Beyond.com

» see beyond.com as it lived, on the wayback machine

~ the goodbye ~

Buying software over the internet was not something I did in 1999. On a 33.6k line a thirty megabyte installer was an evening you had to plan, and a Turkish student did not have a card that a California store would accept anyway. Software arrived on CDs that went around, or in a box from a shop, and the idea that you would pay a US website and receive the program itself down the same wire was theoretically obvious and practically absurd. Beyond.com was built on that theory about six years too early.

It began in 1994 as software.net, launched by William McKiernan, who had come out of Egghead Software and had built a payment system to run the store. On 31 december 1997 the two halves were split into separate companies: the store became software.net Corp and then Beyond.com, and the payment engine became CyberSource. The store took the famous name and the attention. It went public in june 1998 at nine dollars a share and traded above thirty-five within the year.

By 1999 it was the largest online software vendor in the world by its own accounting and nobody much disputed it. The catalog ran to 45,000 titles, of which nearly 5,600 could be delivered as a download rather than shipped. It had passed a million customers and annual sales of 37 million dollars, roughly half of that from downloads. It also lost close to everything it earned, which was the standard arrangement at the time and stopped being tolerable about eighteen months later.

~ the chronicle ~

~ the breakout ~

McKiernan hired Mark Breier away from Amazon, where he had been director of marketing, to run the company. Breier spent like somebody who had watched Amazon buy a market share and understood the mechanics but not the timing. The stock cooperated for a while and the brand got genuinely famous, which in 1999 was widely mistaken for a moat.

~ the funny part ~

The campaign that made Beyond.com a household name was a naked man. The premise of the advertising was that once you learned to shop from home you would stop seeing the point of clothes, so the customer in the spot sat there without any, buying software. Breier committed to it further than any board should have allowed and gave a CNBC interview wearing nothing but his underwear. The company sent out 300 pairs of Beyond.com branded underwear tucked into press kits.

It worked, in the sense that people remembered it. Twenty-five years later the underwear is the most durable thing the company produced, which is a hard result to argue with and a harder one to bank.

~ how it actually ended ~

In early 2000 the management gave up on selling software to consumers and turned the company into a business-to-business operation, running branded online stores for other people. It had already built stores for McAfee and an international one for Symantec, so the pivot was credible. Deloitte ranked it tenth on the Silicon Valley Technology Fast 50 in september 2000, Ron Smith took over as chief executive that june, and by the middle of 2001 it had still never made a profit.

Chapter 11 was filed on 24 january 2002. Digital River agreed to take the eStores and government systems businesses for 3.5 million dollars in cash and roughly 7.4 million in Digital River stock. The plan of liquidation went in on 9 august 2002, and that was the end of the naked man.

~ the long tail ~

The thing Beyond.com actually believed was correct. Software would stop coming in boxes, the delivery would be the download, and the shelf would disappear. Steam launched the year after the bankruptcy and the App Store six years after that, and now a program arriving on physical media is the strange case. Beyond.com had the argument right and the bandwidth wrong, which in 1999 was the same thing as being wrong.

The other half is worth a line. CyberSource, the payments company split off from the store on the last day of 1997, was the piece nobody was writing about. It survived the crash, kept processing transactions for people who did not want to build that themselves, and was bought by Visa in 2010 for around two billion dollars. The boring half won.

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