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"We made nothing," Richter recalls. "I thought all you had to do was put up a Web site and you'd be a millionaire. I didn't understand the Internet."
What he needed, he realized, was a product to sell, an ongoing service of some kind. Something you sold once, then kept tapping a credit card for annual renewal. He decided on low-cost pagers, the kind of pagers people in his bars used for a few years and then threw away. Some quick math: a hundred thousand pagers...forty bucks a year for service...Richter figured he could clear $2 million a year easily.
But the pager business turned out to be as fickle as Fred Durst. Some of the people who ordered were outside his coverage area; in other cases, the pagers didn't work, even when the recipient lived in the right place. And every week there was a new style or color of pager hitting the market, and all the lemmings would flock to the latest thing.
"We put out 10,000 pagers in a few months," Richter says, "but it was more customer service than I wanted it to be."
Okay, forget pagers. How about diet pills? Everybody wants to lose weight, Richter mused. He'd been heavy for most of his life, topping out at 310 pounds. So he came up with a name for a diet pill and a slogan: Inferno, Melt the Fat Away. Then he hired an e-mail marketer to help get the message out. In those distant days -- circa 1999 -- bulk e-mail was expensive, around $5,000 to send out a million e-mails. (Thanks to cheaper bandwidth and other developments, Richter's company charges a tenth of that amount today.) But the initial results were gratifying.
Working out of his basement, Richter was soon shipping several thousand dollars' worth of pills a day. Still, he discovered that he had to keep coughing up bucks for barrages of e-mail to keep the orders coming in.
"Lots of people would order diet products once, but maybe 10 percent or less would come back and reorder," he says. "I'd send out ŒLose 10 pounds in a month,' and someone else would come out with ŒLose 11 pounds' -- and people would switch to an identical product. So I'd take the same pill and change the name. Instead of Inferno, it's Thermalife. I'd spend $10,000 a week marketing, get $15,000 in sales, and hope for reorders."
Richter soon realized the error of his ways. Instead of trying to lock people into one product, one service, for month after month, why not roll with the consumer's endless hunger for innovation, for something New, Improved, Bigger, Better? Instead of handing hard-earned profits to an outside marketer, why not develop your own list of potential diet-pill customers? And why not send those customers a regular e-mail newsletter, touting other health-related offers?
"It was incredible," Richter recalls. "We started building our own lists, getting people to sign up for our newsletter. I'd give tips of the week on how to lose weight, a special recipe -- and, oh, here's a new pill."
Soon Richter partnered with other cyber-hucksters, paying for "co-registration" on their Web sites -- which allowed him to send offers to their customer lists -- and sending their offers to his list ("Inferno has partnered with Telecom X to provide all of its members a free cell phone!"). Within a few months, he'd expanded his diet-pill customer list to a general list encompassing tens of millions of e-mail addresses, prospects for everything from letters from Santa to female arousal cream, from American flags to hard-core porn.
"Before you knew it, I was sending out a million e-mails and making $20,000 a day," Richter says. "It was the easiest thing I ever did in my life. Just send out e-mails and make money."
He pauses. "Of course," he adds, "you get a few spam complaints."
URGENT!!! SCOTT@OPTINBIG.COM CONFIRMATION REQUIRED!!!There are many reasons to hate spam, starting with its sheer volume. Add to that the widespread (and illegal) use of phony return addresses and hacked servers; the crude, obscene or subliterate sales pitches; and, of course, the often elaborate or non-functional process for getting "unsubscribed" from a given list.
For many people, though, the most loathsome aspect of the whole business has to do with its unsolicited nature. In newsgroups devoted to the subject, some of the most passionate denunciations of spam treat it as a kind of cyber-rape, a heinous violation of one's personal space. In the new millennium, is there any more intimate refuge than a private e-mail account? Can there be any more degrading experience than visiting your in-box and finding that you -- yes, you -- have been selected for a special advance copy of a video involving a goat, a midget and an unspecified number of lactating teens?
Scott Richter had become a major target for anti-spammers even before last month's lawsuit. He's visible, he's vocal and, over the past two years, his company has become a major player in a largely anonymous industry. He routinely gets large volumes of spam from his critics -- along with death threats, lawsuits and an endless torrent of online flaming and taunting. To the regulars of the newsgroup news.admin.net-abuse.email, or "nanae," he's known as Snotty Richter, supposedly because of his confrontational attitude toward the anti-spammers.