Speaker 1: Pushkin. So warning time. We're two journalists from the Financial Times,
Speaker 1: and for six months we were set free to pursue
Speaker 1: one question. Who controls the porn industry. There's some content
Speaker 1: that really won't be suitable for kids, and only when
Speaker 1: strictly necessary, we've used recordings of investment bankers in the wild.
Speaker 1: I want to take you back in time to two
Speaker 1: thousand and twelve, to winter evening in Las Vegas. The
Speaker 1: porn industry had convened for one of its flagship conferences.
Speaker 1: It's like dovls, but for porn models, computer geeks, moguls.
Speaker 1: They were all there, gathered together in a flashy music
Speaker 1: arena where Mottley Crewe had its presidency that year. It
Speaker 1: was the most packed I've ever seen one of those
Speaker 1: keynote speeches. Everybody's sitting there talking like I don't know,
Speaker 1: I don't know. He's going to say, who are a
Speaker 1: car crash like type of thing, like we have to
Speaker 1: see this to see what happens. Sarah Jane Anderson sat
Speaker 1: in the hall, not waiting for a rock band, but
Speaker 1: for a speech. Sarah Jane had been working in the
Speaker 1: online adult world since the nineties. She was on the
Speaker 1: business and marketing side of things. It was a close
Speaker 1: knit community. Sarah Jane talks about it like an eccentric family,
Speaker 1: but they were on hard times. Sitting beside her that
Speaker 1: night were a bunch of porn executives, all from big companies,
Speaker 1: all facing the same dilemma. What was the point of
Speaker 1: making new content when your content was being plundered. There's
Speaker 1: no way to stop because trucking. So as much as
Speaker 1: I said, content is king the real king of traffic,
Speaker 1: and the tube sites had a swallowed up all the traffic.
Speaker 1: More people were looking at online porn than ever, but
Speaker 1: they weren't paying for it. Profits had evaporated. It was
Speaker 1: beyond the panic stage. Producers were desperate. They watched their
Speaker 1: best movies get ripped and streamed online for free by
Speaker 1: a faceless enemy, the tube sites. But finally, at their
Speaker 1: conference they would see their problem in the flesh. They
Speaker 1: were going to meet the man behind the biggest tube sites.
Speaker 1: And as the lights came up, everyone began to hum.
Speaker 1: They actually sang underneath their breath the death March for
Speaker 1: Star Wars. When he came out, Don't Don't, Don't. The
Speaker 1: Lord Vader of Pawn was a man called Fabian Tillman,
Speaker 1: the German software engineer who bore XTube roughly four years
Speaker 1: before this conference, the one who started buying tube sites
Speaker 1: as a step towards adult industry domination. When he came
Speaker 1: on stage, he made an impression before a word, he's
Speaker 1: wearing a hoodie Verry Zuckerberg, and then he sat on
Speaker 1: the table and crossed his legs pompous. I just remember
Speaker 1: my whole road just laughing at that out of ridiculousness.
Speaker 1: It was his public debut. Baby faced Fabian, at just
Speaker 1: thirty three, was basically there to introduce himself to an
Speaker 1: industry that he had conquered in just four years. I
Speaker 1: wanted to talk a bit about myself, since I know
Speaker 1: that many of you do not really know where where
Speaker 1: I come from and such, and I thought it's a
Speaker 1: better if people know more, and then should make it
Speaker 1: obvious that I'm not that evil person that so many
Speaker 1: people think I am, that my role was just like okay, then,
Speaker 1: especially in the digital world, a lot of those people
Speaker 1: people are faceless nicknames. So I think he got some
Speaker 1: credit for showing up in taking the heat a little bit,
Speaker 1: but I still think it was pretty much I own
Speaker 1: you I'm Patrician Wilson. He's Alex Parker from Pushkin Industries
Speaker 1: and The Financial Times. This is Hot Money, Act one,
Speaker 1: the Disruptor. How did Fabian do it? He was good
Speaker 1: at coding, but so are lots of people in the
Speaker 1: adult industry. The thing that marked him out was money.
Speaker 1: He was good with money in a business that was
Speaker 1: starved of finance. He was the guy in the hoodie
Speaker 1: who convinced Wall Street to bankroll his vision to take
Speaker 1: control of the adult industry. The guy who managed to
Speaker 1: get even the most prestigious of banks and investors to
Speaker 1: buy in, to look away from the problems what they
Speaker 1: saw as a sin industry and raise more money than
Speaker 1: anyone thought possible. Fabian was like Mercury. Let me tell
Speaker 1: you what it was like trying to get an interview
Speaker 1: with him. He got in touch with me, then he
Speaker 1: went dark. Then he said yes, then he ghosted me.
Speaker 1: I watched in his social media feeds as he found
Speaker 1: love and traveled the world. I saw mere cats, campollion temples,
Speaker 1: bead boats. He even posted picks from her London art
Speaker 1: gallery on the same Saturday that I was there. I
Speaker 1: know he didn't respond to me when I reached out. Then,
Speaker 1: after more than a year of trying, he finally gave
Speaker 1: us a date. We traveled to Cologne in Germany and
Speaker 1: went to his no frills office above a nineteen eighties
Speaker 1: shopping arcade in a nightclub called Vanity. As we waited,
Speaker 1: surrounded by merch from his clubs piled up at the corners,
Speaker 1: I still had this uneasy feeling would he actually answer
Speaker 1: our questions? Would he even show up? And then there
Speaker 1: he was. My name is Fabian. I hate the same
Speaker 1: enemy English. I don't like it. My name is Fabian Tuman,
Speaker 1: and I'm an investor. I guess his family is German,
Speaker 1: but he grew up in Brussels and still lives there,
Speaker 1: just down the road from where I used to live,
Speaker 1: actually on the other side of a royal hunting forest.
Speaker 1: The Tillmans were well to do family, and like many
Speaker 1: people in this business, a teenage Fabian basically stumbled into
Speaker 1: pawn partly for laughs but also to get ahead. I
Speaker 1: was a programmer. I looked online where I could do
Speaker 1: fun projects in an easy way as a young person
Speaker 1: without any connections, not being in La or what San
Speaker 1: Francisco or something, I stumbled over our porn people basically online.
Speaker 1: The chat wools started working for them. He helped build
Speaker 1: something called NATS, a tracking program for afiliate marketing that
Speaker 1: took off in the adult business. It's still around today.
Speaker 1: With this software, he could see where traffic was flowing
Speaker 1: and what porn customers actually paid for. When Fabian peaked
Speaker 1: behind the curtains of these businesses, he had the best
Speaker 1: view in pawn land. It was interesting how how I exaggerated.
Speaker 1: Everybody was talking about how great they were, which they
Speaker 1: really weren't, or at least not as grand as they
Speaker 1: made it look. Fabian thought he could do a better job.
Speaker 1: The first business he bought was a small German porn site.
Speaker 1: He didn't really have a plan. Some friends were selling
Speaker 1: and he could just about get the money together. But
Speaker 1: then I started to look at other things and let's
Speaker 1: see what else is possible to buy. And that's when
Speaker 1: you realize more and more how the industry worked, and
Speaker 1: how is what's there and what isn't And so the
Speaker 1: buying spree began. It started with a few more porn
Speaker 1: sites in Germany, a webcam's business, then x Tube, you
Speaker 1: know the side run by Curtis, the Subpeanut King the
Speaker 1: guy would talk to. In the previous episode the Ft,
Speaker 1: we cover this kind of investor driven buying spreebe all
Speaker 1: the time. It's called a roll up, basically seeing value
Speaker 1: in a sector, raising money and buying up as many
Speaker 1: companies as possible. Money has been cheap for quite a while,
Speaker 1: so plenty of deeply unimpressive buy out groups managed to
Speaker 1: do it. But Fabian he was doing it in porn,
Speaker 1: hardcore porn just after the financial crash in two thousand
Speaker 1: and eight. That's no small feat. There wasn't much money
Speaker 1: around and with all those free videos flooding the web,
Speaker 1: everyone thought the porn industry was doomed. I don't know
Speaker 1: if I had, if I really in the beginning at
Speaker 1: least realized how big this could become. It was a
Speaker 1: game in some shape or form, you know, to look
Speaker 1: at all these companies to be the one of the
Speaker 1: few people that is actually willing to buy anything, because
Speaker 1: everybody else was like, what the way are you buying this?
Speaker 1: This will die in two months. Things got more serious
Speaker 1: when a company called Mansef approached him. The Canadian engineering
Speaker 1: students who were behind this company had founded sites like
Speaker 1: Pornhoub and Browsers. These were already big brands. I was
Speaker 1: lucky they knew about me and they just took the
Speaker 1: chance and came to me. But they were talking to
Speaker 1: four other people at the same time, and I just decided, Okay,
Speaker 1: this is going to be really expensive. I have absolutely
Speaker 1: no clue how to pay for this, but let's just
Speaker 1: chat with them and let's try. He flew to Montreal
Speaker 1: a few days before Christmas in two thousand and nine.
Speaker 1: His wife didn't mind him staying there, at least for
Speaker 1: a few days, but Fabian was so keen to get
Speaker 1: the deal done he was stuck there for three months.
Speaker 1: The thing about Mansef was abridged old and new that
Speaker 1: had production studios and sites like Browsers where he had
Speaker 1: to pay to get access the traditional way of selling
Speaker 1: porn online. But they'd also cracked how to make money
Speaker 1: from free tube sites. They could either sell ad space
Speaker 1: to other pornographers or just channel the viewers to their
Speaker 1: own pay sites. The trick was to just get a
Speaker 1: tiny percentage of all that traffic to actually pay for porn. Really,
Speaker 1: it was uncomparable. The amount of money that this team
Speaker 1: could make with traffic was unheard of in this industry
Speaker 1: before it was impressive. Fabian loved the business. The trouble
Speaker 1: was he didn't have the money to pay for it.
Speaker 1: He bought his first sites with support from a few backers,
Speaker 1: whom he paid back. The next stage, though, was much harder,
Speaker 1: and that's when the financial acrobatics began. When compared to
Speaker 1: the rest of the industry, this turned out to be
Speaker 1: Fabian's real superpower. People think of him as the German
Speaker 1: tech guy that he actually brought financial engineering to online porn.
Speaker 1: He conjured up magic money for a business that no
Speaker 1: mainstream investor wanted to touch. To make his offer from mansef,
Speaker 1: he siphoned cash from other companies, used an asset he
Speaker 1: wasn't allowed to use, staggered payments, massaged payment dates, every
Speaker 1: trick in the book, and just to be clear, some
Speaker 1: were definitely in the gray zone of what's legal. I mean,
Speaker 1: what you were doing when you were buying manse It's
Speaker 1: almost like you want to buy a restaurant and you're
Speaker 1: going to do it with like four different credit cards overlapping. Yeah,
Speaker 1: let's just figure on the way to do it and
Speaker 1: then fix it later, you know, And if it doesn't
Speaker 1: fix then I am like before the deal, so who cares?
Speaker 1: It worked? Fabian bought Mansef, then bundled together all his
Speaker 1: sites x Tube and porn Hub and Browsers and my
Speaker 1: Dirty Hobby in Germany and gave his company a new name.
Speaker 1: It turned out to be one of the most infamous
Speaker 1: and ridiculous in porn, man Win. Fabian squears it wasn't intentional,
Speaker 1: but might remember back in our first episode what the
Speaker 1: performer Stawyer thought of Fabian's company when it bought the
Speaker 1: pawn studio she was working for. And I was like, oh,
Speaker 1: I am now tied to a company that is literally
Speaker 1: named man Win. This is awful, Fabian thought to himself.
Speaker 1: As an opportunistic buyer, he was making waves. Everyone in
Speaker 1: the industry was talking about this rookie turned kingpin, and
Speaker 1: he started to think maybe I could build an empire.
Speaker 1: Then came the day when the CEO of Playboy tapped
Speaker 1: Fabian on the shoulder and asked for a private chat.
Speaker 1: Part of the legendary Bunny brand was for sale. Would
Speaker 1: Fabian be interested? He was, but there was one big hitch.
Speaker 1: Fabian's deal with Mansef, the one that created man Win,
Speaker 1: turned on a big promise because he didn't have the money.
Speaker 1: The payments to buy the company were spread over a
Speaker 1: few years, and right at the end, Fabian agreed to
Speaker 1: make a balloon payment, a big lump sum, and if
Speaker 1: he failed to deliver, the old owners of the company
Speaker 1: would just get it back, so he simply had to
Speaker 1: pay the Fabian still had no idea how to get
Speaker 1: that much money on his own, and so he thought
Speaker 1: he might as well try to do the impossible. He
Speaker 1: would go to Wall Street Act two, the money Game.
Speaker 1: Fabian reckon if Wall Street would fund cigarettes, fossil fuels,
Speaker 1: and even the global arms trade, surely no one would
Speaker 1: think that pawn was worse. He went to one of
Speaker 1: his financial advisors, a group called Raymond Shadow Grant Thornton.
Speaker 1: It's part of one of the world's biggest accounting firms.
Speaker 1: I went to Hamoshable and told them, listen, you know
Speaker 1: these numbers, you've seen them. Why can't we not get that?
Speaker 1: This is ridiculous. There must be away to get that,
Speaker 1: even just one year, just one x leverage, that's it.
Speaker 1: Let's try. And they're like, yeah, it should be simple.
Speaker 1: So his advice has got busy making a slide deck
Speaker 1: bankers love slides. Meanwhile, Fabian got busy running his new
Speaker 1: porn sites, the ones he bought without really having the
Speaker 1: money to pay for them. Before long, the bankers thought
Speaker 1: they'd found the lender, someone who didn't mind porn, someone
Speaker 1: who would let them borrow almost one hundred million that
Speaker 1: would have allowed Fabian to cover what he owed and
Speaker 1: help him buy the playboy business. We had a meeting
Speaker 1: in Chicago, term sheet everything we celebrated in the evening,
Speaker 1: had dinner with them. Sitting at that dinner, Fabian thought
Speaker 1: he'd pulled it off. He found the magic money pot.
Speaker 1: It didn't last long. The next morning the owner said
Speaker 1: that I'm not signing, but because he talked to his wife.
Speaker 1: So it looked very, very easy and good in the
Speaker 1: very beginning, and when this happened, Romishrouble realized all this
Speaker 1: is difficult. So to recap. Fabian Tillman, in his early thirties,
Speaker 1: was on his way to wrestle control over the porn
Speaker 1: industry that had been smashed to bits by two sides,
Speaker 1: many which were run by him. He'd promised a bunch
Speaker 1: of pornographers money to take over their companies. These businesses
Speaker 1: were profitable but he thought he could do even better.
Speaker 1: But to buy them, he'd committed to payment schedule that
Speaker 1: he just could not afford. He needed to borrow otherwise.
Speaker 1: He was toasted. But at the same time, no lenders
Speaker 1: wanted to touch porn. By now we're in the summer
Speaker 1: of twenty and ten, Fabian had a small army of advices.
Speaker 1: They're all on ridiculously high commissions, millions of dollars if
Speaker 1: they could get the deal done, but they were getting nowhere.
Speaker 1: In desperation, one of the advices called an old contact
Speaker 1: in New York. It was the banking equivalent of sending
Speaker 1: up the signal, and the man that answered was called
Speaker 1: Rick Rosenbloom. I'm a special situations investment banker, which is
Speaker 1: a mouthful, but it's a fancy way of saying I
Speaker 1: find capital for people, firms, ventures that don't fit in
Speaker 1: a typical box. I'm essentially a finance specialist for alternative
Speaker 1: investments and misfit toys of the capital world. Ricks firm
Speaker 1: is fuel break Capital. It's a sort of marriage broker
Speaker 1: in the world of finance, a matchmaker for the untouchables,
Speaker 1: maverick companies that need money but can't get it through
Speaker 1: the normal channels. Maybe they are a so called sin industry.
Speaker 1: Maybe they're out of favor industry. Maybe they're what a
Speaker 1: lot of people call headline risk. Headline risk isn't a
Speaker 1: fancy financial term, by the way, it actually means the
Speaker 1: risk of an investor peering in a newspaper headline. You see.
Speaker 1: Finance people don't like bad headlines about their investments, and
Speaker 1: porn it's made for bad headlines. For Rick, it was
Speaker 1: a lottery ticket assignment. The chances of success for low,
Speaker 1: but the potential rewards were huge. Something like this had
Speaker 1: never been done for corn. But Rick could see there
Speaker 1: was something about Fabian's business. Once I dug into it
Speaker 1: and realized how profitable it was. I mean, you can't
Speaker 1: take the content out, but if you just ignored the content,
Speaker 1: it was an incredibly profitable technology company. Let's just unpack
Speaker 1: what very profitable tech company means. A grocer might have
Speaker 1: a margin about two percent. A real moneymaker can have
Speaker 1: something like twenty percent. Fabian's business had a margin of
Speaker 1: about fifty percent. Very two dollars of revenue his porn
Speaker 1: sites generated more than one dollar was clean operating profit.
Speaker 1: Now that will get any investors heart pounding. Yeah, it's
Speaker 1: a home run. There's no bell curve for that. With
Speaker 1: Rick's experience in New York's world of alternative finance, he
Speaker 1: knew it tended to be easier to borrow large amount
Speaker 1: of money like one. In this world, five or ten
Speaker 1: million is just not worth people's time. And if you
Speaker 1: bring a business, would it roughly fifty percent margin? That
Speaker 1: is likely to get a few ears to perk up.
Speaker 1: But for porn, Rick was starting to realize what Fabian
Speaker 1: had learned the hard way on Wall Street. Porn was
Speaker 1: dirtier than guns, cigarettes, and gambling. I knew it was complicated.
Speaker 1: I knew it wasn't going to be easy, but I
Speaker 1: knew that if I could find the capital, would be
Speaker 1: highly profitable. And I'm ken to keep shaking trees, turning
Speaker 1: over rocks until I'm out. I probably went to forty
Speaker 1: or fifty firms. I got my door slammed in my
Speaker 1: face almost every time, but then fate intervenes. It's another
Speaker 1: historic moment for the porn industry. And where else would
Speaker 1: it be but Las Vegas. It's always in Sin City.
Speaker 1: At a conference, ran into a guy called Jason Klobney
Speaker 1: Co founder of a fledgling investment firm called Colbeck Capital.
Speaker 1: They hit it off. He asked me kind of the
Speaker 1: deals I did? And I told them, Hey, I've got
Speaker 1: this great deal, but it's got a lot of hair
Speaker 1: on it, it's got a lot of noise around it,
Speaker 1: and you know, he said, tell me more. Cologny like
Speaker 1: his co founder was a former Goldman sax banker. Colbeck
Speaker 1: was interested, tempted, deepen, but very wary. This would be
Speaker 1: one of their first big deals and they just weren't
Speaker 1: too keen on porn. IM not sure about how well
Speaker 1: the industry was run, but mainly they just wanted to
Speaker 1: make sure that Fabian's company was financially sound. Took me
Speaker 1: probably four or five meetings to get them to really
Speaker 1: dig in. Jason Cologne. He said to me, Rick, we
Speaker 1: tried to kill this deal so many times, but every
Speaker 1: time we did another layer of diligence it checked out.
Speaker 1: In fact, it was probably I'm paraphrasing here, but something
Speaker 1: like the cleanest, best run company we've ever diligenced. That's
Speaker 1: quite a statement, right, Yeah, it was. These guys came
Speaker 1: from Colman Sex and Morgan Stanley. It's a pretty strong statement,
Speaker 1: this wasn't their first barbecue. Eventually, Colbeck said yes, Like
Speaker 1: all of Wall Street, they knew bankrolling a hardcore porn
Speaker 1: company was dangerous, but it was such a sound bet
Speaker 1: they couldn't resist. They agreed to one to write the
Speaker 1: deal and help raise the money. And here's why they
Speaker 1: couldn't resist. When all the loan costs were blended together,
Speaker 1: the annual interest rate was more than twenty percent. Remember,
Speaker 1: Fabian's company wasn't that big in an era of cheap money.
Speaker 1: This was breathtakingly expensive, but somehow it made sense to Fabian.
Speaker 1: Nobody learned to porn companies, so if you managed to
Speaker 1: raise serious money, you take it. In porn land, even
Speaker 1: a man paying twenty two percent interest can become king.
Speaker 1: You're looking at what a quarter of the company's revenue
Speaker 1: going out of the door in interest payments on the
Speaker 1: debt right roughly. Once again, it's the money that enabled
Speaker 1: them to build the empire. You're the largest player by
Speaker 1: a long shot. You dictate a lot of what goes
Speaker 1: on in your industry. The porn industry had been broken
Speaker 1: by tube sites, and Fabian had just raised the money
Speaker 1: to assemble the giant conglomerate that would dominate global porn
Speaker 1: Act three impossible dreams. So Fabian managed what nobody thought
Speaker 1: was possible, raise serious money to begin a roll up
Speaker 1: of the porn industry. But by god did he pay
Speaker 1: for it. To understand why a twenty percent interest loan
Speaker 1: made sense for Fabian, you have to understand the alternative.
Speaker 1: There was only one really selling parts of the company.
Speaker 1: Fabian would have to give up control and share the
Speaker 1: profits paying twenty percent interest. It was worth it just
Speaker 1: to avoid that. And that's extraordinary number. I mean it's
Speaker 1: like usury. Yes, yes, yes. Then on the other side,
Speaker 1: the lenders loved this deal. They came from a banking
Speaker 1: sector and known as distressed finance, so most of the
Speaker 1: time they were backing companies and crisis corn was risky,
Speaker 1: but only to the reputation Fabian's business was humming, so
Speaker 1: they could use the same rights they would use for
Speaker 1: distressed asset for us it was great, much safer, right,
Speaker 1: same rates but safe, safe, I cash flow perfect. They
Speaker 1: loved it, and once Fabian had the former Goldman bankers
Speaker 1: on board, the world of finance warmed to him. A
Speaker 1: bank was hired to farm out the debt and find
Speaker 1: other lenders who wanted to join the syndicate. JP Morgan
Speaker 1: put up money, so did Fortress, a well known New
Speaker 1: York buyout group. Even Cornell University was involved at on stage.
Speaker 1: Cornell told us they had no idea what their fund
Speaker 1: manager had done and later sacked him. When Fabian started out,
Speaker 1: he was trying to raise around one hundred million, and
Speaker 1: he struggled, but then as the process went on, that
Speaker 1: number crept up to one hundred and seventy million, and
Speaker 1: then by early two thousand and eleven, Fabian had raised
Speaker 1: up to three hundred and sixty two million. So, like us,
Speaker 1: you're probably wondering how a pornographer struggling to raise one
Speaker 1: hundred million managed to walk away With Wren and Triple
Speaker 1: that it was hard to find bankers who dared to
Speaker 1: invest in porn, but once they were on board, their
Speaker 1: appetite for business conquest turned out to be even larger
Speaker 1: than Fabians. Not long after Fabian's request for one hundred
Speaker 1: million was accepted, he heard back from one of his
Speaker 1: financial advisors. They said, do you have a wish list?
Speaker 1: And I'm like, what do you mean? Can you write
Speaker 1: us a list of what you would want to buy
Speaker 1: and how much this would cost? Like, okay, sure, we'll
Speaker 1: make a wish list. And we made a wish list
Speaker 1: the next day and it came to two hundred something
Speaker 1: million or something that we estimated it would cost. And
Speaker 1: then they came to me and said, yeah, look, let's
Speaker 1: why are we talking about one hundred if you want
Speaker 1: two hundred fifty? I don't understand. Well, don't we talking
Speaker 1: about two hundred and fifty? And I realized, okay, they
Speaker 1: are hungry and they want to do more. Because obviously
Speaker 1: the term sheet it was expensive as hell. It was crazy,
Speaker 1: really crazy, but it worked cash war wise, so I
Speaker 1: didn't care. And then I said, okay, look, let's let's
Speaker 1: talk about a number you like more. And that's how
Speaker 1: Fabian landed alone of three hundred and sixty two million
Speaker 1: dollars Jack Pop. Remember what Sarah Jane said when she
Speaker 1: was in the crowd of that poorn conference. She was
Speaker 1: waiting for the man who embodied how the world of
Speaker 1: porn had changed those out to make money. We're no
Speaker 1: longer thinking about the most desirable pawn stars or where
Speaker 1: to shoot the next blockbuster. Fabian's game was all about
Speaker 1: internet traffic and With that extra money, he started buying
Speaker 1: it all up. He acquired upawn, probably the most popular
Speaker 1: tube site at the time. Fabian had finance, scale and
Speaker 1: a proven recipe for running site. He thought he could
Speaker 1: make more money from traffic than anybody else, and with
Speaker 1: upawn he was right. Trucking the quadruple the profits of
Speaker 1: the science in two months. After two months, a be
Speaker 1: able of four climates as profitable considering that you buy
Speaker 1: it for peanuts, you know. In the end, it didn't
Speaker 1: take long until people started asking Fabian whereas it's all going,
Speaker 1: are you going to sell? Take the company public? People
Speaker 1: asked me all the time. Also, the lenders asked me
Speaker 1: once I think, what's your excess strategy? I said, we
Speaker 1: make one hundred something million a year. Why would I
Speaker 1: exit this for what reason? There was the social impact too,
Speaker 1: from creating this big tech conglomerate that pumped out free
Speaker 1: pawn to the world. Fabian argues it had a positive
Speaker 1: effect that people became more tolerant of different sexual identities.
Speaker 1: But even he recognizes there is another side to that.
Speaker 1: We've spent a lot of time looking in this industry.
Speaker 1: I've got two preteen boys. I still struggle with how
Speaker 1: to explain that there is this vast well of pawn
Speaker 1: out there? How do I explain it to them? Ye,
Speaker 1: it's a good questions. I have a fourteen year old
Speaker 1: daughter right, for example, and she knows when I did,
Speaker 1: and she knows how I'm involved in this, and I
Speaker 1: told her personally and she kind of knew before, but
Speaker 1: kind of didn't because obviously every single person in class
Speaker 1: knows who I am, every single one of them. In
Speaker 1: my opinion, it's more about the fact that, yes, all
Speaker 1: of this exists, are there, but one is it so
Speaker 1: bad that it does? And tool You need to be
Speaker 1: sure that the kids understand how to put all of
Speaker 1: this in their red buckets or to speak, Just like
Speaker 1: they need to understand what in a Marvel movie is
Speaker 1: veal and what isn't, they need to understand that they're
Speaker 1: tool buckets. I wish it were as easy as that.
Speaker 1: There are tens of millions of pawn videos online, in
Speaker 1: no small part thanks to guys like Fabian, and when
Speaker 1: you're a teen and angsty and learning about your sexuality,
Speaker 1: it's hard just to put pawn in the fiction fantasy.
Speaker 1: Don't try this at home, bucket, But let's be clear.
Speaker 1: This isn't just about conversations with kids. Pawn is a
Speaker 1: big part of our culture. Now it will be freely
Speaker 1: available for generations to come. We can't just compartmentalize the
Speaker 1: darker sides of the industry. The Fabian not only left
Speaker 1: a mark on our world, but the industry he embodied
Speaker 1: the digital world wind that crashed through it. Pay rates
Speaker 1: for producers and performers plummeted. A lot of the traditional
Speaker 1: industry just went out of business. Fabian's name is still
Speaker 1: mud to many of them. But his power it didn't
Speaker 1: come from inventing sites. It came from buying them. I
Speaker 1: cannot help it that technology changes, like the Internet shift
Speaker 1: flow of money, how it works. It shifted it in
Speaker 1: fifty different industries, and it took it important, that's it.
Speaker 1: And I just happened to be there when it was
Speaker 1: there for the taking. And I did it, you know,
Speaker 1: And I wasn't afraid that it might look weird or
Speaker 1: bad or whatever. I guess someone has to be the
Speaker 1: bad guy, right, because it doesn't work without the bad
Speaker 1: guy in the end change, it just doesn't. It was
Speaker 1: always a bad guy at the peak of this power.
Speaker 1: Fabian reckons he controls sixty to seventy percent of all
Speaker 1: the porn traffic. We see it all the time tech
Speaker 1: disruptors pumped up with cash from Wall Street that rapidly
Speaker 1: become giants and push out other companies because they can
Speaker 1: offer things on the cheap or in this case, for free.
Speaker 1: When we started reporting this podcast, we set out to
Speaker 1: find who rules the porn world? So is it Fabian Tillman?
Speaker 1: A decade ago the answer to that would have been yes.
Speaker 1: After his roll up, Fabian truly was the Darth Vader
Speaker 1: of porn, but he had some surprising ideas about how
Speaker 1: to use his power and control. For one thing, he
Speaker 1: says he actually never believed the tube side business model
Speaker 1: would last. He has never said this publicly before, but
Speaker 1: his grand plan was to buy all the tube sides
Speaker 1: and then put behind the paywall. And I would have
Speaker 1: then turned off their websites completely, as in, closed off
Speaker 1: the free content. Because changing one hundred and fifty million
Speaker 1: people's free content from day one to day tool to
Speaker 1: no longer being there makes them buy stuff. This does
Speaker 1: sound like a completely crazy plan. These days, pawn Have
Speaker 1: alone is hosting two billion visits a month. It's hard
Speaker 1: to imagine anybody could just turn off the tap of
Speaker 1: free pawn, especially not the man who managed to convince
Speaker 1: Wall Street that it was a sure bet for quick
Speaker 1: and easy money. So are you saying that the few
Speaker 1: would have been successful and this plan maybe we wouldn't
Speaker 1: have had tub sides today. Yes, basically, yes, that's what
Speaker 1: my plan was. Now, imagine YouTube would turn off today
Speaker 1: and make it pay. Oh my god, I don't know
Speaker 1: what would happen, even at two bucks a month. It
Speaker 1: would be interesting how many would do this? A lot?
Speaker 1: I think famous master plan failed. But what stopped him?
Speaker 1: That's coming up next time on Hot Money. My bank said,
Speaker 1: this person's thick. This is all thick. This person's exist
Speaker 1: who was paying his money. We cann't find anything on him.
Speaker 1: It is impossible that we cannot find anything on him.
Speaker 1: We'll tell the story of how the Wall Street bankers
Speaker 1: who made Fabian the kingpin of porn ended up knocking
Speaker 1: him down. And that was the moment that a long
Speaker 1: time rival had been waiting for him, a man who
Speaker 1: would never tell anyone what his plan was. Hot Money
Speaker 1: is a production of The Financial Times and Pushkin Industries.
Speaker 1: It was written or reported by me Patrician Elson and
Speaker 1: me Alex Barker. Peter Sale is our lead producer and
Speaker 1: sound designer. Edith Russelo is our associate producer. Our editor
Speaker 1: is Karen Shakurji. Amanda Kwong is our engineer. Music compositioned
Speaker 1: by Pascal Wise, fact checking by Andrea Lopez Kusado. Our
Speaker 1: executive producers are Cheryl Brumley and Jacob Goldstein. Special thanks
Speaker 1: to Renee Kaplin and Ruler Kalov at The Financial Times
Speaker 1: and Mia Lobel, Lital Molad, Justine Lang, Julia Barton and
Speaker 1: Jacob Weisberg at Pushkin Industries. Thank you to a similar
Speaker 1: Web for providing our web traffic data. If you liked
Speaker 1: this show, consider subscribing to pushkin Plus, offering bonus content
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Speaker 1: ninety nine a month. Look for the Pushkin Plus channel
Speaker 1: on Apple Podcasts or at pushkin dot fm