The Information
Doesn’t Want To Be Free

In four short years, Jessica Lessin has bootstrapped her Silicon Valley news site into a cash-flow-positive scoop powerhouse that’s emerging as the definitive chronicler of the age of unicorns, with subscribers ranging from Jonah Peretti to James Murdoch. Now, for her next trick: saving the news business.

Together, they also tell a larger story. Since Jessica Lessin, the former standout Wall Street Journal technology reporter, founded the site in 2013, The Information has become the website that more than 10,000 subscribers pay $399 a year — or $39 a month — to take the pulse of the tech world. Startup founders wake up to it. Venture capitalists inbox zero it. Now, many media executives are pointing to its elegant business model as one that could rejuvenate media companies, especially as subscription-based products become increasingly central to the future prospects of the industry. “There’s space in journalism for a lot of different economic models,” says BuzzFeed Editor-in-Chief Ben Smith. “Hers is really impressive.”

Lessin unapologetically promotes the idea of paid content, and she’s working to spread it. In October, at The Information’s San Francisco Subscriber Summit, Lessin announced her picks for “The Information Accelerator,” a business incubator designed to catapult likeminded subscription-based news media enterprises into the rarefied atmosphere of cash-flow-positive digital publications. And that was just one of Lessin’s several bullish announcements, from doubling The Information’s reporting staff by the end of 2018 to adding video to expanding the site’s coverage areas to banking and energy. “I do believe we can charge more, because we’ve been constantly adding value,” Lessin told me in an interview this August. (The Information’s $10,000 a year product, providing additional actionable intel for serious tech investors, including unreported briefings and monthly phone calls with reporters, is evidence of that belief in action.)

Lessin’s official title is Founder and CEO, but in reality, she is a player-coach. Reporters at The Information say she routinely cloisters herself for hours at a time in her office, coming out with pages of notes.

Lessin’s official title is Founder and CEO, but in reality, she is a player-coach. Reporters at The Information say she routinely cloisters herself for hours at a time in her office, coming out with pages of notes.

Lessin’s formula is actually the oldest one in business: Create something people want and sell it to them. In journalism, The Information shares DNA with Bloomberg, legal and financial newsletters, trade magazines, and digital native publications such as Politico. It’s ironic that the publication Silicon Valley relies on has succeeded by ignoring the conventional Valley wisdom on how to do business online: It’s paid rather than free; emailed rather than available on social platforms; niche instead of mainstream. It aspires to be useful without being omnipresent. Lessin doesn’t want every story about Uber, for example — just the best and most insightful one. “The Information proved that you don’t need to be comprehensive to be valuable,” Lessin says.

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“THEY THINK THAT UNLESS YOU HAVE ALL OF THE NEWS OF THE DAY, YOU’RE NOT DELIVERING VALUE. THAT’S FLAT-OUT WRONG.”

 

Most newsrooms do the opposite. “They think that unless you have all of the news of the day, you’re not delivering value,” Lessin adds. “That’s flat-out wrong. Readers don’t want to refresh a website all day to get news.”

With metronomic consistency, The Information staff churns out just two stories each day, for a total of 730 a year, a lethargic editorial metabolism compared to most online competitors. (Huffington Post publishes more articles in a day than The Information does in a year.) Less All the News That’s Fit to Print, more Just The News You Need to Run Your Business.

On another wall in the newsroom, a white paper thermometer chart representing the monthly subscription goal hangs on the wall; about a week into the month, it’s colored in nearly halfway. Those subscription goals — along with several other measures of engagement, such as how many times other media outlets reference their reporting — drive The Information’s editorial team in the same way Chartbeat’s gyrations drive traditional metro newsrooms.

Though Lessin declines to discuss specific revenue figures, the site has more than 10,000 subscribers paying at least $399 a year, which means the operation likely brings in at least $4 million a year. (Other revenue streams are comparatively small.) In the media business, that’s a rounding error. (Lessin’s former employer, News Corp, generated $8.14 billion in 2017.) But The Information’s revenue is highly impressive compared to its editorial output. Assuming the site makes at least $4 million from 730 stories a year, according to some back-of-the-napkin math, the site generates about $5,500 per article published. To earn that same amount from general display advertising — which advisory firm Peter J. Solomon Company pegs at an average CPM of $1.90 — each and every article The Information publishes would need to attract more than 2.8 million ad impressions.

$5,500
Estimated revenue from every article The Information publishes.

In an age of mass newsroom layoffs and charticles, Lessin has found a way to run a sustainable news operation with high margins — in a way that actually incentivizes quality journalism. “Major media institutions have come around to the fact that if you’re playing the click game, it’s not going to lead to good journalism,” Tom Dotan, the site’s media reporter, tells me over a lunch of deli sandwiches. “You’re waging a war against Facebook and Google, companies that have infinite scale and don’t care about you as a publisher. Ninety percent of your audience — if you’re a general, free publication — doesn’t care what you’re writing about.”

2.8 MILLION
Estimated equivalent of ad impressions to generate that revenue under traditional model.

Lessin’s secret sauce is a single-minded focus on news her subscribers can use. “She has a vertical that’s aimed at a high-quality, relatively narrow audience that can be charged a high price,” says ProPublica founder and former Editor-in-Chief Paul Steiger, a former mentor of Lessin’s at the Journal and a member of The Information’s board. “It’s an area where there’s a huge amount of money and a huge amount of interest. Having the readers pay is proving to work better than having advertisers pay. The volume of advertising is going down. The price that people pay for print versions and online versions is going up. She is on the right side of history.”

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Some of The Information’s articles seem deceptively simple. One mapped out Uber’s previously unplotted and nearly impossible to obtain org chart (The Information has run similar charts for Airbnb, Lyft, Snap, and Waymo). Another listed “Cryptocurrency’s Movers and Shakers,” a 2,167-word guide to who’s who in the opaque world of bitcoin and its rivals. With another business model, this reporting would never be viable — good luck writing a clickbait headline for an org chart. It’s worth good money to technology insiders, though.

“They go deep on tech stories that other places are covering,” says James Allworth, co-host of the tech podcast Exponent. “A lot of fortunes are being won and lost over how tech does. If you have better insights, readers are more than likely to pay.”

Now that Lessin is trying to replicate her model, the question is what other kinds of reporting readers will pay for. At the San Francisco Subscriber Summit, drawing on a pool of 188 applicants from 33 countries, Lessin announced the six entrepreneurs selected to join The Information’s inaugural accelerator class. The selectees ranged from a Detroit-based newspaper editor who wants to transform local news to a pair of Taiwanese tech insiders embracing subscriptions for their brand of analysis. As part of the accelerator, selectees will get $25,000 in seed funding to help them generate $100,000 in revenue in their first year. All applicants will receive video access to a boot camp covering everything from managing cash flow to identifying a vertical. “I think we’ll get our money out and more,” Lessin says. (The proposed financial arrangement would take a portion of revenue similar to twice a credit card processing fee, she says). So confident is Lessin about the subscriber model that she believes it can even be applied to local newspapers. The trick, she says, is finding areas of coverage that readers are desperate to understand, and no one else is covering.

“Great journalism,” Lessin says, “is a great business.”

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“THE VOLUME OF ADVERTISING IS GOING DOWN. THE PRICE THAT PEOPLE PAY FOR PRINT VERSIONS AND ONLINE VERSIONS IS GOING UP. SHE IS ON THE RIGHT SIDE OF HISTORY.
 
Paul Steiger, ProPublica

The Information flickered to life on Dec. 4, 2013 with a Lessin-penned, Jerry Maguire-like manifesto that declared: “Technology news needs a reboot.” The digital chase for eyeballs was over, she wrote. “We are focusing on writing for readers we think are underserved: professionals in technology and in industries being upended by it,” Lessin continued. “These readers find plenty to read every day but they don’t consistently find news that is relevant to them and their business challenges. They don’t often find news that takes a stand supported by facts. We aim to do both. So, instead of chasing the highest number of eyeballs, we will chase and deliver the most valuable news. We’ve set the bar high. To succeed, we need to write articles that deliver value worth paying for. That’s why we’re a subscription publication.”

As a twenty-something Wall Street Journal tech reporter, Lessin scored around 1,000 clips chronicling the rise of Apple, Google, and Facebook. In 2011, her contributions to a series on digital privacy made her a Pulitzer finalist. But Lessin saw advertising revenue quickly drying up at publications across the country (her husband, Sam, a former product manager at Facebook, had a front-row seat to this epic advertising shift). Lessin had a hunch that the subscription economy would be the last refuge of quality journalism. “It was never, I want to start this publication, what business model should we use,” she told me. “It was, ‘This has to be a subscription site.’”

Not everyone in Silicon Valley agreed, of course. “That $399 fee has a lot of tech media insiders on Twitter cracking wise,” wrote Business Insider columnist Nicholas Carlson the afternoon the site launched. “Including me.” But, he predicted in the article’s headline, “Jessica Lessin will laugh last.” Since then, the site has grown from five staffers and two contractors to more than two dozen staffers working out of three newsrooms, in San Francisco, New York, and Hong Kong. In back-of-the-napkin calculations, Carlson estimated that if each employee cost Lessin $100,000, she would break even with 1,800 subscribers — a number she hit in under a year.

“You can’t rely on advertising alone anymore,” says Mathew Ingram, a media and technology writer who covered the rise of The Information. “The subscription model is easier with The Information because of the focus. People know what they’re getting. If you’re The New York Times, not everyone is interested in everything you do. You’re just counting on people who like your brand.”

The publication started scrappy, leasing desk space from a friend’s nonprofit and trading on the cachet of Lessin’s byline. Since then, Lessin has forged an identity in the Valley as an amalgam of the tech news site Recode’s swashbuckling impresario reporter Kara Swisher and a D.C. journalist. With the former, Lessin shares a no-holds-barred reporting style and expansive Rolodex; with the latter, she shares a penchant for both fraternizing with and covering power players. At her 2013 launch party, Lessin’s guest list included Mark Zuckerberg and former Twitter CEO Dick Costolo.

“In any industry, reporters live in their world,” Lessin says. “All our reporters know people who work in tech. That just makes them tougher on them.” The Information’s biggest stories back that statement up.

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THE SITE IS NO STRANGER TO PUSHBACK. THE JOKE IN SILICON VALLEY IS THAT WHEN A HIGH-RANKING SOURCE RECEIVES A CALL FROM ONE OF HER REPORTERS, THE SOURCE’S NEXT CALL IS TO THEIR LAWYER.

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Peers, the site’s managing editor, sets a high bar for stories. “What makes a good Information reporter is someone who really wants to drill down and learn their beat, and just wants to do that, and isn’t so concerned about writing announcements.”
Many Information reporters spend little time on Twitter relative to the competition. “The point is to squeeze as much time into actual reporting, and to use any capital you actually have into getting people to talk to you for the story,” says Cory Weinberg, who covers Facebook for the site.

In June, Reed Albergotti, a reporter who came to The Information from The Wall Street Journal, broke a blockbuster story detailing sexual harassment allegations against Binary Capital’s Justin Caldbeck over a period of years. It included interviews with six women victims, three of whom gave their names, a rarity for such a sensitive topic. Axios, Fortune, and other major media outlets expanded on the reporting with their own stories. One of the sources alleged that when she was seeking seed money, Caldbeck “groped her under a table at a Manhattan hotel bar.” Caldbeck eventually resigned from Binary Capital, but not before threatening litigation against The Information, according to Lessin. “He said, ‘Fuck you, you’re going to hear from our lawyers,” Lessin says. The site is no stranger to pushback. The joke in Silicon Valley is that when a high-ranking source receives a call from one of her reporters, the source’s next call is to their lawyer.

“The model that it’s the closest to is an industry newsletter or industry magazine,” Ingram says. “Many of its subscribers are technology CEOs and technology executives. That’s a difficult line to walk. If you are too critical, are you going to lose subscribers. But it doesn’t feel like they’ve shied away from difficult topics.”

The Information’s Inaugural Class

“I’ve looked up to Jessica Lessin and her team at The Information for a while now,” says Ashley Woods, who was among the applicants selected for The Information’s accelerator. Woods runs Detour, a site aimed at covering local news in Detroit. “While our companies and revenue models definitely aren’t identical, it’s going to be amazing to work alongside journalists who are grappling with similar issues.”

The accelerator’s other lucky selectees include:

Beniamino Pagliaro, founder of Good Morning Italia, an Italian current-events news site with a staff of 15, including 12 journalists.

David Bank, a former reporter at the Wall Street Journal and founder of ImpactAlpha, which publishes “investment news for a sustainable edge.”

Michael Chou and YuChing Lu, founders of Daodu.Tech, a Chinese subscription publication focusing on technology and business strategy.

Richard Rushfield, founder of The Ankler, a veteran entertainment reporter who promises to go “where trades no longer dare tread, with hard-nosed reporting and incisive analysis.”

Lessin’s allies say The Information’s coverage of the Valley is as hard-hitting as it gets. “In trade publications, it’s easy to become captive to the industry you cover,” says BuzzFeed’s Smith, a subscriber who attended one of Lessin’s off-the-record media events earlier this summer. “Jessica has done a really good job of not letting that happen.”

The Albergotti scoop was a prime example of this hard-edged coverage. It was also a textbook story from The Information, since it “shifted the conversation,” as Lessin likes to say. In response, billionaire investor and LinkedIn founder Reid Hoffman announced a Decency Pledge, quickly signed by at least a dozen venture capitalists. The pledge credited Albergotti’s reporting. “VCs should understand that they have the same moral position to the entrepreneurs they interact with that a manager has to an employee, or a college professor to a student,” Hoffman wrote.

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This past June, the Italian daily La Stampa invited Lessin to attend a conference convened for its 150th anniversary, along with including Jeff Bezos, Bloomberg News’ John Micklethwait, and The New York Times’ Andrew Ross Sorkin. “I believe the future of news business is being indispensable to some group of loyal readers,” Lessin told the audience. “That can be a small group, or a large group. But rather than trying to do a little bit of everything, I think publishers and journalists need to focus on what they can excel at.”

Afterwards, Lessin was approached by a journalist who wanted advice on launching his own paid newsletter. It happens a lot to Lessin. As Lessin offered the journalist some advice, a lightbulb went off. What can we do, besides a 30-minute phone call? Why not offer the same advice to a larger group of would-be journalist-entrepreneurs? Weeks later, Lessin announced her accelerator, equal parts bootcamp, business incubator, and mini-MBA. “Everyday there’s another thought piece about how to save journalism, and I don’t think it’s very complicated,” Lessin says. “I just think it’s really hard to do. It’s great journalism that you charge a loyal audience of readers for.”

It’s much easier with the right talent, of course. After a human resources cold war among technology publications, The Information may soon have more journalists covering Silicon Valley than any other media organization. The company has been hiring a new reporter every two months — a pace that will only pick up as The Information tries to double its staff in 2018. It currently has more reporters covering the Valley than the New York Times and the Journal, and it’s gaining on Bloomberg. Many of its reporters are Journal alumni: The Information has 14 of them, including managing editor Martin Peers, a former deputy editor at the newspaper. “There’s a massive opportunity right now, particularly when it comes to covering the business of technology,” Lessin says, and having the best reporters and editors leads to the best coverage. “It’s one of the most important things we do. The Information will continue to thrive if we’re the best place for the best talent to work.”

Lessin looks forward to weekly staffing meetings the way Apple executives approach product meetings. In a way, reporters — and the stories they tell — are the The Information’s next big thing. To woo them, Lessin offers compensation that consists of their former base salary plus 10 percent. On top of that, reporters have the chance to land an annual performance bonus. A “well-aligned compensation model is a problem” in most newsrooms, Lessin says, and a smarter pay structure is one of her solutions. “The situation in most newsrooms is you only get a raise when a competitor threatens to poach you. We review comp every December.”

One of Lessin’s greatest innovations — which isn’t exactly Innovation with a capital “I,” as she readily admits — is the idea that the traditional model of supporting a publication with ads isn’t in keeping with readers’ interests. “I’ve long believed that the venture capital model is not aligned with creating long term important and sustainable news outlets. Venture capital is very expensive capital. It comes with not only giving up a lot of control of your company but also expectations around growth and scale that I don’t think are focused on the reader.”

Her readers have come to appreciate the sentiment. “One of the things you see with ad-driven tech media, is that it’s typically quite shallow and you have to do more of it to match ads” — an Apple ad next to a piece about which type of tablet you should buy, for example, says Tim O’Reilly, founder of the San Francisco-based O’Reilly Media publishing company, and a friend of Lessin’s. “They’ve found the sweet spot of focus. They have the ability to go deeper because their business model is less content but deeper content,” O’Reilly says. “A subscription model says: We work for you. The question is, how big does that business get?”

Very big indeed, Lessin thinks: She wants to compete with the the Financial Times and her former employer, the Journal.

But does the new business Lessin imagines consist almost entirely of niche publications, with only the strongest national newspapers surviving? “B2B publications have always done better [than general interest outlets] because they can provide value that helps you make more money,” says Rachel Davis Mersey, an associate professor at Northwestern University’s Medill School of Journalism whose research focuses on understanding media audiences.

Lessin has benefitted from a tailwind, in the form of looming battles between government and companies like Google and Facebook. Covering these issues well demands the kind of expertise and focus Lessin delivers. “The Information has quickly made itself a must-read: unique and valuable insights every day,” says subscriber Julius Genachowski, managing director of The Carlyle Group and a former FCC chairman, according to The Information’s marketing materials.

The Information has also benefitted from the growing subscription economy. “Many publishers are challenged by the current dynamics of digital advertising,” says Chris Vollmer, a partner at PwC’s Global Advisory Leader for Entertainment and Media. “So they’re looking to drive paid subscriptions and earn more revenue directly from readers.” It’s a model not so different than many of the tech firms the site covers. The Information is “the media equivalent of SaaS,” Allworth, the tech writer and podcast host, says of the site’s business model. “You hire great people, hire great engineers, hire great reporters, and build a business around that. You’re aligning incentives between the customers and the vendor.”

And now, with the introduction of the accelerator class, Lessin is aiming to facilitate that kind of alignment outside of her own newsroom. “Prior to meeting us, many of these businesses had tried advertising and non-profit models and concluded they could do better,” Lessin said as she announced the participants. “We are delighted to help them prove that subscription models can sustain a variety of news organizations and the communities they serve — across disciplines and price points. In news, you get what you pay for, and I’m thrilled that so many young entrepreneurs want to build a long-term profitable business directly accountable to readers, not advertisers.”