By Thomas L. Friedman
The New York Times, June 29, 2003
Since 9/11 the world has felt increasingly fragmented. Reading the
papers, one senses that many Americans are emotionally withdrawing
from the world and that the world is drifting away from America.
The powerful sense of integration that the go-go-globalizing 1990's
created, the sense that the world was shrinking from a size medium
to a size small, feels over now.
The reality, though, is quite different. While you were sleeping after 9/11, not only has the process of technological integration continued, it has actually intensified -- and this will have profound implications. I recently went out to Silicon Valley to visit the offices of Google, the world's most popular search engine. It is a mind-bending experience. You can actually sit in front of a monitor and watch a sample of everything that everyone in the world is searching for. (Hint: sex, God, jobs and, oh my word, professional wrestling usually top the lists.)
In the past three years, Google has gone from processing 100 million searches per day to over 200 million searches per day. And get this: only one-third come from inside the U.S. The rest are in 88 other languages. "The rate of the adoption of the Internet in all its forms is increasing, not decreasing," says Eric Schmidt, Google's C.E.O. "The fact that many [Internet companies] are in a terrible state does not correlate with users not using their products."
VeriSign, which operates much of the Internet's infrastructure, was processing 600 million domain requests per day in early 2000. It's now processing nine billion per day. A domain request is anytime anyone types in .com or .net. And you ain't seen nothin' yet. Within the next few years you will be able to be both mobile and totally connected, thanks to the pending explosion of Wi-Fi, or wireless fidelity. Using radio technology, Wi-Fi will provide high-speed connection from your laptop computer or P.D.A. to the Internet from anywhere -- McDonald's, the beach or your library.
Says Alan Cohen, a V.P. of Airespace, a new Wi-Fi provider: "If I
can operate Google, I can find anything. And with wireless, it
means I will be able to find anything, anywhere, anytime. Which is
why I say that Google, combined with Wi-Fi, is a little bit like
God. God is wireless, God is everywhere and God sees and knows
everything. Throughout history, people connected to God without
wires. Now, for many questions in the world, you ask Google, and
increasingly, you can do it without wires, too."
In other words, once Wi-Fi is in place, with one little Internet connection I can download anything from anywhere and I can spread anything from anywhere. That is good news for both scientists and terrorists, pro-Americans and anti-Americans.
And that brings me to the point of this column: While we may be emotionally distancing ourselves from the world, the world is getting more integrated. That means that what people think of us, as Americans, will matter more, not less. Because people outside America will be able to build alliances more efficiently in the world we are entering and they will be able to reach out and touch us -- whether with computer viruses or anthrax recipes downloaded from the Internet -- more than ever.
"The key point is not just whether people hate us," says Robert
Wright, the author of "Nonzero," a highly original book on the
integrated world. "The key point is that it matters more now
whether people hate us, and will keep mattering more, for
technological reasons. I don't mean just homemade W.M.D.'s. I am
talking about the way information technology -- everyone using
e-mail, Wi-Fi and Google -- will make it much easier for small
groups to rally like-minded people, crystallize diffuse hatreds and
mobilize lethal force. And wait until the whole world goes
broadband. Broadband -- a much richer Internet service that brings
video on demand to your PC -- will revolutionize recruiting, because
video is such an emotionally powerful medium. Ever seen one of
Osama bin Laden's recruiting videos? They're very effective, and
they'll reach their targeted audience much more efficiently via
broadband."
None of this means we, America, just have to do what the world wants, but we do have to take it seriously, and we do have to be good listeners. We, America, "have to work even harder to build bridges," argues Mr. Wright, because info-tech, left to its own devices, will make it so much easier for small groups to build their own little island kingdoms. And their island kingdoms, which may not seem important or potent now, will be able to touch us more, not less.
© 2003 The New York Times Company
More cutting-edge reporting from Mr. Friedman:
By Thomas L. Friedman
The New York Times, March 9, 1999
I recently wrote a column about Lyle Bowlin, who, for about $150 a month, had managed to put together a Web site that could compete with Amazon.com for selling books. Mr. Bowlin was underselling Amazon.com (and making a profit!) while running the whole operation out of a spare bedroom in his home in Cedar Falls, Iowa. Well, the column elicited the usual range of skeptical responses from experts, who argued that Mr. Bowlin's operation was just a fluke, or that he wasn't calculating his costs properly, or that Amazon.com would soon crush him and all other would-be little-guy competitors.
Well, to all of you I say: YOU'RE WRONG.
You think the Internet is overrated. It's underrated. Here's the E-mail I got from Mr. Bowlin two days after the column ran, both in The Times and online on www.nytimes.com:
"Dear Tom, I thought I would just fill you in on the impact the column has had. We had over 142,000 hits between 11 P.M. Thursday night [when the column first appeared on the Web] and 2 P.M. Friday afternoon from 40 different countries, before the software that tracks hits gave up and crashed. I have personally responded to over 1,400 E-mails."
The E-mail messages fell into three broad categories. One group was people who were interested in the charitable-donation arrangement Mr. Bowlin offers, whereby 10 percent of the purchase price of any book can be dedicated to an I.R.S.-certified charity. Another group was small-business people around the world -- particularly craft makers -- who were interested in competing against the big boys from their spare bedrooms at home, just like Mr. Bowlin, and wanted to know how to get started.
"There are a lot of people out there who have a passion for selling different things, and if they all start doing it over the Web as a hobby, it is going to have an impact on the big retailers," argues Mr. Bowlin.
What intrigued me most, though, was the third group.
"There is a whole group of people out there," says Mr. Bowlin, "who like the idea of the 'little guy' competing against Amazon.com. People see Amazon.com as this big impersonal thing. Whereas they like the idea of dealing with a person they know actually exists. Even though their contact with me is over the Web, and it is through E-mail, they know when they contact me the answer is coming from a real person, with a real name. I'm a real person, not a virtual person. If someone sends me an order and forgets something or makes a mistake, I will send them a message and say, 'Didn't you mean this?' "
In other words, there is still a deep hunger out there for that old-style, Main Street feeling, built on human contact. This suggests that the really successful retailers in the Internet Age will be those who can combine the efficiency of cyberspace with the intimacy of the backyard barbecue.
Mr. Bowlin's experience underscores another point: If you think globalization is overrated, you're also wrong. You ain't seen nothin' yet. As Lyle Bowlin can tell you, the minute you start to do business on the Web, you now have to think globally. You have to think about your customers as global, your competitors as global, your readers as global, your suppliers as global and your partners as global.
"There has never been a commercial technology like this in the history of the world, whereby from the minute you adopt it, it forces you to think and act globally," argues Robert Hormats of Goldman, Sachs.
Mr. Bowlin got offers last week to go into partnership with local booksellers in both London and Singapore. Whereas before he was doing at best $2,000 a month in business, since the story about him appeared on the Web he is now doing $2,000 a day from around the globe. This is enabling him to make improvements to his site -- www.positively-you.com -- that will make it even more competitive with Amazon.com. In particular, he is now able to afford a search engine, so his customers can easily search the 500,000 titles offered by his main wholesalers.
The only downside to his sudden expansion, says Mr. Bowlin, is that he can no longer compete against Amazon.com from his spare bedroom. It's not big enough anymore to serve as his headquarters.
"I've had to move the whole operation into the downstairs formal
dining room," he said.
By Thomas L. Friedman
The New York Times, March 3, 2000
A year ago I wrote a column about Lyle Bowlin, a professor of small business in Cedar Falls, Iowa, who had started an online bookstore out of his spare bedroom. I used his story to illustrate the low barriers to entry for those wanting to compete on the Internet, even against Amazon.com.
After the column ran, Mr. Bowlin's book site -- Positively-You.com -- was inundated with business and e-mail from moms and pops interested in starting e-businesses -- so much traffic it blew out his computer server. Thus inspired, Mr. Bowlin took a leave from teaching, raised $90,000, rented office space, hired employees, and decided to really try to compete with Amazon. Positively-you's cachet was that it donated 10 percent of the profit of every book you bought to the charity of your choice.
Well, this fair-e-tale, which I helped midwife, came to an end a few weeks ago when Mr. Bowlin went out of business. His experience taught him (and me) several lessons about e-commerce:
Lesson 1: Trying to be a mid-size pure-Internet company is really, really hard. Small is O.K. Big is O.K. Medium is tough.
"We had gotten a big burst of free advertising from all the stories about us, and that drove a lot of our early business," explained Mr. Bowlin. "We could not afford to advertise ourselves. Our plan was to approach large nonprofit foundations and encourage them to buy books from us and get the donations. But they took too long to throw business our way. In the meantime, our free advertising from news stories dried up. Then, when our business grew from $500 a month to $48,500 a month, the bank we were using to manage our credit card sales held back payments to us for 60 days. We had gotten so big so fast they were worried that we wouldn't be able to deliver the books, and they would get stuck with a lot of angry card holders. So our costs went up, while the cash flow and free advertising slowed down, and it was hard to raise more venture capital to buy advertising."
People will throw money at Amazon -- on the bet that it will one day dominate the whole world -- but they won't throw it at a medium-size company on the bet that it will be 10th in the world.
Lesson 2: Mr. Bowlin's experience perfectly illustrates the "Vardi paradox." Yossi Vardi is the granddaddy of Israel's Internet industry. He achieved fame and fortune by backing his son and three friends in founding Mirabilis -- better known as ICQ, better known as instant messaging on the Internet. ICQ became a hugely valuable company, because its popular service spread entirely by word of mouth, without ICQ ever spending a dime on advertising.
The Vardi paradox states: "The value of any Web site is in inverse relation to what it costs to attract new users." The biggest cost for most e-commerce sites is ads, so the more people come for free the more valuable your site.
Lesson 3: The barriers to entry into any Internet business really are low -- "as long as you want to remain a small niche player, or as long as you can get free advertising," says Mr. Bowlin. But, as his own case teaches, while it's easy to compete with Amazon.com if you remain small, it's not so easy to be Amazon.com if you want to get big. That takes big dollars.
Lesson 4: The only way to learn the e-business is to be an e-business. Said Lori McConville, the advertising exec who was Mr. Bowlin's main partner: "We learned by doing. The textbooks can't teach e-commerce fast enough. I got an education money couldn't buy -- well, actually, I did pay for it."
Lesson 5: Don't sell Main Street short. The success ratio of the real store that adds the Internet to its real business may be much higher in the long run than those who try a pure Internet store. The reason, says Mr. Bowlin, "is that the established store has loyal customers, and all you are doing with the Web is making it easier for them to spend, even if they move away. But when you are a pure Internet store, you're always buying customers, rather than having a customer who has already bought into you" -- and there is always someone who will buy your customers for more, just one click away.
Lesson 6: Owning an e-commerce site doesn't mean you've married a
millionaire. "Everyone assumed that I got rich, and in hindsight my
net worth is down from a year ago," said Mr. Bowlin. "I wouldn't
trade the experience for the world. But I'm going back to teaching
now -- with a lot more knowledge of e-commerce to share with my
students."
