Netscape’s Lessons for AI Mania

Today’s innovators are market darlings, but not all of them will make it

By Andy Kessler. Excerpts:

"The initial public offering was filed at $14. Everyone wanted shares"

"the stock popped to $74, ending the day at $58." 

"it was 30 years ago this week, Aug. 9, 1995." 

"It took General Dynamics Corp. 43 years to become a corporation worth today’s $2.7 billion in the stock market. It took Netscape Communications Corp. about a minute.”"

"For investors, it was a new sky-is-the-limit internet era, and long-duration investing became standard. Growth was more important than profit. Funky ideas got funded. Money accelerated innovation as investors were willing to fund losses. Speculation roared and momentum lured in new and late investors. No one wanted to miss out on the next big thing."

"In 1999 dot-com mania saw 480 companies go public, raising $62 billion—most, like Pets.com, with flimsy prospects."

"Netscape was free for individual users, but corporations paid a license fee."

"Every company put up a website, but this enabled search engines like Google to crawl distant computers and run ads against search results, hurting magazines and broadcasters. Craigslist ran classified ads online, killing many local newspapers. E-commerce sites like Amazon devastated much of retail."

"With today’s flurry to invest in any company that can spell AI, Netscape’s biggest lesson is that nothing lasts forever. AOL bought Netscape in 1998 for $4.2 billion in stock. AOL’s peak value reached $222 billion in December 1999, and in January 2000 it bought Time Warner for $182 billion. The dot-com boom peaked a month later, and the merger was a massive failure. AOL stopped supporting Netscape browsers in 2008. In 2015 AOL was sold to Verizon for peanuts, and in 2021, along with the remains of Yahoo, it was sold to private-equity firm Apollo."