The Mandatory Guy Kawasaki Panel: ROFL

Today it’s about "Why Take Venture Capital at All." The CEO of Hi-5
(12b pages)  is here, the creator the the Zombies and Vampires Facebook
application, the CEO of Fark (42m views), popurls (150b pages.mo)– you
get the picture.  Very high traffic sites that either run out of one
guy’s apartment with no employees or monetized themselves very early on
because they couldn’t raise VC money earlier.

The hardest thing about building a business is momentum and if you can
get the momentum, you may not need the money. You don’t raise the money
because you need it, you need it because you want to get to the next
level. In five months time, Zombies and Vampires has 500k users a
month  because it was designed to spread and encourage people to play
it. It just gives feedback loops and interactions that get users very
addicted and they will do anything. A small number of users hit the
site endlessly.

Popurls was a coding project for a guy who thought he had to learn .net
to get his next job. However, one month he actually received a $900k
check from Google for adwords.

Zombies and Vampires was started by Blake Commager as a joke to amuse
his friends. He still doesn’t  know if he has a business model.

Hi-5 grew, largely in the Spanish speaking community, before the
founder could raise money.  He finally took money to expand it to the
next level when he realized how successful it was. He has a long term
business strategy. Hi-5 is big in Latin America,  Mexico, Portugal, and
Thailand. "One thing to keep in perspective is where we live. Silicon
Valley is very different than the rest of the world. Out there, people
talk about what they use, not what they read in the blogs."

Fark was a complete accident from start to finish.  He started the site
in 1999 to collect weird stories he saw on the Internet. By the time he
realized something was going on, the bottom had fallen out of the
dotcom market, but he had lots of users. In 2000, Clear Channel sent
out a memo to all its morning DJs telling them to use Fark as a
clipping service for morning news items. Most comedy shows mine Fark
for material.  They now get 2000 user-generated stories a day. He reads
them all from 7 AM to 5 PM and then he plays soccer and drinks.

He has four other guys who pick up and read stories part time. He can
read 100 stories in five minutes. Stories are submitted and read around
the clock. The readers all have the same sense of humor. The CEO said
he had been gone for a month and no one noticed. "Web 3.0 is good
editing."

The CEO of Plenty of Fish, the largest dating site, is completely
automated. There’s nothing to do. He has twelve servers and a huge
amount of traffic. No one works there.

To me, this is the funniest panel yet. The companies don’t really
follow the Silicon Valley model, but  when they have a lot of traffic
you can do great deals to monetize your offering. Hi-5 was financed by
the guy’s dad, who has a small business background. Venture capital is
about what’s right for you. The Hi-5 guys wanted to do it themselves.
And social networks are where the prime youth demographic resides.
They don’t watch TV and they don’t read the newspapers.

Usage patterns on the Internet are radically different every three
years.  Average users can spend up to three hours a day on these sites.
They don’t  phone, they don’t use email, they don’t even IM, they just
write on your wall.  It’s a different dynamic.

Most males 18-35 get their news on the Internet. If they get it on TV, it’s from the Daily Show.

Hi-5 CEO says when he finally took money he was able to hire a good
sales team and became profitable within a quarter. Some things depend
on money to make them successful — an infusion of a million dollars —
and some things can be done without it. But you can’t just take money.
Has to be money that opens doors to deals.

"We have nothing we could do with venture capital." –Fark CEO

Update: The perils of live blogging. See the first comment below, where the commenter corrects me to say that the site built as a coding project that got a $900k check from Google is the dating site Plenty of Fish.  My apologies.  Sitting in the back of the room it’s tough to see who is speaking.