The Internet’s Filthy Roots

(Bloomberg Businessweek) -- Most of us think of the business leaders behind the modern internet as clean-cut, scientifically minded overachievers, such as Amazon.com’s Jeff Bezos, Facebook’s Mark Zuckerberg, and Google’s Larry Page and Sergey Brin. But as David Kushner writes in The Players Ball: A Genius, a Con Man, and the Secret History of the Internet’s Rise, their arrival followed a tumultuous period when the web was a Wild West and less refined characters made fortunes by staking claims wherever and however they could.

The so-called genius in The Players Ball is Gary Kremen, a Stanford grad who gets his start as a teen selling stolen copies of Playboy. He’s so badly dressed and unsociable that he’s asked to leave his Goldman Sachs summer internship early. He doesn’t change much as an adult—living on burritos, attending meetings in dirty T-shirts, and not brushing his teeth.

Yet in the early 1990s, Kremen is shrewd enough to realize that certain domain names will be worth a fortune one day. He scoops up the rights to some of the choicest, including jobs.com, housing.com, autos.com, match.com, and sex.com, the latter of which he one day envisions as a sexual wellness site. He’s more than a little prescient: In 1994, Kremen borrows $2,500 and turns match.com into an internet dating site that would eventually become a multibillion-dollar business.

The site doesn’t take off without some finagling. Early on, Kremen goes on a tirade, incensed that match.com doesn’t have any women users. So the company has female interns post laudatory reviews and a woman on staff pose as a user for a Rolling Stone spread. When the board tires of Kremen’s obnoxious behavior, he quits Match, never pocketing a nickel from his investment.

If Kremen is the closest thing to a hero in The Players Ball, the villain is Stephen Michael Cohen, a convicted con artist who passes bad checks, impersonates lawyers, and gets into trouble in the early ’90s for running a swingers’ club in a quiet upscale Southern California neighborhood. He also operates an online hookup service, the French Connection, from a jail cell. When he can’t attract women to the site, he fakes it by posing as a female user named “Tammy.”

Cohen strikes virtual gold when he acquires Kremen’s sex .com through an elaborate fraud that involves impersonating a vice president of an internet domain registration company. He turns it into a thriving business, with 9 million members paying $24.99 monthly. Along the way, he helps pioneer many things we now take for granted online, such as banner ads and secure credit card transactions. Cohen may be a crook and a sleaze, but he, too, is something of a visionary.

Having missed out on his match.com millions, Kremen is determined not to endure similar humiliation with sex.com. Kushner devotes much of The Players Ball to his protagonist’s multiyear, drug-fueled legal crusade to win the site. That’s too bad. Like the porn references Kushner copiously sprinkles throughout the book, the lawyerly thrusting and parrying get numbing. Kremen prevails in 2001 when a California judge rules that domain names are, in fact, property and that he’s the rightful owner and awards him $65 million in damages. As his lawyer puts it, “The substantial size of this damage award sends a message that the internet is not a lawless wasteland.”

But is the virtual world really tamed? Today’s internet business leaders may practice better dental hygiene, but they still prefer to operate as if the web were an unkempt frontier where rules can be ignored. Perhaps the best example is Travis Kalanick, the former Uber Technologies Inc. chief executive officer (and still board member) who, in the rush to dominate the ride-sharing industry, fostered a Darwinian corporate culture that tolerated sexual harassment, alleged theft of intellectual property, and efforts to mislead government authorities.

He’s obviously not alone. Until recently, Zuckerberg turned a blind eye to hatemongers exploiting his network to peddle execrable conspiracy theories. Now he’s joined political leaders in the U.S. and Europe who call for tighter rules on the internet. It’s a recurring theme: Entrepreneurs often cry out for regulation only when it might at last benefit them.

By the end of The Players Ball, Kremen and Cohen have moved on to new hustles. Having sold sex.com for $12 million, Kremen, now a clean-energy advocate, runs for a seat on a water district board in Silicon Valley and uses his fortune to pummel his hapless opponent, an environmental attorney. (Spoiler alert: Kremen wins.) As for Cohen, having recently completed another prison stint, he’s salivating over a new internet technology: Bitcoin.