Because the Internet was cheaper, more efficient, and more reliable than any other form of computer communication, universities that were doing defense research wanted to be added to the burgeoning network. Slowly, every major university the world over was also added. Soon professors in Argentina discovered that they could communicate with colleagues in London at virtually no cost over the Internet. It wasn’t long before students came on too. Now that these students, accustomed as they were to the advantages of the Internet, were graduating from college and going to work for large companies, they would be pushing their new employers to go on line, just as Max was pushing me. Not only that, but these former students would want a commercial service to replace the free Internet accounts that they had gotten used to in college. Max assured me that the Internet was going to be the biggest thing ever. I thought it was just a fad.

I did authorize him, however, to get our office hooked to the Internet just to shut him up. Pretty soon everybody in my company was going Net crazy. They were sending messages to friends in Hong Kong, downloading computer games, checking out stocks, and making travel arrangements. And if I wasn’t mistaken, it seemed to me that I occasionally noticed pictures of unclad women suddenly vanishing from computer screens every time I happened to stroll through the office. Max had awakened a monster. The Internet was more than a fad, it was an obsession, and I was sure that before long half the country would be addicted to it.

I knew one other thing for sure: If the Internet was going to be as big as it seemed, I wanted to get in on the ground floor. Once an industry becomes established, it’s almost impossible for a newcomer to become a dominant player. Sure, you can compete by sniping at the giants from the bushes, or you can go after small market niches that the giants are unable or unwilling to defend. But to actually take their primary market from them? Not likely. I tell everyone that IDT is after AT&T and that we’re going to be bigger than they are. It’s certainly a worthy goal, and it keeps everyone excited and motivated. But hundreds of companies, some with multibillion-dollar budgets, have tried everything they can think of to take AT&T’s business away from them, and AT&T just keeps on getting bigger and bigger. Today they do more than $80 billion in sales and command more than 70 percent of the U.S. market. Does IDT really want to pass them? Of course we do. Do I really believe that my company can pass $80 billion in annual sales in my lifetime? Not a chance. Well, maybe just a little chance.

The fact is that once an industry becomes established, the major players have almost insurmountable advantages over the new guys. To begin with, they have brand loyalty and customer relationships. They know about, and have solved, the hidden technological issues that only experience can unearth. They have developed the production and distribution systems that newcomers can only replicate through trial and error. They even know where the new business is likely to come from and how exactly to capture it. They have positive cash flow and deep pockets. Most important, they are reliable. There are no surprises when you patronize them. Because they have already developed proven systems, customers are unwilling to leave them.