Animated digital group – owner of Bustle, Inverse, Input, Mic and other titles – could eventually join the ranks of startups gone public through a Special Purpose Acquisition Company (SPAC).
In an interview on the state of BDG and the digital media industry at the end of 2020, founder and CEO Bryan Goldberg set ambitious goals for the next few years.
“Where do I want to see the business in three years? I want to see three things: I want to be public, I want to see us generate a lot of profit and I want it to be a lot bigger, because we have consolidated a lot of other posts, ”he said.
He added that these goals are linked, because by going public BDG can raise “hundreds of millions of dollars”, which Goldberg wishes to use to “buy a lot of media companies”.
This may sound like a blast after a year in which many digital media companies (including BDG) have had to make serious cuts. But Goldberg said the company would be profitable in 2020, with revenues “just under $ 100 million.” And it won’t be the first digital media company to take a similar path – Group Nine created a SPAC that went public last week.
“I want to prove that we can be very profitable,” he said. “A lot of startups don’t have that goal. A lot of VCs tell their startups: don’t worry about profits, don’t worry about losing money. I do not believe it.
In addition to his intention to go public, Goldberg also discussed how the acquisitions have helped Bustle’s business, his joint venture to buy W Magazine, and the digital media ‘overcapitalization’ issue. You can read our full conversation, edited for length and clarity, below.
TechCrunch: The last time I met someone at BDG it was with [the company’s president Jason Wagenheim] and that’s when you faced the first fallout [from the pandemic]. Now we are much further into what this new world is, so what do you think of BDG’s current position compared to the early days of the pandemic?
Bryan Goldberg: It may be the craziest and most eventful six months for many of us in our lives. And certainly, for those of us in this industry, the difference between April and October, it’s really hard to understand, it’s full day and night. April has been a very frightening time for everyone, personally and professionally, across the country, across the world.
From an advertising standpoint, it was a really scary time as we have customers in all industries and every industry has been affected differently. We have customers who have been hit hard – theme parks, car manufacturers, hotel companies, airlines – and then we’ve had customers who weren’t as hard hit, like a lot of CPG customers, who everyone relied on. so much during the pandemic.
There was a huge hiatus in our affairs in March, April and May. For many customers, launching the ad was kind of a knee-jerk reaction to the sudden shock of COVID, and so we saw a huge negative impact in our second quarter. What we started to see in the third quarter, and especially now in the fourth quarter, is now that the shock of COVID is behind us, the macro trends that were catalyzed by COVID are now moving to the fore.
Media history is no longer about the shock of COVID. Media history is now about all the changes in our world and the changes in our industry that have been brought about by COVID.
The good news for our business, and the good news for other digital media companies, is that it looks like the future is accelerating. It appears that people are watching less TV, and therefore advertisers are shifting their budgets to digital faster than they would have been without COVID. Even things like live sports, [their] TV ratings are dropping. And many advertisers say, “Is there more efficiency in cable TV or broadcast TV?” And the magazine industry was severely weakened, just because magazines are a physical medium, and people didn’t want to circulate magazines or read magazines at the dentist, so we probably saw a print budget go digital. also.
Industry analysts will now go back to their estimates of what digital revenue will look like in 2021, 2022 and beyond. I also think we’ve seen a world where a lot of branded advertisers are starting to think about what happens when they start spending beyond Facebook and Google. For most of the past three years, there’s been so much talk about the duopoly, that Facebook and Google are going to eat up almost every last dollar of advertising. What we’ve seen over the past three months is advertisers saying this has to be the time to learn how to roll ad spend digitally beyond Facebook or Google.
No, that doesn’t mean they’re all pulling out of Facebook – Facebook and Google are doing just fine. But there are still tens of billions of dollars to roll out outside of Facebook and Google. And you see winners like Snapchat, Pinterest. Both have had incredibly strong incomes. They benefit from the same thing that benefits Bustle Digital Group and many other digital media players that are not Facebook or Google, which is, you see big ad spenders finally deciding that the time is right. to find other ways to deploy ad spending.
I think those are the two big trends: dollars are going faster than we thought digitally and major advertisers are now using it as a time to find other channels beyond Facebook and Google.
So when you look at how this affects Bustle’s business, has it returned to pre-COVID levels?
For us, when we think back to the year 2020, we see that we have had a great first quarter, we see that we have an amazing fourth quarter, and we have an epic big crater in the second and third quarters. So when we look at the year, we basically have to say to ourselves, if it hadn’t been for this second and third quarter crater, what would this year have been like? We would have had revenues well over $ 100 million. Now we’re going to have revenue just under $ 100 million.
But when we think about how we prepare for 2021 and set goals for 2021, we need to set goals for 2021 as if COVID never happened, we need to set goals for 2021 without using the Q2 and Q3 as a kind of excuse to lower expectations. . Because the fourth quarter, the one we’re in right now, has exceeded our wildest expectations.
People kind of sat down and noticed the company because you had a pretty aggressive acquisition strategy. I imagine that strategy must have changed a bit in 2020. How much do you think ambition is something you can take back?
So to be clear, not only did we feel good about our strategy, but our strategy was essential in helping our business survive and ultimately thrive in the wake of the virus. You know, we made two acquisitions [in 2019] – in the science and technology category, we bought Inverse, which is a science and technology publication, and then Josh Topolsky started a technology and gadgets publication for us called Input Magazine which is growing very quickly.
It’s critical that we have this strategy, because no category of advertisers has performed better for us in 2020 than technology – we have more than tripled our tech client revenues this year as technology has thrived on COVID. If we hadn’t had an acquisition strategy, if we hadn’t branched out into publishing tech media, we certainly wouldn’t have had the outcome that we had in 2020. That’s just the reality. .
Categories like beauty, fashion, retail have been hit hard. These have always been our bread and butter, and they will be great again in 2021. But this spring, beauty businesses weren’t doing so well, as people weren’t leaving home. So the strategy worked, in part, because we diversified the categories in which we created content, which allowed us to diversify the advertiser base. And we will continue at full speed in 2021.
Now, you know, we made six acquisitions in 2019. I don’t know if we’ll make six acquisitions in 2021. But I want to do a lot more than one acquisition in 2021.