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||Burn Rate - UK
- How I survived the Gold Rush years on the Internet
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B : decent look at the bizarre world of Internet entrepreneurship
See our review for fuller assessment.
|Columbia Journ. Review
|The NY Times
|The NY Times
|The NY Times Book Rev.
Reviews are more descriptive than critical.
Generally consider it insightful and sharp.
Some questions about all the quotes (how could he remember all these conversations ...).
From the Reviews:
- "Burn Rate is a hilarious and frightening account of the life of an Internet startup. (...) Through Wolff's tale, an insightful history of the commercialization of the Internet emerges -- from the days when media titans declared "content is king" to the realization that the best hope for making money in this new medium may lie in E-commerce. (...) Burn Rate is a fascinating cautionary tale that should be required reading for all would-be Net entrepreneurs." - Amy Cortese, Business Week
- "The frankness is entertaining, but the details are hard to believe. Did Wolff, unless he was wearing a wire, really capture all that dialogue he puts into quotation marks? If there is any moral here, it is that in those first heady days of the Internet, puffery and self-promotion worked better than achievement." - James Boylan, Columbia Journalism Review
- "The book tells the alternately hilarious and appalling story of Wolff's efforts to take his small Web publishing company into the big time by courting investors. He offers richly detailed accounts of negotiations with some of the Internet world's best-known figures." - Peter McGrath, Newsweek
- "(M)ore than the story of his struggle for survival, Wolff's account is about how the Internet beguiled everyone who failed to understand it." - Christopher Lehmann-Haupt, The New York Times
- "In the end, this book's sharp perspective comes not from distance but from being inside the swirl. Burn Rate has a terrific feel for the crazy deals, the characters and the clashing bicoastal cultures of the Internet." - Deborah Stead, The New York Times
- "Wolff spares no feelings. He casts such an unforgiving eye on the people around him that his tone often smacks of vendetta. He depicts his cohorts as fakes and blowhards, arrogant and clueless." - Katie Hafner, The New York Times Book Review
- "Mr. Wolff doesn't take Silicon Valley as seriously as it takes itself, and, for all the reviewer knows, he may be a worthless businessman and human being. But he's written a wonderfully funny book." - Mark Williams, Red Herring
- "The author is an entertainingly cynical guide through the labyrinth of a new industry growing under the pressure of overhyped expectations and underperforming results. (...) The paradoxical psychology of Internet finance, its combination of hysteria and cold calculation, has never before been written about with the descriptive and narrative power Wolff deploys in Burn Rate." - Scott Rosenberg, Salon
- "Nobody comes off clean in this vengeful little book." - Philip Elmer-DeWitt, Time
- "To Wolff's credit, Burn Rate does an extraordinarily good job of capturing the ambition, madness, and sheer idiocy of executives in the upper echelons at places like CNet, the Washington Post's new media division, and, most scabrously, AOL." - Austin Bunn, The Village Voice
Please note that these ratings solely represent the complete review's biased interpretation and subjective opinion of the actual reviews and do not claim to accurately reflect or represent the views of the reviewers.
Similarly the illustrative quotes chosen here are merely those the complete review subjectively believes represent the tenor and judgment of the review as a whole. We acknowledge (and remind and warn you) that they may, in fact, be entirely unrepresentative of the actual reviews by any other measure.
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The complete review's Review:
The Internet -- glorious land of infinite opportunity !
A World Wide Web of riches !
And -- best of all -- an IPO at every corner !
A few "visionaries" saw some of the possibilities in the early 1990s.
When Michael Wolff first met Louis Rossetto he didn't get it yet -- but when Rossetto's Wired came together he saw there were some possibilities there and he got in on the action.
Wolff had an idea which, wasn't half bad: NetGuide ! books about the Internet !
Of course, any idea that isn't half bad is, by definition, half bad -- and Wolff's certainly was: books ?!?!? about the Internet ?
Still, he parlayed this and his company, Wolff New Media, into something that attracted the money-boys: some venture capital came his way and he got a fancy investment bank to back him and soon he was off to make the big money.
The idea was to grow the business as fast as he could, burning as much money as possible (the infamous "burn rate" of the title), and then cash in, either by being bought out or by doing an IPO (i.e. going public through an initial public offering).
Wolff was successful at growing fast, and successful in going through all the cash on hand.
He was even, sort of, successful with his product: the books sold like hotcakes.
All this, as it turns out, does not a business make, and the whimpering implosion came all too soon.
The only amazing thing is that he came close to making a mint anyway.
(Not that the business was ever going to be an actual success (i.e. have revenues exceeding costs), but there were people who came close to paying him a lot for it anyway.)
Burn Rate tells the story of how it all fell apart.
There's some talk about the actual business, but the real story is about the constant search for investors or potential partners or buyers -- i.e. suckers.
It makes for a decent example of the ridiculous "business" that is the Internet business.
No one in the book comes off looking good, least of all Wolff himself.
At one point he claims his father-in-law is having open heart surgery (and that the surgery isn't going well) to avoid a business commitment.
But then truth gets bent, plied and twisted by all concerned.
It's the Internet, after all.
There's no place or need for truth there.
There are lots of big players on show in Burn Rate: there is Wolff's snooty investment bank (Patricof & Co.).
There is potential partner Magellan, a West Coast company losing even more money than Wolff's (i.e. an ideal partner -- in the bizarre Internet world) controlled by Robert Maxwell's scary kids.
There other interested parties: AOL (ripped to shreds by Wolff), CMP (who Wolff manages to grandly rip off), and diverse potential partners or money-givers.
Along the way Wolff also gives a decent overview of various other players on the Internet (TimeWarner and their glorious experiment, Pathfinder, Microsoft and all their failed Internet forays, etc. -- the common thread being that everyone loses vast amounts of money).
And he takes the reader to many of the conferences where Internet companies make their pitch and exchange business cards and try to sell themselves to each other.
"Success" and "failure" seem to hinge on surviving long enough to get the next cash injection.
Actual success -- actually making money --, of course, eludes all.
It certainly eluded Wolff.
And so he chose, ignominiously, to take some of the money, bail out, and run ('cause in fact he's a "writer" and that's what he really wants to do).
Wolff's battle to survive is sort of fun to follow.
It is a strange world he has to deal with: basically everyone is trying to rip everyone else off, in one way or another.
Screw the other guy seems to be the main motivation (understandable, perhaps, since not a penny is to be made by the actual businesses, but millions can be made by screwing the other guy).
Still, this irrational tulip-mania can make one queasy.
And the absence of any sort of integrity on the part of any of the players is also disturbing.
Wolff, abetted by his lawyer-wife, survived longer than he should, and there is some perverse fascination in watching him squirm as he struggles to possibly still make the big deal.
Still, despite all the vaguely amusing (but more distasteful) squirming the only laugh out loud moment in the whole book comes when he begins to lose control of the firm and it comes to a grand board meeting showdown.
Steeled against any personal attacks or attempts to depose him the tables are turned when it isn't him they go after but his wife: they move to remove her as secretary and counsel.
Though always described in the most sympathetic terms, she can't have been a very good lawyer if she wasn't prepared for that (and she wasn't): the comeuppance for Wolff and wife is beautiful, the moment diminished only because the meeting is interrupted by another potential suitor calling in (the Washington Post Company).
Wolff acknowledges the Ponzi-like structure to all Internet deals.
"There's no valuation," he quotes his investment banker. "There's only orchestration."
The Magellan deal falls through, not because of reality (reality rarely intrudes in Internet deals because with it there would be practically no such deals), but because of Magellan's "inability to sustain the fantasy."
Near the end of the book Wolff provides an example of some of the numbers.
His company bought the word "cigar" at Infoseek: whenever anyone typed it in Wolff's company's banner would appear on the result page -- providing a link to that site, where users could purchase the company's 22 dollar book.
The ad had a decent click-through rate (3 percent), and of those one out of every 200 actually bought the book.
Having paid Infoseek two cents for every person who typed in "cigar" the company generated about a dollar in sales for every six dollars it paid to Infoseek.
And that was only sales income (i.e. doesn't count expenses, including the cost of the book etc.).
But that, using Internet math, was apparently a successful business model.
Ultimately it wasn't successful enough.
Wolff bailed, coming to a horrible conclusion: there is no money to be made with content on the Internet.
Here is the incontrovertible truth:
Wolff may be onto something.
Content has failed miserably on the Internet.
Slate, Salon, and whatever else they are called: they have all been money-pits.
People don't read much anyway, and they certainly don't read what is on offer on the Internet.
Content-providers seem, by and large doomed to lose money -- and just wait and see what happens when the ad money dries up !
No one reads on the Internet.
Of course, the problem might also be with the idea of the "burn rate": spending more money than you make.
There are arguments for this business "model", and content providers are used to the idea from magazine launches (magazines take a lot of money to launch).
The idea that the Internet, as a different type of medium for media, might require a different approach has apparently eluded most media-savvy folk.
Look at the recent fizz of once ambitious Pop.com .....
As Wolff notes, the model based on advertising-revenue isn't too promising.
For similar reasons (i.e. because advertising basically doesn't work on the Internet -- at least not at the ridiculous prices currently charged) most companies are throwing away way too much money in advertising.
God forbid they would use that cash to make a better product.
(Smugly we note that the complete review is a profitable venture -- revenues exceed expenditures.
And all that without ever placing (or accepting) an ad or burning through anyone's money.
But then we are also never going to be raking in the really big money -- and don't count on an IPO anytime soon.)
Burn Rate leaves a very sour aftertaste.
It is full of ugly people, doing ugly things, and wasting lots of money.
One has to wish failure on them because they are certainly not deserving of success.
More importantly, their business models are not deserving of success, because most of these businesses don't stand a chance in hell of ever making any money, and the possibility (however vague) of eventually making some money seems essential for any business.
Sadly and perversely the Internet also rewards failure.
It will be interesting to see if people ever recognize that failure upon failure is unlikely to breed success.
Wolff himself is now a magazine columnist (apparently those who can do, those who can't write).
His columns in New York and elsewhere are entertaining, but is this a man we should be listening to ?
Certainly, after reading this book, the mere mention of his name makes our skin crawl.
Burn Rate is a decent read, though a harder slog than one might expect.
Wolff is fairly candid about his failure, but it clearly still grates and so his writing is not as crisp and clean as in his magazine pieces.
The story also meanders, with a variety of foci and some chronological jumping and skipping.
And we would have liked to know more of the details of his actual business, about which he remains fairly coy.
Anyone who does or wants to do business on the Internet, or is foolish enough to invest in an Internet company (especially a content business) should definitely read this.
Others might find it harder and less rewarding going.
There is little to learn here -- except that everyone in the business is greedy, nuts, unethical, and deluded, and that you are better off doing business practically anywhere else.
Unless, of course, you are willing to play the game and compromise yourself and your morals (if you have any).
Then Wolff has a few useful pointers for you.
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Other books of interest under review:
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About the Author:
Michael Wolff is a journalist, author, and sometime Internet entrepreneur.
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