Something Old, Something New

“There is no such thing as a new idea. It is impossible. We simply take a lot of old ideas and put them into a sort of mental kaleidoscope. We give them a turn and they make new and curious combinations.”
—Mark Twain

Although Mark Twain’s statement that “There is no such thing as a new idea” may be an exaggeration, some of the world’s best businesses have been built on leveraging old ideas in a “new and curious combination”.  Some great ideas work spectacularly the first time around, handsomely rewarding the original entrepreneurs.  Others fail or flounder initially, sometimes multiple times, before a combination of the right entrepreneur and the right market and technology conditions unlocks their true potential.  Some of the best ideas of all have a great first run, only to return decades later and succeed all over again—reinvigorated with the latest technology and fresh thinking by a new generation of entrepreneurs who may not even be aware they’re leveraging an old idea.

One of the things I love about the technology business is seeing old ideas made new again.   It worked before—will it work again?  It didn’t work before—will it work this time?  At Andreessen Horowitz, it’s not unusual to see ideas from the first Internet wave of the late ‘90s.  Pet food or groceries on the web—maybe this time?   On the other hand, we just invested in a great idea that goes back almost a century—more on that later.  But first, a couple of examples—from 1968 and 1994.

The Information Superhighway Started in…Orlando?

Sometimes a great idea fails to take hold the first time around because the technology doesn’t exist yet to enable it.  Today, we take for granted a virtually infinite selection of online entertainment, information, communications and ecommerce—but the original idea was revolutionary, and unachievable, less than twenty years ago.  I know, because I was there.

In 1994, Time Warner launched the Full Service Network (FSN), a groundbreaking interactive system that promised to give consumers an unlimited choice of home entertainment, information, communications and shopping, starting with 4,000 lucky households in Orlando, Florida.  Customers would cue movies and games on demand, shop the world’s stores from their armchairs, and order Domino’s pizza with a click of the remote control.

Despite the initial fanfare, the project failed due to its reliance on the television as the delivery device, massively expensive proprietary technology ($5,000 set-top boxes and a massive Silicon Graphics (SGI) server at every head-end), and the impossible challenge of inventing and integrating everything involved—interactive content, user interfaces, ordering and billing systems, and so on—from scratch.

In today’s world of Amazon, Netflix and Xbox, it’s funny to read quotes like this one from a 1994 New York Times article about the FSN (it’s worth reading the whole article to realize how far we’ve come):

There is great uncertainty about which services will be popular and whether they can be offered profitably, particularly exotic services, like interactive video shopping and grippingly realistic on-line video games.

It seems almost laughable now, but back then it didn’t seem so obvious.  As a VP at US WEST, one of the major players in Orlando and other projects, I ended up with responsibility for GOtv, an interactive TV guide to local movies and restaurants developed for this brave new world.  Orlando couch potatoes who actually wanted to go out would reserve a table or buy movie tickets in advance on GOtv – something like a cross between today’s Fandango and OpenTable.  At least that was the vision.  Like the FSN, GOtv was a great idea, but based on a flawed technology paradigm.

Of course, the idea of providing full interactivity and unlimited choice to consumers was a very sound one.  That same year, on the other side of the country, my now partner Marc Andreessen and SGI co-founder Jim Clark founded Netscape.  Within no time, Andreessen, Clark and a whole new generation of Internet entrepreneurs were leveraging affordable PCs, open standards and powerful network effects to create a massive ecosystem of providers and consumers and successfully deliver on the core idea of the Full Service Network.  (As for me, I redirected our visionary but flawed TV efforts to the emerging Internet, and soon entered the action directly by joining @Home Network, the pioneer of today’s high-speed Internet, in 1997.)

The Full Service Network: Great idea, wrong technology paradigm.

Loebel’s Blue Envelope

Unlike the Full Service Network, some ideas now succeeding phenomenally on the Internet also worked spectacularly the first time around, using the technology of the time.  In 1968, an entrepreneur named Terry Loebel invested $500 to mail a “cooperative envelope” with offers from 14 local businesses to 20,000 households in Clearwater, Florida (yes, Florida again!).  His sales staff made a name for themselves by zipping from merchant to merchant on roller skates.  The idea of mailing local offers to consumers proved highly compelling to small businesses.  Loebel’s startup, Valpak, grew explosively to become a marketing behemoth, ultimately mailing 20 billion offers a year in 500 million blue envelopes to 45 million households.

Forty years after Loebel’s first mailing, Chicago entrepreneurs Andrew Mason and Eric Lefkofsky founded Groupon, bringing the concept of targeted local offers to a global Internet market of 2 billion users.  Groupon uses email rather than snail mail, its salespeople connect with local businesses over the phone and Internet rather than on roller skates, and it’s pioneered breakthrough innovations like group buying and daily deals—connecting local businesses and consumers worldwide in ways Loebel could only have dreamed of.

Valpak:  Great idea, great first run, now back in a radically different incarnation for a spectacular second act.

Next up

That almost century-old idea I mentioned earlier?  That’s the topic of tomorrow’s post—and the inspiration for Andreessen Horowitz’s newest investment!

11 comments
  1. SteveD- said:

    Hi John, congrats on the new blog. Awesome first post. Loved the ValPak story. Keep ‘em coming. Thanks.

  2. Jos Burger said:

    John, very good post. Great examples of old ideas made new again.

  3. I totally get this. It would also be interesting to hear, from your experience, how companies have taken an idea originated by another company and totally killed the originator.

    Good stuff, keep going!

    Jack
    NocPlace

  4. paramendra said:

    Welcome aboard. Blogging is fun. And get Ben to have a comments section to his.

  5. Right perspective John, having worked for Control Data many years ago, I know intimately what you are blogging here. It is the value proposition and the right technology at the right time that works.
    Many thanks

  6. Glen said:

    I was one of the first to get RoadRunner Internet in the Orlando area, we were lucky that Time Warner (now Brighthouse) rolls out new services in our area. To be fair to Orlando we have Disney, UCF, Full Sail, Research Park, and a large defense and simulation industry. Rolling out new services in a medium sized market makes a lot of sense, you avoid the big city hassles while still making sure the service scales.

    Cheers and Great blog!

  7. paul said:

    "The Full Service Network: Great idea, wrong technology paradigm."

    I think this statement proves that it wasn't a great idea. Because this idea was trying to take off using the wrong technology this shows that it was a bad idea. It wasn't until technology got with the program that this failed idea became a great idea.

    I understand the point you are trying to make. But in the the end I think we should be honest and say an idea fails because it was a bad idea or because the leadership failed. You can never have a great idea and good leadership yet the idea fails.

  8. William Kent said:

    Face book was a new concept, it was not recycled technology. However new social websites will eventually take over from where FB left off.

    Unfortunately for FB it is becoming boring now people have added all the friends they can, it offers no more innovation, and the fun element is decreasing.

    I heard about a new social network that will encompass all that Twitter, Digg, FB, YouTube has to offer at present.

    I did not like the name, even though it made me laugh, as it was too long, but the concept was outstanding. I keep checking to see when it will come live. The guy who owns the concept was trying to raise capital to get it going on various VC funding sites.

    I hope he gets it going, as it is a good idea that will eclipse FB and all the others in one site.
    http://www.bragasaurus.com

  9. Conor said:

    My father used to say "internet groceries is nothing new. When i was a boy, my mum would give me a list. On the way to school I would drop it at the local grocery store. On the way home I would pick up the groceries and deliver direct. Internet shopping is just going back to how it used to be." Mark Twain may be right…

    But I do think that there is a capacity multiplier effect from web video, instant many-to-many connections – never before has it been possible to so rapidly iterate an idea, a business, a skateboard move, a guitar riff, a meme… What will come with this accelerator of possibility? Option A) more funny cat videos? B) vastly improved quality of life on a global scale? It is up to us.

    The future is so unpredictable because we are creators of it.

  10. Tim Rewa said:

    Phenomenal!

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