JIM CLARK IS OFF AND RUNNING AGAINCan the founder of Netscape and Silicon Graphics ring up another blockbuster?
After Silicon Valley entrepreneur James Clark built a new swimming pool behind his home in Atherton, Calif., he discovered to his chagrin that the backyard neighbors had an eagle-eye view into the pool from their breakfast nook. The obvious solution was to put up a taller fence, but that was against zoning rules. Clark's answer was to haul in dirt to build a hill in his backyard--thus elevating the fence. ''That's the way he thinks,'' says longtime friend Robert Burgess, the CEO of Macromedia Inc. (MACR). ''The fence can only be this high? Then raise the land. Change the rules.''
Clark has been changing--and breaking--the rules ever since he can remember. Today, he's best known for founding Internet pioneer Netscape Communications Corp. (NSCP). Before that, he launched Silicon Graphics Inc. (SGI), whose high-powered computers transformed the way everything from suspension bridges to jet aircraft get designed. ''He's a rebel who has a cause,'' says Larry Sonsini, a Silicon Valley attorney who has represented all of Clark's four startup companies to date.
20/20 FORESIGHT. Clark's cause is proving himself. Not just once, but over and over again. As a teen, he was ashamed of his parents divorce and his own failure to graduate from high school--he was a dropout at 16. But by his 20s, Clark was striving to put distance between himself and his troubled youth. He was working full-time as a computer programmer to support a young family while studying to get three degrees, including a PhD in computer science. Later, he proved his scientific ideas in the field of computer graphics to fellow scholars by making them come alive at SGI, Clark's first venture. Then, Netscape proved that SGI was no fluke.
Clark's genius is his ability to see emerging trends, then create a company and assemble a team to exploit them. ''Entrepreneurs believe they can create the future,'' says Marc Andreessen, a co-founder and executive vice-president at Netscape. ''And when you're Jim Clark, you're right.'' Now, Healtheon Corp., which he co-founded in 1996 to provide online medical data to physicians and hospitals, is expected to go public next month. If it braves the tumultuous stock market, Clark will have accomplished what no one else has yet been able to do: start three technology companies with market values of more than $1 billion each. ''Then nobody will be able to say it was just luck,'' says Clark.
Given the shaky financial markets, a little luck couldn't hurt. Analysts agree that Healtheon is well positioned to revolutionize the health-care business by streamlining the way patient information is handled, but they say it has yet to prove itself. The Santa Clara (Calif.) company lost $12.2 million in the second quarter, on revenues of just $11 million. Janice Young, an analyst with the Gartner Group (GART), says Healtheon has solid management and a potent technology, but she believes the health-care industry will be slow to adopt Web-based services. ''We know the opportunity is coming. The question is when,'' she says.
Clark doesn't exactly need the money. He's already worth about $500 million. But a successful Healtheon IPO would put him firmly in the pantheon of high-tech demigods--one notch below Apple Computer's (AAPL) Steve Jobs, Intel's (INTC) Andy Grove and Microsoft's (MSFT) Bill Gates. ''Twenty years from now, Jim Clark will be one of the names in the Valley that people remember,'' predicts Forest Baskett, the chief technology officer at SGI and a former academic colleague of Clark's at Stanford.
He is not, however, likely to ever be remembered as a saint. The imposing 6-foot, 3-inch Texan often blows his top when he gets angry. During Netscape CEO James L. Barksdale's first week on the job, for instance, ''he just started screaming and hollering,'' recalls Barksdale, who told Clark he wouldn't tolerate that kind of behavior. ''That was the last time it ever happened,'' adds Barksdale.
Clark has long since come to understand his weaknesses. When he was chairman of SGI, he fought with then-CEO Ed McCracken, forcing key employees to take sides. But though he ran Netscape for nine months, Clark figured out that managing isn't his forte. He now leaves his handpicked CEOs to run the companies as they see fit. Barksdale says his employment contract allows him to ask Clark to step down as chairman if he interferes. ''I never had to ask,'' says Barksdale. Adds Clark: ''If you're not managing the company, you'd better not be in there telling the general which hill to take.'' Instead, Clark serves as an adviser to his managers and their engineering teams after his companies get off the ground.
The hands-off approach leaves Clark plenty of time to focus on his next pet project, one that he hopes will eventually grow into a real business. He's building a 155-foot sailboat, Hyperion, which is scheduled to be launched in November from the Royal Huisman Shipyard in the Netherlands. The $30 million boat is packed with electronics gear, 20 computers, and an elaborate control system Clark has dreamed up.
The boat project demonstrates just how much Clark's life has changed since his hardscrabble Texas panhandle childhood. He grew up in the 1950s and early '60s in Plainview, Tex., home of country singer and sausage king Jimmy Dean. As a youth, Clark was so poor he couldn't afford to buy a band instrument, so he played the school's tuba. Clark's mother worked in a doctor's office. His father did odd jobs--but suffered a drinking problem and a violent temper, say Clark and other family members. After his parents divorced in 1958, when Clark was 14, his mother supported him and his brother and sister on $225 a month. ''We lived quite meagerly, but our heads were held high,'' says his mother, Hazelle McClure, now 75, who still lives in Plainview, in a house bought with Netscape stock her son gave her. His father now lives in a Texas convalescent home but was not able to be interviewed for this story.
Clark's head may have been held high, but he also had a chip on his shoulder. He got booted out of school once for setting off a smoke bomb on the band bus. The highlight of a typical week, recalls childhood pal John Speck, now a Plainview farmer, was ''snitching some beer'' and drag-racing down Fifth Street on Saturday night, then swinging around the Trio Rebel drive-in and listening to Buddy Holly on the radio. Lamont Veatch, Clark's former principal, remembers that Clark got in trouble to escape the tedium of classes. ''He'd just come in and bend over and wait for me to pop him on the tail,'' says Veatch. When an English teacher upbraided him for failing to read The Rime of the Ancient Mariner and Clark told her to ''go to hell,'' he was suspended and never returned.
GEOMETRY ENGINE. Ambition finally came to Clark during a stint in the Navy, when he got his high school equivalency diploma and started college. Physics captivated him first. Then computer science. At the University of Utah, he saw his first high-performance graphics computer. And by the time he landed as an assistant professor at the University of California at Santa Cruz in 1974, he was thinking of bringing 3-D computing to engineers.
After he got a job as an associate professor at Stanford University, Clark got a piece of a Defense Dept. grant and started working on the ideas that ultimately found expression in SGI. His goal was to design a special-purpose computational system that would allow real-time, 3-D graphics to be created on a single microchip. His invention: the so-called Geometry Engine, which would later allow engineers to model their designs on relatively inexpensive computers, saving months of work and tens of thousands of dollars.
That's when Clark's life became a sprint. He had watched with envy as other Stanford scholars left to start Sun Microsystems Inc. (SUNW). Ronnie Goldfield, a friend and art dealer, found Clark so convincing that she lent him $25,000 to get SGI started in 1982. Unlike many other scientist-entrepreneurs, Clark did not limit himself to technology matters as SGI matured. Colleagues say he was the first to push for making stand-alone workstations, rather than terminals that were leashed to mainframe computers. Later, he urged the company to bring prices down so it wouldn't be overcome by cheaper PCS.
Just as important, he served as the company's top cheerleader, heaping praise on rank-and-file engineers at every turn. Pavan Nigam, a former SGI engineering manager and now a co-founder of Healtheon, recalls a high-profile event for SGI's Interactive TV joint venture with Time Warner Inc. (TWX) and AT&T (T). Most of the execs talked about their visions of the digital future, but ''Jim talked about what a great feat the engineers had pulled off,'' says Nigam. ''He's become larger than life--he's a mythical figure'' for engineers.
EMOTIONAL REACTIONS. Clark also learned important lessons about listening to others. When Tom Jermoluk, now CEO of @Home Networks Corp., arrived at SGI, he called for a fundamental shift in the way the company put graphics chips in its workstations. Clark threw a briefing book at him. ''He said, 'You want to be the guy who takes the silicon out of Silicon Graphics!''' recalls Jermoluk. But Clark rethought Jermoluk's idea and concluded he was right. And SGI quickly changed its chip strategy. ''His first reaction is to be emotional,'' says Jermoluk, who later went on to be SGI's president. ''But, faced with the facts, he makes the right decision.''
In spite of all that, Clark looks back on his years at SGI with regret. Though he remained chairman of SGI from its inception in 1982 until he left in 1994, Clark's style eventually proved too freewheeling and his influence waned. During Clark's last few years, he fell out with CEO Ed McCracken. He got the message that it was time to move on. ''I felt that someone had taken away one of the passions of my life,'' Clark says. But he also concedes he learned never again to crowd a CEO of one of his companies. Says McCracken: ''He needed to have a bigger cut in the action--both financially and in terms of influence.''
Not long after leaving, Clark achieved both goals with Netscape. Back in early 1994, the tech world was fixated on the promise of interactive TV. But Clark soon moved in another direction. Eager for a new project, he E-mailed Marc Andreessen, the 22-year-old phenom who had helped create the Mosaic Web browser while a student at the University of Illinois.
WEB FEAT. At first, Clark intended to pick Andreessen's brain and assemble an engineering team to start a new interactive-TV related business. But his talks with Andreessen convinced Clark that the Internet was the way to go. ''Everybody said you can't make money on the Internet, but I said there are a lot of people out there using it, and I think you can,'' recalls Clark. His enthusiasm won over Andreessen. While he quickly moved to round up Mosaic's core engineering team, Clark recruited Barksdale.
Even before Netscape went public, in the summer of 1995, Clark was already looking for his next startup. His focus: industries that could be transformed by Web communications. He settled on health care because of his own frustrations filling out forms and waiting in doctors' offices. Why not create a system that would slash red tape and create a central depository for a person's records and billing information? Clark recruited Pavan Nigam from SGI. When Clark called Pavan to talk about Healtheon, ''I was there in 30 minutes,'' says Nigam. ''It was a Jim project.'' Now Nigam is creating a software and service platform for the entire health-care business.
Healtheon's first year, however, was rocky. It took months to focus on a market--corporate human resources departments. And it was a year before Clark hired a permanent CEO, Mike Long, who had successfully piloted financial- software maker Continuum for 19 years. Then Clark gave Long the O.K. to shift focus to physicians' organizations, and that yielded a handful of major clients, including physicians' management firm Brown & Toland.
At Healtheon, Chairman Clark seems to have mastered the balancing act of playing a key role while avoiding any power struggle. CEO Long says he encourages Clark to come in and talk to him and the engineers--to challenge their thinking. Clark keeps pressing the company to work on health-care services for individuals, for example. ''As a result,'' says Long, ''we have a team working on it, even though it might be several years away.''
This is Clark's new approach to life--something he calls his ''orangutan'' philosophy. So long as it pleases him, he hangs on to each of his projects like an ape grasps a jungle vine. But if something becomes troublesome, he reaches out for the next handhold and lets go of the last one. At the moment, when he's not helping out at Healtheon, Clark is putting in long days programming software for the boat at his newest company, Seascape Communications Inc. in a one-room office above a Jenny Craig Weight Loss Center in Menlo Park, Calif.
Clark rarely stops working, even when he's supposed to be relaxing. And he brings the same intensity to his boat project as he does to his startups. ''I'm never content,'' jokes Clark, describing himself as ''a maniac who has his mania only partly under control.''
The underlying technology he's creating for his boat may ultimately spawn a new business, he hopes, applied to control systems for homes, commercial buildings, and industrial processes. As with Netscape and the browser market, that would put him in conflict with Microsoft again--since it, too, is designing such systems. But that doesn't deter Clark, who views Gates as a ''dictator'' bent on controlling the computer industry. ''Being anti-Microsoft is an important part of my life,'' he says. ''In a curious way, it drives me.''
RENEGADE ROLE. Such comments make Clark popular in Silicon Valley, though he prefers a relatively low profile. He and his wife, journalist Nancy Rutter, enjoy giving small dinner parties, with $1,000 bottles of Burgundy, or treating friends to join them on sailing vacations. He pals around with billionaire Bill Koch, who also grew up on the Great Plains. Koch, chairman of Oxbow Corp., a power company, says Clark has been a friend during years of family legal battles. ''Jim sticks up for me, though it might be to his social detriment,'' jokes Koch.
Clark, though, isn't one to worry about his social standing. He's been known to eat at the Ring-A-Ding Diner in nearby Hollister, Calif., where he orders the chili-burger special--an open-face hamburger and fries smothered in chili, which reminds him of Texas. In fact, the recent 100-degree days in rural Hollister haven't been all that different from a late-summer afternoon in Clark's hometown of Plainview. Like Hollister, Plainview was flat and brown.
But as he travels back over to the Valley, it's clear just how far Clark has come from his Plainview days. With Netscape and SGI already having changed the face of the computer industry and another potentially transforming company about to launch an IPO, Clark is relishing his role and his life as a computer-industry renegade--Silicon Valley's antidote to Bill Gates.
By Steve Hamm in Mountain View, Calif.
Updated Oct. 1, 1998 by bwwebmaster
Copyright 1998, Bloomberg L.P.