Building Web Businesses: Yesterday, Today & Tomorrow Pt.1

By Clarence Wooten

For someone who has been involved with the Web as an entrepreneur since it’s inception, I find it fascinating how the Web continues to evolve and transform the startup experience. Having started Web companies in both eras, I felt it would be good to share my perspective. To appreciate how far we’ve come, we must remember where we were. Five years ago I wrote a post entitled, Web 2.0: It’s a great time to be an investor. I was mistaken, it was an even better time to be an entrepreneur. It wasn’t long after writing that post that I became an entrepreneur again. Today, five years later, I am more excited than ever before. Below, is my recap (yesterday), present overview (today) and prognostication for (tomorrow).

Yesterday – Web 1.0

From 1994-2003

• Overview:I refer to Web 1.0 as the Hype-Web era. I say this because, at that time, the reality of the Web experience didn’t come close to matching its promise. Connection speeds to the Web were very slow via dial-up modems. The HTML spec was still immature and very limited. Worldwide consumer adoption had not quite reached the masses. Basically, the Web wasn’t ready for prime-time. However, that didn’t stop the flow of capital and excitement.
• Startup constraints: Connectivity: Average connection speed: 56k (via dial-up modem) Web Technology: HTML 1.0, Perl scripts & java Software Costs: Expensive Software Licensing Fees: Oracle Database, Netscape or Microsoft Web Server Marketing & Promotion: Super Bowl Commercials (requiring significant VC funding)
• Case Study: ImageCafe.com – Founded 1998 When we launched ImageCafe.com in 1999, it was a very different time. Unless you were AOL, Earthlink or some other large ISP, you could build it, but they wouldn’t come. PR-hype and Super Bowl commercials were your only ticket to eyeballs. Eyeballs and “stickiness,” and massive VC funding were your ticket to IPO riches. What happened after you went public was another story, usually a sad one. When starting ImageCafe in 1999, it costs roughly $250,000 to launch the company – which was considered cheap at that time. We had to spend significant money licensing web server and database software and hardware. We also had to raise additional capital immediately following launch to hire a PR firm at $15,000 per month to generate needed buzz.
• Since we couldn’t afford a Super Bowl commercial, we had to establish co-branding partnerships with ISPs to generate traffic to attempt to acquire customers. Many of which were just beginning to become comfortable with e-commerce. Fortunately, primarily due to the promise of our platform and the “get big fast” mentality of the time, we were acquired before we had to generate any meaningful revenue. I am proud to say that a form of ImageCafe.com is remains in use by our acquirer. So as an entrepreneur, I feel that I did my job

Stay tuned for parts 2 & 3 of guest author Clarence Wooten’s discussion on Building Web Businesses.

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