How the Internet Happened: From Netscape to the iPhone
How the Internet Happened: From Netscape to the iPhoneby Brian McCullough
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Netscape Communications Corporation held an initial public offering, or IPO, on August 9, 1995. Netscape shares were originally to be priced at $14 per share, but at the last minute the price was lifted to $28 per share. When the markets opened at 9:30 A.M. Eastern Time, Netscape's stock did not open with it. Buyer demand was so great that an orderly market could not immediately be made. Interest from individual investors was so overwhelming that callers to the retail investment firm Charles Schwab were greeted by a recording that said: “Welcome to Charles Schwab. If you're interested in the Netscape IPO, press one.” At Morgan Stanley, one retail investor offered to mortgage her home and put the proceeds into Netscape stock. The first Netscape trade did not hit the ticker until around 11 A.M. The price of that first trade was $71, almost triple the offer price.
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Arianna Simpson@AriannaSimpson﹒7mo
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Cunningham is famous for coining “Cunningham's Law,” which finds that “the best way to get the right answer on the Internet is not to ask a question, it's to post the wrong answer."
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Linda Xie@linda﹒1y
Ward Cunningham who developed the first wiki
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And more important, Netflix's combination of a website storefront coupled with postal delivery proved infinitely more suited to satisfying modern customers. Early on, Netflix introduced the “Queue.” You could browse the site and make a list of the movies you wanted to see, much like Amazon's shopping cart. Every time you returned a DVD to Netflix, it would automatically ship out the next title in your queue. The average number of movies in a customer queue was around fifty and went a long way to endearing customers to the service by making it feel personal. “It's our biggest switching cost," Hastings would later say, a prime reason users stayed loyal. Netflix became a platform to cultivate your individual cinematic tastes.
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Linda Xie@linda﹒1y
Great way that Netflix created loyal customers
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Apple taught the world what it meant to be a consumer electronics company in the Internet Era. This was best exemplified by the brief, glorious life of the iPod Mini. The first smaller, cheaper iPod (also, the first with fashionable colors beyond white), the Mini was the model that really caused iPod sales to take off. It was the bestselling model of the iPod in its time-by far. Most other companies would have milked a cash cow product like that for as long as they could. Not Apple. Less than two years after releasing the Mini, Apple replaced it with the iPod Nano, which switched out the tiny hard drives in favor of superior Flash technology for storage, thereby allowing iPods to get thinner and more portable still. Apple showed a willingness to eat its young in order to stay on the cutting edge; to out-innovate itself before others ever had the chance.
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Linda Xie@linda﹒1y
Apple wasn’t afraid to innovate quickly
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This is another point that's widely misunderstood about the Napster story. The lawsuits and the media publicity that came with them helped create the Napster sensation. It was almost a textbook example of the Streisand Effect, the phenomenon (as Wikipedia describes it) whereby an attempt to hide, remove or censor a piece of information has the unintended consequence of publicizing the information more widely. Before the lawsuit, there were maybe 50,000 users on Napster; a month after the lawsuit, that number had tripled to 150,000. By the summer of 2000, there were more than 20 million. The phenomenon of Napster, this seemingly organic impulse that suddenly inspired millions of everyday people to skirt copyright laws and social conventions and begin exchanging music freely with one another-it was largely inspired by the publicity surrounding Napster's legal battles.
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Napster did a great job playing up the publicity around their legal issues
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Page and Brin were now entrepreneurs, if perhaps still a little reluctantly. But they were not entrepreneurs in the mold of so many others in the dot-com era. Rather than blowing Google's funds on lavish launch parties or marketing campaigns, they stayed grad students at heart, and instead invested all the money they had raised in continuing their project efficiently. Instead of building out their system by buying software from Microsoft, they used the free Linux operating system. Instead of splurging $800,000 on setups from IBM or Oracle, they spent a mere $250,000 to cobble together a rack of eighty-eight computers to meet their number-crunching needs
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AOL had no idea what it was sitting on. AIM was a fully fleshed-out social network. True, it was free to use; but it was making a limited amount of money thanks to traditional banner ads. Had anyone at AOL been able to predict the future, AIM could have been the perfect platform to transition AOL users into the post-dial-up world. Before we were all sending SMS texts, before we all reconnected on Facebook, a great many of us were connected on AIM. The social graph was actually the great prize of Web 2.0.
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SO MANY OF THE COMPANIES that would embody what we think of when we remember the dot-coms shared some or all of Priceline's traits: a business plan that promised to "change the world”; a Get Big Fast strategy to reach ubiquity and corner a particular market; a tendency to sell products at a loss in order to gain that market share; a willingness to spend lavishly on branding and advertising to raise awareness; and, above all, a sky-high stock market valuation that was divorced from any sort of profitability or rationality.
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Early on, Omidyar listed his personal email prominently on the website. When buyers and sellers had a question or a dispute, they came to him directly. But Omidyar knew he didn't want to spend his time settling petty squabbles; his libertarian impulses told him that people should be able manage things for themselves. Oftentimes, when a buyer came to him with a complaint about a seller, he would simply forward the email along to the seller with a note that read, “You two work it out."
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eBay’s early dispute system
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Many, if not most, of the early customers phoned in their credit card numbers, not trusting the online transactions to be safe. “Some people would even just email their full credit card number to us," says Kaphan, “as if that was somehow more secure than entering it in a form on the web." To make sure that the orders were secure from hackers, credit card numbers were recorded on one computer, copied to a floppy disc and then physically walked to a second computer, which would batch the transactions. This was known within Amazon as sneakernet.
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Linda Xie@linda﹒1y
Painful payment process at the start of Amazon
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Amazon tried to deliver books to customers within a week. Rare finds could take as much as a month to track down. And even then, Amazon still had to order the books, receive them, repackage them, and send them back out to customers. Furthermore, it turned out that distributors required retailers to order a minimum of ten books at a time. During the beta, Amazon of course didn't have that sort of sales volume. “We found a loophole!” Bezos would later remember proudly. “Their systems were programmed in such a way that you didn't have to receive ten books, you only had to order ten books." So the Amazon team found an obscure book about lichens that was listed in the system but was regularly out of stock. They began ordering the one book they wanted and nine copies of the lichens book. The book they wanted would ship while the distributor promised to track down more copies of the lichens book.
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Linda Xie@linda﹒1y
Creative problem solving in Amazon’s early days
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Bezos has mythologized the moment as the classic entrepreneur's dilemma. He would be leaving a safe, lucrative career on Wall Street to go off on his own, with uncertain prospects for success. But that was okay. “I knew when I was eighty that I would never, for example, think about why I walked away from my 1994 Wall Street bonus,” Bezos said later. “That kind of thing just isn't something you worry about when you're eighty years old. At the same time, I knew that I might sincerely regret not having participated in this thing called the Internet that I thought was going to be a revolutionizing event.
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Linda Xie@linda﹒1y
Great perspective for making major decisions in life
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Netscape's entire Get Big Fast strategy had been predicated on making the Navigator browser the de facto standard before competitors like Microsoft noticed. The hope was that they could achieve a market share and a mind share that would be impossible to dislodge. But within eighteen months of setting off the big bang that announced the coming of the Internet Era, it looked as though even the head start Netscape had managed to earn might not be enough to fend off Microsoft's muscle. “People aren't asking anymore if Microsoft will be killed by the Internet but whether Microsoft will dominate the Internet," a market researcher from Gartner Group told Newsweek.
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Linda Xie@linda﹒1y
Never underestimate the power and reach of incumbents
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Over the next few months, beta versions, and then the official 1.0 version, were downloaded about 6 million times. The Navigator browser quickly gained a reputation for being fast, stable, and feature-rich. It included so many web innovations that weren't supported by existing browsers that a unique new phenomenon began. Website after website on the still immature web started posting little buttons that read “Best viewed in Netscape Navigator" with a link that sent you to the download page. Just as had happened with Mosaic, webmasters and web creators wanted to show off the cool new things that Navigator allowed them to do, so they steered their users to the new browser organically.
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Linda Xie@linda﹒1y
Netscape Navigator was so innovative that the websites adapted to it
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I thought I had missed the whole thing,” Andreessen would later say of his arrival in California. "The overwhelming mood in the Valley when I arrived was that it was done. The PC was done, and by the way, the Valley was probably done because there was nothing else to do.”
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Still blows my mind that Marc Andreessen thought he was too late when he got to Silicon Valley in 1994. Brian Armstrong has also said he thought he was too late when he started Coinbase in 2012.
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If Mercata sounds like an eerily similar idea to later social-buying companies like Groupon, that's not exactly unusual. Plenty of dotcom startups were founded around concepts that were quite possibly good ideas but were just a bit too early for the time. eCircles.com pioneered online photo albums, and Myspace.com and Desktop. com rented what were essentially virtual hard drives—what we now call cloud storage. After going bankrupt, the Myspace.com domain would later be put to use by another startup we'll discuss shortly.
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It's a well-established notion in business theory that sex often drives the lifecycle of new technology adoption, the most famous example being the way porn movies brought VCRs into America's living rooms. It's safe to say that the popularity and growth of AOL was driven by sexy chat. Lots and lots of sexy chat. For one thing, it was easy to attach and send photos to other users in chat rooms; trading of pornography was a common pastime. But the anonymity of the screen name meant you could be anything or anyone you wanted. Paraphrasing the famous New Yorker cartoon (“On the Internet, nobody knows you're a dog”), in AOL chat rooms, nobody knew if you were a twenty-two-year-old blonde with a pinup's body or a fifty-five-year-old divorced guy with a beer belly. Americans by the millions took to AOL chat rooms to talk dirty, role-play, and act out sexual fantasies. The company didnt like to publicize it, but chat was AOL's bread and butter. The more chat, email and picture trading users did, the more money ADL made. Some users spent hours in chat, racking up monthly one age costs running into the hundreds of dollars. An October 1999 article in Rolling Stone estimated that half of all AOL's chat was sexually oriented and, given the hourly fees, such adult chat netted the company $7 million a month. CompuServe was too serious an operation for such lewdness, and conservative, corporate Prodigy absolutely fled screaming from any hint of unwholesome behavior on their service.
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The one truly tangible thing that eBay had was the goodwill of those buyers and sellers and the community they were creatingon their own—to make the buying and selling happen. eBay would be one of the first web companies to understand that all the value of its service came from the users and their community. eBay's only asset, in fact, was its users, and therefore the only important thing for the company to do was to make sure the buyers and sellers were happy so that they would keep coming back. Song carved out her own role as eBay's community liaison/ manager. She always referred to users as "the community," not as customers. She reached out to the de facto user-leaders who had risen organically on the bulletin boards and hired them to formally take over the task they were already performing gratis: policing the auctions and handling customer service. She also enhanced and expanded the existing community guidelines and processes for which Omidyar had laid the foundation. And it was Song who helped build out the user-reputation systems that were becoming so important for eBay's buyers and sellers. It was these systems that would soon become eBay's most valuable feature.
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Another key enabler of the Netscape IPO was the fact that Wall Street was buying into Marc Andreessen's platform strategy. The investing community believed Navigator was building a platform on the web, and therefore, Netscape could become the next Microsoft. “A lot of people had missed out on the Microsoft IPO because they didn't believe in PCs” said Frank Quattrone, a Morgan Stanley banker who would help take Netscape public. Buying Netscape stock as soon as it IPOed was, in a lot of people's estimation, a once-in-a-lifetime chance to jump on board the Microsoft of the next technology era
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Sounds like many folks rationale last year with regard to missing Ethereum early and buying into ICOs
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It's a well-established notion in business theory that sex often drives the lifecycle of new technology adoption, the most famous example being the way porn movies brought VCRs into America's living rooms. It's safe to say that the popularity and growth of AOL was driven by sexy chat. Lots and lots of sexy chat. For one thing, it was easy to attach and send photos to other users in chat rooms; trading of pornography was a common pastime. But the anonymity of the screen name meant you could be anything or anyone you wanted. Paraphrasing the famous New Yorker cartoon ("On the Internet, nobody knows you're a dog"), in AOL chat rooms, nobody knew if you were a twenty-two-year-old blonde with a pinup's body or a fifty-five-year-old divorced guy with a beer belly. Americans by the millions took to AOL chat rooms to talk dirty, role-play, and act out sexual fantasies. The company didn't like to publicize it, but chat was AOL's bread and butter. The more chat, email and picture trading users did, the more money AOL made. Some users spent hours in chat, racking up monthly overage costs running into the hundreds of dollars. An October 1996 article in Rolling Stone estimated that half of all AOL's chat was sexually oriented and, given the hourly fees, such adult chat netted the company $7 million a month
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Dan Romero@dwr﹒1y
Sex sells
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