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The Great Gaia Journal - Part 4
Yikes, it's been more than a month since the last update! Day after day I told myself I'd spend time on the journal, but either the next bug fix or the next feature release pops up and I'm running the next coding marathon. Need to drop what I'm doing so I can keep up with the journals. Amazon SQS setup, gold granting setup, and sleep will all need to wait!
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It was February in 2003. The world was still reeling over the shock of the tech bubble recession, I was laid off from my tech company, and decided to start a side project with my best friends and roommates. We formed a company called Anime Headquarters, registered the domain name "go-gaia.com", and off we went.
At the time, the biggest anime website was Anime News Network, which had a community with 250 users online on any given day. So we wrote "250" on our whiteboard as our goal to achieve. "If we can have 250 users online, we can run ads and make money!", we told ourselves.
In the first weeks of Gaia, we saw about 50 to 60 new users per day, and then a week later, we were seeing 80 to 90 daily new users. As the days go by, we saw the new user count going up by about 10 more users per day. It was exciting times. People actually liked what we did, and we were all hyped to work hard, design more features and spend more time coding. Before we knew it, we hit 250 users online! We celebrated reaching our goal, but I had no idea that this was the first sign of trouble to come.
The first thing that I noticed was that, with more users came more need for data bandwidth and server computing. On day one, Gaia ran on a server which is nothing more than a desktop computer, shoved in a locker inside a local internet service provider. But that server only hosted the web pages. All of Gaia's data heavy avatars were actually compiled and hosted from our home to save on hosting cost. This embarrassing setup immediately became a bottleneck, and I needed to spend more money to host additional servers just to handle the additional usage. Basically you pay to reserve some space to place your own computer inside a locker, and inside the locker, your server would be able to serve data at really high speeds. Though these services comes with a premium price tag.
The cost for running Gaia started at $300 a month, but that cost quickly ballooned to more than $2000 a month, on top of me having to buy new computers to serve the additional influx of new users. Every week, I was spending half my time writing code, while spending the other half setting up new server software, and assembling new computers to host more users. I was not only learning how to code, but now I was learning how to setup internet servers and software, and I was doing a terrible job at trying to do it all.
In May of 2003, a user spending time on Gaia means waiting half a minute for loading every single webpage, or trying out an item in avatar dress up. I was scrambling to add new servers, while scrambling to find a source of revenue to support this growth. Gaia by then was costing $3500 a month, and my credit card was starting to get maxed out.
That same month we attended the local Fanime convention to promote Gaia, as well as throw our pitch to potential sponsors. We quickly found out that a website with about 20,000 active users would not garner any interest from advertisers. No one was interested in advertising with Gaia. The big difference between other websites and Gaia is that Gaia has 10 times the "engagement rate". Meaning that if a website has 20,000 users, each user would be online for about 15 minutes a day, and the cost for running the server is low. For Gaia, the average user spend about 2 hours a day, with engaged users spending 8 hours a day online. With Gaia's level of engagement came a much higher data hosting cost. At the same time, advertisers looked for unique number of visitors, which Gaia lacked at the time.
Earlier in the year, one of Saka's best friend had been hanging out with us, and eventually developed a relationship with CP. Eventually CP decided to follow his true love and move down to LA in order to be with her. So we were down one founder, we couldn't find a source of funding, and my money was running out. Things were not going well at home, and I remember that L0cke was starting to feel depressed as the weight of our success was literally crushing us. I calculated that my credit card could probably support Gaia for another 4 months, then we will have to shut the site down because I would need to find a job and start paying off my credit card debt.
Even though the going was tough, all users on Gaia were extremely positive and supportive. Many users understood what it takes to keep the site up and running, and the dismal performance of Gaia's servers was also a sign of how strapped in resources we were facing. We often heard that users were offering to donate to Gaia. I was extremely appreciative, but didn't act upon the offer, because my business sense taught me that donation is not a reliable and sustainable source of income. Though after a few weeks, we ended up with a Paypal account per the users requests.
The first day a good number of users chipped in to help support Gaia. We received about $57 dollars in donation. It wasn't enough to sustain the site, but it was a real sign of the level of support from our users, and we were all appreciative of the gesture. That same night, I was out jogging with L0cke and Vo, and we talked about the idea of giving something in return to the users who donated. L0cke was initially against the idea because this would create an unfair situation where some users would have some items that others can't. We had a long discussion, and at the end we decided that the generous gestures of these users should not be ignored. So we decided on a compromise. We would create a very small and subtle item that wouldn't be too flashy as a gift. The item was a halo that was no more than a few pixels tall. I sent the item to the list of donators, sent them a PM to thank them, and went to sleep. The halo itself was made in mere minutes, but its impact was unfathomable.
The very next day, I woke up and found that there were 3 times the funds sitting in our Paypal account! As it turned out, the moment users knew that there would be an exclusive item for donating to Gaia, we got a lot more donation. Who would have thought??? I woke everyone up, and in minutes our dread and worry were over. We found a revenue stream for this little web site that we built, and it was all thanks to the support of our users. Gaia was one of the first online service to offer micro-transaction. By the end of month, we raised enough money to pay for the servers and bandwidth with just two weeks of donation money. We knew we had to change our mindset, from survival mode to expansion mode. It was time to grow Gaia!
Time was immediately spent to write up a business plan, what type of help I would need, and started shopping for an office space.
Before Gaia, I had started and failed on multiple new businesses before. Many of my previous businesses usually started with a big group of founders who were excited and motivated, but when the going gets tough, founders would drop off one by one, and at the very end, it would be me, as well as my old friend Bluecow, who would tough it out at the bitter end. When Gaia became a legitimate business, Bluecow was the first person I called. I told Bluecow that Gaia is finally a real business and it'll take off, Bluecow simply replied "Okay, I'll give my two week notice!". Bluecow quit his 6 figure job and joined Gaia as one of the founders.
Then we added Gill, a friend who helped with building and managing servers, Vo's friend Bill, who handles Flash programming, and Darknrgy, who was the first person we hired to build the original Gaia Marketplace. These guys were all brought on as founders and had a stake of the company.
The first year where Gaia operated as a business was just as crazy as the months before. Instead of scrambling to keep things running, I finally had help, leaving me time to focus on all the creative ideas. It was another year I would never forget.
-- End of Part 4 --
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