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When The Apprentice Becomes
the Sorceror
by Larry Sivitz, Managing Editor

Probably the best thing that ever happened, career-wise, to Seattle Internet entrepreneur James Sun was being fired in front of several thousand people. The milestone event occurred in April of this year in front of a sold-out audience at the Hollywood Bowl in Southern California. To add even more grandeur to the proceedings, Sun was also being fired in front of several million people watching on national network television, and in prime time.

It didn’t hurt that the individual doing the firing was the golden-tufted champion of TV terminators himself, the inimitable Donald Trump, or that, in this case, The Donald was being aided and abetted by his daughter, Ivanka, and son Donald Jr..

To this viewer of the final episode of TV’s The Apprentice and, one might hope, to anyone who considered themselves a self-respecting infopreneur, a collective sigh of relief must have been exhaled at the very moment of termination. How could James, the CEO of a hot Internet social networking startup in Seattle known as Zoodango, and a go-getter who had already made his first million while a young student investor at UW, give it all up to manage a real estate development project for Donald Trump, no matter how glamorous?

The fact that Sun was in the showdown round at the end of the TV series marathon selection process against a rival who was already an attorney handling real estate cases, made the final outcome all the more appropriate. Forget Trump's luxury real estate development in the Caribbean or in Atlanta. James Sun had bigger fish to fry back in the Emerald City. Yet, here he was, winning global recognition on The Apprentice -- and escaping with his life -- getting out while the getting was good, with his soul and his career intact.

We spoke with James to learn how this ambitious Internet executive and tough competitor is making his mark on the Internet in the field of social networking.

Seattle24x7: James, speaking of contenders and finalists in the Internet space, you were around in the early days of the Internet boom, before the first bubble went pop. As a student investor, how were you able to distinguish between the profitable companies and the failures of that era?
Sun: A very simple strategy. The two things I look for in a company are: 1.) is it a product that is simple enough that I understand it and I use it? So, for example, buying pet food online wasn't something that I did or understood. And, 2.) I only invest in companies that are highly scalable. The first experience I ever had with eBay,was buying a baseball card and I thought that was pretty cool because I never would have found that baseball card if eBay didn’t exist. It was simple to use and I got it. I understood the need for it. Was it scalable? I thought that eBay was very scalable because it was on the Internet.

Seattle24x7: Was eBay the major part of your portfolio at that time, or were there other companies you could mention?
Sun: I started with $5,000, so I didn’t have much money to leverage. eBay and Intel were my first two purchases. I choose Intel because I had done a summer internship there and saw what was happening first-hand. I saw the need for increased processing speed and greater bandwidth, particularly with multimedia coming online.

Seattle24x7: In regard to “The Bubble," there’s been a fair amount of debate recently about whether or not we are now in a Web 2.0 Bubble and whether there is currently a surplus of social media companies?
Sun: One big reason why so many people are getting into the game right now is that the cost of resources is very low. You can buy high-end servers for $2000. With open-source software, you don’t have to pay Microsoft a dime. If you have the skill set and you can build a business model around it, you can put it together. That’s really what’s happening today.

As a consequence, I believe there’s going to be an emerging lower class and upper class online. The middle class is going to disappear. You’ll see companies that started on a couple of servers and who didn’t build it right get frustrated with the experience. They will go elsewhere because they have so many other choices. The upper class is going to continue to fuel more and more usage and get a higher and higher valuation.

For example, Facebook and MySpace are the leaders in the social networking world today. I believe there will be at least another 8-10 Facebook, MySpace and YouTube stories over the next couple of years. The question is how do you position your company to drive a business model that actually makes sense and that people are going to use for the long-term?

The upper class in social media and social networking sites will be comprised of sites that build products that people have a need for. For example, Hotmail created a market for “Web mail.” It didn’t exist before Hotmail. All of a sudden, people couldn't live without it. That’s what I think Web 2.0 companies need to do today. Keep your business model sound and build something that people will need.

Seattle24x7: In the social media space, there's been a lot of talk about unification, an open source platform where all of social apps and services can work together. As a social media developer, what is your view?
Sun: There’s one movement that we’ve been watching that is called OpenID. It allows you to have one user account to manage all of your social networks. Microsoft is actually behind it even though it is completely open source. I think that MySpace said that they are looking to get behind it as well. We do a lot of focus groups and find that people have a minimum of three accounts online and many have multiple social networking accounts as well because there’s a different need or interest that it serves. For example, if you went to MySpace and found someone and you messaged them that you wanted to meet fact-to-face, you would be considered a freak. If you come to Zoodango, where we provide the technology and the features and create the social conventions and business rules that help you to meet face-to-face at a Starbucks, for instance, they don’t think you’re a freak.

Seattle24x7: The founding premise of Zoodango is to potentiate relationships before an event and after an event where people can connect from online to offline. Is that correct?
Sun: Yes, that’s exactly what we do. Let me give you a back story as to why. I was speaking with Al Erisman who used to run all research and development for Boeing. He had 250 scientists working for him. He told me about this machine that they created where two people could walk into the machine by putting on these glasses and meet face to face – as avatars -- even in totally different locations -- as if they were in the same room. The problem was that the computer was not smart enough to replicate the dynamics of the five senses of a human being during the interaction. It could not factor in a history of the person, or the personality of the person, or the nuances of speech. Then, when you try to add a third person to the room, the computer just shuts down. That got me thinking of the whole online social networking and business networking space.

Personally, I wouldn’t do business with somebody unless I had met them face-to-face. I wouldn’t hire somebody unless I actually meet them face-to-face. I think that 99% of companies are like that. Would I buy coffee from Howard Schultz at Starbucks without meeting him? Sure, because it’s a commodity. But if it’s a business service that is really going to impact my professional career, my business, I want to meet the person.

The question is, “How do you use the efficiency of social networking and replicate the real human dynamics of the real world?” That’s really Zoodango's whole mission -- to bridge the offline with the online, to provide an integrated platform where you can meet people online and also offline in a safe environment with rules.

Seattle24x7: That’s where the ZooVite invitation and locations like Starbucks come in?
Sun: Exactly. We are in pretty deep talks with Starbucks right now. Basically, we have roughly 9,000 Starbucks locations, so I can find your profile online and see which Starbucks is your favorite and which one you most frequently visit. I can send you a ZooVite saying, “I want to meet you. Let's meet at the place you are already visiting several times a week.

Seattle24x7: You are also working with associations. Is the group or meeting component an integral part of your business model?
Sun: We don’t charge for associations to use our platform. They can use our platform and put all their events online if they choose. For example, the WSA (Washington Software Alliance) is using Zoodango for all their events and they allow their members to pre-network online before the event. That way, the event gets marketed to everybody who visits Zoodango. It’s a win-win situation. Associations are not necessarily our core target market. We still are a consumer play, but the groups we partner with are able to get people to understand what events are in town.

Seattle24x7: Seems like your methodology would also foster communication within and between companies?
Sun: Right now, the only way companies and organizations can be part of social networking is online ads, or buying a channel on YouTube or MySpace. But consumers are becoming more savvy these days. They know when they see an online ad that it’s an online ad. They are being spoken to, not engaged in a dialogue. In the focus groups we've done, the consumer wants to be more respected, not talked down to.

A company needs to be vulnerable on both sides. Vulnerable to a users’ feedback and as a part of the users’ ecosystem if they are going to be marketing to online consumers. Non-profit organizations can set up a presence on Zoodango for free. For-profit companies have a low monthly fee. They can set-up their own profile. They can be in the same ecosystem.

One company in Bellevue is going to add 250 mortgage officers to their profile. They are going to have each of the mortgage officers create individual profiles that will be linked with their corporate profile. Suddenly there are 250 ways for people to find out about Liberty Financial.

Seattle24x7: So companies can showcase their products and services? How will that happen?
Sun: Yes. First they will have a place where they get to write about their services. Secondly, they will have a URL that directs consumer right back to their own homepage. And we are working on a feature where they will be able to upload pictures of products and other images that illustrate what their company does that helps consumers.

Seattle24x7: It sounds a lot like a MySpace for grown-ups.
Sun: Yes. MySpace is juvenile, mostly 12-17 year olds. Facebook is a college level social network. It's funny. College students tell me Facebook is awesome for finding girls, guys, dating, and parties. But if you try to be professional on Facebook you will be laughed at. There is this sub-culture within Facebook that if you try to do professional things, you become the geek of the group. I asked them if they would sign-up for a service that allows them to talk to other students and other professionals in your community about serious networking? If you wanted to start a little starter company in college, if you want to find other VC’s or other people that have done it. Would that be of interest to you? There was an overwhelming response of “Yes!”

Seattle24x7: What is the cost for a small-to-midsize business to set up their account on Zoodango?
Sun: If you are doing less than $250,000, it is $50/month. Most of the small companies would be in that range. For larger companies, it ranges from $50/month to $1,200/month.

Seattle24x7: On a totally different topic, on your website you also talk about social networking as a way of connecting children in need with cyber-parents. Can you tell me more about that? Is this social theory or practice?
Sun: It’s something that I see us doing because I believe there is social networking for profit and there’s social capital for good. What I want to do is create an ecosystem of professional people. But I also want to encourage them to do something positive with extra money, extra pay or extra resources. There are a lot of kids out there who need mentors, and some financial help. There’s no better mechanism to connect people with resources to those that don’t have any. You have to be super careful because you have to protect the kids. Therefore, I don’t see a direct-connect right now from a person to a kid. But I see a connection working through organizations I'm talking to, such as the United Way.

Seattle24x7: We haven’t talked at all about The Apprentice. I noticed a comment that you made in another interview was that one of the things that struck you about the other "competitors" on the show is that they were pretty non-technical, not tech savvy. Clearly, that is a challenge for Zoodango or any online service. How do you deal with that?
Sun: I see it as a challenge to all Internet companies, and technology companies in general. I’m building Zoodango as a site that is user friendly and easy to follow. A very simple approach. That's why we're making sure it is relevant to the outside world and not just the online world. The mainstream market is not on the Internet all day and night. They’re on the Internet for certain things and then they go and interact in the real world. So, you have to make it relevant to them as well. That’s our strategy: Simplicity in features and relevance in context.

Zoodango is at http://www.zoodango.com

Larry Sivitz is the Managing Editor of Seattle24x7.

More ShopTalk . . . Copyright 2007 Seattle24x7.com All Rights Reserved	When The Apprentice Becomes the Sorceror by Larry Sivitz, Managing Editor Probably the best thing that ever happened, career-wise, to Seattle Internet entrepreneur James Sun was being fired in front of several thousand people. The milestone event occurred in April of this year in front of a sold-out audience at the Hollywood Bowl in Southern California. To add even more grandeur to the proceedings, Sun was also being fired in front of several million people watching on national network television, and in prime time. It didn’t hurt that the individual doing the firing was the golden-tufted champion of TV terminators himself, the inimitable Donald Trump, or that, in this case, The Donald was being aided and abetted by his daughter, Ivanka, and son Donald Jr.. To this viewer of the final episode of TV’s The Apprentice and, one might hope, to anyone who considered themselves a self-respecting infopreneur, a collective sigh of relief must have been exhaled at the very moment of termination. How could James, the CEO of a hot Internet social networking startup in Seattle known as Zoodango, and a go-getter who had already made his first million while a young student investor at UW, give it all up to manage a real estate development project for Donald Trump, no matter how glamorous? The fact that Sun was in the showdown round at the end of the TV series marathon selection process against a rival who was already an attorney handling real estate cases, made the final outcome all the more appropriate. Forget Trump's luxury real estate development in the Caribbean or in Atlanta. James Sun had bigger fish to fry back in the Emerald City. Yet, here he was, winning global recognition on The Apprentice -- and escaping with his life -- getting out while the getting was good, with his soul and his career intact. We spoke with James to learn how this ambitious Internet executive and tough competitor is making his mark on the Internet in the field of social networking. Seattle24x7: James, speaking of contenders and finalists in the Internet space, you were around in the early days of the Internet boom, before the first bubble went pop. As a student investor, how were you able to distinguish between the profitable companies and the failures of that era? Sun: A very simple strategy. The two things I look for in a company are: 1.) is it a product that is simple enough that I understand it and I use it? So, for example, buying pet food online wasn't something that I did or understood. And, 2.) I only invest in companies that are highly scalable. The first experience I ever had with eBay,was buying a baseball card and I thought that was pretty cool because I never would have found that baseball card if eBay didn’t exist. It was simple to use and I got it. I understood the need for it. Was it scalable? I thought that eBay was very scalable because it was on the Internet. Seattle24x7: Was eBay the major part of your portfolio at that time, or were there other companies you could mention? Sun: I started with $5,000, so I didn’t have much money to leverage. eBay and Intel were my first two purchases. I choose Intel because I had done a summer internship there and saw what was happening first-hand. I saw the need for increased processing speed and greater bandwidth, particularly with multimedia coming online. Seattle24x7: In regard to “The Bubble," there’s been a fair amount of debate recently about whether or not we are now in a Web 2.0 Bubble and whether there is currently a surplus of social media companies? Sun: One big reason why so many people are getting into the game right now is that the cost of resources is very low. You can buy high-end servers for $2000. With open-source software, you don’t have to pay Microsoft a dime. If you have the skill set and you can build a business model around it, you can put it together. That’s really what’s happening today. As a consequence, I believe there’s going to be an emerging lower class and upper class online. The middle class is going to disappear. You’ll see companies that started on a couple of servers and who didn’t build it right get frustrated with the experience. They will go elsewhere because they have so many other choices. The upper class is going to continue to fuel more and more usage and get a higher and higher valuation. For example, Facebook and MySpace are the leaders in the social networking world today. I believe there will be at least another 8-10 Facebook, MySpace and YouTube stories over the next couple of years. The question is how do you position your company to drive a business model that actually makes sense and that people are going to use for the long-term? The upper class in social media and social networking sites will be comprised of sites that build products that people have a need for. For example, Hotmail created a market for “Web mail.” It didn’t exist before Hotmail. All of a sudden, people couldn't live without it. That’s what I think Web 2.0 companies need to do today. Keep your business model sound and build something that people will need. Seattle24x7: In the social media space, there's been a lot of talk about unification, an open source platform where all of social apps and services can work together. As a social media developer, what is your view? Sun: There’s one movement that we’ve been watching that is called OpenID. It allows you to have one user account to manage all of your social networks. Microsoft is actually behind it even though it is completely open source. I think that MySpace said that they are looking to get behind it as well. We do a lot of focus groups and find that people have a minimum of three accounts online and many have multiple social networking accounts as well because there’s a different need or interest that it serves. For example, if you went to MySpace and found someone and you messaged them that you wanted to meet fact-to-face, you would be considered a freak. If you come to Zoodango, where we provide the technology and the features and create the social conventions and business rules that help you to meet face-to-face at a Starbucks, for instance, they don’t think you’re a freak. Seattle24x7: The founding premise of Zoodango is to potentiate relationships before an event and after an event where people can connect from online to offline. Is that correct? Sun: Yes, that’s exactly what we do. Let me give you a back story as to why. I was speaking with Al Erisman who used to run all research and development for Boeing. He had 250 scientists working for him. He told me about this machine that they created where two people could walk into the machine by putting on these glasses and meet face to face – as avatars -- even in totally different locations -- as if they were in the same room. The problem was that the computer was not smart enough to replicate the dynamics of the five senses of a human being during the interaction. It could not factor in a history of the person, or the personality of the person, or the nuances of speech. Then, when you try to add a third person to the room, the computer just shuts down. That got me thinking of the whole online social networking and business networking space. Personally, I wouldn’t do business with somebody unless I had met them face-to-face. I wouldn’t hire somebody unless I actually meet them face-to-face. I think that 99% of companies are like that. Would I buy coffee from Howard Schultz at Starbucks without meeting him? Sure, because it’s a commodity. But if it’s a business service that is really going to impact my professional career, my business, I want to meet the person. The question is, “How do you use the efficiency of social networking and replicate the real human dynamics of the real world?” That’s really Zoodango's whole mission -- to bridge the offline with the online, to provide an integrated platform where you can meet people online and also offline in a safe environment with rules. Seattle24x7: That’s where the ZooVite invitation and locations like Starbucks come in? Sun: Exactly. We are in pretty deep talks with Starbucks right now. Basically, we have roughly 9,000 Starbucks locations, so I can find your profile online and see which Starbucks is your favorite and which one you most frequently visit. I can send you a ZooVite saying, “I want to meet you. Let's meet at the place you are already visiting several times a week. Seattle24x7: You are also working with associations. Is the group or meeting component an integral part of your business model? Sun: We don’t charge for associations to use our platform. They can use our platform and put all their events online if they choose. For example, the WSA (Washington Software Alliance) is using Zoodango for all their events and they allow their members to pre-network online before the event. That way, the event gets marketed to everybody who visits Zoodango. It’s a win-win situation. Associations are not necessarily our core target market. We still are a consumer play, but the groups we partner with are able to get people to understand what events are in town. Seattle24x7: Seems like your methodology would also foster communication within and between companies? Sun: Right now, the only way companies and organizations can be part of social networking is online ads, or buying a channel on YouTube or MySpace. But consumers are becoming more savvy these days. They know when they see an online ad that it’s an online ad. They are being spoken to, not engaged in a dialogue. In the focus groups we've done, the consumer wants to be more respected, not talked down to. A company needs to be vulnerable on both sides. Vulnerable to a users’ feedback and as a part of the users’ ecosystem if they are going to be marketing to online consumers. Non-profit organizations can set up a presence on Zoodango for free. For-profit companies have a low monthly fee. They can set-up their own profile. They can be in the same ecosystem. One company in Bellevue is going to add 250 mortgage officers to their profile. They are going to have each of the mortgage officers create individual profiles that will be linked with their corporate profile. Suddenly there are 250 ways for people to find out about Liberty Financial. Seattle24x7: So companies can showcase their products and services? How will that happen? Sun: Yes. First they will have a place where they get to write about their services. Secondly, they will have a URL that directs consumer right back to their own homepage. And we are working on a feature where they will be able to upload pictures of products and other images that illustrate what their company does that helps consumers. Seattle24x7: It sounds a lot like a MySpace for grown-ups. Sun: Yes. MySpace is juvenile, mostly 12-17 year olds. Facebook is a college level social network. It's funny. College students tell me Facebook is awesome for finding girls, guys, dating, and parties. But if you try to be professional on Facebook you will be laughed at. There is this sub-culture within Facebook that if you try to do professional things, you become the geek of the group. I asked them if they would sign-up for a service that allows them to talk to other students and other professionals in your community about serious networking? If you wanted to start a little starter company in college, if you want to find other VC’s or other people that have done it. Would that be of interest to you? There was an overwhelming response of “Yes!” Seattle24x7: What is the cost for a small-to-midsize business to set up their account on Zoodango? Sun: If you are doing less than $250,000, it is $50/month. Most of the small companies would be in that range. For larger companies, it ranges from $50/month to $1,200/month. Seattle24x7: On a totally different topic, on your website you also talk about social networking as a way of connecting children in need with cyber-parents. Can you tell me more about that? Is this social theory or practice? Sun: It’s something that I see us doing because I believe there is social networking for profit and there’s social capital for good. What I want to do is create an ecosystem of professional people. But I also want to encourage them to do something positive with extra money, extra pay or extra resources. There are a lot of kids out there who need mentors, and some financial help. There’s no better mechanism to connect people with resources to those that don’t have any. You have to be super careful because you have to protect the kids. Therefore, I don’t see a direct-connect right now from a person to a kid. But I see a connection working through organizations I'm talking to, such as the United Way. Seattle24x7: We haven’t talked at all about The Apprentice. I noticed a comment that you made in another interview was that one of the things that struck you about the other "competitors" on the show is that they were pretty non-technical, not tech savvy. Clearly, that is a challenge for Zoodango or any online service. How do you deal with that? Sun: I see it as a challenge to all Internet companies, and technology companies in general. I’m building Zoodango as a site that is user friendly and easy to follow. A very simple approach. That's why we're making sure it is relevant to the outside world and not just the online world. The mainstream market is not on the Internet all day and night. They’re on the Internet for certain things and then they go and interact in the real world. So, you have to make it relevant to them as well. That’s our strategy: Simplicity in features and relevance in context. Zoodango is at http://www.zoodango.com Larry Sivitz is the Managing Editor of Seattle24x7.