FOLLOWING ARTICLE IS A 5000 WORD WALL STREET JOURNAL
FEATURED COVER STORY.
Seers: For Thriving Dot-Com, One Hot Market Isn't
What It Brags About --- Keen Has Experts to Counsel
On Any Topic, but Clients Click Heavily on Psychics
--- Some Calls Are Inside Jobs
Suein L. Hwang
Staff Reporter of The Wall Street Journal
The Wall Street Journal A1
(Copyright (c) 2001, Dow Jones & Company, Inc.)
FRANCISCO -- Among the few dot-com survivors,
Keen Inc. is a standout. It runs a Web site listing
thousands of people who give paid advice, over the
phone, to people who click on their names. Portraying
itself as a marketplace of advisers on a wide range
of mainstream topics, Keen boasts heady sales growth,
blue-chip backers and plenty of cash.
Keen doesn't boast about one secret to its success:
customers such as Dawn Simpson, a San Antonio legal
administrator who went to the site not for advice
on taxes or gardening or law, but to divine her future.
her life hit bottom after her live-in boyfriend left
and she miscarried their child, Ms. Simpson spent
hours on the telephone talking to psychics listed
on Keen's Web site. They kept predicting her guy would
come back. But the only thing that came to Ms. Simpson
was $3,000 in credit-card bills for the calls.
psychics "knew what I wanted to hear," Ms. Simpson
says. "I even told them I don't have this money, and
they'd say, `Don't you want happiness in your life?'
-- with pedigreed investors such as Benchmark Capital
and Microsoft, glowing press clippings and vocal fans
on Wall Street -- is among the last remaining hot
Internet start-ups. "This is one of the few that will
emerge from the rubble as a legitimate and successful
business," says Andrea Rice of Deutsche Banc Alex.
Brown, which invested in the firm. At least until
recently, Keen was calling itself the fastest-growing
e-commerce business in U.S. history.
says its membership ranks have swelled to more than
3.5 million from two million in mid-February. While
Keen doesn't disclose revenue, executives have said
they expect the company to be profitable by early
next year, and they have plenty of cash to get them
there. Keen has its sights set on an initial public
find sound advice and reliable information, consumers
want to speak to someone they trust," explains the
corporate-background page on Keen's Web site. It describes
Keen as a "resource for connecting people who want
to give or receive live, immediate advice on everything
from computer help to dieting, tax questions to personal
issues, romance to nutrition."
Keen's recipe for success may be much simpler, offering
a revealing clue to what it really takes to succeed
on the Internet. ComScore Networks Inc., which tracks
online consumer behavior, says 89% of calls made to
Keen's advisers in December and January were to psychics,
and 6% were to categories that include sexual come-ons.
NetRatings Inc., another research outfit, says Keen's
household demographics and advertising patterns veer
toward lower-income consumers. "Based on what they're
saying to people, I would have assumed their customers
are clicking on areas like how to repair a wallet
or grill a salmon," says Sean Kaldor, a NetRatings
executive. "That isn't where things are going."
year Keen acquired 800predict, a Web site for psychics,
and began listing them on its own site. It didn't
announce the acquisition. Keen says it was too insignificant
last year, Keen hired a provider of adult Web sites
Inc. Keen was "very clear they didn't want any
press about the phone-sex portion of their business,"
president, Jay Servidio.
chief executive, Karl Jacob, denies that the company
focuses on psychics or sex, or that it has tried to
mask its sources of revenue. He says ComScore's numbers
aren't accurate. Keen, he says, is focused on industries
such as information services, consulting and financial
roots go back to March of 1999, when a young Yale
graduate named Scott Faber watched his New York taxi
driver chat on his cellphone and had a bright idea:
He could create an eBay for human capital, he thought,
where the buyers and sellers could use the phone to
August, Mr. Faber was in California talking to Benchmark,
the firm that made its name by backing eBay. Benchmark
took the idea from there, in classic Silicon Valley
start-up style: putting in some money, tapping its
network of technology investors, lining up board members
and getting the story out to the news media.
first step was to link Mr. Faber with Mr. Jacob, a
Benchmark "entrepreneur-in-residence" looking for
his next project. A former executive of Microsoft
Corp. who had sold it his software start-up, Mr. Jacob
was a quintessential Silicon Valley fast-tracker,
driving a Dodge Viper and racing sailboats. By November
1999, its Web site was up. Just a few weeks later,
Keen announced that it had raised $60 million.
site listed self-registered experts known as "KeenSpeakers,"
usually under pseudonyms, and showed a per-minute
charge for talking to each. A customer who wanted
some advice would register with Keen, then click on
a speaker. Keen's technology would connect them by
telephone -- leaving both sides anonymous -- and start
charging the caller's account, with Keen taking 30%
of the fee.
executives and Benchmark decided to let advice-givers
list themselves freely. "We wanted to position ourselves
to be open to anything and anyone," like eBay Inc.,
says Dustin Sellers, Keen's head of customer acquisition.
Big names invested, including eBay, Paul Allen's Vulcan
Ventures, Inktomi Corp., Integral Capital Partners
and Cnet Networks Inc.
first, Keen targeted Web-savvy young people, advertising
on "Friends" and "The X-Files." Mr. Jacob tapped his
media contacts, talking in interviews about the doctors
and software engineers who offered advice via Keen.
National publications and shows including Fortune,
BusinessWeek, CNBC and The Wall Street Journal picked
up the theme, calling Keen a "cool company," an "up-and-comer"
or "one to watch."
has been pretty consistent in presenting the image
of kind of a homogeneous platform for this exchange
of information, and I guess the media has listened
to that message," says Jeff Skoll, a Keen board member
and eBay co-founder.
employees found it wasn't easy to get people to pay
for travel, business or career advice from anonymous
strangers. "The early adopters were usually people
who already had experience talking to people on the
phone and looking for advice, like astrology and psychics,"
says a former Keen marketing employee. "The problem
is getting [other] people to really see the value."
funding for consumer Web sites started growing scarce
about a year ago, former Keen employees say, Keen
went after "the low-hanging fruit." It acquired 800predict
in June 2000, adding its psychics to the Keen stable.
Keen's Web site nor 800predict's site mentions the
acquisition. Some former Keen employees say top executives
told them that if they were asked about 800predict,
they should describe the relationship as a partnership,
not an acquisition. Mr. Jacob denies that and says
Keen didn't hide the purchase.
the summer of 2000, Keen sent potential investors
projections of revenue growth. "We set numbers out
there and beat them, every time," Mr. Jacob says.
In October, as some dot-coms were folding, Keen raised
$42 million from investors to push its total above
former employees say Keen turned its own workers into
a captive market, frequently asking them to call certain
parts of its own site. For instance, one KeenSpeaker
offered callers taped instructions on how to make
squirrel pie, a piece of advice that ended up in a
Fortune magazine article about Keen. The Web site
shows that 15 callers have offered an evaluation of
that advice-giver under the site's feedback system.
But former workers say that at least eight of the
15 were actually Keen employees, their screen names
show. One was Mr. Sellers. Another, they say, was
eighth-highest-ranked expert in the travel and recreation
category is "Dusty Road." But Dusty Road is a screen
name of Keen's Mr. Sellers. Of the nine pieces of
feedback Dusty Road has received, former employees
say two are from Mr. Jacob, one is from a brother
of the CEO and one is from "kellynice," the name of
Keen declined to verify the identities of the postings.
Jacob says staff calls to the squirrel-pie KeenSpeaker
merely reflect curiosity. He doesn't think evaluations
by anonymous Keen employees are misleading, asking,
"Is their feedback any less valid than yours?" And
they couldn't skew the site's overall numbers, he
says, because the staff numbers only about 150. Some
ex-employees say that while they were asked to make
calls in part to check on speaker quality, they suspect
it was also to prevent rarely called speakers from
listings show that the top five psychics on the Web
site have drawn 15 times as many calls as the top
five computer experts. Mr. Skoll, the director, says
that "certainly more than half" of Keen's business
is "in romance and astrology."
is talking about expanding its ties to Linda Georgian,
a KeenSpeaker who was co-host with Dionne Warwick
of a Psychic Friends Network infomercial once common
on cable TV. "They'd be my [public-relations] representative
and book me on shows" such as Howard Stern, Ricki
Lake and Jerry Springer, Ms. Georgian says. Keen says
it offers such support to any KeenSpeaker.
Jacob was asked about psychics in February, and said
that Keen was just as strong in the health, computers
and business categories as in psychics. Asked again
last month, he said the company didn't wish to reveal
its business breakdown.
did identify categories in which revenue is growing
fastest. They are money and career, business, and
health and therapy, he said. He noted that "calls
aren't the same thing as revenue."
Simpson's calls represented revenue. Recalling the
events of late last year -- her boyfriend's departure
and her miscarriage -- the San Antonio woman says
she was "losing my mind, losing my hair. I started
drinking all the time." She began calling Keen's psychics
repeatedly, at prices sometimes above $4 a minute.
kept telling me that `he loves you, loves you so much,
he'll come back to you,' " she recalls. "It was like
an addiction, filling my head with all this stuff."
One psychic, she says, insisted she stay on the line
for an hour while the psychic burned a candle. It
cost her $350.
one psychic e-mailed her, suggesting she stop wasting
her money and get on with her life. She says she complained
to Keen about all the bad advice from psychics and
the money it cost her, and Keen knocked a couple of
hundred dollars off her bill. "They told me I knew
what I was getting into, that this is just for amusement,"
KeenSpeakers fret about vulnerable customers. "I see
so many people call with the last penny in their hand,
people who spend their grocery money, their mortgage
money, calling a psychic," says "bimmyj," a former
food-service manager who offers counseling on Keen.
Most KeenSpeakers don't want the public to know their
a psychic, says some callers are struggling with loneliness,
abuse, poverty or depression. "I see people come in
with serious problems and lose thousands -- I mean
thousands -- of dollars," he says, asking not to be
identified because of his day job in financial services.
Summer, president of the American Association of Professional
Psychics, says she rejected a request by Keen to encourage
its members to become KeenSpeakers. She says the problems
starting to bedevil the Web site are "just a mirror
of what happened in the 900 [phone] industry. First
it was a core group of psychics who were very responsible
and truly believed they were serving. Then the big
marketing companies got involved in the game, and
they didn't care who answered the phone as long the
caller was on the line long enough."
Jacob denies that Keen has such problems. He says
he isn't familiar with Ms. Simpson's case. He says
Keen's system of letting callers rate speakers should
flush out any problems.
recently advertised in supermarket tabloids, highlighting
a new toll-free telephone number. It gives Keen access
to people who don't have Internet access. "Love him
or leave him?" reads a large color ad in Star magazine.
"Is he the one? Talk to someone who knows! Keen has
the largest selection of the world's best psychics,
tarot readers and spiritual advisers."
of Keen's online advertising promotes psychic readings
and runs on sites targeting women, according to a
partnership between NetRatings, Nielsen Media Research
says Keen users are more likely to have incomes below
$25,000, to have just a grammar-school education,
and to be African-American than are visitors to the
average Web site. KeenSpeakers say the site attracts
a significant number of black women, a traditionally
big segment of the psychic-call market. "They're definitely
focused on relationships and psychics," says NetRatings'
Jacob says Keen doesn't target African-Americans,
lower-income people or the less-educated. In fact,
its customers are more likely to have graduated from
high school or college than the general population,
he says. Advertising in the tabloids is just a "small
part" of Keen's promotion, he adds.
for sex calls, ComScore, which confidentially monitors
the Internet behavior of more than 1.5 million volunteers,
found such traffic not just in Keen's restricted "adults
only" area but also in its "romance and social" category.
That category's top-rated speaker until recent days
was "Liz69," who calls herself an "Experienced, Gorgeous,
Sexy Female!" A woman named Amanda Lewis, who was
listed until recently in the romance and social category
as "ahotsexychick," said she offered phone sex and
had received thousands of calls.
Keen employees say they were surprised to be presented
with a contract that read in part: "I understand and
agree that my job responsibilities at Keen.com may
require me to access, review, and/or monitor material
that is sexually explicit or of a sexual nature (`Adult
a February interview, Mr. Jacob said Keen had never
been much interested in the sex category. "We have
a community, and that isn't the way we want to make
our money," he said.
Servidio of Teleteria,
the adult-Web-site provider, says Keen executives
approached him last year and "said they wanted to
be connected with someone who knows the [900-number]
business, who knows everybody, and who wouldn't get
them in any lawsuits." He says that he "brought the
biggest players from the phone-sex industry in the
world to Keen."
cites Videosecrets, a big provider of live adult entertainment
to the Web. Online customers already could watch and
chat with its models. Now they can also talk to them
on the phone using Keen's technology. The Keen site
shows Videosecrets has received 7,400 calls over the
Jacob says adult content provides less than 5% of
Keen's revenue. He says the point of Keen's relationship
with Jay Servidio was simply "to understand the adult
industry and policies to determine how to deal with
adult on Keen" -- just as Keen tries to "understand
the pitfalls of other industries." Keen and Jay Servidio
are at odds over the continuation of his services.
sides of the business are growing quickly, says Mr.
Skoll, the board member. "I think Keen stepped into
a situation where the markets that were most opportune
for using this kind of system were things like 900
numbers," the eBay veteran says. But Keen management
"really sees this as a platform for helping people
exchange information for all sorts of things. And
over time, they're not limiting themselves to romance
says its latest offering, providing technical support
on Microsoft Office XP software, has been one of many
recent hits. "With the right momentum, the right growth,"
Mr. Jacob said in February, "a company will break
the IPO blockade. It would be great to be the company
to do that."
Servidio is President of Teleteria,
Inc., a company that has been building and hosting
commercial and adult custom Web sites since 1994.
clients are located all over the world.
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