Hot Money · Pushkin Industries

Episode 2: The Darth Vader of Porn

June 7, 2022·33 min·2 clips

Fabian Tillman convinced Wall Street bankers to fund his porn empire with a 20% interest loan, defying industry norms.

1. Hot Money Episode 2 traces how Fabian Tillman, a 33-year-old German software engineer, raised $362 million to roll up the pornography industry and briefly controlled 60-70% of global porn traffic. 2. Reporters Patricia Nilsson and Alex Barker of the Financial Times frame the episode with the 2012 Adult Entertainment Expo in Las Vegas, where Tillman made his public debut to an industry that had been humming the Star Wars Imperial March under their breath. 3. Tillman's central advantage was not technical but financial: he brought financial engineering to an industry that had been excluded from mainstream capital markets, able to see where money was flowing through his early tracking software NATS. 4. Tillman grew up in a well-to-do family in Brussels, started coding as a hobby, and stumbled into the adult industry through online chat rooms, helping build NATS — a tracking program for affiliate marketing that is still in use today. 5. He observed the industry closely: 'It was interesting how exaggerated everybody was talking about how great they were, which they really weren't,' and concluded he could do better. 6. His first purchase was a small German porn site from friends; then more German sites, a webcams business, and Xtube — run by 'Curtis the subpoena king' from the previous episode. 7. The pivotal deal was the acquisition of Mansef, founded by Canadian engineering students behind Pornhub and Brazzers, which Tillman flew to Montreal to negotiate over Christmas 2009 and spent three months completing. 8. Mansef bridged old and new: it had traditional pay sites like Brazzers and had cracked the tube site advertising model, generating revenue by converting a small percentage of enormous free traffic into paid subscribers. 9. Tillman used every available financial trick to fund the Mansef acquisition — siphoning cash from other companies, using an asset he was not authorized to use, staggering payments — some of which were, in his words, 'in the grey zone of what's legal.' 10. After bundling his acquisitions under the name MindGeek — which began as the deliberately provocative 'ManWin' — Tillman needed serious institutional funding to make a balloon payment and pursue Playboy, whose CEO had approached him. 11. He hired Raymond Chabot Grant Thornton to approach Wall Street; an initial deal of nearly $100 million from a Chicago lender collapsed the morning after a celebratory dinner when the owner consulted his wife. 12. Special-situations banker Rick Rosenblum, founder of Fuel Break Capital, was brought in as a 'matchmaker for the untouchables,' approaching 40 to 50 firms and having doors slammed in his face every time — finding that porn was 'dirtier than guns, cigarettes, and gambling.' 13. Rosenblum made the breakthrough at a Las Vegas conference where he met Jason Kolodny, co-founder of Colbeck Capital, a former Goldman Sachs banker whose firm performed deep diligence and concluded Tillman's company was 'probably the cleanest, best-run company we've ever diligenced.' 14. Colbeck agreed to underwrite the deal at more than 20% annual interest — breathtakingly expensive, but the only available option; Tillman accepted because it allowed him to retain full control rather than sell equity. 15. From the original target of $100 million, bankers' appetites expanded the deal to $170 million, then $250 million, and ultimately $362 million after Tillman wrote a wish list of acquisitions and lenders asked why he was thinking so small. 16. The syndicate included JP Morgan, Fortress, and — without the knowledge of senior management — Cornell University's endowment fund, whose manager was later dismissed after the university found out. 17. With the new capital, Tillman acquired YouPorn and quadrupled its profits within two months, validating the business model. 18. The episode reveals a secret Tillman has never publicly disclosed: his plan was always to acquire all major tube sites and then simultaneously shut off the free content, forcing 150 million users to convert to paying subscribers — he estimates even $2 a month would have generated substantial revenue. 19. The episode teases that his plan failed — Wall Street bankers who made him king eventually knocked him down, with a longtime rival waiting for that moment. 20. Listeners interested in financial journalism, the economics of the internet, or how Silicon Valley-style roll-up strategies play out in disreputable industries will find the episode substantive and well-sourced.

As heard by us

A cold money story about porn, leverage, and control.

Hot Money frames the porn industry as a story about leverage, desperation, and the people who get to decide what a whole market is worth. It opens in a crowded Las Vegas conference hall, then tracks the money back through bankers, advisers, and a buyer trying to assemble control…

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Why you'd press play

Follow the money behind porn's control fight, from Las Vegas to the lenders and back.

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