Nowadays, the man who is in many ways synonymous with the technology bubble of the 1990s when he worked as a Wall Street analyst has something to say about concerns that the valuation of social networks such as LinkedIn, Facebook or Twitter represents a new bubble: It isn´t one.
Henry Blodget Blodget is the Co-Founder, CEO, and Editor in Chief of The Business Insider, a blog about internet business trends and research. Blodget's influence increased in 2000, when he was voted the No. 1 Internet/eCommerce analyst on Wall Street by Institutional Investor, Greenwich Associates, and TheStreet.com. In early 2000, days before the dot-com bubble burst, Blodget personally invested $700,000 in tech stocks, only to lose most of it in the years that followed. In 2001, he accepted a buyout offer from Merrill Lynch and left the firm. Nowadays, the man who is in many ways synonymous with the technology bubble of the 1990s when he worked as a Wall Street analyst has something to say about concerns that the valuation of social networks such as LinkedIn, Facebook or Twitter represents a new bubble: It isn´t one.
After your career in Wall Street how did you end having the idea of creating Silicon Alley Media/Business Insider?
After I left Wall Street, I spent several years writing for publications like Slate, Euromoney, and Newsweek. I also wrote a book about investing and a blog called Internet Outsider. In 2007, the former CEO of DoubleClick, Kevin Ryan, approached me about starting a digital business publication. We started Silicon Alley Insider later that year, providing real-time coverage of the technology industry. The next year, we added a focus on Wall Street and the financial markets and changed our name to "Business Insider." We're now covering about half a dozen industries in depth, and we've grown to about 10 million readers a month.
How much important was the role of angel investors in the process to create a small company?
Angels were very important for our first couple of years. Venture capitalists tend to be skittish about "content" companies, so we needed to prove the concept before we raised institutional capital. The business did not need a lot of cash in the beginning, so it was perfect for individual angel investors.
What do you think are the key reasons for the new social media revolution we are living nowadays?
New tools have made it extremely easy for people to share digital information with their friends. That has led to an explosion of "sharing," which is helping to boost readership and commerce at a lot of major sites. I don't think "social" will take over the whole Internet, but it's going to continue to be a critical form of distribution for digital media.
What do you think is the future of news? Pay vs. free information?
Both. The more people need the information a company provides, the more they'll be willing to pay for it. Bloomberg has built a massive business by selling subscriptions to a powerful news and information database. Commodity news and information, meanwhile, will continue to be free (and companies that now charge for it will go out of business). And in between those two extremes, there will be lots of companies with hybrid models. We'll probably be one of them.
Do you think in 10 years people will still look at newspapers as a profitable model for real journalism?
I think it will take a long time for the paper-based model to disappear completely, but the concept of a "newspaper" will seem increasingly preposterous. I mean, think about it. If you weren't used to reading newspapers and someone came to you and said "I have an idea: I'm going to print the news of what happened today and deliver it to your house tomorrow," you would think they were nuts. The old newspaper model was wildly profitable, so as newspaper circulation declines, profits will shrink. But there are already many digital publications that have built real businesses doing real journalism, so the idea that the world is going to end when newspapers go bust is ludicrous.
Do you think all this crazy valuations (Facebook, Twitter, Groupon) are just the anticipation for another crazy tech bubble?
I actually don't think the valuations of Facebook and Groupon are crazy. They're not cheap, certainly, but red-hot tech companies that are doubling revenues and profits every year are never cheap. Twitter's valuation is much more speculative, especially because Twitter has yet to figure out a compelling business model. Across the tech sector, though, valuations aren't anywhere near the valuations we had a decade ago, even for the hottest companies on the planet, like Apple. So I actually think the idea that we're in a "tech bubble" is silly. I think we're in a cyclical boom--and tech is a very cyclical industry. If the broader market crashes, tech stocks will get hammered, but not because tech is a bubble.
We just saw how AOL bought Huffington Post. Are we going to see more deals like this in the future and do you see real synergies in this kind of deals?
Yes, I think we'll see a lot more of these deals. I think companies like Huffpo, Demand Media, Federated Media, Gawker Media, and others are demonstrating the power of the digital media model. This is a very different business than traditional media, and I expect traditional media companies to eventually enter it in a big way. I also think you'll see companies like Yahoo, Bloomberg, and others get more aggressive on the acquisition front.
