FOLLOWING ARTICLE IS A 5000 WORD WALL STREET JOURNAL FEATURED
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
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 offering.
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 to publicize.
last year, Keen hired a provider of adult Web sites called
Teleteria Inc. Keen
was "very clear they didn't want any press about the phone-sex
portion of their business," says Teleteria's
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 planning.
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 trade information.
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
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
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.
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 $100 million.
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 Mr. Jacob.
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's advertising agency. Citing
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.
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
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," she says.
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 real names.
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
of Keen's online advertising promotes psychic readings and
runs on sites targeting women, according to a partnership
between NetRatings, Nielsen Media Research and ACNielsen.
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' Mr. Kaldor.
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
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 Only Material')."
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."
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 past year.
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 and astrology."
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. Teleteria's
clients are located all over the world.
to Pushlished Articles Main Page