Hot Sex

The meeting in the San Francisco high-rise could have been like any of the thousands of mundane sales presentations held daily in the business world. Except for the topic: sex.

But it was sex and a business proposition that brought Gary Kremen, CEO of Grant Media, to visit. Dressed in jeans and a long-sleeved shirt covering his chunky, 5-foot-10-inch frame and hiding the Grim Reaper tattoo on his shoulder, Gary Kremen listened as Eurekster CEO Steve Marder explained how his search engine start-up works.

Then Kremen made his pitch: Because many of the niche online communities using Eurekster's search engine are adult-oriented, Grant Media could give them paid search results from adult Web sites. Kremen's company, Grant Media, would divide the ad dollars with Eurekster.

Once again, the 42-year-old Kremen is going where few will tread. Over a two-decade career that includes founding Match.com and running Sex.com, the high-tech renegade has often walked the line between mainstream and underground.

Grant Media is just the latest twist in a career that defies categorization: Serial entrepreneur. Venture capitalist. Legal combatant. Prankster. Pornographer.

Marder listened, and with a handshake, agreed to a limited trial that later was expanded. It was one more small victory for Kremen's strategy of exploiting the unlikely niches of the tech economy.

From the start, Gary Kremen has sought opportunities in places that might make others squirm. He operates outside the comfort zone of what he calls the ``old white boy Silicon Valley network'' of entrepreneurs and venture capitalists who have grown too conventional for his tastes.

His unconventional résumé includes pioneering online personals with Match.com in the early 1990s and fighting a 3-year court battle to recover the rights to the Sex.com domain name.

Along the way, Kremen branched into venture capital, investing in everything from other people's lawsuits to troubled VC funds. He once bought a stake in a San Jose company called Cool Heat which makes outdoor heaters that look like palm trees for restaurants. Two years ago, he bought a patent he previously had authored from a company in bankruptcy and then flipped it for a $1 million profit. Kremen even spent a year trying to get adopted by a California Indian tribe so he could invest in their casino rights.

At times, Kremen can be both abrasive and hilarious. He insists he's mellowed since the days when he would physically restrain employees from leaving the office if he felt they weren't working hard enough. He can also be a fiercely loyal friend and a romantic. He's offering a $50,000 bounty to anyone who introduces him to the woman he marries.

``I've never met someone who can have you laughing so hard one second and then have you in tears just like that,'' said Steve Klopf, the former chief operating officer of Sex.com, the adult search engine that Kremen owned and operated from 2001 to 2006.

His successes have at times been blunted by poor business decisions or a temper that has alienated business associates. When Kremen was losing money on the NetAngels venture fund run by Ron Conway a couple of years ago, he broke a taboo among venture capitalists and their investors by publicly blasting Conway for his performance in a story in the Mercury News.

Gary Kremen's career path began early, in a blue-collar Chicago home. The proximity to wealthier neighborhoods bred a lifelong resentment of people who had it easy.

Kremen taught himself computer programming in high school during the late 1970s. He also had a love for pranks, such as planting a program that spelled profanities on the computer of a teacher he disliked. After college, he moved to Silicon Valley, where his job in computer security programming exposed him to the Internet.

Not long after graduating, Kremen and his friend, Ben Dubin, started Los Altos Technologies, which developed security software from a house they shared.

Working with Kremen could be exhilarating and intense, Dubin recalls. At his best, Kremen moved quickly on ideas. At other times, Kremen could be obsessive, chewing rubber bands to calm his tension.

Once, when Kremen wanted Dubin to work rather than go on a date, he grabbed Dubin's car keys and threw them into their algae-filled swimming pool.

To prove that online classifieds could work, Kremen focused on one category: personals. The result was Match.com. Initially, it was just text, with potential suitors faxing pictures to each other. Users filled out detailed profiles of themselves and the type of mates they were seeking.

The concept took off, particularly after the release of Web browsers allowed the site to combine photos with profiles. The media, rushing to cover the Web phenomenon, sought out Kremen. He eagerly told the tale of how he started the company because he couldn't get a date.

One story ran under the headline, ``Why the Founder of Match.com Can't Get a Date'' and included a large photo of Kremen holding flowers and looking sad.

But the quality that has most helped and haunted Kremen -- his tenacity or stubbornness, depending on your view -- was already on display. Because he wanted to run his own venture, Kremen rejected an offer to merge with one dot-com that later went public and would have made him millions.

In 1997, Match.com's VC investors sold the company for $8 million over Kremen's objections, largely because they considered personals to be less than reputable.

To make things worse, Kremen discovered around then that someone had stolen one of the many Internet domain names that he had registered for in the early 1990s: Sex.com.

The man who stole Kremen's domain name was Steven Cohen, a two-time convicted felon. Cohen forged a letter in 1995 to Network Solutions, the company that registered domain names, claiming Kremen had given him the name. After Cohen gained control of Sex.com, he turned it into a porn empire.

Kremen sued to get it back. Winning took three years and more than $5 million in legal bills -- money Kremen had thanks to the IPOs of several companies he had backed. When a court ruled that Kremen was the rightful owner of Sex.com in November 2000, a judge ordered Cohen to pay Kremen $65 million.

All Kremen has recovered so far is Sex.com and Cohen's seven-bedroom stucco house in wealthy Rancho Santa Fe, just north of San Diego. It's where Kremen lives when he's not in his San Francisco condominium.

The back yard has an in-ground hot tub and swimming pool plus a tennis court. The main bathroom has two saunas and an above-ground whirlpool tub; the kitchen is cavernous, with 35 cabinets and four refrigerators.

While the house was a nice trophy, running Sex.com turned out to be more challenging than expected. Many people figured owning the name would be like having a license to print money. Under Cohen, Sex.com was a jumble of links to adult Web sites who paid to be on the site.

But those fees fell dramatically after the dot-com bust. Kremen needed to come up with a new business model. Kremen turned down a giant in the online adult industry who offered to run Sex.com and pay Kremen $400,000 a month, plus 40 percent of profits. Kremen wanted to run the business.

Eventually, Kremen turned Sex.com into a paid adult search engine, which delivered links to adult Web sites to people looking for porn online. Kremen eventually hired Steve Klopf to be his partner in running Sex.com.

They expanded the company's staff to 20 over the next couple of years and the site began generating enough money to pay off Kremen's considerable debts. Kremen got another boost in 2004 when he received a reported $15 million for settling a lawsuit against Network Solutions -- then owned by VeriSign -- claiming that the company which originally ran the domain name system had mistakenly handed Sex.com to Cohen.

So when a domain name broker casually raised the possibility of selling the name last year, Kremen realized he was ready to let go. In January, he sold it to a Boston-based adult company for $14 million.

But Kremen kept the back-end technology, which became Grant Media. Using sophisticated algorithms and Internet traffic management tools, the company's network delivers lucrative sex-related advertising to mainstream search engines so they don't have to solicit them directly.

Moving on from Sex.com hasn't been easy. In late October 2005, Cohen was arrested in Mexico and is being held in a local jail for contempt. Kremen's legal team continues to comb through piles of documents from Cohen to see if he has any money -- and where it may be. With interest, Cohen owes Kremen $82 million.

Meanwhile, Kremen has been hopscotching around the country, sizing up potential investments in everything from solar technology to wireless bill payments.

And in April, he launched his latest legal assault on the Internet establishment. He sued the American Registry for Internet Addresses, a non-profit corporation that distributes and registers the central Internet addresses for people in North America.

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