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What prompted him to become his own news network?
“Being an independent journalist is a hobby that sprang from my frustration about biased, incomplete, selective, and/or incompetent information gathering by the mainstream media,” explained Ardolino, who describes himself as a “center-right libertarian.” “Independent journalism and its relative, blogging, are expressions of market forces-a need is not being met by current information sources. I started taking pictures and doing interviews of the antiwar rallies in D.C, because the media was grossly misrepresenting the nature of the groups that were organizing the gatherings-unrepentant Marxists, explicit and implicit supporters of terror, etc. I originally chose to use humor as a device, but I've since branched out. Do I have more power, power to get my message out, yes. The Schieffer interview actually brought in about twenty-five thousand visits in twenty-four hours. My peak day since I've started was fifty-five thousand when I helped break 'Rathergate'... I interviewed the first forensics expert in the Dan Rather National Guard story, and he was then specifically picked up by The Washington Post, Chicago Sun-Times, Globe, NYT, etc., within forty-eight hours.
“The pace of information gathering and correction in the CBS fake memo story was astounding/' he continued. ”It wasn't just that CBS News 'stonewalled' after the fact, it was arguably that they couldn't keep up with an army of dedicated fact-checkers. The speed and openness of the medium is something that runs rings around the old process... I'm a twenty-nine-year-old marketing manager [who] always wanted to write for a living but hated the AP style book. As iiberblogger Glenn Reynolds likes to say, blogs have given the people a chance to stop yelling at their TV and have a say in the process. I think that they serve as sort of a 'fifth estate' that works in conjunction with the mainstream media (often by keeping an eye on them or feeding them raw info) and potentially function as a journalism and commentary farm system that provides a new means to establish success.
“Like many facets of the topic that you're talking about in your book, there are good and bad aspects of the development. The splintering of media makes for a lot of incoherence or selective cognition (look at our country's polarization), but it also decentralizes power and provides a better guarantee that the complete truth is out there... somewhere... in pieces.”
On any given day one can come across any number of stories, like the encounter between Bob Schieffer and Bill Ardolino, that tell you that old hierarchies are being flattened and the playing field is being leveled. As Micah L. Sifry nicely put it in The Nation magazine (November 22, 2004): “The era of top-down politics-where campaigns, institutions and journalism were cloistered communities powered by hard-to-amass capital—is over. Something wilder, more engaging and infinitely more satisfying to individual participants is arising alongside the old order.”
I offer the Schieffer-Ardolino encounter as just one example of how the flattening of the world has happened faster and changed rules, roles, and relationships more quickly than we could have imagined. And, though I know it is a cliche, I have to say it nevertheless: You ain't seen nothin yet. As I detail in the next chapter, we are entering a phase where we are going to see the digitization, virtualization, and automation of almost everything. The gains in productivity will be staggering for those countries, companies, and individuals who can absorb the new technological tools. And we are entering a phase where more people than ever before in the history of the world are going to have access to these tools— as innovators, as collaborators, and, alas, even as terrorists. You say you want a revolution? Well, the real information revolution is about to begin. I call this new phase Globalization 3.0 because it followed Globalization 2.0, but I think this new era of globalization will prove to be such a difference of degree that it will be seen, in time, as a difference in kind. That is why I introduced the idea that the world has gone from round to flat. Everywhere you turn, hierarchies are being challenged from below or transforming themselves from top-down structures into more horizontal and collaborative ones.
“Globalization is the word we came up with to describe the changing relationships between governments and big businesses,” said David Rothkopf, a former senior Department of Commerce official in the Clinton administration and now a private strategic consultant. “But what is going on today is a much broader, much more profound phenomenon.” It is not simply about how governments, business, and people communicate, not just about how organizations interact, but is about the emergence of completely new social, political, and business models. “It is about things that impact some of the deepest, most ingrained aspects of society right down to the nature of the social contract,” added Rothkopf. “What happens if the political entity in which you are located no longer corresponds to a job that takes place in cyberspace, or no longer really encompasses workers collaborating with other workers in different corners of the globe, or no longer really captures products produced in multiple places simultaneously? Who regulates the work? Who taxes it? Who should benefit from those taxes?”
If I am right about the flattening of the world, it will be remembered as one of those fundamental changes-like the rise of the nation-state or the Industrial Revolution-each of which, in its day, noted Rothkopf, produced changes in the role of individuals, the role and form of governments, the way we innovated, the way we conducted business, the role of women, the way we fought wars, the way we educated ourselves, the way religion responded, the way art was expressed, the way science and research were conducted, not to mention the political labels we assigned to ourselves and to our opponents. “There are certain pivot points or watersheds in history that are greater than others because the changes they produced were so sweeping, multifaceted, and hard to predict at the time,” Rothkopf said.
If the prospect of this flattening-and all of the pressures, dislocations, and opportunities accompanying it-causes you unease about the future, you are neither alone nor wrong. Whenever civilization has gone through one of these disruptive, dislocating technological revolutions— like Gutenberg's introduction of the printing press-the whole world has changed in profound ways. But there is something about the flattening of the world that is going to be qualitatively different from other such profound changes: the speed and breadth with which it is taking hold. The introduction of printing happened over a period of decades and for a long time affected only a relatively small part of the planet. Same with the Industrial Revolution. This flattening process is happening at warp speed and directly or indirectly touching a lot more people on the planet at once. The faster and broader this transition to a new era, the more likely is the potential for disruption, as opposed to an orderly transfer of power from the old winners to the new winners.
To put it another way, the experiences of the high-tech companies in the last few decades who failed to navigate the rapid changes brought about in their marketplace by these types of forces may be a warning to all the businesses, institutions, and nation-states that are now facing these inevitable, even predictable, changes but lack the leadership, flexibility, and imagination to adapt-not because they are not smart or aware, but because the speed of change is simply overwhelming them.
And that is why the great challenge for our time will be to absorb these changes in ways that do not overwhelm people but also do not leave them behind. None of this will be easy. But this is our task. It is inevitable and unavoidable. It is the ambition of this book to offer a framework for how to think about it and manage it to our maximum benefit.
I have shared with you in this chapter how I personally discovered that the world is flat. The next chapter details how it got that way.
TWO: The Ten Forces That Flattened the World
“Being an independent journalist is a hobby that sprang from my frustration about biased, incomplete, selective, and/or incompetent information gathering by the mainstream media,” explained Ardolino, who describes himself as a “center-right libertarian.” “Independent journalism and its relative, blogging, are expressions of market forces-a need is not being met by current information sources. I started taking pictures and doing interviews of the antiwar rallies in D.C, because the media was grossly misrepresenting the nature of the groups that were organizing the gatherings-unrepentant Marxists, explicit and implicit supporters of terror, etc. I originally chose to use humor as a device, but I've since branched out. Do I have more power, power to get my message out, yes. The Schieffer interview actually brought in about twenty-five thousand visits in twenty-four hours. My peak day since I've started was fifty-five thousand when I helped break 'Rathergate'... I interviewed the first forensics expert in the Dan Rather National Guard story, and he was then specifically picked up by The Washington Post, Chicago Sun-Times, Globe, NYT, etc., within forty-eight hours.
“The pace of information gathering and correction in the CBS fake memo story was astounding/' he continued. ”It wasn't just that CBS News 'stonewalled' after the fact, it was arguably that they couldn't keep up with an army of dedicated fact-checkers. The speed and openness of the medium is something that runs rings around the old process... I'm a twenty-nine-year-old marketing manager [who] always wanted to write for a living but hated the AP style book. As iiberblogger Glenn Reynolds likes to say, blogs have given the people a chance to stop yelling at their TV and have a say in the process. I think that they serve as sort of a 'fifth estate' that works in conjunction with the mainstream media (often by keeping an eye on them or feeding them raw info) and potentially function as a journalism and commentary farm system that provides a new means to establish success.
“Like many facets of the topic that you're talking about in your book, there are good and bad aspects of the development. The splintering of media makes for a lot of incoherence or selective cognition (look at our country's polarization), but it also decentralizes power and provides a better guarantee that the complete truth is out there... somewhere... in pieces.”
On any given day one can come across any number of stories, like the encounter between Bob Schieffer and Bill Ardolino, that tell you that old hierarchies are being flattened and the playing field is being leveled. As Micah L. Sifry nicely put it in The Nation magazine (November 22, 2004): “The era of top-down politics-where campaigns, institutions and journalism were cloistered communities powered by hard-to-amass capital—is over. Something wilder, more engaging and infinitely more satisfying to individual participants is arising alongside the old order.”
I offer the Schieffer-Ardolino encounter as just one example of how the flattening of the world has happened faster and changed rules, roles, and relationships more quickly than we could have imagined. And, though I know it is a cliche, I have to say it nevertheless: You ain't seen nothin yet. As I detail in the next chapter, we are entering a phase where we are going to see the digitization, virtualization, and automation of almost everything. The gains in productivity will be staggering for those countries, companies, and individuals who can absorb the new technological tools. And we are entering a phase where more people than ever before in the history of the world are going to have access to these tools— as innovators, as collaborators, and, alas, even as terrorists. You say you want a revolution? Well, the real information revolution is about to begin. I call this new phase Globalization 3.0 because it followed Globalization 2.0, but I think this new era of globalization will prove to be such a difference of degree that it will be seen, in time, as a difference in kind. That is why I introduced the idea that the world has gone from round to flat. Everywhere you turn, hierarchies are being challenged from below or transforming themselves from top-down structures into more horizontal and collaborative ones.
“Globalization is the word we came up with to describe the changing relationships between governments and big businesses,” said David Rothkopf, a former senior Department of Commerce official in the Clinton administration and now a private strategic consultant. “But what is going on today is a much broader, much more profound phenomenon.” It is not simply about how governments, business, and people communicate, not just about how organizations interact, but is about the emergence of completely new social, political, and business models. “It is about things that impact some of the deepest, most ingrained aspects of society right down to the nature of the social contract,” added Rothkopf. “What happens if the political entity in which you are located no longer corresponds to a job that takes place in cyberspace, or no longer really encompasses workers collaborating with other workers in different corners of the globe, or no longer really captures products produced in multiple places simultaneously? Who regulates the work? Who taxes it? Who should benefit from those taxes?”
If I am right about the flattening of the world, it will be remembered as one of those fundamental changes-like the rise of the nation-state or the Industrial Revolution-each of which, in its day, noted Rothkopf, produced changes in the role of individuals, the role and form of governments, the way we innovated, the way we conducted business, the role of women, the way we fought wars, the way we educated ourselves, the way religion responded, the way art was expressed, the way science and research were conducted, not to mention the political labels we assigned to ourselves and to our opponents. “There are certain pivot points or watersheds in history that are greater than others because the changes they produced were so sweeping, multifaceted, and hard to predict at the time,” Rothkopf said.
If the prospect of this flattening-and all of the pressures, dislocations, and opportunities accompanying it-causes you unease about the future, you are neither alone nor wrong. Whenever civilization has gone through one of these disruptive, dislocating technological revolutions— like Gutenberg's introduction of the printing press-the whole world has changed in profound ways. But there is something about the flattening of the world that is going to be qualitatively different from other such profound changes: the speed and breadth with which it is taking hold. The introduction of printing happened over a period of decades and for a long time affected only a relatively small part of the planet. Same with the Industrial Revolution. This flattening process is happening at warp speed and directly or indirectly touching a lot more people on the planet at once. The faster and broader this transition to a new era, the more likely is the potential for disruption, as opposed to an orderly transfer of power from the old winners to the new winners.
To put it another way, the experiences of the high-tech companies in the last few decades who failed to navigate the rapid changes brought about in their marketplace by these types of forces may be a warning to all the businesses, institutions, and nation-states that are now facing these inevitable, even predictable, changes but lack the leadership, flexibility, and imagination to adapt-not because they are not smart or aware, but because the speed of change is simply overwhelming them.
And that is why the great challenge for our time will be to absorb these changes in ways that do not overwhelm people but also do not leave them behind. None of this will be easy. But this is our task. It is inevitable and unavoidable. It is the ambition of this book to offer a framework for how to think about it and manage it to our maximum benefit.
I have shared with you in this chapter how I personally discovered that the world is flat. The next chapter details how it got that way.
TWO: The Ten Forces That Flattened the World
The Bible tells us that God created the world in six days and on the seventh day he rested. Flattening the world took a little longer. The world has been flattened by the convergence often major political events, innovations, and companies. None of us has rested since, or maybe ever will again. This chapter is about the forces that flattened the world and the multiple new forms and tools for collaboration that this flattening has created.
The fall of the Berlin Wall on 11/9/89 unleashed forces that ultimately liberated all the captive peoples of the Soviet Empire. But it actually did so much more. It tipped the balance of power across the world toward those advocating democratic, consensual, free-market-oriented governance, and away from those advocating authoritarian rule with centrally planned economies. The Cold War had been a struggle between two economic systems-capitalism and communism-and with the fall of the wall, there was only one system left and everyone had to orient himself or herself to it one way or another. Henceforth, more and more economies would be governed from the ground up, by the interests, demands, and aspirations of the people, rather than from the top down, by the interests of some narrow ruling clique. Within two years, there was no Soviet Empire to hide behind anymore or to prop up autocratic regimes in Asia, the Middle East, Africa, or Latin America. If you were not a democracy or a democratizing society, if you continued to hold fast to highly regulated or centrally planned economics, you were seen as being on the wrong side of history.
For some, particularly among the older generations, this was an unwelcome transformation. Communism was a great system for making people equally poor. In fact, there was no better system in the world for that than communism. Capitalism made people unequally rich, and for some who were used to the plodding, limited, but secure Socialist lifestyle-where a job, a house, an education, and a pension were all guaranteed, even if they were meager-the fall of the Berlin Wall was deeply unsettling. But for many others, it was a get-out-of-jail-free card. That is why the fall of the Berlin Wall was felt in so many more places than just Berlin, and why its fall was such a world-flattening event.
Indeed, to appreciate the far-reaching flattening effects of the fall of the Berlin Wall, it's always best to talk to non-Germans or non-Russians. Tarun Das was heading the Confederation of Indian Industry when the wall fell in Berlin, and he saw its ripple effect felt all the way to India. “We had this huge mass of regulation and controls and bureaucracy,” he recalled. “Nehru had come to power [after the end of British colonial rule] and had a huge country to manage, and no experience of running a country. The U.S. was busy with Europe and Japan and the Marshall Plan. So Nehru looked north, across the Himalayas, and sent his team of economists to Moscow. They came back and said that this country [the Soviet Union] was amazing. They allocate resources, they give licenses, there is a planning commission that decides everything, and the country moves. So we took that model and forgot that we had a private sector... That private sector got put under this wall of regulation. By 1991, the private sector was there, but under wraps, and there was mistrust about business. They made profits! The entire infrastructure from 1947 to 1991 was government-owned... [The burden of state ownership] almost bankrupted the country. We were not able to pay our debts. As a people, we did not have self-confidence. Sure, we might have won a couple of wars with Pakistan, but that did not give the nation confidence.”
In 1991, with India running out of hard currency, Manmohan Singh, the finance minister at that time (and now the prime minister), decided that India had to open its economy. “Our Berlin Wall fell,” said Das, “and it was like unleashing a caged tiger. Trade controls were abolished. We were always at 3 percent growth, the so-called Hindu rate of growth-slow, cautious, and conservative. To make [better returns], you had to go to America. Well, three years later [after the 1991 reforms] we were at 7 percent rate of growth. To hell with poverty! Now to make it you could stay in India and become one of Forbes's richest people in the world... All the years of socialism and controls had taken us downhill to the point where we had only $1 billion in foreign currency. Today we have $ 118 billion... We went from quiet self-confidence to outrageous ambition in a decade.”
The fall of the Berlin Wall didn't just help flatten the alternatives to free-market capitalism and unlock enormous pent-up energies for hundreds of millions of people in places like India, Brazil, China, and the former Soviet Empire. It also allowed us to think about the world differently-to see it as more of a seamless whole. Because the Berlin Wall was not only blocking our way; it was blocking our sight-our ability to think about the world as a single market, a single ecosystem, and a single community. Before 1989, you could have an Eastern policy or a Western policy, but it was hard to think about having a “global” policy. Amartya Sen, the Nobel Prize-winning Indian economist now teaching at Harvard, once remarked to me that “the Berlin Wall was not only a symbol of keeping people inside East Germany-it was a way of preventing a kind of global view of our future. We could not think globally about the world when the Berlin Wall was there. We could not think about the world as a whole.” There is a lovely story in Sanskrit, Sen added, about a frog that is born in a well and stays in the well and lives its entire life in the well. “It has a worldview that consists of the well,” he said. “That was what the world was like for many people on the planet before the fall of the wall. When it fell, it was like the frog in the well was suddenly able to communicate with frogs in all the other wells... If I celebrate the fall of the wall, it is because I am convinced of how much we can learn from each other. Most knowledge is learning from the other across the border.”
Yes, the world became a better place to live in after 11/9, because each outbreak of freedom stimulated another outbreak, and that process in and of itself had a flattening effect across societies, strengthening those below and weakening those above. “Women's freedom,” noted Sen, citing just one example, “which promotes women's literacy, tends to reduce fertility and child mortality and increase the employment opportunities for women, which then affects the political dialogue and gives women the opportunity for a greater role in local self-government.”
Finally, the fall of the wall did not just open the way for more people to tap into one another's knowledge pools. It also paved the way for the adoption of common standards-standards on how economies should be run, on how accounting should be done, on how banking should be conducted, on how PCs should be made, and on how economics papers should be written. I discuss this more later, but suffice it to say here that common standards create a flatter, more level playing field. To put it another way, the fall of the wall enhanced the free movement of best practices. When an economic or technological standard emerged and proved itself on the world stage, it was much more quickly adopted after the wall was out of the way. In Europe alone, the fall of the wall opened the way for the formation of the European Union and its expansion from fifteen to twenty-five countries. That, in combination with the advent of the euro as a common currency, has created a single economic zone out of a region once divided by an Iron Curtain.
While the positive effects of the wall coming down were immediately apparent, the cause of the wall's fall was not so clear. There was no single cause. To some degree the termites just ate away at the foundations of the Soviet Union, which were already weakened by the system's own internal contradictions and inefficiencies; to some degree the Reagan administration's military buildup in Europe forced the Kremlin to bankrupt itself paying for warheads; and to some degree Mikhail Gorbachev's hapless efforts to reform something that was unreformable brought communism to an end. But if I had to point to one factor as first among equals, it was the information revolution that began in the early— to mid-1980s. Totalitarian systems depend on a monopoly of information and force, and too much information started to slip through the Iron Curtain, thanks to the spread of fax machines, telephones, and other modern tools of communication.
A critical mass of IBM PCs, and the Windows operating system that brought them to life, came together in roughly this same time period that the wall fell, and their diffusion put the nail in the coffin of communism, because they vastly improved horizontal communication-to the detriment of the exclusively top-down form that communism was based upon. They also greatly enhanced personal information gathering and personal empowerment. (Each component of this information revolution was brought about by separate evolutions: The phone network evolved from the desire of people to talk to each other over long distances. The fax machine evolved as a way to transmit written communication over the phone network. The PC was diffused by the original killer apps-spreadsheets and word processing. And Windows evolved out of the need to make all of this usable, and programmable, by the masses.)
The first IBM PC hit the markets in 1981. At the same time, many computer scientists around the world had started using these things called the Internet and e-mail. The first version of the Windows operating system shipped in 1985, and the real breakthrough version that made PCs truly user-friendly-Windows 3.0-shipped on May 22, 1990, only six months after the wall went down. In this same time period, some people other than scientists started to discover that if they bought a PC and a dial-up modem, they could connect their PCs to their telephones and send e-mails through private Internet service providers-like CompuServe and America Online.
“The diffusion of personal computers, fax machines, Windows, and dial-up modems connected to a global telephone network all came together in the late 1980s and early 1990s to create the basic platform that started the global information revolution,” argued Craig J. Mundie, the chief technology officer for Microsoft. The key was the melding of them all together into a single interoperable system. That happened, said Mundie, once we had in crude form a standardized computing platform-the IBM PC-along with a standardized graphical user interface for word processing and spreadsheets-Windows-along with a standardized tool for communication-dial-up modems and the global phone network. Once we had that basic interoperable platform, then the killer applications drove its diffusion far and wide.
“People found that they really liked doing all these things on a computer, and they really improved productivity,” said Mundie. “They all had broad individual appeal and made individual people get up and buy a Windows-enabled PC and put it on their desk, and that forced the diffusion of this new platform into the world of corporate computing even more. People said, 'Wow, there is an asset here, and we should take advantage of it.'”
The more established Windows became as the primary operating system, added Mundie, “the more programmers went out and wrote applications for rich-world businesses to put on their computers, so they could do lots of new and different business tasks, which started to enhance productivity even more. Tens of millions of people around the world became programmers to make the PC do whatever they wanted in their own languages. Windows was eventually translated into thirty-eight languages. People were able to become familiar with the PC in their own languages.”
This was all new and exciting, but we shouldn't forget how constricted this early PC-Windows-modem platform was. “This platform was constrained by too many architectural limits,” said Mundie. “There was missing infrastructure.” The Internet as we know it today-with seemingly magical transmission protocols that can connect everyone and everything-had not yet emerged. Back then, networks had only very basic protocols for exchanging files and e-mail messages. So people who were using computers with the same type of operating systems and software could exchange documents through e-mail or file transfers, but even doing this was tricky enough that only the computing elite took the trouble. You couldn't just sit down and zap an e-mail or a file to anyone anywhere-especially outside your own company or outside your own Internet service-the way you can today. Yes, AOL users could communicate with CompuServe users, but it was neither simple nor reliable. As a result, said Mundie, a huge amount of data and creativity was accumulating in all those computers, but there was no easy, interoperable way to share it and mold it. People could write new applications that allowed selected systems to work together, but in general this was limited to planned exchanges between PCs within the network of a single company.
This period from 11/9 to the mid-1990s still led to a huge advance in personal empowerment, even if networks were limited. It was the age of “Me and my machine can now talk to each other better and faster, so that I personally can do more tasks” and the age of “Me and my machine can now talk to a few friends and some other people in my company better and faster, so we can become more productive.” The walls had fallen and the Windows had opened, making the world much flatter than it had ever been-but the age of seamless global communication had not dawned.
Though we didn't notice it, there was a discordant note in this exciting new era. It wasn't only Americans and Europeans who joined the people of the Soviet Empire in celebrating the fall of the wall-and claming credit for it. Someone else was raising a glass-not of champagne but of thick Turkish coffee. His name was Osama bin Laden and he had a different narrative. His view was that it was the jihadi fighters in Afghanistan, of which he was one, who had brought down the Soviet Empire by forcing the Red Army to withdraw from Afghanistan (with some help from U.S. and Pakistani forces). And once that mission had been accomplished— the Soviets completed their pullout from Afghanistan on February 15, 1989, just nine months before the fall of the Berlin Wall-bin Laden looked around and found that the other superpower, the United States, had a huge presence in his own native land, Saudi Arabia, the home of the two holiest cities in Islam. And he did not like it.
So, while we were dancing on the wall and opening up our Windows and proclaiming that there was no ideological alternative left to free-market capitalism, bin Laden was turning his gun sights on America. Both bin Laden and Ronald Reagan saw the Soviet Union as the “evil empire,” but bin Laden came to see America as evil too. He did have an ideological alternative to free-market capitalism-political Islam. He did not feel defeated by the end of the Soviet Union; he felt emboldened by it. He did not feel attracted to the widened playing field; he felt repelled by it. And he was not alone. Some thought that Ronald Reagan brought down the wall by bankrupting the Soviet Union through an arms race; others thought IBM, Steve Jobs, and Bill Gates brought down the wall by empowering individuals to download the future. But a world away, in Muslim lands, many thought bin Laden and his comrades brought down the Soviet Empire and the wall with religious zeal, and millions of them were inspired to upload the past.
In short, while we were celebrating 11/9, the seeds of another memorable date—9/11—were being sown. But more about that later in the book. For now, let the flattening continue.
As John Doerr, the legendary venture capitalist whose firm Kleiner Perkins Caulfield & Byers had backed Netscape, put it, “The Netscape IPO was a clarion call to the world to wake up to the Internet. Until then, it had been the province of the early adopters and geeks.”
This Netscape-triggered phase drove the flattening process in several key ways: It gave us the first broadly popular commercial browser to surf the Internet. The Netscape browser not only brought the Internet alive but also made the Internet accessible to everyone from five-year-olds to eighty-five-year-olds. The more alive the Internet became, the more consumers wanted to do different things on the Web, so the more they demanded computers, software, and telecommunications networks that could easily digitize words, music, data, and photos and transport them on the Internet to anyone else's computer. This demand was satisfied by another catalytic event: the rollout of Windows 95, which shipped the week after Netscape took its stock public. Windows 95 would soon become the operating system used by most people worldwide, and unlike previous versions of Windows, it was equipped with built-in Internet support, so that not just browsers but all PC applications could “know about the Internet” and interact with it.
Looking back, what enabled Netscape to take off was the existence, from the earlier phase, of millions of PCs, many already equipped with modems. Those are the shoulders Netscape stood on. What Netscape did was bring a new killer app-the browser-to this installed base of PCs, making the computer and its connectivity inherently more useful for millions of people. This in turn set off an explosion in demand for all things digital and sparked the Internet boom, because every investor looked at the Internet and concluded that if everything was going to be digitized-data, inventories, commerce, books, music, photos, and entertainment-and transported and sold on the Internet, then the demand for Internet-based products and services would be infinite. This led to the dot-com stock bubble and a massive overinvestment in the fiber-optic cable needed to carry all the new digital information. This development, in turn, wired the whole world together, and, without anyone really planning it, made Bangalore a suburb of Boston.
Let's look at each one of these developments.
When I sat down with Jim Barksdale, the former Netscape CEO, to interview him for this book, I explained to him that one of the early chapters was about the ten innovations, events, and trends that had flattened the world. The first event, I told him, was 11/9, and I explained the significance of that date. Then I said, “Let me see if you can guess the significance of the second date, 8/9.” That was all I told him: 8/9. It took Barksdale only a second to ponder that before shooting back with the right answer: “The day Netscape went public!”
Few would argue that Barksdale is one of the great American entrepreneurs. He helped Federal Express develop its package tracking and tracing system, then moved over to McCaw Cellular, the mobile phone company, built that up, and oversaw its merger with AT&T in 1994. Just before the sale closed, he was approached by a headhunter to become the CEO of a new company called Mosaic Communications, forged by two now-legendary innovators-Jim Clark and Marc Andreessen. In mid-1994, Clark, the founder of Silicon Graphics, had joined forces with Andreessen to found Mosaic, which would quickly be renamed Netscape Communications. Andreessen, a brilliant young computer scientist, had just spearheaded a small software project at the National Center for Supercomputing Applications (NC SA), based at the University of Illinois, that developed the first really effective Web browser, also called Mosaic. Clark and Andreessen quickly understood the huge potential for Web-browsing software and decided to partner up to commercialize it. As Netscape began to grow, they reached out to Barksdale for guidance and insight into how best to go public.
Today we take this browser technology for granted, but it was actually one of the most important inventions in modern history. When Andreessen was back at the University of Illinois NCSA lab, he found that he had PCs, workstations, and the basic network connectivity to move files around the Internet, but it was still not very exciting-because there was nothing to browse with, no user interface to pull up and display the contents of other people's Web sites. So Andreessen and his team developed the Mosaic browser, making Web sites viewable for any idiot, scientist, student, or grandma. Marc Andreessen did not invent the Internet, but he did as much as any single person to bring it alive and popularize it.
“The Mosaic browser started out in 1993 with twelve users, and I knew all twelve,” said Andreessen. There were only about fifty Web sites at the time and they were mostly just single Web pages. “Mosaic,” he explained, “was funded by the National Science Foundation. The money wasn't actually allocated to build Mosaic. Our specific group was to build software that would enable scientists to use supercomputers that were in remote locations, and to connect to them by the NSF network. So we built [the first browsers as] software tools to enable researchers to 'browse' each other's research. I looked at it as a positive feedback loop: The more people had the browser, the more people would want to be interconnected, and the more incentive there would be to create content and applications and tools. Once that kind of thing gets started, it just takes off and virtually nothing can stop it. When you are developing it, you are not sure anyone is going to use it, but once it started we realized that if anyone is going to use it everyone is going to use it, and the only question then was how fast it would spread and what would be the barriers along the way.”
Indeed, everyone who tried the browser, including Barksdale, had the same initial reaction: Wow! “Every summer, Fortune magazine had an article about the twenty-five coolest companies around,” Barksdale recalled. “That year [1994] Mosaic was one of them. I not only had read about Clark and Andreessen but had turned to my wife and said, 'Honey, this a great idea.' And then just a few weeks later I get this call from the headhunter. So I went down and spoke to Doerr and Jim Clark, and I began using the beta version of the Mosaic browser. I became more and more intrigued the more I used it.” Since the late 1980s, people had been putting up databases with Internet access. Barksdale said that after speaking to Doerr and Clark, he went home, gathered his three children around his computer, and asked them each to suggest a topic he could browse the Internet for-and wowed them by coming up with something for each of them. “That convinced me,” said Barksdale. “So I called back the headhunter and said, Tm your man.'”
Netscape's first commercial browser-which could work on an IBM PC, an Apple Macintosh, or a Unix computer-was released in December 1994, and within a year it completely dominated the market. You could download Netscape for free if you were in education or a nonprofit. If you were an individual, you could evaluate the software for free to your heart's content and buy it on disk if you wanted it. If you were a company, you could evaluate the software for ninety days. “The underlying rationale,” said Andreessen, “was: If you can afford to pay for it, please do so. If not, use it anyway.” Why? Because all the free usage stimulated a massive growth in the network, which was valuable to all the paying customers. It worked.
We put up the Netscape browser, said barksdale, and people were downloading it for three-month trials. I've never seen volume like this. For big businesses and government it was allowing them to connect and unlock all their information, and the point-and-click system that Marc Andreessen invented allowed mere mortals to use it, not just scientists. And that made it a true revolution. And we said, 'This thing will just grow and grow and grow.'“
Nothing did stop it, and that is why Netscape played another hugely important flattening role: It helped make the Internet truly interoperable. You will recall that in the Berlin Wall-PC-Windows phase, individuals who had e-mail and companies that had internal e-mail could not connect very far. The first Cisco Internet router, in fact, was built by a husband and wife at Stanford who wanted to exchange e-mail; one was working off a mainframe and the other on a PC, and they couldn't connect. “The corporate networks at the time were proprietary and disconnected from each other,” said Andreessen. “Each one had its own formats, data protocols, and different ways of doing content. So there were all these islands of information out there that were disconnected. And as the Internet emerged as a public, commercial venture, there was a real danger that it would emerge in the same disconnected way.”
Joe in the accounting department would get on his office PC and try to get the latest sales numbers for 1995, but he couldn't do that because the sales department was on a different system from the one accounting was using. It was as if one was speaking German and the other French. And then Joe would say, “Get me the latest shipment information from Goodyear on what tires they have sent us,” and he would find that Goodyear was using a different system altogether, and the dealer in Topeka was running yet another system. Then Joe would go home and find his seventh-grader on the World Wide Web researching a term paper, using open protocols, and looking at the holdings of some art museum in France. And Joe would say, “This is crazy. There has to be one totally interconnected network.”
In the years before the Internet became commercial, explained Andreessen, scientists developed a series of “open protocols” meant to make everyone's e-mail system or university computer network connect seamlessly with everyone else's-to ensure that no one had some special advantage. These mathematical-based protocols, which enable digital devices to talk to each other, were like magical pipes that, once you adopted them for your network, made you compatible with everyone else, no matter what kind of computer they were running. These protocols were (and still are) known by their alphabet soup names: mainly FTP, HTTP, SSL, SMTP, POP, and TCP/IP. Together, they form a system for transporting data around the Internet in a relatively secure manner, no matter what network your company or household has or what computer or cell phone or handheld device you are using. Each protocol had a different function: TCP/IP was the basic plumbing of the Internet, or the basic railroad tracks, on which everything else above it was built and moved around. FTP moved files; SMTP and POP moved e-mail messages, which became standardized, so that they could be written and read on different e-mail systems. HTML was a language that allowed even ordinary people to author Web pages that anyone with a Web browser could display. But it was the introduction of HTTP to move HTML documents around that gave birth to the World Wide Web as we know it. Finally, as people began to use these Web pages for electronic commerce, SSL was created to provide security for Web-based transactions.
As browsing and the Internet in general grew, Netscape wanted to make sure that Microsoft, with its huge market dominance, would not be able to shift these Web protocols from open to proprietary standards that only Microsoft's servers would be able to handle. “Netscape helped to guarantee that these open protocols would not be proprietary by commercializing them for the public,” said Andreessen. “Netscape came along not only with the browser but with a family of software products that implemented all these open standards so that the scientists could communicate with each other no matter what system they were on-a Cray supercomputer, a Macintosh, or a PC. Netscape was able to provide a real reason for everyone to say, 'I want to be on open standards for everything I do and for all the systems I work on.' Once we created a way to browse the Internet, people wanted a universal way to access what was out there. So anyone who wanted to work on open standards went to Netscape, where we supported them, or they went to the open-source world and got the same standards for free but unsupported, or they went to their private vendors and said, 'I am not going to buy your proprietary stuff anymore... I am not going to sign up to your walled garden anymore. I am only going to stay with you if you interconnect to the Internet with these open protocols.'”
Netscape began pushing these open standards through the sale of its browsers, and the public responded enthusiastically. Sun started to do the same with its servers, and Microsoft started to do the same with Windows 95, considering browsing so critical that it famously built its own browser directly into Windows with the addition of Internet Explorer. Each realized that the public, which suddenly could not get enough of e-mail and browsing, wanted the Internet companies to work together and create one interoperable network. They wanted companies to compete with each other over different applications, that is, over what consumers could do once they were on the Internet-not over how they got on the Internet in the first place. As a result, after quite a few “format wars” among the big companies, by the late 1990s the Internet computing platform became seamlessly integrated. Soon anyone was able to connect with anyone else anywhere on any machine. It turned out that the value of compatibility was much higher for everyone than the value of trying to maintain your own little walled network. This integration was a huge flattener, because it enabled so many more people to get connected with so many more other people.
There was no shortage of skeptics at the time, who said that none of this would work because it was all too complicated, recalled Andreessen. 'Tou had to go out and get a PC and a dial-up modem. The skeptics all said, 'It takes people a long time to change their habits and learn a new technology.' [But] people did it very quickly, and ten years later there were eight hundred million people on the Internet.“ The reason? ”People will change their habits quickly when they have a strong reason to do so, and people have an innate urge to connect with other people,“ said Andreessen. ”And when you give people a new way to connect with other people, they will punch through any technical barrier, they will learn new languages-people are wired to want to connect with other people and they find it objectionable not to be able to. That is what Netscape unlocked.“ As Joel Cawley, IBM's vice president of corporate strategy, put it, ”Netscape created a standard around how data would be transported and rendered on the screen that was so simple and compelling that anyone and everyone could innovate on top of it. It quickly scaled around the world and to everyone from kids to corporations.“
In the summer of 1995, Barksdale and his Netscape colleagues went on an old-fashioned road show with their investment bankers from Morgan Stanley to try to entice investors around the country to buy Netscape stock once it went public. “When we went out on the road,” said Barksdale, “Morgan Stanley said the stock could sell for as high as $14. But after the road show got going, they were getting such demand for the stock, they decided to double the opening price to $28. The last afternoon before the offering, we were all in Maryland. It was our last stop. We had this caravan of black limousines. We looked like some kind of Mafia group. We needed to be in touch with Morgan Stanley [headquarters], but we were somewhere where our cell phones didn't work. So we pulled into these two filling stations across from each other, all these black limos, to use the phones. We called up Morgan Stanley, and they said, 'We're thinking of bringing it out at $31.' I said, 'No, let's keep it at $28,' because I wanted people to remember it as a $20 stock, not a $30 stock, just in case it didn't go so well. So then the next morning I get on the conference call and the thing opened at $71. It closed the day at $56, exactly twice the price I set.”
Netscape eventually fell victim to overwhelming (and, the courts decided, monopolistic) competitive pressure from Microsoft. Microsoft's decision to give away its browser, Internet Explorer, as part of its dominant Windows operating system, combined with its ability to throw more programmers at Web browsing than Netscape, led to the increasing slippage of Netscape's market share. In the end, Netscape was sold for $10 billion to AOL, which never did much with it. But though Netscape may have been only a shooting star in commercial terms, what a star it was, and what a trail it left.
“We were profitable almost from the start,” said Barksdale. “Netscape was not a dot-com. We did not participate in the dot-com bubble. We started the dot-com bubble.”
And what a bubble it was. “Netscape going public stimulated a lot of things,” said Barksdale. “The technologists loved the new technology things it could do, and the businesspeople and regular folks got excited about how much money they could make. People saw all those young kids making money out of this and said, 'If those young kids can do this and make all that money, I can too.' Greed can be a bad thing-folks thought they could make a lot of money without a lot of work. It certainly led to a degree of overinvestment, putting it mildly. Every sillier and sillier idea got funded.”
Flattener #1: 11/9/89, When the Walls Came Down and the Windows Went Up
The first time I saw the Berlin Wall, it already had a hole in it. It was December 1990, and I was traveling to Berlin with the reporters covering Secretary of State James A. Baker III. The Berlin Wall had been breached a year earlier, on November 9, 1989. Yes, in a wonderful kabbalistic accident of dates, the Berlin Wall fell on 11/9. The wall, even in its punctured and broken state, was still an ugly scar across Berlin. Secretary Baker was making his first visit to see this crumbled monument to Soviet communism. I was standing next to him with a small group of reporters. “It was a foggy, overcast day,” Baker recalled in his memoir, The Politics of Diplomacy, “and in my raincoat, I felt like a character in a John le Carre novel. But as I peered through a crack in the Wall [near the Reichstag] and saw the high-resolution drabness that characterizes East Berlin, I realized that the ordinary men and women of East Germany, peacefully and persistently, had taken matters into their own hands. This was their revolution.” After Baker finished looking through the wall and moved along, we reporters took turns peering through the same jagged concrete hole. I brought a couple of chunks of the wall home for my daughters. I remember thinking how unnatural it looked-indeed, what a bizarre thing it was, this cement wall snaking across a modern city for the sole purpose of preventing the people on the other side from enjoying, even glimpsing, freedom.The fall of the Berlin Wall on 11/9/89 unleashed forces that ultimately liberated all the captive peoples of the Soviet Empire. But it actually did so much more. It tipped the balance of power across the world toward those advocating democratic, consensual, free-market-oriented governance, and away from those advocating authoritarian rule with centrally planned economies. The Cold War had been a struggle between two economic systems-capitalism and communism-and with the fall of the wall, there was only one system left and everyone had to orient himself or herself to it one way or another. Henceforth, more and more economies would be governed from the ground up, by the interests, demands, and aspirations of the people, rather than from the top down, by the interests of some narrow ruling clique. Within two years, there was no Soviet Empire to hide behind anymore or to prop up autocratic regimes in Asia, the Middle East, Africa, or Latin America. If you were not a democracy or a democratizing society, if you continued to hold fast to highly regulated or centrally planned economics, you were seen as being on the wrong side of history.
For some, particularly among the older generations, this was an unwelcome transformation. Communism was a great system for making people equally poor. In fact, there was no better system in the world for that than communism. Capitalism made people unequally rich, and for some who were used to the plodding, limited, but secure Socialist lifestyle-where a job, a house, an education, and a pension were all guaranteed, even if they were meager-the fall of the Berlin Wall was deeply unsettling. But for many others, it was a get-out-of-jail-free card. That is why the fall of the Berlin Wall was felt in so many more places than just Berlin, and why its fall was such a world-flattening event.
Indeed, to appreciate the far-reaching flattening effects of the fall of the Berlin Wall, it's always best to talk to non-Germans or non-Russians. Tarun Das was heading the Confederation of Indian Industry when the wall fell in Berlin, and he saw its ripple effect felt all the way to India. “We had this huge mass of regulation and controls and bureaucracy,” he recalled. “Nehru had come to power [after the end of British colonial rule] and had a huge country to manage, and no experience of running a country. The U.S. was busy with Europe and Japan and the Marshall Plan. So Nehru looked north, across the Himalayas, and sent his team of economists to Moscow. They came back and said that this country [the Soviet Union] was amazing. They allocate resources, they give licenses, there is a planning commission that decides everything, and the country moves. So we took that model and forgot that we had a private sector... That private sector got put under this wall of regulation. By 1991, the private sector was there, but under wraps, and there was mistrust about business. They made profits! The entire infrastructure from 1947 to 1991 was government-owned... [The burden of state ownership] almost bankrupted the country. We were not able to pay our debts. As a people, we did not have self-confidence. Sure, we might have won a couple of wars with Pakistan, but that did not give the nation confidence.”
In 1991, with India running out of hard currency, Manmohan Singh, the finance minister at that time (and now the prime minister), decided that India had to open its economy. “Our Berlin Wall fell,” said Das, “and it was like unleashing a caged tiger. Trade controls were abolished. We were always at 3 percent growth, the so-called Hindu rate of growth-slow, cautious, and conservative. To make [better returns], you had to go to America. Well, three years later [after the 1991 reforms] we were at 7 percent rate of growth. To hell with poverty! Now to make it you could stay in India and become one of Forbes's richest people in the world... All the years of socialism and controls had taken us downhill to the point where we had only $1 billion in foreign currency. Today we have $ 118 billion... We went from quiet self-confidence to outrageous ambition in a decade.”
The fall of the Berlin Wall didn't just help flatten the alternatives to free-market capitalism and unlock enormous pent-up energies for hundreds of millions of people in places like India, Brazil, China, and the former Soviet Empire. It also allowed us to think about the world differently-to see it as more of a seamless whole. Because the Berlin Wall was not only blocking our way; it was blocking our sight-our ability to think about the world as a single market, a single ecosystem, and a single community. Before 1989, you could have an Eastern policy or a Western policy, but it was hard to think about having a “global” policy. Amartya Sen, the Nobel Prize-winning Indian economist now teaching at Harvard, once remarked to me that “the Berlin Wall was not only a symbol of keeping people inside East Germany-it was a way of preventing a kind of global view of our future. We could not think globally about the world when the Berlin Wall was there. We could not think about the world as a whole.” There is a lovely story in Sanskrit, Sen added, about a frog that is born in a well and stays in the well and lives its entire life in the well. “It has a worldview that consists of the well,” he said. “That was what the world was like for many people on the planet before the fall of the wall. When it fell, it was like the frog in the well was suddenly able to communicate with frogs in all the other wells... If I celebrate the fall of the wall, it is because I am convinced of how much we can learn from each other. Most knowledge is learning from the other across the border.”
Yes, the world became a better place to live in after 11/9, because each outbreak of freedom stimulated another outbreak, and that process in and of itself had a flattening effect across societies, strengthening those below and weakening those above. “Women's freedom,” noted Sen, citing just one example, “which promotes women's literacy, tends to reduce fertility and child mortality and increase the employment opportunities for women, which then affects the political dialogue and gives women the opportunity for a greater role in local self-government.”
Finally, the fall of the wall did not just open the way for more people to tap into one another's knowledge pools. It also paved the way for the adoption of common standards-standards on how economies should be run, on how accounting should be done, on how banking should be conducted, on how PCs should be made, and on how economics papers should be written. I discuss this more later, but suffice it to say here that common standards create a flatter, more level playing field. To put it another way, the fall of the wall enhanced the free movement of best practices. When an economic or technological standard emerged and proved itself on the world stage, it was much more quickly adopted after the wall was out of the way. In Europe alone, the fall of the wall opened the way for the formation of the European Union and its expansion from fifteen to twenty-five countries. That, in combination with the advent of the euro as a common currency, has created a single economic zone out of a region once divided by an Iron Curtain.
While the positive effects of the wall coming down were immediately apparent, the cause of the wall's fall was not so clear. There was no single cause. To some degree the termites just ate away at the foundations of the Soviet Union, which were already weakened by the system's own internal contradictions and inefficiencies; to some degree the Reagan administration's military buildup in Europe forced the Kremlin to bankrupt itself paying for warheads; and to some degree Mikhail Gorbachev's hapless efforts to reform something that was unreformable brought communism to an end. But if I had to point to one factor as first among equals, it was the information revolution that began in the early— to mid-1980s. Totalitarian systems depend on a monopoly of information and force, and too much information started to slip through the Iron Curtain, thanks to the spread of fax machines, telephones, and other modern tools of communication.
A critical mass of IBM PCs, and the Windows operating system that brought them to life, came together in roughly this same time period that the wall fell, and their diffusion put the nail in the coffin of communism, because they vastly improved horizontal communication-to the detriment of the exclusively top-down form that communism was based upon. They also greatly enhanced personal information gathering and personal empowerment. (Each component of this information revolution was brought about by separate evolutions: The phone network evolved from the desire of people to talk to each other over long distances. The fax machine evolved as a way to transmit written communication over the phone network. The PC was diffused by the original killer apps-spreadsheets and word processing. And Windows evolved out of the need to make all of this usable, and programmable, by the masses.)
The first IBM PC hit the markets in 1981. At the same time, many computer scientists around the world had started using these things called the Internet and e-mail. The first version of the Windows operating system shipped in 1985, and the real breakthrough version that made PCs truly user-friendly-Windows 3.0-shipped on May 22, 1990, only six months after the wall went down. In this same time period, some people other than scientists started to discover that if they bought a PC and a dial-up modem, they could connect their PCs to their telephones and send e-mails through private Internet service providers-like CompuServe and America Online.
“The diffusion of personal computers, fax machines, Windows, and dial-up modems connected to a global telephone network all came together in the late 1980s and early 1990s to create the basic platform that started the global information revolution,” argued Craig J. Mundie, the chief technology officer for Microsoft. The key was the melding of them all together into a single interoperable system. That happened, said Mundie, once we had in crude form a standardized computing platform-the IBM PC-along with a standardized graphical user interface for word processing and spreadsheets-Windows-along with a standardized tool for communication-dial-up modems and the global phone network. Once we had that basic interoperable platform, then the killer applications drove its diffusion far and wide.
“People found that they really liked doing all these things on a computer, and they really improved productivity,” said Mundie. “They all had broad individual appeal and made individual people get up and buy a Windows-enabled PC and put it on their desk, and that forced the diffusion of this new platform into the world of corporate computing even more. People said, 'Wow, there is an asset here, and we should take advantage of it.'”
The more established Windows became as the primary operating system, added Mundie, “the more programmers went out and wrote applications for rich-world businesses to put on their computers, so they could do lots of new and different business tasks, which started to enhance productivity even more. Tens of millions of people around the world became programmers to make the PC do whatever they wanted in their own languages. Windows was eventually translated into thirty-eight languages. People were able to become familiar with the PC in their own languages.”
This was all new and exciting, but we shouldn't forget how constricted this early PC-Windows-modem platform was. “This platform was constrained by too many architectural limits,” said Mundie. “There was missing infrastructure.” The Internet as we know it today-with seemingly magical transmission protocols that can connect everyone and everything-had not yet emerged. Back then, networks had only very basic protocols for exchanging files and e-mail messages. So people who were using computers with the same type of operating systems and software could exchange documents through e-mail or file transfers, but even doing this was tricky enough that only the computing elite took the trouble. You couldn't just sit down and zap an e-mail or a file to anyone anywhere-especially outside your own company or outside your own Internet service-the way you can today. Yes, AOL users could communicate with CompuServe users, but it was neither simple nor reliable. As a result, said Mundie, a huge amount of data and creativity was accumulating in all those computers, but there was no easy, interoperable way to share it and mold it. People could write new applications that allowed selected systems to work together, but in general this was limited to planned exchanges between PCs within the network of a single company.
This period from 11/9 to the mid-1990s still led to a huge advance in personal empowerment, even if networks were limited. It was the age of “Me and my machine can now talk to each other better and faster, so that I personally can do more tasks” and the age of “Me and my machine can now talk to a few friends and some other people in my company better and faster, so we can become more productive.” The walls had fallen and the Windows had opened, making the world much flatter than it had ever been-but the age of seamless global communication had not dawned.
Though we didn't notice it, there was a discordant note in this exciting new era. It wasn't only Americans and Europeans who joined the people of the Soviet Empire in celebrating the fall of the wall-and claming credit for it. Someone else was raising a glass-not of champagne but of thick Turkish coffee. His name was Osama bin Laden and he had a different narrative. His view was that it was the jihadi fighters in Afghanistan, of which he was one, who had brought down the Soviet Empire by forcing the Red Army to withdraw from Afghanistan (with some help from U.S. and Pakistani forces). And once that mission had been accomplished— the Soviets completed their pullout from Afghanistan on February 15, 1989, just nine months before the fall of the Berlin Wall-bin Laden looked around and found that the other superpower, the United States, had a huge presence in his own native land, Saudi Arabia, the home of the two holiest cities in Islam. And he did not like it.
So, while we were dancing on the wall and opening up our Windows and proclaiming that there was no ideological alternative left to free-market capitalism, bin Laden was turning his gun sights on America. Both bin Laden and Ronald Reagan saw the Soviet Union as the “evil empire,” but bin Laden came to see America as evil too. He did have an ideological alternative to free-market capitalism-political Islam. He did not feel defeated by the end of the Soviet Union; he felt emboldened by it. He did not feel attracted to the widened playing field; he felt repelled by it. And he was not alone. Some thought that Ronald Reagan brought down the wall by bankrupting the Soviet Union through an arms race; others thought IBM, Steve Jobs, and Bill Gates brought down the wall by empowering individuals to download the future. But a world away, in Muslim lands, many thought bin Laden and his comrades brought down the Soviet Empire and the wall with religious zeal, and millions of them were inspired to upload the past.
In short, while we were celebrating 11/9, the seeds of another memorable date—9/11—were being sown. But more about that later in the book. For now, let the flattening continue.
Flattener #2: 8/9/95, When Netscape Went Public
By the mid-1990s, the PC-Windows network revolution had reached its limits. If the world was going to become really interconnected, and really start to flatten out, the revolution needed to go to the next phase. And the next phase, notes Microsoft's Mundie, “was to go from a PC-based computing platform to an Internet-based platform.” The killer applications that drove this new phase were e-mail and Internet browsing. E-mail was being driven by the rapidly expanding consumer portals like AOL, CompuServe, and eventually MSN. But it was the new killer app, the Web browser-which could retrieve documents or Web pages stored on Internet Web sites and display them on any computer screen-that really captured the imagination. The actual concept of the World Wide Web-a system for creating, organizing, and linking documents so they could be easily browsed-was created by British computer scientist Tim Berners-Lee. He put up the first Web site in 1991, in an effort to foster a computer network that would enable scientists to easily share their research. Other scientists and academics had created a number of browsers to surf this early Web, but the first mainstream browser-and the whole culture of Web browsing for the general public-was created by a tiny start-up company in Mountain View, California, called Netscape. Netscape went public on August 9, 1995, and the world has not been the same since.As John Doerr, the legendary venture capitalist whose firm Kleiner Perkins Caulfield & Byers had backed Netscape, put it, “The Netscape IPO was a clarion call to the world to wake up to the Internet. Until then, it had been the province of the early adopters and geeks.”
This Netscape-triggered phase drove the flattening process in several key ways: It gave us the first broadly popular commercial browser to surf the Internet. The Netscape browser not only brought the Internet alive but also made the Internet accessible to everyone from five-year-olds to eighty-five-year-olds. The more alive the Internet became, the more consumers wanted to do different things on the Web, so the more they demanded computers, software, and telecommunications networks that could easily digitize words, music, data, and photos and transport them on the Internet to anyone else's computer. This demand was satisfied by another catalytic event: the rollout of Windows 95, which shipped the week after Netscape took its stock public. Windows 95 would soon become the operating system used by most people worldwide, and unlike previous versions of Windows, it was equipped with built-in Internet support, so that not just browsers but all PC applications could “know about the Internet” and interact with it.
Looking back, what enabled Netscape to take off was the existence, from the earlier phase, of millions of PCs, many already equipped with modems. Those are the shoulders Netscape stood on. What Netscape did was bring a new killer app-the browser-to this installed base of PCs, making the computer and its connectivity inherently more useful for millions of people. This in turn set off an explosion in demand for all things digital and sparked the Internet boom, because every investor looked at the Internet and concluded that if everything was going to be digitized-data, inventories, commerce, books, music, photos, and entertainment-and transported and sold on the Internet, then the demand for Internet-based products and services would be infinite. This led to the dot-com stock bubble and a massive overinvestment in the fiber-optic cable needed to carry all the new digital information. This development, in turn, wired the whole world together, and, without anyone really planning it, made Bangalore a suburb of Boston.
Let's look at each one of these developments.
When I sat down with Jim Barksdale, the former Netscape CEO, to interview him for this book, I explained to him that one of the early chapters was about the ten innovations, events, and trends that had flattened the world. The first event, I told him, was 11/9, and I explained the significance of that date. Then I said, “Let me see if you can guess the significance of the second date, 8/9.” That was all I told him: 8/9. It took Barksdale only a second to ponder that before shooting back with the right answer: “The day Netscape went public!”
Few would argue that Barksdale is one of the great American entrepreneurs. He helped Federal Express develop its package tracking and tracing system, then moved over to McCaw Cellular, the mobile phone company, built that up, and oversaw its merger with AT&T in 1994. Just before the sale closed, he was approached by a headhunter to become the CEO of a new company called Mosaic Communications, forged by two now-legendary innovators-Jim Clark and Marc Andreessen. In mid-1994, Clark, the founder of Silicon Graphics, had joined forces with Andreessen to found Mosaic, which would quickly be renamed Netscape Communications. Andreessen, a brilliant young computer scientist, had just spearheaded a small software project at the National Center for Supercomputing Applications (NC SA), based at the University of Illinois, that developed the first really effective Web browser, also called Mosaic. Clark and Andreessen quickly understood the huge potential for Web-browsing software and decided to partner up to commercialize it. As Netscape began to grow, they reached out to Barksdale for guidance and insight into how best to go public.
Today we take this browser technology for granted, but it was actually one of the most important inventions in modern history. When Andreessen was back at the University of Illinois NCSA lab, he found that he had PCs, workstations, and the basic network connectivity to move files around the Internet, but it was still not very exciting-because there was nothing to browse with, no user interface to pull up and display the contents of other people's Web sites. So Andreessen and his team developed the Mosaic browser, making Web sites viewable for any idiot, scientist, student, or grandma. Marc Andreessen did not invent the Internet, but he did as much as any single person to bring it alive and popularize it.
“The Mosaic browser started out in 1993 with twelve users, and I knew all twelve,” said Andreessen. There were only about fifty Web sites at the time and they were mostly just single Web pages. “Mosaic,” he explained, “was funded by the National Science Foundation. The money wasn't actually allocated to build Mosaic. Our specific group was to build software that would enable scientists to use supercomputers that were in remote locations, and to connect to them by the NSF network. So we built [the first browsers as] software tools to enable researchers to 'browse' each other's research. I looked at it as a positive feedback loop: The more people had the browser, the more people would want to be interconnected, and the more incentive there would be to create content and applications and tools. Once that kind of thing gets started, it just takes off and virtually nothing can stop it. When you are developing it, you are not sure anyone is going to use it, but once it started we realized that if anyone is going to use it everyone is going to use it, and the only question then was how fast it would spread and what would be the barriers along the way.”
Indeed, everyone who tried the browser, including Barksdale, had the same initial reaction: Wow! “Every summer, Fortune magazine had an article about the twenty-five coolest companies around,” Barksdale recalled. “That year [1994] Mosaic was one of them. I not only had read about Clark and Andreessen but had turned to my wife and said, 'Honey, this a great idea.' And then just a few weeks later I get this call from the headhunter. So I went down and spoke to Doerr and Jim Clark, and I began using the beta version of the Mosaic browser. I became more and more intrigued the more I used it.” Since the late 1980s, people had been putting up databases with Internet access. Barksdale said that after speaking to Doerr and Clark, he went home, gathered his three children around his computer, and asked them each to suggest a topic he could browse the Internet for-and wowed them by coming up with something for each of them. “That convinced me,” said Barksdale. “So I called back the headhunter and said, Tm your man.'”
Netscape's first commercial browser-which could work on an IBM PC, an Apple Macintosh, or a Unix computer-was released in December 1994, and within a year it completely dominated the market. You could download Netscape for free if you were in education or a nonprofit. If you were an individual, you could evaluate the software for free to your heart's content and buy it on disk if you wanted it. If you were a company, you could evaluate the software for ninety days. “The underlying rationale,” said Andreessen, “was: If you can afford to pay for it, please do so. If not, use it anyway.” Why? Because all the free usage stimulated a massive growth in the network, which was valuable to all the paying customers. It worked.
We put up the Netscape browser, said barksdale, and people were downloading it for three-month trials. I've never seen volume like this. For big businesses and government it was allowing them to connect and unlock all their information, and the point-and-click system that Marc Andreessen invented allowed mere mortals to use it, not just scientists. And that made it a true revolution. And we said, 'This thing will just grow and grow and grow.'“
Nothing did stop it, and that is why Netscape played another hugely important flattening role: It helped make the Internet truly interoperable. You will recall that in the Berlin Wall-PC-Windows phase, individuals who had e-mail and companies that had internal e-mail could not connect very far. The first Cisco Internet router, in fact, was built by a husband and wife at Stanford who wanted to exchange e-mail; one was working off a mainframe and the other on a PC, and they couldn't connect. “The corporate networks at the time were proprietary and disconnected from each other,” said Andreessen. “Each one had its own formats, data protocols, and different ways of doing content. So there were all these islands of information out there that were disconnected. And as the Internet emerged as a public, commercial venture, there was a real danger that it would emerge in the same disconnected way.”
Joe in the accounting department would get on his office PC and try to get the latest sales numbers for 1995, but he couldn't do that because the sales department was on a different system from the one accounting was using. It was as if one was speaking German and the other French. And then Joe would say, “Get me the latest shipment information from Goodyear on what tires they have sent us,” and he would find that Goodyear was using a different system altogether, and the dealer in Topeka was running yet another system. Then Joe would go home and find his seventh-grader on the World Wide Web researching a term paper, using open protocols, and looking at the holdings of some art museum in France. And Joe would say, “This is crazy. There has to be one totally interconnected network.”
In the years before the Internet became commercial, explained Andreessen, scientists developed a series of “open protocols” meant to make everyone's e-mail system or university computer network connect seamlessly with everyone else's-to ensure that no one had some special advantage. These mathematical-based protocols, which enable digital devices to talk to each other, were like magical pipes that, once you adopted them for your network, made you compatible with everyone else, no matter what kind of computer they were running. These protocols were (and still are) known by their alphabet soup names: mainly FTP, HTTP, SSL, SMTP, POP, and TCP/IP. Together, they form a system for transporting data around the Internet in a relatively secure manner, no matter what network your company or household has or what computer or cell phone or handheld device you are using. Each protocol had a different function: TCP/IP was the basic plumbing of the Internet, or the basic railroad tracks, on which everything else above it was built and moved around. FTP moved files; SMTP and POP moved e-mail messages, which became standardized, so that they could be written and read on different e-mail systems. HTML was a language that allowed even ordinary people to author Web pages that anyone with a Web browser could display. But it was the introduction of HTTP to move HTML documents around that gave birth to the World Wide Web as we know it. Finally, as people began to use these Web pages for electronic commerce, SSL was created to provide security for Web-based transactions.
As browsing and the Internet in general grew, Netscape wanted to make sure that Microsoft, with its huge market dominance, would not be able to shift these Web protocols from open to proprietary standards that only Microsoft's servers would be able to handle. “Netscape helped to guarantee that these open protocols would not be proprietary by commercializing them for the public,” said Andreessen. “Netscape came along not only with the browser but with a family of software products that implemented all these open standards so that the scientists could communicate with each other no matter what system they were on-a Cray supercomputer, a Macintosh, or a PC. Netscape was able to provide a real reason for everyone to say, 'I want to be on open standards for everything I do and for all the systems I work on.' Once we created a way to browse the Internet, people wanted a universal way to access what was out there. So anyone who wanted to work on open standards went to Netscape, where we supported them, or they went to the open-source world and got the same standards for free but unsupported, or they went to their private vendors and said, 'I am not going to buy your proprietary stuff anymore... I am not going to sign up to your walled garden anymore. I am only going to stay with you if you interconnect to the Internet with these open protocols.'”
Netscape began pushing these open standards through the sale of its browsers, and the public responded enthusiastically. Sun started to do the same with its servers, and Microsoft started to do the same with Windows 95, considering browsing so critical that it famously built its own browser directly into Windows with the addition of Internet Explorer. Each realized that the public, which suddenly could not get enough of e-mail and browsing, wanted the Internet companies to work together and create one interoperable network. They wanted companies to compete with each other over different applications, that is, over what consumers could do once they were on the Internet-not over how they got on the Internet in the first place. As a result, after quite a few “format wars” among the big companies, by the late 1990s the Internet computing platform became seamlessly integrated. Soon anyone was able to connect with anyone else anywhere on any machine. It turned out that the value of compatibility was much higher for everyone than the value of trying to maintain your own little walled network. This integration was a huge flattener, because it enabled so many more people to get connected with so many more other people.
There was no shortage of skeptics at the time, who said that none of this would work because it was all too complicated, recalled Andreessen. 'Tou had to go out and get a PC and a dial-up modem. The skeptics all said, 'It takes people a long time to change their habits and learn a new technology.' [But] people did it very quickly, and ten years later there were eight hundred million people on the Internet.“ The reason? ”People will change their habits quickly when they have a strong reason to do so, and people have an innate urge to connect with other people,“ said Andreessen. ”And when you give people a new way to connect with other people, they will punch through any technical barrier, they will learn new languages-people are wired to want to connect with other people and they find it objectionable not to be able to. That is what Netscape unlocked.“ As Joel Cawley, IBM's vice president of corporate strategy, put it, ”Netscape created a standard around how data would be transported and rendered on the screen that was so simple and compelling that anyone and everyone could innovate on top of it. It quickly scaled around the world and to everyone from kids to corporations.“
In the summer of 1995, Barksdale and his Netscape colleagues went on an old-fashioned road show with their investment bankers from Morgan Stanley to try to entice investors around the country to buy Netscape stock once it went public. “When we went out on the road,” said Barksdale, “Morgan Stanley said the stock could sell for as high as $14. But after the road show got going, they were getting such demand for the stock, they decided to double the opening price to $28. The last afternoon before the offering, we were all in Maryland. It was our last stop. We had this caravan of black limousines. We looked like some kind of Mafia group. We needed to be in touch with Morgan Stanley [headquarters], but we were somewhere where our cell phones didn't work. So we pulled into these two filling stations across from each other, all these black limos, to use the phones. We called up Morgan Stanley, and they said, 'We're thinking of bringing it out at $31.' I said, 'No, let's keep it at $28,' because I wanted people to remember it as a $20 stock, not a $30 stock, just in case it didn't go so well. So then the next morning I get on the conference call and the thing opened at $71. It closed the day at $56, exactly twice the price I set.”
Netscape eventually fell victim to overwhelming (and, the courts decided, monopolistic) competitive pressure from Microsoft. Microsoft's decision to give away its browser, Internet Explorer, as part of its dominant Windows operating system, combined with its ability to throw more programmers at Web browsing than Netscape, led to the increasing slippage of Netscape's market share. In the end, Netscape was sold for $10 billion to AOL, which never did much with it. But though Netscape may have been only a shooting star in commercial terms, what a star it was, and what a trail it left.
“We were profitable almost from the start,” said Barksdale. “Netscape was not a dot-com. We did not participate in the dot-com bubble. We started the dot-com bubble.”
And what a bubble it was. “Netscape going public stimulated a lot of things,” said Barksdale. “The technologists loved the new technology things it could do, and the businesspeople and regular folks got excited about how much money they could make. People saw all those young kids making money out of this and said, 'If those young kids can do this and make all that money, I can too.' Greed can be a bad thing-folks thought they could make a lot of money without a lot of work. It certainly led to a degree of overinvestment, putting it mildly. Every sillier and sillier idea got funded.”