From Forbes, lessons from start up Refinery 29
A model for success
For any entrep wannabee, especially those in the IT Social Media Scene, this is the model. Sulit gets about 70,000 new posts a day according to RJ David (we do not know how many visits) but Refinery29 gets 8.5 million readers a month, with ad revenues that quadrapled for the last 4 years, and is now worth $100 million wow.
Here are the secrets/lessons:
1. Build credibility
2. Try the slow side too;
3. Timing is everything
4. Make it your own.
5. Know your weaknesses
1. Build credibility in your new market.
Unlike now-infamous Bustle.com founder Bryan Goldberg, R29′s cofounders Justin Stefano and Philippe von Borries didn’t make huge promises, at least not right away. They found an industry insider, designer and retailer Steven Alan, to open doors as their first investor. They spent countless hours stopping by individual boutiques around New York learning the business they’d be covering, like then-upstart retailer Rag & Bone. And they gave the content reins quickly to well-connected experts like editor-in-chief Christene Barberich.
“If you are in fashion and you are part of the digital world and interested in what’s going on there, you know about Refinery,” says designer Norma Kamali. And among the next crop, fashion students seem to agree. ”They started being on my students’ radar about two or three years ago,” says Gretchen Harnick, a professor of fashion marketing at Parsons The New School For Design. “Now you feel badly if a student doesn’t know them.”
“Every startup needs this formula: hard work, people, focus and time,” Massoumi says. “If you grow rapidly from the start, it can be hard to have a sustainable advantage,” Massoumi adds, pointing to the rapid churn in the startup community for applications dedicated to catching the photo and video sharing craze.
Unlike Snapchat with its $4 billion valuation off no revenue or even Twitter’s current exploding IPO, media startups need to prove they make sense in dollars and cents. R29′s been profitable for three years and its advertising growth has kept investors interested even as it’s flopped with its commerce offerings.
3. Know what you can’t do well…
“If someone came to us and said, ‘we’ve figured out how to string 20 million users,’ but they haven’t validated their audience on the advertising side, that’s far less interesting,” says Dan Marriott, whose Stripes Group just poured $20 million into Refinery29 in a Series C round. Playing the traffic game, Marriott says, isn’t a good way for a startup to impress investors.
R29 shuttered its commerce offering mid-year after trying several major initiatives, none of which showed scale-able success. Commerce players get much higher valuations and revenue than the typical digital media property. And running a successful content and commerce site at once would’ve helped R29 break out from a crowd of medium-sized digital brands, investor Chris Fralic of First Round Capital told me in Aug.
Stefano and von Borries say they’d jump back into direct commerce if someone else can figure it out, but for now, that more rapid growth is not in Refinery29′s future. Instead, the company’s doubled down on more content like video and new verticals. Eventually personalized brand pages could boost its native advertising offerings, as well.
“They’ve been successful because they’ve been aggressive at finding ways to combine edit and advertising,” says Troy Young, a former adviser and minor investor through his role as president of digital at Hearst . “They responded to the market demand in a post-banner [ad] world.”
What that means, Stefano says, is that R29′s writers don’t have to worry as much about scoring high page views. “With native advertising, revenue per page goes substantially up,” he says. “That lowers the threshold of profitability for a story.”
Refinery29′s founders and investors agree that the New York startup landscape is very different today than in 2005. There’s plenty of good for startups–Stefano and von Borries say they’d have started out in a co-location work space if starting today, and there’s more engineering talent and investors’ dollars to go around. But R29 also benefited from building out its platform in what would prove lean years for digital media. Online media is more crowded now, from fashion blogger Tavi Gevinson (who was 9 when R29 was founded) to Buzzfeed, PolicyMic, and yes, even Bustle.com.
“If there’s one piece of advice I would give an entrepreneur entering this space, I would say focus on what you are really good at. For us, that’s content,” Stefano reflects.
It took Stefano and von Borries some lumps to remember that. But it’s something young entrepreneurs can ask themselves every day.
A model for success
For any entrep wannabee, especially those in the IT Social Media Scene, this is the model. Sulit gets about 70,000 new posts a day according to RJ David (we do not know how many visits) but Refinery29 gets 8.5 million readers a month, with ad revenues that quadrapled for the last 4 years, and is now worth $100 million wow.
Here are the secrets/lessons:
1. Build credibility
2. Try the slow side too;
3. Timing is everything
4. Make it your own.
5. Know your weaknesses
1. Build credibility in your new market.
Unlike now-infamous Bustle.com founder Bryan Goldberg, R29′s cofounders Justin Stefano and Philippe von Borries didn’t make huge promises, at least not right away. They found an industry insider, designer and retailer Steven Alan, to open doors as their first investor. They spent countless hours stopping by individual boutiques around New York learning the business they’d be covering, like then-upstart retailer Rag & Bone. And they gave the content reins quickly to well-connected experts like editor-in-chief Christene Barberich.
“If you are in fashion and you are part of the digital world and interested in what’s going on there, you know about Refinery,” says designer Norma Kamali. And among the next crop, fashion students seem to agree. ”They started being on my students’ radar about two or three years ago,” says Gretchen Harnick, a professor of fashion marketing at Parsons The New School For Design. “Now you feel badly if a student doesn’t know them.”
2. Your app probably isn’t the next big thing. Try the slow game.
What’s most impressive to advisers like Cyrus Massoumi, ZocDoc’s
cofounder and CEO, is that R29′s founders stayed calm–and didn’t go at
each other’s throats–during its first five years of relative obscurity.“Every startup needs this formula: hard work, people, focus and time,” Massoumi says. “If you grow rapidly from the start, it can be hard to have a sustainable advantage,” Massoumi adds, pointing to the rapid churn in the startup community for applications dedicated to catching the photo and video sharing craze.
But to play the slow game, you need cofounders
who are in the same boat. R29 actually lost its third cofounder,
Jonathan Forgang, after its first few months, but Stefano and von
Borries have worked at neighboring desks for years and still vacation
together. (Forgang says he remains a shareholder and a friend.) “What
you go through as an entrepreneur is a lot like a marriage,” says
Massoumi.
Stefano and von Borries are also advocates of accepting lower
valuations in fund-raising in exchange for maintaining strong personal
control. That’s part of why R29 was able to weather the turbulence of a
painful seed funding raise and stay steady until its profitable years.Unlike Snapchat with its $4 billion valuation off no revenue or even Twitter’s current exploding IPO, media startups need to prove they make sense in dollars and cents. R29′s been profitable for three years and its advertising growth has kept investors interested even as it’s flopped with its commerce offerings.
3. Know what you can’t do well…
“If someone came to us and said, ‘we’ve figured out how to string 20 million users,’ but they haven’t validated their audience on the advertising side, that’s far less interesting,” says Dan Marriott, whose Stripes Group just poured $20 million into Refinery29 in a Series C round. Playing the traffic game, Marriott says, isn’t a good way for a startup to impress investors.
There are better valuations in e-commerce than
media, too. But with commerce, Refinery29 has pushed the wrong buttons
so far. “We broke our backs trying to get this commerce thing working,
and it’s really freaking hard,” Stefano admits.
Continue reading…R29 shuttered its commerce offering mid-year after trying several major initiatives, none of which showed scale-able success. Commerce players get much higher valuations and revenue than the typical digital media property. And running a successful content and commerce site at once would’ve helped R29 break out from a crowd of medium-sized digital brands, investor Chris Fralic of First Round Capital told me in Aug.
“Cracking the code on commerce can make [R29]
bigger and more important, it takes them to a whole another level of
multiples and the interested parties to try to acquire then go beyond
the typical suspects,” Fralic said before R29 pulled the plug.
4. …And own what you can.Stefano and von Borries say they’d jump back into direct commerce if someone else can figure it out, but for now, that more rapid growth is not in Refinery29′s future. Instead, the company’s doubled down on more content like video and new verticals. Eventually personalized brand pages could boost its native advertising offerings, as well.
“They’ve been successful because they’ve been aggressive at finding ways to combine edit and advertising,” says Troy Young, a former adviser and minor investor through his role as president of digital at Hearst . “They responded to the market demand in a post-banner [ad] world.”
What that means, Stefano says, is that R29′s writers don’t have to worry as much about scoring high page views. “With native advertising, revenue per page goes substantially up,” he says. “That lowers the threshold of profitability for a story.”
The company’s most recent investor says he’s
actually more interested in the Refinery29 brand as just a media play.
“They could’ve lost their way. I’m glad they didn’t succeed at a level
in commerce that took their focus from the media side,” Marriott at
Stripes says. “You don’t want to wake up and be a full priced retailer.”
5. Then find the right time and place to give it a go.Refinery29′s founders and investors agree that the New York startup landscape is very different today than in 2005. There’s plenty of good for startups–Stefano and von Borries say they’d have started out in a co-location work space if starting today, and there’s more engineering talent and investors’ dollars to go around. But R29 also benefited from building out its platform in what would prove lean years for digital media. Online media is more crowded now, from fashion blogger Tavi Gevinson (who was 9 when R29 was founded) to Buzzfeed, PolicyMic, and yes, even Bustle.com.
Finding the right time to launch, of course, is
an inexact science and not one that founders can necessarily control.
But Refinery29′s story also reinforces an old startup mantra that
remains true with each new wave of innovation: don’t get lost in
something that you can’t do the best.
And that’s perhaps the most important lesson to take away from
Refinery29 even if you’ll never read a story on its site. Stay lean,
don’t take too much money. You’ll buy the time to tinker and fail
without sinking the startup as a whole.“If there’s one piece of advice I would give an entrepreneur entering this space, I would say focus on what you are really good at. For us, that’s content,” Stefano reflects.
It took Stefano and von Borries some lumps to remember that. But it’s something young entrepreneurs can ask themselves every day.
Have your own founders’ story to share or thoughts on Refinery29′s journey? Let me know in the comments and or on Twitter: Follow @alexrkonrad
