The World Is Flat

by Thomas L. Friedman

  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 claiming 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

  p. 56 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 dep. 57manded 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!”

  p. 58 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 (NCSA), 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 Nationa
l 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 p. 59 ‘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 is 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, ‘I’m 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.

  p. 60 “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.”

  p. 61 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 p. 62 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. “You 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,” p. 63 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.”