How To Start An Internet Company In Your Dorm Room And Make $580 Million

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The Business Insider

Bo Peabody in 1994, age 21.

Mark Zuckerberg is the latest and most famous American entrepreneur to launch a fantastically successful company from his dorm room.

But the tradition goes back a while.

Before Mark Zuckerberg, for example, there were Bill Gates and Michael Dell. And there was a Reed dropout named Steve Jobs.

In fact, the dorm-room to board-room path is so well established by now that aspiring moguls who are still in school have plenty of precedent just to go for it. 

That's what another early Internet entrepreneur did in the mid-1990s, when the industry was just getting going.  And his story should serve as inspiration for not only other budding dorm-room entrepreneurs, but the older kind as well.

In 1991, a freshman at Williams College, Bo Peabody, had an idea.

He would build an "online service" offering practical advice to college students.

There wasn't an "Internet" in those days, at least not one that normal people had heard of. There wasn't even an "America Online," which wouldn't get going in earnest for another couple of years. There was mostly Prodigy and Compuserve and a few other early online services that people dialed into with 1200-baud dial-tone modems.

Because there wasn't an Internet, building an online service meant actually building part of a physical network, so that was a key part of the early idea. But to build a network, Bo needed $10 million. And that was a big sum for a college freshman to raise, especially in 1991, when the venture capital ecosystem was a lot less developed than it is today. So Bo incorporated his company, kept working on his business plan, and kept doing his homework. He even signed up a seed investor. Then, eventually, the Mosaic browser arrived. And Bo's capital requirements suddenly dropped from $10 million to $1 million. So he kept at it.

Then, in the summer of 1995, a year after Bo graduated, Netscape went public, and the modern commercial Internet era was born.

Marc Andreessen and other early Internet entrepreneurs became deca-and centimillionaires overnight, and, soon, venture capitalists began funding any Internet plan with a pulse.  As the market surged higher, the stocks of the early net companies flashed like neon signs for 7 hours a day--"RICHES, RICHES, RICHES"--and soon, thousands of companies, public and private, were joining the digital gold rush.

Among them was Bo's company, which he was still working on with a classmate from Williams. Shortly after Netscape's IPO, Bo raised $3 million from a suddenly jazzed New Enterprise Associates. Two years later, having amassed more than 1 million users for a product that looked nothing like his original vision, he sold Tripod to Lycos, for $58 million in stock.  Over the next two years, while Bo's stock was "locked up," the value of it increased 10-fold. Then in 1999, Bo sold almost every share he had, and invested the proceeds in bonds and real-estate.

(Those who were around in those days will remember what happened next: The stock of Lycos and other many other dotcoms plunged ~99%. The price of houses and bonds, meanwhile, went through the roof.)

(Bo's "take" on the Tripod sale and Lycos appreciation, by the way, was considerably less than the $580 million Tripod's stock was worth at the peak. Like many first-time entrepreneurs, Bo didn't end up owning much of his company at the time it was sold.)

So, what's the question Bo has been asked ever since then?

"Were you lucky or smart?"

Bo's a thoughtful guy, so he wrote a whole book about that question: LUCKY OR SMART? Secrets To An Entrepreneurial Life. The book is also about how Bo and some college friends started a company in their dorm room and helped kick off the social-media and personal-publishing revolution. 

Now a serial entrepreneur and a partner at New York-based venture capital firm Village Ventures, Bo has been kind enough to let us print the whole book for you. He has also handed over a bunch of documents and photos from the early Tripod days that provide a quick visual tour of the company's history. We'll be running a chapter a week of the book for the next several weeks. 

LUCKY OR SMART is part "How To," part memoir, and part philosophy.  We're starting today with the Introduction.

Since selling Tripod, Bo has founded six other companies, including Village Ventures, where he's now a managing partner together with his co-founder Matt Harris.  If you don't want to wait to read the whole thing, you can buy Bo's book right here (there's a Kindle version, too).

In the meantime, using Bo's Tripod memorabilia, we've put together a little tutorial...


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