The Duke of URL Pogo Linux Altura Athlon XP Workstation Mandrake Linux PowerPack 8.1 Conectiva Linux 7.0
Review Index Contests News From Around the

Web Forums How to Contact Us Suggested Link-age About UsSite News Archive Join Our Mailing List!

Author: Tim Johnson
Date: 03/13/01
Manufacturer None
Component Type: Features

Foreword: This is the story from a concerned reader who has a little info on Efront.

I'd also like to note that if you are easily offended you may want to avoid this piece of content. While there is nothing too racey, some of the details are a little crass at times, but I suppose reporting the truth requires that at times.

A Tale of Web and Mismanagement

In Spring of 1999, Matt Levine left Toronto, Canada to pursue a dot-com dream called "Efront Media" in California. Like so many before him, he left his family behind and put many plans on hold while he chased after the pie in the sky. Fast forward to March 8th, 2001, when Matt submitted his official resignation as CTO of Efront Media, Inc. What happens next is an event that sets Matt's story apart from the thousands of other laid off hi-tech workers throughout the country.


Efront Media officially began business in May of 1999, amid a frenzy of new dot-com companies starting up. The CEO of the company was 29-year old Sam Jain, who had quit his job as VP of Marketing at a now-defunct Internet company. Through his work, Sam was introduced to Matt Levine, with whom he began discussing the possibilities of starting a company of their own. The concept was to consolidate popular websites into a network from which they could leverage the collective popularity for better advertising rates. Thus, Sam and Matt launched Netwhirl Communications. Their first acquisition was a company called BetaNews, which just happened to own the domain name "Efront.com". Netwhirl became Efront, and began its journey of conquests.


Over the next 2 years, Efront Media swallowed numerous websites with deals sealed with promises of stock options and monthly cash payments. Efront's strategy seemed to work perfectly as it was able to consolidate over 250 websites to increase overall traffic and revenues. Then in September of 2000, online advertising rates began to freefall as companies reevaluated their ad marketing budgets and the slowing economy began to take its toll. Efront's entire revenue model was advertising based, which was decimated as one by one, companies pulled their ad campaigns. To compound the problem, many of Efront's customers faced cash crunches and were unable to pay their bills, resulting in high uncollectable debts.


Jerry Ziegler, who was President of Efront in the Fall of 2000, found himself staring at a financial crisis unfolding right before him. Jerry had quit his previous job in the financial services industry to join Efront's management team in June of 1999. He was attracted to the lure of the dot-com world and was fascinated by the Efront concept. After being promoted to President in 2000, he was thrusted into the most difficult situation of his life. By September of 2000, Efront had cash commitments that largely outpaced its cash flow. The biggest burden to the company was the cash payments that were due to the owners of the acquired websites. Efront signed deals for monthly cash payments stretched out over 3 years to amortize the cost of the acquisitions. The monthly payments ranged from $500 to $30,000 per month. If you multiply that by 250, you can quickly do the math. According to Jerry, the monthly revenues in September were in the range of $500,000, most of which became uncollectible.


Beginning in Septemeber of 2000, Efront's corporate payroll was many times delayed as cash flow became a serious problem. Matt says that he had not received an official paycheck from the months of October to March. During this time, he also purchased computer equipment for the company based upon promises that he would be reimbursed. He voiced his concerns with Sam Jain, the CEO, but was always met with promises and assurances that he would be paid. When the reimbursements and paychecks never surfaced, Matt was faced with debts of over $20,000. Trapped in California with an immigration problem due to his Canadian citizenship and bound by loyalty to his brainchild, Matt continued to work for Efront as its CTO.


As November quickly approached, Efront's financial situation became dire as companies simply refused to pay their advertising bills. The company quickly ate through its cash reserves, largely funded by $750,000 that Jerry raised through friends and family. Webmasters within Efront's network began to notice their monthly checks had been delayed with promises that they would be paid soon. By January of 2001, no Webmaster had been paid for months. Tensions mounted and the Webmasters began their own online discussion forum to compare experiences and trade information. As they discussed their common problem, one theme seemed to arise: Efront had approached each of them individually to renegotiate their contracts for lower monthly payments. The odd part was that the company insisted that the Webmasters each waive their rights to backpay in exchange for more stock options.


Jerry Ziegler was under immense pressure to make ends meet when it seemed that the company was sinking. While he suggested to Sam Jain that the contracts with the Webmasters should be renegotiated, he inisisted that cash payments should still be made even if the amount was smaller than stipulated in the contracts. Sam disagreed and terminated Jerry on February 27, 2001. When asked for a reason, Jerry says he was terminated without cause. On March 8th, Matt Levine and 3 other members of the Efront management team confronted Sam Jain with an offer: Step aside from company operations temporarily so that we can recover the company out of its financial crisis. Sam flatly declined the offer, and the group submitted their resignations effective immediately. Among those departing was Bill Hodson who had been nominated by the group as the interim CEO. Bill had served as the company's Marketing point man since 2000 and was deeply involved in day-to-day operations.


The twist in the story begins here on March 8th. An anonymous former employee of Efront sends an email to the website Fuckedcompany.com containing a number files claiming to be the ICQ logs of Sam Jain, CEO of Efront. ICQ is a popular Internet chatting software that keeps records of every transaction for the convenience of the user. The ex-employee claimed that the logs were copied from Sam's laptop which is used primarily for work. Fuckedcompany.com promptly publishes links to the logs so that its visitors may judge for themselves the contents. What seems to be a innocent prank turns out to be the most damaging and embarrassing event to hit Efront since its inception.


The ICQ logs include daily conversations that Sam had with Efront employees and personal friends. While most conversations pertain to the inane details of company operations, the most damning is alleged evidence of attempts by Sam to defraud the Webmaster that are owed money. Conversations between Sam and Will Bryant, another Efront management figure, include discussions to force Webmasters to accept lower monthly payments and in some cases, returning low-performing websites to its owner despite binding contracts. A tactic that worked was to withhold payments until the Webmaster was on the verge of bankruptcy, then offer a reduced cash settlement significantly lower than the existing contract. Many Webmasters confirmed that this did indeed happen to them and that many times they never received the lower settlement despite signing a new contract. Another tactic was to inform the Webmasters that the company was going bankrupt and the Webmasters would receive nothing if they did not sign a new contract that clearly disadvantaged the Webmasters. Conversations took place regarding altering traffic statistics to cheat Webmaster out of their bonuses, or to increase the amount due by advertising customers.


Matt Levine and Jerry Ziegler were both included in the ICQ logs and both insist that the logs are true and accurate depictions of the events that transpired at Efront between November and March. Both added that they were aware of the tactics that Sam Jain utilized to disadvantage the Webmaters, and both attributed those tactics to their departures from the company.


In my interview with Jerry, he described numerous heated arguments in February regarding company policy that culminated in his termination. By his choice of words, the management style of Sam Jain was similar to a dictatorship. He said that Sam largely ignored attempts by the rest of the management team to resolve the conflict with the Webmasters in a better way. However, that would not be the case as Sam directed negotiations himself with the Webmasters.


One conversation that clearly bothered Matt Levine after the logs were released was between Sam and Tim Eckel in which they discussed problems with the Webmaster of Babynames.com, Jennifer Moss. In the conversation, Sam discusses ways to force Jennifer Moss to accept the new agreement. As negotiations flounder, Sam quickly switches to discussing options to return the Babynames website and terminate the contract without any cash payments. When Jennifer refuses to cooperate, Sam blatantly comments "Rape her and spit on her". Matt Levine said that upon reading this comment, he and numerous other former Efront employees immediately called Jennifer Moss and apologized for the comment even though they had not made the comment. He says that they wanted her to know that they did not agree with Sam's attitude and had already departed from the company.


On Saturday March 10th, it is discovered that there are intimate personal conversations within the ICQ logs pertaining to Sam's relationships with female escorts and call girls. They detail conversations between him and a number of friends discussing pictures of girls whom they could pay for sex. On numerous occasions, Sam writes that he had set up appointments for escorts to visit him from other states, paid for by company entertainment funds. In certain conversations, Sam discusses mutual masturbation with one of his male friends regarding online pictures of naked women.


After the release of the logs on the Internet, many websites began to pick up the story and published the logs on their sites. Message boards came to life as readers began to discuss the significance of the logs. Some readers began to do research of their own, and found out that Sam Jain had once been convicted of fraud when he was 21. Matt Levine confirmed that it had happened but was not aware of the details.


To make matters worse, Efront sent letters to websites publishing the logs to remove them immediately pending a criminal investigation. A second letter was sent on Sunday afternoon ordering a cease and desist for all websites carrying the logs. Many websites did remove the logs, however a number are still up. The most prominent site is: www.echostation.com/efront


Both Jerry and Matt declined to comment on whom they thought had released the logs on the Internet. Jerry did comment that he was not surprised it had happened given the turbulent atmosphere at Efront. His final comment was that while readers could judge for themselves the accuracy of the logs, the overwhelming corroboration of the validity of the logs can be found in all the online testimony of the Webmasters that the events are both accurate and true. The truth, he said, will be known in time.

Send all comments on this article to Tim Johnson, the author.

UPDATE: Tim Johnson will be posting a follow-up article in one to two weeks. Check back here for more infomation.

Home

Skip To...

Copyright Patrick Mullen. Any content from the Duke of URL cannot be used without written consent from the author.