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How I Survived the Gold Rush Years on the Internet. By Michael Wolff.

Michael Wolff: Burn Rate. How I Survived the Gold Rush Years on the Internet, Simon & Schuster, New York 1998, ISBN 0-684-84881-3.


12.03.1999 · Reviewed by Douglas Merrill


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Michael Wolff was not present at the creation of the internet. He missed that by a good twenty years. But he was there when the money started to pour in, when Yahoo! went from an exclamation to a trademark, when Wall Street discovered Silicon Valley. His company, Wolff New Media, rode the wave from modestly profitable publisher of books about the internet to would-be major internet media firm, heading for public ownership and a market value over $100 million. It didn't quite turn out that way; Burn Rate tells how and why.

This is an extremely funny book about two potentially dry topics: business and computers. It's funny because even though he is up to his eyeballs in money and machines, Wolff never forgets that people are in charge of both. He captures not only the uneasy fit between techie and financier (to say nothing of the mile-a-minute media and public relations people) but the gold rush spirit of the first years when people tried to make money from global computer networks.

Seven years ago, very few people had heard the word internet. The idea that internet companies would be household names was laughable, for there were no internet companies. And the idea that computer networks would be the defining feature of the last decade of the twentieth century, well that was somewhere between silly and sad. In the chapter, „How It Got to Be a Wired World," Wolff tells about the transition, starting with what he initially thought of Wired magazine's chances for success:

„[The magazine's] mission was to do what Rolling Stone did in the 1960s - become the voice of a new age and articulate the inchoate. Everything is changing. Whether we want it to or not, it is going to change. People are going to need help. They are going to need help understanding these massive social and cultural shifts brought about by the fevered pace of technological development and commercialization.
To talk about Rolling Stone in the context of creating and planning a new magazine was as real as assuming you would finance it with lottery winnings. Rolling Stone, an unlikely crystallization of the commercial and cultural, happened by chance, by fluke, by mistake. Playboy was like that, too.
Which would therefore have to mean that Louis Rossetto, this middle-aged man living his expatriate life while fantasizing about how he could be at the center of a new American era, would have to turn himself into Jann Wenner or Hugh Hefner and do for computers what Wenner did for rock and roll and Hefner did for sex to realize his dream. One might as well set out to be Gandhi."

Two years later,

„Out in San Francisco, Louis Rossetto and Jane Metcalfe launched the first issue of their magazine, now called Wired, in January 1993. It would have been reasonable to expect this effort to go unnoticed. The venture did not have the necessary capital to promote itself. It did not have access to all-important distribution channels. Its management had scant publishing experience.
What happened?
How is it possible to achieve the exposure, the recognition, the understanding that producers of other products pay millions more to achieve?
What siren song was sung?
The country was coming out of a recession, the recovery being led by the technology sector, an industry of young men looking for a positive identity. ... What's more, Wired magazine was a product designed as an artifact - it wasn't just a magazine, it was a statement.
The zeitgeist was in play.
Climb on board."

Wolff climbs on board with a company designed to introduce people to the internet with a book called NetGuide. The book appeared in January 1994, a few months after the release of the first web browser; „The first call came on January 2. 'Hello? Is this the Internet?' Forty thousand more calls came into our six-man company over the next few months."

Exponential growth wasn't a common term in 1994, but Wolff was riding a wave that made exponential growth not just a possibility but an expectation. That wave carried him onto the front page of the Wall Street Journal and into the web of an investment banker Wolff had once gone to college with. „It was the age of the entrepreneur. It was the age of the visionary. Ideas, concepts, constructs, theories, perspectives, perceptions, points of view - all had value if they were sweeping enough, grand enough, beguiling enough. The great, quick fortunes were all about imagining the future." Thus Wolff begins transforming his book company into a new media company, engaged in talks with Time Warner and AOL, competing for rounds of financing, racing to keep money flowing in faster than it flowed out, and chasing the grail of new economy companies, the initial public offering.

„For [the investment banker], if everything went well, we'd take the company public. That was the most ambitious scenario. That was hundred-million-dollar territory. Going public for a financier was like an election for a politician. Sure you could be appointed to a position of vast influence ... but it was not the same as winning an election. One wanted the public's acclaim and love."

But as Wolff notes, the zeitgeist is an unreliable business partner, and the ways for a company to fall short of going public are many. From personality conflicts to conflicting internal interests, from intermittent buyout talks to sheer failures of nerve, the odyssey of Wolff New Media shows most of them. Are there larger lessons from this story? Certainly - mostly business truisms like have a clear focus, know your partners, and keep your eye on your own interests - but getting there is far more than half the fun. It's a gold rush story full of larger than life characters; if you've ever wondered how internet companies came to be worth billions of real dollars, this is the book to read.
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