April 22, 2024

Andrew Perlman Talks About the Growth of Recurrent


Jacob Donnelly: I’ll be honest, beyond looking at your LinkedIn, I know very little about your background. Can you talk a little bit about your career leading up to Recurrent?

Andrew Perlman: Sure. My love of digital media started incredibly early on, both in the life of digital media and also in my career. My first internship was actually in the first online media department at Anti Record Label, which was at Atlantic Records in the summer of 1997. After a stint in the music business, I ran digital licensing and business development for a company called Classic Media, which is now DreamWorks Classics, then ran a publicly traded company that was involved in patent licensing, and remembered that my first love was digital media and left in the summer of 2018 to ultimately found what is now Recurrent.

Jacob: Can you talk a little bit about that original investment thesis when you made that first deal?

Andrew: Sure. In the summer of 2018, and in many ways, we’ve actually returned to a similar market, there was really very little appetite from investors to buy digital publishing assets. Vice and BuzzFeed, actually back in 2018, had really not been kind to their investors. As a result, it seemed like, to me from the outside looking in, there was going to be a great opportunity to buy phenomenal brands with authentic audiences.

I started to look around the space, and ultimately, it led me to the acquisition of The Drive. My original thesis was that you could buy these great brands with authentic audiences, run them a little bit better, and maybe inject components of commerce into them. Ultimately, that’s what we’ve done over the course of the past five years.

Jacob: Did you set out to acquire The Drive or did you set out to get into digital media again and happen to find The Drive?

Andrew: It was much more the latter than the former. What I will say is, I’ve always had a deep passion for cars. As a kid, I had two sets of Porsche 911 wallpaper, and I had the really good fortune of being with a close friend of mine, a guy named Alex Roy, who’s pretty famous in the auto community and also an incredibly talented writer, former chairman of The Moth.

At the time, Alex was writing for The Drive. He said, “Time Inc just got bought by Meredith, and The Drive is one of the many assets that are for sale. This might be a really good acquisition that fits what you’re looking for.” Separately, by the way, I had always been a fan of the asset. Drive was one of the original automotive YouTube brands. It was the original home of Chris Harris, who went on to be one of the hosts of Top Gear, of Matt Farah, who started The Smoking Tire. I was very familiar with the brand, and the notion of being able to acquire it, just even at first conversation, got me really excited.

Jacob: Now you’ve expanded to six verticals that on your website you refer to as auto, home and culinary, military, lifestyle, outdoor, and science. Was the plan always to expand into these specific verticals, or has every acquisition been mostly opportunistic when you find something?

Andrew: To take a step back in terms of the thesis, really what we’ve been focused on is verticals where there’s an incredibly high convergence of the content and commerce. Really what that does is create two opportunities. First of all, it automatically means that you’re going to get endemic advertisers.

A great example is we own Outdoor Life, a phenomenal brand that has 150-year history in the space. If you are an outdoor gear manufacturer or you’re making fishing rods, that is a place where you have to be seen. As a result of being incredibly focused on these verticals that have that dynamic, you have a built-in base of endemic advertisers. The same is true in auto and home, particularly in our military vertical.

The second opportunity that being focused in that way gives you is the ability to have e-commerce opportunities. That really is embodied in two different ways, in direct-to-consumer e-commerce, but also in affiliate e-commerce business. In that regard, Bob Vila is a great example of what we’ve done where Bob has been a trusted name and really that is a brand that invented the do-it-yourself category.

When bobvila.com creates the incredibly well-done, well-thought-out product reviews that it does, it creates affiliate e-commerce opportunities. Being set up in that way was always intentional. In terms of the verticals that we focused on, again, it was through that lens that we started to do that. In every vertical that we’ve looked at, actually what we did was do a massive survey of every single asset that we could acquire.

If you look at home, for instance, we built our own database that has a list of over 1,000 different media brands in that space. It has impressions, domain authority. We actually were incredibly intentional in terms of building up those verticals.

Jacob: When you’re buying these various publications, how are you underwriting it? Is it purely just an EBITDA play or is there some sort of deeper analysis that you’re doing to help determine the price you’re willing to pay?

Andrew: The analysis is much deeper. I think starting with the process that I just outlined, which is that we really took a look and did a deep dive at every single vertical, a lot of what we did was outside of the typical banker process. We were sitting there and literally cold calling different businesses and saying, “Hey, this is who we are. We might be interested in your asset.”

What happened over time, and of the 16 acquisitions that we’ve done, I can probably point to 6 or 7 of them where the conversation lasted, not a matter of months, but a matter of years before we were actually able to do something. When we first acquired The Drive, The Warzone asset that’s part of The Drive came with that acquisition. We were always looking at military. One great example is as soon as we closed on The Drive, which was November of 2018, I was already aware of the Task & Purpose asset. Started to have a conversation with them at the beginning of 2019, didn’t actually close on that acquisition until almost the end of 2020.

These conversations last a long time. To your question about underwriting, the underwriting process I view is multidimensional. First of all, looking at a case like task and purpose, we really got to know the people behind the asset. We got to know the owner of the asset. We were really tracking what was going on from an editorial and content perspective.

We’re not only looking at the steady state of the business, but what’s that business look like when it becomes part of us? How can we grow that business? Are there advertisers that we could reach that we couldn’t otherwise reach on our own? What we have tried to do is obviously look at the fundamentals of the business as it is, look at the downside in ways that we can protect ourselves, but also really take a hard look at the growth opportunities and things that we can do together.

Jacob: I think a lot of people look at M&A and they get excited, right, because you’re buying a business. It can, I suppose, be a lot of fun. Then obviously the day after you sign the papers, you have to integrate the business. Let’s say I was running a media company. I am running a media company. Let’s say I’m running one and you decide you want to buy AMO and we come to terms and you say, “Yes, I’m going to pay you X, Jacob.” What does integration look like right after that happens? Walk me through those steps.

Andrew: One of the things that you will hear from me, and I know it’s a cliche, but sometimes the reason why things are a cliche is because they are so unbelievably true. It’s all about the people. Everything starts with the people. The biggest question that I would have is how are all these people and all of these parts going to fit together in a way that is really propelling the business forward? The last thing in the world that you would ever want is to buy a business and have an unmotivated team.

One of the things that we did, and we got better at it over time, I don’t mean to say this in a way where we suddenly showed up on the scene and magically had an integration team, but we really did build that out as a function over time so that on day one, things were happening more and more seamlessly as we got further along the acquisition chain.

Again, starting with the people, the details really matter. You don’t want a team to show up and say, “Hey, wait, am I still on that old benefits plan or am I on the new one?” That’s a really disheartening thing. These businesses, particularly media businesses, are made of the people. Every single acquisition that we did, certainly, and again, this got more and more buttoned up over time, but every single acquisition that we had not only our own internal investment memorandum, had our diligence package, which included a really rigorous set of financials, had our legal diligence package, but it had an integration plan attached to it. Starting with the people, going all the way down to the incentive plan, going to the go-forward technology plan, and then other synergies and things that we could build upon.

Jacob: As you’ve bought 24 brands, I believe, what goes horribly wrong in integrations? What are the things that just like– what’s gone wrong?

Andrew: What I would say is there are things that have not, in some cases– I guess to frame it, we’ve done this through 16 different deals, and I think that we’re reasonably smart people, but nobody ever bats a thousand. I would say that some of the things that have not gone as anticipated are sometimes technology integration takes longer than you think it might.

Right now as a business, we have a big focus on improving our tech stack and really making sure that we have the ability to get scale out of having all of these multiple assets. There are some things that quite frankly take longer than they should. Time always has a cost to it both in terms of mental attention, but also in terms of dollars and cents costs.

Those are things that I would say we didn’t estimate correctly. Sometimes you don’t estimate the synergies correctly. One of the things that quite frankly we’ve been very careful about is to price things as if there are no synergies. Synergy is the upside, but that said, you’re building a business plan based on what you want to have happen.

Sometimes we haven’t gotten advertisers to push across the portfolio. Sometimes, we have people where we didn’t correctly estimate what we thought their incentives should be. Those are just some examples of things where things may have been delayed or not gone right. To your question about underwriting, sometimes you underwrite what the market’s going to do in a way that’s not exactly accurate.

Jacob: Obviously the first number of years, the goal was acquiring brands and so you have 16 different deals. Over the past couple of years, you’ve actually divested a couple of brands. You got Saveur, MEL Mag, and then Field & Stream. What is been the strategy and the deciding factor to sell off assets rather than just continuing to acquire more?

Andrew: Yes. 100%. I guess I’ll point to the to of the examples that you mentioned in Saveur and Field & Stream, and those were very specific cases that were very different. I think it’s actually fits into the question of, sometimes what do you not necessarily get right? Saveur was an interesting example, in the case that it was our sole, culinary asset. That is an incredibly competitive category from a Google SEO perspective. It’s actually the most rigorous when you look at the taxonomy that you have to have to win. Number one.

Number two, there are operational things that sometimes you might not think about. To be in the culinary space, you have to have a big test kitchen. That’s a very different dynamic than what we have to do in the rest of our home category. Kat Craddock who was the editor-in-chief and now is the editor-in-chief and the owner and CEO came to us and was able to raise the capital to do it. I think quite frankly, she’s done a phenomenal job on her own. I’m very proud of the deal that we did with her and quite frankly, very happy to see her success from afar.

Field & Stream is really an interesting example as well because it actually fits into some of the themes about our go-forward strategy. Of all of the assets that we’ve ever acquired Field & Stream was an interesting case because it was the only asset that we ever owned where we did not own the underlying IP. The reason for that was actually 20 years ago, an investor group had acquired the IP when Field & Stream was owned by Time Inc, built a licensing business and ultimately sold it to Dick’s Sporting Goods. When we bought the asset, Dick’s actually owned the ability to do things like merchandising and we owned the .com 150 plus years of content and the live event rights.

You had this great amazing brand that’s known in its space with this phenomenal legacy, but we really weren’t able to maximize it. When we think about the future of our business, we’re really in this world where we’re moving beyond being just a publisher into being an omnichannel media company with direct-to-consumer opportunities. Because we didn’t own the underlying IP, that was not an option for that brand. We could never sell a Field & Stream branded t-shirt. We could never do some of the things that we wanted to do.

At the same time, and this is now public, a great group of investors ranging from Eric Church, Morgan Wallen, famous musicians, as well as Ben Weprin who founded Graduate Hotels, and Barry Sternlicht who founded Starwood Capital Group, created this vision and company where they bought the IP from Dick’s are actually launching Field & Stream Hotels Field & Stream Festival. I think we did a great article on exactly this last week and they came to us and quite frankly, offered us a very beneficial deal for us that created great ROI for us. It really was a win-win. Again, very, very different examples of outcomes, but those were reasons why we divested of those brands.

Jacob: Both of those brands at one point had run print products. Then when Recurrent bought them, you shut them down. Then now they’re bringing them back. Why doesn’t print work for Recurrent, but it does work for these independent brands, do you think?

Andrew: I think print is a phenomenal product when it’s done correctly and when it’s done in a very specific way. To your point, Saveur has brought back print, and Field & Stream is in the midst of bringing back print. We actually do have two print products that we do. One for dwell one for business of home. Separately, we actually do a special edition print for popular science and likely we’ll also do that for outdoor life.

My sense of print and why it works really well for us with dwell is print is a really specific experience. When you get a beautifully laid out, high-quality paper print edition of Dwell, that’s the inspiration for your home. That’s a great user experience.

Again, I think just being candid about it was a little hard for us to figure out with Saveur, but I know Kat and the team over there have also figured out a specific use case for it. I think, in their case it will work, but I think there are different examples of why it works. I think the thing that becomes challenging in the print space, is when people are treating it like the way print used to be treated, which is a lower-price product, that’s a subscription product where the publisher is actually taking on real risk.

When you’re in the print business, there are dynamics that do not exist in a business like yours, Jacob or mine, which is a digital business, which is a capital-light business. In the print world. You have commodity price risks because of paper and quite frankly because of fuel and you’re doing it in a fixed subscription. The legacy print businesses I think are very, very challenged because they were trying to just break even on the subscription so that they could sell advertising.

In the case of what we do with Dwell, we have a higher-price subscription. We’re actually making money off of the subscription. It’s a high-quality user, a hyper-engaged audience. We’ve done very little marketing around Dwell. This is an organic, highly interested user base. We’ve actually this year, which has been fascinating to see and the team at Dwell has done a great job doing this. We’re actually beating our own internal plan and budget for print advertising. It’s because we have that highly engaged user on a high-quality product.

Jacob: This might be my last question on M&A, but don’t hold me to it. Back in January AdWeek reported on details of regarding your Blackstone deal. You raised $300 million, but I recall correctly, only low-wage figures had been deployed, limiting your ability to continue buying new assets. Is that true? Are you limited in buying new assets with this Blackstone money?

Andrew: What I would say, I’m not going to comment either on the economics of our deal with Blackstone, but what I will say is the team of Blackstone has been phenomenally supportive, continues to be very supportive of doing M&A. We have consistently been looking at assets over the course of the past couple of quarters and continue to do so today in partnership with the team from Blackstone. The intended use of that capital raise was and continues to be for M&A. That’s all I’ll say on that.

Separately in addition to Blackstone, we also have, our investors from prior to our Blackstone deal, which had been, a collection of family offices who also have been phenomenal and supportive. M&A is something that we would still like to do. We are out there actively looking in the market and everybody from our pre-Blackstone investors, our Blackstone investors our board, to me, is highly interested in supportive of M&A

Jacob: Is the strategy going forward to go deeper in the six verticals or is a strategy to expand into additional verticals?

Andrew: The first and core focus is to continue in the verticals that we’re in. One of the things that we did together with the team from Blackstone is actually really do a hardcore deep dive and market survey into our existing verticals and take a look at other verticals that we might want to go into.

There are one, maybe two other verticals. Now I won’t go into what they are that we might want to look at in the future, but effectively, what we figured out in this survey is the verticals that we’re in are great verticals. They are exactly what I stated our mission was, which is let’s find these verticals where there is a high convergence between commerce and the content itself. These are the places that we continue to look in.

Jacob: Let’s break down the business a bit. High level, what are the various revenue streams across the portfolio? If you had to assign percentages to them, I’m not going to ask you how much ad dollars do you make? If you had to assign percentages to them, what would they be?

Andrew: What I would say is right now, our business is 50-ish percent advertising-based, both between programmatic and direct advertising. We’re 30 plus percent commerce. By commerce, I mean both affiliate and direct-to-consumer put together. The remainder of our revenue is a combination of live events and some licensing and things like syndication and other.

Jacob: Can you dig in more on that, the whole commerce side of things? Obviously, it’s been a big push for a lot of brands over the past few years, Food52, Hodinkee, they’re really pushing hard on selling actual stuff. Can you talk about how you’re doing that?

Andrew: Yes, sure. The first example that I would point you to is what we’ve done and quite frankly, what was being done with Donut Media before we bought the brand. Donut is a great example. I think it actually puts the focus on the things that you can do with video that sometimes you can’t do with text-based media.

Donut, which you may know, is the number one YouTube channel about cars. We also have the number one and number two podcast about cars now, which we’re incredibly excited about. We also, inside of Donut, created a separate spinoff channel called Real Mechanic Stuff that’s taken off like a rocket, and incredibly excited about that.

What Donut has historically done and we continue to grow this business is sell merch off the channel. If you go to the YouTube channel, you see it in the video, you see the cast members wearing the merch, you see it available on the Donut store, but it’s everything from T-shirts, sweatshirts, hats. This past year, we actually expanded the relationship into a partnership with Zumiez, the skate shop that’s in malls that has about 700 stores.

That has been incredible for both the brand and for our revenue to get that kind of retail distribution. I think it’s actually brought people into the Donut ecosystem instead of actually maybe cannibalizing our existing e-commerce business. It really has been growth. Then to give a little teaser, later this year, we’re going to start selling products with a major retailer that are related to cars. Really expanding beyond merch into things that fit with what Donut is as a brand, which is a car-centric brand.

Jacob: As you look at the other publications in the portfolio, do similar non-merch-specific commerce opportunities?

Andrew: Yes. Some of them we actually do today, either in a way that’s direct or licensed. A great example is Dwell has a licensing partnership with a business called Chicory for outdoor furniture. Dwell, high design brand, lending itself to a really well-done line of outdoor furniture. As we progress through the year, you’ll see other things like that we’re either doing in a way that’s direct or through a licensing partner in the cases where we don’t have the actual expertise to make the product.

Jacob: That might be the answer to this next question, but can you dig in a little bit as to when would you license something or the brand versus owning the process yourself? Because you have to imagine the potential upside is greater if you own it versus licensing.

Andrew: Yes. I think everything’s a case-by-case basis, but to frame it broadly, if you think about the working capital requirements for a media business, we’re trying to color within those lines. If you think about doing something, and again, I brought up this outdoor furniture example, if you think about what it takes from a working capital perspective to build up a collection of furniture to warehouse it and sell it, that requires a very different capital framework than running the business that we run today. We’re really trying to stay within those lines.

If you look at the way you can execute on a merch strategy, it’s much more in keeping with what you’re used to running a media business. We try and stay disciplined when it comes to that because launching any new business can use up a lot of cash. That is a way that one could really make a bet that’s outsized relative to what we’re trying to accomplish as a company, which is to build the brand and create revenue streams off of our brands.

Jacob: Where did Recurrent finish 2023 in revenue and EBITDA?

Andrew: We actually don’t share financials other than to say we did finish the year with a double-digit EBITDA margin.

Jacob: Cool. Recurrent is, like a lot of media companies, very reliant on organic search for its traffic. Biggest platform on the planet is Google. Can you talk about that approach? Does it ever worry you considering how much Google has been introducing new features that might impact the CTR to publishers’ websites?

Andrew: Sure. To unpack the question, I think a lot of people lump the concern about Google together with some of the behavior that we’ve seen in the post-COVID world. We all know that traffic shot up during COVID because everybody was at home. Now you have this world and this trend over the course of the past two years that actually, in my view, is three separate things that sometimes people lump into the question that you just asked.

One, you have changing consumer behavior because people are back to work. While we’d all love to browse the internet all day, I have the good fortune of getting to watch things like Donut and our Task & Purpose YouTube channel as part of my job. I can’t imagine that everybody gets to do that at the office or wherever they’re working from.

You have a change in user behavior that’s happening at exactly the same time as a lot of the social platforms have changed the way that they do referrals. That has been a big negative impact to many publishers. Then that’s happening at the same time as the introduction of a huge amount of AI, not just into its own separate products, but I think most people have read the headlines about AI being integrated into search. Search algorithms are changing.

Even within that last bucket, where people are talking about the Google algorithm changing, part of that, in my view, is actually being lumped together with what’s happening on the search results page. Two things that I would call your attention to are one, there are more sponsored results now than there were a few years ago. The second, which there’s been a lot of news about, is the fact that Reddit is part of the results now.

If you are a non-forum publisher and if you hire and generate professional content, the real estate in the search engine results page has been compressed. That brings us back to your stated question, which is, does that worry you? I think that like everything, change, and adversity brings new opportunities. For us, and I’ve seen other people take the sort of ‘what was me route’ and say, “Oh, this is all washing over us and happening to us.” I think it just sharpens the focus on the things that you have to do to run a modern media business.

In our case, we have really doubled down on video this year. We’ve, again, put more focus on our two donut channels. We have put more focus on our Task & Purpose YouTube channel. We hired a phenomenally talented team that used to run Vsauce2 to relaunch Popular Science as a YouTube channel. We relaunched The Drive YouTube channel, and we have at least one more video launch coming this year, and maybe two.

It concerns me, but really what it just leads to is you just have to approach the world from the perspective that change in the media industry is a constant, and you consistently have to focus first and foremost on who your audience is and where you can reach them. Know who they are, if you can. That means things like email capture, that means knowing what their behavior is, putting a heightened focus on that, and making sure that you exist and that you are top of mind on the platforms where they are.

If, to your question, you’re not getting the result that you want out of the Google search, that you exist in all of these other places and you’re monetizing in all of these other places and that’s just, in my view, what it’s about. Media’s been changing ever since 45 became 33s and 33s became 8 tracks. You just have to adapt.

Jacob: Are there areas of the internet that your team is focusing on to drive traffic in a hope of diversifying away from Google or is it predominantly just video on YouTube?

Andrew: To us, it’s actually all video platforms. YouTube is a great one. YouTube is, in my view, in terms of monetization, the number one place where one can start but, Donut is active on TikTok. We have a huge Instagram following for Dwell and Domino and so we are focused on all of the platforms but what I would say is the big focus because I think it’s the place that it is easiest to create that personal relationship with the user is to get going in video.

Jacob: You said YouTube is the easiest to monetize. What are you doing there to generate revenue?

Andrew: The three primary things that we do are the platform revenue. By easiest, that’s really If you look at something like TikTok, you have to either be selling your own sponsorship or selling your own merch. YouTube, you have enough followers, you’re monetizing off their platform first. Then you’re selling sponsorship and direct advertising. Then you’re selling products off of that video. Those are the three forms of monetization that we’ve seen on that platform.

Jacob: Is most of that sponsorship embedded within the content like someone’s holding a Dunkin’ Donuts mug while they’re talking about a car?

Andrew: It’s a little bit different than that. Again, I’m going to go Donut first because it’s our most mature brand in video but two things that you can see in the Donut videos is we do actually have official sponsors. If you look at the Donut Garage, for example, Casey Highlights and Valvoline are our official headlight partner and official lubricant partner. Then separately, we have great branded spots, like absolutely amazing award-winning branded spots.

We are not in the business of just throwing up our own things that look like a TV ad. These are ads that a user wants to watch and should be excited about watching and they don’t disrupt the viewing experience.

Jacob: True native in video.

Andrew: I would argue it’s even beyond native. We’ve gone to the world where the ads are incredibly entertaining. Again, the creative team there has done just an absolutely exceptional job.

Jacob: Can you talk a little bit about the technology stack that powers Recurrent and perhaps how it might contribute to the success of your M&A strategy?

Andrew: Sure. We actually are in the middle of doing a big tech refresh, and that’s a focus for multiple reasons. Again, just going back to this, know who your customer is. Having first-party data in the new world is going to be incredibly important, especially with the deprecation of cookies. We’re doing a big refresh, but I also am very much of the view that Google responds well to things that are sort of standardized.

We’ve been working a lot with things that are brands that everybody works on top of, things like WordPress, and hired a great new CTO last year, a guy named Dave Marks, who’s done an amazing job. Again, we’re going site by site and doing a refresh to make sure that the sites are as fast as they can be, create a great user experience, are not overloaded with ad density, which we think is something that Google has become increasingly sensitive to, making sure that the load time and user experience is just top-notch.

Jacob: Can you talk a little bit about the team and what the structure looks like? Because you’re a house of brands, is each brand standing on its own with its own siloed team, or is it all shared services? What’s the structure?

Andrew: We operate in a way that is a combination of both, and we’ve tried to take the best of both worlds. The shared services are the ones that are obvious shared services. Finance is a shared function. Reporting is a shared function. Technology is a shared function. We do share some components of direct ad sales, but our goal is first and foremost to be brand-first and make sure that, in particular, the people that are the face of the brands, the people creating the content, all sit inside those brands.

Each brand or vertical has a GM, depending on size. For instance, Donut has its own GM, but we have a GM that sits across all of our military brands. That creates this way of having true expertise, and I think, really reaching that level of authenticity.

The second thing that we do, which is related, is the ad sales teams are vertical first, but then share things across verticals where it’s appropriate. A great example is Nissan was an advertiser of ours, and they purchased advertising both on bobvila.com, but also on The Drive, because they felt like the Bob Vila audience was something they were trying to reach, and vice versa. We really have chosen a hybrid, and we think that gets us the best of both worlds. Most importantly, again, just creates that level of expertise that our brand partners and, first and foremost, our audience realize it exudes authenticity.

Jacob: If we look at one of these GMs, what departments are rolling up into them?

Andrew: It is, in most cases, well, sorry, in all cases, what I would say, first and foremost, content rolls up to them. The entire content strategy and plan. In many cases, the go-to-market for our direct sales plan, they also become the owner of the business. They own their own P&L, so they also become the responsible party of working in a way that is cross-functional.

Again, just to pull out another great example, our GM of Domino and Dwell is launching a great new paid newsletter for Domino that we’re really excited about. That sits on our P&L. She works with her editorial team to create the creative that’s really going to drive that audience, but then is also responsible for working with our tech team and our direct email team to make sure that that is a seamless launch.

Jacob: How are you then determining which– you have a tech team, how are you determining whether they should work on the military stuff or Dwell or Donut? How are you prioritizing that when you’ve got these competing GMs who all want those resources?

Andrew: Yes, that’s a great question. I think multiple ways. The first is, we do a pretty rigorous job of planning. We set forth a roadmap, not only for tech, but quite frankly, for all of our new products, all of our new content at the beginning of the year. That’s not to say that that is set in stone. It’s something that, we evaluate at the end of every quarter, which is a process that we’re going through now. At the beginning of the year, we’re figuring out the things that really will move the needle for the business and prioritizing those first.

Jacob: A broader industry question, you mentioned back in 2018, when you made your first acquisition, investors were very spooked about digital media and you saw an opportunity. Then you also said that you think that we’re moving into that era right now, or that we live in that era right now. What are the broad trends you’re seeing in media M&A, over the past couple of quarters and looking forward?

Andrew: Well, I think it’s actually not limited to our space. I think the world has been a little bit stuck, quite frankly. You see it in volumes of M&A in multiple industries, which is, I think it’s fair to say that in some parts of the world got very overheated in 2020 and 2021. We’re coming out of this world where the cost of capital has been increased. Interest rates have risen. As a result, a lot of equity values have dropped because your cost of capital goes up, which is just logical.

I think one of the things that has created this world where we’ve all been a little bit stuck is quite frankly, some seller expectations haven’t come back down to earth yet. I actually think that we’re at the tail end of the cycle and you’re starting to see signs of life right now. To me, a great example is if you look at future PLC, Big UK-centric, although they have a lot of US assets, publisher, I think their stock has bounced off that’s low. It was something like £40 a share. It dropped to £5 and change. Now they’re back up to £7.

The thing that’s the most important, because the prices will follow the business, is last week they came out with a statement saying they think that they’re actually returning to growth. That’s the thing. That’s the precursor to the valuation starting to come back. I do think that we have been in this trough, not only for our industry but for a lot of industries. Now the world’s going to start to come back.

The pace at which it comes back is an obvious question, which is going to be hard to answer. We woke up this morning and the market’s down again because supposedly inflation’s up. I think that’s all debatable. The first thing that has to happen is everybody really needs to return to strong growth. We’re seeing real growth in our own business. Once we see that growth, prices will start to follow.

Jacob: Is a big reason that M&A has been on hold is because of how quickly interest rates were moving?

Andrew: For us, what I would say is we’re less focused on interest rates because we have a supportive partner. It’s not like I have to run to a bank and I’m subject to the interest rate fluctuations. What I will say is I think there are two things that– well, three things for us that have made things slow down. I think anytime a market like this, you have to raise the bar. You have to be dramatically more disciplined. That’s number one.

The second thing is one of the things that I alluded to, which is in many cases, seller expectations just quite frankly haven’t fallen in line to what the businesses have done the past couple of years. Again, that goes back to the point of remaining disciplined. They’re, quite frankly, deals that we could pursue. Again, both for the long-term value of our business and also because we want to create a great return for our investors, we’ve been really disciplined in the things that we’ve looked at.

I think the third is something that I alluded to and something that you asked a question about, which is what’s Google doing to this space? For us, we have a very clear strategic plan and vision for how this business looks in the future, how we truly become an omnichannel business. A lot of the assets that I’ve looked at, quite frankly, would need that same work done on them. We want to see a couple of quarters of what this looks like.

Now, there are still great businesses out there and there are many assets that we’re interested in. Again, I think it’s just finding that right price for the things that look good.

Jacob: Where do Recurrent going over the next three to five years?

Andrew: Again, I think it’s all about the strategic plan of becoming an omnichannel media business, of putting video forward as a big part of the mix, about reaching the consumer everywhere they are, about first-party data, about knowing our audience, about the ways that we can create transactional value, about the ways, quite frankly, that we can make the non-advertiser component of our revenue a bigger part of the revenue pie. Those are the real focuses for us.

I know the follow-up question is, what’s the exit? For us, we really are first and foremost focused on running and creating a great business. The world’s going to do what the world’s going to do. Opportunities present themselves at a certain point in time, but we just want to build something that is a great passion-driven business that’s sustainable and can continue to grow.

Jacob: I want to end with the same two questions that I ask every operator that comes on the show. First, what is a mistake that you have made in your career and what did you learn from it?

Andrew: The biggest mistake that I made, and like all people, I think I’ve made many mistakes in my career. [chuckles] The biggest one that I made was actually an M&A transaction before Recurrent. It was a deal where, when I do the retrospective on it, the logic of the deal was so strong that I completely ignored, again, going back to the people, I ignored that some of the people were clearly not the right people.

It was an M&A transaction that the deal got closed and the aftermath was not a positive outcome. Again, it just was the starkest reminder that it’s all about the people. That is just such a huge part of M&A diligence to me, is making sure that these pieces fit together.

Jacob: Second, what is some advice you would give operators looking to grow their media businesses?

Andrew: I think be really disciplined on your P&L. The streets seem to be littered with companies that thought they were going to build audience and that the profit would show up later, especially in this kind of environment. Quite frankly, I think people forget about this when things are good. You always have to figure out how you’re going to make money. It can’t be just endless spending and sight to grow your audience. I think just being disciplined about the costs and the ways in which you build your business are absolutely critical.