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Following the Rules

How The Internet Started And What That Means For You

Note: This is part three of a multipart series on getting permission and why now is the best time to start a business (especially if you’re still in college). You can start from the beginning here.

Al Gore invented the internet

In order to better understand how good we have it compared to past generations, let’s explore the history of this thing we use every day. The Internet makes it easier than ever before to live your dreams. It is a vast web that connects us all, a web that puts any human on earth only seconds away from your questions and ideas. Since it’s creation, millions of entrepreneurs have got on board, and used its cheapness and accessibility to make sure their ideas spread far and wide, but even the Internet had detractors in the beginning.

Around the time you were born, the Internet was just gaining acceptance. Many Americans thought it was a fad, and a lot of people didn’t use it. Even businesses, the ones with the most to gain from embracing the Internet, sought to avoid it until it was more proven. This early hesitation set the stage for a small group of Initiators to take charge and own the landscape. It was only entrepreneurs who were brave and smart enough to grasp the Internet’s true potential.

My first experience with this world, along with most people our age, was through America Online, an aggressive start up whose main goal was to get as many people using the Internet as possible. They saw a problem: there was no easy way for the average person to access the information held online. Jim Kimsey and Steve Case had the answer: boil all of the internet’s vastness into a single welcome page, and use keywords to help people navigate the web. Starting AOL was a risk, neither of them could be sure that the country would embrace the Internet like they did, but both of these initiators had a dream. They saw not only the Internet’s potential for them, but also how millions could use the system to better their lives.

They were right. The company took off, and soon millions of Americans were logging in, hearing the annoying whir of the dial up connection, and glimpsing the web through AOL’s start page. Eventually, people moved away from dial up, and AOL needed to change with them. Instead of taking their ISP services to the next level, AOL used the money from their early success to create a media conglomerate. They now own The Huffington Post, TechCrunch, and several other popular blogs. Together AOL’s holdings spread news to millions, keeping the same number of eyes, but solving a different problem. The company was run not only by initiators, but also by entrepreneurs who could adapt to changing times.

Another great company in the Internet’s childhood was Yahoo, the most popular early search engine. Jerry Yang and David Filo saw a problem that was similar to AOL’s. They knew people wanted to see relevant websites, but there was no easy way to find them. Yang and Filo committed themselves to solving this problem, and they did it by indexing the Internet. This made it easy for consumers to find the information they needed, and to find it fast. They took the concept of AOL’s welcome page, and removed the proprietary software.

It did not take long for Yahoo to become the number one website in America. At the height of its popularity, the company pulled in millions of dollars in capital from investors. Yang and Filo, just like Dorsey, Kimsey and Case, were dreamers, they saw a problem that needed to be solved, and they dedicated themselves to finding a solution.

Jerry Yang and David Filo, the founders of Yahoo!

Jerry Yang and David Filo, two great entrepreneurs who ran Yahoo into the ground (Photo credit: Wikipedia)

Once the founders of Yahoo stepped out of the CEO position, the company took a nosedive. Unable to compete with Google, a company run by the same style of persistent entrepreneurs, and too scared to take the same kind of risks that got them to number one in the first place, Yahoo’s traffic steadily declined, their share price fell from $150 to $15, and a lot of people lost a lot of money.

Consumers follow the entrepreneurial drive. They want to be lead, and they will gravitate toward the companies that lead them. Similarly, they will abandon companies who do not. Eventually, Yahoo ended up getting rid of the search bar, and sold the space to Microsoft. Yahoo stands now as a warning sign to young entrepreneurs: never lose your drive to find and solve new problems. It would have been better for Yahoo to try something new and risk failure, then to play it safe and watch their market share slowly fade away.

Yahoo and AOL were just two companies in a huge list of pre 2000 start-ups. After 1995, the Internet reached a tipping point and gathered a lot of steam. Entrepreneurs and investors alike flocked to Silicon Valley hoping to make a quick buck on this new technology. Before the crash, investors saw the Internet as a Wild West; a place of unlimited potential where the only thing needed to make a company successful was millions of dollars in marketing money.It seemed like the golden age of the Internet: new companies were created, and nothing was lost. Companies with no business model except to generate page views were given millions of dollars to do whatever they wanted. The

Jim Kimsey, Jean Case, Steve Case Attend City ...

The AOL team celebrating their conquest of the world

problem with unlimited growth is that it does not last forever. Eventually the market needs to correct itself. Much like the housing crisis in 2004, the hype of these new companies overshadowed the actual demand of the marketplace, and soon it would all come crashing down.

After 1999, hundreds of companies began to IPO, to put themselves on the open market for the public to buy. A lot of people got rich, at least on paper, but soon the market snapped back. All of the companies with no real revenue model began to fail as more and more businesses stepped in. It was only the companies who sought to solve a problem, the companies that actually followed the laws of business and provided value that survived.

Investors are still rushing to put money into web companies. There are still billions of dollars in angel funding in the San Francisco Bay area just waiting to be invested, they just need to see that your are driven, have a plan, and are smart. Investors today are only buying into companies who solve problems and provide value to their customers. In the post bust economy, entrepreneurs have figured out that giving people what they want is the key to successful growth. That is what you need to do, but first, you need to gain new knowledge, expand your mind and learn how to find out what people need.

For more insights or to ask questions, you can follow me on Twitter: @alxberman

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