What Hath God Wrought

It was the Internet of its day….

On May 23, 1843, Samuel FB Morse flashed the message “what hath God wrought” along a wire strung from the US Supreme Court Chambers in Washington DC to the Mount Clare railway depot in Baltimore, Maryland.

It was a message that changed the world.

For all of human history, the fastest anyone had been able to transmit a message was a man on horseback carrying a piece of paper.

In France, Napoleon had invested massive amounts of time and effort building a semaphore system using towers and signal arms that could transmit information from tower to tower all the way from Paris to the coast.  Now, it was possible to transmit information almost instantly along a wire.

Like the Internet, the invention of the telegraph would have massive repercussions; and most people were not aware of just how deep the impact of this new technology would be on many industries and on many long-established ways of life and of business.

The more interesting thing is that the invention initially proved to be a financial disaster.

Morse had been able to raise $30,000 from Congress as an initial investment in his telegraph concept.  That was a massive sum in those days, and many in Congress were strongly opposed to the spend.  Representative Cave Johnson of Tennessee opposed the funding, saying that if they were going to start funding the electro-magnetic telegraph, they should start funding mesmerism as well.

Some things never change.

With his $30,000 investment, Morse was able to build his sample telegraph system and one would have thought that upon demonstration, millions would have flocked to his new invention.

This was not to be the case.

When Morse opened the ‘lightning line’ for business, he earned just under $1 in its first week in operation.  He offered to sell the whole thing back to the government for $100,000 and they turned it down as a money-loser.  Later, when Morse opened a telegraph office in New York, the first one, he tried charging admission to watch a telegrapher at work as a way to subsidize the company.

Sound familiar?

Ultimately, of course, Western Union would grow to be one of the most powerful and wealthiest companies in the US.  But prior to that, there was a wild period in the early history of telegraphy.  Unlike railroads or shipping, virtually anyone with a wire and a battery could enter into the telegraph business.  This morning at breakfast, my wife told me that her father, who had been in the Royal Navy, built a telegraph system in his own home using a key, wire and a battery.

Telegraph companies sprang up like wildflowers in the spring and went broke just as fast.

Sound familiar?

Finally, in the 1850s, Hiram Sibley began to consolidate the many small telegraph companies and formed Western Union.  Western Union succeeded because of a 19th Century version of Metcalfe’s Law.  This was named for Robert Metcalfe, coinventor of the ethernet and an engineer at Xerox Parc.  Metcalfe stated that the value of a network increases as more users are added to it.

The same is true for social networks on websites today.  Anyone can start a social network on a website, but its value increases exponentially with each additional user.  What is the value of a social network with 1 person on it? 2? 10? 10,000? Thus, the primary goal of any website should be to attract as many users as possible.

The telegraph went on to become as much a tool of creative destruction as any invention until the web.  It completely changed the way our world works, and to a great extent, we still live in its shadow.  It was only a very few years ago that broadcast and radio licenses stopped demanding that licensees learn Morse Code, really a remnant of the 1850s.

But the parallels between the development of the web and the rise of telegraphy are quite striking, and none moreso than the financial failure of so many early telegraph companies.  Even with a world-shattering technology at your fingertips, so to speak, monetizing does not come easily, nor swiftly.

I am deeply indebted to Henry Schlesinger and his wonderful book The Battery for much of the information above. Read it!