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Startup Spotlight: Vice

What are the driving forces behind the new media empire?

6Nov

In 2011, British newspaper, The Independent, called Vice magazine ‘the new teen bible’.

The media company’s website is now its main content hub, where it combines serious content with satire. The colloquial nature of some of the site’s articles and writing styles allow its features to standout in sharper contrast, a balance which has made the company even more influential in terms of its cultural reach. It was, however, the Vice magazine which the company initially became known for.

It became notorious for covering topics others wouldn’t touch. And for a publication dependent on advertisers, it frequently risked losing funding by carrying articles about controversial stories including ‘Skinheads Against White People’.

The magazine’s elusiveness - it was only stocked in a very limited amount of locations - caused its popularity to rise even further. This distribution strategy, coupled with its in-your-face articles, gave it a unique brand position. It doesn’t go to the reader, it expects the reader to come to them.

The strategy has worked. Not only does Vice magazine have an extensive readership of over a million, most are Millennials. Brands have therefore been falling over each other to get their products within the magazine’s pages. And this hasn’t gone unnoticed by venture capitalists. The company has raised $570 million so far, with $250 million added in September 2014.

This money has been used to diversify the company’s portfolio. In 2013, Vice News - a current affairs brand covering topical issues which normally go unreported- was launched. Shane Smith, Vice’s CEO and Founder, presents many of the documentaries, the most famous being ’The Vice Guide to North Korea’. In it, Smith, accompanied by armed guards, takes a tour of the country’s main attractions. It depicted a grey, joyless state where the government was always watching, but ultimately acted as a springboard for other Vice video content.

Much of the investment has also been used to improve digital capabilities across less traditional channels. A Vice spokesperson said that the funding will be used ‘develop a world-class slate of digital products and distribution capabilities,’ which improve user experience across any ‘device, screen, social network or digital platform.

The media company is currently valued at $4 billion. What separates Vice from many another Unicorns - startups valued at over $1 billion - is that they haven’t experienced success over night. Vice has been around since 1994 and has had time to develop its products. The company’s future, however, remains up in the air. When interviewed by the Financial Times [FT], Shane Smith mentioned that if the company didn’t remain private, it had two options; either go public or get eaten up by another larger media organization. Smith stated: ‘There hasn’t been a media company like this to go public in 15 years,’ and that ‘the markets would love it.’

At $4 billion, Vice would require a very large company to take it over. PoliticoMedia reported that Smith might look at the CNN/Time Warner model as guidance if the company were to go down that route. As a hands on CEO - who apparently still edits all the content that Vice releases - a sell-on seems unlikely. But with Smith recently saying that he found day-to-day business management ‘hard’, he could be looking for someone to take on these responsibilities so that he can concentrate on content.

The FT reported that Vice would explore an IPO ‘if market conditions remain favorable.’ Whatever the case, this year could still be a time of change for the company.

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