It's not an experiment, it's not a demonstration site, it's just a commercial
web property designed to provide something useful, gain readership and make
some money. Guy Kawasaki's two new Web companies, Truemors.com
and Alltop.com, represent a new direction not just for Guy Kawasaki, but for
the entire community of Web entrepreneurs. Guy talks about how the Web has changed,
and how it's a lot cheaper today to start a Web company than it used to be.
You have two dotcom companies, Truemors and Alltop, which have attracted
some attention, not just for their content but because of the way they were
launched and funded, or in this case, not funded. What's the premise of the
two sites?
People are trying to make it into this grand entrepreneurial experiment that
I'm trying to prove that in the Web 2.0 world you can do things for ten or fifteen
thousand bucks, it's actually not true. It happens that I have done it for that
amount, but they're not experiments per se. I'm really trying to make money.
People have this expectation; it's a double edged sword. If anybody else had
done this it wouldn't have gotten the publicity. On the other hand, that's kind
of an unfair advantage. People are looking at it and saying, "He did this
only because it's a good experiment", but really, I'm trying to make money.
I was inspired by Hot or Not, and PlentyofFish, Fark, and sites like that, and
so why not?
Being an icon isn't all it's cracked up to be.
No, sometimes you're a trash can.
There are a lot of news aggregation sites out there, how is Alltop different
from all the other ones?
The fundamental premise is that there is a vast majority of people who do not
know or will never know and don't care about figuring out RSS feeds. And so
what we're trying to do is create a site that is pre-done according to scores
of topics. We have about 45 right now. And what we're trying to do is make it
so that someone who just wants to follow the environment or politics or gaming
or gay/lesbian/bisexual/transgender, they don't have to figure all this out,
it's already done for them. We like to position it as an online magazine rack.
Now for any given single topic there may have been a site that aggregated sites
about that topic, that is true.
There are two kinds of aggregation. One is typically
a blog entry that says, these are the 100 best sites about the environment,
and it's 100 links. That site is not refreshed. We display the five most recent
stories from those 100 sites updated every ten minutes. So it is one thing to
get a collection of links to sites, but then you have to click through to each
site to read the most current story. It's another to have it all aggregated
and displayed constantly. Another big difference is that there have been things
very similar to Alltop in the sense that not only do they grab the site, they
grab the headline, but I don't think anybody has done it with the breadth that
we have. We were inspired by Popurls, and Popurls focuses on tech. That's just
one topic, but we have 44 other topics. Original Signals has more than Popurls,
but not 45. So we're really going for it, trying to front-end the Internet to
make it easier for more people.
Alltop has a very simple and straightforward interface, which is a different
approach from a lot of the others that have all the flash animations and special
features and gizmos, which take forever to load and cost a million dollars to
create. Do successful web sites really need to have all that flash and trash
to become successful?
Our design goal is stark. It's beyond simple. A lot of that is motivated
because we are trying to display at any given point up to 500 headlines on one
page. So when you're trying to display 500 headlines on one page, and you're
trying to cache that in advance so the page loads in less than five seconds,
guess what? You don't do a lot of flash. So it's really performance and purely
trying to jam as much information into a page as possible. It demands that we
do something starkly. Now if you look at something like Netvibes or Pageflakes
or iGoogle or MyYahoo, you could go and get the 100 feeds and do similar things
to what we've done, but boy, they take up a lot more space. Now if you look
at career.alltop.com, you'll see our first ad, so we will have ads in it. And
an ad will take one cell. There's not going to be a sidebar ad, or a leaderboard
or skyscraper or anything like that. They will be inside the cell.
Both of these sites were back-pocket funded, with very small amounts of
money. You could have easily gone the other direction with these and got some
investors to get together a few million dollars and launched in a very big way.
So why did you decide to go with the pay-as-you-go approach?
First of all, it's not clear that it would have been easy to raise money for
these, honestly, and I'm a VC. If I were a VC on the other side of the table,
let's take Alltop as an example. If someone came to a VC firm and said, "I'm
going to do a site aggregation according to topics, starkly designed, no social
community," the first question a VC would ask is, "what's your defensibility?
Anybody can suck in a feed. And what's your patent pending technology?"
There's nothing patent pending. Either it will be a default standard for people
to view certain topics or it won't be. And I don't know what I would do with
several million dollars. So I wanted to do it that way and as I said, I was
inspired by Popurls and Hot or Not and Fark, and they didn't raise millions
of dollars.
When I was in Silicon Valley I observed a different approach. There are
so many stories I saw where somebody with a dotcom launches, they go and get
five or ten million in venture capital, they burn through it, they don't make
a dime, and then they go back and ask for more. And they get it, which always
amazed me. How has the venture community changed since those days in funding
dotcom startups?
What you just described still can happen, don't get me wrong, and it's happening
every day. But generally speaking, because of the nature of Web 2.0, mySQL,
open source, and outsourcing, you really can do a startup much cheaper. From
an entrepreneur's point of view, you want to go and get money at the last possible
moment. Before you run out of money, obviously, but it's much better to raise
money with more than something just drawn on the back of a napkin, because you
get to retain more of the firm, and there's less risk. From a VC's point of
view, the good news is that if you could invest in a company on the back of
a napkin, you'll get more for your money, the bad news is it's more likely to
fail, because who knows if it'll really be completed and work. So the longer
a company works to raise money and the more that it's "proven", the
better it is for you in terms of reducing risk. But the flipside of that is
the valuation is higher. So from a VC point of view, you get to invest in more
of a proven thing, from an entrepreneur standpoint you get to prove something
out with less money or get higher valuation. So that's the new world. It doesn't
apply to semiconductors or biotech, but for software and consumer-facing web
sites, that is the new world.
Things have changed. A web company 10-15 years ago would have cost a couple
million to launch and today you can do it for 10,000.
I can, but not everybody can, to be fair. I have some inherent advantages because
of the 25 years I've paid my dues.
But it is possible to do it with a lot less than what was once required.
What are some of the reasons that it costs so much less to start a web company?
I think the big reason is something as fundamental as MySQL. Before, you
had to spend 100 grand just to buy a license for your SQL engine. Then there's
a whole bunch of open source stuff and things like PhP, Ruby on Rails, all of
that adds up.
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