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Here’s the program.
Hey everyone. I’m Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. Today I’ve got with me Gary Kremen, Internet pioneer and fist-pumping Mixergy fan it looks like. Many people know him as the man who owned the web’s most valuable domain, Sex.com. He had the site taken away from him and had to fight for it for years before winning it back and he eventually sold it. I want to ask him about that. What I learned today was that he got Sex.com for free along with Jobs.com, Autos.com, and a bunch of other sites because, Gary, you were one of the first people online. Right? You were one of the first people to get domains.
Gary Kremen: Yeah. I guess sometimes luck is good. It’s better than being smart. Sometimes I have some luck, although not all the time. I just was earlier than others.
Andrew: He also owned Match.com and I want to ask him about that business, but the famous domains are just a small portion of a big business career. He’s invested in companies. He’s run companies. He’s owned a pay-per-click search company that I hope to ask him about. Invest in Cleantech, which I will probably stay away from because I don’t know anything about being clean or Cleantech. Patented dynamic web pages. I want to ask him about all of that. Gary, first question I got to ask you. You’re at home now, right?
Gary: I am.
Andrew: Is this the house that you won from the guy who took Sex.com away from you?
Gary: It is not. I lived in that house for five years or so. Slept in his bedroom, of all things. Big house. I got married about two years ago and the house was too big for me. You would think it’s cool to have a 9,000-square-foot house. It’s actually, depending on your personality, I like a much more cozy, 1,500-square-foot home. I’ve shrunk down by a factor of six.
Andrew: Oh, wow. So single guy, you have a home that’s huge. It’s six times bigger than the home that you have now that you’re a married guy with a child.
Gary: That’s right. Kind of interesting. Kind of a difference in lifestyles, so to speak.
Andrew: Can you tell people the way that you got that house after you won it in court?
Gary: Yeah. As you may or may not know, I was in this fight with this crazy, five-time-convicted felon. I’m still in a fight with him. It has not gone away. Eventually, I found out he had a house under many of his different sham, off-shore company names and I eventually got a court order. It wasn’t awarded to me, I had to go take it. I got a court order and I finally got it and I got there and I found out there was nothing in the house. There was no wiring. There was no anything. He took the toilets out of the house. He took the plumbing out of the house. I had a beautiful shell of a house in the richest suburb of America, Rancho Santa Fe, but eventually I fixed it up and I lived there.
Andrew: Did I read right? Did he crap on your house too before giving it to you?
Gary: He did leave a little gift like that. Oh well.
Andrew: How do you go and live in a place like that? It’s become such a part of the stories told about you but I always wonder, doesn’t he ever feel creeped out? Or doesn’t it just build up resentment and anger in you before you go to sleep in a house that belonged to the guy who did this to you and that you were given in this way?
Gary: It actually came from my own money, if you think about it that way.
Gary: There was the money based on what he stole from me. A little bit of a live and let live. Having the possession is good. I was enjoying it while he was sitting in a jail cell, which was okay, or he was in Tijuana. You got to separate business from other emotions within reason.
Andrew: You’re living in a house, tell me what you feel. Honestly, you and I are now friends. We’ve talked for a good five minutes, six minutes here.
Gary: It was a little creepy, but it was cool on one way. It was actually the second house I took. I actually, later on, took a porn star’s house who I lent some money to and didn’t give me the money back. That’s my new career, taking people’s houses.
Andrew: Gary, this is like collecting ears for you, isn’t it? You know how the old warriors would do that?
Gary: That’s right. It comes with a lot of psychic pain, the ear takings. Maybe I won’t be doing that as much anymore.
Andrew: All right. Let’s go back and talk real business here. Match.com. I had an interview here with Fran, who you hired to help run Match.com. Right?
Gary: That’s a correct statement.
Andrew: Let me ask you this. I interview a lot of people, they’re founders, they’re titleist founder. What was your relationship with Fran?
Gary: Yeah. I love Fran.
Andrew: Still friends today, I know.
Gary: Still friends today. Fran was employee number six. There’s this, I’ll call it founder creep, you see it in Silicon Valley a lot. I forget what the saying is, “success has many fathers” I think, “failure has no mothers,” I forget what it is. You know what I’m saying? I call it founder creep, so to speak.
It’s funny. I’m doing this company Clean Power Finance and I put up the money. I was the founder. I wrote the patents. Now there’s some other guys who are calling themselves founders who are in there. In a weird way, I’m okay with it because sometimes people who are called founders, you don’t have to give them as much stock and you don’t have to give them as much salary because in their mind, they have this psychic benefit of being a founder. So what?
Andrew: This is Gary’s first day on Skype, by the way, and he’s already getting messages from Russian brides as we’re doing this interview. True? First day on Skype.
Gary: [laughs] First time ever Skype.
Andrew: First time ever, for a Mixergy interview.
Gary: Don’t disrespect a Skypement.
Andrew: In a way, it’s good, isn’t it? You’ve said it is, of course, that it’s good that people call themselves founder. Let me ask you then, what was the experience for you, from your point of view? You bought Match.com for how much?
Gary: It was funny. All those domain names were not taken. I actually forgot if Match, I got it originally. There were some guys who had a little email-based dating service that went out of business.
Andrew: My research says 2,400 bucks you bought Match.com, the others you got for free.
Gary: I think that’s an accurate statement. I bought the business, too. What I bought more of was the email addresses. I saw the value of email addresses in starting. How do you get a seed of a dating service? You got to have someone to start dating. Probably 2,400, some guy in Vegas who was so happy to see $2,400 which I wrote as a credit card cash advance. I was that poor back then.
I always had this vision, I did notice. Before I did Match, I did another business that’s still in business today, LAT.com, Los Altos Technologies. This was in the early ’90s when everyone was email and the only Internet was FTP. We were downloading software, cleaning it up, and reselling it on big tapes to people at big companies. I made some money on that. That was a little bit of my seed money.
Andrew: Downloading open-source software and selling it essentially, right?
Gary: Yeah. World’s first open-source software company. One thing I notice is more and more of the people who are buying the software were administrators and they were women at like HP who would send in the purchase order.
Before that, I’ve been on the ‘net since ’85, there was no women on the ‘net. There was no women in email. I started noticing, in the early ’90s, more women on email and I said, “Hmm. I wonder if I could convince those. . .” Then I saw attachments. I said, “I wonder if I could convince women to get their pictures scanned as an attachment at Kinkos and I could sell access to them.” Just like the 900 numbers. That was the genesis of the idea. I was doing a lot of dating using the 900 numbers in the newspapers. I put it together; I had that Gestalt. “Shoot, we can do this through email and I could charge money.”
Andrew: Okay. How do you get started with that idea? By the way, really? You were doing the 900 dating things that we saw in the newspapers?
Gary: I was. I was one of those guys who’d call up because that’s how you would do dating back then. How else could you meet some people?
Andrew: I thought that was just a PR thing that you told the papers. So you really were doing it. Did you really offer $50,000 bounty to anyone who introduced you to a woman?
Gary: That was way later on.
Andrew: Ah, that was later on. Okay.
Gary: $50,000. I didn’t have any money back then. I was doing those 900 numbers and would be charged $2.99 a minute. I did research on those and I found out there was a lot of money behind those 900 numbers. People made a lot of money. There was the sex chat, but that’s how you would do dating. You’d put the little ad and they’d give you the ad for free and later on you’d have guys call. I said, “That’s a good business model.”
The first implementation is I met a programmer across Usenet, a brilliant guy named Kevin Cunselman [SP], and I said, “I want you to go build this thing and it’s an email-based dating service where you send commands to get send me profile anon.38 or anon.cutegirl.” That’s where handles, we kind of invented the anonymous handles there, among many, many, many other things.
I had an implementation of that running in 1994 and it was growing. I think we hired Fran in ’95. Earlier than that, I saw the web for the first time. I put a web page on it, but until probably late ’95, most of the traffic was through email as opposed to web, because most people didn’t have the web.
Andrew: Uh huh. When you sold it, you were as reluctant as Fran was to sell it, weren’t you?
Gary: We were forced to sell it.
Andrew: Why? Tell me a little about that.
Gary: I raised some Angel money first in early ’95. Later, I raised venture capital and I think what happened was when they saw the content, they got embarrassed. Venture firms have limited partners who are conservative institutions and people were a lot conservative back then. When they saw gays hooking up, when they saw short-term dating, I think it really freaked them out. I know it freaked them out.
Andrew: What was the business that they bought into?
Gary: I don’t think they thought that out.
Andrew: They were buying electronic classifieds, though, right? They bought Jobs.com and the other domains that we talked about.
Gary: They didn’t know about that but I was able. . . They knew about it, they didn’t know where those were going because people didn’t know. There weren’t that many people on the web. It was electric classifieds and they bought the vision of where I thought I could take it, that people would be doing classified advertising online and dating would be our customer acquisition vehicle. They bought into that. When the realities of dating hit, they were like, “Oh my God.”
Andrew: Actually, tell me how you were going to transition people from dating to the rest of the system because it seems like Facebook and other companies have gotten people in with dating and then built robust businesses on top of it. What was your vision for doing that?
Gary: Yeah. We had email traffic growing at 3% to 4% a day. There’s many techniques when you have one property to get them into another property. I think I was the first person to ever send spam in 1990 or ’89. I got, when I was running my little open-source software business, I would find peoples’ email addresses in magazines and send them an email and go, “You should be buying this.” Or read Usenet, and probably the first email harvester ever from Usenet.
I think once you got some email addresses, people weren’t as reluctant back then, you would go, “Join Match.com and get free auto ads.” Things like that. I would’ve figured out the transition, no doubt about it. The dating software took up a lot of the cycles of the company. We only raised a couple million dollars. I made some real early mistakes. Mistake I made number one back then, you ask some of the questions of regrets. I made a mistake, I probably made two one-billion-dollar mistakes in my life. The first one is, let me talk about pre-Match, pre-electric classifieds, if that’s okay?
Gary: I was number 14 on the firewall’s mailing list when I had this open-source software company. The reason it’s still in business is we transitioned it into security software. They’re still selling products today to remove classified information from disk drives. I saw firewalls really early on. I saw companies like Tripwire. I was the first Tripwire implementation. I could’ve worked the company to the firewall area two years before checkpoint. Mistake number one.
The mistake I made next, it was a funny story, actually. There, I raised a small bit of money and we got a CEO in. The first day, he comes in, he says, “Before we start work, let’s get on our knees to pray to Jesus for the success of the company.” Nothing against Jesus, I respect him highly, but that wasn’t my thing. I said, “I will run my next company. I will not have this happen.”
When I started Match, I had a bunch of venture guys really interested in the deal, including this firm called Kleiner Perkins which is a really good firm and another one called Institutional Venture Partners. They said, “Gary, we’d like to do two things. One is, we have this really experienced guy and we’d like him to be the CEO. The second thing is we got these other guys working on a team, these six guys, and we’d like to merge you with them. We’ll give you half the equity and we’ll split the rest of it among these six guys.”
They introduced me to this guy named Fred Gibbins, who ran a company called Software Publishing Company. You ever hear of it? They were a big software publisher before Microsoft came out. He takes me up in his plane, and he had a stroke, so he’s half-paralyzed and he’s flying with one side of his body, and by the time I got to Truckee, not only could I not bond with the guy, they want to get back on the plane. I don’t even know if I got back on the plane. I think I rented a car and got back. I’m like, “I’m running my gig and it ain’t you guys.”
I turned down this well-known two venture firms to take a lesser-known one where they would let me be CEO. Those six guys changed the name of their company. It was called Architects back then. They changed it to Excite. I would’ve been Excite, Excite at home. That stood at the IPO at one point one billion.
Andrew: That’s merging into other, I see. In that case that’s merging into other people’s ideas. You seem to have a lot of your own ideas. Are you a person who can follow through with the ideas or do you have so many ideas that you just can’t keep up with them?
Gary: I think so many ideas I can’t keep up with them. I do best when there’s people around me and I can hand off the ideas to them.
Andrew: Okay. I want to hear a few of those examples, but let’s wrap up Match.com. What happened at the end of Match.com?
Gary: What happened, it’s not a good story, but it worked out slightly okay. The board, over my objections, decided to sell the Match business unit for $7 million to a company called SendIt. SendIt, nine months later, sold it to Citysearch/Ticketmaster/IAC for about $15 million. Talk about mispricing.
The company took that money and used it for something that I thought was insane, which was work with newspapers on classified advertising, be the backend, the back office. What we found is newspapers were incredibly slow, and I knew that, because I went around and talked to all of them about classified advertising and I can see how glacier, look what roadkill they came. The company took in $10, $15 million dollars more and went out of business in 2001.
Andrew: I see.
Gary: One of the things that we created at the company was we invented this idea of web pages that change based on who you are and web pages that change based on a database. We got an issued patent for that. When the company went out of business, the patent was still there. People forgot about the patent. I didn’t because it was my patent. I was the primary inventor.
Comes 2004, when I had some money, I bought the bridge notes, the last series of money that went into the company, for a pittance. Okay? I held a foreclosure sale to get at the asset. I bought a couple million dollars of bridge notes for $20,000 because who wanted this? They were written off three years ago. This company called Intellectual Ventures came in and bought, at the foreclosure sale, came in and bought it for the full face-value of the notes, a couple million dollars. I walked away with a couple million dollars on it. I’m the only one who saw dollars.
Andrew: It’s because of the patent is the real value in those, right?
Gary: Every single company on the Internet, for the most part, infringes on it.
Andrew: I see. They’re a company that goes after infringers.
Gary: Actually, they have a better business model than that. I think they started out by it, but what they do is they go to a company and say, “We’ll license you our portfolio in exchange for you licensing your portfolio into this pool. We’ll charge a management fee.” Pretty smart, right?
Gary: That’s a brilliant model.
Andrew: Sounds like your kind of business. The kind that you would come up with.
Gary: I like that. I’ve looked at buying patents over time. I love writing patents. I just got one.
Andrew: For what?
Gary: A device I invented. Okay. I know you don’t want to talk about Cleantech, but I’ll tell you a little bit about it.
Andrew: Do tell me. I was kidding. I was just trying to prep you and the audience for my lack of knowledge in this space. I know more Internet, but I’m open to learning.
Gary: You’re a bright guy. Please. Here’s the thing, when you give people solar at their home and if you loan them the money, you have no collateral. My idea is a device that goes in the panels. There’s a device already that if they don’t pay their bills, we turn it off from remote, or send the power back to the power grid. With it, people are going to be more likely to loan money for solar.
Andrew: Ah, I see. Okay.
Gary: I just got that issued.
Andrew: Is it easy to bypass that?
Gary: You mean a physical device?
Andrew: Right. The average homeowner’s not going to be able to do it.
Gary: If you’re an electrician, you can.
Andrew: I see. All right. Right on.
Gary: I just found another cool patent I guess I can talk about.
Andrew: Hit me.
Gary: Okay. You’re a young person. They have no collateral for anything, for a loan or something. What do most young people have that’s of value? You’re an 18 year old, what do they spend their day on?
Andrew: I don’t know what they spend their day on. They have a lot of time and they have a lot of future earnings power.
Gary: What do they do online all day?
Andrew: Search and email and Facebook.
Gary: Right. So what about their email account and their Facebook account as a collateral?
Andrew: Oh. You’re saying take their email account as collateral?
Gary: Yeah. Everyone knows you. It’s a pain to change your email address. It’s even harder to recreate your Facebook. Let’s say you keep paying the loan, I’m going to tell all your Facebook friends you’re a good guy. If not, I’m going to tell them you’re a deadbeat. If you’re really not, I’m taking your account away. Just filed a patent for that.
Andrew: [laughs] How are you going to manage both those and the portfolio companies you’re investing in and everything else that you’re doing? Seriously, without being complimentary by asking this question, I’m really curious. How do you manage it?
Gary: Until I was married and I had a kid, I had no life, so it was easy to do that. Maybe I’ll go to the bathroom faster.
Andrew: [laughs] I mean, do you hand off properties over to people and say, “Go with it. Here’s the direction”? Do you have a handful. . .
Gary: Tried to do that. There’s people who can do things much better than myself. I’m not good at running companies. I see that already.
Andrew: I see.
Gary: If I can find someone. . . One of the things I learned in the Match experience was sell when you can for the most. Don’t be greedy. Take a single versus stealing second base. Take a double whether swinging for the fences. That’s okay. There’s nothing wrong with that.
Andrew: Four singles easier than a homerun is what you mean?
Gary: Oh my God. It’s so much easier. You get paid for hitting singles. Homeruns don’t always get you incremental. Most of the homeruns, you strike out. I’m much more into singles these days.
Andrew: I read a story about you that you wanted to be rich since you were a kid, that this was a major focus. Is that true? Is that what you were like? What were you like as a kid?
Gary: I was a nerdy, engineer type of guy. It didn’t take until when I was in high school to get a little less nerdy, be into girls, and stuff like that. Maybe I was more focused on math and science, but after college I was focused on making some coin.
Andrew: At what point did you finally do it? Did you look back and say, “All right. Now I really made enough coin”?
Gary: I’m not sure I can say that today.
Gary: Oh, God. It’s what Ice Cube calls that capitalist migraine, gunning to get paid. I’m not sure.
Andrew: Do you remember when you put the first million in the bank? Do you remember what that was like?
Gary: I don’t know. When it happened, and I hate to say this, that was so 20 minutes ago. I want to know what I’m doing in the future, not what I’ve done in the past. I believe my best stuff’s ahead of me. I know that sounds crazy.
Andrew: No. I believe it too. I can see, as I’m watching your career here, even on my sheet of notes, there is more maturity, there’s more organization, there’s more experience going into what you’re doing. Am I picking up on it?
Gary: Thank you, if that’s true.
Andrew: Here’s the thing, though. I notice it myself when I was the nerd who the girls weren’t going to go out with, I was so much more fired up. Now you’re a guy, who years later, years after you were a teenager, you’re offering 50,000 bounty to somebody who would introduce you to a wife. That means that you must have been, even at that point, really fired up. Did that drive you or am I just seeing my own life in you?
Gary: No. I don’t think so. I think many times the nerds convert, let’s call it. There’s a conversion going on and they’re just later developers. You got to have that fire down below, as broadly defined. Focus to go, what I’ll call, take the right hill and the battle because many times young people will take a hill that’s not a good hill. Hell, older people, everyone, they go after something that might not yield their goal.
Andrew: What drove you? What was the drive that just kept you going when there’s so many setbacks here in your history from the website being taken away from you to Match.com being sold for a penny?
Gary: I think it was an older desire and a continuing desire to prove myself.
Andrew: To who?
Gary: That’s a great question. Psychologists look at this, proving yourself. There’s usually a group of people and it changes at different places. When you’re younger, it’s the kids on the playground. Later on, maybe it’s a group in high school. Probably, if you think about it, you can identify who they are. Later on, people in college or in business school, you can probably pick the people out, who you want to prove yourself to. Maybe it’s a guy at the gym. It’s usually someone you’re trying to show your self-worth to.
Andrew: At your most productive time, who was that person? Who was that group?
Gary: In one case, it could be my parents, proving myself to my mom. I think a lot of people do that.
Andrew: Prove yourself to your mom because she never believed or because she believed too much and you had to show her?
Gary: Believing is one thing but proving is another. A lot of people talk. It’s results. The road to hell is paved with good intentions, as my dad says.
Andrew: How do you mean with your mom? If I’m pushing too much, you let me know and I’ll back away, but you seem like somebody who’s open so I’m going to ask the questions that I would ordinarily hold back with others. What was your relationship like with your mom that would make you want to prove to her later on?
Gary: I think she wanted, usually it was never enough type relationship. Bring home an A, where’s the A-plus type of person. I think that’s honest. I don’t know what you’d call that. Wanting an overachievement. Wanting an overachievement can foster overachievement. Foster a lot of dysfunctional stuff. Sometimes people who have over success, what’s the word I’m looking for? Overachievers. Yeah. To be messed up in lots of places.
Andrew: All right. Now I’m looking. You look like you have a nice family life. You’re married, you adopted a child. Am I understanding right?
Andrew: Life seems good. Are you still as driven now? Now that you’ve proven at least to them?
Gary: I’m less driven. I’m slightly less driven. It’s funny. This is so horrible to admit, but until recently, I would never, ever hire a married person. Didn’t believe in that. I’ve asked this interview question. You can’t legally do that, I would only hire someone married if they answered the question, so I’d go, “Is there any reason this won’t become the most important sole thing in your life?” If they would say, “Absolutely, other than my wife and kids.” They’re out. But if they said, “This would be more important than my wife and kid and family,” they’d be let in. To be done by me, that would be a tough question for me to answer.
Andrew: That’s the kind of honesty that I love to hear. Frankly, when you are a single person and it’s your only thing in life, you’re so much more productive than when you’re married. Aren’t you? Maybe I’m wrong.
Gary: I would never hire a developer who has a girlfriend or smells good.
Gary: Seriously. If they’re smelling good, what is it? If they have time for a girlfriend, to go to concerts, they’re not focused on the PHP. They don’t know the latest in Ruby. Do you want that person?
Andrew: I don’t want that person.
Gary: Or is that crazy?
Andrew: Did you physically restrain employees who wanted to leave early?
Gary: One time only and that was a mistake, because the labor board, I got in a little of trouble. I shouldn’t have done that. I won’t do that again. That was a long time ago. I did fire that person. It was funny. She wouldn’t come in on Sunday. I was under so much pressure. I don’t know how much of it was self-imposed or by the venture, but I said, “Everyone works every day.” She’s like, “I got to go to Sacramento to go see my father and there’s no work for me to do.” It’s like an admin. I’m like, “I do the wastebaskets if I done with my desk. I’ll clean up on the floor. I will find something to do.” She’s like, “I’m not coming in.” I did a public firing.
Andrew: Oh, wow.
Gary: I think that was vindicated, in my opinion, back then.
Andrew: What kind productivity did you get from people with that kind of culture?
Gary: I thought it was pretty good. There’s these arguments to be said, “Oh, it’s busy work. People need their productivity lower.” I said, “Today we’ll get you on Adderal or Concerta for you to focus.” No. Just joking. I thought it was pretty high. Maybe it wasn’t as high as I thought, but I think through the camaraderie of everyone in it together.
Andrew: Okay. That’s not something that’s politically correct, but I’ve got agree there too. When you get people who are. . . Not politically correct, but true.
Andrew: Your most successful biggest hit, was it Grant Media?
Gary: I had some good investments also. After I left Match, I co-founded a company called Net Angels with two guys. We merged that with a company called Firefly and sold it to Microsoft. That was okay. Then I made some small investments that worked out really well. A company called Resonate, that went public. Another one with this guy Peng Ong, who was very early. If there was any co-founder at Match, I would call him the co-founder, although I was 90%, he was 10%. He had a company called Interwoven, which was an incredible success. I wrote the first check and Resonate’s first check. Another company called Mediaplex was an even bigger win. Those are some pretty good financial wins.
Andrew: I see.
Gary: Like over 1,000 to 1.
Andrew: What was Grant Media? Was it just pay-per-click ads for this. . . Well, what was it?
Gary: It started when I had Sex.com. After I sold it, I made. . . What I decided to do when I got this Sex.com thing back, was I didn’t want to be in the porn business, per se, but I had some bills to pay and I had to do something. I decided I will buy a little pay-per-click search engine, just kind of like what I did with Match, but I’ll add a whole bunch of fraud algorithms on. This was almost earlier than Google. It was when Overture had pay-per-click. It was, I think, GoTo back then. I will turn it into a pay-per-click search engine and that’s the best and highest use for the traffic. That was pretty successful.
Then I figured out this new business model of going out to other search engines, and I called on a bunch of adult advertisers and got them to buy into the pay-per-click model. Then I called on more traditional search engines, and said, “Do you want adult listings?” They didn’t like to call on those companies. I would give them my adult paid listings in real time, kind of like what Google does on the AdSense or AdWords. Then, those search engines would say, “We can’t tell if we’re having adult or non-adult, so we’ll just send you all the queries.” Then I would get a query from non-adult and I would send it to a third search engine, get the results back, and give it to the first engine. That was an albatross business. That was a good business. I did okay.
Andrew: That business is not running anymore, is it?
Gary: Yeah. It’s still going. I merged with some other guys. I’m a minority owner. I get paid checks from time to time.
Andrew: I see somebody over your shoulder. Is somebody waiting for you to be done with the interview?
Gary: No, no, no. That’s probably my wife. Don’t worry. She’s probably spying. Actually, that could be my dog. I have a dog now. Used to not be against dogs too much. In any case, no one cares. So, what? What else?
Andrew: Looking back at this point, before we continue with the interview, what are the big lessons? If you were looking at your 20-year-old self, that hungry guy who had to prove himself, and you could sit down with him for just five minutes and say, “Okay. Here’s what I can tell you to arm you for the rest of your life and then I’m going to go back into the future,” what would it be?
Gary: Some of these philosophies like hitting the signals, bringing in other people, so, to share the workload, not wanting to do a lot of the day to day, were things that I didn’t do then and I would’ve done now differently. I would’ve done some more early exits if I could have, even if I would have left a bunch of money on the table. My family has no money. I was living in bad neighborhoods for a long time because I just didn’t have any liquidity.
Andrew: Until what point in your life?
Gary: I didn’t get to live in a good neighborhood or my own place until 2000, maybe, 1999.
Andrew: Wow. You were how old by that point?
Gary: Let’s see. 27.
Gary: Is that right? Yeah. Wait, wait, wait. ’63. 37, excuse me. One of the things you learn, money on rent, as Warren Buffet would say, a nice place is money you can’t invest.
Gary: I wasn’t living high.
Andrew: The base hits though. I see people struggle to get even to the plate, let alone to get a base hit. How do you get the base hits?
Gary: You got to be able to get the base hits. That’s a great question. How do you get base hits? Team up with investors, I think, is not a bad idea. You got this business here, maybe take some money in from an existing media company, going after corporate partnerships is something a lot of people don’t do. I think that sometimes helps get people on base. Getting a customer. Raising equity’s a hard thing to do. Raising money’s hard. Getting money paid for customers helps sometimes get to first base. Pre-selling something is a good way to do it. A lot of people don’t think about that stuff.
Andrew: What about the ideas? One of the things I admire the most as I kept researching you was the guy just keeps coming up with these brilliant freaking ideas. Is that just a gift or is there a system? Is there something you could teach us from that?
Gary: It’s a curse. It’s not a gift. [laughs] No. Everyone has ideas. Implementation is a different thing. It’s not that easy to implement or getting going, getting it so you’re starting to run. If I’m making any sense.
Gary: You got to start to. . .
Andrew: Got to start to what?
Gary: You got to get to the base.
Andrew: You got to get to the base. But the ideas, are these all yours? How do you come up with your ideas? How do you come up with the idea of using Facebook as collateral? What was the other idea you told me that you recently patented?
Gary: This idea of using someone’s electricity as collateral in a way. Turning their power off if they don’t pay electric.
Andrew: How? Is there a system for that?
Gary: It’s the same thing as Match. You want to solve someone’s problem. If you solve someone’s problem, as opposed to a made up problem, like the problem that young people have no collateral and who’s going to give them any money, or no one wants to loan for solar if there’s no way to get it back, or I’m a guy and I want to meet girls, or I’m a woman and I want to have anonymity and I want to have safety and security. That’s solving a problem. Solving a problem is a great way to go, an existing problem. Problems you know about are the best problems to solve.
Andrew: See, that was what I was going to ask. How do you even know about, I understand dating, when you’re single, you can come up with a dating site. How do you even know that kids, that people in their 20s, don’t have enough collateral to borrow money? That you could even be aware of this problem is impressive.
Gary: People are always calling me up to borrow money from me and I’m like, “Do you got any collateral?” They’re like, “No.” I go, “Don’t you work?” They go, “Oh, no. I Facebook all day.” I go, “Hmm. I bet it’s a pain to start over on that Facebook thing. What if your friends found out you’re a deadbeat?” Something like that.
Andrew: Ah. I got you. Okay. That gives me a little insight into where the idea comes from. What else?
Gary: When you think of problems, as my dad said, if you can step in someone else’s moccasins, walk a day in someone else’s shoes. If you can be empathetic to a customer and understand their needs as opposed to America, we’re all me, me, me, me, you might do better.
Andrew: How do you do that? Are you naturally empathetic because you seem to me to be a person who is, frankly, don’t take this the wrong way, but maybe not me, me, me, me, but my goal, my goal, my goal. “Sit the fuck down and work,” is what I can imagine you telling your employees, not, “This guy wants to leave. How do I make his life better.” Do you do that?
Gary: I wouldn’t do it like that. Before I would say, “Sit the fuck down and get back,” or grab someone, God forbid, I would try to understand what’s their motivation. “Well, look. If you stay here, I’ll give you a great reference and this will get you into business school. Okay? But you’ve got to give me two years of your life.” Something I just told someone recently. I try to understand the other person’s thing and manipulate them, I guess is the right word, to get my goal. Nothing wrong with that. You got to understand what they want.
Andrew: I see. Okay. Figure out what they want and then you see if you can come up with a solution.
Gary: That might be your goals. Of course you’re starting with your goal, but then you got to think how am I going to go get my goal?
Andrew: Okay. Here’s another thing that I see throughout your career. Audacity and execution. Other people might have come up with dating back in the days that you did, but they wouldn’t have had the guts to say, “I’m going to do a little bit of spamming.” They would’ve have said, “There’s netiquette. I don’t want to appear like a newbie.” You had the audacity to do it. How do you come up with the audacious steps like that? Are you just bringing them in?
Gary: It’s easier to beg for forgiveness than ask for permission. I think that’s a good truism.
Andrew: Okay. You’re just saying, “Let me see what I can get away with and if it doesn’t work out, I’ll just apologize. I’m trying to send email out. I’m trying to figure out what the Internet is. I’ll apologize to people if it doesn’t work out.”
Gary: That’s right. Match, the big thing was, what I saw early on there, and with help from Fran, I think I saw this, but she helped me execute on this, was those who control the women, no, not even those that control the women, those who control those that influence women control the dating space. My idea was I’m not just going to control women because it’s hard to control all the women. I’m going to control those who women listen to.
Andrew: Ah. How do you get that?
Gary: By going to the websites they read every day and talking about it. I know if I could control one woman who influences 100 women, that would bring 10,000 guys.
Andrew: That seems to be something that Fran was really good at, at creating that environment that would draw women in. True?
Gary: That’s right. I came up with the vision that let’s go get these influences, but she did it, found the influencers.
Andrew: Do you have another example of an audacious move that you pulled that we could give to people? Maybe tell them a story about how you did it to inspire them to come up with their own steps.
Gary: God. What’s some audacious stuff that I did? Legal, audacious stuff. I kind of like the idea of the patent. Anyone could’ve bought that patent I did. Anyone could’ve been reading the USPTO database and running it against companies that have gone out of business. Maybe that’s not a bad business for one of your guys out there. Go look at the assigned to in the patent database, you can download the whole thing. Look for companies that have gone out of business and start writing letters. That’s a good idea actually and maybe someone should go run a company on that space.
Andrew: If you do, call up Gary and see if he’ll work with you. Make him a partner.
Gary: I’ll invest in it.
Andrew: Invest in it.
Gary: That’s right. Find me. Mr. Hard Worker out there.
Andrew: What else?
Gary: Oh, what are some of the other audacious things? Hell, in the solar industry, I was the first person ever to bring booth babes to events. These were a bunch of granola environmentalists and I brought some women from the adult space. That was audacious. I thought they were going to kick me out of the solar event for that.
Andrew: How did that work out for you beyond being kicked out? Did it work?
Gary: No. They didn’t kick me out.
Andrew: Did it get the attention that you needed? Did it help in business?
Gary: It got the attention. Nothing wrong about the attention.
Andrew: I asked you for audacious moves. You said, “You mean legally?” Then you gave me a few examples. Without getting specific, because we’ve got an audience here, without being specific. . .
Gary: I might be arrested outside.
Andrew: I don’t need you being arrested, I would like to do a second interview. Actually, if you are arrested, can I have the first interview from jail?
Andrew: Done. It’s all locked up people.
Gary: Done. What was the question?
Andrew: I was going to say, are you willing to get close? Have you been willing to get close?
Gary: Yeah. Putting out the reward for the bad guy, that was close. I’m a little more careful when Im really out on the edge going to lawyers these days and listening, within reason, about what they say. It doesn’t mean I’ll do what they tell me.
Andrew: Bad guy meaning Steven Cohen, the guy who took Sex.com from you? You put a reward on your website. $50,000 for the capture of this guy.
Andrew: That wasn’t so much illegal as maybe inadvisable, right? Because somebody could have gone and done something crazy to bring him back and that would’ve. . .
Gary: It’s a liability.
Gary: Yeah. Was that illegal? Actually, I did research it and yes, it was okay, but it was on the edge. The judges weren’t too psyched about that one. A bail bondsman can do it, but I seem to recall the law right now and a bail bondsman can physically grab you. I didn’t have any standing to go grab someone, but I could issue a reward for information. It’s just what the reward said. I’m not sure I should recommend a reward.
Andrew: Where is he now, by the way?
Gary: Steve, as I call him because he’s my good friend, he’s doing a series of insane scams right now. The last one, which I think is just indicative of him. You’re in Santa Monica right now?
Andrew: Actually, now I’m in Buenos Aires.
Gary: Okay. You’re in Buenos Aires. You don’t have this issue in Buenos Aires, but here, guys stand on the corner looking for work. Migrants from Argentina or Mexico. Okay? Steve has a phony online bank that would take their money “to send it back home.” But of course, he’s never sending it back home. He’s “holding their money and investing it in bonds.” It’s a Ponzi scam based on the most vulnerable members of society.
Andrew: Now, I don’t know what the legal requirement is, but we’re both going to say allegedly or something that we need to say to make sure that we’re in the clear here on this, what we say about him. Allegedly to everything that we’re about to say on Steven Cohen. He’s still in the U.S.?
Gary: Yeah. He’s in the U.S. a lot. He comes to the U.S. every couple days.
Andrew: You still can grab his assets, they’re just hidden somewhere?
Gary: Yeah. I’m working on them. I’m working on it. I’m not going to [??] on that. I don’t give up on problems. It’s actually entertaining.
Andrew: He’s a friend of yours, you were kidding. You call him up and you talk to him?
Gary: Used to talk to him every night. I’m actually not joking.
Andrew: Really? What would you talk to him about?
Gary: He would call me every night. He’s one of these diabolical geniuses. He’s a genius that would say, “I’m going to tell you my evil plot.” He would tell his evil plot because he’s so much into his favorite person, which is himself.
Andrew: Like what? This is like what we see in Batman where the villain says, “This is what I’m going to do to you, Batman.”
Andrew: Who talks like that? Apparently people talk like that. So like what? What kind of plot?
Gary: He does. “I’m going to get you thrown in jail because of X, Y, Z.” He’s always talking about how we’re going to jail. How I’m going to be sent to jail and how everyone’s going to get sent to jail. Or, “I’m going to win the court case by doing X, Y, and Z.” It’s brilliant. You get some good ideas. He’s always come up with some, subject to him being a sociopath, which gets in the way of his idea, his being a sociopath. He’d go on for hours. You call him right now, he’d go on for hours.
Andrew: I could call him right now and he would talk to me and go on for hours?
Gary: Go on for hours.
Andrew: Would he do a Skype interview with me?
Gary: He might do a Skype interview.
Andrew: I will email you and ask you for contact information. I got to find this guy.
Gary: Yeah, yeah, yeah.
Andrew: This is fascinating.
Gary: Go, “You want to do a Skype interview on the evil and why it was unfair?”
Andrew: Would the two of you be willing to do an interview together? Maybe you can help me ask some questions.
Gary: I’d love to do it. I’d love to do an interview. That’s an interesting thing.
Andrew: That would be fascinating. I can get a corporate sponsor for that.
Gary: Who should we get? Let’s talk about that.
Andrew: I’m guessing Gary’s bail bondsman.
Gary: Aladdin Bail Bonds. It’s a franchise actually. I don’t know if you know it. They license out the name.
Andrew: No I didn’t know it, but I have seen them now that you mention it.
Gary: It’s a good idea. So you can do bail bonds, maybe some guys who, maybe some lawyers who’d be interested in doing it who do intellectual property protection. You’re a creative guy. You’ll think of some sponsors.
Andrew: I’ll think of it. If somebody in my audience, I’m sure, will toss money at me for doing this kind of interview. I would pay to do this interview it’s so good. I shouldn’t say that, he might charge me.
Gary: Oh! How much? I need money. I’m poor.
Andrew: Here’s one story that I heard. Tell me if this is true, that he did this to you. You get one of his properties. I think it was in Mexico. You have the property, you look around, you see the edges of the property, everything looks good. You realize afterwards, no, you own a little bit more. He moved the fence in a little bit so that he would exclude from the property that he’s giving you an Internet cable. Not only did he move the fence in, but he made the fence look old and beaten up so you wouldn’t know that the fence was moved in recently.
Gary: That’s a true story. It was in San Ysidro, California, on the border. Listen to this, typical Steven Cohen thing. He wanted his piece of land on the border that’s been in this guy’s family for a hundred years, since the Treaty of Guadalupe Hidalgo. He goes to a bail bondsman. The guy once put up the property’s collateral like 15 years ago for some nephew. The bondsman expunged a long time ago. He takes this phony lean and holds a foreclosure sale. The guy doesn’t have enough money to fight him because he’s land poor. He gets the land. He steals someone’s land.
Then he builds a tower up to illegally send Internet connectivity to Mexico. You can’t do that. The Mexican government regulates it. He flips it up, gets a place in Mexico, puts a microwave link. Illegal, but he doesn’t care, because laws mean nothing to a guy like that.
I finally get this court order to go grab the property and I get there and this tower, so I go turn off the tower and the next thing I know, I’m almost getting arrested. All these people show up. “You’re on my land.” “You turned off my tower.” The whole of Mexico’s dark and you have the billion dollars in damage. Okay? To my lawyers, I go, “What do you mean it’s our land? It’s Steve Cohen’s land?” This guy pulls out this map and damn it’s on the map. He rented the property next door is actually what he did. No, no, no. It was on this land but he also had a lease for the property next door, where it wasn’t on. He goes, “Oh, it’s on our land.” Are you following this?
Gary: You go out to the fence and it looks like it’s on the other guy’s fence. I’m like, “Why would he not build on his own land as opposed to next door since it was right on the dividing line?” There’s a big telecommunications tower on the neighbor’s, they’re like a Mexican criminal [??]. He’s like, “You’re going to jail.” Turned off the [??].
I’m sitting there looking at it and my lawyers go, “Okay. I don’t know how this happened but I think we’re in trouble.” I go, “No way. No one would do something like that.” I hire a master surveyor and I go, “Come on. There’s got to be something wrong. Why would someone build here?” It turned out he moved all this [??] things and when you do the super-expensive survey, it turns out what he did was bought old fence materials and re-fenced the whole lot to make this look like it was on the neighbor’s land when it wasn’t.
Andrew: See, now, this is the kind of person who is dangerous. I don’t read comic books but I do seem to remember that even Batman was killed by one of the villains. You get in a guy’s grasp when he’s thinking this way, when he’s this kind of clever, to even put up the illegal Internet connection in the first place, allegedly to everything, but also to then move the fence in so that you don’t know that you’ve acquired this. Don’t you think at some point that one of these days he’s going to bite me on the ass? I got to take a nap at some point and that’s when he’s going to pounce.
Gary: That’s as if you’re taking a nap. Oh, right. I see what you’re saying. Yeah. Then you got to be on your game. He’ll probably do that. Now that you got it, maybe I need to not sleep tonight.
Gary: I’m serious. I need to keep my game good.
Andrew: Interesting, Batman, interesting.
Gary: Got to keep the game tight.
Andrew: In another life, could you have been Steven Cohen?
Gary: Possibly. Yeah. Possibly.
Andrew: All right. Before the interview started, I asked you what other people don’t ask about. You said regrets is one of them. Do you have another example of a regret, do you have another example of a big regret?
Gary: Hold on a second. Sorry, one of my guys came in.
Andrew: Are you going to feel comfortable talking about your regrets openly with one of your guys there?
Gary: Oh, yeah. I’m sure he’s taping this. I’m sure Steve Cohen’s on this thing. What are you talking about? I’m sure he’s monitoring my name.
Andrew: [laughs] If Steve Cohen is watching live, please say hi.
Gary: I monitor his name. Why not? Actually that reminds me, gave me a good idea right now, I’m going to be patenting that idea.
Andrew: There you go people. You see how it happens right there. He came up with the idea right here, come up with some patent for monitoring peoples’ names. I don’t know if that’s patentable, but I like the idea.
Gary: What are some other regrets? You mean other than women I didn’t go after? Let me get back to you on that one. Other than the mistakes I made, I definitely made some mistakes. I miss things sometimes. I was dating this girl who was a mortgage broker and I saw how bad these files were and I actually researched is there a way to short these sub-prime mortgage indexes. I had some money and could have done it and probably made 100 to 1, but I just never followed through on it. You have to have some knowledge.
Andrew: Now that you do have money, what’s the best part of it? What’s the best thing for you personally?
Gary: I don’t know. First, I don’t have infinite money. Second, money doesn’t buy happiness at all. It might buy some comfort, but if you travel first class, which I never do because I still believe in living close to the ground. No different than the places in San Francisco that I lived in. It might buy a little comfort, but it’s not going to buy happiness.
Andrew: Weren’t you the guy who actually gave. . . I don’t know if it was you, but I remember reading a New York Times article once about guys who are rich but don’t consider themselves rich because there are people in the world who are super rich. Was that you?
Gary: I don’t consider myself rich. Yeah that was me. Among other people, I think a lot of people feel that.
Andrew: All right. Let’s talk about. . .
Gary: Larry Ellison doesn’t probably feel rich compared to Bill Gates.
Andrew: It’s true. For years, there was a big obsession on his part. We don’t hear so much about him trying to beat Bill Gates or being obsessed.
Gary: He’s coming close.
Andrew: He’s coming close? All right.
Andrew: Somebody in the audience is asking how rich is rich. That’s probably a topic for a whole other interview. Let’s see. What else? Any ideas that you’ve come up with that you haven’t been able to execute?
Gary: Yeah. I come up with ideas all the time. Stay tuned on that. I’m still working on stuff. I haven’t given up. I got a folder now. Now I write them down for once.
Andrew: You do. So you got a folder. Any that you can’t possibly go after that maybe we can give out to the audience? The people who have listened all the way through to this portion of the interview.
Gary: I know they deserve it. [laughs] Listen to me babble. You’re interesting. There’s nothing jumping out to me.
Andrew: All right. You guys have that idea to patent some kind of name alert system. You might want to jump on that quickly.
Gary: Yeah. These are just more some names I need to be looking at. What else?
Andrew: What else do we have here on the screen? Let’s see. I think that’s the sum of everything for me. Last-minute advice? Last advice for entrepreneurs out there?
Gary: Don’t give up. I think a lot of people are close and they give up their ideas. They give up. Some perseverance. 1% inspiration, 99% perspiration. Thomas Edison said that. I do like learning about patent process. Go get the free book “Patent It Yourself.” I can’t speak enough about that. Harder in the software world, but if you’re thinking of a physical thing, good thing to do on your own. You can do it pretty cheaply.
Andrew: “Patent It Yourself.”
Gary: “Patent It Yourself.”
Gary: I try to prove myself every day in something.
Andrew: You do? What was today?
Gary: I do this walk and I wanted to beat my old time and I beat my old time. I proved myself so I won’t beat up on myself just for a couple hours today. I’ll give that one an hour.
Andrew: Actually, one last thing. You asked me to also, when I asked you what other interviewers don’t ask you, you said they don’t ask about the future or what’s coming up. So, what’s coming up for Gary?
Gary: Thinking a lot about energy, the energy space. A lot bigger than the Internet. I’d do something in energy. That’s what I’m thinking. I got some investments already in it. Cleantech with a focus on energy.
Andrew: All right. We’re at the end of the interview and I’ll save a bunch of questions for when I have you and Steven Cohen on here. I’m going to follow up with you.
Gary: I’m so psyched about that. I’ll go get his phone number for you.
Andrew: Oh, that’d be awesome. I’m going to get software especially so that the three of us can be on together. By the way, the day that you backed out of the interview at the last minute, I ended up having exactly that. Two guys who were upset with each other came on here and did a double interview. People loved it. It got me more traffic than anything. I should thank you twice.
Gary: Why don’t we get two women. . . Oh, I’m sorry. I’m not in the porn business. But they could do a topless fight, uncensored.
Andrew: How about this? You and Steven Cohen, two arguments. First you have the two of you talking about your experience together and the second thing is each one of you has to have a booth babe behind you. The person who has the hotter booth babe, as the audience will judge, ends up winning the argument.
Gary: Okay. Let me think about that.
Andrew: Actually, I’ve gone too far. I got to stick with what I know. We’ll talk business. . .
Gary: You’re over the line! Okay, Andrew. Later.
Andrew: Thanks for doing the interview, Gary. I’ll follow up by email. Thanks.
Gary: Bye now.
Gary: It’s great.
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