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Jim EvansWhen it became clear that renowned nonfiction writer Michael Lewis was trolling Silicon Valley to gather material for the definitive Internet book, a lot of people took notice. After all, Lewis had written one of the seminal 1980s greedy Wall Street stories, Liar's Poker. While he's penned other books since then, how better to follow a book on the business story of the 1980s than with one about the business story of the 1990s (and maybe the century): the creation and explosion of the Internet?
With apologies to Michael Wolff, no one has written the big Web business book yet, including Lewis. Maybe it's just too early in the game.
But that's OK. The Web is just too damn big to encapsulate its creation in just one tome. Instead of chronicling the rise of Kleiner Perkins Caufield & Byers, America Online, Yahoo and others, Lewis focuses on the one man who is as close to the center as anyone, Jim Clark.
Clark started three companies - Silicon Graphics Inc., Netscape and Healtheon - each worth more than $1 billion. His own personal fortune after Healtheon went public rocketed to over $2 billion.
Clark is portrayed as a maverick who doesn't suffer fools gladly, a fanatic about making money and controlling his destiny. Most important, Clark as engineer is emphasized.
This is not a small point. Before the technology business became what it is, the financiers, bankers and managers controlled everything. But after he started Silicon Graphics, Clark learned a valuable lesson.
At SGI, Clark and his beloved engineers were effectively squeezed out of the equity they thought they deserved by venture capitalists. So when Clark started his next company, Netscape, he made sure that wouldn't happen again. The terms for investment in Netscape that he secured with Kleiner's John Doerr were revolutionary. Instead of being able to buy into Netscape at the same price at which Clark funded the company, Doerr paid three times that amount, and Clark retained 25 percent of Netscape for himself.
That's the big idea of Lewis' book. Since Netscape, giving out equity in a Net company has become central to attracting and retaining key engineering talent. Clark also did the unthinkable when, over CEO Jim Barksdale's initial objections, he took Netscape public in August 1995; the company was only 18 months old and had no profiits. But what was unthinkable then is now commonplace. In part, that's due to Jim Clark.
In the end, Clark seems to be an idea man only. He has little patience for running his businesses. Yet, that's where some of the Clark magic comes in: He attracts the best people to run his companies. Whether it's Mike Long, the CEO of Healtheon, or Jim Barksdale of Netscape, Clark gives the reins to an experienced executive and goes on to the next big thing.
He can also viciously turn on the chosen executive, as Lewis recounts in hilarious detail. Take Ed McCracken, the former CEO of Silicon Graphics. McCracken was brought in from Hewlett-Packard to run SGI when it became apparent that Clark was not born to be a manager. The problem with McCracken was that he was the Valley's version of an Organization Man, or a manager with a taste for conformity. In Clarkspeak, Ed McCracken became "Ed McMuffin" or "Fucking Ed McCracken."
Disdain for authority is a common thread throughout the book. Clark doesn't think much of venture capitalists and bankers, either. To him, they're parasites who take advantage of engineers. Lewis seems to adopt the same stance. In a passage in which Clark, Healtheon CEO Long and a banker from Morgan Stanley are flying to Europe for Healtheon's IPO road show, Lewis never names the banker. He writes: "Clark let the Wall Street people sell his companies to the public and make him billions of dollars, but only because he hadn't yet figured out a way to get rid of them."
Clark seems dedicated to getting rid of people who complicate his life. He started Healtheon to get rid of health-care professionals who only add to red tape in the medical world. With his latest startup, MyCFO.com, Clark hopes to get rid of a layer of accounting management with whom the ultra-rich deal every day.
Lewis, of course, understands Clark and as illustration tells of a boating trip he took with him across the Atlantic. Clark built the boat so it could be sailed by computer, with the help of 24 SGI workstations. The boat, or rather its computers, performed marginally. But Lewis, in the end, realizes that it wasn't so much the sailing of a computerized boat that was important - it was the idea that such a thing could be done.