American History 1988
Chapter 357 - 346: Surprisingly Low Cost

Chapter 357: Chapter 346: Surprisingly Low Cost

Dean primarily visited Virginia to address the issues with Toktok, which might sound strange, right?

The instant messaging software from Bit, why would it be related to this place?

The reason lies in the fact that several ISPs operate on the East Coast, including the largest network service provider in the US, AOL, naturally.

Other nearby providers like UUNET and SPI, the third largest, together cover about half of America’s internet operational market share.

This point is interesting: while the internet frenzy started on the West Coast, the fundamental services were coming from the East Coast.

This might relate to the investment style of the East Coast, as the old money subconsciously believes that infrastructure investments are more stable.

To them, software and websites seem like rootless duckweed.

But regardless of the kind, neither can exist without the internet—it’s a trend.

Investing in network service companies is like investing in telephone companies.

Although the profits are not as exaggerated as a hundredfold, the long-term returns are substantial, and the market fluctuation is relatively minor.

Even so, at the startup phase of these companies, support from Silicon Valley venture capital is indispensable.

For instance, Dean had invested a lot of money in CIX Alliance when the internet was not as popular as it is today.

Because of his initial investment, he was able to play a role in AOL’s decision-making.

Now he needed to leverage his influence again to convince AOL to accept lower service charges.

Only by doing so could the internet become more prevalent, reducing the cost of internet access for users to almost nothing.

Then Toktok could truly become popular, and people would not have to worry about their phone bills next month.

These issues were interconnected, and he needed to navigate through each layer before he could pluck the most tempting fruit at the end.

But before heading to AOL, he needed to handle another matter first.

"Adams, you don’t look at all like a super founder of a company about to go public."

As soon as he entered the office, Dean started laughing.

Despite being the chairman of UUNET’s board, he looked no different from a tech nerd.

Over thirty, with a gentle face. He had fluffy brown hair and a large beard.

He wore a polo shirt on top and white jeans on his legs.

When Dean entered, the guy was shaking his legs, with feet propped up on the desk.

"To hell with super founder, I still can’t figure out what has happened,"

Adams felt everything was too surreal; UUNET was on the verge of going public in a blink of an eye.

Then various people came knocking on his door, some of whom had a huge appetite, opening their mouths to acquire UUNET.

"So tell me, who is planning to buy us?" Dean had come here for that very reason today.

He owned nearly 20% of UUNET’s shares, making him a genuine major shareholder.

Yes, when the support fund was initially established, UUNET was one of his main investment targets.

Out of twenty million US dollars, four million went to it, in exchange for almost one-third of the shares.

However, after subsequent funding rounds, Dean’s shares dilated down to around 20%.

Of course, this kind of big decision had to have the nod of a major shareholder like him.

"It’s Urban Fiber, they’re prepared to buy out UUNET entirely for 600 million US dollars.

Dean, what do you think?" Adams was somewhat undecided.

He was just a young man who loved internet technology, and the number felt somewhat unreal to him.

"Urban Fiber? If I remember correctly, aren’t they one of the shareholders of UUNET?"

"Yes, they want to take over the business themselves, as they have the capability."

Just from the name, it’s clear what Urban Fiber does.

They have a vast network of fiber-optic systems spanning 11 major cities on the East Coast.

Not only that, Urban Fiber also provides foundational switch services.

During the expansion phase, UUNET once leveraged their facilities to broaden its business scope.

It was then that both parties signed an equity agreement.

Now Urban Fiber wants to integrate UUNET entirely into their company, and do so before going public.

Because once UUNET goes public, such a maneuver would not be so easy.

Adams wanted to seek Dean’s advice, not just because he was a major shareholder, but also because he was willing to trust him.

In 1993, when UUNET began to expand massively, it was a very costly endeavor.

Adams insisted on building their own switch and server centers, which meant they needed to place hardware facilities in various places.

Undoubtedly this required a large amount of capital, but Adams was hesitant about engaging with venture capital.

He was generally skeptical of financiers and did not want to report to the supervisors sent by venture capital.

What he cared about was promoting open communication on the internet. He did not wish to compromise this ideal.

But Dean alleviated his concerns, introducing him to Axel Venture Capital.

This was a venture capital firm specializing in network communication, with many experts in this field internally.

Axel evaluated UUNET’s potential and even offered Adams some advice on communication technology issues.

Such actions won his favor; he had never heard that such technically proficient oddities existed in venture capital.

The cooperation that followed went smoothly, and UUNET now has over a million users.

This was Dean’s second successful ISP operation within the CIX Alliance.

However, when it came to the acquisition request for Urban Fiber, Dean didn’t care at all.

He totally disregarded the $600 million offer, even though it meant that he would immediately obtain $120 million in cash.

He had always been clear that only Nasdaq could maximize the value of UUNET to its fullest extent.

Of course, $600 million was mundane for him, but not necessarily for others.

Going to gamble on the stock market, or walking away with a guaranteed $600 million – many would choose the latter.

Therefore, Dean now needed to dispel any hesitation in Adams’s mind, and he couldn’t be too direct about it.

"Adams, have you heard about Microsoft planning to release the new Windows 95 system?"

"Huh?" Adams was a bit slow to catch on. What did this have to do with the acquisition of UUNET?

"Windows 95 is the first operating system designed based on the internet, it includes a vast amount of networking access demand protocols in its API interface.

This is precisely what UUNET specializes in; we can provide support for it to build network communications with other external software.

Even Microsoft is launching its own ISP services, that MSN software, we could provide the support for its lines, right?"

"What?" Dean’s suggestion left Adams agape.

"Dean, you mean to suggest a collaboration with Microsoft?"

"Of course, why not? This could lead to a higher valuation for UUNET when it goes public.

By the way, when are we planning to go public?"

"May," Adams inadvertently responded.

"Good, that’s enough time to also discuss a similar collaboration with AOL. Three months is enough for us to seal this deal."

Dean had long analyzed the differences among the members of the CIX Alliance; they fell into two categories.

One was content providers like AOL, and the other was pure internet service providers like UUNET that did not offer content.

In fact, they could collaborate, such as UUNET leasing lines to AOL, or providing them with hardware support.

Coincidentally, Dean was planning to visit AOL, so he intended to resolve these two matters together.

...

"Steve, I regret to inform you that AOL has still not decided to initiate a subscription service."

"Hey, AOL’s business is quite healthy right now. But you, you’ve been quite the talk of the newspapers recently."

Steve Case was referring to Dean’s acquisition of Orion and his investment in DreamWorks which had made big news.

Yes, after more than a month of auditing and settlements, Orion now belonged to Dean.

Together with the move at DreamWorks, the entire entertainment industry was shaken.

The New York Times exclaimed that a giant from Silicon Valley was making a massive move into Hollywood.

Especially notable was that these two deals involved over half a billion US dollars in cash transactions.

This revealed to the public for the first time the frightening financial power of Dean; it wasn’t in stocks or bonds, but in green US dollars.

If they knew that Dean hadn’t even cashed out any of his stocks, their jaws would drop even more.

Yes, over half a billion US dollars is indeed a lot, but Dean took in even more.

Just in the year 1994 alone, he received nearly $200 million in dividends from Byte Company.

This too was in cash. Besides, the Price list page had also earned him a big sum.

By the end of the year, surprisingly, they had made a profit of over ninety million US dollars.

This was profit, not revenue.

However, the operating costs for the Price list page itself were also not high, mostly coming from labor and server expenses.

But thanks to a large number of registered users, the listing sections for rentals and jobs had very high throughput.

With some additional advertisements, the profit margins had easily jumped to a higher plateau.

These factors left Dean with nearly $300 million in disposable cash, on top of his previous savings and dividends from various other public companies.

Raising $500 million wasn’t difficult for Dean.

Of course, he wasn’t foolish enough to use all his own money for investments.

Of the $500 million, $300 million was leveraged against Intel shares he had mortgaged from the bank.

So ultimately, the money he took out of his own pocket wasn’t much at all.

The only regret might be that keeping his partial ownership of Intel shares a secret was no longer possible.

But these were minor details, insignificant compared to the transaction.

Steve Case envied Dean’s freedom to operate on the business field.

Although AOL’s market value had exceeded $10 billion, the cash at his disposal was nowhere near as abundant.

"Let’s get back to business," Dean signaled his assistant Anna to bring out the documents.

"Haven’t you always wanted to know how low the cost expenditure would be if AOL adopted a subscription service?

Look, here’s the answer; it’s much lower than you’d have imagined."

Upon hearing Dean’s argument, Steve’s interest was piqued, and he quickly scanned the documents, his eyes widening.

"$20?! Just by having more than a thousand subscribers in a region, such a fee structure could cover our investment and operational costs?!"

"Surprising, isn’t it?" Dean smirked confidently, "There’s more data to come that will astound you, I guarantee it."

Search the lightnovelworld.cc website on Google to access chapters of novels early and in the highest quality.