February 14, 2020
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The Most Successful Pubs Have Long Time Horizons and Require Repetitive Focus

When Axios broke the news last week that Dotdash had acquired two publishers, TreeHugger and Mother Nature Network, it got me thinking. In the report:

Dotdash, the IAC-owned digital publishing company that grew from About.com, has acquired two new digital publishers, TreeHugger and Mother Nature Networkto create a new sustainability vertical within its portfolio, executives tell Axios.

By the numbers: The company expects to do $160 million in revenue and $40 million in EBITDA for 2019.

There are two things worth looking at here. The first is obvious… Dotdash is solidly profitable and continues to grow. In digital media, that’s impressive. On top of that, it’s scaled profitability.

The second is less obvious, but if you look at all of Dotdash’s sites, it becomes clear that the majority of this revenue comes from one stream: advertising. Despite the mantra of many people—including me—that media businesses need to have diversified revenue streams, Dotdash has really focused on what works for them. (As a quick aside, I love that they don’t have the chum-box on their sites, especially since they’re an ad play).

It’s a straightforward business. Fast Company did a profile on the business worth reading, but I wanted to highlight this part:

“People call us a tech company, but the reality is we are a publisher,” says Vogel. Dotdash developed a formula that Vogel has turned into a corporate mantra: the freshest content on the fastest sites with the fewest ads.

By focusing on text rather than 24/7 social responsiveness or expensive video production, the company keeps its costs down. More than 1,000 remote, part-time contributors across the brands use tools built by Ellerson’s team to help identify story ideas that resonate with audiences.

The sites load very quickly, and the company’s proprietary content management system is designed for efficiency: Designers and editors can choose from fast-loading templates that include images, video, and interactive applications.

The emphasis in the quote is mine, but this highlights the entire topic of this essay.

There are two major themes in play with regard to successful media business: a long time horizon and disciplined focus.

Let me break down each of those down for you…

Long time horizons

The phrase “time horizon” is centered around how long an investor expects to hold a specific asset. Day traders obviously have very short time horizons whereas those of us with a 401k have a long time horizon because we won’t be able to touch it for decades.

How you look at an investment determines the decisions that you make. The best media companies look at their “investments” in the multiple years or even decades long timeframe. A decision that they make today might not have a strong return for a long time, but as the effects of compounding take root, the benefits begin to show themselves.

There are a couple companies I want to talk about who have had the foresight of a long time horizon.

Barstool Sports

David Portnoy started Barstool Sports in 2003. It was a print publication all about gambling and fantasy sports. His first website didn’t launch until 2007.

Portnoy knew that he wanted Barstool Sports to be about gambling from the beginning even when there wasn’t a clear path to profitability there. Online gambling was illegal and it has only been the past couple of years that online sports betting has been acceptable.

Fast forward to 2016 and only after the business has been around for 13 years did Chernin acquire the majority of the business.

13 years. I’m 31 years old and I honestly cannot think about what I’m going to be doing when I’m 44. Actually, I can. I’ll be writing A Media Operator.

He was able to focus on methodically growing Barstool when others were dealing with shorter time horizons. The ability to think long-term allowed a certain focus on the core audience.

Aging Media

I’ve written about this business before, but the time horizon is unbelievable. John Yedinak launched the first site in 2006. 14 years later, he and his brother are still running this business, which has expanded to multiple publications. Investments that they made in those early years are still paying off.

It’s possible that they weren’t thinking about the network when they got started, but as majority owners, they were able to operate at the pace that they felt comfortable with.

Today, they do millions in revenue and are very profitable. If I had to guess, they will do more in profit and revenue in 2020 than they did in the first ten years. Why? Their early focus on really covering their industries have paid off with readers’ trust allowing them to expand into new revenue streams.

A disciplined & repetitive focus

Let’s move to the second part of my original thesis. The most successful media companies have a disciplined and repetitive focus.

When you’re dealing with a longer time horizon, you have to stay really focused. Those that have a shorter time horizon tend to lose focus and get distracted by new ideas and opportunities. Let’s break down what that means…

Running a news organization can be frustrating because you need to deliver a product every single day. The reader expects there to be new information every year. It’s pretty repetitive. If you do great work today, congratulations. But tomorrow, you better also do great work.

Every single successful media company does this. They remain disciplined and repetitive with their focus.

Take The Hustle. Every morning, their newsletter is in my inbox. It’s always there. They haven’t deviated from that focus, consistently delivering a product. The business model, by and large, is also repetitive. Every day, there is a newsletter sponsor that has unique copy to entice the click through. It’s all incredibly repetitive, but that’s their business. It works.

Let’s go back to our friends at Dotdash. The team there could have hired a big video studio and tried to chase that mayhem over the past couple of years. But they focused on their original business model: producing text-based content.

Now that they have perfected their repetitive focus, they’re able to quickly expand their business. In the Axios story, Sara Fischer reports:

The big picture: Dotdash has built a sizeable digital publishing business by acquiring service content websites with loyal followings and then growing them using its resources and the resources at IAC.

* It grows the audiences at these sites by first optimizing them technically — streamlining the ad experience, revamping the design, making them faster, etc. — and then selling them at scale alongside other Dotdash-owned sites.

* “This is our fourth time doing this. At this point, we’ve proven that we can grow an audience and then monetize it. We have a swat team in doing these things.”

Because they have taken the time to perfect their processes, they’re now able to expand much faster. This is worth reiterating because it’s an important point. If you’re bouncing ideas around and trying a lot of different things, you’re never able to perfect your processes. Because media is repetitive, if you’re able to have disciplined focus on perfecting your processes, things become easier as time goes on.

I’ve never met CEO Neil Vogel, but I would bet that one of his bigger frustrations today is that he can’t acquire other sites faster. Once you have a system, integrating new publishers likely becomes easier.

What went wrong with media

And yet… So many media businesses have done so poorly and many of the failures can be explained by these two primary topics.

How often does media pivot? Over the past decade, there have been so many “amazing business models” for media. Deal sites, programmatic, social video, podcasts, subscriptions and the list goes on. There’s no real focus with what’s being done. Media companies threw things at the wall and waited to see what happened.

There was no discipline to this either. It was just coming up with random ideas and seeing what happened. They didn’t take the time to build that repetitive focus required to really understand their processes. But why did publishers do this?

Many were desperately chasing their next venture capital round. They couldn’t plan for 5-10 years because they needed to show enough growth to get that next fundraising round in 18 months.

Let me be clear, though… I’m not saying there isn’t a place for fundraising when it makes sense.

Portnoy built for 13 years before the first round of investment, which gave the company a ton of resources to really grow the business. Four years later, it’s been acquired at a $450 million valuation. Amanda Hesser and Merrill Stubbs of Food52 built for 12 years before they sold for a nine figure valuation. Now they’ll have the resources to grow the business even faster.

Media takes time. It takes focus. And most importantly, it takes discipline. It’s hard to watch competitors do different things that look exciting and still have the discipline to stick to your game plan. But sticking to that game plan ensures that the processes are perfected. And that perfection only happens with consistency.

When you’re dealing with a short time horizon, a spastic approach to building is your only choice because you’re trying to get out as quickly as possible. When media is your life, you can operate with years and decades in mind. When that’s the case, decisions you make can take time to really bake.

That discipline is key to success.

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