Meet Brad Greenspan and at first it seems like he's a visitor from another era -- the Internet bubble of 1999.
He's a 28-year-old chief executive of a public Internet company, eUniverse, with tens of millions of users and big backers like Sony.
But listen to Greenspan, and it becomes clear that his story is far from the fairy tales that made millionaires, at least for a while, of so many recent graduates who had the good fortune to cross paths with venture capitalists at just the right moment.
PHOTO: NY TIMES
Since its founding in 1999, eUniverse has scraped by with barely enough cash to keep the lights on. While the bigger sites tried to emulate prime-time television, with quality programming and big brand advertisers, eUniverse resembles late night fare on the more obscure channels. Aimed at women aged 25 to 54, its network of sites are cheap, corny, crass and profitable. Its advertisers are more likely to sell debt refinancing and online diets than cars or perfume.
But the network of sites has become the 15th-biggest service on the Internet, with 18 million visitors in November, according to Nielsen/NetRatings, which researches Internet traffic patterns. While it is a small business -- with only US$6.7 million in revenue in the quarter ended Sept. 30 -- it actually makes a profit.
EUniverse is a prime example of a species of Internet companies that are thriving even in the harsh climate that has killed off many of the dot-com giants of a few years ago. This new breed emerged dodging the feet of their seemingly fearsome rivals. As a result, they are small, scrappy, able to live on the leanest diet and willing to do whatever it takes to survive.
"We made it work in the mean streets without venture capital funding," Greenspan said. "We have had to build and grow at a fraction of the costs that other guys are spending. And we have not been afraid to stop and change where we were going. The companies that raised all that money had to stick to their business plans."
The other Internet companies doing well have a similar low-rent strategy. Overstock.com, for example, is one of the few growing online merchants not affiliated with traditional retailers. Founded by Patrick Byrne, a former aide to Warren Buffett, the chief executive of Berkshire Hathaway, Overstock buys distressed inventory from failing dot-coms and other businesses that need cash and sells it from a no-frills operation in Salt Lake City. Byrne says Overstock, which is privately held, is profitable -- having become so in November -- and expects to post revenue of about US$11 million in December.
Another up-and-comer is classmates.com, which charges users US$29.50 a year to find old school chums. IWon.com, an Internet portal that gives users a chance to win cash prizes as they surf, is thriving and has just agreed to take over Excite.com, the once high-flying portal that was backed by the elite of Silicon Valley.
The biggest force in online commerce these days is not Amazon.com, but eBay, a flea market of individuals and small businesses who collectively sell three times as much as Amazon.
Sites linked with Fingerhut, the downscale catalog merchant that is a unit of Federated Department Stores, and QVC, the shopping network subsidiary of Comcast, post far more sales than sites for big names like Wal-Mart Stores and Sears, Roebuck & Co, according to ComScore Networks.
As a senior at UCLA in 1997, Greenspan wanted a job at a big Wall Street firm, but he couldn't get one. So he started his own firm. What he named Palisades Capital was the telephone in his dormitory room and the fax machine at a nearby Kinko's from which he sent unsolicited pitches to raise money for companies whose filings with the Securities and Exchange Commission showed that they were low on cash.
Amazingly, several agreed, and even more amazingly, Greenspan found investors who put US$60 million into four of them, including the remains of the Hayes Corp, once a leading maker of computer modems. Greenspan walked away with US$2 million in commissions, with which he decided to bootstrap himself into the Internet business.
His first move in putting together what was to become eUniverse was to buy CD Universe, a small online music store founded and largely run by one person, Charles Beilman, in Wallingford, Connecticut, in April 1999. He used his newfound fund-raising skills to get US$6.3 million in investments from Lehman Brothers and some others.
Greenspan's strategy was to use his money and stock to buy popular sites that he could link together to sell CD's and other goods. He searched the Media Metrix ratings that measure online audiences to find mom-and-pop sites with growing popularity.
By the end of last year, Greenspan had sold the CD business back to Beilman, for US$500,000 less than he paid for it, renamed the company to eUniverse, moved it to Los Angeles and focused on serving women through other small sites he had bought. The most popular is flowgo.com, which offers goofy animated e-mail greeting cards. Dancing babies, dancing animals and dancing fat people are common themes. So are illustrated versions of the sort of corny jokes that fill so many e-mail boxes, like "10 reasons why it's great to be a dog."
Other eUniverse sites, like funone.com and justsaywow.com, offer similar content with different styles. Ishaah.com, for example, offers inspirational poems and e-mail greetings with a native American theme.
"This is television," Greenspan said. "People come to get their minds off something else."
Unlike TV, the eUniverse sites constantly ask users for their e-mail addresses. That's why online greeting cards are so useful. The company now has 40 million addresses, and half its revenue comes from sending e-mail advertising to them. The company boasts it sends one billion e-mails a week.
But the advertising market is soft, so Greenspan now wants to develop eUniverse's own products and services to sell to its audience. It started a venture to sell refilled printer ink cartridges and Cupid Junction, an online dating service. With lots of women, who can use the service free, eUniverse can sell memberships to men, who pay US$1.60 to US$3.33 for each message they send to a woman. The service now has US$300,000 a month of revenue and 80 percent profit margins, Greenspan said.
Next up, eUniverse has bought exclusive online rights to distribute a home anthrax test kit. Never mind that the Centers for Disease Control and Prevention runs multiple bacteria and genetic tests that take days to confirm cases of anthrax, this is exactly the sort of product that will keep the new smaller Internet companies afloat.
"It may be controversial," Greenspan said, "but the demand is there."
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