Business Insider CEO 'There Are No Must-Read Publications Any More'
Henry Blodget, editor-in-chief of Business Insider, talks to SPIEGEL about the future of digital media, the likelihood of another dot-com bubble and about his own checkered past on Wall Street.
SPIEGEL: Mr. Blodget, let's talk about watermelons.
Blodget: Watermelons? Ok, nice.
SPIEGEL: A few weeks ago, Buzzfeed published a video on Facebook Live showing two employees putting rubber bands around a melon for 45 minutes until it exploded.
(Please note: The above video is in super-slow motion. It may not look like it is playing even when it is.)
Blodget: A brilliant idea.
SPIEGEL: The video was a viral hit and was watched more than 10 million times in the days after it was put online. What does this tell us about success in digital publishing?
Blodget: First of all: Digital is profoundly different than television, radio or print. Buzzfeed and other digital companies are capitalizing on that difference. You could not have a TV show where all you do is wrap rubber bands around a watermelon for 45 minutes. But for people who are bored at work or at school it was perfect drama, a digital media event. It won't work again: The next exploding fruit or vegetable is not going to be that exciting. But the profound message was: Digital is just a different medium.
SPIEGEL: The watermelon has kicked off a discussion in the US about the future of journalism on the web. Critics take the watermelon as a symbol for the obsession of digital media like Buzzfeed with clicks and reach. The question is: How can stories about tax reform, voting rights or other dry topics possibly compete against exploding watermelons on the web?
Blodget: Wrapping rubber bands around a watermelon is not journalism. It is entertainment. But the key to success in media has always been a broad mix of serious reporting and entertainment. The New York Times does not make its money on reports about Iraq and Syria. It makes money on its gardening section, food and, yes, stories about cats. "The Today Show" is a very successful program because it is a mix of the celebrity chef and the crazy pet who does the rolls and serious news and interviews.
SPIEGEL: The fact that serious news publications have to compete for eyeballs and advertising money with digital-only publications that focus more on reach than on journalism is nothing to worry about?
Blodget: Again, successful publication is all about the mix. What Buzzfeed discovered was that people like cat pictures. We can pretend to be embarrassed about that as a species, but it is actually a truth. So Buzzfeed publishes a lot of cat pictures. But they use the money from cat pictures to build an exceptional newsroom that publishes stories that far fewer people want to read, but it is very important journalism.
SPIEGEL: Only a few days after their watermelon success, it became public that Buzzfeed had missed its revenue forecasts. Vanity Fair was quick to write that we might be witnessing "the beginning of the end of the millennial media bubble." Do you share that perception or is there a whiff of schadenfreude in the air?
Blodget: It is important to note that Buzzfeed might have missed its targets, but it did grow something like 40 percent last year on a significant revenue base. Most media companies would kill for that. I would not call it a bubble by any means, rather a boom and bust cycle. I think our industry will go through a consolidation phase, as pretty much every industry does. The strong companies will come through that and will be in much better positions than a lot of the traditional media companies that still cling to the old business model they have.
SPIEGEL: What makes you sure that you are not being overly optimistic? You became a star analyst on Wall Street during the dot-com era, but then the SEC banned you from Wall Street for life. Doesn't that oblige you to be more skeptical today?
Blodget: The dot-com experience was a searing lesson, without question. I saw that there was a big bubble building up and I warned many times to limit the risks. But I did not foresee how complete the devastation would be and how even great companies would be creamed and all the stocks would get crushed. But I think one has to be optimistic about the future to succeed in any entrepreneurial endeavor. In the early years of Business Insider, some of the investors would say: You are too cautious, you need to be more aggressive, you need to invest more money, you need to take more risk, this is a big opportunity, you are being too conservative.
SPIEGEL: Not everybody is willing to forgive your mistakes. A former editor in chief of BusinessWeek wrote about you: "Blodget was dishonest and deeply cynical. Journalists should be the opposite. It hurts me to see him ply our trade." The book author David Callahan described you as a great "hype master."
Blodget: What happened to me was a distressing, humiliating experience. I just felt terrible at the time. I felt I had let so many people down. But that motivated me to regain their trust. I would invite anybody who says things like that to simply judge my journalism and read what I have written. Most readers love it.
SPIEGEL: You started your career as a freelance journalist, before moving to Wall Street at the age of 28. Were you succumbing to the temptations of money?
Blodget: My father and grandfather were in the financial business. I did not really know what I wanted to do when I got out of college. I knew that I liked to write and tell stories. But actually when I worked at CNN Business News, I realized that the markets fascinated me much more and that I actually wanted to go work in the industry.
SPIEGEL: Your great-grandfather lost his fortune in the stock market crash in 1929. That did not keep you away from Wall Street?
Blodget: That was a legend in my family: My very successful great-grandfather, who had a big fortune and then he was on the Trans-Siberian Railway during the crash in 1929, and when he got off the train he was poor. I think the truth is not exactly like that, but that story was in my childhood. In the late 1990s, I would ask lots of people, who were older than me: Is it the 1920s again? Everybody said: No, no, we are much smarter now, we are so much more professional. It turned out it was exactly like that except worse. As with any bubble, everybody thinks that it is different this time.
SPIEGEL: There has been a lot of bad news in the digital media industry over the last months: Viewer numbers for some sites have plateaued, lots of jobs have been slashed. The New York Times has diagnosed a "borderline panic" in online publishing. And even a Buzzfeed reporter used the term: "digital media bloodbath" So still, nothing to worry about?
Blodget: I think it is helpful to take a long-term view. When CNN launched in the early 1980s, everybody said: A 24-hour news network won't work. They launched, they did ok, CNN went almost bankrupt because of the risks they had taken, they got bailed out, and 25 years later CNN is CNN, this huge global brand. I think the same is going to happen in digital. If you look at the younger generation, there is a huge consumption of digital media and almost no consumption of print or traditional television. Eventually money will follow that. It is just a question of which companies win, how long it takes to get there and what kind of model you need to apply. But there is no question: The future is digital.
SPIEGEL: Until now, many digital-only news sites have been traffic giants, but profits, if there have been any at all, have been meager. When will that change?
Blodget: I think that our industry is similar to the newspaper industry in the first half of the 20th century. There would be five newspapers in each city and they would be competing extremely aggressively. It was very hard to survive as a business, but the papers that did became very profitable over time. I think it is simply a matter of time.
SPIEGEL: But the investors who have poured a lot of money into these companies might get nervous.
Blodget: Well, fortunately most investors in these companies are professional investors. They know that they can't capitalize on the future without taking the risk. Fifteen years ago, nobody thought that content would ever work as a business. It was impossible to raise any money, initial investments were $10,000, seldom $100,000. It is only over the last two or three years that we have started to see very large amounts of capital coming into the industry, with Vice, and Buzzfeed or Quartz. That has created a lot more competition.
SPIEGEL: So you do not get nervous calls from your new owner, Axel Springer in Berlin? The publisher has paid more than $340 million for a stake of 88 percent in Business Insider. Quite a courageous investment in a company that is not yet profitable.
Blodget: No, Springer is a wonderful partner, far ahead of a lot of US media companies. They saw the changes very early. The DNA of Axel Springer is journalism, which is very unusual. A lot of media companies in the United States feel like they have to do journalism, but they do not want to. It is not a business they want to be in, it invites criticism, it is not as profitable as other things. Axel Springer firmly believes in what we do.
SPIEGEL: The small tech blog you founded after your time on Wall Street has become a news site with 94 million unique visitors a month. What is your journalistic ambition?
Blodget: Our mission is to figure out the journalistic model for the digital medium, finding out how we get the right stories readers want, at the right time and wherever they want to read them.
SPIEGEL: Sounds good, but that is more a question of technology and distribution. What kind of journalism does Business Insider stand for?
Blodget: One thing where we definitely want to differ from other business media is that we believe that, in the past 30 years in the United States, our economic system has been harmed by complete shareholder domination. An idea has been created that the only purpose of a company is to make money for shareholders.
SPIEGEL: You mean papers like the Financial Times or the Wall Street Journal focus too much on shareholder value? That is an astonishing statement for somebody who has been part of the system.
Blodget: The defining value for at least a couple of business publications is that profit is the only thing that matters in the end. That's just not the best view for a healthy capitalistic system. At Business Insider we want to celebrate companies that not only create value for their shareholders, but for their clients, employees and for the world -- companies like Google or Amazon.
SPIEGEL: Is this how you want to push papers like the Financial Times or the Wall Street Journal from the throne of must-read publications?
Blodget: In the new world of digital, there are no must-read publications any more.
SPIEGEL: If you work in finance in London, you should read what the Financial Times writes.
Blodget: But that will absolutely change, unless the Financial Times adapts over time.
SPIEGEL: Hasn't the Financial Times digitized itself more than most other papers?
Blodget: The Financial Times is a wonderful publication, as is the Wall Street Journal and many others. But the new generation is consuming media fundamentally differently. At Business Insider, we have the chance to embrace that whole-heartedly. We do not have a print legacy, digital is not our second business behind a newspaper. It is our only one.
SPIEGEL: The power of digital publishing lies in the ability to know what readers like, which stories they actually read and which ones they don't -- and to give them more of what they like. This creates the danger of a filter bubble.
Blodget: What do you mean by filter bubble?
SPIEGEL: Reading becomes a sort of self-optimization and self-reference, the only things that get through to me from the flood of information are those which I want to consume and which I like. My Facebook and Twitter feeds filter what fits into my conception of the world.
Blodget: I don't think that is actually what is happening. In fact, we have more information than ever before, and it is harder than ever to avoid actually seeing what the other side is saying. Yes, we focus on publications that we feel speak to us, but that is exactly the same way it was 20 or 100 years ago. In the US, two million people have subscribed to the New York Times and many more millions think the New York Times is a terrible, liberal paper they would never read. We can, of course, choose to put ourselves in a bubble of only people who agree with us, but in the digital world there are many more ways of saying "Hey, here is something you might want to consider."
SPIEGEL: How compatible is the idea of offering readers more and more of what they like with the role of journalists in a democratic society: to publish information that is relevant to our social coexistence but not necessarily read by millions of people; to investigate and uncover scandals and cases of wrongdoing?
Blodget: Before the internet, big publications were like hydrants in the desert. There were relatively few of them, we needed each one of them tremendously and they had control over what was delivered. Now they are like little streams flowing into a massive ocean. An example: Before the internet, a journalist would write an article about a company that the company felt was unfair and missed a point. All they could do was write a letter to the editor and wait, and maybe a week later it would be printed, or not. Now, they can go to medium.com and immediately publish a long rebuttal, saying the journalist forgot this and did not consider that, the analyst is wrong here. Everybody pulls that immediately into the debate. So it is a much more democratic field for ideas.
SPIEGEL: Your headlines are often bullish, vigorous and colloquial. What about the more quiet and reflective tones?
Blodget: The reason is that in print, once readers have bought the paper, it actually doesn't matter if they read the story. We have to draw readers into every single story. In the early years we did a lot of training around that. What happened typically was that somebody would spot a great story and say it to the newsroom. Everybody would say, oh, that's great, write it. And the journalist would write it, with a formal newspaper headline that nobody would want to read. And we'd say: No. Go back to what you said. And by the way, that's also the tweet. People love our conversational voice.
SPIEGEL: In November, you launched Business Insider in Germany. Even a general interest publication like the Huffington Post is struggling in Germany. Business news is an even smaller niche. Why are you confident that Business Insider will succeed in Germany?
Blodget: Our advantage is that we can see from New York where our readers are, we know where it makes sense to have a local edition. In Germany, we could see the readers reading in English. It is our first market with a different language, so it's a big step for us.
SPIEGEL: Do you still read a print-newspaper?
Blodget: Rarely. It is a nostalgic experience for me. I read the print edition of the New Yorker. A couple of years ago, my kids were growing up and my wife and I suddenly realized to our horror: Oh my god, our children stare at their phones, they do not read. We have to get a newspaper! And so we ordered a local newspaper. It would be delivered every morning and it was my job to go and get it, but I would always forget. We would go out to school and come home and it would still be there. At the end of the week I would eventually take them to the recycling bin and out they would go, unread, in their tubes. So we realized pretty quickly: It's too late, we are a digital household. Hopefully that's ok.
SPIEGEL: Mr. Blodget, we thank you for this interview.