Marc Benioff, founder and CEO of Salesforce, and his wife recently announced they agreed to buy Time magazine. The obvious next question: why?
Many have put forward a narrative of a philanthropic white knight swooping in to save the company with a generous impulse purchase. And a brief text message exchange between Benioff and the New York Times did nothing to dissuade us of that idea.
Benioff admitted a mere two weeks ago, he didn’t even know he would buy the media property. While he was quick to assert his long-standing passion for the magazine, his answers didn’t expose a particularly salient argument for its purchase and instead seemed somewhat perfunctory.
But it’s unlikely someone with Benioff’s track record of success would take on Time magazine without putting in some strategic thought.
With this in mind, I was interested to watch a recent interview of Jeff Bezos, who similarly bought the Washington Post in 2013. In the course of the discussion, Bezos articulated the thought process that motivated his purchasing decision, a decision he broke into a two-part framework.
Why Buy The Washington Post?
Donald Graham, son of the Washington Post’s legendary publisher Katharine Graham, was the first to suggest Bezos buy the Post. Bezos, he thought, had the requisites of a promising buyer.
Bezos countered that idea; he had no interest in such an investment. By Bezos’s own accord, he wasn’t looking to purchase or invest in the newspaper business at all. He had no knowledge of newspapers.
Graham reminded him it wasn’t newspaper expertise they were after, but mastery of the internet. Bezos said he would think about it. “I had to do some soul-searching….Is this something I want to get involved in?” he said. If he did decide to do it, he knew he would have to put "some heart into it and some work into it."
The financials of the business weren’t promising. Bezos admitted the business was “upside-down.” As a high fixed-cost business, they were bleeding money. It wasn’t an intrinsic operational issue, but the changing landscape. “The internet was just eroding all the advantages that local newspapers had. All of them.”
Instead, Bezos relied on intuition to guide him.
1. Is It An Important Institution?
Bezos began to think about the meaning behind the institution. Would the demise of this institution matter?
“If this were a financially upside-down, salty snack food company, the answer would be no. But as soon as I started thinking about it that way, I started to realize this is an important institution….
“It is the newspaper in the capital city of the most important country in the world. The Washington Post has an incredibly important role to play in this democracy. There’s no doubt in my mind about that.”
2. Are You Optimistic About Its Future?
But Bezos didn’t want to purchase it simply to slow the institution’s death if it was fated to fail. He wasn’t planning on providing operational hospice care for the Washington Post. Instead, he realized, he had to believe there was a pathway to recovery.
“I wanted [to be able] to look in the mirror and be sure I was optimistic that it could work. If it were hopeless that would not be something I would get involved in. I looked at that and I was super optimistic. It needed to translate to a global and national publication.”
Bezos drew his optimism from one simple fact. The internet destroyed most advantages newspapers had built. But it did offer “one gift: free global distribution.”
With Bezos's help, The Post developed a new strategy to “take advantage of that gift.” They implemented a new business model. The old model relied on generating a high revenue per reader. Their new focus would forego revenue per reader in favor of acquiring more readers. In other words, a volume play.
Early signs of success indicated the strategy was working. The Washington Post was quick to post profitability and a growing newsroom.
Intuition Not Analysis
Bezos’s approach in purchasing the Washington Post wasn’t exceptionally analytical, as he noted, "my decision-making process for something like this was definitely intuition and not analysis."
But intuition shouldn’t be misunderstood for ego.
The popular white knight narrative can be a vanity trap. And the risk in continuing to advance this theory is that others with the cash but no operational expertise or interest may think they too can sweep in, throw money at a media property, and send it on its way. The issue persists as other media properties, like Fortune and Sports Illustrated, are still searching for a buyer.
The last thing media companies need are “tech bros” purchasing their properties as trophies. Media companies don’t need a prince charming, they need an accomplice.
When Graham initially proposed to Bezos that he buy the Post, Bezos was disinclined. It was only after he realized he had something to offer that he decided to do it. “When I’m 90, it’s going to be one of the things I’m most proud of, that I took on the Washington Post and helped them through a very rough transition.”
Follow Stephanie Denning on Twitter: @stephdenning
And Also Read:
How Jeff Bezos Hires Great People
