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Growing Up Online

Today's Internet companies are not just a youthful adventure, but a more mature and lasting endeavor.

By Anne Baye Ericksen

From zines to blogs, search engines to streaming video, the capabilities of the Internet continue to develop at a frantic pace. Think about it: Barely 13 years ago the invention of the Web browser caught everyone's attention. This new fangled technology literally released the world's information with just a few keystrokes. At first the Internet wasn't exactly instantaneous and usage was limited. But that was not the case for long.

The next few years witnessed personal and business use of the Internet explode. Email accounts weren't just a neat, techy gadget for the computer obsessed. Rather, almost overnight electronic messages became the preferred method of communication from corporate executives to students who thought the standard telephone was a blasé relic. But why leave it at that? Online chat rooms quickly formed where people gathered in cyberspace. But that, too, swiftly mutated to Instant Messaging and then to personal blog pages. Each format allowed users to reach out to a growing spectrum of friends via the Internet.

Also, the thought of being able to access databases of encyclopedias' entries was amazing at first. But now, users call up detailed satellite maps, upload home videos, or download radio and television programs. Thanks to the implementation of broadband and other similar technological advances, transmission of these files is not only possible, it's a computer scientist's dream come true—after all, that's what the early Web pioneers envisioned for this unique technology.

21st Century Approach

Despite the fact that the Internet has come a long way, it's still a relatively youthful entity, and its applications in commerce are still undergoing growing pains. During the mid- to late-1990s, it appeared as if the dot-com world was poised for extreme success. After all, engineers, computer scientists, investors and layman alike held high hopes for the limitless opportunities in the virtual marketplace that would undoubtedly lead to unbridled profits.

Nearly six years ago, that initial dream came to an end. Investors were seeing red and technical professionals were left disillusioned with job layoffs and company closures. But the Internet has matured as well. Of equal importance is the fact that the general public never lost its lust for improved online technology. Although the initial craze for investing has dulled, people are still infatuated with online tools. And the statistics back it up: 77% of American adults are online, an increase of nine percent from a decade ago; 73 million households had access to high-speed Internet service in 2005; and an estimated 700 million people log on worldwide.

From an industry perspective, Internet newcomers have learned from the mistakes of those early online ventures. Engineers and computer scientists have fine-tuned the software, and processors boast faster, expanded capabilities that put the previous machines to shame—long gone are the days of 64K dial-up modems. Additionally, security concerns are continually being addressed and safeguards are enhanced. All of this makes for a larger realm of possibilities.

The Old Guard

Here's a quick rundown of some of the Internet companies—old and new—making the biggest impact right now. These businesses survived the dot-com bust and have established a successful track record, making them a force to be reckoned with among the newcomers.

eBay

Stats: Founded in 1995; headquartered in San Jose, Calif.; 193 million registered users worldwide; $1.329 billion net revenue in 2005.

Touted as "the world's online marketplace", eBay is one of the long-lasting, shining examples of what can go right with Internet commerce. Nothing more than a cyber auction house, users advertise items for sale and prospective buyers bid for them, with the product going to the customer offering the highest bid. You'll find everything on the site, from hard-to-find toys to fine art.

Perhaps its most successful transaction to date was the acquisition of PayPal in October 2002. This subsidiary enables individuals and businesses to make secured payments online. As the leader in its category, PayPal has millions of registered accounts and is widely accepted by merchants around the globe.

eBay has also expanded into the socialization of the Internet where members can publish their personal blogs, exchange communiqués and images and simply interact. There are also classified listings, including apartment opportunities.

craigslist

Stats: Incorporated 1999; headquartered in San Francisco, Calif.; more than four billion views per month; $20 million revenue in 2005.

Looking for substance without the glam? Then look no further. This simple classified ad service lacks the cool graphics or design innovation many other sites boast today. It is what it is; a catalog of job openings, rentals and other useful classified information—and users love it.

In 1995, Craig Newmark, an independent software consultant at the time, emailed a brief countdown of things to do in the Bay area to his friends, who forwarded it on to their friends and acquaintances, starting a chain reaction. The concept was simple and extremely beneficial, and the email list grew exponentially.

Within a year, Newmark elevated the service to a Web site. Three short years later, craigslist was established. Today, there are approximately 6.5 million classified postings at any given moment through 300 local sites in 50 countries.

What makes craigslist so unique in the current Internet environment is that there are no ad banners or popups and no subscriber fees. It's remained free to users throughout its history. So how does it generate income? It basically functions on the same principle as traditional newspaper classifieds: The site charges employers and real estate brokers a fee to post a job opening or house listing. The costs vary depending on location, but usually don't exceed the $75 mark.

Not only do job-seekers or house hunters value the Web site, but so do human resource departments, real estate agents and apartment managers—it's one of the more effective means of advertising.

Move.com

Stats: Founded in 1996 as Homestore Inc.; headquartered in Westlake Village, Calif.; more than 11 million monthly users; $252.6 million revenue in 2005.

Not unlike eBay and craigslist, Move operates as a service-based business where sellers and real estate agents can advertise their properties and prospective buyers can browse. During the past few years while the nation's housing market was at an all-time high, the site became an invaluable tool. Move still logs an estimated 318 million minutes spent on its site per month. Interested parties take virtual tours of homes, getting a feel of floor plans and interiors, before ever stepping foot on a property. This allows them the ability to save time and gas rather than driving from one open house to another. For sellers, the site also saves time because only serious buyers will take the next move to show up on site.

Move also offers a variety of other services through various Web pages. Realtor.com is another listing service with more than three million properties and it reaches twice as many consumers. Moving.com connects people to businesses associated with the actual process of transporting households. Move also has a formal relationship with Welcome Wagon, the 78-year-old organization that embraces new homeowners to an area and offers information on local services, businesses and cultural opportunities.

1-800-flowers.com

Stats: Founded more than 25 years ago as a toll-free phone order company; headquartered in Carle Place, N.Y.; more than 50% of its 15 million customers order online; nearly $671 million revenue in 2005.

Fresh, beautiful flowers arrive on your doorstep, bringing a smile to your face. Sure the sender could have gone to the local florist to pick out the bouquet and have it delivered, but that purchase included overhead costs that drive up the final price tag. Or, there's a strong possibility he or she logged onto this company's Web site to complete the transaction.

Doing business online simplifies the whole process because it removes middlemen and keeps costs within a certain range. It's a business philosophy adopted by many Internet organizations because it's effective. 1-800-flowers.com's Internet presence has steadily and quietly grown since 2001 when it reported $182.9 million online revenue. Four years later, it passed the $360 million mark in online revenue.

Of course, that income isn't only generated by roses on Valentine's Day and daisies on Mother's Day. The company operates several brands, including Plow & Hearth, a home décor and garden merchandise entity, The Popcorn Factory, which creates flavored popcorn and other specialty treats, Cheryl & Co., which offers cookies and baked gifts, gourmet foods from Greatfood.com, wine gifts from the Wine Tasting Network, and a variety of children's gifts from either HearthSong or Magic Cabin.

Google

Stats: Started in 1998; headquartered in Mountain View, Calif.; more than eight billion Web pages available; more than $805 million revenue in 2005.

Google is perhaps the most well known Internet success story to date. This search engine phenom started off like so many other sites: Individuals frustrated with the status of certain aspects of the technology, convinced there was a better way, set out to create an alternative. Such is the story of Larry Page and Sergey Brin. The graduate students both believed one of the biggest problems facing the Internet in 1995 was retrieving relevant information from the growing mountain of available data. That was all the motivation they needed. Little did they realize their efforts would redefine expectations of search engines.

Today, Google is not only an everyday tool for any Internet user, but it's been inducted into the Merriam-Webster Collegiate Dictionary, 12th Edition, as a verb.

What started in Page's dorm room has evolved over the past seven years to become a multidiversified business that encompasses virtually all aspects of Internet use. Besides the search engine, Google has figured out how to use advertisements to create income. Through its keyword-targeted ads, the organization's revenue entered the black in 2000.

Other key accomplishments include Google Catalog Search, which allows users to view company's catalogs that were traditionally sent via snail mail, and Google AdSense, which uses highly targeted ad placements adjacent to searches, increasing the likelihood of customer traffic. Google Maps gained even more popularity last year after Hurricane Katrina, as millions of people viewed before and after satellite images of the region. This year, the company ventured into the music industry with a search service that delivers a myriad details on artists and guides users to where they can purchase desired products.

Net Newcomers

In the past 18 to 24 months, the Internet has taken a turn away from service-focused businesses to establishing and promoting social interaction and the exchange of media, such as music and movies.

YouTube

Stats: Founded in 2005; headquartered in San Mateo, Calif.; more than 70 million videos viewed daily; $11.5 million in venture capital.

YouTube has been on fast-forward for more than a year now. Creators Steve Chen and Chad Hurley, both twentysomethings, were at a party taking videos of the revelry, but when they went to share the moving images with friends through emails, the large files were too much to send off. Months later, the problem was solved with a Web site through which users can upload their comedies, tragedies or just bizarre movies and visitors can peruse. The idea took off and, within a year, YouTube is one of the heaviest traveled sites on the Web.

The site's not just for amateur Spielbergs. Rather, the entertainment world has taken notice as well. Within 48 hours of posting its exercise-inspired music video, the Chicago-based band OK Go had more than half a million viewers. Now movie companies are hooking up with the site for previews and other advertisement endeavors. Music companies are also looking to form a partnership to capture fans' attention.

Facebook

Stats: Launched in 2004; headquartered in Palo Alto, Calif.; more than 7.5 million registered users; valued at $1 billion.

Who would have thought Harvard University didn't have an online student directory by 2004? Student Mark Zuckerberg was tired of waiting for the school to get around to it and decided to take matters into his own hands. Not only did he create a directory, but he also developed one that included student photos.

Within weeks, more than half of Harvard students had posted their photos and other personal data on the site. That's the story behind the birth of Facebook, a socializing site that caters to the world of academia.

Indeed, it has embraced a unique niche. It is only available at universities and high schools, using the ".edu" designation of member email addresses. That approach, however, is anything but limiting. To date, Facebook is available at 2,100 universities and 22,000 high schools, and is ranked as the seventh most trafficked site. Two-thirds of users return on a daily basis and spend an average of 20 minutes on the site.

Because of its highly targeted audience of teens and twentysomethings, Facebook is an advertiser's dream, and selling banners has been a breeze for this young company. It's also attracted the attention of some of the Internet's biggest players, such as Apple, Amazon.com and Yahoo.

Ready for the Next Phase

This new-and-improved online environment is primed for stimulating and challenging a new era of cyber capitalism. It's one that will drive technical professionals to push their visions of what's possible further than ever before. And that means the job market will clamor for individuals who can turn those visions into reality—or virtual reality, as the case may be.

Anne Baye Ericksen is a free-lance writer based in Southern California.

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