...Mr. Andreessen’s strategy was: “give away today and make money tomorrow”. The successful intuition of Andersen lied on the fact that Netscape could reach a high degree of success (make money tomorrow) only if its software was known and used by the public. Thus, Andreessen was committed to distribute of software for free, as well as to a heavy invest in R&D. This strategy generated initial negative cash flows and clearly it was not sustainable in the long run. In order to become highly successful, Netscape had to be able to find the means to continue the invests in R&D, set the industry standard, outperform the competition, and ultimately be profitable. When Andreessen initiated his strategy the market was not competitive. However, Microsoft had the financial means and the reputation to potentially become Netscape’s direct competitor. Netscape was able to set the industry standards and create a good reputation. Ultimately, when the IPO took place, investors perceived the company to be the new leader in the market. Currently, the market is very competitive and the same strategy that made Netscape so successful it may not lead to the same results. New tech companies who focus on high growth, tend to raise capital in three main ways: creating an alliance, through venture capital or through IPO. A strategic alliance, would have provided not only capital but also assets to create economies of scale. It seems that an alley would provide much more than what Netscape needs...
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