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How Rafat Ali Found a Job (Part 7)

Posted on Wednesday, Sep 10th 2008

SM: When did you finally close the investment deal with Alan Patricof?

RA: It was in the middle of 2006. I believe it closed in June.

SM: How much was the investment?

RA: We did not announce the amount, but it was less than $1 million. We brought in a part-time COO whose main job was to pull this out of my bedroom. He was working at some other company in Los Angeles and had an office already. I was not working out of his office, but it was good to have a part-time COO who had actual office space to work out of.

We started putting in HR policies. We officially made Staci and James employees and brought others on as well. We also hired a salesperson. This was all happening in 2006, which was a very rapid growth year for us.

SM: What kind of revenues did you hit in 2006?

RA: We crossed $1 million in 2006.

SM: What was your split between advertising and events?

RA: In 2006 we did four or five mixers. They were all low-cost and were getting sponsored. We did one in New York in July of 2006 which 700 people attended. That is when we literally landed on the face of New York media. Alan invited Arthur Salzberger, the head of The New York Times, to be the speaker at that mixer. He accepted, which gave us strong editorial content at that mixer.

His digital people were reading us at that time, so I interviewed him about blogging and NewYorkTimes.com, and things of that nature. At that point in 2006, the split was still heavily online.

SM: Did your traffic and ad rates increase?

RA: We have never sold by CPM, and still do not. We have flat fee sponsorship.

SM: Do you have salespeople doing that for you?

RA: We do now. There are four full-time employees in our sales department.

SM: In 2006 did you have your own salespeople?

RA: I was still doing part of it, and we had one commission-only part-time sales person. It has always been our own; we have never outsourced any part of it. My thought was that advertisers who understand the industry can only be sold to by somebody who is part of the company, who knows what we write about and how we are covering the industry. That was my rationale for not outsourcing.

Federated Media had not started at that point. John Battelle called before he started Federated and said, “Whatever you are doing, I can do it.” I literally remember his words. My response was, “Go ahead and do it, why are you calling me?” I did not exactly know what he was starting, I thought he was going to start a competitor to us. He didn’t, instead he started Federated Media, which was a servicing company to these blogs.

I did realize that blog advertising models were coming online, and I did evaluate some, including theirs. Ultimately it was a sales service model that took 20-30% off the top. I could not see the point in outsourcing the advertising at that rate since I could do it organically with my sales force at the same rate.

This segment is part 7 in the series : How Rafat Ali Found a Job
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