Gawker's new international strategy is wise...for Gawker

By Sarah Lacy , written on January 8, 2013

From The News Desk

While not the best of friends, New York media moguls Nick Denton and Jonah Peretti have two things in common. Both run media empires that some people feel are warnings of the journalistic apocalypse. But -- love the editorial or hate it -- both have the most innovative, ambitious and ballsy business strategies aimed at defying the economics of a struggling industry.

Peretti's feel-good Buzzfeed has just added another $19 million to its ambitions publication as it rolls out more and more verticals, anchored by the world's love of cats.

Denton's snarkfest empire fueled by cheap pot shots and -- astoundingly-- continual accusations of others engaging in too much link bait has also announced some interesting news around an aggressive international expansion strategy.

It announced today it is launching its Gizmodo and Lifehacker brands in India via a partnership with the Times of India. Gawker has also recently launched a Spanish-language version of Gizmodo, and various sites in Brazil, Hungary and the UK. Mathew Ingram has a nice run down of the news here.

The big hole left, Denton says, is China, which Gawker is actively working on.

First off, if this works, Gawker Media has come a long way. The New York-style snark blog couldn't even successfully translate to Silicon Valley culture well when it tried ValleyWag back in the early Web 2.0 days. Emerging markets are a far bigger cultural leap.

The smartest thing about the India strategy is it guarantees revenue; as Denton says in the interview with Ingram, the licensing fees are very high margin. "Extreme profits" in a content business aren't words you hear every day.

But when you sell your name to a partner, you give up a lot of editorial control. But my guess is that matters little to Gawker. After all, Denton built the many US iterations of his empire by putting an early 20-something know-nothing in a market and allowing him to sink or swim. There wasn't a lot of fear of brand damage if someone sucked for six months, while they figured it out or waited to get fired. When content is being produced in a language the core US audience can't read, my guess is there's even less concern about it eroding its brand. These brands seem more focused on those building new audiences in those markets, rather than acting as bureaus to expand US content.

For Denton and Gawker, the strategy is interesting and well thought through. For many other blogs and media companies, it'd be a disaster waiting to happen.

I know a bit about the challenges of international blog expansion. The last year I was at TechCrunch, I spent a large percentage of my time planning our forays into Asia -- a market AOL was very excited about. TechCrunch's international expansion had been pretty haphazard until that point. No offense to the hardworking international editors we had, but France and Japan wouldn't be my first two priorities if I ran a blog on tech entrepreneurship.

I didn't have to be sold on why TechCrunch should be more international. In two years of traveling the emerging world I saw more than anyone how big the global audience that TechCrunch already was in far flung places around the world where hopeful entrepreneurs and early adopters wanted to feel in touch with the Valley's elite.

Likewise, as more of our US audience was investing in other parts of the world, there was a big demand to translate (literally and figuratively) what was happening on the ground in China or Brazil or India, beyond the hype, fear and undeniably impressive growth demographics.

Frequently, I'd write about a company I'd dug up in the middle of nowhere, and dozens of US-based VCs would cold call or email the company for a meeting within an hour. There was just such a paucity of information and people would jump on any lead from a source they trusted. It was a level of impact we never had in the US, and people called us "kingmakers" here. Editorially, there was clearly a massive opportunity.

And after a while -- particularly post AOL-acquisition -- TechCrunch's management was pretty sold too. Like Gawker, international was seen as a core way to grow and diversify the business into something even bigger. So I spent the better part of 18 months coming up with a strategy to launch a blog in China and hold our first ever Disrupt outside the US, also in China.

Unlike Gawker, China isn't a country that a tech blog can put off in my opinion. China is home to more multi-billion dollar Internet companies than anywhere else in the world except Silicon Valley, and is the lynchpin of all the fear and hopes of international investing. It was by far the place with the biggest editorial need. Unfortunately, it also had the biggest business challenges.

Coming up with a practical, affordable strategy that could work was filled with months of frustrating hits or misses. There were huge questions about how much to invest, where to put servers, language and style. But the biggest was who should staff it.

For decades, VCs have grappled with the same thing when setting up venture firms in China. You can hire the local guy who deeply gets China but doesn't get Silicon Valley style venture capital. You can move someone who is ethnically Chinese and speaks the language, and is steeped in the way your firm has done things for decades. Or you can just straight up hire a Westerner who's been in China long enough he or she gets the cultural idiosyncrasies but will get what the US leadership wants.

We had all the same back and forth arguments on the pros and cons of each. Chinese bloggers we looked at had way more access to the big Chinese companies, but even the best ones would struggle with writing at a blog pace in English, and being in both languages was important to us. Meanwhile, some talented expats would always be able to have a Western point of view that could speak to our core readers, but would be limited at how far they could permeate in the Chinese Internet scene.

We agreed on a strategy, eventually secured an existing team to acqui-hire and launched our first big Disrupt Conference in China after a year of hardcore planning. Even getting news that I was pregnant midway through the conference planning wasn't going to derail it. I chose to risk hosting the conference a few weeks after my due date, rather than move the date of the event. Logistically, my first baby was just way easier to fit around a conference in China than the other way around.

And astoundingly, Disrupt Beijing was a massive success. We couldn't have asked for more things to go right for something so daunting: We picked excellent local partners, had an absolutely kick-ass agenda of speakers (thanks to about a jillion called in favors on my part), had pretty comparable startups in the Battlefield, and had a packed house, even though the tickets were much cheaper than in the US.

But it took a toll on the team who put it together. We were far less productive in our core jobs, and time zones and language and cultural barriers were exhausting to navigate. All of us have since left, and you'll note TechCrunch didn't do it again this year. It wasn't because it wasn't a success. It was a wild success; there was even increasing sponsor demand for another one.

But with anything international you need a strong internal advocate who wants this so badly, they can force the near-impossible to happen. I did it on the content side, and Tanya Porquez did it on the logistics side, essentially working in two time zones for months. (Jeanne Logozzo and Heather Harde rounded out the incredibly slim team that made this happen, while Jon Orlin somehow got a livestream in two languages to work from behind the Great Firewall. Amazing.)

This time around with PandoDaily, I have put off the international strategy for a while, which was a surprise to many people given how bullish I am on emerging markets. It's not because I think it's any less of a need or opportunity. I'm heartsick that all the hard work that went into TechCrunch's Chinese debut has been squandered. But I'm well aware of what I'm biting off this time, as much as the opportunity may sound like a no brainer.

We have plenty to do in the US, for a while. But I am already thinking about what I would do differently, once PandoDaily gets to that stage. It was an incredibly valuable learning experience that I'll always be grateful to the old TechCrunch for giving me.

If other media companies are grappling with this, these are the core things you need answered before you start. The answers will be different for every media company, but the questions are mostly the same. The answers were clearly dramatically different for Nick Denton than they were for me when I was at TechCrunch. But the similarity is that he's been smart enough to think them out before launching, as you can see reflected in his strategy:

1. Who is your most important audience? It can't be two groups. You'll fail. With TechCrunch, we opted for people who are bridges between the two ecosystems. We didn't assume we could be "the TechCrunch for China," but didn't want to be just a site for expats either. This will determine many of the other answers, and most importantly, it will determine who you hire.

2. What is the eventual plan for making money? It won't be the way you make money in the US. Ad markets are comparatively nascent and events don't have close to the same economics. In our case, we had a very different event strategy than in the US; but also assumed by focusing on the connection between the two startup ecosystems, we could get more revenues out of existing US customers. Is this about making your core property stronger -- the way national papers view international bureaus -- or is the end goal itself revenue growth, as it is in the case of Gawker?

3. How much does your brand rely on consistent quality? Do you expect the same standards? If you are a site predicated on editorial excellence and reporting, you will need more day-to-day management of any international operation because in each country there are different journalism standards and cultures. That's not a dig; just fact. You even see very different media cultures what's between acceptable in the US and the UK, where so many other cultural barriers aren't a factor. For publications that rely more on volume and process-based journalism, this matters less. PandoDaily, for the record, obsesses about this a lot more than we did at the old TechCrunch, but it was still a big concern.

4. How long will you give this before pulling the plug? Truly building a great international franchise for a US media company will take a very long time, particularly if you want local reporters to be able to contribute to the US brand like traditional bureau reporters. Your best case scenario plans for revenue will probably take twice as long. If finding your first editor took a year, finding a replacement should he or she quit will be even harder as you try to keep a publication going in the meantime. In short, everything is harder than doing it in the US. Media companies should view these as either as experiments that have a clear expiration date; or something that's strategically important for the long haul of the company. Something in the middle is a disaster. And either way both offices need to be aligned on what the expectations and plan are.