Billionaire investor Warren Buffett is known to love being in boring businesses like utilities, bricks and carpets. Buffett would probably love Industry Dive, a downtown Washington company that has updated a
century-old business model for the mobile age.
Industry Dive’s business is journalism, but its subject matter is of a distinctly unsexy nature. It lives in that growing space where journalists create narrowly focused products that the general public rarely sees but private industry eats up. Sports Illustrated and Vanity Fair, it ain’t.
Some recent scintillating headlines:
“How New York is incentivizing utilities to interconnect DERs under REV.”
“Will HEB smoke competitors with new barbecue drive through?”
“Novan spikes on positive antifungal results.”
Its Waste Dive site includes a podcast called “Talkin’ Trash.” If Industry Dive had a highlight reel, it would include its story about Microsoft billionaire Bill Gates investing in urine-powered energy. That grabbed a top slot on Google News a few years back. You’ve got to be a real noggin to love this stuff.
The business’s sweet spot is providing inside analysis to thousands of executives across 13 industries: construction; health; pharmaceuticals; technology; retail; the supply chain; utilities; waste; food; education; marketing; smart cities; and human resources.
It expects to gross $15 million in revenue this year in an industry that delivers profit margins of 20 to 30 percent. Industry Dive reinvests most of its profits back into the company.
The business has 600,000 daily subscribers to its free morning digital newsletter, most of whom are business decision-makers. Those are the readers. The advertisers are a different bunch. The ones around the edges.
They are the unglamorous companies that build and sell critical goods to Industry Dive’s executive readers. Think software, drug-testing consultants, garbage-truck manufacturers and consultants.
“We are focused on a specific audience that buys expensive stuff,” said co-founder and chief revenue officer Ryan Willumson. “Our customers are marketers looking for different channels to get their message out. We can charge a premium for that.”
You want to sell your conveyor belt to a plant manager at Nestle? Food Dive has the readers. How about some technology that tells Duke Energy how its substation is doing? Consult Utility Dive. United Parcel Service might advertise on Retail Dive to capture e-commerce businesses who need to get their goods delivered to your home on time.
“Think about electric utilities,” Willumson said. “They spend a whole lot of money on capital infrastructure, software and things like that. We are a site that provides news and insight on the industry. The waterfront of the industry.”
Advertisers pony up big for the rarefied eyeballs that Industry Dive delivers. The company said that it charges $60 for every 1,000 “impressions,” a digital industry metric known as CPM. Facebook may charge $2 to $10 for the same ad.
Willumson, a Penn State graduate, said that the company’s two big differentiators are its terse, bullet-pointed presentation and technology.
“We’re not trying to compete with Reuters and Bloomberg,” Willumson said. “What we are really looking to do is save executives time. Executives are really busy. We want to make sure that no matter where they are, they are having a really good experience [with Industry Dive] and they are cutting through the clutter.”
To save seconds for its customers, Industry Dive has a team of 12 full-time engineers, developers and designers who work on nothing but “mobile optimization.” That phrase, which was new to this reporter/dinosaur, is another way of saying you need to have really, really fast mobile performance that doesn’t eat up time with things like “buffering.”
Willumson pulled out his iPhone in a recent meeting in his office to illustrate his point. We pulled up Utility Dive, then tried a competitor. Utility Dive was several seconds faster. (I am wondering if that had anything to do with being in his office at the time.)
Willumson then pointed to the competitor’s site, which was difficult to read and slower in generating its advertising.
“This isn’t new,” he said of his business model. “This is trade publishing. This is a model that’s been around for 100 years. What we’ve done is we’ve taken a traditional model and applied it to digital. It’s an ad-supported trade publication.”
The three founders are in their 30s and 40s. Sean Griffey, the chief executive officer, runs the day-to-day operations; Eli Dickinson is the chief technology officer. They own most of the company.
They met while working for a Washington newsletter, which gave them a window into the business-to-business publishing world. They saw that many legacy print newsletters were reluctant to drop the lucrative print side and move to digital.
“Their digital strategy was to take the print magazine, scan it into a PDF and email it out. It didn’t work,” Willumson said.
The three saw an opportunity.
“We all had the entrepreneurial bug,” Willumson said. “When the Internet came around, people captured market share because legacy publishers said, ‘We’ve gotten this big, golden goose of print. It’s a battleship and it’s hard to turn a battleship, and we’re just going to stay with print.’ ”
The partners raised $650,000 from angel investors and their own contributions. They launched the company in January 2012 in a former corner market in Adams Morgan. Like most start-ups, the founders were the entire company and did everything: writing stories, selling to advertisers, developing products.
They targeted five industries that they wagered would entice advertisers: construction, education, marketing, utilities and waste. It took nearly two years to reel in the first big client. Siemens, the German-based manufacturing conglomerate, signed a six-figure deal for a year-long campaign targeted at utilities.
“It was real money,” Willumson said.
Thanks to Siemens, the last quarter of 2013 grossed more revenue than the entire previous 21 months.
As Industry Dive grew, it bounced to a rowhouse near Dupont Circle, which it shared with the Albanian Embassy. It later moved to the former headquarters of LivingSocial, the once-hot, daily-deals site that was absorbed by Groupon earlier this year.
The company experienced a temporary cash crisis when the U.S. Postal Service muffed its address change. The advertising checks didn’t come through.
“Who would have thought that a post office mess-up was a risk to our ability to operate as a business?” Willumson said.
In January, Industry Dive moved to its current fourth-floor digs at 15th and I streets NW.
The firm turned a profit after its second year and has reinvested most of its earnings into new hires. Like most digital publishers, the big cost is labor. The 75-and-growing head count is 80 percent of its costs. About 35 employees are full-time journalists.
Culture is big, and there are twice-a-year town halls, prizes and awards. The requisite foosball table is on the way. The hours are regular, Monday through Friday. Health, dental and eye care are subsidized. And you can take as much vacation as you want.
The company is making enough now that the co-founders and investors paid themselves a nice dividend at the end of 2016.
That’s something Warren Buffett would love.