Well, Mary Meeker likes Chemdex (from the latest BusinessWeek)
BUSINESSWEEK ONLINE : SEPTEMBER 27, 1999 ISSUE
COVER STORY -- E.BIZ -- THE E.BIZ 25
Mary G. Meeker
Poor Mary Meeker. When she started covering
technology companies as an analyst at Salomon
Brothers Inc. in 1989, it looked as though she had
come late to a doozy of a party. The PC revolution
was well under way, and it seemed that nothing else
would come along during her career that could
possibly be its match. Still, she learned the fine art of
trend-spotting from some of the sharpest analysts in
New York--just in case another technology
revolution should happen to come along.
Boy, was she ready when it did. Meeker, by then at
Morgan Stanley Dean Witter, not only called the
Internet early as a mega business opportunity, but,
with her insightful commentaries and bold
predictions, she helped just about everybody else
see it, too. She and a handful of colleagues penned
three pieces of standout trend analysis--the Internet
Report in 1995, followed by advertising and
e-commerce studies in 1996 and 1997--that
became virtual bibles for investors and CEOs alike.
'She gets it, got it earlier than most, and was able to
articulate it to the business community in a way they
could understand,' says John Chambers, CEO of
Cisco Systems Inc.
NUTTY MARKET? Meeker is an unlikely seer.
Born and raised in rural Indiana, she's plain-spoken and humble. But all that only
masks her laser-sharp analytical skills. Her specialty: Making sense out of bedlam.
Like the day one of her early discoveries, Netscape Communications Corp., went
public in 1995. 'I will never forget that,' Meeker says. 'We were on the trading
floor when Netscape was trading at 72. Someone turned to me and said 'Isn't this
exciting?' and I just looked at him and almost started to cry because now I had to
deal with this.'
The market seemed to have gone nuts. Meeker's challenge was to explain it to
Wall Street. She saw that new rules were required for evaluating Net startups.
These companies didn't have profits. In some cases, they didn't even ask
customers to pay for their goods. What they had, she understood, was millions of
customers and brands that had a shot at shining around the world. After
Netscape's initial public offering, she helped create a new methodology for
estimating companies' value based on how much a Web site visitor or software
user might be worth in the future and projecting revenues and profits based on
that. Since then, hundreds of Internet companies have gone public--and nobody
blinks when their stock prices soar.
Meeker isn't all numbers and spreadsheets, though. She learned about the Net
industry by talking to hundreds of entrepreneurs on frequent visits to Silicon Valley
and San Francisco. She immersed herself in Net culture--hanging out in the Valley
with Netscape wunderkind Marc Andreessen. In 1995, she and Andreessen
smugly estimated that only 400 people really 'got the Net.' Meeker was one of
them--and proved expert at pulling all that she had gleaned into one big picture.
Some of Meeker's early revelations seem quaint or obvious now. But at the time,
they were daring. In 1993, she backed America Online Inc., a fledgling service
with just 300,000 subscribers that was viewed skeptically by many analysts. But
she understood how AOL would gain tremendous power and value as more and
more people signed on for news, e-mail, chat--and, ultimately, access to the Web.
'She understands the economics of the medium and has an intuitive feel for the
people and trends,' says AOL Chairman Stephen M. Case, whose service now
has more than 20 million customers.
The trends Meeker is spotting now could very well become tomorrow's gold
standards. She believes there is plenty of room for good companies to build huge
businesses that support rich market caps. She has high expectations for
business-to-business markets that are revamping traditional commerce. Example:
Chemdex, an online marketplace that brings together chemical buyers and sellers.
Another hot space could be online music, where companies such as
RealNetworks, MP3.com, Amazon.com, and AOL are making deep inroads.
Since 1995, Meeker's job has shifted with the Net tides. Now, in addition to
analyzing new companies and trends, she increasingly focuses on how established
companies such as Yahoo, AOL, and Amazon will adjust and compete with one
another. And she even gives counsel to some of the industry's big shots. 'She sees
how large the opportunity is--and encourages us to think big,' says Amazon CEO
Jeffrey Bezos.
Meeker also has become something of a Cassandra--warning that greed is
encouraging investments that won't ever pan out. 'I think we have a vicious cycle,
where the amount of money lost for a lot of new companies and a lot of old
companies trying to get into this space is going to be HUGE--in all caps,' she
says. That's a scary warning, especially if you consider the forecasting record of
the person it's coming from.
By Heather Green
Copyright 1999, by The McGraw-Hill Companies Inc. All rights reserved.
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