LAS VEGAS, NV—If he had accomplished nothing else during his Keynote of the Year address Tuesday afternoon at Internext 2012, Manwin principal Fabian Thylmann succeeded in setting a record that will probably last a very long time. Of all the keynote addresses that have ever taken place at an adult convention, this one was the most attended, boasting somewhere between 600-800 people gathered at The Joint in the Hard Rock (where the AVN Awards will be held Saturday) to hear the 33-year-old talk a little bit about himself and a lot about his ridiculously successful company, which only yesterday officially announced the latest in a series of high-profile acquisitions—this time, the purchase of Digital Playground.
But Thylmann, who is German and whose English is very good, did accomplish more than just break an attendance record during the hour-long keynote. Rather than play it safe, he addressed head on many of the rumors that people have been talking about ever since he consummated the deal of the century in March 2010 by purchasing Montreal-based Mansef, a company that had grown by leaps and bounds but which was still reviled by many in the industry for operating massively trafficked tube sites supported by unheard of amounts of stolen content.
Thylmann has of course made himself available on a number of webmaster forums, where he has taken the many insults and conspiracy theories thrown his way with an equanimity that has impressed even the harshest critics of Manwin, but this was the first time (and according to him, the last time) he would speak publicly before a crowd of industry professionals… and what a crowd it was. The address had to start about half an hour late just to get all the people into the auditorium and seated. A quick assessment of the makeup of the crowd revealed a very healthy mix of people from both the internet and video sides of the business. Even the organizers of Internext (and AEE) had no clue what sort of turnout to expect, and it is safe to say that everyone was impressed by the result, including Thylmann, who at the outset expressed his surprise at the number of people seating before him.
Introduced by AVN chief executive Theo Sapoutzis, Thylmann came dressed down, wearing a Manwin sweatshirt over a t-shirt. He seated himself perched on a table downstage with a laptop available but preferring to speak extemporaneously in the confident manner of any young CEO of a fabulously rich company. The effect was immediate and clear. The intent here was to present not an intimidating figure but someone approachable and human, whose success had not ruined him. Thylmann was successful in this even as his immense pride in his accomplishments (and abilities) also came through very loud and clear.
But the keynote also had some other obvious goals, including pouring as much cold water as possible on some of the more persistent rumors that have grown about Thylmann himself and the makeup of Manwin. Whether he succeeded in changing hearts and minds is something for each individual to determine for themselves, but his determination to address the issues as specifically as he could was impressive.
Before Thylmann began his prepared talk, however, there was some business to attend to, which he did immediately after thanking his hosts and the audience for coming to hear him speak.
“The second thing I would like to do is welcome the lovely people from triple-x,” he said, gesturing to ICM Registry people in attendance. “They are sitting there, just so you guys know. I guess they have to file an answer [to the Manwin lawsuit] in a few days; they seem to not care about that one. Maybe they just want to listen in. In case they ever want to file a lawsuit against me, this might be a nice venue of course. So if you do want, you can climb on the stage and give me the papers, but if not I’m good with that, too—up to you.”
The back story to that last comment was the rumor circulating Internext that ICM Registry was planning on serving Thylmann with a counter-suit of some sort at the keynote. He presumably wanted to take any such surprise off the table, though no such service ensued. In taking the bull by the horns in such a public way, however, Thylmann demonstrated in real time that he has no qualms about engaging in hand-to-hand combat without resorting to surrogates or hiding behind attorneys—which is always impressive for someone with enough money to purchase a walled existence.
And he was not done setting a similar foundation for his talk.
“I wanted to talk a bit about myself,” he said, “since I know that many of you don’t really know who I am, where I come from, and I thought it’s better if people know more because that always helps clear up some of the weird conspiracies that exist in the industry about myself, and that should make it obvious that I am not the evil person that so many people think I am.”
The last comment elicited some nervous laughter in the audience. Who, after all, begins a talk of this magnitude with the goal of convincing people they are not evil? But in doing just that, Thylmann did with any detractors in the audience what he had done with the “people from dot-xxx”—let them know that he is in control of his own agenda.
For the next 20 minutes or so, Thylmann spoke about his history in the business, starting in 1998 when as a young programmer/entrepreneur at the peach-fuzz age of 18 he founded a stat service that was bought years later by Streamate. He did not stay with the stat service for long, leaving to do freelance coding for companies in Europe and North America. He started other companies, too, but said he made lots of mistakes when he was young as all people do when they start out, enduring bankruptcies and failures that hopefully pave the way for future success.
“I think that helped me quite a bit, actually,” he said. As the new millennia dawned, his fortunes began to turn in earnest.
“Starting in 2001-2, I started to work with John Albright, which some of you may know as the owner of Too Much Media, the people that make NATS [affiliate software],” he said, and then told a brief story about the original inspiration for NATS. “The reason we started NATS, and made quite a few problems for the competition [i.e. Mansion Productions, which makes MPA3] was because their head tech at the time did not want to help me change stuff on the join page, so I decided to write my own software, which I called NATS.” He also said that the NATS name comes from his industry moniker, Nathan, which he used to name the software Nathan’s Affiliate Traffic Software, or NATS. Who knew?
The software was seen by other programs in the industry, people starting asking if they could use it, and in 2003 it was first use by Duke Dollars and then many other programs. Through several upgrades that continue to be rolled out on a regular basis, NATS remains a dominant product to this day.
But that gig also lasted only a few years, after which he sold his stake in the company and left to start consumer-centric websites in adult in Europe. During that time, he said he also did three strategic acquisitions over a few-year period. The deals—“small compared to the ones we do today”—did not involve the need for him to acquire outside financing, which allowed him the freedom to grow the companies and achieve 50 percent growth in a matter of months. That success convinced him that he was ready to move back into the U.S. market, where he had worked previously and knew a lot of people. At the beginning of 2009, he approached the owners of PornHub, which was owned by Mansef, to see if they were interested in selling the notorious tube site.
“I wanted to buy PornHub because I thought that starting in the U.S. with two things I didn’t have—traffic and a site that sells—was going to be hard, so if I had one of the two, it would be easier.”
Not knowing him very well, however, the Mansef people did not want to sell and the deal fell apart, but in October 2009 he spoke with the owners again and by that time they were not only ready to sell the one site but all of their properties, including Brazzers and MoFos. Negotiations continued through the end of the year.
“I asked my wife two days before Christmas 2009 if she was willing to come to Montreal with me to talk with them personally to see if we can get a deal done. She agreed to that, thankfully, and we flew to Montreal. I told her it would be two weeks, but it didn’t work out; we stayed three months, and in March 2010 as many of you know I acquired all the assets of the Mansef group of companies. At the same time I bought WebCams.com, which was a side deal, but it made sense. I used those two deals to redo my whole company structure and basically in March 2010 what is Manwin today was born.”
It should be noted that the specificity with which Thylmann recounted his negotiations and purchase of Mansef, including the role played by his wife, was intended to squash once and for all the rumor that he is just a front man for the company. His next comments were even more direct in that regard.
“Manwin,” he said, repeating the name. “That’s one of these rumors, one of these conspiracy theories, that exist in this industry, especially on GFY, that obviously it is such a similar name that I never actually bought Mansef but I am just a front person helping the owners hide, and to make it seem legit I renamed the company Manwin, which seems like a stupid idea since it is such a similar word, why would that help?”
In fact, he said, the only reason he chose the name Manwin was because Mansef, which owned a tall building in Montreal, was at the tail-end of a two-year negotiation with the city to get approval to put its company logo—a big “M”—on the side of the building. Now, as the new owner of the building he did not want to disrupt the negotiations, so he figured he needed a name that also started with “M”. After asking the Hunting Moon domain broker to suggest some available .com domains, and after getting 25 to pick from he settled on Manwin.
“So that’s how we got the name, and although it might sound like an excuse to some people on GFY, who will find a reason why that cannot be the case and will continue asking questions, that’s how it is; there is nothing more to it.”
Thylmann then explained in somewhat greater detail than anyone might have expected the financial structure of the deal to purchase Mansef. In doing so, the effect was to put into further doubt the claims that he could not have put the deals together himself without financial backing. In short, the deals to buy both Mansef and WebCams.com were self-financed by the sellers to such a degree that Thylmann’s lawyers tried unsuccessfully to talk him out of it, believing he was taking on risk that could not possibly pay off.
“Because of those two deals [taking place] at once, it was a relatively risky thing. If one had failed it would have pulled down the other one.”
Despite his attorneys’ objections, Thylmann was convinced that the opportunity was one he could not possibly pass up, and even more significantly he was equally convinced that his plan would succeed and he would be able to pay off the loans without losing everything. The story revealed another main theme of the talk, that Manwin is the result of not just risk, but a deep understanding of the direction the industry was taking at that time and the sorts of companies that could—if properly managed—take advantage of the changing marketplace.
That confidence also allowed Thylmann to make his next even more ambitious move to seek a funding that would allow him to grow his business even more. Eventually, despite resistance from funds and banks who could not quantify the numbers claimed by his current portfolio of adult businesses, in April 2011 he managed to secure a “clean loan” from a Wall Street fund in the 9 figures, a substantial sum in any industry but staggering in adult entertainment.
“That funding helped to pay down the sellers notes for Mansef and WebCams,” but it also helped fund the Spankwire, Twisties and Playboy deals, and also the Digital Playground acquisition. In other words, with respect to Manwin acquisitions history is still clearly unfolding.
“Although Mike South has posted on his blog that it was done months ago,” added Thylman, “when he first reported it we weren’t even talking about this, and deals always take time, and we finally signed yesterday. We signed in a bar in the casino, so you could have actually seen it.”
With that, Thylmann concluded the personal history part of his talk, which was really a recitation of the creation of Manwin and the manner in which he got to where he is, but as stated it also laid out a clear history that included no other principals but Thylmann himself.
For the next 30 minutes or so, Thylmann spoke about the trends in the industry that inspired him to envision the company that would become Manwin and the reasons why tube sites in particular began to attract so much traffic. Stating clearly that copyright infringement per se is not good for the industry, for Thylmann the devolution of the traditional affiliate model—caused by a glut of affiliates—was already underway when the tubes and large TGPs came along to take market share by serving essentially the same purpose as individual affiliates, though on a much larger scale.
“Major players in the industry like Manwin have built internal teams that do exactly the same thing as affiliates,” he said. “They perfect monetizing traffic.” They also have so much data, he added, that “it is a lot easier for us to test it and to figure out what works and what doesn’t work, and also to do much faster changes to our systems to see how we can optimize each level of our business.”
Thylmann then explained a little of the structure of the company, outlining a system of attentiveness to detail that only a company the size of a Manwin could achieve. As an example, just one part of it is organized into two teams of 50 people, one of which does nothing by manage and monetize specific ad spots on behalf of advertising clients, and the other manages and monetizes Manwin’s ads.
The work on behalf of clients is very important to Manwin, said Thylmann, adding, “The more money you make, the more money we make so why wouldn’t we want to help you.”
Along those same lines, he mentioned the recent launch of a new Manwin product called Legendary Stats, which once it is perfected will “allow anyone to tap into these tools we have to optimize and to rotate ad spots.”
Obviously sensitive to the fact that Manwin’s size alone is a threat to individual affiliates, Thylmann went out of his way to assert his support for affiliates, saying, “I don’t want affiliates to go away. They are very creative. They have built this industry. I want to help them make more money. We want to monetize all sides overall because it only makes us more money.”
Indeed, this part of the keynote seemed dedicated to putting the industry at ease regarding Manwin’s intentions and ambitions, not only with respect to affiliate sales but content protection and production as well, and also the ever-present state of piracy.
“Competition in the market is very important and helps innovation,” he said. “Without competition there is no [innovation] anymore. And I think I’ve shown over the past few months that after I bought the tube sites that I actually do want to make them the way they should be.”
As additional proof of his good intentions, he added that right after buying Mansef he set up meetings with one of the more powerful intellectual property law firms in the country so that he and his team could learn more about the Digital Millennium Copyright Act (DMCA). He also began to change the underlying business model of the tube sites acquired from Mansef to make them more DMCA-compliant. He added, however, that he was not able to change them over as quickly as some (or he) would have liked, explaining that doing so would have driven too many of the site’s surfers to tubes that don’t care about the industry. Doing so slowly still resulted in a decrease in the Alexa ratings of his sites, but the end result was the survival of the sites and a user base that actually converts into paying customers.
It was in many ways a masterful clarification of his management of the old Mansef tube sites intended to cast Manwin as one of the more responsible members of the industry. In fact, he added at one point that yes, they had put ads on the notorious Pirate Bay site, but only to test the traffic, and found that it could actually be converted into sales. The ads have nevertheless been removed from TPB, he added.
Likewise, Thylmann insisted that the tubes have “helped us protect our brands and helped us improve them,” adding that they now “update all members areas once a year.”
On the production side of things, Thylmann said that even though Manwin shoots all content for the internet, he “still believes in premium products,” and pointed to the purchase of the feature-producing studio Digital Playground as an example of that interest, as well as the Playboy deal, which he said was instigated by Playboy shortly after his purchase of Mansef’s assets. They only wanted to sell their online properties, he added, but he was more interested in the TV channels, which they were at first resistant to part with. It took two years, he said, to change their minds.
During the remainder of the keynote, Thylmann spoke in greater detail about the underlying business philosophy of the company and how well it treats its 902 employees spread across six countries, but the most important elements of the speech had been delivered. Thylmann had come to diffuse the many theories swirling around him and Manwin and to put the industry at ease regarding its intentions. In doing so, he could hardly avoid mentioning the scale and ambition of the company, but even the questions asked during the Q&A seemed devoid of any controversy as a result of his openness.
Talking briefly with people afterwards, a few were dubious but most said they were impressed with Thylmann’s performance and expressed a positive impression of the man. Considering the vitriol delivered his way over the past many months, what Thylmann achieved is as much as one could hope to achieve under the circumstances and one would assume that he is pleased as punch with the result.
