As a player in the online game Wagner was certainly not lackluster. Indeed, he demonstrated a great deal of energy and flair. Nevertheless he lost. How come? "I got shot by a sniper from the sidelines," he says simply.

Wagner's story, as he tells it, is always exciting—if a little self-aggrandizing—and not without some persuasive power. Above all, it is the story of a visionary iconoclast who sought to shake up an industry that has all too often failed its users.

Beginning with M.A.I.D.
Few in the U.S. knew ofWagner prior to his daring purchase of Dialog in 1997. In the U.K., by contrast, he was already a household name. He was portrayed in the media as a flamboyant young entrepreneur who, at the time of his IPO, outraged London's financial institutions by appearing in a Donald Duck vest.

Wagner made his industry debut in 1984 at age 21, when he founded the online company he christened M.A.I.D. (Market Analysis and Information Database). Youth aside, this was no mean feat. As industry observer Martin White points out: "Until then, online information in the U.K. was very news-oriented, but Dan began offering much more market analysis information with a lot of added value. So M.A.I.D. was a very visionary concept, and the way Dan sold it was spot on. As such, he was embraced as someone who was going to be a British savior in an industry dominated by Americans."

Certainly M.A.I.D. was soon posing a threat to established local players like Reuters Textline and FT Profile, the online business of the Financial Times. This achievement was aided by Wagner's ability to attract vivid media coverage—which often succeeded in annoying his competitors in the process.

In 1992, however, Wagner made what he now believes was his first mistake, one that was to return to haunt him some years later. Angry that FT Profile had consistently refused to allow him to distribute content from the Financial Times, he complained to the Monopolies and Mergers Commission (MMC), the U.K. antitrust authority.

Wagner still believes he had a genuine case, but now characterizes his complaint as a pointless gesture that achieved little more than to earn him a powerful enemy. Although the MMC agreed that the FT was acting in an anti-competitive manner, Wagner claims, the then president of the Board of Trade, Michael Heseltine, refused to take action. "It was politics," he says. "Heseltine threw the MMC report out because at the time the Conservative Government was in a head-to-head with the Financial Times, and they needed the support of the FT more than they cared about M.A.I.D."

But if complaining to the MMC was to unnecessarily anger a competitor, the decision in 1994 to float M.A.I.D. on the stock exchange was to place a gun in his enemies' hands, he says. "What I failed to realize—which I should have known—is that the people who control the market perception of public companies are the media and the analysts. And when it comes to the U.K. media the two most powerful in this area are Reuters and the FT—two companies that I had riled badly over the years. So it was only a matter of time before they would be able to get their own back."

Thus it was, he says, that when later he was struggling to turn Dialog around, the Financial Times chose to get its own back by writing an editorial in which his new company was given the damning sobriquet "Dial-a-Dog." The insult still visibly rankles and was, he says, the catalyst to his eventual decision to throw in the towel at Dialog. "If we had still been a private company it wouldn't have mattered. But as a public company the comment put us into a sentiment-driven downward spiral."

But that was later. During the early, heady days of M.A.I.D., Wagner seemed unstoppable and increasingly wealthy. After his IPO, his personal fortune climbed to over $62 million, and he began to demonstrate an insatiable appetite for fast cars and increasingly controversial press briefings. He made ever more grandiose claims about M.A.I.D. and dangerously taunted his competitors.

When he wasn't talking to the press he was answering calls from lovelorn suitors desperate to buy M.A.I.D. "We were being courted by everybody," he boasts. "Dun & Bradstreet offered $5 million for the company back in 1986, when we had only been going for a year and a half. Later, Reed Elsevier approached us, and Reuters pursued us for some time. But I always pushed them off because I was passionate and visionary about where my business was going."

A Bit Naive
Some might argue that Wagner's fundamental mistake was his November 1997 purchase of Dialog. While initially seemingto confirm him as the British savior some had predicted, many now portray it as his nemesis. Not so, says Wagner. "It was simply a very good idea that had the rug pulled out from underneath it."

Certainly it didn't help that he had to borrow $260 million in order to pay the $420 million price tag Knight Ridder demanded. Does he feel he overpaid? "We paid a full price," he answers. "But we had to because we were not a good covenant. Wewere a dark horse that had to raise money from the markets, so we had to pay a premium." He adds with a bitter laugh: "Actually, the total cost was $460 million. We had to pay $40 million in fees."

Did that $40 million buy him good advice? "I don't want to criticize," he says tentatively, his eyes darting briefly toward the tape recorder on the desk. But then he sits back with a smile. "Well I don't supposeit really matters now. No, I don't think we got good advice. We were advised not to borrow all the money in high-yield debt [aka junk bonds], but also to take some 5-year senior debt. In my view we should have taken it all in high yield. While we would have paid more interest, we wouldn't have had to worry about it for 10 years—so long as we kept on paying."

By opting to take some senior debt, he adds, he left himself dangerously vulnerable to market sentiment and put himself in the cross hairs of the sniper. The more so, he adds, since his advisors failed to negotiate a tight contract. "In going for seniordebt we should have made damn sure we closed all the loopholes, but I guess I was a bit naive, and that my advisers were equally naive—or maybe they hadn't done this sort of thing before. Anyway, since the contract wasn't very tight, when the markets turned against us the banks were able to use all sorts of levers on me and subject me to constant harassment. By the end they were driving me completely bananas."

The point, emphasizes Wagner, is that there was no business reason for his failureat Dialog. He was simply a victim of negative sentiment created by hostile press commentary—much of it generated by his competitors—and a consequent loss of nerveon the part of the banks.

Asleep at the Desk
But the deal was done, and Wagner embarked on the challenge of turning Dialog around. In doing so, however, he immediately attracted the wrath of the online industry.

"In terms of employees, his handling of the move from California to North Carolina was particularly notorious," comments one U.S.-based observer. "Not only did Dialog lose much of its valuable and knowledgeable staff in the relocation, but longtime employees who couldn't, or wouldn't, move lost their severance benefits."

On the details of the layoffs, Wagner is uncharacteristically vague. "I really don't think it's likely that anyone lost their severance money. Not in California. California is extremely good for the employee and extremely bad for the employer."

On the principle, however, he is robust in his own defense. When he took over the company, he says, he found it in an appalling condition. "If you had walked into Dialog's head office at that time you wouldn't have believed it. It was like the company was dead, and many of the employees were ineffectual and lazy," he says forcefully. "I reduced the head count from 1,400 to about 1,000, but if I had my time again I would be far more aggressive, and I would get rid of a lot more people on day one than I did."

It was so bad, adds Wagner, that some of the staff were literally asleep on the job. He recounts how, for instance, he attended a human resources meeting in which a manager was complaining that he had to constantly go up to the desk of one of the employees and shake him awake. "I sat there and thought, 'Why the hell hasn't this guy been fired long ago?'"

After a string of such incidents—including discovering that employees often spent entire half-days watching soccer in the local bar rather than sitting at their desks, and that senior management took every Friday afternoon off to play golf—he concluded that relocation was essential.

"I tried to make it work in California—for 9 months. But the people in Mountain View were stuck in their ways, and they weren't up for the challenge that was ahead of us," he says. "There is a much more go-getting atmosphere on the East Coast, however, and I felt it was important to provide a change of scene."

He adds: "Did we lose good people in the process? Did we lose intelligent people?Yes, I think we did. Did I need them? No. I discovered, for instance, that there were five 'evangelists' being paid $250,000a year to fly around the States and talk about intellectual property. You don't need a professor in intellectual property to sell an online product. What you need is a good salesman!"

A Clash of Cultures
For users, Wagner's most controversial decision was to introduce the infamous DialUnit, which was aimed at moving away from connect-time pricing to unit-based system resource pricing. Wagner is unrepentant about this, too. "I knew it was going to cause a stink, but it had to be done."

It was, nonetheless, a slap in the face to information professionals, Dialog's primary customers. Did that not make him pause for thought? Wagner glances again at the tape recorder. "I wouldn't have said this when I was running the company, but our eyes were always on the end-user. Attracting them was the only way Dialog would have survived. That meant we had to penalize the 'super searchers' who were taking advantage of us."

Taking advantage? "They were running really complex computations for as little as $3, when the cost of the processing involved was enormous," he explains. "To do this they were bypassing the traditional search process, while other customers were having to pay for that process. When we introduced DialUnits the super searchers said, 'Hell, things that would have cost me $3 will now cost me $150.' Naturally this really upset them."

However, he adds, there was no alternative. "Connect-time charging was bleeding the business of $50 million in revenue. It was just common sense. Which is why Thomson hasn't got rid of DialUnits. Nor will they."

What the DialUnits controversy brought to a head was an irreconcilable clash of cultures between Wagner and Dialog users. While Wagner viewed Dialog as a business gone to seed and in need of shaking up, many users saw the company in a very different light. "My own impression is that Dan had not a clue as to the intangible and intellectual value that he was really acquiring when he bought Dialog," comments one of the super searchers, on condition of anonymity. "He was unprepared for users who felt that Dialog was a sort of 'public trust': a resource that is rich and deep, and to be preserved rather than exploited."

"That stuff all made me sick," snaps Wagner. "I had to be a bit more diplomatic at the time, but what a lot of nonsense. There is no public trust in Dialog. Dialog is a commercial service that provides information to customers. Nobody thinks LexisNexis is a public trust; nobody thinks of Reuters as a public trust. Simply because the service is indispensable for many people does notmean that it shouldn't be commercialized."

To his annoyance, Wagner discovered there was also an internal clash of cultures. One moreover that he believed had split the company down the middle and laid at the heart of many of the problems that had been holding it back. In short, when Knight Ridder had acquired DataStar it had failed to successfully integrate it with Dialog. "When I arrived, DataStar was here, and over there was Dialog—and never the twain shall meet. I had never seen anything so ridiculous in my life."

Was that then the reason for proposing the closure of DataStar? Wagner hesitates, removes his wedding ring and spins it on the desk. Then he looks up. "I was misled," he says. "I was given a view that absorbing DataStar into the Dialog infrastructure was the best thing to do. It turned out though that that was a load of [b.s.]. Because the DataStar system was actually very, very good, and their technical people were much more dynamic than the Dialog people. I didn't realize that until later, which is why I reversed the decision."

In short, says Wagner, he was duped by Dialog staff intent on a final rout of the DataStar camp. "They thought, 'Great, we've won now, because we have a listening ear in management.'"

Was there perhaps also a clash of cultures between the British team who arrived with Wagner and the incumbent American employees? "Absolutely," says Wagner. "There was no question about it."

This too was White's impression. "Dan was dealing with people in the U.S. who had seen Dialog get into a real mess and then been bought by Knight Ridder. Then it was rescued by this guy from the U.K.—and I think the Dialog people would simply not play along with it."

Looking for a Creative Solution
This debilitating internal conflict was the last thing Wagner needed. "By 1999 I was being beaten up on all sides," he says. "I was being beaten up by the customer base over DialUnits; I was being harassed by the banks; and the shareholders were complaining that the share price was slipping away."

Nevertheless, he says, he was not in a mood to give up. "We had a lovely business that I was trying to get off the ground, and my intention was to mow through all of the opposition, irrespective of what people thought."

What he was not able to ignore, however, was the growing panic at the banks, alarmed at the negative publicity Dialog was attracting. "When Dial-a-Dog came out they called me in for a meeting, and they started to say, 'You know, we would really quite like to have our money back.'"

His first thought, however, was not to sell, but to come up with a creative solution that would remove the banks from the equation. "Initially, we tried to organize a merger with Bridge Information Systems [the real-time information company subsequently acquired by Reuters]. We wanted to do something clever to take the debt out, while at the same time enhance the position of the company."

When that failed, Wagner approached a number of well-positioned dot-coms, including LookSmart, the search engine, and Verticalnet. "These guys had huge valuations and could have issued $100 million of stock without blinking their eyes. I thought, 'Let them take us out with their paper, and then we can work together to enhance the position.' They really should have done a deal with us, but they were worried about the Dial-a-Dog dragging them down."

All smart options exhausted, Wagner made contact with Thomson. "I thought: 'Hell, my life is too short. Let Thomson have it.' So we spent 2 days in a room; we couldn't leave the room. I remember seeing the sun come up."

In early 2000 Thomson agreed to pay $275 million for the bulk of Dialog.As part of the deal it also agreed to invest $25 million in Dialog's new business, Bright Station.

A Fatal Flaw
As told by Wagner, his is a story of a dynamic entrepreneur who made the mistake of alienating powerful competitors. Then, when he became vulnerable, they conspired in his downfall.

But like a Shakespearean hero, Wagner also has a fatal flaw in his character. Namely, a tendency to always promise more than he can deliver. It was this flaw perhaps that proved the ultimate arbiter of his fate at Dialog. "I was very aggressive about what we would do with Dialog," he concedes. "After all, the company was bleeding; it was dying on its feet. So I said, 'We are going to turn this thing around from a minus-10-percent month-on-month decline in revenues to a plus-10-percent position in the first year.' The other thing I said was that we would make it profitable within 3 months and take out 25 percent of the costs."

In reality, he adds, he achieved a plus-3-percent growth in the first year and took out 33 percent of the costs. "So we showed confidence we could do it, and actually we did a very good job from a commercial point of view. We turned Dialog around from a loss-making business, and M.A.I.D. from a loss-making position, to plus $65 million in profits in 1 year. You can't say that is Dial-a-Dog, but that is what we were named, and as a consequence the share price never again reflected the value of the business."

One might question Wagner's upbeat portrayal of the financial situation at Dialog. In June 1999, for instance, the U.K.'s Observer newspaper reported that quarterly sales at Dialog had fallen from $70.3 million at the start of 1998 to less than $62.5 million by the end. And the Electronic Information Report commented that the company had experienced a sales drop of 4.7 percent in the first quarter of 1999.

The point, however, is that by over-promising what he could deliver with Dialog, Wagner played into the hands of his critics. As he himself now says: "If I had made the promise that we would break evenin the first year at Dialog and in year 2 growsome, it would have been better. But as soon as we missed our target, Reuters and the FT just piled in."

What is certain is that every time Wagner's financial results undershot his forecast his credibility took a knock—and one thing bankers and investors rarely forgive is a failure to meet financial targets. The tragedy is that if the numbers had come in as Wagner promised, the banks and the investors may have ignored the bad press—and the sniper would have missed the target.

Bad Timing
The one area in which plain bad luck played a hand in Wagner's fate, perhaps, was his timing. Thus, while he had all the qualifications for being a dot-com entrepreneur—youth, pizazz, brashness, outrageous vest—his IPO predated the dot-com boom.As a consequence, the markets always judged Wagner—and Dialog—by old-economy standards.Among other things, this meant that Dialog was never able to attract the high valuation that many Internet businesses did.

"The equity markets were very down on us and very buoyant on dot-coms, which we found difficult to understand," says Wagner. "We had revenues, we had profits, and we had debt. True, the dot-coms generally had no debts, but unlike us they had no revenues, and they had no profits. Consequently, while we were the largest company on the techMARK [the U.K.'s NASDAQ], we weren't valued anything like the others."

Had Dialog been able to command the valuation levels afforded to the dot-coms, says a disgruntled Wagner, he would have been able to pay the banks off by issuing more equity. The story, he suggests, would then have been very different.

The timing of his exit from the industry was equally unpropitious. Taking the knowledge management and e-commerce divisions originally developed at M.A.I.D. with him into Bright Station, Wagner's intention was to reinvent himself as the CEO of a new business incubator. "But 2 weeks after I did the deal the techMARK crashed, so my timing on sentiment was wrong there as well!"

In the wake of the dot-com collapse the KM business, rebranded SmartLogik, struggled to survive, and earlier this year its assets were acquired by APR—with Wagner's remaining 8 percent investment in the company disappearing in a puff of smoke. All that's left of the Wagner empire today, therefore, is the e-commerce technology originally branded Sparza, which is now trading as a private company called Venda.

For all that, Wagner says he has few regrets. With a surprise edge of emotion in his voice, however, he adds: "The biggest regret I had with Dialog was how I let down Roger Summit [the founder of Dialog, whom Wagner had brought back to the company as chairman emeritus]. Roger was a visionary, and we got on extremely well."

The Wagner Episode
Wagner spent 16 years in the online business and just over 2 as CEO of Dialog. What was his contribution to the industry? "I gave it a good jolt in the neck," he says confidently.

In fact, rather than viewing his time at Dialog as a failure, Wagner insists that he performed a very important function. "Knight Ridder couldn't turn it around. It needed me to go in there and shake it up. I don't thinkthey could have done it any other way, since it had become so entrenched that it needed to be pulled kicking and screaming out of its complacency."

For this reason, he adds, Thomson should be grateful to him. "I did them a good favor. I sorted out DialUnits, I brought the company back from the brink, and I stepped down. I took a huge problem away from that business, one that was killing it and one that no one was prepared to tackle head-on."

The irony, he implies, is that his legacy is now being squandered. Specifically, he charges Thomson with failing to build on the foundations he laid for broadening its user base, most notably by developing the end-user product DialogSelect. "DialogSelect was very innovative, but Thomson hasn't developed it; it is exactly the same as when I had it. So is Profound [a former M.A.I.D. product]. To be quite frank, Thomson hasn't done a lot with Dialog since they bought it."

He adds, "My view is that at some point Dialog will simply be absorbed somewhere into Thomson's content business.After all, 40 percent of the content on Dialog is Thomson's anyway." Such a scenario would presumably mean that Dialog would become little more than a technology platform for Thomson content. What price then the public trust that users so castigated Wagner for trying to exploit?

How does Thomson respond to Wagner's comments? We can't say, since the company declined to be involved in any
article dealing with what its London PR company referred to as "the Wagner episode." Indeed, the very idea of talking to Wagner was characterized as an unhelpful "raking up of the past."

Speaking to Wagner one is struck with how little the Dialog debacle appears to have changed him. True, he has dyed his hair blonde and moved six blocks up from his former London base in Leicester Square. But the ambition and the big ideas are still very much present.Ask him, for instance, about Venda, and he immediately launches into the familiar Wagner sales pitch. "We provide machines, hosting, and bandwidth. We integrate with your internal inventory systems and warehouse systems, and we build an infrastructure that allows you to manage your entire store on the Web," he says, pushing across copies of recent press clippings about the company. "In fact, we're going to shake up the whole e-commerce industry."

He is, he says, very glad to be running a private company again. "I am enjoying myself enormously. I don't have a lot of people banging on the door, so I can just get on with running the business."

It is hard not to conclude that, for Wagner, playing the game is ultimately more important than winning—particularly whenit is done with flair. As London-based industry observer David Worlock commented to Information World Review at the time of the Thomson acquisition: "Dan was a great punter who pushed the envelope of opportunity as far as it would go. I admire his spirit and his sense of play."

Perhaps the greatest tragedy was that Wagner found himself operating in an industry that has come to despise visionary individuals and grown wary of big ideas. "I now realize that I was a target looking to be shot down," concludes Wagner, "and eventually I did get shot down."

All that remains to be argued over is the extent to which Wagner conspired in his own shooting.

As the interview comes to an end the street grows quieter. There is just the occasional whoop from a lone fan wending his unsteady way home. Two weeks later, of course, England was knocked out of the World Cup by Brazil. Undefeated in spirit, the fans are already looking to the 2006 tournament.

Wagner too has his eye on the next chance. In fact, he says with a quiet smile, it may even mean a return to the online industry. "You never know, I may be back. After all, I wouldn't have gained all this experience over the years to just disappear into the background, would I? What I can say for certain, however, is that I will never ever run a public company again."

Is there an issue of relevance to the information industry that you would like examined, a story you feel should be told, or an industry player you would like to see interviewed? Please send your suggestions to Richard Poynder at the e-mail address below.

Richard Poynder is a U.K.-based freelance journalist who specializes in intellectual property and the information industry. He writes for a number of information publications, and contributes regularly to the London Financial Times. His e-mail address is richard.poynder@journalist.co.uk.