INSUBCONTINENT EXCLUSIVE:
Local newspapers may be shuttering and people may be consuming most news on social media, but don&t tell Alex Mather that a subscription
news publication can&t grow like a unicorn startup
His 2-year-old sports publisher The Athletichas gained over 100,000 paid subscribers (60 percent under age 34) and has a 90 percent
retention rate.
Having already raised $30 million in its short life, the company announced a new $40 million Series C yesterday, led by
Founders Fund and Bedrock Capital
It reportedly values The Athletic around $200 million.
I interviewed Alex Mather (The Athletic CEO) and Eric Stomberg (partner at Bedrock
Capital) to understand what behind the breakout success, and why they think this publishing startup can scale to become a multi-billion
dollar company.
EP: Bedrock makes concentrated, contrarian bets
Explain how The Athletic fits that.
ES: I first met Alex and Adam in 2016 during Y Combinator
The popular view then, as it remains now, was that people just aren&t willing to pay for content online and that to win in media you have to
put out a high volume of free articles on social
The Athletic took the opposite approach
Everything is part of a paid subscription, with the belief that instead of writers needing to post 3-4 pieces per day, they should focus on
deeper stories that add value to paid subscribers over time
That worldview resonated with us
If you can create content at scale that people are willing to pay for, that a powerful economic engine.
There so much sports coverage
already out there, by professionals and amateurs alike, so why are people willing to pay for The Athletic
AM: While there appears to be an
abundance of content, most of it is aggregated, shallow content for abroad audience
We produce fewer stories and target a diehard fan
Our subscribers consistently tell us that no one else produces the same depth on a daily basis.
How did you determine the $60/year price
point
AM: We think of $60/year ($5/month) as less than the average NBA ticket
It a meaningful price but not prohibitive, especially when we do discounts in the first year
Like all subscription companies, whether we like it or not, we have to consider how our pricing stacks up against Netflix
For $10/month, you can subscribe to Netflix which is spending $8 billion per year in content.
Is The Athletic profitable
AM: We expand by
launching in local markets
The operational focus is on building a local team and becoming profitable in each local market
I can tell you that most markets are profitable in the first year — currently all of our markets over one year old are profitable and most
of those over 6 months old are profitable.
(Photo by Thearon W
Henderson/Getty Images)
Explain your growth strategy in terms of coverage: Which sports did you start with and at which level (local versus
national)
AM: Direct-to-consumer businesses have to really work to earn their subscribers& hard-earned money
We have to obsess over where we can be different
In the beginning, that was with hockey and baseball, because those have been de-prioritized by the bigger players
That shifted as we gained more subscribers: we needed to become comprehensive
We hired folks to cover the NBA, to cover the NFL, to cover soccer
Do subscribers usually come just for one local sport or for the broader bundle
AM: We&ve built a powerful bundle
A local newspaper has local politics, local restaurants, and then local sports
We have just the sports, but add a national perspective and a nationwide bundle
Most of our subscribers are &super bundlers,& meaning they subscribe to content from multiple cities plus at least one national product and
usually a college product that not local
We provide all that for significantly less than competitors.
Eric — as a VC looking for multi-billion-dollar exits, how are you analyzing
the potential scale of a subscription publication like this Even most people who are bullish on subscriptions believe it a choice of going
for a niche audience and staying small
ES: There are two things we look for in a subscription business: retention and a positive flywheel.
Retention
In any subscription business, the key question is: can they maintain their subscribers over time Most of them don&t
Spotify does, Netflix does, and The Athletic does as well
The Athletic is off the charts, which sets it up for scale
You want to see deep engagement over a very, very long period of time — years.
A positive flywheel
The more you build your subscriber base, the more you build your revenue base
That allows you to get better content, to hire unique writers, to build greater depth
In doing so, you attract people who weren&t ready to subscribe in the early days but now you have writers they follow and content they want
Technology is important here too: as you build a bigger platform with more content, serving the right content at the right time to each user
When this flywheel is working it actually quite hard to put a ceiling on the business.
Most publishers did a so-called &pivot to video& over
You&re anchored in writing
Why not more video at the start
AM: We&re obsessed with the consumer and all our research in the beginning said that people still like to
Advertising with text may not be as good as with video, which may be why so many other companies &pivoted to video,& but we think the
written word is still the best way to convey certain types of stories
It straightforward, it doesn&t require headphones.
There an incredible amount of talent out there that can produce these stories and that
has been cast aside by many entities
We saw it as an opportunity to give them great jobs and bring value to our subscribers
That has paid off for us.
What are your plans for video or other content formats in the future
AM: We raised this Series C with audio and
We can tell even more stories when we add in audio and video possibilities
Our goal is to serve the subscriber: some love to read, some love to listen, others prefer to watch
We look up to things like The Ringer, Andre the Giant on HBO, VICE News, Gimlet, and The Daily by The New York Times all as incredible
storytelling, and we ask ourselves &how can we do sports versions of those&
Why focus on hiring experienced, full-time writers rather than a
stable of contributors or curating from the vast pool of content by fans Lots of amateurs pay close attention to sports.
AM: What really
important to us is a growth mentality — that by Day 100 on our team a writer is thinking very differently
We&re providing lots of data, lots of feedback
We invest in great people who will figure this out with us over time
Also, scaling so quickly from 0 to 300 editorial staff was possible because we recruited experienced talent who know what to do already.
We
do have about 400 contributors as well
These are folks who may be lawyers or accountants but are passionate about the teams they cover
We are a way for them to reach a premium audience
We can pay them really well and give them world-class editors formerly with Sports Illustrated and ESPN.
How are you acquiring your
subscribers
AM: When we expand into a new market, we gain new subscribers by hiring writers who have a following already and by word of
mouth from existing subscribers
Then like any direct-to-consumer brand, we are acquiring subscribers through Google, Facebook and Twitter.
You financially incentivize your
writers based on them acquiring new subscribers through their articles or by promoting The Athletic with their followers online
That is very uncommon in publishing
Explain that strategy.
AM: It ties back to our focus on building for the long term and investing in talent that will grow with us
We like to assign incentives that give us the best chance of building a sustainable business and we think about compensation in that way
We give our team equity in the company and for many, we tie a portion of their comp to the performance of their team, sport, city
It a great way to share in the responsibility and success of the business.
At the bottom of articles, you ask readers to rate each story
as &Meh,& &Solid,& or &Awesome.& I wish every publisher did this
How do you use this data How do a writer scores impact them
AM: It about feedback loops
Our writers gauge feedback when they share on Twitter
This is another data point
It helps paint a more complete picture
NPS alone isn&t enough of course though
We look at whether articles drive new subscribers, drive deep engagement, drive comments, etc
We don&t use pageviews, but we certainly use metrics
Usually, this results in a writer producing very different work on Day 100 than they were on Day 0.
Explain the interaction between
It not unique to have a comments section: there are bad comments sections, good comments sections and comments sections that go unused
At a tactical level, how do you think about building community
AM: My co-founder and I met at Strava, the social network for endurance
I ran the product team and we were obsessed with community
We see an incredible connection between community engagement Subscriber retention
The question that drives us is how can we connect users in an authentic way, how can we connect users to our staff in an authentic way, how
can we connect users to athletes in an authentic way
We&re doing a lot of experimentation here
We have a distinct opportunity because of our paywall: most of the comments on The Athletic are saying substantive things
