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So What Do You Do, Rafat Ali?

The founder, publisher and editor of the newsblog for media execs desperate to make content pay online on leading the way to blogs' payday

- March 28, 2007
Rafat Rafat Ali is the founder, publisher, and editor of ContentNext, the parent company of his first and most widely known blog, PaidContent.org. Only 31 years old, Ali started PaidContent in 2002, after reporting stints at Inside.com and Jason Calacanis' Venture Reporter. Long before the phrase "blogging for dollars" entered the Web's lexicon, Ali was the sole proprietor of the newsblog of record for media executives desperately trying to crack the code of making content pay online. Since then, he's added editors (including former Inside colleague Staci Kramer), investors (including Alan Patricof), new sites (MocoNews.net) and even veteran management (new COO Jordan Posell). I remember Ali when we were both cub reporters sitting back-to-back in the cubicle farm of Brill's Content in its final days, after Brill had bought Inside and everyone was scrambling for the exits. Ali was an afterthought then; today he's arguably its most successful alumnus not named Andersen or Hirschorn. "Last year was a very eventful one; it was when we really became a company. To call us one before then was really a stretch," he says.

Name: Rafat Ali
Position: Editor & Publisher, PaidContent.org
Company: ContentNext Media
Education: Master in Journalism, Indiana University, Bloomington, 2000; B.Tech in Computer Engineering, Aligarh, India, 1996
Hometown: London, England; Presently settled in: Santa Monica, CA
First job: A PR executive in India... glorified press release distributor
Last three jobs: Intern, Inside.com and then Reporter, Inside.com; Managing Editor, Silicon Alley Reporter; and now this
Birthdate: April 26, 1975
Marital status: Married
Favorite TV show: Friday Night Lights
Last book read: The Gang That Couldn't Write Straight: Wolfe, Thompson, Didion, Capote and the New Journalism Revolution by Marc Weingarten
Most interesting media story right now: The attempts by big media companies to develop a YouTube rival. More the mentality behind it than the story itself.
Guilty pleasure: Carpenters

Not many journalists ever make the leap from reporter or editor to CEO or senior manager. Did your training as a journalist adequately prepare you for that? And if not, what would you liked to have known before diving in head first?
I wish I had understood the financial aspects. If you want to run a company one day, and you're a journalist and you don't know stuff like "former earnings versus this versus that," then you're making a huge mistake, not just as a journalist, but as an entrepreneur as well. If you don't, no one else will sort it out for you.

That set us back considerably [at ContentNext] because we couldn't get our act together organizationally. Part of that was my fault because I didn't know how to get health insurance -- I didn't know how to do the operational day-to-day stuff. That's what I would tell someone getting into this game. Even with Om [Malik, a former Business 2.0 editor-turned blogger], I told him, "Make sure you get a financial person, even if you have to pay for him through the nose." Make sure all the business stuff is in order because that will save you so much heartbreak and worry. That was what I had no clue about when I started in 2002. These days, bloggers start with the idea of being a business, but I started [my blog] just to raise my own profile.

Obviously you've always wanted to be an entrepreneur…
No, I did not. In 2000 and 2001, I came out of school, and like everybody, I wanted to be a magazine feature writer. But the world doesn't work that way.

You come to realize that being a magazine feature writer, like writing for The New Yorker or Esquire, just doesn't happen. When you go to a journalism school, they don't try to teach you that you will, but that's the image you get: feature writing is glamorous. That's what I had in mind. I never thought I would go out and break news. I never thought of myself as a reporter. But it turned out that way.

At Inside.com, I was a feature writer because I wasn't doing daily stuff, I was writing one or two stories a week. Mine were trend pieces. But when I went to Silicon Alley Reporter, Jason [Calacanis] had that same question: "Do you have the chops to do reporting?" I said "Well, I haven't really done much, but I can try." I asked him to give me two months to prove myself, and after that, he could fire me. I emailed him that much and he said, "When can you join?" That's where I learned reporting -- or not learned, but where I was just thrown into it. We had a daily newsletter, and it had to have X many stories. I was given stories where I had half an hour to figure out the background and then start calling sources.

Before Alan [Patricof] invested, we went through a round of talks with various media companies. I realized that we were nowhere even close to being in a shape to sell the company. I decided we're going to make an investment: Let's build the company into a real one.

One of the things I tell people is that at Inside.com, how I learned to report was actually from watching you [Lindsay] and David Carr conduct interviews on the phone. In school, they never teach you how to do phone interviews -- they never teach you about interviews in the first place. One of the things I learned from David Carr -- I overheard him because he was generally loud, especially at the old Inside.com building where I sat across from him -- was how to ask the hard questions.

And what did you possibly learn from listening to me?
You were always the guy they gave a story to when they couldn't figure out anything else to do, and then you would call 50 people. I learned to call as many people as you can and that somebody will get back to you; somebody will tell you the story. People ask, "How do you get a story?" I say that there are as many sources within the company as there are employees in the company. Somebody will talk. I'll email everybody, I'll call everybody I have to, and somebody will talk. That's what I learned at Inside as a general principle: Do whatever it takes to get the story. That's what they don't teach you at school.

As one of the first blogger-entrepreneurs, you're also the closest to the end game at this point. What's your exit strategy? And what will be the likely fates of your contemporaries?
We don't have an exit strategy. I'll tell you that right up front. If two years down the line someone says, "We want to buy your company," we'll be in a position to have that discussion. Our company should be in good enough shape that we're ready to flip the switch if we need to.

I know this sounds vague, but even before Alan [Patricof] invested, we went through a round of talks with various media companies. Three or four companies you can probably think of wanted to buy us, and we had first-round talks with each of them. I realized that we were nowhere even close to being in a shape to sell the company. I decided we're not going to sell the company; we're going to make an investment: Let's build the company into a real one. That was when I realized that we needed to build enough systems organization. I might sound like a guy on Dilbert, but the fact of the matter is that the business fundamentals are now in place. It's difficult to scale beyond a certain point.

That's a thing I worry about -- we have built the company with me, Staci [Kramer] and two other people. How do we scale it? That's another strategic thing we think about a lot. We have a CFO now, whose job is to ensure that everything is GAAP [Generally Accepted Accounting Principles] compliant. We're very close to being GAAP compliant, which is a huge deal to us. All that stuff we have to worry about.

But back to your question about the endgame. I've been at this for five years. I have a wife now. I've been with her for two years, I haven't really spent any time with her, and I want to. When someone comes along with the right amount, we'll look at all the options. It's an honest answer. I guess there's no science to it: If somebody makes an offer that makes sense, I'll definitely look at it.

Do you think what you are doing now is fundamentally any different than classic newsletter publishing or trade publishing?
Not really... Well, yes, in the sense that the economics have gotten much leaner. And yes, because you can come to market much faster, you can run on a leaner budget, and you can break stories as they happen because of the tools. But, at the end of the day, it's all about sales. You have an audience; so how do you sell that audience to an advertiser?

For us, because of the industry we are in, because we have so many endemic advertisers in the space, the sale space has been shortened by a huge factor. And this is the trade media mentality -- because of the endemic advertisers we have in the field, our sales factors are short, compared to a big general news site, which is focused on everything, and then they have to go to the agencies, and the agencies have a yearly budget. We don't work by those budgets. We work with "I'm gonna email a CEO at some company and ask 'Do you want to advertise?' and they say 'Yes.'" Then, a week later, they start advertising.

The next step is to go to the bigger companies, who go through a buying agency. We've started working with them -- we now have three ad sales people. They've begun making the rounds of the agencies, speaking to clients, taking them out to dinner, all that stuff. If it were me, I would have said "Screw all that," but you have to do it. It's how a media company has been run for ages and ages. At the end of the day, it's about ad sales.

One again, what will be the fates of your contemporaries? Jason Calacanis sold Weblogs Inc. to AOL, and he's long gone. Denton continues to hold out, and remains enigmatic about his ultimate plans. John Battelle has gained some traction with Federated Media, but once the blogs in his network reach a certain size, they hire their own sales staffs and leave.
All these sites, these small blogs that are influential in a certain area or community, will never be on the radar of the media planning agencies because the latter don't have the bandwidth to go that small and to look for the gems in a specific industries. John Battelle and his company, that's their role, to be the broker for medium-to-large-ish sites. He'll tell you that his aim was never represent the biggest of big sites because they can survive on their own, they can hire other people. His aim is to really represent the middle part. To that extent, I think he's been successful over the last six to eight months or a year. It's still too early to tell if he'll be successful in the long run. He takes a huge chunk of money -- 40 percent, which is ridiculous -- but generally, I think he's doing okay.

If the big media companies come and subsume us... I don't know, that's what happens with everything. Is that wrong? I don't think so. Look at YouTube. Look at MySpace. I'm not sure if any of those two sites have lost anything yet. It's too early to tell with YouTube, but has MySpace gone completely uncool because News Corp. bought it? I'm not sure that has happened. If it's lost cool, it's not because News Corp. bought it -- it's become too big and too mainstream to remain cool.

If big media comes in, will a lot of the stuff lose its indie cachet? If they do, then I'm sure new ones will be started. That's the thing about this: It's so easy to start something, that even if the bigger ones get bought by bigger media companies, there will always be enough people to start new ones.

Greg Lindsay is a freelance writer.

[EDITOR'S NOTE: This interview contains excerpts, and has been edited for clarity.]



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