Company Loves Misery


Despair Inc. is one dot-com venture whose prosperity depends on others' abject failures. Losers, underachievers, pessimists, cynics, nihilists -- this is the Web site for you. Massive layoffs, the burst of the Internet bubble, the crash of the Nasdaq -- this is the stuff that rings Despair's cash register.

The site offers posters ("Not All Pain is Gain" and "Failure -- When Your Best Isn't Good Enough") and plaques ("Below and Beneath the Call of Duty"). For thirsty down-and-out souls, there's the Pessimist's Mug, which "makes everything taste bitter." For company incompetents and screwups, there are the black T-shirts and baseball hats, with "another dissatisfied customer" written in white. "Clothes may make the man, but these clothes make the man unhappy," declares Despair.

But the hands-down best-seller in Despair.com's 100-plus product line is the $14.95 Dotcom Meltdown Calendar, which helps you keep track of all the horrible things that went wrong last year. "The Official Requiem for the Dotcom Dream," declares the Web-site ad, "there's no better way to take all the fun out of 2001." CEO Justin Sewell, 29, who co-founded Despair with his twin brother Jef and 41-year-old friend E. Lawrence "Larry" Kersten, says the calendar is the perfect Christmas gift. After all, why not "give a gift that keeps on hurting?" as the ad puts it. The company has sold 45,000 copies.

"PRETTY DEMORALIZED." With the economy in a swoon and dot-coms laying folks off left and right, business is booming, Despair.com's owners claim. The privately held, Dallas-based venture says it had 1.6 million hits on its site in March. It generated $1 million in sales in 2000 and thinks 2001 will be even better -- maybe double the sales. Despair claims it's in the black, figuratively and literally.

After all, in these times, selling dark humor makes plenty of marketing sense. "Clearly there's a place for such an off-the-wall concept," says Kurt Barnard, a retail trends and consumer spending expert. "Everybody has reason for despair," explains co-founder Kersten.

These entrepreneurs know whereof they speak. In the late '90s, the Sewell brothers and Kersten put in 80-hour weeks at a Dallas-based Internet service provider only to feel "like a subclass." They were passed over for a promised equity stake, says Justin. "We were pretty demoralized," he says. Just then, the three stumbled onto a motivational-products catalog and "we jokingly made our own," says Justin. They designed a few mock "demotivational" posters. Justin pinned them to his cubicle's walls. Their co-workers' reaction: "Can we buy those?"

So the three left their Net slave world -- just after the ISP was bought out. They invested $15,000 each, raised $75,000 from family and friends, and stocked up on inventory, launching Despair.com in September, 1998. "We didn't have a lot of entrepreneurial ambition and confidence, but we figured it would be funny to lose [this business] and be left with those posters saying 'Losers,'" says Justin.

LOWERING EXPECTATIONS. For kicks, the entrepreneurs came up with their mission statement, which is still posted on the site: "...A company that would create dissatisfied customers in the process of exploiting demoralized employees while selling overpriced and ineffective products to remediate the problems caused by the very process itself. A company that would become the bold embodiment of every shortcoming rife within corporate America..."

But the founders failed at failure. Soon after the site went live, Yahoo! (YHOO) linked to it. In no time, Despair.com was receiving 250 orders a day. Business has quadrupled since then, and Justin thinks times have never been better for giving miserable people something to laugh about. They seem to have struck a nerve. "There are a greater number of people who are feeling disappointed and disregarded by their employers today [because of massive layoffs]," says Harvey Hornstein, a workplace psychology expert at Columbia University. "Instead of creating despair, they would probably have a good effect -- people would laugh at them."

Despair.com offers an online catalog and a toll-free number (877-DESPAIR). The site also has a 10,000-postings-strong "wailing list" offering company news, feedback (like angry voice mail from someone who didn't get a joke), and occasional discounts for regular customers.

While more than $1 million in annual sales isn't a bad start, Despair.com isn't yet in the same league with motivational products venture Successories Inc. (SCES), which rang up $50 million last year. But who knows how bad things can get? While Successories.com promotes teamwork, attitude, effort, and innovation, Despair.com offers "teambreakers," "pessimistic visions," and "idiotic insights." Successories' slogan: "Our goal is simple...to help you reach yours." Despair.com? "We increase success by lowering expectations," states Kersten.

SADLY, THE BEST. The difference between the sites isn't as profound as you might think. "A product is not as important as the gesture," says Hornstein. For example, he notes that if a company does everything wrong, yet gives its employees gifts truly designed to motivate them, such efforts may just breed cynicism. Sometimes, the best way to motivate people is to give them a reason to laugh at their predicament.

So Despair's goal is to build a brand tailored to cynics everywhere. "I think we plan to stick with our model of profiting from misery, at least until someone solves the problem of human unhappiness," proclaims Justin Sewell. "At that point, I guess we'd have to find something else to do."

The entrepreneurs hope Despair -- and despair -- don't disappear for a while. After all, they enjoy what they're doing, for a change. Every time they get together for lunch to brainstorm on new products, "we fall over laughing," says Kersten. But that's not to say there's nothing to fret over. The breakup of the gang, for one: These days, the three usually come up with new products via e-mail, since Jef moved to Austin last year and started a company providing sales support. Meanwhile, Kersten works full-time at another company. And Justin's wife recently had a baby.

"I was the face of despair my whole life," young Kersten muses. Now, he's quite content. For the Sewell brothers -- college dropouts, unhappy in their prior jobs -- Despair.com's success remains a baffling blast of hope and optimism. "It's the best job I've ever had, sadly," admits Justin. "Creating products that address just the reality of failure and find humor in it -- it can be kind of uplifting." A poster on the site claims: "You'll Always Miss 100% of the Shots You Don't Take and, Statistically Speaking, 99% of the Shots You Do." The three managed to hit the 1%. Despair: what dreams are made of in the age of the dot-com meltdown. By Olga Kharif in New York


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