Venture Voice – interviews with entrepreneurs

Entertaining Entrepreneurship

VV Show #49 – Rafat Ali of paidContent and contentNext

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Attention entrepreneurs dealing with the current economic downturn: This interview is for you. After working as a journalist for Jason Calacanis at Silicon Alley Reporter, Rafat Ali ended up broke in a market with a dearth of employment opportunities. To try to find a new job, Rafat created as an “interactive resume.” Luckily, no one hired him. From these humble beginnings, Rafat bootstrapped his blog holding company, ContentNext Media, for four years before taking a small investment from famed media investor Alan Patricof in June 2006. From its inception paidContent has doubled revenues each year and was recently acquired by UK-based Guardian Media Group for a rumored $30 million. Listen in as Rafat outlines the past, present, and future of online media, while sharing his war stories from another uncertain economic time.

1:35 Early career
3:25 Worked for Jason Calacanis
4:48 Working at – “Timing was all wrong.”
7:50 Learning on the job with paidContent, “I had no idea, zero idea.”
8:45 Growing and getting the word out – “It really did spread by word of mouth. There was no other way.”
9:20 Launch of, a sister site covering the mobile space
9:45 June 4th, 2002: The exact genesis of paidContent
10:57 “People thought that you would have to pay to access websites because the online advertising market had crashed.”
11:33 paidContent covers “all the ways in which content gets paid for.”
11:45 paidContent becomes a full time gig
14:03 Heeding the advice of Seth Godin: “A downturn is the best time to start a company.”
14:15 “I actually did e-mail [Seth Godin] a couple of years after that ‘you were one of the catalysts that helped me decide’… and he never e-mailed me back. And I’m kind of still angry about that…”
15:05 Early days and a limited budget
15:30 “There were at least two times I remember when my bank [account] had zero balance.”
17:23 Advice to entrepreneurs: Get your finances straight
18:53 The blogging lifestyle
19:04 “I had a phone and an internet connection. That’s all you really needed in my business.”
19:47 Early attention and awards
21:11 Was it fun?
22:04 From a blog to a business
25:10 Early revenues: “high five figures” after 2.5 years
28:20 4 years of bootstrapping: First investment came in June 2006
28:58 On receiving “a few hundred thousand” in financing from media investor Alan Patricof: “his validation was huge for us.” They never raised any more money.
30:15 The financing process
32:18 On Alan Patricof: “Immediately I felt like he got (our business).”
33:11 Giving structure to the business
35:32 Post-funding growth: new sites (contentSutra, “covering India’s digital content market”), conferences, seminars, research reports, and jobs sections
42:41 Main revenue streams: conferences, advertising, and sponsorships
43:40 Biting the hand that feeds you, i.e. reporting on your own advertisers
46:43 Competition: “It’s not a cliche… having competitors in the market helps you define yourself.” Note: One of the competitors was co-founded by Kevin Ryan
48:48 On dealing with the rumor mill: “We don’t publish rumors.”
50:45 “A gossip rag is tough to monetize.”
51:23 “You can’t define blogging as one industry.”
53:22 “We will probably see some more consolidation in the [online media] industry [in the next six to nine months.]”
54:40 Current state of ContentNext: 25-27 people, will add more but being careful, given the current economy
55:40 A “few million” in revenue
55:52 “We’ve doubled our revenue every year… and are on track to do it this year.”
56:17 On the economic slump: “Because we have multiple revenue streams in multiple countries, we will be able to weather [the downturn] a lot better.”
57:03 The exit: ContentNext is acquired by Guardian Media Group
60:00 On exit multiples: “Typically some of the big traditional media companies — and we are not big and we are not traditional — get anywhere from 3-5x forward looking revenues.”
60:51 Keeping the deal quiet: “Tried to keep it quiet… but somebody beat us to it.”
64:38 Rafat’s advice for media entrepreneurs in the current market
67:10 What’s next for paidContent?

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