1 00:00:15,516 --> 00:00:24,716 Speaker 1: Pushkin. So warning time. We're two journalists from the Financial Times, 2 00:00:24,756 --> 00:00:26,676 Speaker 1: and for six months we were set free to pursue 3 00:00:26,756 --> 00:00:31,396 Speaker 1: one question. Who controls the porn industry. There's some content 4 00:00:31,556 --> 00:00:35,676 Speaker 1: that really won't be suitable for kids, and only when 5 00:00:35,876 --> 00:00:41,196 Speaker 1: strictly necessary, we've used recordings of investment bankers in the wild. 6 00:00:45,996 --> 00:00:47,596 Speaker 1: I want to take you back in time to two 7 00:00:47,636 --> 00:00:53,076 Speaker 1: thousand and twelve, to winter evening in Las Vegas. The 8 00:00:53,156 --> 00:00:56,596 Speaker 1: porn industry had convened for one of its flagship conferences. 9 00:00:57,356 --> 00:01:03,436 Speaker 1: It's like dovls, but for porn models, computer geeks, moguls. 10 00:01:04,076 --> 00:01:07,476 Speaker 1: They were all there, gathered together in a flashy music 11 00:01:07,516 --> 00:01:11,396 Speaker 1: arena where Mottley Crewe had its presidency that year. It 12 00:01:11,476 --> 00:01:13,636 Speaker 1: was the most packed I've ever seen one of those 13 00:01:13,716 --> 00:01:16,196 Speaker 1: keynote speeches. Everybody's sitting there talking like I don't know, 14 00:01:16,196 --> 00:01:17,316 Speaker 1: I don't know. He's going to say, who are a 15 00:01:17,436 --> 00:01:20,156 Speaker 1: car crash like type of thing, like we have to 16 00:01:20,156 --> 00:01:24,156 Speaker 1: see this to see what happens. Sarah Jane Anderson sat 17 00:01:24,196 --> 00:01:26,876 Speaker 1: in the hall, not waiting for a rock band, but 18 00:01:26,996 --> 00:01:29,876 Speaker 1: for a speech. Sarah Jane had been working in the 19 00:01:29,996 --> 00:01:32,716 Speaker 1: online adult world since the nineties. She was on the 20 00:01:32,756 --> 00:01:35,876 Speaker 1: business and marketing side of things. It was a close 21 00:01:35,916 --> 00:01:39,756 Speaker 1: knit community. Sarah Jane talks about it like an eccentric family, 22 00:01:40,556 --> 00:01:43,516 Speaker 1: but they were on hard times. Sitting beside her that 23 00:01:43,636 --> 00:01:47,036 Speaker 1: night were a bunch of porn executives, all from big companies, 24 00:01:47,596 --> 00:01:50,836 Speaker 1: all facing the same dilemma. What was the point of 25 00:01:50,876 --> 00:01:54,276 Speaker 1: making new content when your content was being plundered. There's 26 00:01:54,316 --> 00:01:56,596 Speaker 1: no way to stop because trucking. So as much as 27 00:01:56,596 --> 00:01:58,436 Speaker 1: I said, content is king the real king of traffic, 28 00:01:58,956 --> 00:02:02,556 Speaker 1: and the tube sites had a swallowed up all the traffic. 29 00:02:04,916 --> 00:02:07,636 Speaker 1: More people were looking at online porn than ever, but 30 00:02:07,676 --> 00:02:11,196 Speaker 1: they weren't paying for it. Profits had evaporated. It was 31 00:02:11,236 --> 00:02:16,196 Speaker 1: beyond the panic stage. Producers were desperate. They watched their 32 00:02:16,236 --> 00:02:19,036 Speaker 1: best movies get ripped and streamed online for free by 33 00:02:19,036 --> 00:02:23,796 Speaker 1: a faceless enemy, the tube sites. But finally, at their 34 00:02:23,916 --> 00:02:27,796 Speaker 1: conference they would see their problem in the flesh. They 35 00:02:27,836 --> 00:02:30,716 Speaker 1: were going to meet the man behind the biggest tube sites. 36 00:02:31,236 --> 00:02:34,876 Speaker 1: And as the lights came up, everyone began to hum. 37 00:02:34,916 --> 00:02:39,236 Speaker 1: They actually sang underneath their breath the death March for 38 00:02:39,396 --> 00:02:51,356 Speaker 1: Star Wars. When he came out, Don't Don't, Don't. The 39 00:02:51,476 --> 00:02:54,876 Speaker 1: Lord Vader of Pawn was a man called Fabian Tillman, 40 00:02:55,316 --> 00:02:58,916 Speaker 1: the German software engineer who bore XTube roughly four years 41 00:02:58,956 --> 00:03:02,676 Speaker 1: before this conference, the one who started buying tube sites 42 00:03:02,716 --> 00:03:06,596 Speaker 1: as a step towards adult industry domination. When he came 43 00:03:06,636 --> 00:03:12,116 Speaker 1: on stage, he made an impression before a word, he's 44 00:03:12,156 --> 00:03:14,716 Speaker 1: wearing a hoodie Verry Zuckerberg, and then he sat on 45 00:03:14,756 --> 00:03:18,716 Speaker 1: the table and crossed his legs pompous. I just remember 46 00:03:18,716 --> 00:03:22,316 Speaker 1: my whole road just laughing at that out of ridiculousness. 47 00:03:22,796 --> 00:03:26,276 Speaker 1: It was his public debut. Baby faced Fabian, at just 48 00:03:26,476 --> 00:03:30,796 Speaker 1: thirty three, was basically there to introduce himself to an 49 00:03:30,876 --> 00:03:34,436 Speaker 1: industry that he had conquered in just four years. I 50 00:03:34,476 --> 00:03:36,556 Speaker 1: wanted to talk a bit about myself, since I know 51 00:03:36,636 --> 00:03:39,716 Speaker 1: that many of you do not really know where where 52 00:03:39,716 --> 00:03:42,516 Speaker 1: I come from and such, and I thought it's a 53 00:03:42,556 --> 00:03:46,036 Speaker 1: better if people know more, and then should make it 54 00:03:46,036 --> 00:03:48,036 Speaker 1: obvious that I'm not that evil person that so many 55 00:03:48,076 --> 00:03:51,716 Speaker 1: people think I am, that my role was just like okay, then, 56 00:03:51,996 --> 00:03:53,836 Speaker 1: especially in the digital world, a lot of those people 57 00:03:53,956 --> 00:03:57,316 Speaker 1: people are faceless nicknames. So I think he got some 58 00:03:57,356 --> 00:04:00,356 Speaker 1: credit for showing up in taking the heat a little bit, 59 00:04:00,396 --> 00:04:02,556 Speaker 1: but I still think it was pretty much I own 60 00:04:02,596 --> 00:04:10,196 Speaker 1: you I'm Patrician Wilson. He's Alex Parker from Pushkin Industries 61 00:04:10,196 --> 00:04:45,316 Speaker 1: and The Financial Times. This is Hot Money, Act one, 62 00:04:45,716 --> 00:04:52,516 Speaker 1: the Disruptor. How did Fabian do it? He was good 63 00:04:52,516 --> 00:04:54,916 Speaker 1: at coding, but so are lots of people in the 64 00:04:54,916 --> 00:04:58,476 Speaker 1: adult industry. The thing that marked him out was money. 65 00:04:59,116 --> 00:05:01,236 Speaker 1: He was good with money in a business that was 66 00:05:01,316 --> 00:05:04,516 Speaker 1: starved of finance. He was the guy in the hoodie 67 00:05:04,556 --> 00:05:07,636 Speaker 1: who convinced Wall Street to bankroll his vision to take 68 00:05:07,676 --> 00:05:11,396 Speaker 1: control of the adult industry. The guy who managed to 69 00:05:11,396 --> 00:05:13,876 Speaker 1: get even the most prestigious of banks and investors to 70 00:05:13,916 --> 00:05:16,596 Speaker 1: buy in, to look away from the problems what they 71 00:05:16,596 --> 00:05:19,396 Speaker 1: saw as a sin industry and raise more money than 72 00:05:19,436 --> 00:05:25,916 Speaker 1: anyone thought possible. Fabian was like Mercury. Let me tell 73 00:05:25,916 --> 00:05:27,636 Speaker 1: you what it was like trying to get an interview 74 00:05:27,676 --> 00:05:31,036 Speaker 1: with him. He got in touch with me, then he 75 00:05:31,076 --> 00:05:34,396 Speaker 1: went dark. Then he said yes, then he ghosted me. 76 00:05:35,196 --> 00:05:37,676 Speaker 1: I watched in his social media feeds as he found 77 00:05:37,716 --> 00:05:41,356 Speaker 1: love and traveled the world. I saw mere cats, campollion temples, 78 00:05:41,436 --> 00:05:44,396 Speaker 1: bead boats. He even posted picks from her London art 79 00:05:44,396 --> 00:05:48,236 Speaker 1: gallery on the same Saturday that I was there. I 80 00:05:48,356 --> 00:05:52,036 Speaker 1: know he didn't respond to me when I reached out. Then, 81 00:05:52,076 --> 00:05:54,876 Speaker 1: after more than a year of trying, he finally gave 82 00:05:54,956 --> 00:05:58,476 Speaker 1: us a date. We traveled to Cologne in Germany and 83 00:05:58,596 --> 00:06:02,116 Speaker 1: went to his no frills office above a nineteen eighties 84 00:06:02,156 --> 00:06:06,316 Speaker 1: shopping arcade in a nightclub called Vanity. As we waited, 85 00:06:06,476 --> 00:06:09,756 Speaker 1: surrounded by merch from his clubs piled up at the corners, 86 00:06:09,916 --> 00:06:14,796 Speaker 1: I still had this uneasy feeling would he actually answer 87 00:06:14,796 --> 00:06:19,956 Speaker 1: our questions? Would he even show up? And then there 88 00:06:19,996 --> 00:06:22,796 Speaker 1: he was. My name is Fabian. I hate the same 89 00:06:22,916 --> 00:06:26,836 Speaker 1: enemy English. I don't like it. My name is Fabian Tuman, 90 00:06:27,076 --> 00:06:35,436 Speaker 1: and I'm an investor. I guess his family is German, 91 00:06:35,516 --> 00:06:37,876 Speaker 1: but he grew up in Brussels and still lives there, 92 00:06:38,276 --> 00:06:40,316 Speaker 1: just down the road from where I used to live, 93 00:06:40,356 --> 00:06:42,996 Speaker 1: actually on the other side of a royal hunting forest. 94 00:06:43,996 --> 00:06:46,596 Speaker 1: The Tillmans were well to do family, and like many 95 00:06:46,636 --> 00:06:50,116 Speaker 1: people in this business, a teenage Fabian basically stumbled into 96 00:06:50,116 --> 00:06:53,796 Speaker 1: pawn partly for laughs but also to get ahead. I 97 00:06:53,956 --> 00:06:57,316 Speaker 1: was a programmer. I looked online where I could do 98 00:06:57,636 --> 00:07:00,356 Speaker 1: fun projects in an easy way as a young person 99 00:07:00,676 --> 00:07:03,476 Speaker 1: without any connections, not being in La or what San 100 00:07:03,516 --> 00:07:08,076 Speaker 1: Francisco or something, I stumbled over our porn people basically online. 101 00:07:08,076 --> 00:07:11,796 Speaker 1: The chat wools started working for them. He helped build 102 00:07:11,836 --> 00:07:15,396 Speaker 1: something called NATS, a tracking program for afiliate marketing that 103 00:07:15,516 --> 00:07:17,916 Speaker 1: took off in the adult business. It's still around today. 104 00:07:18,756 --> 00:07:21,596 Speaker 1: With this software, he could see where traffic was flowing 105 00:07:21,676 --> 00:07:25,516 Speaker 1: and what porn customers actually paid for. When Fabian peaked 106 00:07:25,556 --> 00:07:28,116 Speaker 1: behind the curtains of these businesses, he had the best 107 00:07:28,196 --> 00:07:34,796 Speaker 1: view in pawn land. It was interesting how how I exaggerated. 108 00:07:34,876 --> 00:07:38,676 Speaker 1: Everybody was talking about how great they were, which they 109 00:07:38,836 --> 00:07:42,316 Speaker 1: really weren't, or at least not as grand as they 110 00:07:42,476 --> 00:07:45,996 Speaker 1: made it look. Fabian thought he could do a better job. 111 00:07:46,756 --> 00:07:49,196 Speaker 1: The first business he bought was a small German porn site. 112 00:07:49,676 --> 00:07:52,196 Speaker 1: He didn't really have a plan. Some friends were selling 113 00:07:52,236 --> 00:07:54,596 Speaker 1: and he could just about get the money together. But 114 00:07:54,716 --> 00:07:56,276 Speaker 1: then I started to look at other things and let's 115 00:07:56,276 --> 00:07:58,756 Speaker 1: see what else is possible to buy. And that's when 116 00:07:58,796 --> 00:08:01,876 Speaker 1: you realize more and more how the industry worked, and 117 00:08:01,956 --> 00:08:04,676 Speaker 1: how is what's there and what isn't And so the 118 00:08:04,796 --> 00:08:07,796 Speaker 1: buying spree began. It started with a few more porn 119 00:08:07,836 --> 00:08:12,076 Speaker 1: sites in Germany, a webcam's business, then x Tube, you 120 00:08:12,076 --> 00:08:14,876 Speaker 1: know the side run by Curtis, the Subpeanut King the 121 00:08:14,876 --> 00:08:17,396 Speaker 1: guy would talk to. In the previous episode the Ft, 122 00:08:17,676 --> 00:08:20,796 Speaker 1: we cover this kind of investor driven buying spreebe all 123 00:08:20,796 --> 00:08:24,396 Speaker 1: the time. It's called a roll up, basically seeing value 124 00:08:24,396 --> 00:08:26,916 Speaker 1: in a sector, raising money and buying up as many 125 00:08:26,956 --> 00:08:30,876 Speaker 1: companies as possible. Money has been cheap for quite a while, 126 00:08:31,156 --> 00:08:34,036 Speaker 1: so plenty of deeply unimpressive buy out groups managed to 127 00:08:34,036 --> 00:08:37,356 Speaker 1: do it. But Fabian he was doing it in porn, 128 00:08:37,916 --> 00:08:41,516 Speaker 1: hardcore porn just after the financial crash in two thousand 129 00:08:41,516 --> 00:08:44,676 Speaker 1: and eight. That's no small feat. There wasn't much money 130 00:08:44,716 --> 00:08:47,956 Speaker 1: around and with all those free videos flooding the web, 131 00:08:48,196 --> 00:08:51,196 Speaker 1: everyone thought the porn industry was doomed. I don't know 132 00:08:51,236 --> 00:08:55,036 Speaker 1: if I had, if I really in the beginning at 133 00:08:55,116 --> 00:08:58,116 Speaker 1: least realized how big this could become. It was a 134 00:08:58,236 --> 00:09:01,156 Speaker 1: game in some shape or form, you know, to look 135 00:09:01,196 --> 00:09:02,636 Speaker 1: at all these companies to be the one of the 136 00:09:02,636 --> 00:09:05,236 Speaker 1: few people that is actually willing to buy anything, because 137 00:09:05,236 --> 00:09:07,076 Speaker 1: everybody else was like, what the way are you buying this? 138 00:09:07,196 --> 00:09:10,556 Speaker 1: This will die in two months. Things got more serious 139 00:09:10,556 --> 00:09:14,436 Speaker 1: when a company called Mansef approached him. The Canadian engineering 140 00:09:14,516 --> 00:09:17,116 Speaker 1: students who were behind this company had founded sites like 141 00:09:17,236 --> 00:09:24,956 Speaker 1: Pornhoub and Browsers. These were already big brands. I was 142 00:09:25,036 --> 00:09:27,756 Speaker 1: lucky they knew about me and they just took the 143 00:09:27,876 --> 00:09:29,356 Speaker 1: chance and came to me. But they were talking to 144 00:09:29,516 --> 00:09:33,876 Speaker 1: four other people at the same time, and I just decided, Okay, 145 00:09:34,636 --> 00:09:38,556 Speaker 1: this is going to be really expensive. I have absolutely 146 00:09:38,636 --> 00:09:41,356 Speaker 1: no clue how to pay for this, but let's just 147 00:09:41,436 --> 00:09:45,676 Speaker 1: chat with them and let's try. He flew to Montreal 148 00:09:45,716 --> 00:09:47,956 Speaker 1: a few days before Christmas in two thousand and nine. 149 00:09:48,436 --> 00:09:50,716 Speaker 1: His wife didn't mind him staying there, at least for 150 00:09:50,716 --> 00:09:53,516 Speaker 1: a few days, but Fabian was so keen to get 151 00:09:53,556 --> 00:09:57,036 Speaker 1: the deal done he was stuck there for three months. 152 00:09:58,396 --> 00:10:01,676 Speaker 1: The thing about Mansef was abridged old and new that 153 00:10:01,756 --> 00:10:05,196 Speaker 1: had production studios and sites like Browsers where he had 154 00:10:05,196 --> 00:10:07,796 Speaker 1: to pay to get access the traditional way of selling 155 00:10:07,836 --> 00:10:11,476 Speaker 1: porn online. But they'd also cracked how to make money 156 00:10:11,476 --> 00:10:15,116 Speaker 1: from free tube sites. They could either sell ad space 157 00:10:15,196 --> 00:10:19,236 Speaker 1: to other pornographers or just channel the viewers to their 158 00:10:19,276 --> 00:10:22,156 Speaker 1: own pay sites. The trick was to just get a 159 00:10:22,156 --> 00:10:26,596 Speaker 1: tiny percentage of all that traffic to actually pay for porn. Really, 160 00:10:26,596 --> 00:10:31,476 Speaker 1: it was uncomparable. The amount of money that this team 161 00:10:31,636 --> 00:10:36,316 Speaker 1: could make with traffic was unheard of in this industry 162 00:10:36,716 --> 00:10:42,516 Speaker 1: before it was impressive. Fabian loved the business. The trouble 163 00:10:42,796 --> 00:10:44,516 Speaker 1: was he didn't have the money to pay for it. 164 00:10:45,196 --> 00:10:47,836 Speaker 1: He bought his first sites with support from a few backers, 165 00:10:47,876 --> 00:10:51,436 Speaker 1: whom he paid back. The next stage, though, was much harder, 166 00:10:51,996 --> 00:10:55,716 Speaker 1: and that's when the financial acrobatics began. When compared to 167 00:10:55,716 --> 00:10:58,476 Speaker 1: the rest of the industry, this turned out to be 168 00:10:58,516 --> 00:11:01,996 Speaker 1: Fabian's real superpower. People think of him as the German 169 00:11:02,036 --> 00:11:07,116 Speaker 1: tech guy that he actually brought financial engineering to online porn. 170 00:11:07,836 --> 00:11:10,796 Speaker 1: He conjured up magic money for a business that no 171 00:11:10,916 --> 00:11:15,276 Speaker 1: mainstream investor wanted to touch. To make his offer from mansef, 172 00:11:15,716 --> 00:11:19,516 Speaker 1: he siphoned cash from other companies, used an asset he 173 00:11:19,596 --> 00:11:25,556 Speaker 1: wasn't allowed to use, staggered payments, massaged payment dates, every 174 00:11:25,556 --> 00:11:28,996 Speaker 1: trick in the book, and just to be clear, some 175 00:11:29,196 --> 00:11:32,396 Speaker 1: were definitely in the gray zone of what's legal. I mean, 176 00:11:32,516 --> 00:11:34,876 Speaker 1: what you were doing when you were buying manse It's 177 00:11:34,876 --> 00:11:37,836 Speaker 1: almost like you want to buy a restaurant and you're 178 00:11:37,876 --> 00:11:41,596 Speaker 1: going to do it with like four different credit cards overlapping. Yeah, 179 00:11:41,676 --> 00:11:43,356 Speaker 1: let's just figure on the way to do it and 180 00:11:43,396 --> 00:11:45,676 Speaker 1: then fix it later, you know, And if it doesn't 181 00:11:45,716 --> 00:11:48,836 Speaker 1: fix then I am like before the deal, so who cares? 182 00:11:49,676 --> 00:11:53,916 Speaker 1: It worked? Fabian bought Mansef, then bundled together all his 183 00:11:54,036 --> 00:11:57,236 Speaker 1: sites x Tube and porn Hub and Browsers and my 184 00:11:57,356 --> 00:12:00,676 Speaker 1: Dirty Hobby in Germany and gave his company a new name. 185 00:12:01,156 --> 00:12:03,316 Speaker 1: It turned out to be one of the most infamous 186 00:12:03,316 --> 00:12:08,476 Speaker 1: and ridiculous in porn, man Win. Fabian squears it wasn't intentional, 187 00:12:08,756 --> 00:12:11,436 Speaker 1: but might remember back in our first episode what the 188 00:12:11,476 --> 00:12:14,476 Speaker 1: performer Stawyer thought of Fabian's company when it bought the 189 00:12:14,476 --> 00:12:18,156 Speaker 1: pawn studio she was working for. And I was like, oh, 190 00:12:18,196 --> 00:12:23,036 Speaker 1: I am now tied to a company that is literally 191 00:12:23,156 --> 00:12:30,476 Speaker 1: named man Win. This is awful, Fabian thought to himself. 192 00:12:30,476 --> 00:12:33,956 Speaker 1: As an opportunistic buyer, he was making waves. Everyone in 193 00:12:33,956 --> 00:12:36,956 Speaker 1: the industry was talking about this rookie turned kingpin, and 194 00:12:37,036 --> 00:12:39,556 Speaker 1: he started to think maybe I could build an empire. 195 00:12:40,236 --> 00:12:43,876 Speaker 1: Then came the day when the CEO of Playboy tapped 196 00:12:43,876 --> 00:12:46,836 Speaker 1: Fabian on the shoulder and asked for a private chat. 197 00:12:47,316 --> 00:12:51,156 Speaker 1: Part of the legendary Bunny brand was for sale. Would 198 00:12:51,156 --> 00:12:54,676 Speaker 1: Fabian be interested? He was, but there was one big hitch. 199 00:12:55,236 --> 00:12:58,076 Speaker 1: Fabian's deal with Mansef, the one that created man Win, 200 00:12:58,716 --> 00:13:02,356 Speaker 1: turned on a big promise because he didn't have the money. 201 00:13:02,756 --> 00:13:05,196 Speaker 1: The payments to buy the company were spread over a 202 00:13:05,236 --> 00:13:08,516 Speaker 1: few years, and right at the end, Fabian agreed to 203 00:13:08,516 --> 00:13:11,476 Speaker 1: make a balloon payment, a big lump sum, and if 204 00:13:11,476 --> 00:13:14,476 Speaker 1: he failed to deliver, the old owners of the company 205 00:13:14,556 --> 00:13:18,356 Speaker 1: would just get it back, so he simply had to 206 00:13:18,396 --> 00:13:21,836 Speaker 1: pay the Fabian still had no idea how to get 207 00:13:21,876 --> 00:13:25,036 Speaker 1: that much money on his own, and so he thought 208 00:13:25,516 --> 00:13:28,276 Speaker 1: he might as well try to do the impossible. He 209 00:13:28,316 --> 00:13:37,876 Speaker 1: would go to Wall Street Act two, the money Game. 210 00:13:43,236 --> 00:13:46,516 Speaker 1: Fabian reckon if Wall Street would fund cigarettes, fossil fuels, 211 00:13:46,516 --> 00:13:49,116 Speaker 1: and even the global arms trade, surely no one would 212 00:13:49,116 --> 00:13:51,836 Speaker 1: think that pawn was worse. He went to one of 213 00:13:51,836 --> 00:13:55,476 Speaker 1: his financial advisors, a group called Raymond Shadow Grant Thornton. 214 00:13:55,876 --> 00:13:58,476 Speaker 1: It's part of one of the world's biggest accounting firms. 215 00:13:59,516 --> 00:14:02,916 Speaker 1: I went to Hamoshable and told them, listen, you know 216 00:14:03,116 --> 00:14:06,156 Speaker 1: these numbers, you've seen them. Why can't we not get that? 217 00:14:06,396 --> 00:14:08,756 Speaker 1: This is ridiculous. There must be away to get that, 218 00:14:09,156 --> 00:14:11,836 Speaker 1: even just one year, just one x leverage, that's it. 219 00:14:12,556 --> 00:14:14,956 Speaker 1: Let's try. And they're like, yeah, it should be simple. 220 00:14:15,716 --> 00:14:17,956 Speaker 1: So his advice has got busy making a slide deck 221 00:14:18,396 --> 00:14:21,916 Speaker 1: bankers love slides. Meanwhile, Fabian got busy running his new 222 00:14:21,956 --> 00:14:25,356 Speaker 1: porn sites, the ones he bought without really having the 223 00:14:25,396 --> 00:14:28,876 Speaker 1: money to pay for them. Before long, the bankers thought 224 00:14:28,916 --> 00:14:34,356 Speaker 1: they'd found the lender, someone who didn't mind porn, someone 225 00:14:34,436 --> 00:14:37,716 Speaker 1: who would let them borrow almost one hundred million that 226 00:14:37,916 --> 00:14:41,036 Speaker 1: would have allowed Fabian to cover what he owed and 227 00:14:41,196 --> 00:14:44,316 Speaker 1: help him buy the playboy business. We had a meeting 228 00:14:44,316 --> 00:14:49,596 Speaker 1: in Chicago, term sheet everything we celebrated in the evening, 229 00:14:49,716 --> 00:14:53,476 Speaker 1: had dinner with them. Sitting at that dinner, Fabian thought 230 00:14:53,476 --> 00:14:56,116 Speaker 1: he'd pulled it off. He found the magic money pot. 231 00:14:56,996 --> 00:15:00,516 Speaker 1: It didn't last long. The next morning the owner said 232 00:15:00,516 --> 00:15:03,036 Speaker 1: that I'm not signing, but because he talked to his wife. 233 00:15:03,436 --> 00:15:05,916 Speaker 1: So it looked very, very easy and good in the 234 00:15:05,996 --> 00:15:11,156 Speaker 1: very beginning, and when this happened, Romishrouble realized all this 235 00:15:11,236 --> 00:15:17,116 Speaker 1: is difficult. So to recap. Fabian Tillman, in his early thirties, 236 00:15:17,716 --> 00:15:19,996 Speaker 1: was on his way to wrestle control over the porn 237 00:15:20,036 --> 00:15:22,676 Speaker 1: industry that had been smashed to bits by two sides, 238 00:15:23,276 --> 00:15:26,556 Speaker 1: many which were run by him. He'd promised a bunch 239 00:15:26,596 --> 00:15:30,276 Speaker 1: of pornographers money to take over their companies. These businesses 240 00:15:30,276 --> 00:15:33,236 Speaker 1: were profitable but he thought he could do even better. 241 00:15:34,196 --> 00:15:37,596 Speaker 1: But to buy them, he'd committed to payment schedule that 242 00:15:37,716 --> 00:15:41,476 Speaker 1: he just could not afford. He needed to borrow otherwise. 243 00:15:41,476 --> 00:15:45,956 Speaker 1: He was toasted. But at the same time, no lenders 244 00:15:45,956 --> 00:15:51,276 Speaker 1: wanted to touch porn. By now we're in the summer 245 00:15:51,316 --> 00:15:54,796 Speaker 1: of twenty and ten, Fabian had a small army of advices. 246 00:15:55,076 --> 00:15:58,196 Speaker 1: They're all on ridiculously high commissions, millions of dollars if 247 00:15:58,196 --> 00:16:00,956 Speaker 1: they could get the deal done, but they were getting nowhere. 248 00:16:01,556 --> 00:16:04,956 Speaker 1: In desperation, one of the advices called an old contact 249 00:16:04,996 --> 00:16:08,756 Speaker 1: in New York. It was the banking equivalent of sending 250 00:16:08,836 --> 00:16:12,316 Speaker 1: up the signal, and the man that answered was called 251 00:16:12,396 --> 00:16:16,836 Speaker 1: Rick Rosenbloom. I'm a special situations investment banker, which is 252 00:16:16,876 --> 00:16:19,676 Speaker 1: a mouthful, but it's a fancy way of saying I 253 00:16:20,476 --> 00:16:25,436 Speaker 1: find capital for people, firms, ventures that don't fit in 254 00:16:25,516 --> 00:16:30,676 Speaker 1: a typical box. I'm essentially a finance specialist for alternative 255 00:16:30,716 --> 00:16:34,876 Speaker 1: investments and misfit toys of the capital world. Ricks firm 256 00:16:34,956 --> 00:16:37,716 Speaker 1: is fuel break Capital. It's a sort of marriage broker 257 00:16:37,716 --> 00:16:40,996 Speaker 1: in the world of finance, a matchmaker for the untouchables, 258 00:16:41,116 --> 00:16:43,876 Speaker 1: maverick companies that need money but can't get it through 259 00:16:43,916 --> 00:16:47,676 Speaker 1: the normal channels. Maybe they are a so called sin industry. 260 00:16:48,276 --> 00:16:51,676 Speaker 1: Maybe they're out of favor industry. Maybe they're what a 261 00:16:51,676 --> 00:16:56,196 Speaker 1: lot of people call headline risk. Headline risk isn't a 262 00:16:56,236 --> 00:16:59,396 Speaker 1: fancy financial term, by the way, it actually means the 263 00:16:59,476 --> 00:17:03,596 Speaker 1: risk of an investor peering in a newspaper headline. You see. 264 00:17:04,276 --> 00:17:07,996 Speaker 1: Finance people don't like bad headlines about their investments, and 265 00:17:08,196 --> 00:17:12,316 Speaker 1: porn it's made for bad headlines. For Rick, it was 266 00:17:12,356 --> 00:17:15,756 Speaker 1: a lottery ticket assignment. The chances of success for low, 267 00:17:16,396 --> 00:17:20,476 Speaker 1: but the potential rewards were huge. Something like this had 268 00:17:20,516 --> 00:17:23,916 Speaker 1: never been done for corn. But Rick could see there 269 00:17:23,996 --> 00:17:27,316 Speaker 1: was something about Fabian's business. Once I dug into it 270 00:17:27,316 --> 00:17:30,196 Speaker 1: and realized how profitable it was. I mean, you can't 271 00:17:30,236 --> 00:17:32,716 Speaker 1: take the content out, but if you just ignored the content, 272 00:17:32,756 --> 00:17:38,396 Speaker 1: it was an incredibly profitable technology company. Let's just unpack 273 00:17:38,476 --> 00:17:42,596 Speaker 1: what very profitable tech company means. A grocer might have 274 00:17:42,676 --> 00:17:45,676 Speaker 1: a margin about two percent. A real moneymaker can have 275 00:17:45,796 --> 00:17:49,876 Speaker 1: something like twenty percent. Fabian's business had a margin of 276 00:17:49,956 --> 00:17:53,396 Speaker 1: about fifty percent. Very two dollars of revenue his porn 277 00:17:53,436 --> 00:17:57,036 Speaker 1: sites generated more than one dollar was clean operating profit. 278 00:17:57,556 --> 00:18:00,556 Speaker 1: Now that will get any investors heart pounding. Yeah, it's 279 00:18:00,556 --> 00:18:02,916 Speaker 1: a home run. There's no bell curve for that. With 280 00:18:03,076 --> 00:18:06,876 Speaker 1: Rick's experience in New York's world of alternative finance, he 281 00:18:06,996 --> 00:18:09,556 Speaker 1: knew it tended to be easier to borrow large amount 282 00:18:09,636 --> 00:18:15,156 Speaker 1: of money like one. In this world, five or ten 283 00:18:15,236 --> 00:18:18,916 Speaker 1: million is just not worth people's time. And if you 284 00:18:19,036 --> 00:18:22,956 Speaker 1: bring a business, would it roughly fifty percent margin? That 285 00:18:23,156 --> 00:18:25,396 Speaker 1: is likely to get a few ears to perk up. 286 00:18:26,156 --> 00:18:29,716 Speaker 1: But for porn, Rick was starting to realize what Fabian 287 00:18:29,756 --> 00:18:32,956 Speaker 1: had learned the hard way on Wall Street. Porn was 288 00:18:33,036 --> 00:18:36,876 Speaker 1: dirtier than guns, cigarettes, and gambling. I knew it was complicated. 289 00:18:36,876 --> 00:18:38,716 Speaker 1: I knew it wasn't going to be easy, but I 290 00:18:38,756 --> 00:18:40,556 Speaker 1: knew that if I could find the capital, would be 291 00:18:40,596 --> 00:18:43,396 Speaker 1: highly profitable. And I'm ken to keep shaking trees, turning 292 00:18:43,396 --> 00:18:48,636 Speaker 1: over rocks until I'm out. I probably went to forty 293 00:18:48,676 --> 00:18:50,996 Speaker 1: or fifty firms. I got my door slammed in my 294 00:18:51,036 --> 00:18:58,356 Speaker 1: face almost every time, but then fate intervenes. It's another 295 00:18:58,436 --> 00:19:01,436 Speaker 1: historic moment for the porn industry. And where else would 296 00:19:01,476 --> 00:19:04,876 Speaker 1: it be but Las Vegas. It's always in Sin City. 297 00:19:05,636 --> 00:19:08,676 Speaker 1: At a conference, ran into a guy called Jason Klobney 298 00:19:09,156 --> 00:19:12,876 Speaker 1: Co founder of a fledgling investment firm called Colbeck Capital. 299 00:19:13,316 --> 00:19:15,436 Speaker 1: They hit it off. He asked me kind of the 300 00:19:15,476 --> 00:19:18,636 Speaker 1: deals I did? And I told them, Hey, I've got 301 00:19:18,676 --> 00:19:21,436 Speaker 1: this great deal, but it's got a lot of hair 302 00:19:21,516 --> 00:19:24,076 Speaker 1: on it, it's got a lot of noise around it, 303 00:19:24,956 --> 00:19:29,756 Speaker 1: and you know, he said, tell me more. Cologny like 304 00:19:29,836 --> 00:19:34,236 Speaker 1: his co founder was a former Goldman sax banker. Colbeck 305 00:19:34,396 --> 00:19:39,876 Speaker 1: was interested, tempted, deepen, but very wary. This would be 306 00:19:39,916 --> 00:19:43,476 Speaker 1: one of their first big deals and they just weren't 307 00:19:43,596 --> 00:19:46,556 Speaker 1: too keen on porn. IM not sure about how well 308 00:19:46,636 --> 00:19:50,076 Speaker 1: the industry was run, but mainly they just wanted to 309 00:19:50,116 --> 00:19:53,676 Speaker 1: make sure that Fabian's company was financially sound. Took me 310 00:19:53,836 --> 00:19:56,716 Speaker 1: probably four or five meetings to get them to really 311 00:19:56,796 --> 00:19:59,916 Speaker 1: dig in. Jason Cologne. He said to me, Rick, we 312 00:20:00,076 --> 00:20:04,676 Speaker 1: tried to kill this deal so many times, but every 313 00:20:04,716 --> 00:20:07,356 Speaker 1: time we did another layer of diligence it checked out. 314 00:20:07,396 --> 00:20:10,956 Speaker 1: In fact, it was probably I'm paraphrasing here, but something 315 00:20:11,036 --> 00:20:16,396 Speaker 1: like the cleanest, best run company we've ever diligenced. That's 316 00:20:16,476 --> 00:20:18,716 Speaker 1: quite a statement, right, Yeah, it was. These guys came 317 00:20:18,756 --> 00:20:21,676 Speaker 1: from Colman Sex and Morgan Stanley. It's a pretty strong statement, 318 00:20:21,716 --> 00:20:26,556 Speaker 1: this wasn't their first barbecue. Eventually, Colbeck said yes, Like 319 00:20:26,596 --> 00:20:29,796 Speaker 1: all of Wall Street, they knew bankrolling a hardcore porn 320 00:20:29,836 --> 00:20:33,036 Speaker 1: company was dangerous, but it was such a sound bet 321 00:20:33,236 --> 00:20:35,836 Speaker 1: they couldn't resist. They agreed to one to write the 322 00:20:35,876 --> 00:20:40,076 Speaker 1: deal and help raise the money. And here's why they 323 00:20:40,156 --> 00:20:43,596 Speaker 1: couldn't resist. When all the loan costs were blended together, 324 00:20:43,996 --> 00:20:48,836 Speaker 1: the annual interest rate was more than twenty percent. Remember, 325 00:20:49,116 --> 00:20:52,876 Speaker 1: Fabian's company wasn't that big in an era of cheap money. 326 00:20:53,316 --> 00:20:58,636 Speaker 1: This was breathtakingly expensive, but somehow it made sense to Fabian. 327 00:20:59,996 --> 00:21:03,796 Speaker 1: Nobody learned to porn companies, so if you managed to 328 00:21:03,876 --> 00:21:08,036 Speaker 1: raise serious money, you take it. In porn land, even 329 00:21:08,076 --> 00:21:11,276 Speaker 1: a man paying twenty two percent interest can become king. 330 00:21:11,716 --> 00:21:15,836 Speaker 1: You're looking at what a quarter of the company's revenue 331 00:21:15,956 --> 00:21:19,116 Speaker 1: going out of the door in interest payments on the 332 00:21:19,196 --> 00:21:23,156 Speaker 1: debt right roughly. Once again, it's the money that enabled 333 00:21:23,196 --> 00:21:26,196 Speaker 1: them to build the empire. You're the largest player by 334 00:21:26,236 --> 00:21:28,876 Speaker 1: a long shot. You dictate a lot of what goes 335 00:21:28,916 --> 00:21:33,116 Speaker 1: on in your industry. The porn industry had been broken 336 00:21:33,156 --> 00:21:36,156 Speaker 1: by tube sites, and Fabian had just raised the money 337 00:21:36,196 --> 00:21:40,156 Speaker 1: to assemble the giant conglomerate that would dominate global porn 338 00:21:45,676 --> 00:21:52,396 Speaker 1: Act three impossible dreams. So Fabian managed what nobody thought 339 00:21:52,476 --> 00:21:55,476 Speaker 1: was possible, raise serious money to begin a roll up 340 00:21:55,516 --> 00:21:58,116 Speaker 1: of the porn industry. But by god did he pay 341 00:21:58,116 --> 00:22:01,836 Speaker 1: for it. To understand why a twenty percent interest loan 342 00:22:02,276 --> 00:22:05,756 Speaker 1: made sense for Fabian, you have to understand the alternative. 343 00:22:06,156 --> 00:22:09,276 Speaker 1: There was only one really selling parts of the company. 344 00:22:09,876 --> 00:22:12,236 Speaker 1: Fabian would have to give up control and share the 345 00:22:12,316 --> 00:22:15,996 Speaker 1: profits paying twenty percent interest. It was worth it just 346 00:22:16,076 --> 00:22:19,556 Speaker 1: to avoid that. And that's extraordinary number. I mean it's 347 00:22:19,556 --> 00:22:22,676 Speaker 1: like usury. Yes, yes, yes. Then on the other side, 348 00:22:23,076 --> 00:22:26,556 Speaker 1: the lenders loved this deal. They came from a banking 349 00:22:26,596 --> 00:22:29,516 Speaker 1: sector and known as distressed finance, so most of the 350 00:22:29,596 --> 00:22:33,156 Speaker 1: time they were backing companies and crisis corn was risky, 351 00:22:33,676 --> 00:22:38,236 Speaker 1: but only to the reputation Fabian's business was humming, so 352 00:22:38,276 --> 00:22:40,356 Speaker 1: they could use the same rights they would use for 353 00:22:40,476 --> 00:22:44,436 Speaker 1: distressed asset for us it was great, much safer, right, 354 00:22:44,956 --> 00:22:48,716 Speaker 1: same rates but safe, safe, I cash flow perfect. They 355 00:22:48,756 --> 00:22:52,316 Speaker 1: loved it, and once Fabian had the former Goldman bankers 356 00:22:52,316 --> 00:22:56,036 Speaker 1: on board, the world of finance warmed to him. A 357 00:22:56,156 --> 00:22:59,036 Speaker 1: bank was hired to farm out the debt and find 358 00:22:59,036 --> 00:23:02,716 Speaker 1: other lenders who wanted to join the syndicate. JP Morgan 359 00:23:02,796 --> 00:23:05,516 Speaker 1: put up money, so did Fortress, a well known New 360 00:23:05,596 --> 00:23:09,716 Speaker 1: York buyout group. Even Cornell University was involved at on stage. 361 00:23:10,116 --> 00:23:13,156 Speaker 1: Cornell told us they had no idea what their fund 362 00:23:13,236 --> 00:23:17,796 Speaker 1: manager had done and later sacked him. When Fabian started out, 363 00:23:18,356 --> 00:23:21,916 Speaker 1: he was trying to raise around one hundred million, and 364 00:23:21,996 --> 00:23:26,636 Speaker 1: he struggled, but then as the process went on, that 365 00:23:26,756 --> 00:23:30,236 Speaker 1: number crept up to one hundred and seventy million, and 366 00:23:30,276 --> 00:23:34,196 Speaker 1: then by early two thousand and eleven, Fabian had raised 367 00:23:34,316 --> 00:23:39,356 Speaker 1: up to three hundred and sixty two million. So, like us, 368 00:23:39,676 --> 00:23:42,956 Speaker 1: you're probably wondering how a pornographer struggling to raise one 369 00:23:43,036 --> 00:23:45,956 Speaker 1: hundred million managed to walk away With Wren and Triple 370 00:23:46,036 --> 00:23:49,956 Speaker 1: that it was hard to find bankers who dared to 371 00:23:49,996 --> 00:23:53,436 Speaker 1: invest in porn, but once they were on board, their 372 00:23:53,476 --> 00:23:56,636 Speaker 1: appetite for business conquest turned out to be even larger 373 00:23:56,636 --> 00:24:00,276 Speaker 1: than Fabians. Not long after Fabian's request for one hundred 374 00:24:00,316 --> 00:24:02,996 Speaker 1: million was accepted, he heard back from one of his 375 00:24:03,076 --> 00:24:06,516 Speaker 1: financial advisors. They said, do you have a wish list? 376 00:24:06,596 --> 00:24:08,716 Speaker 1: And I'm like, what do you mean? Can you write 377 00:24:08,796 --> 00:24:11,196 Speaker 1: us a list of what you would want to buy 378 00:24:11,836 --> 00:24:15,276 Speaker 1: and how much this would cost? Like, okay, sure, we'll 379 00:24:15,316 --> 00:24:16,916 Speaker 1: make a wish list. And we made a wish list 380 00:24:17,076 --> 00:24:21,716 Speaker 1: the next day and it came to two hundred something 381 00:24:21,756 --> 00:24:24,356 Speaker 1: million or something that we estimated it would cost. And 382 00:24:25,076 --> 00:24:27,356 Speaker 1: then they came to me and said, yeah, look, let's 383 00:24:28,036 --> 00:24:29,796 Speaker 1: why are we talking about one hundred if you want 384 00:24:29,796 --> 00:24:32,076 Speaker 1: two hundred fifty? I don't understand. Well, don't we talking 385 00:24:32,036 --> 00:24:34,156 Speaker 1: about two hundred and fifty? And I realized, okay, they 386 00:24:34,156 --> 00:24:36,236 Speaker 1: are hungry and they want to do more. Because obviously 387 00:24:36,276 --> 00:24:39,236 Speaker 1: the term sheet it was expensive as hell. It was crazy, 388 00:24:39,796 --> 00:24:43,796 Speaker 1: really crazy, but it worked cash war wise, so I 389 00:24:43,796 --> 00:24:46,716 Speaker 1: didn't care. And then I said, okay, look, let's let's 390 00:24:46,756 --> 00:24:51,276 Speaker 1: talk about a number you like more. And that's how 391 00:24:51,756 --> 00:24:56,036 Speaker 1: Fabian landed alone of three hundred and sixty two million 392 00:24:56,116 --> 00:25:00,276 Speaker 1: dollars Jack Pop. Remember what Sarah Jane said when she 393 00:25:00,396 --> 00:25:02,596 Speaker 1: was in the crowd of that poorn conference. She was 394 00:25:02,676 --> 00:25:05,156 Speaker 1: waiting for the man who embodied how the world of 395 00:25:05,276 --> 00:25:08,436 Speaker 1: porn had changed those out to make money. We're no 396 00:25:08,516 --> 00:25:12,116 Speaker 1: longer thinking about the most desirable pawn stars or where 397 00:25:12,156 --> 00:25:15,876 Speaker 1: to shoot the next blockbuster. Fabian's game was all about 398 00:25:15,996 --> 00:25:19,556 Speaker 1: internet traffic and With that extra money, he started buying 399 00:25:19,596 --> 00:25:23,636 Speaker 1: it all up. He acquired upawn, probably the most popular 400 00:25:23,676 --> 00:25:27,596 Speaker 1: tube site at the time. Fabian had finance, scale and 401 00:25:27,676 --> 00:25:30,716 Speaker 1: a proven recipe for running site. He thought he could 402 00:25:30,716 --> 00:25:33,556 Speaker 1: make more money from traffic than anybody else, and with 403 00:25:33,756 --> 00:25:38,236 Speaker 1: upawn he was right. Trucking the quadruple the profits of 404 00:25:38,676 --> 00:25:41,116 Speaker 1: the science in two months. After two months, a be 405 00:25:41,196 --> 00:25:44,996 Speaker 1: able of four climates as profitable considering that you buy 406 00:25:44,996 --> 00:25:48,916 Speaker 1: it for peanuts, you know. In the end, it didn't 407 00:25:48,916 --> 00:25:52,916 Speaker 1: take long until people started asking Fabian whereas it's all going, 408 00:25:53,476 --> 00:25:56,996 Speaker 1: are you going to sell? Take the company public? People 409 00:25:57,076 --> 00:25:58,956 Speaker 1: asked me all the time. Also, the lenders asked me 410 00:25:59,076 --> 00:26:02,836 Speaker 1: once I think, what's your excess strategy? I said, we 411 00:26:02,956 --> 00:26:06,036 Speaker 1: make one hundred something million a year. Why would I 412 00:26:06,076 --> 00:26:10,876 Speaker 1: exit this for what reason? There was the social impact too, 413 00:26:10,996 --> 00:26:15,396 Speaker 1: from creating this big tech conglomerate that pumped out free 414 00:26:15,436 --> 00:26:18,996 Speaker 1: pawn to the world. Fabian argues it had a positive 415 00:26:18,996 --> 00:26:23,836 Speaker 1: effect that people became more tolerant of different sexual identities. 416 00:26:24,356 --> 00:26:28,276 Speaker 1: But even he recognizes there is another side to that. 417 00:26:29,236 --> 00:26:31,716 Speaker 1: We've spent a lot of time looking in this industry. 418 00:26:32,036 --> 00:26:37,516 Speaker 1: I've got two preteen boys. I still struggle with how 419 00:26:37,556 --> 00:26:41,956 Speaker 1: to explain that there is this vast well of pawn 420 00:26:42,036 --> 00:26:45,236 Speaker 1: out there? How do I explain it to them? Ye, 421 00:26:45,316 --> 00:26:48,876 Speaker 1: it's a good questions. I have a fourteen year old 422 00:26:48,916 --> 00:26:52,276 Speaker 1: daughter right, for example, and she knows when I did, 423 00:26:52,436 --> 00:26:55,916 Speaker 1: and she knows how I'm involved in this, and I 424 00:26:56,036 --> 00:26:59,916 Speaker 1: told her personally and she kind of knew before, but 425 00:27:00,036 --> 00:27:03,596 Speaker 1: kind of didn't because obviously every single person in class 426 00:27:03,716 --> 00:27:06,556 Speaker 1: knows who I am, every single one of them. In 427 00:27:06,636 --> 00:27:13,036 Speaker 1: my opinion, it's more about the fact that, yes, all 428 00:27:13,076 --> 00:27:17,436 Speaker 1: of this exists, are there, but one is it so 429 00:27:17,636 --> 00:27:20,716 Speaker 1: bad that it does? And tool You need to be 430 00:27:20,796 --> 00:27:27,756 Speaker 1: sure that the kids understand how to put all of 431 00:27:27,756 --> 00:27:30,436 Speaker 1: this in their red buckets or to speak, Just like 432 00:27:30,476 --> 00:27:33,396 Speaker 1: they need to understand what in a Marvel movie is 433 00:27:33,476 --> 00:27:35,396 Speaker 1: veal and what isn't, they need to understand that they're 434 00:27:35,436 --> 00:27:40,796 Speaker 1: tool buckets. I wish it were as easy as that. 435 00:27:41,316 --> 00:27:43,756 Speaker 1: There are tens of millions of pawn videos online, in 436 00:27:43,876 --> 00:27:47,236 Speaker 1: no small part thanks to guys like Fabian, and when 437 00:27:47,236 --> 00:27:50,436 Speaker 1: you're a teen and angsty and learning about your sexuality, 438 00:27:50,756 --> 00:27:53,636 Speaker 1: it's hard just to put pawn in the fiction fantasy. 439 00:27:53,876 --> 00:27:57,076 Speaker 1: Don't try this at home, bucket, But let's be clear. 440 00:27:57,396 --> 00:28:00,876 Speaker 1: This isn't just about conversations with kids. Pawn is a 441 00:28:00,916 --> 00:28:03,196 Speaker 1: big part of our culture. Now it will be freely 442 00:28:03,196 --> 00:28:07,516 Speaker 1: available for generations to come. We can't just compartmentalize the 443 00:28:07,636 --> 00:28:11,436 Speaker 1: darker sides of the industry. The Fabian not only left 444 00:28:11,436 --> 00:28:14,796 Speaker 1: a mark on our world, but the industry he embodied 445 00:28:14,836 --> 00:28:18,036 Speaker 1: the digital world wind that crashed through it. Pay rates 446 00:28:18,036 --> 00:28:21,556 Speaker 1: for producers and performers plummeted. A lot of the traditional 447 00:28:21,556 --> 00:28:24,916 Speaker 1: industry just went out of business. Fabian's name is still 448 00:28:24,996 --> 00:28:29,556 Speaker 1: mud to many of them. But his power it didn't 449 00:28:29,556 --> 00:28:33,876 Speaker 1: come from inventing sites. It came from buying them. I 450 00:28:33,956 --> 00:28:38,996 Speaker 1: cannot help it that technology changes, like the Internet shift 451 00:28:39,636 --> 00:28:42,796 Speaker 1: flow of money, how it works. It shifted it in 452 00:28:42,876 --> 00:28:45,236 Speaker 1: fifty different industries, and it took it important, that's it. 453 00:28:45,636 --> 00:28:48,516 Speaker 1: And I just happened to be there when it was 454 00:28:48,596 --> 00:28:50,276 Speaker 1: there for the taking. And I did it, you know, 455 00:28:50,716 --> 00:28:54,356 Speaker 1: And I wasn't afraid that it might look weird or 456 00:28:54,396 --> 00:28:57,036 Speaker 1: bad or whatever. I guess someone has to be the 457 00:28:57,356 --> 00:28:59,956 Speaker 1: bad guy, right, because it doesn't work without the bad 458 00:28:59,956 --> 00:29:02,676 Speaker 1: guy in the end change, it just doesn't. It was 459 00:29:02,676 --> 00:29:09,076 Speaker 1: always a bad guy at the peak of this power. 460 00:29:09,836 --> 00:29:12,556 Speaker 1: Fabian reckons he controls sixty to seventy percent of all 461 00:29:12,556 --> 00:29:16,316 Speaker 1: the porn traffic. We see it all the time tech 462 00:29:16,396 --> 00:29:19,956 Speaker 1: disruptors pumped up with cash from Wall Street that rapidly 463 00:29:19,956 --> 00:29:23,636 Speaker 1: become giants and push out other companies because they can 464 00:29:23,676 --> 00:29:26,556 Speaker 1: offer things on the cheap or in this case, for free. 465 00:29:27,796 --> 00:29:31,436 Speaker 1: When we started reporting this podcast, we set out to 466 00:29:31,516 --> 00:29:36,636 Speaker 1: find who rules the porn world? So is it Fabian Tillman? 467 00:29:37,676 --> 00:29:40,396 Speaker 1: A decade ago the answer to that would have been yes. 468 00:29:41,316 --> 00:29:44,996 Speaker 1: After his roll up, Fabian truly was the Darth Vader 469 00:29:45,076 --> 00:29:50,436 Speaker 1: of porn, but he had some surprising ideas about how 470 00:29:50,476 --> 00:29:54,796 Speaker 1: to use his power and control. For one thing, he 471 00:29:54,916 --> 00:29:59,236 Speaker 1: says he actually never believed the tube side business model 472 00:29:59,276 --> 00:30:03,916 Speaker 1: would last. He has never said this publicly before, but 473 00:30:04,076 --> 00:30:06,956 Speaker 1: his grand plan was to buy all the tube sides 474 00:30:06,996 --> 00:30:13,236 Speaker 1: and then put behind the paywall. And I would have 475 00:30:13,316 --> 00:30:17,876 Speaker 1: then turned off their websites completely, as in, closed off 476 00:30:17,876 --> 00:30:21,996 Speaker 1: the free content. Because changing one hundred and fifty million 477 00:30:22,036 --> 00:30:24,356 Speaker 1: people's free content from day one to day tool to 478 00:30:24,956 --> 00:30:29,036 Speaker 1: no longer being there makes them buy stuff. This does 479 00:30:29,116 --> 00:30:32,276 Speaker 1: sound like a completely crazy plan. These days, pawn Have 480 00:30:32,436 --> 00:30:35,396 Speaker 1: alone is hosting two billion visits a month. It's hard 481 00:30:35,396 --> 00:30:37,756 Speaker 1: to imagine anybody could just turn off the tap of 482 00:30:37,796 --> 00:30:40,636 Speaker 1: free pawn, especially not the man who managed to convince 483 00:30:40,636 --> 00:30:42,836 Speaker 1: Wall Street that it was a sure bet for quick 484 00:30:42,836 --> 00:30:45,356 Speaker 1: and easy money. So are you saying that the few 485 00:30:45,356 --> 00:30:48,996 Speaker 1: would have been successful and this plan maybe we wouldn't 486 00:30:49,076 --> 00:30:53,036 Speaker 1: have had tub sides today. Yes, basically, yes, that's what 487 00:30:53,076 --> 00:30:56,596 Speaker 1: my plan was. Now, imagine YouTube would turn off today 488 00:30:56,796 --> 00:30:59,636 Speaker 1: and make it pay. Oh my god, I don't know 489 00:30:59,636 --> 00:31:02,396 Speaker 1: what would happen, even at two bucks a month. It 490 00:31:02,436 --> 00:31:04,396 Speaker 1: would be interesting how many would do this? A lot? 491 00:31:04,436 --> 00:31:11,596 Speaker 1: I think famous master plan failed. But what stopped him? 492 00:31:11,636 --> 00:31:15,596 Speaker 1: That's coming up next time on Hot Money. My bank said, 493 00:31:15,636 --> 00:31:19,276 Speaker 1: this person's thick. This is all thick. This person's exist 494 00:31:19,756 --> 00:31:22,356 Speaker 1: who was paying his money. We cann't find anything on him. 495 00:31:22,396 --> 00:31:24,636 Speaker 1: It is impossible that we cannot find anything on him. 496 00:31:24,676 --> 00:31:27,756 Speaker 1: We'll tell the story of how the Wall Street bankers 497 00:31:27,756 --> 00:31:31,756 Speaker 1: who made Fabian the kingpin of porn ended up knocking 498 00:31:31,836 --> 00:31:35,836 Speaker 1: him down. And that was the moment that a long 499 00:31:35,916 --> 00:31:39,156 Speaker 1: time rival had been waiting for him, a man who 500 00:31:39,236 --> 00:31:53,436 Speaker 1: would never tell anyone what his plan was. Hot Money 501 00:31:53,596 --> 00:31:56,356 Speaker 1: is a production of The Financial Times and Pushkin Industries. 502 00:31:56,716 --> 00:31:59,596 Speaker 1: It was written or reported by me Patrician Elson and 503 00:31:59,756 --> 00:32:03,916 Speaker 1: me Alex Barker. Peter Sale is our lead producer and 504 00:32:04,036 --> 00:32:08,556 Speaker 1: sound designer. Edith Russelo is our associate producer. Our editor 505 00:32:08,916 --> 00:32:14,676 Speaker 1: is Karen Shakurji. Amanda Kwong is our engineer. Music compositioned 506 00:32:14,676 --> 00:32:20,036 Speaker 1: by Pascal Wise, fact checking by Andrea Lopez Kusado. Our 507 00:32:20,116 --> 00:32:24,796 Speaker 1: executive producers are Cheryl Brumley and Jacob Goldstein. Special thanks 508 00:32:24,836 --> 00:32:27,636 Speaker 1: to Renee Kaplin and Ruler Kalov at The Financial Times 509 00:32:27,996 --> 00:32:33,116 Speaker 1: and Mia Lobel, Lital Molad, Justine Lang, Julia Barton and 510 00:32:33,236 --> 00:32:37,196 Speaker 1: Jacob Weisberg at Pushkin Industries. Thank you to a similar 511 00:32:37,236 --> 00:32:41,396 Speaker 1: Web for providing our web traffic data. If you liked 512 00:32:41,436 --> 00:32:45,516 Speaker 1: this show, consider subscribing to pushkin Plus, offering bonus content 513 00:32:45,596 --> 00:32:48,356 Speaker 1: and ad free listening across our network for four dollars 514 00:32:48,396 --> 00:32:51,236 Speaker 1: ninety nine a month. Look for the Pushkin Plus channel 515 00:32:51,316 --> 00:33:07,756 Speaker 1: on Apple Podcasts or at pushkin dot fm