Burn Rate

by Michael Wolff

  Anyone who has ever conducted a business that is even remotely dependent on a telecommunications company, a long-distance carrier, or one of the RBOCs (Are-boks, like Reeboks—Regional Bell Operating Companies) has stories of pain and frustration mounting to murderous rage rivaled only by, well, one’s own family. There’s no way out of the dysfunction.

  The slick, humming, clean, climate-controlled, fire-proofed wonder-of-modern-technology “facility” we had rented at ground zero of efficient, triumphant capitalism turned out, in fact, to be a dusty, hot, garbage-strewn, just slightly oversize closet, with a cage surrounding our servers. The “support personnel,” were off-the-waterfront guys blowing smoke (literal and otherwise) all over our Sun stations and Cisco routers.

  For four months Weird Stan sat in the “cage,” tinkering, storming, cursing, belittling, and then finally producing a system that could do, well, a lot—but not everything. Like bill our customers. It couldn’t exactly tell us how much people owed. But that was okay. As long as we had something. It was okay because the opening of the system was six months overdue and for the last four months our six employees had been fielding calls from people who wanted to sign up for the expansive free offers (15 HOURS FREE!) we were advertising in Wired and in a variety of computer magazines.

  Robert, our office assistant, whom we had hired out of a Long Island delicatessen (The Deli Button) because his mother had gotten me on the phone (“He just needs a chance”), had developed a whole new sense of corporate inefficiency and remoteness, which he communicated to our prospective customers. “Yes, I understand your frustration. I’ll pass that upstairs. The final date hasn’t come down to us yet. No, no, I’m not privy to that information.” There was no upstairs. Robert sat directly outside my office, staring in at me all day, waiting for word that we would actually begin to offer Internet service.

  In my short, unhappy life in the service business, I quickly came to hate customers.

  The personal neediness, the demanding nature, the vast stupidity, and the predictable obnoxiousness of the American consumer were only part of the problem. The other downside of the service business was that none of this technology worked. At that time, the process of getting an ordinary human being connected to the Internet was so fraught with misunderstanding, breakdown, and sudden death that I find it painful to contemplate that this wilderness crossing, as fearful and as heroic as if it were made in a Conestoga wagon, will soon be forgotten as the Internet becomes merely another plug-and-play appliance.

  Our tech support was Otis, a three-hundred-pound somnambulist who spoke at a ten-word-a-minute rate; Benoît, a twenty-four-year-old ninety-eight-pound self-styled digital intellectual with an ardent belief in the Internet and distinctive body odor; David, a Jewish nationalist in matted beard and sandals; and the other David, the one who was living on my mother-in-law’s sofa, a runaway from the Choate School. It was a sitcom without a laugh track, burning my money at a 24-7 rate of inexperience and incompetence (on the part of both provider and user).

  As fast as I thought it, the industry went from start-up to consolidation. Jim Gleick, a journalist colleague whose phlegmatic ambivalence and lack of interest in business made me look like Donald Trump, had developed a New York–based ISP system called Pipeline that, relatively speaking, was easy to use. It worked, sort of. And in less than a year managed to attract ten thousand customers or so. We had talked about joining forces, about working together (“Why should we both be hassling with this technical stuff? Why don’t we just make one system?”), but Weird Stan would have none of it. “He’s fucked. He’s not Web compatible. He’s gone.” Weird Stan’s assessment turned out to be largely true, but before Gleick got buried by the Web, almost the second before, he sold Pipeline and its ten thousand customers to PSI, a company buying systems around the country, for a reported $25 million. Ah, so.

  My thinking was still (is still) this: if you don’t have a real relationship with your audience, like somebody actually buying your book or your magazine or paying to sit down and watch your movie, then what you are doing is a lot more like street theater—mimes and jugglers and whatnot—than it is like the publishing or the entertainment business. That’s why connectivity seemed important to me; it was an actual relationship rather than just a virtual one.

  Still, I couldn’t stand the hassle. The relationship with the consumer was too codependent. It was a mess of inadequacies; nothing was straightforward. Even the payment thing. We were each trying to hoodwink the other: I’ll sign you up, hoping you’ll forget about having signed up and racking up charges (aka “the health club model”: you pay for it, but we count on you not using it). And on the other side: “Hey, I’ll take your free time, then someone else’s, then someone else’s again. Then I’ll come back to you, and if you do manage to charge me, I’ll just complain to the credit card company, which knows that you’re screwing somebody over, even if it isn’t me, so I’ll get the benefit of the doubt and Amex will void the charge.”

  Enough.

  The other part of my analysis, that we could extend our content to other systems, was being hit by another market development. Contrary to the belief that Content is King, content was losing value every day. Content was just an ordinary schmo. There was a glut. Nobody had to pay for content, or license Content. Nobody had to hire writers and producers. Nobody could compete by offering content. Content was pure common denominator. All content was available to everybody through all systems.

  Still, stubbornly, I couldn’t keep myself from believing that if you had content that was smarter, funnier, and just plain easier to understand than the next guy’s, cyberspace would eventually beat a path to your door. Free content was fine and the Web was charming, but you weren’t going to get clean sentences or good jokes without paying for them. I was sure.

  And I knew the competition. And they didn’t know anything about writing a clear sentence or a strong headline or telling a funny joke. They really were nerds.

  We were talking to the kids from Architext (later called Excite). Nice kids. They had a search program, which they would demonstrate for you until you begged for mercy. They had Kleiner money. We had numerous discussions about combining forces. They would supply the technology, we would supply the content.

  If we didn’t want to do it with them, they threatened in an entirely non-threatening manner, they’d do it themselves.

  “We feel we can do, you know, content,” said their marketing vice president. “Like, the guy we’ve hired. He was the editor of the New York Herald Tribune.”

  “Excuse me?”

  “Ah . . . he’s . . . yeah, I think he’s the top editor.”

  “You do know, don’t you, that the New York Herald Tribune has been out of business for thirty years?”

  “Ah, no. I didn’t know that. Hmm.”

  “You should maybe check his references—or his age.”

  Well, yes. That was the moment, or at any rate one in a series of confirming moments, when I decided to go for broke.

  By taking investors, getting involved with Patricof and Rubin, I decided, we’d be able to take a set of New York skills—how to convey information in an efficient and appealing manner—and compete with the software companies, which were at the forefront of colonizing cyberspace but had no narrative skills and little sense of style and charm.

  Of course, we had to solve our technical problems, Sisyphian in nature, too. In New York, as technologically backward as a European city, finding people who understood and who kept up with the nuances of network technology was not terribly likely. The Internet industry was dependent on a knowledge base possessed by no more than a few hundred people. That base now had to be turned into an intelligence pool that could service the fastest-growing industry in the nation. You had to find someone who knew someone who knew someone who had been at the Media Lab at MIT or Livermore or Cern.

  Ah, the techies. The developers. The programmers. The project coordinators. The sys admins. The Webmasters.
Who are they? Where do they come from?

  Partly the answer is that they are nobody and come from nowhere. They are twenty-five or twenty-six or twenty-seven. Rubin’s technology advisor, for instance, had gone to film school; the technology advisor’s lieutenant had answered mail for the Clinton–Gore campaign in ’92. Techies are quite often unusually smart, cleverly adept, and unnaturally dogged. But they are unformed. They should be in graduate school. Or interns. Instead, by default, they become the brains of the operation. With technology people you have dorm clothing and dorm living and eating, the junk food and dirty T-shirts, but then you also have a quality of earnestness and a tendency to take oneself so very seriously, which results in, among other things, a type of literalness and stultifying sentence structure, as well as meetings and hierarchies and team spirit that have a political youth camp quality.

  Communication was clearly the problem. Like all technology people, ours told us they could do whatever we wanted done. Occasionally, they would say some problem was “not trivial,” but they never said “impossible,” never “not within my talents,” never “not this century,” never “not worth the time and effort.” Literally, whatever we asked for could in fact be done, given the right circumstances. Unfortunately, whether it could be done on our budget and on our timetable was not what we had asked.

  “You don’t understand,” I said to the technology advisor. “When I say something has to be finished, it has to be finished.”

  “Nothing,” he replied quietly, beatifically, “is ever finished.”

  Still, we made it. Our grand Web site launched. Not on time. Not in another month, as promised. Not even the week after that. Not on the never-ending succession of new lines in the sand that were crossed so many times that the whole notion of credibility—them for the job completion, me for my threats—had long since been eroded and jettisoned. Still, it launched. Not entirely finished, of course. Personalization features did not really personalize much at all. The World’s Greatest Content Management System was a tad bit slow. The Most Advanced Database System Operating on the Web was a little too complex for everyday use. But we’d clean that up in version 1.1.

  In fact, it was beautifully wrought. Your Personal Net it was called. YPN. It was certainly among the grander, if not most grandiose, Web sites of the moment. There was nothing on the Web that began to resemble the kind of coherent editorial vision that we had created. Designing a Web site has more in common with designing an airport terminal than it does with, for instance, creating a magazine. It is all about ingress and egress, about routing and traffic flow, about efficiency and convenience. Ours was clearly not a product created just by software kids but a product built by people who knew a thing or two about how people read and why. It was far ahead of everything else in the medium because it was proposing to tell its users just what this new medium was good for. What it would do for them. How it would save them time and save them money. It was a kind of city magazine. The Web was an undifferentiated urban sprawl; we proposed to differentiate, to offer judgments, to civilize, to make sense. We weren’t offering a software solution, we were offering a relationship with our readers. Your interests are our interests, we were saying; we know you don’t want to have to trudge through all this data and technology. Enter Paris in a search engine and get back six hundred thousand matches; while that might impress someone who was in love with computers, we figured it would only irritate someone who was going to Paris. We were proposing a solution. We were proposing to have actual normal people—intelligent, too—help you get this thing to work.

  It crossed my mind, as I thought about Rubin and his ultimatum and his efforts to seize control of the company, that this was the perfect time, with the work done, the system built, the product brought to market, to squeeze out the founders (i.e., me). It was, potentially, a brilliant business move.

  But at the same time that I was full of pride for what we had created, and possessed by a bit of paranoia that agents were plotting to take it from me, I was also uncomfortably aware that we might have given birth to a big beached whale.

  The fundamental assumption of what we had created was that people needed and wanted a planned environment, a proscenium, a formal sentence structure.

  Secretly, I thought I could be out of touch. People, perhaps, aren’t waiting to be spoken to anymore. They want to hold their own conversations.

  On the other hand, who knew? What existed today would not exist tomorrow. It was an extraordinary existential business environment. The real job was just to keep the cash coming while you shifted with the paradigm.

  “We need to meet the payroll,” Alison said at breakfast. She had been up all night and was surrounded by legal pads and Post-it notes. “And we need to deal with Jon’s demands. So our first challenge is to try to separate those two things. Because we’ll lose the company if we meet the payroll by meeting Jon’s demands.”

  I was glum, defeated, exhausted by a sleepless night, a huddled figure at the breakfast table.

  “Will he risk missing a payroll,” she said, hyper with scenarios, “and risk the possibility that missing payroll will have an immediate effect on the value of the company?” She continued to analyze, maniacally.

  “He’s wondering, of course, if we’ll risk that.”

  “His risk is greater,” she stubbornly surmised. “He has an IPO coming up. He’s trying to get this First Virtual thing off the ground. He’s not going to want a big public mess with us.” She paced. “We need to get that money into the bank today. Obviously. But how can he expect you to sign this if your lawyer’s father—your lawyer and your wife’s father, for God’s sake,” she said dramatically, as though it were true “is having open heart surgery? How could he?”

  “Maybe. Maybe I can pull it off.” I nodded, thinking of how to play the sympathy card. I actually thought I could do it. Maybe. “But if push comes to shove, I mean, if we can’t get him to wire the money without signing this, do we sign?”

  “I don’t know.”

  By 10:00 Jon Rubin was making his politician’s sweep through the crowds in our office. He’d surprise the junior staff with a word and sometimes a touch (he was a back rubber), have a stilted conversation with several Mac crunchers who had been at Brown when he was at Brown (they, however, were formatting Quark pages while he was investing millions), ominously huddle with the new EVP, and spend twenty minutes behind closed doors with the technology advisor before finally making it to my office.

  I had arranged to have Ann ring my phone as soon as Rubin shut my door. The phone now rang on cue, and I motioned Rubin to stay—we were partners; I had no secrets from him—as I conducted my “conversation.”

  “How long has he been in now?” I asked in a subdued tone.

  Pause.

  “What did the doctor say if it went beyond four hours?”

  Pause.

  “What kind of brain damage?” I asked, my voice rising in alarm.

  Pause.

  “Listen, calm down. Let’s just wait.” Pause. “I know.” Pause. “We can’t make any decisions until we’ve spoken to the doctor and options have been laid out.” Pause. “Just stop it. Take it easy.” Pause. “I know. Listen, Jon is here. Let me talk to him. I’ll get over there right away.”

  I turned to Rubin: “They think my father-in-law has had a stroke. Jon, I’m really sorry. I have to get over there. Listen. I don’t know what to say. Shit. We need to get that money into the bank today. Alison has some minor comments on the agreement, but obviously we’re going to do what we have to do. You know that. I cannot get her to talk to you or to Jesse today. It’s just not going to happen. But I think it’s crazy for us to miss payroll. We’ll have seriously compromised ourselves. Obviously, it’s your decision. But I would ask you to make this money available today. And I’ll give you my word that we will do what we have to do in terms of this agreement. I’m really sorry. I just—I really have to go. This is one of those times. To say the least.”

  I
regretted the satisfaction I was taking in his cornered look, because I knew my advantage would be awfully short-lived. And yet a reprieve of any duration feels very good. Happiness is just the remission of pain.

  “Michael?”

  “Yes?”

  “All right. I will do this. On one condition.”

  “Of course. Anything.”

  “There won’t be any misunderstanding. We understand each other. This is it.”

  I nodded solemnly.

  How many fairly grievous lies had I told? How many moral lapses had I committed? How many ethical breaches had I fallen into? My rationale would surely be that I had been brought to the document, pen in hand, at virtual gunpoint. Whatever I had said, whatever promises I had made or representations I had fudged, were coerced. So fuck it. In addition, like many another financial conniver, I was in a short-term mode. With just a little more time, I thought, I could make things right. I could pull it off. Just one more day. True, I was about to forever alienate our main investor. That could not be good. On the other hand, it could not be helped. And now I had a month to get rid of him.

  I played telephone cat and mouse all weekend, using my children as perfect buffers. You could not leave a threatening message with a child (on a machine you can do all sorts of threatening), and if you couldn’t make the threat, you couldn’t act on it, either. On Monday the message being given out was that I was spending the day in the hospital and was unreachable (no cell phones in hospitals).

  On Tuesday I was set to appear at a gathering of venture firms; media, communication, and technology companies; and other investors at a hotel in midtown Manhattan. It was a financial beauty contest. Promising companies, such as ours, were invited to make presentations to the investment community. There was a rabble in the halls, then fifty-minute periods, then the bell, then tumult through the halls again. I saw many of the same people who had been at the Laguna Beach conference, but whereas that gathering offered the guise of discussing great industry issues to cover the naked grab for money, this conference pulled away the curtain entirely. We were all here, if we were lucky enough to be invited, to pitch, nakedly.