GigaOM » Henry Blodget

Amazon CEO Jeff Bezos invests in Business Insider, leading $5M financing round

Laura Hazard Owen — Fri, 05 Apr 2013 14:15:30 +0000

Amazon CEO Jeff Bezos has invested in Henry Blodget’s website Business Insider, according to a report first published by Bloomberg and then confirmed with an internal memo at Business Insider. Bezos led a $5 million series E round that also included participation from RRE Ventures and Institutional Venture Partners.

The new investment brings the total amount of money that Business Insider has raised to $18.3 million. In the memo to staff, Business Insider CEO and editor-in-chief Henry Blodget writes, “This capital will allow us to continue to invest aggressively in many areas of the business, including editorial, tech/product, sales and marketing, subscriptions, and events. As we mentioned last night, it will also allow us to expand our office.”

Blodget tells AllThingsD that “the new deal values the company above the $50 million valuation it earned during its last round in 2011.”

Business Insider reportedly lost about $3 million, or a quarter of its revenue, in 2012, though Blodget says the site turned a small profit in the first quarter of this year. Business Insider is known for its short news pieces and slideshows. According to the BI memo, Jeff Bezos said that he “sees some parallels with Amazon.” Blodget said the site will now include a disclosure statement whenever it writes about Amazon.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Henry Blodget says Business Insider is growing, but it’s still losing money

Mathew Ingram — Mon, 01 Apr 2013 15:48:58 +0000

When Business Insider founder Henry Blodget opened up about his website’s traffic and business model a few months ago, we noted that he didn’t reveal the most important thing about it — namely, whether it was profitable. And now we know why: a profile of the former Wall Street analyst by New Yorker writer Ken Auletta says the site lost $3 million in 2012, or about a quarter of the revenue it pulled in, most of which came from online advertising. So if there is a recipe for how to create a profitable online publisher, Blodget doesn’t seem to have discovered it yet.

Update: The Business Insider founder said on Twitter that the site turned a small profit in the first quarter, although he wouldn’t say how much.

@mathewi Don't have exact numbers yet (quarter just ended). More than we made in 2010 ($2k). Not enough to pay us like TV talent (sadly)
—
Henry Blodget (@hblodget) April 01, 2013

Much of what Blodget says about his business to the New Yorker also appeared in the slide presentation he published as part of his experiment in “opening the kimono,” as he described it. The site has about 24 million unique monthly visitors, according to Google Analytics, which puts it ahead of traditional outlets like the Financial Times and BusinessWeek — although comScore says it only has 9 million (Blodget says the discrepancy stems from BI’s large non-U.S. audience).

On Twitter, Blodget called the $3 million worth of red ink that Business Insider racked up in 2012 an “investment” rather than a loss. According to the New Yorker piece, the site has only spent about half of the $13 million it has raised in financing, which came from investors like Kevin Ryan (Business Insider’s chairman and co-founder of the Gilt Groupe) as well as IVP and Marc Andreessen. Ryan tells Auletta that for $7 million “we’ve created the new Wall Street Journal.”

Although Blodget mentioned in his recent presentation that programmatic ad buying and other forces are putting increasing pressure on advertising returns for publishers, the New Yorker piece says about 85 percent of Business Insider’s revenue still comes from ads, with the rest coming from conferences and its proprietary research arm. The site has also been experimenting with various forms of “sponsored content,” including sponsor-focused slideshows.

Not "lost!" Invested! And, yes, about to fill out AARP card RT @emilybell @pkafka... BI lost $3m last yr, HB is 47. allthingsd.com/20130331/henry…
—
Henry Blodget (@hblodget) April 01, 2013

Blodget describes the site’s approach — which focuses primarily on short, newsy pieces that often feature salacious details about and/or slideshows of celebrities — as being “halfway between broadcast and print,” and tells Auletta that it is designed to be “conversational.” He also argues that the model of aggregating content from other sites is sharing rather than stealing, although others have disagreed about that interpretation rather strongly.

And what does the future hold for Business Insider? An unidentified board member tells Auletta that he expects the site to be acquired, and Blodget says it “either will become part of a larger enterprise or become the larger enterprise.”

Bonus fact: Blodget, who played tennis while at the upscale Phillips Exeter Academy, plays doubles with his father — a successful banker — and the two were recently ranked nationally in the Super-Senior Father/Son Tournament.

Post and thumbnail image courtesy of Flickr user TechCrunch

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Henry Blodget isn’t telling us the most important thing about Business Insider

Mathew Ingram — Thu, 10 Jan 2013 16:35:17 +0000

Business Insider founder Henry Blodget has pulled aside the curtain — or the kimono, as he likes to call it — to tell us all about how well the site is doing, courtesy of a presentation he put together for Folio magazine. In true Business Insider fashion, it’s basically a 90-item slideshow featuring a host of details about the site and its growth, including its traffic numbers (both in aggregate and by individual writer) along with favorable comparisons to other players such as Forbes and Mashable. But for someone promoting transparency for media entities, there’s a lot he’s not saying.

There’s no question Business Insider has grown substantially since the last time Blodget opened up about his company’s performance: almost two years ago, he released some public numbers, and at that point the site — which was then about three years old — was pulling in 8 million unique visitors per month and had revenues of $5 million. The site even turned a minuscule profit in 2010, Blodget said, of about $2,000 (that’s not a typo).

In the latest update, the Business Insider founder says the site has boosted its traffic substantially, and now gets an average of 23 million unique visitors per month, or more than a million on the average day — growth that he says puts it ahead of giants such as Businessweek, Mashable and TechCrunch.

While that’s impressive, however, Blodget hasn’t provided us with some of the most important data a media company needs in order to prove its health: namely, revenue and/or profitability metrics. It’s probably safe to assume that revenues are higher than they were almost two years ago, or the site would have shut down by now — and they may even be dramatically higher, since pageviews and unique visitors are still popular measurements used by many advertisers to determine success.

But as Blodget himself notes in his presentation, the profitability of digital advertising has been plummeting over the past few years. The amount of advertising is still growing rapidly, and ad revenues are also increasing, but it’s a little like the Red Queen’s race in Alice in Wonderland: media companies are having to run faster and faster just to stay in the same place — every incremental pageview is worth less and less.

This is the same dilemma that almost every media entity is facing, from traditional players such as the New York Times to newer stars like BuzzFeed and The Huffington Post. Some of the newer entrants like BuzzFeed — and even the more entrepreneurial of the old guard, such as The Atlantic and Forbes — are trying to use more “native” advertising formats such as sponsored posts and marketing-related content to combat this problem.

It’s not clear from Blodget’s presentation whether Business Insider is doing much of this, although he does say that social “is not the be-all and end-all” for digital news sites, and that the importance of social as a referrer of traffic is “grossly overstated.” And it isn’t clear what the site is doing instead of social or native advertising — which makes it almost impossible to say whether the company is financially healthy or not.

Huge pageview or readership numbers are nice to have, but they are not enough for a business in and of themselves (just ask Tumblr, which has 20 billion pageviews a month and yet is still facing questions about its business model) unless of course you are planning to flip your business to someone much larger who already has a business model. Business Insider is going to have to answer those kinds of questions somehow, whether Blodget wants to tell us the answers or not.

Post and thumbnail images courtesy of Flickr / TechCrunch

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Groupon’s Mason: I “can’t talk the stock up back to 20 bucks”

Laura Hazard Owen — Wed, 28 Nov 2012 17:22:15 +0000

“Is the board going to fire you tomorrow?” That was the first thing Business Insider’s Henry Blodget asked Groupon CEO Andrew Mason at the Business Insider Ignition conference Wednesday, amid reports that Mason may be pushed out of his role as CEO.

AllThingsD and other media outlets reported Tuesday that “discussions about Mason’s tenure as CEO have increased as its stock has dropped precipitously. That has prompted its directors and management to seek to find a way to get the company on more stable footing as a business and, perhaps more importantly, with investors.”

“News flash: Our stock is down about 80 percent since we IPO’d a year ago,” Mason said. “It would be weird if the board wasn’t discussing whether I’m the right guy to do the job… the only thing unusual is that it’s showing up in the newspapers.”

But Mason claims “Groupon’s a special kind of company. When you’re creating a new category, there’s going to be bumps along the road and things that can’t be predicted.” The company is “unlock[ing] local commerce and plug[ging] it into the web,” Mason said. “I’ve seen Groupon crush the most seasoned professionals. What Groupon needs from the CEO role is consistent leadership.”

Groupon had two big surprises in the past year, Mason said. The first one was that “the performance of the international business has been in steady decline. That’s been a major impediment on the growth and an obfuscator in the story of Groupon.” He described it as “a tale of two businesses.”

The second surprise was the popularity of goods. “We’ll run a deal for a Garmin GPS device and sell 30,000 in eight hours. There’s never been an outlet for something like that,” Mason claimed — though many other companies, like Amazon (which owns Groupon competitor LivingSocial), run flash deals on goods. The company is “absolutely not” building out an Amazon-like service with fulfillment and shipping. “The way we think of goods is a way to strengthen that core, daily deals value proposition.”

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

NYT editor unsure if reporters are print or digital – and that’s a good thing

Jeff John Roberts — Wed, 28 Nov 2012 15:56:20 +0000

The executive editor of the New York Times, Jill Abramson, does not fetishize print newspapers and says the NYT’s editorial integrity is as strong as ever. Her remarks suggested that, despite financial hiccups and a mini-contretemps over a new CEO, the celebrated publication’s day-to-day operations are in good hands.

Abramson, who has been in the job for a year, made the remarks during a freewheeling interview with Henry Blodget at Business Insider’s Ignition conference in New York Tuesday. She offered a frank and confident appraisal of the Times and the evolving business of news.

In response to a question about how the Times divides up the newsroom between print and digital reporters, Abramson says most staff no longer fit into one category or the other. She does not oversee “the paper” or “the web” but rather a global product she calls simply “the news report.”

“There was too much focus in the past on the print product,” said Abramson. “[We] now make sure energy is 24/7 and not focused on newspaper deadlines and rhythms.”

This is a relief to hear because, from a business perspective, the Times has recently been relying on price hikes to its print paper to make up for cratering ad revenue. The price increases, however, provide at best a medium-term solution. Abramson acknowledged as much, noting that when she taught journalism classes at Yale, none of her students read paper newspapers.

Abramson’s pragmatism improves the Times‘ chances of developing the right longterm digital strategy which, for now, relies heavily on an imperfect paywall model. Her presence may also help the Times preserve its role as a news authority at a time when many once-mighty news brands are rapidly waning.

The interview also provided some personal color. Abramson, who grew up on New York’s Upper West Side with parents who had two NYT subscriptions, said she is regularly accosted by fellow dog walkers over the Times’ Sunday Review.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

To Kleiner Perkins’ web woes, add greentech

Katie Fehrenbacher — Wed, 22 Aug 2012 07:00:06 +0000

Business Insider Editor-in-Chief Henry Blodget wrote an article on Kleiner Perkins that I actually agree with, pointing out how the once dominant VC firm has misstepped when it comes to its web investments — particularly its later stage investments in Groupon, Zynga and Facebook. But Blodget missed a big chunk of Kleiner’s fall from grace story: the firm’s investing struggles include a really aggressive bet on capital intensive cleantech companies several years ago, which has yet to pay off and from which Kleiner seems to be moving away.

Blodget focuses his article on how in the early 2000′s “Kleiner lost its edge,” and missed investments the first time around in the next generation Internet companies like Facebook, Twitter, Zynga, LinkedIn, and Groupon. Then in 2011, seemingly to make up for those missed investments, Kleiner launched its digital growth fund and tried to associate itself with hot web companies by buying stock in these companies from existing investors. Subsequently those later stage investments in Facebook, Groupon, and Zynga have been disasters, says Blodget.

So what exactly was Kleiner doing while it missed those early next-gen web deals? A big chunk of the firm’s attention and finances were going to greentech startups. A third of its 12th, 13th and 14th funds went to greentech, Kleiner Partner Ray Lane told me in an interview in the Summer of 2011, and the firm at that point had 14 active greentech investing partners. (It still lists 20 execs under the greentech section).

Cleantech hasn’t delivered the returns expected on the timeline expected for most venture capitalists. A few VC’s are still positive on the sector (like Nancy Pfund), but many are not and a good portion of the generalist investors have moved away from it. Kleiner’s Lane said last year that Kleiner wasn’t moving away from investing in cleantech — but that was last year.

Since then, both greentech focused partners Ray Lane and Bill Joy have moved away from making new investments for Kleiner. And many of Kleiner’s greentech portfolio companies are struggling to scale up. Thin film solar company Miasole recently did layoffs, electric vehicle maker Fisker Automotive has hit financing and scaling problems, smart grid company Silver Spring Networks never made it to its planned public debut, solar company Amonix shuttered it factory and V-Vehicle has basically gone kaput. Other Kleiner portfolio companies have been more successful, like Opower, Nest and Clean Power Finance, but those companies have yet to find exits, and make Kleiner money (and those firms are also all IT based).

Back in 2009, Kleiner’s John Doerr even noted that if Kleiner had seen how bad the market was going to crash, it probably wouldn’t have started it’s green initiative. Lane has expressed similar sentiments to me about how difficult the recession has been on greentech startups trying to raise money and scale up.

Kleiner could still make some money in greentech over the long term, but it’s clearly not meeting the traditional VC timetable of returns that Kleiner’s been used to. I’ve noted before that some of the major web home runs could have made up for these longer horizon greentech companies, but if those web investments aren’t their either, then that’s a big problem. There’s clearly a point when a firm has to return its funds, particularly when younger upstart firms like Andreesen Horowitz seem to be making the fund back in spades.

Is it the end of an era for Kleiner and did greentech play a large part? What do you think?

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

The #1 Reason Not to Feel Bad Over a VC-Rejection

Carleen Hawn — Mon, 31 Mar 2008 15:08:35 +0000

They’re just throwing darts at a wall. Or worse…

“Oh, Look! Mr. Peepers just picked the very same [startups] your investment software did!”

OK, venture capital may be slightly more sophisticated than this — but I have trouble with VCs who nobly claim that their business has more risk than any other, and in the very next breath hammer you with their big-brained analytics for consistently discovering winners. At least the honest VCs admit they often have “no idea” what will succeed and what won’t.

Consider what Fred Wilson had to say yesterday in response to Silicon Alley Insider’s attempt to handicap the 25 most valuable Internet startups. Fred wrote:

… the idea of trying to determine the most valuable startups is an exercise in futility. Yes, it’s clear that Skype, YouTube, Facebook created a lot of value for their founders and investors… Here’s what is certain, many of the companies they put on their SA25 list will be busts. Many of the companies that don’t make the list will create hundreds of millions if not billions for their founders and investors. [Henry Blodget, editor of SIA] asked me to nominate some of my companies. So I nominated all of them. I have no idea which ones will make us a lot of money and which ones won’t.

Fred admits that if he’d been asked to handicap his firm’s “most-likely-to-make-the-fund” portfolio companies before the last bust — he’d have gotten it dead wrong.

“I certainly would not have picked Mercado Libre. Our whole foray into latin america was turning into a disaster … But here we are, MELI is worth $1.6bn.” Meanwhile, other investments that looked like “sure things” went bust.

I love it that Fred, and other VCs like Josh Kopelman are willing to say they have no idea which of their portfolio companies are most likely to succeed. “Uncertainty is the hallmark of the venture capital business,” Fred concludes. Keep his words in mind the next time you get rejected, or discouraged.

No one knows how these things will turn out, and in that truism lies a font for optimism — if not opportunity.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.