I find this Washington Post article about today’s Twitter IPO very amusing. You see, I’ve been there, done that, have the T-shirt. Literally (take a photo of my NSCP IPO shirt and post it here).
August 9, 1995 was quite a heady day for me and most of my 250 Netscape colleagues. Remember, this was the startup Netscape, so it was before people did much of anything serious on the internet. With the exception of the porn purveyors, who are very successful early adapters for new technologies, no one was making money on the internet. Imagine with your 2013 glasses that back then people couldn’t track stock prices or read newspapers online. So, it was pretty darn cool when one of the programmers set up a stock ticker so we could track the stock price as we worked. It was hard to look away after the stock opened at 9:30 and began to soar. A couple days before the IPO, we were expecting a stock price of $14, then it doubled to an IPO price of $28. But on August 9th it soared to $75 before rebounding to something in the $50’s that day. $56, I think. Before the 1995 ended, it soared as high as $171.
There were some early danger signs that things wouldn’t always be rosy. I remember one of our sales guys losing a huge deal to AOL at the last minute – an unexpected, strange twist. Shortly after, AOL made Microsoft’s embedded browser part of its technology. The writing was there on the wall, but it didn’t take up enough space for most of us to worry too much. We were young and we were fighting the good fight against the big bad Microsoft and, apparently, the big bad AOL, though that battle was more peripheral than central on the Netscape landscape.
Those were the heady days of our rocket ship ride up to the stars on our little Netscape Navigator, soon rechristened the more robust Netscape Communicator as features like email and chat were added to the browser. Microsoft was always looming in the rear-view mirror, but we couldn’t focus on them. We had to work hard, build the best products and do the best jobs possible so the company would succeed. Looking forward, not back. We kept soaring, but every quarter was a struggle to get to that success marker. Through all of 1996 and most of 1997, we kept delivering on forecast and kept moving the rocket ship up.
Hell, JB (Jim Barksdale, our CEO) made up a company cheer and got us to repeat it at the holiday parties. This is amazing when you consider that most of us were NOT joiners or cheerleaders. We were entrepreneurial people who wanted to work hard and win the fight, though, so we cheered.
On December 31, 1997, I knew before I left work that night at almost midnight that something was wrong. Our quarter close for this final quarter of the fiscal and calendar year was not going well. I remember our CFO calling to ask me if there were any deals on my desk that hadn’t been logged. There was nothing left that we could do on the east coast, so I left about 11pm and went to a Swedish friend’s New Year’s eve party and drank glogg with my boyfriend. We got home late.
The phone rang very early on New Year’s morning from a colleague in California who hadn’t gone to bed yet. I had work to do that day; we all did. We missed a number, were going to miss our earnings, and the market was going to react. There would be firings (maybe) and layoffs (definitely), and things would get very turbulent. 1998 was a tough year. The stock was in free fall that spring.
It was also a fascinating year as I watched our executives and my colleagues rebuild the business from the ashes. We would rebuild a better, stronger business and become the phoenix sprung from the ashes. I think our stock price was about $10/share at that point, so we were pretty much at the bottom.
I got to fly along to a series of meetings in the eastern U.S. and Canada as a team of our top executives on an informational tour learned about the business from those in the trenches selling the products. It was one hell of a learning experience. We talked about what worked and what didn’t in terms of our products, customer service, competitive factors, sales and marketing, financial, everything.
We all worked so hard, but we could feel that looming dark cloud pressing down on us, threatening to smother us if we didn’t keep running as fast as we could. I worked so hard that my personal life suffered. Dumped by the guy I loved, I moved back into a little city in the apartment and kept on working. The company was reorganized into two distinct divisions. It was obvious to many of us that the company was being prepared for a sale if we couldn’t go it alone: we had the web services division with our valuable Netscape portal and our enterprise software sales division (where I worked). We had changed our fiscal calendar to end Oct 31. In November 1998, we had a heady, exciting annual kickoff meeting where it really seemed things were looking up for the company. Thrilled by what appeared to be a company in turnaround with a bright future, I spent the weekend after the meeting touring Napa wineries and flew home exhausted but optimistic on that Sunday night.
Monday morning I heard on NPR as I got ready for work that AOL was buying Netscape. No bit of news could have shocked me more. That’s quite a change from the meetings I’d been in just days before.
The stock price, now paired with AOL, soared. When the deal was announced that November morning, our market cap was $4 billion. By the time the deal closed on March 17, 1999, our market cap was closer to $11 billion. Having watched the stock roller coaster of the last four years, I decided it was time to sell a chunk of my stock to buy a house and furniture, and to do a lot of traveling. I closed on my house March 10th, and took my sabbatical – two months in Europe – in August and September 1999. Why not? I was single.
I stayed with AOL-owned Netscape for two years before they laid off our entire division in August 2001. I was laid off by conference call on my birthday that year.
I scrambled and found another job at AOL, in its AOL Anywhere division. The job wasn’t a first choice, but I discovered I had a lot in common with the Tegic division folks in Seattle and stayed with that job for three years, through the ill-fated Time Warner merger, subsequent stock freefall, and a couple reorgs and layoffs. The commute was long, though, and the atmosphere at AOL was never as exciting as Netscape had been. I got tired of the “cover your ass” scramble that everyone did to keep their jobs when faced with so many rounds of layoffs, so I jumped off the hamster wheel and took a job as COO of a very small nonprofit downtown in the spring of 2004 for another set of very different and far less lucrative adventures.
Bringing this back to Hot IPOs, as I said, our stock went up and down that took all of us on a wild roller-coaster ride. There was at least one split along the way. The thing that stuck with me was hearing JB say that investors who bought the stock at the beginning and held didn’t lose. What he didn’t say, but we all knew, was that it was all those short-term investors who buy and sell in very short time frames, who made or lost money on the stock.
That’s not the company’s fault, though. That’s one of the vagaries of the stock market. Experiencing that crazy roller coaster first hand certainly impacted how I make investment choices. So, learn about the market and determine your investment philosophy, then be ready for the ride, because it will probably be bumpy.
