Burn Rate

by Michael Wolff

  It was a weird marketplace, a bizarre mating game. It was a morphing exercise. By the process of mergers and acquisitions, we would each turn into something else, partly into one another but, then again, into something further, stranger. This was some kind of cellular process, evolutionary, Darwinian, but absurdly random, too. There were no boundaries. There was a great symbiosis. The outcome would either be predictable—Microsoft hovered at the side—or, as likely, unimaginable.

  In the hotel lobby I ran into Seth Godin, the Internet game show impresario who bore the unflattering resemblance to me. I’d last seen him at the Laguna Beach conference.

  “Hey, I’ve been talking to your guy,” he said.

  “My guy?”

  “Rubin.”

  “Yes,” I said neutrally.

  “Smart guy. Very sharp. We were really thinking about doing something with him. He really wanted to invest in us.”

  “He mentioned you were talking, yeah . . .” I was racing to understand the implications, if any, of Rubin having conversations with Godin.

  “But we’ve decided we’re going with Softbank on this. But you’ve got a good guy there. Very sharp.”

  “Oh. Very, very sharp.”

  I had a paranoid moment of clarity. If I were Jon Rubin, if I were a boy wonder with millions at my disposal and eager to make my business bones, I’d go after these underfunded companies, get control of them for the price of a preferred minority stake, draw them all together, and roll out an offering. Was that the game I was in?

  The lobby was filled with people I knew. I saw Bruce Judson. He was sitting on a panel with Benoît, our aromatic twenty-something, the kid who had been our tech support telephone person less than a year ago but who was now an executive at a major public Internet company. I saw the people from Patricof. I ran into Seth Goldstein (known as “the other Seth”), my twenty-five-year-old assistant who had quit his job to start a company called Site Specific, one of the new breed of Internet advertising agencies. “If you mention me in your speech,” he said, “I’ll mention you in mine.”

  Our $40,000-per-month PR firm was everywhere in evidence—silent, eerie women in black suddenly at your side, whispering in your ear.

  I saw Jon Rubin with his technology advisor cross through the lobby.

  Three or four presentations went on at once. It was a minicompetition. Who would get the audience? I went upstairs to see if we were popular today.

  We were doing well. Better than the online sports company in our time slot. Better even, I thought, than the Motley Fools, AOL’s hugely successful investment advisors, who were also in our time slot.

  I was pleased. Our room was filling up. I knew this crowd.

  There comes a moment when you know an industry well enough. You know its personalities, its moods. You’re like a good politician who knows his voters, his town.

  I had been thinking this through. I had an idea that I could push the electorate. Change their thinking. I had an idea of how to break through. It was an industry that wasn’t much more than a year old. It had to be looking for some meaning.

  Most presentations were by the numbers. With low-tech slides or overhead transparencies or, for the snappy people, Power Point. CEOs walked the audience through assumptions and projections. It was preparation for an eventual road show. That was partly what the VCs were looking for—not only companies selling good ideas but companies with showman CEOs. Who can talk the talk?

  I dispensed with charts and numbers. I came around from the podium. I showed myself. I made eye contact. I looked for the heart of the audience.

  I knew how important this presentation could be and wondered, briefly, if this was my Checkers speech and whether or not it could save me.

  I began: We were building an industry on what we—the people in the industry, the people in this room—cared about. We were building an industry not only with technology but about technology. It was an industry that day by day became more inbred, self-referential, obtuse. We had better recognize, if we were to build a consumer business, a new mass medium, that America—my mother, my doctor, my real estate agent, my children’s teachers, my insurance salesman—didn’t care about technology, didn’t find it thrilling, didn’t find it endlessly interesting, didn’t find it sexy. In fact, quite the opposite. They found it boring. Mind numbing. America, I said heretically, doesn’t care about what Microsoft is up to.

  As I spoke, the room filled up. The usual-size crowds of thirty or forty grew to at least a hundred. The room overflowed. In a sense, this made my point. People wanted a story. People wanted a point of view. Also, people like to be attacked. They liked the whip.

  And I finished:

  “In 1945 my father came home from the Pacific theater and found himself in the television business. I grew up on stories of the rise of CBS and Mr. Paley and Frank Stanton and remember the evening Mr. Sullivan came to dinner. Looking back, I realize the enormous uncertainties that must have pervaded that time, but in hindsight what I really see now is a pattern of inevitability. Likewise, in the four years I’ve been in the Internet business—making me something of a statesman—I can see that the pieces are falling into place in a way that has certainly already transformed my life and business and that will transform all our lives and the workings of this economy before it is finished. In 1949 the total amount of advertising dollars spent on TV was fifty-eight million. By 1955 that amount had reached one billion—that’s eleven percent of the total consumer advertising market—achieved on the basis of a sixty-five percent television penetration of U.S. households. Work with me here. When do we reach a sixty-five percent Internet penetration? If we include office access, we reach it by 1998. On just households alone, the year 2000 looks good to me. Let’s live a little and extrapolate from that eleven percent figure. That would mean a twenty-two-billion-dollar payload for our industry in the year 2000. That’s not including transactions, that’s not including subscriptions, that’s not including premium services. Just advertising.”

  My autobiography was as tenuous as my numbers.

  “None of this will happen, none of these numbers will be real, if we fail to create an industry capable of speaking to people who don’t, and never will, give a damn about how this thing works. Trust me, they have more important things on their minds than what you’re thinking about.”

  Judging by the noise level (the room was near silent) and the direction of all eyes, ahead on me, I guessed that my aim had been true.

  Presenters, after they’d finished, were shown into small conference rooms to await follow-ups from bankers, VCs, and CEOs of other companies, who might want to come by “just to say hello,” with a business card exchanged like a tip in a hotel.

  Expecting to be mobbed, I was startled by the loneliness of my room. I checked the number on the door with the one that had been announced. No one.

  “You stole all our business,” said one of the guys from the sports online company, good-naturedly, in the next room. “You’re hot.” But the sports people had a steady stream of important well-wishers.

  All we were getting were the foreigners. Europeans two or three generations behind where the business was. They would talk to anybody who would talk to them (“Cheeberspazio,” the Italians say).

  Of course, what was I thinking? I had just told the software industry, self-righteously, preacherlike, that they lacked the ability to command an audience. That they had no people skills. In my mind, I had thought (really) that they would say, “For sure, he’s right!” and turn to me. But in the hard light of one of these little rooms, I had a new sense of the world. Software people, quite likely, did not want to be in the software business. They wanted to be in the pop culture business, too. They wanted to go Hollywood. They wanted to wrap America around their little finger. What was the fun of being rich and successful if you couldn’t get girls?

  Slowly, though, we began to attract a few visitors. The marketing vice president from Excite came by. I thought he was extending a f
eeler or two (“The next time you’re in Mountain View . . .”). There was an East Coast representative from CNet who seemed to like what I had to say. “You were right on. We really have to talk.”

  Toward the end, as I looked at my paltry haul of business cards, I noticed two last-minute loiterers.

  In the mythology of such conferences, it’s the people right at the end, out on the edges, hanging back, the people who don’t want to call attention to themselves, don’t want the competition to know what’s on their mind, that they’re interested in you, who are the really serious fellows.

  The first clerk-like-looking lurker introduced himself as representing Ameritech. The RBOCs are among the most prestigious and most stupid money around. Prestige money, of course, does not have to be smart. It just has to be endless. The more money, the more prestige. Of course.

  “We were very impressed by your talk. Are you looking for financing?”

  I demurred. “We’re looking for partners.”

  “What we like about what you’re doing is that you have a real feel for the consumer. Our customers are not technologically oriented.”

  “Well, we’re a technologically sophisticated company that doesn’t particularly believe in the virtues of technology. At least not for technology’s sake. We believe that the Internet can succeed only if it can draw an audience. Drawing an audience, holding its attention, making it—” (The first rule of business is just keep repeating yourself.)

  “Yes. Yes!”

  Then the exchange of business cards.

  Still hanging back was an older gentleman. He sprung then, seconds before our time in the private room was up. He was so-and-so, a name I didn’t catch, from the Washington Post Company. “We’d like to set up a follow-up meeting with you. Very good presentation. I’d like to have someone call you.” Fumble. Card. Mine. His. Exchange. Done.

  Ameritech. The Washington Post. Maybe CNet. Respectable. Very respectable.

  The game, now, was simple. I had managed to take Rubin’s loan without agreeing to his terms; I could not predict the firepower of his response. But if there was a possible deal that emerged from the conference, the preferred holders would be forced to hold their fire. Any disruption on their part would doom a deal. They couldn’t throw me out—not yet.

  We had precious little time left, though. I wasn’t taking Rubin’s calls. I was avoiding increasingly strident messages from the factotum, too. There are x days of unreturned phone calls, which can arguably be justified; x+ days, which can no longer be justified but which you can cover with a variety of defendable technicalities (sick children, just got in so late, etc.); x++ days, a period in which all concerned understand that calls are flatly, defiantly not being returned but a period still in which one might cure; and then, finally, past x+++, where you are beyond the psychological point of no return, when an act of total fuck-you is evident. We were now at x++.

  By avoiding all calls I had crafted a kind of demilitarized zone that was safe and almost restorative.

  Within hours, it seemed, CNet wanted to talk. There was a fit, they said. CNet had a vision to which we might lend an interesting dimension. There was a paper compatibility. Worth exploring. Why not right away? urged the CNet execs. (The disregard of the time–space factor between East Coast and West Coast is a bizarre conceit that I kept thinking would shorten numerous lives in the coming years.)

  Rubin, growing ever more restive that he couldn’t make contact with me, insisted upon attending the CNet meeting.

  I got a message: Rubin had booked the rooms for us in San Francisco. Smart, I thought.

  I flew into San Francisco with our EVP. It was a pleasant business-class flight. My surmise was that it would not be a very pleasant circumstance when I arrived at the hotel. Rubin, with his reservations ploy, had laid a trap. He would be waiting for me. A confrontation was on the schedule.

  But he had apparently gotten hungry and left his post, allowing me to check in and go out for dinner myself.

  In the morning, I had breakfast in my room. Before coming down to the lobby, I retrieved an e-mail message from the treasurer of the Washington Post Company, who wanted to set up a meeting, and from Ameritech—its investment committee wanted a meeting, too. This was good news. I could use it on Rubin as a sort of tranquilizer dart.

  “The Washington Post wants to meet with us as soon as possible,” I said to Rubin, firing my dart as I carried my luggage through the lobby. “They seem really eager to talk.”

  He seemed taken aback—“Kay Graham is a very good friend of the family”—but respectful.

  “Ameritech wants to set up a meeting, too. They’re really foaming at the mouth! You should see their e-mail!”

  He wanted to ask what the e-mail said, I thought, but he also wanted to maintain the chill between us.

  The cab ride over to CNet was strained but businesslike. Rubin, the EVP, and I discussed the probable scenarios for the meeting: In the ideal scenario, we’d skip the prefatory dance, admit the logic for a business combination (the deal), and start to talk what-ifs and hows. Barring that, we ought to be prepared to offer a preface that would set out the logic of a business combination. In the worst-case scenario, we’d have to make our pitch from scratch, but, we figured, you don’t tell people to get on an airplane because you don’t know anything about them.

  CNet had built a wonderful stage for itself on the San Francisco waterfront. It was one of those weird reality upsets. Take an office and turn it into a television set. Take a television set and turn it into an office. I had been here just a few weeks before as an interview subject. CNet had created a talk show about technology with a kind of midday sensibility. Television had a weird draw on the computer world. In addition to CNet, Wired, MSNBC, and Ziff were trying to smuggle computers onto television and into the heart of America.

  “Good spot the other day,” said Shelby Bonnie about my recent CNet appearance. CNet’s CFO and largest shareholder was a pleasant-looking young man, affable, forthcoming, networky—and ready, I thought, to make a deal. “Were you given the tour?” he asked me. “Would you like to see the space?” He turned to Rubin and the EVP.

  Jon Rubin chatted with Shelby. They both seemed like socially adept young men. Expansive. Knowledgeable. Polished. Why can’t everyone be like this? Possessing such smoothness, such ease.

  As for me, I tripped on one of those intrusive structures you find in broadcast studios with a thud that shot a skeletal vibration down my back and legs. Assistant producers and key grips scurried toward me. “No, no, I’m fine,” I smiled tightly.

  Halsey Minor, CNet’s CEO, whose talk I had heard at the Laguna Beach conference, brushed past me in the men’s room, oblivious to my expression of familiarity and complicity and shared status.

  While I had had a natural antipathy for Halsey Minor at the Laguna Beach conference, I was now, given that he had invited me to San Francisco to make me a millionaire at the very least ten times over, strongly predisposed to think of him as one of the industry’s real pioneers.

  CNet was reconstituting itself as a publisher in this new medium, stealing the ground from under the print publishers. It had invented itself as a publisher without print. It was creating a coherent information brand without the cost and headache of paper and distribution. Sort of.

  CNet’s play was not too different from ours. It was just larger by a factor. And CNet, too, if it did not reverse its fortunes or raise more capital, would run out of money.

  It was odd. The meeting didn’t know where or how to start. It was in Minor’s office, which seemed too small for how he wanted to project himself. He seemed embarrassed by it, uncomfortable.

  I was sorry we were seeing him like this.

  We sat in front of his little desk in low-slung couches.

  “What do we have here?” he said, looking to Shelby (Halsey and Shelby . . . hmm).

  “We talked about this,” Shelby said, frowning.

  Halsey stared at papers in front of him. “Yo
u did the show recently?” he said to me after a moment, as though a veil were lifting.

  “Yes,” I nodded like crazy. “Good show,” I said. “I had a good time.”

  Halsey looked at his watch.

  Just as you can get a sexual vibe, you can get a business buzz. Or not. I knew immediately that something was fouled up here.

  I said, grasping, “We met, just briefly, at the Laguna Beach conference.”

  “Umm.”

  “All right,” Rubin said, impatient.

  Everyone looked at him, willing to have him seize the floor.

  “You know the company,” Rubin said. “You know how we’ve been trying to position it. We apparently have points of intersection. We may be ahead of you in some areas of development.”

  “I’m only vaguely familiar with the company,” Halsey said.

  Rubin almost stamped his foot.

  “I’m sorry,” Halsey said.

  “Did you have time to look at any of the material?” Shelby asked Halsey.

  “This? No. Should I have?”

  I had been in this meeting numerous times before. I had been in this meeting at Microsoft and AOL and companies up and down the Peninsula. It had a fraternity ambiance and a Mafia social club atmosphere. It was Hollywood style, too. It grew out of a kind of princeliness, a feudal sensibility. “You’re calling on me in my lair. I don’t think I will even bother to raise my head.”

  I, the soul of control, affability, and good sense, said, “Why don’t we just start at the beginning, and I’ll take you through the story of the company and why we think we’re going in the same direction that you guys are heading.”

  “I don’t think we have to go through that,” Halsey said, making a kind of Windsor-wave gesture. He glanced distantly at our materials. Vagueness seemed like an affect or personality trait of his.