Jeff Bezos, John Henry, and the New Reality
On the very day that the Washington Post Co. announced it was selling its flagship newspaper to Internet billionaire Jeff Bezos, the Boston Globe opened its doors for a meet-and-greet with billionaire Red Sox owner John Henry, who had announced plans to buy New England’s iconic newspaper less than 72 hours before. So much for the lazy, hazy days of summer: If any of us needed one final reminder that the competitive logic of business and media and branding are being reshaped before our very eyes, that the merciless advance of technology upends every institution it touches, well, we got it. As one pundit wryly noted, the Graham family, which controlled the Washington Post for the last 80 years, “survived Nixon, but not the Internet.”
I have no idea what Jeff Bezos plans to do with the Post or what John Henry plans to do with the Globe — and I’m not sure they do either, at least not yet. To me, the reason these transactions are so noteworthy is that they symbolize so vividly three powerful new realities that define not just the media landscape, but the competitive landscape in which all companies and leaders operate today. You don’t have to be in media to face those realities — in fact, facing them is mandatory.
The first new reality is that the logic of economic value has changed forever. How do we process the paultry $70 million that John Henry paid for the Globe, or the $250 million that Jeff Bezos paid for the Post? One thing to remember is that, as a result of Amazon, Bezos is worth something like $28 billion — so writing a check for the Post means committing less than 1 percent of his personal fortune. Thanks, ecommerce! It’s also worth noting that a few months before Bezos opened his checkbook, Yahoo opened its checkbook to buy Tumblr for $1.1 billion. Thanks, sassy teenagers!
In other words, a company launched in 2007 to host a collection of photos and short blog posts is worth more than four times as much as an organization launched in 1877 that has shaped democratic discourse and brought down presidents. When it comes to pure economics, the value of incumbency has never been worth less. Do you understand the new sources of economic value in your field, and have you reckoned honestly with how the market currently values what you’ve done in the past?
There’s a second new reality to reckon with: In a world defined by “creative destruction,” the destruction happens a lot faster than the creativity. I love the world of new media, Internet-era brands, grassroots information flows. Indeed, I’ve benefited personally from all digital ferment. More than ten years ago, during the first Internet boom, a big German publisher, bought Fast Company, the magazine I cofounded, for more than what the Washington Post and the Boston Globe sold for this past week — combined. Thanks, Gruner+Jahr!
And yet, I can’t get over what all of us have lost in the process. In virtually every major city in the United States, once-powerful local newspapers are shells of their former selves. Does anyone think that City Halls in Philadelphia or Detroit are more efficient or less corrupt because the Inquirer and the Free Press are on their knees? Or that the public conversation about the future of Atlanta or New Orleans is more robust because bloggers are bringing new attention to the arts and food scene, even as the daily newspapers wither on the vine? As much as I celebrate the rise of the New Economy, I can’t help but echo Joni Mitchell as I witness the demise of so many venerable companies and institutions: “You don’t know what you’ve got ’til it’s gone.” My question for all of us as leaders, and as members of society, is: Are we being as honest about the costs of the digital revolution as we are about its benefits?
That question leads to my third new reality of the world today: For old organizations to survive, new ownership structures are required. As I said at the outset, I have no idea what John Henry and Jeff Bezos have planned for their newspapers. What I do know is that the Globe and the Post had virtually no chance to survive, let alone prosper, as unpopular stepchildren in larger, publicly traded companies. There are plenty of worse circumstances for making much-needed change than being owned by smart billionaires — and the worst of all is being at the mercy of Wall Street’s mindless quarterly demands or working under nervous-nelly CEOs trying to please the Street.
A case in point: Bloomberg BusinessWeek. Less than four years ago, the privately held company controlled by billionaire (and New York City Mayor) Michael Bloomberg paid a few million bucks to acquire one of the great names in business publishing — a magazine that was launched just a few weeks before the stock market crash of 1929, and was on the verge of crashing into irrelevance and insolvency as a basket case inside publicly traded McGraw-Hill. Today, Bloomberg BusinessWeek is a force to be reckoned with, brimming with new energy and confidence under editor Josh Tyrangiel, who was named Ad Age‘s Editor of the Year in 2012. I have no doubt that BusinessWeek’s renaissance would not have happened had it not been rescued from McGraw-Hill. The lesson seems clear: To respond to radically new circumstances, organizations and their leaders need new ownership structures that give them day-to-day breathing room and fire up their creative juices.
So here’s my final takeaway from the head-spinning events of the last few days, one that applies well beyond the world of big-city newspapers. Yes, technology changes everything it touches. But technology is not destiny. Talented leaders, given enough imagination and the right organizational platforms, can respond creatively and effectively to the most challenging circumstances. In fact, that is the defining work of leadership today — unleashing long-lasting, positive change in an environment that moves faster than ever. Our ability to do that work will shape the future of our organizations, our media, and our society for decades to come. So good luck to John Henry, Jeff Bezos, and all of you!