Silicon Valley Online's Bottleneck
Frank timely poured cold water on the situation, pushing a financial statement in front of Nakayama Takuya with a slight frown.
"While GG revenue is increasing, and ICQ's premium membership service can cover some costs, server and bandwidth expenses are a bottomless pit. The more users we have, the larger the amount of data we need to store. Especially recently, the growth curve has started to slow down."
His hair has visibly thinned over the past six months.
As a CEO, you not only have to keep an eye on the growth curve, but also on the competitors who want to cause trouble, and even more so on the soaring bills every month.
Especially at the end of last year, the browser called Mosaic released version 1.0 and announced support for Apple.
Following Macintosh and Microsoft Windows, it made the internet a simple and convenient page for ordinary people to browse.
Users' attention is being diverted.
Frank's first thought was, "We need to get on board and move the entire BBS to the webpage."
This allows users to log in and post directly through the Mosaic browser without having to download that bulky client.
If it weren't for Nakayama Takuya stopping them, Silicon Valley Online might have truly been "naked".
"Do you remember that proposal about Mosaic?" Nakayama Takuya put down the report in his hand and looked at Frank.
Frank chuckled wryly and rubbed his temples. "How could I forget? At the time, I thought you were too conservative. But after our discussion and evaluation, we also found that the HTTP protocol's security is indeed inadequate."
"Users are our assets, Frank. If Sequoia Capital ever finds our user passwords all over the internet, Donald will be the first to come and strangle you." Nakayama Takuya joked, but there wasn't much of a smile in his voice. "Security is always the bottom line."
Ultimately, they adopted a compromise "showcase strategy," creating a mirror content server for Silicon Valley Online BBS and then placing the mirror on the website.
You can read the latest technical posts, watch the debates among experts, and even see introductions to star projects like TaWiz. But if you want to reply or send a private message? Sorry, please click the prominent "Download Client" button.
This tactic not only avoids security risks but also redirects web traffic back to the client.
Those tourists who originally just intended to browse casually were so engrossed in the content that they eventually ended up contributing to the download count.
"But that's not the most frustrating thing," Frank sighed, pulling a new chart from under the pile of documents. "It's this feature you insisted on—image upload."
Two weeks ago, the BBS underwent a major upgrade, allowing users to insert images into posts. This is a game-changer in the world of BBS forums, which are mostly filled with plain green text.
The effects were immediate.
Previously, in the "hardware enthusiast" section, people could only describe how cool their new PC case was. Now, they can just post a picture, which has a hundred times stronger visual impact.
The "Pets" section was instantly overrun, filled with low-resolution photos of all sorts of cats and dogs.
Merchants went crazy; even a single product image with impressive resolution was far better than a few lines of dry text from before.
User activity surged, resulting in a large bullish candlestick.
"Isn't this great?" Tom Kalinske leaned over for a look. "I saw that 'Show Off Your Workbench' campaign has over ten thousand participants."
"It's really good, so good it's making my heart stop." Frank pointed to the red curve in the lower right corner of the chart that soared along with user activity, representing bandwidth costs. "The data volume of images is hundreds of times that of text!"
Several thousand times! Our bandwidth costs tripled last week! Tripled!
He grabbed a calculator, typed away, and showed the astonishing figure to Nakayama Takuya: "At this rate of burning through cash, unless we increase the GG fee tenfold, next quarter's financial report will look terrible. Those guys on Wall Street don't care how high your user stickiness is; they only care if your earnings per share are positive."
Frank was genuinely anxious.
Although the board of directors didn't say anything harsh or make any demands on profitability for the time being, his pride as a professional manager couldn't take it.
If it doesn't make money, even if it's valued at a billion, in his eyes it's still a crippled the Greed of Man.
"This is the internet, Frank." Nakayama Takuya looked at the bill that had caused him so much pain, but instead smiled.
He stood up, walked to the window, and looked out at the bustling streets of Silicon Valley.
"If you're already counting your money, it means we're not big enough yet. Bandwidth costs are high, but they're the necessary entry ticket." He turned and pointed to the calculator in Frank's hand. "Don't just focus on the numbers. Think about it, when users get used to posting and viewing pictures here, and even posting videos later, will they still tolerate competitors who can only post plain text?"
"We're using this money to dig the moat even deeper, so deep that anyone who sees it will despair."
Frank paused, looked at the report in his hand, and remained silent for a few seconds.
"Damn it, you always find the perfect reason to spend money." Frank threw the report back on the table, let out a long sigh, and the worry on his face mostly disappeared, replaced by a gambler's ruthlessness. "Fine, if we're going to dig, let's dig even deeper. I'll talk to PSInet and see if we can sign a long-term, big contract and bring down the bandwidth price."
"That's more like it." Tom patted Frank on the shoulder and teased, "Don't always think about saving money for the shareholders. Sequoia Capital will only panic if they see us going bankrupt. If they see us burning money to expand, they'll just think they've chosen the right track."
Nakayama Takuya smiled and nodded; he knew he had passed Frank's test.
In this barbaric age, only those who dare to burn their last penny have the right to define the future.
"However," Nakayama Takuya changed the subject, "Simply burning money isn't a long-term solution. I do have a new idea about how to turn this traffic into real cash flow, which might alleviate your anxiety."
Frank and Tom looked up at the same time, their eyes lighting up instantly, like two sharks that had smelled blood.
Instead of immediately offering the solution that would instantly alleviate his cash flow anxiety, Nakayama Takuya asked a seemingly unrelated question.
"Frank, approximately how many websites are there in the US now?"
Frank paused, realizing that was indeed a good question.
As CEO, he may not be an expert on such macro data, but he has a general understanding of it.
He pondered for a moment and gave a conservative figure, "Specific statistics are difficult to obtain because new servers are connected to the network every day. However, based on data from MIT, the number should already exceed one thousand. And this number is still growing rapidly."