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http://www.wired.com/wired/archive/11.08/sex_com.html
Gary Kremen started Match.com but ended up with chump change. Then he got caught up in Sex.com, where success left him lying on his back in the gutter.
By Chris O'Brien
It's a typically sunny day in Rancho Santa Fe, California, and Gary Kremen is standing on the back patio of the mansion that's a monument to his greatest success - and his worst failure.
A sleepy suburb 15 miles north of San Diego, Rancho Santa Fe is the richest community in the country, according to the US Census Bureau. Even by local standards, Kremen's seven-bedroom home is swank: It has a swimming pool, an in-ground hot tub, a tennis court, and a volleyball sandpit, all set against rolling acres of lemon groves.
Kremen won the house in a lawsuit over the domain name Sex.com. In November 2000, at the end of a three-year legal battle, a federal judge ruled that Stephen Cohen had stolen the domain by forging a letter from Kremen's company to Network Solutions. Cohen was ordered to return Sex.com to Kremen and pay him $65 million in damages. (Cohen appealed, and in June of this year, the US Supreme Court declined to hear his case.) In the meantime, Cohen had fled the country, so all Kremen got as compensation was this California mansion and a derelict house on the US-Mexico border. Even so, Kremen figured he'd found his winning lottery ticket. Under Cohen, Sex.com had been taking in $500,000 a month selling banner ads to other online porn sites.
Ian White
It takes only a quick peek inside the Rancho Santa Fe house to realize Kremen, 39, didn't hit the jackpot. The place is an utter mess. The doors have no knobs. Only a few of the rooms have beds, which are rented. The kitchen has 35 cabinets and four refrigerators, with Post-it notes on the few that contain food.
Sex.com is in similar shape, a marquee property decaying beneath an enticing facade. When Kremen took possession of the porn portal, he figured it would run itself. But by early 2001, the Internet had become saturated with free porn on peer-to-peer networks like Kazaa, and Sex.com's revenue dropped by two-thirds. Kremen compounded his problems with lousy management skills - multiple firings, obsessive litigation - and an addiction to speed. "I'd be lying," he admits, "if I said I wasn't my own worst enemy sometimes."
Most porn sites reacted to the crisis in the industry by getting more extreme - bombarding visitors with spam, hawking herbal sex-enhancement products, catering to bizarre fetishistic niches. But "we want to get away from porn's negative aspects," Kremen says. He wants to make Sex.com an advertising middleman, selling sponsored links that would appear on major search engines as well as his own site. "Our pitch is simple" Kremen explains. "We'll deal with the adult industry so you don't have to."
Even if that's possible, Kremen might not be the man for the job. As we talk in an office he keeps in the mansion, a man bounds into the room. Kevin Blatt is an adult-entertainment business consultant who goes by his initials; KB has short, gelled hair, a goatee, and sunglasses he keeps on indoors. He works for HerbalO, a company that sells virility products on adult Web sites. Kremen thinks that's tacky. KB scoffs: "If there's money on the table, I'm going to take it."
By KB's side is his current girlfriend and the star of Girliescam.com, Anna Castro, who's wearing a tank top that barely conceals her breasts. "This is Girlie," KB says by way of introduction. "She's hot. And she sucks cock like you wouldn't believe."
Kremen is speechless. "Well," he says.
Kremen sees himself as an accidental pornographer. But he's best described as a speculator in virtual real estate who bought property on the wrong side of the tracks and toughened up to fit in with the neighborhood. In the early 1990s, when the Mosaic browser was fresh to the Web, Kremen registered dozens of domain names like jobs.com and housing.com while they were still free, figuring they could be worth a lot down the road.
Meanwhile, he focused on a site he already had up and running, Match.com. At the time, online personals were seen as terminally tacky - customers faxed in their photos - and venture capitalists were dubious. In 1994, Kleiner Perkins Caufield & Byers offered to invest in the online classifieds business that Match.com was part of, but the VCs wanted to merge it with Architext, which would become Excite.com. Kremen said no, because he wouldn't be made CEO of the new company. Instead, he accepted money from a group of investors led by Canaan Partners. As Internet dating became popular, Match.com started to draw media coverage. A typical photo, in the San Francisco Chronicle, featured Kremen looking forlorn and holding flowers, alongside a story about how the founder of Match.com couldn't get a date.
His relationships with his financial backers weren't so smooth, either, and Kremen developed a reputation for being smart but tough to deal with. The board wanted him to start developing other classifieds and stop messing around with lonely-hearts ads. "They were embarrassed by it," Kremen remembers. Meetings became shouting matches. "Gary sometimes loses perspective," says Ron Posner, a venture capitalist who was on the Match.com board. "VCs would call me in the middle of the night and say, 'What are we going to do about Gary?'"
Over Kremen's objections, Match.com was sold for $8 million in 1997 to Cendant, a Connecticut consumer services company. (A year and a half later, Cendant sold it to Ticketmaster Online-CitySearch for $50 million.) All Kremen got was $50,000 and a lifetime account on the site - his login is "The Founder."
It was around this time that Kremen discovered Sex.com had been snatched by Cohen, and he pursued the epic case through six lawyers, two dismissals, and a host of setbacks. When he finally won three years later, he was on the verge of bankruptcy. He figured Sex.com represented his second chance to build an empire, to show those VCs what they had missed.
Kremen initially wanted someone else to run the business while he invested the profits in more respectable ventures; after all, he had an MBA from Stanford. But from the day he won control of the site, Kremen just couldn't let go. In January 2001, he fired his attorney, Charles Carreon, who had a 15 percent stake in the business, in a dispute over how much power the lawyer would have. In the course of a year, Kremen hired and fired three management teams. Some of the arguments were about his reluctance to pander as much as other porn sites did; he wouldn't allow bestiality, for example. "I'm judgmental about some of this stuff," he told me at the time. "There's a line I won't cross."
--------------------------------------------------------------------------------
Chris O'Brien ([email protected]) is a reporter at the San Jose Mercury News.
Gary Kremen started Match.com but ended up with chump change. Then he got caught up in Sex.com, where success left him lying on his back in the gutter.
By Chris O'Brien
It's a typically sunny day in Rancho Santa Fe, California, and Gary Kremen is standing on the back patio of the mansion that's a monument to his greatest success - and his worst failure.
A sleepy suburb 15 miles north of San Diego, Rancho Santa Fe is the richest community in the country, according to the US Census Bureau. Even by local standards, Kremen's seven-bedroom home is swank: It has a swimming pool, an in-ground hot tub, a tennis court, and a volleyball sandpit, all set against rolling acres of lemon groves.
Kremen won the house in a lawsuit over the domain name Sex.com. In November 2000, at the end of a three-year legal battle, a federal judge ruled that Stephen Cohen had stolen the domain by forging a letter from Kremen's company to Network Solutions. Cohen was ordered to return Sex.com to Kremen and pay him $65 million in damages. (Cohen appealed, and in June of this year, the US Supreme Court declined to hear his case.) In the meantime, Cohen had fled the country, so all Kremen got as compensation was this California mansion and a derelict house on the US-Mexico border. Even so, Kremen figured he'd found his winning lottery ticket. Under Cohen, Sex.com had been taking in $500,000 a month selling banner ads to other online porn sites.
Ian White
It takes only a quick peek inside the Rancho Santa Fe house to realize Kremen, 39, didn't hit the jackpot. The place is an utter mess. The doors have no knobs. Only a few of the rooms have beds, which are rented. The kitchen has 35 cabinets and four refrigerators, with Post-it notes on the few that contain food.
Sex.com is in similar shape, a marquee property decaying beneath an enticing facade. When Kremen took possession of the porn portal, he figured it would run itself. But by early 2001, the Internet had become saturated with free porn on peer-to-peer networks like Kazaa, and Sex.com's revenue dropped by two-thirds. Kremen compounded his problems with lousy management skills - multiple firings, obsessive litigation - and an addiction to speed. "I'd be lying," he admits, "if I said I wasn't my own worst enemy sometimes."
Most porn sites reacted to the crisis in the industry by getting more extreme - bombarding visitors with spam, hawking herbal sex-enhancement products, catering to bizarre fetishistic niches. But "we want to get away from porn's negative aspects," Kremen says. He wants to make Sex.com an advertising middleman, selling sponsored links that would appear on major search engines as well as his own site. "Our pitch is simple" Kremen explains. "We'll deal with the adult industry so you don't have to."
Even if that's possible, Kremen might not be the man for the job. As we talk in an office he keeps in the mansion, a man bounds into the room. Kevin Blatt is an adult-entertainment business consultant who goes by his initials; KB has short, gelled hair, a goatee, and sunglasses he keeps on indoors. He works for HerbalO, a company that sells virility products on adult Web sites. Kremen thinks that's tacky. KB scoffs: "If there's money on the table, I'm going to take it."
By KB's side is his current girlfriend and the star of Girliescam.com, Anna Castro, who's wearing a tank top that barely conceals her breasts. "This is Girlie," KB says by way of introduction. "She's hot. And she sucks cock like you wouldn't believe."
Kremen is speechless. "Well," he says.
Kremen sees himself as an accidental pornographer. But he's best described as a speculator in virtual real estate who bought property on the wrong side of the tracks and toughened up to fit in with the neighborhood. In the early 1990s, when the Mosaic browser was fresh to the Web, Kremen registered dozens of domain names like jobs.com and housing.com while they were still free, figuring they could be worth a lot down the road.
Meanwhile, he focused on a site he already had up and running, Match.com. At the time, online personals were seen as terminally tacky - customers faxed in their photos - and venture capitalists were dubious. In 1994, Kleiner Perkins Caufield & Byers offered to invest in the online classifieds business that Match.com was part of, but the VCs wanted to merge it with Architext, which would become Excite.com. Kremen said no, because he wouldn't be made CEO of the new company. Instead, he accepted money from a group of investors led by Canaan Partners. As Internet dating became popular, Match.com started to draw media coverage. A typical photo, in the San Francisco Chronicle, featured Kremen looking forlorn and holding flowers, alongside a story about how the founder of Match.com couldn't get a date.
His relationships with his financial backers weren't so smooth, either, and Kremen developed a reputation for being smart but tough to deal with. The board wanted him to start developing other classifieds and stop messing around with lonely-hearts ads. "They were embarrassed by it," Kremen remembers. Meetings became shouting matches. "Gary sometimes loses perspective," says Ron Posner, a venture capitalist who was on the Match.com board. "VCs would call me in the middle of the night and say, 'What are we going to do about Gary?'"
Over Kremen's objections, Match.com was sold for $8 million in 1997 to Cendant, a Connecticut consumer services company. (A year and a half later, Cendant sold it to Ticketmaster Online-CitySearch for $50 million.) All Kremen got was $50,000 and a lifetime account on the site - his login is "The Founder."
It was around this time that Kremen discovered Sex.com had been snatched by Cohen, and he pursued the epic case through six lawyers, two dismissals, and a host of setbacks. When he finally won three years later, he was on the verge of bankruptcy. He figured Sex.com represented his second chance to build an empire, to show those VCs what they had missed.
Kremen initially wanted someone else to run the business while he invested the profits in more respectable ventures; after all, he had an MBA from Stanford. But from the day he won control of the site, Kremen just couldn't let go. In January 2001, he fired his attorney, Charles Carreon, who had a 15 percent stake in the business, in a dispute over how much power the lawyer would have. In the course of a year, Kremen hired and fired three management teams. Some of the arguments were about his reluctance to pander as much as other porn sites did; he wouldn't allow bestiality, for example. "I'm judgmental about some of this stuff," he told me at the time. "There's a line I won't cross."
--------------------------------------------------------------------------------
Chris O'Brien ([email protected]) is a reporter at the San Jose Mercury News.
