Stay on Top of Enterprise Technology Trends
Get updates impacting your industry from our GigaOm Research Community
Late Monday afternoon, Arianna Huffington tweeted a picture from AOL (NYSE: AOL) headquarters with the note “Valentine’s Day transition meeting with ice cream sundaes afterward.” She’s already sent one from the AOL gym. The actual $315 million merger of the Huffington Post with AOL is weeks away but the transition is already well in gear.
The First 72 Hours: The merger of AOL and The Huffington Post is a month away at best but to Tim Armstrong, it’s all about the first 72 hours. “Mergers work and don’t work in 72 hours of the deal. Full stop. That’s what happens. If the visions aren’t aligned and the personalities don’t align, they don’t work. I can go through history and point out every merger that didn’t work and there’s some set of stories. If you talk to the AOL – Time Warner (NYSE: TWX) people, which I have, and you hear the first 10 stories of the deal, you just knew it wasn’t going to work out.”
If that is the case, this one has a better shot of working than AOL’s previous big deal history shows. It helps that the players are new with an enthusiasm factor that goes off the charts. Monday, Huffington started that transition meeting by telling the leadership team for editorial, sales, and tech: “I was excited a week ago when we announced; I’m even more excited a week later.” Why? “There is such boldness about everything we are looking at. There is that sense of ‘the sky’s the limit’ of what we want to achieve. That sense of possibility is a great way to build a team.”
She’s given out her AOL e-mail address, an old one she had the foresight to keep, at every turn. Has she heard from any of the staff? Hundreds. “We can’t act on any of the ideas because we have to wait for the regulatory process to be complete.” That’s at least three weeks out. “We’ll collect ideas and then as soon as we get the final permits, we’ll be ready to start.”
But AOL has an overhang when it comes to big deals that’s hard to shake externally and internally.
That’s why it was particularly interesting to be in the front row when the two went to AOL’s Beverly Hills office for an all-hands meeting two days after the deal went public. They weren’t there to tell the 50 or so staffers in the screening room about the merger. They were there to sell them. I was an accidental tourist, initially asked to treat the session off the record. (This was but one of many meetings in person and by video conference, including a day-one AOL-wide session.)
The two, wearing dark jeans to very different effects, stood side by side at the bottom of the steep room, with HuffPo editor Roy Sekoff nearby and AOL execs along the wall.
Armstrong, the master of the sales pitch, quickly stepped out of the way for Huffington after a few almost off key comments about her status as a women entrepreneur. “The female touch has been missing from the web,” he said, calling it a “revolutionary day” for the internet and mentioning iVillage as the last big women-centric internet company that was sold. (Not the deal I would have mentioned given the issues NBC Universal (NSDQ: CMCSA) had bringing it in house.)
But she picked up the theme, saying it was “fantastic” to see so many women in the room. And it is quite true that bringing Arianna in has the instant effect of diversifying AOL at the top. Nearly every major Armstrong hire has been male, including the head of every content area. When I mentioned a week later that the transition meeting she tweeted seemed to be mostly male, she listed the women who were there, including board member Susan Lyne.
She quickly picked up with an idea that occurred to her during the Signal LA session, matching Armstrong’s vaunted display ad program with Project Devil with her own Project Angel, humanizing content with a “clear voice and intimacy.” “So much reporting is regurgitating data,” she said. She wants to “put flesh and blood on the data” and “do success differently.”
She also wants to humanize work. Armstrong has the winter luge. Huffington wants a napping room. “We need to unplug and recharge. Be less stressful and have more impact. Have a sense of pleasure and fun.”
It’s a message that’s a little at odds with the 24/7 dynamic of the highly competitive internet content space. She took a poll of the number of people who sleep with connected devices nearby, then suggested they charge them in other rooms.
When she offered her AOL address for staffers to be in touch with ideas and comments, the clicking as people took note was audible.
But the most illuminating part came with questions from the mix of sales and editorial staff in the room. They wanted to know why she sold without an auction, what’s going to happen with the HuffPo bloggers, when Armstrong’s blogging will kick in, how she works with editorial – and they push back at her statement that she’s going to cut down her TV appearances.
“We need you to do that,” one staffer said. “You get a younger group of people that are not part of the AOL family.”
Huffington plans to cut out cable TV altogether during the next few weeks, at least. “No more cable TV until we get all the organization done. I’m going to be single minded. During this critical stage of executing our plan I’m cutting out a lot of things that are not as essential as getting these plans on track.”
Armstrong quickly jumped in: “We want her out there.”
And he wants her “in” here too – Huffington changes the narrative at AOL, bringing a new energy to a strategy that centered on content but lacked focus. One relative newcomer might as well have come from central casting: “We’re so excited to have your bold and forward thinking move here. It’s just invigorated us.”
The AOL Network?
While Huffington is staying off of cable TV, she has major plans for video at AOL. HuffPo never quite got its video act together but AOL has all the resources in place to ramp up – and even to create its own network. Huffington already has a pilot in hand about women’s issues.
Huffington laid out the broad outline for video. “Having our bloggers turn their blogs into vlogs, this is the low hanging fruit. The content is there, the studio is there and it will give us amazing monetizable content very quickly. Also, video around causes — the easiest way to get a celebrity to do a video is something they care about.”
The staffer who was so invigorated mentioned a pre-deal interest in a show based on HuffPo’s divorce vertical (appropriately based in LA). That’s just one example of the possibilities.
For Armstrong, the divorce vertical, which was suggested by Nora Ehpron, shows how AOL + HuffPo can lead in content. We’ve heard his turnaround to comeback line; this time it morphed into turnaround-comeback-pioneer. Asked who they see as competition, Armstrong replied: “We don’t need to worry about them. We need to just put the absolute hammer down and just make magical experiences for consumers and advertisers.” HuffPo’s Sekoff chimed in: “It’s not a zero-sum game anymore.”
And Armstrong finished it off: “We’re going to kick a lot of ass and people are going to look at us as a creative engine for the web. It starts here and finishes with you guys.”
That doesn’t mean everyone is on board. Huffington’s liberal image is a flashpoint for some, an excuse for others. Bringing together teams comes with its own issues. Good will and enthusiasm don’t always translate to effective transition. Plus there are disaffected staffers at AOL who were complaining and leaking before the deal.
First Down: Not surprisingly, Armstrong disagrees vehemently with Ken Auletta and others labeling the acquisition as a “Hail Mary pass.”
“It’s not. It’s first down. Basically everybody who sees us through the Time Warner lens of Bebo, switch to free, all the things that have happened — those are all basically massive Hail Mary changes to the company. We’ve been saying for two years we’re in the content space; we’re going to invest in content brands. Huffington Post is the best content brand on the internet right now. It’s right dead center of our strategy.”
Fair enough. Armstrong walked into a content strategy that wasn’t his, one that devolved from the switch Jon Miller made to attract web users when AOL went free and with a fair amount of confusion baked in. He’s changed it along the way, most recently outsourcing health, sports and parts of real estate to companies with stronger traction in those areas. He cultivated Seed and acquired his own hyperlocal startup, Patch, expanding it dramatically.
But if it’s a first down, it comes after multiple drives down the field failed to convert. Now it’s up to Huffington and the team she brings together from HuffPo and AOL to manage not just media, but all AOL content. At first glance, the group of properties that will be under the Huffington Post Media Group makes little sense – media, yes, local, yes, but mapping and search?
It needs to be integrated, Armstrong insists. “From our standpoint, breaking down siloes and having people think differently about things is part of this acquisition.” Search will sit outside “pure” content but mapping is content. Patch has been meshed with Mapquest already. “The benefits of having Mapquest within this integrated content group is mapping is an experience, it’s about where you’re going but it’s also trying to find what is it where you’re going, what is the town, location, place like? I think that is one of the successful things we’ve seen with Patch is Patch is so localized to the community we can actually match up map results with Patch results and mix them together and that’s a very potent cocktail for mapping and for content.”
Huffington stresses that her job is editor. As was the case at HuffPo, others will do the operating. “I’m the editor-in-chief. There’s going to be an operating officer. … My job is to make sure that we have a cohesive editorial vision across all sections and make sure there’s all the kind of engagement we’re looking for. As I was at the Huffington Post, I’ll continue to be here — involved in sales teams, marketing, because that’s part of what I do to facilitate making what we’re doing as profitable as possible.” She told the AOL team she’s on every editorial thread.
When I suggest that the execution will be hard, Huffington politely steamrolls that notion: “I don’t think so. I’m very optimistic about it. We had the same reaction in New York, the excitement. It’s so real and authentic, you can feel it. I think because it’s the right move for the companies, it’s going to be really, really embraced. I think that’s what’s going to make the transition and the integration easier. I’m not saying there won’t be challenges but I feel they will be the challenges of creating something great.”
One challenge is getting people internally and out to move with her toward the idea that HuffPo is independent, not liberal. Asked if HuffPo and AOL can be used as different ways to brand news, Huffington says it’s about educating the user: “I think it’s important for us to keep educating our readers that what we’re doing in our politics section is informing, we’re not doing advocacy. We’re not protecting any ideology or cheerleading for any particular group. This is really about good news and opinion coverage with a reverence for facts. That has to be like our DNA. Facts are revered. Storytelling is the way we want to capture what is happening across all the sections.”
Despite Armstrong’s calculation that 85 percent of the HuffPo isn’t about politics and her protestations about ideology, you can’t escape the image of a liberal bastion with Huffington as the liberal equivalent of France’s Marianne. Or can you? Pushed a little, Huffington, who remade herself as a liberal years ago after she became known as a conservative, returns to the idea of education.
“One of the things we need to educate people about is the issues the Huffington Posthas covered exhaustively, like the decline of the middle class, are not left-wing issues. Who in this country does not want a thriving middle class? … We’re where a lot of digital consumers are. We’re much more independent politically. Party registration is going down. People are registering independent. We want to capture that in our coverage.”
When I passed along a message from my mother, who wanted me to tell her she’s disappointed and doesn’t like AOL, she replied: “You should tell your mom that nothing is going to change at the Huffington Post.”
It’s a nice sentiment and she’s sincere. But it doesn’t mean everything will stay the same. It can’t — or you can label this another AOL deal that doesn’t work despite the 72-hour honeymoon.