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Chapter 99: The Development of a Promising Company
🕑 Added 2024-11-06 19:29:47 +0000 UTC"We've updated the algorithm so that when users input keywords, they can more accurately find the content they want."
As Elisha Lyon led Gilbert on a tour of the company, he introduced the latest developments in portal websites and search engines.
"Currently, we are primarily considering how to quickly expand our user base and the subsequent profitability issues."
Gilbert didn't understand the internet well, but he had some experience from his previous life.
So, Gilbert suggested, "I think you could collaborate with some popular tech companies, like Microsoft and Cisco. You can place their websites on your portal, and when users click, they can jump to their pages.
Also, users are likely to search for products like headphones or game consoles. You could develop an algorithm that charges brands for advertising fees, allowing for targeted ad placement when users search."
Elisha's eyes lit up, and he flattered, "It seems we need you to come by more often, boss. Your suggestions have given me more ideas on how to operate the company and website."
Elisha and his classmates had dropped out of school to focus on developing and running Banana. To retain these talented individuals, Gilbert allowed them to value the company and buy shares.
Since the company wasn't publicly traded, this was considered an internal equity transaction.
Moreover, granting equity was essential; in this era, creative ideas could be considered valuable or not, depending on circumstances.
Without adequate incentives to bind these talented individuals, they could steal Gilbert's ideas and set out on their own, leaving him with no recourse.
Of course, some might say: "You could apply for a patent!" But this wasn't like the semiconductor industry, where patents were crucial. There were many ways to bypass patents on the internet.
Otherwise, Yahoo wouldn't have created a portal and search engine, and then Google wouldn't have developed its own search engine!
Apple and Microsoft are still embroiled in patent lawsuits, having fought for four or five years without affecting Microsoft's profits, while Apple has faced some difficulties.
Gilbert didn't understand technology himself; after providing creative ideas, initial development funds, and guidance on the company's direction, there wasn't much more he could do.
His role was limited to suggesting how the company should operate.
In the future, when financing and going public, as long as he could maintain his shares and control over the company, that would be enough.
Honestly, Gilbert preferred to quietly focus on filmmaking rather than take risks. But he felt that if he arrived in this era, not making an effort would be a shame.
Additionally, the dollar was depreciating, so investing in these two companies also served to preserve his assets.
Gilbert avoided involvement in things like the 1997 financial crisis, the oil crisis, or gambling, as those fields were too far from him, and diving in blindly could be unwise.
Currently, Banana had entered its commercial operation phase, and its traffic and click-through rates were increasing rapidly.
Good performance naturally attracted interest from venture capital firms on Wall Street.
New internet companies were being established daily in North America, and as long as a company was founded, it could receive funding from venture capital firms.
However, Elisha calmly rejected the financing, believing that bringing in capital at this stage was premature.
He thought it better to wait until the company developed further before seeking funding.
Gilbert agreed with Elisha's financing suggestion, not wanting to invite capital too early.
Such powerful capital could easily see Banana's growth potential and might turn the tables, taking control of the company and pushing him out.
Gilbert didn't have the funds or strength to fight off those greedy vampires.
While he didn't expect to maintain 100% control of the company—an unrealistic goal—he didn't want to end up like Steve Jobs, being ousted from the very company he helped create.
Banana was thriving, and similarly, Honey Mars's Facebook had captured over seventy percent of colleges in the U.S. and was beginning to expand beyond campuses.
At a certain point, outsiders attempted to steal Facebook's user data, but didn't realize that Facebook's privacy was well-managed, and user data remained secure.
The college dorm startup's Honey Mars announced that Facebook was the world's first real-name social network with high privacy standards.
Based on real-name social networking and high privacy, it quickly won over college students across the U.S.
When registering, students would provide their private personal information, such as names, addresses, interests, and photos.
Users could selectively stay in touch with people they liked, keep up with their friends' activities, chat with friends, and search for new acquaintances.
Facebook rapidly took over Ivy League schools like Stanford, Harvard, Duke, and Princeton.
Once it appeared on a campus, within a few weeks, around seventy to eighty percent of eligible students would register.
The rapid development of Facebook was also thanks to Honey Mars's roommate, Mark Ruhl.
It was his suggestion that allowed Facebook to expand quickly across U.S. colleges.
Due to Mark Ruhl's keen insight and business acumen, Honey Mars stepped back to focus on technical aspects, entrusting operations to Mark Ruhl.
This change received Gilbert's approval after he met Mark Ruhl and spoke with him.
Similarly, Facebook's swift progress was unexpected, and soon both Mark Ruhl and Honey Mars dropped out of college, relocating the company to San Francisco to officially start commercial operations.
Additionally, Facebook's emergence had an unexpected result: an increase in personal computer sales.
Although most students attending college generally had decent economic backgrounds, a personal computer was still relatively expensive.
However, many students without personal computers, seeing their peers engaging with Facebook, decided to purchase computers to fit in and use Facebook for socializing.
This turned out to be a pleasant surprise for computer companies.
Since Facebook gained attention, it attracted interest from venture capital firms.
Facebook was even more popular than Banana, with numerous investors seeking to finance the platform.
After consulting with Gilbert, Mark Ruhl initiated the angel round of financing.
Competitors had emerged in the market, making it essential for Facebook to secure substantial funding to solidify and expand its market presence.
To secure financing, aside from showcasing strength and technical prowess, telling a compelling story to demonstrate the company's potential was vital.
The financing process was complex, involving valuation, negotiation, and the possibility of venture capital firms demanding voting rights and veto powers before reaching an agreement.
Gilbert didn't understand these matters well, but before the financing negotiations, he discussed them with Mark Ruhl.
He emphasized the need to maintain control over the company, advising against giving away any veto rights, even if it meant accepting a lower financing amount.
Mark Ruhl understood; as a shareholder, he, too, didn't want his stake to be overly diluted after financing.
Eventually, after a challenging negotiation process, the Wall Street ADG venture capital fund valued Facebook at sixty million dollars, investing nine million in the angel round for a fifteen percent stake.
Consequently, ADG demanded to establish a board of directors and requested a veto right, both of which Mark Ruhl rejected.
During negotiations, Mark Ruhl stated, "Trust me, just give me the money, and I'll lead everyone to a brighter future. This investment will earn ADG tenfold or even dozens of times its profits."
The ADG negotiator replied, "I know you're not the actual boss. Who is your boss? Can I speak to him directly?"
Mark Ruhl smiled mysteriously: "Want to know? Just go to the cinema this summer!"
This left the ADG team puzzled—could it be that the mastermind behind Facebook was a Hollywood movie star?
It wasn't entirely wrong to think that way; from a certain perspective, Gilbert could indeed be considered a movie star.
However, unlike those top Hollywood stars, he had a unique kind of fame that set him apart.
Mark Ruhl didn't reveal Gilbert's identity; for now, Gilbert wanted to maintain a low profile.
Of course, such things could only be hidden for so long. A little investigation would quickly reveal that the investor behind Facebook was the famous Hollywood genius director, Gilbert Landrini.
After securing the nine million dollar investment from ADG, Mark Ruhl officially led Facebook out of the campus and into the broader U.S. market.
Simultaneously, Facebook and Banana established a partnership, placing a link to Facebook on the most prominent spot of the Banana portal site.
Of course, this cooperation wasn't free; despite being created by an investor, both companies had to keep their accounts clear.
This was fundamentally a mutually beneficial action—Facebook drew traffic from Banana, while Banana obtained funding to continue its development.
As Facebook moved beyond campuses, seasoned professionals suddenly realized the unparalleled advertising advantages of real-name social networking.
What did this indicate? It indicated that Facebook could start advertising and achieve profitability quickly.
This realization instantly elevated Facebook's value, attracting even more investment firms.
Unfortunately, the angel round of financing had concluded, and investors would have to wait for the Series A financing.
However, by then, the equity offered would be even less than in the angel round.
The company's smooth development was good news for Gilbert, as he felt his own ventures were becoming too sprawling to manage.
For now, these two companies, along with Apple, would be held long-term.
As for the stocks of other companies, a small portion would be sold off as the internet bubble approached.
Of course, before that, it would be wise to invest whenever possible.
Choosing familiar company names for investment would help ensure a reduced risk of losses.
