The Rebooting Show

Big Cabal has raised $2.3 million in venture capital as it builds an independent digital media company in Africa’s largest economy that's geared to shifting consumption patterns. Tomiwa and I discuss how Big Cabal looks to find white spaces in the market, making hard calls when to pull back on efforts like it recently did with a citizen journalism project, when brands can be pan-African vs market specific, and an on-the ground assessment of the impact of Semafor in its Africa push.

Check out "The State of Publisher Subscriptions" report.

Blockworks, founded as a crypto events company in 2018, has rode these ups and downs. It began in the face of a crypto pullback with the thesis that crypto would become a major asset class and as it grew, institutional investors would need a credible source of information, analysis and research beyond an anonymous Twitter account with a monkey avatar shooting lasers from its eyes.

As crypto recovered and headed into a bull run that accelerated during the pandemic into what I’d consider a bubble, Blockworks expanded from events into podcasts and news. With $12 million in VC raised in possibly the hardest time to raise for a crypto media company, Blockworks is building out a research arm.

Jason Yanowitz, CEO of Blockworks, discusses the evolution of the company and the benefits of staying focused and being a "mile deep" vs an inch deep.

Thanks to Ex.co for sponsoring The Rebooting. Check out its recent guide to selecting an online video platform.

Before the Lumascape, there was another go-to conference and pitch deck slide for anyone betting on what was then called web advertising. The slide, updated annually by the financial analyst Mary Meeker, showed twin bar charts of time spent and budget spent by medium. 

The message was clear: the internet would win, it was just a matter of timing. The time spent gap did close, although a disproportionate amount of gains went to tech platforms rather than web publishers. The chart was always wrong, argues media analyst Brian Wieser. Time is simply one variable in assessing the value of a media impression:

“It speaks to an incorrect framework. You look at the historical data, you ask why this happened, and you try to make sure the model mirrors why decisions are made. The common narrative was always that it's time. That's what drives the money. If that were true, radio would be a much bigger business.”

Five cents. That’s how much general-news newsletter 1440 makes each time one of its 3 million subscribers opens one of its daily emails. Say what you want about scale, but nickels can add up when the multiplier is in the millions. After paying for the expenses of its 14-person team, the profits are then invested back into growing 1440’s subscriber base with paid marketing campaigns through Facebook and Instagram, newsletter ads and other channels. That “flywheel” has enabled 1440 to enter an exclusive club: It generates over $1 million in revenue per employee.

1440 CEO Tim Huelskamp joins the show to discuss taking a unit-economics approach to publishing.

increase revenue from first-party data by 46%.

On this week’s episode of The Rebooting Show, I was joined by Hearst’s David Carey to discuss the resilience of so-called legacy media businesses. David returned to Hearst in 2019 as svp of public affairs and communications after a stint at Harvard, picking up on an eight-year run as president of Hearst Magazines from 2010 to 2018. He was group president at Condé Nast for many years, as well as the founding publisher of Smart Money.

Some highlights from our discussion:

The broad view of content: Hearst used its media assets to diversify into information services. Fitch Ratings is its largest business, and in 2016 it spent $2 billion on Camp Systems, a software provider for the airline maintenance business. “The company's had a very broad view of what content is, and, boy, is that to the benefit of everyone who works here.”

The end of the shiny object era: “There was a lot of chasing whatever the latest thing was, but those businesses turned out not to be sustainable, or they turned out to be gimmicks, or they turned out to be easily replicated by others. It’s chaos in all directions for all media forms. It very much favors companies with real strategies, deep roots.” 

Media’s always been hard: “Media is much harder to operate than it looks from the outside. That's always been true. It's easy to make a splash and make some noise, but even the latest upstarts are finding it's really hard to build a sustainable business that engages people on a regular basis.”

Media businesses need a bigger price curve: “Whenever I meet a [Wall Street] Journal executive, I tell them, you should come up with a $1,000 a year subscription, because I would pay that. It's that important. to how I operate in the world as an executive. Every brand has these concentric circles of diehard fans and next diehard fans and so on. The problem is there hasn't been effective price discrimination.” 

Print is like a couture fashion show: “What they send down the runway is important but not their biggest business. What happens at Chanel at a couture show, that business is relatively small, but it sets the stage for everything below that. It's the eyewear, the handbags, the accessories. Ultimately they make their money from selling beauty products at Bloomingdale's and in Saks Fifth Avenue. You're starting to see that happen with magazines. They have an opportunity to become multi-tiered businesses. The print piece becomes the standard bearer [to more lucrative businesses like events and data].”

Which brings me back to late 2021, because that’s when IAC plunked down $2.7 billion to buy the storied Meredith brands: People, Entertainment Weekly, Better Homes & Gardens, InStyle. It was something of a minnow swallowing the whale, and indicative of the prevailing winds of publishing that were moving against glossy brands and toward performance workhorses. 

“We had this incredible ability to serve users and to make advertisers happy because we had lots of intent,” Neil said. “What we were lacking was brands.”

Of course, soon after the deal took place, Jerome Powell decided he’d seen enough with the normalization of $7 coffee and started hiking interest rates. The repricing of markets isn’t fun. And the now re-re-re-rechristened Dotdash Meredith has been no different. As it has integrated the Meredith properties, it has also dealt with a soft ad market it can do little to mitigate. You are not going to sell as many mortgages when interest rates are high. In the first quarter, Dotdash Meredith revenue declined 23% year over year, including 15% in digital advertising.

“We bought at the frothiest point in the market,” Neil allowed. “The market is going to go up, the market is going to go down. If you look out at a long time horizon, it doesn’t matter.”

Neil and I discussed the deal (“I would do it again in a heartbeat”), the demise of the third-party cookie (“We don’t need cookies to deliver scale and performance”), and WTF AI (the whole market is going to change). 

Anna Palmer is a journalist turned startup CEO. Along with Jake Sherman and John Bresnahan, she founded Punchbowl News in January 2021, just in time for the assault on the Capitol. Punchbowl’s obsessive focus on the Capitol, and business model that combines subscriptions with high-value issue advocacy ads led it to sprint out of the gates with a $10 million first year. Anna is more reticent about its current pace – I tried – but by all measures what Punchbowl is doing is working in a media environment that's shifted to favor narrower brands focused on high-value audience segments, backed by direct connections and diversified business models.

“I've been in Washington journalism for almost 20 years, and I always laugh when everyone talks about Substack and the rise of newsletters,” Anna said. “It's the new hot thing. I mean, I've literally been doing newsletters for that entire time.”Some things that stand out to me about Punchbowl:

1. It is reporter focused. I believe journalists who start media businesses create different products. Punchbowl is journalism-driven, relying on the daily grind of uncovering new information vs playing SEO or social traffic games.

2. It has a rich niche. Issues advocacy ads are a lucrative ad category, and one where you not only mostly don’t compete with Google and Facebook, but they’re also your biggest clients. If only more media was like this.

3. It has stayed lean. Punchbowl started with funding from Liontree, and it has grown quickly, but it has also resisted the temptation to expand quickly by, say, springing up operations in state capitols around the country or joining the fray at the White House. Instead it has focused on high-value areas like its expansion in financial services vertical with The Vault.

4. It has managed to be a publication about politics without being a political publication. Many aspire to non-partisan news. Easier said than done. See the Chris Licht experiment at CNN for evidence. Punchbowl has managed to thread the needle for the most part with not being pulled into the inevitable political Rorschach test, mostly because they’re obsessed with the legislative process vs the posturing of politics.

This episode is sponsored by Kerv, which uses artificial intelligence to identify objects within video and match them to databases, enabling for, among other uses, the creation of interactive “shoppable video” that embeds commerce in entertainment

Kerv CEO Gary Mittman sees AI leading a sea change to the creative process, allowing for a movie franchise, for instance, to create sequels to the original without starting from scratch. For advertising, the changes are poised to be broader, with AI detecting ads that are not performing and automatically "fixing" them without much in the way of human involvement. “This is another revolution, and we're at a precipice of the creation of something new,” he said. Other highlights:

• Subscription fatigue. The land rush phase of the streaming wars is over. The pendulum is shifting from subscriptions to advertising. “People are not going to pay for 100 different channels at $5-$10 a month,” Gary said. “ It's just not going to happen.”

• The “Jennifer Aniston’s sweater” moment. In ancient days – think 2005 – a staple of what were then called internet conferences was the idea that you’d be able to watch “Friends” and tap to buy a Jennifer Anniston sweater set. Much of the tech wasn’t ready, much less the consumer behavior, but that’s changing. “There's a long road of dead bodies to get here,” Gary said.

• QR codes are changing behaviors. Of all the changes of the pandemic, the comeback of QR codes was among the least likely. Now, it’s the norm to see QR on TV ads, shifting consumer behavior. “The capability of having a one-click transaction off of television with your remote is where we're heading,” Gary said.

The Rebooting show is sponsored by Kerv Interactive, an AI-powered video creative technology that creates shoppable and immersive experiences within any video content. Learn more.

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On this week’s episode of The Rebooting Show, Bob Guterma, CEO of The China Project, to discuss how to maintain credibility while catching flack from many sides, The China Project’s decision to leave Substack, adopting a subscription-first model and its crowdfunding efforts to raise capital from its audience.  

• For seven years, The China Project – called SupChina until July 2022 – has aimed to act as a bridge for the outside world to understand China. “It's literally 5x the number of people in America. In some ways, you could say [China] is more dynamic. Their historical trajectory is so fast that there are simultaneously people living the same as they did 150 years ago, and there are people living in the Jetsons – all in the same country.
• That task that’s grown more complicated in recent years as tensions have risen between the US and China. That’s ensnared The China Project in political hot water, with a group of hawkish senators saying it is a tool of Chinese influence and the Chinese government banning it. Guterma has described The China Project as “neither pro-China or anti-China” and its mission as “helping the world understand China better, more contextually, and with greater care, so that better decisions can be made.”
• The China Project moved off Substack, which is oriented more to single writer projects than full-fledged media properties. “There are ways to customize Substack as you go along, but it's really built around this one experience of a paid newsletter. We were already, and just only became more and more as time went on, not just a newsletter.”

• The China Project has multiple revenue streams, including ads, events and consulting, but it aims to be a subscription-first publisher. The China Project sells subscriptions from $120 for an individual up to $5,000 per year for database products. It made this shift with a changed focus on a B2B audience, which is more likely to pay for subscriptions than regular people simply curious about China. “As much as I think China is the biggest story of our times, most people aren't sitting at home thinking about how to cultivate better knowledge of China, and they're certainly not sitting at home ready to spend money on that.”
• The era of venture-funded publishing is mostly over, but new avenues are emerging, such as RegCF, which allows companies to use crowdfunding to raise up to $5 million over the course of 12 months. The China Project raised $1.6 million two years ago and is near $1 million in a second round. The China Project has raised nearly $10 million over the years. That incremental approach is preferable to big upfront funding, in Bob’s view: “Raising $50 million before you've done anything almost guarantees your irrelevance.”

More perspective:

• Semafor did a deep a piece on The China Project that highlights the criticisms leveled at it in a whistleblower complaint that alleges it slants coverage to favor Chinese interests. (Bob dismisses this coverage as innuendo and cover for Semafor’s own indirect ties to the Chinese government through a partnership with a Chinese think tank.) 

• The China Project published a lengthy rebuttal, claiming it is “a target of racist, populist, anti-China sentiment.”

• Unlike most small publishers, The China Project has published an annual report as part of its earlier crowdfunding capital raise. 

⁠Thanks to Kerv ⁠for sponsoring this episode. To see Kerv's technology at work, ⁠check out Peacock's MustShop TV⁠.

If you’ll be on the Cote d’Azur next month. The New Attention Economy, presented by Kerv, will have speakers from the Financial Times, Uber, Paramount, Havas and more. Let’s talk ‘Active Attention’ Economy at Cannes Join us for three days of exclusive thoughtful conversations and cocktails with the industry’s best to discuss the Attention Economy and the future of publishing, streaming, AI & creativity. Register here.

Last week, I traveled to Washington DC to record a podcast with Sean Griffey, CEO of Industry Dive. I’ve known Sean and Industry Dive a while, mostly because two of its 33 publications – Marketing Dive and Retail Dive – were in areas in which my previous companies had publications. Sean was also the rare media CEO who would come onto my podcast and not rattle off a bunch of talking points. The big numbers he talked about weren’t Facebook video views of ComScore uniques ginned up through traffic assignment schemes. He spoke about revenue and, imagine, EBITDA. 

Industry Dive went on to be bought not once but twice. First in a transaction to growth equity firm Falfurrias Capital in 2019 and then last year in a deal to events giant Informa last year that Axios reported put an enterprise value on Industry Dive of $525 million. That would make Industry Dive’s value at over two Vices and five BuzzFeeds.

What Industry Dive got right is something I covered after the Informa deal. I was long impressed by Sean and Industry Dive’s management ability to stay focused and disciplined in their business model. It helped that Industry Dive didn’t raise venture capital. Constraints can be good. It meant focusing on what was working, notably newsletters and being good at putting first-party data to use for B2B marketers.

In B2B, the pull to do events – have you signed up for The Rebooting’s Cannes events yet? – is strong. That’s because B2B doesn’t have advertisers per se, but marketers. And B2B marketers serve to get their sales teams prospects. That leads many B2B publications to go heavily to events.  Industry Dive skipped events because it was very good at building publications in high value industries with tons of regulation and tech-driven change and acting as a critical marketing partner. That isn’t revolutionary. But it’s hard to execute.

Another aspect that impressed me about what Industry Dive did was it executed its playbook not once but across multiple industries. It didn’t wait until it perfected its playbook in one industry, because as Sean told me, you will perpetually put it off because you’ll never feel like you’ve gotten there. Building a leading publication in a single industry is hard but also has a fairly low ceiling, if you’re trying to build a big company. (I tend to think more people should be OK building a great company that’s smaller and skip the lure of massive exits.) Industry Dive was able to pull that off.

And finally, I think there’s something to be said about how Sean and his team went about building their work without all the PR nonsense. I hope of the many things that are left behind from the previous era, it’s the out of whack ratio between sizzle and steak. Fake it till you make it always struck me as a terrible strategy. Ask Ozy. 

Will Hayward, the CEO of Private Media, an independent publishing company in Australia that publishes several titles, including politics-focused Crikey, recently faced the intriguing and likely slightly terrifying experience of being the subject of a defamation lawsuit filed by Lachlan Murdoch over a Crikey opinion column that held the Murdochs were “unindicted co-conspirators” of the Jan 6 attack on the US Capitol. Murdoch withdrew the lawsuit in the aftermath of Fox settling its case with Dominion, much to Will’s relief. 

We discussed the case, the decision to stand firm against a powerful and angry individual, and how Crikey made lemonade out of lemons by using the case to rally support for the politics publication through subscriptions. We also touch on the impact of Australia’s news bargaining code that has wrung payments from platforms and is the model for similar laws worldwide, including in the US, as well as lessons learned from the social publishing era, since Will was in the thick of it.  

• The Messenger is coming next week and… counterintuitive: “I don't believe that there is an audience that's salivating out there for straight-down-the-middle news,” Peter said. “Anyone who says that is lying to themselves or to the public.”

• After the streaming wars comes the winnowing: “You’re going to have fewer of these big subscription services, more of these free ad-supported services, and streaming will continue to dominate more of the time that people spend in terms of consuming television,” Sara said. “No longer is it plausible that everyone can just launch a subscription service and think that they're going to take meaningful market share.”

• The AI “tsunami of bullshit” is coming: “We're still relying on Google for referral traffic and the idea that people might find our articles there,” Peter said. “Whether or not you use AI, you are going to be swamped by the tsunami of bullshit, whether it's good or not, content made by robots. And even if every publisher and every trade group in America agrees to not do it, it doesn't matter because it'll come from all over the world.”

The Bitter Southerner began as a passion project for a group of natives to the South who were, well, a bit bitter about how it was often caricatured or reduced to its historical legacy as the birthplace of American slavery. That’s a past that is unfortunately still alive and is an indelible part of the American story. The Bitter Southerner confronts such issues head on but while telling a more nuanced and expansive story of this unique and yes complicated part of the world. 

Kyle Tibbs Jones, a co-founder of The Bitter Southerner, joined me to discuss the decade-long effort to build a sustainable, independent publication.

Patrick Trousdale started The Daily Upside in 2019 after working in investment banking at Guggenheim. Patrick saw the success Morning Brew and The Hustle had with newsletters that produced business, finance and entrepreneurial news for younger audiences. He started The Daily Upside with the idea there was space for a newsletter that catered more to investors as a lens instead of general business and finance.

The Daily Upside is now at the point where it can incrementally expand. It started that in January with the acquisition of a specialist newsletter called Patent Drop that trawls  patent registries for updates on what tech companies are filing patents that will expand into a publication focused on “technologies like blockchain and AI, how policy is impacting tech innovation, and conversations with the thought leaders and entrepreneurs building the future.” The Daily Upside will also launch Power Corridor, a publication at the intersection of Wall Street and Washington with longtime Institutional Investor journalist Leah Goodman.

The opportunity Patrick sees is applying The Daily Upside growth playbook to these new properties – and using them to move beyond aggregation. Making the shift from aggregation to original content is a time-honored and tricky path in digital publishing. I can remember when Business Insider was mostly aggregating the reporting of others.

Axel Bard Bringéus is co-founder of Informed, a Berlin-based company with $5.3 million in backing that’s building a service for subscribers to pay for access to paywalled content from top tier publishers like Bloomberg, The Economist, The Financial Times and more. Informed is focused on people in non-English speaking countries who graze on English-language news content yet not enough to consider a subscription. This is a smart approach. Publishers always struggle to make money from international audiences. Most advertisers do not sell globally. And international visitors, in my experience, are far less likely to convert to paid. Axel and I discuss the Informed approach, and how his experience as a Spotify exec informs how he sees the news market.

On this week’s episode of The Rebooting Show, I spoke to Darren Samuelsohn, a longtime politician reporter who was most recently head of Insider’s ill-fated DC bureau. Darren and I spoke about his new newsletter devoted to journalism, the decision to take an independent path, and the topsy-turvy career that’s journalism.

Bill Bishop likes to make clear he’s not a journalist. Instead, he’s a China analyst who brings his deep understanding of the country to an English-speaking language through his newsletter, Sinocism. In 2017, Bill became the “original Substacker” after teaming up with Substack’s co-founders to be the first newsletter on the platform.

On this week’s episode of The Rebooting Show, Bill and I discuss his independent path, and how a subscription model has created different dynamics as opposed to his experiences in the dot-com era as a co-founder of Marketwatch. What’s telling to me is that Bill is also now considering advertising. The Substack model of “only ads” doesn’t make much sense long term for most writers. Even if they convert 10% of their audience, they’re making no money from 90%. Most businesses don’t operate that way.

Substack’s Reid DeRamus talks about growing newsletter audiences. Reid and I have spoken for the past two years on this topic, going back to before Substack bought his company Yem, which was focused on building a growth engine for newsletter writers. The thing about growth, at least I’ve found, is it takes a long time for most people. It’s taken me over two years to get 12,700 subscribers. I always tell people to take with a grain of salt the overnight success stories of newsletters that amass 250,000 subscribers in less than a year. They are remarkable because they are unusual, and the people running them are likely experts in marketing while most of us writing are not.

Recommendations is Substack’s No. 1 feature it has rolled out. It needed to provide that distribution function to publishers. Otherwise it would just be a newsletter CMS with Stripe integration. Recommendations are now responsible for 40% of new free subscriptions to Substack-hosted publications. Reid and I discussed that dynamic and other features Substack is rolling out to increase the number of people who covert to paid subscribers.