FACES OF BUSINESS 2007 : True believer: John Battelle tries his third media enterprise

FACES OF BUSINESS 2007
True believer: John Battelle tries his third media enterprise

Sam Zuckerman, Chronicle Staff Writer

Monday, December 24, 2007
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John Battelle runs his Federated Media Publishing from an... John Battelle likes the feeling of being at the center of...
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As long as there's been a Web, John Battelle has been near the center of it.

Managing editor of Wired magazine and later CEO of the company that published the Industry Standard, Battelle was an essential figure at the digital world's two most iconic publishing enterprises, chronicling the explosive growth of the Internet during the 1990s.

His contagious enthusiasm and missionary zeal about the world-changing power of technology were instrumental in making both magazines cultural phenomena in their own right.

"John saw certain things way before most people," said former Industry Standard Managing Editor Jonathan Weber, now publisher of New West, a Denver online media company. "His role was to be the true believer."

Now, at the ripe age of 42, Battelle is in the thick of his third media venture, one he says could become an even bigger phenomenon than the first two.

This being 2007, there are no printers and no post office to contend with. Battelle's Federated Media Publishing lives entirely in the online world of blogs and related Web 2.0 sites.

What Battelle has done is zero in on a unique money-making opportunity that's emerged as a handful of such sites have turned into successful businesses. With a roster of 140 online affiliates, his company handles back-office chores - most vitally the sale of advertising, which is the life blood of Internet publishing ventures - so that the bloggers and online entrepreneurs can spend their time thinking great thoughts and writing great copy.

"He was looking for a way to somehow liberate the folks who do the writing," said Martin Nisenholtz, CEO of New York Times Digital, an investor in Federated.

Just 2 years old, Federated Media, with a staff of 53, has been in the black for three months, Battelle said recently during a wide-ranging interview in his Sausalito office.

In contrast with online publishing conglomerates such as Gawker Media, Federated doesn't own the sites in its network. Its business model is to contract with independent online publishers and take a minority cut, typically 40 percent, of the advertising it sells for them.

It also makes money by holding conferences that attract well-heeled digerati, charging several thousand dollars for admission.

Gawker Publisher Nick Denton, who's made a cottage industry of tormenting Battelle, needles Federated's chief for allegedly exaggerating the popularity of the company's affiliated sites and for losing ad sales business from key clients, such as Digg.com. And Denton, whose sites have been accused of tabloid-style journalism, repeatedly has posted an old photo of Battelle flipping the bird.

Battelle said he has no interest in publicly feuding with Denton. "I have nothing but nice things to say," he said.

Recent surveys of traffic to Federated sites have confirmed Battelle's claims about the network's popularity, he said. And concerning Denton's gloating over lost clients, Battelle noted that Digg and other supposed defectors still do business with Federated. Affiliate gains and losses are part of the normal churn of the advertising business, he added.

"Our churn is extraordinarily low," Battelle said.

When Digg moved its ad sales business to Microsoft, founder Kevin Rose posted a statement calling Federated "an awesome partner" and noting that his company would continue working with Battelle's operation on special projects.

Those who know Battelle, who grew up in Pasadena, say his drive and charisma were evident from his earliest days at MacWeek, when he was a newly minted Berkeley anthropology graduate turned tech reporter. He was legendary for prying loose secrets about the insular Apple, once getting his hands on a new Mac version before its official release. MacWeek put a picture of the computer's motherboard on the cover.

Wired founders Louis Rossetto and Jane Metcalfe picked Battelle to be their managing editor, a leap of faith almost as big as starting the magazine itself.

"He looked like a Southern California water polo player and had this can-do attitude, excitement and optimism," Metcalfe recalled. "He came to us with fully formed ideas about the magazine we were inventing. Here's a complete stranger that felt like our oldest friend."

What they shared, Metcalfe said, was a vision of digital technology as "this giant economic machine creating wealth, disrupting existing power structures and sparking a whole new way of thinking."

After Wired, Battelle was recruited by publisher International Data Group to start the Industry Standard. The magazine quickly became the essential guide to the dot-com boom. And it turned into an integral part of the bubble itself, thick with advertising and known for its flashy electronic billboard at the foot of the Bay Bridge. Everyone expected a blockbuster initial public offering that would sow a crop of millionaires and place the Standard in the top tier of magazine publishing.

A year-and-a-half later, the Standard was dead, killed by the dot-com bust and IDG's decision to declare the magazine bankrupt. Never in publishing history had a magazine risen so spectacularly and fallen to Earth with such a resounding thud.

Battelle said he was shattered by the Standard's spectacular and very public flame-out.

"I was bereft," he recalled. "I lost something I had created. I knew I had let down so many people."

Some in the Internet world suggested his Internet boosterism and predilection for Big Thoughts about the march of technology had blinded him to the excesses of the dot-com era and set the Standard up for failure. One disgruntled ex-employee even started a Web site called Battelle Watch, sticking him with the name "Mr. Bubble" and chronicling his foibles.

For his part, Battelle experienced an almost religious crisis of faith in the theme that had animated his personal and professional outlook since college and his early days as a wunderkind reporter at MacWeek - the idea that the digital revolution was an epochal and potentially liberating event in human history. He even considered forsaking the tech world to start a magazine about men's health.

"It was the narrative I had been involved in since MacWeek," he said. "But when the Industry Standard blew up, I lost faith in the narrative."

Battelle taught at UC Berkeley and then found his optimism rekindled by the mushrooming clout of Google as an Internet search powerhouse. His best-selling book, "The Search," is part history and part meditation on the transformation wrought by search technology.

Battelle said he got the idea for Federated in 2004 from his blog, SearchBrains, which was attracting up to 60,000 visitors a month. But he couldn't make a business of it without hiring a staff, and there wasn't enough revenue to pay employees. Catch-22.

Around that time, friends at technology blog Boing Boing told him that their expenses for Internet hosting services were doubling, a drain of cash that threatened to shut them down. Battelle had a brainstorm - start a business to handle administrative tasks and pump up advertising so there would be enough money coming in to pay the bills and turn a profit.

"Why not create a company to partner with them ... a collection of companies that hang together?" he recalled thinking. "Perhaps there's a business there.

"I just saw it," he said. "But I couldn't believe it would work. You say, 'No, put it away. Last time I started a business it didn't work out so well.' "

But he couldn't put it away. He modeled it and found "off-the-charts" profit potential for his company and its affiliates. Both his marketing and online author contacts told him they were interested. He started Federated Media in spring 2005.

Now, once again, Battelle is in a publishing maelstrom of his own making. Federated's Sausalito office buzzes - just like Wired and the Standard. Battelle is at the center, setting off sparks that keep the atmosphere electric and inspire prodigies of work from his staff.

And he's still the true believer.

Asked about his reputation as a wide-eyed technology enthusiast, Battelle confessed that there's truth in the description: "I believe in Google. I believe in the Internet. I believed in the Industry Standard. I believe in Federated Media. Frankly, I don't know how else to live."

Battelle said he doesn't know what's going to happen to Federated, although he suggested one possibility is "a great exit." That could be interpreted as a sale down the road at a fabulous price to a deep-pocketed buyer who would preserve his vision of an online media community.

But the prospect of big money seems less crucial than that sense of being at the center of things.

"Maybe ... we become part of media history," he mused. "That would be most important to me."
Online resource

Faces of Business is a year-end series of profiles featuring prominent people in the Bay Area business scene. To read all the profiles:

www.sfgate.com/ZBWQ

Faces of Business is a year-end series of profiles featuring prominent people in the Bay Area business scene. To read all the profiles, go to www.sfgate.com/ZBWQ.
John Batelle

Age: 42

Job: Founder, chairman, Federated Media Publishing

Previous employment: Founder, chairman, CEO, Standard Media International; publisher of the Industry Standard; managing editor, Wired magazine.

Blog: SearchBrains ( www.searchblog.com), covering media, technology and the Internet.

Education: Bachelor's degree in cultural anthropology and master's degree in journalism, UC Berkeley

Family: Married, three children

Quote: "I've had a 15-year obsession with the intersection of media and technology. I've been obsessed with making media in this space."

E-mail Sam Zuckerman at szuckerman@sfchronicle.com.

This article appeared on page D - 1 of the San Francisco Chronicle