"We've updated our algorithm so that when users enter keywords, they can find the content they're looking for even more accurately."
Elihu Lyon was showing Gilbert around the company, introducing him to the latest developments in their portal website and search engine.
"Currently, our main focus is on how to quickly expand our user base and, further down the line, address profitability," Elihu explained.
Gilbert wasn't an internet expert, but he did have some prior experience from his past life.
So, Gilbert offered a suggestion: "I think you could partner with some popular internet tech companies, like Microsoft or Cisco. You could put their website links on your portal, and users could click directly to their pages. At the same time, users will definitely search for products like headphones or gaming consoles. You could develop an algorithm to charge brands for advertising, allowing for precise ad targeting when users search."
Elihu Lyon's eyes lit up, and he complimented Gilbert, saying, "It seems, boss, you should visit more often. Your suggestions have given me so many new ideas on how to operate the company and the website."
Elihu Lyon and his classmates had already dropped out of college to focus entirely on developing and running Banana. To retain these talented individuals, Gilbert allowed them to value the company and then buy shares. Since the company wasn't publicly listed, this was an internal equity transaction.
Moreover, offering equity was a necessary step. In that era, ideas and concepts could be valuable or worthless depending on the context. If there wasn't enough incentive to tie down these brilliant minds, they could easily steal Gilbert's ideas, start their own companies, and he'd have no recourse.
Of course, some might say, "You can apply for patents!" But unlike the chip, lithography, or semiconductor industries, the internet had countless ways to circumvent patents. Otherwise, Yahoo wouldn't have created a portal and search engine, only for Google to come along and do the same later! Apple and Microsoft were still entangled in patent lawsuits that had dragged on for four or five years, yet it didn't affect Microsoft's profitability at all, while Apple was struggling to make ends meet.
Gilbert himself wasn't technically proficient. After providing the initial ideas, concepts, and startup funds, his involvement was minimal. He could only offer suggestions on the company's direction and operations. When it came to hands-on execution, he was out of his depth. Later, when it came to fundraising and going public, as long as he maintained control through his shares, that would be enough.
To be honest, Gilbert actually preferred to quietly make movies and avoid taking risks. He just felt it would be a missed opportunity not to try something big after arriving in this era. Additionally, with the dollar constantly depreciating, investing in these two companies also served as a way to preserve asset value.
As for things like the 1997 Asian financial crisis, the oil crisis, or gambling on sports, Gilbert decided to steer clear. Those industries were too far removed from his understanding, and getting involved without knowledge or research would likely lead to trouble.
Currently, Banana had entered its commercial operation phase, and its traffic and click-through rates were growing rapidly. Its excellent performance naturally attracted the interest of Wall Street venture capital firms. In North America, new internet companies were popping up daily, and as long as they were founded, they could secure funding from VCs.
However, Elihu Lyon calmly declined the funding, believing it wasn't the right time to bring in venture capital. He thought it would be better to wait until the company had developed and grown more before starting to raise funds. Gilbert agreed with Elihu Lyon's advice on fundraising; he also didn't want to introduce capital too early. These powerful capitalists, upon seeing Banana's immense potential, could easily turn the tables, take over the company, and push him out. Gilbert didn't have the funds or strength to fight against these greedy "vampires." While he didn't expect to hold 100% control of the company, as that was unrealistic, he also didn't want to end up like Steve Jobs, ousted from the very company he helped create.
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Banana was developing well, and similarly, Facebook, managed by Honey Mars, had already captured over 70% of colleges across the US and was starting to expand beyond campuses. At one point, when Facebook had grown considerably, outsiders tried to steal user data. However, Facebook's privacy measures were so robust that no user data was leaked.
Honey Mars, who had started Facebook in his college dorm, immediately declared that Facebook was the world's first social networking site to implement real-name registration and excellent privacy. Based on real-name social networking and high privacy, it instantly captivated college students across the US. When registering, students provided their private personal data, such as names, addresses, interests, and photos. Users could selectively stay in touch with people they liked online, keep up with friends' activities, chat with friends, and search for new ones.
Facebook quickly conquered Ivy League schools like Stanford, Harvard, Duke, and Princeton. Often, within a few weeks of appearing on a campus, about 70-80% of eligible students would register for Facebook.
Facebook's rapid growth was inseparable from Mark Rule, Honey Mars' roommate. It was his suggestion that enabled Facebook's swift expansion across US universities. And it was also due to Mark Rule's keen insight and operational abilities that Honey Mars stepped aside, focusing on technical matters and handing over operations to Mark Rule. This change was approved by Gilbert after he met and chatted with Mark Rule.
Likewise, Facebook's rapid development was unexpected. Soon, Mark Rule and Honey Mars both dropped out of college, moved the company to San Francisco, and officially began commercial operations.
Furthermore, Facebook's emergence had an unforeseen result: an increase in personal computer sales. Although college students in North America generally came from good economic backgrounds, personal computers were still quite expensive at the time. However, many college students who didn't own a PC, seeing everyone around them using Facebook, would consider buying a computer just to fit in and use Facebook for socializing. This was a pleasant surprise for computer companies.
From the moment Facebook appeared and gained attention, it attracted the interest of venture capital firms. Facebook even garnered more attention than Banana, with many capitalists already approaching Facebook for funding. After consulting with Gilbert, Mark Rule initiated an angel round of funding. Competitors had already emerged in the market, and Facebook desperately needed substantial capital to solidify and expand its market share.
To secure funding from the market, besides inherent strength and demonstrated technical capabilities, it was crucial to tell a compelling story and make venture capital firms see the company's potential. The fundraising process was quite complex, involving valuation, negotiation, and potential demands from VCs for voting rights and veto power, before finally reaching an agreement and securing the funds. Gilbert didn't understand these things, but before the funding negotiations, he talked with Mark Rule. He explained to Mark Rule the importance of maintaining control over the company, advising against giving away veto power, even if it meant a lower funding amount. Mark Rule understood; he also had shares and certainly didn't want his equity to be diluted too much after fundraising.
Finally, after a difficult negotiation, Wall Street's ADG Venture Fund valued Facebook at $60 million, investing $9 million in the angel round for a 15% stake. Correspondingly, ADG Fund requested the establishment of a board of directors and demanded veto power, both of which were rejected by Mark Rule.
During the negotiation, Mark Rule stated, "Trust me, just give me the money, and I will lead everyone to a more brilliant future. In the future, this investment will yield ten or even dozens of times the profit for ADG."
The ADG representative at the negotiation table replied, "I know you're not the real boss. Who is your boss? Can I talk to them directly?"
Mark Rule smiled mysteriously, "Want to know? Go to the movies this summer!"
This left the ADG people bewildered. Was Facebook's backer a Hollywood movie star? No wonder they didn't lack funds during the initial expansion; it must be those nouveau riche from Hollywood. The ADG people weren't entirely wrong in their thinking; in some respects, Gilbert indeed counted as a movie star. It was just that his fame was exceptional, not inferior to those A-list Hollywood stars. Mark Rule did not reveal Gilbert's identity, as Gilbert wished to remain low-key for the time being.
Of course, such things couldn't be kept secret forever. A little investigation would quickly reveal that the investor behind Facebook was the renowned Hollywood genius director, Gilbert Landrini.
After securing the $9 million investment from ADG, Mark Rule officially led Facebook out of college campuses and began its expansion into the nationwide market. At the same time, Facebook and Banana formed a partnership, placing a prominent link to Facebook on Banana's portal website. Of course, this cooperation wasn't free; although founded by the same investor, they were two separate companies, and the accounting needed to be clear. This was a mutually beneficial arrangement: Facebook gained traffic from Banana, while Banana received funds from Facebook to continue its development.
As Facebook expanded beyond campuses, seasoned professionals suddenly realized the unparalleled advantages of real-name social networking for advertising. What did this mean? It meant that Facebook could achieve profitability simply by starting ad sales, and quickly. This discovery instantly elevated Facebook's value even further, attracting more investment firms. Unfortunately, the angel round of funding had concluded, and investment firms would have to wait for the Series A round. But by then, they would receive even fewer shares compared to the angel round.
The smooth development of the companies was good news for Gilbert, as his own ventures were expanding so rapidly that they almost felt unmanageable. For now, these two companies, along with Apple, would be his long-term holdings. He would sell off his smaller stakes in other companies just before the dot-com bubble. Of course, before that, buying more whenever he had money was always a good idea. Investing in companies with familiar names would largely ensure he wouldn't lose money.