Netscape, the competition with Microsoft was so severe, we’d wake up in the morning thinking about how we were going to deal with them instead of how we would build something great for our customers,” McCue says. “Basically, we ‘mooned’ Microsoft. And man, did we pay for it.”
What lessons did McCue take from Netscape to his new company, which is growing at blazing speed, generating healthy profits, and dealing with many of the familiar perils of success? “What I realize now is that you can never, ever take your eye off the customer,” McCue replies. “Even in the face of massive competition, don’t think about the competition. Literally don’t think about them. Every time you’re in a meeting and you’re tempted to talk about a competitor, replace that thought with one about user feedback or surveys. Just think about the customer.”
Andreessen, now in his early thirties, has emerged as an unlikely elder statesman in high-tech circles, a voice of experience and reason in an industry that still revels in grandiose claims and overcharged rhetoric. His post-Netscape company, Opsware, went public, with a market value in February 2006 of more than $750 million and a sharp focus on the arcane world of data-center automation. In July 2007, Hewlett-Packard paid a stunning $1.6 billion for the company.
Andreessen appreciates the power (the necessity even) of business strategies and value systems that challenge the industry’s established points of view. He’s just lost his taste for the fight-to-the-death spirit that tends to accompany these change-the-game aspirations. “My view is that the only new companies that end up succeeding are those founded on ideas that were considered pretty crazy at the time they were started,” Andreessen says. “Big established companies are really good at executing on the ideas that make a lot of sense. So if you’re going to start a company, you better have an idea so radical that most people think it’s crazy. Dell sounded crazy—a personal computer company started in the teeth of an enormous recession in the industry. People thought the idea behind Netscape was nuts—everybody told us we’d never amount to anything. Google sounded like a crazy idea—another search engine, started in 1998, growing right through the dot-com meltdown. It seemed like complete lunacy. Of course, the problem is that a lot of ideas that sound crazy are crazy. So for every Dell, Netscape, and Google, you get 300 companies with crazy ideas that fail.”
The other problem, Andreessen says, is that all too often companies with crazy ideas end up in crazed competition with the powers-that-be. Indeed, he watches with morbid fascination as the latest David-versus-Goliath showdown takes shape in Silicon Valley—a struggle with eerie echoes of his own battles at Netscape. “Google is being led through the nose into a direct confrontation with Microsoft,” Andreessen warns. “I’ve seen this before! Everybody loves the fight, everybody lines up for these all-out battles. It’s not clear to me why both companies can’t win. But ingrained behavior pushes both sides toward all-out war. The one thing it does is draw attention to you—a lot of people know your name. But one of the hardest parts of business is when everybody knows too much about your business.”
Early on in the growth of his new company, Andreessen encapsulated what he’d learned from his Netscape days in a document called “Ten Reasons We’re Going to Go Out of Business.” It was, he told an interviewer at the time, “a list of the ten most serious threats” to the company. “It definitely focuses the mind as much as the prospect of an imminent hanging.” Andreessen told us that he no longer maintains the list (“We’re on much firmer footing than at any point in the last five years”), but that he does work to instill and maintain the strategic modesty that the list implies. “Now we get to worry about lots of other things,” he says.1
The moral of the stories told by McCue and Andreessen: you don’t have to be a pugnacious leader or a combative organization to recognize the power of strategy as advocacy. The point is not to have sharp elbows. It’s to develop a sharp-eyed point of view about your industry and to present crisp and persuasive alternatives to business as usual. Sometimes the innovators with the most compelling strategic twists choose to broadcast them with a whisper rather than a shout.
COMPETING BY NOT COMPETING—THE BUSINESS VALUE OF “NERD VALUES”
Jim Buckmaster, president and CEO of Craigslist, the online bulletin board that has become a darling of Internet users, will never be mistaken for the hard-charging Arkadi Kuhlmann, the silver-tongued Roy Spence, or the twentysomething version of Marc Andreessen. He is soft-spoken, reserved, and minimalist in his rhetoric and demeanor. But his low-key personality (along with that of founder Craig Newmark) is a perfect fit for the disruptive idea at the heart of this one-of-a-kind company—to provide a no-frills “public service” in an industry filled with overblown claims, intrusive marketing, and a grow-at-all costs mind-set.
“I don’t want to bad-mouth corporations,” Buckmaster says. “We’re a corporation. But there’s room for a lot more diversity in the approach companies take. We’re trying to stake out one modest example for corporate America, for people to see if it’s applicable to what they do.”
Craigslist, based in San Francisco, has attracted worldwide acclaim by virtue of what Buckmaster calls its “nerd values.” The company, which took shape in 1995, operates Web sites from San Francisco (the original) to Sydney, Australia, from Boston to Berlin, from Atlanta to Amsterdam. But there’s no talk here of monetizing eyeballs, maximizing click-throughs, or building a backlog of banner ads—the universal business language of the Internet. On Craigslist, users swap messages, sell goods and services, search for apartments, and look for jobs on a site that charges no monthly fees, accepts no advertising, and uses virtually no graphics.
Its bare-bones form and function give Craigslist a simple, almost simplistic, feel. (One writer cracked that the site has “the visual appeal of a pipe wrench.”) Yet that very simplicity is the heart of a forward-looking business strategy. The company is built around an explicit commitment to serve as an alternative to business-as-usual on the Internet. Craigslist doesn’t have an elaborate mission statement (that would be too showy for this low-key crew), but the site does offer a brief statement of purpose. Craigslist is about “giving each other a break, getting the word out about everyday, real-world stuff.” It is committed to “restoring the human voice to the Internet, in a humane, noncommercial way.” It focuses on “keeping things simple, common sense, down-to-earth, honest, very real.”
But here’s what’s so instructive: these authentically anticommercial values have unleashed a pop-culture sensation and a hot commercial property. Independent filmmaker Michael Ferris made a documentary, 24 Hours on Craigslist, that captures the strange and wonderful passions of the people who rely on the site. (The tagline for one of the trailers for the film: “There are Web sites about films. Now see a film about a Web site.”) USA Today described the Craigslist phenomenon this way: “Some call the site a public forum. Others call it a classified market. Many call it an obsession.”2
Experts on Internet strategy call it something else—one heck of a business. It’s no multibillion-dollar behemoth like Google or Yahoo—and that’s precisely the point. It’s a fabulously successful small company whose reach extends around the world and whose influence extends across the Internet. Craigslist operates 450 Web sites in all 50 states and 50 countries—sites that add 20 million new classified ads and receive more than 7 billion page views from 10 million visitors each month. Financial analysts have estimated that Craigslist, which has never raised a dime of venture capital and employs fewer than 20 people, who work out of a Victorian house in San Francisco’s Inner Sunset neighborhood, could fetch as much as $100 million if it were put up for sale—a valuation of more than $5 million per employee.*
Fortune magazine, the unofficial voice of the big-business establishment, has marveled at the small company’s hugely impressive business results. In an article titled “Guerrilla Capitalism,” the magazine estimated Craigslist’s 2005 revenues “in the neighborhood”