Building A Vertical Ad Network Powerhouse: Glam Media CEO Samir Arora (Part 2)

SM: Was Rae a successful venture for you?

SA: Rae did well. We created navigational applications for Apple, then PCs, and later
worked with Wells Fargo and American Express. Interestingly enough, they introduced us to a small company called Mosaic. Once I saw what Mosaic was doing, I knew we had the legs to deliver our technology. I went back to the team and we made a decision to create a new company called NetObjects as opposed to continuing to make Rae evolve.

NetObjects created the first web site building product, and we helped build and popularize the term web site with the team. We were one of the first ten companies on the Internet. We launched NetObjects Fusion as a graphical design product, and publishers loved it. They felt great building things for the Internet without coding. We created the concept of a site versus just one page at a time. We also developed the concept of a web site building editor. The US Patent and Trademark Office recognized this, and the first web site building editor and the first page layout editor for HTML patents were issued in 1998; these are now owned by Adobe. In total, 12 patents were issued between 1996 and 1999 for me and my team for inventions at Rae Technology and NetObjects.

SM: When did this occur?

SA: NetObjects was founded in 1994. In addition to Series A, which was done through Rae and me, it received venture funding. IBM then acquired the company for $100M. We took the company public and it did well. As the market started to slow down, IBM moved to privatize it. We sold the consumer portion and the enterprise side was licensed out.

SM: It is still sold by IBM?

SA: IBM had a license for the enterprise portion; on the consumer side NetObjects Fusion is sold by Website Pros and is now on version 11. The enterprise portion made sense for IBM, but the consumer piece was largely a blocking tactic against Microsoft. The market segmented itself, very much like desktop publishing. Since launch, over 10 million people have published over 25 million websites using NetObjects Fusion, and it continues to have dedicated users, fans, designers and publishers worldwide after all these years.

SM: What did you do after NetObjects?

SA: I took some of the money I had made over time and started investing as a limited partner in venture funds. I also helped create Information Capital in 1997. In 2000, I took some time to think about the cycles I had been through in technology and identified powerful 7-12 year economic cycles. I have gone through these cycles three times. The best times to invest are during the downturns.

SM: This is typically when strong companies that can prove their methodologies emerge.

SA: Google is a perfect example. It focused on building technology and a publisher base when nobody else was investing in those areas. Ad Sense is new, but Google has done a good job carving out that space because of its foundation.

If you look at the web as a series of layers, you need the lower layers before you can build value on the top. During stage one, market developers need tools. The problem for tools companies is that as soon as the market shifts to stage two, the better opportunities are in applications. When the market shifts to stage three, it is very much at consumer-level services. That is why tools companies go through these cycles.

My view on the Internet as it is today is very simple. At one point, we did not have connectivity. Once we had connectivity and tools, websites became important. Once websites had proliferated, the platform for content-based advertising businesses and e-commerce emerged. The cycle changed again in 2001 because of blogs.

Once a technology platform becomes established and is simple enough for large numbers of people to use, it moves very quickly from stage one to stage two. The long tail can do blogs, individuals can do blogs, AOL and Facebook have blogs embedded. Video is on the same curve today; it is still expensive and hard for users to produce quality videos. Quality is the key. YouTube has removed a lot of the technology barriers to uploading and streaming video. The question is, how will the quality catch up?

SM: It is the same with text content. A small percentage is high quality while the rest is crap.

SA: What has been the result of enabling so many publishers? That is the real question.

This segment is part 2 in the series : Building A Vertical Ad Network Powerhouse: Glam Media CEO Samir Arora
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