Do loose e-mails sink IPOs?

Wired proves as clueless as the media dinosaurs it attacks

By Scott Rosenberg

Published October 25, 1996 9:02AM (EDT)

Wired magazine and its satellite ventures have always proudly stood upon the hippest and savviest edge of the digital revolution. Stick with us, Wired promises, and we'll guide you through the confusing new high-tech landscape; we know the ropes.

The news of Wired's latest mishap in its quest to go public isn't in itself surprising: the company's initial public offering (IPO) has been a rocky deal since it was announced in June, then suspended, then relaunched this month at a lower valuation. Analysts chortled at Wired's prospectus, with its reports of massive losses and little prospect for profit; true believers argued that the company had the strongest "brand identity" in the digital universe and stood to grow and prosper.

So today's news that Wired is pulling the plug on its IPO for the second time this year was hardly a shock. The company blames "market conditions," and no doubt if Wall Street were as overheated on Net stocks today as it was nine months ago the story might have had a different ending.

Still, there is a real shocker in the news, and it has to do not with finance but with Wired's specialty Q digital savvy.

On Tuesday, Oct. 15, about a week before the scheduled stock offering, Wired Ventures CEO Louis Rossetto sent out an e-mail to more than 300 of the company's employees. Addressed to "Wired Ones," it was a confident retort to a wave of negative press the Wired IPO had received in Business Week, the L.A. Times, U.S. News and World Report and other publications. Rossetto cited a variety of statistics to counter the negative press Q including a claim that Hotwired's "page views" are up to 18 million a month, that Wired's ad pages are up and that the future is bright: "The takeway is that media envy and ignorance are rampant (no surprise). That Wired is on track to conclude its IPO and execute its business plan. And that in the end, as F. Scott Fitzgerald put it, success is the best revenge."

There was nothing unusual about the memo's rally-the-troops rhetoric. And it was certainly no surprise that the e-mail wound up posted on the Well, whose media-obsessed habitues have turned scrutiny and criticism of Wired into an art form. But online distribution of the memo became a headache for Wired because of the Securities and Exchange Commission's "quiet period" rules, which mandate public silence by executives between the time an IPO is announced and the time a stock starts trading.

Now, if you were Joe Blow CEO who'd never fired up an e-mail client in his life, you could safely claim that you really thought that e-mail was strictly confidential and that your staff memo would never get leaked to the press. But if you're Louis Rossetto, digital-capitalist guru, it's a little hard to stand up and claim ignorance of the realities of online information flow.

Rossetto has only two choices: Either he can admit he knew exactly what he was doing and intended the memo to make its way to the public Q in which case he stands on very dubious legal ground with the SEC; or he can say he genuinely believed that the e-mail would not reach the public Q in which case he admits to a remarkable practical ignorance about the digital revolution he touts.

"Information wants to be free" is one of the tenets of the Wired creed. The notion is that computer networks make it trivially easy to copy and distribute material, whatever kinds of restrictions or copyrights or "confidential" notices have been placed on it.

True, there is also a sort of gentleman's tradition that e-mail ought to be treated with the same confidentiality as postal mail, and the practice of posting personal e-mail in a public forum like the Well is generally frowned upon. But a company e-mail sent to hundreds of people is, for all practical purposes, very different from a private person-to-person communication. It's far too easy to press "forward" and send the note on to someone who wasn't on the original list of recipients. Online veterans know that when you send a group e-mail, you're on a podium, not in a private booth.

The public release of Rossetto's broadside occasioned a flurry of outrage from Wired's emissaries on the Well. But Wired can't complain too loudly that its confidentiality has been breached; Hotwired's gossip column Flux, penned by the pseudonymous "Ned Brainard," is a veritable news-service of leaked e-mail from high-tech companies.

It's unclear just how Rossetto's memo wound up in the hands of Gerard van der Leun, the Well regular and Wired gadfly who posted it. But however it got into his hands -- whether it was leaked to him by a disgruntled Wired staffer, or sent to him by accident because his name was on an old Wired e-mail list -- hardly matters. The inevitability of its eventual publication ought to have been obvious to any digital insider worth his salt.

According to the Wall Street Journal, Wired insists that market conditions alone are the cause of its withdrawal of the IPO, and that the leaked memo had nothing to do with it. Maybe so. Either way, the surprise is how, for all its trumpeting of its own online savvy, Wired wound up dealing with the new medium's unique conditions as clumsily and cluelessly as the "media dinosaurs" it regularly lambastes. This time around, for Wired, information turned out to be a little too free.

Scott Rosenberg

Salon co-founder Scott Rosenberg is director of He is the author of "Say Everything" and Dreaming in Code and blogs at

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