E-Commerce

Expanding and Selling the Internet

After Mosaic, Internet traffic increased 341,631 percent as more than one million users downloaded the software for free. In 1994, Andreessen joined with computer industry veteran Jim Clark to form Netscape, one of the Web's pioneering companies. That same year, Time magazine ran its first cover story on the Internet. By early 1995, a Business Week survey estimated that 27,000 websites existed, with the number doubling every two months.

The Web grew so quickly that commercializing it seemed inevitable. Countless entrepreneurs founded Internet-based start-up companies, funded by Silicon Valley venture capitalists headquartered near Stanford University on famous Sand Hill Road, such as Sequoia Capital, Draper Fisher Jurvetson, and Kleiner Perkins Caufield and Byers.

The feeding frenzy for start-ups reached a peak after several early innovators filed initial public offerings (IPO) and turned its founders into paper millionaires. In early August 1995, Netscape went public and Clark's shares were worth $565 million, making him one of the wealthiest people in America and coining the phrase “Internet billionaire.” By the end of the year, the company's stock reached $170 a share, making it worth nearly $6.5 billion. Netscape's IPO success turned the Internet into the new Wild West, a place where fantastic wealth could be created—a capitalist nirvana on the western edge of the country, similar to the gold rush days in the mid-1800s.

Amazon Sparks Dot-Com Revolution

The company that embodied both the Internet stock market bubble and the promise of the dot-com revolution was http://Amazon.com. Founded by Jeff Bezos, a [Page 378]former investment banker, the Seattle-based company sold books online, then later expanded into other consumer goods, including music, movies, clothing, and much more. Initially, Bezos thought that selling books via the Web would exploit the power of the Internet, since the company would not have to stock inventory.

Bezos adopted a “get big fast” mentality that emphasized building Amazon's brand name, despite the negative effect it had on earnings. Bezos saw the battle as one of market share, not profitability, and other Web entrepreneurs and investors followed suit. Soon, nearly every industry had Internet-based startups fighting with traditional competitors and any corporation on the Fortune 500 was suddenly deemed stodgy if it lacked a viable Web component.

Bezos became the most celebrated New Economy cheerleader, particularly after being deemed Time's “Person of the Year,” the fourth-youngest individual ever named to the list. His story was considered the quintessential e-commerce fairy tale. Amazon's lasting significance may be as a cultural force. By getting on the Web early, Amazon enabled millions of people to become comfortable with the Internet as a purchasing tool.

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