Seeking Riches, Partners Turn to Porn
By CONOR DOUGHERTY
Staff Reporter
When childhood friends Greg Clayman and Chuck Tsiamis decided to start a company a few years ago, their immediate goal was to get out of the life insurance business and make lots of money.
After giving up on an idea that would connect financial advisors to their clients via the Internet (“Nobody was ever going to pay for this,” Clayman recalled), the pair moved to other possibilities.
Specifically, porn.
Clayman and Tsiamis say the company they co-founded in 1996, VS Media Inc., is a profitable venture that reaps double-digit margins on about $20 million in annual revenues. The debt-free business employs 37 people who, according to the two owners, make an average of $60,000 a year, receive full-health benefits and have a competitive 401(k) matching program.
“We’re building a real business here,” Tsiamis said in an interview at the company’s Calabasas headquarters. “And we’re building it like an insurance company.”
They’re also quick to mention that VS Media doesn’t actually produce content, it merely distributes adult entertainment to a network of Webmasters who then sell it to their customers a pornographic Amway of sorts.
VS Media works in conjunction with independent producers who hire models to produce live sex-shows, which VS streams to independent Web sites for free. Through those sites, users can engage in a live chat with models, both male and female. They chat for free until they opt for a one-on-one session, at which point the meter starts running at rates set by the individual sites.
VS collects money from the users of the live chat service. They pay Webmasters roughly a third of the revenues and another 27 percent goes to content providers and featured models. Clayman and Tsiamis keep the remaining 40 percent.
Originally from New England and buddies since third grade, Clayman and Tsiamis say their business is premised on providing Webmasters and consumers with what makes money. “If tomorrow something else starts to pay our Webmasters more than sex, we’ll pursue that,” Clayman said.
In building the service beyond the original live chat feature, the two friends pursue already proven concepts. VS Media’s online “sexzine,” for instance, has a popular letters column that bears resemblance to similar columns in Hustler and Penthouse. They’ve inked deals with popular adult film stars and secured the rights to distribute the famed Pamela Anderson and Tommy Lee sex tape, one of the most popular Internet features ever.
“They’re out there with some heavy loaded guns,” said David Schlesinger, vice president of Internet marketing at Vivid Video in Van Nuys. “A content company could be a college kid who think it’s cool to film naked girls. These guys are a real business.”
Schlesinger said Clayman and Tsiamis are “not pornographer types,” rather, “executives who basically run a marketing company.”
Adult-themed eBay
It’s not surprising then, that VS Media’s new “Adult Auction” service, set to launch this week, is more or less a variation of online auction house eBay.
The service, which aims to give users a medium to sell items ranging from sex toys to cars driven by porn stars, is structured almost identically to eBay. VS Media collects a fee that is a percentage of the final sale price. The fee ranges from 30 cents for items between $1 and $10 to $3.30 for items over $200. If the sale takes place on the site of one of VS’ partners, the webmaster receives 5 percent of the sale.
“The auction business model is one of the strongest out there right now,” Clayman said. “(EBay) buries its adult material, and most people don’t go there for that. It’s an untapped marketplace.”
VS Media’s operations have a tinge of dot-com laxness. Employees wear shorts and T-shirts and the break lounge boasts leather couches, video games and ping pong tables. While company walls are dressed in prints from artists like David Hockney, just about all of the computer monitors show naked bodies on top of text that goes beyond the suggestive.
Friends and family are impressed the two have been able to remain in the business for so long. “I thought they’d get out of it and so did they but it’s definitely not short term anymore,” said Keith Ferdinando, a childhood friend of both Clayman and Tsiamis.
Ferdinando said he was offered a partnership but declined because he couldn’t reconcile the racy line of business to his Christian parents. Others have used the VS service to start successful businesses in their own right.
Meni Troupakis, another childhood friend, says he makes about $70,000 a year streaming VS Media’s content to one of the 100 plus Web sites he’s started. Troupakis said he could potentially make more but doesn’t like to work “more than a few hours a week.”
For two years Tsiamis kept the company’s line of business a secret from his mother. As it turned out, Clayman said his mother didn’t mind, but she thought the venture would be short lived. “My mom thought ‘As long as he’s with Chucky he’ll be out of this in a year,'” he said.
While he concedes he’d be a lot richer had he joined VS Media, Ferdinando said he has no regrets about staying in the insurance industry. But that’s not to say he’s not proud of his friends.
“They started the company as a get-rich-quick scheme,” he said. “The interesting thing is that it’s turned into a real business.”
