[on-hold music] Welcome to the Rebooting show. I am Brian Morrissey.
Before we get to today's episode, I wanna take a moment to highlight a couple of things that we have going on at the Rebooting. This is one of our busy seasons, which I think is mirrored throughout the entire industry.
I, I used to joke that there was, there was an event season, like the Taliban have a fighting season, and usually it is around now. It's sort of late April through Cannes, and then it starts again in October, November.
And those make up like one-third of the year, but they make up like two-thirds of the business.
So we have a lot going on, and I'm very excited by a lot of these projects, and I wanna highlight a couple for you if you'll indulge me. First, we just released a new research report.
We're doing a lot of these, and I think they keep getting better. We have a good system going, and we're getting good insights. So those of you who, who have participated, thank you very much.
I'm hoping to put together a program that rewards people to, you know, share their insights with us. But we did this.
We, you know, we surveyed over a hundred product leaders at publishers, and then we complemented that with a series of stakeholder interviews.
And we were basically trying to get how publishers are navigating the, the shift from the scale era of platform dependency to product-led growth and doing it against the backdrop of, you know, the reality of this being a more with less era.
Some of the key findings are that, you know, audience engagement remains a top priority, product priority, but there are tech limitations and organizational silos that often prevent progress.
And a majority of respondents, you know, allocate most of their technology budgets to maintain existing systems, and this leaves little room for experimentation.
Now, as for AI, it is being used, no surprise, to streamline workflows and assist in marketing and operations. But right now, editorial adoption remains kinda off-limits at a lot of places.
I think people are very wary about diving into that.
I can understand that, but I think it might also be a mistake because this, uh, this is a to-- an assistive tool that will be part of every single process, if not replace a lot of them, to be honest with you.
Another finding was that many companies, you know, are using third-party or hybrid CMS solutions. The, the era of, like, creating your own CMS and giving it some name from Greek mythology is... That, those days are over.
And finally, product leadership is often fragmented, and that leads to conflicting priorities. And we get into, you know, how this manifests itself in the day-to-day in the report. So do check out that report.
And secondly, we are hosting another online forum also with WordPress VIP. This is later this month. This is on May twenty-first at one PM.
I'll be joined by Aaron Siegel, the head of product and engineering at Recurrent, and Lauren Stefano, customer success manager, WordPress VIP.
We're gonna dig into how Recurrent overhauled its tech stack across, you know, multiple brands in its portfolio and how it did that, you know, without stopping innovation or compromising, you know, the user experience.
And so this online forum, we like to go deep. It's very interactive. I try-- I treat these things less like quote-unquote webinars and more like digital programs, so definitely check it out.
We'll get into, like, why flexible open source platforms are replacing custom CMSs, how to consolidate infrastructure without, without slowing down product cycles, and we also get into how Recurrent makes the most out of one-off traffic spikes i-in order to convert them into long-term and sustainable audience engagement.
So do join us for that on May twenty-first. This is all against the backdrop we are doing tom-- uh, actually later today because this is delayed. I admit this podcast is delayed a day.
We're doing the Media Product Forum with WordPress VIP at Chelsea Piers, and we're gonna get together about a hundred and fifty top product people and publishers.
I'm gonna be doing a conversation with Neal Vogel, the CEO of Dotdash Meredith.
We've got product leaders there from Hearst, from the Free Press, from Forbes, from a whole swath of Politico, a whole swath of publishers, so it's gonna be a great event.
Anyone who's listening the day of the event, uh, look forward to seeing you later. Anyway, do keep in touch on all these events.
I'm gonna be promoting various things that we're gonna be doing in Cannes later if, if you go there. But I wanna get on to the conversation.
And again, you can find links to, to the report and to the online forum in the show notes and on therebooting.com.
This week's episode, I'm joined by someone who is familiar to listeners of the other podcast I do, which is called People vs. Algorithms, and that is Anonymous Banker, AKA AB.
AB is something of a breakout character from PvA, so I wanted to do a standalone episode with him to get deeper into how the M&A market in media is actually working or not working, and AB has, has a, a tight grasp on that.
So he breaks down what's changing in deal-making and why many media assets are trading like, in his words, a declining chemical business, and how the current market has coalesced around three types of buyers.
One is the financially driven operators. These are people that, you know, are not household names. They're people like Static Media or VowNet. They optimize for cash flow.
They often are very reliant on programmatic revenue. These are canny operators, and we get into the different players in this.
The other ones are, you know, strategic acquirers who are using media to reduce customer acquisition costs or just to gain soft power. You know, the soft power part is the billionaires.
You know, it, it gets you into parties, whatnot.
But there's a lot of companies with contiguous businesses to media who see it as a way to cut down on their acquisition costs, and AB breaks down why that makes sense to them.
And, you know, there are still, you know, related high, high net worth, you know, vanity buyers who treat media as a way to get cultural access, you know, or just, you know, virtue signaling. Let's be real.
So it's a wide-ranging, sometimes depressing, but I think very insightful conversation, and I hope you enjoy it. As always, love your feedback. My email is bmorrissey@therebooting.com.
Also, you can leave us a rating or review wherever you get these podcasts. Always love to see them. And now on to my conversation with AB. [on-hold music] AB, welcome to this crossover episode.
You, you were a breakout star on People vs. Algorithms, so I wanted to, I wanted to do it without Troy hovering around. Got it. Cool. I met actually a fan last week. Did you? In the wild, yeah. My first.
I've never had that before. Oh, really? Yeah, it's good. Yeah. It's fun. But-- Yeah. I didn't sign any autographs. Did they recognize your disguised voice? Do you walk around with your disguised voice? Exactly. Yeah.
With my Eleven Labs app. No, it's been, it's been fun on the other podcast talking about this market stuff. A lot of times I don't think it's that interesting, but people seem to find it interesting.
No, it's interesting because, like, most of the people listening to this podcast are not deep in your world. We would always find these things when I was at Digiday.
We would do these, which is kind of like this, we would do these confessions, which were like anonymized Q&As in s- particular areas. Yeah. And usually the reaction would be twofold.
The people who were in that area would be like, "No duh," and the people who were not in that area would be like, "Holy shit, that's screwed up." [chuckles] Yeah. And you wanna like... It's perfect, you know? Yeah.
'Cause I'm like, I would get, I would get the, those two types of messages that were sent to me. All I care about is I get the messages. Yeah.
So I want- I mean, the big thing is to prope- yeah, pro- like, provide insights that people wouldn't normally have or peel back.
'Cause like some of this stuff isn't a secret, but I just don't think the information is fully distributed. Okay, so let's talk about what's not a secret, but like, is, is not distributed.
And I wanna start with the state of the sort of publishing, and then we'll go broader into media M&A market. Okay.
I, I know this having over the years, having talked to investment bankers, you guys think it's always a great time to be doing deals. If the [chuckles] market's up, good time to be doing deals.
If it's down, good time to be doing deals. [chuckles] Is it a good time to be doing deals, AB?
For digital media or traditional media, I think you're at this place right now where you can, with a ninety percent certainty, predict that the value of your company will likely be less next year than it is this year, right?
Just because of so many significant headwinds between audience fragmentation, advertiser fragmentation, and AI.
People have asked me, like, when is a good time to sell their business, and this is like a digital media site or someone who has something that has a subscription plus a digital site.
I think that's like a simple way to think about it is you're always trying to figure out, okay, with market timing, if I can grow my business a little bit more, will I get a higher multiple? Will there be more buyers?
I, I think next year there's gonna be continue to be less people interested. The multiples will not change or have gone down, and just the market continues to get tough.
So what-- And so that is basically the market has, kind of hates these businesses to some degree. Yeah. Any business that is a webpage business, it seems like the market is almost marking to zero. Risk off, yeah.
I mean- They're risk off. Ri- Yeah. That's a nice way of putting it, risk off. And that basically means that it's clearly a buyer's market. But who are the buyers, right?
'Cause I think we've seen emerge, and we talked about this on PVA, which everyone should check out. We talked about this new set of buyers. They're different, you know.
They'll, they'll, they'll have offices in like, you know, like an, a nondescript area of LA or, you know, [chuckles] they'll be, you know, they're-- I just feel like what we're seeing come in the market is not like big name strategics, but people who are very good, I think we call it, like harvesting.
Yeah, I was visiting one yesterday in South Miami. It w- they were the second floor above an ice cream shop. South, South Miami. [chuckles] Second floor above an ice cream shop, I love it. And they make a lot of money.
So I think the people that still exist here, you have companies like Static Media, Valnet. Valnet's the one that just bought the, the asset from Vox a couple days ago. God, the asset.
We're-- We've gone beyond ca- ta- calling them brands to be calling them the asset. Br- bra- [chuckles] The thing. And so there's probably- It's called Polygon- Polygon... AB.
There's like, there's like ten of these folks. There's like five that are relatively big, and what they do is they look at these businesses.
And like the first part of my career, I sold a bunch of newspapers, and the unfortunate thing after most of those newspaper deals closed is I knew like half the people were gonna be fired a- at the company that I was selling.
God, you're like Bud Fox. Yeah. It's like a grim reaper. Do you even know that? Do you know Wall Street? No, I don't. No. [chuckles] The movie Wall Street? Yeah. Bud Fox was the Charlie Sheen, you know. Got it.
They would, they would strip out like the overfunded pensions. They would go after the overfunded pensions to milk them. That was how the business- Yeah... was done in the '80s.
And so w- in the newspaper world, same thing with these digital sites. Like you're effectively... And I don't think it's just the operators trying to necessarily maximize value and cut any valuable person.
What's happening is Google's changing how it perceives content and how it drives users to these websites, which means, and this started really happening about two years ago, where publishers were rewarded for publishing more thinner content because through Google Discover and Google News, that's where a lot of websites are finding net new users to come visit their pages.
And so people shifted their editorial staff to much more freelance, less thinking about expensive articles, evergreen content, and more focused on purely just writing a, a bunch more.
And so the normal owners of these businesses like Hearst and Conde, they're kinda just sitting there. They obviously have much more diversified businesses, family money that can keep their media operations going.
But the people that are succeeding now buy the businesses, cut a bunch of headcount, and then rely a lot on programmatic to, to drive revenue. Yeah.
They've, they've all dipped their toes into affiliate, direct sales, things like that, but most of themTheir core, eighty percent of their revenue is from programmatic advertising.
Okay, so give me some of the players in here, because we've seen them. Like, it's just to me the like the consideration set when we talk about the harvesters, right? Yeah. Are like the people like Savage.
I mean, the name Savage Ventures, I know that there's a guy whose name is Savage, but it just, it fits. Like, I don't know if you wanna be owned by someone whose name's Savage.
[chuckles] Like, you know, the name is on the label at that point. Yeah. Yeah, so they acquired Vice last year, and then they acquired Pop Culture Media from CBS. Right.
And, and, and the play there is it's not like they're going to rebuild the Vice of old. This is not gonna be the, the swashbuckling Vice. This is an asset, and the asset has value, and that's why it was traded.
That value is very different, and you know, they're gonna r- they have a playbook. Like, what is, what is the playbook of someone like Savage? To turn back on the content in a very inexpensive way using freelancers.
There's a lot of SEO juice that they're relying on, so like the domain authority of the website. So when they publish, they know it's gonna get syndicated better.
Yeah, the, the deal value was honestly probably neared one year of Shane Smith's T&E budget. That's like the degradation in value that happened at Vice between from the investment rounds to the, the, the deal last year.
So it's cheaper content. They're republishing some video. They turned back on the magazine with a limited run. I think it's published quarterly with like five to ten thousand print copies.
They're, they're not gonna just completely, like, abandon any of the creativity around content, so they'll probably turn on a couple podcasts.
There's ways to do that content in a economical way and use the brand and use that halo, but it's-- they're never gonna invest.
Like, that, that Vice deal too, to be clear, it's Vice Media, it's not the TV and the production assets. Mm-hmm. So it's two separate things.
So Vice Media owns vice.com, Motherboard, all these things, and the YouTube channels and, and the food brand. Munchies. Munchies. Munchies. Yeah.
And so I think they'll selectively invest in those, but you'll never see... All the investment is gonna come from cash flow.
There's not an investor that's going to s-sit there and say, "I'm gonna spend twenty million dollars and put a bunch of new content out there and hope the advertisers come."
Any content that has to be RO-ROI positive within thirty days. And so it's just a different way of, of running these sites. Okay. And is that the sort of common sort of approach?
I mean, like we saw G/O Media keep shedding assets, right? Like- Yeah... and I think I joked with, with Jim that he used to sell ads and now he sells websites.
Maybe he made the joke himself and I just repeated it to him. And I mean, they shed-- And I always find these things like pop up that I've, I've heard of tangentially.
You know, like for instance, G/O Media sold Quartz, which look, it was a withered, it was basically a minimally viable brand at that point. Yeah.
But at the same time, like Quartz used to have, like it used to be a pretty robust company.
And it was from a different era i-in many ways because the playbook then, you know, when it was started out of The Atlantic was, "We're gonna lose money for like three to five years," and that was the typical way you built these properties is you're gonna lose money.
And then it, it got unloaded to i-this Canadian software firm, Red Brick. I mean, I had known them for buying like a, a, a newsletter, basically outsourced ad network, but kind of an unusual...
I mean, these are the-- are these the kinds of, of... Are they in the same sort of world as this Savage or are they different? Yeah.
I think where, where someone like that comes into play, and you'll always see these like unique things of where someone, like a credit card company is buying a food media business.
It's like someone said, "We need to reduce the cost of customer acquisition, so if we have this media company, everything will be magical and our CAC will go down."
I don't think it usually turns out that well because a business that's not a media company running a media company, they don't know the levers of growth.
They typically hire a bunch of consultants, spend a bunch of money, and then either shut it down or spin it out. You saw that with GameStop.
They owned, I think it was-- they had this magazine called Game Informer that they shut down and they finally sold off. But that was like an amazing title inside.
They could have done so much with it, but they just didn't have the, the wherewithal to operate it properly. And so I think that type of buyer is completely different.
There's probably like, if you had to break it up into sort of three pockets, there's at a G/O, they sold Onion, right?
And Onion was acquired by, I forgot the lineage of the person, but it's someone that's had a billion dollar plus exit, wanted to play around. Yeah.
I think they're running it actually pretty well, so it's not gonna cost him a lot of money.
But you have this bucket, Mark Benioff with Time Magazine, where they try to bring some cultural relevance back to those brands, grow them, and kind of have them as like a, a thing.
People have used media since newspapers to... I mean, they talked about Jared, Jared Kushner using The New York Observer to kind of make his way into the New York scene. And I think magazines,
other dotcoms, you know, if they have the right cachet, can help get you into different sos- parts of society that you may not have been before. Okay. So their economic purpose- So that's, that's one...
their economic purpose is totally different in that model. Yeah. And in a lot of these models, the economic purpose is very different than it, it used to be.
And I think this is a simple point, but an important one, you know, in that it's less about connecting a buy and a sell side and serving like an important role in the marketplace with, you know, with connecting, you know, information and being an intermediary there.
It's more being a front business to a different business, whether the job is being done to lower CAC or, you know, whether it's just a pure arbitrage play and that there's an opportunity here if you cut costs to financially engineer these into being profitable assets.
I mean, I think, you know, Reid at Apollo w-will regularly remind me that like AOL is like a massively profitable business.
You can, [chuckles] you can make money off of a lot of things at different parts of their life cycle. Or it's a way to get, you know, into parties for rich people, I guess. You put on the party.
It's the best way to, to have- Yeah. There's effectively, it feels like there's three buckets, right? And ROI is different in every case.
So the wealthy folks, and I would even say this of the Steve Cohen, likeThe Feastables acquisition and things like that is there might be other ways that they're calculating ROI versus pure just money ROI.
And then so second bucket is probably like these adjacent companies that wanna bring down CAC, and then the third one being the Valnet static media savage, where they're actually trying to get r-real ROI, and they've been pretty successful.
I think where they struggle is they're still at the whim of Google.
A lot of them are happy because Facebook is giving publishers back its traffic right now, which they had turned off for a few years, which means that like Facebook is now being much more open about letting people click on links and go out off the site.
But even though they're so operationally minded and profitable, they're still under constant pressure because Google keeps changing things and, you know, AI is here, so the traffic's just getting less. Yeah.
I mean, I did, I did the-- an online forum with James Coser from, from Valnet about their Facebook strategy.
And like, 'cause a lot of it's like we've sort of moved on from the Facebook, but Facebook sorta came back, like, and
I guess in journalism, you always say something happened quietly when you just didn't notice it originally. It quietly came back.
And, you know, they're really smart about how they operate these businesses, and you have to be, you have to be executor first. Like, vision comes second, like [chuckles] I feel like at, i-in, in these. Like it's very...
And media's always been an execution business, you know.
I mean, Shane painted a great, great picture of the future and, you know, he was able to like, you know, close massive deals over a thousand dollar bottle of wine, but it's a spreadsheet game now. Yeah.
The, at the t- kinda the twilight of the newspaper land is like when they started to put together the editor and publisher role, 'cause it was always supposed to be separate, right? Yeah. Business and editorial.
But as you said, these businesses are, are focused on the bottom line, and so yes, they have editor people, but the, the direction of the different titles is completely based on business motivations.
So how much is there an AI overhang in, in the M&A market when it comes to valuing these assets?
Because it's very uncertain what the value of a-- to me, I would think it would be uncertain what the value of these assets is gonna be in three to five years. There's not a lot of visibility.
I can remember, you know, my first job in journalism, it was right in the dot-com implosion, and so I would listen to all these earnings calls of people who would like, were running like web design agencies, but were, were for some reason publicly traded, and they were totally in over their heads, you know?
[chuckles] And so they were like cracking under the pressure, and they're like, "We don't have visibility." [chuckles] Yeah. And it's like we have no idea what's gonna happen.
How much of that is because like, you know, I feel like I compare it to like Wile E. Coyote, like going off the cliff. His like his, his legs were still churning, and he wasn't dropping immediately, right?
And it seems like with, with AI, you play out a lot of these scenarios, and it is not good for a lot of these assets. Yeah.
I think the, the Ben Thompson interview with Mark Zuckerberg, where he's like, "We just want the, the brands to come with their credit card- Yeah... and we'll give them customers."
That- Customer vending machines, that is what people want. They do not wanna buy advertising. They wanna buy customers, and they want it to be predictable, and Facebook proved this.
Like, remember when, remember when they just basically pulled the rug out from the brands and said, "Nah, you're not gonna get your organic. You helped build this. You advertise Facebook.
Now you're gonna have to pay for distribution." I, being a moralistic journalist type, was outraged. I did not like this. I was like, "This cannot stand." Guess what? The marketers didn't care.
They were like, "We'd rather have predictability, and we will pay for like predictable distribution. We pay for distribution all o- all the time. We don't care about ads."
And so that's like the-- to me, that's, I know we're a little bit off topic of what the question- Yeah...
you asked, but that to me for-- and then basically the way that Mark talked about like I just wanna give, he just basically I need to give the machine more power, right?
And when you think about what Facebook is doing, so they're building the data centers. In some cases, they're now adding power factories.
Like they're taking the marginal cost out of so many processes where people used to get a spiff. So there would be a power company, and then there would be a data center company.
And like a lot of these businesses like Google, Amazon, they're literally, it's, it's kind of a weird thing to think about, but they're end to end. They're like capturing all, like they're no cost.
They're capturing a lot of the value.
And I think that even if you were to build an ar-- and I know you don't have the distribution of a Facebook and the audience, but the, to try to even just compete with Facebook going forward is they're gonna be able to compete so much better because they're not paying middlemen for anything, uh, for compute power, da, da, da.
They're building their own chips like, and everyone else is gonna have to basically use someone else's model to, to drive similar, not similar experiences, but similar kind of outcomes.
So where I see, I guess what scared me is like I see a lot of these ad tech companies, everyone will always figure out different ways of like, I'm gonna test for adjacency and, and guarantee identification and, and reduce waste and fraud and like da, da, da.
But I think what's interesting in the, in those instances is Facebook is basically the kingmaker because Facebook doesn't give that data to a- No... any ad tech company.
Total black box, and it is a, it is what, what did Martin Sorrell used to call it? Like, he would say like in a very British way, like, "It's transparently untransparent." [chuckles] Which [chuckles] I kinda love.
And it seems like the market is moving towards that. And I think we always talk on PVA about, you know, media, media being downstream of, of all kinds of different things, starting with tech.
And being downstream of a market that has shifted to outcomes and is less, is less about are youWhatever, MRC certified or whatever, like they're just-- You know, I, I'm reminded of, you know, for a while, the TV up-fronts were the Wile E.
Coyote, you know? It was-- It wouldn't drop. It was like the, the-- I was like, "Why is this still up?"
And it was like, literally like the, the brand managers were like, "You know, look, I don't care about your like counting clicks and stuff. When I run a flight of TV ads, I don't care what the ne..."
Like, "My sales go up. Like things happen, and that's all I sort of care about."
And you know, Mark Zuckerberg is basically just gonna use Three Mile Island, I know it's Microsoft opening that, but allow me some poetic license, in order to create an end-to-end system that does away with not only a lot of the ad tech that sits in between, but he's coming after like the advertising agencies too to some, to a large degree.
Yeah. I mean, if you, if you're doing hyper-targeted ads, the creative can be built with AI.
There's so many things that AI can probably do a better job than a bunch of 25-year-olds at a ad agency running around putting creative together and- Like if you think about it, like I rem...
Like I know like Troy has like what, Chamath derangement syndrome, but I thought one thing that he said that was very smart, although he said it very slowly, was, you know, that SaaS companies were basically arbitrage on software talent, right?
And companies couldn't hire that software talent for themselves, it just would be inefficient. Agencies in some ways were just, you know, have been, I mean, they're basically arbitrage for creative talent.
Like you, do you-- You couldn't get a crea- you couldn't get a top-notch creative to sit in IBM. That was the old thing. Forget about IBM now. But like, uh, so you, you would rent them from Droga, right?
But now that, like everything, it's just a form of content. When the cost of that goes to near zero, doesn't mean you don't need creative talent, but you don't need like, you don't need McCann, you know?
You don't need-- There, there's a few people that will need that kind of like distribution, whatever, but like the majority of the market, it's already been shown, is the overwhelming majority of the market is people who are just doing self-serve.
You know, that's why any of these advertiser boycott, boycotts never get out of the gates because it's like you have no leverage, not when someone has millions of customers. Yeah.
And the, the palette of most consumers is actually relatively low.
So that's what's g- So, so on the AI side, we talked about Facebook and Google and how they're gonna eradicate all these different layers of age, agencies.
One thing to think about on the consumer or like a service side is as you have to spend less on, say, a call center, they're gonna have more margin to then push into advertising.
It's this really interesting flywheel that will just, I think, make Facebook and Google more valuable because as businesses get better and more productive because they're able to wipe out cost for, with headcount or other services by bringing it in-house or using some sort of AI vendor, is they're gonna put all that margin to going after customer, more margin to going after customers.
Right. So you could have a situation-- So advertising usually, I forget what the percentage is, but like it was always a percentage of GDP. And so like when- Mm-hmm. GDP falls, advertising falls.
That's why advertising is a really good canary in the coal mine with the economy really, is because the first levers that, that companies... Like when you're looking for, you know, I think, what?
Like five of the last three recessions have been predicted. Is that the old expression? Sure.
And that's clearly been happening since the pandemic because things are just wildly gesticula- I for- I even forget, like there's been so many mini recessions that have been predicted, I, I like forget some of them.
But now we've got the tariff recession coming, and like one of the things that stood out to me at Possible was, again, to go back to this Wile E.
Coyote, is like everyone was preparing for the tariffs to hit in a couple of months, and already they're seeing softness in advertising because when you look at the levers that can be pulled by the CFO, I don't know if the CFO reads those Ad Age articles that say, "Do not cut," you know, "advertise"- Yeah.
"... in a downturn," but they never pay attention to them. And they have a few levers, you know. And what I saw was I'm out there inviting a bunch of marketers to one of the dinners that we did.
I hope that's protected, by the way, from AI. We can talk about that. But so many people were like, "We're not traveling. We-- [chuckles] They cut our T&E." And I'm like- Well. "Oh."
[laughs] You know, 'cause like that's one that's like, it's an easy first step. Advertising comes next, like 'cause you don't wanna start to like lay off people.
But to me, that was like a sign that I looked at was like, "Oh, that's a little weird."
So the other side of that is a lot of these performance businesses are having some of the best months because as certain brands leave the market, they're able to kinda come in and get custom...
And they're, they're just spending more and more money because there's pr- there's insurance co- there's a lot of advertisers that still want customers, and as long as they know that they can pay for them and still make return on- Yeah.
That investment, some of these guys are having massive Q1s and Aprils. Yeah.
But I think my like larger point was that I was trying to get at was that advertising as a percentage of GDP, I forget who said it, should go up. It should actually decouple. Yeah, yeah. And that would be like historic.
And so you would think, like if this were a normal market, like publishers would be like, "Wow, this is amazing. The market is getting bigger.
We're actually in a market that's growing because we're exposed to advertising." But the problem is, all of the gains are gonna go to, not to publishers. Yep, and that's how it's always happened, right?
So like they, they always have those pie charts which show whatever eighty percent of every dollar that comes to digital advertising goes to Meta and Facebook, or sorry, Meta and Google. So is there a future then?
Like, so I mean, basically the market is, is saying that a lot of these ad-supported, page-based models areAlmost worthless to a degree.
I don't wanna say worthless because you, you have intangible value and brand, and you have distribution, you have SEO juice and whatnot, but that there isn't necessarily a future for these businesses as they're operating to grow.
The, the future is you can financially engineer growth in different ways, but like- Sure... what they do is not gonna have a greater economic, you know, value in five years. Yeah. So I think there's sort of two groups.
You have, you know, Dotdash Meredith is turning on like new ad tech, right? Because they're like, "Hey, we have such good intent data- Yeah...
let's figure out how to better monetize this, both on our properties and then off of them."
And so I think if you're a bigger platform, you can make a push to becoming more like an ad tech business, where you're starting to decouple necessarily people advertising directly on your sites, but you're getting more of this brand money just to find these customers wherever they are and become more performance-based advertising.
I think the way that the rest of the world, like when some of these smaller assets are trading and the multiples are trading at, which is typically four, five, six times current year EBITDA, that's indicative of almo- of almost like a old, like a chemical business, right?
So lower margins, low grower. I think to your point, there's not going to be massive value increases for these typical mainline digital media sites or, or media brands, but that's how they're trading, right?
And so you can still, depending on how much leverage you use, how conser- conservative you are with capital, you can still make a pretty good return.
You just have to make sure you're buying them at the right price, and the expectation is you're never gonna go twen- grow twenty percent year over year. You're gonna get the uplift by cutting costs.
There's always opportunities to do like unique tuck in. Like there's a-- The best kinda glue factory, and not in a mean way, but is this group out of LA called Regent LP, which is a private equity firm.
So they got Cheddar. Yeah. And along with Chre- Cheddar, they got Rate My Professor, was a, which is actually a really valuable business.
They just got a bunch of those assets, like the tech publications for like applenews.com or what, like a bunch of like esoteric kinda tech-focused things.
And so the goal there is just to kind of like the, they, they get these assets for effective... Oh, they got TechCrunch too.
They're not paying that much for these assets, and they're just kinda getting nice dividends from the cash flow. Yeah. I mean, that's like a, that's a great example of one. Is it Regent or Regency? Regent. Regent.
Regent. Regency is the, they used to be a, a movie theater chain. So like Regent is a great like example of one of these companies, right?
That is collecting a lot of these assets, and their, their main thing is that they, they are great operators of these assets, right? Like it's not like they are building assets, you know.
They're, they, they don't create media or anything, you know. They're a holding company, right?
People go to Regent, like corporates go to Regent when they have a problem, and they just wanna spin off a division and fire a bunch of people and don't want the negative press.
[chuckles] Oh my God, this is depressing, AB. [chuckles] This is very depressing. People say that I'm like... I'm like, "No." I was like, "I j- it's the people I talk to, it's not me." Yeah.
I mean, there are f- there are like a lot of fun things happening in media. Like I think audio is doing, like obviously audio had a pretty good run seven or eight, six or seven years ago with some really great exits.
There's new money going in. People are figuring out better ways to monetize. The whole newsletter ecosystem is growing and interesting.
I don't know how much real enterprise value will be created there versus just really good jobs for people on the newsletter front, on the Substack front.
But it's like, you know, just to kinda t- pause on Substack for a second.
So I did not appreciate how much people, say like your newsletter or we take Pat's newsletter, Daily Upside, I didn't realize how much you have to pay for new subs. Oh. Like if- I don't pay... on the open market. Okay.
What did you have, like a fourteen forty? Like how much fourteen forty is paying, right? It's a buck f- I, here's some numbers that I got. Yeah, a buck fifty, two bucks or so.
Just for like the ability to register somebody, and then the potential for them to register, open it up, and actually become an active person is like tw- twenty percent, right?
And so I guess what surprised me is as much as people hate on Substack, it's like it's bringing...
And sure, they're stuffing people with all these extra newsletters they don't need, but you're not paying for these subscribers, right? Oh, yeah. No, it's a great deal. It's a great deal. Yeah.
I mean, I was on Substack for, I don't know, two and a half years, right? And- Yeah... you know, all of li- a hundred percent, outside of like word of mouth and people- Yeah...
forwarding around, almost all of my growth came from their recommendations network, and I paid zero dollars. I hosted, I paid zero dollars. I didn't have [chuckles] subscriptions at the time. I paid zero dollars.
So like I was a complete cost center to Substack. Every single email gets delivered.
I mean, it's like amazingly amazing service in that way, and I'm like thank God for venture capital money because like that's not a good deal for Substack to be basically subsidizing me.
Because my model was in basically reaching high-value audience segments and getting them to take some kinda commercial action on behalf of my partners.
And, you know, the growth features were real, like didn't have to go and pay. Now, the, a lot of the people ended up on there, you know, were not, you know, they... It wasn't like a co-reg, you know.
It's like somewhere in between.
Like I think a lot of times people, and that's I think, you know, a lot of media, particularly in this area, has gotten over the aversion to, you know, that idea that only losers pay for it because, you know, acquisition, paying for, for distribution is going to be just the common cost of doing business I think in many of these areas.
Yeah. Yeah. So to your broader point on the sky is falling, there are-Fun places that people-- I think sports media, as we talked about that before on- Yeah. Good Good Golf- Last week... good business. Yeah.
I mean, they're, they're interesting businesses. They're not gonna look like they were in the past. I don't think they're ever gonna be as stable. There's not gonna be like this monopolistic power that existed before.
You just have to kinda keep innovating. But like s- it's not all bad, right? Cons-consumer attention is still up for grabs, and advertisers- Okay. So what areas are- Still need to kind of buy stuff...
what areas are growing outside of the frigging tech companies? Obviously, they're growing. In media and media adjacency. I mean, like, I look at medium like anything.
Like, anyone who uses media as a front end to a commerce business or, like, any kind of media. Yeah. So I think-- So the reason why-- Just take, take one specific thing that I know a little bit about.
So sports is interesting because there's a change in consumption habits, and what I mean by that is, like, the amount of people that watch sports on linear TV in a live environment is shifting to now not live on their phone, on social media.
And so the value that these large broadcasters used to pay for sports rights is changing. In some cases, it's staying the same or going down a little bit.
And so the teams, the leagues, everyone else has to figure out, "Okay, how am I gonna make value off of these sports rights?" And then more broadly speaking, like, these athletes are marketable people.
Like, how do we build content around them? How do we use them to convince consumers to basically buy stuff and feel good about, feel good about it?
And so in the Good Good Golf example, you see a company that's both going after the media side, but also the commerce, and hoping to kinda stitch it together in a, in a relatively large market. It's like fifty...
We looked up the number before. It's like fifty million people that play golf either on a golf course or- Yeah... at a golf simulator or some sort of hitting range.
So that's a, a big part of the US that is touching a golf club, and they're buying the clothes and all that thing like, sim- things like that.
And so to me, sports is an interesting space because the sports rights, that's getting all broken apart in terms of where that value is being allocated. The audience is shifting.
And then the other thing is, like in the golf example, you have Liv and PGA sort of competing for people, and so they're willing to kind of lean in and give out some of these sports rights to the YouTube folks to get people back into the linear environment- Mm-hmm...
to support their advertising ecosystem. So in the sports space, it's, it's helpful that things are fragmenting and people are changing habits because it's allowing new companies to be built to go capture that audience.
Yeah. I mean, it seems like-- [sighs] It's funny because we talk about platform power, right? As if it's just, you know, black and white.
But the reality is, you know, these platforms, and particularly YouTube, but also Sub Stack now too, are enabling tons of businesses that would not ha-have otherwise existed.
So when a lot of people, you know, look at the doom and gloom media extinction event, on one hand, you can be like, "Okay, that's, that's fair." But on the other hand, you're like, "Wait a second."
I mean, I'm operating one of these businesses. [chuckles] Like it wouldn't have existed ten years ago, could not have existed.
And there's-- I, I am not alone, as every paragraph or like the fifth paragraph of every story does, in which you, like, list all the different people.
And there's tons of these businesses being built on YouTube that look a lot different, that are being built on Sub Stack, that have different needs.
And I think one of the things that I've noticed is the market will absolutely need to adapt because I think a lot about...
Like, I was at, I was at the Possible conference last week in Miami, and, like, in the Fontainebleau lobby, it was like five thousand... Well, I think it was five thousand people at the conference.
They said thirty-three percent or thirty-five percent were brands. My experience, my lived experience was ninety-five percent were, like, ad tech people, which is fine. Maybe it's somewhere in between.
But, like, the s- no-- sheer number of middlemen that were there was just shocking.
And I think about how the m- the parts of the media ecosystem that are growing fastest are absolutely not exposed to that or, or less exposed to- Yeah... to, to that world. Less reliant on it. Yeah. Yeah.
When, when you're, when you're, when you're in harvesting phase, yeah, you're gonna be, like, programmatic, like you're gonna be jacked up on all the programmatic. Hundred percent.
So I would say that, like, value is accruing in much different ways. Like, in your example, in your business, like, it's effectively you.
I mean, you have some people helping, but I think one nuance with as there's more opportunities to kinda put out your own shingle and create a brand on YouTube or Sub Stack, it's like there's less people needed.
And so it's a, it's a, it's a negative trend in my mind because if you built a media company twenty years ago, you're gonna hire a bunch of people.
Now, you don't necessarily need that because you can freelance it out and a lot of the value can accumulate. Yeah. You're taking risk. Yeah.
The, the challenge is like, not to make this about me, but, like, the challenge is, like, how do you build enterprise value?
Like you said, it's like basically me, which is basically what you're saying in, like, investment bankers- It's a job. It's a good job. [chuckles] It's like I, I don't have a business.
I have a job that just without health insurance. Is that what you're saying? Yeah. Or you cut that out. Well, you can get O- you can get Obamacare. [laughs] I do have it. Yeah.
I'm not like, what a raw dogging healthcare. No.
[chuckles] I think a lot of these people that are more consumer-focused, like the way they're gonna make their m- the most money is either through audio or through doing production of content that has much wider distribution.
I don't think they're ever gonna-- They're never gonna make the most money on Sub Stack. They're gonna do it in some other venue, other media form. But I think- Wait, explain, explain that, like with an example.
L- l- use Lenny as an exa-- Or- I, I think, I think Lenny makes the majority off Sub Stack. He, he has a big subs business, but that event business is, is, is big.
He said s- I think he said he makes more money off the podcast than the newsletter. Yeah. I mean, we could use Emily as an example, right? Okay. Emily Flatter. So- Feed me. Feed me, Emily...
Emily does an amazing business on the paid side, has a much bigger audience, non-paid, has a bunch of advertisingBut as she thinks through, like, and she says this pretty directly, she like sees it the business as more like a studio to do other creative endeavors, like the newsletter is not necessarily the end-all be-all.
Yeah.
And so in other mediums like movies or TV or podcasts, if you do that right, you'll make so much more va-- say she's making, whatever, a couple million on the Substack, doing something in a, and partnering with a much larger media company that has massive distribution, the potential there, you get an HBO show, the potential value there could be millions or more dollars, and it's not, you don't have to work every day, right?
And so I think it's just something for some of these more consumer-focused Substackers, the value they're gonna create is not gonna necessarily, necessarily come from that person paying- Yeah...
whatever, eight dollars a month. Yeah. There's no, there's no, there's no B2B HBO, unfortunately for me. But, you know, I'll, I'll, I'll try to find it.
Maybe Salesforce+ I mean, you have the work, that work, the Work Week guy, right, Adam, is- Adam Rian, yeah... like, yeah, he's trying to do things that are like marketplaces.
I mean, ag- that's, I guess that's what I'm trying to say is like if the way to create enterprise value is taking that audience and figuring out some other way to monetize- Oh, for sure... that, their attention, right?
And so that's like simple speak, but my point is like I think on the consumer side, I could just give you the Emily example 'cause it's like easy, but on your, like, I know you don't wanna do this, but conference, like a bigger conference- Yeah...
like that's where you would actually create a business that could be sold. Right. Yeah. Yeah. Right? 'Cause it gives you leverage in, in other businesses, right? Like- Yeah...
I mean, I use the sort of leverage of media in a lead generation and sales enablement business, right? Versus like a typical like events business.
But I understand that the economics are probably better with doing, you know, the, the Rebooting summit. I don't know, maybe.
I just find it's funny 'cause there's, there's always this divide between what the market wants and what's, what you want and what's better for your business.
And like, maybe I talk to the wrong people, but like none of the market tell me that they want like another big event. Like, literally everyone says that they want like smaller- Sure... more meaningful.
And just, you know, your incentives as a provider, I mean, you know, I think I did 18 private dinners like last year. Yeah, I mean, I would rather just do like one event. Why, why, why do 18? [chuckles] Yeah.
But y- y- I also try to be responsive to the market. But like- Yeah... I think we see this across like the entire swath. That's why I think of media as a front business, as like a, a mega trend.
You know, look at Brian Goldberg and BDG. I mean, I give Brian a ton of credit. You know, he is, he's on that ship. He's got his Napoleon hat on. Was Napoleon ever on a ship? I don't know.
But he's got, he's got his Napoleon hat on. Mark Stenberg just did a story. I don't know if you were quoted in this. Some people, maybe you weren't. He just did a story about how...
You know, you know someone is in the market when, when they do one of these stories, I find.
Like anytime anyone was like really eager for me to, and open about their business numbers, I was like, "Oh, you're for sale, huh?"
And, you know, it was saying how sales were up twenty-five percent, and we're gonna get a ten percent margin.
And like when you're bragging about a ten percent margin in a, a business that is over, well over a decade old, like the dog is not hunting. And- Yeah... it's an events business.
He says basically in this thing, instead of being a website that publishes stories, we're now basically an events company, which I give Brian a lot of credit for just like, you know, flying that flag. Yeah.
I mean, it's kind of this, this... I think Semovore has figured out that there's... And look, this can change really rapidly.
I think when you talked about the people not being allowed to travel to a conference, one of the things that a lot of these businesses are benefiting from is where these ad budgets, where these advertisers have allocated budgets.
And so today, I went to an event a couple nights ago, and it's like the Cash App is there. All these people are paying probably way too much on a CPM basis to be at this event and to have their logo.
But I think if the economy gets tougher, which it probably will, is a lot of this live event, these live event budgets w- is, are some of the first to be cut, right? These activations and things like that.
'Cause they're, they, they, they feel good, and the CMO likes to talk about the partnerships- Yeah... and things like that. They're fun. But there's no performance. They're fun. Yeah. And s- Yeah...
and so I think it's, and I wish Brian well, but he, like 10 years ago, I remember like he had this like, his thing was like, "I'm gonna apply for any RFP. I don't even care if it doesn't fit with our brands.
Like, I'm just gonna apply for it 'cause you never know, and it'll get our name out there." And like, he leaned in heavily- Yeah... on the direct side.
As he shifts and talks about live events, like obviously it's a big money maker right now, but that could qu- very, it's probably one of the first things to change and get cut is like people are like, "As long as this isn't fully committed and we can cancel and get our money back, we don't need to do this stupid activation."
So... Yeah.
No, and I, I think like, you know, the Nylon House, it's not like if you pull out your sponsorship from the Nylon House that your business is, is gonna like, it's like, "Oh no, we're not gonna make our quarter yet."
I don't mean it as like a- Yeah... knock on the Nylon House. It's a great, it was, it wasn't my kind of party, but it was, it was, it was a good party.
[chuckles] I think I went to Formula 1, and I have to say like I've never seen an event so adapted to corporate, to corporate money.
It's like the amount of infrastructure they build for a, a race that lasts two hours- Yeah... and like how much...
They obviously, any person can go and buy random tickets, but the amount of amenities and suites they have...
Like, if you looked at the ratio, and I'm probably gonna get this wrong, but it's like it feels like it's getting close to parity where the number of people in suites or in seats is-Getting close.
And all those suite people, it's like, you know, when they show the diagram of the plane, it's like the people in business class pay for the profit. Yeah. It's like, it feels like that.
It's like the cost of these suites for two or three days is insane. Oh, yeah. And they're just giving you cheap food and, and, and alcohol.
So I have to say, going to, like, a new upgraded, like, Liberty-owned Formula 1 race, it's pretty eye-opening in terms of how much they're able to just suck from the corporate goddess, and just so much money just pumping through there.
And it's a great event. It's a good, it's a good thing, so. Yeah. I mean, look, F1 is supposed to have a billion-dollar impact to the Miami economy. It, it-- supposedly it had it in its first three years, right?
So, like, I mean, that's everything from the, like, five thousand dollar bottle service to, like, clubs during F1 to, you know, all of this. And- Yeah...
you know, whether the-- I, I actually had a conversation last F1 with the guy, G-Greg, what, Greg Moffat, like, from Liberty. Greg Maffei. Maffei. Greg Maffei. Oh, he's Maffei. Yeah. Very fancy. I had no idea.
And, you know, I asked him, like, what, like, what other businesses he was into or media, and he just said women's sports, which is kind of interesting. I don't know. It was a year ago. But yeah, amazing business.
I don't know if there's that many. One business that I think should-- deserves more attention in the, the overall media system, it gets some, but I think it's an interesting model, is like, is A24.
Like, I wonder if that model- Yeah... can be, can be replicated in other areas. What-- For those who don't know, why, why is that? We didn't prepare for this at all, but I'll put you on the spot. Yeah.
I have a feeling you, you know it. Like, why is A24 interesting to you? It's interesting because they're figuring out new ways to make money in an old medium.
I think filmmaking and TV production is a really tough business. Typically, like, I've sold a production company before and, like, you're- Yeah...
you're building enterprise value normally on, like, one or two hits, and then everything else is just kinda s-sucky. But A24, I think there's obviously a lot of tastemakers there.
They have the right creatives, and they're producing interesting content, but then they're also attaching value through the merch, and now they turned on A24 Music. And so there's a lot of other- Yeah...
places where they're just-- They're basically thinking about the business differently. I saw they got the guy from Adobe to come over to do more AI- Dowski... stuff, and so. Right. Yeah.
And so I think once you have the right, like, once people, right, signaling in a market and you ha- you're take, taking, starting to take market share, as long as you continue to produce great content and then figure out other ways to attach revenue- Yeah...
to it through merch and... It, it becomes a really strong business. The problem is, like, Legendary Pictures is a good example, right? It, like, had this, like, ins- unique flywheel.
It said it was able to get the right people and the right content, and it got bigger and was able to sell at a, an amazing value.
I just don't think that business was sustainable over the long, long term because you basically have to make new things every day. Yeah. Metaphorically. That's media. Yeah. [chuckles] That's why it's a sucky business.
[laughs] But it's different. Yeah, but a, a movie is much different than an article, right? Like- I agree...
if you mess up on a movie, that's a g- g-- and there's ways to fix it along the way, but I think that's the one hard thing about this content production world is, like, a mess up can- Yeah... can mess up a whole year.
I mean, I was, I was, I was walking through the Greenwich Village this weekend. I walked by, like, a theater that they bought, Cherry Lane Theater. I mean, they're- Yeah... they're going in lots of different directions.
I, like, hope it doesn't, like, you know, they don't get, you know, it, it's a financial mess. Like, that's my hope.
Anytime these companies are doing all kinds of interesting, cool things, I was like, "Uh-oh, they must not be in good financial shape."
So I hope it's actually a successful business [chuckles] too because it's interesting. It's kinda like Mischief on the agency side to me. It's like if you think about- Yeah...
what a creative agency is, it's gonna l- it's g- not gonna look like BBDO. It's gonna look like Mischief and, and how Mischief makes money.
Yeah, i- in a lot of ways I believe it's like ki- it's similar to agency work, but in some ways it's not, right?
Like, I mean, agencies would always have to try to get permission to like, you know, say that they did the work that they did, you know? And which- Yeah...
kind of tells you where they are in the pecking order when, like, you have to get permission to say you did the work, and then on top of that, your client is calling you, quote-unquote, "non-working media."
I mean, not a good- Sure... not a good, not a good label. [chuckles] Yeah. I, I would take the opposite- Okay... so I know Mischief, the people maybe that listen to this podcast know Mischief, but I don't...
Like, you have to understand, like, the typical, and this is not being me, being me, like, coming from a coastal elite perspective, but the average consumer does not know who Mischief is.
They may be bumped into, like, a MrBeast activation with, like, a game that Mischief created, but I don't think the palate is, like, refined enough to care. They're, like, going to the supermarket- Yeah...
and, like, buying something based on where it's positioned, and, like, it's so simple. No, I get that, but I guess what I'm saying- Yeah... is even in a B2B context, in that- Yeah...
they are able to de-commoditize themselves in an industry that has always, always been a race to the bottom.
Like, uh, I covered agencies for a long time, and agencies would always be like, "We c- need to be paid for pitches. We can't be doing all this, these payment terms." Sure.
And then they would line up around the block to pull their pants down anytime Coke had a pitch. Yeah.
No, I g- I, I get your point, and there, there are, uh, at South by Southwest, I met this guy who all he does is run Twitter handles for B2B companies. And so there are fun ways to, like you said- What's his name?
Charlie?... to like not have permis- What is his name? I feel like I know this guy. I don't know. [chuckles] Charlie. [laughs] Is that his name? But it's just like people are pecking away.
I, I think not having permission is an interesting way to frame itI think most of the stuff- That guy's, by the way, that guy, that guy's probably gonna have like an agency worth more than like BBDO.
Like he's running [chuckles] like B2B Twitter account. Like who even knows at this point? Yeah.
I met this guy who's in his early twenties with a college agency, and in two years he's basically comparable to some of the incumbents without any tech.
He has a team, but he's done it based on his connectivity and influence with the creators that the brands wanna get to.
So Amazon and Netflix and everybody comes to him when they have premieres that they want creators at, when they want to get the college influence.
And so I do think if your point is like, look, there's other ways to attack these markets and completely usurp the traditional model, a hundred percent.
This guy is so young and he's-- like the amount of revenue he's generating in EBITDA is like insane. Like it's a lot. Will you tell us who this is or no? Secret. What? [chuckles] I gotta have some secrets.
[laughs] Your name is a secret. Isn't that enough? Yeah. All right. Let's wrap it up. But it's just cool to see it. Yeah. Let, let me get...
Give me like, give me three, three businesses that everyone should know about that are either in media or tangent. Take it in as many- Three... directions as you want.
It just, you know, it has to in some way map to media and where media is going as a business or as a front for other businesses. You can think. We'll play the Jeopardy! theme music.
[Jeopardy! theme music] Vanya, put the Jeopardy! theme music on now. Okay, Jeopardy! theme music's over. A, B.
The thing is like, I know companies that are interesting to me, but I don't know, they're not interesting to most people. That's okay. That's okay. They're, th-they're people just making a lot of money on the internet.
I love money. I think that's like the fun- I love it. [chuckles] The fun thing is like I bump into people that like, I made this joke to you, it's like the private jets and ketamine.
Like it's kind of wild how much some of these people make on the internet and what we- Give me a wild, give me a wild story of someone makes a lot of money o-on the internet that in some ways touches media or the dynamics of media.
Basically it, it's one of these companies, if you google like best vacuum cleaner, da, da, da, da, I'm not gonna tell you the name of the company, but it's like fifteen people and it makes like fifteen to twenty million of EBITDA.
And like most of the people at the company are not executive. They have like three or four executives. And so the two founders of this business make a majority of the, of the money, right? And so- Okay.
So they're each peeling down millions a year. Like they're just taking- Yeah, like seven, seven or eight million dollars each. Yeah. And they don't work... They work like thirty hour, forty hours a week. Vacuum cleaners.
Okay, good. Yeah. [chuckles] All right, I'm getting into that business. [laughs] Forget this. Yeah. I'll tell... Okay, so two point- Forget these dinners. I'm selling vacuum cleaners. [chuckles] Yeah, it's crazy.
So I think, I think these companies in this like functional... So there's a business called Function Health, which just bought an MRI scanner.
I think there's a really interesting play which will happen whereby you basically decouple from going to your average doctor, and AI becomes a better... For the, p-for the non-sick person, right?
So I can tell you get older and you're literally seeing the doctor for maintenance or maybe, you know, you go through the cycles of life around pregnancy or something like that where you need to see the doctor.
But for the most, for most of your life, unless you break a bone, you're not- No... seeing a doctor. And so I think there are companies that are gonna play in this space.
It's really interesting when you go through the Function Health checkout, you can literally end up with like a two thousand dollar blood test even because they trick, they like scare the shit out of you.
But I think there's gonna be a lot of money made by people helping you maintain, whatever you wanna say, a more healthy lifestyle by- Okay...
by integrating testing- So basically being, being like an affiliate front for like a deca scan or something. Yeah, but and then they're buying their own things, so. Okay. But the, the outputs are interesting.
They do a better job than your doctor, but I think you'll like no longer care about... You'll go to the doctor if something bad happens, otherwise you're not gonna go see your, your, your general physician. Okay.
Function Health. You should be. I'm gonna check them out. Yeah. Give me a third. A Good Good Golf. I, I know this is like a... But I just love- Yeah, I love it...
I love these golf companies because I think the market, the more I did research on it, the market is like massive.
It's, it's much bigger than tennis, it's much bigger than like basketball, and so you saw The Chernin Group try to go after like surfing with... They did a roll-up in surfing.
They've done it in a couple niches, but I think these golf ones are gonna be some of the first roll-ups that actually work and that will eventually exit and sell to probably back to a bigger media company. Okay.
So that's a true media business. I, I think that- Yeah... you're totally right on that. My, my nephews are into golf. I'm not a golfer, but- Yeah...
and they were wearing gear from like Good Good Golf or one of these, I forget which one it was. And yeah, they're, they're teenage kids and- Yeah... th-that's a lifelong thing.
Like they came up, you know, they play lots of different sports, but they're into golf too, and their like experience with it, my, my dad's got the like, you know, the PGA Tour like on, you know, the volume on like fifty-five, but like their experience is all these like YouTubers and, and that is their entry into the sport.
I don't think that's changing. I don't think that that is like a way station to like, you know, okay, turn into like Jim Nantz and [chuckles] I don't know, maybe. Yeah.
And the nuance with the PGA is like the players have a little bit more flexibility off the course. Yeah. They're independent contractors.
Versus, versus some other sports, and so that's why, you know, Bryson can show up on these random YouTube guys' channels and make content, and then your family members watch it.
So it's kind of one of these fun things- Yeah... where the s- the athletes can pop up in a bunch of different places. Oh, final question, and then I'll let you go. I could do this forever.
Chernin Group, you brought them up. Yeah. Tell me if I'm wrong. Like their thesis was totally wrong.Like, I mean, I understand it, and I understand that the market was different, et cetera.
But like, the way I understand the churn in thesis, right, was that there was a ton of these Barstool opportunities out there, and they were gonna find them. But the thing was like Barstool was completely sui generis.
Like it was-- happened to be located at a time and a place when a massive market that had always been suppressed by the government having a law against sports gambling all of a sudden opened.
That is like a generational opportunity that- Sure... ignites a land grab. And a lot of media companies sold into that thing at basically what was typically EBITDA multiples and applied to revenue.
So they were selling at like five, ten times revenue, which never happened. So I think it's really tough to like sort of nitpick a private equity firm because we don't know...
We know the, the couple successes and the couple of the failures like Hodinkee. It's just hard to see, like, across a portfolio. Like, we're not an LP, right?
So we're not getting, like, where things are marked and how things are doing. That's true. That's true. I'm just judging their thesis because they're a thesis-driven PE firm, correct? Yeah.
So here's the thesis that was wrong, but this is what I believe, is when they wanted to basically build a full-stack media commerce company, being a retailer sucks. And I don't know...
Like, if you own even a small retail business, i-in a month, you're like, "This is the worst business that anybody could ever own," especially with Amazon.
Like, because your P&L, which is like the profit and loss, doesn't actually show what's happening at a retailer.
You could be massively hemorrhaging cash based on mis-misordering inventory and look like you're profitable because you don't have to sh-recognize the cost of the inventory until you sell it.
And so I think the part of their thesis that was wrong is like, let's try to monetize consumers, let's get them to the website and then sell them things, and like, let's own what we sell.
But I think there's, like, really interesting things that they've done recently. They have this whole collectibles business, which is, like, amazing. So they own all the companies that rate collectibles. Yeah. Okay.
So basically- And-... it's like any of these businesses.
They can be wrong nine out of ten times, but if they're right, like one-- like they can, they can have like nine Hodinkees, but if this collectibles business becomes like where it is, like it doesn't matter anyway.
So you make tons of mistakes anyway. No, private equity needs- Okay. So VC is like, you can make nine mistakes and one good one.
Private equity, you wanna make-- if, if you have ten companies in your portfolio, you wanna make a couple of mistakes. And you actually-- you're trying to never make a mistake where you lose all of your money.
Well, yeah. So. That's my goal too. All right, Andy.
So I think they had a couple wrong bets, but they're-- like in that portfolio, there's a lot of interesting companies, but there are like some insane blow-ups, like Hodinkee, right? Yeah. So.
They basically like handed it back to, to, to Ben Clymer. I mean, like any of these deals- Yeah... where they're just like basically handing the asset back to...
I mean, it, it, it-- Turnitin, it, you know, it-- they sold it to Penn, and Penn basically handed it back to, to Portnoy. Yeah. Dave. Yeah. And like that's like, first of all, great deal for him.
Like any of these things like when it's like... I remember I used-- I covered like the Aquantive deal when Microsoft bought Aquantive. It was like the worst deal- Yeah... in history. Well, I don't know.
Ask Brian, ask Brian McAndrews. I don't think he thinks it was the worst deal in history. [chuckles] I think he, he thought it was like the most amazing deal. Yeah. So there's two sides to all the deals.
Yeah, if you try to capture events in speci- like, okay, they sold it back to Dave. It's like, well, you don't-- there's a lot of maybe other places along the way where value was created.
You don't know if the CEO got some great stock options that he sold as the Penn stock was going up pre-COVID.
Like there's a lot of other factors that despite them giving the assets back to Dave, they're also-- they have to be good corporate stewards, so they also had no other places to probably sell that, right?
So that's another kind of thing. But what I would say is like, it's really tough to say, "Oh, someone's dumb," or they did a bad strategy because of the end outcome. They might have gotten other value along the way.
I wanna d-- I would-- I, I like to call balls and strikes here, AB. So [chuckles] if they, if they got a lot of hype on the way up, I-- that was always my rule.
I'm like, "Look, if you're gonna rizz 'em on the way up, you gotta take your shots on the way down." That's just how the, that's how the business works. Yeah. Those are the rules. All right. Sure. This was fun.
Thank you. Come back again. Okay. Talk to you later. Bye. [outro music]