Formative Years

READER ROI READ THIS STORY TO * Track IT-inspired changes in two core businesses * Glimpse future developments of continuing trends TALL FIREPLACES. WIDE PLANK FLOORS. Quilt-covered four-poster beds. This sleepy inn in small-town Maine looks a great deal like it did 30 years ago. In fact, beyond the addition of electric lights and indoor plumbing, the drafty white-clapboard mansion probably hasn't changed all that much in the past century. Except that, these days, virtually no cash changes hands here. The owners not only accept payment by plastic, they all but require it.

And although the inn is as free of radios and television sets as it was 30 or 130 years ago and gets only one copy of a local newspaper, visitors have no trouble getting their business and technology news. They just plug into the data line hidden behind a Victorian writing desk in the front parlor, connecting to Web news sites such as The Wall Street Journal Interactive Edition.

Information technology has altered two fundamentals of business in even the most quiet, remote corners: how people pay for things and how they inform themselves. Naturally, the industries serving those needs have changed dramatically over the past few decades-and, their leaders warn, they're going to keep right on changing, faster and faster.

Among the companies that know plenty about constant, high-speed change and expansion are Visa USA Inc. and The Wall Street Journal. At first glance, they've got little in common: San Francisco-based Visa didn't exist 30 years ago, while The Journal began as a handwritten newsletter on Wall Street in 1882. Visa's product has always been virtual: commercial and personal lines of credit, enabled by little plastic cards. The Journal remains best known for its Industrial Age product, the ink-and-pulp newspaper delivered to about 1.8 million readers every weekday, although its four-year-old Interactive Edition continues making Information Age history as the Web's most successful paid-subscription site.

But technology continues to transform both companies. Visa, which handles 22 million transactions a day-that's 253 per second-is moving toward cards equipped with computer chips instead of magnetic strips. Such smart cards, already in limited use, eventually will be capable of handling everything from buying milk to financing a mortgage. Meanwhile, The Journal and its parent company balance the demands of publishing its mainstay print publication, growing its Web edition, and launching many new print and digital products, such as foreign-language editions, The Wall Street Journal Sunday and, a vertical portal of free business resources.

We took a day-in-the-life look at these two very wired organizations: one on the East Coast, one on the West, one old and one new, but both with international influence, both moving almost unfathomable amounts of information every minute and both transformed in ways their founders couldn't have imagined. Their evolution over the last 30 years has revolutionized how people get information and spend money, even in a timeless town in Maine.

VISA USA "I'm getting on a plane to Zurich tomorrow with two Visa cards and $100 in my pocket, and I won't give it another thought," says Win Derman of San Mateo, Calif., who recently retired after 26 years as a Visa executive and who, as the company's unofficial historian, is writing a book on the company. "I know I can pay my bills, I can eat, I can shop."

If Derman had been taking this trip in, say, 1970, things would have been much different. Thirty years ago, "There weren't a lot of credit cards," says Carl Pascarella, president and CEO of Visa USA. "People used checks, they used cash, they used traveler's checks when they traveled," especially internationally; often, they needed to exchange currency either before leaving or upon arrival.

As Visa officials are only too happy to point out, credit cards are no longer just a convenient way for consumers to procrastinate on payment. For business people, they're all but required. "Think about trying to rent a car, check into a hotel, buy an airline ticket without a [credit] card," Pascarella says. Those little pieces of plastic give consumers "an unsecured line of credit that's good anywhere in the world."

Accordingly, it's changed the lives of employees at Visa, the intermediary settling transactions between the merchant's bank and the cardholder's bank. In the early days, customer service representatives sat shoulder-to-shoulder in a room the size of a football field, answering call after call from merchants serving customers who wanted to charge a purchase. Merchants would read off credit card numbers-often as customers waited at the register-then wait for the customer service rep to provide a string of numbers known as an authorization code. If service reps couldn't reach the issuing bank-if, for instance, they were calling after hours or on a holiday, merchants had to either reject the sale or accept it and risk eating the loss if the card turned out to be invalid.

After approving the charge, the merchant used a hand-operated imprinter to stamp the card's identifying information onto a sales slip, usually in triplicate, peeling off one inky copy as the customer's receipt. At the end of each day, merchants separated the slips into "ours" and "theirs," keeping one hard copy of each receipt and sending the other to the credit card companies.

Getting reimbursed could take weeks.

In some cases, merchants needed only verbal authorization for large charges-say, for more than $50. For smaller sales, they flipped through paperback books, updated every month or so, listing column after column of stolen credit card numbers. As long as the customer's card number didn't show up, merchants could authorize the sale (which, when busy, they often did without checking the guide). Later, by the early 1980s, merchants swiped cards through devices that automatically dialed the bank, feeding back either approval or rejection.

These days, unless there's a problem, the whole process happens automatically.

"There is no paper flow to speak of anymore," Pascarella notes. There's human intervention only if something's amiss at either end. And everything happens much faster: With VisaNet, Visa's proprietary transaction-processing system, the average transaction-approval time has dropped from nearly 1 minute in 1973 to less than 2 seconds today, critical for processing the millions of credit card charges that go through daily.

Meanwhile, because major credit cards are so convenient, consumers increasingly use them for goods or services that they used to buy with cash or checks, such as groceries, doctor's visits and prescription drugs. In some cases, they even charge items that once would have required bank loans, such as small businesses that finance their launches or furnish their offices by charging everything.

Just as consumers overcame concerns about giving credit card numbers to catalog merchants by phone, they are moving past their fears about using their accounts on the Internet. And they're increasingly using another form of payment: Visa check cards, which deduct funds directly from cardholders' checking accounts rather than apply them to a credit account.

Apparently, customers want to use Visa cards "for everything from a milkshake to a Mercedes," as Harvey J. Bondar, Visa's executive vice president of strategic marketing, puts it. In 1998, Visa enabled more than $600 billion in sales. That translates to more than 8 billion credit, debit and commercial card transactions-an average of more than 15,000 every minute, or about 253 per second.

That's a lot of activity. Not surprisingly, Visa claims to have the world's largest transaction-processing system, capable of handling more than 10 times as many transactions in the same amount of time during peak periods, such as the week before Christmas. Visa CIO Scott Thompson says he built that idea of constant rapid access into every aspect of the company's technology. "I translated 'everywhere you want to be' into the [VisaNet] system," he says. "We have zero tolerance-truly zero tolerance-for downtime."

To make sure its transactions keep moving, Visa maintains a data center built on a 10-foot-thick foundation of reinforced concrete anchored in bedrock, with redundant backup power, cooling and systems. Built to withstand a disaster on the magnitude of the 1906 San Francisco earthquake, the data center is so solid that when another quake rocked the Bay Area in 1989, some data center employees didn't realize it had happened.

Inside, room after room filled with row after row of quietly humming servers provide no outward sign that hundreds of millions of dollars of digital expenditures pass through here every day. While the center still relies on some IBM mainframe computers, they're both more compact and more powerful than their predecessors. One unit, about the size of two large refrigerators, replaced a machine 10 times its size-and provides at least twice the capacity. The entire VisaNet system processes an average of 100,000 transactions per minute for more than 12 million merchants and 19,000 member institutions worldwide. Relying on fiber optics, satellite and 9 million miles of communications lines, the system includes backup centers in Denver, McLean, Va., Yokohama, Japan, and Basingstoke, England.

Visa's image has changed dramatically during its history, but particularly in the past decade. In the mid-to late-1980s, consumers viewed Visa and MasterCard as interchangeable. "At the time, they were like Chevrolet and Chevrolet," says Elizabeth J. Silver, Visa's senior vice president of advertising and brand management. Businesses tended to view Visa as second in prestige to American Express because the brand stood for more prosaic consumer activities. "It was the card women used when they went to the mall to buy shoes for the kids," Silver says. Over the past decade, Visa worked not only to distinguish itself from MasterCard but to compete aggressively with American Express Co. The Visa strategy: emphasize access, acceptance and universal admission to all the desirable places where even an AmEx gold card wouldn't buy you a cup of coffee.

Curiously, for a company boasting that it's now got one of the world's best-known brands, Visa keeps an exceptionally low profile in the real world.

Business cards and promotional materials include only a San Francisco post office box. For security reasons, the company's headquarters in nearby Foster City feature absolutely no exterior signage, just a street address. The first sign alerting visitors that they've reached the right building is in the parking garage, where trash cans feature that familiar blue-and-gold logo.

Security is equally tight at the unmarked data center a few miles to the north:

Lower-level staffers have access only to their own departments, and even senior employees need to pass through airlocks to move from one part of the center to another.

Today, Visa continues to expand to new markets. Among its top priorities: teenagers, who often get credit cards with their parents' approval. "They have an intense amount of capital," Bondar says. "We want to make sure we embrace all their needs." After all, the CD and skateboard buyers of today are the opera ticket, sports car and home-mortgage consumers of tomorrow.

The company also continues to build its traffic in debit cards, which subtract money directly from checking accounts. Pascarella expects those cards to eliminate paper checks over time.

The company has already begun testing smart cards that contain microprocessor chips with 90 times more memory than magnetic strips. Smart cards not only will let consumers access their credit checking accounts but will track loyalty programs and store electronic cash, passwords and identification numbers.

Because credit card transactions have long been electronic, Visa already knows something about e-commerce. But the Internet's growth has spawned a whole new set of competitors. They include telecommunications companies, already experienced at handling micropayments such as 35-cent telephone calls, and Microsoft Corp. and Yahoo Inc., which are experimenting with electronic wallets. Then there are newcomers like eBay Inc., where buyers mail checks directly to sellers without going through a transaction-settling intermediary like Visa. Visa predicts that by 2002, two out of every three Visa cardholders will shop on the Internet; by the following year, Internet e-commerce will account for at least 10 percent of the company's volume.

Pascarella compares his company's e-commerce challenge to the 1997 Belmont Stakes (which was, of course, sponsored by Visa), when a horse named Touch Gold unexpectedly sailed past leader Freehouse to win the race. "It's the nontraditional competitors you've got to worry about," he says. "We've got to keep reinventing ourselves [to stay ahead]."

For Bill Stewart, Visa's e-commerce chief, the future depends on making Visa cards-or account numbers, if plastic cards eventually disappear-the most desirable way to pay for anything online. The corporate goal, he says, is "to make Visa the currency of the Internet."

THE WALL STREET JOURNAL It's mid-morning on an autumn weekday in New York City, with cabs and limousines and pedestrians jamming the streets and sidewalks around the World Trade Center at the very tip of Manhattan. But up on the ninth floor of 200 Liberty St., the main Wall Street Journal newsroom is largely deserted, row after row of blinking PC monitors facing row after row of empty chairs. Later in the day, as reporters and editors arrive for their shifts, the desks and cubes and offices will fill with frantic, furiously typing journalists. For now, though, it's quiet, almost hushed, except for the section housing the newspaper's Web site, known as The Wall Street Journal Interactive Edition. As they do around the clock, Interactive Edition staffers are busy refreshing the Web site with the latest business news from around the world. At this hour, the updates are mostly from Asia and Europe; as the day wears on, new stories will come from Latin America, the United States and Canada.

That 24-hour approach to news is the biggest change Assistant Managing Editor Paul Martin Sr. has seen in his tenure at the 110-year-old business newspaper, which, with about 1.8 million readers, remains neck and neck with USA Today for the title of the United States' largest national newspaper.

Of course, at its foundation, The Journal remains the flagship publication for Dow Jones & Co. It still covers Wall Street and the rest of the financial world. It still publishes its text-heavy black-and-white print newspaper every weekday. It still hires what its management believes are some of the world's best journalists (an effort that has undoubtedly contributed to The Journal's 21 Pulitzer Prizes).

But The Journal is a very different publication and a very different place to work than it was when Martin came on board as a copy editor 39 years ago, or even when fellow editors Rich Jaroslovsky and Cathy Panagoulias joined the staff in the mid-1970s.

Before the mid-'80s, The Journal enjoyed a near monopoly on daily business news, a dominance dating back to 1882, when its founders circulated handwritten updates on New York Stock Exchange activity. The Journal's historic target audience: middle management, primarily in the United States. Its size: one section, 32 to 36 pages. "That was all the businessman had time to read; it was his second paper," usually a supplement to a general interest publication like The New York Times, Martin explains. And, for much of its life, The Journal was distinctly American. For many years, the newspaper's foreign staff consisted of one reporter, a London-based correspondent who covered stories everywhere from Iceland to Istanbul.

That's all changed. Today, Journal editors reach out to a much broader audience, including small businesses, startups and Internet-based companies.

"We're no longer writing for just the big corporate guys," says Panagoulias, who began as a proofreader in 1976 and is now national news editor. And because it is no longer aimed at an Industrial Age audience, The Journal no longer runs graphics with arcane figures such as the number of cardboard boxes manufactured nationally or the amount of coal loaded in Norfolk, Va. "These things are no longer [significant] indicators in the new economy," Panagoulias says.

The paper publishes about 80 pages daily in multiple sections. And it staffs 11 domestic and more than 36 overseas bureaus, produces separate Asian and European editions, and provides business stories in Spanish and Portuguese for Latin American newspapers.

The production processes have grown, and changed, as well. The print newspaper is, of course, still printed on presses and delivered by trucks. But these days, stories and graphics are transmitted by e-mail, satellite or over an internal network to printing plants in 17 locations nationwide and about a dozen others internationally, allowing the paper to provide more news with later deadlines.

Obviously, journalism technology has evolved rapidly in recent years too.

Reporters used to dial telephones connected to a switchboard; at one point, making a call meant requesting an operator to get an outside line. (Voice mail, one editor recalls, meant the voice of an intern or colleague answering your phone if you were away, taking a handwritten message.) Before the advent of CNN in the early 1980s, there were no newsroom televisions; only a few editors kept small sets in their offices. But with 24-hour financial news available around the world, editors realize they need to keep a constant eye and ear on the other media. They religiously monitor upstarts like CNBC, CNNfn, CNET,, Bloomberg News and USA Today, among others, looking for any business scoops their reporters might somehow have missed.

And, of course, before the mid- to late-1970s, reporters worked on typewriters, first manual, then electric. They pasted the typed pages into a single long sheet, rolled it up like a paper towel tube and dropped it on a conveyer belt that carried it around the newsroom until it reached the right editor, who then edited with pencil and sent it on to be typeset. Wire machines, isolated in their own room, spit out streams of cheap paper containing stories from The Associated Press, Reuters Group PLC and other news services. Distant correspondents sent stories by telex or early versions of fax machines or by dictating them over the telephone-each procedure requiring somebody else to retype the words.

Journal veterans universally recall a much noisier environment in those days, and not just because of all those telephones and typewriters. "We used to communicate back and forth by yelling at each other-the desk yelling at you, 'Hey, when are you going to have that next take [story page]?'" recalls Deputy Managing Editor Barney Calame, who started working for The Journal in the 1960s. "Today, things are so quiet, even here at our big copy desk in New York, because everybody is e-mailing or using the internal message system" to ask the same questions.

Researching a story inevitably meant searching through small folders filled with folded-up newspaper stories painstakingly clipped from each day's paper and filed by subject. The Journal's research library also included shelf after shelf of newspaper-sized black books containing bound copies of The Journal and The New York Times. Looking up past stories was something like using a dated encyclopedia; reporters turned to an index, then flipped to the indicated page.

Of course, that system worked well only for stories with a history, and only if that history had been previously chronicled in either newspaper. For instance, if someone were covering a little-known nominee for a Labor Department post, Calame says, "We often had no way of really knowing whether the guy had been involved in stock fraud in Omaha or [had] once been Man of the Year in Los Angeles."

When The Journal began to consider computerizing its newsroom in the late 1970s, Calame, who was bureau chief in Los Angeles, begged to have L.A. be one of two offices testing the new system, which consisted of dumb terminals connected to a mainframe in New York City. Not long after, he got to borrow a portable computer from Dow Jones News/Retrieval salespeople, a bulky box that took several minutes to transmit even a short story, word by painstaking word.

Now everything happens electronically (including constantly updated information flowing into the famous Dow Jones stock "ticker," which records the information only digitally, no longer producing the long streams of hole-punched paper used in ticker tape parades). Reporters can search the archives of The Journal or just about any other newspaper through their database-searching tools such as Factiva. (Previously known as Dow Jones Reuters Business Interactive, the information service-also available publicly by subscription-provides access to thousands of stories from Dow Jones, Reuters and other publications.) The newsroom's few remaining typewriters gather dust along one wall, used only as historical exhibits for newsroom tours. Stories move from reporter to editor to copy editor, always electronically, materializing in the physical world only when they're translated to ink and paper at one of The Journal's printing plants, which, like the rest of the publishing world, switched in the 1970s from "hot" to "cold" type-that is, from metal Linotype impressions to photographic reproduction.

In fact, The Journal's next biggest technological challenge will probably be cutting another major step from its production process. Sometime in 2000, the newspaper will switch to pagination, meaning editors will assemble entire pages on their desktops rather than sending them electronically, piece by piece, to composing rooms in Orlando, Fla., and Chicopee, Mass. Doing that will let the print edition push its deadlines further back (currently 7 p.m. for the first edition, 10 p.m. for the second), at least for some coverage. "It will give us a way, on some really important stories, to get in the last bit of interpretation and analysis from an interview that we just got late in the day," says Calame. And it will give editors more control over how stories appear on the page, a decision now made in those distant composing rooms. "We might gain some time, or at least the ability to make changes," say Panagoulias. Says Martin: "We'll no longer be at the mercy of the production process."

Meanwhile, The Journal's biggest technology venture remains its groundbreaking Interactive Edition. Launched in 1996, the news- and resource-rich site remains the Web's most successful subscription-based service ($29 a year for print Journal subscribers and $59 for everyone else), with more than 300,000 subscribers.

Like other new media, the Interactive Edition has created a whole new set of how-do-we-handle-this questions for its parent publication. For instance, should the Interactive Edition be first to break big stories, possibly alerting competitors to scoops? Or should it hold off until print deadlines have passed so that nobody else can match the story on the same day?

So far, it's opted for the latter, often releasing big global stories in the wee hours of the morning, long after print editions have gone to press. For instance, on this particular weekday morning, the Interactive Edition released a report at 5 a.m. Eastern Standard Time about a Federal Express board meeting in Paris-long after the print Journal and all of its newspaper competitors had been published (without the story).

The Interactive Edition faces plenty of challenges in the next few years. Chief among them: figuring out ways to provide electronic news through a variety of media, such as cell phones, pagers and personal digital assistants. "The luxury of having one device to aim at-a computer-and one level of access is gone," says Interactive Edition Editor Neil Budde.

Yet, online and off, some traditions endure at The Wall Street Journal. Among them are the newspaper's distinctive dot-and-dash drawings, used instead of head-and-shoulder mug shots. Despite their 19th-century feel, the drawings date back only to about 1978. And although they're equipped with Macintosh computers to create charts, maps and graphs, the newspaper's artists still create those pictures entirely by hand from photographs, using a step-by-step drawing process that takes three to five hours per picture. The reasoning: It creates a sense of continuity, of tradition, of recognizing that, in some ways, quality just can't be improved by technology. As Jaroslovsky, now managing editor of the Interactive Edition puts it, old venture or new, online or off, it's all still The Wall Street Journal. And that powerful brand name "has to stand for something; it has to stand for the same thing across all these media," Jaroslovsky says. He recalls his first day on the job, as a college intern in 1974, when he went to lunch with a senior editor. "He told me about a mistake he had made as a reporter and the huge reverberations from it. The message I took away from that was that accuracy matters above all, and that the credibility of The Wall Street Journal rests on [individual employees]."

Despite all the technological changes, Jaroslovsky asserts, "Every word of that is still true."

Former Senior Editor Anne Stuart is now a senior writer at Inc. Technology. She can be reached at


Headquarters: San Francisco

Founded: 1974 (known as Visa since 1976) Revenues: Privately held Ownership: Owned by 21,000 member banks; Visa USA is the largest of six regional companies lumped under the umbrella of Visa International Employees: approximately 5,000 worldwide Market share (1998): 53 percent Volume (1998): $660 billion from June 1998 to June 1999, up from $525 billion in 1997; projected to reach $1 trillion by 2002, including nearly $100 billion in e-commerce by 2003 Transactions (1998): 8 billion Average transaction speed: Less than 2 seconds (1998), down from 54 seconds in 1973 Cards (1998): 322 million credit and debit cards, accepted at 17 million locations and 530,000 ATMs globally URL: VISA USA INC. (VISA INTERNATIONAL) 1958 Bank of America issues 60,000 BankAmericards in California.

1970 U.S. banks form National BankAmericard association.

1974 Bank of America licensees charter Ibanco, an international banking company, to issue BankAmericard outside the United States. Company establishes first electronic clearing and settlement system.

1976 Ibanco becomes Visa International; National BankAmericard becomes Visa USA under new bank partnership model.

1979 Begins using electronic-dial terminals at point of sale.

1983 Launches global automatic teller machine network.

1984 Launches computer-based system to pinpoint suspicious credit-card transactions.

1986 Begins using multiple-currency clearing and settlement system.

1987 Launches China's first computer card-transaction processing network.

1988 Issues first bank cards in Russia.

1993 Launches neural network to combat fraud, establishes international pre-paid card, offers first "smart card" with merchant loyalty, offers first corporate, business, purchasing cards.

1995 Introduces cards with computer chips.

1997 Successfully makes first secure electronic transactions.

1998 Releases first multi-application smart card based on open standards.

1999 Completes first download of electronic cash via mobile phone; develops card with built-in magnifying glass for reading small print.

2000 Moves forward with eVisa, the company's e-commerce initiative.

THE WALL STREET JOURNAL (DOW JONES & CO.) 1882 Charles Dow, Edward Jones and Charles Bergstresser founded Dow Jones & Co. near New York Stock Exchange, publishing handwritten stock-report newsletters.

1889 Company begins publishing The Wall Street Journal; first four-page edition sells for 2 cents.

1896 Company launches Dow Jones Industrial Average to track stock market.

1920 WSJ circulation reaches 20,000.

1929 Company launches Pacific Coast edition days before stock market crash plunges nation into depression.

1960s WSJ circulation surpasses 1 million.

1976 The Asian Wall Street Journal launches in Hong Kong (circulation now 62,000).

1980 WSJ begins publishing in two sections.

1983 The Wall Street Journal Europe launches in Brussels (circulation now 71,000).

1988 WSJ begins publishing in three sections.

1991 Monthly Wall Street Journal Classroom Edition launches (circulation now 125,000).

1992 SmartMoney: The Wall Street Journal Magazine of Personal Business launches (circulation now 725,000).

1994 The Wall Street Journal Special Editions launch, offering local-language reports in 28 countries (circulation 4 million, primarily in Spanish and Portuguese).

1996 The Wall Street Journal Interactive Edition launches.

1997 WSJ establishes business TV alliance with NBC.

1998 WSJ launches print Weekend Journal.

1999 WSJ launches The Wall Street Journal Sunday and Dow Jones launches, a vertical portal of free business resources.

2000 Parent company Dow Jones & Co. and Reuters Group PLC expect to launch combined Web-based news and research tool called Factiva.


(Dow Jones & Co.)

Based: New York City

Founded: 1889 (newspaper); 1882 (parent company) Revenues (1998): $2.15 billion (Dow Jones & Co.) Circulation: Nearly 1.8 million print readers; more than 300,000 paid Interactive Edition subscribers Employees: 2,000, including 200 on Interactive Edition, in nearly 50 news bureaus and 30 printing plants worldwide Honors: 21 Pulitzer Prizes to date URL:

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