A digital game-changer rises

From its launch in 2005 until its sale to AOL in 2011, The Huffington Post online gathered a huge audience of unique visitors—Google says 60 million, ComScore says 30 million--and it reached $60 million in ad revenue. CEO Eric Hippeau described the principles that produced this entrepreneurial success.

A bit like “Forrest Gump,” Eric Hippeau (pronounced EeePoe) seems to have been in many interesting places at just the right time.  Call it prescience or instinct—or call it operating from a set of business principles that guide his choices.

“In every major economic cycle, there is one big breakthrough company,” he said, at the Harvard Business School Club of New York on April 5, 2011.  He was speaking at its popular “Media Guru” series of breakfasts, not long after his triumphant $315 million sale of The Huffington Post to Time-Warner spinoff AOL.

He recalled watching years earlier as Ted Turner built CNN into the breakthrough company of its cycle, creating a 24-hour cable news channel, built on excellent video from all over the world.

Like Facebook in the social media space and YouTube in the online video space, The Huffington Post was that breakthrough company in the digital news, opinion and blogging space.  “It has created a new genre, open-source and very social,” he said.

The Young Entrepreneur
Mr. Hippeau, a self-described “fifth-generation journalist,” was born in France and went to a French high school in London.  He remembers going at age 12 to the United Press International office in London, where his father ran the photo business, on the day John F. Kennedy was assassinated.  The photographers were in shock, and that was when he decided to become a journalist.

He moved to Brazil in 1970, dropped out of college, and became sports editor for a local English-language newspaper, where they “used a hot lead press and set type one letter at a time.”  

Then he launched a Portuguese-language computer magazine called DATA NEWS, sold it to Patrick McGovern, head of IDG, ran the IDG business in Brazil, and moved to the U.S. in 1986 to become president of IDG’s InfoWorld.  In 1989, Bill Ziff, owner of Ziff Davis, hired him as publisher of PC Magazine, and promoted him to President and CEO.  

Starting in 2000 he worked at investment firm Softbank, where he was renowned for having invested in Yahoo way back in 1995.  He became an early-stage investor of HuffPost, was on its Board, and became CEO in June 2009.   

Principles and Key Decisions
Mr. Hippeau described the decisions and points of difference that made The Huffington Post that breakthrough company, in fierce competition for readers with The New York Times, The Guardian, The BBC, The Daily Beast, and thousands of smaller players.

•    Readers could “comment” from day one.

The HuffPost, as it’s affectionately called, was launched when “As a society, we had lost trust in institutions, in government, even in journalists.”  The blog was the technology of the day, facilitating a direct person-to-person connection, not information filtered through a gatekeeper.  Mr. Hippeau said, “The classic journalist is a gatekeeper, deciding what is worthy of being reported and published.  Blogs were the democratized version of that.”

The first bloggers on HuffPost were founder Arianna Huffington and influential friends of her co-founder, Kenny Lehrer.  From that start, the interactive conversation grew, until now some four million “comments” per month are posted on the site by readers.

•    The “comments” were always moderated.

“Most sites don’t have moderators because it’s expensive,” Mr. Hippeau said.  Online sections that aren’t moderated can devolve very quickly into very “nasty” posts.  

Today HuffPost is moderated both by a team of 25 full-time moderators and by technology programmed to flag a list of terms and phrases.  

•    A large investment in technology teams and development on open platforms.

Compared to its competitors, HuffPost likely invested more in technology than others—it set up tech teams around the world, in the U.S., Ukraine, Sri Lanka, China, and several other countries, so that a project could be passed along from one time zone to the next around the clock.  “By the next morning when you wake up,” he said, “300 hours of work had been done on it.”

HuffPost’s first content management system was open source, the equivalent of WordPress today.  His advice, “You can’t wait for the open-source community to develop products for you.  You have to develop them yourself, on an open platform.”  

In addition, HuffPost “couldn’t afford to buy data from Omniture,” he said, so the team partnered with Google on analytics.

•    Development of a unique “voice.”

HuffPost was originally viewed as a kind of left-of-center political news site.  One questioner in the audience asked Mr. Hippeau if publishing “politicized, sensational, non-objective information,” as Arianna Huffington does on HuffPost, she asserted, isn’t bad for society right now?

Mr. Hippeau acknowledged that this “taking of a position” is a big change.  He is frequently asked if journalism is really objective, and he answers that it can’t be, since every reporter comes with his own set of biases, assumptions and experiences.  “People today want media to take a position, to be upfront about what they think, and then start a conversation,” he said.  They don’t prefer efforts at objectivity, and he cited the decline of the “objective” CNN’s ratings compared to the rise of the opinionated Fox News.

He concludes that it is “a more honest approach” to take a position and be open about it, rather than pretending objectivity.

The Future—The Next Breakthrough Company?

Mr. Hippeau said definitively, “All sectors of the economy have been disrupted by technology.”  He is now in an angel investment company, with HuffPost co-founder Kenny Lehrer, looking at companies where technology advances are the common denominator.  He sees opportunity in continuing innovations in mobile that are now making their way into new products.  “That’s definitely the next wave,” he said.

This article was not based on a published case. But the following case may prove useful. Harvard Business Press is preparing a case for release this year.

For further reference:
ECCH Case A196A
AOL Time Warner (A):  Accounting for Goodwill
Professors Ron Kasznik and Brian Tayan
Stanford

By Christine Arrington, published April 2011