The Untold Story of SAIC, Network Solutions, and the Rise of the Web—Part 2

7/30/09Follow @bvbigelow

The beginning of the Internet gold rush is often dated with some precision—the date of Netscape Communications’ IPO, on Aug. 9, 1995—even though a broad array of Internet-related technologies had been under development for years before that. A case in point is Network Solutions Inc., a small Herndon, VA, computer networking company that was acquired by San Diego-based SAIC six months before the Netscape IPO.

If the Netscape browser made it possible for people to tour the World Wide Web, Network Solutions was responsible for keeping track of all the places they could go. The small, minority-owned government contractor founded in 1979 was granted a government-sanctioned monopoly in 1992 to serve as the sole registrar of Internet domain names that end in “.com,” “.edu,” “.net,” and “.org.” At the time, Network Solutions was a money-losing enterprise that had been generating about $18 million a year in revenue, mostly by installing computer networks for banks and government agencies.

SAIC, the defense contractor also known as Science Applications International Corp., purchased Network Solutions before it was obvious just how important—and lucrative—that service would be. As I explained yesterday, SAIC operated Network Solutions from 1995 until 2000—an extraordinary inflection point in terms of Internet growth—and made billions of dollars on its initial investment. But it’s not a story that’s widely known. So it’s something of a coup to provide an exclusive interview with two key insiders, SAIC founder (and Xconomist) J. Robert Beyster, who was SAIC’s chairman and CEO during the Network Solutions years, and Mike Daniels, the SAIC executive who led the acquisition and served as chairman of Network Solution’s board during the years SAIC controlled the company.

Here is an edited account of our conversation:

Xconomy: SAIC’s former chief financial officer told me SAIC began an expanded acquisition strategy in 1990. Why?

J. Robert Beyster

J. Robert Beyster

J. Robert Beyster: At the time, I was interested in expanding our network installation business. This task fell under Mike Daniels in Washington, who managed the contracts where SAIC installed networks for other companies and for the government. I felt that business was such that we needed to acquire more people, and the best way to do it was through acquisitions.

X: Why did SAIC acquire Network Solutions?

JRB: We were originally interested in acquiring … Next Page »

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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  • Joe

    Ugh…..VeriSign! Overpriced SSL certs.

  • Pingback: Your Thoughts on Cybersecurity at Dr. Beyster’s Blog

  • Lee

    Great article!

    What was Mr McHenry thinking! He had the oyster in his hands. I know he did well in the sale of NSI but if he just could have hung on for a few more years. Was he forced to sell? As soon as SAIC took control of the domain industry it became an ever growing monopolistic mountain of hundred dollar bills. I have to think that Mr. McHenry knew what was going to happen but was not allowed to put prices on each registration. Anyone know?