Y2K10: Part Two: late 90’s tech effect on wine ecommerce

“After studying the potential impact of Y2K on the telecommunications industry, health care, economy, and other vital sectors of our lives, I would like to warn that we have cause for fear. For the failure to address the millennium bug could be catastrophic” … Senator Daniel Patrick Moynihan

The Last Year of the Century

At the end of the 1990‘s the top story wasn’t about the significant advancements in technology but rather about a programing decision made decades before. Y2K was a hydra like story spreading its tentacles into all recesses of media throughout the word. It became the world’s most famous bug. It really wasn’t a bug, but a memory saving programing decision of using two digits instead of four for a date. The solution was a simple BIOS update, and by Jan 1, 2000, to a world-wide collective sigh of relief it was a non story. 1999 had been a very busy news year: President Bill Clinton had survived impeachment. John Elway won his second Super Bowl title in Denver then retired. Lance Armstrong came back from testicular cancer to win the Tour de France. J. K. Rowling, a Scot writer’s first novel ‘Harry Potter and the Sorcerer’s Stone’ hit the top of the New York Times best seller list. The US Women’s Soccer team won the world cup and Brandi Chastain’s picture made the covers of Time, Newsweek and Sports Illustrated. The New York Yankees won their second straight World Series title. Mark McGuire hit 65 home runs and Sammy Sosa hit 63. Tiger Woods won 8 tournaments including the PGA and was named AP Male Athlete of the year.

But the big stories, not withstanding Y2K, were still in tech. Both Nordstrom and auctioneer Sotheby’s decided to create unique ecommerce divisions, with significant investments from Benchmark Capital and Madrona Investment Group funding Nordstrom.com and Amazon as the primary investor in Sotheby’s. Merrill Lynch launched it’s online brokerage after Paine-Weber’s late summer launch and Morgan Stanley’s folding Discover Brokerage online trading unit in-house. In November Nike began to take orders for customized shoes, following this practice from P&G,  Levi’s and Maidenform. District Court Judge Thomas Penfield Jackson found that Microsoft used monopoly powers to stymie competition. The forecasted dotcom bubble didn’t pop, but just got bigger and bigger. 200 net businesses had IPOs in 1999, double the combined total of the previous four years. From April through August net stocks declined on street talk that the bubble wasn’t sustainable. But a end-of-the-year rally restored value to the stocks, and on the desk of federal regulators awaiting approval were 16 new internet mutual funds. The words IPO, burn rate and VC entered the everyday lexicon, and billionaires were created through mergers and IPOs. 29 year old Atlantan Jeffery Arnold became a paper billionaire when his then obscure website WebMD merged with Healtheon, an internet service that connects doctors, patients and insurers over the internet. With all this news, and all of the Y2K panic in the press, the late 90’s provided some key developments that either directly or indirectly provided the philosophical foundations for the movement towards wine business ecommerce.

Google

In March of 1996, after meeting as Stanford computer science grad students, Larry Paige and Sergey Brin start to work on a web crawler called BackRub, developing a PageRank algorithm to convert backlink data as a measure of page importance. Search engines at the time ranked results on the number of times the search term appeared on the page. Paige & Brin were convinced that the pages with the most links to them from other relevant web pages would be the most relevant and produce better results. Inspite of impressive and innovative technology Brin and Page were grad students struggling for attention and financial support. In August 1998, cutting their pitch meeting short, Sun co-founder Andy Bechtolsheim wrote a $100,000 check made payable to Google Inc. The original BackRub had been renamed Google, based on a play-on-words in reference to the math term googol, and was registered and incorporated on September 4th, 1998. At the time Google was located in Susan Wojcicki’s garage in Menlo Park. By June of 1999 Google announced a $25 million dollar infusion of capital from Sequoia Capital and Kleiner Perkins Caufield & Byers. This idea of organizing the googol of information available on the web, making it universally accessible to users would have a profound impact on ecommerce and on the dissemination of wine product information.

craigslist

In 1995 former IBM and Charles Schwab computer programmer Craig Newmark decided to jump into the conversation with the community of users on the WELL and in the Usenet by contributing information about events in San Francisco to an email list of friends. Through word-of-mouth the increasing number of visits to the site became numerous enough to require a list server, majordomo, which required a name. Craig wanted to call the site ‘sf-events,’ but was persuaded by friends to call it ‘craigslist.’ The site was built on conventional open source LAMP architecture, and has changed little graphically since it’s inception, which even by 1996 standards is very basic, with the last visual upgrade completed in 2001. The idea behind ‘craigslist’ is that everyone is included…”the net is everyone’s printing press.” Because the volunteer managed list was user generated, people started listing for sale or help wanted ads. This started to become chaotic and Craig stepped in changed this from being a hobby to being a real company. By 1999 the site had been incorporated and Craig hired Jim Buckmaster to be the ‘dude.’ Craig is a believer in providing the list as a service to ‘a centerlized network of online communities, featuring free online classified advertisements.’ The idea of free classifieds has affected newspaper and news organizations by repurposing classified advertising that was a main source of print medias’ revenue stream. With the move of news, information and advertising to online media, newspaper have diminished power to influence or control consumer choice.

Amazon and eBay

As 1999 came to an end, ecommerce was being celebrated as the engine that would drive the economic boom of the new millenium. Amazon.com founder Jeff Bezos was named Time Magazine Person of the Year. He was 35 years old and as a result of the recent IPO was now worth $10 Billion. Not bad for a former Wall Street techie. In 1994 Jeff quit his day job, and drove across country stopping here and there to write his initial business plan, then launched a new retail business model out of his garage in Seattle. His vision of cyber commerce wasn’t singular, in fact it was a vision also held by eBay’s Pierre Omidyar, founding Auction Web in 1995, soon after rebranded as eBay. These were revolutionary times in the world of retail. Not since the 1890’s when Sears & Roebuck started as a mail order company and then grew into the largest retailer in the US by the mid-20th century had retail seen so much innovation. A tipping point towards a new channel, a new paradigm had been initiated. The entry and success of both Amazon and eBay gave credence to the ecommerce channel with consumers, and Amazon’s investment in Virtual Vineyards/Wine.com help to create an awareness of wine ecommerce with both wineries and consumers.

The Cloud

Prior to 1993 the only way to navigate the web was limited to FTP, Usenet and Gopher, excluding the technologically challenged. In 1993 Marc Andreessen and Eric Bina who as University of Illinois undergrads were funded by the High-Performance Computing and Communications Initiative to write the script for Mosaic, the web browser that made the web relevant to the public. It was the first killer application that took the web from a niche technical arena to mass market appeal. Mosaic made the web accessible to the general, non-scientific public for the first time. Although Mosaic was not the first browser for windows, that was Tom Bruce’s Cello, future additions of Internet Explorer were based on Mosaic code. The release of Mosaic resulted in a dramatic increase in the growth of web usage in a short period of time, expanding within the general populace and outside the closed corridors of academia and research institutions. By 1994 Marc Andreessen left NCSA and with Jim Clark the founder of Silicon Graphics founded Mosaic Communications which was rebranded as Netscape Communications. Just 4 years later in November of 1998, AOL initiated the purchase of Netscape for $4.2 Billion. In September of 1999 Andreessen and three associates from Netscape founded Loudcloud. By utilizing Opsware, Loudcloud introduced the idea to clients the idea of cloud computing. The term ‘cloud computing’ was first coined and defined by Emory University Goizueta Business School professor Ramnath Chellappa. In the jargon rich world of the computer industry the term cloud computing has become a phrase to describe information stored and processed in the ‘cloud’ world of the Internet. Cloud computing refers to remote scalable virtualized data or software programs available to authorized users over a computer connection, but for the most part it is a simplification of a complex infrastructure. Basically it’s information stored and processed on remote servers and delivered back to your computer screen through your web browser. As a user of cloud computing you don’t have to own the servers or grid functioning as host to your software programs. Cloud computing utilization billing usually follows the public utility model, pay for what you consume. This helped to change the idea of software from Software as a Product (SaaP) to the idea of Software as a Service (SaaS), as first experienced by most business in 1999 with the launch of the cloud based SalesForce.com CRM. Cloud computing rationalized the cost of entry for any company wanting to launch an ecommerce web site.

Blogger

Blogging started in a very basic form, dating back to CERN when Tim Berners-Lee began listing sites as they came online. Most digital communities in the early days of the internet took the form of user moderated newsgroups. The first single user moderated group was mod.ber. Netscape followed this practice by running the ‘What’s New’ list of sites in June of 1993. The first modern version of a widely read blog was by Swarthmore College student Justin Hall. Although the site was highly personal, it was primarily a list of links that Justin found to be cool. His site was called ‘Links from the Underground.’ Dave Winer launched ‘Scripting News’ in April 1997, another frequently updated links list. Blogs were still lists developed by nerds for nerds, and for the most part out of the mainsteam of public awareness. A prime example is ‘Slashdot, news for Nerds, launched in September of 1997. Jorn Barger in his December 1997 ‘robot wisdom weblog’ site coins the term weblog. The first open community of bloggers were diarist posting on Open Diary which was launched in October of 1998. Peter Merholz coined the term blog in early 1999, shortening the term weblog which he called ‘we blog,’ then shortened to blog. At about the same time Brigitte Eaton started the first portal devoted to blogs. Brad Fitzpatrick launched the first open source blogging site Live Journal. And in July Metafilter provided the earliest blog archives. Also that July, Pitas.com launched the first free build your own blog web tool. But what we in the wine world view as blogging started with the release of Ev Williams scripted Blogger, a product that like Mosaic opened the internet to less than tech savvy consumers by blurring the lines between web diaries and weblogs, a distinction only important to the cognoscenti. Blogger was launched in August 1999, with an upgrade released in November 1999. Blogger was an overnight success, putting stress on the frequently crashing Pyra Labs Blogger server. But the cat was out of the bag. This was the beginning of the democratization of information, and the real start of user generated content, lessening over time the influence of traditional wine print media. The first wine bloggers that came to my attention were Alder Yarrow of Vinography and Tom Wark of Fermentation. It should come as no surprise that these are two individuals with tech backgrounds. In fact many of today’s wine bloggers have a tech backgrounds. Wine blogs have and will continue to change how consumers receive and access information.

Glass Half-Full

The path to wine ecommerce development is closely tied to the historical path of technology. Most of the development was done initially by educational or research institutions, but then fleshed out by entrepreneurs, people who could grasp the implication of the large and small steps. Going all the way back to Thomas Watson of IBM who bet his Father’s office machine company on the future of computers; or, Marc Andreessen who based on the work at CERN by Breners-Lee predated by the hypertext theorist, developed the first contemporary web browser that featured a consumer friendly graphical user interface. Or perhaps Jeff Bezos who gazing on a server bank visualized Amazon. Or a disparate team of Larry Page and Sergy Brin who saw a better way to map search engine technology. When a piece of new technology is released with a particular intent, i.e., the internet as a research communications tool, it can never be fully utilized until one of these visionary bootstrappers has the opportunity to put another brick in the wall of progress. Build it and they will come. To have your own vision of the future as a wine ecommerce manager, study the past to discover a better path to the present.

Note: Copyright © 2009 Think Wine Marketing® All rights reserved.

One thought on “Y2K10: Part Two: late 90’s tech effect on wine ecommerce

  1. 12/24/2009

    “Cork”

    THANKS for nine months of GREAT reading on wine marketing.
    Your ability to put into print your vast knowledge not only of
    wine but also wine marketing in a clear and orderly manner is
    a gift that few writers have mastered as you have.

    Hope to be reading many more post in the years to come.

    Merry Christmas and Happy New Year to you and Jaclyn

    HVCjr

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