Zip2

Zip2 was a company that provided and licensed online city guide software to newspapers.[1] The company was founded in Palo Alto, California as Global Link Information Network in 1995, by brothers Elon and Kimbal Musk and Greg Kouri.[2] Initially, Global Link provided local businesses with an Internet presence,[3]:61 but later began to assist newspapers in designing online city guides before being purchased by Compaq Computer in 1999.[4]

Zip2
FormerlyGlobal Link Information Network (1995–1996)
TypePrivate
FatePurchased by Compaq Computer in 1999
Founded1995 (1995) (as Global Link Information Network)
Palo Alto, California, U.S.
FounderElon Musk
Kimbal Musk
Greg Kouri
DefunctFebruary 1999 (1999-02)
Headquarters
Palo Alto, California, California
,
U.S.
Area served
United States
ProductsZip2.com
Auto Guide
ParentCompaq Computer (1999–)
Websiteweb.archive.org/web/19990202180446/http://www.zip2.com:80/

History

Global Link Information Network was founded in 1995 by brothers Elon and Kimbal Musk and Greg Kouri in Palo Alto, California with money raised from a small group of angel investors,[5][6][7] plus US$6,000 from Kouri.[3] In Ashlee Vance's biography of Elon Musk, it is claimed that the Musks' father, Errol Musk, provided them with US$28,000 during this time,[3]:Ch.4 but Elon Musk later denied this.[5] He later clarified that his dad provided around 10% of US$200,000 as part of a later funding round.[8]

Initially, Global Link provided local businesses with an Internet presence by linking their services to searchers and providing directions.[3]:61 Elon Musk combined a free Navteq database with a Palo Alto business database to create the first system.[3]

In 1996, Global Link received US$3 million in investments from Mohr Davidow Ventures and officially changed its name to Zip2.[3] Davidow Ventures changed the fundamental strategy of Zip2 from localised direct to business sales to instead selling national back end software packages to newspapers to build their own directories.[3] Elon Musk was appointed the Chief Technology Officer and Rich Sorkin became the Chief Executive Officer. Zip2 trademarked "We Power the Press" as its official slogan and continued to grow.[3] Zip2 struck deals with The New York Times, Knight Ridder, and Hearst Corporation,[3] and its collaboration with newspapers made it a major component of "the U.S. newspaper industry's response to the online city guide industry", according to the Editor & Publisher.[9]

By 1998, the company had partnered with about 160 newspapers to develop guides to cities, either locally or at full scale. According to chairman and founder Elon Musk, twenty of those newspapers led to full-scale city guides. The New York Times reported that Zip2 also provided newspapers with an online directory, calendar, and email alongside their core offering.[10]

Product

Zip2 allowed for two-way communication between users and advertisers. Users could message advertisers and have that message forwarded to their fax machine. Likewise, advertisers could fax users and users could view that fax using specific URLs.[11][12]

One Zip2 product was called "Auto Guide". AutoGuide connected online newspaper users with local dealership or private party car sellers.[11]

Merger and acquisition attempts

In April 1998, Zip2 attempted to merge with CitySearch, its main competitor. While Musk initially supported the merger,[13] he persuaded the board of directors not to proceed with it.[14] According to The New York Times, The two companies "cited incompatibilities in cultures and technology" as the reason for the merger's failure.[15]

In February 1999, Compaq Computer paid US$305 million to acquire Zip2.[3]:109 Elon and Kimbal Musk, the original founders, netted US$22 million and $15 million respectively.[3]:109[16] The company was purchased to enhance Compaq's AltaVista web search engine.[4][17]

References
  1. Outing, Steve (24 October 1997). "Zip2 Plays Up National Network Card". Editor & Publisher. Archived from the original on 2 December 2014. Retrieved 10 December 2015.
  2. "Elon Musk". Foundation 20.
  3. Vance, Ashley (2015). Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future. HarperCollins. ISBN 9780062301239.
  4. Napoli, Lisa (17 February 1999). "Compaq Buys Zip2 to Enhance Altavista". The New York Times. Retrieved 10 December 2015.
  5. Strauss, Neil (15 November 2017). "Elon Musk: The Architect of Tomorrow". Rolling Stone. Retrieved 15 November 2017. One thing he claims is he gave us a whole bunch of money to start, my brother and I, to start up our first company [Zip2, which provided online city guides to newspapers]. This is not true," Musk says. "He was irrelevant. He paid nothing for college. My brother and I paid for college through scholarships, loans and working two jobs simultaneously. The funding we raised for our first company came from a small group of random angel investors in Silicon Valley.
  6. Huddlestone Jr., Tom (June 19, 2018). "Elon Musk slept on his office couch and 'showered at the YMCA' while starting his first company". CNBC. Archived from the original on August 18, 2020. Retrieved September 4, 2020.
  7. Hull, Dana; Delevett, Peter; Owens, Jeremy C. (2012-08-13). "Greg Kouri, early investor in PayPal, dies in New York". The Mercury News. Retrieved 2021-01-30.
  8. @elonmusk (December 28, 2019). "We started Zip2 with ~$2k from me plus my overclocked home-built PC, ~$5k from my bro & ~$8k from Greg Kouri (such a good guy — he is greatly missed). My Dad provided 10% of a ~$200k angel funding round much later, but by then risk was reduced & round would've happened anyway" (Tweet) – via Twitter.
  9. Outing, Steve (31 August 1998). "Zip2's Evolving City Site and Portal Strategy". Editor & Publisher. Archived from the original on 18 October 2016. Retrieved 22 June 2016.
  10. Flynn, Laurie (14 September 1998). "Online City Guides Compete in Crowded Field". The New York Times on the web. The New York Times. Retrieved 10 December 2015.
  11. Rossello, Rosanne (September 1996). "Zip2 offers Yellow Pages niche to newspapers" (1). Joss Group. Seybold Report on Internet Publishing.
  12. "Zip2 to offer online Auto Guide" (4). Joss Group. Seybold Report on Publishing Systems. October 1997.
  13. Cooper, Charles (3 April 1998). "CitySearch, Zip2 to merge in $300 million deal". ZDNet. Retrieved 22 June 2016.
  14. Kidder, David; Hoffman, Reid (2013). The Startup Playbook: Secrets of the Fastest Growing Start-Ups from the founding Entrepreneurs. San Francisco, CA: Chronicle Books. pp. 2224–228. ISBN 978-1452105048.CS1 maint: multiple names: authors list (link)
  15. "2 Web Ventures End Merger Plan". The New York Times. 1998-05-18. ISSN 0362-4331. Retrieved 2016-06-17.
  16. Junnarkar, Sandeep (February 16, 1999). "Compaq buys Zip2". CNET.
  17. "Compaq Buys Software Firm Zip2". Los Angeles Times. Reuters. 1999-02-17. ISSN 0458-3035. Retrieved 2016-06-17.
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