A Conversation With Michael Wolff

by Claire E. White

Respected journalist, author and entrepreneur Michael Wolff is used to ruffling feathers. A current columnist for the Industry Standard and New York Magazine, his columns candidly address the latest happenings on the Internet. He is the author of NetGuide, one of the first books to introduce the Internet to the general public, and NetBooks, the bestselling 30-title series of Internet guides. His company, Wolff New Media, became one of the Web's leading content companies, producing the websites Your Personal Net and NetClock.

His latest book, Burn Rate, a controversial nonfiction exposé of the early days of business on the Internet, is causing a furor among the Web elite, inspiring outrage from some of those mentioned in the book and relief mixed with envy from those who were not included. Burn Rate tells the story of the rise and fall Wolff New Media, sparing no one in its candid portrayal of life during the glory days of Internet start-ups. In Burn Rate, Wolff vividly describes the landscape of the Internet in its infancy: the race to put up content first, his hilarious, sometimes surreal meetings with AOL executives, the greedy venture capitalists, the rapid expenditure of cash and other pitfalls and absurdities he experienced first hand during the early days of the World Wide Web. A story of the trials and tribulations of his own company, Burn Rate also serves as a fascinating history of the Electronic Revolution and the rise of Internet-born companies.

Wolff spoke with us about his time as an Internet entrepeneur, the future of books and print media, and how he came to write Burn Rate.

Where did you grow up?

Suburban New Jersey.

What was your first job in journalism?

A copyboy at the New York Times.

When did you first become interested in the Internet?

Someone first mention the Internet to me in (I think) late 1991. This person told me I could get the stuff I was paying hundreds of dollars a month for on CompuServe for free on this thing called the Internet. Except, this person said, there was no real way for an average person to get to the Internet. Great, I thought, some help.

What do you like to do in your spare time?

Spare time?

Who are some of your favorite authors?

Saul Bellow, Norman Mailer, Joseph Heller, Mark Twain.

When did you first know you wanted to be a writer?

I was a kid; my fate was always clear.

Let's talk about your new book. Why did you decide to write Burn Rate?

Just as the battle with my investors was reaching its peak, I remembered that I was, in fact, not a businessman, but a writer. It occurred to me at approximately that moment that this business catastrophe was a great story.

In the book you have some amazing anecdotes about the people you met during the Gold Rush days on the Web. For example, would you tell us about the first time you met Louis Rosetto, the founder of Wired magazine?

He came to my house. He had first gone to see a lawyer at my wife's father's law firm hoping they'd help him finance this idea he had for a new technology magazine. But they wanted to get rid of him so they laid him off on me. I took pity on him and bought him a beer, hoping that he would then go away. But he turned out to be unshakable.

What was the strangest aspect of your dealings with AOL?

That reality shifted so quickly and so easily. One moment, everyone had agreed on something; I mean we were all enthusiastic, committed, charging ahead, and the next moment, gone, no agreement, no enthusiasm, no memory of the former moment in the slightest.

What kind of reactions have you gotten since the publication of Burn Rate?

People who are in the book are apoplectic. People who are not in the book but who suspect they could quite easily have been in the book are grateful. And for people who have had an experience in a start-up company, it's deja vu all over again. The latter tell me that this experience I describe, which I had always thought was too crazy to be anything but unique, is, in fact, just the start-up experience.

BURN RATE: The amount of money a promising start-up company consumes each month in excess of its income. Burn capital too fast, and you are out of business; burn capital too slowly, and you risk falling behind in the competition to innovate, expand and gain market share.

Knowing what you know today, if you were transported back in time before the major expansion of your company, what would you do differently?

I suppose I would not have taken money from investors. On the other hand, then I would not have been able to write Burn Rate. In the end, I think the pain is worth the book.

Since you walked away from your company, what changes have you seen in the Internet?

If possible, the Internet business has grown even more absurd. There are still no successful business models; we've upped the ante from unreal net worths of hundreds of millions of dollars to billions; and we've managed to create a myth that everyone must have a Web site.

In your column and in speaking engagements you have espoused the "Mother Metaphor." Would you elaborate on this concept of yours?

I think the technology business speaks to itself. I don't think it speaks to the real American audience -- my mother, my mother's friends, my kid's teachers, my real estate agent, my dry cleaner, a whole population of people who don't make their living from the Internet.

Do you regret selling Net Guide?

Not for a single second. I sold Net Guide to CMP, a company so dumb that God must have personally intervened to give me this business opportunity.

Who do you feel the leading Net-born companies are?

I don't believe that there is any Net-company that is dominant today that will exist in its present form 36 months from now. Therefore, I would say "leadership" in this industry is almost an irrelevant attribute.

I'd like to talk about the Internet and the book publishing industry now. What do you think about the viability of electronic books? Will they replace paper books eventually?

Without question. Most reference publishing is certainly better served in a searchable digital format. Of course, we are a long way from agreeing on, no less getting comfortable, with that format.

How will the Random House/Bertelsmann merger affect the publishing industry? Will it have ramifications beyond the book world?

I think it will speed the growth and the need for independent book producers. The need for such "independents" will come not only from readers but from these megacompanies which will not be able to produce books economically.

You have stated that, "it's likely that the widespread faith in advertising as the universal business model will soon hit the wall." Why do you believe this to be true? Is the subscription model the way of the future for online publications?

"If possible, the Internet business has grown even more absurd. There are still no successful business models; we've upped the ante from unreal net worths of hundreds of millions of dollars to billions; and we've managed to create a myth that everyone must have a Web site."

If we are seeing one clear trend, it's constant downward pressure on online advertising rates. Advertisers are just not seeing value in Internet media buys. Yes, it's logical that we'll start seeing models that combine subscription and advertising revenue streams.

What online content are you willing to pay for?

For starters, virtually anything that saves me time and money.

Do you ever miss the stress and excitement of the days described in Burn Rate?

Right.

What was the most important thing you learned from your experiences described in Burn Rate?

As an entrepreneur, I learned that I should be awfully careful about whose money I take. As a writer, I learned that there are good stories in very unlikely places (most books by writers about business seldom show you how business is really done -- and that turns out to be riotously funny). As a husband, I learned that when you work with your wife you can discover vast new areas of marital support and annoyance.

What projects are you working on now?

I'm writing a weekly column about new media for the Industry Standard and a regular column about old media for New York Magazine. Meanwhile, I am looking ahead to both new literary and entrepreneurial adventures.

Return to the August 1998 issue of The IWJ.