BUSINESSWEEK ONLINE : SEPTEMBER 27, 1999 ISSUE
COVER STORY -- E.BIZ -- THE E.BIZ 25

Mary G. Meeker


MARY G. MEEKER

MORGAN STANLEY DEAN WITTER

Position: Managing Director

Contribution: Kicked off the consumer e-commerce gold rush by predicting huge growth in Internet advertising and consumers' readiness to open their wallets on the Web.

Ambition:To spot the next Netscapes (the way she did the original one) and help investors avoid getting caught in the backdraft when the weaker Internet stocks melt down.

Check out a Q&A with Morgan Stanley's ace Internet analyst, Mary Meeker at ebiz.businessweek.com.

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 (MWD), 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. (CSCO)

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. (AOL), 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 (CMDX), an online marketplace that brings together chemical buyers and sellers. Another hot space could be online music, where companies such as RealNetworks (RNWK), MP3.com (MPPP), Amazon.com (AMZN), 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 (YHOO), 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

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BACK TO TOP
RELATED ITEMS
The e.biz 25: Masters of the Web Universe

COVER IMAGE: The e.biz 25

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TABLE: Who's Lagging in the Net Age


[empire builders]
Jeffrey P. Bezos
AMAZON.COM INC.

Stephen M. Case
AMERICA ONLINE INC.

Timothy A. Koogle
YAHOO! INC.

[the innovators]
Louis H. Borders
WEBVAN GROUP INC.

Jay S. Walker
PRICELINE.COM

Margaret C. Whitman
EBAY INC.

Glen Meakem
FREE MARKETS ONLINE INC.

James H. Clark
MYCFO INC.

Christos M. Cotsakos
E*TRADE GROUP INC.

[bankrollers]
Masayoshi Son
SOFTBANK CORP., JAPAN

Robert C. Kagle
BENCHMARK CAPITAL

Lawton W. Fitt
GOLDMAN SACHS & CO.

L. John Doerr
KLEINER PERKINS CAUFIELD & BYERS  

Bernard Arnault
LVMH MOET HENNESSY
LOUIS VUITTON  

[the visionaries]
Mary G. Meeker
MORGAN STANLEY DEAN WITTER

John Hagel III
MCKINSEY & CO.

William Joy
SUN MICROSYSTEMS

[the architects]
Louis V. Gerstner Jr.
IBM CORP.

Pehong Chen
BROADVISION INC.

David C. Peterschmidt
INKTOMI INC.

Kevin J. O'Connor
DOUBLECLICK

Ellen M. Hancock
EXODUS COMMUNICATIONS

[the pace setters]
David S. Pottruck
CHARLES SCHWAB CORP.

John T. Chambers
CISCO SYSTEMS

Michael S. Dell
DELL COMPUTER



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