The Crazy Story of Pixelon

when we get done, won't we. But I thought I would do a spotlight on a particular startup story during the heyday of the dot com bubble, as in when dot com companies were considered the new you know, gold rush. And it's a story about greed, deception, and a spectacular collapse. So let's set the scene. And by the way, this is a story that has been told before, and I'll talk a little bit about a particular depiction of this

later on. Now, in the early nineties, very few people outside of academia and maybe some research facilities, some military facilities, very few people were aware of the Internet. In general. The mainstream was blissfully ignorant of the Internet. People might have made use of an online service provider or OSP or maybe if you were a nerd like me, a

bulletin board system or BBS. But these were kind of windows into tiny walled gardens for the most part, and they only offered a hint of what would be possible with the proliferation of the Internet and the Worldwide Web. As such, no one was really thinking ahead about, you know, monetizing the Internet in a meaningful way, because again, most folks didn't even know the Internet existed, but then came

the Worldwide Web in the early nineties. If you listen to my interview with barrittun Day Thurston, then you know I was skeptical of the Web when I first countered it in college, and I could hardly be blamed because at that point the Web was essentially a bunch of text based pages. Uh these were static pages, so nothing would change on them, and everything kind of looked like it was torn out of a statistics text book. It

was not exciting. It didn't resemble today's web at all, really, But with netscapes, introduction of the Secure Sockets Layer or SSL, and the foundation of companies like eBay and Amazon, the mid nineties saw a glimmer of what the Web could be from a commercial standpoint, if you had to pick a year where things really began to take a turn

towards the commercial would be a pretty decent choice. Shortly after that, folks began to really dream big about the sort of businesses that could be enabled by the Internet and the Web in particular. And behind those companies was the financial sector, And in this case we're talking mostly about venture capitalists and other types of investors who saw this as an opportunity to turn a lot of money

into let's see a metric buttload of money. Yeah, so these are rich people looking to get way more rich. For the most part, there are probably some people who probably couldn't afford to invest, and we're doing it anyway. But yeah, this was these were the money people, right. The potential of the Internet in general and the Web in particular looked like it was gonna be uh the possibility of a huge payout, and for some cases it was. So we started seeing these various money people for ludicrous

amounts of capital into various startups. Now, some of these startups didn't really have any business plan to speak of, So while they were flush with investment capital and they had a whole lot of money to spend. They didn't necessarily have a way to generate significant revenue, and so these were companies that were just kind of coasting on investment cash and not able to support themselves. So they

were living on borrowed time. You know, a lot of them would end up seeking multiple rounds of funding, and they would stay afloat constantly in the in the effort to try to either find a way to generate enough revenue to sustain itself or and this was the preferred thing it still is to this day, get acquired by somebody else and and accept an enormous payout and get like bonkers wealthy. And some of these companies actually did

have ways to generate revenue. They weren't like just completely directionless. However, most of the time we're talking about some relatively modest revenue, and maybe if they were allowed to grow organically, they

could have stuck around. But a lot of investors were encouraging these companies to scale rapidly, to expand their services in their presence well beyond what they could support, and so these companies ran into serious trouble because, you know, scaling increased costs, but not necessarily an equivalent increase in the ability to generate revenue. So really it just meant that it was getting more expensive to run these companies as they were growing larger and larger. But we don't

need to talk about all of that. We all know that the dot com bubble ultimately burst, and it was due to a lot of different factors. But our story focuses on one tech startup in this dot com bubble era, a startup that got a lot of attention and money before things went totally pear shaped, and that startup was called Pixelon. Now, a man calling himself Michael Finna founded Pixelon in n in San Juan Capistrano, California, and the whole purpose of pixelon was to bring streaming video to

the web. In nine Now, let's get some perspective on this. In much of the world that was online was still relying on dial up internet. That meant that people who were using a modem connected to an ordinary telephone line and dialed into an I s P server. Now, the fastest modems on the market in were capable of download speeds of up to fifty six kill a bits per second, not gigabits, not megabits, kill a bits and that was the fastest. Not everyone had the fastest modems. Some of

us were rocking significantly slower ones. And sure there were a few folks who had DSL connections in the late nineties which were significantly faster than dial up modems, and fewer. Still, we're starting to get cable internet connections that was really on the verge of becoming a thing more in the

two thousand's era. By the late nineties, it was pretty darn rare, So it would take time for folks to migrate away from dial up, even as these services were starting to come online, because I mean, obviously rolling out these services across different regions took a lot of time. Now, to look at it another way, YouTube, arguably the best known online video platform, wouldn't debut until two thousand five.

So a web based video platform capable of sending streaming video with a thousand different channels to a user's computer way back in was a pretty darn ambitious goal, not necessarily impossible, but very challenging to pull off. Now, Finny didn't just come into this idea out of the blue. He had founded a quote unquote computer business, which is about as specific as I can get. Because I couldn't find any real details about it, but he called it a re steck r E S T E C. Find

out what it means to me. He leased off a space from this guy named Chuck Halsworth and Finney's clients, we're asking about the possibility of, you know, replaying horse races over a computer, like televised horse races, and that got him into thinking about computer video, and he and Houseworth put a couple of other folks together and they

founded a company called Digital Motion Video. Over the course of about a year, their team made some progress, and that led Finney to think of the next big thing, a one thousand channel internet video platform capable of streaming digital video to users no matter where they were, as long as you know, they had a computer and an Internet connection. So Michael Finney seemed determined and he established himself as the head of pixel on. Uh, it depends

what the title like. The title depends on what source you're looking at. It sounds to me like he was pretty loosey goosey with titles. In some accounts he's referred to as the chairman, and some the CEO and others the chief technology officer, and he worked really hard to get various investors to pour money into this endeavor, and one person whom he tapped to invest in his vision was the owner of an insurance company in southern California,

a guy by the name Paul Ward. Now Ward was fascinated by Finney's pitch, but he didn't feel so great about Michael Finney himself. I mean, he seemed a bit unstable, to put it lightly. This was in the very early days of pixel On, when it was just a small office with a few employees, plus Finney himself and Finny had hired some engineers, but the whole enterprise seemed a little uncertain. Finny definitely seemed like a an eccentric leader.

So Ward was guiding the company toward a round of fundraising, which was aiming for around thirty million dollars. Actually, the accounts on this very too. Some it says as low as twenty eight million, and some it's as high as thirty five million, But at any rate, Ward was getting

a bit nervous about seeking this funding. Meanwhile, Michael Finney was publishing press releases announcing that Pixelon had signed a deal with Paramount Pictures and Paramount would lean on Pixelon to promote Star Trek Insurrection, the next generation film using online video. Star Trek Insurrection wasn't that great of a movie, so I guess that's was kind of a match made in heaven. Okay, the plot will thicken, but before we

thicken the plot, let's take a quick break. Michael Finney didn't come across as someone who could build out the technical infrastructure to make something like an online streaming video network work. So Ward reached out to someone that he had met when a New York insurance company had purchased his California based insurance company. This was a guy named Robert Feldman. Ward asked Feldman to come on board with Pixelon to help make it work from a technical level.

And uh, Feldman had been working in I T and telecommunications for years, So by this time we're into early Pixelon was working on components for streaming video. They would later turn out that a lot of the stuff being worked on wasn't actually Pixelon's own, stuff like the player wasn't Pixelon's. Instead, what they had done was they had re skinned. Essentially, they had disguised a version of other

companies products, namely Microsoft's Windows Media Player. So it had a pixel Pixelon overlay, but it was in fact Windows Media Player underneath, so Pixelon wasn't even a real pixelon product. It was just a you know, just a facade. But Feldman he comes on and he's told his title as Chief Technology Officer, but as I mentioned, the titles were

real Lucy Goosey. Feldman himself said that maybe that was something that Michael Finney was doing intentionally in order to keep people kind of off balance and at odds with each other so that no one could really challenge him as a leader, which should sound a little suss. So Feldman starts to work on establishing the technical components to make Pixelon's business possible. The company built out a server room.

They established a few co located server spaces and other cities because they knew that if they just depended upon one centralized server room, they would not really be able to provide service across the country, Like there would be severe lag and latency issues the further out you got from the main server room, so they started to who

locate servers in other places. There really wasn't any existing infrastructure for the company to rely upon, like there were no other providers out there that already had established server farms where you could lease space in the farms. That that that business didn't really exist yet, so they were kind of making it up as they go along. Now, the company also purchased some extremely expensive video encoding stations, so the idea was that users would generate video, they

would upload it to pixelons servers. Pixelon would then use these very expensive encoding stations to encode the video to make it suitable for streaming, and then visitors to Pixelon's site would be able to watch that video on demand. While the engineers were trying to figure out streaming video, Michael Finna was planning some pretty massive moves. He was also, at least according to Fellman, hurling verbal abuse at various

pixel On employees over the office's p A system. He would get on this p A system and talk about people need to go back behind the shed for a whooping because they weren't um performing up to his expectations. I suppose. He also occasionally would lead mandatory prayer services in the office, again something you don't typically see. Some folks would later liken a few of his activities to that of a cult leader. Now the biggest pr move that he made, and it was one that would really

become the stuff of legends. Was a twelve million dollar party some accounts have it as high as like sixteen and a half million dollars that was held in Las Vegas, Nevada at the MGM Grand Hotel and Casino and it was called the Eye Bash Laura case I Big b I Bash. By the way, this is you know before like iTunes and stuff, So really edgy there, now, y'all. I work for I Heart Radio, and I Heart Radio really knows how to put on a big live music

event like they do one every year. I've never been, but it's this huge event that happens again in Las Vegas, Nevada, and they get huge names on there, so that's not that unusual to me. However, if you look at the list of performers for Pixilons October debut party, like this is their launch party, it really boggles the mind. Let's do a quick rundown of some of the acts that

performed at this insane launch party. Keep in mind we are talking about nine because at least one or two of the acts you might say, well, that doesn't sound like that's that big of a deal. These days you might find that person performing at a county fair. Not not the same in so up, first up we got the Brian sets Or Orchestra, which was desperately clinging on to the fading days of the swing revival fad of

the early to mid nineties dark days. Indeed for some of my friends who some of them actually really got into swing dancing, so they loved it, but the others were like, why did swing come back? Um? There was also Tony Bennett, a familiar face on the Vegas scene. There was Faith Hill, Leanne Rhymes, Natalie Cole. There was Kiss you know, they rock and roll all night and party every day. There was Sugar Ray, which all right, get your jokes in now. And there were the Chicks.

Back then they went by the name Dixie Chicks. They dropped Dixie in twenty twenty. This was also before they raised the ire of certain branches of their fandom when they started to criticize certain American military policies in the early two thousand's. But Happening Things Off was an incredibly

expensive reunion of the Who. Big big deal there, I mean, the Who are like they're there at that upper echelon of rock Star right there, like at Rolling Stones level, and the plan was to live cast this party to a digital billboard in Times Square, New York. Feldman actually requested to be put in charge of making that happen because it meant that he could work on a technical challenge and more importantly, not be around Michael Finney, whom

he found to be extremely abrasive. However, he discovered that the company's tech just couldn't do it, or maybe it was actually on the billboard side of things. They were leasing billboard space from a company and maybe that was where the problem was. In fact, he said that they were not able to figure out what was going wrong.

They just knew it wasn't working. So instead of streaming over the inner Net to this digital billboard, Feldman and some other folks were able to set up a satellite dish on top of a telephone pole and connect that to the digital billboard and use the satellite dish to catch the satellite feed of the party and send that to the billboards. So, in other words, the video being shown on the billboard was not being streamed over the

Internet at all. It was a satellite feed. See pixelon was actually beaming this feed via satellite, so that the offices in California would be able to receive the broadcast and then stream it. It's just that the streaming part

wasn't working. Now. On top of that, the plan was to make video clips of this party the eyebash, available on pixel On the following day, the idea being all right, well, you know, well, we're going to cut this up into performance sized pieces, upload the videos to the service, and

then people can watch it later. However, it turned out that Michael Finney had not set up the proper contracts with the talent to secure the rights to do that, and so apparently everyone except maybe Kiss, denied Pixelon permission to make available their performances at this party. So the twelve million dollar party was largely a bust, at least as far as demonstrating Pixelon's technology. Uh. It might have got a lot of press, but didn't get a lot

of movement on the tech front. Now, towards the end of nine, Pixelon's investors had had enough of Michael Finney as chairman of the company. They felt that he was a detriment to the mission. They thought they still thought that the company had merit, but that Michael Finney was just a destructive force need to be taken care of, so they had decided to force him to step down from his role at the company. Now, according to Robert Feldman,

this is when another really bonkers thing happened. Finn A apparently hired some armed guards to prevent folks from coming into his office. Uh so, really a couple of like big beefy bodyguards who at least according to some accounts, were armed. Now this was just as the investors were supposed to visit the company and convince Michael finn A two step down. And Feldman says that after contacting the Orange County Police Department, a SWAT team showed up and

the guards ended up being dismissed. Like it, it didn't escalate from there, but it did require the SWAT team to arrive. Finn A was on the out skis because the investors told him he had to go, and Feldman and team rushed to lock finn A out of the company systems. Paul Ward would take over s CEO. But y'all, things are about to get even more crazy. See Pixelon was still trying to get services up and running. But just wait, at do we come back from this break,

things are gonna go super nuts. So I said before the break, things were about to go super crazy, fun bonkers, and here we go. It turned out that Michael Finney wasn't Michael Finney. In reality, he was a man named David kim Stanley, or, as one Wired article accidentally put it, Paul Stanley. Paul Stanley is in fact a member of Kiss. But no, it was not Paul Stanley of Kiss who was posing as Michael Finney. It was David kim Stanley. Now David kim Stanley had a history of running cons

and scams. He was a pastor's son. In fact, his grandfather was also a preacher, so he was the son of a preacher man. He had initially focused on tricking parishioners and his father's church out of their money. This graduated into an all out general stock fraud scheme and he was caught in nineteen nine. He was convicted on fifty five counts of fraud related charges, which authorities said amounted to around one point two million dollars of ill

gotten gains. He was sentenced to thirty six years in prison, but the judge suspended all but eight years on the condition that Stanley repay his victims. So Stanley goes to prison for a while. He agrees to this this judgment, he's released from jail, and then when it came time for him to show up and pay restitution, what do you know, he didn't. He skipped town. So nearly a decade after his conviction, he would establish himself in California

under the identity Michael Finney. He recognized pretty early on that there was this frantic rush towards funding businesses that were built on top of the web, and he knew a good opportunity when he saw one. Now, I've said this many times in the past, but whenever you've got yourself something that people do not fully understand, but they're excited about it, it opens up the opportunity for scam

artists to take advantage of people's ignorance and enthusiasm. In the nineties, the web represented exactly that kind of opportunity. We see the same stuff happening today with stuff like cryptocurrency and n f T s. Now, I don't mean to say that all crypto is just a scam, or even that all n f T s are a scam. But what I am saying is that when people are eager to pour their money into something they don't fully comprehend, there will be plenty of other folks who are just

willing to take said money. And Finney was one of those folks. Now, to his credit, he did actually put together a team of engineers who were legitimately trying to make the vision of Pixelon work, even if they ended up leaning very heavily on other companies products to do it. Now, this kind of makes me think of para no nos.

I get the feeling that Elizabeth Holmes had a fairly good idea towards the end, that her vision of a device capable of running more than a hundred medical tests on the tiniest drop of blood wasn't really likely, maybe not even possible. Uh. She certainly didn't know how to make it actually happen, but she did have a whole company filled with engineers who were trying really hard to

make that vision come true. They just couldn't do it. Now, I feel like Pixelon was in a similar place, only maybe Elizabeth Holmes might have been a bit more sincere in her initial effort. Maybe her earliest days were based more on naivete rather than you know, just a cold calculated approach to scamming people out their money. But finn a slash Stanley feels like it was more on the let's get as much cash as we can approach. I

don't know. Maybe Finney believed it too. But eventually authorities in Virginia sussed out that the Michael Finney in California was in fact the David Kim Stanley who was wanted in places like Virginia and Tennessee. So they called him up and they told them they were onto him, and he would subsequently turn himself into the authorities. Now, as you might imagine, this sent some shock waves through Pixelon, even though he had already left Pixelon or been forced

to leave. Finding out that your founder wasn't who he said he was is a bit surprising. I'm pretty sure that at least some people were not surprised that he had been involved in illegal stuff, but they might have been surprised to learn that he wasn't Michael Finney. Now, if Finney had just been an overenthusiastic but naive founder who had made some really questionable calls, Pixelon might have survived. But the revelation and that he was a wanted fugitive

and had a history of running scams. Was obviously a big strike against the company. People were worried that maybe he had stolen money from the company he had apparently been demanding that he be paid out of like the Petty cash fund. Anyway, Pixelon would possibly have recovered from it if he had just been a well meaning but inept founder. But the company also had to face another

big challenge. It turned out that Pixelon owed several different parties a significant amount of money and shares of stock. So there were vendors that had done work on the office space they were owed cash, there were consultants who were promised shares of stock and returned from their work, and Pixelon was facing creditors who just wanted to get paid.

The whole situation was unsustainable. While under other circumstances, the Pixelon team might have been able to get a working system up and running and make it a reliable one and perhaps even become YouTube before YouTube was a thing, it all came crashing down. The investors booted the management team, and Pixelon went into Chapter eleven bankruptcy, effectively disappearing in two thousand one. As for Michael finn a slash David kim Stanley. I'm not entirely certain what happened to him

after he turned himself in. He has a YouTube channel which was established I think in eleven as maybe a dozen video clips in it, some of them dating to the days when he was a piano player and his father's church back in the late eighties. There's also the star Trek promo spot that Pixelon did for Paramount on that channel. But yeah, I don't know how his legal issues ultimately resolved. If you happen to know, you know, give me a shout out. Let me know, because I'm curious.

By the way, if you want to see a dramatic retelling of the events of Pixelon, um not necessarily a accurate retelling, but an entertaining one. National Geographic did a series a couple of years ago called Valley of the Boom, which follows multiple threads during the dot com boom days, and one of them is the story of Michael Finney

and pixel On and Steve's on Blaze Michael Finney. So you should check that out if you're really curious to see a dramatization of this tale, because it's again pretty entertaining. Robert Fellman actually said that he felt that the other threads, the ones that followed Stuff like Netscape, were perhaps more accurate than the pixel on version, but still something to you know, check out if you haven't seen it before.

And that's set for this episode. If you have suggestions for future topics session tackle on tech Stuff, reach out to me. The handle for the show on Twitter is tech Stuff h s W and I'll talk to you again really soon. Text Stuff is an I Heart Radio production. For more podcasts from I Heart Radio, visit the i Heart Radio app, Apple Podcasts, or wherever you listen to your favorite shows