Fishbowl (9 page)

Andrei wasn't blind to that fact. The very power of the data he was generating, paradoxically, increased his reluctance to let in advertising. It seemed almost too powerful, the responsibility of using it too great. Where would it lead?

He started work on the Fish Food idea. But even as he did, he knew Kevin was right about it. Even if he could get it launched quickly, and even if Fish Food took off, the revenues were going to be a slow build. But there was nothing slow about what was happening to their bank balance. The pace at which it was emptying was frightening.

He could find an investor, but an investor, as Kevin said, would only demand that he start advertising. The result would be the same – the only difference would be that he would have given away a chunk of the business and the control that he currently had.

Yet still Andrei couldn't bring himself to do it.

But the bank balance didn't lie, and it was giving him less and less room for manoeuvre. A few nights later, after looking over the latest dismal figures in the company bank account, he walked into the room he shared with Ben. Ben was buried in a psychology text, a rare moment of academic work. Andrei sat down glumly on the edge of his own bed.

Ben looked at him. ‘Hey,' he said, then turned back to his book. He read for a moment, then looked up at him again.

‘We've got six weeks left,' said Andrei.

‘Until what?'

‘Until we don't have any money.'

Ben closed the book.

‘Six weeks, and then we can't pay for the servers.' Andrei shrugged. ‘That's optimistic. It might only be five.'

‘That doesn't sound good,' said Ben.

There was silence. It hung thick between them.

‘What about Fish Food?' asked Ben eventually.

Andrei shook his head.

‘You don't think it's going to work?'

‘Not quick enough.' Andrei frowned. ‘Do you think we should go with advertising?'

‘Do we have a choice?'

‘That's not what I asked. Do you think we should?'

‘What's the alternative?'

‘We could stop. We could say, OK, we came this far, and that's it.'

‘And then what?' said Ben. ‘Sell it?'

‘Maybe. Maybe just stop.'

Ben gazed at him in bemusement. ‘And the money we put in …?'

‘I know.' Andrei sighed. ‘Look, I know what Kevin wants. His mind's made up. If it was up to him, we'd start tomorrow. I want to know where you stand. Should we let in advertising or not?'

‘You've got the majority share, Andrei. You can do anything you want with the company.'

‘I want to know what you think, Ben!' Ben's opinion made a difference to Andrei in a way that Kevin's didn't. Ben thought about things, he considered them on their merits. Kevin always ended in the same position from which he had started.

Ben was silent for a moment. ‘I'd prefer not to,' he said at last, ‘but we've got to recognize reality. Our first principle is not to make the world worse, right? Well, let's assume that without advertising we go out of business. So we stop, like you say. Let's
forget about the money we put in. The question is, is the world a worse place with a Fishbowll that has advertising or with no Fishbowll at all? Because those are the alternatives, right?'

‘If we go out of business,' said Andrei, ‘someone else will do it.'

‘Right, and let's assume they'll allow advertising. Or we could sell it to someone who will, which is effectively the same thing. So, for the sake of this argument, there are really only two options. One, Fishbowll with advertising that we control. Two, a Fishbowll copy or a sold Fishbowll with advertising that someone else controls.' Ben shrugged. ‘If those are the only options, then doing two definitely makes the world a worse place, because I think it's fair to assume that anyone else controlling Fishbowll would not be as responsible as us.'

‘But that still leaves the world a worse place than Fishbowll with no advertising.'

‘But that's not a realistic option, Andrei.'

‘That just means option one is the least worse. It makes the world worse by less than option two. We didn't say that our objective was to make the world a less worse place. It was not to make the world a worse place, period.'

‘Maybe the least worse is the best you can do right now.' Ben leaned forward. ‘Andrei, you've put this thing into the world. You can't take it out again. If you try, someone else will put it back there. So it's a question of us or someone else. And I think, if that's the question, it's a no-brainer. Having someone else do this rather than us makes the world worse. So that means we've got to go with advertising.'

Andrei didn't reply.

‘We don't have to do it like everybody else. Kevin's right. We don't have to be like Mike Sweetman and wring every last drop out of the stone. We can do just enough to keep ourselves going, if that's what you want. And in the future, if Fish Food works, we can stop. This isn't irreversible, Andrei. Maybe it's just a temporary thing we need to do. I think if we explain it like that, people will understand. I think even the 300 will understand. Karl
Morrow will hit the roof but, then, when doesn't he?' Ben grinned. ‘The Dillerman will find a way to make it seem OK.'

‘Even the Dillerman will have trouble on this one,' murmured Andrei.

‘You might be surprised. People know the reality. It takes money to keep going.'

Andrei sighed. A deep, long, troubled breath. He didn't have to do it like Sweetman or any of the other net entrepreneurs who had sold their ideals, as he saw it, for a fistful of cash. He could do it any way and to any degree that he chose. But still he felt that something was happening, a line was being crossed, and, once crossed, whatever Ben said, it couldn't be crossed back.

‘OK,' he said eventually. He put his head in his hands and nodded a couple of times. ‘OK.'

Ben watched him. ‘We don't need to sell our souls.'

‘I guess not,' said Andrei quietly.

‘The thing is,' said Ben, ‘I don't know how we even do this. How do we make this happen? You say we've got six weeks' cash left?'

‘Five, to be safe.'

‘Where do we start? Do we go out and hire somebody? How do we start getting the money in, in five weeks? Do you know how to do this stuff?'

Andrei shook his head.

‘Does Kevin?'

‘I doubt it.'

‘I don't think we've got the time to make it up as we go along.'

‘I know,' said Andrei.

Ben looked at him questioningly.

‘There's a guy who's been bugging me,' confessed Andrei. ‘Somehow he got my number. He's been calling me for weeks.'

12

ED STANDISH FIRST
learned of Fishbowll when his nephew, an engineering senior at Duke University, came home for the holidays and raved about the site over Christmas lunch. Standish was a Dallas-based advertising executive for a firm called 4Site, which had developed a lucrative practice helping internet start-ups build and target their advertising offerings. At forty-six, he was accustomed to dealing with twenty-something tech guys and had honed a keen sense of what worked on the net.

That Christmas night, when the kids had gone to bed and his wife had collapsed in front of the TV, he opened Fishbowll, registered, explored the site and found an advertising-free service. When he went back to work two days later, he did some research about the website, took a closer look at it and tried to figure out what income stream they could have. He wasn't able to come up with anything. Unless he was missing something, or unless they had backing from a deep-pocketed investor who had no interest in getting a return on his money – a mythical creature, as far as Ed Standish was aware – that was an unsustainable situation. Ed then wondered if they had already done a deal with another agency, so he did a search of the trade media to find out if it had been reported. Then he did some calculations about Fishbowll's revenue potential under various assumptions, and immediately wondered how 4Site could get a piece of it.

He got an assistant to ferret out Andrei Koss's phone number and started ringing. The first couple of times Koss answered, then he didn't. Standish kept trying, on average, a couple of times
a week. If Koss was ignoring him, he figured, at least he knew who he was. He wanted to keep reminding him. At some point, Koss's attitude might change, and Standish wanted to be the one he thought of.

He would have kept going for a year if necessary. But he didn't need to. Koss rang him.

Mentally clearing his diary of anything that was in it, Standish said he could be in Palo Alto the next day. He asked Andrei where he wanted to meet.

Andrei gave him the name of the first place that came into his head.

Standish stood on University Avenue with the 4Site colleague he had brought with him. They were both dressed in open-neck shirts and chinos. Standish was a little overweight with receding reddish hair. The other man, Andy Merritt, was dark-haired, good looking and young. Ed Standish knew that he himself looked an unlikely type to specialize in dealing with tech startups, and liked to have someone who fitted the stereotypical mould at a first meeting to set the tech guys at ease.

‘You sure this is the place?' said Merritt doubtfully.

Standish looked at the name on the door. Yao's. ‘This is it.'

In they went. They found Andrei, Kevin and Ben sitting at a table with the remnants of a meal in front of them. Standish wondered if this was some kind of weird power play on Andrei's part, to have him turn up like a supplicant while they were eating.

The truth was, while they were meant to meet at one o'clock, Andrei had got hungry and had headed down for lunch at twelve.

Standish introduced himself and Merritt and then sat down.

‘Do you want to order?' said Ben, looking around for Lopez.

Standish shook his head. ‘We're fine. Andy, you OK?'

‘Sure,' said Merritt.

‘Let's talk,' said Standish. He started by congratulating Andrei on Fishbowll and said that 4Site had a team that tracked developing companies in the internet space and Fishbowll was the
most exciting thing they had seen in years. ‘Everyone at 4Site is dying to work with you guys.'

‘What control will we have?' said Andrei by way of reply, jumping straight to one of the two main things on his mind.

Standish looked at him blankly for a moment.

‘Over the kind of advertising we do,' said Andrei. ‘You said on the phone we'd have control.'

Standish smiled. ‘It's something we'd work out together. Like I said on the phone, this has to be win-win for you and your users. The kind of advertising you put on the site has to enhance the experience. It's something your users have to value. We know how important that is. We'll have time to discuss that.'

‘What if any advertising we put on the site can only detract from the experience? What if they come to the site because they want a site where there is no advertising?'

‘Well, Mr Koss,' said Standish, quickly abandoning his plan for how he wanted to direct the conversation and deciding to go along with the stream of questions coming at him, ‘if that's the case, then you don't want us. But I doubt that's the case.'

‘You don't know our users.'

‘What I do know is that not a single website that I'm aware of – and you can correct me if I'm wrong – has ever been abandoned by its users because of advertising. I don't know of a single case where it's had negative impact of any duration. A lot of hot air, but nothing real. Do you know of any examples, Andy?'

The younger advertising executive shook his head.

‘People are realistic now,' said Standish. ‘They expect it. They know the internet doesn't come for free.'

‘Andrei's got very high principles,' said Ben.

‘That's good,' said Standish. It wasn't the first time he had had to deal with a start-up founder agonizing over introducing advertising to his site. Most of them got over their qualms pretty quickly. ‘Look, it may be, Andrei, that you're thinking this is some kind of betrayal of why you started Fishbowll. And I understand that. But the bigger betrayal, I think, is if you're
not businesslike, if you let your principles – which I respect – get in the way of making sure that you can provide the best possible service for your users, or, even worse, your survival. You've got to raise money in order to do that. Let's face it – that's the reality. We're here to help you do that in the way you're comfortable doing it. We're not here to try to make you put anything on the site that doesn't work for you. In the long run, that's not smart. Even if we earn a little more today, that means we all earn a whole lot less tomorrow. I don't like to think of it as who has control, as such. We work this as a partnership. That's how we at 4Site always work. Our experience is that that gives the best results.'

Andrei watched the advertising man silently, wondering just how much of what he was saying was bullshit.

Standish smiled again. ‘Look, I haven't even told you what we offer. Let me take a few moments to tell you. We think your site has incredible advertising potential for specialist companies seeking their unique audience. We have a few slides we can look at to show you what I mean.'

Standish gestured to Merritt, who reached under the table and extracted a set of thin, bound folders from a bag. Standish pushed aside the plates on the table and handed them out.

Standish opened a copy of the file. ‘Skip the first couple of pages – just the usual company wadding.' He grinned. ‘Yadda, yadda, yadda. OK, let's look at page four. Now, I don't know what the other agencies you're talking to have been telling you, but I'm not going to sit here and tell you that you are going to be the number one choice for every company under the sun. A Coke, a Bud …' Standish shook his head ‘… you're not a great channel for them. Maybe when you're really, really big, when you can put a billion eyeballs on their ads … great. But, right now, for me, it's about specialized services and goods. We think you're an unparalleled venue for that kind of client – and this is not exactly niche. If you look at the next page … we're talking about an annual worldwide advertising spend for clients of that type of upwards of
a hundred and fifty billion dollars.' He chuckled for a moment. ‘Not that you'll get all of that – at least not at once.'

‘I think we could figure out what kind of company we'd appeal to,' said Andrei.

‘Fair enough. I'm sure you could, probably better than me. But you need to get to them. How do you do that? That's where we come in. You're going to spend a lot of time and need a lot of people and spend a lot of money if you try to get to that kind of client yourself, especially as an unknown website. Just getting to their VP of marketing or their advertising agency will be a challenge. What do you think they do when
another
internet start-up calls up? What you'll struggle to achieve with ten calls, we can get in one. I know that, because that kind of clientele is our sweet spot. We have the knowledge and the network and the experience and the resources to identify and target those clients and bring them to you in a way that would take you years to replicate if you had to do it yourself. And I'm guessing, if I'm right, that you don't have years.'

Andrei didn't reply.

‘What's the deal, Mr Standish?' said Kevin.

‘Good question. I know this is going to sound kind of cheesy, but the most important part of the deal for you is what I've just said. 4Site's network and experience. We work with net companies, amongst which are many start-ups. We know the challenges you'll face and we know how to solve them. I skipped these before, but go back to the first couple of pages and you can see some of our credentials.'

Ben and Kevin flipped back. Standish noticed that Andrei didn't. He decided to ignore the credentials and move on to the next subject that he guessed was on Andrei's mind.

‘There are financial aspects, of course. That's summarized on page six. We'll guarantee revenue to you of a million dollars in the first year, with a rising guarantee depending on performance over years two and three. Also, our deal includes an introductory commission for the first twelve months of twenty per cent rather than the normal rate of twenty-five per cent. That helps you get
established and gets your cash flow going. I'm guessing you guys may not be too familiar with advertising models but you've probably already found out from the other agencies you're talking to that twenty-five per cent is pretty much a norm and twenty per cent is a genuine discount. Now, of course we don't know your user numbers or time on site or any other metrics so on the next page you can see what we've assumed. As long as we're in the ballpark, we're happy to honour these terms.' He smiled. ‘Actually, we'd love to honour these terms.'

‘How much is upfront?' said Andrei.

‘How much of what, Andrei?'

‘How much of the million you guarantee?'

‘We normally pay that quarterly.'

‘Quarterly in advance?'

Standish shook his head. ‘Over the year, we expect you to be considerably ahead of the guarantee. What we do is top up quarterly to – in this case – a quarter of a million dollars if you don't make the numbers, and we'll take that back when you make up the ground. That gives you certainty over your cash flow, which is helpful to most start-ups. What we would expect here is for the next quarter or two, we would be making up the payment and then later, when the revenues get going, we'll adjust that back. What you can be sure of is getting your quarter million minimum each quarter.'

‘But not in advance?' said Andrei.

‘Is that important, Andrei?'

Andrei frowned for a moment, wondering if he had given too much away. Then he said, ‘The other agencies we're talking to are prepared to consider that.'

Merritt glanced at Standish. The older man's face showed no reaction.

Andrei turned a page in his file and glanced at the numbers. ‘We're considerably ahead of the numbers you've assumed.'

‘Great,' said Standish. ‘You'll do even better. The million guarantee, Andrei, is a minimum to give you some certainty as
you plan. Now, I don't how much the other agencies are offering you but a million in this circumstance is a considerable sum – by far the highest offer I have ever made to a new start-up – and 4Site is happy to do that because of our belief in your business. Even on the numbers we've assumed – and you say your numbers are even better, and I believe you – and even with our reduced commission, you should do a lot better. I'm estimating at least two to three times better. If you don't, we take the hit.'

‘How long does the contract run?' asked Andrei.

‘Three years.'

‘Is that exclusive?'

‘That's exclusive.'

Andrei nodded. He got up. ‘Thank you.'

Standish looked up at him in surprise. ‘What's wrong?'

‘I wanted to know whether you were serious.'

‘Andrei, we're offering you a million-dollar guarantee over the next twelve months. I think that says we're serious.'

‘Do you know how long three years is in internet time? Three years is a lifetime.'

‘Andrei, sit down, please. We're serious. We think Fishbowll has enormous potential and we thought you'd want a partner who was prepared to commit to a substantial involvement. That's why we said three years. But if three years is too long, I'm sure we can manage something else. Sit down. Please.'

Andrei sat. ‘The numbers you've assumed in your presentation, the numbers you have for our users and visits and time on site, we're over double that on every one of those.'

‘How far over double?'

‘Significantly.'

‘That's awesome.'

‘I want to be fair to you,' said Andrei. ‘I understand that if we're going to do this, you have to have some time to benefit from the investment you make. I think an eighteen-month deal is fair.'

‘You know, eighteen months is quite a short timeline, once you set up and start to roll out. I think if we could do two years—'

‘Eighteen months from go live,' said Andrei. ‘That's a clear eighteen months. And the one million – we're over double the numbers you assumed, so let's guarantee that in the first six months, not the first year. And I don't like this quarterly thing. I'd like half up front, the rest at the end of the six months.'

Standish watched him, absorbing what he was saying.