BUSINESSWEEK ONLINE : OCTOBER 23, 2000 ISSUE
BUSINESS WEEK E.BIZ -- UPSTARTS ONLINE EXTRA: Q&A with VeriSign's Stratton Sclavos Building "the Internet's first utility" VeriSign Inc. CEO Stratton Sclavos has always been a little ahead of his time. He graduated high school in his native San Francisco before he turned 17 and college before 21. And he wasn't yet 35 when he became chief executive of an up-and-coming Internet company. That company stayed in the shadows of the Internet's infrastructure for three years, selling high-tech security to companies doing business online. An up-and-comer no longer, VeriSign, based in Mountain View, Calif., has arrived. With a market cap approaching $38 billion and newly acquired Network Solutions Inc. tucked into place, VeriSign is looking more and more like the company that consumed the Internet's infrastructure. Sclavos recently chatted with Business Week's Jim Kerstetter about how VeriSign got to this point and where it's going next. Edited excerpts of their conversation follow: Q: Let's go back to the beginning. VeriSign was spun out of another company, RSA Security, right? A: That's right. It was [RSA CEO] Jim Bidzos's idea. It spawned from a discussion Jim had with Jim Clarke at Netscape involving a security model for the Internet. The unusual thing was, the basic technology for the business had already been built, we just had to Internet-ize it, if you will. Q: Who were the RSA employees involved in the launch of VeriSign? A: Really it was only two engineers from the digital certificate group that RSA had -- one marketing person and one engineering person. It was the implementers, and that was about it. Q: It's not like RSA was a big company at the time, was it? A: No, maybe they had 60 employees. It was an important company, but not big. Q: Why did you take the job as CEO? A: Clearly, you were going to need security, identification, and authentication services if commerce on the Internet was going to take off. VeriSign was going to be in a unique position to take advantage of that. It was very obvious to the Yahoos and the Netscapes of the world that something like VeriSign was going to be necessary. Q: Were you worried about working with PCs? A: No. I positioned the company solely for the Internet and let the PC world get on without us. Q: That said, it was a long time before your revenues took off, wasn't it? A: We had a market, and it was growing at the rate of commerce on the Internet. The first thing everybody did on the Internet was put up Web sites. Phase two was going to be commerce. We were going to benefit from phase two. It definitely was 18 to 24 months until we saw that. The revenues started small and started growing from there. We never went down, but we definitely started small. Q: A lot of people were more than eager to write VeriSign off early on. How did you deal with that? A: Because it started slowly, but was building every month, we could see progress. One of the things we thought early on, was we would be known by the company we kept. Getting Visa in early [as investors] helped a lot. Getting Microsoft and Netscape in as technology partners allowed us to go out and get other technology partnerships. They allowed us to keep building the credibility of the company. Even though the revenues were just $1 million or $2 million per quarter, we had the credibility that made people believe we had potential. I'm from the old school that believes you start slowly and keep building. Q: Are you pleased with VeriSign's current state of affairs? A: We're on a great trajectory, no question. Five or 10 years from now, we think we will be viewed as one of the companies that made the Internet happen. Q: You were trying to buy Network Solutions for several years, weren't you? A: Yes. As they were going public in 1997, they asked me to come on their board. It was the first board seat I had taken. Over the next two years, it became apparent that they were also an infrastructure company. Almost where they left off, we picked up. They also had the same kind of business model -- subscription services, paid up front, in many cases, with customers buying more and more as they expand. And if you thought about it, putting these companies together was a chance to create end-to-end services. We could keep going back to that same customer to keep selling more and more services. It's why we coined the term, "the Internet's first utility." Q: Are you glad you made the acquisition, even though it was more than a $15 billion deal in stock? A: Yes. Network Solutions and VeriSign was a combination we believed could create critical mass immediately. We believed it would be big enough to be one of the survivors. Q: Analysts project you will top $1 billion in revenues next year. That's a pretty big company. What's next? A: The nice thing about being a utility is, I don't care who wins. E-tailing is becoming less interesting to people. B2B is coming on. Wireless hasn't even started. I think we're in a position to benefit in any case. Q: Will the E-Signature bill just passed in Congress help? A: You will not see VeriSign's revenues be impacted by this one way or another for a long time. It will increase our long-term value, but it won't be for a long, long time. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS EBIZ Contents for issue dated Oct. 23, 2000 The Web's Virtual Vault: VeriSign CHART: VeriSign: A Net Giant Emerges TABLE: Gross Margins for Web Software Leaders TABLE: Analyst Ratings on VeriSign TABLE: VeriSign's Portfolio of Businesses ONLINE EXTRA: Q&A with VeriSign's Stratton Sclavos INTERACT E-Mail to Business Week Online

Copyright 2000-2008, by The McGraw-Hill Companies Inc. All rights reserved. Terms of Use   Privacy Notice