Stanford University

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NEWS RELEASE

4/18/00

Dawn Levy, News Service (650) 725-1944; e-mail: dawnlevy@stanford.edu

Job satisfaction, not millions, should be goal, says Andreessen

Job seekers should look for employers that have long-term vision, not companies that just want to cash in, get bought or sell out, 28-year-old Netscape co-founder Marc Andreessen told a packed crowd of student entrepreneurs at Terman Auditorium on April 7.

"Young people have to ask themselves, do I want to be basically a mercenary, or do I want to go to work for a company that is going to make a difference, a company that is going to be around for a while?" he said.

Andreessen spoke as part of the Industry Thought Leaders Seminar Series sponsored by the Business Association of Stanford Engineering Students, the Asia/Pacific Student Entrepreneurship Summit and the Stanford Technology Venture Program, the entrepreneurship center at the School of Engineering. The series brings leading technologists and venture capitalists to campus as part of a one-unit seminar class (Industrial Engineering 292).

Wearing a gray sweatshirt and khaki pants, Andreessen looked more like a Stanford graduate student than an Internet entrepreneur. He shared what he learned in the seven years since he and colleagues at the National Center for Supercomputing Applications at the University of Illinois, Urbana-Champaign, invented Mosaic, the first widely used Web browser.

Comparing dot-com businesses to extreme sports, Andreessen said building a startup today is like snowboarding off a 200-foot drop. Businesses start faster, grow bigger and sign deals before the company has built its product or service. Even more risky, he said, are companies that have a good idea but no underlying product or business whatsoever. "It is certainly not something I recommend you try at home," Andreessen said.

The Internet has tossed the old way of doing business out the window, he said. "In the 1980s the slogan was 'ready, aim, fire,' and in the 1990s it was 'ready, fire, aim,' but nowadays its 'fire, fire, fire.'"

The question is not whether a company will become enormous, but how fast, he said. The first company to grab market share is probably going to be the one that succeeds. "After the dust settles," he said, "the number one company gets most of the customers, and the number two company gets some of the customers." As for companies ranked third through tenth, Andreessen said, "their life sucks and they get sold."

Fast growth and fiercer competition mean companies have to focus and specialize more than ever. "There is only room for one company to do one thing well," said Andreessen. The move to outsource technology is creating new opportunities for entrepreneurs. Making products or services that make technology easier to use is another growth area.

Students scanning the want ads or in today's economy being hounded by cold-calls from recruiters, need to look at a company's goals. "For a lot of companies these days," he said, "there is no mention of a business, of products, of customers, and certainly no mention of a company with a purpose to make something better."

Andreessen called these firms "burgers," or companies that were made to be flipped. "A burger is a company whose only goal in life is to get bought by a big company like Microsoft or AOL," he said. When that happens, company founders and venture capitalists make out like bandits, he said, but employees who joined a cutting-edge startup are now trapped working for a giant company, where innovation lags. A lot of employees, not wanting to quit until their stock options vest, stick it out at the new firm.

Instead, Andreessen said, people should look for companies especially ones building a useful product or skill that will retain their autonomy.

His advice was not entirely altruistic. "We're hiring," he said of his new company, 7-month-old, 170-employee Loudcloud Inc., which provides the behind-the-scenes hardware and software that businesses need to run a busy website. Instead of spending millions on technology and personnel, companies will simply call up Loudcloud to install databases, application servers and other infrastructure.

"We want to be Silicon Valley Power and Light," said Andreessen, "so companies can plug into our product like they plug into a phone line or a power grid to instantly light up a business."

As well as recruiting the best and the brightest from universities, dot-coms find that the mania surrounding them makes it easy to lure experienced, senior-level executives away from traditional companies, or as Andreessen called them, "big, dumb companies." But that strategy often backfires. "Hiring a professional CEO from outside is like saying the company will only last for three to four years," he said. "After the CEO vests, he or she will leave, and the employees will be left holding the bag."

Companies that are run by their founders have the best chance of succeeding, said Andreessen, listing off a number of successes. But that strategy is not sure-fire, he cautioned: "There are lots of both types of companies that are huge craters in the ground."

On the sale of his former company, Netscape Communications, to America Online, Andreessen acknowledged that a lot of Netscape employees were left working for AOL. The good news, he said, was that sale was profitable for employees and shareholders. "If they held onto the stock until today, they made money," he said. Smiling widely, he noted that the following day (April 8) would be when all Netscape employees' options would fully vest.

He doesn't aim to get bought with his new company, though. "Our motto at Loudcloud is 'all new mistakes.'"

Andreessen applauded government sponsorship of research at universities like Stanford. "The government is responsible in just about every way for the Internet as we know it today," he said, referring to the fact that its predecessor, ARPANet, was created as a Department of Defense research project. The government built the Internet when private companies wanted nothing to do with it, he said. The National Science Foundation funded Andreessen's work on Mosaic, the prototype browser for Netscape Navigator.

For Elaine Chung, a master's level student in the Management Science and Engineering program, Andreessen's speech made sense. "I know personally I want to work for a company with a long-term vision," said Chung, who is graduating in June. "There is a lot to be said for the mentality of wanting to create something that has a lasting effect. It will be important for the future of the Silicon Valley."

Tom Byers, associate professor of industrial engineering and director of the Stanford Technology Ventures Program, said students need to hear Andreessen's message that business is about more than making money. "It means more coming from him than it would coming from a professor or a textbook," Byers said.

 

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By Catherine Zandonella


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