Boca Raton, Fla. - On a drizzly day in south Florida, Steve Hardigree is at the helm of his growing business: fielding sales calls, speaking to his accountant, signing off on a press release and, oh yes, showering the Internet with 100,000 unsolicited e-mails.
Hardigree, an affable, earnest 30-year-old with a marketing degree from Florida Atlantic University, describes what he does as targeted e-mail marketing, a legitimate, cost-effective alternative to snail-mail marketing, a.k.a. junk mail. But many of his cyber-recipients prefer to use the s-word when one of Hardigree's missives lands in their mailboxes — spam.
Since he set up shop 2 1/2 years ago, Hardigree has fielded angry phone calls, endured flame mails, fended off assaults from hackers, watched in horror as a denial-of-service attack crashed his system, and suffered the indignity of having his Internet connection cut off.
"It's been a constant fight," says Hardigree, clad in a gold chain, black polo shirt, white tennis shorts, white socks and white Nikes. "We feel like we're a good service and we're playing by the rules, but no matter how fine a line you try to walk, there are people out there who still can't stand the fact that we're on this earth."
Pinning down the total amount of spam zooming across the Internet, and the costs associated with it, is tricky. ISPs report that spam amounts to anywhere between 5% and 30% of their e-mail volume. They spend millions of dollars per month employing people to fight spam and providing additional bandwidth to carry it. One estimate is that spam-related expenses constitutes about $2 of a consumer's monthly ISP bill. On a more personal level, Scott Hazen Mueller, chairman of the Coalition Against Unsolicited Commercial E-Mail, estimates he receives 100 messages per day, of which between 10% and 30% are spam.
To learn more about the people behind the spam, Network World spent a day with a man who is in the business of sending out unsolicited e-mail — and who's proud of it.
Taking e-mail to the next levelHardigree staunchly maintains that what he's doing is not spam because his e-mails are targeted to the individual recipient, and he argues that he pays for the bandwidth he uses. He describes himself as a hard-working, ethical entrepreneur who has built his business from a one-man show based in his house to a five-person operation that expects to take in between $750,000 and $1 million in 1998. And he has grand expansion plans.
But for now, Internet Media Group, Inc., is still very much a start-up. Behind an unmarked door in a generic office suite here, the company shares no-frills space and secretarial resources with another tenant. Hardigree even shares his corner office with a sales rep, while his technical staff is crammed into a second room.
Sitting behind a black desk, with palm trees swaying outside the room's picture windows, Hardigree says his goal is to bring respectability to unsolicited e-mail. "We'd like to be the company that takes e-mail to the next level," he says.
While the Internet's most notorious spammer, Sanford Wallace of Cyber Promotions, Inc., and other bulk e-mailers have been accused of spoofing addresses, cloaking headers and sending out millions of scattershot e-mails for various schlocky schemes and products, Hardigree says his business is on the up and up.
For example, all e-mails are signed with Internet Media Group's return address. The e-mails are clearly labeled as one-time-only offers in which recipients are automatically dropped from the list if they don't respond. And Hardigree steers clear of pornography and get-rich-quick schemes.
Hardigree positions Internet Media Group as a boutique service that sends out targeted e-mails to groups of about 25,000 people who might be, say, cigar aficionados or golf enthusiasts.
He could have made a quick killing if he had followed the Sanford Wallace model, but Hardigree says he decided to operate in a responsible manner. "I'm extremely proud of what I do," he says.
12 million addressesThis particular morning, as he's preparing to send out a mailing that invites computer professionals to a job fair called Tech Expo 98 in Hartford, Conn., the phone rings, Hardigree chats with a list broker looking for names of marketing managers in St. Louis and Kansas City, Mo.
Hardigree will have no trouble coming up with the list because he has built a database of 12 million e-mail addresses. He's assembled the database using customized software that trolls newsgroups for names, and by striking deals with companies that run sites where customers volunteer information on their hobbies and buying preferences. One example would be a site that ships catalogs to consumers based on their requests.
Using Microsoft Access, Hardigree is able to develop lists in more than 2,000 categories. Since accurate lists are the lifeblood of his business, he has a full-time employee who does nothing but perform "list hygiene," which includes deleting invalid addresses and fulfilling removal requests. In fact, Hardigree says he completely updates the database every three or four months.
The phone rings again, and it's a potential customer from Israel asking about pricing. Internet Media Group's pitch is compelling. Hardigree charges a flat rate of $35 per 1,000 names with a minimum of 10,000 names per order. Plus, there's a $100 fee for setting up a POP3 mail account in the client's name.
That's basically 3.5 cents per name, and Internet Media Group does it all: from sending out the e-mail to filtering and sorting the return mail to delivering a list of respondents to the client.
There's no way snail-mail can compete on price. Between the cost of the list itself, plus the postage, paper and envelopes needed to send out hard copies of marketing material, the average cost runs about $1 per piece. And Hardigree's e-mail gets out as fast as his Sendmail 8.8 shareware can batch the various domains to which the mail is being sent.
Plus, the response rate is the same for regular mail and e-mail, averaging between 2% and 3%, Hardigree says. And the results come back a lot quicker.
While Hardigree is positioning himself as the anti-Sanford Wallace, it was Wallace who provided the inspiration for Hardigree's new career. Hardigree had a well-paying job in direct mail marketing when he got himself an America Online account and was immediately spammed by none other than Cyber Promotions.
"I'll never forget the first day I got e-mail," Hardigree says. He was intrigued, but realized that "the guy is doing it all wrong." Hardigree started researching the idea of using the Internet for targeted marketing and, despite having a wife and newborn to support, within weeks he had quit his job and ventured out on his own. "I felt confident I could move those lists," he says.
Fighting for survivalLittle did Hardigree know that moving lists would be the least of his problems. Cyber Promotions and its cohorts in the bulk e-mail business created an antispam backlash that Hardigree has been unable to avoid.
Angry e-mail recipients have called him directly or sent flame mail, sometimes copying it to his upstream ISP or to the Federal Trade Commission. One day, someone launched a SYN Flood denial-of-service attack that took down his entire system. "I watched each machine go down, boom, boom, boom," Hardigree says.
The most serious threat to his business came when his local ISP, responding to complaints his upstream provider received, cut off his ability to send e-mail. He managed to work out an arrangement to co-locate two servers with an ISP in Phoenix "who understands how we operate." But he still has to worry that his connection could be cancelled again or that legislation will wipe out his business.
So Hardigree is hedging his bets. He is creating a Web site, edirect.com, at which consumers can enter information about themselves with the understanding they will receive e-mail only on topics they select. The site uses free prizes as a lure.
Hardigree says his long-range plan is to transition out of unsolicited e-mail, which is also known as the opt-out model because recipients typically have to ask to be removed from the mailing list. He wants to become a leader in the opt-in' movement with his edirect.com site.
While not everyone agrees on the definition of spam, even antispam crusader Hazen Mueller concedes that mail sent through the opt-in model does not constitute spam.
However, Hardigree isn't getting out of the unsolicited e-mail business just yet. The edirect.com site is just getting off the ground, and Hardigree says, "I'll keep doing targeted unsolicited e-mail as long as we fall within the legal boundaries."
The difficulty of running a start-up business in such a controversial field has taken its toll on Hardigree. "My wife has seen me age 10 years in the past 2 1/2 years," he says.
When Hardigree or his wife mention direct e-mail marketing in social settings, people are usually intrigued, but they occasionally make the connection to spam. "It's a little unfair," Hardigree says. "They associate any type of direct e-mail with spam."
But Hardigree is sticking to his guns. "This is a viable service and a great service if it's done right and responsibly," he says.
"I've got a daughter, a wife, family members. I want them to be proud of what I do," he says. Despite the negative connotations that come with the territory, Hardigree says his wife is totally supportive. "She knows I love this," he says. "This is my destiny."
Links to spam-fighting resources.
Four days in spam hell
Canadian ISP executive recounts frustrating and costly experience of being victimized by mysterious spammer. Network World, 3/30/98.
Cheap enough for spam?
Spammer bets some people will accept spam in exchange for lower 'Net costs. Network World Fusion, 6/19/98.
Coming soon: A spam ban in a can
Looking for a way to block up to 95% of spam you are assaulted with every day? A new antispam device BSDI just may be the ticket. Network World, 3/2/98.
Once just annoying, now spam is a real threat
Daniel Blum's view. Network World, 2/16/98.
Unsolicited Bulk Email: Mechanisms for Control
Detailed paper by the Internet Mail Consortium on the issue.