Posted by Ralph on October 17, 2003 at 20:21:24:

In Reply to: Re: Can Knowledge be managed - follow up posted by Don Mezei on October 17, 2003 at 13:47:16:

Don, there is an interesting story about HotMail, the first mass 'free' e-mail database started by a guy named Sukhbir out of Bangalore, India, who was working in Apple in Santa Clara. He planned the creation of this company (with potential for IPO) with his colleague and then later met with many of the VCs on the Sand Hill road in the Valley. He did not tell them the real story - about the database of the already registered users that was the real value as the 'free e-mail' could be easily copied by any new player. There is also an interesting story about how he negotiated the sale of Hotmail with Bill Gates subordintes for $450 million. As a sideline, he started his next venture Arzoo (which stands for "wish" in a foreign language) which he described as an e-Bay for 'knowledge.' However, his 'wish' did not materialize as the company fell through after burning 15 million or so of VCs money.

To make a long story short, cost of developing anything doesn't matter at all in any such deal most of which have been and are apprised based on potential "market value" estimation of which is as much an art as it is a science. Timing, opportunity costs, potential threats from other buyers, all such factors come into play in assessing the 'cost' or 'value' of any such venture. - R

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