'Free Stock' Chain Letters Unlikely to Net Riches

If you haven't encountered some version of the following in your inbox yet, chances are you soon will:

The come-on bears more than a passing resemblance to last year's spate of chain letters announcing a similar stock giveaway by a start-up called Travelzoo.com. Travelzoo drummed up a good deal of attention by handing out 700,000 shares of "pre-IPO" stock to its Website visitors, not to mention benefited from ad revenues generated by the flood of traffic. Exit23b.com's campaign was obviously designed to achieve the same effortless notoriety.

The good news is: it's not a hoax or a scam. The bit about Yahoo! in the message is blatantly false, but the offer itself is legit.

The bad news is: it expired Feb. 10.  If you've already entered the contest, you're still eligible to win, but no more entries are being accepted.

Exit23b.com, billing itself in advance as "your favorite source for electronics, interactive games, music and video," decided this week to discontinue the promotion because, among other reasons, it was raising doubts in some people's minds about the company's respectability.

"This has been an incredible marketing plan that has helped us create a name and brand for ourselves," said Brian Larsen in answer to my query to company headquarters in Redmond, Washington. "At the same time it has also created a lot of controversy."

Small wonder. Visitors to Exit23b's stark, uninformative Website, drawn there by chain letters evoking the precipitous ascent of Yahoo! stocks, were asked to submit their name and email address and watch them be whisked away to some unknown location in cyberspace. "We won't send you any junk mail," promised the anonymous blurb on the Website. But it didn't say who "we" are.

For the moment, that information is still hard to come by. The company has yet to release details on itself or its owners to the press. Larsen says a public announcement is coming soon, but in the meantime he's anxious to allay public fears that Exit23b.com might be up to no good.

"Exit23b.com does not want to be associated with spam lists or any other source of illegal activity," he said. "The list that we have accumulated will be deleted after the drawing and we are not going to sell or distribute the names."

A Stock Giveaway FAQ has now been posted to clear up any doubts or misconceptions.

Another reason the offer has had some people balking is the apparent extravagance of giving away a total of 100,000 shares of stock to randomly-selected winners. No real mystery there. The pre-IPO stock is essentially worthless, and there's no guarantee the company will ever go public. What about dividends? Current stockholders in Internet companies can attest to the fact that dividend earnings are a rarity in the topsy-turvy world of cyberfinance.

Aside from the dubious Netiquette of encouraging spam for the sake of publicity, Exit23b's stunt could cause the company more harm than good in the long run, precisely because of the skeptical attention it has attracted. As financial analyst Jim Nail confided to Wired News, "I would absolutely not recommend this to a respectable company trying to build its brand."

Ironic, isn't it, that the same gimmick which will allow 10 lucky people to acquire stock in the company for free may also diminish its worth?

At the risk of sounding like a curmudgeon, I'll float the old saying one more time: "Don't expect something for nothing."

Funny thing about human nature, though – no matter how many times it's proven true, we still don't quite believe it.

For more information, see:

• Exit23b.com
  The home page of all this fuss. Check here for updates on the company's progress
• Free Stock for Your Visit
  Wired News' coverage of Exit23b.com's stock giveaway

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