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> "Amazon was for selling books online when relatively few people used the internet. Google was a search engine in a landscape crowded with search engines that

> "Amazon was for selling books online when relatively few people used the internet. Google was a search engine in a landscape crowded with search engines that weren’t themselves gigantic businesses. Ebay was for selling beanie babies." I don't find Google, Amazon or Ebay as compelling examples of "toy markets". Google started when search engines such as lycos, ask jeeves and yahoo were already household names. The key issue is that at that point, none of them were giant companies because they hadn't figured out how to monetize their businesses. However, their market was clear and obvious as the internet already had wide adoption. Ebay was an auction site. People have a lot of crap and want to get rid of it. The site obviously had a large potential target market to begin with. Amazon started out with books, which is a huge and well understood market. An online bookstore could offer a far better selection than any physical bookstore. Even if Amazon were just selling books, it would be a fairly large company. If Amazon was never founded, there would have been someone else who filled the niche pretty quickly. (Some of these early companies definitely made big bets on the popularity of the internet. Amazon was founded in 94 and Ebay in 95. Back then, the internet had less than 20 million users, so it was obviously a niche, but it was also growing very quickly (usage just about doubled each year for the next 4 years) [1]. If an investor was already bullish on the rising popularity of the internet, than the fact that companies like this would have large markets was a no brainer. It's kind of like how Coinbase, or someone similar, will obviously be huge if cryptocurrency pans out.) The article also mentions Facebook, which again, was founded well after the internet became a big thing. MySpace was already getting pretty big traction by the time Facebook came around. When I think of companies that started out as "toy markets", I think of Apple where their early product (the Apple I) was geared towards early-adopter consumers. But even Apple wasn't really a huge company until Jobs came back in the two thousands (in 2001, after the tech bubble collapsed, their market cap was about 200x less than it is now and far far smaller than Microsoft was at the time). The fact is that many very successful companies don't start out in "toy markets". They start out in big markets, but they just do things better than the next guy. Amazon and Walmart didn't invent retailing, but they did (and do) run very efficient supply chains. Apple didn't invent the market for cell phones, but they made iterative improvements to what was out there until they came to dominate a huge market. [1] https://www.internetworldstats.com/emarketing.htm https://www.internetworldstats.com/emarketing.htm

nostrademons 8y ago
Common wisdom in 1998 was that search was a feature and the money was all in "portals", the all-in-one gateway to the Internet. Yes, most Americans with Internet access had tried Altavista/Lycos/Infoseek...and found them wanting. My go-to Internet start page in 1998 was Yahoo, and among older people it was often AOL.com or MSN.com. Google's first major business deal was with AOL, and they promised AOL a guaranteed amount of revenue that would've bankrupted Google had they not delivered on it. Those aren't negotiating terms you agree to when it's clear (to other people) that everyone is going to use your product.
- mdorazio 8y ago
  Which AOL deal are you referring to? I've never heard of anything in that partnership prior to 2005.
  - nostrademons 8y ago
    Pretty sure it was AOL, but it might've been Netscape...which was owned by AOL at the time, so still AOL. I'd heard of it from early (single-digit employee ID) Googlers, but am struggling to find a public source. It was basically that very early in Google's history (late 1998 or first couple months of 1999), Google signed a deal to be their sole search provider in exchange for $Xm (this was right after their $25M funding round, and the total dollar amounts involved were more than they'd taken in funding up to that point). As part of the deal, they guaranteed AOL a certain minimum amount of revenue, basically saying "You will make $Ym >>> $Xm in additional revenue from people using our search engine, and if you don't we will pay you $Ym, so signing this deal is a no-brainer." At the time, $Ym was such that it would've bankrupted the company, so this was basically Larry taking a calculated risk that they could deliver on their promises. There is a separate story related to this deal that was told to me in Noogler orientation, as an example of "focus on the user and all else will follow." They underestimated the traffic coming from AOL/Netscape, such that when they flipped the switch, all of their servers were instantly overwhelmed. Their response was to shut off their consumer-facing webpage and only handle AOL traffic. For a while, until they could get a handle on server capacity, visitors to google.com got a "connection refused" error and they basically functioned as a whitelabeled AOL search provider. And this was critical in building trust in Google within the industry. It seems ridiculous now, with both AOL and Netscape just memories, but Google at the time was a scrappy startup running on a shoestring.

nostrademons 8y ago

Common wisdom in 1998 was that search was a feature and the money was all in "portals", the all-in-one gateway to the Internet. Yes, most Americans with Internet access had tried Altavista/Lycos/Infoseek...and found them wanting. My go-to Internet start page in 1998 was Yahoo, and among older people it was often AOL.com or MSN.com. Google's first major business deal was with AOL, and they promised AOL a guaranteed amount of revenue that would've bankrupted Google had they not delivered on it. Those aren't negotiating terms you agree to when it's clear (to other people) that everyone is going to use your product.

mdorazio 8y ago
Which AOL deal are you referring to? I've never heard of anything in that partnership prior to 2005.
- nostrademons 8y ago
  Pretty sure it was AOL, but it might've been Netscape...which was owned by AOL at the time, so still AOL. I'd heard of it from early (single-digit employee ID) Googlers, but am struggling to find a public source. It was basically that very early in Google's history (late 1998 or first couple months of 1999), Google signed a deal to be their sole search provider in exchange for $Xm (this was right after their $25M funding round, and the total dollar amounts involved were more than they'd taken in funding up to that point). As part of the deal, they guaranteed AOL a certain minimum amount of revenue, basically saying "You will make $Ym >>> $Xm in additional revenue from people using our search engine, and if you don't we will pay you $Ym, so signing this deal is a no-brainer." At the time, $Ym was such that it would've bankrupted the company, so this was basically Larry taking a calculated risk that they could deliver on their promises. There is a separate story related to this deal that was told to me in Noogler orientation, as an example of "focus on the user and all else will follow." They underestimated the traffic coming from AOL/Netscape, such that when they flipped the switch, all of their servers were instantly overwhelmed. Their response was to shut off their consumer-facing webpage and only handle AOL traffic. For a while, until they could get a handle on server capacity, visitors to google.com got a "connection refused" error and they basically functioned as a whitelabeled AOL search provider. And this was critical in building trust in Google within the industry. It seems ridiculous now, with both AOL and Netscape just memories, but Google at the time was a scrappy startup running on a shoestring.