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

selling our services were put into building a secure facility in Herndon, VA, to be sure that no one could attack the server farms containing all the domain names for everyone around the world. In addition, we decided to spend our money building a backup facility in case something happened to the primary facility. That was built somewhere in Southern Virginia, I believe. There are other backups in the system protecting the data—other nodes have complete routing information. SAIC had to spend over a million dollars to build the secure facilities.

X: Was there any connection in SAIC’s purchase of Network Solutions with other acquisitions at the time? In other words, was it part of a broader Internet strategy?

JRB: Yes. I believe we continued to acquire smaller network companies, such as the company that Daniels ran, which really started us thinking along this line.

MD: Yes, at SAIC we did begin to focus on networking businesses, and built talent and acquired clients in both the federal and commercial space. We saw this as big growth business in both sectors.

X: Why did SAIC decide to do the partial IPO in 1997? Did that turn out to be a smart thing to do? SAIC sold 3.3 million common shares, or a 21 percent-stake in Network Solutions, raising more than $59 million. SAIC retained almost 12 million shares of the stock, which carried preferential rights that basically preserved 96 percent control of the company.

JRB: The value of NSI was becoming so great that we wanted to take some of the profits we had made off the table in case of difficulties later on. Yes—it was a good idea.

X: Which was a bigger headache? The financial issues associated with Network Solutions or the operational issues?

JRB: The financial issues were never a problem because NSI was unbelievably profitable. The operations were a headache because SAIC’s ownership of NSI rubbed a lot of people in the Internet community the wrong way. They felt the government should run

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Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.