Capítulo 345: Chapter 345: Investing in People
Simon spent a week in San Francisco, only to discover that laying out his internet industry blueprint involved far more complexities than anticipated.
Just as the founders of America Online had envisioned online music and gaming in the early '80s, in the realm of the internet, ideas themselves are not particularly valuable. Many similar concepts had likely been conceived before the industry's rise, according to Simon's memory.
The key was execution.
Thus, beyond Simon's strategic guidance, what Igrit and America Online needed most was an efficient management team capable of execution.
Indeed, many of Simon's investments, based on his foresight, ultimately boiled down to investing in management teams.
More precisely, it was an investment in people.
Simon invested in Microsoft because of Bill Gates; in Nokia because of Jorma Ollila; in America Online because of Steve Case.
During his week in San Francisco, Simon also extended an invitation to John Chambers, who would lead Cisco to its peak in the original timeline, hoping he would helm the company once Westeros Corporation secured absolute control over Cisco.
Because of this philosophy, Simon easily recognized that Tim Berners-Lee, who currently led Igrit, might be suited as the CTO given his technical prowess akin to Apple's co-founder Steve Wozniak, but he was not cut out for the comprehensive management role at Igrit.
Beyond Tim Berners-Lee, Simon urgently needed an Igrit 'Steve Jobs'.
Of course, this was merely a metaphor; Simon would never actually invite the uncontrollable Jobs to manage Igrit, as it was difficult to predict where Jobs' reality distortion field might lead the company.
On the flight back to Los Angeles on April 29, Sunday, Simon did not retire to the front cabin suite but chose a seat by the window bathed in sunset, pondering over potential management hires for Igrit while reviewing the week's accomplishments.
Primarily, these involved plans for Igrit and America Online following the achievement of absolute control over America Online.
As for Cisco, Simon planned to entrust it to John Chambers, with whom he had discussed the future direction of the company in detail. Chambers' customer-first approach and expansion through mergers aligned well with Simon's memories, and he felt no need to make unilateral changes.
Naturally, for Cisco's expansion to proceed smoothly, the company needed to go public soon.
For Igrit and America Online, once absolute control was obtained, Simon promptly and decisively segmented the two companies' operations, insisting that America Online divest its content business and focus solely on being an internet service provider.
Igrit was to handle content.
The online gaming and other content services originally offered to customers by America Online were based on value-added services beyond basic access. Due to the current small user base of just over 60,000, it was not feasible to offset costs through online advertising. Divesting these could actually save America Online money.
Of course, Steve Case didn't see it that way, especially after seeing the many content ideas Simon had planned for Igrit.
However, Simon gave Case little choice.
In the original timeline, one of the main reasons America Online rapidly declined after the internet bubble burst was because its business was too broad without a core competitive edge. It couldn't compete with Yahoo in content and was easily overtaken by traditional carriers with infrastructure advantages in access services, leading to a 90% loss in market value from its peak within just a few years.
This time, Simon's vision for America Online was clear: to excel as a precise internet service provider. In the early stages of the internet industry, it was to perfect this service area and then, aligning with the convergence of telecommunication, television, and internet around the new millennium, it would merge with a traditional telecom operator to solidify its industry position.
Beyond long-term planning, considering its scale, America Online would initially expand its business along the California coast and from Boston to Washington D.C. along the East Coast. The vast Midwestern and equally vibrant Southern coastal regions would have to be left to other enterprises.
Most of the U.S. population is concentrated on the coasts, particularly in these regions. Securing a foothold here would easily facilitate expansion elsewhere.
To save on costs, apart from top-tier servers, America Online would temporarily lease network lines from traditional carriers for its endpoint networks.
This arrangement must be temporary.
To avoid being throttled by traditional carriers like AT&T, gradually building and improving its own network was essential, though this would mean investing billions of dollars, which was unrealistic in the short term.
Another reason for America Online's rapid decline in the original timeline was its over-reliance on its content advantage. It continued to rent lines from others without upgrading its own network or even adopting high-speed broadband until it was too late.
In addition to these major plans, confirmed plans for America Online in the coming months included opening 100 internet cafés in cities like Los Angeles, Boston, and New York.
This
proposal was naturally put forward by Simon.
Simon's first exposure to the internet in his previous life was in an internet café.
However, the internet café industry did not catch on in North America.
The main reason was the difference in spending power.
Like VCRs, while video parlors might be popular across the ocean, they were unnecessary in North America because over 70% of households owned a VCR.
Similarly, since their emergence in the '70s, the ownership of PCs in American households had been rapidly increasing. The reason they didn't become as ubiquitous as VCRs within a decade was primarily because PCs of the era lacked sufficient entertainment value, leaning more towards office use.
The explosive increase in PC ownership in American households coincided with the rapid spread of the internet during the '90s.
Although many media outlets noted Simon's involvement with new tech companies like America Online, Igrit, and Cisco during his week in San Francisco, most Americans still had no concept of the internet.
Proposing the internet café concept, Simon did not intend to profit but rather to promote Igrit and America Online. As long as people could experience the benefits of online news, email, online gaming, forums, and personal homepages in these cafés, they would naturally consider getting internet access at home.
For 100 internet cafés, even at a minimal budget of $100,000 each, the total expenditure would be $10 million.
If America Online were to bear this cost alone, it would equal 20% of Westeros Corporation's $50 million investment, not including the cost of developing the café management system and subsequent operational expenses.
Such a massive 'marketing expense' was unaffordable for America Online.
When Simon left San Francisco, Steve Case had already started contacting PC manufacturers to find partners. The 100 unprofitable internet cafés would also operate as a separate subsidiary of America Online, even potentially being sold off at an appropriate time.
Simon also personally called a former classmate to inquire if he was interested in sponsoring a batch of the latest Windows 3.0 software, or alternatively, he could ask Apple.
He then successfully secured 1,000 sets of free operating system software.
Given that many manufacturers would likely want to participate in a project initiated by Simon, the most costly PC equipment might be saved, even the operating system software for the cafés could be provided by interested software companies. America Online would only need to cover the network access costs and rental fees for the cafés.
The savings could be used by America Online to develop its core business.
As for Igrit, Simon had spent much of the week focused on it, which is why he urgently sought another suitable manager. Even Tim Berners-Lee, who was quite self-aware, agreed with Simon's decision.
The most critical issue for Igrit was establishing a revenue model.
Again, any company looking to grow needs a sustainable revenue and profit model.
Membership for portal sites, paid email services, and news subscriptions were all considered by the Igrit team.
Simon, however, unequivocally rejected each suggestion.
To rapidly attract users, basic services like portal sites, email, and online news must be free.
Although the newly operational Daenerys Malibu Studios installed an enterprise email system, Simon rejected the idea of Igrit's patented email system moving into the corporate market. This could perhaps be handled by other companies through technology licensing and equity participation, but Igrit must maintain Simon's populist development path.
Simon envisioned Igrit over the next decade as an internet technology company disguised as a digital media platform.
Digital media was a concept that could significantly stimulate stock prices in the '90s.
However, from the outcomes of Yahoo and America Online in the original timeline, it was clear that digital media was not sustainable. The internet giants that survived and thrived, whether Amazon, Facebook, or Google, were all fundamentally technology companies.
Creating platforms through technology to attract a significant user base that produces 'content' on its own was the key to dominance in the internet sector.
In contrast, the business model of digital media involved producing content to meet user needs, which worked during the early Internet 1.0 era. But in the 2.0 and 3.0 eras, after the user base exploded, it was impossible for one company to meet the content needs of billions of internet users.
Since revenue could not be immediately generated through services like portal sites and email, attention naturally returned to software.
Applications such as server software and web design software developed by Igrit based on web technology were confirmed for commercial operation.
Initially, Simon's idea to promote the graphical interface IE browser for free was not well received by the Igrit team, who believed the software, developed at significant expense, held epoch-making value and should not be free.
After several discussions and even arguments, Simon had to compromise.
Or rather, Simon acknowledged that his ideas were too radical.
Just as he believed America Online's network access should be billed monthly rather than hourly, such
a concept was not feasible in the short term. Until the user base expanded significantly, America Online's network access would still be charged by the hour.
On the other hand, applications like server software and web design software developed by Igrit had a very small market in the short term, limited mostly to Igrit's internal team.
Therefore, the widely anticipated end-user application software, IE, became crucial.
The final decision was for the IE browser to adopt a paid model.
This was the most practical way for Igrit to generate real revenue soon.
However, compared to Netscape's browser pricing at $50 in Simon's memory, the team settled on a retail price of $15 for the IE browser, with an even lower installation charge of $10 for network service providers like America Online.
At $10 per set, the price was very affordable for America Online.
Moreover, Igrit would not limit its licensing to just America Online, as it would only focus on expanding in the densely populated states along the coasts for the next few years. With the anticipated development of America Online, other internet service providers would inevitably emerge.
While Igrit would freely license most of its web technology, Simon would not allow a second manufacturer to emerge for core website and terminal application software for a long time. If the web could achieve the proliferation seen in the original timeline, just the software revenue alone would cover most of Igrit's developmental costs.
For now, this was the only feasible approach.
Igrit had completed construction of two data centers on the coasts capable of accommodating 100,000 users, and internal testing was also finished. Although modest compared to the large data centers in Simon's memory, they were sufficient for the current internet user traffic.
Additionally, Igrit had compiled a complete set of web technology documents, which would be available for free download on the Igrit portal site and some partner university websites. The team also planned to publish physical books on web technology as supplements.
A simplified version of web application software, intended solely for students, would also be distributed across North American universities.
Next, all that was needed was for America Online and Igrit to join forces and promote the web extensively.
May 1990, just around the corner, was destined to be remembered as the dawn of an era by many.
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