RURAL ROUTES/Margot Ford McMillen

We're The Third Saddest Fallout

Go to the film Startup.Com. Not for the special effects or long car chase because there aren't any. See this independent film and spend a couple of hours in an America we rarely see -- the moneyed world behind the financial pages.

In this documentary film, a pair of young friends with a good idea succeed with venture capitalists (whom they call "VCs"), get Big Money, and build a web site. The twenty-something entrepreneurs, Tom Herman and Kaleil Isaza Tuzman, have dreamed since childhood of running a business together. Unlikely best friends, Kaleil is a charismatic, forceful personality while Tom is painfully sincere.

Virtuoso filmmakers Chris Hegedus, Jehane Houjaim, and D.A. Pennebaker get in on the ground floor, catching the first echoing introductions of new employees in the empty office space and following Tuzman and Herman for 18 months. Hegedus and Pennebaker are well-known documentary filmmakers, having delivered portraits of the Clinton campaign, Bob Dylan, Janis Joplin, and John DeLorean. Startup.Com is a debut feature for 25-year-old Houjaim.

From eight employees in May 1999 the company acquires money and a staff of 30 by August, 70 by October, 120 by January, 200 by April, 233 by May. When they open their website, however, it isn't particularly good, and they have competition.

The promotional materials call this "a deft exploration of friendship," and there are some nice moments between the Herman and Tuzman, but, as my friend Peter said, "I'm glad they're not my soul mates."

More important than the personal story is the insiders' story of Big Business. The most interesting major characters don't appear in the credits. One is Big Money, a dominating presence. Without Big Money, the dot-com masterminds are like the rest of us, but not as nice. Hard-working, yes. Interesting, maybe. Millionaires, no.

Tuzman, working for a Wall Street firm when the film opens, has figured out the Big Money system. He puts the biggest names he can find on the Board of Directors. They borrow a few thousand from family and friends. That's rent, a few desks, some salary.

Meeting with VCs, Tuzman eventually snares $20 million. That's money from your pension fund and your generosity means, in Big Money language, that the business becomes worth more than it owes -- maybe as much as $50 million. The boys, with 1.2 million shares each, are now multi-millionaires.

If this business so far seems like a pyramid scheme, with the entrepreneurs at the top and you at the bottom, don't forget about the power of the media to legitimize things that are wrong. This dot-com business could be a hog factory that pollutes air and water but manages to convince the media they are feeding the world. It could be a drug company that tests new compounds for one use without looking at side effects.

In fact, the dot-com could be any economic development program that barrels forward without looking at the consequences. For Big Money, the consequences don't matter. All that Big Money needs is a spin that attracts media. The media will bring consumers.

Tuzman now becomes one of those good-looking money wizards you see on TV. He schmoozes at formal dinners and rebuilds history and geography, insisting that Herman call San Francisco "Silicon Valley." The filmmakers snip in TV talk show clips; in one long segment Tuzman sits next to Bill Clinton, and explains the new economy. He jokes later that he's offered Clinton the CEO job after he leaves the Oval Office. But the most important, uncredited, character is the Consumer. And the Consumer doesn't buy. So, when the VC money is spent, there's nothing coming in to repay it. The marketplace fails.

The Consumer, who in real life is forgotten by the dot-com marketplace, is the most important character in the drama. To put this in perspective, remember that in the '90s a kind of tulip-mania took over Wall Street. Experts James Glassman and Kevin Hassett proclaimed that the Dow, which had nearly doubled to 11,000 in five years, could go to 36,000. "Stock prices could double, triple, or even quadruple tomorrow and still not be too high," they bugled in the Atlantic Monthly.

The New Economy geniuses predicted "astounding profits," and declared outdated the measure of stock value like the Price/Earnings ratio that measures the price of a share of stock against the earnings of the company. They asked, "What is the right value of a stock?" and found, after gleeful cogitation, that stock prices could go up forever.

In their theory, more and more money would come into the stock market each year, making the pyramid scheme a national program. All that money would come from you. You'd be adding to the pyramid with money from your 401K, and if lawmakers can convince the government to put your social security money into the hands of investor gurus, that is to privatize social security, you'd be adding to the pyramid with your one secure retirement account.

At the end of Startup.Com, the company has gained some customers but the stock has declined to zero. The once-cheerful VCs and Board have become angry. "I refuse to lose ... " says Tuzman as it becomes clear that he will. Herman's mother reminds him that he was raised to believe that "people come before things" and "I'm not sorry that part of your life is over." Indeed, Herman seems much more comfortable at home. The only believable smile in the film is one he shares with his daughter.

The boys are out. And the loss of your pension fund? That, in the analysis of the heroes, is number three on the list of "saddest fallout."

If you've tried to figure out how Big Money works, see this film. It won't be at the Hollywood cineplex or on the major TV channels, but the website -- -- gives a list of small theatres and auditoriums where it will appear.

Margot Ford McMillen farms and teaches English at a college in Fulton, Mo. Email:

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