Issue No. 196: Matrimony

If you read enough tech blogs, 2010-2012 was the height of the content / commerce play and today is but the graveyard of those attempts. When Ben Lerer aptly purchased Jason Ross’s Jackthreads for $10m, I remember salivating. “There’s no way that it could fail,” I thought.

A decade later and we’re still reading content and commerce obituaries. Yet, it thrives today in brands like: GoopMr. PorterPoler Stuff, Brewdog, and Fitbit.

There is an old adage, “it doesn’t matter how you make your money.”

For many businesses, this is true. But one of the reasons that the marriage between Jackthreads and Thrillist failed? It does matter how Ben Lerer makes his money. In the valuation chase, all revenue is not equal. There was a premium paid for media companies. Whereas, eCommerce startups are often valued at 1.5-5x EBITDA, media groups can exceed 8x EBITDA.

Who’d want to be an eCommerce company when you can privately raise money as a media company? This is at the root of Thrillist jettisoning Jackthreads. And coupled with some severe, margin-eating tactical errors, the former Columbus eCommerce retailer couldn’t bounce back.

We are going to see more (not less) consolidation of digital revenue modeling. And the companies that manage it correctly will be around for quite some time. Yes, even with Amazon breathing down all of our necks.

 

See more of the issue here.

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