How do you raise £1m? Good question. The answer to which was not to raise £1m, but instead to raise £5m, as we were told at the time by another internet entrepreneur. Apparently this was much easier. A good .com business plan needed ambition, and ambition required cash, so in a way if your plan lacked ambition you wouldn’t get the cash, so £5m it was.
(Aside – I feel the need at this point to explain my view on .com-enomics, as I’m conscious I don’t want this account to seem either frivolous or disrespectful. Certainly with hindsight, you could say it seemed a little strange that these unproven business plans could attract so much cash, but at the time it was a very different matter.
I believe that people fell into one of three categories at the time:
i) I believe this is a new era of economics and dotcoms would revolutionise the way things work; ii) I’m not sure I believe the economics myself, but the market is placing very high value on it; iii) This .com stuff is a load of nonsense.
Personally, I felt a little between (i) and (ii), a bit like an agnostic; I would have liked to believe (i) was true, but a little too sceptical to fully throw myself behind it. But that’s why I wouldn’t have been able to raise that kind of money in that climate. The people that threw themselves behind (i), made a bold claim and were prepared to back it, were real pioneers of the time. And succeed or fail, they had a commitment to the .com era and helped make it what it is today.
As an investor, you could justify being involved if you believed either (i) or (ii). Clearly if you believed (i) you’d go for it, but even if it was (ii), and you were very sceptical/cynical, you could make an investment with the expectation of selling it in the high stakes .com boom and exiting well even if you didn’t believe it yourself. While there were companies buying each other for $100m, or going public for $1bn, it was possible. Taking their lead, conventional wisdom said that if you built a service, grabbed as many customers as you could (usually at low or free prices), you could be valued very highly, even before you’d made any money yourself.
I’m not sure what our investors believed. Probably a mixture of (i) and (ii), and all .com plans certainly involved making money. It was just the business model itself that was unproven (if you added up all the .com advertising revenues on all the .com plans, I’m sure it would have come to more than the GDP of the world…). But they, like the entrepreneurs, were prepared to put their money where their mouth was, and helped shape the most dramatic change in business climate since the industrial revolution. – end).
So armed with conventional wisdom, our free product launched in January 2000, and we set about grabbing as many customers as we could.
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