Pando

Ben Lerer: "We're in 1985 all over again"

By Sarah Lacy , written on May 18, 2017

From The Lessons from the Trenches Desk

[Editor's note: This piece, based on my PandoMonthly interview with Ben Lerer, originally ran on Startups.co as part of an editorial collaboration with Pando aimed at sharing founders' struggles, challenges, and origin stories with millions of founders across America.]

It's hard to decide who has changed the most in the last 12 years: Thrillist or its co-founder and CEO Ben Lerer.

Back in 2004, Thrillist was frequently described as the male equivalent of DailyCandy, a female oriented email newsletter that sold for $125 million only to be killed by Comcast. To be clear, that is still one of the largest content exits in the Web era, and it inspired plenty of envy at the time. Many expected Thrillist to be flip-bait as well.

Fast forward to today and Thrillist has raised more venture capital than that DailyCandy acquisition– much of it during a $100 million mega round announced last year. That deal rolled up Thrillist and three other media platforms into one company called Group Nine, and Discovery invested the cash. Lerer is the CEO of it all.

It’s an astounding bet on a lot of fronts: A big bet by Discovery that Lerer and these companies can steward its digital assets. A big bet by Lerer that there isn’t a better partner… or potential acquirer given how wedded the two are now. Both are making a huge bet on video and an even dicier bet that distributing their content across platforms like YouTube, Facebook and Snapchat will eventually give them in revenues what they give up in terms of control.

But the transformation of Lerer himself may be even more astounding. The son of the media mogul and Huffington Post co-founder Ken Lerer, he defies the stereotype of the New York kid born into privilege, always hustling, anxious to prove his chops beyond being his father’s son. That said, Thrillist was a bro’s brand before tech bros were a thing. When I did a sit down interview with Lerer in 2012, he said his mediocre superpower would be his wife not getting mad when he travels to his friend’s bachelor parties.

In this interview, Lerer said he’s never been less focused on flipping his company and believes that now is the time — finally– when major billion dollar digital brands are going to be built. Having survived this long, he aims to be part of it. Meantime, he’s also become an investor in several of the largest digital content brands via his firm Lerer Hippeau Ventures, including BuzzFeed, Refinery29, and BusinessInsider. And just hours after we did this interview, he welcomed his second child into the world.

Just as email newsletters have been replaced by massive bets on Facebook and Snapchat, his beer pong days have been replaced by diapers. Lerer is a rare media mogul who was somewhere between being born and made.

I started out by asking him how things evolved since our last sit down interview in 2012, when he’d just raised a huge round and acquired men’s clothing company JackThreads. At the time, a lot of people believed content and commerce should merge, and Thrillist appeared to be on the cutting edge. But it turned out to be a costly mistake.

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Ben Lerer: We had just bought JackThreads and we raised effectively a series A. We were building two brands JackThreads and Thrillist, a retail company and a media company. We would build one very quickly and the other would not get time or attention, and then we’d build the other very quickly and like, it was Whack-a-mole. That’s a game we all know how to play when we are building companies, but it was like the bad version of Whack-a-mole, because we didn’t have a balance sheet to grow these two businesses. With each passing day, week, month they were more and more different.

Thrillist was becoming less like “young dude,” and JackThreads became less consignment and was really becoming a business about making its own stuff and fulfillment. We were running a retail startup and a media startup.

Sarah Lacy: Neither of which are easy or cheap.

BL: …Right. We were basically running two businesses off one balance sheet and one senior management team and it was total discombobulated. I would dive in and fix one problem here and then have to go fix something else in a totally different business.

And so probably two years ago-ish we went out to raise money for the combined business. The investors we were talking to were insistent on valuing each of the businesses independently, and we never thought of it that way. When we started to do that way, even we learned we were starving one child to feed the other. I think we knew it intuitively, but not in reality; the numbers spoke pretty clearly.

We thought “Well this is pretty fucked up, we have two management teams, we have not enough capital to support both businesses.” We needed to either raise a mondo round and find an investor who really appreciates this content and commerce thing, or we need to face the reality that maybe we built two independent businesses.

There was clear interest in each of the businesses, but the combined was one plus one was equal to one and a half not one plus one equals three. And so we said, “Ok let’s call a spade a spade and spin off JackThreads.”

I’m a media guy. I like investing in retail businesses. I don’t like running them. And by the way, the media landscape was changing rapidly, and that’s what I wanted to do with my time. So we raised another round 18 months ago a $50 million. It was a combined round, really two different rounds. It was really fun two different rounds at once…

SL: I can imagine; it’s so fun to do it for one company…

BL: Imagine doing it for two. So we spun JackThreads and began a separate independent business, and put our heads down on Thrillist and (German media company) Axel Springer came in as the investor on Thrillist. But macro, at LHV we’re Pando investors but investors in a lot of media businesses…

SL: …I was going to say, you guys were really bullish on media businesses when almost no one was and have remained more bullish. In general, have you been proven right? Have you made money off of them?

BL: We just made money off of PureWow just last week. We did very well on HuffPo, and will do very well on BuzzFeed. And in the context of Group Nine, we took several businesses and put them together I think we’re going to do very well on those. We’re in Refinery29. We made money from BusinessInsider. I would actually say we have done better in media than anyone else in the world by far. If you were to make a list of the digital winners we generally were meaningful investors in most of them.

SL: Sorry I interrupted you, you were saying in general about the media space…the macro?

BL: So I’ll say something that my dad talks about: We’re in 1985 all over again. What’s happened in digital is all these brands that are being built sort of look like cable networks. The pipes have just changed.

So you had the companies that owned distribution in the 1980s and then the cable networks. There ended up being consolidation and the creation of Viacom and Disney’s cable business and TimeWarner and Discovery Communications and all the giant cable companies that were collections of brands.

Fast forward 30 years, and the pipes are changing. Maybe Google owns them and maybe Snapchat owns them, but the traditional TV guys have had a lot of trouble figuring out how to build real digital capabilities. Everyone went really hard before the space was mature at all and took losses and so everyone got scared.

But the reality is we’re reaching that point where TV is going to not be as good a business as it has been for the last 30 years. I think everyone can acknowledge that, but the thesis is these big TV companies are not going to go quietly into the night. They are going to need to buy meaningful digital businesses that will become the future of what they do.

They need the brands that understand this environment.

And there’s no middle market M&A. No one wants to buy a $75 or $100 million company, because there’s nothing to plug it into. It’s sort of a big check, and it won’t really make a difference to your $40 billion dollar old media company. But I think there is appetite at the top of the market, and I think VICE has proven this and BuzzFeed has proven this. Big brands that can represent the core asset in your digital arsenal are going to be very interesting, and there are going to be a bunch of buyers for them.

SL: But there are not very many. And it takes so much money and point of view and execution to get there.

BL: Yes, absolutely. My thought was I can take the very long road of brick by brick building it and raising venture capital every 18 months to do it, or I can try to find assets that have a certain set of qualities that I think are going to make up the successful networks and I can put them together. And that’s Group Nine.

SL: So when did you start thinking about that?

BL: My dad and I have talked about this kind of nebulous “new co” for a few years. The idea of the digital roll up, but with no specificity around the assets in it or the timing or what it would look like. But we were just thinking, “Boy, there’s gotta be an opportunity to put some stuff together to make something bigger, faster.”

But I don’t think it was until March or April that I was once again starting to think about what a financing round would look like for Thrillist. Not that we were in any rush, but you know, you execute a few months and business is great, and then you have to start thinking about it. I started thinking about the qualities of brands that were going to be successful.

I have my set of criteria, but one of the simplest ideas is that you need to have brands that dream in video. That doesn’t mean brands that are exclusively video, but it means, brands that are video first. It also means brands built not in spite of social distribution but acknowledging and embracing the fact that these are the new pipes. And not cautiously building for those environments, but totally embracing them and saying if we make the best content on these platforms– like YouTube and Facebook and Snapchat– monetization will come. And we’re going to be all into that idea.

SL: That seems like such a shift from where Thrillist started out.

BL: Well we started out as a men’s email newsletter.

SL: So what is the thread, what is still the core of Thrillist?

BL: It has never changed; it is about “helping people do the things they love better”

SL: People? Not men?

BL: People. I think it started as men, although it always had a pretty nice female fan base. As the business has grown more and more social, it’s become more and more 50/50 because women tend to overshare versus men.

And in reality, we are talking about eating and drinking and traveling. Amazingly, women do this, too. It turns out women eat stuff. I had no idea when I was 22, and I started this.

The tone and sensibility… maybe it’s changed a little bit since we started it, and me and Adam were frat boys writing it. But it hasn’t changed all that much. It’s still funny and punchy, self deprecating, but confident. The brand is actually similar, but the mechanism for delivering it is very different, because ten years ago you could be an email newsletter as your sole function. Today you have to be building for the distributed web.

Thrillist does not yet fully dream in video, but boy are we quickly moving to that. And it doesn’t hurt that we share a company now with NowThis which certainly dreams in video and the Dodo which this month will surpass 1.5 billion monthly video views. They have really figured out video in a short period of time. And the asset that Discovery contributed after they invested into Group Nine is Seeker which is a science brand, which is made up of a bunch of successful YouTube channels. Again it just totally dreams in video and is strong in YouTube where the other brands have spent more time and energy building Facebook and Snapchat.

I think Thrillist brings some real old web chops, Seeker brings YouTube chops, Dodo and NowThis bring Facebook and Snapchat chops, and the idea is the brands will learn from one another but build fully independent businesses. We’re trying to build Viacom. We’re trying to build TimeWarner.

SL: So when you think about your whole journey. You were a comp to DailyCandy. Do you ever think “God I wish someone had just bought us then, and I could have started over in this new era?” Or do you think you’ve had an advantage to the longevity and all the phases you’ve been through?

BL: There’s a few advantages to longevity, and one is in the advertising community. Thrillist is a very well known quantity at this point in that it opens doors. We have relationships everywhere, and as we’re now going and building Group Nine, we’re not starting from scratch. We have a way in to reach scale much, much faster. We’re not just starting the engine up.

I also think just the learnings that we have pivoting and bobbing and weaving… like those are battles you are stronger for after you are done with them.

Look, if I were to go back, I think there were many times during the course of the business where I was short term focused or I would have loved to call it a day or whatever. But it’s hard to Monday morning quarterback when you’re happy where you’re at, and I’m happy where I’m at. I’m more long term focused than I’ve ever been by far, genuinely.
When you are running a business and at any given time you think maybe “it could be bought!” you are always putting lipstick on your pig. Like, every morning you wake up and dress up your roast pig, and that’s so not the mentality we’re in right now. We are so focused on building and operations and communications and best practices. It’s a stressful time, and it’s a lot of work. But it’s a fun time, but it’s not some primping for some moment.

There will be many billion dollar media businesses built in digital.

SL: And that hasn’t happened yet, because it just took us ‘til now for the ecosystem to get there?

BL: It just took us until now, I believe so.

And by the way, it’s not like it’s here today. It’s not like Facebook is lining my pockets. But I think we are going to see if we look five years from today, you will look back and go,

“Wow, look how far we’ve come.”

Facebook has built an ecosystem where there are — not a lot– but there are the best publishers. And they have to make money and make real money because that’s the only way Facebook actually goes and takes a meaningful chunk out of the TV business.

Because right now Facebook has eaten up print and eaten up radio all these other things, but it hasn’t eaten TV. And that’s where the real money is. And if Facebook and YouTube and Snapchat and whoever else wants to take a bite out of TV, there is one thing TV has always done, which is paid its publishers. So that’s gonna have to happen if they’re going to get the quality of content they want to really thrive against TV.

SL: Theoretically, you guys have been disrupting cable companies, but cable companies have been the ones investing in all the newer companies you just mentioned that are in your portfolio and so doing well.

So how do you think about that from a coopetition standpoint? Is it lining up potential acquirers? Is there any trepidation in the limitations around that?

BL: For us… I mean the relationship with Discovery is a tight one. I mean A) They wrote a meaningful check. And B) they contributed their digital business in Seeker. So they put their money where their mouth is, and they’re serious about this partnership and we’re trying to do the same.

I think it’s inevitable that the smartest traditional media companies won’t sit on the sidelines and decide not to participate in digital…. It’s not a phase. If this is the future of where the consumer is spending their time, than this is the future of their business. And so you are going to see the smarter ones move more aggressively.

SL: But is there any reason for the newer brands to be wary that Comcast has basically invested in every major content company, from BuzzFeed to Vox to Refinery29. With corporate venture funds, there’s always a sense of “Is this a good idea?” They’ll write big checks, they’ll step up, and there are not a lot of late stage investors in media who will do that. But a lot of people are concerned that those kinds of investors aren’t aligned with you, that they have their own motivations. Are you putting yourself in a weaker position down the line, acquisition wise, or in any sense?

BL: There’s a trade off. There is a trade off. Here’s what I like about the relationship with the right corporate strategic:They need you and you need them. That’s a pretty good set-up versus what I’ve seen with VCs, where it’s a lot more of a one-way street.

I’ve made a bet that the right relationship means a real commitment, not a $15 million round own 8% of your business and you have a board seat and have some co-production dollars and we do that with 12 of your competitors and watch and learn. That’s not a real commitment.

A real commitment is more along the lines of what we have with Discovery or what NBC has with BuzzFeed, more along the lines of maybe VICE and A&E… I mean that’s a real commitment, they gave them a TV network. There aren’t a lot of other real commitments. The real commitments are the ones where you have some security when things take longer because time takes such a role here. If it takes another two years for Facebook to deliver dollars at scale, you have a partner who is a partner who can help you in that time.

But it limits you in that right now, I’ve made my bed with Discovery. I can’t go hang out tomorrow with TimeWarner. I am in business with Discovery. I wanted to do this with Discovery. I think their assets line up with us, and we knew their senior management team, and they needed to do something big in digital. That’s a good balance. They needed to do something big in digital; we needed a real partner, that makes sense, right?

And by the way, they’d been investors in the Dodo and very supportive investors in the Dodo.  Even though I wasn’t representing the Dodo, we were meaningful investors with Lerer Hippeau Ventures, and it’s my sister’s company. So we saw how they behaved.

But in the next few years, we have to turn it from a relationship where we say nice things about each other in interviews to really figuring out how to sell advertising and create programming together. That’s going to be hard. Because you know who has figured that out so far? Nobody.

But by the way, if we do, that’s awesome. Someone will.

SL: Do you think it’s weird that you are so closely in business with your dad and your sister?

BL: Weird? Life is short, work with people you love. There’s no separation between work and life the way we are; it’s all the same thing. Spend time with people you love. Work with people you trust, who you know are competent and know aren’t going to screw you.

I think it’s the best. I would want to do business with more of my friends and family. Can there be moments of frustration and conflict? Sure but there can be moments of frustration and conflict, but you can have that with people who aren’t your family. People who when those moments come, can decide to try to screw you.

At the end of the day, I would probably feel different if i didn’t think my sister was exquisitely capable.

SL: You are clearly not carrying her…

BL: Right. No one is doing each other any favors. The situation has come as it is, because of everybody doing their own things. My dad’s involvement is as an advisor and a friend; he has no tactical role in any of this. And Izzie [Lerer] runs creative at one of the brands here, and I’m leaning on her to share lessons learned with other brands. She’s looking for me not screw up the corporate stuff that she’s entrusted her business to.

Group Nine is a collection of equals… you can be an awesome stand alone brand, but there are a lot of awesome stand alone brands. It is hard to put this together. It is hard to get all the boards of these companies to agree to this. This was hard to pull off. This was not a simple deal, between Discovery and between combining the assets and the integration is not easy. This is four businesses with four cultures that we are putting together right now. It’s really a very cool puzzle, but it is hard.

SL: When you first started Thrillist what was your favorite part of the job, and what’s your favorite part now?

BL: When i first started my favorite part was that I did everything, and knew how to do everything, and that I was very controlling. I knew the business inside and out and that was my thing. That I knew everything. And I think now the greatest pleasure I take is how many awesome things are happening that I touch in no way, shape, or form.

And I mean my favorite part really is I believe we can actually make an impact now. We’re building a real company. It’s amazing. We’re building a real thing, not building a thing to flip. We’re building something real.

I think the coolest thing earlier was the reality of building anything. Now, I go to my Facebook feed and I need to pinch myself.. . it’s us. It’s all of our portfolio companies, not just Thrillist, but my feed is overwhelmed by all the content they and we create in all these different areas. That’s sweet. And I don’t think that’s just Facebook’s algorithm knowing me. I’ll go sit with clients and also pull up their feeds and I see it.

SL: So I’m working on a book about motherhood and entrepreneurship…I’m curious, has being a dad changed you as an entrepreneur?

BL: I would like to think it’s changed me. That when stuff is really hard, I’m able to really prioritize… I remember in particular when we were spinning JackThreads off, it was really hard. It was really stressful. But I remember having a moment where I looked at Calvin, and I was like “You literally will never even know that I did this.” I am trying to remember what my dad did when I was six months old. It will never even cross his mind. This doesn’t matter.

Not that it doesn’t matter… but just I gotta just take a chill pill. I’m doing the best that I can, and the most important stuff is not this.

So it helps with perspective. What’s really, really, really, really, really important is your family. It just helps with screwing your head on a little more in the right direction.