July 21, 2007
(See Corrections & Amplifications item below.)
Just days after Laurel Touby's bank account grew -- by a lot -- the mediabistro.com inc. founder sounds exhilarated and still a bit unbelieving. This week, Jupitermedia Corp. said it agreed to pay $20 million in cash plus a possible $3 million over the next two years for the business Ms. Touby started in the mid-1990s by hosting cocktail parties.
Ms. Touby kicked off her venture when she mailed postcards to friends and acquaintances in the media industry, inviting them to gatherings to network and socialize. Sometimes, she walked around the bar with a hat, collecting contributions to cover the tab. "People got married, people got jobs, people got free-lance work," recalls Ms. Touby, who says she's "a broker of people."
By 1997, she was sending an email newsletter. In 1999, she built a Web site -- with the help of a friend's boyfriend -- and its job listings took off. Today, mediabistro.com, with close to $10 million in annual revenue, makes money mostly through job listings, ad sales, membership fees and writing classes.
The Wall Street Journal talked with the 44-year-old Ms. Touby, who once covered small business as a journalist, about how she funded her business.
The Wall Street Journal: In 1999, you had an idea that job listings could be the cornerstone of an online business, but you didn't want to go to friends or family for money. What did you do?
Ms. Touby: I started talking to everyone I knew. One thing I learned writing about small business is that you don't want to be undercapitalized. I got into the old-boy network. I met this guy he was cute, and we got to chatting. He looked like the young-old-boy network. He agreed to let me take him to lunch. I agreed to pay him a finder's fee, and he introduced me to his ex-girlfriend's father. This guy was my first serious meeting -- I wore my million-dollar suit. I was charging for the job listings and [the investor] had the vision to look at this crazy plan It took him five minutes, and he was like, "I'm in."
He put in $250,000. I said, "Do you know any leads [for more investors]?" I wanted someone who would be arm's length, not angels who often want too much control. Well, the old-boy network really works. He introduced me to [the person who would become] the lead investor, and he put in $750,000.
He put me through the ringer -- he didn't know media. They only gave me half of the money upfront, and wanted certain milestones, like revenues and profits -- hard things to do!
WSJ: Two years later, the dot-com bubble was deflating, followed soon by Sept. 11, 2001. What happened?
Ms. Touby: I was running out of money. I went back, hat in hand, to get the other half of the promised money [from the investors]. They gave me around $50,000 -- enough to get through the panic. It basically bought two months. For three months, I took a pay cut to zero. Much of my staff took a 20% pay cut. I put up my apartment for a $100,000 line of credit, though I ended up not having to use it.
WSJ: How did you turn things around?
Ms. Touby: We launched classes and seminars, and I realized this makes money. People loved it. In 2003, we had our first profitable month. By the end of 2003, we were really [consistently] profitable. Now, 15,000 people have gone through the classes.
WSJ: Did you go out looking for a potential buyer?
Ms. Touby: I don't just go knocking on doors. That's lame. But I'm always at conferences, always running into people. I was always friendly to potential buyers. I've been out and about -- speaking at conferences, on panel discussions. One reason you do that is to get your name and your company out there for a potential sale. I've always been strategic.
WSJ: When did buyers start coming around?
Ms. Touby: Over the past few years, we had a few hard offers and a bunch of whisper offers. Financial buyers wanted to pay low and sell in a few years. I always wanted a strategic buyer who would help achieve my goals, and I always knew in my head I wasn't going to sell for less than a certain number. We were growing at 30% each year, so it made sense to wait [for the right buyer]. Discussions started with Jupiter on March 16. We had lunch and argued. I think they got a bargain compared to what I wanted. But I think I'm going to get more out of working with them than going at it alone. I never really believed it until the money hit the bank. I was sure someone was going to snatch it out of my hands.
Write to Simona Covel at firstname.lastname@example.org
Corrections & Amplifications:
Jupitermedia agreed to pay $20 million in cash plus a possible $3 million over the next two years for mediabistro.com. An earlier version of the story incorrectly stated the possible $3 million additional payment would be over three years.