Where are they now? New York City’s Dot Com Entrepreneurs: Part One

The early days of the New York Internet scene were similar to the early days of the Industrial Revolution in the 19th century. The men and women who pioneered the Internet in the mid-late 90s lived in a time marked by freneticism, enthusiasm and rapid hiring. Innovation was celebrated and there was a real spirit of anything’s possible.

It’s similar in many ways to the pervasive spirit in NYC’s tech community today. Last week, we interviewed dot.com legend Josh Harris, who went from being a bona fide New York City millionaire to bootstrapped artist with a harrowing vision of the future. This got me thinking about how many other great stories from that era need to be told.

All of these entrepreneurs began and remained in the New York City tech community. Never straying from Silicon Alley meant that they found something incredibly special about the small, collaborative and supportive milieu that is still pervasive in New York City’s tech scene today.

They began their careers on the Internet while Yahoo was still hosted on Stanford’s servers. It was a time before standard banner sizes or ad counting technologies. Instead of “Find me on Facebook” it was “Find me at this URL.” Stephan Paternot, Robert Levitan, Rich Forman, Jeff Stewart and Andrew Weinreich are entrepreneurs who didn’t let the collapse of the market and the implosion of the Internet space stop them from continuing to conquer.

Robert Levitan: iVillage and Flooz

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On September 11, 2001, Robert Levitan woke up for the first time in 20 years without a job. He had just walked away from his company Flooz, an online payment platform which had to be shut down as a Russian mob was using it with stolen credit card numbers as part of a money laundering scheme. A company that had grown from zero to 30 million in sales in just 18 months, now owed $4 million dollars in 8 weeks. It was the largest bankruptcy case ever in terms of its 325,000 creditors, which had to be notified via email, the first time email was ever used as a form of legal communication to creditors. You know that 3 digit security number you have to enter when making a credit card payment online? You can thank this Flooz case for that.

Prior to Flooz, Levitan logged online for his first time one day before a meeting with AOL in January 1995. Levitan was chatty in the meeting and quickly saw the need for online communities; so he, along with two other co-founders decided to start their own company based on creating those mini social networks. iVillage launched in January 1996. 3 years later, the company was worth over a billion dollars when it went public in March of 1999. In 2006, it was acquired by NBC and now operates as a women’s content network.

Now Levitan, who’s never had a job working for anyone else in his life, is now the CEO of Pando Networks, which officially launched its first product in 2006. “Simply put, we believe that the Internet is the media distribution platform of choice, but new technologies are needed to help it scale,” explains Levitan. Pando Networks is now the largest gaming delivery network in the world, serving over 200 million game downloads a year.

CBM: When did you know you wanted to be an entrepreneur?

Robert Levitan: Oh, the 4th grade? That was when my twin brother and I started publishing a newspaper in PS6. Ever since then I’ve enjoyed entrepreneurial media-related ventures. I’ve always loved creating new products and working with people to bring those products to market.

CBM: What are you most proud of having accomplished in your life?

RV: I finally married at 47, and now I am 50 and have two kids. I was such a crazy entrepreneur that I never got married or thought about a family until recently. I’m incredibly proud of my children. It’s a whole different joy to create children and help them grow and develop.

Professionally, I’m also very proud of having started iVillage from scratch and taking it to IPO. It was a wide open field and anything was possible. People who were involved with Internet businesses in 1995 were a special breed; they were all excited about what they were doing. It was not about the money, it was about the excitement. And I don’t think that’s true today.

CBM: Will Pando be your last venture?

RV: No. At this point, I’m unemployable. I have to face the reality. I like running startups or I wouldn’t keep doing it. Working with smart people right out of college is fantastic. Giving them a lot of responsibility makes the business fun again. We’ve had to reinvent Pando a few times just to find the right market for this technology and that’s been a good process. The company is profitable and growing. Hopefully I will look back on it and have good memories. Today, there are 80 million installs of Pando software on people’s computers. But I know this isn’t the last stop. There will be something after this.

We are fortunate enough to live in a world that affords a lot of opportunity. It doesn’t get much more fun than that. It’s an incredibly meaningful place to be. And it’s a real privilege.

Stephan Paternot of theglobe.com

In 1995, when Stephan Paternot was just a 20-year old student at Cornell University in New York, he started theglobe.com, an online social network that predated Facebook by nearly 10 years. Paternot moved to New York City to pursue this venture and at one point in the late 90’s, theglobe had 20 million monthly users, 10% of the Internet at that time. Theglobe decided to go public and made headlines on November 13, 1998 when it posted the largest first day gain of any IPO in history up to that date, a 606% increase over the initial share price.

CBM: When did you know you wanted to be an entrepreneur?

Stephan Paternot: I don’t think I knew until close to when we started theglobe. As a CS major I had an internship at a video conferencing company in 1993 and realized I didn’t want to just be a programmer.

If there’s one thing I knew it was that the Internet was going to connect people to each other. We wanted to create something social where people could connect about different topics and interests. One of the first social experiences on the Internet was a rudimentary chat room and nobody understood it at the time. A lot of investors didn’t understand the value of the Internet. They’d ask, “Why not just pick up the phone?”

CBM: theglobe.com draws obvious parallels to Facebook, what do you think of Mark Zuckerberg’s social network?

SP: They created a new approach to the social community by limiting it to colleges at first. But as soon as it opened, I signed up immediately. Adults, parents, investors, media all had the same reaction– “Why would people want to share photos like this or post their private details?” It only intrigued me further. It made perfect sense. Facebook was executed brilliantly. I wasn’t surprised when it exploded. I just have to thank Mark Zuckerberg because he single-handedly validated the social networking online community model. It feels like people’s attitudes changed. overnight. How the hell did we ever live without it?

CBM: What are you working on now?

SP: I left theglobe in 2000 and took a few years off from the Internet world. I enjoyed the food I was eating, saw friends for the first time, and traveled back to Switzerland to see my family. I got back down on Earth. I missed the ‘living in your 20s’ experience and had a lot of catching up to do. Right around 2002 I started a seed capital fund. A lot of my investors made a killing on theglobe–I did not. Having grown up in Switzerland and London, I knew about all these startups and concepts coming out of Europe so I asked my investors if they’d be willing to invest money in a seed fund that would let me get back in the game.

Paternot launched Actarus Funds, a name based on a Japanese cartoon character he loves. His first investment was Zingy, a company that creates, publishes, licenses, and distributes products and services to mobile consumers in North America, South America and Europe. The company saw 1,000% growth, which gave Paternot the momentum to do a series of funds, which saw far more successful bets than losses. In the last few years, Paternot, who has starred in a film with Linda Hamilton and is a self-declared ‘film fanatic’ became interested in the power of ‘crowd funding’ – companies like IndieGoGo and Kickstarter.

After co-founding a film production company, Palm Star Entertainment, he thought deeply about how crowdsourcing could disrupt the film industry. Movies are often distributed digitally, but the way that investments flow in Hollywood is archaic. He’s currently developing Slated, a company that rests nicely between his film and tech career. Slated will launch later this fall as an exclusive film and financing marketplace. The platform will allow anyone in the film industry to connect with an investor base. In essence, it’s quite similar to AngelList but for films.  .

CBM: What do you consider your biggest professional success?

SP:

I think one of the greatest successes I had was theglobe. We weren’t savvy, cynical, jaded entrepreneurs who had been there and done that. We were naive, fresh, young and willing to completely think out of the box. We didn’t even now what the box was.

After the market collapsed and the Internet business imploded, I wasn’t feeling my best, but I learned 90% of what I needed on the way down. I had not made my 100 million or billion. I needed to take some time and build myself back up. I’m proud of the small iterative steps I’ve taken, and really confirming that I can identify the right companies to invest in. I’m proud I was able to be patient and let myself grow and go at the right pace. The Internet at that stage was too much, too big, too fast.

CBM: What’s the most important lesson you’ve learned in this business?

SP: Have confidence in yourself and know that just because you’re young and have some ideas that aren’t necessarily what other people believe doesn’t mean they’re right. I wish I had the courage to keep muscling through theglobe. So many people put pressure on us, saying that young kids don’t know how to run a company and we bought into it. We brought on someone more seasoned and it collapsed.

Secondly, don’t go public unless it’s absolutely essential. It used to be essential to raise a lot more capital and to create liquidity so your investors could sell your stock. Now it’s way too expensive to go public. It’s a nightmare. Today, Second Market lets companies access a broader market of liquidity. You can hold off going public. Going public is the beginning of the end in my mind. These companies become large tankers that can no longer make visionary shifts in any direction.

Rich Forman: Register.com

It’s safe to say that Rich Forman had one of the most important roles in the dot.com era. Forman started Register.com in 1994, literally fueling the domain name marketplace during those years, signing people up to the Internet one after the other. He remained CEO until June 2003 and during his tenure he grew the employee base from 9 to over 500 employees and increased annual revenue from under $1 million to over $115 million.

In 2004, Register was sold to a private equity shop in California. He decided to take time off and was looking for his next opportunity when friends were discussing liquefying the health care industry in Florida. Forman was touched by the thought of building companies that allowed individuals to make better health care decisions. “We have Expedia, TripAdvisor, etc. for travel, but what kinds of tools do we have to help us make health decisions in the real world?” he said.

He now serves as the managing member of Health Venture Group, LLC and as a board member of the New York Angels. Teddy Roosevelt is his hero.

CBM: When did you know you wanted to be an entrepreneur?

Rich Forman: I was 19 years old. I was an electrical engineer working at UPenn’s physiology department. My job was to hook up electronic microscopes to frog tissue and analyze the frog tissue’s response. I was working for this guy who received $4-5 million grants annually– and this was 20 years ago. He was quite a political player but he ended up abusing the system. They say the fights and the politics in academia are very rough and tumble, and raw, because they’re fighting over so little. That was the moment I wanted to be an entrepreneur.

CBM: What do you consider your biggest professional success?

RF: I would say building Register.com and getting the licensed, networking solutions to deregulate the market for domain name registration. We provided a service for our customers, employees and shareholders. I also think I was doing a service for the Internet as a whole. I was very involved in deregulating the Internet and I take a lot of pride in my role during those days.

CBM: What are you most proud of having accomplished in your life?

RF: My children. I have 3 lovely, smart, fun, great children that I’m proud of.

CBM: What’s the most important lesson you’ve learned in this business?

RF: Never give up. When I was building Register, I probably did 80 presentations before someone gave me money. And so now I almost take some pleasure when people tell me an idea I have is a bad idea. I believe that too many people in the tech community are lending and following trends that their peers are following rather than trying to understand the customer and focus on what’s important. That’s part of the problem with a community like NYC or Silicon Valley– is that there’s a lot of ‘group think’ and that can lead you astray. I am a big fan of becoming a bit more reclusive and not being subject to the perspective of the broader market.

Jeff Stewart: Mimeo

Over the last ten years Jeff Stewart started over a half-dozen companies that employ over six hundred people. Today, he is an angel investor in about two dozen companies but his day job, his number one passion, is building Lenddo, a micro-finance tool that harnesses the power of social media in emerging markets.

Stewart started his career in the early 90s as a technology consultant, living out of a suitcase for 4 years. As the World Wide Web picked up in late 1994 to early 1995, he started a web software methodology firm called SquareEarth, which helped pioneer the deployment of Internet technology for large corporations. When asked why he called his company SquareEarth, he replied, “We were going to use the word ‘web’ but no one knew what the web was, people were referring to it as a multimedia resource at the time.”

In 1998, Stewart founded Mimeo, an Internet-based printing company. In just under 18 months, he’d built a team of 45 software developers. Mimeo has made the INC 500 list twice and now boasts over 600 people at its U.S. operations. The firm operates at a level of automation and quality that may very well put Kinkos out of business.

While Stewart officially left Mimeo in 2004, he still remains the founder and Chairman of the Board. He subsequently founded Urgent Group, a venture development firm focused on seed-stage investments. He started Lenddo in January of this year. It was launched with the belief that professionals in emerging markets should have access to the same high level of financial products and services as are enjoyed in more mature financial markets such as Japan, Germany, United Kingdom and the United States.

CBM: What’s your favorite new technology that you wish you’d had your whole life?

Jeff Stewart: Ubiquitous Internet access.

CBM: Well, we’re not there yet.

JS: Then, video conferencing. Our operations [at Lenddo] rely on communicating with our customers are in the emerging markets. Video conferencing has given us the ability to supplement face-to-face meetings in a powerful way.

CBM: When did you know you wanted to be an entrepreneur?

JS: I was 8 years old. I did some yard work for a neighbor and just really enjoyed the idea of getting paid.

CBM: When you were a child who was your favorite super hero?

JS: Andrew Carnegie.

CBM: Who do you look up to now?

JS: There’s a whole slew of entrepreneurs who brought in the industrial revolution. That was a huge technological shift. I think a bunch of them deserve our respect.

CBM: What do you consider your biggest professional success?

JS: Co-founding Lenddo. While I really enjoyed helping to pioneer the deployment of the Internet 1.0 in 1995, I believe the power the social graph unlocks will be even bigger than the Internet itself. And we’re pioneering it at the very beginning.

CBM: What’s the most important lesson you’ve learned in this business?

JS: It’s all about the people; getting great, high potential people to work with you. My business philosophy is to over-invest in getting a great team. The second thing – I’m continually amazed by the power of technology so I think it’s great to always look at businesses through the lens of what’s possible.

Andrew Weinreich- Sixdegrees

When Andrew Weinreich first graduated from Fordham Law School, he found himself $100,000+ in debt and in need of a job. He had hoped he’d never find himself in a situation where he’d have to take a job in law. But after starting a handful of businesses as a student, none of them took off. In the end he found a job as a “professional stickerer.”

The job was the most miserable of his life: He was working on the largest anti-trust case in the history of the country against a pharmaceutical company for price collusions. He was part of an army of in-house lawyers tasked to document cases, spending every day in a warehouse putting red, yellow and green stickers on documents. For Weinreich, the job was completely unrewarding to say the least. He left as soon as he could and took a huge pay cut to become the General Counsel of Hertz Technology Group. Two weeks before the company went public, he quit to start Sixdegrees, which many hail as the first social networking site.

The Sixdegrees story:

“In 1995, there was something brewing in the Internet. Netscape came out with its first browser. There was this excitement that something big was going to happen and no one knew what it was… A large part of the world didn’t now whether it was a gimmick or transformative. It was clear to me that it was transformative and critical that I do something right away. I met once a week with a group of people, including a back-end programmer for the purpose of starting a business together. At the time, I didn’t even know what a back-end programmer was.

I came up with an idea that requires user-generated content, but we used the phrase “We need lots of people to contribute,” and it was an idea that could only be done on the Internet. I was thinking about my own life and how I conduct myself in my day-to-day, and how networking was the ability to meet the people you don’t know through the people you do. It became apparent for the very first time in history that the essence of a social network is your contact list. It’s where you capture all of your relationships in a single place. And for the first time you could put your contact manager on the Internet, and not hand written on a Rolodex.

I told the group, ‘This is it. I’m convinced, let’s all quit our jobs!’ They said no. At 27 years old, I was thinking ‘How can no one be willing to quit their jobs? This is it!’ So I said I’m going to quit this group and the next day I quit my job. I thought I’ll raise money but I couldn’t raise it. A guy I knew offered me office space for free and I had a marketer join me. So the two of us sat in a room with no windows and with two loaner computers for the first several months.

Then an attorney who hated his job said, ‘I want to join you. I’ll invest $25,000 if you’ll hire me.’

But we had nothing to pay him with! He still thought it was a good deal. We starved in the wilderness with no money for a very long period of time. I gave a programmer equity for building us a prototype. At one point, we had 8 people and no money. We were running out of money, and everyone was underpaid including me, so I asked everyone to write down the lowest amount of money they could live on, and the highest amount would be paid to everyone equally. It took a couple rounds to get the number low enough, but in the end, after 5 years of running the business, I never had any turnover at the management level.

We were about to launch a great experiment that would change the way people network forever. With the press of a button I will be connected to these 8 people who are joining now. We literally patented the notion of a social network. There was no empirical data to show that this was actually going to work. After we launched it was scary, we were adding only 5-50 people a day. There was a real question Is this thing going to take? I always had total faith.

A lot of these businesses are built in blind faith, and you have to move forward and continue plugging along. When we launched Sixdegrees in 1997, there was a period when we didn’t know if it would go viral. Often you don’t know whether the fire is lit, you just need to stay on course. After a month, we started to see exponential growth. The company took off and raised $13 million from James Murdoch and News Corporation. It raised $2.5 from high net worth individuals and $10 million from a hedge fund, totaling $25 million dollars. In December 2000, Sixdegrees made a $125 million exit to UStream Media Networks.

After Sixdegrees, Weinreich founded Joltage in 2001, an Internet infrastructure business that built the framework needed for WiFi hotspots at coffee shops and other small businesses. In December 2003, he started I Stand For, Inc., a technology solution to bring political fundraising online, which he sold in February 2006.

“I like to work on opportunities that I think are massively disrupted,” Weinrech says. So now he’s completely obsessed with mobile. Weinreich is the Chairman of Xtify, the first geo-notification API that powers “persistent location,” allowing a user’s location to be extracted from a mobile device on a periodic and continuous basis.

He is also the Chairman of MeetMoi, a dating service that uses Xtify’s persistent location to process your location while pairing you up with nearby singles that match your profile preferences. Whenever two users with matching preferences are near one another, MeetMoi NOW notifies them both, allowing them to begin a conversation. To encourage face-to-face meetings when people are near one another, connections made through the service expire after 60 minutes.

CBM: What do you consider your biggest professional success?

Andrew Weinreich: Sixdegrees. I get excited about imagining where the world could be before it’s there. We described a world where social networking would be what we called ‘the operating system of the future’. When you bought something on Craigslist, eventually you’d see your proximity to the person selling it to you. When you read a book review, you’d see who the reviewer was in relation to you and your networks. We pictured a world where social networking was the underlying infrastructure for the Web. As things turned out we weren’t the ones to see all of that happen under the name of our company, but we were there first.

CBM: What was the difference between The Globe and 6 Degrees?

AW: The Globe was a community, it wasn’t a social network. There wasn’t a notion of listing someone as my friend and validating that friendship. The Globe was joining a community and people getting together. Those terms have largely blurred over time.

CBM: What’s your favorite new technology that you wish you’d had your whole life?

AW: My smartphone. If I had my smartphone my whole life I would’ve lived much, much more efficiently. It’s a computer in your hand.

CBM: What’s the most important lesson you’ve learned in this business?

AW: Take risks. I define my life by taking ever-increasing risks each year. Almost every time I outsource something I or take a shortcut I regret it. The people who are most successful have a few things in common: They make quick decisions. I’ve learned that a fast, wrong decision is almost always better than a drawn out, right one. Businesses take a long time. If you think of the most successful entrepreneurs most of them have run their businesses for 7-10 years. I wish Sixdegrees didn’t sell. The people who did the best personally had a different perspective and the stomach to stay with something for the long-term. Lastly, I learned the only way to start something is to go all in. I was always trying to start something while I was doing something else and nothing ever took.

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Tune in next week for Part 2 of our NYC Dot.com Entrepreneurs: Where Are They Now? And don’t worry there will be a few amazing female entrepreneurs as well! Those ladies were just too busy to chat this week.