All summer there seemed to be a race to get a piece of Vice Media, with companies such as Fox, Disney and Time Warner all reportedly wooing the growing media powerhouse that began as a punk magazine. On Thursday, Vice announced that Technology Crossover Ventures and A+E Networks had agreed to a combined $500 million investment to grow the site’s news operations.
Sites like Vice and Buzzfeed are particularly good at attracting a young digital audience. Buzzfeed, too, recently received an infusion of funding with a $25 million investment from the venture capital firm Andreesen Horowitz.
We spoke on Thursday to Vice’s newest investors at Technology Crossover Ventures about their $250 million stake in Brooklyn-based Vice. The following is an edited version of an interview with Woody Marshall, a general parter of the Palo Alto-based TCV, which has also invested in Netflix and Facebook:
Cecilia Kang: Media was supposed to be dying, right? Why did a tech capital venture firm with investments in Electronic Arts and Netflix decide to bet on news?
Woody Marshall: Media isn’t dying. Well, not all media. First of all, it’s not like the consumption of information is going down. What’s dying is the traditional print publications that haven’t shifted away from static printed word to new media. A couple of big opportunities we are playing on is the move to mobile and the move to video, and our underlying view is that attention will go to the companies with quality content on those mediums. That’s what’s exciting about Vice. When they talk about an authentic voice and all the shifts of consumption, its a perfect storm for a massive demographic trend f0r millennials.
Why do millennials flock to Vice?
People who are defined around that group of 18- to 35-year olds are totally frustrated with traditional media. There’s the liberal ideology on one side, the conservative ideology on another. All they want is a good story. Vice is, pardon my French, no [expletive] and with an authentic voice that is delivering on mobile and online in a way that is most relevant for those users.
Vice is making money, but its valuation of $2.5 billion is also lofty. How can they grow to justify that valuation? They are competing with a flood of online content — not just direct competitors for news — who all want to get in front of millennials.
Yes. There is a ton of noise out there, especially for that audience. That is very true for millennials, who have a lot of distractions and opportunities to spend their time differently. So we start with Vice by looking at the quality of their content. People seek Vice’s information because it is very relevant and because of the stories they tell. If you look at Vice News, and how they come at food and “Munchies,” and how they come at technology, and how they come at music, you see that the content they generate is very high quality.
What will Vice look like in three years? Founder Shane Smith said at a Tech Crunch conference it will be 10 times bigger than CNN. Do you think he can really pull that off? And what would that look like? Would a Vice audience see more of what Vice does today — just 10 times more of it?
If you look at their reach and engagement today versus 12 months ago, Vice has been on an exponential growth path. It’s ISIS piece was picked up by significant, traditional media publications. My view is that if you create quality content that is no [expletive], tell different stories and leverage tech platforms that are happening today, you will continue to accelerate viewership. Vice’s HBO show is a perfect example. That is a channel of traditional television. Traditional broadcast is trying to get on the Web and a Web company was able to executive on the broadband side.
Will it ever be a site catering to other groups, beyond millennial males?
A: If they continue to focus on quality content, their demographic will expand naturally. They did a five-part series on the Islamic State that was remarkable journalism and is an example of the kind of journalism that is not just for millennials. Before you said media is dead. Yes, many places can’t do true, real investigative journalism. Vice is scaling this content and great stories.
As Vice beefs up on investigations, I’m reminded that that journalism is expensive. Again, does that make sense for the business?
A: Vice has a remarkably intelligent and gifted group of young smart kids creating their journalism. They are leveraging all the technology advancements of today in creating content at the lowest cost. Think of most media companies with big silos of old technologies for creating audio and video and people are inflexible because of the massive capital expenditures they’ve made. These days, all that technology is available on a laptop.
So what happens when the New York Times and CNN start equipping all their staff with those cheap laptops with all the equipment they need for great online journalism. In fact, they are doing that now.
Great. It’s not a zero sum game.
Is there room for all these new media players?
Yeah, why not? People aren’t consuming less information. They are consuming less crap information. The people who need to worry are the people who are just repurposing headline stories. The people who are doing celebrity topless photos at the beach. That to me is what is going to get marginalized. If the New York Times does the same kind of quality of journalism as Vice, great. But Vice will be better positioned because it is today the only company with significant global reach –in 36 countries — and significant engagement with one of the fastest-growing audiences.
How will technology play out in Vice’s success?
When we met with them, it was very much a meeting of the minds. With the other Internet businesses we invested in, we were very patient and long-term investors. We were invested in Netflix in the late 1990s. When we think platforms shift, some growth opportunities aren’t measured in quarters, or years, or many years. Again, I go back to their quality of content. Tech is an enabler for Vice. Content is king. Some people debate whether it’s content or distribution that’s king. I’ve been investing for 40 years and there is no substitute for quality content.
Who is Vice’s competition?
We look at Vice as a stand-alone in what they are doing. Buzzfeed is interesting. But are they competitors in that people would read something on Vice and then read something similar on Buzzfeed? Maybe yeah, but very loosely interpreted.