Marc Andreessen's New Gamble

In this excerpt from BW columnist Sarah Lacy's book, the co-founder of Netscape backs a social networking site named Ning columnist Sarah Lacy's Once You're Lucky, Twice You're Good: The Rebirth of Silicon Valley and the Rise of Web 2.0 is a look at the latest generation of Web companies and the charismatic figures behind them. Among the newbies: social-networking sites such as Facebook and MySpace (NWS), news site, and the video-host site YouTube (GOOG). In this excerpt from the chapter entitled "The Return of the King," Lacy describes the recent activities of Silicon Valley pioneer Marc Andreessen:

It's hard to imagine a place Marc Andreessen would hate to be more than the Web 2.0 conference, held in November, 2006, at San Francisco's Palace Hotel. Yet here he is on day two, striding down the halls with a mini-entourage. He's staring straight ahead. No eye contact with anyone, which isn't hard, because at 6 ft. 4 in. he towers above most people.

This is a rare appearance for Andreessen. Forget conferences or parties—he rarely even leaves downtown Palo Alto unless it's one of his regular trips to Los Angeles (more so in his single days, before he married Laura Arrillaga in 2007) or Las Vegas (it's an hour away, same time zone, and he loves the fights).

Andreessen is here for one reason only: Gina Bianchini. She is launching Ning, the startup the two of them co-founded in 2004. Gina is the chief executive, and Andreessen, Ning's chief technology officer, is careful not to overshadow her. But the conference would put them on the program during prime time only if Andreessen showed up, too. So he stands onstage stone-faced while Gina talks. If you didn't know better, you might think he was her bodyguard. He sums up with a few quick—and smart—statements. And that's that.

To say Andreessen is "here" because of Gina has a meaning beyond just the conference. Three years earlier, Gina convinced Andreessen that the consumer Internet wasn't dead. Andreessen had met Gina through her previous company, Harmonic Communications, funded by Sequoia Capital. Andreessen was on the board, and Gina quickly impressed him, even as the company stalled. Harmonic sold software for companies' marketing departments that aimed to help them create sophisticated advertising campaigns that would include Internet advertising for the first time. Then, in 2000, the advertising recession hit, and "that was it for that business model," Andreessen says matter-of-factly. (The company was sold for a lackluster amount in 2003 to Dentsu, a large Japanese advertising agency.)

Andreessen—a co-author of the first popular Web browser, Mosaic, a co-founder of Netscape Communications, and founder of Opsware—is now in the elite category of having started two companies that both crossed the $1 billion milestone. Among all the entrepreneurs who've come through the Valley, you can count on two hands the number who've done that. And only one guy has done it three times: Jim Clark, Andreessen's Netscape colleague. Andreessen is now in a race with his former mentor, as he's hoping Ning will be his third billion-dollar outfit. Netscape was purchased for $4.2 billion in 1998 by AOL, itself later acquired by Time Warner (TWX). Hewlett-Packard (HPQ) bought Opsware for $1.6 billion in 2007.

Once Gina convinced Andreessen that the consumer Internet was still alive, they came up with the idea behind Ning. Gina had been obsessed with online social behavior, and the technologist in Andreessen wanted a company that would be an open platform, giving people total creativity to make it whatever they wanted.

In essence, Ning allows people to create their own mini-MySpaces. Say you want to stay connected to people with whom you attended high school. It lets you create your own social-networking site just for that purpose. Like Facebook or MySpace, Ning has profile pages, photos, videos, and messaging. Name it whatever you like, pick the layout, and voilà—you have your own social network.

Everything about Ning is customizable. All the underlying code allows tinkering. So if you know Web languages such as HTML, you can completely reconstruct the look and feel of the site. If you're less tech savvy, you can just follow easy-to-use templates: Put this column here, ask people these questions when they fill out a profile. The site is free if you allow ads on your social network. If you don't allow ads, you can pay a monthly fee to Ning. Want to sell your own ads? That's cool, too. All this means Ning is the exact opposite of MySpace, which has a one-size-fits-all approach that may appeal to millions but also turns off others.

Andreessen and Gina were quietly building Ning for about two years, at one point operating under the code name "24 Hour Laundry." In February, 2007, they felt it was finally ready for prime time. They approached BusinessWeek, Newsweek, The New York Times, and of course all the bloggers. "The smarter members of the media were off-the-charts positive," according to Andreessen.

Before Ning's February, 2007, launch, 30,000 mini social-networking sites had been created. The week after, 13,000 more were added—a big jump, thanks largely to Ning. Recently, Ning has been valuated at $500 million and growing in popularity, with page views rising 10% each week. But not everyone is a believer in Ning. Plenty of critics say people don't want to build their own social networks. Moreover, the critics claim it's too hard to fight the early lead and fast growth of MySpace and Facebook.

To Andreessen, this is reminiscent of the early Netscape days, when naysayers told him all the users were already on CompuServe, AOL, or Prodigy, and he couldn't fight that momentum with a browser even if it could give you unfettered access to the entire Web. As with Netscape, he believes Ning will be huge, provided the execution is right. What's more, Andreessen believes this fervently enough to invest $9 million of his own money in the company and to enlist a host of friends into making small investments, capped by Andreessen at a few thousand dollars apiece. As in the case of Ning's early 2007 launch, no venture capital was involved. If Andreessen can't have control as the CEO, he intends to keep control as the only investor of any size. The approach has allowed Andreessen and Gina to move just as fast or as slow as they want without any outside pressure.

Personally, 36-year-old Andreessen feels he no longer has to prove anything to anyone. While people have been calling him a has-been, his net worth has grown nearly fivefold and is now well north of $600 million. But he is disturbed by one fact: Most of the fundamental breakthroughs in science, math, culture, music, or business, he says, came from people in their early twenties. "As far as I can tell, it's not because those people are particularly brilliant or unusual, it's because you know enough to be able to actually produce something…. You have enough of an education and training," he says. "But you're so young, you know little about what's been done before. You've not bought into the assumptions that exist in any field. By the time you're 35, you start to have a really good understanding of the things that are possible to do and not possible to do." So while he's happy he has gained the experience to know that good times always come back in Silicon Valley, the confidence to tell doubters they're flat wrong, and the money to do whatever he wants, Andreessen knows his experience may be a hindrance if he wants to truly change the world again.

From Once Your Lucky, Twice You're Good: The Rebirth of Silicon Valley and the Rise of Web 2.0, by Sarah Lacy. Reprinted by arrangement with Gotham Books, a member of Penguin Group (USA). © Sarah Lacy, 2008.

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