How to Build a Profitable Media Company in 3 years, with Semafor’s Justin Smith

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1:35Peter Kafka:From the Vox Media Podcast Network, this is Channels with Peter Kafka. That is me. I'm also chief correspondent at Business Insider. We've had quite a bit of gloom these days on this show as well. So let's have a bit of positivity this time around. There is a new media business out there and it is doing well. That new media business is Semaphore, which is a mere three years old, targeted towards the global leadership class, and it says it is now turning a profit. So today I'm talking to Justin Smith, Semaphore's co-founder and CEO, who built the business with Ben Smith, who you've often heard on this podcast, and is not related to Justin Smith.

2:15Peter Kafka:That never gets less exhausting. I'm not surprised to learn that Semaphore built a successful events business because they are the kind of media outlet that does very well at events, almost like they were built for it. They target business and government leaders, people who want to influence them, particularly people with business to do in Washington, D.C. But I am surprised at the scale and speed at which they've pulled this off. So this is a conversation about how they did that. Here's me talking to Justin Smith. I'm here with Justin Smith. He is the CEO of Semaphore. You have heard of it because you listen to this podcast.

2:50Peter Kafka:It is three years old. Amazingly, it is profitable. Justin Smith is here to talk about how he has created a profitable media business in three years. Just as impressively, he says it is one that is immune from Google Zero and other platform dependency. Congratulations, you solved all the world's problems in one go. Welcome, Justin. Well, listen, thank you, Peter. It's wonderful to be back on the show with you. I think the last time we spoke, I was at Bloomberg and we talked about podcasts. But you said were a terrible business. I can't. Which I did say was a terrible business. Now you're in the podcast business too.

3:27Yeah. No, we had a healthy debate. I will say, though, your intro, I don't quite recall saying that we'd solved all the Google Zero post-distributed web problems, but I'm happy to talk about it.

3:44Peter Kafka:You have suggested you have. So let's talk about that. Let's just do the numbers quickly because they're interesting numbers to me. You've raised$30 million. I think that brings you to like 65-ish million, all told. 64, to be precise. You're in your third year. You said in your third year last year, you guys made$2 million in profit or at least EBITDA. $2 million EBITDA. On 40 million in revenue. Yeah. Amazing. So first of all, if you're profitable or EBITDA profitable, why go raise more money? I thought one of the lessons all of us digital media people learned over the last decade was don't go raise more money.

4:24Peter Kafka:You don't need to raise money. And raising money comes with all kinds of problems. Well, you know, you also, if you've been in the media business for 30 years, you know that the media business is pretty unpredictable. And so just because you've had a good couple of years and you've developed what we think is a really interesting model, I think if there's a chance to raise money with good long-term investors to accelerate the things that are working, it's a good idea. So that's why we did it. And we're thrilled with the outcome. And we feel like it's taken three years, but we've got the foundation of what we believe is an interesting, I wouldn't say it's a massive innovation in the media space, but it's in the business model space.

5:19But it's a new formula that is working, and we feel like we can extend it across the world and across new markets. And that's what we're going to use the new capital for.

5:32Peter Kafka:You mentioned long-term investors. I think you guys from the get-go, I think partly because you probably didn't have any choice and partly because you wanted to, intentionally weren't raising money from traditional VCs, people who would say this needs to go 10x in five or seven years. Good memory. Yeah, I mean, so much of Semaphore's founding was based on an ideology or thinking around long-term horizons. Ben and I, when we first started Semaphore, the first decision beyond deciding to work together that we made was actually that we would work for 10 years together. And so as this sort of the first chapter and actually our entire company at this point, everyone's a shareholder in the company and the entire company is structured on a 10-year vesting plan.

6:24So I think that long-term perspective.

6:27Peter Kafka:By the way, if you don't follow stuff closely, normally you vest over two to four years in traditional startups. Four years is a traditional Silicon Valley model. But anyway, the reason we chose that 10-year horizon was both of us, and I think especially me, I'm a little bit older than Ben, you look back at your careers, you say, well, what are the meaningful things that you've done across your career? And you realize in hindsight that it takes a while to do meaningful, significant things. It takes six, seven, eight, 10 years to transform something, to build something from scratch. And we did not start Semaphore, you know, unlike I think a lot of other entrepreneurs just in order to sell it.

7:13We started it because we wanted to build what we hope will be one of the most meaningful and purposeful, independent, high quality global news brands.

7:23Peter Kafka:So let's talk about what those investors have bought into. You said global news brand. You sort of pitch it as global leadership. I think about The Economist, Financial Times, The Journal. bosses, essentially. Bosses, people who are going to be bosses one way or another. Yeah, there's no really good language for it. We sometimes use the jargony, the leadership class, or C-suite executives and public sector leaders. But yes, that's the market that we're focused on. And that$40 million, you said half of it is from events, half of it is from advertising. That really surprised me. I would assume the bulk of it would have come from events, just because that's kind of maybe the easiest thing to scale up compared to advertising, especially in this climate.

8:10Peter Kafka:So am I missing something? No, no. People are spending$20 million on newsletter ads and website ads? Yeah. No, no. I mean, honestly, I think a lot of people, we've gotten a lot of attention for our events innovation strategy because one of the things we did is we decided to put the events business sort of at the center of the company, at the center of our newsroom in particular, which is very different from a lot of traditional news organizations. So people have often sort of said, oh, Semaphore is an events business. With the website on top of it. I used to work at one of those. I know. But in fact, I mean, the truth is that Semaphore is really a journalism business at its heart, you know, at its core.

8:49The journalism powers everything. It powers, you know, obviously the news and the news briefings and newsletters. We have 11 newsletters. We publish in the United States. We publish in sub-Saharan Africa. We publish now in the Gulf. And the advertising business is built around premium, largely corporate affairs advertising against those audiences of leaders in those markets. Really, the U.S. market, like many global publishing businesses, is the dominant market. But what the journalism also powers, and this is novel and different compared to our competitors, is it really powers the convenings, which is why we call them live journalism convenings.

9:35Our journalists, even our biggest star journalists, we joke that Ben is not just the editor-in-chief of Semaphore. He's the editor-in-chief of Semaphore's live journalism. And our top journalistic talent design the convening content. They moderate the content. We oftentimes treat them as news-breaking opportunities, news-breaking moments. And that is a different approach than a lot of our competitors. And it's allowed us to build something, to build an events business more quickly and more powerfully, I think, than others have tried in the past.

10:13Peter Kafka:I want to come back to that in one second. But just to be sure, when you say half the business is split between advertising and the other half is events, is that 20 million advertising, is that tethered to the events? If someone's buying, I assume that someone's buying a sponsorship from you, you're also selling them, you know, display advertising, newsletter advertising. The reality is that this is an integrated kind of multi-platform news media model. And both on the product side, which is deeply integrated, as I mentioned, the journalism is deeply integrated, but also on the business side. And so not only are the event partners, commercial partners, sponsors also advertising, but many of the advertisers are also sponsoring events.

10:57I think I'd say nearly 90 % or more of our commercial partners on the events business are also advertisers in the media business. So it's a fully, fully integrated approach. And it makes sense because the news briefings, the news media products deliver a kind of an audience of decision makers and leaders in Washington and Wall Street, Silicon Valley. These are not very large-scaled audiences. They're very targeted audiences. And so the notion that when you have a segment of audience that's not that big, you actually can convene them quite easily. And that combination of convening and very targeted precision-based advertising is the model that we've developed.

11:47Peter Kafka:So you mentioned the idea that Ben's not just the editor. He's also the chief show pony and has to do all the big events. And I think that's considered standard for a lot of media companies now these days, that their biggest stars are multi-platform. But when it comes to events, that's also potentially a limiter, right? Because Ben Smith can only be on stage one place at one time, and he can only do so many events a year. So how do you think about scaling that business? Well, yeah, no, but I think that, I mean, honestly, I think that, I mean, obviously, many journalists are expected to be multi-platform these days.

12:18But in truth, in real practice, I don't think that the events businesses are deeply, deeply integrated into the heart of these newsrooms. I mean, you have a few stars who may be given a podcast. They may be given their own event program. But on a sort of a day-to-day kind of business architecture, content, product architecture basis, having these two things live together and breathe together, that's actually quite a different thing. You know, as for Ben's time, well, Ben, as you know, works 24 hours a day, seven days a week. So he's a bad example because he can do everything.

12:56Peter Kafka:But he can still only be at one conference at a time. You can't have a Ben conference. You can have a conference that he attends every day. You can't do it probably once a week, right? Yes. Yeah. But the thing is, is that, I mean, we're also, you know, one of the things we do, we did do, you know, almost 100 events this year. but a lot of the energy and the focus of our event strategy is around some of the bigger convenings that we do and I would say that as we go forward the idea is not necessarily to go from 100 to 200 to 300 events I mean it may grow as we grow geographically around the world but the strategy is much more likely to be to build a series of tent poles that themselves become larger more significant, more valuable commercially, more influential editorially.

13:47So that's how you scale it.

13:50Peter Kafka:Some of the press I've seen about your raise and your business sort of has you guys trying to take on Davos, which is happening in a week or two, directly to sort of build your own convening of the biggest, fanciest, most expensive people in the world and get them all in one place. Is that a real ambition? Is that a 10-year ambition or am I misguided? No, I mean, listen, when we started Semaphore, actually in the original business plan deck, we saw an opportunity to build a leading CEO convening in the United States. We looked at the U.S. market and we thought, it's interesting, this is the largest economy in the world.

14:32And this is 2023, 2022. And there is not a dominant leading CEO convening platform. And in fact, Davos was and still remains to this day the sort of the preeminent gathering for global CEOs. And we thought that was an interesting fact and one which presented an opportunity. And so we, from the very beginning, envisioned building this from scratch. And we identified Washington, D.C. as the best location to do this, which was also a little bit of an unusual choice. D.C. has historically not been a place where CEOs travel. It's not been historically a center of business, but that, of course, has been changing across the last five to seven years.

15:25You know, the role of geopolitics in the boardroom, the rise of regulation, all these different trends have converged. And now CEOs from both the United States and across the world find themselves in Washington, you know, three, four, five, ten times a year, some of them. And we were fortunate because we made that bet. And in the first year, we had five Fortune 500 CEOs. The second, we had 25. The third year, we had 200 Fortune 500 CEOs. And this coming year, in April 2026, we're expecting over 400, which really makes it the single largest CEO convening in this country and probably second to Davos globally.

16:09And of course, that's not just a great moment to do a lot of journalism because much of these conversations, if not all of them, are on the record and all the conversations are led by our journalists. But it's clearly an interesting and powerful commercial opportunity to connect different brands and companies who are interested in reaching this.

16:32Peter Kafka:My next question is sort of like flesh out how that business actually works. When you gather all those CEOs in Washington in April, are you making most of your money selling tickets to those CEOs? What's the ticket cost? And then how much of your revenue comes from selling access to those folks to advertisers? We are, right now, we're not charging any delegate fees to the CEOs. You pay to be in the audience if you're not a CEO. Yeah. And honestly, I mean, it's obvious that the CEOs are the sort of the core of the audience, the core of the product idea and proposition. So virtually 100 % of the revenue that we have generated so far has been companies who want to reach CEOs.

17:16So these are the big global, you know, Fortune 100 B2B companies who, you know, whether they're banks or consulting firms who, you know, who want to want to reach CEOs because CEOs control big, big corporate budgets. And anyway, so that's been that's been the nature of the business. I think over time, as we build it and scale it, we're hoping to, beyond 2026, if we can go from 400 to maybe 600 or 700 next year and really get on par with the market leader, we think many other revenue opportunities will emerge given the value of that type of audience.

18:00Peter Kafka:And when you're when you're selling a Pfizer, whoever, sponsorship for specifically an event like that, right? I mean, when I've dipped into the conference business, the thing you always hear from from potential sponsors is they want to be in the thought leadership space. They essentially want to be on stage. They want to be on a panel or they want to give a speech. Even if you allow them to do that, it doesn't seem like they get a ton of value out of that. It seems like the real value they're getting is the chance to be up close and personal with, you know, statesman X and Y and CEO Z. How do you how do you sort of make your advertisers happy when they sponsor an event?

18:38You know, I think, I mean, different different advertisers and different sponsors have different motivations for for being involved. You know, some are very focused on building their business. You know, they want to sell more software to CEOs. And, you know, and so getting their brand in front of that audience, you know, getting their content in front of that audience is actually valuable for them. Some other companies are not necessarily looking to sell their products per se, but want to tell a story about their corporate brand to people who matter, to stakeholders who may influence different aspects of their business ecosystem.

19:20And so that tends to be sort of a more ethereal, as you say, thought leadership messaging, corporate brand messaging, more of a content-based thing. So it just really depends on the client.

19:34Peter Kafka:We'll be right back, but first, a word from a sponsor.

20:01The deal for$149 or less is like your phone at 1%. It's about to power down. Limited time offer for new clients on federal returns. Participating locations only. Terms at jacksonnewitt.com slash 149.

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21:15Peter Kafka:And we're back. You've been describing a business that's very D.C.-based. You are based in D.C. It's really striking to me that some of the most successful media startups of the last few years, you guys, Axios, Punchbowl, to some extent Puck, are all making money or trying to make money in Washington in that same market as corporate responsibility, whatever you want to call it. You sort of matching advertisers with powerful people. How much, why had no one tapped into that previously and how much bigger can that market get? Is it saturated now? Well, you've got to think of it, I mean, it's effectively a B2B marketplace, right?

21:55You know, so it's, and I think this is what's different and what's sometimes confusing to people is that many of these news properties, including Semaphore, you know, are consumer facing. Now, they're consumer, you know, web pages and consumer focused newsletters. But since the audience that they're appealing to is this segment of this leadership audience, both public sector and private sector, it allows for a much more targeted type of business monetization. In this case, it's the corporate affairs market, which is largely corporate reputation, which I mentioned before. There's also a bit of advocacy advertising, which is advertisers looking to advocate different positions.

22:46Peter Kafka:Facebook saying, here's why we believe healthy regulation is a great idea. Exactly. And the truth is this market has existed for a long time. And there was a whole predecessor group of brands before Politico and Axios. You may remember Roll Call or The Hill or National Journal. And in fact, when I was at the Atlantic and ran Atlantic Media Company, we had a property called National Journal, which was deeply in this space. And even back then in the early noughts, those were some of the most successful and profitable and commercially viable media businesses around. So I think obviously these new digital disruptors came along and stole the market from those legacy players.