Cheers! The New Year’s Memo 2017

• Uniques: 32,281,432
• MOM: -3% from Nov
• YOY: +2% from Dec 2015
• Comscore: 19 of all Lifestyle Sites

• Uniques: 25,003,829
  
• MOM: -2% from Nov
• YOY: +13% from Dec 2015
• Comscore rank: 9 of all Food Sites

• Uniques: 8,275,998
• MOM: -6% from Nov
• YOY: -20% from Dec 2015
• Comscore rank: 10 of all Home Sites

There have been ups and downs, twists and turns, huge successes and surprising drops, but during it all our company has grown, raised it standards, raised its capacity and created new features and content that we never would have been able to create before.

When you were all here in NYC I gave you a quick run through of our past we well as my aim for our next year. I want to recap that now and go further, pairing thoughts I’ve had since we did our two week OKR push as I’ve had time to let things settle in during this holiday. However, if you want to skip ahead and see where I end up, I’ll tell you now, right upfront.

This year, 2017, is a make or break year for this company. The entire challenge, I believe, lies in our ability to get deeply in touch with our readers on all levels – story, art, product, distribution, sales – surprising and delighting them with our ability to get them the information and inspiration they need to make their homes beautiful, organized and healthy quickly and easily.

But first, let’s go back in time.

For those of you who are new, just take a look back at the very end of 2009, seven years ago, when we were four years in and a very small crew of barely twelve people running, at the time, five full blown websites, including Apartment Therapy and Kitchn, and posting twenty to forty times a day on each. You will note, and this has long been our legacy, that our Tech Department is seriously underpowered.

We had nice growth in those early years, relatively speaking. It was slow, but steady and nothing really ever created a hiccup as people went online more and more and there was not much Google manipulation and Facebook and Pinterest didn’t exist yet for publishers.

Fast forward five years and we’ve just grown to thirty six people, with a big year of, count ’em, EIGHT new people! Nicely, a majority of that new cohort are still with us. 🙂

You will still note that Richard was the lone representative new hire into our Tech Department that year! It was still not growing very quickly.

And traffic in 2013-14 really started to change, as you can see above. When Google started to aggressively play around with their algorithm in 2013 it cut AT down 25% and shot K up 25% almost overnight. Kitchn took off like a rocket in 2014 and Apartment Therapy went through major repairs that began to get it back on track by the end of the year.

And revenue? After a tough year in 2011 (we lost one major paint client), we began to grow handily, despite the bouncing around of the traffic. We were extremely under-monetized, and during these years, building our Ad Sales team was an effort to build our own business after working with ad networks since 2008. Also note that nice big margin we kept through the years. That’s the money we saved each year, just in case times got tough. The problem we soon discovered was that all that saving was heavily taxed (55 cents on every dollar) so that the saving wasn’t so great, we were depriving the company of growing faster with this investment.

Many of you will remember Bugs Bunny who kicked off this year, starting our two year run to achieve our two year plan.

What was that plan? Double Revenue to $20M! And, oh yes, do a number of other things that we need to do to get there. Mind you, while all these goals are still entirely worthy, they have been subsumed for the next year with our tighter, quarter by quarter OKR process.

By the way, we’re totally on track with this goal, as we are with a majority of the other things we set out to do, which I’ve highlighted in green. Those that we’ve not succeeded on yet, are in red.

Traffic has been the really tough one over the past year. Despite continued gains by Kitchn, the truth is that both sites have seen their traffic drop below what we expected of this year due to a number of forces and pageviews, which we naively thought we could control, have continued to decline as mobile readership has continued to climb . At the same time, a few fast following website collection companies have snuck up into the Comscore Top 10, putting pressure on us as well. But we still have 12 months….

We did double down on our editorial and art objectives this year. While it took a full year to build out these teams, staffing both AT and K to levels we’ve never seen before, we have made tremendous headway here, which will continue in the new year.

Distribution is one of the areas were we’ve not yet gotten strong enough, and where we’re showing a particular weakness as the environment gets more challenging. 2017 will see a much bigger role for Aud Dev in working closely with Editorial to “send, measure, learn” with all of our content so that every piece has a destination before it’s even written.

Product has finally grown this year, did a ton of work and got to push out our first true redesign in four years. It was a big shift which achieved a lot of our goals, but it left us still trying to answer questions about losses in engagement. Amidst the redesign, necessary cleanup and building editorial features, what we didn’t get to are the investment pieces you see in red above. This is the area we’re going to crush into in 2017.

Video was one of the big highlights in 2016 as it grew, grew fast and not only met its play and revenue goals, it also delighted everyone with the endless stream of characters and stories that we were now able to bring to moving picture life. Video has truly given us an exciting new medium to feature, connect and inspire our reader community.

Without a doubt, we’re….

And we’ve invested a lot in the past twelve months to build this brand new engine…

Revenue is always one good metric, and I really have pushed to grow out ability to monetize ourselves more fully and therefore insulate us from outsiders. Growing 50% this past year was a HUGE successful effort that showed what we could do when we raised our game (and grew our team). This next year will be no less of a significant push, but we will not overstretch our resources to reach extra money, because this year I want to see how the investment of the past twelve months pays off. We will aim for $20M (our original 24 month goal) because that will be a sign of our healthy capability, but we will also put aside more money this year (bank some savings) so that we have a little more powder in the keg for 2018. There will be a healthy margin this year and while we push our Sales abilities into new realms, we will spend more carefully until we see what the future holds.

Traffic! Audience! Pageviews! Sessions! Mobile! This year we recorded our largest ever audience in January and then…. Ugh!

This where we turn our attention as one company in this new year so that we can figure out and reverse the industry wide stress that we went through this year. While many of our challenges come from forces that we can’t completely control, I am under no illusions that we are not 100% responsible for our fate here and, therefore, 100% responsible for figuring them out. No one else is going to help us.

We have been working with an old editorial formula, informed by passion and intelligence, but out of step now with the seas in which we find ourselves. As I mentioned in my presentation, Gut instinct can grow a small company, but only true Head intelligence can guide a big one. Our audiences are massive and moving in ways that we don’t fully understand. We need to learn new skills, data mastery in particular, so that we can become deeply acquainted with our large audience in all of its parts. These are growing pains, and we have a number of new people on board specifically to help with this.

These were our quickly cobbled together and awesome OKRs from the last three months. While we will all grade these, I went ahead and graded them myself. You are free to disagree with me.

As you can see I think we did very well in terms of organizing ourselves with new process and going after incredibly bold revenue targets (I would even raise them both to 9s). These were both huge objectives that every single person in the company had a hand in, so hats off to everyone.

We split and got lucky on audience growth as AT continued to gain traction and K wholloped the Thanksgiving holiday in record style. Nevertheless, we were not directly in control of these moves and a number of our fledgling experiments didn’t return the results we had hoped for. This, along with building with community at the center, are the two other components that we will tie together as we focus on this next quarter.

First, always remember our mission:

So, in light of the year we had, have we been firmly on mission?

I would say that all the data is telling us that we are not 100%. It sort of makes sense. We’ve pushed incredibly hard in the past year to build the company engine, we’ve taken on a lot of new people, many of whom are so recent that are still settling into their jobs, and we’ve built our Sales team into a award winning entity. We took our eyes off of readers. Now it’s time to focus on them.

For the next year:

BTW we’re not entirely alone in this. Other sites are wildly experimenting, sites once built on Facebook traffic are reeling, no one has seen this landscape before because it’s all new. The prize is going to go to the smart, nimble ones who Build, Measure and Learn.

It is indeed.

Columbia Journalism Review: There is a lot of angst in the industry about the business model of newspapers. How do you feel about your progress in solving the question?

Shailesh Prakash (CIO of The Washington Post): The first thing we all have to accept is that no one has figured it out. If no one has figured it out, then I don’t see any other option than to try and experiment.

We know this already. We learned this a year ago with The Lean Startup: in a highly unpredictable environment you have more move quickly in small steps, building, measuring and learning.

We have to remember that in all of this we hold two prized positions in our categories. We have worked incredibly hard, earned and won a lot in the past decade. There is, therefore, no criticism of the past. This is about the future and a chink we’ve discovered in our armor, which requires a new way of working.

And the payoff?

Beyond the lovely words of praise that I hear from people I meet that read the sites, I want to take it further, raise the bar and show them what more we can do for them via the web. We will..

This is where I ended just a few weeks ago, and I follow it now with a few further thoughts born of being nice and sick and sleeping a lot during this break.

The web is a highly transactional environment. It is not like traditional media vehicles that live on paper or the television screen. While what we write, photograph and video requires increasingly higher standards and many lessons learned from the past, the entire environment we operate in calls for the continued evolution of new forms. We have to continue to bend all of our minds around this and NOT simply reproduce that which we grew up with and, largely, still see around us.

The web calls for two way interactions that involve reader as much as writer. This is the promise and the excitement of our digital world. If we don’t realize this to our core and begin to grow our capabilities more strongly into this area, we will perish along with the traditional media outlets that are simply building the reproductions of the old on the web with new advertising.

We need not to think of ourselves as publishers or simply “makers of content” but as platform builders for a community that has real needs and problems that we can solve best from multiple directions. We’re in the delivery and connectivity business as much as we are in the creation business now.

Look at the amazing rise from the ashes of The Washington Post, which with only half the investment that got poured into R29 is now beating the NYTimes in audience size and pageviews. Listen to how they talk about their work now:

“The Post newsroom now talks unabashedly about journalism as a consumer product. “[Jeff] constantly tells us, ‘Don’t focus on the competition, focus on the reader,’ ” says Shailesh Prakash, the Post’s chief technology officer. It’s easy to see parallels between Bezos’s philosophy of growth as developed at Amazon — essentially, give the people what they want, as fast as possible — and the changes at the Post.”

How many of you ordered Christmas or Hannukah presents from Amazon and discovered them delivered in a blinding flash with remarkable surrounding contact via email and phone notification? Amazon creates tremendous loyalty out of it’s uniquely close relationship with its customers. How does this apply to newspapers??

“CJR: You talk a lot about being product-focused. What is the product here? Is it the journalism?

SP: It’s part of it, I think. But everything else is as important: the features on the product, can you save a story for later, is it on the platforms, the speed, the crash rate. All of these are parts of the product that ultimately have to go hand in hand with the journalism.

CJR: Journalists traditionally have had a hard time accepting this notion that journalism is a product that isn’t just journalism. I think that’s a hard shift for people to make.

SP: The penetration and enthusiasm around that concept is palpable at the Post. Jeff’s a product guy. We talk to him every two weeks. That’s what he talks to us about.”

CJR: But I do think that if there wasn’t someone like Marty Baron [Editor] to balance it out, people would freak out.

SP: Absolutely. I 100-percent agree. And there are examples in the industry of that pure Silicon Valley approach. Jam too much medicine in and the patient will die.

I stirred you all up during the retreat with a battlecry to focus on the reader this year, and I think you all heard it deeply and is resonated. You all came back with powerful OKRs designed to jump right into this work this quarter, however, they are all still quite broad, there are many with slight differences and our first work is to accurately describe our true one quarter OKRs and to then list in below what the projects are that we all agree to own and complete in these first three months. These projects are the details and we all need to be squarely focused as one company on them.

In the interest of finding this focus quickly, I am going to work closely with each department in the next ten days to line up a coordinated, thoughtful, inspiring list of projects that will plant seeds early in the year and give us the most momentum early on.

Of particular importance, Editorial, Product and Aud Dev are going to work together more closely than ever to build a framework in which the content creation, audience insights and product deliverability are all seamlessly integrated, measured and optimized continually.

No story will be written without knowing who it’s for and where it’s going. All of our editorial content will be broken down until we can see the full range of our efforts and how our audience responds to each category and vertical. All of our content will be constantly measured and put through our “build, measure, learn” loops. All of our technical features and design improvements will be constantly measured and put through the same loop.

The results of this and the planning all needs to be transparent and clear to the whole company.

We will innovate how we connect with and reach our audience in new ways led by the Product team as they build under the Annual Objective around Community.

Our relationship with our audience will take place in a creative and data informed laboratory, not at the end of a slingshot where we send stuff out and check every week or month to see how it went.

This is how we’ll slowly get to truly know our readers again. At the same time we will not treat them as one homogenous mass or try to make them into one. We will identify our core audience and, most likely, a number of healthy segments that we speak to differently or in different places.

One size does not fit all.

It feels like every year is a make or break year, with big challenges and new hurdles to face and this year is no different. The big advantage we have over every previous year however, is the sheer size and intelligence of the group that now makes this company hum. The other big advantage is the incredible tool we now have is the OKR process to radically focus all of our efforts and align every department, ensuring that we work quickly, efficiently and smartly, taking advantage of this tremendous opportunity and “land grab” of a landscape that we have in front of us.

I invite you all into this new year. Your job, each and every one of you, is to stay focused on our collective goals over these next four quarters, giving your absolute best, while keeping your ears and eyes open for new opportunities and problems that inevitably will appear. Each quarter we will learn and start again, and the collective intelligence of our company trickling up and down will continue to be the secret sauce that guides us through the forest to heights we’ve never seen before.

Happy New Year everyone, I can’t wait to get started tomorrow.

Best, Maxwell

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