Part 1: Great products, "otters" kissing and profitability

Rob, thanks for "talking" to us. Can you tell us about the founding of Webfast?
Webfast was founded as an umbrella company to take advantage of Internet related business opportunities because I and other team members stumbled across many of them.

Can you tell us the moment when you knew the Web was going to be such an amazing business adventure.
Initially, I did not comprehend the potential of the Internet. Two events stand out to me as clear signs that the Internet had huge potential. The first was an article by John Markoff of the New York Times in mid-1994 about using a graphical browser for searching items that were stored on others' computers. Markoff is the technology reporter whose opinion I respect the most.

The second event was around the same time. I was at Stanford University for an executive course and I walked into the computer lab and every computer screen I saw had some type of Internet browser on it. At the time, I was accustomed to seeing students working on MS Word or Excel (or some other Microsoft application) and in this case NONE of the screens had a Microsoft application on them. I was stunned!

You see pitch after pitch in your capacity at Webfast. Tell us three things that make for a good idea in regard to a Web based company. And can you share with us the funniest pitch for a business you've ever received?
There are three criteria: solid people, a solid product that takes advantage of the Internet and a clear path to revenues and profitability.

Funniest pitch ever was a smart woman who was pitching selling two stuffed animals that were otters, meant to be used as a communication device for two partners in a relationship. One could turn their otter away from the other's otter if they were playing hard to get. Or place their otter in a position where it was kissing the other otter if they felt romantic. It was called Squabbles. I actually believe such a product could work but I didn't know enough about such a business to invest.

What's the most challenging aspect of competing for "market share" online? And why is it the most challenging?
The biggest challenge is in creating a truly great product. Again and again, new products come out that prove that they can capture leading market share almost immediately if they are good enough.

Examples include Napster, ICQ and Hotmail. None of those products needed advertising, they were just plain good!

Your company's statement says in reference to the Internet, "...a medium which we believe is the largest opportunity of a lifetime." Can you tell us why in your opinion that holds true even with the failure of some very high profile dot coms as of late?
The Internet, in my observation, is still the largest new business opportunity in my lifetime (I'm 33). For two reasons; one is that it allows enormous distribution, especially for Internet-specific applications such as search (Yahoo), chat (Instant Message) and email (Hotmail). The second is it can be a cost effective medium for off-line businesses such as Dell and JCPenney.

Regarding the many failures we're experiencing, it's my opinion that companies misjudged two important items. The first is scale: companies bet heavily on being a certain size and many missed the target.

Etoys is the best example of this: they provide an excellent customer experience and did more than $100 million in revenues in the fourth quarter. That's great for a relatively new company.

Unfortunately, they capitalized their company based on a revenue projection of US$200+ million in revenues for the fourth quarter and spent aggressively to reach that goal. Now, they are in the hole a bunch of money and need to be bailed out. So they misjudged scale significantly.

The second misjudged item is profitability. Many companies have had a herd mentality, rushing to launch new businesses that simply didn't have profitability built into their business models. Those businesses, of course, are doomed to fail.

Do you think the Internet "equalizes" the playing field? Does everyone basically have a good shot via the Internet if they are willing to work hard and have a good product?
Absolutely! I'll make a bold claim here: For every major industry in the world, the Internet will enable at least one new market leader to emerge by 2005.

I'll give you a good example in the Entertainment/Comedy industry, ComedyCentral, co-owned by Viacom and Time Warner, is a leader based on its Cable Channel/Web site reach. Well, there's a new company focusing on comedy and humor on the Web called Goofball.com. Goofball,with absolutely zero promotional dollars spent, is currently serving as many pages on its website (15 million per month) as ComedyCentral.com. And, Goofball is profitable! There are numerous other examples.

Continued...