Entrepreneurship and Wealth Creation
Session One: Web Content
Friday, November 12, 1999
2-3:15p.m.

Ted Snyder: I'm Ted Snyder, Dean of the school and we want to continue the excitement and energy and conversation from this morning. I thought I would very quickly tell you a little bit about Darden as an e-business and some of the things that we are doing. We're pushing very hard on multimedia cases. We are launching this month, early next month, what we call the Darden e-panel which will be our way of talking with a wide range of people about major business issues. We've selected a group of major business issues that we want to concentrate in for the next several years. One of them is e-business transformation. Another is managing the innovative process. Another is strategic alliances and the extended enterprise, so we are deep into it.

I regret the fact that we don't have enough room for everybody. I have to say this virtually every major event that we have here. I apologize. We're building a building. We will have an auditorium and each time we have one of these events, I recognize that we're at least a few days closer to that eventuality, but again, welcome. It's a great pleasure to have you here. This event is really the creation and the realization of a lot of work by our Darden students and at this point, I want to turn it over to Parker Cassidy, Vice President of the Entrepreneurs' Club, to get us started.

Parker Cassidy: Thank you. I have the pleasure today of introducing our first panel, "Entrepreneurship and Wealth Creation," with a focus on Internet content. We have some fantastic panelists here today to talk to us about their vision, information and community-based sites, and even beyond that, in the Internet. Each of them are going to start off with a piece about themselves and their vision and then we'll open it up to the audience for questions. There'll be people with mikes walking around, so please hail them down and they'll pass the mike over to you. So, our first question from the audience will be coming from Patty Sellers from Fortune Magazine. She'll lead our discussion session off and without any further ado, on the far side, we have Tom Gardner of The Motley Fool. He is the co-founder of The Motley Fool. Beside him, we have Jim Thomas, CCO and CFO of MapQuest.com. Over here we have Bill Martin and he is a co-founder of Raging Bull.com, and on the far side, Alison Abraham, one of the plenary session panelists this morning, COO of iVillage. Thank you, so Tom, if you'll lead us off.

Thomas M. Gardner: I think it's only fitting, of course, that for marketing purposes and also for very clearly some personal reasons for me to wear that cap today. Thanks for having us all. Thanks for having me here. It's a great opportunity to sit down and talk and see so many people who are thinking about where the world's heading. We are in the middle, as we all know, the biggest commercial revolution in the history of this country and we're able to design and participate in it in ways that just weren't possible for me as I was graduating from school and personally not actually finishing my graduate degree, even though I did all my course work.

The Fool started up and I moved on and began focusing on that, and I think one of the reasons I did is I personally, maybe a slightly unpopular message in this crowd, but I personally became a little bit frustrated with my educational experience where I felt that I had been put in the position, certainly up until my graduate work, where I was a single student out in a large audience of many other people who were interested in learning a particular subject and I was really responsible for listening to a lecture and taking notes and preparing to take my mid-term exam on American foreign policy in the 20th century or whatever the subject was, and I didn't really feel that I had that connection with other people in the class. There were times when I had to turn in a 25-page paper and I didn't know what Susie was writing her paper about or Joe was writing his paper about. There wasn't a lot of conversation going on between the people in the audience, and I think that's the most exciting thing for me, personally, about what's happening with the Internet is that decentralized force where it is actually the ideas right out here in the audience that are more important than the things you're going to hear from the panelists, just based on simple mathematics--the number of brains and creative ideas that are sitting out there in any audience will overpower the few supposed experts that get to sit in the front of the room and be the centralized force of knowledge. The exciting thing for us about our Internet site is that open community discussion.

Participation where we've hired more than 50% of the people that work at our company today-- We have about 250 people working at Fool global headquarters in Alexandria, Virginia, and more than half of them have come from our community. Have applied for jobs on our site, or sent us resumes, or we've simply noticed that they were great contributors out in our discussion groups. They knew an awful lot about estate planning or about how to buy a car because they had been a dealer, a car dealer, for five years at four different dealerships. Are there any car dealers in the room today? I'm about to take a cheap shot at you and maybe they powered up the lights. Don't worry--Merrill Lynch is next. Things are going to get uglier in a second .

It was the opportunity to get all these voices and hear contributions. I know I've probably only got about two more minutes, but I'll tell a quick story about eBay since I know we're all familiar with the 24-hour garage sale around the world that goes on on eBay every day. This is sort of a sense of what happens when you have the rapid growth rates that we're seeing and the innovation. A lot of these rule-breaking companies are missing some of the checklist things that you have to do as a public company. You're supposed to be on top of everything at all times and when you're doubling in size every three months, it's difficult to keep track of it all.

eBay won the Cool Site of the Year Award in New York City about six months ago and they unfortunately neglected to send a representative to receive the award. Just in the blur of their growth they weren't there for the academy awards of the Internet and when they were called out a second time as the winner, the emcee called it out, and 700 heads turned around looking for someone to step up and receive the award. When no one did it, somebody popped up 10 rows back, ran up on a stage to receive the award. The individual had no affiliation with eBay whatsoever. His acceptance speech had nothing to do with eBay. He took the crystal Cool Site of the Year Award off the podium, walked out of the back of the arena, drove home and listed it for sale on eBay that night . So that's the spirit of what's happening in the Internet.

That's the sense of enterprise. You don't have to buy Internet stocks to actually make money on the Internet, but I think what's really of such great excitement to us is the innovation and the innovation that truly relies on team participation, on getting as many voices and ideas as possible to really push forward and I'm disappointed whenever I see different groups attack each other and the supposed competition that's going on in the Internet because it's actually very cooperative. We partner up with a lot of people that some would consider to be competitors of ours, but when you look at what's going to happen in biotechnology and when you see that by the year 2003, 750 million people are going to be using the Internet and going to be using wireless, most of the access to the Internet is going to be wireless. When you see all this opportunity out there, it just overwhelms you to think of the prosperity and the opportunity that we have individually.

[Background audio sound] Does this mean that I don't get to make my Merrill Lynch joke? I just want to close by saying a lot of you are probably familiar with "To Serve Man," the "Twilight Zone" episode where they've descended on our planet and it isn't until one point in the episode that everybody realizes that the title of their operating manual is an alien race is to serve man. We think they've been serving us. In fact, once we translate their operating manual, to serve man is a cookbook. When I think of full financial services and full service brokerage firms today, I ask myself who's being served and who's being served up for dinner and I think the Internet is undermining the sort of business model that has the top broker of Merrill Lynch generating $3 million in commissions in the first three months of 1999. I don't think a service has been done to the client and I think that the Internet is bringing a lot of people together to realize they can do better managing and overseeing their financial situation themselves with maybe some outside help, but certainly not somebody drive on commission to serve them. Thank you.

James W. Thomas: Can I pass? [l] I haven't been back to Darden. This is the first time since I left and I'm quite amazed at the changes that have occurred here, and for me, it did change my life. It made me have to work pretty hard and my study group took me screaming and kicking all the way through two years and I appreciate it very much.

The activities that we do as a company, I'm going to talk about that a little bit. We migrated a traditional business that was basically simple--mapping business, and we migrated it to the Internet. How did we do it? We went from print media to CD-Rom. Nobody heard about us as a little company. We were called Geo Systems Global Corporation. Then we said we've got some client server technology here that we're serving some of these other business customer. Can we migrate that to what was called the Internet at the time, and we didn't know what our business model was going to be. We didn't know if it would make it or not.

We had a parent company who was an old-line business, R.R. Donnelly and Sons, and they didn't want to spend a lot of money in this new media. What was going to really happen there? We snuck about a $100,000 out of the budget, hid it and did the little skunk works and developed our Internet application and I think it was February of '96 is when we turned the site on. We had about four or five processors in a closet and the next night, the closet was about 150 degrees because the traffic was so high. They were being hit so hard, and over the last four years, 3_ years, I should say, the traffic on that site just to show you the proliferation that is occurring with the people hitting out on the Internet, we passed the threshold of about half million maps a day that we were drawing in '96. It went over a million in '97. It went over two million in '98 and this year, in '99, it's grown over three, four, five, six and it's just pushed past seven million maps a day that's going on, so the proliferation that's going on is just amazing and it's very difficult for somebody who graduated from Darden 20 years ago to have the energy to keep up with these young guys and the enthusiasm that they have.

The technologies that surround the Internet have really enabled us to do two things--distribute our products and make it more applicable to the daily lifestyle of people, so how many people have used MapQuest. I asked this question three years ago of how many people ever heard of MapQuest and I had four or five people raise their hands, so this basically word-of-mouth has spread and made this a really marketing effort for us over the last few years. This year we've been doing advertising but it really shows that the net has allowed a product that's very useful, whether it's our product or someone else's, to really proliferate if people find it helpful in their daily lives.

The tough thing that maybe we'll talk about a little bit here is how do you monetize that. We are taking an old business. We were serving business to business customers. We still see that as a major revenue stream for us and now we're also serving consumers and we're obviously using advertising revenue as the major revenue stream there.

What's going to happen in the future real quick? Broader distributions through other media. A lot of you have Palm Pilots and so forth. You can download things now. There's a wireless Palm that you can use. What's that going to do? It's going to mean it's in the hands of everybody, wherever they go. The next phase had just started which we're doing and other companies are doing is touching into wireless with the Spring PCS phone and so forth, so wherever you go, there's going to be information. This is radically going to change how people live and work. If I get lost, I want to be able to find where I am and where I can go. If I'm hungry and I want to go to a Chinese restaurant and I'm in a new city, I don't know where it is, I can find it in 15 seconds. Radically going to change our lifestyle.

It's a pretty challenging time for us and I think all of us sitting on this panel, it's probably been-- I don't know, the last year has probably been the most exciting year of my life in business.

William C. Martin: It's been a pretty exciting year for me as well. I'm just absolutely bewildered and amazed that I'm sitting here. First, thank you to Tom, who although I'm not getting equal time because I forgot my Raging Bull hat, Raging Bull is a finance site and this guy came into the finance base on the Internet and just blazed a trail for the rest of us, and he's been one of my heroes since-- I'm only 22, so not that long , but he counts up there.

The second reason, and most of you probably know that Darden was an Internet incubator, but a year and a half ago, my buddy Rusty and I who started Raging Bull, we were over at the Bloomberg's every afternoon skipping out on our Comm School classes working on this website called Raging Bull, so it's pretty remarkable to be sitting here a year-and-a-half later and just doing this. It's been amazing. We started a web site Focus on Community for People.com and talk about stocks, so on a daily basis, we have 4 to 500,000 people coming to our site to post 30 or 40,000 messages about any topic you can imagine, starting with CMGI or Dell or C-Net or Yahoo! down to politics or their retirement, everything, which it's just a tremendous business model and it's tremendously exciting for me and I think we're in a great position.

First, because the content's cheap because our users are producing it, so there's good margins there. Second, it's very timely. CBS Market Watch has 150 reporters and The Street.com has these huge editorial budgets and we just have lots of people who were watching CNBC or reading the papers and if something happens and the stock's moving, there're on the boards two minutes later instantly reacting to what's going on and it may not always be right. They at least have an opinion and I've been in more than one analyst's office while doing the press tour type thing where they get a phone call from the Wall Street Journal, why is this stock moving, Internet stock, analysts tend to-- They'll walk over to Bloomberg. There'll be no news. There's another proprietary news service--no news. Walks over to Raging Bull or The Motley Fool, reads four posts, paraphrasing it and he's quoted in the Journal the next day . True story.

That's absolutely amazing and what we're starting to see because The Fool and Raging Bull were sitting right on this trend with the retail investors getting more and more power in the markets and many stocks are literally making the markets that the content they're producing and the sediment that they're producing is true valuable editorial that we're-- We don't have a staff sitting there telling you what Abby Cohen said. We're telling you what the retail investors are saying and pushing that out. They're making the news, so it's awesome to be on the cutting edge of that.

I also think Raging Bull's just a great example of the power of viral Internet growth and it shows you that you can build a brand on the Internet. We've spent 70 grand on marketing to date and we had two million unique visitors last month. January first, we're doing 200,000 pages a day. Last week we were doing 6_ million with just word-of-mouth, so if you put a good service out on the Internet, people will come and I think that's for entrepreneurs out there, I think that's an amazing possibility. All that's becoming more and more difficult as these huge marketing budgets, etc.

The only reason I think we're really in a good position is the possibilities of merging the community with transactions, with media, you look at players at e-Trade or DayTech who are spending-- eTrade just announced they're going to spend $500 million in the next 18 months to market which is basically saying to everyone else, ante up or get out of the game. They're all competing on price. They're competing on execution which is in the end is a commodity. They go to the eTrade site. They spend three minutes executing a trade and they come back to Raging Bull and The Motley Fool and they spend 25 minutes or 30 minutes talking with their friends, sharing information. At the same time, they're seeing all the competitors' ads for their on-line broker, so who truly owns the customer's mindshare. We think we do.

So one of our business models is actually to go out and partner with different transactional providers and bring the two together which I think you'll see more and more happen with e-commerce. These guys rather than spend $50 or $100 million to flash TV commercials at you, put a community there where people will voluntarily come and then sell goods around that, a soft sell. I think Amazon and eTrade are the models there because they get it.

Just to reaffirm just the amazing possibilities, to be an entrepreneur right now, I'm up in Boston and I spend a lot of time at HBS. Don't hold that against me. One of the professors there has just an amazing analogy. Bill Solomon who was 10 years ago everything thought he was a nut ball because he was talking about the Internet and being an entrepreneur and today his class, it's like a rock concert, but he compares the Internet to Jurassic Park. You had Jurassic Park and they put this fence around it, this electric fence to keep all the raptors out and then someone turned off that fence and all the raptors came in. The same thing's happening in American industry today where for the past 50 years Dow Jones, Sears, everyone has built up these huge barriers to entry and now guys like me are coming in and just tearing it down. Tearing down the barriers of entry, so amazing possibilities, so strike while the iron's hot.

Allison H. Abraham: I'm Allison Abraham from iVillage and I thought I'd tell you a little bit about my background and then a little bit more about the company. I went to Darden about 10 years ago and came out and went pretty traditional. Went to American Express first and I launched the Optium Card which was considered very entrepreneurial then although what we're doing how is completely different, and went to Ameritech so I was in the big telephone service. In marketing, when you're a monopoly, when you're trying to convince people to use telephone service when they don't have any choice , so it's very traditional and finally one day-- I remember, it was Memorial Day weekend in '96 and I had gone home and just suddenly realized that I really wasn't all that happy because going to work every day wasn't very fun and I literally went in on Monday morning and just quit and it was like, no, you must be too burned out. You can't quit. Why don't you just go on a vacation?

So, I was like, okay, so I want the summer off. No, you can take a week , and so we ended up, I take the month of June off and I went to Wimbledon, had a fabulous time, came back, was supposed to be rested and refreshed and literally lasted a day and walked in the next day and I just don't want to do this any more. I'm gone, so two weeks later I was out of a job and decided that I wasn't really sure what I wanted to do and someone called me and said I'm starting this new-- Or I'm taking over this company that does grocery shopping on the Internet. Would you like to come and just kind of help us do some marketing? And it was in Washington, DC and I lived in Chicago and I said, well, okay. I'll help you a couple of days a week, and so I started to do that and had never used the Internet before.

I had no idea what was going on, but it was a big business because it was phone and fax at the time, so there was lots going on. I thought it was kind of neat, and it took a lot of the experience that I'd learned at Darden and at American Express from direct marketing and I found that I could get it and liked it a lot and within about 60 days, they had fired the guy who'd hired me and made me president of the company and the next thing you know I was leading an Internet grocery shopping company. Literally in like a 90-day period, and my brother kept calling me and said I thought you were going to take some time off and relax and no, I'm doing this thing again.

Literally, in retrospect now, had a web band model where we were trying build warehouses across the United States and at the time, we were in 19 markets but we were outsourcing everything. We were slowly bringing it all in and I'm learning about the business model as we were delivering thousands of orders a day, because it was a fairly large business.

The difference between the web band model now and what we were doing is the revenue numbers actually look very similar. It's just we felt we were going to lose more like $20 million instead of $200 million and the reality was is that business, it is more like $200 million than $20 million, so I ran that for about 18 months, had many parts of the business model right. The biggest issue was we couldn't fulfill the groceries correctly because we were filling them out of stores and so you never were sure what was actually on the shelf when somebody ordered it. We couldn't get retention high enough to make the model work, realized we needed another-- We'd already lost about $20 million at that point, which was a lot for a kind of '97 version although not much now, and we realized we needed another probably $20 to $30 million in capital, couldn't get it, sold off part of the business and literally I shut the company down because the venture capitals got very nervous and it was basically a phone call that said, shut it down today, so while we were keeping it going while we were trying to sell it, and I literally fired 450 employees over night, had sat there and spent the next 30 days negotiating out of seven lease payments, 103 creditors, I mean the whole bit, and as we talked a little bit this morning. It's like you try stuff and you fail and at the time I was just thinking this is just a horrendous experience, but in retrospect, it was probably one of the best things I could've done because I realized I started a company, tried to make it work, did spend a lot of money doing it, but realized at the end that you failed and you could still start over again and be just fine.

What happened was my investors from that company were also investors in iVillage and said iVillage had just bought a commerce company. Why don't you go to iVillage and run that? So, I came in as a consultant again. That, again, lasted less than a week at iVillage and within about 60 days, I was COO of the company and that was-- I mean, literally, that's the way it works here, and the other challenge is I lived in Chicago and the company was in New York and we didn't want to move, so I ended up commuting actually between Chicago and New York for the first year, but I was at iVillage, so it was west coast, east coast, living in Chicago, pretty much living on planes for about a year or so.

So, I'd been at iVillage about 18 months and what really occurred over that period is 18 months ago, we were about six months into saying we're a site for women. The company had started in '96 and it was really a baby boomer parenting site with our first site, Parent Soup, and then after about a year and a half, finding that that was a very hard model to monetize, we broadened and literally over night became the site for women. Now, we had a lot of women, but we'd never really positioned ourselves that way and at the time it was very controversial because there weren't that many women on the Internet and it was unclear whether that was really a viable business model and so we ended up--

We continued to raise money. We continued to establish the brand. Really build the product. Bought a commerce company so we got into commerce of which about a quarter of a our business is that now, and basically went from not sure if it really is a business model, got through the fourth quarter of last year where for the first time more women than men were starting up by us or getting new AOL accounts, for instance, and women outspent men on a percentage basis during the fourth quarter and then suddenly the world realized that women make 80% of the purchases, they are the recipient of about 70% of the off-line advertising, they're influencing everything from cars, houses, computers, consumer electronics, everything, and suddenly the world realized that, wow, we should really be targeting women because not only they are a great audience for advertising, but they also are a perfect purchaser in the commerce side, so we were a little bit of right time, right place.

Went public in the first quarter and had an unbelievable roller coaster of a year where we were one of the hottest IPOs out there. Couldn't do anything wrong, 30 times oversubcriber, the whole bit. Went up, stood the golden hits, and watched the stock go up. Open at 95 and then it dropped to 85 and we were all like, wow, what happened? Market cap went down to under $2 billion or something , and then now we're actually where we closed yesterday at 22 3/8s or something. We've been on up down, up down, up down, and the hard part is that we actually have executed everything we said we would execute in the original IPO plan in terms of revenue growth, profit, losses that we have, and etc., but the world has changed and we are not in a favorite stock. There is much more movement to profitability and we are continuously having to change the business we're in to meet the market demands, to meet the demands of the marketplace in general, from a recruiting standpoint, employees.

We've spent a lot of money on branding unlike my friend next to me [MapQuest] who probably 200 times that amount of money, and we most recently, for instance, just spent about $20 million in the last 120 days really positioning ourselves well in the marketplace, so we've gone from-- I can't remember where we were 18 months ago, but right now we're at just under 7_ million unique women coming in the site every month. We're larger than basically every traditional women's magazine out there. We are really seeing huge advertising demand and that's from companies like Ford and Charles Schwab and Warner Lambert and all really traditional womens' advertisers, and are feeling very good about the model, but it's just a continual execution challenge and then trying to make sure that everything works 24 hours a day, 7 days a week, while you're also trying to get as much sort of creativity and innovation and everything and push out into international markets, other different devices, and it just is really a difficult balance between trying to get everything kind of right all the time, being a public company, quarterly numbers, and then really trying to grow because we've essentially tripled in the size in the last 12 months.

I had a different experience--I loved Darden and felt that you walked in every day and it was like a firehose and it's great because it's exactly how I feel right now when I go to work every day which is just kind of more things, more opportunities than you ever imagine you could do in a day and the hard part is is most of them are pretty good. There's just a ton of creativity out there and things to do, but you have a limited amount of resources, a limited amount of brain power and you can only do so many things, so it's kind of my story, and I guess at this point we open it up to Patty for questions.

Cassidy: Actually our first question will be coming from Patty Sellers.

Patricia Sellers: Thanks. We keep hearing that anybody with an idea on a napkin can walk down Sandhill Road in Silicon Valley and get $10 million and they say that's what really missing is people, is talent, but I can't imagine that it was that easy for you to get financing, and I'd love to hear from each of you what the smartest thing you did in raising money from the venture capitalists, and in your case, Allison, in the IPO. If there's one thing that you could point out you did in positioning the company, in marketing the company to investors and what was the dumbest thing you did in terms of positioning the company.

Gardner: I'm willing to confess to the second. The smartest thing that we did is that we wanted a cultural fit with our investors. We viewed the development of our service as the linking together of, again, people that we've hired from our community to people that we've worked with and known for a lot of our lives, so we've had a strong sense of just a genuine love for the service that we're creating. We're addicted to, which is problematic at 3:30 in the morning last night when I'm going through different areas of our site and thinking about ways to improve it, but that means for us that getting investors was we designed it as a natural extension of hiring an employee. We had the same qualifications. We are lucky in that we are in an environment where there's an awful lot of capital out there, and I think a lot of companies are in a position now where they're turning away investors which is an unusual thing to do as a small private company, but at the same time, the best thing we did was to take our time and make sure that the people we found represented our beliefs, our culture.

Our leader investor is [Mavron] which is the fund that invested in eBay. They were an early investor in eBay and Drugstore.com. They're the fund that was started by Howard Schultz, the CEO of Starbucks, and they have a great collection of people that just naturally want to create value rather than profit. That's their focus.

The dumbest thing that we did was to wait so long in going out and looking for money. We were raised in a family by a father who had very much of a Buffet mentality which has served us well and that is to hold onto your ownership if you love what you're doing, but the flip side of it is you can miss out some innovating opportunities if you don't watch AOL and how they finance their business. For four or five years in the public markets, AOL was called criminal. They were attacked in our local Washington Post newspaper of which I was a shareholder for a number of years and a happy shareholder, but I was quite disappointed by the coverage of AOL because they were told that they were creatively falsely accounting for their marketing spend and they were mocked and now they're $150 billion company. They're three times bigger than Disney today, so I think we weren't aggressive enough in financing in a company like some of the other Internet companies have been more focused on going out and raising capital.

Thomas: We went through a couple of phases, One, we were owned by R.R. Donnelly, so we were spun out. Then we got venture capital money and then we went public, so in that span, there were a couple of dumb things we've done, but we did a couple of smart things, too. One on the financing side--we looked to be partners with the venture capitals that we brought in also, and so we looked at their backgrounds. We talked to probably 70 different financing institutions that we could have brought in and we really focused on a couple of things. We brought in two venture capitals, one that had real good experience in funding Internet companies and the other was one funding traditional businesses because we had two segments of our business, one traditional and one Internet. The combination of those gave us a couple of board members that really would evaluate and determine where was the best growth strategy that we presented to them, so they would make the tradeoffs and it worked very well. At the time, we had R.R. Donnelly has a partial owner and moving towards this faster Internet business was difficult for them, so bringing these venture capitals in that would discuss these types of problems on the board with the Donnelly really made a difference in helping Donnelly understand that maybe they should be getting out of this business.

The dumbest thing we did parallels yours. We didn't go fast enough. We should have closed the financing faster than we did. It just took a little extra time. Made us defocus a little bit internally from what we should be doing as a business. It becomes all-consuming when you're trying to raise $5, $10, $15 million. When we did the IPO, we sort of changed that around a little bit. The market sort of heated up and we were looking at what we should do with our business and another round of financing and the underwriter said move now and we moved at phenomenal pace to get out the door, and it put a lot of stress on our employees. We hadn't started our audit to end the year end, and we had to cram an audit in about two or three weeks to get that done and we had to go through a lot of private company clean up to get public and it went very well. We actually had a lot of good people working on it, but the speed that you have to make decisions for financing-- Don't hold back because you'll lose an opportunity in the market if you're too worried about where's the next dollar coming from.

Martin: I think the right thing we did when we starting Raging Bull it wasn't-- We didn't sit in some ivory tower and dream up a new way of doing a community or a new way of doing commerce and write up a business plan and try to get venture capital. We just threw some money together and we went out there and did it because we loved the idea. We loved what we were involved in and it seemed natural to us, so there was a true energy and passion and because of that, we took $30,000 which, at the time, seemed like a lot of money to us and built something real, so the right thing was not even thinking about venture capital early on which was great when we walked into the venture capital's office at the end of that summer, CMGI, and like most of the thousand business a month they're looking at was an idea. Here, here's our idea. We went out and did it. It works. We actually have people coming to our site. Give us some money. We'll throw gasoline on the fire and we'll take it to the next level.

That also led kind of into a mistake there, although you could look at it two different ways. We gave up just under half the company for $2 million which for us, compared to going back to school it seemed like a great thing , and it wasn't a badly negotiated deal, but it was probably a little bit more equity than we should've given up if we had some negotiating experience prior to that, but luckily we got out of that because we took this $2 million and we still were like on this $30,000 budget so we didn't spend any money. Our burn rate was like $50 or a $100 grand a month which for most Internet companies--

Abraham: Most but not mine .

Martin: This actually led to other problems, but it was good because we didn't spend the money very quick and we actually didn't raise another round until June of '99 which we raised $20 million, an astronomical valuation, so the founders--we still have about 30% of the company which is pretty good, but there's also problems in that too, in that we didn't spend enough money so we actually were caught flat-footed early in '99 because we were growing too quick and we hadn't made the right investments so it's all experience. Learn from it.

Abraham: The smartest thing we did in terms of raising money and we raised a lot of it. We basically went through about a third of the alphabet in terms of financing rounds before we went public and in a sense are already doing secondary having gone public in March of this year, so I would say we are probably in that top tier of raising money, but I think the thing that was really important was to get the right investors in for the right reasons. We're at today AOL, NBC, Kleiner Perkins, TCI. It is just the list of a fabulous group of people who are willing to go the mat even today and maybe they were in round B or C somewhere along the way and have been just really a great help. Many of them are still on our board. I literally get flooded with stuff from them of did you know about this? They're very helpful for strategic negotiations. They're really helpful for moving in international markets, particularly companies like AOL or Sportsline, who's on our board, who've already done this things before, so I think picking those early partners in particular and then keep going. Don't just leave them, but continually add people who can support you, who've got a good mix of strategic and operational experience will help you particularly in things like IPOs or additional financing.

I think the thing that I would say we did not do well is we made some enemies early. There're some people who for personality reasons, things we did, or things we did not even knowingly. Just in the fact that there were not enough hours in the day or whatever. I think we made a few enemies which I really feel have come back to get us and we've recovered from some of those, but even if you've had a challenge with someone whether it's an investor or an advertiser or someone else, make sure that when you've left or you've gotten over it, that everybody's still feeling good about the relationship because it's like while they're in industry, it's like we have a relationship with MapQuest, we watch The Motley Fool all the time. It's like I feel like we know everybody and somebody in iVillage knows someone and the industry's actually really small, so if you do things that could hurt you later on, they will come back to get you because it's just not big enough to do that sort of thing.

Audience question: There's been such a rush for market share and branding on the Internet. It seems like everybody is talking about the number of page views and unique visitors and all those factors when they talk about their Internet ventures. I wonder if you all spend much time thinking about other forms of sustainable advantage and more precisely, my question is what factors do you think will be key to developing sustainable advantages in the future once the Internet begins to shake out a little bit.

Gardner: I think one of the things is an emotional connection with the people that are using your service, your business. I think that that was less of a requirement before the Internet, but the Internet is a social medium that as was just said it's very connected. You run across the people at different conferences. Anybody who goes out on the conference circuit and speaks, you're seeing the same people and that's what the Internet is, so it is actually building a bond that you're creating real value for them.

At the core of our mission as a company is to improve the living standard across the world. That's basically what we're shooting for. That's an outrageously sized mission for a bald guy who's wearing a full baseball cap , but it's believable because of the Internet and one illustration on our site that people would not associate with The Motley Fool perhaps depending on your familiarity with our service is the idea that we're dealing in quality of lives and we're trying to create value and so one of the really popular community discussions that's grown up that we're going to provide services into is a group of people that are coming together to quit smoking on our site. There're about 250 people that have come into a discussion group and a year after trying to quit, only 8% of people who are smokers are able to remain quit; 92% fail and that's in a world where our bodies are addicted only for about two weeks physically to nicotine. I thankfully was never a smoker but I've done a fair amount of reading, so you're done with your nicotine addiction, but it's all psychological after that. It's mind games and it's very difficult to get rid of it, but if you actually bring people together and they're interacting with each other and cheerleading one another and gathering information and I've done this, I used Zyban; I didn't do that, I used hypnosis. Here's how it worked for me. You open that up and then you get them pissed off at Philip Morris also which I know I can't say in this state. I apologize, but I've got Merrill Lynch and Philip Morris. If anyone sees a red laser light on my cap, please let me know , but that's a connection that they have. That's a connection that they have on our site and unless we blow it, they're going to be there for the rest of their lives. They're putting that up in the discussion. We're not egging them on and letting them know how great we are. We're saying, hey, we just opened this for you all and you've created this service and I don't see any reason why we can't have a million people quitting smoking at our site and it may not seem monetary but, for a lot of people, $2,000 a year, and if you start that at age 18 and invest it in just the index fund, by the time you're 75, you've got $9 million bucks, so we tell an 18-year-old and maybe you can convince one 18-year-old not to start smoking. I think you can convince a lot of people to stop, so it's that emotional connection for us that we see as our core sustainable advantage.

Thomas: I think providing that value to the consumers is extremely important. That's where you're going to win in the long term. There's no question about it. From our perspective, we have somewhat of a utility that we're providing, so the technology that we provide to be able to provide the best service that we can provide, new applications around that utility. We think that's very important for us, whether it's increased content from improved data or whether it's the technology for delivering maps faster or routes faster, or tying in additional content. One example is real time drive traffic. You hear it over the radio. You can see it on Internet sites right now. We have it on our Internet site also, and one of the new applications is to take that and move it to the wireless device so you save your routes to and from work on our Internet site and say let me know at 7:30 in the morning if there's a traffic problem here and we'll be able to send you an e-mail. We'll be able to put it to your pager or a mobile device or even call you and let you know, so there're all new technologies that we have to keep up with for enabling our utility for consumers. It's very very important for us right now.

Market share is extremely important. For us, as a company, when we had printed products, we did not have a brand name that could compete with Rand McNally for printed maps. We didn't have CD-ROMs with a brand name that could compete with [Deloram] Rand or Microsoft, so it was important for us to rush very quickly and establish that brand presence. That brand presence, we hope, we can continue and spread that through other media and people will feel comfortable and feel like they can rely on our products.

Martin: I think in addition to what these guys said, just to describe the general landscape out there right now. It's just the battle of attrition. The public markets are so much money flowing in the sector. Every venture capital fund is raising $500 million or a billion dollar, so it's become less about innovation and loyalty and it's become more about marketing and if you raise $60 million, I'm going to raise $70 million. I'll out-spend you and lose more money than you but at the end of the day, I'm going to be still standing, and that's what Amazon's going to do in the fourth quarter and hopefully close a lot of the funding off to new e-commerce start-ups. It's what e-Trade's doing in the on-line brokerage arena. It's [Petspace] pet-space, so until the flow of money into the sector starts to slow, it's like the cold war. It's Ronald Reagan.

Abraham: Well, you do have to have the product, though. Your point of whether this is sustainable, I mean, the brand and the composition of that brand is sustainable. As long as the product quality does support that because I think what I'm seeing happening today is there's a lot of money being poured into like come to my site, but when you get there, it's kind of like it doesn't work, you can't place the order. They lost something. The thing didn't show up and you're just spending money down a black hole, but I think part of the reason, and we are spending a lot of branding money, but one of the reasons we feel really good about it is the quality metrics and yes, we look at metrics every hour. I do get hourly reports on membership growth.

One of the reasons we think the branding money is so important is our time on site has doubled in the last nine months which is really a quality metric. We're in like the top. It depends on who you're measuring and what day it is, but we're in the top 15 sites in terms of like time or site or top 20. It's just that quality metric, Our repeat visits are going up which are all signs of us having actually a sustainable product, but you just spend money on the marketing side when you really don't have the execution down is just bad and it is happening a lot because there's so much free flowing money out there that it's really easy to just throw up a site, and I think what's really nice about this table is we've been here a while and we know how hard this is and we've got a lot of community and a lot of things that are building but even just listening here, it's like we're in sites all day.

I use audit every Sunday night and people just hate it because I sit there and go through like line by line by line, look at broken links, this went to there, something didn't work over here, and it just happens all the time, but once I start doing it, now they hate it, so I've got everybody going through it like Saturday and fixing everything to make sure that the product is just as good as it can possibly be and the matrix focus is really the score card. Are people coming back? Do they like it? Where are they going? How can you build more of that? And the competitive advice is created by doing more of what people like and maybe that's different tools, different interactivity, these sections. We get about 9,000 e-mails a week just in feedback and we summarize each week all the new product suggestions, all the complaints and issues and people react on those. Every Monday morning we review them, so that's how we create new things and so you're really following your consumer base very closely on what's working, what's not working, and that consumer insight does create your product and your brand and your involvement with it, and it is sustainable, particularly in this environment where there is a lot of stuff out there that doesn't work very well.

Audience question: One of the questions that I have is now you're starting to see two, three, and four players in each one of the market spaces out there. For instance, Allison, iVillage, maybe Oxygen Media coming on here in February with their station and I was just curious with Raging Bull, maybe, and The Motley Fool, how do you view that? Do you view that as expanding the market? Do you view it as competition? Maybe if you could explain kind of short term your thoughts on that and also maybe long-term, how you think that's going to play out?

Martin: I think brand wins in cyber place and it's just like going to the supermarket where it'll be two or three brands that you recognize and use regularly and if you're not in those two or three which is what the four and five portals are seeing right now, you either spend a ton of money, buy up your competition. You've got to do something quick and that's one driving the valuations, so it's a death match.

Gardner: How many people here think that the Internet stocks today are overvalued? How many think that they're fairly valued or undervalued? So, maybe 70/30. I think that 90% of them are overvalued and 10% are terribly undervalued, and that even accounts for a company like Yahoo! that's a $50 billion company today. I see it as being significantly undervalued. I think eBay is significantly undervalued over the next 10 years because these are decentralized models where Yahoo! does not create much of the content that we see when we go to Yahoo! and eBay isn't out there selling Furbies, although they are buying Cool Site of the Year Awards from their customers and I think so half of it is, much more than half, but a significant part of it is the economic model of the company and how it actually is network driven, whether or not it is network driven, because you can spend a fortune on the brand and if you're not actually exploring and taking advantage of the tools that are available to you, somebody else is going to. They may only be 16 years old. In fact, it's likely that they're 16 years old, and you're set up in a very difficult situation even with the great brand name.

Remember that Planet Hollywood spent a lot on their brand. They were a $3_-billion-company when they went public. They're not a company today, so the economics of the business model are key and we've heard it about the Internet companies and about the different iterations of commercial revolutions and a lot of the companies disappear in those models and it is the businesses that are creating a true service around innovating on the tools that are available to them or duplicating those who are innovating with those tools very quickly. That's where survival and prosperity, tremendous prosperity, lies, unless you just want to flip your shares when the stock option window opens and move on. Take public shareholder money and disappear which I don't think is a great model.

Abraham: I think the way we are looking at it is we are in a very very large market. Women 25 to 54 is probably just about a big as you can get and we do think that there will be multiple players that survive, but I think from competitive standpoint, if you take Oxygen, it's just a completely different business model from what we're in. They are TV focused. I mean, Gerry Laybourne will be phenomenal and we've seen a bunch of her stuff because of a variety of different ways, but it will be really good but we're an Internet company. We will move in that direction, but we will always be Internet based. We will have the economics that support that, not a cable-based company trying to grind my way through to get more subscribers before I can even get enough reach, so I think it's very different. Her brand is also just the antithesis of what we are. I don't know if you guys have seen her recent ads, but they're very anti-men which is just exactly what we're not. We all love men. We just haven't figured out how to get everybody in the day and it's really different and so I think on a bigger picture from a competitive standpoint, is everybody's a competitor on the Internet side because for our space, in particularly, we're fighting for mind share in a woman's life is very busy. I think my biggest competitor is sleep. It's their job. It's their kids. It's their husband. It's just all those things to do and what we really try and do is make their life a little easier, a little better. Give them a place to get some help and support to realize that they're not really alone in things that they are challenged with, and so we're fighting for mind share across everything, but it's a different positioning, but I don't think in most categories there's enough room for two or three players, and right now, in some places, you just don't even know who they are.

Thomas: We think it'll revolve around two, three, four players but you've got to look at-- We've been talking mainly consumer content, consumer application, but there's the business to business side and in that side, performance really counts. That's what's really going to pass the test with companies. Your product has to be perform economically for them, so when we look at our business, we've got two separate ones. The business to business, we know we have to focus very heavily. We know there's competition in other forms of mapping and delivery services, but we focus on what we do best and really go after those customers and build long-term relationships and that's how you fight off some of the competition.

We do have to competition, not just with other map-enabling type companies but we serve all the major portals, so as we have our own consumer site, we are somewhat competing with ourselves. We made the decision a couple of years ago that we would rather be serving our products into those portals than have some other competitor do it, so that we've become basically the de facto standard on the Internet. Our brand names's still there with them, so it's sort a cooperation--you've heard that word before and it seems to be working for us now.

Audience question/Daniel Oddy: My name is Daniel Oddy. I'm starting a web business up in the northern Virginia area and there's a group of us up there called the Netpreneurs and it's a group of start-up types and we've debated back and forth a lot recently about whether a business is sustainable simply through advertising revenue and it's not as clear cut as I would have expected it to be. I lean heavily towards the community model and Allison, I heard you talking a bit about advertising revenue and Bill and Tom, I heard you talking more about the community model--when you have a lot of users, it's easier to get into their wallets type of thing. I just was wondering if you could expand a bit on that and what's the answer?

Abraham: For us, we definitely think the advertising model is sustainable. Today, we're about 75% advertising. We like commerce, although it's got economics that start to look like Amazon after a while, so we're not going deeper into that, but I think what we've done is we've found pretty creative ways to figure out how to monetize the page views we have. We've got about $30.00 per thousand pages which is really the top of the category and it's because of our demographic and we're able to charge premiums, but it's also because of the way we've been able to bring in sponsors, integrate them into the site although we have very clear lines between church and state. Where is editorial and this is advertising, but we've been able to bring them in so that they do get good results. They are able to have a business model. Their business model, but sustainable off advertising with us, but you've got to be pretty creative. I don't think that a pure banner model is going to work very well.

Click-through rates continue to go down, and you've got to have a very broad base of advertisers in that model to make it work and I'm just not sure you're going to get the results, but we've seen pretty creative-- We've been able to do some creative things that are also good for us. For example, we created this whole shopping program where we've put eight different retailers on the front of our home page so that women can have a very easy time figuring out where to go and it's brand names you've seen like Nordstrum and Macy but also some leaders in the category like Garden.com and there're all people who've done well on iVillage and so that we know there was good consumer demand. We put them literally on a text link on the home page so there's no ads sorting, etc., and then all of them have been required to do continual offers for our members that are special values, so that you can have a reason to come to iVillage. They get a special discount and offer from this particular retailer. Retailer likes it because it's well positioned for branding and they're getting good transactions and that's kind of a win-win from an advertising standpoint that's good for their business, good for our business, but we dreamed that up on a plane. Figured out if we could sell it. Sold it for frankly-- That box on a page for us has about $40 million in advertising revenue associated with it, so it's very high margin business, but the economics have worked for both sides, but sort of traditional-- Traditional, I guess in the Internet standpoint, but just pure sort of banner ads are going to be hard. I look through their perspective because I don't know but we couldn't-- If that's all we did, we would never be profitable.

Thomas: We're similar. When we launched the site we didn't know what business model was going to work and we look at, yeah, let's get some advertising but there were few advertisers at the time, and over time, we realized that our own site was the best advertisement for business customers. We weren't first going after business customers, so our own web site became our best advertising medium and it really drove us to have a two-pronged attack on the marketplace, one for business, one for the consumer. On the advertising side, I think Tim Koogle was talking about this it this morning, the relevance of the advertising for the content that people are viewing, and we think that's very important. Traditionally, in media, more than 50% of advertising is local advertising. On the Internet, it hasn't been that way yet. It's migrating to that. I think Jupiter's saying in a couple of year, it'll be like 57% or so will be local advertising, whether it's a major retailer advertising locally or just local companies. We think that's very important and how we position ourselves for that is that obviously when people are going to get maps or driving directions, we know where they're going to be. We don't have to know any more about them per se, but we do have some other information and we're cautious about using that, but we know where they're going to be, so we can target that.

One of the first little groups to pick up on that was, I think it was the tourism bureau of Myrtle Beach, South Carolina. They wanted an ad to show up only when somebody had a destination to Myrtle Beach on a driving direction and the click-through rates on that were the highest of any particular advertiser that we had on the site, so when you're a real target, you have an opportunity, but it's a very difficult battle out there on the advertising front because everybody's going after it right now. That's why we're taking two approaches.

Martin: Whether advertising works, the dollars follow the eyeballs and unlike any other medium, it's not just the billboard. You can actually click through and complete a transaction, get a cut of that transaction. No one else does that. No one else has the ability to target like the web does. I would look at it flip, just to jolt some thoughts and look at tradition media. What is eBay going to do to local newspapers over the next few years as all the classified move on line which they will. The web is a superior medium for that type of stuff and as they go more regional, it will.

In traditional broadcasting, you look at companies have Tivo and Replay which are providing these big basically digital VCRs where you can literally save a week's worth of programming and go play it any time you want. You can watch something at 3:00 a.m. in the morning, in the afternoon, any time you want and that just flips the broadcasting model on its head which was typically I'm going to advertise on "Seinfeld" at 9:00 o'clock because it's prime time. I know this many people are going to be watching the show at this time. Now, all of a sudden, one, people have the ability to skip over advertisements so much easier, and number two, you don't know when people are watching and what they're watching, so I think TV advertising is going to have to become a lot more like the web. So, neat stuff going on.

Gardner: The one piece of the pie that is not yet being eaten from is the broadband. Without broadband, I don't think advertising on the web in banner form is a profitable model, but once you start adding in the truly rich and overpriced brand advertising into the mix and allow people to use audio and video to have that integrated, then I think you truly have a very very large sucking sound and the traditional media is just boom, Internet, and the question, one of the great business questions of our time, is whether or not the traditional media companies can make the transition or not. I think some of them will. I have questions about Disney, given their financial situation with $11 billion in debt from their Capital Cities ABC acquisition at a time when you wanted to get from network television unfortunately.

I think that if I was planted for a day as the CEO of Disney, I would take that 24-hour period, first of all, to give myself $700 million worth of stock options , and then I'd settle with Katzenberg and then I'd start selling assets as quickly as I could and I'd license my name on all of them because assets, and that's been the big defense of kind of the old business model thinkers, and I'm not the big new era, new economy. I think the basic principles underlie today's economy. We're just moving more quickly towards information and communications and away from heavy assets and manufacturing, but that means you want to move pretty quickly away from that and I think right now a lot of the traditional media companies are tied around the neck by assets. They have the albatross around their neck of their past assets. Their theme lands and their movie studios and all the rest, and the question is can they make the transition because I believe that it's essentially all traditional media advertising that goes on today, 10 or 15 years from now will be on the Internet and so it's going to be a tremendous economic opportunity for companies, but they have to be companies that can truly take advantage of broadband interactive services.

Martin: I'd just add to that. If you realize how powerful Yahoo! is. Look at Rupert Murdock.

Gardner: Did anyone ever expect that we'd saying that? Do you realize how powerful Yahoo! is?

Abraham: Like it's just a name.

Martin: Someone like Rupert Murdock has spent his entire life buying up assets around the world because he wants this global media company. Same with Time Warner, all these other guys, and Yahoo!'s done in three years. They have a platform and the number one, number two, in every country in the world where they can stream, when broadband comes about, can stream anything off of it--radio, TV, text. It's awesome. It's awesome.

Audience question: I'm involved in running a traditional company as well as an Internet start-up and I'm going to switch gears on you a little bit here. One of the hardest thing that I have coming to terms with is balancing home and work, and Allison, I hear you talking about doing stuff on a Sunday night or a Saturday night or whatever. You all are very successful. I'd love to hear you talk a little bit about striking that balance between home and work and any hints that you have for the rest of us.

Abraham: Is my husband here? I'm just giving you an example of balance. Like my husband and my son are here. My husband quit his job probably about six months ago because we just couldn't both work at the same time. When I was commuting to Washington, my son came with me every week. Southwest actually gave him a free pass because every Sunday night on the 9:35, he was with me and he stayed with my sister-in-law. I had a baby sitter. I had babysitters in every market where we had business and he went everywhere, so he grew up on an airplane calling the flight attendant for snacks and he does that today, but he's five now and he's a big Internet user and he loves it. He orders stuff. He's got 42 times on wish list from eToys, but in the position I think all of us are in, or I'm in personally, is you can't get away from this. It's very difficult.

It just continues to escalate because now people can find you pretty much anywhere and you have access to e-mail anywhere and the numbers of things just continue to grow. I can get on line at 9:00 at night and be in at work at 6:00 and I'll have 50 e-mails there waiting for me and there're not just junk. There's people because the west coast is up and there's somebody else in the U.K. who wants to talk or whatever else, so it's really difficult, but I think I've been really fortunate where I do have a husband who is very understanding and really good about it and has no issues with changing roles because I'm sure in five years from now, we'll probably reverse again. But you be creative. I take my son wherever I go and I'm trying kind of integrate and do both at the same time. Like, today, we got the plane ride together and they were there this morning and at 3:15 or whatever, we're off doing something else, but it is really hard.

I think the only thing that I have to keep reminding myself is this is isn't a sprint. It's not like it's going to end in 90 days. We have a long time because I think as we talked a little bit about it this morning, this is just the beginning. We are just-- We're 200 weeks old in industry that is really on a pace that it just continues to accelerate and it's really exciting but it's also-- It's going to be here a while and it's not going to quit, so you've got to get a little rest and have very good people around you that can help.

Thomas: Did my wife give you that question? I haven't been successful at balancing evenly. I've had a very good success at balancing much heavier towards work, and unfortunately, but you make the times you have together really count. Today, we're on a date today and my wife is out in the audience and I appreciate her taking the time to come with me. It's very very difficult, and as Allison was saying, the media that's available now. You're 24 hours. I'm sitting here, I pulled this out an exhibit and already I've missed three calls. She puts up with this at all hours. It's very difficult and you just have to block out certain time and especially when you're traveling, if you have the flexibility to bring your spouse with you, it's really important, but it's probably been the toughest thing for me and our family over the last 10 to 15 years. We both put each other through school off and on, and then the work has been pretty hard, and it's been tough. I would say work very hard at it. Don't neglect it because it's very easy to get caught up in answering three or four phone calls every 10 minutes.

Martin: How do I balance work and home? I've got a T1 at work and I've got a cable modem at home.

Abraham: Me, too.

Martin: I'm still waiting for the data feed that I can just plug into my vein. Stock quotes, e-mail . I think just the new economy and what defines work is really cool. Where you can just be sitting in a car or doing anything, and an idea pops in your head and you've just created enough value to justify three months of your time, so it's all redefined. You don't have to be at the office from 8:00 to 5:00 any more.

Gardner: One of the things that Steve Case said was that American On-Line took off when he realized that he could delegate a hell of a lot more than he was delegating at the time. Having not gotten an MBA degree and as somebody who could not have gotten into Darden , and yet I'm here-- Where's the honorary degree? I think that finding people who are top quality and that you can sit down and say what are your goals, because as an organization we have so many opportunities, so let's set up some metrics for you to shoot for and that's what Steve Case did in bringing in [Pittman] and that's when the company went from a $10 billion company to a $150 billion company, not when you're tightly trying to hold onto the reins of the company because if the growth is going to continue and I don't see a reason for it not to, it's just going to overwhelm any single mind, so for us, it is just finding the best people and we've got standing in the doorway up to the right Neil Campbell who I know Neil's coming back and working at The Fool after he's done with school. Right, Neil?

Neil Campbell: Yeah.

Gardner: But actually Mary Ann Bord who was here last year and once she came aboard, all of a sudden we had about 10 applications to jobs.fool.com from people saying I went to Darden too. I know Mary Ann. She's loving here. Here's what I'd like to do, so it is finding people that you can turn things over to. If our mission is to improve the living standard, then we have to improve the living standard of the people that are coming to work every day, including ourselves, including myself, so improving the living standards is not going to be separating myself from the basic necessities of life in order to grow shareholder value and they have to actually be tied together and it's difficult but I think a lot of it has to do with the trick of delegation which I'm still just learning.

What I was going to say about business school, I think the case studies are starting to change a little bit now towards more people management issues. It was the thing that was left out of when I would've gotten an MBA degree. A lot of the Harvard case studies were about whether or not to introduce the new widget in Japan or not, when in fact so many of the issues that we face, and that you all face as entrepreneurs and have faced in the workplace as well, is cultural, the cultural issues. How strong the alignment is between people and how well they know their place within a company and that given mission and so if you can get that cultural line and delegate and set metrics and goals for people, you can actually have dinner before midnight.

Cassidy: I believe we have time for one more quick question. We have about three or four minutes left before we have to clear out.

Audience question: My question is about traditional business models versus what we see now. This morning in the plenary session in the data that was recited, there was a discussion of the growth in business to consumer, business versus business to business, and Jim, you were talking about a two-prong strategy. Bill you mentioned the analyst who uses the same content as any of the consumers who participate in the community. Is that distinction of business to business models and business to consumer models still a relevant distinction and if so, will it eventually kind of go by the wayside because of the new medium?

Martin: In the venture capital world, it's a huge distinction because the stock market right now, if you're b to b, you've got a $10 million cap. I think we're talking about a lot of the b to b stuff, the stuff we wouldn't even be able to grasp, like trading energy or trading power plants or whatever, weird stuff where you're taking these fragmented markets and putting them on line, ECNs for various industries and personally I have just no understanding of that. I understand media and the consumer, but we are looking for multiple revenue streams that leverage what our retail base is creating and pushing that out to institutions, but I don't think that equivalates into a b to b. I think the terminology is a little off.

Abraham: From our perspective, I guess we could probably create a b to b model somewhere in here, but it's really about focus. You may end up with a few people but it would be very hard for many business models to do things like that at one time, and I think the hard part just for all of us is there's just more opportunities and more good ideas than there is time in the day. A lot of people ask us why we aren't in the teen market or why we haven't gone older or whatever. I mean, we could do all of those. I think they're great opportunities, but just stay really focused on what you're trying to do, make that work and then continue to branch from there, and I just think consumer versus business is just a very very different model for most of us and I think you're lucky if you can figure out how to do it at the same time, but it's really hard.

Thomas: It's difficult for us, but we're very fortunate because the underlying technology and products basically serve the consumer and the business customers and for similar needs, so it makes it a little bit easier from a development point of view, but it does cause extra work from a marketing position and sales point of view because you have different sales forces and so forth, but we've been able as I mentioned earlier.

The advertising for our business products really is our best advertiser is our own web site, so we've been able to have a real mix of business and consumers. I don't think most sites can do that. We've been very fortunate so far. I think one of the underlying things that you really ought to understand is that from going to business school, and I needed to go to business school. I needed to understand. I needed to get rigor of understanding, understand certain business techniques that I wouldn't have understood if I didn't go to business school. It's the basic principles of running a business are the same, okay, whether you're running a trash collection business, whether you're running a computer business, a bookstore, or an Internet business. You've got to understand your customer. You've got to understand what can make money for you. You've got to understand your cost and you've got to manage people. Those things won't change no matter what your business model is.

Gardner: I agree. I think that there's going to be a collection. I think businesses are going to be focused on both, different aspects of both, and there are slight modification but the core model and the core focus on service is the same. For us, two things that we're doing that are business to business--our 401K plans in which there's a travesty today that companies don't have an index fund as a 401K option, so as an advisor that can go in and work with companies to set up an administrative, work with a 401K administrator to match their fiduciary obligation to the employees to have what has been one of the best performing funds in the U.S. over the last 20 years available or investment vehicles available to people, then our hiring site, jobs.fool.com. We're going to get 20,000 applications for 200 positions over the next year right now at the rate we're going at, and we could just sit smugly and say isn't that great. Look a this. We get to turn away all these great candidates, but, in fact, what we should do is to work with other companies to make sure that they get applicants that by sheer volume right now just because the Internet turns on the fire hose. We can redirect and work with other businesses and have a hiring service on our site, but in the end, for us, I think the 20th century has shown that consumer brands is where the true value is created.

The real wealth has been generated. It doesn't mean there aren't great opportunities in business to business particularly in the short term, but as you move to the intermediate and truly to the long term, I think the brand to consumer when you truly reach billions of people over the next 20 years because of the Internet is a really promising model. It demands that you keep your promise with your customers. You violate it and you get in serious trouble and that you keep your promise to shareholders and be a company that focuses on full disclosure because you're going to have a lot of consumer shareholders of your business, but there's going to be a mix between the two, I agree.

Cassidy: I'd like to thank our panelists and we have some refreshments out in the hall. The next session will start promptly at 3:45. It's going to be web cast so we absolutely need to start on time and look forward to seeing you back then.