Up to August 2000, when Glavine arrived, Lefebvre mostly worked alone in a cavernous, three-thousand-square-foot space, one-third of which was dedicated to Neteller. Lawrence had an office and nothing else in that part; the rest was leased to his other businesses. Lefebvre worked seven days a week, from the opening of business in New York to closing time on the West Coast, 9 p.m. PST. He soon found that people tended to gamble at all hours, so he had better be there. On weekends, Neteller’s customer service department—that is, Lefebvre—worked later. Sometimes he was on the phone until midnight. Finally, he’d go downstairs to his purple RAV—he’d park out front early then run up and down pumping coins into the meter all day until parking was free again—climb in, drive to his condo, crash, get up at five and do it again. He spent most of his waking hours troubleshooting and getting accounts to work: “I can’t get my money to transfer”; “I can’t figure out how to get my money from my account to Neteller”; “my son stole my credit card and set up an account—I swear, it wasn’t me”; “can I have fifty bucks please? I’ll pay you back tomorrow.”
Eventually, Glavine, who would take over all IT responsibilities, and Bob Edmunds, who would be Mr. Mom in the morning and Mr. CFO in the afternoon, joined Lefebvre. A few months later, after multiple near-death experiences for the company, more people would get desks above the Keg. There would always be room for Hacky Sack.
• • •
On Thursday, August 24, 2000, Steve Glavine received a call on his Motorola flip-top cell phone. He was sitting in the Fusion Media Group parking lot with his buddy Doug Rigby. They had just left the office, where they both worked, and were are about to pull out onto Tenth Avenue SW. “Hey, I hear you’re the number-one ColdFusion guy in the city,” said the man on the line.
Glavine cracked up. “Doug!” he shouted to his friend. “You wouldn’t believe what this guy just said to me …”
Rigby had started up an internet design company the previous year and had invited Glavine to join. Glavine was glad to jump to Fusion Media. He wanted something (anything) to take him away from what he’d been doing for the past four years. After completing his degree in business administration at Acadia University, he’d abandoned Nova Scotia for Calgary in the spring of 1996. “There’s lots of work out west,” a friend had told him, “if you’re out here and interested.”
He promptly stranded himself. There was the dead-end job changing tires at an auto parts chain store. And then there was the lucrative-but-brain-numbing lure of working for a company called Midland, “spraying weeds and killing trees for TransAlta hydro underneath power lines.” After a few years of that, Glavine was in dire need of change: “At Midland you work every single day for four or five months. You make good money in overtime, but it’s a racket. You’d see guys working there ten, fifteen years, inhaling chemicals all day long. I just didn’t want to be one of those guys.”
Glavine’s work had him outside Calgary for months at a time. When he quit Midland for the second time, having replenished his savings again, he moved back to the city and looked up Rigby, with whom he’d previously shared a place. Because of his business degree at Acadia, Rigby started Glavine in sales at Fusion Media, which made perfect sense except for one thing—Glavine had always been fascinated with computers. He’d gotten a Commodore 64 in ninth grade and, just fiddling around, figured out things on computers many could not. He agreed to start in sales but made it known his real interest was in programming. Rigby suggested he give ColdFusion a whirl—it was one of the easier HTML programs to learn. Glavine bought a manual at a bookstore and checked it out. He picked it up quickly by playing around with a mock website he’d paid an Edmonton company to host for him.
Glavine says:
In front of the internet program you used, you have another server. The ColdFusion server has to process the page first before it sends it out to somebody’s browser. I hired this company in Edmonton called Fox Microsystems to host a test website so I could play with ColdFusion. I’d talk to Ron Billings up there about technical stuff or to restart the server. When the two Neteller programmers quit, Johnny called Ron because it just so happened that Neteller was hosting its ColdFusion website at Fox Micro. That’s where the connection was.
When Lefebvre flattered Glavine, telling him he’d heard he was the best, etc., Glavine knew it wasn’t true. But he took the pitch anyway. He said, sure, I know a few things about ColdFusion. They agreed to meet the next day, a Friday, at the offices above the Keg.
Glavine’s buddy Rigby eventually became part of the Neteller story, too. He assumed the mantle of head designer and splashed a gaudy orange Neteller logo on his first iteration of the company website. “If you go to WayBackMachine.com you can see the first one I designed in 2000,” says Glavine. “It was horrible compared to now. Well, it was horrible even for the day. And then we had a rendition that looked like PayPal’s. After that, Doug came on and designed the site until 2004 or ’05.”
Glavine’s first meeting was in Neteller’s office space, with Lefebvre and Lawrence:
Johnny was telling it like it is, like he usually does, about sports books and online gambling. Steve’s in the background, whispering to Johnny, “Don’t tell him about the sports books!” which I can hear. I didn’t know and I didn’t much care, either. They went, “What do you think?” I said, “I don’t know, let me think about it over the weekend and I’ll give you guys a call on Monday.” So I went home. About seven the next morning Steve calls and asks if I can look at something on the website. And I was like, “Uh …” So I came in and fixed the problem, which was probably somebody clicking on a page and an error coming up. ColdFusion would generate an error page, like a 404 page but its own version, and you’d have to check the log. Usually it was descriptive so you’d go and change a bit of code to get it working again. And then I fixed about ten more, and then ten more, and then I came in Sunday …
What Glavine didn’t know at this point was that the cofounders were desperately searching for someone to replace Jim Humiske and Chris Morin—two tech-savvy high school grads Natland had brought in as replacements for himself and who had both just walked out the door. They had built the all-important launch version of the Neteller website and wanted their back pay. The founders had no cash to offer either of them—if money equaled oxygen to a start-up, Neteller was gasping for air. Humiske and Morin were offered equity, but one of their dads, seeing what was happening on the news, advised them that taking equity in a dot-com was probably worthless. They came back to Lawrence and demanded the money owed, or else they were out.
It may not have been an unreasonable decision. The dot-com bubble reached its optimum size on March 10, 2000. Soon after, the NASDAQ index began its painful correction. Seven months later, half its value had vaporized. At the point when the young men left, the correction would have been excruciating to watch. Humiske went on to work at Natland’s company, Arizona Bay, and then went to China. Morin returned to Neteller, briefly, two years later.
“And then I came in Monday,” Glavine continues. “And then I came in Tuesday. And by Wednesday, I guess I was working there. After we fixed a bunch of stuff we got into building new stuff and buildings reports for Bob. They had no money—which I figured out a couple of weeks later.”
“I knew there was no money from the get-go,” says Bob Edmunds, who was also hired in August. Edmunds signed on as Neteller’s chief financial officer, but he wanted to work part-time. His wife was in graduate school and she needed help raising their two daughters at home. That was fine with the cofounders, and they welcomed aboard another senior officer in a company that had no employees.
“I remember working there for three or four days,” said Glavine, “and I said, ‘John, it seems like I’m working here.’ John says, ‘Yeah, it does, doesn’t it?’ So it’s like, ‘Well, let’s make a deal.’”
“But there was no deal,” says Edmunds. “We were working with the promise
of equity, and we had no idea what that looked like.”
Glavine says,
Right, originally we made a deal where I was going to be paid fifty bucks an hour to be a consultant. I was working crazy hours the first couple of weeks, fifteen hours a day. I’m thinking, This is going to be great! After two weeks I make up this really nice invoice. It was for quite a bit of money for me at the time, several thousand. I brought it in and said, “Johnny, here’s my invoice for the first couple of weeks.” He looks at it and says, “Yeah, we really can’t pay this.”
I knew by then that there was no money in the company, so I said, “Yeah, I kind of figured that. But you know, I’m having fun so I’ll stay working for you guys as long as I can pay rent each month.” Johnny’s like, “That’s cool. Y’know, you do that and we’ll hook you up down the road.” That was it. No numbers, nothing. Just: We’ll hook you up down the road.
Johnny’s word was gold, so I said, “Sure, we’ll do that.” Every now and again I’d have to go to Steve and say, “Steve, I need a couple hundred for rent.” And Steve would cut me a personal check for $300 just so I could make rent. Late in the year, things started flying so we all sat down and made the agreements and worked out salaries.
That’s when the number of official Neteller investors grew from five to seven. Lawrence and Lefebvre kept their promise. They dangled points, around four percent each. Fortunately, Edmunds and Glavine liked their bosses and found the gig exciting and gratifying. They gambled, smartly, and became minority equity partners.
• • •
When Glavine arrived, Neteller’s website boasted a sleek new sign-up method. Lawrence and Lefebvre had paid a company called Smart Dynamics about a quarter of a million dollars in borrowed start-up cash for the system. That was okay, because it would lead them to the promised land of customers. They branded their version the “Neteller SmartCard.” The company would send new customers their own cash cards, along with instructions on how to set up and operate the card readers that were included. It looked like a cinch. Five minutes and off you go, gambling your paycheck, the kid’s back-to-school clothes budget, whatever you want.
The sign-up drive was built on FedEx credit. Edmunds says, “They were using smart cards as a PIN. When you signed up they would FedEx you a little smart card reader—that was your PIN—and twenty bucks loaded onto your smart card. The cost to the company was fifty bucks a sign-up.”
From Boulder, Colorado, someone working freelance would receive Neteller’s list and send out the packages. The reader had a small wire you were supposed to plug into a serial port at the back of your computer. The regular-sized credit card had a chip, and when you slid it into the reader a light would come on. That meant you had access to the website.
But many clients couldn’t figure out how to work the reader, and it only worked with Windows 98, which limited the customer pool. Glavine explains, “This package, it might take four or five days, or a week, to get to them. Then they’d have to set it up, which usually meant they had to call in to get the thing to work. Then they could finally make a deposit, and then send money to a merchant, and finally make a bet.”
“For a gambler!” says Edmunds. “I mean, they want it now.”
“Yeah, they want to bet a hundred on the Giants tonight,” says Glavine. “It was so clunky. I bet seventy-five percent of the smart cards we sent out, nothing ever happened.”
One of the first recommendations Glavine made to his new bosses was—news flash—you guys don’t need the Neteller SmartCard to get people to sign up. He was told they knew that, but they liked how it gave customers the impression they were getting cash on a card. Lefebvre’s position was “It gave people the idea that, ‘Look, my money is safe, it’s right here on this card.’ That’s where a lot of start-up money went—they had borrowed money to create a glorified PIN, and it rarely worked.”
And when it didn’t work, Lefebvre bore the brunt. Not that he wasn’t used to long hours on the phone by this point, but it became more intense and frustrating as more clients couldn’t find the serial port or negotiate the card/PIN or didn’t have Windows 98.
“John became the call center,” says Glavine. “He’d be walking people through this process. When it got busy, I’d start answering calls. I’d see John take his headset off, whip it down on the desk and start cursing, then pick it back up and politely go, ‘Neteller. John speaking.’”
“There was this one chick,” says Edmunds, “who kept phoning in and saying, ‘Wow, I guess I must be lucky, every time I phone in I always get you, John.”
“That happened a number of times,” says Glavine. “John was working ridiculous hours. He was probably home for four or five hours a day. I’d come in at six, seven, eight in the morning and John would already be there. I’d leave at eight, nine, ten o’clock at night and John would still be there for another three or four hours. Work till the wee hours, go home for a few hours and then go back in and do it again. He had a guitar and some clothes, living in this one-room rental. That’s how Johnny was rolling.”
Lefebvre the busker became Lefebvre the phone call center. Meanwhile, Lawrence the CEO was busy finishing off one of his condo projects in Calgary’s Bridgeland neighborhood. Glavine says his job was a “handful” at that point because he was working on new programming while backstopping Lefebvre. Edmunds the money guy came in afternoons and looked at any sales reports Glavine might have had time to generate, but he too jumped on the phones if necessary.
Neteller seemed to have built its own self-defeating filter, weeding out potential customers by the thousands. The persistent ones, they were true masochists: the phone calls, the talk-throughs, the talk-’em-downs. Not only was this wave-of-the-future system screwed, it was doubly screwed. Since it cost the company fifty bucks to sign up a new customer, they were actually losing money signing up clients who then couldn’t, or wouldn’t, use the system. That was bad enough, but even when a customer did figure it out, there was another problem: Neteller didn’t have a business number for processing Visa and MasterCard transactions. When a customer did get his card/PIN up and running—and it did run smoothly once he got there—Neteller couldn’t convert any credit card receivables into cash. “When I first went there in August,” Edmunds says, “we were accepting credit cards, but we didn’t have a credit card processor, so we had no way of getting that money.”
“Actually, we did have one,” says Glavine, “but within two or three weeks it blew up and we were forty grand in the hole.”
So they jotted down customer credit information in a ledger—and waited. They could accept bank deposits, the old-fashioned kind made by customers in person, but even that process was a nightmare. There was a common American system in place, Automated Clearing House, which handled financial transactions. ACH was like an electronic central nervous system that connected all the banks together to process money back and forth—credit and debit transactions, payroll and vendor payments, mortgage and insurance payments, you name it. Any bank-to-bank transfer, for instance, went through ACH. The problem was, Neteller didn’t have an ACH account, so it had to do things the hard way.
Edmunds says,
Somebody would go into Bank of America, who had an account at Bank of America, and he would make a deposit to our account at Bank of America. Then he would phone us, and then he would fax in the deposit slip. And then we would phone the bank to verify that a deposit had been made so you could actually do a cash deposit.
I’m looking at this and thinking, Okay, so this is the high-tech, dot-com age and we’re using faxes …
“And the photocopies,” says Glavine, “sometimes would be really bad. You’d have to get them to send it again. It was horrible.”
Neteller’s vision, to create a streamlined process to move gambling funds efficiently back and forth, was still there, but it was getting blurry. It was going in and out of focus, like the victim in the film
Se7en who is kept alive for a year strapped to his own bed. Edmunds figures they almost went under at least three times within his first four months. There was money coming in. Customers did exist, and they did pay, but there was no way of accessing large chunks of the sums accruing. By the fall of 2000, according to Edmunds, “Glav had just started working there and John and Steve were completely tapped out. The smart cards weren’t picking up, and things were just not going well. John looked at me and said, ‘Bobby, I think we’re well fooked here.’ We were right on the brink of This-Ain’t-Gonna-Go.”
The company was floundering. It had no cash reserves and few employees, but everyone kept banging away at it anyway—what else to do? Glavine explains, “By the end of September 2000 I had a new login system set up. Once we got rid of that card and PIN thing, people could sign up instantly and make a bet instantly. It was just a normal sign-up like any other website had then—which was a username, which was the email address, and a password, and away you go. No sign-up, no cards, you’re rolling. It was instantaneous. That was one of the big differences early on—getting the system so that people could sign on and bet right away. That’s when we started to get a lot more turnover in the system.”
Rob Eltom, who joined Neteller a few weeks later, was impressed with Glavine. Even though he had taught himself programming and was paid to look after the IT side of the business and develop the business from a technology standpoint, Glavine was brilliant at seeing the website from the customer’s point of view, not as code. “He understood that online people have the attention span of goldfish,” Eltom says. “He got the fact that what people really wanted was a big red button.”
Neteller went with both the new login system and the smart cards through October, but then informed all clients that it was discontinuing the smart cards. They would have the month to switch over, but after that it would just be a normal login.
For all the hard work, early numbers for the company were pitiful. When Neteller went live in July, it earned about $600 in revenue. August wasn’t much better, maybe $3,000–$4,000 from clients. Edmunds says, “This is booked revenue, but it’s revenue for credit cards we can’t process, remember. This is just what our fee would have been if we actually got the money. There ain’t no money coming in.”
Life Real Loud Page 16
