Digerati - Chapter 4

Digerati - Chapter 4

David Bunnell [10.1.96]

Chapter 4


David Bunnell

THE SCRIBE (John Markoff): David was present at the creation of the personal computer industry, and he had this wonderful insight. He essentially helped create the personal computer magazine industry.

David Bunnell is founder of PC Magazine, PC World, MacWorld, Personal Computing, and New Media, and is president and CEO of Content.Com, Inc., a digital publishing company.

You wouldn't expect that the personal computer would have been invented and commercialized in 1974 by a company of twenty employees called MITS in Albuquerque. You would expect that the personal computer would have come out of the labs at IBM or Xerox PARC. But that's not what happened, and David Bunnell was present at the creation, having left his job as a sixth-grade teacher in the Chicago public schools to find his place in what he perceived to be a new and important industry. 

"One of the more interesting things that happened," he recalls, "was that two fellows in Cambridge, Massachusetts, noticed the Altair on the cover of the January 1975 issue of Popular Electronics and got very excited about working at MITS to develop software for this first personal computer. Their names were Bill Gates and Paul Allen. They created a basic language program for the Altair and called us up and said, 'Gee, wouldn't you like to have Basic for the Altair?' The company president, Ed Roberts, who is regarded by many as the father of the personal computer, replied, 'Well, if you can show us that it works, we'd love to have it.'

"Paul Allen hopped on an airplane and flew to Albuquerque and demonstrated that Basic worked, even though Paul and Bill hadn't seen an Altair. They created the Basic language interpreter on a mainframe computer at Harvard University using an emulator for the 8080 Intel chip that was the brains of the Altair. The entire personal computer industry sprung out of MITS, and the Altair, and Paul Allen and Bill Gates."

That David happened to be at the right place at the right time and was able to take advantage of it was probably no accident. And that circumstance has been a hallmark of his career in the personal computer industry. He was not a technical person like everybody else; it was his job as a writer and an editor to interpret the personal computer for people who wanted to use it, to explain what you could do with it, and to help market it. That became his role not just at MITS but in the industry at large. At MITS, David and his colleagues created the first retail computer stores, the first computer conventions, the first publications. David is "The Seer," a player from the very beginning.

David is best known among his peers not for his stunning successes in promoting the personal-computer magazine industry but for his idealistic and deeply humanistic vision. (Perhaps this just means that he's not quite as greedy as his counterparts in the computer revolution.) He devotes his considerable energies and resources to this end. One of his favorite projects is Computers and You, a program he founded at San Francisco's Glide Memorial Church to give hundreds of underprivileged kids and homeless adults computer training every day.

I met David in 1983. Together we made the front page of the Wall Street Journal when I, representing his magazine PC World, sold a line of computer books for a newsworthy sum to Simon & Schuster. This publishing deal was a prime example of the dictum that the people who make money in a gold rush are the ones selling eggs at $10 apiece.

I ran into him in March 1995 at the Intermedia show in San Francisco. Over a drink at the Clift Hotel, we decided to join forces and form a digital publishing company, Content.Com, Inc. As president and CEO, David would run the company out of San Francisco. As chairman, I would be in New York spending half my time on this new venture. Allen & Company, Incorporated, the New York media investment banking firm, became the third partner.

We recruited a board of advisors, many of whom are in this book, including: John Perry Barlow, Stewart Brand, Doug Carlston, John C. Dvorak, Esther Dyson, Danny Hillis, David R. Johnson, Jaron Lanier, Howard Rheingold, Paul Saffo, Cliff Stoll, and Sherry Turkle. Content.Com's opening announcement included its motto‹The default site for intelligent people on the Internet‹and stated the following:

Content.Com, Inc., founded in September 1995, is a digital publishing company that will launch an Internet site envisioned as a virtual community, a "place" in cyberspace built around contemporary thinkers, writers, artists, musicians, filmmakers, technologists, and scientists, who represent their creative work, their lives, and the questions they are asking themselves. This will not be journalism or any other kind of mediated experience. This will be what sets Content.Com, Inc. apart from the pack.

In the Internet revolution, David sees the possibility of an optimistic future that can rescue us from the materialistic and misguided conceptions of a personal computer revolution gone wrong.

David and I have been talking several times a day for a year. He wears well. He's the real thing.

THE SEER (David Bunnell): There's a misconception among major publishers‹and some smaller publishers as well‹who seem to feel that they have this tremendous asset because they're magazine publishers. Their magazines have been coming out every week for fifty years, and they have all this text, and somehow if it can just be digitized, they can put it online and sell it for lots of money. Book publishers have the rights to different books, and movie companies have the rights to films and have film libraries, and they think that this is a tremendous asset. Well, it's not. If anything, it's an impediment to the new media age. Just as it has been for upstart media in the past, the content for a particular medium has to be created fresh and has to take advantage of the capabilities and characteristics of the new medium. The idea that old media have any value in this new world is misguided.

People who understand the technology and the online experience are beginning to create content that's exclusive to that medium. It's not that different from when the film business started, when some of the early movies consisted of stationary cameras filming plays. You can't take a magazine or a book and put it online and expect that to be a robust experience and a valuable property. Content online is something that is continuous, changing, and evolving. It is something you react to; it's an experience, an intangible. It's not an object. It's more like a flow of information, a reaction to that information, a mixture of things. The people who are going to make a difference in the Internet and the online world understand this concept and can create entirely new and interesting content.

There's a fundamental shift taking place, because information is no longer an object that has to be transported. In the digital world, information that traditionally took the form of newspapers, magazines, or books can instantaneously be transported anywhere. The implication is vast. It requires a different value system. How heavy a newspaper is and how much it costs to get it to somebody no longer determines the cover price. Suddenly that cost is zero.

How do you think about charging for the substance of the newspaper, not the production costs of the newspaper? How do you create new models for the publishing and entertainment industries, and for communications? How does that impact governments, and societies, and cultures? It's bound to have a radical impact and transform our societies. Nobody knows how it's all going to turn out. It's scary, and perhaps that's the reason why the United States Congress is so frantically trying to control the Internet: they're afraid of what might happen if it's not controlled.

How do you make money on the Internet? You need multiple revenue streams. You need advertising revenue, transaction revenue, and subscription revenue. You need to be willing to sell Internet publishing services to your advertisers and outside clients. To achieve this goal, just follow "The Bunnell Eight-Fold Path to Internet Revenue and Profits."

1. Avoid the temptation simply to "put something up there on the Net." You'll end up with a business that is all costs and no revenue. Then you'll run out of money. You won't be happy.

2. Repeat: Business is king. It's not hard to create a site that tens of thousands of Net surfers will want to check out once. But it's difficult to create a site that thousands of people will return to routinely. In the future the real money will come from "destination sites" that can demonstrate loyal followings. Pass-through sites like Yahoo! are successful in attracting advertising because they get a lot of traffic, but no one stays at Yahoo! for long. Yahoo! is not a site that can engage you. (Yahoo! is working hard to fix this problem. They want to become both a pass-through site and a destination site.)

3. Build your content for the technology breakthroughs that are just around the corner. The most engaging sites a year from now will have lots of multimedia bells and whistles, and they will be highly interactive. People spend more time on AOL in forums than they spend looking up information. The same will be true on the Internet.

4. Know who your site visitors (customers) are so you can attract advertising. Don't be afraid to ask them to sign up as subscribers so you can capture their demographics and determine their usage patterns. If you have a fun site with good information, people won't mind filling out a form to get to it. In some cases, they won't mind paying a subscription fee either. The conventional wisdom that everything on the Net has to be free because it's "always been free" is wrong because the population of the Net is fluid. To the extent that there really is a "Net culture," it is an evolving one.

5. Tie your content into things you can sell, preferably lots of things, all under $50. Take it from me, small transactions will be the biggest business on the Net. The model is France's Minitel. Content that lends itself to selling books, records, theater tickets, T-shirts, etc., will be the big winner. Although it will take some time for this business to develop, it will happen eventually in a major way. By the year 2000, this business will grow to $100 billion. Make sure your site gets its share.

6. Develop great technology skills at your company that you aren't afraid to sell to advertisers and outside clients. A "service" component to your business is a great way to augment revenues while you wait for advertising and transactions to build up. All the companies I know that are in the business of providing Internet design and production services have a lot more work than they can handle.

7. Attract new traffic to your site through "special events" that you can promote through the Internet and through the press. A good site will change every day, and it will always be fresh. A great site will also have events that draw in thousands of new customers. These events can be built around celebrities (today at 3 p.m. PST, Heidi Fleiss answers questions on business management!), or they can be tied to real events (Microsoft's Super Bowl Internet Site is an example).

8. Most importantly, manage your site like the business it is. All businesses, even hip, cool, revolutionary, new-paradigm businesses, live or die on the fundamentals. If you asked Bill Gates the secret of his business success, he would tell you it is to make more money than you spend. A lot of spectacular Internet sites will flame out as they run out of money and their backers get cold feet. No matter how much money you raise, be conservative about spending it. Make your employees fly coach on the cheapest flights available. Make them stay at the Holiday Inn instead of the Four Seasons. Don't let them go out to lunch together and bill it to the company. Treat cash as king because in a digital world cash is still the master.

Remember, many streams make up a river.

Remember, also, that there are issues of greater import than revenues and profits. There is the issue of the ever-widening gap between the haves and the have-nots. The personal computer has penetrated the suburban area. Middle-class and upper middle-class families have computers, and the more wealthy school districts have computers. People who live in poor areas don't have computers at home or at school, and unfortunately the computer is so important to so many jobs and pursuits of different kinds that it's creating a doubly disadvantaged class who are living in poverty and, because of their condition, are unable to take advantage of the new computer technologies.

It's very important that we address this issue, simply because it's in the best interest of the country and of businesses that people have access to computers and have the skills to do jobs that require computers and, beyond that, to participate in democracy. A true democracy is a society in which people are well educated and can participate. Without access to computer technology, you're left out.

Another issue is the unequal gender presence on the Web. About 80 percent of the people on the Internet are male. It's been that way for a long time. It goes back to the notion that girls aren't good at math and science and boys are. For whatever reason, technology has been the domain of guys. Men are always working on their cars and gadgets, getting involved with fixing things and making stuff work, and women are expected not to know how to do those kinds of things. This is a problem that will take some time to overcome.

Speaking of democracy, I'm really, really pissed off because the man whom I helped vote into the presidency, spineless Bill Clinton, signed the Telecommunications Giveaway Bill that includes the so-called Communications Decency Act, a draconian assault on the First Amendment that threatens to turn the Internet into a virtual Vietnam. I'm pissed off that any president, Republican or Democrat, would knowingly sign a bill that so blatantly disregards the First Amendment. This president has decided for the sake of political expediency, for the sake of kissing the butts of gun-toting Christian Right meatheads, and for the sake of giving away billions of dollars to media giants to ignore the "first" and most important principle of our democracy. Without freedom of speech, there can be no democracy. None. Zero. Innocent people were at risk of going to jail before this amendment was overturned by a unanimous federal court ruling.

We need a free, unfettered Internet. You can't trust commercial online services to respect your rights. They are too susceptible to commercial pressures, too likely to cave in when their profits are on the line. The Internet is different, and it should stay that way. The future of our democracy depends upon this, because the Internet has the potential to give individuals much more say in government affairs. (Maybe this, not dirty pictures, is what the government is really afraid of?).

The most puzzling thing is that the vast majority of genetically deficient congresspeople who voted for the Telecommunications Bill did so knowing full well that the Communications Decency Act is blatantly unconstitutional and for the most part unenforceable. A friend of mine said the Internet site he found most interesting was one that broadcasts live video from Amsterdam sex clubs! Last time I checked, Amsterdam wasn't subject to U.S. law. If you want to sell dirty pictures on the Internet to the U.S. market in this post-Communications Decency Act era, all you have to do is set up your file server outside the border.

The basic fallacy of this law is that it treats the Internet as if it were a broadcast medium like television, not an interactive, multidirection medium with millions of nodes. Although it was created by the government, the technology of the Internet is now beyond the control of the government. Hackers will always figure out a way to get around laws that attempt to censor the Internet.

To enforce this law, the government would need a way to monitor everything that appears on your computer screen. Luckily, this is not possible, nor is it ever likely to become possible. The only way the government could do this would be to use the old-fashioned Stalinist method of having neighbors spy on neighbors. You might be sitting at your desk looking in on the Amsterdam sex club scene while your neighbor spies on you with his binoculars. Then he might call up the local police department and say, "Hey, my neighbor is looking at dirty pictures on his computer screen."

Oh, well, many streams make up a river.

THE SOFTWARE DEVELOPER (Bill Gates): I worked with David in the very early days of this business when it wasn't really a business and nobody paid attention. And he did the first computer convention, which was a Mits Altair-based thing. And he did the first interesting magazine, PC Magazine. Then PC World got involved with him on encouraging him to do Mac World. You know, it's great to have somebody who's played the role he has. I think it's a real contribution.

THE ORACLE (Paul Saffo): David Bunnell is extraordinary in this business in that he's a pioneer who never lost sight of his roots and seems to follow his heart. At moments he seems to be the only person in Silicon Valley who has any sense of social obligation and takes seriously opportunities to do things with the information dispossessed. While everybody else has cashed out and decided to hang out around their swimming pools, David is still quietly working away at the things that he thinks matters.

THE CITIZEN (Howard Rheingold): David puts his time and money behind his ideals. He started "Computers and You" at Glide Memorial Church in San Francisco with his own money, a project that provides computer training to the poorest people in town. If only more Silicon Valley jillionaires would put something back into their communities the way David does.

THE GADFLY (John C. Dvorak): David Bunnell is a guy who's smarter than even he knows. He's got some sort of a weird visionary thing about him that makes him ahead of the curve to the point where sometimes he fails, because he's too far out front. I admire the guy.

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Excerpted from Digerati: Encounters with the Cyber Elite by John Brockman (HardWired Books, 1996) . Copyright © 1996 by John Brockman. All rights reserved.