Continued from Page 1
Defying the odds If Loudcloud fails, the damage to Andreessen’s reputation could be
considerable. In his first business foray out from
under the wings of past mentors, Netscape co-founder James Clark and former
Netscape CEO James Barksdale, Andreessen is determined to build a company that
doesn’t end up like Netscape. Should Loudcloud emerge as a winner, Andreessen
will cement his status as a visionary. If not, the Internet’s wonderkid could
be a has-been at the
tender age of 30.
|
A Tale of Two IPOs |
| Marc
Andreessen helped launch the Net Era when Netscape Communications went
public in August 1995. By the time he took Loudcloud public on March 9,
2001, the world had become a hostile place for Net startups |
| Age at
IPO |
16 |
18 |
| |
Months |
Months |
| Time
from IPO |
47 |
164 |
| Filing
to Offering |
Days |
Days |
| Quarterly
Revenues |
$11.90 |
$4.60 |
| Before
IPO |
Million |
Million |
| Quarterly
Losses |
$1.60 |
$58.20 |
| Before
IPO |
Million |
Million |
| Expected
IPO Price |
$13 |
$22* |
| Actual
IPO Price |
$28 |
$6 |
| First
Day Closing Price |
$58 |
$6.16 |
| First
Day Gain |
107% |
3% |
| First
Week Performance |
86% |
-26% |
| Number
of |
5 |
25 |
| Shares
Offered |
Million |
Million |
| Percent
of Company Sold |
14% |
34% |
| Market
Cap at |
$1.03 |
$440 |
| IPO
Price |
Billion |
Million |
| Money
Raised |
$140 |
$150 |
| by
IPO |
Million |
Million |
| *Adjusted
for reverse stock split |
\What happened? Andreessen and CEO Benjamin Horowitz created a company in one
business environment, and when the world changed, Loudcloud didn’t. The basic
problem is that Loudcloud’s business is so capital intensive. The company
charges customers for three months of service up front and a monthly fee
thereafter, but it has to spend its own money first on engineering the software
and getting customers set up. At the same time, the company decided to delay
reaching profitability, instead spending money aggressively to grow as quickly
as possible. This plan may have seemed smart in earlier Internet days, but in a
world where money is hard to get and dot-com customers are vaporizing, it no
longer looks like a winning formula. Yet they kept plunging ahead as if they
could defy the IPO odds.
Whether Loudcloud succeeds or fails, it will have been a remarkable journey
filled with big money, larger-than-life reputations, a cast of hundreds,
arrogance, pathos, and intrigue. BusinessWeek gained exclusive access to the
company’s odyssey, sitting in on dozens of meetings and conducting 100-plus
interviews in and around the company. Here’s Loudcloud’s tale:
| 
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