The Deal Is Done: ReadWriteWeb Sells to SAY Media
In early December 2011, I travel to San Francisco for due diligence with SAY Media as it prepares to acquire ReadWriteWeb. Then, on the 14th, the transaction goes through and I no longer own RWW.
When I arrived in San Francisco on Saturday, December 3, I was hoping to close the deal with SAY Media by the end of the week. Sean and I would be in meetings with them from Monday to Wednesday, and I would fly back to New Zealand on Friday (I’d added Thursday just in case it was needed).
The contract talks weren’t as advanced as I’d have liked by this point. That said, I thought the SAY Media due-diligence team was much more efficient than what I’d experienced with ZDE a few years ago, and I was still hopeful the meetings would get us over the line. There were a few key points still to sort out: our request to keep receivables (to which they hadn’t yet agreed), the termination clause on my employment contract being super-tight (since I needed to be working for SAY for at least a year to get the second half of the sale payment), and my own tax situation (as usual, I was paying accountants left, right, and center to figure this out for me).
Kourosh Karimkhany was put in charge of looking after me for the three days. He was relatively new to the company, having joined in August as its head of integration—his role was to help companies like ours settle into SAY. I soon discovered that part of his role was to devise editorial strategies for acquired companies, and it turned out that both he and Troy Young had opinions on RWW’s editorial direction.
Kourosh was a good-looking guy in his forties who had a stylish dress sense. He usually wore skinny jeans with a brightly colored button-down and blue jacket, and his salt-and-pepper hair was slicked back. He looked exactly like how I imagined a Silicon Valley executive wanted to look; indeed, he’d worked at many of the usual tech media suspects throughout the years (Wired Digital, Yahoo, Condé Nast). I found that I got on well with him in person, although I felt underdressed compared to both him and Matt Sanchez. Perhaps I’d have the budget to upgrade my wardrobe once this deal went through!
Despite the friendly welcome from Matt, Troy, Kourosh, and the rest of the SAY team, they did play hardball over the three days I was there. We didn’t end up getting all the receivables—we eventually agreed that RWW would keep the direct-sales receivables (about $100,000 worth), but SAY would keep the FM receivables (over $300,000). This revenue had been earned before the date of acquisition, they said, and so it was needed to cover short-term staffing and other expenses. It was a fair point, but just one of a number of little things that SAY dug in about.
I also discovered they would not be giving all the writers full-time positions and in fact wanted to move most of them to a paid-per-post freelancer model instead of a set monthly sum. However, they did want a couple of writers based in San Francisco, so we discussed hiring Jon Mitchell and Dan Rowinski as full-time employees for those roles. We also discussed hiring Abraham and David full-time, and one or two of the channels team. Unfortunately, Robyn, Curt, Jared, and Tyler didn’t fit into the structure SAY wanted. So while I was pleased for the people who would get hired as employees, I was disappointed for the others in the team.
Troy and Kourosh were keen to expand the scope of RWW’s editorial vision. They wanted us to cover tech beyond just the web, so that we reached a wider range of tech consumers. They envisioned RWW covering hardware (like the gadget blogs) and even space technology. In one of our conversations, Kourosh mentioned that he was obsessed with nuclear energy—he sent me a Gizmodo article about Bill Gates funding a nuclear plant in China. “I’ll make sure I study up on nuclear reactors,” I replied, tongue in cheek. “Not sure I want them on my doorstep, personally, but agree those are the big tech challenges—energy in this case—that RWW can eventually tackle.”
As part of this expanded scope, Kourosh wanted to change our domain name to ReadWrite.com. I said I’d inquired about buying that domain back in 2007 but had balked at the asking price of $75,000. I admitted I’d made the rookie error of telling the owner of the domain that I ran RWW, which probably accounted for the high cost. Kourosh asked me to forward him my email conversation and to leave this with him. (SAY bought it that very week by pretending to be a random person unconnected with RWW; they paid much less.)
During my week in San Francisco, our respective lawyers and accountants were working furiously behind the scenes to sort out the various legal and accounting issues with the sale. Of course, being an NZ company made everything more complicated (same old story!), but our US lawyer, Camille Linson, was doing an incredible job making sure we made progress. If it wasn’t for her, I’m not sure I would’ve been in a position to sign on the dotted line by the end of 2011. But by the time I got back to New Zealand on Sunday, December 11, it did indeed seem like the sale would go through in the coming week.
The Big Day
I spent most of Wednesday, December 14, nervously waiting for my bank to confirm receipt of the first SAY payment. The announcement of the sale was scheduled for Thursday morning, and multiple news sites had been told under embargo. But I still didn’t quite believe it was happening, so I wanted to see the money in my bank account to make sure I wasn’t getting screwed. SAY’s lawyer Jason Crain had confirmed to Camille earlier that day that he’d wired the money. However, the international banking system was prone to delays because of intermediary banks, so I was worried it would take a few days to show up.
I’d phoned the bank several times that day and had been checking my online account at regular intervals, but nothing had turned up. By 5:30 p.m., I’d resigned myself to not getting the confirmation before the embargo lifted. But I decided to check my bank account one last time. I logged back in, and then I saw it: a seven-figure deposit! I sat back in my chair, put my hands on my head, and exhaled. Needless to say, I’d never seen that much money before, and I was pleasantly shocked. It was real.
The next morning, I got up at 3:30 a.m. The plan was for the news announcement from SAY Media and a blog post on RWW to go up at 5:00 a.m. my time (it was a Thursday for me, but Wednesday in San Francisco). I would tell the editorial managers, Abraham and David, an hour before the embargo time, and then the entire RWW team a half hour before the news broke.
I stumbled into my home office, located directly opposite my bedroom, and switched on my iMac computer. While still rubbing the sleep from my eyes, I saw an email from January Machold, SAY’s director of communications. She’d just discovered, via a Google Alerts notification, that a site called Adweek had broken the embargo. She said she’d called Adweek to try and get the story taken down but “wanted to give you a heads up ASAP so you can alert your staff.”
That woke me up! I checked Skype and saw a panicked message from Sean. I flipped to Twitter and saw that the news was beginning to bubble up there as well. I was also getting DMs congratulating me on the sale. By 3:40 a.m. my time, TechCrunch had posted a story based entirely on Adweek’s (the writer must not have gotten the embargoed news). This was problematic, since Adweek’s story focused a little too much on SAY’s hiring of Dan Frommer as a RWW “editor at large.” So the messaging, at least from my side, was already out of whack. Dan was well-known in tech media as a former Forbes reporter and an early employee at Business Insider. I was pleased that SAY had hired him, but in my draft post I’d only briefly mentioned it. Now it was part of Adweek and TechCrunch’s lede.
The breaking of embargoes was a known problem in the blogosphere at this time. The cynical goal was to get juice on social media before anyone else, as well as land the lead story on Techmeme. I found out later that it was an Adweek editor who had broken the embargo (the reporter profusely apologized to me). Regardless, I had a frantic back-and-forth on Skype with Sean and members of the SAY team. I hadn’t even had time to get a coffee, but it didn’t matter because I was running on adrenaline now.
Since members of the team were already pinging me individually about the news, I sent a group Skype message: “Guys, this wasn’t how I wanted to tell you this, but someone broke the embargo on this story. It was due to go public at 8am PT. If you did see the Adweek story, the gist of it is true. RWW has been acquired. I will give you all the full details about this as planned at 7.30am.”
By now it was time for my scheduled meeting with Abraham and David. I sheepishly confirmed the news to them and confirmed that both would become full-time employees of SAY Media. I promised we would have a proper talk later in the day, but I said I had to get our official blog post up ASAP. That I duly did, around 4:10 a.m. my time.
The meeting with the whole team went well. I apologized again that they’d found out about the sale via a broken embargo, but I don’t think anyone minded too much. They were obviously more concerned about what this would mean for their jobs. I explained that SAY Media would be hiring some of the editorial staff as employees, and that everyone else would go on rolling contracts for now—the same as their current status. Sean and I would have individual conversations with each person, I said.
The rest of the morning was a blur of emailing with reporters, talking to members of my team, and Skyping and DMing with people I’d not heard from in a while. I talked on the phone with my local newspaper, the Dominion Post, and arranged for them to come to my house at 1:00 p.m. for a sit-down interview.
By midday my time, the story of RWW’s acquisition was at the top of Techmeme—and thankfully, my blog post had finally taken over Adweek and TechCrunch as the lead story. The Dominion Post crew arrived as scheduled and did a video interview of me standing in front of a built-in bookcase in my hallway. After I saw it later that week, I was taken aback at how exhausted and drained I looked.
The following morning, a Friday for me, I finally opened my paper journal to acknowledge the big change in my life. “A new chapter,” I wrote, “I’ve sold RWW.” Then, as had become my habit, I rolled a couple of dice across the pages of my journal to get an I Ching reading. How I interpreted these readings typically depended on what I had going on my life at the time—and, frankly, what I wanted the I Ching to tell me. For the reading I got that Friday morning, I chose to transcribe the following into my journal: “The sixth line, undivided, shows the overthrow (and removal of) the condition of distress and obstruction. Before this there was that condition. Hereafter there will be joy.”
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: 066. Epilogue, part 1
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