NetObjects

NetObjects, Inc.

Company type	Private
Industry	Software
Founded	1995
Founder	Samir Arora, David Kleinberg, Clement Mok, Sal Arora
Defunct	2001 (first incarnation)
Fate	Assets sold to Website Pros; patents transferred to Macromedia; revived as independent company in 2009
Headquarters	Redwood City (original), Pennsylvania (revived) , United States
Key people	Samir Arora (founder, former CEO), Steve Raubenstine (president and CEO from 2009)
Products	NetObjects Fusion, NetObjects Authoring Server, NetObjects MatrixBuilder

NetObjects, Inc. is a software enterprise founded in 1995 by Samir Arora, David Kleinberg, Clement Mok, and Sal Arora. The company gained prominence through its development of NetObjects Fusion, a web design program aimed at small to mid-sized businesses, providing designers with comprehensive control over page layout via an interface resembling that of desktop publishing software.

Originally headquartered in Redwood City, California, NetObjects halted operations in 2001 after divesting its assets to Website Pros (currently Web.com) and transferring its patent holdings to Macromedia. The company was later revived as an independent software entity in 2009.

Origins

From 1992 until 1995, the founders of NetObjects were employed at Rae Technology and previously at Apple Computer, where they concentrated on pioneering web browsers, information navigation systems, and tools for web design.

Established in 1995 to commercialize NetObjects Fusion, the founders are credited with coining the term "web site" and securing the inaugural patent for a web site creation tool.

NetObjects operated as a privately held firm initially funded by Rae Technology (Series A), followed by investments from Norwest Venture Partners, Venrock Associates, Novell, Mitsubishi, AT&T Ventures, and Perseus Capital.

In April 1997, IBM acquired a majority ownership by investing $100 million, valuing the company at $150 million.

Introduction of NetObjects Fusion and Public Offering

The debut of NetObjects Fusion 1.0 in 1996 marked the first all-encompassing web design software, attracting considerable attention within the industry. That same year, Fortune recognized NetObjects as one of the "25 Cool Technology Companies," and it earned PC Magazine's Editors' Choice award. In 1997, Samir Arora was honored as a Web Innovator by CNET's Builder.com. The following year, NetObjects received the Gold award from the Industrial Designers Society of America (IDSA).

The company obtained eleven U.S. patents covering various aspects of Internet technology, including both design features and functional innovations.

Following releases—NetObjects Fusion 2.0 (1997) and 3.0 (1998)—were well-received by technology media and achieved commercial success. In 1999, IBM took NetObjects public through an initial public offering on the NASDAQ, raising $72 million while maintaining a controlling interest. The board comprised chairman and CEO Samir Arora, former Apple executive John Sculley, three IBM representatives, and one from Novell.

Market Success and Stock Performance

In subsequent years, NetObjects secured numerous product-bundling agreements with leading PC manufacturers such as Dell and HP, along with Internet service providers including UUNET, Earthlink, and Germany's 1 & 1. The company reported licensing over 15 million copies of NetObjects Fusion.

By 2000, NETO (ticker symbol) stock reached an all-time high of $45 11/16 USD, placing the company's valuation at approximately $1.5 billion.

Revenue expanded from $7.2 million in 1997 to $15 million in 1998, then to $23.2 million in 1999, culminating at $34.2 million for fiscal year 2000 (October 1999 - September 2000).

On March 3, 2000, Adam Lashinsky of TheStreet.com commended NetObjects for outperforming analyst forecasts, steadily reducing operational losses, and establishing itself early as a business-to-business software provider.

Strategic Realignment

In 1998, NetObjects launched the NetObjects Authoring Suite alongside the "Collage" product—content management systems designed for large enterprises with higher price points than NetObjects Fusion.

Despite this expansion, IBM and NetObjects chose to concentrate on small and medium enterprises (SMEs), emphasizing their primary product NetObjects Fusion to better address this market segment.

Adopting the emerging "software as a service" (SaaS) approach, the company transitioned toward a subscription-based business model. To support this shift, it developed the NetObjects Matrix platform and introduced GoBizGo.com, an e-commerce solution tailored to assist small businesses in adapting to online sales.

To fund this strategic transformation, NetObjects divested its Enterprise Division—including forty employees along with the Collage and Authoring Suite products—to UK-based Merant (later merged with Serena Software Inc.) for $18 million.

High hopes surrounded the potential of the NetObjects Matrix platform to establish the company as a "Business Service Provider." Plans included a Mac version release and collaboration with IBM Global Services aimed at broadening market penetration.

Difficulties and Decline

Starting in 2000, fierce competition from Microsoft, Macromedia, and Adobe intensified challenges for NetObjects by eroding market share and driving down prices for web design tools, negatively affecting revenues. Industry controversies over bundling deals further impacted long-term income streams. The price of NetObjects Fusion was significantly reduced—by more than half between versions 1.0 and 4.0—with earlier editions sold at even lower costs. Market demands shifted toward websites for large enterprises that required direct HTML code access by programmers—a feature absent in NetObjects Fusion. The product primarily catered to designers desiring comprehensive control over page layouts through a desktop publishing–style interface.

IBM's Decisions and Divestiture

In 2001, amid shifting market conditions, price reductions, and a strategic pivot toward Software as a Service models, NetObjects experienced a steep revenue decline. Although subscription income from NetObjects Matrix began accruing, losses increased: revenues amounted to $4.22 million during the first three quarters of fiscal year 2001 against expenses totaling $7.67 million. The company attempted to raise $50 million through a private placement led by Deutsche Bank; however, IBM—the controlling shareholder—did not approve this financing effort. Following the dot-com bubble burst and market downturn mid-2001, IBM resolved to sell NetObjects.

Assets including NetObjects Fusion, NetObjects Matrix (with MatrixBuilder), BizGoBiz, among others were sold to Website Pros (now Web.com), a Jacksonville-based provider specializing in web design services. Additionally, seven patents were transferred to Macromedia (now Adobe), distributor of Dreamweaver—NetObjects Fusion’s main competitor.

Integration within Website Pros

Website Pros (WSP), currently known as Web.com, continued development and distribution of NetObjects Fusion while offering subscription services tied to the application—reflecting the hybrid business model initially introduced by NetObjects.

License revenues from NetObjects Fusion reached approximately $3.58 million in 2006, then declined to $2.4 million in 2007 and slightly rose to $2.5 million in 2008. In May 2009, ownership of NetObjects Fusion changed hands once again.

Revival as an Independent Company

In May 2009, NetObjects Inc. was reconstituted as an independent entity through acquisition of the NetObjects Fusion product line from Web.com. Part of the transaction involved upfront payment combined with $3 million payable from future Fusion sales through 2013.

Steve Raubenstine—former vice president overseeing the NetObjects Fusion division at Web.com—was appointed president and CEO of the re-established firm.

Products

• NetObjects Fusion: A web design application originally launched in 1996; sold to Website Pros (now Newfold Digital) in 2001; regained independence following a management buyout in 2009. The most recent version is Version 15 Update #1 (March 2015).
• NetObjects Authoring Server: A collaborative web development and content management platform introduced in 1999; sold to UK-based Merant in 2000; later integrated into Serena Software's "Collage" line before discontinuation in 2008. It evolved from its predecessor client–server application called NetObjects Team Fusion (1998).
• NetObjects MatrixBuilder: An online tool for building web pages and services released in 2000; sold alongside other assets to Website Pros in 2001; licenses were sold directly by Website Pros while also using MatrixBuilder internally for client website development.