NILE.COM(This essay was written on December 21, 1998. At that time Amazon.com's market capitalization was in the vicinity of $16 billion.)Here is my plan for a new e-commerce company called Nile.Com. It will have an $8 billion IPO, thus at the IPO the stock will be half the price of Amazon.com's. I expect Internet investors to greet my company's IPO with enthusiasm after they have studied my business plan, which will put the eight billion dollars to good use. To wit: The Website (or, the First Billion Dollars)The primary website will be www.nile.com. The company and website take their name from the mighty Nile, the longest river in the world, renowned as the birthplace of civilization. I will spend my first billion dollars on nothing but computers, network hardware, etc. I do not wish to skimp on capacity. Nile.com's servers should be able to handle more traffic than AOL and Yahoo put together. They will also have a high degree of redundancy so there is never the slightest interruption in Nile.com service. Of course, I will also reserve other domain names that may be useful in the future such as nile-tv.com, nile-software.com, nile.edu, nile.mil, and nile.gov. The Employees (or, the Second Billion Dollars)I estimate that this year about 600 students will graduate with degrees in computer science from MIT, Stanford, and Caltech. I will hire all of them at salaries of $100,000 per year. Next year I will repeat the process. This should give me about 1,200 programmers to create the world's most sophisticated web site. If any of the 1,200 programmers can be spared from working on the web site, they will be assigned to create a free browser, superior to the existing browsers, that has Nile.com as the default start page. Besides computer programmers, I expect that Nile.com will need lawyers so that it can patent and copyright things, sue people, defend itself from anti-trust lawsuits, etc. So I will also hire this year's entire graduating class of Harvard Law School (about 600 lawyers) at salaries of $150,000 per year. Nile.com will use its second billion dollars to pay all these people's salaries until the year 2004. These are just the start-up employees, of course. Once customers start placing orders, Nile.com will need more employees to pack and ship boxes and so forth, but we will account for those separately. The Marketing (or, the Third Billion Dollars)Brand name is an important part of being a successful e-tailer. I will use the third billion dollars to build Nile.com's brand name in the following ways. I will buy commercial air time on TV during the next Superbowl. All the commercial air time. Estimated cost: $150 million for the air time, $50 million to actually make the commercials. I will release a major motion picture, Nile.com: The Movie, a 250-million-dollar special effects extravaganza directed by James Cameron, about a spunky little company that tries to change the face of e-commerce. I will be played by David Duchovny. Jeff Bezos will be played by the chillingly evil Anthony Hopkins. Gwyneth Paltrow will be the romantic interest. Estimated cost: $250 million. I will mail a full-color glossy catalog to every home in America. It will feature interviews with fifty prominent sports and movie celebrities in which they explain why they shop at Nile.com. It will also contain brand-new stories by Stephen King, Elmore Leonard, Judith Krantz, and Umberto Eco. Actually, the catalog will only contain 80% of each story. If you want to read the last 20% of each story, you must log in to Nile.com. Estimated cost: $200 million. The first million Nile.com customers will receive a free Beanie Baby. It will be a green Beanie crocodile called Niles. Estimated cost: $4 million. After that I will rely mainly on word of mouth. There is $346 million left in the marketing budget. It's possible that I will use that money to secure exclusive deals with AOL, Microsoft, etc. However, I am somewhat wary of giving money to portals since to some degree they are Nile.com's natural competitors. By now they will realize the threat that Nile.com represents. The Distribution Network (or, the Fourth and Fifth Billion Dollars)I'm not sure of the exact figure, but I think Borders spent something in the vicinity of $40 million this year on a new distribution center to serve the west coast. Nile.com's distribution centers should be much bigger and nicer anyway so let's assume $60 million per center. We will have eight of them to start, in California, New York, Texas, Florida, Illinois, Britain, Germany, and Japan. A weakness of Amazon's business model is that they are dependent on UPS, etc., to ship goods to their customers. Nile.com will avoid that weakness by integrating shipping into its operations. Rather than build the shipping side from the ground up, I will just buy Airborne Freight (ABF) for $1.5 billion. Everything Else (or, the other Three Billion Dollars)I will use the remaining three billion dollars from the IPO to cover the day-to-day costs of doing business, conduct price wars with any competitors until they go bankrupt, and pay for anything else that I've forgotten. So, now there are only two questions:
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