$100 Million Valuation

Conference room at Silicon Valley Online headquarters, Redwood City, California.

The air felt somewhat stagnant.

Donald Valentine, a partner at Sequoia Capital and a legendary figure who wields considerable influence in Silicon Valley, is currently scrutinizing the three people opposite him with his hawk-like eyes.

Frank Marshall, the new CEO, was dressed in a suit and exuded composure.

Tom Kalinske, with his feet propped up on the edge of the table, looked relaxed, but his eyes were full of confidence.

And, Director Sugiura, who came all the way from Tokyo.

Sugiura sat upright, his back ramrod straight, his expression serious, exuding the air of a plenipotentiary representative of headquarters.

In reality, his mind was filled with Nakayama Takuya's parting words. "Bring your best suit, practice golf, and then just listen to them brag."

"A valuation of thirty million US dollar." Donald finally spoke, his voice steady yet carrying undeniable weight. "For a company that has just launched a new product, Sequoia Capital's offer is always very sincere."

Tom Kalinske almost burst out laughing.

Thirty million? Is that enough to feed a beggar?

Frank Marshall calmly pushed a document towards him. "Mr. Donald, I think you might need to take a look at our latest daily active user data, and this—K-Factor."

Donald's deputy took the document, glanced at it, and his expression changed. He leaned close to Donald's ear and whispered a few words.

"1.8-" Donald raised an eyebrow, but remained calm. "A very good growth model. But, Frank, where is your profit model? Relying on that pitiful GG fee from the BBS?"

"No." Frank shook his head, stood up, and walked to the whiteboard. "We don't sell software, nor do we simply sell GG. We operate a network, a pure social network comprised of millions of college students and an ever-growing and more diverse range of internet users."

He picked up a pen, drew a circle, and wrote "ICQ" inside it.

"Every user is a node. Every chat is a connection. In the past, when we discussed user value, we were talking about how much revenue a user could contribute. Now, we need to discuss how much value a user can add to the network itself."

This theory is precisely Nakayama Takuya's "Network Value Theory".

Director Sugiura picked up his coffee cup and took a small sip to conceal the turmoil within him.

This theory has clearly been passed on to the United States as well, but coming from Frank, a former Apple executive, in fluent English and with the confident demeanor of Wall Street elite, it feels completely different.

These United States really know how to make the executive's theories sound incredibly impressive!

Donald's expression finally changed, and for the first time, he sat up straight. "Interesting. You mean, referring to Metcalfe's Law of the telephone network?"

"Not entirely," Frank laughed. "The value of the telephone network spills over. AT&T users can call Verizon users. But our ' Silicon Valley Online Passport ' is currently closed. All the value is currently locked within our own ecosystem. Want to chat with friends on the BBS? You need an ICQ number. Want to join an interesting group? You also need an ICQ number."

"You're building a walled garden!" Donald said incisively.

"You can understand it this way," Frank put down his pen, "And now, the number of people in the garden is growing exponentially." Just then, the conference room door was flung open, and Harry, sporting dark circles under his eyes, rushed in. Ignoring everyone else, he went straight to Frank, his voice hoarse and excited. "Five to five hundred thousand! Frank! Registered users have just surpassed five hundred thousand!"

The conference room was deathly silent.

From 50,000 a few days ago to 500,000 now.

What kind of insane growth rate is this?!

Donald's face finally showed its weakness, and his deputy's breathing quickened.

Tom Kalinske slowly pulled his foot out from under the table and said to the assistant at the door, "There seem to be some guests outside? Don't keep them waiting."

The next second, the team from another top venture capital firm, KPCB, walked in, guided by an assistant.

The lead partner was taken aback when he saw Donald, then revealed a hunter's smile upon spotting his prey.

"Donald, what a coincidence, you're also interested in this 'little green flower'?"

The man in the Sequoia Capital instantly turned extremely pale.

The negotiating table has turned from a one-on-one negotiation into an auction.

Frank Marshall sat back down, shrugged, and wore an impeccable business smile. "It seems we need to revisit our valuation model. After all, it's unfair to our partners to invest in a great future with a valuation they can't explain to the board."

Director Sugiura nearly spat out his coffee.

That's awful! Those United States are absolutely awful!

They clearly want to raise prices, but they make it sound like they're doing it for the investors' benefit.

Nakayama was absolutely right; all I had to do was sit here and watch the show.

The representatives from Sequoia Capital and KPCB exchanged a glance, both seeing urgency in each other's eyes.

They were all shrewd people; they understood Frank's delaying tactic perfectly well.

If this drags on any longer, forget about 500,000 users, we won't even reach 1 million! The valuation at that point will only be more outrageous!

Cut the Gordian knot!

"A valuation of one hundred million US dollar!" Donald practically gritted his teeth as he uttered the figure. "Sequoia Capital wants 5%!"

"KPCB too!" a KPCB partner immediately chimed in.

Frank and Tom exchanged a glance, then looked at Sugiura together.

Director Sugiura suppressed his inner elation, maintaining an inscrutable expression, and slowly nodded.

It's done!

Valuation at US dollar 100 million, offering 10% stake, raising US dollar 10 million!

When the news was published on the front page of the Wall Street Journal and The Los Angeles Times the following day, the entire Silicon Valley felt the ground tremble beneath its feet.

A company founded just one year ago, whose products are only the size of a few floppy disks, is valued at $100 million!

This completely overturned the perceptions of all hardware manufacturers and traditional software vendors.

What made countless people even more envious was that "Silicon Valley Online" took the opportunity to announce that it would be the distributor of Sega's email client software.

It's priced at just US dollar 9.99.

In an instant, the road leading to Redwood City was packed with media from all over the United States.

This time, it's not a shill hired by Tom Kalinske, but a shark that has truly smelled the scent of money and change.

At the entrance of Silicon Valley Online's headquarters, Tom looked down at the massive crowd of reporters blocking the entrance and turned to Frank, saying, "Frank, it looks like we'll have to hire some security guards."

Frank straightened his tie, a barely concealed smile on his face. "No, Tom. We should hold a press conference and announce what our next target is."