Alien in New York: ReadWriteWeb & the American Dream
I sit down with Insight Partners to discuss ReadWriteWeb's finances. Later, I get the meat sweats at Carnegie Deli and catch up on blog business before my flight home.
Tuesday’s financial discussions were with Kobi Levy and Jake Stein from Insight Partners, the private equity firm that was buying ReadWriteWeb on behalf of Ziff Davis Enterprise.
Jake looked like he’d just come out of business school (which I soon found out that he had). Despite his fresh-faced youth, he had a confident look in his eye that unsettled me. Maybe it was my imagination after Steve Weitzner’s warning last night, but I felt that Jake looked at me as if he were the keeper of arcane accounting knowledge that he knew I didn’t have.
Both Kobi and Jake wore stylish suits and were clean-shaven with efficient haircuts. As usual, I had tufts of hair that refused to be tamed by whatever styling cream I'd used that morning, and I was wearing slacks and a dress shirt, along with a warm but not very trendy jacket. I’d become aware during the last couple of days that my attire was not as suitable in Manhattan as it was in Silicon Valley—men who worked in offices seemed to wear suits, which was (in my experience, at least) rare in the valley.
My discomfort worsened as we got down to brass tacks with the spreadsheets and financial projections. I did, however, let my feelings be known regarding any potential change to the sale price. I told them straight up that it could be a deal breaker if they tried to cut the price specified in the Letter of Intent (LOI). Kobi said it was one of his bosses who wanted to stick to the exact EBITDA multiple. He wouldn’t promise not to change the price, as it wasn’t up to him. But he said that he could see I was unhappy about it and would relay my position to his boss.
At this point, it did occur to me that I’d likely never meet these higher-ups at Insight Partners. Just as unknown head-office bureaucrats had torpedoed any chance of a decent offer from CMP, these faceless private equity honchos could do the same for ZDE. Insight had sent a couple of relatively junior people to do the due diligence with me. Which was fine, I suppose, but I would’ve preferred to know who was really making the decisions—especially if they wanted to nickel and dime me on the sale price.
We went through my spreadsheets in some detail, but Jake had a list of things he wanted me to send once I was back in New Zealand. These included a copy of the accounting software I used, the annual accounts for 2006 and 2007 from my accountant, and the Google Docs spreadsheet I used for sponsors. I promised to send those through as soon as possible.
I didn’t see Steve (ZDE’s chairman and CEO) at all that day, but he sent me an email later expressing his support. He wanted to let me know that it was his intent to go forward with the deal as originally offered. This might require “some debate with Insight over the next day,” he said, but he didn’t want me to worry that a small miss on my February and March projections would impact the purchase price. Everything was headed in the right direction with my business, he assured me.
Wednesday morning at ZDE was more relaxed, with no talk of RWW finances. In fact, it was more about getting my opinions on various ZDE initiatives—their multimedia efforts, what it meant to be a blogger in 2008 (the words passion and authenticity were listed on the agenda as a guidepost to that discussion), and how to grow ZDE’s developer community, DevShed.
By lunchtime the official due diligence appeared to be over. I was on my own for the rest of the day, and there would be no need for me to come into the office again tomorrow. I’d already cut short my trip by a day and booked a Friday-morning flight home, after realizing that the meetings with ZDE and Insight wouldn’t take the whole week.
I didn’t know what to do with myself for the remainder of my time in New York City. Kobi wanted to do lunch with me before I left, and I was also planning a dinner with Bernard and Alex. But both appointments would have to wait till Thursday, due to everyone’s busy calendars. The only thing I wanted to do before I left was see the Empire State Building. I figured I would do that between lunch with Kobi and dinner with my colleagues.
It wasn’t as if I lacked things to do in New York. I could’ve gone to MOMA or the art galleries in Chelsea that Wednesday afternoon, but it had been an intense week and I was feeling worn out. So I went back to my hotel room to catch up on RWW business.
I decided to finally write the detailed email I had promised to Marshall about our editorial operations. “Firstly I have to apologize for not spending more time talking to you in recent weeks,” I began. “I have been very busy on the biz side of things.” That was certainly true but obviously avoided the whole truth! I went on to note that I didn’t think our content was “as good as it could be right now,” adding that one reason was that I hadn’t been as involved in editorial as I needed to be. I was the site’s editor, so any content issues were ultimately on me.
Marshall was our “senior blogger,” I said, and we’d originally agreed for him to do two to three posts per day during his twenty paid hours per week with RWW. He was in fact averaging about two a day, or ten to eleven per week. Some were detailed and had a lot of thought put into them, so I wasn’t too concerned about quantity. However, I did want to see at least one post per day from him in the morning, West Coast time, on a consistent basis—which had been a bugbear of mine for all the US writers.
I then commented on the blogging output of our small team of daily writers. Two were doing well, but I wasn’t entirely happy with the third’s writing. I wanted Marshall’s feedback on that, and I added a few suggestions for helping the writer with story selection. However, I reserved the harshest comments for my own output: “I’ll be honest, my posts have sucked recently! Being so much focused on biz has affected my ability to keep up with the latest web apps and blog about them. So I hope to solve this by removing some admin burden from myself, incl sales.” I finished by promising (again) to forward the premium-content discussion, and asked if he’d like to increase his hours at RWW.
I skirted the real issue—that I had spent the last four months trying to sell the business. I had, in fact, spent more time talking to Bernard about M&A than with Marshall talking about content. All going well, the ZDE deal would be finalized by early June, but even then I would have to spend a lot more time integrating our business into ZDE. So I was worried about how this would impact editorial going forward.
I was also feeling guilty about not bringing Marshall into the ZDE discussions. However, he claimed he made more money consulting than he did with RWW, so it was the right business decision not to involve him. He could easily find another blogging home, and I couldn’t risk that. As I’d implied in my email to him, his content was currently the best of the crop (I’d somehow squeezed out two posts while in New York, but they were both poor by my own high standards). I resolved to do my best to keep Marshall happy and involved on the editorial side, and then bring him up to speed as soon as the ZDE deal was finalized.
Thursday was my last full day in New York City. Over email that morning, Kobi had asked if I had a preference for lunch. I’d replied, “anything ‘New York-ish’ is fine with me.”
“This is kind of touristy,” Kobi wrote back in response, “but how about the famous Carnegie Deli?”
Touristy was where I was at—especially with my planned visit to the Empire State Building that afternoon—so I readily agreed. Kobi mentioned a few business details to be tidied up as well, so we would hold our final meeting over lunch.
Carnegie Deli was at the intersection of Seventh Avenue and Fifty-Fifth Street, about a thirty-minute walk from my hotel on Twenty-Eighth Street. For some odd reason, I decided to take a taxi. Perhaps I just wanted to add to my touristy experience that day and go crosstown in a Manhattan Yellow Taxi, as if I were a character in Sex in the City. Needless to say, it was rush hour when I jumped into a taxi fifteen minutes before our 1:00 p.m. meeting. The taxi crawled its way uptown and I soon realized I’d made a mistake in not walking—especially since it was a sunny spring day.
I arrived about fifteen minutes late; the taxi had taken the exact same amount of time as if I’d walked it. Kobi was sitting in a booth when I stumbled in, and he looked confused as I explained about the taxi. “Why didn’t you walk?” he asked, incredulous. I had never felt so much like a tourist.
The deli was famous for sandwiches with at least one pound of meat, so I ordered a pastrami and corned beef sandwich. Sure enough, an open-faced sandwich piled with a massive amount of thinly sliced meat soon arrived. The restaurant’s motto was “If you can finish your meal, we’ve done something wrong.” I determined to give it a good go, but there was no question I would be walking it off afterward. No more taxis for me that day!
Kobi was very friendly and enjoyed seeing me tackle the ridiculous sandwich, but there wasn’t much more to say about the business deal. I just had to send them more financial documents when I got back home and hope they wouldn’t try any more tricks to reduce the sale price.
In between mouthfuls of meat washed down with Diet Coke, I told Kobi that I had enjoyed meeting Steve and his ZDE team, and I felt that Steve understood what RWW needed in order to take the next step as a tech-media business. We seemed to be aligned on the plan to fold RWW into ZDE’s operations, although I reiterated that I would be trusting them to set up a suitable structure for sales and admin. Kobi assured me that ZDE would do the right thing on the operations side—they all wanted me focused on editorial and on expanding the RWW brand.
I nodded, gulped down another forkful of pastrami, and told Kobi that I was comfortable moving forward with the deal. Insight and ZDE were keen to get it done too, he said, grinning as I started to show signs of meat fatigue—not even halfway through the sandwich. It was just a matter of working through the final few weeks of paperwork, he added, handing me a napkin for the soon-to-arrive meat sweats.
After lunch, I walked back downtown to the Empire State Building—or maybe I should say I waddled. The view from the top quickly cleared my head, though. It was a fine, cloudy day and I could feel the hum of the city as I gazed out on the mass of high-rise buildings. It sounded like millions of people were chattering all at once, continuously interrupted by honking cars. Even though I couldn’t see anyone eighty-six floors below, the density of people on the ground and inside the buildings pulsed through me. I could feel the vibrations of America in my bones, like Walt Whitman’s “body electric” come to life.
There was a cliché in the tech industry at the time that “Web 2.0 is made of people.” It went through my brain at that moment that New York City is really about the people, too. This is what a real human city looks and feels like, I marveled. To think I would soon become a part of this energetic, throbbing scene—a hopeful blogger from the other side of the world, married off to an eligible American suitor from Manhattan.
In a way, it legitimized what I was doing with my life and fulfilled a destiny I’d only peeked at when I was younger. One of my favorite courses at university had been American Literature, which I’d taken as a part of my English literature degree. I’d loved The Great Gatsby, Moby-Dick, and Catch-22. I identified as a seeker of the American Dream—although more like Nick Carraway, in my quiet determination, than Jay Gatsby with his overt striving. I was also Captain Ahab, pursuing something deep inside of me that I didn’t fully understand yet—would I ever? But at least, I told myself, I recognized the absurdity of it all, like Yossarian.
Fanciful yearnings aside, I had a real life to go back to tomorrow—and that included a still independent blogging business. When I got back to New Zealand, I would need to focus back on RWW’s editorial operations; my team needed me to guide them. I also wanted to get back to writing at least one post per day, the blogging rhythm that had gotten me this far. I needed to take care of business—bring home the bacon, as Andy Warhol used to say (according to Lou Reed). I had sponsors to email, FM Publishing revenue to monitor, stats to check, budgets to review, expenses to keep a tight rein on.
Suddenly I felt exhausted, so I made my way back to the elevators. I just wanted this business deal to be consummated. But to get that done—to drive it over the line—I would have to rejoin the masses on the streets below.
Lead image: View of New York City from the top of the Empire State Building; May 2008.
This post is part of my serialized book, Bubble Blog: From Outsider to Insider in Silicon Valley's Web 2.0 Revolution. View table of contents.
Next up: 034. Unacquired: ReadWriteWeb Pulls Out of the ZDE Deal
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