Cheater’s Poker

Is the Internet full of it, or just Michael Wolff?

Burn Rate: How I Survived the Gold Rush Years of the Internet
By Michael Wolff
Simon & Schuster; 268 pages; $25

About two-thirds of the way into Burn Rate, Michael Wolff’s sardonic tell-all about his failed attempt to become an Internet multimillionaire, the author pauses to ask himself a set of questions I had been wanting him to address for 150 pages:

How many fairly grievous lies had I told? How many moral lapses had I committed? How many ethical breaches had I fallen into?

Alas, it only sounds like soul-searching. Wolff relishes the many deceits and indiscretions he commits in his pursuit of Internet riches and, after this brief hiatus, he redoubles his efforts to hoodwink the financier-partners he believes are out to swindle him.

Burn Rate, currently all the rage in Silicon Valley and on Wall Street and excerpted in the June Wired to wide acclaim, deserves our attention for its panoramic treatment of the Internet’s boom years and its pus-ugly picture of the get-rich psyche. But Burn Rate will attract the majority of its readers because its message–The Internet Has Failed Us–panders to the current consensus. Didn’t the last round of Internet initial public offerings bomb? Aren’t the existing Internet stocks depressed? Isn’t the Internet really about technology and not content? Isn’t the Internet like cable TV–all those Web sites and nothing on?

The Burn Rate saga begins in 1994, as Wolff, a respected journalist and publishing entrepreneur in his 40s, attracts the interest of several heavyweight New York investors and $5 million in financing. The money men want to transform his little successes (a Yahoo!-like home page for the Internet masses–“Your Personal Net”–and the NetGuide series of books about what’s on the Internet) into the next Yahoo! As the investors and the investment banker prepare the foundation for an IPO–“There is no valuation. There’s only orchestration,” intones the investment banker–Wolff imagines a public company worth several hundred million dollars. Meanwhile, his company’s “burn rate,” the amount it spends in excess of income, soars. By 1997, many meetings, industry conventions, threatening phone calls, and transcontinental flights later, Wolff flees from his creditors and the crocodile swamp of deals and venture capital and legal disputes as competitors overtake his flimsy concept. He decides he isn’t a craven CEO, a Netrepreneur, or a deal maker. He’s a writer (with this book in him). And the Internet is a big joke.

Iowe Burn Rate a better synopsis, if only to excavate the psychopathology that runs through it like a sewer. But beware of comparisons with Liar’s Poker (1989), Michael Lewis’ first-person account of his wild ride on the Salomon Bros. money-go-round and his eventual escape. (In fact, beware of the flattering blurb by Lewis on Burn Rate’s dust jacket.) Charm, not malice, guides Lewis’ odyssey through a business gone similarly bonkers. Listen to Wolff’s treacherous heartbeat as he daydreams on his way to a business meeting with CMP Media, the multibillion-dollar computer-magazine publisher: “Would I get rich for being a visionary? Or would I get rich for being a charlatan?” CMP wants to buy Wolff’s Web sites database and license his NetGuide name for a magazine about the Web. Alison Anthoine, Wolff’s wife and attorney, sizes up the deal with the acumen of a confidence man. “They know nothing about this. And you know next to nothing,” Anthoine says. “It does appear, however, that we can sell them the next to nothing we know for a lot of money.”

Wolff gloats like a hyena when CMP makes the purchase. “I genuinely believe they thought that they were buying the Internet from us,” he writes. “Just think … how many stupid people there are in this world we can take advantage of.” To Wolff’s all-knowing smirk, CMP pulls the plug on the NetGuide concept a couple of years later, after having dropped tens of millions on it.

This sort of candor and cold-bloodedness abounds on every page. Wolff gratuitously singles out (by name!) one of his employees as having “extreme body odor.” He calls America Online executive Ted Leonsis “a fat man, an ugly man, sweating like crazy.” He labels his most dependable source of investment capital a “wire-thin, almost feminized JFK Jr. look-alike” and quotes the look-alike describing their investment banker as “a fat fuck.” Of an old colleague, Wolff writes, “I admired him at the same time I made fun of him (behind his back)”; he goes on to dismiss him as “a gay Sammy Glick.” He ridicules Wired founder Louis Rosetto as a “lost soul” who wears sneakers. (Full disclosure: I’m acquainted with Rosetto and the “gay Sammy Glick.”)

Wolff heaps analogous abuse on the Internet industry. “In the cyber business, it seemed that no one ever told the truth. Sometimes it seemed that there was no truth. It was all bullshit.” He calls AOL “the most dysfunctional company in America,” adding that “every business AOL had ever tried had failed.” The moronic Baby Bells are 18 months behind the curve. Microsoft hasn’t a clue. (More full disclosure: Microsoft publishes Slate.) The Washington Post? Ready for fleecing when it invests in NetGuide. Wolff admits only one person into his circle of virtue: Former Time Warner new media chief Walter Isaacson, who has since ascended to the editorship of Time. Isaacson’s genius was that he understood the Web’s potential but was smart enough to leave the new media division early.

D elicious dish, but watch out for the aftertaste. Wolff exploits the human tendency to confuse frankness and cruelty with truth-telling. And by repeatedly reminding the reader of what a dishonest, scheming little shit he is, he seeks to inflate his credibility. A real liar wouldn’t tell you that he’s a liar as Wolff does, would he? The wealth of verbatim quotations–constituting a good third of this book–also enhances Burn Rate’s verisimilitude. But should it? Wolff writes that he jotted down bits of dialogue on his legal pads during meetings while others composed to-do lists. Not to accuse anyone of Stephen Glassism, but I’d love to see Wolff post those copious notes on his promotional Web site,

As Wolff’s dreams of undeserved riches fade into a mirage, Burn Rate becomes the journal of a loser. And, like most losers, he fails to give the winners their due. No Web startup except for Yahoo! appears to be making much money, yet scores of insurgent companies–Excite, AOL,, Virtual Vineyards, Auto-by-Tel,, and eBay, to name a few–continue to massage the medium, attract serious investors, and lay the substructure for the inevitable: an Internet economy. What’s more, these companies believe in their products–unlike Wolff–and back them with serious managers, who, whatever their other weaknesses, are fleet-footed and care about their customers. Given Wolff’s transparent contempt for his industry, his business partners, his end users, and his colleagues–actually, everybody but his wife and Isaacson–it’s a miracle he got as far in the Internet business as he did.

Has the World Wide Web, which only appeared in 1993, failed us? Can any 5-year-old fail us? Compare the breakneck growth of the Web with that of any new medium of the past 150 years: the telegraph, the telephone, the motion picture, radio, television, cable TV, and the VCR. Blithe investors toss millions at the Web out of the conviction that it will subsume the other media, change the face of capitalism, and generate billion-dollar payouts.

They’re right. But consider yourself fortunate if you’ve never invested a penny in this market. Any sure thing attracts too many hackneyed ideas, like Wolff’s, and too much foolish money. For all his bluntness, Wolff never concedes that the product he was selling–essentially another set of Web directories–wasn’t that appealing. Nor, judging from this book, was its primary salesman.