Burn Rate; How I survived the Gold Rush Years on the Internet

Michael Wolff

Simon & Schuster

New York

1998

REVIEWED BY: Jennifer Morley

Date: August 1998

Burn rate means. . .

the amount of money a promising start-up company consumes each month in excess of its income. Burn capital too fast, and you are out of business; burn capital too slowly, and you risk falling behind in the competition to innovate, expand, and gain market share.

Michael Wolff’s intention was to describe the insanity of the Internet in its early days. Nobody really understood it, including him. The book is concerned specifically with the business side of the Internet — the side normal everyday users never see — and perhaps never should.

Wolff dealt with many top companies in the early Internet years including Time Warner, Wired and Magellan to name a few. He has seen and been through an ordeal, so he is qualified to be writing about the early days of the Internet. His goals in exposing the early days were met successfully. However, the first four chapters dealing with financials were incredibly difficult to get through. (This even coming from a business major). Just as I was about to give up, the pace changed drastically.

Wolff gave the account of how companies naively began business on the Internet. Looking back now it is humorous how gullible these companies were. Wolff sold CMP Media (a major publishing company) his FileMaker Pro database that had some newsgroups, gopher addresses, ftp, and telnet sites listed. (A mere snapshot of the Internet). He made $10 million on that deal. CMP ignorantly believed they were buying the whole Internet!

This book is an interesting look into the world of business on the Internet. There was no structure or stability in the early days of the Internet — perhaps none still. This was a whole different world companies were entering. "This was an industry, I thought everyone understood, of weak companies. How could they be strong? They were new companies, composed of people who had worked together a very short time, without a sufficient capital base and without a dependable business model." (98)

The book is very one-sided, though. Wolff’s side. It would make for a more interesting story to compare notes of all the parties involved — especially Michael Leeds, the head of CMP!

The book focused mainly on the business side of the Internet. There really was not any mention of artificial intelligence. It could be stretched to say some business decisions were made with artificial intelligence, but this is really not the same thing. There was a brief mention of Firefly, which uses AI techniques to match people with similar tastes. However, Burn Rate talked more about the $200 million they raised, rather than their technology.

This book is appropriate for anyone who is interested in the business-side of the Internet. Even for those not interested in business, this is a real eye-opener and is good for a few laughs. Wolff has given an account of the mad scramble companies made as they haphazardly entered cyberspace. Actual companies that all of us know and use are portrayed. It is frightening, though, to read about the realities of the business, since over time, we are becoming more dependent on it.

All I have to say is I will never look at Time Warner the same way again. . .

Links to information about Burn Rate:

www.simonsays.com/burnrate

This is the homepage for the book. It has very cool graphics and gives a good background for the book.

www.cgi.pathfinder.com/netly/article/0,2334,13660,00.html

A negative review called "Who’s Afraid of Michael Wolff." Coincidently it is from Netly News, a Time Warner publication . . . hmm!