Want to understand the secret of Vice's success? Wait and watch

By Sarah Lacy , written on September 4, 2014

From The News Desk

Most content startups have two things in common with my three year old:

- They have an incredibly hard time apologizing when they’ve done something bad. (Ok, that’s all startups.)

- They totally underestimate the value of patience. Crazy patience. Watching grass grow kind of patience. Mr. Miyagi killing flies with chopsticks kind of patience.

To a three year old-- or most startups-- patience is like purgatory. Waiting five seconds for Animal Mechanicals to load on Netflix is the worst punishment Eli can imagine. Ditto, a content company forced to actually organically growing an audience through years of day-after-day production of differentiated work.

Why do that when you can raise millions of dollars and employ every link-bait, social, listicle, SEO trick in the book to grow now?

Nearly every single investor Pando has has asked me how more money or algorithms can scale our company faster. My answer is always: They can’t. It’s just going to take five to ten years of solid work to build the media company we want to build. There is no shortcut.

Further, I’ve been told-- again and again-- that there is no way to build a huge ad-based business without Huffington Post/BuzzFeed-like page views and scale. I disagree with that one too. And when I say that, people smile like they are taking to a delusional child. They struggle not to pat me on the head. There’s a reason we’ve raised $4 million and not $50 million.

Every time I have this conversation, I always think of something Marc Andreessen said back in 2007 when people were doubters of the early social media wave: “Ok, just wait. Wait and watch.” He had an enigmatic smile when he said it. This, a man who describes his personal mantra as: “Often wrong but never in doubt.”

This has become my personal mantra: Wait and watch.

I’ll take a break from that zen stance to give you a great reason that I’m right today. In fact, I’ll give you 2.5 billion great reasons: motherfucking Vice. The company most of the media world loves to hate has confirmed reports that it’s raised a whopping $500 million at a huge $2.5 billion valuation, half from A&E and half from Technology Crossover Ventures. This after its already shocking investment from Fox that valued it at $1 billion.

People will give you all kinds of reasons Vice has gotten this price. Its audience of hard to reach young men. Its agency business. Whatever. There is one big reason: Patience. Wait and watch.

When people told CEO and founder Shane Smith young people didn’t care about global news? Wait and watch.

When people said big brands wouldn’t pay to be next to Vice-style content? Wait and watch.

When people said he couldn’t build the new MTV and CNN rolled into one? Wait and watch.

Smith has essentially sat crosslegged with chopsticks for a dozen years, and now he only has to look side-eyed at the juiciest flies for them to fall. Hundreds of millions of dollars for minority stakes, and all from the kind of investors who can syndicate and keep his media empire growing. He has his cake and gets to eat it too: Huge cash and huge independence. All he had to do was keep building, keep evolving and keep being patient.

You know what’s even weirder than the idea of Pando building a huge media company over time? That a one-time government-funded magazine from Canada did it.

Some 15 years into this wave of new media companies using the Web to build new news and information franchises, no one has yet to touch Vice’s valuation. Not Huffington Post, the master of SEO. Not Business Insider, the master of the slideshow. Not BuzzFeed, the master of social.

And this is why some days it seems like Vice is hated by everyone in media except me. Well, me and all the legacy companies who keep paying shit loads of money for tiny stakes in what Smith and his team have painstakingly built brick-by-brick.

Old media hates it because they mix up serious international war reporting with first person accounts of smuggling cocaine in body cavities. Old media hates anything that doesn’t play by old media rules, and Smith makes Michael Arrington look like Don Graham.

Meantime, new media hates Vice for a whole different reason: It doesn’t have outrageously over the top pageviews numbers, and yet it still has that monster valuation. Press reports I’ve seen put it’s reach at about 100 million uniques or so counting different properties and social reach different ways. It’s big, but not obscenely big given the price and age. Put another way: It’s not big for the sake of big. And it’s a property that reaches that audience through myriad  channels not all on a big, long infinitely scrolling home page.

Any younger company can buy and game monster page views. What they can’t buy is deep authenticity with a valuable audience that has taken a decade to build. We can all mock the tattooed war correspondents. We can find Dennis Rodman going to North Korea repugnant. We can jump up and down pointing out that a so-called badass, stick it to the man brand shouldn’t also be able to charge millions of dollars producing videos for Intel.

But it doesn’t matter. Vice has done it.

I interviewed Shane Smith and Tom Freston at the Lerer Hippeau Ventures CEO summit earlier this year. There was a great moment where the two smiled at each other reflecting on the journey and Smith said something to the effect of we’ve re-applied lipstick to this pig about a dozen times over the last dozen years until it finally got big. Investors have been brought in, bought out, and new ones brought in over those years. Vice has been most known as magazine, a YouTube giant, an ad agency, and now potentially a real TV powerhouse. It even owns a bar in London.

Media moguls-- real ones -- are crazy. They don’t act rationally. They aren’t motivated purely by money, but a mix of ego, power, truth-seeking, legacy, and sticking something to someone, somewhere. Probably someone who once told them they needed to build an algorithm or write a listicle.

Nothing about Vice’s journey makes sense. Nothing about it is a “playbook” that any other media company could actually follow. It’s completely fucking weird and not algorithmic and shouldn’t have worked.

And that’s why, whether it always follows the rules of journalism or not, Vice is a real media company and Upworthy isn’t.