Something new was in the air. It was July 1995, the hottest New York summer in a decade and a half, but heat wasn't making the headlines. Tech was. Within weeks, tech's 900 pound gorilla would conquer the Empire State Building, turning it red, yellow, and green to celebrate Windows 95's launch. Web browsers were the hot new thing—or so Netscape's PR team was telling everyone who would listen, ahead of their upcoming IPO. The frenzy of next half-decade would bring unprecedented tech riches, the ultimate triumph of the nerds.

But that was then, and this was now. Everything was just starting. Floppies were far more common than CDs. Cell phones made calls—just calls. The internet had only been fully privatized two months earlier. The goldmine was barely even discovered.

Up a narrow flight of stairs littered with the landlady's children's shoes, programmer Robert Morris' apartment felt closer to Silicon Valley than Wall Street. Companies are supposed to have offices and desks, pomp and circumstance—and a company is what Morris and his roommate Paul Graham wanted to start, something that would put their skills together and make their long academic careers finally pay off. But all they had was a bunch of computers and some top-notch brains.

"We don't know anything about business," mused the team, as Graham related later to Founders at Work¹ author Jessica Livingston, "but we're good programmers. Maybe if we write a really good program, we'll make something all these users will want and we'll get lots of users and then some big company will buy us."

Ideas don't come fully formed. As Morris and Graham batted around potential programs they could build, one stuck out—perhaps inspired by living in the shadow of the Met, the Guggenheim, and dozens of other museums. The internet promised to "provide organizations with new means to do business," as Netscape's IPO prospectus said². Why not apply that to museums? Photograph and catalog their artwork, put it online, and let anyone on earth wonder at the detail in a Picasso or Monet from the comfort of their homes. Thus, Atrix, a program to put museums online.

Museum curators had different ideas. "The problem was, art galleries didn't want to be online," said Graham. It would take over 16 years before Google would finally bring much of the western world's art and the museum experience to the web.

Atrix for museums wouldn't work, but the idea wouldn't die. "Maybe we should make something people actually did want," thought Graham. If museums didn't want to go online, who did?

Retailers. With inventory to be photographed, cataloged, and put online, stores were the obvious next choice. Amazon.com had just sold their first book 3 months earlier, after a year of being called first Cadabra, then Relentless.com³. Now was the time to put your store online—and the software to do it wasn't all that different from what it'd take to put a museum online. All you needed to add was a shopping cart.

The store would live on the web, that much was certain. The question was how to make the software to build those store websites. You could code a Windows app and ship it in a shrink-wrapped box. That's how you bought Norton Utilities, Photoshop 3.0, and Microsoft Office—on a CD or an insane number of floppies (Office took 34). Even the internet came in a box, with tech publisher O'Reilly shipping a browser, an email app, and a book about the internet in a box⁴. Microsoft's own Internet Explorer was only available if you bought Microsoft Plus—in a box. The App Store of the day was literally a store.

Boxes and disks were the last thing Graham and Morris wanted. "The prospect of having to write desktop software was horrifying to us," said Graham. They'd spent their academic careers developing terminal software, with simple, logical code. Perfect for developers—not so much for the rest of us. Windows made software much easier for most people to use, and that much harder for developers to build. Where the simplest Hello, World! program would take 5 lines of code, it could take 150 lines of code to make the same program in Windows. As Graham said, "Neither of us knew how to write Windows software and we didn't want to learn."

Plus, even if you built online store builder software for Windows, customers would still have to find it in a store, buy it, install it on their PC, reboot, run the software, then figure out how to get their site online. It was already a stretch to get customers to purchase and install any software, much less convince them their business needed to go online. Any extra friction was too much.

Morris puzzled over it by day, Graham by night, coding when they preferred and emailing the latest code back and forth to pass the baton. Remote work, separated by an apartment wall and time.

Something clicked one hot July afternoon, waking Graham up after another 4AM coding session. "Hey, maybe we could make this run on the server and have the user control it by clicking on links on a web page," thought Graham. The software could run on the server, with a web page as the interface customers would use. "I sat up in bed, like the letter L, thinking, 'We have got to try this.'"

Thus, Viaweb. Instead of boxed software running on a Windows desktop, you'd make your store website online. Fill out some forms, upload a few photos, and voilà, the server's software would work its magic and build your online store. Without an FTP server or hosting server to figure out, you could get your business online in minutes.

Software without installing anything. Applications on the web. Store builders that worked on any browser, any computer, Windows and Macintosh alike.

Via web.

"Progress happens when all the factors that make for it are ready and then it is inevitable."- Henry Ford, The Business of America

Innovation's a funny thing. Someone discovers red phosphorous, another finds that a bit of heat turns it into white phosphorous, then one day another person puts one and one together and invents the match.

Congratulations, we say. You changed the world.

Truth be told, we're all building on what comes before. "Whenever there’s a major breakthrough, there’s usually others on the same path," observes Kirby Ferguson in Everything is a Remix⁵. "The most dramatic results can happen when ideas are combined."

Computers brought software, which made more people want to use computers, which made us figure out how to share them—even over vast distances.

And in the early 1990s, computer technology was all coming together. Put PCs, software, and the web together, and you just might change the world.

"Most of the hackers we knew used this program called X Windows, where you could be using a program that was running on some remote machine, but it would be drawing stuff on your screen," said Graham. "All the brains were on the server."

"Could we just treat the browser like an xterm (a terminal that only ran X Windows), and have the application running on the server?"

That was the killer idea, the paradigm change of web-based software.

"A lot of people could have been having this idea at the same time, of course," Paul Graham wrote⁶ 6 years later, "but as far as I know, Viaweb was the first Web-based application."

That piqued our curiosity. We take web apps for granted today. They're the reason Zapier exists, the way so many apps we rely on today work—from Amazon to Zoho, Gmail to WordPress. Were there prehistoric web apps that shaped the apps we use today, teams that beat Graham and Morris to the punch?

Where did it all start? For months we researched. A Hacker News thread⁷ here, a Slashdot comment⁸ there, and countless hours digging through old books about the internet and the Wayback Machine's invaluable snapshots of early websites started to paint a picture of the crucible of innovation that was the early world wide web.

There were a thousand flowers blooming on the web, it seemed—and five of the earliest web apps, including Viaweb, had lived to tell the tale.

The Path to the World Wide Web, the Information Mine

An ocean away and a half-dozen years earlier at the research institution best known today for the Large Hadron Collider, CERN's international group of researchers in Switzerland often felt like they were accelerating confusion instead of research. A German physicist would collaborate with a French chemist while referencing the work of Dutch and American researchers—and leave more research documents of their own.

"If we're sitting around a table, I'll start a sentence and you might help me finish it, and that's the way we all brainstorm," then-CERN fellow Tim Berners-Lee told author Walter Isaacson⁹ years later. "How can we do that when we are separated?"

Computers so far had not proved that helpful. The first computers were advanced calculators, built to solve math problems like calculating the flight paths of rockets—or bombs. Soon enough, though, they became office tools, devices for calculating data, writing it up in reports, and emailing it to colleagues. They were far too valuable to only let one person use them at a time. You'd share them instead. Dozens of terminals could use the main computer at the same time, each with their own monitor and keyboard. It was like having your own personal computer—except the real power was in another room behind lock and key.

Slowly, the terminals moved further away. Instead of your monitor and keyboard being in a different room of the same building, you could have one in your school or home and connect to the real computer via the telephone network. It was on computers like these that Bill Gates cut his coding teeth, sharing a remote computer from a terminal in his school.

Connecting the computers themselves was the next leap. Instead of connecting only to a nearby university's computer from your terminal, the earliest internet—or ARPANET as it was called—let you access files and software on any other connected computer. A month after the first man stepped on the moon, the University of California, LA and Stanford Research Institute's computers were connected as the original ARPANET nodes—with the University of Utah and UC Santa Barbara to follow before the end of the year. The next year brought the East Coast's computers at MIT and the US government online, with a satellite connection to Norway finally making ARPANET international in 1973.

ARPANET's early growth, via Wikipedia

Suddenly it was possible to send an email message from Norway to Utah or run the early computer game Spacewar from MIT's computer in Boston, Massachusetts while sitting in Santa Barbara, California. Before long, you didn't even have to run the program remotely. Starting in the late 1970s, microcomputers—what we now call personal computers or PCs—made it cheap enough to have your own computer on your own desk, crunching the numbers right at home without having to wait for time on a room-sized computer.

Yet, twenty years after ARPANET connected the first computers, things were messier than ever. Sure, you could now access files on other computers and email questions to researchers around the globe. But the internal confusion Berners-Lee's CERN team found was only compounded on the internet. Documents were there for the taking—if only you knew where to look on the more than 60,000 connected computers. The internet itself was just a network, a way to connect computers. You had to find the stuff you wanted yourself.

So in 1989, Tim Berners-Lee decided to add a notebook to the internet. "A 'web' of notes with links between them is far more useful than a fixed hierarchical system," wrote Berners-Lee¹⁰ in his original proposal.

On the web, every page was supposed to be an app, or at least an interactive piece of digital paper filled with what Berners-Lee called hypertext (web pages even today are formatted in HTML—or HyperText Markup Language). You could include words and paragraphs in your page on the web—along with hyperlinks that connected words to other pages. Anyone could add those links or change anything else on the page, in the web's original inception, much like you could mark up a paper book. "Computers could become much more powerful if they could be programmed to link otherwise unconnected information," though Berners-Lee. In the original vision, there were no pictures, no animations. The entire dream was around connections.

You could write a document, then I could write my own take on the topic and link to your document. A colleague could notice similarities and edit both of our documents with links to the others. The web as Berners-Lee imagined was the original online notebook or word processor app.

It wasn't even that smart of an app. "There have always been things which people are good at, and things computers have been good at, and little overlap between the two," Berners-Lee later wrote. People were good at writing, finding connections between abstract ideas, and mashing them up to make something new. Computers were good at storing massive sets of data and organizing them logically, perhaps alphabetically or by date written.

Put humans and computers working together, you might have something special. That special thing is what Berners-Lee called it the World Wide Web—with a system of website addresses to locate documents, HTML markup to format documents, and a browser to view and edit them.

It quickly became just the web—and before long, it was the only internet we remembered existed. The web where Graham and Morris–and a few other pioneering coders–built their web app.

Let There be Multimedia: The Web Gets Its First Interactive Online Maps

While researchers at CERN were probing the particles that make up the universe, Xerox's legendary research team at their PARC laboratory were dreaming up the future. It was here the laser printer was invented, along with ethernet, unicode, and eInk screens. One of the first personal computers, the Xerox Alto, debuted the original computer desktop with overlapping windows and a mouse—the computer that inspired Steve Jobs to build the Macintosh.

And in 1993, that's where researcher Steve Putz built the first online maps app, "a custom map rendering service—yet another experiment in providing dynamic information retrieval via World Wide Web," wrote Putz¹¹ when he shared his invention with the world on June 21st. It was, perhaps, the actual first web app, if an interactive tool is enough to count.

The world wide web wasn't supposed to be this fun. Berners-Lee imagined the internet as a place to collaborate around text, somewhere to share research data and thesis papers—with tools to edit and author those documents, not just view them. The first popular web browser, Netscape, turned that around, adding images to CERN's text-only document format—and dropping the Edit button. Personal computers brought the rest of us online—and we were happy enough without editing web pages.

The web became the latest book, magazine, and museum rolled into one—written and curated in thousands of hypertext documents. Goodbye Encarta CDs, hello Wikipedia.

The genie was out of the bottle, and the PARC team set out to see how far they could push it. Using the web's newfound love of images, Xerox PARC Map Viewer showed a large map of the earth right on a web page. You could click anywhere on the map to zoom in—much like you would in modern map apps—or choose from map projection styles to see the planet the way you wanted.

It was all a bit of a trick—but the same trick Google Maps uses today. Instead of downloading the full map, it divided the map up into small images and stitched them together to look like a full map. Those tiny images were each linked to a zoomed-in view of that same area of the map—which is what would load when you clicked on the map. It was "yet another experiment in providing dynamic information retrieval via World Wide Web," as Putz said.

"The HTML format and the HTTP protocol are used like a user interface tool kit to provide not only document retrieval but a complete custom user interface specialized for the application," explained Putz¹². Users weren't creating anything new, but they were doing far more than Berners-Lee's plain text pages offered, enough that textbooks a half-decade later still recommended Map Server as the tool student should use to find locations online.

Work on the Web: The First Online Form

PARC wasn't the only team pushing HTML pages to do more. 2,000 miles away and a year later at the University of Minnesota, the team that built Gopher—a protocol for organizing files as an alternative to Berners-Lee's World Wide Web—were trying to find their place in the world now that the Web was becoming the way most people used the internet.

The web was everywhere. "I saw a URL on the side of a bus," Gopher development leader Marc McCahill¹³ later said. "I knew Gopher would start winding down."

His team needed something new to do—and to them, building a web app was the obvious way to jump in. So they built an accounting app, perhaps the web's first custom form app. Forms Nirvana, they called it.

"The university always has big problems," said McCahill, among them an accounting scandal where a surgeon was indicted for fraud and embezzlement (and later acquitted) and the National Institute of Health threatened the university's funding—with the financial issues largely stemming from messy paperwork and inconsistent record keeping. Surely the web could help. McCahill pulled his Gopher team together, and off they set to HTML the problem away. "And because we were being ironic, we said, ‘Oh this will be Nirvana if we can get the purchase orders on-line and get them approved,’" reminisced McCahill¹⁴ years later.

And, they did it with one of the first online forms. "We did a document routing and approval system for online documents," said McCahill, launching in September 1994¹⁵. University faculty could enter grant info and purchase order details online—and the Forms Nirvana web app would store that data in the university's database.

"Your financial documents get processed and into the ledger right away, as opposed to being key punched in after two weeks," said McCahill. Not only did the web shrink distances, it shrunk time too, apparently. And Forms Nirvana worked so well, the university relied on that early web app for the next 24 years.

Shouldn't Everything be Quicker? Editing Comes to the Web

The web's simplicity made it accessible, democratic even. The early adopters had built their early sites and pushed HTML's limits. Now was time for the masses. By the end of 1994, sites like Tripod and GeoCities—then called Beverly Hills Internet¹⁶—let people build their own pages and publish them online, for free. But still, Tim Berners-Lee vision of an editable web was little more than a dream.

"Sometimes innovation involves recovering what has been lost," wrote Walter Isaacson in The Innovators⁹. For the web, that came on March 25, 1995 with yet another early web app.

Universities and research centers weren't the only ones with more data than they could manage. Ward Cunningham found the same issues at testing device manufacturer Tektronix, where he spent his days coding operating systems for microcomputers, the type that ran machines and kept industry humming. And by night, he hacked together ways to store information better, something to make it easier to find the data his team needed among everything Tektronix staff wrote down.

The core problem was links. On standard web pages, you had to research the best links to share on your page—something Tim Berners-Lee thought others could add later by editing your page. But what if you could make links to pages that might or might not exist, and let the software figure out the rest? And what if you brought back the edit button to the web at the same time? Perhaps web software could be a bit smarter than Berners-Lee planned.

With Perl code on the server, a web form to enter and edit text, and HTML pages of copy, Ward Cunningham made the first editable webpage: WikiWikiWeb, from a Hawaiian word for quick.

"You're browsing a database with a program called WikiWikiWeb," wrote Cunningham¹⁷ in the site's introduction on launching it March 25th, 1995. "And the program has an attitude. The program wants everyone to be an author. So, the program slants in favor of authors at some inconvenience to readers."

Unlike other web pages, Cunningham's wiki had an edit page, one that finally fulfilled Berners-Lee's vision of the internet. Anyone could click Edit, modify the test, and save their changes. Moments later, the wiki software would produce a new HTML page and the site was changed for good. As you wrote, you'd add brackets around words that should be linked—names, especially—and the wiki would automatically add links. It was a bit of extra smarts to do what humans were too lazy to do, in a web app. And with that, the web came full circle.

The Devil in the Details

Networked computers were great—until they weren't. The web at the time was like the wild west. You don't link thousands of computers together without something going wrong, eventually.

The internet already had security issues, where one could often view and even edit most files on a server, or perhaps even remotely run programs on the computer that would change passwords and delete data. The web's explosive popularity only made it worse. Thorny problems like these attract the brightest minds, including Dutch programmer Wietse Venema who'd already started writing security software. And in 1992 when American developer Dan Farmer was writing a research paper on network security, that's who he wanted as his co-author.

That is, if Farmer and Venema could manage the distance—easy today, not so much before the days of Gmail and Slack. "To my surprise, he was willing," said Farmer¹⁸, "and we struck up a long-lasting friendship." Remote work, right at the beginning of the web.

Over the next year they worked on the paper, collaborating over phone and email. "Wietse was the über technical guy," said Farmer, "and I was the idea guy who didn’t know enough to think my notions weren’t possible or not." So they brainstormed and theorized, then built SATAN—or Security Administrator Tool for Analyzing Networks—a "network gatling gun" in Farmer's words to analyze networks and see if they were right. Their finished paper, Improving the Security of Your Site by Breaking Into It¹⁹, mentioned their testing tool in passing—and it struck a nerve.

"There was still a 'don't ask, don't tell' sort of mentality about security and no one wanted to talk about it, let alone give up their secrets," said Farmer. "The paper started people talking about how they really wanted this program."

The old debate over how to develop software struck again. You could build a standard terminal app—it'd feel familiar to researchers, but not to the general public. Developing a more familiar Windows app would require learning a whole new set of skills.

Or you could just use the web's HTML as your app's interface—it'd be an easy way to show the same text as a terminal app, only in a much more user-friendly way.

"We first started simply creating reports that could be viewed by a browser," said Farmer, "but then discovered if you tweaked a web server the right way you could actually interact with your browser and make it a more pleasing user experience, with buttons you clicked that would execute programs and dynamic links that would be generated on the fly, with a database in the backend stashing all the data and configurations."

With the new web-powered, remotely-coded SATAN in hand, Farmer and Venema launched their network security tool on April 5, 1995. Instead of installing a new tool, you'd simply enter your own server name and let SATAN do its work online, testing your security and generating an HTML report on the fly.

It worked—too well, in fact. "It was so hyped up, many of the initial servers we had put up melted down on the 5th," remembered Farmer, "and I’d heard that many corporations closed down their company sites in order to ensure that they scanned their stuff before the Bad Gals did."

"It’s a bit quaint now, but at the time, bleeding edge."

Back in New York, Graham and Morris' July hackathon continued apace, gradually becoming a full web app that could build online catalogues, online. They built a website to showcase their product, and an account system for users to log in to their own store's site, much like the compatible time-sharing system's terminals with their separate user accounts and personal files.

Computers were still expensive—at least the powerful ones that could run software for multiple users behind the scenes. The team bought a $3,000 server (fast for its day, with less than 1/25th of a modern smartphone's computing power), paid $350/month on their internet connection, and spent $5,000 for Netscape Commerce Server as "the only software that then supported secure http connections."²⁰

Viaweb was taking shape. After weeks of coding, by August 12, 1995, they were ready to show it to the world²¹. Users could sign into their account, fill out an online form with their product info, choose from six layouts to organize their catalog, and select the font and button style they wanted. The web still didn't have JavaScript (something invented around the same time as Viaweb by Netscape developer Brendan Eich for building interactive websites) or a way to upload files through the browser. Instead, Viaweb users still needed to upload photos of their products via FTP—a longstanding internet protocol for accessing remote files. Another push of a button in Viaweb's website, and its server software would automatically create photo thumbnails, turn the text into button images, put everything together into HTML pages, and build a searchable database of the store's products.

Minutes and a Commit button click later, they had built a online store using online software.

For $100 a month²², anyone with a computer and a web browser could start an online store, from an app they never had to download and install. And it worked. Within three years, Viaweb's thousand customers—including NASA, Rolling Stone, and Cirque du Soleil—were selling collectively over $3.3 million per month.

All that time, "no one ever seemed to get that the software ran on the server," marveled Graham. "We would explain to people how the thing worked and give them a demo and they would say, 'Great. Where do I go to download it?'"

But no downloads were needed. Viaweb was a web app—or, "web-based software," as Viaweb's PR agency called it. It just took a web browser, and 10 minutes later you could have a store.

And a browser window away, you could zoom in and find your house on a map, submit an expense form, edit a wiki page about your hometown, and get SATAN to make sure your network was secure.

"Ten other people were probably working on similar things."- Paul Graham

Computers. Networks. Browsers. Inspiration. One thing led to another, and over the 26 months from September 1993 to August 1995, web apps became a thing. First an online map, then a forms tool, and then the wiki which brought us full circle to the original vision of the web. A bit more time, and a team figured out how to test server security online while working remotely, and another built an app that built stores.

All apps, in one form or another, doing more than what came before it until you couldn't quite tell which exactly was the first true web app.

And that's what we call history.

Yahoo! acquired Viaweb for $49 million in 1998²³—before themselves being acquired by Verizon this year²⁴. Xerox shut down the Map Viewer in 2005²⁵. The University of Minnesota relied on Forms Nirvana to manage their grant system until 2008, spending $50 million to replace that early web experiment²⁶. WikiWikiWeb got vandalized by hackers in late 2014, and lives on today as a read-only site²⁷—something closer to the first web pages than the interactive web it brought. SATAN alone lives on for the ages²⁸, itself scarcely relevant to today's security challenges.

Yet their spirit lives on. Today's web would scarcely be recognizable to someone opening Internet Explorer for the first time in 1995. It's an interactive, app-fueled place with social networks, streaming video, and more content than one could ever hope to consume. It's where we crunch numbers in sheets, edit documents collaboratively, connect our business software, and tweak Wikipedia whenever something feels off.

Of course there are apps on the web. It'd hardly seem right any other way.

History is messy—and it's easy for the details to get lost to time. As Paul Graham told us via email, "Ten other people were probably working on similar things." These are the app stories we found—but we're certain there were likely other web apps being built around the same time. We'd love to hear of any other early web apps you know of or inspirations that might have shaped today's web apps.

For the majority of the life of this site, I’ve been a staunch OmniFocus user. Detailed and meticulously maintained systems for doing. I didn’t have, nor did I want, a list — I wanted platform from which I launched my projects.

That’s a fancy way of saying I scheduled time — I made tasks — for managing all my other time and my other tasks.

Over the last few years I’ve sought to simplify my systems, not because something was broken, but because something simply felt “off”. I moved from a Mac to iOS, and yet my task manager was heavy, and not light — it wasn’t of the same philosophy that my iPad was. I tried and liked 2Do, but moved to Todoist for many reasons I told myself would make things better. Each time, I was gaining simplicity in some form, but not reaching that intangible thing I couldn’t verbalize, but wanted.

When Things 3 dropped, I went all in. It was, it is, near perfect. It had that intangible factor and I knew it did because I had long ago sworn off using Things, and version 3 had me eating my own words. I’ve been putting Things through its paces, trying to figure out how to verbalize what I like about it.

Simplicity? Minimal? Hidden power? Those all felt like they were striving towards the right answer, and they feel true on the surface, but dig deeper and that’s not true.

All the power of Things resides at the surface. It’s not hidden in the way as it would be in OmniFocus or 2Do. Minimal? Hardly, people misuse that word too much for me to fall prey to that trap. Simple? Perhaps in design, but I would go no further than that.

There’s something about the usability of Things which leads you to a state of happy-contented-ease. The app moves you from one thing to the next in the most elegant manner possible.

When the topic of a humanities education for software developers came up, it struck a chord. There’s such a thing as too much logic in an app’s implementation, and it’s that fact which was bothering about all those other apps. They lacked a soft touch. They lack personality, calm, and care — all stifled by logic.

That’s not to say they are not good, at times of great crisis it is logic that we should turn to. However, most of my task management isn’t in crisis, it’s in providing me with the calm that there’s a place where it is all recorded.

I can tell you all about the features Things has, and what it’s missing (like fucking keyboard shortcuts on iOS), but none of that matters, because none of that is the reason why you should use Things.

There is, in fact, only one feature I need to point out to show you the humanity of Things. When you go to set a due date, you get this view:

Take that screen in for a moment and look at the lack of logic which exists there. The lack of precision. Today? This Evening? Someday‽ I mean David Allen would shit himself.

And yet, it’s perfection. It’s what we need. Sure you can set a “real” date, or even a “reminder” for the item, or you can just toss it into a general bucket. What does “this evening” mean? Does it matter? Because we all know what it means, and it’s so good. Why isn’t this in every app?

And that Someday bucket? Without even telling us, we are creating a literal bucket list within our task lists, so that we can remove the weight of trying to remember that item, while simultaneously never having to see that item again. I’d love to see a psychologist, or perhaps an anthropologist talk more about this, because Things feels like it was designed for the human psyche first and foremost.

Things doesn’t make you jump through hoops, or follow a logic tree to set about doing things with tasks. At it’s most basic level, it’s like telling a personal assistant to remind you to do something. You simply would not tell him “remind me to take out the steaks at 7pm” — who does that? You’d say later, this evening, or someday. Things gets that.

While the app immediately clicked, and was at once dead simple to get started in, it’s taken me quite a while to realize what actually makes it so good. It was simply designed with the understanding that real people are going to be using it for real life.

What an amazing piece of software.

You can find Things here: iPad, iPhone, Mac.

While the “look-at-the-silly-millenials” genre tends to be a bit tiresome, the Wall Street Journal came up with a novel angle earlier this month: the TV antenna.

The antenna is mounting a quiet comeback, propelled by a generation that never knew life before cable television, and who primarily watch Netflix, Hulu and HBO via the Internet. Antenna sales in the U.S. are projected to rise 7% in 2017 to nearly 8 million units, according to the Consumer Technology Association, a trade group…

Since the dawn of television, the major networks have broadcast signals over the airwaves. It is free after buying an antenna, indoor or outdoor, and plugging it into your TV set. It still exists, though now most consumers have switched to cable television, which includes many more channels and costs upward of $100 a month.

The story is even more ironic when you consider the origins of cable TV. In the late 1940s, households that, due to geography, could not receive over-the-air television signals in their homes, banded together to erect “community antennas” on mountain tops or tall buildings, and then ran cables from said antennas to individual houses. In other words, cable TV originated as a means to get the free TV that was broadcast to everyone.

It turned out, though, that these “super antennas” could pick up not only local broadcast signals but also signals from stations hundreds of miles away; that meant that having cable access didn’t simply bring households to parity with customers using in-house antennas: cable TV was actually better. And while the FCC soon killed the ability of cable operators to offer those far-off channels, the idea of using cable access to offer additional differentiated content inspired Charles Dolan and Gerald Levin to launch the United States’ first pay-TV network in 1972; they called it the Home Box Office, now more commonly known by its acronym, HBO.

HBO pioneered the use of satellites to spread its content to all those community access cable networks; TBS, an Atlanta local television station owned by Ted Turner soon joined them, at first offering content for free, funded by advertising. Eventually, though, TBS and other channels, including the USA Network and an all-sports venture called ESPN, realized that the entrepreneurs investing in building out cable systems needed content to entice new subscribers in order to pay off their fixed costs: that meant the ability to charge fees on a per-subscriber basis — provided, of course, that the cable channel charging such fees actually had content that was worth paying for.

What made this transition easier is that cable operators were already charging customers for access; cable channels didn’t have to charge customers directly, and if their subscriber fees resulted in higher cable rates, well, that wasn’t their problem! Indeed, it wasn’t a problem for anyone: thanks to bundle economics everyone was happy. Cable operators charged more but justified increases with more and more cable channels; customers may have grumbled but increasingly found cable indispensable, thanks to cable networks doing exactly what they were incentivized to do: create or acquire content that was worth paying for.

Vertical Versus Horizontal

Perhaps the oldest theme on Stratechery is the importance of understanding the difference between vertical and horizontal companies; in May 2013 I wrote of Apple and Google:

Apple invests in software, apps, and services to the extent necessary to preserve the profit they gain from hardware. To serve another platform would be actively detrimental to their bottom line. Google, on the other hand, spreads their services to as many places as possible – every platform they serve increases their addressable market.

Vertical companies like Apple achieve profits by selling differentiated goods at high margins. Horizontal companies like Google, on the other hand, achieve profits through scale, which by extension means being free (or as low cost as possible) is more important than being the “best”; the brilliance of Google’s model, of course, is that having more users, and thus more data, means it is the best as well.

Indeed, that is the foundation of another major Stratechery theme: Aggregation Theory. Some companies, in markets with zero distribution costs and zero transactions costs (like search, for example), can leverage an initial user experience advantage into a virtuous cycle: new users attract new suppliers, which in turn increases the user experience, thus attracting even more users, in turn attracting more suppliers, until the aggregator has all the users and all the suppliers. Naturally, given that the payoff is, as I said, all the users, aggregators are horizontal companies.

Netflix: The Disruptive Aggregator

Netflix is an aggregator, perhaps my favorite example of all, in part because their industry — television — was in a far stronger position than the text-based industries aggregated by Google and Facebook. Making good content is hard, and expensive, and cable has always been a good deal; that Netflix has been as successful as it has is perhaps the most powerful example there is of how an initial user experience advantage can lead to a dominant position in an industry.

Netflix is also disruptive; while the term is overused, the formulation is actually quite simple: a new entrant leverages a technical innovation to serve customers with a business model incumbents cannot compete with, and over time moves up the value chain until those incumbents end up with a worse product that is more expensive to boot.

In the case of Netflix the innovation was streaming over the Internet: it was both a user experience breakthrough that gained the company customers, providing revenue with which the company could start to produce its own content, and also an enabler of a new business model — content everywhere. From a recent feature in Variety:

No media company today is expanding faster and is more talked about, admired, feared and debated than Netflix — which has upended the traditional models for television and inspired binge culture. “They totally made television global, and that was an unheard-of concept,” says Harvey Weinstein. “Whoever thought of buying universal rights to anything?” Depending on where you stand, Netflix is either saving Hollywood or wreaking havoc on an already unstable industry.

Netflix’s recent deal with longtime ABC Studios showrunner Shonda Rhimes draws that line quite nicely: for content creators Netflix’s rise has been a boon, not only financially but also creatively; for networks the streaming service is nothing but a threat, not just for talent but also viewer attention, and, inconveniently, a source of income at the same time.

Disney’s Netflix Problem

Rhimes former employer, Disney, is a perfect example. Back in 2012 the media company signed a deal with Netflix to stream many of the media conglomerate’s most popular titles; CEO Bob Iger had crowed on an earnings call earlier that year:

We feel very, very good about opportunities in SVOD and on digital platforms, as we’ve seen and other large media companies have seen the opportunities to monetize owned IP are only growing not just because of new technology but globally. And I think you’ll continue to see growth in both revenue and growth in bottom line, in income, from output deals to these third party or new platform owners. An exciting time for intellectual property owners.

Iger’s excitement was straight out of the cable playbook: as long as Disney produced differentiated content, it could depend on distributors to do the hard work of getting customers to pay for it. That there was a new distributor in town with a new delivery method only mattered to Disney insomuch as it was another opportunity to monetize its content.

The problem now is obvious: Netflix wasn’t simply a customer for Disney’s content, the company was also a competitor for Disney’s far more important and lucrative customer — cable TV. And, over the next five years, as more and more cable TV customers either cut the cord or, more critically, never got cable in the first place, happy to let Netflix fulfill their TV needs, Disney was facing declines in a business it assumed would grow forever.

The company finally responded earlier this month: not only did Disney terminate its deal with Netflix, CEO Bob Iger announced plans for Disney’s own streaming service, populated not only with the company’s family-friendly library but also original shows. Make no mistake, this is a big deal, and strategically sound; Disney, though, faces an under-appreciated challenge in making this streaming service a success: its own fundamental nature as a company.

Disney’s Choice

One of the luxuries of monopoly is that a company doesn’t need to make the vertical/horizontal distinction I referenced earlier; Microsoft, for example, profited for years with a vertical-type business model — making money on device sales, via licensing — without ever developing an internal culture suited towards creating differentiation that customers would pay for. The presumption was they would have no choice, leaving the company free to focus on horizontal empire expansion.

That is a big reason why the company floundered when the rise of mobile reduced PCs to a minority position in the market; in an effort to preserve the business model former CEO Steve Ballmer attempted to build a devices business that Microsoft was fundamentally unsuited for. And, on the flipside, CEO Satya Nadella’s greatest achievement has been shifting the company towards non-Windows-dependent services that serve everyone, the sort of approach that Microsoft as a company is far better at.

Disney has the opposite problem: the company is really good at creating differentiated content — the absolute best in the business. The business model, though, has been a horizontal one. Thanks to the cable bundle the company has long since grown accustomed to getting a little bit of money from everyone, not a lot from the smaller number of folks who are willing to pay a premium for Disney’s differentiation.

The challenge for Disney is that as that old business erodes, the freedom to not choose between a vertical and horizontal model will erode as well:

• Disney could pursue a vertical business model that would suit its differentiated approach; this would mean a streaming service that looks a lot like HBO. A relatively high price for a relatively small amount of content, and, by extension, an outsized dependence on the company’s ability to continually generate must-see TV.
• Disney could pursue a horizontal business model that better aligns with the economics of video; video has high fixed costs which means the more customers over which to spread those costs the better. This, interestingly enough, would look much more like Netflix: ever more content with the goal of reaching ever more customers, and becoming an aggregator.

The worst approach would be to try and have it both ways: a streaming service that has limited differentiated content with horizontal audience and revenue assumptions; unfortunately for Disney this is exactly what Iger hinted at in his announcement:

• While Iger didn’t announce pricing, he did say that “What we’re going to go for here is significant distribution because we believe one way to be successful in the long run is for both of these services to reach a maximum number of people.” That sounds like a horizontal approach!
• At the same time, Disney might not even include all of its own content in the service. Iger said of Marvel and Star Wars, “We’ve also thought about including Marvel and Star Wars as part of the Disney-branded service, but there where we want to be mindful of the Star Wars fan and the Marvel fan and to what extent those fans are either overlapped with Disney fans or they’re completely basically separate or incremental to Disney fans.”

To be clear, both of these decisions are up in the air, but Iger’s comments are fundamentally at odds with each other: you reach everyone by having more content, not less, and by building a new sort of bundle (which is exactly what Netflix is doing). That means not only including Marvel and Star Wars but also content from non-Disney studios as well. Yes, that may seem antithetical to Disney, the only company that can rival Apple when it comes to fanatical control of how it is perceived by customers, but the company is rapidly losing the luxury of having cable companies do its dirty work.

On the other hand, if Disney insists on doing its own thing, limiting its service to its own differentiated content, it needs to charge the premium that such a strategy entails, and accept the smaller customer base that will result.

The Challenge of Culture

From my perspective the best approach is the horizontal one: content production is economically suited to a model predicated on maximum reach, and the Disney brand is uniquely capable of giving Netflix a run for its money when it comes to acquiring customers and building the streaming bundle of the future.

I wonder, though, if Disney, particularly under leadership that was so successful under the old model, is desperate enough to do what it takes to build a truly successful horizontal business. In some respects the challenge is even more difficult than Microsoft’s: in that case the company had to give up its business model to pursue a new opportunity that fit the fundamental nature of the company. I am suggesting Disney do the opposite: keep its business model — making money from everyone — while letting go of the need to control everything that is so inextricably tied up with the ability to create differentiation. It might be too much to ask.