a small company in Virginia that was trying to do something worth
covering. A lot of the time, her stories probably got buried at the back of the car pages
in The Washington Post, but she kept at it and brought attention to what AOL and
other companies were trying to do. At one point she decided to take a career-breaking, or
career-making, move, she left The Washington Post to write a book.
The book, at that time, was about a company that was facing busy signalsI'm sure
none of you remember thatand all kinds of other challenges on the road to growing
from garage to gorilla. She wrote a book called "aol.com" which came out a year
ago. It has done extremely well, and I'm sure she would be happy to have me tell you that
the paperback edition is coming out this summer.
Kara is, and with all due respect, Kara, a reporter who models herself and reflects the
best of what I think our industry and our technology is. She has all the passion of the
people she covers. She covers it with the same kind of paranoia that we all exhibit on a
daily basis. She works the hours and works the medium the same way as we do. It's what's
made her a very good reporter. I know she is going to do a good job tonight directing you
through finding out what it takes to grow your business into, hopefully, one as exciting
and as successful as ours. Kara.
part 3: kara swisher: shut up and listen
It's really nice knowing that size
matters from the former press secretary for Gary Hart. I left Washington two years ago.
There is no sex in Silicon Valley, just entrepreneurism, so it's nice to be back here.
I'm going to start out with three statistics from my life: 10,526 - 437 - 103. The
first one, 10,526, is the number of emails I have not opened in my account at The Wall
Street Journal from entrepreneurs who are starting Internet companies and their press
people. The second one, 437, is the number of faxes I have gotten from entrepreneurs that
are starting Internet companies. The last one, 103, is the number of contacts from day
traders who are driving me nuts since I started this job. Usually, they call up and say,
"Hi, Kara, I want to trade some information." I'm like, "Well, you don't
have any and I have a ton." I have a little test for them. I say, "Can you tell
me who the head of AOL or Yahoo! is and where the company's located?" They just don't
know. They are just trading with stocks. They have no idea what's going on, so I'm glad to
be in front of an audience that does know a little bit about what's going on in the
That's because what's going on right now, and I mean this in the nicest way, is insane
in Silicon Valley. I liken it to what Hollywood was probably like in its greatest moments.
Everybody is starting a Web company. Everybody has a business plan. When you go to a
restaurant, the guy parking your car hands you a business plan. He has a little Web site,
and he is going to do this. Same thing at the grocery store. It goes on and on and on. You
get handed lots of business plans. I get a lot of them. I don't have any money to give to
anybody, but they don't care, they'll give it to you.
And it's not just people with business plans moving in a crazy way; people are getting
funded. The tiniest companies are going public and becoming worth billions of dollars.
Just recently, for example, another search enginelike we need another search
enginejust got $25 million from one of the top venture capitalists in Silicon
Valley. That is a huge amount of money to start a small company. I think there are 10
A company called pets.com was recently funded by Amazon. There is a bunch of funding
going on in the pet industry. The pets.com CEO is a woman named Julie Wainwright who is
very funny. She used to run a service which sold videos over the Internet. When she wrote
in the pets.com press release that she sent to me that they are the biggest pet site on
the Internet, I called her up because I happened to know she just got to the company and
they have two employees. I said, "Julie, how could you say that you are the biggest
pet site on the Internet?" She said, "Well, someone has to be."
What's going on out there is crazy. The other day I got a press release from a company
that sells antique watches on the Internetanother $25 million, which to me is
astonishing. I'm very close friends with John Markoff who is an excellent technology
reporter for the New York Times. We were at dinner the other night, and we didn't
want to say it too loudly because we thought some venture capitalists would throw a bucket
of money at us, but we thought that we would start a Web site called ShutUpAndListen.com.
We would just pontificate on the Internet, on and on and on.
We weren't ready to go public, even though we made no profits, but that's okay.
What I've tried to do in Silicon Valley since leaving Washington, DC, is try to figure
out why this is happening. At the heart of it, it's clear that the Internet is changing
the world. On the edges there is greed and love of money that's really a little bit
nuts, but we are changing the world. It's the kind of thing you always have to say.
What's happening is something very significant. Major industries are changing
dramatically and overnight. Just recently, major companies that we once thought of as
steady and in great shape are seeing troubles. Companies like Disney and Time Warner are
trying to rethink how they can enter this medium while companies like AOL and Yahoo! begin
to take parts of their business. Major retailers are seeing dramatic shifts, from the way
they distribute things to the way they get information, to their customers, to
It is a really significant medium, and it's really important that the excitement has
inspired so many people trying to start Internet companies. It's like being in Detroit at
the beginning of the car industry or in Hollywood in the beginning of the movies.
I would like to go back, however, to where it all started and how just three years ago,
this was an industry that everybody was questioning. When I started doing my book on AOL,
the editor of The Washington Post came up to me and said, "What are you
writing, the death of AOL?" And I said, "No, I'm going to write AOL buys The
Washington Post." Frankly, that's what I think is going to happen.
I love The Washington Post, but it was typical of the attitude of the day, which
was that the Internet was a fad, that companies like America Online and others were not
going to make it, that this was a flash in the pan. Seeing so many people excited about it
is very encouraging, and to be able to introduce these next two speakers is also very
encouraging because, even though everyone claims to be the father of the
Internetthere is no "mother" of the Internet. Have you ever noticed that?
. . . I am the mother of the Internet. No, wait, I should be careful about that.
There are some people who were very significant to the beginning of the Internet,
including many of the people who worked for the Defense Department, but in terms of the
commercial medium, there are a handful of people without whom this would not have
occurred. I would say there are about 10 such in the world, and you have two of them here
Ted Leonsis is very well known as being the president of the AOL Interactive
Properties. He was with AOL early on, at a time when they were very small, and he was one
of the most critical parts of making it into the biggest new media company in the world
Marc Andreessen, I don't think needs any introduction. With a bunch of students, he
created the browser which allows you to navigate the Internet and without which you would
not be able to use the Web significantly. It caused this medium to take off in a way that
I think very few of us could ever understand.
I'd like to start by introducing Marc who, at 28 years oldgosh, you are really
old for the Internetis like the granddad of the Internet. He has been through one of
the most important startups of all time, Netscape Communications Corp. (http://netscape.com), which he saw through an incredible
roller coaster ride, including the stock running up and down and an attack by Microsoft
Corp, the subject of a trial I have been reading about recently here in Washington. He
also sold the company to AOL to create what many people think is one of the most
significant companies going forward. After not liking AOL, he loves it nowYeah,
it's really great. I love AOL, Kara. He is now the Chief Technology Officer of America
Online, a critical job because, going forward, the technologies are going to change
significantly over the next five years as we move into broadband and high speed
connections. What Marc Andreessen thinks about the Net is going to be very important to
how you do your business and how consumers all over the world are going to receive it.
part 4: marc andreessen: living on skittles and mountain dew
Thank you. It's a lot of fun to be
here tonight. I was kind of hoping that we would be able to move this whole event outside,
but I guess they didn't want to do that for some reason. It must be the weather.
It was just a little bit more than five years ago that we first started Netscape. Back
then, nobody took the Internet seriously. There was just a handful of us in a little
office in Mountainview, California. I don't remember much from those days because not only
was that 35 Internet years ago, but, like all of you, we were pretty much surviving on
Skittles and Mountain Dew, so the resulting sugar-induced haze pretty much determined our
Every step of the way during the five years after we started the company, I was
surprised by the amount of change that kept happening, and the level of impact that the
Net kept having. We are really, in many ways, only getting started. As Kara mentioned, so
many businesses and industries are being changed. Any CEO of any company in the world
today who is able to sleep at night is probably smoking dope. There is really no other
explanation, because if he thinks that things are going well enough that he can sleep at
night, something is deeply wrong. That's why there are all of these huge opportunities out
there, certainly more opportunities now than ever before. It's a tremendously exciting
What I thought I would do is spend a few minutes talking about how I would do a startup
todayif I were going to do a startup again, which I'm not today. I have been keeping
notes and have a few rules of thumb that I would follow if I were going to do it again, so
I thought I'd share those with you and have that be our kickoff for our discussion. There
are five basic rules that I would follow.
1. ride the right horse
The first rule, and the most important
one, in fact the most important thing in the world, is to ride the right horsedecide
to do the right thing. I wanted to kick off this section with two quotes from personal
heroes of mine. One is Jim Barksdale, our CEO, who, when he first got to Netscape, sat us
down in the conference room and said, "Look, if we want to be a leader, what we need
to do is find a parade and jump in front of it." We said, "Okay, we have
The problem with that, of course, is that it's a very confusing time. It's hard to
figure out what the parades are when you are trying to figure out what a specific business
is going to do. It's very easy to jump on the wrong horse and to decide to do the wrong
thing first. In fact, I think that for most businesses throughout history, their original
business plan was the wrong thing to do.
I also want to quote my second hero of the night, probably the finest legal mind in
Washington, DC, Thomas Penfield Jackson, the judge in the Microsoft case. He recently
said, and I'm going to take his quote out of context because he was referring to
Microsoft's legal strategy, but I would apply it to the rules of thumb you have to follow
at the beginning of a startup. He said, "The code of tribal wisdom says that when you
discover you are riding a dead horse, the best strategy is to dismount. However, at law
firms," and I would apply it to startups, "and in established companies
we often try other strategies with dead horses including the following: buying a stronger
whip, changing riders, saying things like, 'this is the way we have always ridden the
horse,' appointing a committee to study the horse," that's something that older
companies tend to do, "arranging to visit other firms to see how they ride dead
horses, increasing the standards for riding dead horses, declaring that the horse is
better, faster and cheaper dead. And finally, of course, harnessing several dead horses
together to increase the speed." That kind of sums it up.
Riding the right horse is the single most important thing you can possibly do. In fact,
I'll make a fairly radical statement that being on the right horse in a startup is more
important than having a good CEO; it's more important than having a good team; it's more
important than having good programmers; it's more important than having the right
marketing strategy; it's more important than setting prices correctly; it's more important
than venture financing. It's more important than all of those things put together because,
if you are on the right horse, with the way these markets are developing and the growth
rates that we see, you will probably figure out everything else. If you are on the wrong
horse, you are probably dead.
I'll probably quote Jim Barksdale a couple of more times because he is very quotable.
He told me something that I thought was very interesting with respect to how unpredictable
this whole environment is, and how unpredictable the impact of a new idea can be. He said,
"Thomas Edison thought he was inventing the light bulb. He was actually inventing not
going to bed with the chickens."
It took me a little while to figure that one out. You can think about it for the rest
of the night. What he meant was, it's very unpredictable. When we see something like the
Internet in its early days, or the PC, the things that we assume at first about the way
they are going to be used and the impact they are going to have is often not at all the
way that they actually develop or the way they actually turn out.
Like I said, I think that if you go back through history, most companies have changed
their plansthey have changed horsesoften very early in their histories.
Microsoft is an obvious example. They shifted very early from doing programming tools like
Basic to doing operating systems. It was Bill Gates who was still urging Apple in 1985 to
license the Macintosh operating system. You really have to be able to adapt, and it's
something Microsoft has been very good at.
IBM, at a later stage of its development, in the early 1950s, had to make a shift from
electrical tabulators, the business they had been built on, to computers. It was a huge
source of stress in the company. Intel went through the same thing with the shift from
memory chips to CPUs. Every big, successful company has had to make that kind of
transition, and a lot of startups have to as well.
What you see happening in a startup, we saw it at Netscape and you see it at a lot of
companies, is that you develop your product, you get it all figured out how people are
going to use it, you put it on the market, they buy it and then they use it for the wrong
reason. They do the wrong thing with it. You build the Aardvark 7000 for people to use to
suck ants out of their holes, and, instead, they are using it to go after anteaters.
They're using it for the wrong reason.
You take a look at the customers and say, "The customers don't get it, they are
using the product for the wrong reason." They're actually using it for the right
reason. You have to go back, look at it and proceed along their courses.
Entrepreneurs who are too stubborn will suffer. One of the things you will hear is,
"Pick your plan and then have a huge amount of determination to achieve your
goal." I don't believe in that at all. I think that it's much more important to have
the right plan, much more important than anything else you can possibly do.
Therefore, the only quality in a management team that matters in the early days of a
startup is the ability to end up on the right horse, even if you don't start there.
2. know why your company exists
The second thing I would do is to
really know why you are in businessknow why your company exists. Really know it deep
in yourself. This is increasingly important because there are so many startups out there
now. For example, some ex-Netscape people were starting their own companies. I was talking
to one guy in the Valley a few months ago. I asked, "What's the goal of your
startup?" He said that their goal was to try to sell out within the next 12 months.
That's a fine goal to have, I suppose, but it's not a goal that's going to build a
tremendous amount of passion. It's not a goal that is going to make it easy for people in
the company to figure out what to do. The second most important thing, next to riding the
right horse, is knowing viscerally what you are in business to do, even if you don't know
exactly what you are going to do. Know why you exist. Know what you are trying to
do. Know how you are going to try to change the world. It becomes much easier to manage a
startup if this is the case. There are startups in the Valley right now that are
absolutely adrift because they don't have that sense of mission, they don't know what they
are trying to do. They don't have well-developed management teams because no startup does,
and it's very hard to run that way.
3. focus on just one thing
For the third rule of thumb, I have to
quote Jim Barksdale again. You are going to love this one. "At a ham and egg
breakfast, the chicken is involved but the pig is committed."
I told you, you would have to think about these.
It's very important to be the pig. It's very important to ruthlessly focus on just one
thing. It's very important to be totally committed to exactly one thing.
It's extremely easy in a startup environment for the entrepreneur, to say, "I'm
going to run the company. I'm going to do this and I'm going to do that. I'll be the CEO
myself." That's something a lot of entrepreneurs do. A lesson I learned very early
from Jim Clark is that when you start a company, you don't have to run it. You don't have
to be the CEO. You can actually hire CEOs and they can become an integral member of the
team. You can have a tremendous amount of influence and the company can be much more
successful than it ever was. At a personal level, we need to understand what we are good
at doing and we must focus and bear down on that one thing. The exact same thing is true
for what our companies do.
Companies have a hard time, no matter what size they are, really doing more than one
thing, however that thing is defined. A bigger company can define it more broadly, but
regardless, it's a huge problem for a lot of companies, both small and large, that have a
huge amount of corporate ego. You see this in the software industry all the time. You talk
to a software company executive and ask, for example, if they want to partner around a
software product. We'd do that with Netscape. We'd go talk to the big software companies
when we were starting out and they would say, "Well, we can do that. We can do
browsers, we can do servers, we can do that stuff."
And the fact is, they can do that in theory. They can do anything in
theory. But in practice, all of their best people are focused on the business they
already have. They are focused on the one thing they have, the one thing they are already
There were a tremendous number of companies in the first few years of the Internet that
tried to develop their own browsers and servers. They tried, but if they thought about it
for 30 seconds, they would have realized that with the talent they had and the management
bandwidth, and given how fast the world was going, they should bear down and focus on the
one thing that they can really do well.
In the world of software, there is a unit of measurement that not many people know
about. It's called the SMOP. SMOP stands for "Simple Matter Of
Programming." You can typically evaluate how long a software project is going to take
by how many SMOPs it's going to be. If it's a simple, little thing, it will take a team of
four about six months. That's one SMOP. If it's a big project, it can take five or ten
SMOPs. Any time it takes even one SMOP, if it's not something that's in the mainstream of
what you are doing, that's the time to figure out how to partner and figure out how not
to do it. Therein lies the opportunity.
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