How the Internet Happened: From Netscape to the iPhone

by Brian McCullough

it does capture the early thinking when computers first began to serve man. They were to be rare, expensive oracles; and like the oracles of ancient times, they would be useful only in rare, exceptional cases.

Throughout the Internet Era, company after company would become obsessed with the idea of creating or owning a platform. If you are a platform, you can create an ecosystem of developers and software and apps all dependent on the underlying platform. To own a platform is to own the ball field, the rule book, the turnstiles, and the broadcast rights. Netscape did not originate the obsession with platforms, but it would provide the template.

“If you get ubiquity, you have a lot of options, a lot of ways to benefit from that. You can get paid by the product that you are ubiquitous on, but you can also get paid on products that benefit as a result.”

It had taken twelve years before you could begin to talk about all the millionaires Microsoft had minted. Netscape had done it in fifteen months.

The more valuable thing was to show a sense of “Netscape speed,” the ability to be nimble and a willingness to chase markets and market share; to sense your moment of opportunity and be willing to go after it immediately.

Microsoft’s corporate motto was, famously, “A computer on every desk and in every home.”

Early employees say that the original motto (before the lawyers advised Microsoft to tone it down) was: “A computer on every desk and in every home, running Microsoft software.” By

You could be forgiven for assuming that the information superhighway is the Internet, or at least, the Internet is what the information superhighway became. But that is wrong. The information superhighway was the fever dream of the telephone industry and the cable industry and the computer industry and even of Hollywood. The idea was that we’d all be linked together via a Frankenstein-like combination of the television and the PC. We’d be able to shop from home, and exchange video chats with each other, and rent movies on demand and receive personalized news and media based on our interests. I know. Sounds exactly like the Internet we know today. But all of this was supposed to happen on your television.

It was a strategy that had worked for Microsoft time and again in the 1980s: let others do the hard work of proving a market, then come in and dominate it once the dust had settled.

In a way, AOL embodied that most American of dichotomies: wholesome, friendly, mainstream on the outside, with all sorts of prurient stuff going on behind closed doors.

The entrepreneur and venture capitalist Chris Dixon has remarked that “the next big thing always starts out dismissed as a ‘toy.’

But the greatest lesson to learn was how to make this unruly web pay. The solution to that problem would come from another magazine dabbling in the World Wide Web, and in the process, the very business model of the larger Internet would be discovered: advertiser-supported content.

The first banner ads got click-through rates in astronomical percentages. “People just clicked on anything to see what might lead them somewhere,” Joe McCambley says. “It bordered between the high 70s and low 80s

Pioneers of new technologies are rarely the ones who survive long enough to dominate their categories; often it is the copycat or follow-on names that are still with us to this day: Google, not AltaVista, in search; Facebook, not Friendster, in social networks. But in a case of the exception proving the rule, the company that broke the most ground in what would be known as ecommerce is still the company that dominates today: Amazon. ■

But Amazon felt it needed to mimic a real-world book retailer in one key aspect: acting as a source of recommendations.

Omidyar had accidentally stumbled upon one of the longer-term factors in AuctionWeb’s eventual success. A focus on community, on empowering the users and allowing them to function autonomously would prove to be absolutely vital.

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.

Same for airbnb

Internet stocks proved to be particularly susceptible to speculation for a couple of reasons. Dot-com companies were young. They were going public sometimes only months after their creation. When they showed any sign of growth, their stock prices took off because it seemed to validate the notion that there was only more growth ahead. And it was that limitless promise that led to the second unique feature of Internet stocks: the profits didn’t seem to matter.

“The stock market is not the kind of game in which one party loses what another party wins. It is the kind of game in which, over certain periods of time, nearly everyone may win, or nearly everyone may lose.”

And even then, what did it matter if you backed a loser when you could take it public and cash out one way or another in less than nine months?

Yahoo’s market cap surpassed $120 billion at its peak around the turn of the millennium.48 Its price-to-earnings ratio got as high as 1,900.

If the “good will out,” as they say, then the opposite is true as well: the bad will out eventually, if given enough time.

crucially, once the dot-com bubble burst, Microsoft was in no position to swoop in and gobble up the wounded survivors because it feared angering the government again.

What we can say definitively is that we know who ended up holding the bag as the bubble exploded: average investors. Over the course of the year 2000, as the stock market began its meltdown, individual investors continued to pour $260 billion into U.S. equity funds. This was up from the $150 billion invested in the market in 1998 and $176 billion invested in 1999.67 Everyday Americans were the most aggressive investors in the dot-com bubble

IT TURNED OUT THAT the reason search engines had never worked very well prior to PageRank was not that they were broken, but because they were missing the key innovation that Brin and Page had stumbled upon: relevancy.

“It wasn’t that they [Page and Brin] sat down and said, ‘Let’s build the next great search engine,’ ” said Rajeev Motwani, who was Brin’s academic advisor. “They were trying to solve interesting problems and stumbled upon some neat ideas.”7

Google didn’t take pages from the established Silicon Valley playbook because, in a way, they had never bought into it. They didn’t try to Get Big Fast. Instead, Page and Brin were almost manically focused on endlessly iterating and improving upon their Big Idea, making sure it was the most comprehensive, reliable and—most important—speedy search engine in the world.

This confidence that they could do everything better proved, in the coming years, to be something of Google’s secret sauce.

Frugality and efficiency were not just virtues, they were also philosophical and aesthetic differentiators.

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.

the music industry was caught in a classic innovator’s dilemma, tied to a highly lucrative business model it was loath to give up, even in the face of an existential threat presented by new technology.

Napster was the first signal that the web had changed consumer behavior in a fundamental way. Today, we live in a world where consumers not only expect, but demand, infinite selection and instant gratification.

It is always about giving people what they want, when they want it, how they want it.

Jobs was convinced that ease of use and customer choice were key to competing with the lure of the free.

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.

the Internet and digital technology enable a world of unlimited selection and instant gratification. If your business model stands in the way of that, well, consumers will just go around you.

The new postbubble web was about the users and the content in equal measure. It was about spontaneous impulses like “sharing” and self-organizing schemes like “tagging” and taxonomies.

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.”

Google was the savior Napster never had. It had the infrastructure to allow YouTube to scale up; it had the technical sophistication to keep YouTube on the right side of the law; it had the money to contest the legal battles; and—most important—it provided YouTube with the business model that would allow it to thrive.

WEB 2.0 WAS ABOUT PEOPLE expressing themselves—actually being themselves, actually living—online.

Even as AOL the company began to crumble after the disastrous merger with Time Warner, AIM continued as a breakout success for one simple factor: it was a literal social graph, a tangible map of your online connections and relationships.

The social graph was actually the great prize of Web 2.0. Others were only able to seize this prize because AOL dropped the ball.

It’s something of a universal phenomenon that we can probably all recognize from our own lives. When you’re between the ages of sixteen and twenty-four, you’re plugged into the zeitgeist. During that intellectually fecund period, you tend just to “get” things: the latest fashions, the coolest new music and films, the trends and jokes and ideas that are au courant. It’s almost like young people see the future before everyone else.

“We looked around,” said Forstall, “And we noticed that almost everyone around us had phones. And everyone was complaining about their phones. And we thought, ‘Could we build something better?’

To stay off Jobs’s radar, the engineers often met in Apple’s abandoned user-testing lab. In the Steve Jobs era of Apple, focus groups and user testing were superfluous. Only one person (Jobs, of course) decided whether products were worth producing or not.

This predictive typing algorithm saved the iPhone from repeating the failures of the Newton.

In a larger sense, the iPhone and the App Store were triumphs of software. “Software wrapped in a beautiful package,” was how Steve Jobs liked to describe