Menasha’s PowerNet: The Old-Fashioned Corner Store of the Early Internet (1998)

I came across this old newspaper clipping the other day and it stopped me in my tracks. It’s from the Appleton Post-Crescent, Monday, November 23, 1998, a piece by Avi Stern in the Fox Valley “inc.” business section, headlined “Menasha’s PowerNet an electronic corner store.” That’s me on the left in the photo, nineteen years old, standing next to my dad, Tim, in front of a rack of equipment at our offices at 304 Appleton Street in Menasha. We ran an internet company together called PowerNet Online Services, and seeing this article again brought back a whole era of my life that I don’t think about often enough anymore.

Let me set the scene a little, because it’s hard to explain to anyone who came online later just how different the internet felt back then. In 1998 the web was still new and strange and full of promise. Most people in the Fox Valley had never sent an email. “The internet” was something you read about in the paper or saw on the news, and if you wanted to actually get on it, you needed a phone line, a modem, and somebody to dial into. That somebody, for about 1,500 households and businesses around Neenah, Menasha and Appleton, was us.

The old-fashioned corner store

The angle the reporter took has stuck with me all these years, mostly because it was genuinely how we thought about ourselves. “We’d like to think we’re the ol’ fashion corner store,” my dad told him. That wasn’t marketing spin. It was the whole idea. The big national players (America Online, Microsoft with its MSN service, the CompuServes and Prodigys of the world) were faceless. You were a credit card number to them. If your modem wouldn’t connect or your email stopped working, you were on hold for an hour listening to a recording, and at the end of it you talked to somebody in a call center who’d never set foot in Wisconsin.

We were the opposite of that, on purpose. Somebody could drop a sick computer off at our counter in the morning and, as I told the reporter, we’d usually have it fixed the same day or overnight. Dad called it “the kind of service you don’t see around anymore,” and even in 1998 that was true. PowerNet had started in 1996, and by the time this article ran it had grown into something more like an all-purpose cyberspace shop than a plain internet provider. We sold hardware and software over the counter. We built web pages for local businesses. We fixed machines other shops had given up on. And we were starting to dabble in this brand-new thing everybody was calling “electronic commerce.” Three of us were full-time, plus one part-timer, and the whole operation had grown straight out of my obsession with computers and my dad’s itch to run his own business.

I was the president, which sounds very grand for a teenager. The truth is in that quote where I admitted I’d “used a lot of my college tuition money” to get the thing off the ground. That was a real decision and not a small one. I had a choice in front of me about what to bet on, and I bet on this. My dad was 48, I was 19, and between his nerve and my willingness to live inside a computer for eighteen hours a day, we somehow made a real business out of it.

What the internet actually looked like in 1996

People forget what getting online actually involved back then. There was no always-on connection, no Wi-Fi, no little icon that just quietly stayed green. You sat down at the computer, opened your dialer, and listened to that unmistakable sound: the dial tone, the touch-tones of the number, and then the screech and hiss of two modems negotiating a handshake. If you were lucky it locked in and you heard the static settle into a connection. If you weren’t, you got a busy signal and tried again.

And actually getting a new customer connected was an adventure every single time. Windows 95 and 98 had Dial-Up Networking buried in them, but you couldn’t count on it being set up right. Half of what we did was walk people through configuring TCP/IP by hand: entering DNS server addresses, setting up the Winsock stack, pointing their email client at our mail server, getting the dialer to actually pass the username and password through. A huge chunk of our support calls were just sitting on the phone with somebody, reading them numbers to type into little boxes, while their computer sat there making that modem noise in the background. We did it cheerfully because that was the job, and because that was exactly the kind of hand-holding the national outfits would never give you.

Speeds were a moving target, too. We’d gone from 14.4k to 28.8k to 33.6k modems, and when the 56k modems showed up in 1997 they split into two warring standards: U.S. Robotics had x2 and everybody else had K56flex, and they didn’t talk to each other. You had to make sure the modems in your dial-up bank could handshake with whatever junk your customer had bought at the store. The whole industry held its breath until the v.90 standard finally settled it in 1998. To put 56k in perspective: that’s slower than a hundredth of the speed of a basic connection today. A single photo could take a minute to load. We thought it was miraculous.

The room full of modems

That rack of gear behind us in the photo was the actual heart of the business, and I loved it. Running a dial-up ISP meant you had to be the phone company’s customer in a big way. Every person dialing in at the same time needed their own modem and their own phone line on our end. So you had banks of modems: the U.S. Robotics Total Control chassis were the gold standard, racks of modem cards all humming away, wired into terminal servers that answered the calls, authenticated the user, and handed them an IP address. You sized the whole thing on ratios: how many subscribers could you pack onto how many lines before people started hitting busy signals at 8 p.m. when everybody got home and logged on at once. Get that ratio wrong in either direction and you either went broke buying lines you didn’t need or made your customers furious because they couldn’t connect.

Behind the modems sat the servers that actually made us an internet provider: the machines running our mail, our news feed, the customer web space, the authentication database, and the connection out to the rest of the internet through a leased line. That upstream pipe was the single biggest check we wrote every month. Bandwidth was expensive and you bought it in chunks that felt enormous and laughably tiny at the same time. I spent more late nights than I can count babying those boxes, watching logs scroll by, restarting a service that had wedged itself, swapping a dead modem out of a bank at midnight so the morning crowd could get online. There’s a particular kind of pride in being the invisible thing that just works, the dial tone of the internet for your whole town, and I felt it even when I was exhausted.

Going up against AOL

Here’s the part that the “corner store” framing in the article was really about: we were a tiny local shop trying to survive in a market that the giants were doing everything in their power to own. America Online was the eight-hundred-pound gorilla. You literally could not escape their CDs: they came in the mail, they were taped to magazines, they showed up everywhere offering you free hours. AOL wasn’t really the internet, either; it was a walled garden, its own little world of keywords and chat rooms and channels, with the actual web sort of bolted on the side. But for a lot of people AOL was the internet, because it was the name they’d heard and the disc was sitting right there.

And then came the price war that nearly ended all of us. AOL flipped to flat-rate unlimited access at $19.95 a month, and the whole industry had to follow. For a small provider that was brutal math. Flat-rate meant your heaviest users could sit online all day and all night for the same money as somebody who checked email once a week, and every one of those hours tied up a modem and a phone line that you were paying for. AOL famously got so overwhelmed with their own flat-rate flood that customers got nothing but busy signals for months. We watched that happen and had to thread the needle: keep our prices competitive with the nationals, keep enough lines open that our people could actually connect, and still come out with a little money at the end of the month. There were a dozen other little ISPs around the valley doing the same dance, plus the cut-rate national flat-rate outfits underpricing everybody. It was a race to the bottom on price, and our whole bet was that some people would pay a few dollars more to deal with a human being who knew their name and would fix their computer the same day. A lot of them did. Not enough of them, in the end, but a lot.

Betting on electronic commerce

The most interesting part of the article, reading it now, is the part where we were clearly trying to see around the corner. We’d figured out that being a dial-up provider was a commodity business with the margins getting squeezed flat, and that the real money was going to be in helping people do things on the web, not just get to it. So we leaned hard into building web sites and into e-commerce.

The reporter talked to one of our clients, David Kauzlaric, who ran Fox Valley Military Surplus in Appleton. We’d built him an online store and, more importantly, gotten it placed so well that it came up first out of 361,000 results, and in the first five days at the top he got 13,000 hits. He gave us a great quote: “It’s one thing to have a nice Web site, it’s another to be well placed on the search engine.” Most people had never heard the phrase “search engine optimization” yet, and we were already living it. Getting a small-town surplus store to the top of the results and watching the orders roll in. That felt like magic, and it felt like the future.

We’d also just launched our own e-commerce site, letsbuyonline.com, where you could buy and download more than 127,000 software programs. Think about how wild that idea still was in 1998. No box, no shrink-wrap, no drive to the store. As I told the reporter, “Without ever getting out of a chair, consumers can use a credit card, download legally licensed programs via the Internet, and within minutes you’re using the stuff: in terms of convenience, it’s unbeatable.” I said electronic commerce was “the wave of the future” and that “it will make billions.” My dad laid out the bigger dream: take that electronic corner store and grow it into something “akin to a virtual mall,” partnering with the up-and-coming internet powerhouses like Amazon.com so people could buy a million different things (food, clothes, appliances, books) and we’d earn a commission on all of it.

What we got right, and what we didn’t

Reading those quotes from a teenage version of myself, I have to laugh a little, because we were so right and so wrong at the same time. Right that e-commerce would make billions. It made trillions. Right that you’d eventually buy everything online and have it download or show up at your door. Right that Amazon was the powerhouse to bet on. We saw the shape of the whole next twenty years pretty clearly from a little storefront on Appleton Street.

What we couldn’t see was that the “corner store” itself was the thing that wouldn’t survive. The dial-up business got steamrolled from two directions at once. Broadband (cable modems and DSL) came along and made the modem banks obsolete, and that was a game only the cable and phone companies could really play. And the relentless consolidation that swallowed the small independent ISPs swept right through the Fox Valley like everywhere else. The very personal, same-day, know-your-name service that we were so proud of turned out to be hard to scale and easy for the giants to undercut just long enough to win. The corner store, as it turned out, was as fragile online as it had become on Main Street.

But I don’t look back on it as a failure at all. I was a nineteen-year-old running a company with my father, wiring up modems at midnight, talking little surplus stores into selling online before anybody believed in it, getting written up in the paper as one of the people building the future of the valley. I learned more in those years than any class could have taught me, about technology, sure, but really about customers and patience and standing behind your work. And I got to do it side by side with my dad, the two of us figuring it out together. Not many people get to say that.

So here’s to PowerNet, to 304 Appleton Street, to U.S. Robotics modems and busy signals and the screech of a 56k handshake, and to the ol’ fashion corner store of the early internet. We were right that it was the wave of the future. We just didn’t know we were riding the very front edge of it. I wouldn’t trade that for anything.

See it for yourself

I have been rebuilding the old PowerNet Online site the way it looked back then: recreated home pages from 1998, 2000 and 2001, scanned brochures and rate cards, the server-room photos, the logos through the years, and the story of where it all started. Step inside the time machine and have a look around.