Busy as ever, though out of the spotlight, the Net legend says exciting stuff "is happening all over the map" -- especially in Silicon Valley
Ten years ago, programmer Marc Andreessen became a
tech icon when the Web browser company he co-founded, Netscape, went
public. The IPO made the 15-month old Netscape a $1.07 billion company
and ushered in the advent of the dot-com boom and the Internet age in
one fell swoop. Netscape was all but run out of the business by
Microsoft (MSFT) and its Internet Explorer, and Andreessen, now 34 years old, has shunned the media spotlight, no longer donning the covers of Time
and other magazines or headlining the conference speaking circuit.
Netscape was eventually bought by AOL and later closed down when newer
versions failed to gain traction.
But don't let the retreat from the public eye fool
you. Andreessen is busy as ever and is still smack in the middle of
where the Web is going next. The Midwest native spends most of his time
as chairman of Opsware (OPSW), which went public as Loudcloud in 2001.
In
contrast to Netscape, Opsware had to cut its offering price in half to
even make it out the gate. And it has changed significantly since its
IPO, now focusing on software that helps companies better and more
efficiently manage an ever-growing number of servers with multiple
operating systems.
A NEW JAVA?
Running that business may not sound as sexy as pioneering Internet
browsing, but it's at the backbone of several cutting-edge trends in
tech, including running free Linux software on commodity servers;
utility computing, where companies can pay for hardware and software as
they go, like electricity or water; and autonomic computing, the idea
that networks can run and monitor themselves.
That's not all
Andreessen is up to. On Sept. 29 he took a board seat with Zend, a
Silicon Valley open-source startup that wrote and supports PHP, an
open-source developer language that some people think could replace
earlier language Java one day.
And while Andreessen is mum on
the subject, he's behind a new venture called Ning. It's a Web site
that lets people use very simple developer tools to build so-called
social Web applications, such as developing a Match.com, but for
activities other than dating, or a Craigslist for specific cities not
on that site now. The Web site whimsically calls itself a free
"playground" for such applications, and it plans to make money
eventually through charging for premium services and advertising.
All
this is to say nothing of other personal investments Andreessen is
making in other hot startups throughout the Silicon Valley. He may not
be out talking about it, but one gets the sense that Andreessen still
has several new, new things up his sleeve. BusinessWeek Online Silicon
Valley reporter Sarah Lacy
caught up with Andreessen to talk about Opsware, Zend, and his view
that anyone who says high-tech innovation is dead just isn't paying
attention. Edited excerpts of the conversation follow:
You've got Opsware, Zend, and several other projects in the works. Where do you spend most of your time these days?
It's
a lot of Opsware. A lot of trying to keep abreast of what's happening.
The rate of change is so high right now. I'm doing some angel
investing, serving on a couple of outside boards. I've stayed fairly
busy, definitely.
I've been a big believer that the rate of
change has stayed high over last five years. People who say innovation
is dead haven't been paying attention to what's been happening.
Where do you see the most exciting pockets of innovation?
All
over the map: On the one hand, in terms of stuff you can see, [it's] in
the Web. And with the build-out of broadband and mobile, there's the
build-out of new, huge Web startups. [There are] huge rates of change,
and businesses are continuing to build out Web applications. You go
into any company, and the number of new Web sites is just staggering.
Similar
stuff is happening in the home with new technology, from music to
video. There's actually a big story on the economics to build out
information systems. It's falling in price so fast, the cost is
becoming almost trivial. Then that's leading to explosion of new
applications. Servers are completely commoditized. It's shocking the
velocity with which networking and storage infrastructure software has
commoditized.
We've entered a phase where a lot [that was]
invented in the 1990s is being deployed at a massive scale. That stuff
is all accelerated and we're at the beginning of a 10-year wave of
deployment. People get confused because that doesn't show up in the
P&L statements [of big companies]. It's not necessarily good for
big vendors. Their revenues might fall in the process.
How does the open-source movement tie into that?
If
you have a $500 PC and an Internet connection, you have a far more
powerful development environment than you could have had for a million
dollars 10 years ago. It's that old thing of, would you rather have
been a king in the 17th century or poor today, when you've got
penicillin? Would you rather be a 15-year-old kid in Vietnam or [have
a] PhD from MIT in 1979? You'd rather be the kid, because you've got an
unlimited amount of free software.
What about all the consolidation in software? Will it cramp innovation?
By and large, there's a lot less consolidation [than people think]. [Oracle (ORCL)
Chief Executive Larry Ellison] goes out and talks about consolidation
happening and buys two [big] companies. He's going to have to buy a lot
more than that. His business has matured to the point where there's not
much growth left.
That said, there are a large number of new
software companies, and we're certainly one. More categories are
emerging all the time. It used to be understood what a software company
was. It was a [program] on a CD ROM.
Today Google is a huge
software company. They [just] don't sell it and don't deploy it on your
own systems. Salesforce.com is a very significant artifact of that
change of business model. Those are very much software companies.
A bunch of people on Wall Street get this wrong. They're so manically focused on Siebel (SEBL)
and Oracle, they miss out on all this stuff happening. The packaged
software industry has only been around since the mid-1970s.
[Previously], people built all their own software. Maybe the next 30
years [will be dominated by] the [application service provider] or
service style. That's fine, if that's the way [customers want] to
consume it.
How does Opsware fit into all of this?
Opsware
is a bet on the continuing proliferation of unit volume and complexity
of customer systems. Big companies have large numbers of servers and
software. The spread of open-source software [plays into this].
Customers are all dealing with the same thing: 10 to 100 times more
computers today than 10 years ago. They're ramping up very fast, and
it's a challenge not to get eaten alive. Our software frees up their
people.
Does Opsware benefit from the Linux movement?
Linux
tends to drive up Unix volumes. [Researcher] IDC predicts that 5
million servers will be sold in 2005. It turns out the real number will
be like 6.4 million. It's a big leap, year to year. There are basically
2 big factors. One is the increasing proliferation of Linux and
Microsoft. The software is cheaper, and it runs on lower-end hardware,
so you need more boxes: 1,000 or 2,000 instead of 100. That makes us
more necessary.
The other big trend is virtualization. VMware
enables you to run 10 individual operating systems on a single piece of
hardware. We're big fans of that.
So is the outlook brightening for Opsware?
We
think so. There's a big pickup in terms of the pipeline of customer
interest. We've been in this nuclear winter for software companies. It
takes longer to go through a sales cycle and establish a new category.
But another thing [that has worked] on our behalf is we've had very
little independent competition. If we'd have done this in 1998, [we
would have] 20 competitors. Instead, we've got one.
We've [been
selling this type of software] for about three years, and we're doing
$60 million in revenue this year. From $0 to $60 million in three years
is faster than Veritas (VRTS), Siebel, or PeopleSoft. We think we're doing fine from that standpoint. It should start getting easier still.
Let's talk about Zend. Why did you decide to join the board?
I
really like the company. A lot has to do with the people. It's a great
case study about a new software company that started and ran in Israel,
moved its headquarters to the U.S., but [still does] R&D in Israel.
That it moved to Silicon Valley speaks to continuing importance of this
region.
[Zend also plays into that] long-term trend [about
commoditization of technology]. With hardware that cheap and that
powerful, there's a new set of programming techniques that allow you to
develop applications faster. PHP needs fast and powerful servers with
multiple gigabytes of memory, but you can develop applications much
more quickly and cut programmer time by a factor of 10.
[Application
developers are switching] from Java to PHP, like the shift from C and
C++ to Java in the 1990s. We're seeing it now with a big migration from
Java to PHP in Web development. A significant percentage of Yahoo (YHOO)
runs on PHP. A lot of amateur and semi-professionals are PHP
[developers]. And we're seeing more and more inside companies, they're
using it for intranet applications. They can just develop new
applications, faster.
Could this be the death of Java?
PHP
is just used for different things. It's just more powerful. Just like
Java in the late 1990s didn't cause the death of C and C++, [those
programs just became used more for] systems programming, not
applications. What's happening now is Java is becoming the new systems
programming language or [is being used for] very exotic high-end
applications.
What other areas of open source excite you? Where are you seeing the most potential?
There's
stuff all over the map. You can plot the number of projects people are
working on, then the number of people downloading all of them, and
these are these exponential curves. It's becoming more and more
worldwide, more international in scope. And it's in all kinds of
categories. This stuff is moving incredibly fast. It's just great for
everyone, except the affected software companies.
What about the
impact of the next generation of programmers coming into the workforce.
They're all skilled in writing in open-source code, right?
That's
also worth talking about. In the next five years, there will be all
[these] new developers trained on all of the open-source stuff [coming
into companies]. Everyone coming in the door knows Linux inside and
out. They've known Java and now PHP. They don't know a lot of the older
stuff. Not that they get to make all the decisions, but they'll have a
big influence on what [big companies' IT departments] do. And in the
next 5 to 10 to 15 years, they'll have more control, and these trends
will all continue.
At Oracle's annual customer conference in September, Ellison said Linux owed a big debt, and Hewlett-Packard (HPQ),
which have been pushing for corporate acceptance of Linux -- and
without that support newer open-source companies wouldn't have the same
success. What do you think? Is open source acceptance still in the
hands of the old guard?
Conveniently, several of them, including Oracle, are pushing PHP. SAP (SAP)
is pushing MySQL. So a lot of that seems to be happening. [But Ellison]
is really underestimating the amount of grassroots adoption that is
happening bottom-up [within companies]. What the CIO wants to do is
important, but he wakes up and [decides to get Linux and realizes] he
has already got 2,000 copies of MySQL running around he didn't even
know about. There's more dynamic stuff bubbling up than people want to
admit.
Can you talk about what you're doing with Ning?
No, we're literally doing nothing on that right now, press-wise.
You
mentioned Zend's decision to relocate its headquarters to Silicon
Valley. What do you think of Silicon Valley's stature in the tech
world? Why is it still important to be here?
Overall, it's the
combination. There's a critical mass of investors -- way more than
anywhere else, which does matter. [There are] sales people, executives,
accountants, lawyers, bankers, and you're in the flow of what's
actually going on. [Being in tech and not being in Silicon Valley] is
like trying to be in the movie business not in LA or trying to be in
national politics and not be in D.C. You just don't know what's going
on half the time. You get outside the valley and you're not aware of
next six startups that just got funded. That actually matters.
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