The BusinessWeek interview basement tapes

The author of the BusinessWeek love letter to John Battelle interviewed me for the story… as is my tradition, here is the complete email interview.

best j

> Since you sold your company in late 2005, how has the market for blogging
> networks changed?

Well, three ways: everyone is doing, advertisers love it, and consumers have embraced reading them on a daily basis.

> What is the annual revenue run rate and profit forecast for Weblogs, Inc. in
> 2007?

I don’t work there any more, so I don’t speak for the company. When I was running the company in November of 2006 I was very public about the fact that we were doing over $1M a month and eight figures a year.

> How many sites does Weblogs have now? How many employees (staff members not
> freelance bloggers)?

You would have to ask AOL.

> When you sold Weblogs, Inc., you said your advertising inventory for 12 of
> Weblogs’ sites was sold out. Are sites still selling out today?

When I was last running Weblogs, Inc. in November many of the sites were sold out, however the traffic had gone up significantly so I don’t think we were as sold out as we were when we were first building the company.

> What kind of CPMs are you getting?

I was very public about this on my blog. When we were an indie company we were getting $2-8CPMs on a regular basis, and when we joined AOL their amazing sales force did much more than that.

> What is your outlook for the market for blogging networks? Will they become
> a force, or will individual blogs rule the day?

Well, only two networks ever reached any scale: Weblogs, Inc. and Gawker Media. The other blog networks are not even close to the traffic of the two winners. Frankly, I’m surprised that no one started a third, powerful network. Nick Denton and I always thought someone else like Jeff Jarvis would throw their hat in the ring.

I think what’s happened now is the window for a network has closed as the top slots in gossip, tech, autos, video games, etc. have filled. When Gawker and Weblogs, Inc. launced there were no auto, video game
or movie blogs–for example. We got to the free land first and to displace those brands now would cost millions and take years.

> How will the market for blogging networks change over the next year or two?

It would take a $20M investment to build a network to compete with Weblogs, Inc. and Gawker. I don’t see anyone investing that much. So, I think the window is closed for a scale blog network. I think you’ll
see some niche ones that will have modest success (i.e. a parenting network).

> What do you think of Federated Media? Do you think FM will be a success?

Right now it’s just an advertising repping business and that’s a horrible business to be in because the second you build your clients business past $500,000 a year they hire their own sales force–as they should! So, I think John Battelle–who is a really smart guy–has another plan in mind. We’re only seeing 50% of what Federated Media is
going to be, it can’t just be a repping business. I think he is going to buy the blogs he represents–that’s what I would do if I was him. Rollup the blogs and make a really big network.

Think about it, if the folks running TechCrunch, digg, and get to $1-2M a year in advertising and they give 40% of it (or $400-800,000) to a rep firm they are out of their minds. Like insane. Your cost of sales at a scale business should be 10-20%, not 40%.

My guess is as these businesses grow they will either leave Federated Media, or Federated Media will have to charge them a sliding scale of 40% up to $500k and 20% after that.

Now, if your goal in life is to just run a small business a rep firm is the perfect solution. So, the real question is how many of Federated’s client list will grow into a “real” business. For $400,000 you could hire two great sales folks from Yahoo, give them some equity, and hire them an assistant and do way better than any rep firm.

> What will be their biggest risk/challenge? Have they already stumbled in
> some way?

I think their execution has been amazing so far. The only thing I’ve heard negative is that some folks have not been able to get in and that they don’t have enough sales folks–we call those high-class problems in the business. 🙂

> Do you think John Battelle is up to the challenge?

John has built two huge businesses at WIRED and Industry Standard and gotten his butt kicked both times–something I can relate to! Those kind of battle scars are what make great entrepreneurs and Battelle is
a great entrepreneur. I couldn’t think of a better person to make this work in fact. If it can be done he’s the person to do it. In fact, it might be his destiny.

> Who is the number one blogging network? What are the top blogging networks
> today?

Weblogs, Inc. and Gawker are the two biggest. Nothing else even comes close. I mean, B5 Media raised some money but can you name their top blog?

Federated Media is *not* a blog network, they are currently a rep business. If they are selling $10M a year that means they really have revenue of $4M–they never earned the other $6M (that belongs to their clients). So, you have to keep that in perspective when comparing to Gawker and Weblogs, Inc. which OWN the real assets: the brands. That is the big problem with Federated Media in my mind, they don’t own any IP. Of course, the same is true of Google Adsense and that’s a great business.

> What are you doing at Sequoia?

Working very hard and taking a lot of meetings. 🙂

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