They're "The money guy." They don't need to know squat except how to squash ideas that don't turn out hockey stick growth. Most websites don't need funding, it's a misnomer, and ruins what could be a perfectly good life style business.
People need to get over the idea that they're building the next big thing.. Because they're not. Turn out profitable business and then if the growth is there push on till the day. Otherwise enjoy what you have or sell it and try again.
E.g., suppose a Web site starts to take off,
that is, has number of users per day
increasing rapidly. Then, a crucial number
in the growth is how soon can
one server computer generate
enough revenue to pay for a second server
computer? That is, we're talking
about a start on exponential growth.
Well, long the M. Meeker KPCB reports said
that can get paid about $2 per 1000 ads
displayed. Okay, maybe now that's down
to $1.
Okay, suppose send just one ad per Web page.
Get, say, a server with an 8 core AMD
processor at 4.0 GHz for $1000
and send on average
24 x 7 just one Web page per second.
Then the monthly revenue would be
1 * 3600 * 24 * 30 / 1000 = 2,592
dollars.
So, in two weeks, get another server.
So, we have essentially exponential
growth with a doubling time of a little
less than two weeks.
So, we have, in the history of (legal)
business, about the fastest growth,
the best business opportunity, of all
time.
But we were talking 8 cores, right?
At 4.0 GHz, right? If the Web pages
are relatively simple, then we're
talking being able to send maybe 8 Web pages
a second. And we may have more than
one ad per page. Okay, assume
as above but 8 pages a second with
4 ads per page and get
1 * 8 * 4 * 3600 * 24 * 30 / 1000
= 82,944
dollars a month in revenue. That was one
server. So, in a spare bedroom get a
wire rack shelf unit at Sam's Club
for $100 and put 12 midtower cases
of such servers on that rack. Have
an electrician upgrade the house
circuit breaker box and run 240 V
to the spare bedroom for the computers
and a big window unit A/C. Also put
a propane powered backup generator
on a concrete slab in a small hut
out back. Now we're up to ballpark
$1 million a month in revenue.
So, we're talking ballpark $10 million
a year in pre-tax earnings. At a P/E
of 40, we're talking a company worth
$400 million, from a spare bedroom.
Is the Internet a great opportunity
or what?
Sure, the issue is getting the users.
But with the users, there's only
a small window of time when even a
dirt poor founding entrepreneur
would take equity funding. And
without the users, still there would
be not equity funding.
Net, it looks like equity funding
and Web sites mix like oil and water.
If the site grows, if it doesn't, in
either case, there's little or no role for
equity funding.
Of course, if have just a Web site,
may have only a lifestyle business.
Okay. Not so bad.
What about "focus"? User's
focus when the look at the
screen; my focus when
I have to work on all the issues
in the startup and, then, in
addition the ads and, thus, lose
my focus; something else?
For user experience, with
my Web pages, the ads are fairly
easy to ignore. The pages are dirt
simple with essentially no JavaScript --
so that pages don't jump around.
And all the layout is just via
tables so that I know to the last
pixel where everything is.
The content the user wants
is on the left, and some ads
300 x 250 pixels are on the right.
Simple.
So, I'm guessing that the
ads will not be very distracting, e.g.,
won't hurt the ability of the
users to focus on the content,
i.e., won't yield a poor user
experience.
People need to get over the idea that they're building the next big thing.. Because they're not. Turn out profitable business and then if the growth is there push on till the day. Otherwise enjoy what you have or sell it and try again.