Bill said he didn't pay attention to the Internet, but IE1 was planned as part of the Windows 95 Plus! Pack even before Netscape was released. So I always saw that claim as a bit of false modesty. I think they were hoping MSN/Blackbird would take off faster than the Internet.
I wonder how close we were to having the Internet be a academic thing and a closed network like MSN or AOL taking over in the 90s. Scary to even think about.