Our interview today is with Richard Rosenblatt, co-founder, Chairman and CEO of Demand Media, Inc. (www.demandmedia.com), which raised over $220M in venture funding to develop a unique new media firm. Rosenblatt is the former CEO of Intermix Media and Chairman of Myspace. Richard turned Intermix Media around and negotiated the sale of Intermix and MySpace to News Corp for $650M. Ben Kuo spoke to Richard about the company's plans and future.
Let's talk a little bit about Demand Media - - what's the idea behind the company?
Richard Rosenblatt: We formed the company around the idea that social networking and community is going to reach beyond large portals, become more vertical and expand to an older demographic. We believe that you can marry the vertical nature of organic domain traffic with cutting edge Web 2.0 technologies to form a different type of community experience. The most effective way to do that was to raise significant capital and acquire a number of companies that fit in certain passionate niches and build an accompanying set of proprietary technologies. The best vehicle to do that was to start a new company.
You've been making some interesting acquisitions, which to an outsider might seem like they're all over the place. Can you talk about how a company like eNom might have something to do with the niche content sites you've been acquiring?
Richard Rosenblatt: We really did three different groups of acquisitions. The first group of acquisitions was in the domain infrastructure space. We found that a registrar platform, if properly implemented, could provide the base infrastructure for a new media company. That was why we bought eNom and Bulk Register. We then bought a number of companies in the niche’ media space, such as Trails.com, GolfLink.com, eHow.com, Grab.com, and a number of other properties that people were passionate about. Finally, we focused on building and acquiring powerful publishing and community tools. We bought the social networking tools developed at Intermix and Answerbag.com, a leading social Q & A site. Combine all this together and you have a flexible, expandable infrastructure, with multiple content verticals and a set of community tools that expand those verticals. While it might have looked like we bought companies all over the place, we were very strategic.
So those tools are going to be rolled out across all of those websites you acquired, is that the idea?
Richard Rosenblatt: Yes, we think that there are a number of different applications that will fit across all of our properties, and a couple of applications which will fit certain niche verticals.
You've raised a boatload of money--isn't it hard to deploy all of that?
Richard Rosenblatt: We are spending it very carefully, and very strategically. There are a number of exciting, profitable businesses that we can make much more profitable by putting on our platform.
When are people going to see the platform show up--are you deploying that now?
Richard Rosenblatt: We have a big launch of eHow scheduled for early to mid March. We have a large release which will really show people what we're talking about on our platform. In early April, we'll be showing our dot TV platform, which will give people the ability to build their own video centric web sites and social networks, if that's what they choose, and that's coming in April. You will see a number of our properties rolled out on the platform in the coming months
Given the MySpace experience, I imagine the fund raising this time was very easy?
Richard Rosenblatt: It's much easier to raise capital each time you are fortunate enough to have a successful prior deal. The most difficult capital raise was for iMALL, my first company, in 1995. It continued to get much easier as you begin to understand the market, and understand what investors are looking for. That said, we have a really smart group of investors and they asked a lot of hard questions. In the end, they really believed in the model.
What's in your plans -- it looks like you've been doing lots of acquisition, are you going to be buying more companies?
Richard Rosenblatt: We are. Our business is going to be about fifty percent strategic growth--we're going to be looking for the right companies at the right multiple in the right verticals that can benefit from our platform. And about fifty percent of our growth is just working focusing on our business and developing our properties to reach more people and be more profitable. It's a really neat combination of strategic and organic growth.
Thanks for the interview!