WHAT MAKES NICK TICK? The smartest publisher in the blogosphere says there’s no money online. So why doesn’t anyone believe him? BY GREG LINDSAY ICK DENTON WON’T TALK TO ME. friends jealous. I’ve been after him for weeks. But the But now, clearly, I am unloved. man behind the wittiest, bitchiest, So I’m a bit surprised the morning I receive Nmost irresistible weblogs going—the this e-mail: gossipy Gawker and Wonkette, the gadget pag- eant Gizmodo, and the smut aggregator Flesh- From: Nick Denton bot—is shutting me out, claiming he’s over- To: Greg Lindsay Subject: exposed. He’s so serious about not commenting Calacanis Date: Tue,13 Apr 2004 11:16:27 -0400 that he’s ordered his stable of blog writers not to talk to me either. Hey, Greg—not sure whether you’re still doing your business-of-blogging story. To drive home the point, Gawker gives me But here’s a possible peg. the silent treatment. I—and my media stories [Jason] Calacanis has commitments for for Women’s Wear Daily—had been a running $4M from Mark Cuban and an Israeli in- joke on the site, which once sized me up as a vestor, possibly Yossi Vardi. You former “parboiled-ham-in-a-suit” and relent- didn’t hear it from me. lessly questioned my sexual preferences. Like I told you, Calacanis is a much (“Greg Lindsay Comes Out” was a headline better business story than I am. last fall.) Gawker is so beloved in New York’s Nick media circles that this actually made my 128 BUSINESS 2.0 JUNE 2004 PHOTOGRAPH BY MICHAEL EDWARDS HIGH TURNOVER Bloggers Meg Hourihan, left, and Pete Rojas no Back of the Envelope: Gawker Media longer work for Denton. Monthly Monthly Site Launched Current editor Who’s it for? visitors revenue (est.) GIZMODO August 2002 Joel Johnson Gadget freaks 537,000 $6,000 GAWKER December 2002 Choire Sicha New York chatterati 456,000 $6,000 FLESHBOT November 2003 John D’Addario Pornoisseurs 519,000 $5,000 WONKETTE January 2004 Ana Marie Cox Beltway buffs 250,000 $3,000 DEFAMER May 2004 anonymous Hollywood habitués N/A N/A Could Denton be capitulating? Maybe his Calacanis gambit was skimming off the demographic cream—the influential chatterati. a bid to pique my interest. Jason Calacanis, as you may know, was How does he turn that cream into milk money? The revenues at his biggish during the bubble years as, among other things, the pub- flagships, Gawker and Gizmodo, have nearly tripled since last fall, to lisher of the now-defunct Silicon Alley Reporter in New York City. about $6,000 a month each. Both are in the black, several Denton as- He’s the closest thing Denton has to a competitor these days. But sociates claim. Based on current rates and inventory, a quick calcu- as a blog impresario, he’s not a business story. lation suggests Denton is grossing about $250,000 a year. Denton, on the other hand, may be quietly figuring out the Given the rate of growth, he could be taking in $1 million an- most vexing problem of new media—how to make it pay. That’s nually by next year—and that’s assuming he doesn’t add more sites. the more provocative scenario, anyway. Less interesting is the pos- Naturally, he does plan to add more sites: Defamer, an L.A. version sibility that he’s simply manipulating me to write about him. He’s of Gawker, was to open by this magazine’s press time, and Den- an expert at getting the right kind of buzz, after all, which helps ton is said to be considering launching a travel blog. inflate his properties’ value. And that could be the real endgame: “My guess is that Nick has been downplaying the size of the finding someone to unload his business on at the right time. Sound opportunity of blogging,” says Fred Wilson, a venture capitalist and too cynical? One of Denton’s first companies threw networking blogger himself, “because he’s not excited about the prospect of parties for dotcom naifs. And that one sold for millions at the top lots of capital coming in and creating competition for him.” of the bubble. It sounds ambitious for a man who’s consistently talked down Any way you look at it, you have to conclude that Denton is his own financial ambitions. So what really makes Nick tick? wily. Consider his blog business model. A decade ago, media com- panies sank untold millions of dollars into building and staffing ENTON CAME FROM NOWHERE, ALTHOUGH HE websites. Most of them are still in the red. It turned out that most wasn’t a nobody. Half-English and half-Hungarian, he Net users don’t want to pay for content, so new-media publishers Dwas Oxford-educated and lucky to be in Budapest when the had to rely on the trickle of revenue that came from online ads. Berlin Wall fell. He covered the end of communist Romania for a Denton learned from that debacle and embraced weblogs, which London newspaper and parlayed that into a gig at the Financial are the LEDs of the media firmament: They require almost no Times through the ’90s, eventually covering Silicon Valley. Then he resources to run. His mini media empire, Gawker Media, has no caught the bug, having perversely decided that journalists were ex- offices, no proprietary technology, and no full-time employees, pendable. He launched a company called Moreover, whose goal yet it can attract audiences big enough to generate ad revenue. was to aggregate all the world’s news on one site, disintermediating Better still, the “content” is virtually free, since it consists of little most of his former profession. (This is a theme; when I first met more than snarky comments pointing to other sites (mostly news- Denton before working on this piece, he promised that Gawker papers and magazines) that really do spend money or time creat- would commoditize my then-job of media reporter.) ing content. It’s so dumb, it works: Denton’s blog model is lean- Back in London, he began hosting dotcommer parties that grew er than a George Foreman turkey burger. And it’s already returning so big, he and his three partners decided there must be a revenue a modest profit—with the potential to deliver substantially more stream in them somewhere. After throwing half a dozen events, within a few years. Denton bounced between London, San Francisco, and New York, Of course, if it were that simple, everyone would be doing it. raising money for Moreover. His partners carried on with what be- Denton has figured out a couple of tricks. By offering fame rather came First Tuesday—a face-to-face network that connected entre- than fortune, he’s persuaded talented writers to work for him for less preneurs with investors over drinks—which they sold at the peak money than they’d make pulling cappuccinos at Starbucks. And he of the bubble, in July 2000, to the Israeli firm Yazam. Though no one picks subjects for his blogs that are irresistible to the chattering involved will say how much, if anything, Denton himself made from classes—media, power, sex, and toys. In the end, it costs Denton a the deal, the four partners and their investors got a reported $50 few thousand bucks per month for each site, in return for a month- million in cash and stock in the combined company. Six months ly audience of about 1.6 million young, media-savvy readers. Sev- later, Yazam sold First Tuesday for a pittance and shortly thereafter eral Internet user studies recently concluded that the total blog- sold itself to a prison-labor operator. It was a valuable lesson. ger audience is only 13 million to 14 million readers. Denton is “Nick understands the difference between valuation and value,” TIMES K. YEE/THE NEW YORK MARILYNN 130 BUSINESS 2.0 JUNE 2004 says one of First Tuesday’s co- gave Spiers a weeklong audition founders, former Wired UK ed- for a staff job in September, itor John Browning. “He’s per- Denton replaced her. fectly able to say, ‘This is He quickly launched two undervalued and worth invest- more blogs. First was Fleshbot, ment,’ and he’s equally willing making Denton a pornograph- to say that the market is valu- er-by-proxy with its hard-core ing this business at more than links. Having timed Fleshbot’s its underlying worth.” Denton’s debut for the day the Paris modus operandi is to buy the Hilton tape went wide on the former and sell the latter. Web, Denton earned another While negotiating First Tues- plug in the New York Times. day’s sale, he was simultane- Wonkette followed in Janu- ously trying to raise a decisive “WE DON’T HAVE ary, filling a niche that was gen- round for Moreover. He suc- uinely underserved: scorched- ceeded, finding $21 million, but TO KOWTOW. WE earth gossip from inside the stepped down as CEO in Au- Beltway. Its editor, old new-me- gust 2001 in favor of someone DON’T HAVE TO dia hand Ana Marie Cox (once with more salesmanship. He SUCK UP.” the editor of the now-closed then left for London to care for Suck.com), predictably roiled his ailing mother. Moreover still NEW NEW MEDIA? Denton says he’s in it for freedom, not money. the locals, leading to the obliga- slogs toward profitability today, tory Times piece.