Startup.bomb

Saturday 1st September 2001

Tuzman and Herman's less-than-excellent adventure

One day Hollywood will get around to mythologising the dot-com boom that closed out the 20th century. For now, perhaps, the great sucking sound is just a little too close to home. But before the screenplays are written, it's just as well that the first cab off the rank is a documentary.

Not that Startup.com, which screened during this year's film festivals, needed any fictionalising. It has all the components: love, friendship, drama, comedy, conflict and money. Produced by the dean of fly-on-the-wall documentaries, DA Pennebaker, it sticks with school buddies Kaleil Isaza Tuzman and Tom Herman as their dream comes unstuck.

The nerdy, meditative Herman wooed the bustling, brash, but self-conscious Tuzman from his job at Goldman Sachs to become chief executive of govWorks.com, a company based on an idea developed by Herman and half-a-dozen chums. They raised $US60 million, hired around 250 staff and, earlier this year, went down in a screaming heap.

There was nothing particularly wrong with the idea: a commercial company acting as an electronic intermediary between citizens and government, letting people pay everything from property taxes to parking tickets online. What was clearly in doubt was the ability of a bunch of kids to execute a business plan that demanded extraordinary technical integration and, surely, some deep experience with government services.

The film captures the preposterous sense of urgency that was presumably being replicated at govWorks' half-dozen or so competitors. In 1999 the charge to market (and the wild growth it entailed) was an article of faith.

At one point, the govWorks crew look to be contemplating suicide while they watch a TV item on the launch of competitor ezgov.com. I sat in the cinema thinking, "It's just a media launch, for goodness sake; it doesn't actually mean anything." But back then, it very obviously did.

The film's closing titles reveal that on the day it scooped the job of handling payments for New York City's parking infringements, a bereft govWorks was sold to a "multinational company". We weren't told what that company was, which is odd, because it is quite revealing.

The purchaser of govWorks - well, the purchaser of its name and payment processing division, which were probably the only components of the business with any value - was CashTax, an operating company of eOne Global, a division of the NYSE-listed First Data Corporation. The sheen of the merged company's new name, govOne Solutions, disguises its distinctly non-dot-com roots. Drill down through a fashionable burst of re-branding and acquisition last year and you discover that CashTax has been providing electronic tax payment services to local, state and federal governments since 1985. It is roughly the same idea that govWorks used to raise that $US50 million: sound, but hardly new.

So why didn't the venture capitalists who put up the money, and the board members paid to mind the baby, twig that a start-up with no previous competence and only generic technology was going to struggle?

The strangeness of the times is underlined by a scene in the film where an embarrassed Tuzman tries to reach his lawyer by phone. He and Herman were in a New York office where a $US17 million deal was on the table - but it would be withdrawn if they left the office to seek advice. What on earth was everyone thinking here?

The film concentrates on the way the stress of the business sets the boyhood friends against each other (at one point Tuzman has security escort Herman off the premises) and on the goofy motivational cheer-leading and new-agey exhortations toward oneness.

It makes for a compelling and often amusing story, but it leaves many questions unanswered: Did they crash because their site sucked so badly? Would it have been different if Herman had hired a chief technical officer to do his job? Or if they hadn't grown so fast? Perhaps there ought to be a professional cut of the movie for those of us who want to know the gory details.

Other stories go untold. We hear little from the employees and the investors, though they later crowded the discussion forums at fuckedcompany.com, drawing a witless threat of legal action from Tuzman. But we do find out that Tuzman and Herman have mended their relationship and are back together in the small company they should have begun with in the first place, which aims to help other twentysomethings deal with the dot-com downward spiral.

In the grand American tradition they have traded humiliation for a dose of stardom that will serve them well in their future business lives. They will be forgiven: making mistakes is part of the learning process, after all. And we can only marvel at the madness of a system that gave them $US60 million of other people's money to do it with.

Russell Brown
russb@dubwise.co.nz

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