A conversation with Mediabistro founder and startup investor Laurel Touby on starting a media company and embracing new revenue models and technology [reprinted from my post on www.pubexec.com]
It takes courage to interview Laurel Touby. In recent years, she has been interviewed by The New York Times, CNN, Inc., Oprah, Fast Company, Bloomberg BusinessWeek, CBS, Kiplinger’s, Time, Forbes, New York Magazine, Entrepreneur, Village Voice, The Huffington Post, Slate, and Adweek, among others. Six years ago, I spoke with Laurel for pubexec.com and you can read that interview here.
Laurel is most recognized as the founder and CEO of mediabistro.com, a website that revolutionized the way media professionals do business, connect, and communicate. During her 10-plus-year tenure, she navigated the business through two recessions, a pivot, early adoption of online audience development and most impressive . . . profitability. Prior to launching mediabistro.com, Laurel worked as a media planner at Y&R, as a writer covering corporate strategies for BusinessWeek, and as a writer-editor of the “Getting Ahead Guide” for Glamour magazine.
Laurel is managing partner at Flatiron Investors, a venture capital firm she launched two years ago that focuses on fintech, digital media, enterprise software, and SaaS companies. Here she shares how she got mediabistro.com off the ground by focusing on her members’ needs and what lessons she’s learned from the startup world that publishers should apply to their businesses.
I read an interview in which you said that the most important thing you did in the early days of your career was that you “listened to people.”
Because I was a journalist, I was accustomed to actually tuning in to what the other person was saying. That turns out to be the number one way to gain the trust and support of your customers. The customer will tell you what he or she really thinks of your product, what he wants to pay for a product, what features she wants, and much more, if you just pay attention.
You cannot simply push content out to customers and expect them to bite; it’s all about the conversation. That means physically sitting down with your readers, users, listeners, etc. and asking “What are some of things you might purchase?” There is a reason why they are reading you, paying attention, and giving you a piece of their mindshare. Find out if there are other things you can offer them, in order to monetize the audience better.
When I first started out, the first thing my members seemed to want was a free cocktail party, where they could connect in person. Then, as a direct result of my conversations with my audience, I added on a website, an email newsletter, and job listings. At this point, I was not making any money from the individuals engaged with the brand.
Three years into giving away my products and services, I began making money from the job listings (HR managers began to pay). It wasn’t a ton of money, but it was a tremendous start. Then, in March of 2000, that little tiny revenue stream was threatened. The job listings began plummeting, as the Internet suffered a dramatic decline. Luckily, I was paying close attention to my customers. I hosted a focus group pizza party and asked the attendees what else they would like me to offer them. They had great ideas such as education, health insurance, and a formalized membership program. Training seemed like an idea that I could most quickly launch and collect revenues from.
Committing to a new product line is scary, but the alternative for me was scarier. I teamed up with a trainer who had taught classes and she encouraged me to create a media “school.” Gradually we began to offer more and more classes and we brought the trainer in-house as our Learn Director.
How do you think publishers are doing with diversification?
My observation is that most publishers acknowledge the importance of diversification and creating new ways to engage the audience and monetize, but they rarely commit enough capital to these efforts. In most cases, they test out concepts without hiring someone to oversee them, without spending any marketing money, without developing any in-house tech. So, those efforts fail. They try to partner with a provider instead. That always fails. Partnerships that are revenue splits never work for anyone. You have to commit to it, devote real in-house resources to it, market it, commit to it.
You have a passion for working with entrepreneurs and you have stated that undercapitalization is one of the biggest mistakes that those in media make. [Undercapitalization limits growth by constraining business investments in key assets; the business does not have the funds it needs to meet demands.]
Yes, I believe this. And it’s critical to get the right investor. My investors looked at me and saw things in me that I did not recognize in myself. I knew that I had vision and hustle. But they saw a driven, powerful, intentional, intelligent founder. When they told me that I had to sell the company for over $33 million, I thought they were crazy. But then I worked my butt off to meet their expectations, and soon those were my expectations, too.
Because I have worked in both the media world and in the world of the “Gazelles,” I now see a huge difference between the provincial media owners out there and the high-growth business owners. Media owners don’t understand business revenue streams, only media revenue streams. They are almost like horses that have worn a path to their one watering hole. They have been traveling this same watering hole for so many years with their heads down, following one another. That watering hold is advertising/sponsorship revenue. They are afraid to get off the path. They don’t trust another path. If they do veer off, and don’t see floodplains immediately, they abandon the new potential revenue streams and go back to what’s familiar.
You have to believe in the future media disintermediation and you have to run toward it. You must invest money and energy in order to find other watering holes. Sure, media companies have added little streams, such as white papers and conferences, etc. But, how about new technologies? Where is the new tech coming from old media? Maybe they need to attend more of the conferences I am attending, see more of the startups I am evaluating to gain the vision to see around the next corner?
There are so many cool small companies innovating in the world that a media company could take hold of with their unique and very fertile audience – and make money on. The will to do this must come from top leadership and the board. This is why many media companies are dying and lovely tiny companies are evolving into media powerhouses right under their noses.
As one who has built a very successful brand based on community, and you are doing so again, I was surprised that you once said that community and business don’t always mix. Please elaborate on this.
Companies become too corporate and forget that brands are personalities; the audience wants, no demands, an authentic interaction.
In addition, you cannot make money from every interaction with your audience. More brands should consider bringing their customers together for the fun of it. It just has to feel good. That leaves a lasting impression. People leave saying “I LOVE this brand.” These experiences don’t have to be in person. They can just be wonderful experiences the brand offers, a little gift that the brand gives to the audience. Think: how can we delight your audience? Brands (media companies included) take themselves too seriously. There is little whimsy. You have to bring some emotion to your interaction. Some media brands I hear people using the word “love” with, other than mediabistro.com (of course), are Garden & Gun, Dwell, Wired, Inc. Take a look at what they are doing.
In the early years running mediabistro.com, it served only journalists. When you expanded the audience beyond journalists, how hard was it to retain the sense of exclusivity?
In the very beginning, we were leaving out the marketing, sales, and other departments. Once I had built a strong following with editorial people, then I expanded into TV, design, and finally sales and marketing. Our website had 13 blogs and each targeted blog was read by mostly that group of people.
Any principles that you attribute to building mediabistro.com into a solid brand with a small staff?
I believe in giving ownership to employees so they are part of the success. It’s easier to do with small companies, but any size company can offer some type of reward. And it is important to acknowledge that millenials want a career track and want to feel that they are continuously learning. You can create an artificial ladder of learning for them. Sometimes they would rather have that than money. Look at what Goldman Sachs is doing to keep its millennials engaged, creating constant, instant feedback!
Why did you transition from media to tech investor?
I think the best companies are started by people solving their own problems. My original reason for launching mediabistro.com was to find a boyfriend (I kid, but only sort of) and to get better writing gigs. Then, I figured out that what I was really creating was a safe space for people who shared the same demographic and psychographic to commune. People in any industry, even the media, craved community; that became my mantra.
When I joined the media world, it was where all the ideas and all the smart people were. A decade later, media increasingly was looking backward and sideways. Tech is about the future. I find myself more engaged by the future than the past, so that’s why I migrated into tech. I love helping AI, IoT, software, and other types of startups achieve great things. Not surprisingly, I avoid any media-related investment that has sponsorship or advertising as its business model.
You have been recognized throughout your career for being supportive of women in business, including receiving the Women in Leadership Compass Award for shifting the paradigm of how women are perceived in the world. I notice that you don’t list women on your board or your team at Flatiron Investors. Why is that?
I see a lot of female founders, because of who I am, but I don’t see a lot in the space where I invest. I see a lot of women starting consumer-facing companies. I have invested in two, but mostly I don’t invest in consumer tech. And in terms of staffing, I have tried to get women to intern for me for next to nothing and they won’t do that. The men do, the women don’t.
What are key questions you ask before investing?
Where did the deal come from? Why is this founder uniquely positioned to turn it into a company? It’s all about the founder. Is this person going to pull off the impossible or quit when things get tough? How big is the market? Is the company or product evolutionary or revolutionary? There is a list of 40-plus criteria that I evaluate, but in the end, with an early stage startup, you rely a lot on your gut.