Phil Kaplan musing on the dot.com death watch
By Marty Beard
In 1999, when the internet craze was in full bloom, all the mainstream business magazines like Fast Company were celebrating the dot.com boom as if there were no tomorrow. But tomorrow did come, in the dot.com crash of last year, and as those voices went suddenly silent, a new voice arose to record the death whines of the dot.coms that had drawn in millions upon millions of investor funds. This new voice came with a name that got right to the point: FuckedCompany, a play on Fast Company. It quickly became the web site to visit for the skinny on the latest dot.com in trouble, and the discussions are as vituperative as they are wide-ranging. FuckedCompany is supported in part by ads and merchandise sales, but mostly through the $75 a month the site charges for access to the hundreds of tips it receives each day. Women.com named FuckedCompanyís 25-year-old founder, Philip Kaplan, a.k.a. "Pud," one of the 10 most eligible high-tech bachelors. He once attempted to sell FuckedCompany on eBay. He now says his company is profitable. He has a book deal with Simon and Schuster, with a working title of "Dot.com Babylon: A chronicle of the internet mania."
In running this site what have you observed about what makes a pure-play internet company succeed or fail, and how have you applied what youíve learned to FuckedCompany?
The real key is spending. When I came up with the idea for Fucked Company--and also when I came up with the idea for PK Interactive, my consulting company--I was working for a big web shop. It was not unusual to charge upwards of a million dollars for a basic e-commerce site. Which is one of the things that prompted me to start my own business and FuckedCompany.
Letís say youíre starting a clothing boutique. In real life, you should be a clothes expert. You should know about the fashion world, you should know about all that stuff.
If youíre starting the same business on the internet, I say you donít need to know any of that. You need to know about technology. You need to know about programming. Because thatís what youíre building--a web site.
In a regular store maybe 80 percent of the things you deal with relate to fashion stuff, and buying, models, fabrics and all that. With your web site, 80 percent of the things you have to deal with on a day-to-day basis are technology. The siteís falling apart, the transactions arenít working, users need passwords.
If youíre a programmer you can build any site you want to build. Iím a programmer and I built FuckedCompany and a lot of other web sites. I try not to do anything that makes me need to hire anybody else. I try to do everything myself.
How much longer do you think the dot.com downturn will last?
How long are companies going to continue to go out of business? Forever.
But I think itís already over and has been over for a while. At this point, thereís still enough carnage for me to write 20 pieces every night. The interest level is the same. But the massive dot.com problems are gone.
Now, I believe weíre stooping into a recession, and I think itís going to be pretty bad, but thatís not a dot.com thing.
What role do you see FuckedCompany taking as the cycle shifts?
A lot of people have come to rely on FuckedCompany for the bad news about companies, and I think they will continue to do so. Plus, thereís the subscription service, where you can search through all the tips that are sent to me.
Thatís another role that I think itís taking. FuckedCompany.com is basically the only place where millions of employees go to anonymously send the information about whatís happening within their companies. I just started the subscription service about two-and-a-half months ago, and I have about 1,200 subscribers.
Content sites like Inside.com are increasingly moving toward mergers, synergies and/or charging for their content. Ad-supported free sites like Suck and Feed are going extinct. When the dust settlesóand itís probably already settling, as you sayóit doesnít seem unreasonable that the only sites left will be in a better position to start charging their readers.
I donít think anybodyíll pay. I donít think a significant number of people will pay to read Salon or Inside. Thereís a lot of things to read out there.
What Iím offering is something that nobody else has. Sometimes people try to group what Iím doing with sites like that, but Iím clearly not. Anyway, I think theyíre all going to die. Most of the content sites on the internet will not be around for much longer.
Web sites like Salon are trying to survive by going hybrid, by balancing free, ad-supported content with subscription-only services. Is this hybrid approach a good business model?
No, because theyíre not going to make any money from ads and theyíre not going to make any money from subscriptions. The problem is that they have more than two people working there.
Iím making about $1 million a year doing FuckedCompany. Thatís a lot when youíre one person or two peopleóI have an assistant who works for me. But thatís nothing if youíve got 10 people working for you. If youíve got 10 people working for you and youíre making a million dollars a year, youíre going to go bankrupt. Thatís just the way it is. I canít figure out what all those people are doing at these companies.
How reliable are your sources and how do you verify them?
I donít verify them. I just go with whether I believe theyíre right or not. I have ways of figuring it out. If 20 different people send me the same sort of tip, 20 different places, 20 different times, Iíll assume that itís probably real. But if Iím not totally sure, Iíll write, ĎRumor has it.í But so far, itís 99 percent right.
Youíve said your subscribers do rely pretty heavily on your content.
Statistically speaking, thereís a search performed on my site by a subscriber every second.
Have there ever been false reports of company troubles that later impacted the company in question by scaring its investors when there was no previous problem?
The only problem that Iíve had out of the 2,200 pieces Iíve written is that two times I said a company was laying off 80 people, when itís really like 60 people. It was never really a big deal.
Is there material you don't run or that you feel you shouldnít run?
I donít publish personal information about anybody. While part of FuckedCompany is definitely about bashing the CEOs and the founders who have taken advantage of their employees, lied to people and tricked people, a lot of times I get rumors that Iím pretty sure are real: so-and-so is a cokehead and spends company money on hookers, stuff like that. And that kind of stuff Iím not going to publish because it doesnít have anything to do with the business.
But never anything thatís confidential, from a business standpoint?
Oh, that Iíll publish; I donít care.
Thereís never been any business thing that I thought was interesting that I havenít published. Somebody sent me photographs of the inside of Kozmo.com just before they closed. I put those up, and the guy whoíd sent them replied back to me and said he was trying to get fired. And he got fired when I put those up, so he was really happy. But I appreciated it. He wanted to get fired so he could get severance, as opposed to just quitting.
FuckedCompany is profitable and extremely lean, unlike many of the companies it covers. You keep your expenses low, paying only for rent on your apartment and salary for one assistant, and your site is hosted for free. While this puts you in a pretty good position to criticize pie-in-the-sky dot.com schemes, has it changed your standards as to what makes a company "fucked?" For example, your site and your readers seem to treat layoffs as a terminal symptom.
There are companies that could benefit from layoffs. Itís not necessarily a sign of being in trouble. I remember when APBNews.com started laying people off. I donít remember how many people, about 100. About four people were left, and their web site was still the same. It was like, OK, what were those other 96 people doing?
The failure of Plastic suggests that user-generated content and a lean staff alone donít necessarily keep costs down. Yet Slashdot and FuckedCompany still rely on user-generated material. Where did Plastic go wrong?
It definitely keeps my costs down. But when you say user-generated material, Iím not thinking of message boards. Thereís a billion sites with message boards besides me and Slashdot, literally a million other sites with message boards. What Iím thinking of is my product, the product that I sell. Thatís all generated by users.
Slashdot and Plastic donít have a product. You canít say your content is a product if itís going to be supported by ads. Iím packaging something up, Iím putting it in a little box and Iím selling it to people.
Content is too easy. Itís difficult to have a content site, but content is just fun. Everybody likes writing. Everybody likes reading. The whole internet is a content site. The four billion web sites out there all have something to read on them. You canít build another one and think youíre going to make money from it.
So you think that trying to make money off a content site is like trying to profit from a personal weblog.
FuckedCompany was like that for a while. I was making money from merchandise and ads, but no real money. Two things prompted me to come up with the archive service. One, I get about 400-500 tips a day from different people about whatís going on in their companies, and I only have time to read maybe 50 of them. And of those 50 there might be just 10 that I think are interesting enough to put on the site.
So out of 400 tips, I publish 10. Thatís 390 tips a day that donít make it onto the site. Constantly, people would email me and say, hey, whatís up, I sent you all this stuff and you never published it.
Conversely, I had journalists and investors emailing me all the time saying, hey, what do you know about Company XYZ? I donít see anything about them on your site, but do you know anything about them? And it turns out I would know a lot about them because thereís a lot of stuff about them in my database that never made it onto the site. So I figured I could make both parties happy.
I could just let the journalists and investors and all those people search the tips. That way, the people who submit the tips are happy because theyíre being read, and the journalists are happy because theyíre getting the information. I could stick myself in the middle and take a little toll for the service.
And thatís what I did. I priced it kind of high because itís for businesses. My pricing model: I decided that it needed to be higher than my cable bill, which is 50 bucks, so I made the service $75.
Dot.com layoffs and collapses have not stopped, but media attention doesnít seem quite as focused upon it now. What kind of traffic are you seeing in light of this, and is FuckedCompany filling a gap that the business press has been ignoring or otherwise unable to cover?
The press covers something when itís news, of course, but also when itís entertaining. There are always two types of people who come to FuckedCompany. There are the people who come because itís funny and entertaining and want to know whatís going on, like theyíre watching a TV show.
Then thereíre the people in business, whether in the dot.com business or any other business, who actually are using it for news and things like that.
I think eventually the people who are coming just for entertainment will stop coming, but the business people, if they need to read it, they need to read it.
My traffic is still going up. I have about four million unique users a month and a million page views a day. For the past year Iíve been saying that FuckedCompany is going to last just another two weeks, so weíll see.
How seriously do you take the legal threats you receive?
Not seriously at all. Whoís going to sue FuckedCompany? That would just be embarrassing.
Youíve said your mentors are your dad and Howard Stern. Youíve got statements on your site such as "Summer's almost here, the time of year when women make the world a happier place by wearing tight, breast-enhancing clothing," which reflect a very Stern-like sensibility. Do you feel that your audience is a male, Stern-worshipping crowd?
Hey, Iím just trying to sell T-shirts. I say that about the ladiesí T-shirts. In fact, some women, some lady friends have said ĎHey, I bought one of your shirts because I read that.í
Anyway, I just post whatís on my mind. Itís like the only site I can think of thatís not written by journalists, by analysts. Itís not written by executives, itís not written by investors. Itís written by a 25-year-old, geeky, single programmer that lives in New York City and thatís why I keep it that way. And part of that is that thing that you just said: Well, thatís something I would say.
July 12, 2001 © 2001 Media Life
-Marty Beard is a staff writer for Media Life.