Given the big news yesterday that TechCrunch has been acquired by AOL (for a reported $40 million, including earn-out), I thought it would be worth laying out some of the key lessons that this blog can teach us. Most of these are as old as media itself, but that’s the point: successful new media businesses MUST employ the eternal principles of good publishing, but be through-and-through ‘digital’, with low costs, a nimble approach, and an understanding and love for the digital community.
Arrington has a zero-sum approach to ‘winning’ with his reporting. It might be considered blunt and unsophisticated, but he chalks up the stories that TechCrunch break as positives, and the stories that others break before TechCrunch as negative. This demands a ruthless focus on original reporting and speed, which has led to TechCrunch becoming the number one technology business blog by a fair distance. TechCrunch watches its competitors closely, curates and improves the stories coming from other sources, but all the staff also employ pretty sophisticated and personalised ‘news radar’ comprising of feed aggregators, automated filters, and strong personal networks across Skype and Twitter. This is not visible, but is certainly noticeable through the speed of the reporting.
Always Be Reporting
The TechCrunch staff now numbers 20-30 people in over 10 countries, but even when the operation only had a few staff there was almost 24/7 reporting. It might have taken a toll on Arrington’s work-life balance (or just the removal of the ‘life’ part), but the ‘always on’ approach has led to some of the biggest stories they have broken. Whether at a party, a launch event, or an interview, Arrington is sniffing out the next story. Yes he hasn’t slept much. But this means TechCrunch is the first site thousands of people visit when they wake up.
Live and Breathe It
TechCrunch was started as a hobby, where Arrington casually posted about start-ups as he researched the market. And whether or not you like his brash style, he loves entrepreneurs and the process of a technology start-up. He has hardly ever missed a TechCrunch event, and he is thoroughly embedded in the Silicon Valley ecosystem. Everyone knows him and he knows everyone.
Focus on Engagement
Arrington says that his reward, even from the very beginning, is watching the comments come in. The style of TechCrunch is to open up a debate, even if not all the details are known, and watch the comment fight begin. Although TechCrunch’s reach is now a key part of its current value, the fanatical engagement of the audience is what has enabled this. Yes, many of the comments have little value, but some are pure gold. And the conversation is where the value lies. I very rarely read a TechCrunch post without scrolling down to at least skim the comments section. The focus on comments is summed up by the fact that Arrington says he can predict with almost perfect accuracy how many comments any individual post will garner. He knows his community, and he knows how to stimulate a conversation.
TechCrunch has never been too bothered with the costly appearance of ‘professionalism’. The company ran out of Arrington’s house from 2005 to 2009, by which time local residents were complaining at the 15 cars parked on the street and in his driveway! Then they moved to a cheap office nearby; cheap because it had structural defects. Only a few months ago, did the entire operation move into a ‘proper’ office in San Francisco.
The constant flow of interns have also been key in keeping costs low. Although there is an editorial process, it could be described as “ready, fire, aim”, where stories are published with little checking, relying on the comments and ongoing leads to clarify and further hone the story. This is a far cry from the expense of a traditional editorial and production process, where each article is touched by 8-10 people before production.
The TechCrunch team revolves around a central knowledge feed, where all staff can chat and share ideas within the team. The tool they use is Yammer, similar to Twitter, but private and built for enterprise communications. There are no team meetings, no all staff planning sessions. It might not suit everyone, but it builds massive efficiency.
Whereas many other media companies would have added the expense of offices, equipment, travel and expense budgets, and traditional players are stuck with the legacy of print operations, layers of hierarchy, designers, producers, and editors, TechCrunch have built a profitable media enterprise from the ground up.
Hire the Best
For the first few years of TechCrunch’s life, it was solely focused around Arrington. The personality-centric nature of the writing built the initial community. Even today, Arrington and his style is visible through the entire blog network. But when it came to hiring (really by necessity, given the toll it was having on Arrington’s life and health), he certainly managed to attract some stars. Erick Schonfeld moved from Business 2.0 to become Co-Editor, Heather Harde left a great role in M&A at Fox to become CEO, and more recently MG Siegler left Venturebeat to become a lead writer. These high-profile appointments have helped TechCrunch continue to scale, with Heather running the business, and Erick running the editorial team.
Attract Multiple Audiences
One of the most impressive aspects of TechCrunch to me is how it has managed to bridge two distinct markets. It has a strong following across the venture investment sector, providing breaking M&A and new funding details. It is read rabidly by technology company founders and their management staff, especially those on the Angel/VC/IPO track. And yet the sheer numbers (almost 10 million monthly readers) show the global reach and breadth of its audience. It provides information for those doing deals and running companies, inspiration for those wanting to start, and aspiration for a wider audience of voyeurs.
The two-pronged approach described above allows TechCrunch to charge $3000+ a head for its conferences, whilst also attracting large consumer brand sponsors, for the high trafficked site. Although the current revenues (of around $10m a year) have taken time to build, the visibility that TechCrunch advertising buys has long been a source of cash. Even two years ago, the small box adverts on the homepage were commanding $30k a month. Given the infrequency of TechCrunch’s in-depth paid reports, it does not seem that these made much money, but they provided another opportunity to add a revenue stream.
But arguably the most powerful price point for TechCrunch is ‘free’. The monthly meetups and other events are usually free, the conferences are always free for the start-ups pitching, and most importantly the blog itself is free.
When most business media companies are moving towards a paywall, many verticals have yet to be disrupted by a quality free+ competitor. When this happens, existing players have to either restructure, or fight on the quality front.
Whatever happens, the key approach must be to achieve profitability with a cost structure that is appropriate to the achievable revenues. It sounds so simple, yet is so hard for incumbents that are not building from the ground up.
While it might seem that I am being hopelessly optimistic, I know that TechCrunch is far from perfect. Some of the ‘reporting’ is dire. Most of the comments are fluff. And as it’s grown the content breadth has burst out of its original focus and become less definable. But even if it’s just a hypothetical or rhetorical question, the bottom line remains, if TechCrunch can build an audience of nearly 10 million people and revenues of nearly $10 million, whilst operating in profit, with 25 paid staff, then why can’t you do something similar in your sector?
Let the excuses begin.