A look at several entrepreneurs who are seeking emerging opportunities in the on-line market.
Like the birth of the auto business before it, the explo-sive flourishing of the on-line communications industry marks the beginning of a new economic era. And even ordinary businesses are taking a piece of it
Call it a revolution. For better or worse, 1994 marked the year the on-line world, after quietly building momentum for years, finally hit the popular consciousness. The Internet found its way into everyday conversation, and suddenly, every fashionable business card included an electronic-mail address. By year's end there was no clichÉ more tired than "information superhighway." Everyone, it seemed, was worrying about building highway "on-ramps" or, God forbid, ending up as "roadkill."
Beyond the overworked metaphors, however, there lurks a larger truth: the move to conducting business on-line is an economic revolution. And like its predecessor the automotive revolution, which brought about the concrete superhighways, this upheaval will bring far-reaching change to all aspects of business. Not today, not tomorrow; despite the more breathless predictions of overnight technological transformation, yours will not be the last business in America to have a presence on the Internet. In the long run, however, you can expect to see some dramatic effects.
Sweeping changes in technology bring obvious opportunities but also unexpected ones. Think of the automotive revolution, and Henry Ford, the quintessential auto entrepreneur who founded a $128-billion company and pioneered assembly-line manufacturing, comes to mind. Similarly well-known is J. Paul Getty, whose petroleum empire flourished on the oil that fueled the cars. But who recalls R. Thomas McDermott, who in 1923 started $3-billion McDermott International to build oil-drilling rigs? Or the original Howard Hughes Sr., whose dominance of the early market for oil-well-drill bits built the family fortune? Or Joseph Eaton and Viggo Torbensen, who launched $6.1-billion Eaton Corp. in 1911 to make rear axles for that radical new innovation of the highway, the truck? What about George J. Mecherle, a farmer? He founded State Farm Mutual Automobile Insurance Co. in 1922, and the Bloomington, Ill., company became the nation's largest automobile insurer and the employer of 68,700 people.
Those make up but a tiny sample of the entrepreneurs who made it big. Along the way, countless thousands of small-business owners -- proprietors of a million and one gas stations, towing companies, and muffler shops -- have also made their fortunes, large and small, from the automotive superhighways. Cars changed the way Americans live and work, opening opportunities for everybody from mall builders to moving companies.
Maybe the "information superhighway" is a fitting metaphor, after all. The revolution that connects computer networks to one another and, ultimately, to telephones and televisions is another technological and economic transformation that will usher in a new era. Ultimately, it won't benefit only the stockholders of telephone companies and on-line services. Like any economic revolution, this one will reverberate throughout the economy.
But the revolution is still in its infancy. One recent survey, conducted in January, found that only 7% of U.S. households subscribe to an on-line service. Many of the earliest beneficiaries of the move on-line were the businesses you'd expect. Services like America Online and CompuServe, along with Internet service providers like Netcom and UUNet, are in the forefront. They are followed by a host of software companies with products that range from Internet interfaces to communications software. Anything related to computer networks and servers is big business, as is anything to do with the World Wide Web (WWW) section of the Internet.
No doubt many of the pioneers won't last -- just as most of the early auto manufacturers are long dead, merged, or forgotten. There are challenging hurdles to overcome, such as the security hazards of the Internet. And even the successful growth in on-line communication will likely lead to cutthroat competition, to business perils as well as successes. Just ask Dennis Hayes. In 1978 he founded Hayes Microcomputer Products, a company whose name is synonymous with modem standards: other manufacturers invariably proclaim that their products are "Hayes compatible." The modem market is booming, with 1994 shipments up 26% over the previous year. Such growth invites fierce new contenders -- and cash-flow problems. Last November Hayes Microcomputer, struggling in the market it defined, filed for Chapter 11 bankruptcy protection.
In any case, a real economic revolution reaches further than those who make modems, cable, or Internet interfaces. Sure, fortunes will be built around the new technologies. But there will also be perfectly everyday businesspeople who prosper because they seek -- and seize -- emerging opportunities in a fast-growing market. Already, some of their companies are starting to profit from the on-line revolution. Take a look.
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Fish Processor
Michael Samsel
Free Range Media, Seattle
Frozen fish. That was Michael Samsel's line of business before he discovered the Internet. Samsel sold his five-year-old fish-processing company in 1990. After a few years of consulting for the new owner, a Japanese corporation, Samsel was ready for fresh challenges. Today he and partner Andrew Fry head rapidly growing Free Range Media, a company that other businesses hire to design their corporate presence, or "home page," on the increasingly popular World Wide Web section of the Internet. WWW home pages can include sound and graphics as well as electronic links to other information on the Internet.
