Jay Servidio Articles
May 27, 2010
Jay Servidio founder of Teleteria front page The
Wall Street Journal
By: Jay Servidio
SAN FRANCISCO -- Among the few dot-com survivors,
Keen Inc. is a standout. It runs a Web site listing thousands of
people who give paid advice, over the phone, to people who click
on their names. Portraying itself as a marketplace of advisers on
a wide range of mainstream topics, Keen boasts heady sales growth,
blue-chip backers and plenty of cash.
But Keen doesn't boast about one secret to its success: customers
such as Dawn Simpson, a San Antonio legal administrator who went
to the site not for advice on taxes or gardening or law, but to
divine her future.
When her life hit bottom after her live-in boyfriend left and she
miscarried their child, Ms. Simpson spent hours on the telephone
talking to psychics listed on Keen's Web site. They kept predicting
her guy would come back. But the only thing that came to Ms. Simpson
was $3,000 in credit-card bills for the calls.
The psychics "knew what I wanted to hear," Ms. Simpson says. "I
even told them I don't have this money, and they'd say, `Don't you
want happiness in your life?' "
Keen -- with pedigreed investors such as Benchmark Capital and
Microsoft, glowing press clippings and vocal fans on Wall Street
-- is among the last remaining hot Internet start-ups. "This is
one of the few that will emerge from the rubble as a legitimate
and successful business," says Andrea Rice of Deutsche Banc Alex.
Brown, which invested in the firm. At least until recently, Keen
was calling itself the fastest-growing e-commerce business in U.S.
Keen says its membership ranks have swelled to more than 3.5 million
from two million in mid-February. While Keen doesn't disclose revenue,
executives have said they expect the company to be profitable by
early next year, and they have plenty of cash to get them there.
Keen has its sights set on an initial public offering.
"To find sound advice and reliable information, consumers want
to speak to someone they trust," explains the corporate-background
page on Keen's Web site. It describes Keen as a "resource for connecting
people who want to give or receive live, immediate advice on everything
from computer help to dieting, tax questions to personal issues,
romance to nutrition."
But Keen's recipe for success may be much simpler, offering a revealing
clue to what it really takes to succeed on the Internet. ComScore
Networks Inc., which tracks online consumer behavior, says 89% of
calls made to Keen's advisers in December and January were to psychics,
and 6% were to categories that include sexual come-ons. NetRatings
Inc., another research outfit, says Keen's household demographics
and advertising patterns veer toward lower-income consumers. "Based
on what they're saying to people, I would have assumed their customers
are clicking on areas like how to repair a wallet or grill a salmon,"
says Sean Kaldor, a NetRatings executive. "That isn't where things
Last year Keen acquired 800predict, a Web site for psychics, and
began listing them on its own site. It didn't announce the acquisition.
Keen says it was too insignificant to publicize.
Also last year, Keen hired a provider of adult Web sites called
Teleteria Inc. Keen was "very clear they didn't want any press about
the phone-sex portion of their business," says Teleteria's president,
Keen's chief executive, Karl Jacob, denies that the company focuses
on psychics or sex, or that it has tried to mask its sources of
revenue. He says ComScore's numbers aren't accurate. Keen, he says,
is focused on industries such as information services, consulting
and financial planning.
Keen's roots go back to March of 1999, when a young Yale graduate
named Scott Faber watched his New York taxi driver chat on his cellphone
and had a bright idea: He could create an eBay for human capital,
he thought, where the buyers and sellers could use the phone to
By August, Mr. Faber was in California talking to Benchmark, the
firm that made its name by backing eBay. Benchmark took the idea
from there, in classic Silicon Valley start-up style: putting in
some money, tapping its network of technology investors, lining
up board members and getting the story out to the news media.
The first step was to link Mr. Faber with Mr. Jacob, a Benchmark
"entrepreneur-in-residence" looking for his next project. A former
executive of Microsoft Corp. who had sold it his software start-up,
Mr. Jacob was a quintessential Silicon Valley fast-tracker, driving
a Dodge Viper and racing sailboats. By November 1999, its Web site
was up. Just a few weeks later, Keen announced that it had raised
The site listed self-registered experts known as "KeenSpeakers,"
usually under pseudonyms, and showed a per-minute charge for talking
to each. A customer who wanted some advice would register with Keen,
then click on a speaker. Keen's technology would connect them by
telephone -- leaving both sides anonymous -- and start charging
the caller's account, with Keen taking 30% of the fee.
Keen's executives and Benchmark decided to let advice-givers list
themselves freely. "We wanted to position ourselves to be open to
anything and anyone," like eBay Inc., says Dustin Sellers, Keen's
head of customer acquisition. Big names invested, including eBay,
Paul Allen's Vulcan Ventures, Inktomi Corp., Integral Capital Partners
and Cnet Networks Inc.
At first, Keen targeted Web-savvy young people, advertising on
"Friends" and "The X-Files." Mr. Jacob tapped his media contacts,
talking in interviews about the doctors and software engineers who
offered advice via Keen. National publications and shows including
Fortune, BusinessWeek, CNBC and The Wall Street Journal picked up
the theme, calling Keen a "cool company," an "up-and-comer" or "one
"Keen has been pretty consistent in presenting the image of kind
of a homogeneous platform for this exchange of information, and
I guess the media has listened to that message," says Jeff Skoll,
a Keen board member and eBay co-founder.
But employees found it wasn't easy to get people to pay for travel,
business or career advice from anonymous strangers. "The early adopters
were usually people who already had experience talking to people
on the phone and looking for advice, like astrology and psychics,"
says a former Keen marketing employee. "The problem is getting [other]
people to really see the value."
When funding for consumer Web sites started growing scarce about
a year ago, former Keen employees say, Keen went after "the low-hanging
fruit." It acquired 800predict in June 2000, adding its psychics
to the Keen stable.
Neither Keen's Web site nor 800predict's site mentions the acquisition.
Some former Keen employees say top executives told them that if
they were asked about 800predict, they should describe the relationship
as a partnership, not an acquisition. Mr. Jacob denies that and
says Keen didn't hide the purchase.
In the summer of 2000, Keen sent potential investors projections
of revenue growth. "We set numbers out there and beat them, every
time," Mr. Jacob says. In October, as some dot-coms were folding,
Keen raised $42 million from investors to push its total above $100
Some former employees say Keen turned its own workers into a captive
market, frequently asking them to call certain parts of its own
site. For instance, one KeenSpeaker offered callers taped instructions
on how to make squirrel pie, a piece of advice that ended up in
a Fortune magazine article about Keen. The Web site shows that 15
callers have offered an evaluation of that advice-giver under the
site's feedback system. But former workers say that at least eight
of the 15 were actually Keen employees, their screen names show.
One was Mr. Sellers. Another, they say, was Mr. Jacob.
Keen's eighth-highest-ranked expert in the travel and recreation
category is "Dusty Road." But Dusty Road is a screen name of Keen's
Mr. Sellers. Of the nine pieces of feedback Dusty Road has received,
former employees say two are from Mr. Jacob, one is from a brother
of the CEO and one is from "kellynice," the name of Keen's advertising
of the postings.
Mr. Jacob says staff calls to the squirrel-pie KeenSpeaker merely
reflect curiosity. He doesn't think evaluations by anonymous Keen
employees are misleading, asking, "Is their feedback any less valid
than yours?" And they couldn't skew the site's overall numbers,
he says, because the staff numbers only about 150. Some ex-employees
say that while they were asked to make calls in part to check on
speaker quality, they suspect it was also to prevent rarely called
speakers from dropping out.
Speaker listings show that the top five psychics on the Web site
have drawn 15 times as many calls as the top five computer experts.
Mr. Skoll, the director, says that "certainly more than half" of
Keen's business is "in romance and astrology."
Keen is talking about expanding its ties to Linda Georgian, a KeenSpeaker
who was co-host with Dionne Warwick of a Psychic Friends Network
infomercial once common on cable TV. "They'd be my [public-relations]
representative and book me on shows" such as Howard Stern, Ricki
Lake and Jerry Springer, Ms. Georgian says. Keen says it offers
such support to any KeenSpeaker.
Mr. Jacob was asked about psychics in February, and said that Keen
was just as strong in the health, computers and business categories
as in psychics. Asked again last month, he said the company didn't
wish to reveal its business breakdown.
He did identify categories in which revenue is growing fastest.
They are money and career, business, and health and therapy, he
said. He noted that "calls aren't the same thing as revenue."
Ms. Simpson's calls represented revenue. Recalling the events of
late last year -- her boyfriend's departure and her miscarriage
-- the San Antonio woman says she was "losing my mind, losing my
hair. I started drinking all the time." She began calling Keen's
psychics repeatedly, at prices sometimes above $4 a minute.
"They kept telling me that `he loves you, loves you so much, he'll
come back to you,' " she recalls. "It was like an addiction, filling
my head with all this stuff." One psychic, she says, insisted she
stay on the line for an hour while the psychic burned a candle.
It cost her $350.
Finally, one psychic e-mailed her, suggesting she stop wasting
her money and get on with her life. She says she complained to Keen
about all the bad advice from psychics and the money it cost her,
and Keen knocked a couple of hundred dollars off her bill. "They
told me I knew what I was getting into, that this is just for amusement,"
Some KeenSpeakers fret about vulnerable customers. "I see so many
people call with the last penny in their hand, people who spend
their grocery money, their mortgage money, calling a psychic," says
"bimmyj," a former food-service manager who offers counseling on
Keen. Most KeenSpeakers don't want the public to know their real
"DeepWater," a psychic, says some callers are struggling with loneliness,
abuse, poverty or depression. "I see people come in with serious
problems and lose thousands -- I mean thousands -- of dollars,"
he says, asking not to be identified because of his day job in financial
Gail Summer, president of the American Association of Professional
Psychics, says she rejected a request by Keen to encourage its members
to become KeenSpeakers. She says the problems starting to bedevil
the Web site are "just a mirror of what happened in the 900 [phone]
industry. First it was a core group of psychics who were very responsible
and truly believed they were serving. Then the big marketing companies
got involved in the game, and they didn't care who answered the
phone as long the caller was on the line long enough."
Mr. Jacob denies that Keen has such problems. He says he isn't
familiar with Ms. Simpson's case. He says Keen's system of letting
callers rate speakers should flush out any problems.
Keen recently advertised in supermarket tabloids, highlighting
a new toll-free telephone number. It gives Keen access to people
who don't have Internet access. "Love him or leave him?" reads a
large color ad in Star magazine. "Is he the one? Talk to someone
who knows! Keen has the largest selection of the world's best psychics,
tarot readers and spiritual advisers."
Most of Keen's online advertising promotes psychic readings and
runs on sites targeting women, according to a partnership between
NetRatings, Nielsen Media Research and ACNielsen.
Nielsen//NetRatings says Keen users are more likely to have incomes
below $25,000, to have just a grammar-school education, and to be
African-American than are visitors to the average Web site. KeenSpeakers
say the site attracts a significant number of black women, a traditionally
big segment of the psychic-call market. "They're definitely focused
on relationships and psychics," says NetRatings' Mr. Kaldor.
Mr. Jacob says Keen doesn't target African-Americans, lower-income
people or the less-educated. In fact, its customers are more likely
to have graduated from high school or college than the general population,
he says. Advertising in the tabloids is just a "small part" of Keen's
promotion, he adds.
As for sex calls, ComScore, which confidentially monitors the Internet
behavior of more than 1.5 million volunteers, found such traffic
not just in Keen's restricted "adults only" area but also in its
"romance and social" category. That category's top-rated speaker
until recent days was "Liz69," who calls herself an "Experienced,
Gorgeous, Sexy Female!" A woman named Amanda Lewis, who was listed
until recently in the romance and social category as "ahotsexychick,"
said she offered phone sex and had received thousands of calls.
Some Keen employees say they were surprised to be presented with
a contract that read in part: "I understand and agree that my job
responsibilities at Keen.com may require me to access, review, and/or
monitor material that is sexually explicit or of a sexual nature
(`Adult Only Material')."
In a February interview, Mr. Jacob said Keen had never been much
interested in the sex category. "We have a community, and that isn't
the way we want to make our money," he said.
Jay Servidio of Teleteria,
the adult-Web-site provider, says Keen executives approached him
last year and "said they wanted to be connected with someone who
knows the [900-number] business, who knows everybody, and who wouldn't
get them in any lawsuits." He says that he "brought the biggest
players from the phone-sex industry in the world to Keen."
He cites Videosecrets, a big provider of live adult entertainment
to the Web. Online customers already could watch and chat with its
models. Now they can also talk to them on the phone using Keen's
technology. The Keen site shows Videosecrets has received 7,400
calls over the past year.
Mr. Jacob says adult content provides less than 5% of Keen's revenue.
He says the point of Keen's relationship with Jay
Servidio was simply "to understand the adult industry and policies
to determine how to deal with adult on Keen" -- just as Keen tries
to "understand the pitfalls of other industries." Keen and Jay Servidio
are at odds over the continuation of his services.
Mainstream sides of the business are growing quickly, says Mr.
Skoll, the board member. "I think Keen stepped into a situation
where the markets that were most opportune for using this kind of
system were things like 900 numbers," the eBay veteran says. But
Keen management "really sees this as a platform for helping people
exchange information for all sorts of things. And over time, they're
not limiting themselves to romance and astrology."
Keen says its latest offering, providing technical support on Microsoft
Office XP software, has been one of many recent hits. "With the
right momentum, the right growth," Mr. Jacob said in February, "a
company will break the IPO blockade. It would be great to be the
company to do that."
About the Author
Jay Servidio started his career in the telecom industry. Having
worked for MCI, Sprint and AT&T in various sales positions starting
from telemarketing up to national accounts. His ability to manage
accounts always had him in the top 3% of his peers. Wanting more
challenge Jay Servidio started Teleteria in 1994 to resell 900 and
970 numbers and offer custom adult website packages. Teleteria quickly
became the industry leader in the adult design business and Jay
Servidio started teaching classes about the business in NYC and
Toronto monthly which led to guest speaking at trade shows and conferences
all over the world. He has been written up in many periodicals such
as a front page article in The Wall Street Journal. Teleteria also
builds gaming and commercial sites and can be found at www.teleteria.net
or call toll free 1 866 408 8694.
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Servidio founder of Teleteria front page The Wall Street Journal