Bustle Digital Group — owner of Bustle, Inverse, Input, Mic and other titles — could eventually join the ranks of startups going public via a special purpose acquisition company (SPAC).
During an interview about the state of BDG and the digital media industry at the end of 2020, founder and CEO Bryan Goldberg laid out ambitious goals for the next few years.
“Where do I want to see the company in three years? I want to see three things: I want to be public, I want to see us driving a lot of profits and I want it to be a lot bigger, because we’ve consolidated a lot of other publications,” he said.
He added that those goals connect, because by going public, BDG can raise “hundreds of millions dollars,” which Goldberg wants to use to “buy a lot of media companies.”
That might seem like bluster after a year in which many digital media companies (including BDG) had to make serious cuts. But Goldberg said that the company would be profitable in 2020, with revenue that’s “a little bit under $100 million.” And it won’t be the first digital media company to take a similar route — Group Nine created a SPAC that went public last week.
“I want to prove that we can be highly 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 don’t believe in that.”
In addition to his plans to go public, Goldberg also discussed how acquisitions have helped Bustle’s business, his joint venture to purchase W Magazine and digital media’s “overcapitalization” problem. You can read our full conversation, edited for length and clarity, below.
TechCrunch: The last time I caught up with someone at BDG, it was with [the company’s president Jason Wagenheim] and that was when you guys were dealing with the initial fallout [from the pandemic]. Now we’re a lot further into whatever this new world is, so what is your sense of where BDG is now, versus where it was in the early days of the pandemic?
Bryan Goldberg: It might be the craziest, 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 fathom, it’s complete night and day. April was 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, because we have clients across every industry, and every industry was impacted differently. We have clients who were greatly impacted — theme parks, car makers, hotel companies, airlines — and then we had clients who were not as badly affected, such as a lot of CPG clients, who everybody depended upon so much during the pandemic.
There was a huge pause in our business in in March, April and May. For a lot of clients, tossing advertising was a sort of 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 into the forefront.
The story of media is no longer about the shock of COVID. The story of media is now about all of the changes to our world, and changes to our industry that were brought about as a consequence of COVID.
The good news for our company, and the good news for other digital media companies, is it looks like the future is being accelerated. It looks like people are watching less television, and so advertisers are moving their budgets into digital faster than they would have had it not been for COVID. Even things like live sports, [their] TV ratings are way down. And a lot of advertisers are saying, “Is there efficacy anymore in cable television or broadcast television?” And the magazine industry was heavily impaired, simply because magazines are a physical medium, and people didn’t want to pass around magazines or read magazines at the dentist’s office, so we probably saw some print budget move into digital as well.
Industry analysts now are going to take up their estimates of what digital revenue is going to look like in 2021, 2022 and beyond. I also think we’ve seen a world in which a lot of brand advertisers are starting to think about what happens when they start to spend beyond Facebook and Google. For most of the last three years, there’s been so much talk about the duopoly, the idea that Facebook and Google are going to eat almost every last dollar of advertising. What we’ve seen in the last three months is advertisers saying that this needs to be the moment in which they learn how to deploy advertising spend digitally beyond Facebook or Google.
No, it 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 that need to be deployed outside of Facebook and Google. And you’re seeing winners such as Snapchat, Pinterest. Both had incredibly strong earnings. They’re benefiting from the same thing that benefits Bustle Digital Group and a lot of other digital media players who aren’t Facebook and Google, which is you’re seeing big ad spenders finally deciding that now’s the time to find other ways to deploy advertising spend.
I think those are the two big trends: Dollars moving to digital out of TV faster than we thought, and major advertisers using now as a time to find other channels beyond Facebook and Google.
So when you look at how that is impacting Bustle’s business, has it returned to pre-COVID levels?
For us, when we reflect upon the year 2020, we see that we had a great first quarter, we see that we’re having an incredible fourth quarter, and we have a big, epic crater in the second and third quarters. So when we look at the year, we basically have to say to ourselves, if it were not for that crater in the second and third quarters, what would this year have looked like? We would have had revenue well in excess of $100 million. Now, we’re gonna have revenue a little bit under $100 million.
But when we think about how we prepare for 2021 and set goals for 2021, we have to set goals for 2021 as though COVID had never happened, we have to set goals for 2021 without using Q2 and Q3 as a sort of excuse for lowering expectations. Because the fourth quarter, the quarter we’re currently in, has exceeded our wildest expectations.
People sort of sat up and took notice of the company because you had a pretty aggressive acquisition strategy. I imagine that strategy had to change a little bit in 2020. To what extent do you feel that ambition is something that you can pick up again?
So to be clear, not only do we feel great about our strategy, our strategy was critical in helping our company 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 launched a tech-and-gadget publication for us called Input Magazine that’s growing very quickly.
It’s critical that we had that strategy, because no single advertiser category has performed better for us in 2020 than tech — we more than tripled our revenue from technology clients this year, because technology has thrived through COVID. Had we not had an acquisition strategy, had we not diversified into tech media publishing, we certainly would not have had the outcome we had in 2020. That’s just the reality.
Categories like beauty, fashion, retail were very hard hit. Those have traditionally been our bread and butter, and they’re going to be great again, in 2021. But this spring, beauty companies weren’t doing so well, because people weren’t leaving the house. 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’re gonna continue full speed ahead in 2021.
Now, you know, we did six acquisitions in 2019. I don’t know if we’ll do six acquisitions in 2021. But I want to do a lot more than one acquisition in 2021.
Venrock, the 51-year-old firm that started as the venture arm of the Rockefeller family, has closed its ninth fund with $450 million, the same amount it raised for its last two funds. The outfit, with offices in Palo Alto, New York and Cambridge, clearly feels comfortable with the fund size, but it says change is otherwise a constant, given that trends and tech shift so fast that so-called pattern recognition can prove a liability if an investment team isn’t careful.
To learn more about what the team is tracking at Venrock — whose newest exits include last year’s IPOs of Cloudflare and 10x Genomics IPO, and the recent sales of Corvidia and Personal Capital — we were in touch earlier today with longtime partner Bryan Roberts, who has spent his 24-year career in venture with the firm.
Our exchange has been edited lightly for length and clarity.
TC: I talked with your colleague Camille Samuels earlier this year about aging biology. How big an area of focus is that for Venrock and why?
BR: It’s one of many interesting areas of biology on a go-forward basis, along with immunology, CNS (central nervous system) and other areas where there has been little progress and great unmet need.
TC: Speaking of unmet needs, Camille also talked about why infectious disease isn’t good business for new companies, as are cancers and orphan diseases. As she explained it, with something like the coronavirus, it’s hard to get funding before it’s an actual problem; once a treatment is developed, it has to be sold at low cost, and then you hope you won’t have repeat customers. Do you agree, and do you think this needs to change?
BR: Yes, I think things need to change, but there are several issues. In the case of one company on which I lost a bunch of money — Achaogen, which made a successful drug for a big unmet need [but faced] screwy commercialization dynamics in the infectious disease space — and for many historical infectious disease companies, the cost of a drug is borne by the hospital, not billed separately.
It has also been hard historically to get anyone to pay attention to much of anything from a preventive perspective — even more so in communicable diseases. COVID was, on the one hand, not a particularly hard biological problem to solve, but from an investing perspective, the issue was it was a problem tailor-made for an existent or large company to tackle, not a startup. Startups take 12 or more months to find their way out the front door, and the problem is largely solved by then by one of the very large competitors.
You saw this with Moderna. Its tech turned out to be specifically suited to vaccines — and then a pandemic hit.
TC: Venrock recently helped incubate a new microbiome startup called Federation Bio, which is the firm’s first bet on the space. Why not move faster into this area, and how would you describe the size of the opportunity now? Is this something you want to delve into more aggressively?
BR: We did spend 12 months or so helping get Federation started, including my partner Racquel Bracken acting as the initial CEO. We weren’t compelled by the prior approaches and teams, and it is really the intersection of those two dynamics that get us involved in new projects.
In this case, a terrific academic, Michael Fischbach, had generated great data, so we ran with it. We recently spent more than 12 months incubating a new gene therapy startup in the same manner — in the latter case, a couple of great academics generated exquisite cell type specificity — so we went out and found some leadership and just seeded the business.
TC: It’s one way to avoid crazy valuations. Where have valuations gone up the most?
BR: Everywhere, but especially for companies that appear — or actually have — reduced binary risk and become growth-stage businesses [and that’s] across sectors.
TC: You focus on so much: biotechnology, diagnostics, genomics, healthcare IT, medical devices. What are some of biggest trends you’re watching in some of these areas, and where do you think you might be spending a little more of your time in 2021?
BR: Personally, I am compelled these days by first, value-based care in healthcare delivery — meaning it’s more efficient, there are better outcomes, there’s better customer experience — and mostly from full-stack platforms versus point solutions. I’m also focused on biological insights and applications that new genomics tools — single cell; gene editing — can bring. Last, [I’m tracking what] novel therapeutic modalities can bring to really bad diseases. It feels like we’re in the first inning of cell and gene therapy.
TC: How do you think the new administration in Washington could impact your work?
BR: I think there will be lots of talk about material changes to healthcare and other stuff, but I think it will mostly be talk given the slim margin in the Senate, as well as the decreased and small margin [that Democrats have] in the House. I think it will be a positive in that a bunch of the silly stuff around the [Affordable Care Act] will fade to nothing and people can get on with trying to improve implementation and go build.
TC: What do you make of the recent collapse of Haven, the joint venture of Amazon, JPMorgan Chase and Berkshire Hathaway to reduce the healthcare costs of their own employees? Would you like to see Amazon focused more — or less — on healthcare?
BR: We’ve long been bears [about its odds] for a bunch of the reasons folks cited over the last few weeks [including lack of transparency into healthcare costs].
I would love to see Amazon use its brand, delivery logistics excellence and ability to compete at super-tight margins in healthcare. I don’t think it extends to real regulatory, privacy or risk appetite, but the company could be an awesome pharmacy/pharmacy benefit manager — and I hope they do it.
TC: Regarding Venrock’s new fund, have there been personnel changes? Will check sizes change?
BR: We made Racquel Bracken and Ethan Batraski partners; it’s always fun when you can promote terrific young talent from within.
As for our high-level strategy, check sizes and stages all remain the same. We’ve raised $450 million for each of the last several funds because we like that size and our culture and personality is way more focused on performance than on asset accumulation. It also feels really hard to raise increasing amounts of capital without affecting performance excellence.
TC: Healthcare has never been hotter. How much of Venrock’s capital is focused on healthcare, and will that change with this newest fund?
BR: We’re pretty bottoms-up allocation driven; we invest based on the projects we find and fall in love with. Life sciences usually ends up being around 30% to 40% [of capital invested]. Healthcare IT, which depending who you talk to in the universe gets lumped into healthcare or tech — I confess those software-enabled services businesses feel much more tech-like than biotech — usually ends up being about a quarter of the fund and there are no anticipated changes. The balance will go into tech — primarily tech and data-enabled software and services businesses.
TC: Has Venrock considered forming a blank-check company to take a company public, as more VCs are doing?
BR: We have not. I feel like most investors that have formed SPACs have done so more because of the compelling sponsor economics than a compelling, durable mechanism to get awesome companies public in a much more efficient manner than they otherwise might. It’ll be interesting to see how the economics change as the supply and demand of SPACs versus “great targets” changes and the SPACs get closer to the end of their hunting-license period.
A new mobile app called Honk aims to make messaging with friends a more interactive, real-time experience. Instead of sending texts off into the void and hoping for a response, friends on Honk communicate via messages that are shown live as you type, with no saved chat history and no send button. The end result is a feeling of being more present in a conversation, as Honk will notify users the moment someone leaves a chat. And if you really want to get someone’s attention, you can send them a “Honk” — a hard-to-miss notification to join your chat.
If it’s even more urgent, you can even spam the Honk button by pressing it repeatedly. This sends notifications to a friend’s phone if they’re off the app, or a flood of colorful emoji if they have the app open.
Need to get someone's attention fast? Honk them! They'll get a notification to come to the chat. If it's super important, you can spam the Honk button — that's hard to miss. pic.twitter.com/VqcinmeeT2
— Honk (@usehonk) December 22, 2020
After setting up an account by customizing your profile pic, selecting a username and adding friends, you can then tap on a friend’s name in your list to send them a message.
When you enter a chat in Honk, you’ll be presented with two large conversation bubbles. The gray one on the top is where your friend’s messages are shown, while you type in the blue one. (You can change the colors and theme, if you choose.)
As you type, the other person will see the text you’re entering into this box in real-time — including the pauses and typos that would normally be missed. This “live typing” experience is reminiscent of older communication technology, like the early instant messaging app ICQ, or the innovative collaboration tool Google Wave, for example.
In Honk, you’re given 160 characters to type out your thoughts, and this is counted down on the right side of screen below the conversation bubbles. But you don’t tap a “Send” button to share the message — the recipient saw the text as it was entered, after all. Instead, you just tap the double arrow “refresh” button to clear the screen and type something new.
There are also buttons for sending emoji, snapping a photo or accessing photos from your Camera Roll to share in the chat. The emoji here work more like iMessage’s “Send with Echo” screen effect, as you’re not just sending a single emoji when you use this feature — you’re sending several huge emoji that temporarily fill the screen.
With Magic Words, you can assign any emoji to any word or phrase, which automatically trigger effects as you type. It's the best way to personalize your chats and bring them to life. Set up to 50 unique Magic Words per chat! pic.twitter.com/2BYUyNrEzz
— Honk (@usehonk) December 23, 2020
You can also optionally assign emoji to any word or phrase within an individual chat, using a “Magic Words” feature that will trigger effects as you type (see above). Plus, you can customize chat themes on a per-conversation basis or turn off notifications from an individual user, if you don’t want to hear from them as much.
None of the conversations are stored and there’s no history to look back on. This is similar to messaging apps like Snapchat or Messenger’s Vanish Mode, for instance. (Honk hasn’t clarified its position on security, however, so proceed with caution before getting into riskier content.)
And, of course, if you need to get someone’s attention, you can tap “Honk” to flood them with notifications.
If this all seems somewhat silly, then you’re probably not the target market for the Honk messaging experience.
The app is clearly aiming for a young crowd of largely teenage users. When Honk asks for your age during setup, in fact, you can select an exact number from the list that appears — unless you’re “old,” that is. The last option on the list of ages is “21+” — the “older folks” age bracket, which may sting a bit for the millennial crowd who often still think of themselves as the online trendsetters.
But Honk is aiming to grab Gen Z’s interest, it seems. It’s even marketing to them on TikTok, where it’s already generated some 140K+ “Likes,” as of the time of writing, despite having only uploaded its first video yesterday. Honk founder Benji Taylor also noted on Twitter the app has seen 550,000 “Honks” sent so far, as of Wednesday, December 23, 2020, shortly after noon Eastern.
@usehonkwait for it ##fyp♬ original sound – Honk
Per its website, Honk is the flagship product from software company and app publisher Los Feliz Engineering (LFE), which is backed by investors including Naval Ravikant, Elad Gil, Brian Norgard, David Tisch, Jeff Fagnan, Ryan Hoover, Sarah Downey, Josh Hannah, Sahil Lavingia and others.
“It’s exceptionally well designed,” said Product Hunt founder and Weekend Fund investor Ryan Hoover, about Honk. “[Honk founder] Benji [Taylor] and team labored over the small details, from the animations to the sounds. They’re also super focused on speed,” he added.
Taylor declined a full interview when TechCrunch reached out, noting the team was focused on building the product for the time being.
“We’ve been working on Honk for a while now. Our goal is to make messaging fun, and empower people to communicate in new, creative ways that take relationships deeper,” Taylor told TechCrunch. “Ultimately though, we’re a small team building this for ourselves and our friends. If other people like it, all the better,” he said.
Honk, we should note, has been struggling under the load of new signups at launch and high usage. Honk users report the app will sometimes say they’re offline when they’re not, for example, among other bugs. Honk acknowledged the issues on its Twitter and says it’s been working to resolve them.
The app is currently a free download on iOS. It does not include in-app purchases or have any obvious business model.
In the past decade, celebrity interest and investment in tech companies has significantly increased. But not all celebrity investments are created equally. Some investors, like Ashton Kutcher, have prioritized the VC pursuits. Some have invested casually without getting overly involved. Others have used their considerable platforms to market their portfolio to varying degrees of success.
The four-year-old company has seen a tremendous amount of growth, boosting revenue nearly 50,000% in the past three years. However, the D2C wireless carrier has seen its highest traffic days on the backs of Reynolds’ marketing initiatives and announcements.
There is a long history of celebrities getting involved with brands, either as brand ambassadors or ‘Creative Directors’ without much value other than the initial press wave.
Lenovo famously hired Ashton Kutcher as a product engineer to help develop the Yoga 2 tablet, on which I assume you are all reading this post. Alicia Keys was brought on as BlackBerry’s Global Creative Director, which felt even more convoluted a partnership than Lady Gaga’s stint as Polaroid’s Creative Director. That’s not to say that these publicity stunts necessarily hurt the brands or the products (most of the time), but they probably didn’t help much, and likely cost a fortune.
And then there are the actual financial investments, in areas where celebrities fundamentally understand the industry, that still didn’t get to ‘alpha.’
Even Jay-Z has struggled to make a music streaming service successful. Justin Bieber never really got a selfie app off the ground. Heck, not even Justin Timberlake could breathe life back into MySpace. Reynolds seemingly has an even heavier lift here. It’s hard to imagine a string of words in the English language less sexy than, “mobile virtual network operator.”
Reynolds tells TechCrunch that he viewed celebrity investments as a kind of “handicapping,” prior to the Mint acquisition.
“I’ve just sort of seen how most celebrities are doing very, very well,” he explains. “We’re generally hocking or getting behind or investing in luxury and aspirational items and projects. Then George and I had a conversation about a year-and-a-half ago, maybe longer, about what if we swerved the other way? What if he kind of got into something that was hyper practical and just forget about the sexy aspirational stuff.”
Mint isn’t Reynolds’ first entrepreneurial venture. He bought a majority stake in Portland-based Aviation Gin in 2018, which recently sold for $610 million. He also cofounded marketing agency Maximum Effort alongside George Dewey, which has made its own impact over the past several years.
Maximum Effort was founded to help promote the actor’s first Deadpool film. Reynolds and Dewey had come up with several low-budget spots to get people excited about an R-rated comic book movie. The bid appears to have worked. The film raked in $783.1 million at the box office — a record for an R-rated film that held until the 2019 release of Joker.
Maximum Effort (and Reynolds) was also behind the viral Aviation Gin spot, which poked fun at the manipulative Peloton ad that aired last year around the holidays. The same actress who portrayed a woman seemingly tortured by her holiday gift of a Peloton sits at a bar with her friends, shell-shocked, sipping a Martini.
The original ad on YouTube, not counting recirculation by the media, has more than 7 million hits. Reynolds calls it ‘fast-vertising’.
“We get to react,” he told TechCrunch. “We get to acknowledge and play with the cultural landscape in real time and react to it in real time. There isn’t any red tape to come through, because it’s just a matter of signing off on the approval. So in a way, it’s unfair, in that sense, because most big corporations, they take weeks and weeks or months to get something approved. Our budgets are down and dirty, fast and cheap.”
He explained that this type of real-time marketing is only possible because he’s the owner of Maximum Effort (and in some cases of the client businesses, as well), but because there is no red tape to cut through when a great idea presents itself.
Reynolds has brought this marketing acumen to Mint Mobile in a big way. Last year during the Super Bowl, Reynolds took out a full page ad in The New York Times, explaining that the decision to spend $125,000 on a print ad instead of $5 million+ on a Super Bowl commercial would enable the prepaid carrier to pass the savings on to consumers.
In October, Reynolds spun Mint’s 5G launch into another light-hearted spot. He brought on the head of mobile technology to explain what 5G actually is, and after hearing the technical explanation, happily said “We may never know, so we’ll just give it away for free.”
Mint also released a holiday ad just a couple of weeks ago warning of wireless promo season, wherein large wireless carriers may try to lure customers into expensive contracts using new devices. Standing over a bear trap, Reynolds dryly states: “At Mint Mobile, we don’t hate you.”
Reynolds enjoys nearly 17 million Twitter followers and more than 36 million Instagram followers. He uses both platforms to promote his various brands without alienating his followers. Moreover, he doesn’t exclusively promote his brands on social media, but weaves in his own funny personal commentary or gives followers a peek into his marriage with Blake Lively, which we can all agree is #relationshipgoals.
Mint Mobile partners exclusively with T-Mobile to provide service, and unlike some other MVNOs, it uses a direct-to-consumer model, foregoing any physical footprint. Plans start at $15/month and top out at $30/month. CMO Aron North says that Reynolds’ ownership and involvement with Mint Mobile is “absolutely critical.”
“Ryan is an A plus plus celebrity, and he’s very funny and entertaining and engaging,” said North. “His reach has given us a much bigger platform to speak on. I would say he is absolutely critical in our success and our growth.”
We asked Reynolds if he has any specific plans for further tech investment, or if there are any trends he’s keeping an eye on. He explained that his motivations are not purely capitalistic.
“I’m really focused on community and bringing people together,” said Reynolds. “We think it’s super cool to bring people together, particularly in a world that is very divisive. Even in our marketing, we try to find ways to have huge cultural moments without polarizing people without dividing people without saying one thing is wrong.”
In one of the company’s more notable recent spots, Reynolds enlisted the help of iconic comedian, Rick Moranis. It was an impressive coup, given the actor’s seeming retreat from the public eye, turning down two separate Ghostbusters film reboots.
“It’s funny what happens when you just ask,” says Reynolds. “I explained that people genuinely miss him and his performances and his energy. And he, for whatever reason, said yes, and the next thing I know, six days later, we were out of there in 15, 20 minutes and we shot our spot.”
Of course, it didn’t escape the internet’s notice that two well-known Canadian actors were standing in a field, selling a U.S.-only wireless service.
“I would love to see [Mint] in Canada,” Reynolds says. “There’s a Big Three here that’s challenging to crack. I don’t pretend to know the telecom business well enough to say why, how or what the path forward would be there. I see basically a tsunami of feedback from Canada, asking ‘why can’t we have this here?’ I think it’s sexy. It’s pragmatic and sexy. That’s why I got involved with it.”