Southern Graphics
"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.
The Explanation
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."
In
short:
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.