Netscape co-founder Marc Andreessen's registered to sell shares of another Internet company this week -- Loudcloud. Its services will help companies build and rapidly scale their e-commerce operations without getting tangled up in the wires that make it all happen. In other words: leave the plumbing to Loudcloud. Andreessen is excited by the idea that instead of running one of the stores on the block, he'll own and run the block instead. If so, it's all America Online's fault.
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This time, it's Loudcloud, its proposed Nasdaq ticker is LDCL, and the 12-month-old startup hopes to raise up to $150 million through its IPO. What value the public will place on the company is another matter, of course, and is sure to be a topic of speculation in the coming months. The markets haven't exactly been greeting Internet IPOs with open wallets over the last year.
That stands in sharp contrast to much of the era that Netscape helped launch, and which catapulted Andreessen into the pantheon of late 20th-century geek superstars. It will be a tough act to follow.
New class of Internet infrastructure services
Loudcloud's filing with the Security and Exchange Commission does not say how many shares will be sold or the expected share price -- details typically filled in closer to the offering date, which has also not been set. But once everything has been lined up by the offering's principle underwriters, Goldman Sachs and Morgan Stanley, the anticipated $150 million purse will be used for general corporate purposes, including keeping the lights on, the employees paid, and the desktops humming.
The registration statement does, however, show that for the six-month period ended last July 31, Loudcloud generated revenues of $1.9 million and booked a net loss $49.4 million -- which is, in its way, also fairly typical for an Internet startup. And what does this start-up do?
Loudcloud describes itself as "offering a new class of Internet infrastructure services to established enterprises, ASPs [application service providers] and Internet-based businesses."
In more practical terms, Loudcloud's services will help companies build and rapidly scale their e-commerce operations, reducing their time to market, and freeing them to focus on their core business without getting tangled up in the wires that make it all happen. In other words: Leave the plumbing to Loudcloud.
As an example of the "coopetition" so common among technology companies, Loudcloud both partners with and to some extent competes with co-location and data center providers such as AT&T (NYSE: T), Equinix (Nasdaq: EQIX), Exodus Communications (Nasdaq: EXDS), and GlobalCenter, a subsidiary of Global Crossings (Nasdaq: GBLX.) The company counts among its clients Oracle (Nasdaq: ORCL), Sun Microsystems (Nasdaq: SUNW), and former Netscape arch rival Microsoft (Nasdaq: MSFT.)
Loudcloud's co-founding fab four
Loudcloud was founded in September 1999 by Marc Andreessen and three other former Netscape execs and AOL escapees who that month all disconnected from America Online (NYSE: AOL) after seeing Netscape through its acquisition and early assimilation by the Dulles giant.
Marc Andreessen, whose story is fairly well known, claims chairman of Loudcloud as his latest job description. Inevitably overshadowed by Andreessen, his co-founders nevertheless contribute to the company's pedigree.
Loudcloud's president and CEO, Benjamin Horowitz, was a Netscape vice president from 1995 through April 1999 when he became VP and general manager of AOL's E-Commerce Platform Division following the Netscape merger. Timothy Howes, Loudcloud's chief technical officer and president of Product Operations, was with Netscape from 1996 as a server products engineer and chief technology officer of the Server Product division before becoming AOL's VP of technology.
Rounding out Loudcloud's co-founding fab four is Sik Rhee, who has been Loudcloud's VP of research and chief strategist and is now chief tactician. Rhee was a development manager at Netscape since its December 1997 acquisition of Kiva Software, which Rhee co-founded. And while Andreessen gets the spotlight, it is Rhee who gets credit for Loudcloud's founding vision, drawn from his experience building Shop@AOL during his days as chief technology officer of AOL's E-Commerce Platform division.
It's all AOL's fault
A recent Wired Magazine cover story profiling Andreessen and Loudcloud explains how Rhee and the others at America Online were in charge of bringing Internet shopping sites onto AOL and giving small operations as well as the Amazons and eBays of the Web access to AOL's monster user base. Unfortunately, after going live on AOL, their sites would collapse when traffic increased by a factor of 10 to 100, leading users to naturally blame AOL for these problems.
Looking at the sites of potential merchants, Rhee found that, "Almost all of them were rickety systems" that were "doomed from the start." Rhee found himself preparing companies to scale up so that they could benefit from their expensive slot on AOL. Fast forward to September 1999, and Rhee's suggestion that instead of simply being a company doing business on the Internet, Loudcloud should become the company that puts other companies' businesses on the Net.
"I became excited about the idea," Andreessen told Wired, "when I saw that instead of running one of the stores on the block, we'd own the block -- we'd run the block."
Which brings us to yesterday's SEC filing. Andreessen is excited, as no doubt are the other co-founders and the rest of Loudcloud's nearly 400 employees. And who wouldn't be excited at the idea of owning and running the block that, not very long ago, you helped build in the first place?
Your Turn:
Will Loudcloud make as much noise as Marc Andreessen's first legendary company? Share your thoughts on the discussion boards of his last employer, America Online, or of his former nemesis and current partner, Microsoft.
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