eBay instead found joy by going the technology VC route. In June 1997, Benchmark Capital paid $5 million for 21.5% of eBay. By various measures, this deal would go down in history as one of the greatest investment home runs of all time. Benchmark’s stake in eBay would eventually be worth $4 billion.15 Benchmark’s money came with strong suggestions that more serious management be brought in to eBay. The days of card-table desks were over. Both Omidyar and Skoll were sanguine about this, with Omidyar saying, “We were entrepreneurs and that was good up to a certain stage. But we didn’t have the experience to take the company to the next level.”16 And so, a world-class manager was recruited in the person of Meg Whitman. Whitman had nothing in the way of a technical background, but she did have experience with brands and marketing. With a degree in economics from Princeton and an M.B.A. from Harvard, like Steve Case, Whitman had done a stint at Procter & Gamble, as well as Disney and the toy company Hasbro. She proved to be a perfect choice, capable of shepherding eBay into an era when it was turning into a marketplace for every brand and product category under the sun.
Whitman came on board as eBay’s CEO on February 1, 1998. By that point, eBay had only 500,000 registered users. But those users exchanged more than $100 million in goods in the first quarter of 1998, generating $3 million in revenue every month. Only one quarter later, in June 1998, eBay would announce its one-millionth user. When eBay went public on September 21, 1998, its stock popped 197% on the offer price. The company was valued at almost $2 billion. Nineteen ninety-eight was, as we’ll see, the year that the dot-com mania really struck, and eBay would become one of the true highfliers of the era. Roughly two-thirds of the pre-IPO staff—about seventy-five people—became paper millionaires at eBay. By July of 1999, Forbes magazine would peg Pierre Omidyar’s eBay fortune at $10.1 billion, Jeff Skoll’s at $4.8 billion and Meg Whitman’s at about $1 billion.
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THE INTERNET ERA might have been launched in Silicon Valley, but to a large extent, it was monetized by startups in New York City. As the web began to call out for digital advertising as a revenue engine, young New York–based geeks stepped up to create digital agencies, brokerages and advertising companies. There was a new technology on the scene. The olds couldn’t quite grok it, so they turned to the youth to bring them up to speed. The phenomenon of young interns being summoned to the executive suite to give presentations on the new digital realities became common. “We were all twentysomethings in really bad suits,” remembered Seth Goldstein, founder of one of the first New York–based Internet marketing firms, SiteSpecific.17 But they seemingly had a grasp on the future, so the usual rules of decorum and seniority were increasingly overlooked.
The young techies on the East Coast had a sense of fearlessness and a DIY ethos that was possibly more aggressive than even the moxie displayed by their peers in Silicon Valley. A perfect example is Craig Kanarick who, fresh off his efforts designing the first banner ads for AT&T and HotWired, founded the interactive media and advertising agency Razorfish with his childhood friend Jeff Dachis. The two twenty-somethings ran their “company” out of Dachis’s Alphabet City apartment and suddenly found themselves consulting with Fortune 500 companies like Time Warner for no other reason than that they claimed to “get” the web. SiteSpecific had its first offices in a “hovel” on Broadway just north of Madison Square Park. The startup made great efforts to hide its squalid condition and give off an air of professionalism to their old-media clients. “Seth would call all his friends and say, ‘Come in and look like you’re working,’ ” remembered SiteSpecific co-founder Jeremy Haft. “So we would all arrive fifteen minutes before the client would arrive, and would be sitting at our desks typing away. You put up shadow puppets, and ‘Look! We’re a company!’ ”18
For various reasons, the design, marketing and advertising startups sprang up around, and especially below, Madison Square Park and the Flatiron Building. This entrepreneurial “scene” acquired the nickname Silicon Alley, a sobriquet that many people claim credit for but which owes its popularization primarily to New York–based advertising startup DoubleClick. DoubleClick, founded by Kevin O’Connor and Dwight Merriman, would create the first large-scale advertising network and marketplace on the web, brokering and delivering the banner ads that would generate revenue for many of the advertising-supported websites in the late 1990s. By 1998, DoubleClick was serving up more than 1.5 billion ads a month and had one of the first significant Silicon Alley IPOs in February of 1998.19 Flush with success, DoubleClick hung a banner behind the Flatiron Building that, at the height of the company’s success, declared to the world DOUBLECLICK WELCOMES YOU TO SILICON ALLEY.20
If Silicon Valley had a software engineering culture, Silicon Alley had a creative culture. A media culture. The DIY New York spirit spread to journalists and writers who figured the web allowed them to start publications with a global reach that could match any print publisher in the world. The best example of the web-based “ezines” that sprang up was Feed magazine, aka Feedmag.com, or, simply, Feed. Launched by two young freelance writers, Stefanie Syman and Steven Johnson, the lure was the same for independent publishers as it had been for bigger names like Time Warner: the promise of seemingly insignificant production costs. Syman and Johnson began reaching out to big names in media and culture for interviews and profiles. “And we’d be like, ‘Hi! We just started this online magazine. Would you come and have a dialog about this topic?’ ” Syman recalled. “And they’d say yes! And we were always shocked! We were like, ‘We’re no one! We’re not the New York Times, we’re not Esquire, we’re not even Wired.’ And yet, people wanted to participate.”21
But by then, of course, even big names like the New York Times were participating as well. The Times had experimented with a cobranded news presence on America Online called @times back in 1994. A full website went live at www.nytimes.com on January 22, 1996, with headlines, stories and pictures from the print edition. The Times’s local rival, the Wall Street Journal, limited its content solely to paying subscribers when it launched on the web in 1996. A paywall ended up being successful for the Journal, which eventually accumulated around a million online subscribers, proving that there were some types of content that audiences were willing to pay for. But time and again, publishers that went the subscriber route found that by doing so, they only left the door open for free, advertising-supported online competitors. Larry Kramer, a longtime veteran of the newspaper industry, saw just such an opportunity to deliver financial content thanks to the Journal’s paywall. “I said, ‘I can replicate information about the stocks [investors] care about, for free on the web!’ ” Kramer says. “I can build a newsroom that gives them their version of the Wall Street Journal and the Bloomberg terminal.”22 And he did so, launching Marketwatch.com (later, CBS Marketwatch), which would IPO and earn a billion-dollar valuation, before eventually being purchased by Dow Jones, the parent company of the Wall Street Journal itself.
The biggest lesson to learn about online media was the 24/7 nature of the beast. The tragic 1997 death of Britain’s Princess Diana was the media sensation of its day, and not just for traditional outlets like the Times. Online news sites like Pathfinder saw their traffic numbers spike as distraught readers went online to absorb any and all details they could find. Furthermore, web users found online forums and message boards the perfect venues to express their feelings and share their collective grief. One site that did not benefit from this spike in traffic was Slate, which had followed a long-standing publisher’s tradition of taking a vacation during the summer, considered to be a “slow” period for breaking news.* And so, the whole week surrounding the Diana tragedy, Slate was dark, with no new content for news-hungry readers. “Diana’s death finally made us understand that online journalism is by nature a round-the-clock business,” Slate’s David Plotz would admit later.23
The site that best exemplified the new metabolism of media in an online environment was Suck.com. Two HotWired staffers, Joey Anuff a
nd Carl Steadman, launched Suck on Wired’s servers in August of 1995; it was just that nobody knew it at the time. Steadman and Anuff, and eventually other Wired employees and outside freelancers who were let in on the secret, all published under pseudonyms. The site looked different right away. Most early websites had some sort of landing page, and usually a navigation menu, a table-of-contents–style holdover from the print paradigm to help readers get oriented. Suck completely eschewed this convention and simply put its content right there on the front page. No need to click anywhere. Suck had a simple one-column structure with reverse-chronological formatting: the newest stuff on the top, older stuff on the bottom, very much in the style of what we would later call blogs or a social networking newsfeed. And unlike any of the other sites at the time, Suck was always updating. There were no “issues” as at Slate. Suck tried to put up new content every day. Steadman and Anuff figured that they were going in to work every day and consuming content on the web in between doing their jobs (for most people at this time, the fastest and most reliable Internet connection available was often found at work), so Suck should regularly have fresh content to serve this audience of bored office drones.
The voice of Suck was pitched to people just like them: jaded cubicle warriors, Gen Xers, grunts in this new web revolution. Suck was not stentorian, like traditional media. It was first-person, confrontational, skeptical. The very first post was about the nascent Kurt Cobain death conspiracy culture. Another early post poked fun at Netscape’s Marc Andreessen. There were no sacred cows, even among the digerati. But the Sucksters reserved their most cutting missives for digital Luddites. Here’s a quote form a typical post. The pseudonymous author “Pop” describes his frustration with the clueless suits he is forced to work for in the new media world:
They don’t browse. They don’t keep up. They read about the web, fer chrissakes, in the New York Times and in the Wall Street Journal. They tell their flunkies to order up some presence and have no idea what they’ve done or what it should look like. They’re virgins who’ve been told about sex and think they have a clue. They’re experts vicariously.
The columns, posts and diaries sometimes followed a regular topic or subject matter. Sometimes they were just random screeds. Some posts were well researched, almost “serious” journalism. Just as often, they were just gossip items or analysis of web industry news. And this was Suck’s crucial contribution: a lot of the formal structure and stuffy posture of “traditional” media writing was abandoned. The posts on Suck always felt like they came from a distinctly personal point of view. There was commentary, sometimes overt, but also between the lines. Suck was rude, often crude, glib and satirical, but always with purpose. Suck was, in short, snarky. It was a publication that laid the groundwork for blogging in its modern form, both in structure and in tone.
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BY 1996 AND 1997, AOL was consolidating its position as perhaps the dominant player in the new Internet economy, surpassing 10 million subscribers in 1997.24 To serve this audience, longtime AOL executive Ted Leonsis was tasked with creating AOL-specific content that would extend the AOL experience and allow the online service to compete with what the web had to offer. Under initiatives variously called AOL Studios and AOL Greenhouse, Leonsis began to shepherd new sites into existence, often on AOL’s proprietary pages, but also with experimental web presences as a way of hedging AOL’s bets. There were sites devoted to fitness (The Health Zone), golfing (I Golf), finance (The Motley Fool) and people of color (Net Noir).
Candice Carpenter Olsen, Nancy Evans and Robert Levitan were media veterans who were consulting with Leonsis to develop Greenhouse sites. AOL had noticed that, for the first time, women—especially stay-at-home mothers—were beginning to come online in big numbers. So, Leonsis commissioned the trio to create a parenting-focused site called Parent Soup. With their background largely in publishing, Parent Soup launched with a magazine mindset and a plethora of professionally written articles and parenting advice. But right away, it became obvious that what the users really liked were the message boards around the articles, where they could trade tips, experiences and stories with other users. “Once they came in, yeah, they read the content,” Evans says. “But the content was the appetizer. They congregated at the message boards. They began talking to each other. I remember this one mother going, ‘I am just so thrilled to be talking to someone today who could talk in complete sentences.’ ”25
Expanding on this lesson, AOL funded a standalone website targeting the female audience more generally, eventually called iVillage. Content was still a key component for drawing users in, but iVillage consciously focused on the message boards and forums as well. Again, the lesson was that users in an online community were perfectly capable of producing value all by themselves. The community aspect of sites like iVillage became more than simple chatting and interaction, it became a way for people to live their lives online. “ ‘iVillage got me through my pregnancy, iVillage got me through my breast cancer, iVillage got me through my divorce,’ ” says Evans. “It was all those women together. Women got the webbiness of the web. The web was made for them.”26
Like eBay had done, a growing crop of community-based sites realized that their most valuable asset was their users. Today, we take for granted that social-networking sites like Facebook are merely platforms for user activity. Facebook doesn’t actually generate anything itself. We do. The users generate content for Facebook to advertise against. The early social sites stumbled upon this miraculous business model almost a decade before Mark Zuckerberg did.
A Los Angeles–based entrepreneur named David Bohnett started a small firm that designed and hosted websites for local businesses. In order to drum up more clientele, he hit upon the idea of giving away limited homepages to individuals for free. “I was a passionate advocate of the validity of user-generated content,” Bohnett says. “That the Internet was all about giving people the opportunity to contribute and participate, and feel like they were a part of the medium—that it was not a top-down, programmed model like radio and television.”27 Bohnett provided templates and plug-and-play tools that allowed a user to create a rudimentary homepage without having to know HTML or how to find a host or a server. Bohnett’s brainstorm was to group the homepages into groups of similar interest using a virtual real estate model. So, you could homestead your website in a “neighborhood.” For example, Nashville for country music sites, Area 51 for science and technology, or West Hollywood for LGBT sites.
GeoCities, as the site was called, proved to be wildly successful by pursuing the “let a thousand flowers bloom” strategy to its conceptual extreme. Millions of GeoCities homepages were created, often by individuals, with most being nothing more than simple personal pages with variations of a “Hello World” message. Similar plug-and-play homepage hosts sprang up called Tripod and Angelfire, both allowing users to express themselves directly by producing rudimentary “profiles.” GeoCities and the like were “social media,” or at least, an early form of it. What they weren’t, precisely, was “social networking” because despite the fact that GeoCities grouped like interests together, the focus was not exactly on mapping social connections. Not yet.
If Bohnett eschewed the “top-down” model of media, other entrepreneurs thought that the web itself could be a powerful new model of top-down media, at least in the broadcasting sense. Mark Cuban was a retired entrepreneur who had made his millions selling a company to CompuServe in 1990. As the web was taking off, Cuban was approached by a college acquaintance from his alma mater, the University of Indiana. “There’s gotta be a way that we can listen to Indiana basketball even if we’re in Dallas,” Todd Wagner told Cuban.28 The pair formed AudioNet, which was eventually renamed Broadcast.com, in September 1995, based on that one simple premise: giving people access to streaming radio and video content anywhere in the world, via a web browser. Soon, the site was hosting 400 live events a day and was being accessed by half a million viewers daily.29
Cuban had the same intuition that Suck.com had: that because people were tied to their computers at work, there was a certain “prime time” for content during the day. “We reach people where they are,” Cuban told Fast Company. “We reach more white-collar office workers during business hours than ABC, NBC and CBS combined.”30 Broadcast.com would air literally anything, even live police scanners. But it also signed exclusive deals to webcast live programming from hundreds of local radio and TV stations as well as sporting events from Major League Baseball, the NCAA and the NHL. Broadcast.com even had some community elements like SportsWorld.com, where fans could discuss the live events they were watching along with other fans.
Broadcast.com proved that just allowing people to use the web could be an incredibly successful business model all by itself. Sometime in 1995, two low-level Apple employees named Sabeer Bhatia and Jack Smith took this idea even further. In the mid-nineties, your email address was something that was assigned to you by your Internet service provider, by your employer at work or by your university if you were at school. And you could access your email through that provider only. Today we are used to free, almost disposable email addresses; but in the early days of the Internet, email addresses were actually something of a scarce commodity. Bhatia and Smith’s idea would change all that, allowing people to check their email anywhere—at work, at home, on the road—anywhere there was a web browser and Internet access. They wanted to let users pick their own email address. They wanted to enable people to separate their personal lives from their professional lives, at least in the realm of email.
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