"There is a new paradigm at work today," says Robert L. FitzPatrick. "The companies of the future have vague business plans, unfathomable products, and no prospect for ever achieving profits. THE EAGLE.com fits that profile. Few people understand its articles or heed its advice, and it has never been profitable. It is therefore poised for explosive growth."
This statement, issued by FitzPatrick himself, was the basis of the much talked about April Fool's prank recently revealed at the NAGASA conference. FitzPatrick set out to spoof the dot.com explosion and ended up trying to find his way out of a potential disaster.
The Birth of a Hoax
Robert FitzPatrick is the founder and CEO of The Eagle, a quarterly graphics supply journal based in Charlotte, NC. Along with running The Eagle, FitzPatrick is also highly interested in the current trends in venture capital, e-commerce, and dot.com mania. It was this interest that lead him to send out an "instructive hoax" on April 1, 2000, informing readers of his e-mail newsletter Connexions that the World Wrestling Federation had come forth with a $5 million investment in the Eagle, 20% of its current equity. The newsletter went on to explain that this funding would allow The Eagle, now called The Eagle.com, to expand dramatically, becoming an information portal in the key areas of distribution trend analysis, e-commerce development, and the study of dealer/manufacturer relations. According to the newsletter, an IPO was to be offered later this year, encouraging interested parties to accept this new direction in e-commerce and hop on board.
"Products are commodities. Overcapacity is rampant. Services are expected to be given away free. What is rare in this environment is an understanding of why it is all happening and how to avoid bankruptcy as well as clinical depression," FitzPatrick stated. "THE EAGLE.com will provide that data," he noted.
Last One In Loses!
Steve Aranoff, co-editor of The Eagle and head of strategic partnerships, says that the announcements of these new partnerships, while supplying necessary funding for The Eagle's growth, also seem to increase equity. Therefore, The Eagle would issue press releases on a weekly basis. The first information released about strategic partnerships involved Pyramid Partnerships, LLC, who would provide first round venture capital funding for The Eagle. Pyramid's company president, Lasdwun N. Luzes, stated that his company considers THE EAGLE.com to be a dynamic investor opportunity.
"Wisdom and truth are rare in business today," Luzes stated. "Some would say that the market appears completely irrational and headed toward disaster. THE EAGLE.com has had a reputation for objective analysis, promoting partnership and value added services, and providing visionary insight into future trends. By taking THE EAGLE.com into the public equity market, we are merging wisdom with irrationality. We think there is great synergy here as well as investor opportunity."
Luzes also commented that the World Wrestling Federation and multi-level marketing are strangely applicable to the graphic arts field today.
The Emperor's New Clothes
Robert FitzPatrick had no idea what he'd done when he sent out the newsletter that would have the industry in an uproar. He thought that people would get the joke. Some did, and felt free to comment on the satire he had provided. Others, however, did not see the humor in his hoax and were more than anxious to congratulate him as well as become involved in his new dot.com venture.
Since "nonsense" has accompanied many other IPOs, it can be understood how the irrational assertion was made. Because few people actually read THE EAGLE’s articles or heed its advice, the notion that, "it is therefore poised for explosive growth," might actually be swallowed. In an environment in which truth is stranger than fiction, it can be seen why my satire failed for many people.
FitzPatrick knew he had to address his snafu in order to get ahead of the industry buzz. He states, "I had to keep it out of the trade journals".
Contacted to speak at the NAGASA Forum 2000, he soon saw his golden opportunity. He wanted to make it clear that the satire was not intended to discredit e-commerce. The result of this delusion is the loss of judgment that now pervades much of the graphic arts industry just as it does the stock market. FitzPatrick states, "Gently warning of these consequences was, indeed, the reason for the satirical press release in the first place. I find four factors at work here that have led us away from a firm grip on real business and toward a perilous gullibility for preposterous business propositions such as THE EAGLE’s $25 million Venture Capital valuation."
1. News of multimillion dollar funding for Internet start-ups has had a
stupefying effect in an industry that has been cash poor for decades. The
"funded" are granted a reverential status beyond critical analysis.
2. Years of successful and profitable operations have been devalued and
dismissed by the "New Economy" spokespeople.
3. Fantastic and incomprehensible business programs have been put forth. We
have heard that customer buying patterns will change over night, that branded
products will be forgotten.
4. Finally, new names are introduced that few people know or have even heard
of. Few can therefore evaluate their credibility.
These four disorienting and disempowering blows have struck the industry causing people to relinquish their powers of judgment. Little wonder then that news of THE EAGLE’s receiving "first round" funding of $5 million from a company headed by the fictional "Lasdwun N. Luzes" might be accepted as plausible.