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How Rafat Ali Found a Job (Part 9)

Posted on Friday, Sep 12th 2008

SM: Can you talk about the recent sale of the company?

RA: We were in the middle of raising our second round. We decided somewhere, probably mid last year, that we could leverage more money. For all intents and purposes we were still bootstrapped. If we could get a specific amount of money, we could hire another person. It was simple math. That is how we were growing. We were always resource-strapped.

Industry activity was reaching a fever pitch, and competition was coming in. When I started I was the only one doing this. Since then, everyone has raised their game. The Wall Street Journal started covering a lot of stuff, the New York Times started, and it just became a lot more competitive.

SM: It is a very low ‘barriers to entry’ type of business.

RA: That is true. The first thing we decided was we needed to bring in a CEO. I knew we needed someone to drive the business. I was killing myself driving everything. That is what I wanted to grow out of, the company had to grow beyond me. Over the years we had done in large steps, but ultimately the daily business decisions needed to go away from me. We decided to raise a second round to enable us to hire a CEO and a chief sales officer.

It just so happened that it all occurred in reverse. Two candidates, a CEO and a chief sales officer, fell in our laps at the same time before we went on the fundraising round. We did that with the knowledge that having senior management in place would help us be more attractive to VCs and I would not have to do this on my own. The investors we already had were helping a lot, and we had a formal board.

Nathan came in and he was literally the ‘dive right in’ on the fundraising issues. The reality is he did not do any of the CEO duties until we got bought by Guardian.

SM: Were you pitching to Guardian to raise money?

RA: We were thinking about strategics or venture capital for raising money. We decided not to go the strategic route and the VC funding because it was a conflict of interest, right of first refusal for exit, and all that stuff. It was just too complicated for a small company like us.

I had known Guardian people very well for years. The first person who ever expressed interest in our being a part of Guardian was Simon Waldman. In 2003, when I was living in London, he mentioned that my site should be a Guardian property, and he was the head of Guardian’s online properties at the time. I never thought about it seriously at that point.

We had some term sheets on the table and the valuation was very competitive. Guardian came in and a lot of things clicked immediately. Whoever was going to buy us had to leave us alone as a unit. That is what they wanted as well. From a journalistic perspective, we wanted to be part of a company that was upholding the values of journalism that we uphold. They are known for that, and they are digitally savvy, one of the most progressive firms in terms of what they do online. They also had good international outlets. The nature of the sites we had built gave us an international view. Even in terms of events, we had done them in London and Barcelona as well. Whoever was going to buy us had to have that ethos, and Guardian has it. They own a lot of trade properties aside from the Guardian newspaper.

This segment is part 9 in the series : How Rafat Ali Found a Job
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