"Chasing paper paper chasing, look that's all we know
Coming through the neighborhood on them 24's
Bet a thousand, shoot a thousand, n**** up it some more
Fast money, Cash Money, that's all I know"
Birdman, Get Your Shine On
I can't for the life of me remember how this book was recommended to me (my best guess is via the Acquired podcast), but it was a thrilling look at the DotCom bubble right before it burst with a passenger seat with the man who helped fuel it, Jim Clark. The book chronicles the tale of Jim Clark's rise in Silicon Valley and the start of the Dotcom era all the way to its peak (the book was published in 1999, 1 year before the bust). Starting with Jim Clark's Silicon Graphics to Netscape to Healtheon, it's a tale of how Silicon Valley became the hottest place to work and chase money, creating its own counterculture and breaking all the rules along the way.
Overall impression: Fun read with great insight into the 90s Dotcom go-go era. Falls a little short for me in being a must read because we don't get the same passenger seat ride when the tech bubble burst and all these companies got their comeuppance. For fans of business eccentrics and learning more about the history of the Valley, its a really fun book (I like to think of it as beach reading for nerds). My takeaways and favorite excerpts:
1. The Dotcom Bubble was Growing but Had Not Burst Just Yet
"Wall Street, to take just one example, was turned on its head by new companies and new technologies and new social types created just south of San Francisco. The financial success of the people at the heart of this matter was unprecedented. It made 1980s Wall Street seem like the low-stakes poker table. As yet, there is no final reckoning of the wealth the valley has created."
The book was released on October 17, 1999 when the NASDAQ hit $2,816 on its relentless path towards a March 6th, 2000 high of over $5,000. The NASDAQ would lose more than 65% of its value over the next 12 months.
The book does a good job describing how the foundation for the Dotcom craze was built. Jim Clark, after already building out one of the more successful Silicon Valley companies at Silicon Graphics, went after Mark Andreessen at the University of Illinois who had helped create Mosaic (the first real internet browser). Jim convinced Mark to work on a commercial browser with him and they started, Netscape. Netscape ushered in to start of the real consumer internet and showed the world what IPOs in those days would look like - Netscape was going to go public at $14 dollars a share, then right before the IPO they decided to double the price to $28. It closed at $58 that day.
The lists the successful companies that rode the wave of Netscape's success and that were flying highest in 1999: Yahoo, Excite, @Home, and Ebay. I was 12 years old in 1999, and I had never heard of @Home before reading this book. A gentle reminder that history is written by the victors.
2. Jim Clark is one of the great future predictors because he lives in the future and does not give a shit about the past.
"I was thirty-eight years old. I'd just been fired. My second wife had just left me. I had somehow fucked up. I developed this maniacal passion for wanting to achieve something."
Some people say you can't change who you are, Jim Clark would tell those people to fuck right off. At age 38, he just pressed reset on his life and no one before that date would be in his life a few years later (thought it helped he had a degree in physics and PhD in computer science). In the book Michael Lewis describes asking Jim about his past and Jim would just say: "That's the past. I really don't give a shit about the past."
He wasn't talking about pre-38 past either. He didn't want to talk about Silicon Graphics or Netscape that much. Jim Clark was a man who needed to be in the future. Even with companies like Netscape and Healtheon, he never wanted to be the CEO or leader - he wanted to move on the new new thing, always.
Most great business leaders have to believe they know where the future is going because they bet on that future (a bit like Gretzky skating to wear that puck was heading - Jim Clark was inventing new sports instead of skating). Mark Zuckerberg famously said there would be no new product development for web and focused on mobile at all costs for over a year. That conviction, seeing where the future was leading, has helped drive Facebook stock 10x since 2013.
Most entrepreneurs are betting on where things are going and that's why only 1 in 10 venture-backed startups survive because most people don't know. Jim Clark bet right on Silicon Graphics and Netscape. Describing his insight into Netscape he said "All of a sudden it was clear to me when I looked at the Internet that I was looking at the personal computer in 1985."
His third major venture, Healtheon, was going to reshape the multi trillion dollar US healthcare industry. He thought that 15 smart engineers, with no healthcare experience, could conquer any market because that's what his past told him. Healtheon ended up having a great IPO in 1999 (shocking) but ended up merging with WebMD in 1999 and not revolutionizing the entire healthcare industry. Still incredibly impressive.
Unrelated: Jim Clark was the main driver into the federal government anti-trust investigation of Microsoft (didn't know where to put this but thought more people should know).
3. Jim Clark - money is everything, people who provide money are nothing.
"He would permit venture capitalists to purchase a stake in the new company [Netscape] at three times what he had paid. Or as he put it to [Dick] Kramlich, 'My dollars are worth three times what yours are worth.'"
Jim Clark hated bankers and most venture capitalists because they ended up owning the majority of the wealth created by the true visionaries. He thought that the wealth should reside with the engineers - the real builders. He was also obsessed with the next billion dollar idea.
He was the first to shift the paradigm that great engineers and entrepreneurs should get the majority of the upside. When he started Netscape, he didn't go after the venture capitalists money - they came to him. After telling Dick Kramlich of New Enterprise Associates, a prominent VC firm in the Valley, that its money was worth 1/3rd what his money was worth, Dick went to the one VC that Jim Clark respected, John Doerr of Kleiner Perkins. Dick asked John to talk some sense into Jim Clark. Instead John Doerr accepted the terms and bought 15% of Netscape for $18 million dollars.
That changed the game forever.
4. When everything looks overvalued everything gets overlooked.
"Out of fear of losing yet another very public success to Benchmark [VC], Kleiner Perkins had just paid $25 million for a 33% stake in a new company called Google.com. Google.com consisted of a pair of Stanford graduates who had a piece of software that might or might not make it easier to search the internet. In short, Kleiner Perkins was already feeling a bit of the pressure on capitalists that [Jim Clark] wanted to create a lot more of."
This was my favorite passage in the book because its dated so poorly. Let's run through this: