New York publisher and editor Michael Wolff stepped down Wednesday as president and CEO of Wolff New Media, the Web information-packaging company he founded, over disputes with his investors. More than just another example of a troubled new-media company, the departure points to a larger trend: content innovators — watched by their nervous investors — are struggling to come to terms with their new roles as entrepreneurs.
Wolff New Media was formed in January 1996 with a US$3.5 million investment from National Direct Marketing Corporation and NY venture capital firm Patricof & Co. The company, which owns the successful NetBook review series along with sites NetClock and Your Personal Net, ballooned up to 40 staff members in 1996, but has few left.
"This just seals the coffin here," says Jay Jaffe, an assistant art director at the company who has been freelancing to support himself for the past month. "I approached Michael Wednesday about a project and he said, 'I no longer work for the company,'" said Jaffe, "I answered, 'Join the club.'"
Wolff said the company is being torn apart by the ambitions of the investors. Hoping to sell the company to two new bidding investors, Wolff claims the board was unwilling to negotiate. "I had been unable to come to terms ... not with the bidding companies ... but with the present investors. It was an intractable position. I didn't see how I could go forward if I could not come to an understanding with them. The relationship soured with them when it became clear that we were not going to be able get a maximum return on the value of the company." It was fundamental conflict of personality, said Wolff: "My interest is in inventing media. Their interest is in rate of return."
As president and CEO, Wolff was unable to lure investors last fall when it became clear that the company was entering rough financial straits.
In September, the company offered its employees a payroll deferment for a cut of the sale of the company - deferments that still have not been paid. At the same time, the investors decided to bring in Jim Morouse, a Wharton graduate, to energize the company's market position. "He was brought in by investors who told him the company would go to the moon," says Wolff. But Morouse left three weeks ago, after only five months on the job, to become the head of marketing for Starwave.
As it stands, Wolff will re-create Michael Wolff & Company to pursue marketing in publishing and television. Michael Wolff & Company is the same company that conceived NetGuide magazine, selling that concept to CMP in 1994. Wolff is considering writing a book about his experiences in the business.
from the Wired News New York Bureau at FEED magazine
