was budgeted, at least initially, to burn through $18 million in three years, with (wildly optimistic) hopes for advertising revenue of at least $10 million in that same time.
Um, that would be a total of $28M to run a news aggregator for 3 years. Riighht.
What's interesting to me though, is not the site's financing. Nor is it the bad name. Rather, its the fact that Tina Brown is at the helm of the site.
I remember when Tina Brown left Vanity Fair in the early 90's to take over at the New Yorker. My recollection is that while many thought the combination of a flashy leader like Brown and a serious literary magazine was a marriage destined for disaster, in the end the New Yorkers circulation/ revenue were significantly boosted during her tenure.
But that was before the internet was so prevalent. Before traditional marketing channels like TV (and magazines) were found to be less effective than Google. That happened at a time when the association of a flashy personality and a media product would draw the attention of the other media outlets, and thus assure its success. But those days are long gone.
Celebrity backed companies are a funny thing. I'm racking my brain to think of one that has actually worked for an online property. Sure celebrities, like the rest of us, have used existing websites to boost their own exposure. Bands, actors, etc. do this on MySpace everyday. But when has a famous people used his or her own fame and exposure to boost the awareness of an online property they are running?
The only example I can think of that kind of comes close is Arianna Huffington and the Huffington Post. But this isn't a home run, yet anyway. That site has good traffic numbers, but not a home run. Otherwise, the other celebrity backed websites - as far as I can recall - don't seem to go anywhere. (One of the reason, I think, is that the web likes humble, but that's for another post).
Which then begs the question: if you are Barry Diller, i.e. a veteran of the online world, why would you throw $28M behind a start-up in the notoriously poor performing (revenue wise) news space who's sole asset at this point seems to be Tina Brown's name?
I don't know, if it's me and I need to pick a high profile CEO for a new news aggregator, I'd throw a bunch of money at someone like Marshall Simmonds, not Tina Brown. Because he's not a flashy name, I'm guessing he would be a lot cheaper. But more importantly, given the dynamics of the online world, he seems better suited to make the site a success.