Founders at Work.pdf

James Hong 381
an essay to get in. It was basically built on the BBSs of the old days that had different
levels with different skills.
We told the moderators to reject any pictures that were inappropriate,
looked like an ad, or had contact info. (Pornographers were including fake
email addresses to get people to email them so they would spam them later.)
And then we got a bunch of emails from people saying, “Hey, I was meeting
people.”
We quickly realized that we needed to make something to allow people to
meet each other without letting all these porn people in. So we came up with
the “Meet” system, which required a little more work than most dating sites,
because it requires both people to be active. You can’t just post an ad and wait
for emails to come in, so it’s harder for porn people to come in and take advantage
of it.
As we were solving the problem of keeping the site clean so that we could
get advertisers, ad rates were dropping. We had to come up with something
that we had more control over, and that’s when I thought, “Can we charge for
anything?” We started charging $6 per month to belong to the Meet Me system.
We chose the pricing based on what we thought would be an impulse buy.
In retrospect, it’s easy to see that we had this dating system that was slapping
us in the face, but it took us a while to think that we could charge for it,
because the Meet Me system was never built to make money. It was only built
in response to the porn issue. It’s ironic that I have an MBA and also started a
company before that had raised venture capital, but the one idea that worked
was all an accident.
Another thread of what happened was that I was trying to reduce our costs.
Though we weren’t being charged yet by Rackspace, I now knew how much we
needed to cover those hosting costs, plus enough to hire someone to manage
the site. After running into a guy who worked at Ofoto at an office-warming
party, I talked to Ofoto about how we were sending people to GeoCities, and
since many of our users have digital cameras, maybe I should send them to
Ofoto instead of Yahoo to host them, and now Ofoto would have a lead. So I did
an affiliate deal with Ofoto.
It’s funny to think that we took something that was originally costing a lot of
money, to making them free, to actually making money on some of them. Again,
all of this wasn’t planned or brilliant, we were just trying to survive. At this point
we thought, “OK this deal buys us more time.”
On top of all this, we were constantly fixing the site to scale. We were working
like madmen, only getting 3 to 4 hours of sleep a night for a long time. It
became a race between Jim and me; could I bring in people faster than he
could keep up with? It was a good challenge for both of us. My job was to make
a bottleneck and his job was to clear the bottleneck, technically. So we didn’t
really get to breathe until we had the Meet Me system and it was making
money. I think it made about half a million a year when we started, and we now
had a scalable business model.
But we still didn’t think it was going to be a business at that point; we didn’t
think it was going to continue growing. We thought it was just going to be there