Ben Lerer is the managing director of venture capital firm Lerer Hippeau Ventures and cofounder and chief executive officer of The Thrillist Media Group. Along with his father, Ken Lerer, who cofounded The Huffington Post, Ben, 33, has made more than 300 investments in some of the buzziest companies in media and retail, including Birchbox, Buzzfeed, BaubleBar, Refinery29, Mic, Warby Parker and Into the Gloss. Lerer launched Thrillist 10 years ago, and acquired men’s wear brand Jack Threads in 2010, turning the lifestyle site into a hybrid e-commerce play. From Thrillists’ headquarters in SoHo, Lerer told WWD that The Thrillist Media Group will likely realize more than $100 million in revenue, with about 75 percent of that coming from commerce and the rest from advertising.

This story first appeared in the May 27, 2015 issue of WWD. Subscribe Today.

What makes a good media investment? What do you look for?
For our media investments, we’re early-stage investors, so we’re always first money into a company, seed-stage checks. What that means is that we don’t have a ton of data to make a decision around business performance. We believe that it’s a really good time to invest in media because we’re at a place now where the pipes have been laid in the digital world. The world is smaller, thanks to search and social. Good content can get discovered and can spread quickly. Ten years ago, that wasn’t the case on the Internet. When we think of investing in media, we think of investing in people we believe are going to build organizations that create great content.

So you focus on the people behind the company?
People are the number-one thing for every sector that we invest in, but specifically for media, you want to invest in people with a vision for what they want to create. That means a focus on a specific audience or a specific category of content. It means somebody who is sensitive to the user’s needs and is customer-centric in the way that they carry themselves and operate. You want some sort of special sauce if you can. You want to think about a business that is better at something than everyone else.

What’s an example?
Buzzfeed. The secret sauce at Buzzfeed was that they were going to understand how to make content go social better than anybody else, and they had proven that. [Buzzfeed founder] Jonah [Peretti] had proven that at another one of our media investments, The Huffington Post. The secret sauce there was the way that they used contributors and bloggers and high-profile people who had real followings to come in and create content, and create that community. They had a strong voice in liberal politics in an important time, which was the first campaign that Obama was running. They really stood for something that established a strong brand and a voice that allowed them to move into all these other verticals.

What do you make of the crazy valuations of some of these digital companies? Buzzfeed is valued at $850 million and Vice at more than $2.5 billion.
There are a few different ways to look at these businesses — one is the size of the business as it exists today. How much revenue or profit do they have or what does their growth rate look like or what are their margins? Some of those metrics make it difficult to get to the big valuations that you see in the market. On the flip side, I would say, think about these as brands. What do they represent and how do you attribute value there for the ways that the brands will be able to extend themselves into different businesses or be able to grow in the future? I don’t think media is overvalued right now because it’s the early days of advertising dollars coming to digital.

When will those ad dollars come online?
It’s already happening. The bottom is not going to fall out one day. I think we’re all like: “How is print still holding on?” Brands are slow about how they think about shifting dollars, and then you’ll see big companies make some big decisions at some point. Some big luxury advertiser is going to say that they’re done with print, and then the dominoes will fall. That may not happen for a really long time.

Is there a bubble of digital media firms?
I don’t know that there’s so many. There’s like 20 leading businesses total — the digital media companies that are doing more than $25 million in advertising revenue digitally — and they are not overlapping in the same category. My dad talks about the comparison to now and what it felt like in the Eighties when you had the move from broadcast to cable, and when you went from a few big networks to vertical cable channels. I think you’re going to see the same thing online, digital destinations, brands that will be built in really important categories.

Can companies like The New York Times, Time Inc., Hearst and Condé Nast make the transition to the digital age?
Those are all very different cases. I think The New York Times is making that transition. It is still the most important content brand in the world. The biggest problem that The New York Times has is that it still has so much of the overhead that is from a different time. Their challenge is to right-size the cost structure for the digital world, and let the digital dollars catch up over the next five or 10 years. They will probably eventually be able to support the infrastructure that they used to have, but I think The New York Times has done a great job.

Who hasn’t done a good job?
Time Inc. I hate to say specific brands, but there are certain publications that they own that have done a terrific job digitally. You can find other ones that have done terribly, that while they were the leading print brand in a category, in a digital world they are not relevant. For those traditional guys, they just have to be comfortable with the idea that their print businesses are not going to be there to support them forever. They need to be very serious about investing in new forms of monetization.

Traditional firms are looking to e-commerce again. Condé Nast is making a big push. How do they succeed this time?
I don’t think that the way they are doing it will work. I don’t believe that the way that content and commerce fits today is that magazines make every article or every story that they write shoppable. The solution is more centered around the idea that media companies need to own their biggest advertisers or some of their own advertisers. Media companies need to get into businesses other than content creation and selling ads. Retail is one of the businesses that I think more media companies will begin owning — not necessarily directly integrating retail into the pages of their magazine. That’s the biggest mistake most make.

When you say “owning,” do you mean investing?
Or outright owning them — operating them separately — the way a Time Inc. might operate Sports Illustrated and Entertainment Weekly independently of one another.

Not all media companies have that kind of capital sitting around.
Time Inc. has that capital. Some other companies absolutely have the capital. Some of them can start these companies.

Condé Nast has tried to transform Lucky into an e-commerce play, and they are trying something similar with
These are examples of doing what feels like it could work without necessarily really doing the proper amount of thinking about if they should work.

If you were put in charge of Lucky tomorrow, what would you do?
The first thing I would do is go to their Web site for the first time in my life, then see if they have a print magazine still, and pick that up for the first time in my life. Then, I would go and see if they own any of their own social handles, and see if they are creating any of their own content. What I would do with any of these businesses is think about what the customer actually wants, and not what the business model theoretically or potentially says it can or should or might be able to be. I’d back up a step and say, “What problem are we solving? What hole are we filling in the customers’ life? What can we do that doesn’t exist that will make this awesome for our target audience?” Not, “Let’s jerry-rig our existing business to squeeze money out of something.” I can say this because I’ve been guilty of jerry-rigging and corner-cutting and everything that I think a lot of these traditional media companies are guilty of. It’s a short-term fix that doesn’t address a long-term problem, which is that a lot of these traditional companies own brands that used to create relevant content that now ride on the coattails of what they used to do [well]. They don’t actually know how to talk to modern consumers in the platforms and places that modern consumers communicate.

When you acquired Jack Threads, how long did it take for e-commerce revenue to overtake ad revenue?
It happened right away. Within a year, revenue from e-commerce was more than revenue from our ad business.

What traditional or digital media companies are you impressed with that you aren’t invested in?
Scripps is doing a really good job in the way that they kicked categories of content that have real communities around them and deep areas of interest. They’ve created strong brands that have multiplatform destinations, and have elegantly spanned content and commerce in a way I haven’t seen other traditional media companies do necessarily. For digital, I really like Brian Sugar’s business at Pop Sugar. He’s really built monetization that isn’t only reliant on brand advertising, but that spans into commerce.

What about that digital juggernaut, Vice. Is it expanding too fast?
They are the prettiest girl at the party and money just shows up all day long. Everybody says this about Vice, that they are better at building relationships with marketers than consumers right now; that’s not to say they don’t have great relationships with consumers, they are just really good at selling ads. They’ve built a cool brand at Vice. They’ve built something that feels really big and I’m sure it feels bigger than it is, but perception is reality.

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