It ends up a ragged day for the Loudcloud team. They pile into the 35th-floor office of an Internet analyst. After posting back-to-back solid days, the Nasdaq is down a freaky 120 points. "We’ve got cojones. That should be our slogan," bellows the analyst.

Taking a bloodbath

On a warm New York City afternoon on February 20th, a black limousine pulls up in front of Morgan Stanley’s world headquarters in bustling Times Square. Andreessen, wearing an elegant black coat, is the first of five Loudcloud execs to step onto the curb. They’re there to give a 4 pm pitch to the Morgan Stanley sales crew. They can’t miss the giant electronic ticker, 40 feet above street level, reeling off one stock disaster after another. Nasdaq is down 106 points for the day.

Over the next 16 days, they will notch 70 meetings in 26 cities. The audience is tough. At every stop, money managers are shell-shocked–some sitting on portfolios that are down well over 50% in a year. They ask why the Loudcloud team is there and why now? Many fund managers turn out for meetings because of Andreessen’s pedigree. But that’s not enough to convince them to invest.

• Anticlimax

It’s IPO day. Loudcloud staffers don’t pop any champagne. The only celebration is an impromptu gathering of about 40 employees eating doughnuts and watching their CEO on TV. There are a few laughs and cheers, then it’s back to business. Loudcloud got its money. But that’s all.

Today, Loudcloud looks a lot like any other post-meltdown Internet company.

It has a low-single-digit stock price, some employee stock options are under water, and most of its investors are in the red. The company is conserving cash. It has delayed a costly TV ad campaign, it’s hiring more slowly, and has eased up international expansion. "It was a whole different set of rules when we started," concedes Horowitz. "Everything about our business has changed. Now we’re optimized for profits, not growth." With luck, Horowitz and Andreessen will one day look back on Loudcloud’s early miscalculations as a bullet dodged, not one taken to the heart.

Ben Elgin with Steve Hamm in New York—BusinessWeek