In my twenty-five-year career as an investment banker, hedge fund manager and researcher, I have learnt a series of lessons that have held me in good stead. These lessons have morphed into rules that I try to rigidly adhere to. These rules can often mean that you miss an opportunity but if a structural investment does not meet the parameters that you set for yourself, then you should not allocate capital. I have missed many opportunities, which with the value of hindsight proved to be lost chances but equally so, I have avoided numerous landmines. With experience comes proof of concept. While there are no guarantees, sticking to your convictions dramatically increases your chances of success.
I do not invest in companies. I invest in business models. I do not allocate capital to ticker symbols, I trust my wealth to management teams that share not only my business philosophy but also a dedication to doing things the right way. You should never invest in people who cut corners, exploit their customers or view their employees and partners as interchangeable commodities. If a management team has a vision on how to upend an entire industry, you owe it to yourself to listen. If the business model is sound and management is diligent, your capital is in good hands. When you combine a disruptive business model with proven operators, you are compelled to seriously evaluate the opportunity. These are my parameters and I have found them at Maven.
Let me start by saying that I have an economic interest in Maven. Yes, I have equity exposure to the company but more importantly, my firm, View from the Peak has committed to the Maven as a channel partner. This wasn’t solely about economics. Many of the existing channel partners had solid businesses in the fields of financial research, politics, music, family / relationships etc. They use Facebook, Twitter, Google and developed their own sizable web presences that worked well within a traditional framework. A framework that unfortunately didn’t really have our best interests at heart. The reason that VFTP never launched a retail offering was because the numbers simply didn’t work if we utilized the traditional networks of a little Facebook, a little Google and a little Twitter.
Unfortunately, the reliance on traditional social media for an array of publisher fields has seen the value of content suppressed. The providers of intellectual property were relegated to receiving a mere pittance for work of the highest quality. They received cents on the dollar for content that a dedicated audience was prepared to pay for. I have seen this in finance for years, but it is clear this problem was universal. This is changing.
I am constantly drawn to the share price of the New York Times. I have been told for years that print media is dead, that content is and always will be free. Someone forgot to tell the failing New York Times that has seen its share price rise some 80% in the past 12 months. Video content has Netflix, Amazon and Hulu. We are in a golden age for television and film and the demand for quality video content has no boundaries. The NY Times is telling us that the demand for quality journalism is also there. Is it that big of a leap to believe that quality independent publishing will also not experience a similar renaissance? Previously, we did not have that solution. There was no Hulu for independent publishers. Maven is now this platform.
The vulnerabilities for publishers being forced to distribute via the social media duopoly of Google and Facebook has been realized in recent months via the change in the Facebook algorithm. Overnight, publishers across a myriad of segments saw their revenue plummet after Facebook decided to focus more on local news and personal interaction. Facing mounting pressure regarding “fake news”, Facebook’s switch has left providers of legitimate discourse and information completely exposed to the whims of the social media platform. Unfortunately, many extraordinary publishers have discovered that they have lost control over their ability to profit from their content due to the changing impulses of the duopoly.
I joined the Maven eco-system because it will not only scale View from the Peak but the hundreds of other quality publisher than now have a platform to ensure that their message is heard by a broad audience who is prepared to pay. I control the process and frankly, while Facebook marketing must be a part of our agenda, it has been relegated to nothing more than a necessary evil. Many other are seeing what I am seeing. Dozens of quality publishers are looking for a new alternative, an alternative that allows them to take back control of their intellectual property and to be fairly paid for their content.
It is all well and good to find an alternative to the Facebook /Google duopoly but without scale, publishers like ourselves will never get our message heard. This business is all about monthly uniques and it is all well and good to take back control of the distribution of your content but without eyeballs, it is all for naught.
When I first met James, Josh and the balance of the management team back in Q4 2017, they had an extraordinary vision and a framework for success, but the company was in its infancy. I was drawn to them initially, not due to their existing scale because at the time, they were still in the early growth stages. I was attracted to a management team that had worked together for years on multiple projects. C suite continuity is vital for any business, especially a new company. This was incredibly reassuring, but the publishers still needed scale.
The recent announcement of the acquisition of Hubpages has, overnight, provider the scale that the publishers demand. The following is an excerpt from a Maven Press release on March 19th, 2018:
The combined traffic of the two companies (Maven and Hubpages) grew to over 43 million unique users in February, with more than 200 content channels combined and live by April, across more than 30 content verticals.
“Independent publishers, true mavens, can now reassert control of their future by uniting,” said Maven CEO James Heckman. “Fueled by innovative platform technology and a collective advertising and distribution presence of elite digital media properties, this coalition of mavens now has enough scale to offer true sustainability for independent publishers and the HubPages merger is key to fulfilling that goal.”
43 million unique monthly users. Allow me to put this into some kind of context. This puts them in the same ballpark as the Washington Post, the Guardian, the Wall Street Journal and the BBC. If the Maven achieves its lofty objective of 100 million uniques by 2019, suddenly Maven is vaulted into rarefied territory. There clearly is a lot of work to do regarding achieving this growth organically but as far as I am concerned, management diligence and the struggles / deficiencies of the social media incumbents means that achieving these goals is a distinct possibility.
Did I mention that I cannot find a publisher platform with 100mm unique monthly users that wasn’t worth $1bn in market capitalization? Please correct me if I am wrong on this. While one can argue the difference in pure news models versus the publisher platform, scale is scale and the number of unique monthly users is the key metric that the market should eventually focus on.
In the near term, you cannot control the valuation of your company, but you can control the corporate culture, the business model and the quality of the management team. I am huge believer that markets will reward superior companies and punish poor ones. Eventually, strong profitable companies where growth is outstripping the peer group will be recognized by the market. Undervalued companies that are truly disruptive do not remain that way for long. The timing is of course uncertain, but I am playing a very long game with Maven as a platform to distribute my work and with a management team with whom I am trusting my business and my capital. I sincerely believe that an efficient market will eventually reward the Maven business model.
This is why I joined Maven.