Netscape's IPO: The Big Bang That Opened the Internet Age

Looking back at individual moments in history is quite fascinating. Netscape: the beginning of the internet's transformation of the world. Netscape held its IPO on August 9, 1995. Its shares were initially priced at US$14 each, but the price was raised at the last minute to US$28. When the stock market began trading at 9:30 a.m. Eastern time, Netscape's shares did not open with it. Buying demand was so great that an orderly market could not immediately be established. Individual investors were extraordinarily enthusiastic. Investors calling Charles Schwab heard a recording: “Welcome to Charles Schwab! If you are interested in Netscape's IPO, press 1.” At Morgan Stanley, one retail investor offered to mortgage a house and use the proceeds to buy Netscape shares. Netscape's first trade did not appear in the trading system until around 11 a.m. that day. It was at US$71 a share, nearly three times the offering price. During the day, Netscape, ticker NSCP, reached US$75 a share before closing at US$58.25. The company had been founded only 16 months earlier. Since its founding, it had generated just US$17 million in revenue and had no retained earnings on its balance sheet. Yet by the end of its first trading day, the stock market valued it at US$2.1 billion. Today, soaring stock-market debut valuations for technology startups seem familiar. In August 1995, such an event was almost unheard of. The financial press was shocked, even skeptical. The Wall Street Journal's lead story the next day observed: “It took General Dynamics 43 years to become a US$2.7 billion company ... Netscape took about a minute.” Many commentators were stunned that a company not yet consistently profitable could receive such a high valuation. Others were confused about what the internet even was and why it was making people rich. Because the famous singer Jerry Garcia happened to die on August 9, 1995, a joke circulated on Wall Street: “What were Jerry Garcia's last words?” The answer: “What is Netscape's opening price?” This sudden, unprecedented creation of enormous wealth prompted much discussion. Netscape cofounder Jim Clark owned 20% of the company, worth US$663 million on IPO day. Netscape's early employees were all worth millions of dollars. They included its 24-year-old cofounder, only months out of college, youthful-faced, and suddenly worth US$58 million. Just a few months later, in December 1995, Netscape's shares reached US$171, more than six times the IPO price. A few weeks after this milestone, its 24-year-old cofounder Marc Andreessen appeared on the cover of Time. Occasionally an event heralds a new force or marks a dividing line between historical eras, such as the September 11 attacks. Netscape's IPO was just such an event. Today, people in their twenties dream of earning US$1 billion by writing code. Today, the phone in your pocket is more powerful than any computer used when humans landed on the moon. Netscape laid the groundwork for these realities. Its IPO was the Big Bang that opened the internet age. The photograph of a barefoot Marc Andreessen on Time's cover marked the beginning of young geeks' dreams of pursuing wealth in Silicon Valley. Netscape could not define the internet age, or even survive the internet wave that followed. But it was the first company of its kind and, in many ways, the template that everyone and every company would follow. #互聯網進化史 — Hulianwang Jinhua Shi