Charles Stack may be the first person to ever sell a book on the Internet. It’s not a stretch to call him the Ferdinand Magellan of e-commerce, exploring the very edges of the online world at a time when the Internet was text only, security encryption was still military technology and people trying to sell stuff were as welcome as a 16th century Spaniard in the Pacific. Stack courageously ventured into those inhospitable waters in 1992 when he founded the world’s first online bookstore — Book Stacks Unlimited — long before the World Wide Web existed.
What Stack remembers most about that first online sale was the waiting. Interminable waiting. He first got word out about the bookstore by placing ads in magazines dedicated to the esoteric world of online bulletin board systems — BBSs in computerese.
Then, day after day, Stack and his small staff passed time at the office, waiting for someone — anyone — to see one of the ads and dial the phone number that would let their computer log on to the bookstore.
“BBS technology lets you watch the guy navigate through the site,” Stack explains. “So we sat there and watched the modems, with the ringers turned up loud.”
After a week of nervous fidgeting, a modem finally hissed and lit up. Stack and his staff huddled around a single monitor to watch the historic transaction unfold.
“I remember watching this person typing very, very slowly,” Stack recalls in an uncharacteristic chattiness. “He navigated so slow.”
The minutes dragged; the staff waited for the visitor to make a purchase; Stack tried not to interfere. But a mix of excitement and frustration got the better of him. “We couldn’t stand it anymore,” Stack says. “Finally, we broke in on his session and told him he was our first customer.”
Stack had spent a year painstakingly programming the BBS for ease of use — an unusual nicety at the time — and he wanted to ask the customer what was taking so damn long. Instead, he prudently typed the more open-ended message: “Why do you like this service?”
He waited through an abnormally long pause, and waited still more as the answer appeared on the screen in front of him, one painstakingly typed letter at a time:
A…s… … a… … b…l…i…n…d… … p…e…r…s…o…n…, the response began. Several minutes later, Stack understood what the technology meant for his first customer, who had a computer that read ASCII text aloud and a Braille keyboard for input.
Charles Stack may have been the first true online retailer, but his venture was grossly undercapitalized and outmatched by those who followed. “My dream was to have a bookstore that had every book ever published. To feed my own habit,” says Stack, whose own bookish personality is more like the reference section than, say, new fiction.
The selection eventually reached more than 500,000 titles under Stack’s ownership, but for all his vision about the impact of the Internet on consumers, Stack failed in one critical area: He didn’t anticipate the excitement it would generate in the financial community.
If his goal from the start had been to take the enterprise public, Book Stacks today might be the premier online book store. But Stack’s entrance into the world of Internet finance came before the impossibly high multiples achieved by one high-tech stock after another.
Instead, he sold the business in 1996 for $4.2 million to the company that has since become Cendant Corp. (At the time, its sales volume apparently had already been eclipsed by the months-old Amazon.com, though Stack has never revealed any meaningful clues about the finances of his businesses.)
It was an unquestionably profitable payday for Charles Stack — but nothing compared to the $32 million that Amazon’s IPO attracted just a month after the sale. All of which made the transaction seem rather familiar to Stack, who has spent the last 20 years a step ahead of the mainstream and a step behind the big money.
But in the mind of this reclusive entrepreneur, that is about to change.
After quietly undermining the foundation of the retail book trade, Stack has now taken aim at the software business. His latest venture, Flashline.com, sells software components online, and Stack believes it will change the way businesses acquire and build their software applications. This time, his plan includes remaining the market leader.
When Charles Stack graduated from Case Western Reserve University law school in 1982, he was already familiar with computers; he owned the fabled Radio Shack TRS-80 Model 1 — the first true personal computer. In 1980, as a student law clerk, he computerized the products liability division of Nurenberg, Plevin Heller & McCarthy Co. LPA.
“Then IBM came out with the first real PC,” recalls Stack. “And I computerized the entire law practice.”
Stack soon branched out on his own to take his computer know-how to other law firms. “I wrote time and billing software and case management software,” he says. “I realized it was more fun than practicing law.”
In 1984, he founded Parallax MicroSystems Inc., which designed and implemented custom software for law offices. That business plodded along until late 1988, when opportunity knocked. Stack says simply, “The Wellington Group broke up.”
It was a consortium of law firms that handled asbestos liability claims across the United States — one firm in each city. Suddenly, Stack says, defendants were forced to find new representation, and Parallax software was in the middle of the gold rush. “We wrote our first asbestos case management system that year and grew 25-fold overnight.” he says.
For the next three years, Stack crisscrossed the country, hawking his product.
By the time asbestos business slowed down, he had stumbled across computer bulletin board systems. In the days before the graphic capabilities of the World Wide Web, BBS’s were the first online communities, allowing people with a shared interest to post messages and create conversations, regardless of their geographic location.
Though his background wasn’t in retail, Stack made an immediate leap in understanding that the power of this new medium was not in idle conversation, but rather in applications.
“All we ever did was database technology,” he says. “So I thought it would be cool to combine a BBS with a database — and sell stuff.”
In 1991, Stack wrote a simple program for Book Stacks. Two years later, it became a telnet dial-up service. “That created global access to the bookstore and tapped into the power of the newly developing Internet.”
In 1994, when most people were looking for [email protected] on the keyboard, Stack developed Book Stacks’ Web site.
The business was a success. It received national awards for content, innovation and design. But Parallax never provided enough cash to market the “store” effectively, and by 1995, Stack believes, it was too late.
Though he says he lined up venture capital, the deal never closed. Stack blames the overbearing headlines generated at the same time by the Amazon.com start-up. But Stack’s reclusive nature may have played a role, too.
“He was right out there with the first practical use of the Internet. Anybody that was doing Web technology back then knew of him,” offers Ron Copfer, of Copfer and Associates, who first tapped the emerging Internet at the same time and for the same market as Stack — using it to do research for courtroom attorneys.
The community of Internet-savvy entrepreneurs was small then — perhaps no more than five or six people in Greater Cleveland. Oddly, none of them know Stack personally.
“I’ve never spoken with him or met him to this day,” Copfer says.
“I dialed into his telnet store,” recalls Mark Geyman, founder of Netforce Development and another member of that pioneering clique. “Everybody did back then. But I’ve never met Stack.”
Even Stack admits that he’s an inside guy — more interested in building an infrastructure than promoting a business — though he’s not quite ready to concede that may have been why he failed to raise capital for Book Stacks.
So when he got an offer to sell the business outright, he took it. Even then, he wouldn’t talk about himself or his ideas. The book store, he told SBN at the time, “is the real story.”
After selling the business, Stack stayed on to develop new ideas. “I’d been doing Internet retail for a few years and saw the next big thing was going to be digital products,” he says. “If not packaged products, then services.”
As soon as he figured that out, he signed a noncompete agreement and in early 1998 left Cendant to open Flashline.com.
“I saw a great opportunity,” he says. “And it was best to do it as a start-up.”
In a large whiteboard behind Stack’s desk is a three-year plan for anyone to see. He’s scribbled a flowchart depicting his vision for the future of the software industry. Not surprisingly, Flashline.com is in the middle.
“That’s about three months worth of work,” Stack says. “I had to determine things that don’t even exist yet. We’re about a good year ahead of everyone else. We will be well-poised when this industry does take off.”
But Flashline had to start small. Stack’s only rule: It had to sell a downloadable digital product.
He settled on typefaces. The company offers more than 720 fonts, most for less than $39. While nobody at the company will offer even the slightest hint about sales volume, Stack says traffic has been good enough to let him develop Beans By Design — the product that he thinks will change the software business.
Beans By Design, which is based on the Java programming language, allows software developers to upload original programs to the Flashline server. The idea is to create a marketplace where software designers and companies come together to commission, buy and sell reusable software components that simply plug into existing software.
For instance, a company that doesn’t need an entire ERP program could buy just an inventory control module — or commission a designer to create a specialized module.
More than 200 software developers worldwide have signed on, according to David Goebel, Flashline’s director of business development.
Contrast that to today’s software design, which offers two choices: Buy an expensive custom package for your business or buy an off-the-shelf package and pay consultants to adapt it. Either way, the bill is likely to be tens of thousands of dollars for a system that still falls short 12 months later.
In Stack’s model, users buy components that generally sell for less than $500 apiece, and drop them into existing software.
“This is the outsourcing of customized software components online,” says Goebel. “And no one else is doing it. What happens is that people find components that fit 80 percent of what they needed [that aren’t] exactly what they’re looking for. With Beans By Design, they can provide specs and have the designers bid to develop the specific customized component in an auction setting.”
As new components are developed, they are added to Flashline’s database, creating a cafeteria-style system for customized software. That, says Stack is the revolutionary aspect: “Reusable software components will finally move software development from craft to science — and with it bring faster development, lower costs, bug reduction and reduced maintenance.”
“In my most optimistic moments, I think Flashline’s model will change the way software’s made,” Stack muses. “On a more realistic level, we’re trying to make a fundamental change in an industry.”
One of Stack’s lesser-known enterprises was the early registration of nearly two dozen high-profile Internet domain names, including books.com (Book Stacks) and cleveland.com — which he sold to Cleveland Live.
“We sold all the best ones ,” he says. Disney paid Stack $25,000 for movies.com. Brokering domain names has become a lucrative (if not well-regarded) business. But Stack never made out that well. “We got between $15,000 and $25,000 each,” he says.
That begs the question — Why does Stack think he’s about to hit the jackpot this time, after a history of visionary enterprises that have only performed well enough?
First, he says, “I’ve been in the custom software business since 1984 in one way or another. This is a more natural fit for me.”
Second, the experience with Amazon.com taught him the importance of promotion. For Flashline, Stack has sought and received publicity among the half-dozen or so leading trade publications in software development.
He has beefed up his PR and marketing staff, and no matter how uncomfortable it makes him, he allows himself to be prodded into public appearances and handshaking opportunities.
Stack’s usually grim countenance has been replaced by a warmer facade. Though he’s still likely to answer questions with the kind of short, uncolorful phrases that brand him “a tough interview” among the journalists he needs, you can at least see the effort in his face. He has accepted the need for a more public profile.
He’s been featured at several Internet software conferences, and slowly is gaining the national reputation he might have earned years ago.
As a result, Flashline is starting to develop the elusive and all-important “buzz” that is central to success on the Internet. A simple keyword search for Charles Stack and Flashline turns up dozens of glowing references from software developers and purchasers.
But most important to his success — and the success of anyone who dabbles in Internet businesses — is the one thing Stack seems to have today that he never had before: an appreciation for the money.
He says he will raise capital (he met with prospective investors the day before his photo shoot with SBN and termed the meeting a “nightmare” that went well). And he will eventually take Flashline public — even if it means smiling ’til it hurts. Perhaps then he’ll finally earn his place in the history of Internet exploration.