How two millennials built a $100 million startup in 4 years and landed an interview with the president
On Thursday August 6, Jake Horowitz spent three hours in the White House's library, waiting for the president to arrive.
Michelle Obama's glam squad had already powdered his nose. He sipped water and thumbed an issue of The New Yorker, trying to stave off nerves.
Horowitz, 27, was about to conduct his third-ever video interview for a website he cofounded four years earlier, Mic. The president had only granted two media interviews that day, twenty minutes to CNN and twenty minutes to Horowitz, and Horowitz was only given one week to prepare.
Suddenly, the dozen people in the library fell silent. A secret service agent entered and Barack Obama filed behind him.
Horowitz shook the president's hand. He showed him Mic's mobile app, which they'd be using to crowdsource questions from Mic's millennial-age readers during the interview. Horowitz began showing Obama how to swipe when the president stopped him.
"Guys," Obama said, "I'm not a complete and total idiot. I know how to use an iPad."
With that, the interview began. Horowitz gulped, and dove into the first question.
By 20-somethings for 20-somethings
Mic is a small startup with big ambitions. Founded in 2011 by Horowitz and former Goldman Sachs employee Chris Altchek, Mic is aiming to be the voice of the digital generation.
The site boasts a youthful readership; 73% of its 20 million monthly readers are younger than 35. Additionally, Mic says 85% of those millennials plan to vote in the 2016 election, which was attractive to Obama's team.
MicThe startup has just 82 full-time employees with 50 staffers in its editorial department. A June round of financing valued Mic at nearly $100 million. Mic is also rumored to have walked away from early Twitter acquisition talks for that same amount.
$100 million might sound like a lot of money, but it's just a sliver of what competitors like Vox, Vice, Business Insider, Gawker and Buzzfeed are worth. Vox and Buzzfeed each recently raised $200 million at $850 million and $1.5 billion valuations respectively. Mic has raised $32 million in total.
Can Mic compete? Or should it have sold when it had the chance?
"There have been conversations with a lot of different people," Altchek said when asked about acquisition opportunities. "But I think it's becoming very clear to us that now is the time when new major media companies are being built and we have an opportunity for the first time in a long time to build independent media companies from scratch that challenge the big guys."
Here's how Altchek, Mic's CEO, plans to win as David in a sea of media Goliaths.
Video has gone from 0 to 34 million views in six months
Mic, like every other digital media company, began to build out a video department this year.
Video is a coveted new opportunity for digital publishers because advertisers are willing to pay higher CPMs (cost per thousand views) for those placements than for traditional banner units (300x250 boxes and 728x90 rectangles).
For the first time, advertisers are shifting some of their multi-billion-dollar budgets away from television networks and giving it to digital properties offering pre and post-roll placements. Companies that are succeeding in online video, like Vice and Buzzfeed, are worth hundreds of millions of dollars more than their digital peers.
Mic's early video efforts seem successful. In January, Mic launched an online show hosted by its senior editor, Elizabeth Plank, called "Flip the Script." Plank, who started at Mic as an intern, produced eight short episodes which have generated about 34 million views across the web, on Facebook, YouTube and Mic.com.
One of the videos, which examines when it's okay to say the word "retarded," went viral and generated 15 million Facebook views. Mic says it's planning to produce an entire franchise around Plank in 2016.
Mic is also producing a web show called "Future President" which highlights cool technology.
The first episode featured a child's 3-D printed arm and generated 3.4 million views on social media. Each episode after that has generated 2.5 million views on average. The Obama interview, which took months to nail down and one sleepless week to produce, generated close to 300,000 views for Mic, half on Facebook and half on its website.
"We're investing in really high quality video," Altchek says. "We're traveling all over the country to go to the places where news is happening. The in-studio and green screen video approach makes it easy to fill 24 hours of news. But in this digital world, all video is being consumed on demand. The average American only spends 70 minutes consuming news each day. So, whoever is going to replace cable news doesn't need to be rolling 24 hours a day because that's not how people are consuming online video. People are going to find the segment they really want to watch, but they're not going to watch it live."
The average American spends 70 minutes consuming news each day. So, whoever is going to replace cable news doesn't need to be rolling 24 hours a day.
Mic is also focused on making sure its videos are well distributed across the web and in households nationwide. Business Insider has heard it's joining Comcast's new Watchable streaming product but Altchek — who declined to comment on Comcast —says Mic will announce a few major video partnerships in the upcoming months.
Revenue has grown from $0 last year to $5 to $10 million in 2015
Last October, Mic hired its first head of sales, Evan Gottlieb. Gottlieb then hired a sales team in San Francisco, Los Angeles, Chicago, Texas and New York. That team is focused on selling a few products for Mic: branded content, video content, and a "Hero" banner unit.
The "hero" ad appears on both mobile and desktop. It spans the full width of Mic's site and is used as a page break between articles. Mic's website and mobile app use infinite scroll, which means one article feeds directly into another, and users are never actually able to reach the bottom of the page.
Altchek says the Hero unit is sold out for the remainder of the year at a $40-50 CPM.
Mic didn't generate any revenue in 2014, but Gottlieb's team is closing a few seven-figure deals, which will generate $5-10 million for the company in 2015. Some months, Altchek says Mic is accidentally profitable.
That's great and all, but Mic is only 1/10th the size of Vice, Vox and Buzzfeed. Is it screwed?
2015 has been a wild year for media companies. A few venture-backed publications, including Gigaom and Circa, ran out of money and shut down. Others like Elite Daily and Recode got acquired.
Buzzfeed, Vox, and Vice sit on the other end of the spectrum. They've raised hundreds of millions of dollars and are worth billions. Buzzfeed, which has more than 900 employees, says it's profitable. It generated more than $100 million in 2014.
Where does that leave a site like Mic, which has one-tenth the number of employees, revenue, and funding?
Mic board member and former AOL CEO Jon Miller thinks it's too early to predict who the digital media winners will be.
"I think we're still in the very early stages of the digital media revolution," Miller told Business Insider during a phone call Friday.
"I've been through enough of these cycles now to know that these really big companies do develop over some period of time. People said there was nothing to do in the news space, and then CNN emerged. They said there was nothing to do after CNN, and the CNBC and Fox emerged. For Mic, its growth is really about having a distinctive point of view and having a quantity of quality content."
Altchek and his investors acknowledge that Mic has a long way to go. But the startup has one thing most modern media companies don't: millennial founders and staffers who are writing for their peers.
There are about 80 million millennials in the United States, which makes it larger and more powerful than any generation prior. Mic believes winning them over could be a multi-billion-dollar opportunity.
If Mic can create a trusted relationship with millennials now, it thinks it will be able to age with them, like Baby Boomers who became attached to CNN, and become a household name. Mic views itself as the next MTV, which was started by Bob Pittman in 1981.
Pittman, by the way, founded MTV when he was 27, the same age Horowitz and Altchek are today.
"The next $10 billion media company will be the one that wins over millennials," Altchek insists. "We understand them intuitively because we are them."
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