Even now, it seems an improbable story. Two engineering graduates get together to develop a website that allows you to vote whether someone is attractive or not. Less than a decade later, the business is sold for a reputed $20 million.

James Hong. Is he hot, or not?

HotOrNot, which let users rank from 1 to 10 the relative hotness of someone in a photo, is reputed to been a significant factor in how Facebook and YouTube was created.

In the film ‘The Social Network’, which dissected the creation of Facebook on the cinema screen, a scene shows Mark Zuckerberg attempting to be erudite and charming to his date, but his social skills are so underdeveloped that his verbosity is entirely counterproductive, and the girl walks out on him.

According to the legend faithfully reproduced in the film, Zuckerberg vengefully hacks into the Harvard database and creates a hot-or-not website to rank the university’s female students. In fact, Zuckerberg’s ‘Facemash’ (October 28, 2003) was created some time after ‘HotOrNot’ (October 2000) or the pioneer sites ‘RateMyFace.com’ (summer 1999) or ‘AmIHot.com’ (January 2000).

The real story behind HotOrNot is rather different. A website, launched more for street-cred than profit by Jim Young and James Hong , which quickly became a teenage sensation but then became a blueprint and business model for the many social media models that followed.

James Hong, HotOrNot’s co-founder (along with Jim Young) grew up in the San Francisco Bay area, went to the University of California at Berkley and graduated as an electrical engineering computer science major. He then worked at HP doing sales engineering and then product marketing for test equipment. After leaving HP, he did an MBA and began a short-lived venture-funded company called Red Ladder.

Now a serial investor and adviser to technology companies, James still lives around the Bay area.

RM:

James, how did you get interested in technology? In high school did you learn any computer languages?

JH:

As a kid I was always getting into stuff, trying to figure out how they worked. My favorite toy was a screwdriver, and my parents tell me I was always taking things apart (and breaking them). When I was 8 or 9 years old, my dad brought home an Atari 400 for us to play with.

I mostly played games and learned at an early age how to pirate games by stringing 2 tape decks together. At some point I started playing with the BASIC and Assembly Editor cartridges, I remember checking out books from the library that basically had programs of games printed in them. The fact that you had to manually type in the game was a valuable experience because you learned along the way what each command in each line did. I remember asking my parents to send me to some summer workshop where I played with LOGO and Basic some more

A few years later we begged our dad for an Apple IIe which had just come out. For some reason which I can’t remember – most likely because we heard you could download games – we also got him to get us a 300 baud modem from Hayes. Until the day I die, I’m pretty sure I will always remember a lot of the Hayes AT command set. I was hooked, and I think I learned a lot that shaped my entire life. How online communities worked, how modems worked, how to phreak, crack, and card… I did a lot of things that as a parent would freak me out if I caught my kids doing them!

In High School I was playing with soldering irons trying to make Blue Boxes and things like that. I think the computer classes in high school used Pascal. When I went to college, I had been programmed by my Asian parents to think that maybe I should become a doctor. Since there is no official Pre-med major (you just have to make sure you take a few classes like Organic Chemistry and the like), I decided to major in Electrical Engineering and Computer Science just for fun. I think my main motivation was that I wanted to understand at a deeper level how walkie talkies, TVs, and modems worked. At some point I realized that I enjoyed the technology stuff more than the biology stuff, so I decided to scrap being a pre-med.

RM:

Would you say you’re the classic accidental entrepreneur? Was being the owner of a company or something that you aspired to do?

JH:

I’m not sure. I think I’ve become an entrepreneur because it’s the quickest route to getting things done, and I like building things. The idea of running a company has never really appealed to me, although I do like the idea of 1) being able to work on what I want to work on, and 2) being able to work a team to get more done than I could alone. So I think entrepreneurship is just the result of my figuring out that I was less likely to get all that by working at someone else’s company. Owning a company has never been my motivation, and I guess I like being my own boss but mainly because then I get to work on what I want. I’d say my primary motivation is to have fun creating new things.

RM:

You were self-funding at the start and refused to take outside investment. Was that a clear strategy to starting the business that you and your business partners would have 100 per cent ownership from the start?

JH:

At the time we started HOTorNOT, the dotcom bubble had just crashed. When VC’s started calling, we thought they were crazy to want to invest in HOTorNOT at the time. We concluded that any VC calling us to invest was probably stupid and/or desperate, and we wouldn’t want to have someone like that involved.

That’s why we didn’t return those calls. We didn’t have a problem with venture capital as a whole though, we just thought that our company was much better suited to be a successful small business than a failed venture-backed one. But to be completely honest, at the start we didn’t even think there was a business in it at all. Our goal was to have the site make enough money to pay one admin to keep the site going.

We thought the main benefit from building the site would be street cred, not money.

RM:

I read an interview with you in which you said HotOrNot had 40,000 views on its first day. I suppose it was a kind of voyeurism so that shouldn’t be too surprising! Did the sheer number of visits present any problems bringing the site to scale?

JH:

The site had about 40,000 unique IP addresses hit the site. I’m not sure how many unique people and pageviews that translated into back then… not sure about how many people that meant because a lot of ISPs proxied their users requests through a handful of IP addresses, and not sure how many pageviews that meant because our machine was so overloaded, it was constrained by how powerful the server was.

The server we started on was a free machine I got from E-trade for opening an account with them… Since it was a free machine, you can imagine what kind of specs it had, even for those times.. I don’t remember the clockspeed but I remember it had a Celeron processor and I think 128 Megs of memory. We had a LAMP stack running on it, I think at the time Red Hat but I might be wrong. I wrote an article in WebTechniques Magazine at the time that speaks about some of our scaling. It is still up at Dr Dobbs.

RM:

Did you write mocks in the test-first sense so you could test as you went along, or did your it’s overtake any need for that to happen?

JH:

The site grew faster than we could plan.

RM:

Did you spend any time talking about features or scribble ideas out on a whiteboard before you monetized the website? Or did you decide there was no point in over-engineering it?

JH:

We did quite a bit of whiteboarding around the product that we ended up monetizing, basically it was a paid dating site, but we didn’t do that with the intention of monetizing. We were motivated by building a better product for users, and only after we had that product did we realize that we could charge for it.

RM:

Because the idea around the site spread so quickly you must have been working relentlessly day after day to try to catch up with was developing with outside of it. What things kept you awake at night?

JH:

Totally. Very early on, we decided that I would focus more on handling all the external stuff, and my cofounder Jim would focus more on handling all the internal stuff. In other words, I handled all the business development deals that kept us afloat and I did all the press that tried to drive as much traffic as possible to the site, while Jim’s job was to keep scaling the infrastructure to handle all that traffic.

Many of the product decisions were made at 2 in the morning on our whiteboard. In the first week, we barely slept, so nothing “kept us up” at night because we never went to bed. I got about 2 hours of sleep each night that week.

The things that worried us though were:

1. Somebody else would be able to steal our thunder – that’s why we worked hard to get as much press as possible, knowing that it would lock most competitors out from getting similar press.
2. Our system not scaling
3. Our system scaling so well that costs would skyrocket beyond our means to cover them

RM:

Other than having millions of people using your website what other aspect of business excites you?

JH:

Mainly just the ability create something from nothing, not just the product, but everything. Taking anything, business or not, from just an idea to a series of decisions that evolve into a fully formed, well thought out product is a lot of fun. It’s more than fun, it’s art.

RM:

Do you feel you know more about running a business or did your experience with HotOrNot make you a shrewd investor?

JH:

Absolutely, there were lots of lessons. Here are some of them:

1. Simple wins.
2. Brand matters (as does authenticity).
3. Ideas are much easier than executing them right.
4. Getting your users from step 1 to step 5 of your vision requires knowing how to get them from 1 to 2, 2 to 3, etc. In a way that makes sense to the users. Just because you want it doesn’t mean they want it.

It’s hard for many people, but you have to be honest about “would a user really care about that and love it as much as you want them to, or are you just fooling yourself?”

1. A small capable team that cares can achieve more than large, well funded companies, and they can do it faster.

RM:

Do you think the kind of people who can be successful in business, especially with tech start-ups, is changing because so many things, such as building a website, are much more accessible?

JH:

It’s opened up a little bit, provided that person who is not adept technically can quickly get someone strong technically on board soon enough. But I think on average, you are much better having someone who understands technical issues running the product. I guess my main point is that I think the main person should be concerned mostly about the product, and to be able to build good product, it’s important to have some level of understanding of the technology, but to some degree, too much knowledge can also be an impediment because it might then limit the imagination when conceiving new product features.

RM:

What would be your advice for anyone wanting to start-up a technology company?

JH:

Prepare yourself for massive emotional swings. Choosing entrepreneurship is like volunteering to become bipolar. The highs are insanely high, and the lows are among the lowest you’ve ever felt. Beyond that, think on your feet, don’t be boxed in by what you think “others would do”, don’t worry so much about how smart or dumb you look… just do it, jump at opportunities because you never know when/if they might disappear. If you don’t love it, don’t do it. Have fun!