Dot-Com’s Short Life Is Captured on Film

In recent years so many dot-coms seemingly went straight from dormitory bull-session to multimillion-dollar IPO that the very idea became a commonplace, then a cliche and finally a joke. Now that the inundation is over and the water has receded, the wreckage is in full view: billions of dollars invested and vaporized by a market brought abruptly to its senses.

This accelerated Internet business life cycle is the subject of “Startup.com,” a documentary opening Friday at the Nuart Theater in Los Angeles. Produced by the husband-and-wife team of D.A. Pennebaker and Chris Hegedus with the assistance of Jehane Noujaim, the film traces the short, troubled life of the Web company GovWorks.com, which was founded in May 1999, grew with the help of $60 million in venture investments to employ more than 200 people and flared out of existence last fall--before it had any prayer of floating a public stock offering.

What makes “Startup.com” such an interesting documentary is its snaring of the dot-com debacle in real time. It is difficult today, after the fact, to avoid seeming churlish in pointing out the defects of the “new-economy” mantras of the late 1990s. But when director Hegedus started her project in 1999, the dot-com frenzy was in full cry.

“We wanted to get the pulse of the times,” Hegedus said. “We really thought the Internet was this revolutionary thing, like the railroad. Its entrepreneurs were like rock stars.”

While Hegedus was penciling out her idea for a film, Noujaim, a fledgling filmmaker, was independently launching a documentary project about her roommate, Kaleil Isaza Tuzman, who had just thrown over a trading-desk job on Wall Street to start a Web company with a high school friend, Tom Herman. A marketing executive at their new company subsequently approached Pennebaker and Hegedus with the idea of chronicling its birth on film--much as the team’s previous documentary, “The War Room,” chronicled Bill Clinton’s 1992 presidential campaign from the inside. Hegedus and Noujaim agreed to collaborate.

As “Startup.com” unspools, it quickly becomes clear that Herman and Isaza Tuzman had one or two big ideas, but not enough small ones. In meetings with potential investors, job recruits and each other, they chatter on about creating a Web site for “facilitating government processes” and “making municipal government work.” Laudable sentiments, of course, suitable for a university seminar on Edmund Burke, who was big on the sovereignty of the people and the consent of the governed. But the centerpiece of their Web site, at least on the evidence in “Startup.com,” was a system to allow motorists to pay their parking tickets online.

An inability to distinguish what makes a real business was a hallmark of the dot-com age, and it is in full view in “Startup.com.” One of the looniest moments in the film features former Atlanta Mayor Maynard Jackson, who got cajoled into serving on the GovWorks board, telling the employees: “I see this as more than a company. I see it as a mission. It’s a legitimate idea to help people, and incidentally”--here he really gets fired up--”we gonna make a lot of money!”

About a year ago, before the scale of the dot-com shakeout became fully visible, the Israeli entrepreneur Yossi Vardi codified his 10 rules of “Businessplanology,” or the art of extracting six- and seven-figure sums from investors without proposing a substantive idea. Among them: “The limiting factors to business plans are imagination, chutzpah, creativity and paper,” and “Business plans have been invented in order to give astrology respectability.”

Vardi, who developed the ICQ instant-messaging system into a venture he could sell to America Online for more than $400 million, might well have subjected the GovWorks business plan to merciless scrutiny, attempting to educate the founders to the necessary epiphanies about what makes a business on the Internet and what does not.

“Startup.com” is full of epiphanies that flit past the eye almost faster than they can register. At one point Isaza Tuzman emerges from a pitch session at the leading Silicon Valley venture capital firm Kleiner, Perkins, Caufield & Byers, his sails thoroughly depleted of wind. As he relates the thrust of the meeting: They didn’t like the idea; they didn’t like its implementation; they didn’t like companies headquartered on the East Coast or those run by people with no start-up experience; they thought GovWorks was already passe.

“He was just there to tear us apart,” Isaza Tuzman concludes.

“This guy doesn’t get it,” one of his colleagues responds, absurdly.

Some time later, flush with tens of millions of invested cash (a few East Coast venture firms finally anted up), Isaza Tuzman is working the tables at a fancy businessmen’s banquet in New York. This is a time when dot-com millionaires are the envy, not the bane, of Wall Street. As he’s introduced to the billionaire Preston Robert Tisch (co-chairman of Loews), someone mentions that Isaza Tuzman’s company is addressing a $600-billion market.

“All these markets are big,” Tisch replies. “It’s a matter of who’s going to make money in them. That’s the big question.” He might have been uttering the dot-com boom’s epitaph, but the most interesting thing about the exchange is that Tisch delivers his judgment almost with embarrassment, staring at the floor, as though too browbeaten by the atmosphere of Net-driven exuberance to stand up for the principles of the old economy.

Interspersed with such glimmers of reality are hints of the hubris that was an integral part of the dot-com ethos. At one point Isaza Tuzman invites his leading rival, the chief executive of Ezgov.com, to tour the GovWorks loft, possibly with the goal of intimidating him with the advanced development of the GovWorks Web site.

Although the visit provokes the GovWorks team to lots of nervous jokes--”You got the bug planted now?” one person asks the guest--in the end the joke is on them: Ezgov beats them to market, runs a superior Web site and is still operating today. (But its centerpiece is also the payment of parking tickets.)

“Startup.com” ends with the breakup of the founding partnership (Isaza Tuzman forces Herman out) and the extinction of GovWorks. The two founders have groused since the film’s release that it focuses too much on their conflict and not on their mission. The two have since teamed up again, this time on a company that helps counsel failing dot-coms.

Some of the commentary about “Startup.com” refers to GovWorks’ “disastrous” end, but that seems extreme. The founders had a nebulous idea, got entirely too much money to spend on it, worked like fiends for two years, and lost. Isaza Tuzman and Herman are young, they have new jobs, and they’re still friends.

Perhaps the scariest thing about their story is that lately they’ve taken to hinting that GovWorks might have succeeded if not for the distracting presence of the filmmakers themselves.

“We should have paid more attention to the business,” Isaza Tuzman said in a recent interview, still in full-scale denial that there may never have been a business there.