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metalmike
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Sunday, December 14, 2003
Copyright © Las Vegas Review-Journal
The Spam King
Bill Waggoner's rise from pizza delivery boy to pill pusher
By J.M. KALIL
Spam king Bill Waggoner smokes a cigarette during his radio talk show, which he broadcasts out of one of his homes five nights a week. The two-hour program centers on right-wing politics and paranormal phenomena.
Bill Waggoner stands outside Club Paradise, the topless cabaret where he unwinds three nights a week after finishing his Internet radio show. "They treat me like a king," he says of the strippers, bartenders and bouncers inside.
Bill Waggoner testifies in April at the Federal Trade Commission's "Spam Summit" in Washington, D.C., where he is heckled and laughed at by some of his critics.
Guitar slung around his neck, Bill Waggoner talks about his musical aspirations in one of several bedrooms he has soundproofed. Waggoner, the frontman for a local metal band called Missing Since Monday, is converting one of his two homes into a recording studio.
You probably don't know Bill Waggoner, but chances are good he has annoyed the hell out of you.
Waggoner is a single father, a guitar-playing metalhead and the boyfriend of a topless dancer. He's also a raconteur, a staunch political conservative and a conspiracy theorist with his own Internet radio show. A tangle of contradictions, he's a devotee of alternative medicine and all-natural products who smokes two packs a day.
But none of this has anything to do with why Waggoner, a Southern Nevada resident of four years, has gotten on your nerves.
The wide-scale repulsion for Waggoner stems from those persistent and irritating messages he has blasted into untold millions of e-mail in-boxes across the world.
Waggoner is a spam king, one of the new breed of entrepreneurs who makes a living deluging e-mail users with pesky pitches for questionable sex aids, prescription drugs, low-interest mortgages and easy weight-loss plans.
"A lot of people sell scams. I'm not one of them," says Waggoner, an intense 29-year-old with hair that almost reaches his waist. "I'm a legitimate businessman."
But Waggoner isn't just any spam king. He might be the most hated in the world.
Just ask the subculture of anti-spam computer buffs from San Francisco to London who have battled him for five years in the war to stop the wildfirelike spread of spam. This army of tech geeks has a special antipathy for Waggoner because, unlike other spammers, he doesn't hide from his critics.
They say he brazenly defends an unethical and sometimes illegal practice as a legitimate business, confronting anti-spammers head-on in shouting phone calls, in expletive-laced exchanges online and, earlier this year, during a nationally televised government hearing.
"If there was any justice in the world, his nuts would be crushed in a vise," says Roosevelt, Calif., software engineer Ron Guilmette, the operator of the anti-spam Web site Monkeys.com.
But Waggoner believes anti-spammers have got him all wrong. His critics are the real problem, he believes. After all, they're blocking Internet commerce in one of its purest forms.
"The Internet's a hard business," Waggoner says, "especially when you have people, terrorists, trying to destroy you every single second of the day."
However difficult the business might be, the spam king appears to have mastered it. He owns two houses near a golf course, drives a $60,000 sport utility vehicle and will be jetting with his kids to Antigua for a Caribbean Christmas.
The story of how Waggoner became a new economy wizard is a tale of reinvention. It chronicles a young man with a seventh-grade education morphing from broke pizza delivery boy in Cincinnati to prosperous Internet entrepreneur in Las Vegas.
"I guess you could say I'm a self-made man," Waggoner says.
A spammer is born
But before we go further, let's address this pressing question: Do those enlargement pills work?
"I don't know, but people buy them like crazy," Waggoner says, smiling as he draws on a cigarette. "I've never used it. Don't need to, if you known what I mean."
The more important question, of course, is how do you find people actually willing to fork out $30 for a bottle to find out?
Easy. You spam a million people. If only one-tenth of 1 percent respond and make a purchase, presto, you've generated $30,000 in revenue with minimal advertising costs. At his peak, Waggoner was sending out 16 million spams a day. If one recipient out of a thousand makes a $30 purchase, that's $480,000 in revenue.
How did Waggoner become one of the first guys to figure out this simple scheme?
Waggoner, who grew up in Cincinnati, had a blossoming romance with technology by adolescence. His father, an IRS agent now divorced from his nurse mother, gave him a Commodore 64, the $595 home computer that was a fixture in the bedrooms of millions of American adolescents following its introduction in 1982.
A step up in sophistication from the then-wildly popular Atari 2600 video game console, the Commodore 64 could be outfitted with a modem that allowed users to download programs from online forums.
"I'd sit all day on (electronic) bulletin boards and download video games," Waggoner recalls. "That came along and just ruined my whole school career right there."
Waggoner was suspended from school time and time again in junior high school for smoking, missing classes and generally angering teachers. Eventually, he was expelled.
"I didn't really care," Waggoner says one night at a house he is converting into a recording studio. "I was getting into music, and I just wasn't into the whole school thing." He says he was later forced to enroll in high school as a ninth-grader without having completed the two previous years of study. But soon after, he purchased a high school diploma through what he describes as a sham work-study program in Florida.
Waggoner said good riddance to the educators he hated.
"I was like ... I've got a diploma, I'm out of here,' " he says. "And then I went to college."
Despite the questionable nature of his diploma, officials at the University of Cincinnati confirmed that Waggoner was enrolled in classes there from 1991 to 1994. Waggoner acknowledges this period also was not one of profound scholarship. "It was basically three years of taking political science classes and arguing with all the liberals."
By his early 20s, Waggoner's prospects were bleak. His interest in computers had waned during his teenage years in Cincinnati. A college dropout, he was making next to nothing delivering pizzas and fronting a metal band. But then an ailment led him into a business career and, eventually, back to the world of computers.
At 21, Waggoner was diagnosed with rheumatoid arthritis. The medicine doctors prescribed did nothing to quell the severe aches in his hands and shoulders. In desperation, he tried an herbal remedy of grape seed extract and was amazed when the pain subsided almost instantly.
Waggoner immersed himself in the literature of alternative medicine and natural products, making some "discoveries" that most of the scientific community would find dubious.
"I figured out that the government and the big powers that be, these big corporations, are not telling us the truth about what they're putting in our personal care products like your shampoo, your soap, your toothpaste, your deodorants," he says. "So I started exploring this and found out that, toothpaste for example, well, fluoride, is rat poison. Look it up in the dictionary, you'll see it, boom, right there. It's a byproduct of aluminum and they just need to dump it somewhere so they put it in our water and our Coke."
In another conversation, Waggoner says he believes that most toothpastes contain engine degreaser and that popular skin lotions contain antifreeze and brake fluid.
(Waggoner, who smokes like a chimney, is able to reconcile his fear of toxins with his cigarette habit, which he acknowledges must pollute his body more than Prell, Colgate or Right Guard ever could. He sees cigarettes as a necessary evil. "I'm a little high-strung," Waggoner says. "When I started smoking at 14, I started chilling out and stopped getting in fights." Still, he has tried to quit several times by using nicotine gum, but the outcome is always the same: "It works, but then I get addicted to the nicotine gum.")
Waggoner kept his pizzeria job but became a pitchman for Neways, a natural products company that claims most cosmetics and personal care items contain poisonous ingredients. An articulate and persuasive talker, Waggoner paid for airtime at several radio stations across the country to host a lengthy call-in show/advertisement called "Cancer In Your Bathroom," on which he simultaneously shared these views and hawked Neways products.
But he soon discovered he couldn't make enough money to pay for the airtime. Kentucky-based radio station chain Jacor Communications sued Waggoner in 1998 for $14,000 and won a default judgment because he never showed up for court dates, according to court records filed in Hamilton, Ohio.
When he filed for bankruptcy a few months later, the 24-year-old had almost nothing left. In the bankruptcy documents, he listed only $20 cash, a TV, a microwave, some books and his clothing as his assets. But the bankruptcy filing was dismissed.
"He stopped showing up for court dates. He wasn't cooperating with me or his lawyer," says Hank Menninger, the federal trustee assigned to the case.
"I changed my mind about bankruptcy," Waggoner explains. "I decided I was going to work to pay off all my debt, and I did. I got the radio people their 14 grand."
Attempts to confirm this account were not successful. Jacor was purchased in 1998 by Clear Channel Communications, the nation's biggest radio conglomerate. Clear Channel officials last week said they did not know whether the debt had been paid.
Waggoner began looking for a cheaper way to market products. He found it one day in late 1998 while messing around with his mother's personal computer.
"I discovered the Internet," he says.
It was around this time that Web site addresses were first becoming ubiquitous in advertisements and millions of Americans were signing up for their first e-mail accounts.
"It had been a long time since the Commodore 64, since I just dropped it all, but I got pretty involved in computers again. That's how it all started. ... I decided I was going to try and experiment, try and do some bulk e-mail."
He pulled together $1,000 and bought spam software. The first time he sent the program trolling through America Online chat rooms, it returned hundreds of thousands of e-mail addresses.
"This is back in the old days, man, before AOL filtered everything under the sun," Waggoner says.
He then hammered out what would become his first mass e-mail. The pitch was simple: It offered to advertise any product or service to hundreds of thousands of people for a one-time fee of $200.
Immediately after sending it out, he was deluged by clients who wanted him to hawk everything from cartridges for ink jet printers to sex aids. He quit his delivery job, but mass e-mailing was still more work than he could handle alone.
Waggoner convinced the drummer in his metal band to work for him for $300 a week answering the nonstop phone calls. The former pizza delivery boy was suddenly making about $5,000 a month.
"I made a gamble and it worked out," he says. "It was like this whole other world opened up."
At age 24, a spammer was born.
He moved to Nevada a year later.
Spam vs. e-mail marketing
It's almost 2 a.m., and the spam king is having trouble relaxing.
He's constantly moving in his chair, and he can't stop fidgeting with a pack of Marlboro Ultra Lights.
On a typical Friday night, Waggoner would be unwinding among the dancers in the strip club across the street. But tonight, wanting a change in scenery, he's swilling Coors Light inside the Hard Rock Hotel and eyeing scores of beautiful women showing slightly less skin.
The line of questioning is not helping to loosen him up.
"I'm not one of the Top 10 spammers in the world. I'm not," he says.
Although he only stands 5-feet-5 and weighs a measly 130 pounds, Waggoner's glares can be withering. One of the rules is to never refer to "spam." To him, it's "mass e-mail marketing," and he finds it quite disagreeable when you refer to it as anything else. (A similar Waggoner rule: His girlfriend, a voluptuous 38-year-old who works at Club Paradise, is not a stripper or a topless dancer. She is a "showgirl.")
Needless to say, anti-spammers don't follow Waggoner's rules.
The ROKSO, or Register Of Known Spam Operations, is an online most-wanted list of spammers, replete with lengthy dossiers on those considered the worst offenders.
Maintained by a London-based group called The Spamhaus Project, the ROKSO describes Waggoner this way: "A long-time spammer & spammer-for-hire. Waggoner is a former DJ/musician who turned to spamming and moved from Ohio to Las Vegas, Nevada. Like most spammers, Waggoner hides behind a number of aliases. He specializes in spamming for dubious sex-aids and quack weight-loss cures."
Spamhaus, one of the anti-spam groups that has gotten Waggoner kicked off numerous Internet Service Providers, or ISPs, by complaining about his activities through phone calls or letters, maintains that Waggoner is, in fact, "one of the Top 10 spammers in the world."
"That's complete and utter foolishness," Waggoner says, raising his voice to be heard over the din inside the Hard Rock. "I am not a spammer. Illegal scams, that's how I define spam. Those people, what they do is they steal. They lie, they cheat. OK? What I did is I never lied, I never cheated. I never stole anything from anybody. I didn't sell products that were scams. I didn't sell offers that were scams." Most technologists disagree with this definition. They say any unwanted commercial e-mail is spam.
Unlike some of his colleagues, Waggoner acted mostly as a middleman rather than a supplier of the product advertised in his e-mails.
For instance, a company in Arizona paid him flat fees to send out millions of e-mails pitching their penis enlargement pills with a link to the company's Web site and an order form.
In the one exception he admits to, Waggoner sent out e-mails for a topical ointment he had obtained and was distributing. Called Climax Cream, the product was billed as "female Viagra."
When business was good, Waggoner was employing seven of his friends and sending out as many as 16 million e-mails a day hawking sex aids, printer cartridges, mortgages, PlayStation 2s, insurance and "business opportunities."
"When he was going full bore, he was really pushing it," says Spamhaus' John Reid.
Although some of the anti-spammers acknowledge physically threatening Waggoner, a few also express admiration for him as a formidable opponent.
"It's a very short list of spammers who have been able to put together the kind of staying power he has," says Andrew Barrett, executive director of The SpamCon Foundation, a San Francisco-based group that lobbies for anti-spam legislation. "There are those that give it a try thinking that spam is a quick and easy way to make money, and learn quickly that it's not as easy as they thought. They fold and go away.
"Then there's those that tough it out, the guys who are pushing the envelope, who are part of the arms race, guys who can respond to every technological advance in anti-spam software. Waggoner's definitely one of these elite few."
Waggoner declined to discuss how much money he makes, but his lifestyle indicates he's doing just fine. He owns a three-bedroom and a four-bedroom home on the same street near Craig Ranch Golf Course.
The smaller home, which formerly served as the home-base for his business, is being converted into a studio and already has three soundproof rooms. Waggoner drives a new Yukon Denali, a luxury sport utility vehicle. He owns dozens of computers and is the sole financial supporter of his two children.
"I'd much rather be making what he's making," Barrett says.
Mr. Waggoner goes to Washington
Asked to pick a restaurant for a free lunch one Friday afternoon, Waggoner chooses an Applebee's near his home. He orders a chicken Caesar salad and maintains eye contact with the waitress while methodically instructing her that the chicken breast atop the Romaine lettuce should be warm when it's served. When his salad arrives 20 minutes later, he affirms for the worried waitress that it has been prepared correctly. He then takes only three bites before pushing it aside and firing up a cigarette.
Today is Halloween. After Waggoner makes a phone call to arrange his children's trick-or-treat outing, he discusses fatherhood.
Waggoner has custody of an 8-year-old boy and 3-year-old girl but has not stayed in touch with either child's mother. Although he speaks tenderly of the children and says he enjoys being a single father, he largely relies on a nanny to care for them while he parties with his friends at Club Paradise several nights a week, sleeps until almost noon, runs his business and does his radio show.
Asked whether he would allow his children to read the sex aid e-mails he has sent out to millions of computer users, the usually articulate and self-assured Waggoner bristles and, for a moment, has trouble formulating a response.
"A penis enlargement pill, number one," he pauses to draw on his cigarette and exhale a cloud of smoke before starting again. "I never did anything that I would not want my children to see. Any Web site I ever advertised never had anything that was pornographic on it, whatsoever, didn't have any type of foul language on it at all. The things that I would market, even if it was adult-oriented, still would not be offensive."
Anti-spammers dispute this, saying some of Waggoner's e-mails would make almost anyone blush. But the anti-spammers say the kind of material he sent out isn't what distinguishes Waggoner from his peers.
The spam king became a poster-boy target for anti-spammers because of his unwillingness to hide from critics. Specifically, it was that trip Waggoner made to Washington last spring.
"The interesting thing about him is that he is sort of making an attempt to court anti-spammers, to be in public. It's really unusual," says Julian Haight, the owner of SpamCop, a Seattle-based anti-spam service. "A bank robber is not going to go around lobbying for weaker locks on banks. He's just not going to admit he robs banks. Waggoner is interesting because he does go around lobbying for weaker locks."
Haight is referring to Waggoner's appearance in April at the Federal Trade Commission's first "Spam Summit" in Washington, D.C., which drew most of the major players in the spam debate, as well as policy-makers such as Sen. Charles Schumer, D-N.Y.
Several anti-spammers who attended the FTC conference worried that Waggoner would spin government officials and others into sympathizing with spammers as legitimate businessmen. Some even became angry upon learning that Waggoner planned to attend.
"If you're hated more than Saddam Hussein, you don't go to a forum like that and try to push your point," says Spamhaus' Reid.
The anti-spammers' anxiety evaporated once Waggoner showed up.
Waggoner had his hair pulled into a tight ponytail and was clad in a black suit that he accentuated with a burgundy tie. The only person in the room wearing dark glasses, he often dramatically removed the small oval frames each time he spoke and put them back on pointedly when he was finished.
In its coverage, The Washington Post quipped that Waggoner resembled a " `Miami Vice' extra."
Most government hearings are tame affairs where bureaucrats lull one another to sleep with long-winded speeches.
But Waggoner stirred up the crowd and was met with open hostility by defending practices such as using software that trolls the Internet to collect e-mail addresses.
"There were a large number of anti-spam activists on the panel, and especially in the audience," says FTC staff attorney Brian Huseman, one of dozens of government officials who attended. "He was either laughed at or booed by the audience when he spoke."
The loudest laughter and heckling broke out when Waggoner referred to himself as a legitimate marketer, prompting him to taunt the audience.
"Yeah, who's laughing?" he said. "It's funny, huh? Try and make fun of those things? Yeah, real funny."
Anti-spammers say they believe Waggoner inadvertently boosted their cause by making statements that alternately outraged or amused attendees.
"It's just amazing how poorly the guy comes off," says SpamCop's Haight. "He was just completely off the deep end."
Asked whether he regrets appearing at the hearing, Waggoner demurs. He believes he had valid points to make to the audience: that he's a legitimate businessman; that mass e-mail marketing and spam are not synonymous; that anti-spammers are extremists. But he acknowledges that he probably failed in bringing people around to his way of thinking.
"I was nervous about it. I expected the worst, but I went anyway. I just didn't know it was going to get so much national press coverage," he says. He now believes it was valuable as a learning experience.
"The FTC thing made me realize that just because you're right doesn't mean you're going to win."
The Spam King has left the industry
When the spam king hits the air on a recent Friday night, he's in prime attack-dog mode.
Perched in front of a microphone, Waggoner is frenetic. He gulps RC Cola and smokes almost nonstop while rabidly holding forth for his radio audience on everything from child molestation suspect Michael Jackson ("Michael, I don't know what the hell you're thinking") to his loathing for an outspoken country music trio he repeatedly refers to as The Dixie Sluts ("She's just a sloth," Waggoner says of Dixie Chicks singer Natalie Maines).
Broadcast onto the Internet five nights a week, "The Bill Waggoner Show" is a fusion of right-wing political talk and occasional forays into paranormal phenomena and government cover-ups. Imagine Rush Limbaugh taking over UFO freak-conspiracy theorist Art Bell's radio show and you'll get a pretty good idea.
Waggoner bills the show as "politically incorrect extreme talk," but he gets more calls from listeners when his subjects center on the metaphysical rather than the political.
The show is broadcast from one of Waggoner's homes in a living room lighted by 11 lava lamps. Scores of computer cables run across the heavily stained carpet, up the walls, through desks and over a roof beam. The room is decorated with posters for "Scarface" and "The Matrix" movies. From a different poster, a shapely woman in an American flag bikini smiles upon Waggoner as he speaks to his listeners.
Waggoner's off-radio personality is similar to when he's on the air. The chief difference is that when broadcasting, he doesn't feel compelled to justify or apologize for himself.
During tonight's show, he's incensed over the recent Massachusetts court ruling on gay marriage. He and sidekick John Penn opine that homosexuality spurred the decline of the Roman empire and maintain that the Bible expressly forbids gay sex.
"This is a Christian country, like it or not," Waggoner forcefully tells his listeners.
Minutes later, during a break, he slides away from the microphone and, with what appears to be genuine sensitivity, asks the newspaper's photographer and reporter whether either is gay. When both say no, he explains his rather nuanced feelings about homosexuality without prompting, ending his off-air comments with, "I'm not really anti-gay."
Waggoner doesn't typically discuss spam on the show, but he will tonight.
Congress only hours before had passed an anti-spam bill designed to crack down on the most egregious spammers. Besides the annoyance, spam costs the U.S. economy billions of dollars each year in efficiency, both in the wasted time employees spend deleting unwanted e-mails and wasted computer power.
Research groups have estimated this cost at as little as $10 billion and as much as $90 billion. And the problem is getting worse. Experts estimated earlier this year that spam accounted for 40 percent to 75 percent of all e-mail.
Still stinging from his appearance at the FTC summit, Waggoner tells his listeners that his distaste for the anti-spammers who backed the bill almost rivals his aversion to left-wingers. "Anti-spammers and liberals should get together and have a big tea party," he says into his microphone.
He's getting all of this out of his system this night because he's decided he will waste no more energy dueling with the anti-spammers. Waggoner stopped bulk e-mailing a few months ago. He says he now is freelancing as a marketing consultant. Although at first skeptical of the claim, some anti-spamming groups now say evidence suggests Waggoner is telling the truth.
"He's kind of just dropped off the radar for a while," Reid says. "He now seems to be settled in Vegas and wasting a lot of time with his metal band, and we're kind of hoping with his radio show and other endeavors that he's going to tail off with spamming."
Waggoner says that the notoriety he garnered from the FTC conference, as well as the increased threats it brought, gave him serious misgivings about staying in his line of work. "My uncle in California sees a front page article in the L.A. Times quoting me as `the penis pill spammer,' and then the whole family finds out," he recalls, shaking his head. "Man, I don't need that.!
But while Waggoner was considering whether to get out of the game this summer, another development left him with little choice.
In an Aug. 1 segment on the growing problem of spam, ABC's "20/20" aired a snippet of an interview with Waggoner, identifying him as a bulk e-mailer in Las Vegas.
"We definitely boost the economy," Waggoner said in the less than 10-second clip, the only time he appears in the report. "Without us small businesses, there's no America. I mean, it's a perfect example of how our system works."
Less than a week later, Cox Communications notified him without explanation that it would no longer provide him with Internet service.
"I was spending four to five grand a month with Cox," says Waggoner, who had 10 high-speed, commercial-grade modems from Cox in his home. "They just kicked me off because I'm supposedly a notorious spammer."
Stephanie Stallworth, a spokeswoman for Cox, confirms that Waggoner is a former commercial customer of the service provider, which would enable him to process a higher volume of Internet activity. Cox's privacy guidelines prohibit her from saying anything else about Waggoner's history with the company.
"I have a tremendous amount of information about him, but I can't share that with you," she says.
Speaking generally, Stallworth says Cox goes to great lengths to warn customers who are violating the company's usage policy, which bans spamming, before terminating service.
"If it (termination) were to happen, rest assured that what they were doing was extremely offensive or something that had placed the system or network in jeopardy, which puts other customers in jeopardy," Stallworth says. "When customers start complaining to us in droves about spam, it typically leads back to a central source. And it's at that point that companies like Cox will work to identify that source and make sure their activities are ceased. ... We certainly would take back all of our equipment also."
While Waggoner strums a guitar in one of his soundproof rooms, he reflects on whether he misses the business.
"I made a lot of money, but my life is a little calmer now," he says. "It's not like I don't have anything else to do. I'm just going to concentrate now on raising my family and working on my music and doing the show. Because with my past, I think a career in politics is out."
You can't unring a bell
So what makes a man seek out such a role? What compels him to go to a government hearing to become the face of spam, a quasi-spokesman for a group that vies with IRS agents for being possibly the most hated segment of American society?
The answer is simple. Waggoner had little to lose. He already had placed himself in the cross hairs of the anti-spammers.
In his first e-mail, Waggoner made a gross mistake that he has spent years regretting. He naively surrendered what is possibly the most valuable asset of spammers, something they spend unbelievable amounts of time and energy protecting.
Anonymity.
He included his name and phone number in the pitch that he sent out to nearly 1 million e-mail users. During the next few months, he would receive hundreds of complaining phone calls from e-mail users angry about how he was using the Internet. A few of them demanded to be removed from Waggoner's e-mail list. The majority threatened him.
"People would be calling me up 24 hours a day and telling me that they were going to ... come and murder my kids," Waggoner says. "People (were) calling all night long, just hanging up, y'know, saying everything you could possibly imagine. It was unbelievable. ... My girlfriend, she wouldn't even go outside."
Waggoner's early misstep has made it relatively easy for anti-spammers to track his movements and compile dossiers on him and his work, such as the one found on the ROKSO list.
Waggoner acknowledges the gravity of his mistake. If he hadn't made the error, he would never have become a notorious spammer, and thus, an invitation to the FTC conference would have been unlikely. And he still might be spamming now.
"Oh, man, if I would have not done that, we wouldn't be talking right now," Waggoner says. "You wouldn't even know my name."
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