Netscape’s Navigator
During early-morning workouts on a treadmill in his Palo Alto home, Jim Barksdale likes to watch videos from a PBS series called “The Great Commanders.”
Running in place, he chases the histories of Alexander the Great, Julius Caesar, Napoleon Bonaparte and Ulysses S. Grant.
An hour or so later, he arrives for work at Netscape Communications Corp., where he begins his daily pursuit of the great commanders of another age: Andy Grove, Larry Ellison and Bill Gates.
As chief executive of Netscape, Barksdale has an opportunity to join that corporate pantheon, a chance to cap off a remarkable career as a lieutenant at Federal Express and McCaw Cellular Communications by proving he is a first-rate leader in his own right.
But that chance is slipping. His 4-year-old company, which once seemed poised to dominate the Internet age with its Navigator browser, now looks wounded.
Just a few weeks ago, Netscape reported its first quarterly and yearly losses, then laid off 400 employees. Its stock, which peaked at $85 per share in 1995, has plunged below $17 recently, and now there are rumors that the company may be exploring a sale. The stock closed Friday at $21.63.
Meanwhile, archenemy Microsoft Corp. may be battling an antitrust suit over the way it has marketed its browser. But the Redmond, Wash.-based software company recently posted record profit and continues to eat away at Netscape’s market share.
Barksdale, 55, is widely regarded as a gifted executive. Colleagues and rivals alike point with reverence to his charisma, his sincerity and his ability to organize and motivate people.
*
John Doerr, Silicon Valley’s eminent venture capitalist, calls Barksdale the “gold standard” that every start-up company is looking for. And Marc Andreessen, co-founder of Netscape, said that without Barksdale, the company “would be a smoking crater in the ground.”
But if there is one question about Barksdale--a Mississippi native whose family tree includes a Confederate general--it is whether his skills as a corporate strategist will be enough to guide Netscape to safety in time.
Barksdale has mapped a difficult course that depends on Netscape’s ability to compete with IBM and Microsoft in selling communications software to businesses. Many wonder whether Barksdale can steer the Mountain View company to a defensible position, or whether it is in a battle with Microsoft it can’t win.
“The measure of a great CEO is their ability to weather crises,” said David Yoffie, a professor at Harvard Business School who is writing a book on Netscape. “The verdict on Jim Barksdale will be written in the next six to 12 months.”
*
In late 1994, over dinner at a restaurant near the San Francisco airport, Barksdale listened to pitches from the three men who started Netscape: Silicon Valley entrepreneur Jim Clark, programming whiz Andreessen and venture capitalist Doerr.
Barksdale had already turned down lucrative offers from AT&T;, where many believe he had a shot to become CEO, when that company purchased McCaw. Microsoft made a run at him too, but Barksdale balked at standing in the shadows of Gates, Steve Ballmer and other Microsoft giants.
By the time Netscape approached him, Andreessen recalls, “we were auditioning for him, rather than the reverse.”
Barksdale was intrigued by the potential of Netscape, whose software was the vehicle for navigating the Internet. But the deal wasn’t sealed until Clark had called him dozens of times and agreed to give him nearly 12% of the company. When Barksdale finally arrived in early 1995, he set an unmistakable tone.
“My general principle is that we can run this thing based on facts or opinions,” Barksdale said during his first staff meeting. “If we want to run on facts, I’ll take anyone’s. If we want to run on opinions, we’ll use mine.”
Colleagues describe Barksdale’s management style as a combination of gentle nudges and firm decisions. He is deeply analytical and well-read, fond of Faulkner but more likely to quote the military teachings of Von Clausewitz. He is best known, however, for his vast mental library of Southern homilies.
“The main thing is to make sure that the main thing stays the main thing” is one of his favorites. “When you’re a hammer, everything looks like a nail” is another.
*
Stories about him tend to dwell on these “Barksdaleisms,” and colleagues chide him about them. To Barksdale, they have become a source of embarrassment. “It makes me sound sort of canned,” he said, “like I’m a one-track person, or trite.”
But his Southern mannerisms are an integral part of his identity, and rivals say they often work to his advantage.
“His aw-shucks, country boy demeanor is misleading,” said Nathan Myhrvold, chief technology officer at Microsoft and one of Gates’ closest advisors. “No one should think of Jim Barksdale as other than very sophisticated, very capable and very smart.”
Myhrvold maintains that he was hoodwinked by the Barksdale charm several years ago, when Microsoft and Netscape explored a partnership. Netscape’s only purpose in the meetings, Myhrvold now suspects, was reconnaissance.
“People here said Netscape’s participation was a ploy and I was being fooled,” Myhrvold said. “It’s very hard for me to make an argument in another direction.”
Barksdale said both sides were deeply suspicious and approached each other like wary dogs, “just circlin’ and sniffin’.”
*
Jim’s success is only slightly above average in the competitive Barksdale clan. The eldest of the six brothers, an IBM salesman, died of cancer at 36. The others are a federal judge, a cardiologist, a former bank chairman and a high-ranking attorney for BellSouth Corp.
The boys seem to have acquired their social skills from their father, Jack, a natural conversationalist equally comfortable among the elite and the poor of Jackson, Miss. He was warden of his church, president of the University of Mississippi Alumni Assn. and a vice president of Deposit Guaranty Bank.
But the Barksdale brothers were particularly attached to their mother, a pillar of strength in the family. Mary Bryan Barksdale spent the last 20 years of her life in a wheelchair, crippled by arthritis, with nary a complaint. Throughout her life, she set high standards for herself and her boys.
While Jim was in high school, there was a rash of pregnancies among some of his well-to-do classmates. Fearful that Jim’s girlfriend might be next, his mother grounded him for a month as a preventive measure.
But she was trusting in other ways. To foster Jim’s interest in art, Mary Barksdale allowed her son to paint a mural of pine boughs on the dining room wall that remained until the house was sold decades later.
Blessed with his father’s grace and mother’s grit, Barksdale gravitated to leadership roles from an early age.
“If there was a group of neighborhood kids wondering whether to go throw rocks or play football,” said older brother Tom, “Jim would lead that discussion.”
He was class president in high school (although he spent summers working for a power company in Texas), president of his fraternity at the University of Mississippi and a rising star in the sales ranks at IBM.
His big break came when he was managing computer systems for a conglomerate called Cook Industries. Cook went bust in the late 1970s and Federal Express bought the company’s systems and hired Barksdale to manage them.
At FedEx (now FDX Corp.), Barksdale worked for Fred Smith, one of the most influential chief executives of the modern era. Smith had written a paper at Yale University about building a shipping business using a hub-and-spoke delivery network analogous to the telephone industry. The paper got a failing grade, but the business became a blockbuster.
Barksdale played a key role, assembling a revolutionary computer system to track FedEx packages. In 1983, he was named chief operating officer, and over the next eight years sales grew from $1 billion to $7.7 billion.
Barksdale mastered the details of the business, even getting his pilot’s license to better understand the demands on the company’s pilots. He began to earn a reputation as a thoughtful but demanding manager of people.
Much of his management style came from Smith, an innovative leader who allowed employees to air their grievances directly to top management during weekly courtroom-like sessions.
“We heard 20 to 30 cases a week for eight years,” Barksdale said. “I got to see every conceivable employee situation--matters of productivity, personal tragedy and blatant management abuse.”
(Well, almost every employee situation. Barksdale was taken aback by the reaction to his decision last year to ban dogs from Netscape offices. Employees protested by dressing up a golden retriever to look like a goldfish. Barksdale promptly backed down.)
In 1992, employees formed a line in the FedEx parking lot to say goodbye to Barksdale, who left to join McCaw Cellular in Seattle, where he was lavished with stock and given greater management control.
As president, he helped founder Craig McCaw build a $3-billion cell phone empire from scratch. But when the company was bought by AT&T; in 1994, Barksdale bolted for Netscape.
“At Federal Express, Barksdale was considered a god,” said Philip Greer, a longtime friend and member of the FedEx board. “But this is not a guy who wanted to go out as a good lieutenant. He wanted to prove himself as a CEO.”
For that, he chose a monumentally difficult proving ground.
*
From the beginning, expectations surrounding Netscape have been enormous. Its stock offering was one of the hottest ever. The company seemed to represent all the possibilities of the Internet itself. And if that wasn’t enough pressure, Clark and others believed Netscape was Silicon Valley’s best hope for overthrowing Microsoft.
Barksdale’s job was to deliver on these expectations, something that may have been impossible no matter his capabilities.
*
Microsoft responded to this new threat with a furious assault on Netscape. The software giant created a rival Internet browser, gave it away and bundled it with its ubiquitous Windows operating system. Microsoft’s share of the market has risen from zero to about 40%, mostly at Netscape’s expense.
A stung Netscape responded with flip-flops that left analysts scratching their heads and rivals snickering.
The company started out offering its browser for free, then began charging for it in 1995, then made it free again a few weeks ago. Last year Netscape tried bundling its browser inside a suite of products called Communicator, only to reverse that decision when sales stalled.
“I have trouble understanding Netscape’s strategy,” said Microsoft’s Mhyrvold. “First it’s the browser war, and then there’s no war. We’re going to integrate everything; no we’re not. It’s the client; no, it’s the server. There’s a virtue to being quick on your feet, but having a strategy du jour is not a good thing.”
Netscape lobbied aggressively to get the Justice Department to bring its recent lawsuit against Microsoft, which accuses the behemoth of antitrust violations in forcing PC makers to carry its browser--not Netscape’s--or be denied the Windows operating system.
But even if Microsoft loses the case, Netscape has lost all hope of making money on browser sales. So Barksdale has hitched the company to two sources of revenue: fees paid by advertisers on the popular Netscape Web site and sales of networking software to big corporations.
But IBM and Microsoft dominate the market for these “groupware” products that manage corporate e-mail and allow employees to collaborate electronically. Further, it’s a high-stakes market in which customers ponder decisions for months and get spooked by any signs of trouble, such as Netscape’s recent layoffs and rumors that the company might be an acquisition target.
Last week, the company’s stock jumped 35% amid speculation that Netscape was in talks to sell all or part of its business to Oracle Corp., IBM, Sun Microsystems Inc. or America Online Inc. Barksdale declined to comment.
The CEO, who spent most of his career buying software, has shown a talent for selling it to customers that include Chrysler Corp. and Boeing Co. He rightly points out that Netscape, with 2,800 employees and sales of $534 million last year, is far larger than Microsoft was at the same age.
And Netscape’s troops seem happy with their leader.
“I think of him as a Confederate general,” says Clark, who made his first fortune founding Silicon Graphics Inc. “I only wish his job weren’t so difficult.”
In fact, there was a Gen. William Barksdale in the Confederacy, a flashy, hot-tempered man who led a brazen charge across a peach orchard at Gettysburg, overrunning five Union regiments before being felled by six shots, including one that cost him a foot.
*
Some have drawn parallels between the Civil War and the browser wars. Netscape, the theory goes, is like the Confederacy: smaller, nimbler and dependent on wile and valor. But Microsoft, like the Union, has impressive leadership of its own, along with abundant resources and troops.
Financially, Barksdale doesn’t need to endure these battles. He and his wife of 33 years, Sally, live in Palo Alto. They could easily retire to their house in Aspen, Colo., or another they are building in Mississippi. Barksdale takes a nominal salary of $1 a year, but his Netscape stock and other holdings are estimated to be worth several hundred million dollars.
Like many of the commanders he admires, Barksdale is motivated less by the spoils of combat than the thrill of being part of it.
“It’s things you tell your grandchildren about,” Barksdale said. “I was there during the great browser wars.”
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
PROFILE
JAMES L. BARKSDALE
Age: 35
Title: President and chief executive , Netscape Communications
Family: Married for 33 years to Sally McDonnell Barksdale. Three children, ages 21 to 30
Education: B.A., University of Mississippi BACKGROUND
1995 to present: President and chief executive, Netscape
1992-94: President and chief operating officer, McGraw Cellular Communications
1983-91: Executive vice-president and chief operating officer, Federal Express
1979-83: Chief information officer, Federal Express
QUOTE
‘The main thing is to make sure that the main thing stays the main thing.’
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Peaks and Valleys
Since Netscape went public in 1995, in one of the most sucessful initial public offerings in history, its stock price has fluctuated--falling dramatically in recent months. Monthly closing prices and Friday’s close:
1998-- Friday: $21.63
Source: Bloomberg News
