Rupert Murodoch just spent $70 million for a 5% interest in Brooklyn-based Vice.
Founded in 1994 in my hometown of Montreal by Suroosh Alvi, Shane Smith and Gavin McInnes, Vice traces its history back to a magazine launched with government funding in 1994 and then known as the Voice of Montreal. The company adopted its now-famous moniker in 1996. Then, buoyed by the dot-com hype and the lure of greater advertising revenue, the company relocated to New York City in 1999.
Six years into its existence, the dot-com bubble burst, and Vice had to start anew. In the period between then and now, Vice sold and bought back a stake to MTV and launched VBS.tv. Today it has become one of the darlings of the media world, evidenced by Murdoch’s investment via the print-less 21st Century Fox — fitting, since Vice has all but shed its print DNA as it has added record labels, a booming online video unit, and a pub!
Following the announcement, Smith explained, “We have set ourselves up to build a global platform but we have maintained control.” Here are seven lessons from Vice’s rise to fame and quest for global domination.
1) Mecca matters. As someone who has built a company out of Montreal, I can tell you that indeed, yes you can start a company anywhere and should even be able to play up Anytown’s advantages to your benefit. Still, you can only build the biggest and best media businesses in New York City, Los Angeles, London, etc. — where the other big boys play.
2) Fork in the road. Alvi and Smith separated from McInnes because McInnes (who coined the term hipster) wasn’t all that much into partnering with Viacom back in the day. You don’t get to choose your family, but you do choose who your partners are, and if at some point your worldviews diverge, it’s perfectly fine to split up. The show will go on. While Smith doesn’t go out of his way to erase McInnes’ early contribution, he does like to state that it was in the post-McInnes era that Vice experienced its massive growth in revenues and market value.
3) Print isn’t dead, but if you think it’s growing, you will die. When you sit in one of Vice’s boardrooms, you notice two things: there’s a big stuffed bear against one wall. Facing that bear are framed covers of Vice, which continues to publish to this day. But the company realized early on that the future of media wasn’t just online, but sight, sound and motion. The Viacom hookup was to facilitate and accelerate VBS.tv. Today VBS.tv isn’t the main video brand, the main video brand is Vice. While Vice is by no means without fault, print media ought to analyse Vice’s successful transformation from print to video.
4) Have a POV. I credit Smith as one of the handful of execs who helped me crack my company from what it was to what it is today. What I’m referring to is having a point of view and editorial focus, whatever it may be. I also credit Smith for realizing that it was OK to have slightly different editorial in print and images than in video. The print mag was probably way more focused on sex than politics, whereas via online video, Vice is way more politics than sex. Violence, drugs and alcohol remain a motif everywhere.
5) It’s not what you sell, it’s how you sell it. Vice is big, but what is more impressive about the company is that its P&L dwarfs its reach. Vice’s owned-and-operated website is by no means gargantuan, but with $175 million in revenues, Vice is clearly selling ads the right way. That’s something the big tech companies with aspirations to build ad-supported units ought to pay attention to.
6) With friends like these… Smith has always played up his admiration for Tom Freston. When Freston was fired from Viacom, Vice bought Viacom’s stake back, but Freston remained an advisor, and he negotiated the deal with Fox. In addition to Freston, Smith’s circle of advisors is impressive: Ari Emmanuel is an investor, Fareed Zakaria and Bill Maher are consultants. Some of that is for show, some of it is for real; either way, it can’t help with the programming, but it certainly doesn’t reduce the company’s cachet.
7) Strike when iron is hot. While many content companies become sexy, very few capitalize on that. Some may call that selling out, but you have to credit Smith et al. for sticking to their guns. There’s always virtue in that.