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March 2 - March 10, 2019
Legend holds that the founder of IBM, Thomas J. Watson, once remarked, “I think there is a world market for maybe five computers.” This quote is probably apocryphal, but 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.
The received wisdom of their rarefied utility affected their design; computers were not conceived to be user-friendly because it was never assumed a nonexpert user would interact with one. Histories of early computers talk about a “priesthood” of computer specialists who actually interacted with the machines.
in the 1970s. The hobbyists wanted to master computers themselves. They wanted computers that responded to them directly, without intermediaries. They wanted personal computing. And so, they made it happen. Steve Jobs, Steve Wozniak, Bill Gates, the Homebrew Computer Club—the hobbyists created the personal computer category
(originally, they were called microcomputers) and thus, the PC Industry.
Almost a decade into the PC era, the industry remained trapped in the paradigm of the “command line.” If you sat in front of a computer, you would see a blinking cursor and would need to type something to make the machine do anything for you. What would you need to type?
In the era of the command line, you almost needed to have read the manual cover-to-cover or have previously mastered a computer language even to use the damn things. You had to know how to use a computer before you could use a computer.
Now when you sat in front of a computer, you could grab the mouse and just—click. You didn’t have to know anything beforehand. You could learn how to use the machine by using it. Invented by Xerox, popularized by Apple Computers and the Macintosh, and then mainstreamed by Microsoft and its Windows operating system, the GUI was the evolutionary leap that would eventually make computers friendly to the average user.
THE INTERNET, AND ESPECIALLY the World Wide Web, finally brought computers into the mainstream. The Internet is the reason that computers actually became useful for the average person. The Internet is the thing that made a computer something you check in with daily,
The ARPANET was a blue-sky research project that, ostensibly, would allow for greater (and more resilient) communications among decision-makers during a nuclear strike. While they sold their project to the generals this way, the academics behind the ARPANET then spent the next twenty years evolving the network into a system that better suited their own needs: a distributed, nonhierarchical computer and communications network that facilitated discussion and exchange among the research and scientific community.
The Internet, in short, needed its own GUI revolution, that application/user interface innovation that would make the Internet user-friendly just as the graphical user interface had done with computing itself. The World Wide Web arrived just at the right time, and provided this exact paradigm shift just when it was needed.
You navigated the web with a mouse, you clicked on links, and the whole thing moved with the innate, logical simplicity of how human thought seems to work: jumping from one idea or association to another, flowing backward and forward in the direction of idea and inspiration, reference and retort. The web took the fundamental concept of the Internet (connecting computers together) and made it manifest through the genius of the hyperlink.
One website linked to another. One idea linked to another. This metaphor of the link made the whole conceptual idea of the Internet, of linking computers together, of linking people’s minds together, of linking human thought together, finally and wonderfully real.
Tim Berners-Lee invented the web while he was employed at CERN, the great multinational scientific research institution in Switzerland. As the Internet was born in the midst of a great scientific effort to win the Cold War, the web was born in the midst of a great scientific effort to reveal the secrets of the Big Bang.
Berners-Lee saw his new Internet protocol as an improvement on top of the existing structure of the Internet itself. He built the web upon previous conceptual and philosophical notions (hypertext, cyberspace, collaboration) to create what was really a new medium.
The WWW project was started to allow high energy physicists to share data, news, and documentation. We are very interested in spreading the web to other areas, and having gateway servers for other data. Collaborators welcome!
The information superhighway was interactive, sure. It let you talk back to your TV. But it didn’t allow you to create your own television program. The web, by contrast, allowed users to consume content, and create it. Any user. Anywhere. Any kind of content. And anyone could do so outside the control of a major media corporation or gatekeepers like the cable companies or Microsoft.
“The Internet was the information highway everyone was looking for,” Netscape’s Jim Barksdale said. “They just hadn’t recognized it.”
It’s conceptually jarring to realize that a medium and an industry that we think of as being so futuristic and technological is sustained by a business model that is centuries old. But then, one of the very first things that the web disrupted was advertising itself, because the Internet and the web promised to revolutionize advertising in ways that marketers had only dreamed of previously.
John Wanamaker, the department store mogul, famously said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
advertisers have always been obsessed with things like circulation numbers and ratings points. An ad is only effective with a small percentage of an audience in the first place, so the best way to spend money effectively is to try to reach the largest audience of likely customers.
Online advertising promised to make this vague science obsolete. Because a computer serves up webpages, on the web it is possible to know the exact number of times a web page—and with it, a given advertisement—is delivered to an audience. No more guesswork.
the web allows an advertiser a better gauge of how many people ignore a given ad. Because each ad is clickable, often leading to the advertiser’s own website or another traceable property, the web allows an advertiser to measure how many people interact with an advertisement. They can know how much of an impression the advertisement makes on an audience. In the language of the advertising business, this is called “engagement.”
Beyond even this, there are the cookies, those little lines of software code that follow you around the Internet once you visit a website or click on a web ad.
Cookies can tell you, as well as any advertisers who want to market to windsurfing enthusiasts. Add to this the voluntary information audiences online might be willing to share with a given website. Your name, your age, sex, income, geographic location—in ways complex and yet not entirely appreciated, our online activities have delivered the holy grail of advertising from time immemorial: knowing exactly an audience’s interests so that the ad man can market only to the most promising leads.
Each time a webpage was loaded, this would be counted as an “impression,” for which an advertiser would pay on a CPM basis.* But what the advertiser was really after were the “clicks.” Measuring the “click-through rate” provided a greater measurement of advertising engagement. Forget mere passive impressions, it was now possible to measure how often a user interacted with an ad. In the age of ecommerce, advertisers could even measure clicks that led directly to a sale. This made it easier for advertisers to calculate their return on investment by orders of magnitude. For the first time it was
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Another advantage of the web was how it fit into the historical advertising paradigm. There are only so many hours in a day. So, broadly speaking, advertisers are interested in how many hours of the day a given medium can capture a person’s attention. How many hours a day does the average person listen to the radio? Read the newspaper? Watch television? Advertisers—especially the larger ones—apportion their overall advertising “spend” based on what percentage of a person’s daily atten...
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As Americans came online in increasing numbers, the Internet promised to capture more and more of their time and attention. It was expected that advertisers would logically shift their advertising spend to try to advertise against this new attention center. And sure enough, the ad money chased the eyeballs. In 1995, around $50 million was spent on banner advertising on the web.25 By 1997, online advertising passed $1 billion for the first time.26 That was a mere rounding error compared to the $60 billion corporations spent on advertisin...
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They were right. In 2015, digital advertising hit...
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In the modern web era, a click-through rate of 0.5% is considered a blockbuster.
For decades, all advertising has been sold using a metric called CPM, or cost per mille. In Latin, mille means thousand, so CPM is essentially saying that an advertisement is priced based upon how many thousands of people are exposed to a given advertisement. Imagine that the total cost of running a full-page ad in a magazine is $50,000. Now, imagine that the magazine has a circulation of 4 million people. $50,000 divided by 4 million is .0125. CPM is calculated by multiplying .0125 by 1,000. So in this example, the advertisement in question has a CPM of $12.50. The advertiser is paying $12.50
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the vast number of websites and webpages remained random, even individual, affairs. Most of the early websites had to publish wherever they could, and that often meant piggybacking on existing academic or corporate websites. It wasn’t until 1995 that individuals were broadly allowed to register their own .com domain names.
Anyone could now publish anything; but if you did, how would anyone ever know about it?
And so, necessity dictated that search engines would become the most popular and most important early websites. And because the problem of a business model had been solved by HotWired, search sites, and Yahoo in particular, would become the web’s first great companies.
The not so secret truth about all the early search engines was that they weren’t very good. They returned results in a way that could be comprehensive, but often had no accuracy. A search for, say, “windsurfing” might give you a list of every webpage in the world that mentioned the word “windsurfing,” but made no effort to sort for context. What was the best windsurfing site on the web? The search engines had no way of telling you. A more refined search for, say, “windsurfing in California” might return sites for windsurfing or California, but maybe not both. The searcher might find the State
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To this day, a “search engine” is actually a database of website copies. The search engine sends out “spiders,” which are computer programs that go out onto the web and find new web pages. The spiders locate the pages and then copy some or all of the code into the search engine’s own database. When a user searches a search engine, they’re not actually searching the web itself, but are instead querying the database of copied webpages the search engine has compiled. The accuracy and comprehensiveness of this database varied from search engine to search engine and the results therefore varied
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There was more than a century of precedent for doing commerce remotely: the multibillion-dollar catalog sales industry. A webpage could be a more dynamic and effective catalog than what Sears or Lands’ End could offer. And the Secure Sockets Layer technology developed by Netscape made actual transactions possible on the web;
scale. Just as the newspaper industry dreamed of delivering its product without the need for costly delivery and production expenses, a forward-thinking retailer could dream of a world without the need for costly commercial real estate expenses and perhaps vastly simplified warehousing and logistics costs. To early commerce pioneers, the promise wasn’t that the web would allow them to do something fundamentally different than before—this was still about selling goods to consumers—but that it could radically transform the way they would do it.
Nearly twenty-five years on, this vision has largely come to pass, and in the popular imagination it has come to pass because of one company. 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.
books were “pure commodities; a copy of a book in one store was identical to the same book carried in another, so buyers always knew what they were getting.”1 This is different than something like clothing, which has all sorts of vagaries when it comes to details like size, cut, shape, and color. Books also had an advantage over something like CDs because, at that time, there were only two major book distributors that every bookseller in the country worked with, Ingram and Baker & Taylor. This compared favorably to the several major and hundreds of minor record labels in the world.
there were three million different titles of books in print worldwide, as opposed to only 300,000 different titles on CD.2 No single store could shelve all those titles. But an online store could.
Bezos himself settled on Amazon. As he would later say, “This is not only the largest river in the world, it’s many times larger than the next biggest river. It blows all the other rivers away.”9 The earth’s biggest river; the earth’s biggest bookstore.
Amazon was by no means the first ecommerce player to launch; but it had the ambition to incorporate some key innovations the web made possible, many of which we take for granted today. These innovations were meant to show that ecommerce could do things traditional commerce couldn’t.
Prior to the Internet, few general retailers offered reviews of the products they were selling. A supermarket doesn’t say one brand of toothpaste is higher-rated by shoppers than another. Quite the opposite in fact: a traditional retailer wants to be seen as a neutral broker.
User ratings and reviews were controversial, as, obviously, authors resented bad reviews getting posted prominently alongside their books on the sales page. But to its credit, Amazon stuck to its guns, believing that honest reviews, as well as a reputation for helping customers make smart purchasing decisions, would be a key differentiator compared with offline retail.
Bezos believed Amazon had a chance to not only establish ecommerce as a viable proposition, but also to disrupt the entire system of buying and selling everything. Bezos wasn’t just thinking about books, but about retail itself, a business model that went back millennia to that first day merchants gathered in a central location to hawk their goods to a local population. In Bezos’s vision, the products would come to the people. First books, then anything else. In the end, he would make the everything store a reality.
As Amazon executive Joy Covey remembered, Bezos “always had a large appetite. It was just a question of staging the opportunities at the right time.”
A key factor that would contribute to the coming dot-com bubble would be the untold billions that companies in all industries spent in an attempt to be proactive and come up with an “Internet strategy.” To avoid being Amazoned. Bezos himself would later say of his first competitor’s sudden efforts to compete on the web, “Barnes & Noble isn’t doing this because they wanted to. They’re doing this because of us.”
Silicon Valley has always been equal parts egghead libertarianism and acid-tinged hippie romanticism. Both of these worldviews mesh quite well actually when it comes to believing that technology can be used to better mankind and free it from all manner of oppression, repression and just everyday drudgery. The Internet was another in a long line of technological miracles that many believed would elevate minds and free souls from all sorts of impediments. For the libertarians the Internet was great because it had few rules and no governance. For the hippies, the Internet promised free expression
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eBay was nothing more than a virtual marketplace, and by being virtual, it didn’t actually do anything other than facilitate the interactions between buyers and sellers. It didn’t store goods. It didn’t ship goods. It didn’t even guarantee the exchange of goods between buyers and sellers! The one truly tangible thing that eBay had was the goodwill of those buyers and sellers and the community they were creating—on 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.
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Just as the Internet allowed people to connect to the entire world, eBay allowed a person to sell to the entire world from their tiny little corner of it.
