Fresh Look For Rotten Tomatoes / Help from college buddies elevates movie-rating Web site beyond hobby status

Image 1 of / 3 Caption Close Fresh Look For Rotten Tomatoes / Help from college buddies elevates movie-rating Web site beyond hobby status 1 / 3 Back to Gallery

There are some people, of course, who are perfectly comfortable picking a movie to watch by whether it gets a thumbs-up or a thumbs-down, or by the body language of a little man in a little chair.

But others may want a broader sampling of critical opinion before deciding to shell out $8 on the latest from Hollywood. And that's where Rotten Tomatoes comes in.

"We basically make it easy for people to decide what movies they want to see," said Paul Lee, who heads up marketing for this small Internet startup in Emeryville. "When you have a snapshot of 50 or 60 reviews, it's a pretty good resource."

What Rotten Tomatoes (www.rottentomatoes.com) does is gather reviews from dozens of different print and online critics and divide their opinions into two camps: "fresh" and "rotten."

Along with brief excerpts from each review and links to the full text, the site also uses its "Tomatometer" to come up with a consensus ranking of how the critical winds are blowing.

MBA BY THE BAY: See how an MBA could change your life with SFGATE's interactive directory of Bay Area programs.

For example, the Julia Roberts hit "Erin Brockovich" scored a "fresh reading" of 85 percent -- meaning that most of the reviews surveyed found it a winner -- while the Brian De Palma dud "Mission to Mars" produced a fresh reading of just 23 percent.

A pretty cool idea. But whether this idea can translate into a profitable business -- as the young University of California at Berkeley college chums behind the venture are hoping -- may be another matter altogether.

Rotten Tomatoes began as a hobby for Senh Duong, 26, who had recently launched a Web-design firm called Design Reactor with two UC Berkeley pals -- Patrick Lee, 26, and Stephen Wang, 24.

Between moneymaking gigs producing "official" Web sites for movies and TV shows, Duong would indulge his passion for film by prowling around the Web in search of new reviews.

It was while hunting for word of Jackie Chan's latest movie that he realized how much easier it would be if reviews from multiple sources could be compiled in a single location.

After working during off-hours sometimes until 4 a.m., Duong took the wraps off Rotten Tomatoes in August 1998. Within days, the site was spotlighted by both Yahoo and Netscape as a must-see destination.

"Immediately," Duong recalled, "traffic went up to a thousand hits a day."

This only encouraged him to put more energy into his pet project, which did not go over big with his colleagues at Design Reactor.

"We had plenty of discussions," said Wang. "I mean, we all had hobby sites, but Senh was spending a lot of time with his."

Eventually, Duong left the firm to pursue film classes at a community college in Sacramento. But he still kept Rotten Tomatoes going, and the site continued to draw a growing number of visitors.

The latest "Star Wars" movie boosted traffic considerably last summer, as Web surfers flocked to Rotten Tomatoes to see what critics were saying. The same thing happened with "The Blair Witch Project."

"By this time," Duong said, "it went from 10,000 users every day to 30,000."

This success wasn't lost on his buddies back at Design Reactor. Because Rotten Tomatoes was being hosted on their computer servers, they couldn't help but notice that traffic was surging at their friend's little upstart of a movie site.

As it happened, the other Design Reactor founders, Wang and Lee, were by this time growing a little bored with their bread-and-butter business designing Web sites for the likes of "Who Wants to Be a Millionaire" and Hong Kong action star Jet Li. They were looking for new challenges.

It didn't take long for the partners to realize how much fun it could be for them to pool their talents and really make Duong's Rotten Tomatoes take off.

For his part, Duong liked the idea. "We did Design Reactor together," he said. "I knew how well we could execute."

As a first step, the partners contacted a small San Jose design firm called Smart Medium and cut a deal in January for the latter to take on Design Reactor's name and existing client base. To maintain continuity with their former customers, the Rotten Tomatoes crew purchased a 40-percent stake in Smart Medium.

With their design customers taken care of, the guys put all their creative energy into the movie site. They launched their new business on April 1.

Momentum was clearly on their side. Under Duong, Rotten Tomatoes was attracting 1 million visitors a month by December. In January, that total doubled to 2.1 million and jumped to 3.7 million in February. By last month, the site was drawing 7 million monthly visitors.

"This month," said Patrick Lee, "we expect to break 10 million."

Now comes the tough part: How does Rotten Tomatoes turn all that traffic into nice, tidy profit?

"For a site like this, an entertainment content site, it's not clear what the business model is," said David Card, an analyst with Jupiter Communications in New York.

The guys at Rotten Tomatoes don't seem sure, either. But Patrick Lee, the company's chief executive, hopes revenues can be found in any of three ways:

-- Advertising.

-- Commissions from related e-commerce deals.

-- Licensing of the Tomatometer and other Rotten Tomatoes features.

Jupiter's Card was quick to point out that few online operations can support themselves solely from ads or licensing.

And he wasn't sure if Rotten Tomatoes would be able to cut deals with sellers of videos and other movie-related goods whereby the site would get a piece of the action for helping users make purchases.

Online ticket sales would be a natural extension, Card noted, but that market is already dominated by major players like Ticketmaster and Moviefone. "I don't think they can crack that," he said.

Nevertheless, Andrew Hoppin, chief executive of New York's Sports Futures, an online gaming venture, said he invested $100,000 in Rotten Tomatoes just this month.

"I have a lot of faith in Patrick and his team," he said. "They did some design work for us, and they really seem to get what will be appealing to people."

Hoppin isn't too bothered by questions of how Rotten Tomatoes will turn a buck. Perhaps the fact that his own company is nowhere near being profitable has something to do with it.

"I assume there will be subsequent rounds of capital that will be required" for Rotten Tomatoes, he said. "I haven't dug into their financial model in great depth."

However they do it, the Rotten Tomatoes crew will have to come up with something soon. Patrick Lee estimated that it costs the 20- employee company about $100,000 a month to operate.

With $1 million in initial funding from investors, he said Rotten Tomatoes essentially now has six months to live before running out of cash.

Not that an air of urgency hangs over the firm. The mood in the office is decidedly laid-back, and a clubhouse atmosphere prevails. "Star Wars" and "Godzilla" toys adorn cubicles, and when the gang needs to blow off steam, they get together for networked computer games.

"I don't think anyone has any fear," Patrick Lee said. "When we started Design Reactor, nobody was really worried."

Besides, considering that just about everyone in the office is still under 30, it's not as though this is the end of the line for anybody.

"Worst-case scenario," Patrick Lee said with a cocky smile, "we just start another company."