By the next day, the offer had unraveled into what Gallagher called “a total sham.” Sir William Douglas, the alleged chair of Ocean Fund, denied any association with the company, prompting an apology from the British newspaper The Independent for publishing statements from the press release that were “incorrect and unfounded.” The bid was concluded to be little more than a publicity stunt—but an effective one at that. Within twenty-four hours, Sex.com had generated headlines from the Los Angeles Times to the New York Post, which surmised that “Wall Street hadn’t seen such cojones in years.”
It also managed to move the market, boosting Starwood’s stock by 44 cents, and dropping Park Place’s by 19 cents on the New York Stock Exchange. “After following gambling stocks for 10 years,” the Bear Stearns analyst said, “you think you’ve seen it all. Then something like this comes along that makes you shake your head.” But in addition to promoting Sex.com, it also added to the notoriety of the “porno peddler,” as the Post put it, who was revealed to be responsible for it all: Stephen Cohen.
Cohen’s antics weren’t just garnering the attention of the mainstream world. He was now among the most infamous “peddlers” in the net’s most notorious industry—and at war with just about everyone in the online sex trade who crossed his path. By the summer of 1999, Cohen’s battle with Kremen, and Kremen’s high-profile backers, Fantasy Man and Warshavsky, had made him the industry pariah.
But he had other concerns: building his ISP, and running Sex.com. He spent his days zipping back and forth across the border to his fiber optics hub. It became so routine that Cohen grew weary of the red tape he had to deal with every time he passed through Customs. Instead of stopping to claim whatever duty-free items he had, he’d just reach out the window and put a $100 bill in the border agent’s hand and keep going. If he didn’t like the agent, he’d simply reverse backward on the highway, and split.
Sitting back in his office in Tijuana, Cohen readily spun his story on the phone to anyone who’d listen. “When Kremen filed this lawsuit, he did us a big favor,” Cohen told Luke Ford, who wrote a widely read blog about the online porn business, “because if you don’t sue someone within a period of time, it can be construed as giving implied permission. We decided at that point, instead of fighting forty lawsuits by people using the name Sex.com, to take care of Kremen.” This included both Fantasy Man and Warshavsky, whom Cohen considered part of Kremen’s team. “We’ve got Warshavsky’s tit in a wringer,” he went on. “We’ve got him cold. He’s fucked.”
Cohen slipped into his pedantic mode, deriding the other dot-com moguls as technological neophytes overinflating their claims. “We have 8,799,232 members,” he told Ford. “The other adult internet sites are not even in the ballgame. Most people do not understand the internet. You get these fools like Seth Warshavsky who claims he’s doing all these millions of dollars’ worth of business. If writers were more technical they could check out the information.”
Cohen told Ford to do a WHOIS search for Sex.com, and waited as he heard Ford’s fingers rattle across his keys. He wanted to show Ford proof that he was dominating Warshavsky’s traffic. “Do you see the number 11083?” he asked. “That’s an autonomous system number. That means you report to more than one place. That means that more than one ISP feeds you.” The implication was that Sex.com needed more than one internet service provider to handle all its eyeballs.
He had Ford then type in the address of Warshavsky’s site, Club Love. “Hear that noise in the background?” Cohen asked, as he put the phone up to his own computer, which played back a fuzzy sound like TV static. “Club Love’s internet provider is cable and wireless,” he went on. “He’s running out of an IP address of 166.48.217.250. Club Love is registered as JNS Communications Inc. and the address is 208.139.0.21. He only has one ISP. He’s probably running less than a T3 line, and yet he claims he’s doing all this business. From what I can see he’s not running more than a couple of T1s. His claims of millions of dollars are all BS.
“Now, let’s take a look at Cybererotica. Cybererotica is fed by IGallery. Cybererotica is running greater than T3. About 60–70 megs, probably two T3s. It looks like they have a big video stream coming through. Clublove is a dinky site. Cybererotica doesn’t even have an autonomous system number. Bandwidth is not indicative of how much money you make. You can make millions of dollars with TI if you’re running nothing but text. But once you start doing video and pictures, it eats up more bandwidth. For every dollar made, how much is kept? Cybererotica does lots of webhosting and buying of other people’s traffic. He has great gross but shitty net. While Sex.com has tremendous gross and a 98% net, I don’t need to buy traffic. That is what separates the men from the boys.”
Curious to learn more, Ford drove down across the border to meet the man once and for all. “I wanted to see this infamous Cohen everyone always talks about,” as he blogged soon after. Once in Tijuana, he came to a busy thoroughfare with a median of palm trees. Strip malls with UPS stores, tanning salons, and dentist offices lined either side of the road. He pulled into one spot along Diego Rivera Avenue, and went into a brand-new office building, where he was greeted by Jim Powell, Cohen’s gray-haired associate of many years. Powell showed Ford around the computer room, which buzzed with servers and wires and heat. It seemed impressive, but, then again, he had no idea who owned what. But the man himself was nowhere to be found, having gone to Vegas, he was told.
Before long, Ford had had enough. He considered the industry leaders his friends, he later wrote, and descending into the belly of a beast, where Cohen and his cronies were suing everyone into oblivion, was making him feel queasy. “These people are into a very heavy revenge trip that goes well beyond scary and it seems to me they do not care about the harm to our industry that they will cause,” he later wrote. “I felt so sick after seeing what I saw that I just made an excuse and left Tijuana.”
* * *
Kremen wanted money. That’s what he was going to tell Warshavsky, the online porn wunderkind who, along with Fantasy Man, had offered to fund his lawsuit against Cohen—but had never come through with enough cash. Kremen was heading up to meet him at his office in Seattle. As he drove through the misty streets of downtown Seattle, he felt broke, besieged, anxious, unable to fathom how much longer he could fight Cohen—who was growing increasingly successful.
When he arrived at the headquarters of Warshavsky’s Internet Entertainment Group (IEG), it looked like some nerd’s porn fantasy come to life. While rows of geeks worked computers in one room, he’d devoted one warehouse to what he called “the Arcade.” Inside rooms decorated like dungeons and gyms, male and female strippers cooed into computer screens as the visitors in the tiny little windows eyed them hungrily. It cost $24.95 per month, plus an hourly fee, to have them fulfill their fantasies. Warshavsky had set up cameras in their dressing room, so people could watch them change, and a “pee cam” in the bathroom.
But the boss, as Kremen found, couldn’t care less about the distractions. Warshavsky was slight and twitchy, with tight blond curls, and a prominent dimpled chin. Kremen noticed Warshavsky’s notorious tic immediately, the way he’d snort a long honkkkkkk between sentences. He bounced around like a kid off his Ritalin. And, as he made clear to Kremen, he was under siege. In the past year, he’d made $45 million by luring eyeballs with celebrity scandals. In the time since releasing the Pam and Tommy tape, the twenty-six-year-old multimillionaire had become, as the Los Angeles Times put it, “the most infamous pornographer of the Internet Age.”
He posted nude photos, taken years before, of conservative talk radio host Laura Schlessinger under the headline “Amateur Slut,” alongside compromising shots of Tori Spelling and Keith Richards. More recently, he was getting sued by the Archdiocese of St. Louis for exploiting an upcoming visit by the pope to America by launching a porn site under the domain name PapalVisit.com. As the suit alleged, Warshavsky had “provided advertising for defendant’s adult entertainment websites, hyp
erlinks to these other websites, and an assortment of ‘off-color’ stories and jokes regarding the Pope and the Roman Catholic Church.”
He had hassles, he told Kremen, and not just the Roman Catholic Church. He was tired of being treated like an outlaw. “Look at Viacom, Time Warner or the contents of Cablevision,” as he bemoaned to the Los Angeles Times. “All of them derive a huge amount of revenue from adult content. But they don’t call Time Warner smut.” He’d launched a new site, Online Surgery, which was broadcasting live breast implant and liposuction operations, another for psychics and home loans.
To keep going, he alternated between carbs and proteins. His desk was covered in turkey slices and vitamin supplements. He was going to take IEG public, and was battling reports by others in the adult business that he was swindling them or suing them just to maintain control. And he had no more time left or interest in financing Kremen’s own battles. “I’m not going to give you money,” he said, as Kremen later recalled. Kremen left empty-handed. With Warshavsky out, Levi decided getting involved was more trouble than it was worth. But he remained available for Kremen if need be down the line. “I kept it professional with Gary,” Levi recalled.
But Kremen had no idea how he would afford to continue the battle against Cohen on his own. By the time his thirty-sixth birthday came around, on September 23, 1999, Kremen was licking his wounds. No Match.com, no Sex.com, no payoffs to his countless investments in start-ups across the Valley: an internet wine company, a digital watermark developer, a golf cart marketing group. And now, Cohen was trying to dismiss the case on a technicality—that Kremen, under the auspices of Online Classifieds, never really had the rights to Sex.com in the first place.
It felt like too much, too much work, too much wrong, too much suffering. It was times like this he wanted to just pack up his Honda and drive out to the Anza-Borrego desert for a camping trip and fast. Cleanse his body, cleanse his mind. And so that’s what he did, driving off until the buildings became trees, and the apartment lights turned into stars. Two weeks later, on October 7, Kremen’s old friend and partner Peng Ong took his content management company, Interwoven, public, raising $53.5 million. Kremen, from a remaining investment of $5,000, had just made $3 million. And he knew exactly how he wanted to spend it: by making Cohen pay.
CHAPTER 8
RANCHO
Not just anyone could get a home in Rancho Santa Fe, the posh enclave of five thousand residents thirty miles north of San Diego. Dubbed “the richest town in America” by the Associated Press, Rancho had been home to some of the country’s rich and famous for decades: Howard Hughes, Bing Crosby, Bill Gates. The sprawling mansions dotted the winding roads, shrouded in sweet-smelling eucalyptus and lemon trees.
The town prided itself on a strict “Protective Covenant” that ensured homes had the proper acreage between them and designs that were pleasing to the eye. “To buy a property up here you have to invest a lot of money,” as the town’s planning director told the AP, “but once you invest a lot of money, you don’t have to worry about a McMansion going up next door that’s flamingo red.”
From the outside, the $3 million, eight-thousand-square-foot estate at 17427 Los Morros Road—with its Spanish-style roof, tennis court, guesthouse, and kidney-shaped, palm-tree-lined pool—met all the community standards. There was even a suit of armor in the foyer. Little did the neighbors know, however, that the masterful mogul of online porn, Stephen Cohen, was living with his new family inside.
Rosey had picked out the home the year before, a bucolic estate where, as she later recalled, she hoped to start “a new life” beyond Mexico with her two daughters and Cohen. She didn’t know how much Cohen had paid, or where he got his money. “I never asked,” she said. She was just happy to have a peaceful place to raise her girls, with good schools nearby, and enough room for her large, extended family across the border to come and go. This suited Cohen perfectly enough. With its rolling hills and moneyed neighbors, it reminded him of his glory years running The Club in Orange County, just two hours north. Like the Mel Brooks line, Cohen finally felt like it was good to be the king. He deserved this life, this fiefdom, ruling the net, legions of wannabes hoping to be in business with him, while his family enjoyed the fruits of his labor. Despite what his mother had always told him, he had amounted to plenty, he thought, puffing out his chest. While his wife and children spent their days poolside under the palms he would travel down to Tijuana to build his Sex.com empire, beam internet over the border, and keep his rival, Gary Kremen, at bay.
He had reason to be concerned. Kremen was showing no signs of backing down and, if anything, digging in even more against him. They seemed to have one thing in common: they were equally obsessed. Despite the fact that Cohen had control of Sex.com, Kremen was capitalizing on his PR as the inventor of online dating to cash in on the buzz over online porn. All Cohen had to do was go online and search for Kremen’s name to find that Kremen was, on November 10, 1999, a featured panelist on “integrity in adult entertainment online” at an internet conference in San Francisco. The event was devoted to “the rise in adult content’s popularity and profitability on the Web,” and Kremen was billed as “former owner of Sex.com.” Who did Kremen think he was?
Cohen wasn’t just going to stand by idle. He was going to game Kremen into a corner, use whatever powers he could to drain his time and money. And he had just the plan. Two days after Kremen’s adult entertainment panel, Cohen had his lawyer flood the fax machine of Charles Carreon, Kremen’s attorney (and a real freak, in Cohen’s mind), with a multipage missive. It was Cohen’s deposition schedule for the next month—and it was meant to be daunting. They were going to be held in several locations around the world, including two in Israel, three in Moscow, one in Bangkok, another in Athens. Carreon later decried them as what he called “decoy depositions,” meant to tie up time and money by sending him and Kremen on a global goose chase. “Never had I heard of anyone abusing the discovery process so blatantly,” as Carreon put it.
But Cohen wasn’t stopping there. He subpoenaed Kremen’s doctor, his old lawyers, a half dozen old business colleagues. It would take about 222 hours and $17,000 in airfare alone to meet Cohen’s demands, Carreon told the judge. The judge agreed that it was outrageous, and said as much to Cohen. But Cohen wouldn’t stop at that. Instead, he filed a counterclaim against Kremen, alleging that it was Kremen, not him, who had illegally taken control of the Sex.com name, and was now unfairly competing and defaming him—to the tune of $9 million.
Cohen could feel Kremen cowering even more, especially when he learned, in December 1999, that NSI wasn’t backing down against Kremen either. Kremen had never had a contract with NSI for Sex.com, never paid for the domain, and, most important, NSI had no way of knowing if Cohen had forged the letter taking over the site. Therefore, they insisted, in a formal motion to the U.S. District Court of the Northern District of California, that they should be dismissed from the case entirely. The court would soon grant the motion, which dealt a devastating blow not only to Kremen but anyone who tried to defend their right to own something online. It determined that a domain name is intangible property, not the kind of property that could be stolen.
NSI, in essence, was telling Kremen to go fuck himself, just as Cohen was telling him. And so, when Cohen found out that he was to appear in a San Diego court reporter’s office in February to be deposed by Kremen, he wasn’t about to cower. The future of the internet, and his empire, was at stake. He would readily attend—not only to tell his side of the story, but to, once and for all, meet his nemesis Kremen in person and show him the real emperor of love and sex online.
* * *
The world did not end at the stroke of midnight on January 1, 2000, despite the warnings. Rumors had burned around the world that a mysterious computer bug, nicknamed Y2K, would cause machines to go haywire at the turn of the millennium. Because most software represented years by their final two digits, the concern was that when the clocks hit �
��00” the computer would reset its calendars to 1900 instead of 2000—causing programs to fail.
Fear spread that hospitals would go offline, planes would crash, stock markets collapse. A cottage industry popped up around Y2K preparedness, resulting in more than $300 billion being spent in anticipation. When the ball dropped in Times Square, however, so did the worries, it was all for naught. But it seemed to represent something else: how increasingly reliant the world was on computers, and how much the global culture and economy hinged on them.
One month later, Gary Kremen found himself looking out on the ocean from his hotel room in La Jolla, ready to reclaim his throne online. He was there for Cohen’s deposition, and their first face-to-face. He had stayed up all night with Carreon, preparing for battle. Carreon quoted to him from early nineteenth-century Prussian general and military theorist Carl von Clausewitz’s classic treatise, On War. “In order to induce surrender,” as Carreon read, “it is necessary that every day bring the opponent news of a new defeat, and that there be no end in sight to the daily drumbeat of failure.”
“Every day has got to be a bad day for Cohen!” Kremen concurred.
On February 3, 2000, Kremen and Carreon drove to a nondescript office building in downtown San Diego, and ascended to the sixth floor to meet their rival once and for all. Flanked by his lawyers, Cohen sat at the conference table. His mouth was in a permanent smirk, like it was chewing his ever-present cigar even when it wasn’t there. Dressed in a cheap black suit with a pink and black checkered tie, Cohen eyed Kremen like tobacco he was going to roll and smoke. When he rose to meet him, he handed Kremen a gift: a T-shirt. Kremen unfolded it to see that it bore a logo that read “Sex.com.”
“I thought you’d like this,” Cohen said, smugly. “I’ve sold thousands of them at conventions for $25 a piece.”
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