Gresham's Law of the Web
It seemed the late-1993 internet trend was to attach one’s own name to a site in order to build credibility. Since even warez sites carried names like Chandler, it felt perfectly natural that a search site should bear the names Jerry and David. “Let’s see how it performs.” Yoo Jae-won entered various keywords into the lengthy-titled search site, Jerry and David’s Internet Search Guide, and examined the results. “Hmm. Not bad at all.” The quality of the results was better than expected. As Jae-won recalled, in its earliest days the guide had relied on manual categorization—people visited sites themselves and entered the data. It was the same approach Nextcom had once used. Without Nextcom’s existence, Jerry and David’s guide would likely have followed that same manual path, yet something had changed.
“They’re already running search bots from the start, aren’t they?” Numerous entries that didn’t quite fit their categories suggested the team had begun using an automated classification program. Those results carried a small “Auto” icon; clicking it revealed a brief note explaining that the item had been sorted by automatic search. Overall quality still fell short of Nextcom’s. Even if Nextcom’s category-based system felt dated, its long history had accumulated an impressive volume of data, and its recognition remained unmatched. Naturally, companies and individuals registering their sites chose Nextcom first. Yet new sites appeared daily, far beyond what manual curation could handle. Many sites never registered with Nextcom at all, making automation essential.
“I wonder how people are reacting.” On 2CH.com, now the largest community board in North America, the reviews were overwhelmingly positive. That made sense—Nextcom could only host legal content. Attempts to register warez sites were automatically blocked, and adult material carried a prominent notice restricting access to those under eighteen. Jerry and David’s guide imposed no such filters, allowing searches across any content regardless of its nature. “Well, that much can be excused.” They had correctly identified Nextcom’s two weaknesses and turned them into strengths. It was clear the two young men had put considerable thought into their approach.
Of course, Jae-won had no need to consult his memory archive to learn who they were. Anyone familiar with internet history would recognize the names instantly. Before Yahoo! and Google claimed the throne, the site that had reigned as the internet’s emperor was none other than the original incarnation of Jerry and David’s Internet Search Guide. In his previous life, the pair had launched their search site in early 1994, but the presence of Nextcom and Jae-won himself appeared to have spurred them into action much earlier—and with noticeably higher quality. If Jae-won judged the situation coldly, a formidable competitor had emerged and tension would have been the rational response. Instead, he felt genuine delight. It wasn’t merely because Jerry and David were Stanford alumni. Jae-won had always envisioned the coming internet wars as an era of site inflation accompanied by a flood of competing search engines. Nextcom’s decision to position itself as a portal while de-emphasizing search had been deliberate, intended to encourage precisely this proliferation. Even with future knowledge, racing too far ahead and widening the gap with the present would ultimately harm him. The market could shrink, and monopoly status might invite concentrated attacks. Just as Rockefeller’s Standard Oil had been forcibly broken up, ID Group faced a real risk of forced separation. Most critically, if the capital stored in his memory archive ever ran dry, the entire market could stagnate. Guided by these considerations, Jae-won had adopted a strategy of staying only one step ahead of his competitors. The appearance of Jerry and David’s guide—the predecessor to Yahoo—proved that strategy was working. With Yahoo on the scene, Inktomi, Lycos, AltaVista, and eventually Google would follow. In his previous life Google had dominated search, but with Jae-won and ID Group now introducing a massive variable, the eventual winner was no longer certain. Already, Jerry and David’s guide featured a search-bot capability that had never existed before.
Jae-won intended to watch the internet wars unfold and simply acquire whichever engine emerged victorious for Nextcom. Search engines, no matter how sophisticated, would eventually be constrained by profitability, while Nextcom had already perfected the advertising revenue model. Suddenly, Jae-won found himself wanting to meet Jerry and David in person—to ask how they had come up with the search-bot idea. He felt no urgency, however. Anyone building an internet business would inevitably form some relationship with ID Group, whether friendly or adversarial. They were bound to cross paths naturally; time would handle the rest. Besides, as fellow Stanford students, the odds of running into them on campus were high. The ever-decisive Jae-won acted immediately. He began visiting the university far more frequently than the two or three times a month he had previously managed. Of course, a student’s primary duty was to attend classes without absence, yet Jae-won had long since lost that sense of purpose and felt awkward at first. To his surprise, attending school proved more enjoyable than expected. Meeting professors for conversations was pleasant, and joining classmates like Gilbert for LAN parties was genuinely fun. A LAN party meant hauling one’s own computer to a gymnasium or similar venue to play games together. In the days of poor network infrastructure, direct connections had offered the best speeds. Now that Nextcomcast’s ADSL service had removed bandwidth limitations, the gatherings had shifted toward social bonding rather than technical necessity. Even with midterms approaching, the gaming-obsessed students showed little interest in studying and played relentlessly.
Finally, Jae-won even enjoyed dates with Tiffany on campus. Stanford’s vast grounds offered plenty of spaces for couples. As he threw himself into campus life, the original goal of meeting Jerry and David gradually faded from his mind. November 19th. A Friday. Jae-won suspected this would be his last day on campus for a while. The following Tuesday, the 23rd, was the scheduled summit between President Kim and President Clinton, and he had been invited to the White House dinner that evening. From late November through December he would also need to focus on year-end accounting at the company. He was explaining this to professors and friends, letting them know he would be absent for the foreseeable future.
“Excuse me.” He had just finished a meeting with his advisor, Professor Chu-Cheng, when someone called out to him. “Oh?” Assuming it was another autograph request, Jae-won turned—and nearly gasped. Two people stood there. He recognized them instantly. The one who had spoken was a young East Asian man wearing round glasses, the sort commonly seen around Stanford. Beside him stood a slightly nervous-looking blond young man. Jerry Yang and David Filo—the very pair whose search guide was currently taking the internet by storm.
“Ah, um! Chairman Yoo Jae-won, I’m Jerry, and this is my friend David. You may or may not know, but we run the search guide that carries our names. Could we trouble you for a few minutes of your time?” Jerry Yang spoke on their behalf, his tone extremely polite. “Of course!” Attending school more often had been precisely for the purpose of meeting these two. He had wandered off on tangents and wasted time elsewhere, yet fate had arranged the encounter anyway. The day was chilly, making conversation on a bench impractical, so they found seats at a nearby café despite the modest crowd. Though they were meeting for the first time, the shared topic of internet business quickly broke the ice. Their common status as Stanford alumni allowed the conversation to turn candid almost immediately. They began by explaining how they had arrived at the idea of a search site. Jerry Yang and David Filo even described at length the program they had built that crawled unregistered websites and automatically generated lists and categories. After listening, Jae-won neatly summarized it with a single term: “search robot.”
“Wow—search robot. That’s far simpler than trying to explain the automated classification program.” “If we shorten it further, it’s just search bot.” The two seemed to prefer the longer “search robot,” though a small question lingered in their minds. If Jae-won could define their work so precisely after hearing their explanation, why did Nextcom’s own search function still rely on the old category-based system? After discussing various aspects of search engines, the conversation moved to the main point.
“We placed an ad on Nextcom just to test the waters, and the results exceeded our expectations.” “That’s because the search guide you built performs so well. You gave netizens exactly what they wanted.” Jae-won’s praise brought fresh smiles to their faces—smiles that soon turned to concern. “Yes, we’re grateful people recognize our work, but the problem is that far more users are arriving than we anticipated. The servers keep crashing.” “Every time the phone rings, we’re terrified it’s the university computing center again.” Jae-won had expected this issue. Jerry and David’s guide was running on Stanford’s network. Because the university actively encouraged student entrepreneurship, it opened its resources when needed. Stanford’s network was substantial, built to serve countless students, faculty, and global netizens, and had carried comfortable spare capacity. Yet the explosive popularity of the guide had overwhelmed even that, threatening to bring down the entire campus system. The university had contacted Jerry and urged him to become independent—time to secure their own servers and run a proper business. Faced with the sudden need for massive server capacity, the most natural solution was ID Technology’s cloud service.
“An excellent choice. You’ll be hard-pressed to find a server service anywhere in the world as stable and high-performance as our ID Cloud Service.” Jae-won spoke with unmistakable pride, unburdened by any falsehood. “Yes, we also believe ID Cloud Service is the best solution under these circumstances. However…” Jerry trailed off. David looked equally hesitant. The reason was simple: cost. ID Cloud Service charged based on usage. Pricing considered the size of data uploaded, CPU consumption by server programs, and daily traffic volume. Minimal use across all three metrics remained free, but balanced consumption across the board drove the fee steadily higher. Given the scale of Jerry and David’s guide, the charges would be substantial. They needed to keep running the search robot, continuously cataloging newly appearing servers into a database, and process keyword searches from millions of users.
“Ah, I understand the difficulty immediately. How about this?” When Jae-won spoke, both men leaned in attentively. “I’d like to offer two options. The first is that I make an equity investment in your company. The amount will be determined by ID Group’s professional valuation, but I’m confident it will be satisfactory.” The word “investment” widened their eyes. “The second option is to integrate your search engine into Nextcom. We’ll pay a fair licensing fee, of course, and we’ll also provide the servers required to operate the service.” The moment of decision had arrived. Interestingly, the two recipients of the offer appeared far more nervous than the man who had made it. “D-Do we have to decide right now?” Jae-won would have preferred an immediate answer; from his perspective, neither option required prolonged deliberation. Both proposals were remarkably generous to Yahoo. Yet the two young men who had built their own world clearly had much to consider. “Well then, please contact me by next Saturday. You can reach me through ID Talk or the secretary’s office.” Their expressions were so earnest that he reluctantly granted them time to think.
Monday morning, November 22nd. Yoo Jae-won headed to the airport first, bound for Washington, D.C., to attend the dinner hosted by President Kim that evening. “This way, sir.” This time even Remington had come to see him off. There was a reason. Waiting at the airport was a Gulfstream III business jet. Remarkably, the vertical stabilizer bore the ID Group logo in clear relief, and the fuselage was painted in the ivory that served as the group’s signature color. It turned out to be a private aircraft leased for one year by ID Technology. With ID Group’s operations now spanning the United States and Canada, business travel had grown intolerably inconvenient. Comparing airfare and waiting times at airports, simply leasing a dedicated jet proved more economical. Thanks to Remington’s thorough preparations, the Gulfstream III’s maiden flight would carry Jae-won to Washington, D.C.
“Whoa, thank you!” This was a luxury he had never enjoyed even in his previous life. The surprise made the gift all the sweeter. The private jet was indeed comfortable. The crew existed solely to serve Jae-won and his entourage—an enormous difference. Even business or first class could feel cramped when full, yet inside the jet one could do anything without self-consciousness. He could place a shell book on the shelf, turn the sound system up, and play games if he wished. The flight proved more stable than expected. He had anticipated turbulence in a small aircraft, but none materialized. The weather might have helped, yet the comfort remained undeniable. After several hours aboard the private jet, Jae-won landed in New York rather than Washington. With time to spare before the White House dinner following the summit, he planned to inspect his business interests in nearby New York and review candidate buildings he intended to purchase in Manhattan. Though ID Group now employed many capable people who could handle such matters, Jae-won’s nature demanded he personally oversee anything truly important.
Until the car phone rang, his schedule remained unchanged. “Hello? This is Kim Dae-seok, executive secretary to Chairman Yoo Jae-won of ID Group.” Kim Dae-seok answered at once. Since the advent of mobile phones, all of Jae-won’s personal calls came through his cell; the car phone had naturally become the line for official matters. “Who did you say is calling?” Kim Dae-seok’s tone grew steadily more formal. The voice on the other end was evidently quite forceful. Courtesy demanded courtesy in return, and since he was answering on Jae-won’s behalf, he maintained his politeness. Then something unexpected occurred. “Chairman, you’ll need to take this call.” Ordinarily the caller would hang up in such situations, yet this time Kim Dae-seok had been overruled. The reaction only piqued Jae-won’s curiosity. Who could elicit such a response? “It’s Kim Young-chul, the second son of President Kim. He says he has an urgent matter to discuss.” The moment the name Kim Young-chul appeared, Jae-won understood the situation perfectly. He accepted the receiver from Kim Dae-seok and began the call.