How To Make $300 Million Without Really Trying

Here’s an idea. (1) Spend $7.5 million on the domain name. (2)

?. (3) Profit!

The crazy thing is, it seems to have worked. The bright people who bought

for $7.5 million in 1999 are now selling it for upwards of $300

million. What’s more, they barely did anything beyond buying the domain

name: they just sat back and watched the dollars roll in.

What’s the moral of this story? Let’s just say that when mortal

enemies Nick Denton and Marc Andreessen agree,

then you can pretty much be sure they’re on to something.


Denton, on Friday:

The site is little more than a rebadged version of Google Adwords,

serving the search engine’s text ads in both the main column of search results,

and the sidebar, alongside a few perfunctory business listings.

pages are so useless that the site is its pages don’t appear in the Google

index, but the search engine’s text ads still fund the company. The company’s

pitchmen claim earnings will hit $15m this year, making the $300m pricetag

quite reasonable, at least by the degraded standards of this internet boom.

So, what’s the moral of the story? It certainly helps to have a domain that

web newbies are likely to type into a browser address bar. And those are the

internet users most likely to click on text ads. But here’s the bigger lesson:

search is such a lucrative business that fortunes can be made by even the

most cynical of operators, with the thinnest of products, and the tiniest

slice of the market.

Marc Andreessen,

on Monday:

In a great market — a market with lots of potential customers and/or a highly

growing set of potential customers — the market pulls product out

of the startup. The market needs to be fulfilled and the market will

be fulfilled, by the first viable product that comes along. The product doesn’t

need to be great; it just has to basically work. The market doesn’t care how

good the team is, as long as the team can produce that viable product. In

short, customers are knocking down your door to get the product; the main

goal is to actually answer the phone and respond to all the emails from people

who want to buy. This is the story of search keyword advertising, and Internet

auctions, and TCP/IP routers…

Monster market, weak product, terrible team — startup will probably

be a huge success, as long as the team can do the basics of getting the weak

product out and fulfilling the customer orders. The market pulls the product

and the team.

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