Newsonomics: Bryan Goldberg

wants to build Bustle into the

“Meredith of the digital age”
“I think the hard part for something like Esquire or
Harperʼs Bazaar in digital — even to some extent
Vogue — is that you get into the scale game. Digital
demands greater scale. I just donʼt know how many
men are trying to figure out if corduroy is back in
fashion.”
Ken Doctor

Bryan Goldberg positions himself as a contrarian. While many media

owners look to sell, heʼs on the hunt for bargains — and heʼs finding a few
he believes in. While he was outbid by Great Hill Partners for the
Gizmodo Media Group, the Bustle Digital Group CEO and founder has
added brands like Mic, Gawker, and The Outline to his portfolio, breaking
out from his companyʼs womenʼs content niche.

Having walked away with a chunk of the $200 million Turner paid for
Bleacher Report (which he cofounded) in 2012, Goldberg has attracted a
fair amount of controversy in the hothouse of the New York City media
world. His Bustle Digital Group built itself on what it considered a unique
approach to womenʼs content — an assertion that didnʼt win a lot of
friends coming from a 30-year-old male hard-charger. Others have
pointed to Bustleʼs use of lower-priced freelancers to build its business.
Whether you see that as the way of magazines overall or as “content
farming” that exploits the growing class of content serfs, itʼs nonetheless
a building block of the expanding “digital Conde Nast” that Goldberg
talks of building into the 2020s.

In this interview, the now 35-year-old Goldberg talks about why heʼs
buying and building, and why he thinks his niche of the digital content
business — now earning in the low hundred millions in revenue, he says
— is sustainable against the ravage of the Duopoly. This interview is
condensed for clarity and length.

Ken Doctor: Is this the kind of year you expected?

Bryan Goldberg: I remember on New Yearʼs Eve 2019, I was thinking to

myself: “Maybe this will be the year where there are changes, and it
becomes clear that the bottomʼs behind us.” And really, the first quarter
of 2019 was probably the most dramatic, in terms of all those flashing
signs that tell you that we are at or near bottom. We had a bunch of
layoffs — Huffington Post, BuzzFeed — and some decent deals to get
done and at really distressed prices.

Itʼs a broken market. Not just in terms of prices weʼre getting on assets —
itʼs a broken market in terms of just sort of a liquidity crisis. Thatʼs how I
describe it now: Thereʼs just sort of a media liquidity crisis thatʼs driving
prices to be even more nonsensically low. But thereʼs just going to be
beneficiaries of that. I mean, thatʼs the nature of the market, right? I kind
of view it like the real estate market in Florida was in 2010.

Doctor: How long do you think it will last?

Goldberg: My thinking is by 2020. I think this window is maybe another

12 months, and then people are going to start to enter. Youʼre going to
see private equity enter. I donʼt think youʼre going to see traditional media
getting involved in that position, but I think youʼll start to see private
equity get involved, if prices get low enough, and see what they can do.

Doctor: And how much of it do you think is logical, and how much of it is
basically panic?

Goldberg: I think I would say itʼs panic of non-participation.

I mean, you just canʼt get many venture capital or private equity guys to
move, because unlike real estate you can just buy and sit on, youʼve got
to operate these assets. And people just have no idea how to do that.
Advertising by its nature is an incredibly intimidating business for most
people with a finance background. I mean, when I talk with VCs and
private equity guys about advertising, they just clam up. Theyʼre scared
because itʼs not a terribly rational, straightforward business, and you got
a lot of VCs applying these ridiculously simple frameworks trying to figure
it out. Saying things like: “Wait a minute, inventory impressions times
CPM equals your revenue potential.” Itʼs like, no, thatʼs not really how it
works. Theyʼll say sometimes: “You know, we canʼt get our heads around
this business.” And itʼs like, yeah, you canʼt. Youʼre finance guys.

So youʼve got that double problem. Youʼve got the liquidity crisis that
mirrors the real estate debacle of 2010. But unlike the real estate debacle
of 2010, you actually need people who can operate. It would almost be as
if the only people who could buy real estate in 2010 were contractors or
developers.

Doctor: And you are buying.

Goldberg: The prices have gone low and weʼve basically come in here
and said, look, we have two major advantages over pretty much
everyone. One, we have a platform, so we have infrastructure. And
infrastructure for digital mediaʼs gonna cost you — if executed more or
less perfectly, youʼre still going to have to spend about $150 million of
cash just to get to that infrastructure. You need to get a scale to get a
CMS built to scale.

And then the second thing we have is just operational expertise. I mean,
Iʼve been doing this about as long as anyone I ever talk to. I started
Bleacher Report in 2005. Weʼve built a great team around it, so we know
how to operate. Weʼve got the platform to operate, and so we can buy
things like Gawker.

Doctor: The other piece of it is capital. Youʼve raised something like $50
million over the years?
Goldberg: Well, technically itʼs $80 million. We raised another $30
million of cash, and typically when we do deals, itʼs a mix of cash and
equity. Usually more equity than cash. And if we keep top executives like
Josh Topolsky [founder of The Outline], weʼre going to grant them some
shares too. So for every dollar cash, maybe weʼre doing two dollars of
equity. And weʼll probably raise more at the end of the year — or if we
find a big target that requires cash, we would raise around that.

Doctor: These advantages that you have built and earned, is there a
metric you use to measure them? Youʼd say, like, “we think we can
operate this business at 20% more efficiency”? Or does it really vary on
each property?

Goldberg: It varies, but thereʼs a couple things we try to do. We try to

keep the revenue per employee north of $400,000. North of $300,000
revenue per employee, youʼre typically not earning a lot of cash.
$400,000 per employee puts you in sort of a nicely profitable position.

When all was said and done at the point of close, Mic was kind of in that
$300,000 range. When we look at The Outline, we basically said we
could be in The Outline and the stuff that we expect Josh to launch —
how fast can we get it? If heʼs successful in the launch of the tech
platform [which Bustle Digital Group will launch later in the year], he
could do even more than that for us, simply because we donʼt really play
in that category. We have all those advertiser relationships with the
Samsungs and Microsofts.

Doctor: So youʼll also be leveraging existing clients.

Goldberg: Weʼve done deals with them. Every time we do a deal with
them, itʼs for a female-specific campaign. Overall, weʼre going to be
leveraging our sales force of 28 ad sellers. Then, behind them, youʼve got
about a dozen planners, a dozen account managers, maybe eight or nine
marketers, and that doesnʼt even count the brand and content folks,
which is probably another 50 people. Youʼve got behind them about a
100-person revenue organization.
So weʼve got really an army behind what it is that Josh Topolskyʼs going
to do in the next year, and he didnʼt have that before. And frankly, I think
we can all agree his ambition [with The Outline] was kind of shooting for
the moon. But now weʼve got a real rocketship behind him.

Doctor: Youʼve also made points about the very basic costs, like office
space and legal. In legacy media, magazines and newspapers, the game
is now all about cost consolidation. What about your editorial model? Is it
a percentage of revenue or a percentage of expenses? How much of it
relies on staff versus freelance, or does that vary by property?

Goldberg: Itʼs going to vary by property. The freelancers are a big

percentage of the content, but we do have editorial staff, which I want to
say is around 100 people. Then probably about 200 freelancers on top of
that. And we actually pay pretty competitively. People always presume,
“You must be getting sort of favorable pricing on writers and editors,”
which really isnʼt true. Thatʼs sort of a presumption. We do have a lot of
writers outside of New York, so itʼs typically on a geographic basis. Weʼve
built a pretty big bunch of freelancers who are paid competitively — they
just have to be in places where those rates are more than livable. I think
when things get thorny is when people are expecting to make a certain
wage and live in prime Manhattan. Thatʼs when things can get tough.

Doctor: Starting out with womenʼs content, a womenʼs-magazine

orientation, thatʼs magazine money. Magazines have always been spurred
more by freelance than “news” has. I take it thatʼs a key part of your
model. Then a lot of those full-timers are people who are editors and
aggregators and curators as well, right?

Goldberg: Yeah, and a little social media editing as well.

The money in the social media stuff hasnʼt really panned out the way we
wanted it to, or at least hoped it would. And youʼre right. You know that
both Bleacher Report and now Bustle and Rachel Zoe arenʼt New York-
centric the way some of the news looks. Even the way Condé Nast is
—Meredith is probably the best analogy. I tell people weʼre the “Condé
Nast of the digital age.” Itʼs a little sexier than saying “the Meredith of the
digital age.” Meredith has been good. They said: “Look, if a lot of our
coverage is going to be service and lifestyle journalism, we can have
writers across the country and places like Iowa or the Midwest.” I think
New York tends to get a little bit in New Yorkʼs own head.

Doctor: As a Californian, I can confirm that. Has Meredith tried to buy

you guys? Theyʼre moving from being a magazine company to being a
womenʼs marketing company now.

Goldberg: Meredith has turned over a lot of folks.

Doctor: You say “the Conde Nast of the digital age.” I mean you saw the
same thing they saw for another generation and for a different kind of
delivery, right?

Goldberg: Itʼs two things. One is youʼre right that cost-cutting is sort of
the only game in town. And for Meredith, itʼs cost-effective, but itʼs kind
of not the game weʼre playing. If they wanted to buy us, theyʼd have to
pay a growth multiple, because weʼre growing really fast. I just donʼt think
theyʼre in a growth mind. I think theyʼre sort of in an annuity mind.

In terms of Condé Nast, why couldnʼt they go do what we just did? The
answer is they could have. The Newhouses certainly have the capital to
do it. But the switch from traditional was so slow — it was just so slow-
moving and so gradual that they never had sort of an “aha!” moment
where they said: “Oh shit. Weʼve got to flip the switch here and become a
digital-first company.” That moment never came.

Doctor: Itʼs not coming, either. What do you think about what Troy Young
has done at Hearst? Is that the closest to understanding how digital
magazine content is different than print in the magazine industry?

Goldberg: I mean, I think heʼs done a solid job, and I think heʼs well
regarded for that. I think heʼs pushed to move print to digital, but heʼs still
facing reality. And the reality is that the bread basket for Town & Country
— or you look at Elle or Harperʼs Bazaar — thatʼs definitely never going to
be digital first, and theyʼre still making a lot of revenue at least in print.
And so how did he transform something like Town & Country to digital?
You canʼt. Heʼs sort of been forced to take a small subset of publications
like Cosmo and really focus on the flagship ones for digital. Some of
these smaller, more niche lifestyle publications, theyʼre just never going
to move to digital. Thereʼs not a lot that he can do to solve that problem.
You know, Cosmo made a decent-enough move to digital. But it just canʼt
be a digital-first company. It just canʼt. You look at Esquire as well —
theyʼve moved to digital. Theyʼve done some good stuff in digital. No
oneʼs saying that Esquire digital is a failure. But you canʼt replace what
Esquire was in a print magazine two decades ago.

Doctor: So letʼs say they decided they were going to sell Esquire. Could
you see, with your strategy, buying an Esquire? Or is it uniquely the
digital-only brands that can be built out in a way that makes financial
sense?

Goldberg: I think the hard part for something like Esquire or Harperʼs
Bazaar in digital — even to some extent Vogue — is that you get into the
scale game. Digital demands greater scale. I just donʼt know how many
men are trying to figure out if corduroy is back in fashion.

I always say digital demands a scale of, like, 5 to 10×. So I donʼt know
what the circulation of Town & Country is — maybe itʼs half a million
readers. But youʼd need to get that to maybe 5 million readers, and the
nature of Town & Country… [Update: Hearst noted after this interview
was published that Town & Country currently gets 6.7 million monthly
uniques per comScore, as compared to a 475,000 rate base in print.]

Doctor: Implicit to what youʼre saying is that, in digital, itʼs an ad model.

Itʼs not a reader-revenue model, right?

Goldberg: Yeah. And you know, you wonder how much of that revenue at
first is legacy subscribers. How many people are 79 years old and they
just donʼt even remember that they keep paying the Town & Country
subscription fee?
Doctor: Itʼs a large number.

Goldberg: Itʼs a large number, and thatʼs their business, like it or not.

Doctor: You donʼt have any reader revenue in any of your products, do
you?

Goldberg: No, with the exception being about 10 percent of our revenue
is from commerce — from affiliate commerce, people buying.

Doctor: How about events? Are events a significant part of what you do
or not?

Goldberg: Thatʼs growing fast for us. The tickets from events will now be
a big slice of revenue. Youʼre probably talking, you know, hundreds of
thousands of dollars this year, which is not super needle-moving for us,
but when you package it with advertising, itʼs sort of part of the program.
And those events, when packaged with a large-scale program, are really
compelling to advertisers.

And Iʼd like to see that grow on. Itʼs not going to be 50 percent, but Iʼd
love it to be 20 percent in the next year or two. And I love that because
we have enough clients who are doing multimillion-dollar relationships
with us where we can say: “Look, itʼs part of a $2 million yearlong deal.
Youʼre going to have a presence in these major events.”

Doctor: The great majority of what you sell is brand advertising, right? I
mean, it is brand presence, the formatting of the ads, as your way of
competing against the duopoly, right?

Goldberg: Yeah, and thatʼs critical. Youʼd be surprised at how many

investors donʼt even distinguish. I tell them: “Look, Facebook and Google
arenʼt really equipped to do what we do. At best, they can run some
rotational inventory, but itʼs not going to be a fit for any fashion company.”
I mean, could you imagine Gucci using ads on Google? Could you
imagine Gucci having a tiny little icon on the Facebook screen?
They need more interesting, engaging ads and more contextual ads, and
that was part of why we did the Outline deal. In addition, we did because
our engineers said, “Hey, we like what these guys are doing with more
complex advertising, and we want to be able to distinguish our ads from
what you could buy with Google and Facebook.” And we have to be
telling that story. And weʼve got to be living up to it.

Doctor: I know Amanda [Hale, who joined Bustle Digital Group after
innovative ad stints at The Outline and Talking Points Memo, and who is
now Gawkerʼs new publisher] brought a lot of that to Josh. So basically,
youʼre incorporating what they developed there within your own platform.

Goldberg: Yeah. About two-thirds of our revenue is brand advertising.

And thatʼs why weʼre replacing magazines.

Doctor: A lot of people compare Bustle Digital Group to Vox Media. Is it a

good comparison?

Goldberg: I mean, I think Vox does some things well. I just donʼt think
theyʼre in the right category, because theyʼre not in a lucrative brand-
organizing category. Theyʼre not doing beauty dollars, theyʼre not doing
fashion dollars.

Doctor: And how do they compare to you in size in revenue?

Goldberg: I think theyʼre a little bigger. Theyʼre probably in the mid to

high hundred millions, so theyʼre 30 percent bigger, 40 percent bigger.
But the key thing is they raised three or four times as much money. That
to me is sort of an efficiency thing. And you know they canʼt really
change that historic valuation.

Original photo (minus the sticker) of Meredith Corporation headquarters

in Des Moines, Iowa, by AP/Kristoffer Tripplaar.