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The future of Web? Two men bound together in the past, future

November 22, 1997

NEW YORK (AP) _ In the yearbook, James J. Cramer and Martin Nisenholtz are separated by just a few pages.

Cramer _ the Springfield Township High School student body president, editor of the student newspaper, a big man on campus. Nisenholtz _ a quieter guy who made silk-screens and Super 8 movies, co-managed the baseball team and played tennis.

The year was 1973. Nixon was president, ``M-A-S-H″ was a hit, and the Internet was just a research project of the military and academia.

The two boys graduated and went their separate ways. But in the next quarter century, those ways led to center stage in cyberspace.

Today, Cramer is a well-known writer, financial manager and co-chairman of TheStreet.Com, a site on the World Wide Web that churns out financial news, analyses and Cramer’s blunt talk about the markets.

Nisenholtz is president of The New York Times Electronic Media Co., the man in charge of creating the digital doppelganger to America’s paper of record.

Two men, from the same suburban Philadelphia roots, both players in one of the major stories of their time: the development of that 1973 research project into a mass medium of incredible reach.

The difference is how they plan to pay for it. Cramer charges admission to TheStreet.Com, making it a toll road on the information superhighway; Nisenholtz lets advertisers foot the bill, and exploits information that comes from visitors to his site.

The story of these two men is the story of the Internet, circa 1997: How do you make money from it?


Cramer’s path to TheStreet.Com has been a winding road.

He entered Harvard College in the fall of 1973, started at the Harvard Crimson in his freshman year and moved up to president as a junior. Nicholas Lemann, then Cramer’s editor, says Cramer was ``kind of shy.″

``He was conscious of being at a lower economic level than other kids,″ says Lemann, now a national correspondent for the Atlantic Monthly. ``His family was very against him going into journalism.″ They wanted him to make more money.

After graduation in 1977, Cramer knocked around the country, living hand-to-mouth as a reporter in Florida and California. Finally, fed up with being broke, Cramer enrolled in Harvard Law School in 1981, paying with loans and scholarships.

There, through mutual friends, Cramer met Martin Peretz, owner and editor-in-chief of the New Republic.

Peretz wanted Cramer to write a book review, and left many messages on his answering machine (he was busy helping Alan Dershowitz defend Claus von Bulow, Cramer says).

Cramer, who had followed the stock market since the fifth grade, put a different stock tip on his outgoing message each week. Peretz followed the recorded advice, and when they finally met, Peretz handed the stunned law student a check for $500,000 to invest.

Within two years, Cramer had tripled the money.

``Jim has one of the fastest intelligences on the street,″ says Peretz. ``He’s also very deep. He sees things deeply.″

After graduation in 1984, Cramer moved to Wall Street. During the go-go 1980s, Cramer proved his skill first at Goldman Sachs, and then at his own firm, Cramer, Berkowitz & Co., which he founded in 1987.

By 1990, Cramer was a well-known trader and financial writer, having appeared in GQ and Time. He helped Dow Jones start SmartMoney magazine. In June 1996, while vacationing with Peretz on Cape Cod, Mass., the two men agreed to invest $1.5 million each to launch TheStreet.Com.


Where Cramer remembers Nisenholtz as his best friend in high school, Nisenholtz says they only ran in the same crowd. Cramer was a practical guy; Nisenholtz was more inclined toward theory, says Sheldon Polsky, a classmate who is now a video designer at Merrill Lynch Video Networks.

``They were both communicators in their own way,″ says Polsky. ``Jim on the people side and Martin in a much more artistic way.″

On a Ph.D. track in 1979, Nisenholtz took a research position at New York University to develop videotext, an early technology similar to America Online that used television signals instead of computers. In 1983, he joined advertising giant Ogilvy & Mather to do interactive marketing, using videotext and, later, personal computers.

``There have to be people who are first,″ says Nisenholtz. ``Many of the concepts that people take for granted today, we developed in the early to mid-1980s.″

Nisenholtz draws comparisons between his work and the Renaissance. ``I was sitting there telling people that the Earth was round and they were telling me it was flat.

``Well,″ he says, ``the Earth is round.″


Nisenholtz took the helm of the Times’ Web site in 1995, charged with extending the Times’ reach into cyberspace.

The sprawling site uses much of the daily content of the newspaper, and its 50-member staff updates it every 10 minutes with breaking news from The Associated Press. The Times, as ever, is the Times, virtual or real; the overall impression is of stuffing a 12-pound paper through a phone line.

And it’s free. Users fork over their age, ZIP code, income and e-mail addresses; that information, Nisenholtz says, is the stuff of the largest database on the Web, Nisenholtz says. About 2.1 million people and their reading habits are cataloged for the Times.

TheStreet.Com, by contrast, has about 5,000 users who pay $9.95 a month for access to Cramer’s brain and the reports of his 20 staffers.

Aimed at small investors, the site covers financial doings with the verve of sports writing. Cramer’s column, ``Wrong!″, is a daily dispatch from the front, and considered a main selling point of the site.

It’s tempting to portray the two sites _ if only symbolically _ as David and Goliath. TheStreet.Com is backed by $3 million from two men; the Times is a huge media corporation. But this is far from the original vision of the Web, invented in 1993.

Early Web sites were primitive, cheap to produce, easy to distribute and often personal to the point of banality. Profit rarely drove the first Web designers, which was probably a good thing. The market for pictures of other people’s pets is surprisingly small.

But in 1997 all that has changed, and the Web is a commercial market with $250 million in advertising last year and almost twice that expected this year.

Bill Bass, an analyst for Forrester Research in Cambridge, Mass., predicts those amounts will swell to $5.6 billion in 2001, the year he expects Web-based companies to be returning regular profits.

Still, $5.6 billion in 2001 is a ``drop in the bucket,″ Bass says. Total advertising across all media for 1997 will tally about $180 billion, enough to buy 18 billion subscriptions to TheStreet.Com.

OK. It’s been established that if you build a site, people will come. But it’s not so clear whether enough people will pay admission.

Bass does not expect TheStreet.Com to last, saying many sites offer similar financial news for free, he says. ``It’s economics,″ he says. ``If you want to charge for air, you’ve got to figure out a way to keep the trees from pumping it out for free.″


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