Chapter 502: The Right Moment

[Chapter 502: The Right Moment]

The emergence of graphical web browsers like Internet Explorer (IE) significantly transformed how ordinary people accessed the internet. Previously, users needed to navigate complex procedures to get online, which kept most people from becoming avid surfers. However, with IE's integration of the Yahoo homepage, everyday users could browse internet information according to their preferences. They could also leverage Yahoo's search engine features to find content that piqued their interest. This shift made it much easier for people who had almost no experience with computers to explore the web.

Thanks to effective advertising and word-of-mouth, IE sold 110,000 copies across major North American cities within just a week of its launch. Although the company didn't impose a limit on installations from each floppy disk, the software's sales trajectory continued to rise rapidly without any sign of decline. Some retailers even raised the prices significantly due to the overwhelming demand.

The popularity of IE not only resulted in a surge in user applications for internet services from mainstream telecommunications companies but also led to a notable increase in personal computer sales for major brands by the end of the year.

Meanwhile, both mainstream newspapers and specialized computer magazines attentively tracked the sudden market arrival of this "magic software." Almost all North American TV news channels featured special reports on IE's soaring sales. More specialized publications like PC Magazine, InfoWorld, and Byte Magazine praised IE extensively, offering in-depth analyses of IE and Yahoo in their latest issues.

...

Standing by the window in his study, Eric hung up his mobile phone and returned to the seating area by the sofa. Chris slid a freshly brewed cup of coffee toward him, curiously asking, "From Los Angeles?"

Eric nodded. "Warner wanted me to attend the premiere of The Bodyguard, but I turned it down. I've been getting calls like that all week. Spielberg even had Drew call me two days ago to test if I could make it to the premiere of Schindler's List."

Chris chuckled and inquired, "You're going to attend the premiere of Mr. & Mrs. Smith, right? After all, you're the screenwriter."

"Maybe," Eric said, taking a sip of his coffee.

Suddenly, light laughter came from the desk behind him. Turning around, Eric saw Virginia, Joanna, and Emily, who had come with Chris, huddled around a computer screen whispering to each other.

While Eric couldn't fully grasp the industry's adulation for IE, Virginia made him aware of it. Due to the convenience of IE and Yahoo, Virginia, who previously had no interest in computers, had become fascinated with internet browsing, spending hours in front of the computer screen. She often dragged Joanna along. If it weren't for the severe radiation from computer screens, which often left her skin oily after extended exposure, Virginia would have wanted to hold onto the computer all day long.

Following Eric's gaze, Chris smiled knowingly at the sight of the three women.

"News from the IE headquarters indicates that in less than two weeks since its launch, total installations of the IE software have already surpassed three million, and it continues to grow explosively. As long as no competitors emerge, IE is expected to cover all internet users in North America and Europe within three months. Likewise, Yahoo's homepage traffic is skyrocketing, and the company is expanding its website's server to accommodate the influx."

Eric patiently listened to Chris's information before asking, "These are all good news. Is there anything else?"

"Of course," Chris replied. "Lately, Microsoft, Apple, IBM, and Oracle have all approached me about potentially buying IE and Yahoo. Apple even offered a high price of $150 million for both companies, clearly aiming for its operating system to dominate the IE software market. Additionally, several major internet service providers have contacted me. Steve Case from America Online plans to visit tomorrow to discuss personally."

Eric only invested about $30 million in IE, Yahoo, and Hotmail online email services over the past year. If he sold IE and Yahoo to Apple, that would mean a quick five-fold return on his investment. However, with IE and Yahoo showing such strong growth potential, only a fool would sell them off. Other investors would typically consider going public to cash in after a while, but Eric had no intention of doing so before 1995.

However, America Online was a very important piece in Eric's internet strategy, and with Steve Case expressing interest in both companies, it would be unwise to ignore him. "What does Steve Case want?" he asked.

"He hopes to acquire IE and Yahoo, or at least Yahoo," Chris responded, gauging Eric's reaction. Knowing Eric well, Chris felt certain he wouldn't part with either company.

"His interest in merging with either IE or Yahoo might not be a bad option," Chris considered aloud.

At this time, America Online had begun exploring online advertising. In September, Steve Case secured a $1 million online advertising deal, which, while insignificant compared to what a TV network or print media would typically charge, was arguably a breakthrough for the nascent internet. This demonstrated Case's outstanding managerial capabilities.

Seeing the contemplative expression on Chris's face, Eric thought for a moment before saying, "Chris, do you know why I initially set up the browser, portal, and email services as three separate companies?"

Chris smiled but remained silent, suggesting Eric continue.

Eric didn't keep them in suspense, adding, "Because the computer and internet information industry is vastly different from the nearly century-old film industry. This is an emerging industry with plenty of aspects still in their infancy. Making a hasty move towards diversification isn't wise. If a company has too broad a product line, it becomes difficult to focus on excelling in any one area. The rapid development of computer and internet technologies means that if you fall behind, your competitors could leave you in the dust."

"So you want these three companies to operate independently. Refusing the Yahoo team's suggestion to set IE as the homepage means you want them to maintain a strong drive to improve their positions, right?" Chris surmised.

Noticing that Chris had guessed his intention, Eric smiled. "Exactly. My plan is to wait until these enterprises achieve undisputed dominance in their respective fields before considering horizontal expansion. That's the sensible approach, rather than spreading ourselves thin from the start and ultimately falling behind more focused competitors, leading to failure across the board."

"What should I say to Steve Case when he comes by tomorrow?" Chris asked.

"If he needs a reason, just tell him what I just said. Both IE and Yahoo could engage in deeper cooperative ventures with America Online in certain areas, which would undoubtedly be mutually beneficial, but a merger isn't in the cards."

While they chatted, light laughter again came from behind them. Eric turned around and asked, "Hey ladies, what's so funny? Care to share?"

"Nothing much, Vicky found a joke website," Emily replied, looking up.

Virginia also shifted her gaze from the screen and said to Eric, "I realized something."

"What's that?" Eric asked, leaning back with a smile, cradling his coffee.

Virginia pointed at the computer screen and exclaimed, "Although some information on these websites is interesting and diverse, much of it is outdated. We just saw a fashion website that provided brand information, and I actually read some of that last year in a magazine. The news sources aren't current either."

Eric felt a spark of inspiration but kept his composure. "What do you think should be done about it?"

Virginia replied, puzzled, "What's it to me? If they've got dated info, I'll simply stop visiting."

Emily, sitting beside Virginia, noticed the flicker in Eric's eyes and remarked, "Eric, you're definitely onto something, aren't you?"

"Yes," Eric nodded, turning to Chris with an enlightened expression. "Chris is on the same page."

Virginia typed a few keys on the keyboard, casting a curious glance at Eric and Chris. "Then just say it already! Hiding things is no fun."

Chris looked over at Eric and commented, "I think Yahoo can create its own content. I'm not sure if you feel the same, Eric."

As portal websites evolved, they mainly split into those offering search engine capabilities and those focused more on providing news. Although the former seemed more promising, the current scale of the internet hadn't yet reached the point where large search engines could thrive. Yahoo's existing search technology was sufficient. Thus, shifting towards a primarily news-based portal was undoubtedly a safer choice.

Eric agreed. "Close enough, but with so many content sections on Yahoo's main site, it simply wouldn't be feasible to do it all. They could test a few aspects that internet users find most engaging first."

"Perhaps...," Chris glanced back at the women at the desk, lowering his voice slightly. "Don't you think collaborating with traditional print media could be a more efficient way to obtain content?"

Looking at Chris's sly demeanor, Eric instantly thought of News Corporation. His relationship with Elisabeth wasn't a secret among those present, and Chris's expression suggested he wanted Eric to take the lead.

News Corporation had operations across Australia, Europe, and North America, virtually covering the entire Western world with numerous types of newspapers, magazines, and a large number of television networks. Collaborating with News Corporation for content could be the difference between Yahoo thriving and merely surviving.

However, solely considering Yahoo, the enormous News Corporation wouldn't likely be interested in a small fry like Yahoo, which had only just begun making waves in the online world.

Eric didn't dismiss Chris's idea right away. "I'll make time to talk to Mr. Murdoch, but I'm not overly optimistic. Establishing a dedicated content editing department at Yahoo is the way forward. Besides, Yahoo doesn't need to collaborate with such a colossal media group. Simply working with some individual newspapers and magazines for content would suffice."

"I'll head back and have the Yahoo team draft a plan ASAP," Chris nodded.

After a moment of thought, Eric added, "One more thing: now that IE and Yahoo have launched, it's also time for stock equity incentives. I plan to allocate up to 20% equity for each company as rewards, but the payout will take place in 1995. Of course, these aren't being handed out unconditionally. The specifics of how much equity will be awarded depend on negotiations with each company's management team. The key metrics will include product market share, user numbers, revenue, patent holdings, company evaluation, etc., as of 1995."

It's quite common for investors to grant equity incentives to management teams making significant contributions to a company. This not only keeps the company motivated but also boosts its cohesiveness.

Although Chris thought Eric's proposal of 20% equity was somewhat excessive, he understood that this was the best way to maximize motivation across the three companies. Moreover, Eric pointed out that it was up to 20%, not a mandatory distribution. If the teams didn't meet expectations, the equity incentives would certainly decrease. However, securing 20% to retain a team capable of keeping the three companies in a leading market position was a worthwhile investment.

Thinking along these lines, Chris began to ponder specific contract details with the three companies' management.

*****

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