Star venture capitalist Fred Wilson explains why he invested $5 million in video media startup The Recount and how it could quickly become a profitable, $200 million business in seven years
- The successful venture capitalist Fred Wilson has invested $5 million in John Heilemann and John Battelle’s media startup, The Recount, which sums up the day’s politics news in short clips.
- He not only believes the world needs another video media startup like The Recount, but he sees it becoming a profitable, $200 million business over the next seven years.
- Wilson was an early investor in Twitter, and he said companies like The Recount could correct some of the problems caused by the rise of social-media platforms.
- He also outlined what he thought VCs got wrong previously about media and why now might be a great time to invest in it, despite a slew of layoffs and consolidation in the industry.
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The veteran media entrepreneurs John Heilemann and John Battelle have a new video startup, The Recount.
It resembles its fellow video startups NowThis and Quibi and aims to summarize the politics news of the day in short clips.
The Recount has attracted $10 million in venture funding from notable investors including the Union Square Ventures cofounder and partner Fred Wilson. Union Square Ventures was one of the first firms to bet heavily on social-media startups, and it made successful early investments in companies such as Twitter, Zynga, and Etsy.
Wilson explains in a rare interview why his firm put $5 million into The Recount and why he believes now is a good time to invest in media companies, even as many digital publishers have been imploding.
The following interview has been lightly edited for clarity. Read the rest of the interview with Wilson here.
Lucia Moses: What’s the case for The Recount?
Fred Wilson: The idea is basically, what does news look like when it’s designed for a mobile phone and for social networks like Twitter and TikTok? There are highlight reels for sports, but what might a highlight reel for news look like on a phone?
The Recount is starting in politics because John Heilemann is a journalist in the political realm. Also, because as John Battelle and John Heilemann like to say, US presidential politics is the biggest story in the world in 2020. They have three or four ideas they’re pitching to streaming platforms. The idea is to have a traditional 30- or 60-minute television show and reproduce smaller, quick shows you can deliver on a phone.
Over time, we think recounting what happened on a given day or week with other vertical news slices ought to be interesting as well. Watching news on cable or broadcast television or reading the newspaper are yesterday’s format.
Watching news on television or reading the newspaper are yesterday’s format.
There is a way to convey a lot of information in five minutes or less. Lots of people would prefer to get their news that way. The text-based news audience is really well served, if you look at what Axios is doing. But not as many are doing it for video.
Moses: Quibi, Meg Whitman’s and Jeffrey Katzenberg’s video startup that raised $1 billion, has its detractors. How far does the comparison to Quibi go?
Wilson: We haven’t raised however many billions of dollars, but I think the Quibi bet actually makes sense. The scale I can’t speak to but the basic idea that there’s a market for high-quality, well-produced, but much shorter-length content is actually right. We put $5 million into this company, and it’s focused on one vertical. Quibi’s ambition is much larger to start.
Moses: When you announced the investment, you wrote that Twitter has caused some negative (and positive) disruptions in media. How can The Recount help?
Wilson: A lot of what happens on Twitter today and on all of these social platforms is people pontificating. In broadcast news, we have higher journalistic integrity. Cable lines up along ideological lines. What I’d like to see is high-quality journalism created natively for the social platforms. There’s a little bit of a vacuum right now.
It’s important we have real journalism, customized for these platforms. I think NowThis is the best example of somebody else doing this. The big media companies still produce content the way they always have, so we need something new.
Moses: How big can The Recount get? You hear companies like The Athletic talk about becoming a $1 billion media company, but there’s some skepticism about how large most media companies can actually become.
Wilson: The current newsroom is around a dozen to 15 people. A 30-, 40-person newsroom ought to be enough to do what we want to do in politics. If we go into new verticals, we’d have to create additional teams to go after those. But I think of it as relatively modest and each could be a $50-million-a-year-revenue business or more.
So if you have three to four verticals, you could have a $150 to $200 million business over a five- to seven-year period.
If you have four verticals, you could have a $200 million business over a five- to seven-year period … a nicely profitable news organization.
The curation model is pretty cost-effective on a dollar-per-minute basis. I think of it as a nicely profitable news organization.
Moses: How does a company like The Recount — or not — fit with the rest of your investing strategy, which has been largely focused on big networks of users, not small media companies?
Wilson: It is absolutely not something we’ve done in the past, but as media has come out of favor in the venture business in the past couple of years, that has created a pretty big negativity around the sector, and I think it’s a very contrarian thing to do. It’s possible we’ll get even more conviction and do more [media investing]. We’re intrigued about what looks like a little bit of a vacuum now in media, so we’re making a couple of bets, and if we feel good about those, it wouldn’t surprise me if we continue to do that. I like to zig when other people zag. I like to get to things before people get into them or when other people have gotten out of them. Those are generally the good time to invest in companies.
Investing in a scooter company last year was probably not a good idea because everyone wanted to have a scooter company in their portfolio. Venture is a follow-the-herd business. But [to us] they have to be doing something differently than what has come before.