From that point on, John Leighton’s life settled into something resembling a routine.
He and Zach became thoroughgoing homebodies, making one large supermarket run and then barely leaving the apartment for almost a week at a stretch.
Another month slipped by without much fanfare.
It was already March.
The Yahoo portal had been live for over a month, and according to Jerry Yang, it had been the most remarkable month in the company’s short history.
When John Leighton heard that, he smiled to himself.
The real glory, he thought, would come when Yahoo rang the bell at Nasdaq.
That was the moment he was waiting for.
…
“Hello, John Leighton.
Very comfortable over there while the rest of us work ourselves into the ground.
Investors really are something else.”
“Brother Yang, if you have time to tease me, things must be going well.”
“Haha.” The laugh confirmed it immediately.
“John Leighton, I don’t know how you do it, but everything you predicted has come true.
In the past month alone, the company has brought in nearly five hundred thousand dollars in advertising revenue.
We are profitable.
Actually profitable!”
Listening to Jerry Yang shout down the phone with barely contained excitement, John Leighton felt genuinely pleased.
…
“So what’s the actual purpose of this call, Brother Yang?
Are you ringing to announce dividends?”
“Get lost.
We’ve been spending everything on new servers, network equipment, and bringing in talent.
We still don’t have enough.
But here’s the thing, people are coming to give us money.”
“Venture capitalists are knocking on the door?”
“Several firms have already made contact.
A couple have even floated the idea of an outright acquisition.”
“Tell the acquisition people to go away.
As for venture capital, yes, we move on that immediately.
Time is everything on the internet.
One step ahead means staying ahead.”
“Exactly.
John Leighton, get here as soon as you can.
We need to align on a position before we sit down with anyone.
Come talk it through with us.”
“YES!”
John Leighton ended the call and jumped to his feet.
It was a natural reaction.
Venture capitalists had the sharpest instincts in the business world.
The moment they recognised Yahoo’s value, they had come running.
That was exactly how it was supposed to go.
…
“Boy, what happened?
You look like you just won something.” Zach leaned around the doorframe, smiling at the display.
“Zach.
We did it.
Yahoo just called.
The first venture capital round is about to begin.”
“That is genuinely the best news I have heard in months.”
“Are you ready to become a multi-millionaire?
Because that is what is about to happen.”
“John.
I love you so much right now.”
…
“The investor has agreed.
They will be here tomorrow.
We need to be aligned, all of us, before we sit across from anyone.
Get ready.”
“I knew he’d agree!” David Filo said, practically vibrating with energy.
Beside the two founders stood a third figure worth noting.
Tim Koogle, currently serving as the company’s general manager and, in American terms, its CEO.
Tim and Jerry Yang were Stanford alumni who had known each other for years, and despite the fact that this timeline had unfolded differently from the original, historical inertia had apparently brought Tim into Yahoo’s orbit anyway.
He had joined early, before any outside investment had come in, and had quickly become indispensable on the operational side.
The Yahoo business cards still listed Jerry Yang and David Filo as the primary faces of the company.
John Leighton had been offered a place on them and declined.
He was an angel investor, not a figurehead.
…
“I have to say, I’m very curious about this person everyone keeps calling the Son.
I hope to meet him soon.”
“Don’t worry, Tim.
He’s something else.
The entire profit model came from him.”
“A genuine prodigy, then.”
Tim had studied Yahoo’s business model thoroughly since joining.
The portal concept, the framing of Yahoo as a new form of internet media distinct from traditional outlets, the content plus traffic plus advertising structure.
All of it was groundbreaking.
The fact that it had come from an outside investor, and a young one at that, made it even more striking.
His curiosity about the Son was considerable.
…
While Tim was thinking about John Leighton, John Leighton and Zach were still in the Los Angeles apartment, running slightly delirious circles around each other.
“Zach.
We leave for Silicon Valley tomorrow.
I cannot wait.”
Zach stopped moving and looked at John Leighton with a rare seriousness.
“John.
Thank you.
Genuinely.”
He meant it.
The equity John had given him so casually represented a level of wealth Zach had never come close to imagining for himself.
Nobody gave that away without a thought unless they were either a fool or something far more unusual.
“We’re family, aren’t we, Zach?”
“Yes,” Zach said, and his voice was steady.
“We are.”
…
The next day at noon, as John Leighton and Zach pulled up in front of the Yahoo garage, Jerry Yang led more than ten members of the team outside to meet them, applauding as they arrived.
John Leighton was genuinely moved.
A month of working together and they had treated him like this.
He hadn’t expected it.
Jerry Yang brought John Leighton, Zach, David, and Tim into the company’s small conference room.
Over the next hour, they went through Yahoo’s performance in detail, laying out every metric from the past month so that John Leighton had a complete picture before the conversation turned to the financing round.
By any measure, the month had been extraordinary.
Yahoo had become the default starting point for a significant portion of internet users.
Visitors came to browse the portal, read current events, and search for content.
The site was functioning exactly as the model had envisioned, combining search and portal in a way that served users naturally and advertisers profitably.
John Leighton was aware, from everything he carried in his memory, that this combination would eventually be Yahoo’s undoing.
In the future they would underinvest in search, focus too heavily on the portal side, and watch Google rise to take what should have been theirs.
But that was a conversation for another time.
Right now, Yahoo was the undisputed king of the internet, and it was time to act accordingly.
…
“Since we’re aligned on moving forward with the first financing round, the first thing we need to settle is our valuation. Get faster updates on g.com.
Everyone, speak freely.”
Tim went first.
“Based on current performance, we generated five hundred thousand in advertising revenue last month alone.
Projected annually, with internet growth factored in, ten million in annual advertising revenue is a reasonable figure.
At standard market multiples, our valuation should not be below one hundred million dollars.”
As the general manager, Tim had approached it methodically.
By price to earnings standards, Yahoo was already a giant within the internet space.
John Leighton nodded.
The number was defensible for the American market, and Tim was right to anchor there.
But John Leighton was not thinking about the American market alone.
…
“Everything Mr.
Tim has said about the domestic market is correct.
But is that the limit of our ambition?
The internet has no borders.
Our goal is not the American market.
Our goal is the entire world.”
The room went quiet for a moment.
Then the energy shifted.
Every person sitting at that table had been thinking domestically.
The entire world.
The global internet market.
The scale of that idea landing in the room all at once was something physical.
They looked at the young man across the table and felt it.
…
“With that framing, what we actually need to determine is how much capital Yahoo requires to pursue genuine global development, and then we raise accordingly.
Our early advantage is real, but early advantages on the internet are also the most fragile.
We can build a portal.
So can others.
In the American market our head start protects us.
Internationally, we will face competition from local internet companies in every country we enter.
This first financing round needs to secure the initial capital for building a world class infrastructure.
Our strategy is to deploy capital aggressively, to move faster than anyone else can follow.
My original investment was angel funding.
This round is a second round of financing.
Whether there is a third depends on how development proceeds.
If things go well, we may be in a position to list on Nasdaq within the next year.
The vision is simple.
Anyone who goes online opens Yahoo first to read the news.
Anyone who needs to find something uses Yahoo Search.
We already meet the fundamental needs of internet users.
Given that, should we not be demanding a valuation that reflects it?
My number for Yahoo is five hundred million dollars.
We are the number one internet company in the world.
We should be valued as such.”
…
The silence that followed was a different kind from before.
Five hundred million.
For a company with fewer than twenty people, operating out of a garage.
They had all anticipated that John Leighton would push high.
After everything he had said, a large number was not a surprise.
But hearing the specific figure said plainly in a small conference room still stopped everyone cold.
If the financing proceeded anywhere near as planned, Yahoo would create history in the United States.
Many people would later say that in the early days of the internet, raising money was a grinding, humbling process.
Yahoo, Amazon, Google, and others had all faced more rejection than the polished retrospective stories suggested.
Capital flocked to these companies only after they had already proven themselves.
The ones who got in early received returns that were almost impossible to describe.