Issue No. 196: Matrimony

If you read enough from the early tech blogs, 2010-2012 was the height of the content amd commerce play. And today is but the graveyard of those attempts. When Ben Lerer purchased Jason Ross’s Jackthreads for $10 million, I remember my personal excitement. “There’s no way that it could fail,” I thought.

A decade later and we’re still reading content and commerce obituaries. Yet, the marriage thrives today in brands like: GoopMr. PorterPoler Stuff, Brewdogand even Fitbit. And New York Times acquired a sure bet in Wirecutter.

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’s media companies drives its revenue. In the digital publishing valuation chase, all revenue is not created equally.

Done poorly, eCommerce is low margin and customer acquisition is expensive. If this is the venture capital world’s impression of content and commerce, Lerer is correct – it would be more difficult to raise capital. At the time of the fracture between Thrillist and JackThreads, there was a premium paid for media companies. And eCommerce startups are commonly valued at 1-4x revenues, media groups can exceed 8x revenues. Parting ways with direct-to-consumer revenue and focusing on high-margin advertising was likely motivator in the divorce between the then-interdependent brands.

What founder would want to be an online retailer when one could 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 their necks.

See more of the issue here.

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