Frager Factor

Saturday, December 04, 2010

Frank Schilling Gems: The Sage April 2007

Editors Note: In celebration of Mike Berkens monumental anniversary today I went to the archives trying to find a post that I remembered when Frank stopped blogging and passed the baton to newly minted blogger Mike Berkens saying something like "I can leave knowing that you are in good hands." I couldn't find that post, but for whatever reason, this post turned up in the search and boy was it right on the money. Then and now. Enjoy!

Jump to comments

Special Guest Post; “The Sage” – Perspectives on (from) Web 2.0 in SF

My friend "the Sage" chimes in with one of the best perspectives I’ve ever read on Web 2.0 for those investing in these heady times, as well as some Sage advice (no pun intended).

Web20people_3"Give me neither poverty nor riches; feed me with the food that is my portion, that I not be full and deny You and say, "Who is the Lord?" Or that I not be in want and steal and profane the name of my God."– Proverbs 30:8-9

I’d like to do a quick post about a new revelation [light bulb moment]. I think I just figured out Web 1.0 and built a business with a solid foundation and I have been trying to figure out this Web 2.0 and its business model. I just don’t get it and was all prepared to just skip to Web 3.0, but Web 3.0 is even more abstract and pie in the sky. So I am back to trying to figure out Web 2.0 because I feel like I am surely missing something. It seems like everyone else has figured this out and here I am scratching my head. I should change my alias from “The Sage” to “The Ignorant”. The more you learn, you realize how little you really know.

I heard there was a Web 2.0 conference so I thought it would be worthwhile to invest a few days, a plane ticket and admission and see what it was all about. After listening to a few sessions, I heard the term Google mentioned over and over again. If Google was in the title or in the description of the session, the room was packed. The more times Google was mentioned, the more people seemed to enter the room, sitting on the floor when there were no more empty chairs. And I just kept hearing the word, Google, over and over again.

After the first day and listening to a few sessions, I heard the speakers of a few of the sessions admit that they too were confused about Web 2.0 and were trying to figure out the difference between Web 1.0 and Web 2.0. One speaker said that he hardly recognized any of the companies from Web 1.0 (they aren’t around anymore). Anyone remember Altavista, Excite, Hotbot, Metacrawler, Dogpile etc? Those search engines were big and popular. He said that to be a Web 2.0 company, you just had to have a fancy logo.

I think I have it all figured out now.

Web 2.0 is about social collaboration (blogs, vlogs, wikis, user generated content [ugc]) using Ajax and Ruby on Rails and a nice looking logo with a name that is either missing some vowels or adding extra ones in (translation – no money to buy the properly spelled domain name and all the good domain names are gone). The business model is to get enough interest in it for a few months to get some VC backing to then go and use that VC money to purchase enough traffic from Google over the year and hopefully sell to Google, Google, or Google. Maybe Yahoo if Google passes.

The founders get 5% of their company, the VCs at the various stages get 95% and Google gets a lot more eyeballs to monetize of their adsense product. Those who get these eyeballs are more Web 2.0 companies that just received some VC funding and these VC funds are flush with cash because every 2 in 10 companies they fund ($50,000 to $5M with the average being $350,000) get sold for $20 to $50 million to Google or a profitable business. This will keep going as long as the business model is supported by VCs, the money used by VCs to buy traffic from Google, and Google making more revenue by having more eyeballs to monetize.

What do the actual Web 2.0 companies make? “Almost all are not profitable”. The ones that are don’t really need seed capital. What do the founders make? A sliver of the pie but a slice of a big pie is better than 100% of no pie.

But remember, it isn’t a bubble because everyone is making money off the Google train. Is it time to buy more Google stock and sell when it peaks like Mark Cuban did with Yahoo stock when he sold Then go out and buy some real businesses like a basketball team? Or maybe something boring like some industrial company?

People are feeling good, ideas are flourishing and VCs are making a lot of money again. A lot of positive energy is in the atmosphere and that is contagious. It’s even making me confident that I could go out and raise some money by pitching a good idea. At the same time, everyone with money is trying to become an angel investor. Who owns Frank? Maybe you should get into this VC thing as well. There is a guy here who was in the domain industry as CEO of and is now a very popular blogger at Tech Crunch, but he’s an angel investor (we all know who this is right?). So the evolution is domain industry to blogger to angel investor. You learn so much from these conferences.

So having figured this out, I felt the conference was worth it. I then had dinner with some bright individuals and I was amazed at the ambition, the smarts, and actual competence of this one friend. I was like a sponge soaking in everything he was saying and I would say the "lightbulb" went on many times in my head as I listened to him speak. Later, when I heard his goals in life, I started thinking about why I work, why I spend much of my time away from my family and I told him about perspective. That perspectives change when your life changes. What would happen to your goals if you suddenly lost your eyesight? Your hearing? Or you became a paraplegic? I’ve seen these things happen to people, young people, people I know. The eye is not satisfied with seeing, nor the ear with hearing. We hope to accomplish goals and that is very good but those goals always seem to be endless, not quite fulfilling. It’s like watching a good movie and then feeling like you wish you could watch another good movie again.

Someone’s father has cancer, someone is suffering from arthritis, it’s always the other person and you think it can’t possibly be you. I remember someone who was all set to leave for the Cayman Islands (how many people do you know who live in the Caymans?) to live went and visited his doctor and the thing he feared most was to hear that the doctor would diagnose him with some fatal disease. What use was all that money then?

In the pursuit of goals, of what we believe to be happiness, we should oftentimes think about just how lucky we are for the things that we have, the loving people around us, the house we live in, the oxygen we breathe and the things we can see with our eyes and hear with our ears. They are truly a tremendous blessing, especially if you are healthy. Be thankful with little and thankful in times of plenty.

It’s truly good to see other’s happy, even when things are bad. It makes you wonder where that happiness stems from. Those people are truly infectious. There is a life and joy inside them that would be the envy of those who do not have it. I am glad that I am surrounded by such people and remind me often about what is really important in life. Keep those people close to you so that they always remind you of what is important.

***FS*** Well said brother Sage… Well said.

About The Author: Owen Frager is an Internet marketing expert ready to help take your company to the next level.

Contact Owen: Twitter | Google+ | Facebook | LinkedIn | Email