Alabama Rising (Wikipedia)

With the great encyclopedias of history tracing their lineage back to Rome, Imperial China, France, and Britain, few would guess that Wikipedia’s roots could be traced back to Alabama, a U.S. state known more for civil rights struggle than for being a spawning ground for great Internet projects.

Huntsville, Alabama, is where Jimmy Wales hailed from, and the city’s growth in the 1960s would have a profound effect on his outlook.

Jimmy’s parents, Doris and Jimmy Sr., came from modest backgrounds. The dad, a high school graduate, worked as a grocery store manager in town. His mother and his grandmother Erma had their own ideas on teaching children and started a small private educational establishment in town, House of Learning Elementary School. It was so small that, in the tradition of the one-room school-house, grade levels were clumped together and kids of different ages learned side by side.

Intellectual activity was not Alabama’s forte, but during the Cold War, Huntsville suddenly saw itself become a locus of activity. In the ensuing space race between the United States and the Soviet Union, there was a huge advantage in launching rockets closer to the equator, where the rotational acceleration of the Earth helped catapult vehicles into orbit. So immediately, the Southern United States found itself in a prime spot. In 1960, Redstone Arsenal and Marshall Space Flight Center opened in Huntsville, pouring resources and academics into the area. The so-called Rocket City was established in what seemed like an overnight development.

It was in the midst of the town’s upsurge that Jimmy Wales was born. Life in town with his brother and sister was exciting, as the innovative energy of the space program was palpable. Rocket tests could be heard in the background of the expanding city. "Growing up in Huntsville during the height of the space program, and all exciting things going on with that, kind of gave you an optimist view of the future, of technology and science," recalls Wales.7

Doris, ever the educator, was optimistic too, buying a set of the World Book encyclopedia from a door-to-door salesman not long after becoming a mother. Jimmy, the firstborn, was not even three years old at the time. She didn’t know it then, but she was planting a seed that would inspire a phenomenon.

As Wales learned to read, he became fascinated with the encyclopedia, which seemed to put all of human knowledge at his fingertips. World Book was a popular tome for families of the era. Its thick, glossy pages with black-and-white photos made it accessible to children and, more importantly, durable. As opposed to the delicate onionskin-like paper of Britannica and other scholarly sets of encyclopedias, World Book’s pages were tactile and withstood rough handling.

Kids could read from beginning to end, continually fed by maps and illustrations. The encyclopedia was also famous for its more low-tech "multimedia" features. The "F" volume had transparent overlays for frog dissections showing in vivid color the different organs for the muscular, digestive, and circulatory systems of the amphibian. World Book quickly became a favorite for many children like Jimmy, and its tough pages begged to be turned and dog-eared. It opened up the world of knowledge for kids in an accessible way.

But Wales also learned how inadequate it could be. Things were changing all around him. He was growing up in the Space Age, with new things being tested and discovered. And as a printed tome, the encyclopedia could not keep up with describing the technology he was seeing.

Buying a new set of encyclopedias each year was impractical, and was something only libraries could afford to do. Instead, World Book would send out amendment "stickers" to correct small errors or add new information to subscribers’ books. Owners of the encyclopedia would receive updates in the mail and dutifully apply the stickers to the respective pages, something Wales remembers doing with his mom. Of course, this could only be done for so long. At some point an entirely new edition had to be purchased.

Jimmy became a pupil in the House of Learning, under the direction of his mother and grandmother, benefiting from the close nurturing of a parent and learning from older classmates. When it came time to advance to high school, he enrolled at the Randolph School, a private college prep school near Huntsville. One of the great benefits there for Wales was access to computers, somewhat of a rarity back in 1979, when the personal computer was only beginning to blossom. It provided him his first taste of computer programming.

Wales graduated ahead of schedule from Randolph and at sixteen enrolled at Auburn University, a state-funded institution in the east part of Alabama, choosing a practical line of study—finance. He remembers life in college as a time of learning the nuts and bolts of crunching numbers.

After graduating from Auburn, Wales started graduate work in finance at the University of Alabama, and then later at the University of Indiana, in the doctorate degree program. But halfway through that program, he realized finance wasn’t his calling. Instead, he went halfway and earned a master’s degree, but chose to forgo his Ph.D.

Wales stayed in the Midwest, and with his skills, he wanted to put his talent for numbers into making money. He had written academic papers about financial derivatives and "options-pricing theory," and in the heyday of the 1980s, there was no better way to put that expertise to work than the city of Chicago, a center for the financial trade industry. A friend of his at the time was working at a Chicago trading firm, and knowing about Jimmy’s theoretical work in options, she said he should meet her boss.

Jimmy walked into the offices of Chicago Options Associates in 1994 and met the CEO Michael Davis for a job interview. Davis had looked over Wales’s academic publication about options pricing.

"It was impressive looking," says Wales wryly about the paper. "It was a very theoretical paper but it wasn’t very practical." But Davis was sufficiently intrigued, as he wanted someone like Wales to pore over the firm’s financial models and help improve them. So he took on young Wales, who seemed to be sharp and had acumen for numbers. Little did either of them know they would have a long road ahead together, with Wikipedia in the future.

Wales’s first job was to go over the firm’s current pricing models. "What was really fascinating was that it was truly a step beyond what I’d seen in academia," he recalls. "It was very practical, and didn’t have a real theoretical foundation." Wales was intrigued that the firm traded on principles that worked in practice, not in theory. (This is something he would say about his future endeavor Wikipedia.) "Basically they just knew in the marketplace that the existing models were wrong."

After working on the analysis side, Wales eventually moved on to perform trades himself. Davis noticed immediately that he was careful and thorough, and Wales quickly gained a reputation for consistently being right on his bets. The legend was that Wales might have made money on every trade he’d ever performed. But in options trading, this was not necessarily a good thing.

Recalling Davis’s criticism of him, Wales says, "Michael always said, ‘Jimmy could have made so much more money on every trade.’ He used to always tease me, ‘If every single trade makes money, you’re not being aggressive enough!’"

It was an interesting early introduction to Wales’s personality for Davis. His new employee was thorough but not aggressive, as a trader needed to be.

Life in Chicago was going well for Wales in the 1990s. He was research director of COA, and at night, on the side, he would draw on his computer hacking interest and hone his programming skills. He freely admits, "I basically had no life at the time."

But he would get a life soon enough. He would cross paths with his future wife, Christine, in June 1996 when a mutual friend arranged for them to meet at a party. "We ended up talking to only each other the entire night and stood in the same place for a few hours," Christine would remember, having been in the dark about the fix-up. A summer of dating was a thrill for the couple.

Four months later they were on a weekend getaway trip to Las Vegas Jimmy had planned. Halfway through the plane trip, Christine opened the lunch bag the airline handed out, and inside was an engagement ring from Jimmy. They resisted the temptation to elope in Las Vegas. Instead, in March of 1997, the couple married in the Florida Keys, with immediate family surrounding them.

During that time, the Internet was starting to blossom. Even while working for the trading firm, Wales still kept up with the mailing lists and discussion groups of his university days. One of the people he knew online was Tim Shell, a fellow member on one of the philosophy subject mailing lists. Working the odd job and studying computer systems in Chicago at night, Shell was on the lookout for breaking into the dot-com business, which was just taking off. He and Wales met in person when members of the mailing list would get together for social functions in the Chicago area.

The two felt it was something they could make a go of, given that start-up costs were minimal, and Jimmy could do it without leaving his COA job. Shell had the time, while Wales worked when he could after hours. Wales put in money from his trading income and Shell took money from his savings, and they were off.

What to call the venture? They jokingly thought of themselves as Bitter Old Men in Suits. What started as an acronym later had appeal in itself, so they stuck with it, officially denying that it stood for anything in particular.

Bomis, Inc., was created in 1996, but as with other dot-coms of the era, the problem was coming up with a viable business model. The sheer breadth of ideas Bomis explored during this period reads like a tour through Internet history. Their first idea was to create an online used-car directory. Shell bought a digital camera, an exotic thing back then, and offered to take photos of cars at different dealers and put the cars up for sale on the Internet. When Shell snapped photos of the cars, the dealers got a kick out of seeing the photo instantly on the camera’s screen.

But Wales and Shell quickly found that this enterprise wasn’t something that scaled up very well. It took a lot of time to individually photograph and list each car, hoping a buyer would be interested. This was only reproducing what a print catalog would do, and it wasn’t really working for them. Moving to something with less legwork and travel, they tried creating an online food ordering service. But to get folks to discover their service required advertising, real-world advertising. Looking at tens of thousands of dollars to get advertising in subways and other venues, they realized that this wasn’t going to be a cost-effective model either.

Rather than stick to one business idea, Wales and Shell wanted to keep the firm experimental. There were no proven business models for the Internet then, and they wanted to stay nimble. "Learning from mistakes was the fun part," says Shell.

They started to see what was getting attention—Yahoo!, AltaVista, and Excite were the search engines of the time and were gathering lots of momentum. (It would be a few years before the Google juggernaut would be part of the scene.) It was increasingly clear that transaction services were complex—delivery of goods and handling customer service made such a business hard to start up or scale up. Directory services were much cheaper.

Put listings online, and if people found it useful they would return. Put up some advertising, and you suddenly have a site that can generate revenue without requiring costly customer support.

With that inspiration, Bomis created a Yahoo-style directory for Chicago, which brought about moderate success. It contained listings for links related to the city, and became a place where people would repeatedly return. Bomis signed up advertisers, and with their steady stream of traffic, Chicago suddenly looked like a small market. They then expanded their listings to include anything and everything in the United States, to become one of the many portals that vied for public eyeballs in the dot-com boom.

By 1998, the business was good enough that Wales wanted to leave not just the world of Chicago Options Associates but the city of Chicago too. As a trader, he had made enough money to live comfortably for a while, or as he would say, "I made out OK" and earned "enough." With no incentive to stay in the Windy City, and with the warmer weather of California calling, Wales and Shell decided they could relocate to San Diego and run the business from there. Wales and his wife, Christine, made the move in 1998.

With the basics of directory services figured out, Bomis tried experimenting with other things that were trendy at the time, including creating a special Web browser, which would be known as the Bomis Browser. While the directory service they were building was not as large or as well known as Yahoo, it was well known on the Internet for other smaller innovations.

In an era of incredible Internet growth, it wasn’t easy to discover new related sites. One of Bomis’s signature features was the use of "rings" to organize chains of Web sites for users to browse. Bomis cataloged and recommended sets of sites, so that after users were done looking at one site, they could press a button to visit the next site in a "ring" of connected and related content. Rings about all sorts of different topics were created—food, travel, cars, business, and the like.

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