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Three Founders Are Out At Demand Media

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Demand Media is known for churning lots of content through its sites, but today it’s notable for another churn, of the executive kind: three of the people who helped found and build up the company are leaving.

Larry Fitzgibbon, Joe Perez, and Steven Kydd — who had all been founders and EVPs of Demand Media (NYSE: DMD) — are to leave the company. All three had been with the company for seven several years — approximately 5.5 years.

paidContent first learned of the three founders’ departures from an anonymous source; the news was then confirmed by Kristen Moore, VP of corporate communications for Demand. She said that most of their duties will be passing on to Michael Blend, EVP of Media & Marketplace for the company, after a transition period of a couple of weeks.

Demand does not anticipate any strategic changes as a result of their departures, she added.

Fitzgibbon had overseen international operations, Perez was in charge of product and Kydd was EVP of video — a huge portfolio if you look just at those category names.

Kydd’s departure as the head for video comes at a crucial time for Demand, which will be one of YouTube’s partners for its premium-content video effort launching this year.

Fitzgibbon’s responsibilities for international, meanwhile, will be partly overseen by one of his former reports, Stuart Stewart Marlborough, an SVP who is based out of London Santa Monica. He will report to Blend.

Update: there is now an 8-K filed for Fitzgibbon that detailed his departure terms. All three owned equity in the company, but Kydd and Perez had “not enough to trigger the 8-K,” said Moore:

In connection with his resignation, Mr. Fitzgibbon entered into an Executive Separation Agreement and General Release with the Company dated as of January 27, 2012. The Separation Agreement provides that Mr. Fitzgibbon will receive the following benefits in connection with his separation from the Company: (1) accrued but unpaid base salary through the date of separation, (2) his accrued bonus at 100% of target for 2011, in an amount equal to $125,000, (3) twelve (12) months of continued COBRA coverage and expense reimbursement under the Company’s Executive Medical Reimbursement Plan, (4) acceleration of 21,750 of his currently unvested restricted stock units and (5) one year to exercise vested but unexercised stock options outstanding as of the date of separation.

According to Moore the fact that the three departed at the same time was “just coincidence.” The departures, she said, had nothing to do with contracts around the company’s IPO — that lock up, in fact, expired in August last year. She added that the three will “pursue separate opportunities and new business ventures” but did not provide further information.

We’re still looking into the story, and will update it as we learn more about the three executives’ future plans.

Demand Media is due to present its Q4 results on February 16.

Other founders of Demand are remaining with the company. They include CEO Richard Rosenblatt, head of M&A Shawn Colo, and EVP Courtney Montpas.

12 Responses to “Three Founders Are Out At Demand Media”

  1. Kevin Horne

    All this back and forth in the comments about traffic numbers is a red herring. DMD is now a public company, and needs a little more than “stabilized” traffic. Considering the stock is now at sub-$7, it would need traffic growth of about 10% per month to even have a chance at getting back to its IPO price.. That pace of growth doesnt seem to be in any cards. Dead money.

  2. Brianstkmav

    Dinoj1, That article is ancient. The monthly uniques for eHow–I own DMD stock, so I watch closely–have risen and stabilized to near-peak volume, so the predictions in the piece appear to be wrong. Do you have anything more current?

      • Brianstkmav

        Dean, The problem is the numbers have fluctuated, so comparing over a range of months from end-to-end doesn’t tell us much for the sake of hardcore analysis.

        For example, according to Compete, eHow was attracting 39 million uniques and change in December 2011. Last December, the UVs were 41,123,396. That’s an increase. That number is down from it’s peak of 45+ million in March, 2011, just before Panda hit the company, but it’s significantly higher than the 37.8 million low it hit in July, 2011.

        Furthermore, the traffic has stabilized with four straight months of 40+ million. If you watch the weeklies, that stabilization should continue for a fifth straight month, probably with a slight increase. Compete ranks the company 22nd in US UVs. Not bad. Could it go down, of course, but those UVs give the company a firm foundation for building and growth. We’ll have to see what they do with it, but I’m not selling my shares.

        • Traffic may fluctuate. But they’ve abandoned their original strategy of matching articles to long tail searches. Now they’re trying to become a premium “destination site”. Analysts may like the strategy of lessening dependency on google but they won’t like that ehow is now competing with premium entertainment sites. It doesn’t bode well for the former content farm.

  3. Interesting times at Demand – they dried up the work for their thousands of writers, with no official announcement other than “that’s the way it is” (most found out by seeing zero titles where months earlier there had been thousands), then this month they started reorganizing into new content silos (while maintaining that the dried-up work is still “the way it is”).

    It appears like Demand doesn’t have much of an idea where they’re going next. The IPO cash only lasts so long and if you believe some critics they’ve never actually made money. It’s no doubt they’re cutting their content costs by slowing new production to a bare trickle and just profit-taking on existing content, but that’s not a business plan any investor should be happy with.

  4. Wow. The number if incorrect statements in this article is astounding. Your portrayal of who runs what (outside of what their title indicates) and the significance of the roles these 3 played is stunningly inaccurate.

    • Ingrid Lunden

      Hi commenters. I have corresponded with the spokesperson quoted in the
      story. The “seven” was my mis-hearing of “several”, which is now
      corrected. Spelling for Stewart Marlborough is also corrected, as is the
      city where he is based. Thanks for pointing this out. As for who really
      runs what, I am not getting into that in this story except to point out
      that they were the EVPs with these titles. I’m all ears for other news related to this story, or to Demand Media — not dirt, but actual news. Thanks.

      • Studio4PR


        As a former journalist and current PR professional, I can only surmise that you are new at this job. A writer’s credibility is his calling card, and while no one is perfect 100% of the time, good writing usually trumps the few mistakes that are made.

        Not only do you have glaring errors that others far more familiar with DM than me have already called you out for, but you published this post with strikeouts through the incorrect copy, so now EVERYONE can draw the conclusion that you are not qualified to cover this story.

        The first rule every journalist learns is: make sure your sources are confirmed before going live with anything. The second is: proof, proof, proof your copy, and then proof it again!

  5. A lot of poor reporting here, including referring to employees of “seven
    years” despite the company being approximately 5.5 years old, as well
    as a misspelled name and erroneous mention of an employee in London. If
    you’re going to hammer companies for being “content farms” (which you’ve
    done for several years now) at least show you have the journalistic
    chops to get basic facts straight.