The idea behind the event was to get Pixelon's name in front of all kinds of people, from stock brokers addicted to classic rock to truck drivers hooked on country music to senior citizens who liked lounge crooning. The event, the thinking went, would provide the perfect opportunity for Pixelon to showcase its unique ability to broadcast high-quality video live over the Internet. Exclusive rights to the archives of iBash would keep the masses coming back to Pixelon's Web site for months after the event.
But it never happened that way. Despite some spectacular performances, Pixelon was unable to broadcast the event live using the very proprietary platform the event was designed to hype. Even worse, the vast majority of footage from the event never made its way online. If Pixelon meant to become an instant success among a public hungry for unique content on the Web, it became only the object of scorn. "This has got to be the most incompetent, pathetic Internet company I've seen to date," one person wrote in an Internet discussion group after unsuccessfully trying to access iBash footage for days. "Pixelon is a perfect example of how new technology should NOT be used," another frustrated viewer wrote.
Worse than being a public relations disaster, iBash turned into a financial black hole that largely sank Pixelon's chances of ever getting off the ground. Socolof, who was fired two months before iBash, received a severance package of $150,000 in cash and stock conservatively valued at $870,000, Paul Ward says. The music veteran, his secretary confirms, went on to take the coveted position of road manager for the Who's North American tour.
For their efforts the Who received $2 million in cash and a generous offering of stock; LeAnn Rimes made $1 million; and the Dixie Chicks got $875,000 and at least $230,000 in stock. All told, iBash cost more than $16.2 million, more than 75 percent of the capital Pixelon had taken in during its year and a half existence. As if it made any difference, the company continued to tell the press the event's price tag was $12 million.
Fuming over the launch debacle, the principals from Advanced Equities were in no mood for negotiations when they arrived at Pixelon on Nov. 12. They had received enough reconnaissance information to know that the situation was dire. The trio's message as they stopped at each executive's office was the same. "It's not a negotiation. It's not a debate. It's not a discussion," one person remembers one of the principals saying. "If we don't have an agreement by the time we leave, you will have a class-action lawsuit on your desk within 48 hours."
Interim CEO Ward called Michael Kelley, a director living in Northern California, and told him to take the next available flight to San Juan Capistrano. He also began tracking down Bart Moore, another board member who was on a horseback riding trip for the day.
It was 10:30 that morning when the investors had their first contact with Stanley, who was clearly unhappy about their visit. Badger, who had been instrumental in sealing the deal with Pixelon, stood up and offered to shake his hand, but Stanley, who appeared out of breath and badly in need of sleep, just walked past the man. Stanley, according to some in attendance, then launched into a long and sometimes vulgar rant about how he would never give up control of the company. He seemed on the edge of violence.
The investors, however, were digging in. "We sold this deal as a $57 million market cap and we're not taking a percentage point less," one of them responded. "If you don't rectify this, you'll never raise money again."
The investors ticked off a plethora of concerns. There was the firing earlier that week of Pixelon's newly appointed CEO, Judy Smith, a former deputy press secretary during the Bush Administration and communications exec at MSNBC. She was probably best known for being Monica Lewinsky's spokeswoman after the intern's affair with President Clinton became public. For months, Stanley had been pushing Smith as a candidate for the CEO spot, but Advanced Equities had resisted. Finally, at a shareholders meeting just two weeks earlier, Stanley had stunned the investors when he stood and with great fanfare introduced Smith as Pixelon's next CEO. Now, just as they were getting used to the idea, they had learned she had been fired. Advanced Equities was also upset about the massive and unauthorized grants of Pixelon stock that grossly diluted current shareholders' holdings.
As the day wore on, Wiskowski and others who wanted to oust Stanley were concerned about whether they had the votes. Of course, Stanley was sure to vote against the measure, as was Snyder. That meant the plan would need the support of either Moore, who was unreachable on his riding trip, or Kelley, who was still in flight from Northern California. In the meantime, they continued to worry that Stanley might get violent if he learned of the plan. They decided to get Stanley into the conference room and that Feldman, the recent Pixelon hire, would keep on eye on the room from outside through a window. If the plotters thought Stanley was about to go ballistic, one of them would gesture to Feldman with a thumbs down, the agreed-upon signal for him to call the police.
