Managing Business Model Changes

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1:03What happens when the best business decision you can make is to change businesses? What's the best way to redeploy your skill sets in the modern age of artificial intelligence and changing business models? I'm Barry Ritholtz, and on today's edition of At The Money, we're going to discuss how to manage your way through the challenges of technology-driven change. To help us unpack all of this and what it means for your career, let's bring in veteran markets journalist and CFA, Sam Rowe. Sam is known for his clear data-driven insights into markets and the economy. He spent two decades working in the trenches for shops such as Forbes, Yahoo Finance, Business Insider, and Axios.

1:53He launched his own substack three years ago, Ticker, T-K-E-R, which earned him the Society of Business and Editor and Writers Award for best in business in 2022. So let's start with your background. You earned a certified financial analyst, but you became a financial journalist. Explain that initial career choice. Yeah, well, the initial plan actually was to figure out a way to get into Wall Street. You know, if we go even further back, I was working as a contractor for a law firm that for whatever reason got me exposure to equity research for the first time. And this is the first time I started to realize how asset valuation worked.

2:42And it's not just math and spreadsheets and a hard science theoretical exercise. There's a lot of soft sciences involved in here because you're dealing with human behavior. So I was interested in getting into equity research. And my first job being able to write about stocks or markets was at Forbes in their investment newsletters division. So a traditional media outlet, but a sort of non-traditional position. That's kind of been your career history. So you go from Forbes newsletters, Yahoo Finance, Business Insider, Axios. These are all post-20th century sort of technology-based news organizations.

3:29Sure, yeah. I mean, even Forbes, when I was there, I was there from 2006 to 2010, was by far number one in terms of news websites. They had tons and tons and tons of traffic going to their website because they were one of the first news outlets to really establish themselves in the late 90s and early 2000s. and then of course the financial crisis comes and you know business media did not do very well during that time. I eventually get laid off in 2010 and I'm in between jobs a little bit and then I end up at Business Insider where the business model is just completely different. You know my last day at Forbes I actually had a talk with my boss's boss in my office.

4:16That's what the state of things were back then, right? That I could actually have an office at a print magazine in a building in Greenwich Village. Seems super inefficient. Well, I didn't realize how inefficient that was until I ended up at Business Insider, where on my first day, I'm on a desk that's probably about three feet wide in a newsroom where we're basically just sitting there shoulder to shoulder with every other editor and journalist, including the editor-in-chief and the CEO of the company. And the productivity there was insane. So yeah, in the snap of a finger, I realized there's a reason why we had layoffs at my previous employer.

4:59So that took place in 2010. But really, we've seen technology really hurting traditional media's business model since the 1990s. So Craigslist really did a job on the classified advertising business, which was a big driver. eBay was another thing that took sales away from the traditional ad model. Now it's things like Facebook Marketplace, Zillow for real estate, bring a trailer for automobiles. Technology has been taking big chunks of the revenue streams from traditional media. It's now three plus decades of this When did you first start to realize, hey, this entire underlying business model is under assault?

5:51I think it was probably late in my Business Insider days and early in my Yahoo Finance days where we started to really begin to understand how much digital news sites were beholden to the traffic coming from places like Google Search and social media platforms like Facebook. But then in terms of the revenue perspective with advertising and all of this stuff, you quickly saw that the economics of this was falling apart. And I think that the advertisers were largely realizing that the ROI of having ads on some of these sites weren't as competitive as what they're doing now, which is having an influencer on TikTok hawking products.

6:38So we're going to work our way up to social media. I want to track your career. So you start Business Insider in 2011. Yahoo Finance is when? 2016. So five years later. And then Axios? 2021 for a very brief period. And then you launch your Substack back in 2022. When Substack was still kind of young, we hadn't quite hit peak Substack yet. Sure. What was the motivation to say, you know what, I have to take control of this and do it on my own? I think being in management at Yahoo Finance and getting a little bit of exposure to it at Business Insider, for me, I think it was as simple as – there was two parts to this.

7:27One, if you can keep your costs low, then I think you can have a media operation. and related to costs, if you have an audience, and if you are sort of very deliberate about who your audience is and how big that audience can get, then you can have the revenue to cover that cost and you can have a nice small business like what I'm doing now. So Substack really inverted the traditional media model back in when you have an office and a salary, They're the ones who are building subscriptions, running ads, doing the business side of it. Your job in a traditional media business is to just create content.

8:11The inversion is writers now earn money based on their subscriptions, which are driven in part by their content, but also their marketing savvy, their branding, their reputations. is this new content model a modern meritocracy? I think increasingly, I'm not sure if I would characterize it that way. I think about, I spend a lot of time on TikTok and Twitch and watch all the various streamers that have found career success. And there are some people who get massive and there are some people who have very medium-sized, moderate-sized audiences. The analogy that I've been using lately when it comes to how people or how media has been working is the difference between publicly traded fast food companies and your favorite restaurant that's run by mom and pop around the corner.

9:10It's possible to have a really great restaurant with just one outlet. I think if you ask most people, if you ask them what their favorite restaurant is, it's a privately owned family business somewhere because the red sauce will never be replicated by Olive Garden or whatever. That doesn't mean Olive Garden and McDonald's and any of this stuff is bad, but it's just the business strategy, the reach, the audience that they're going for is going to be very different. And so I think that there's probably a world where these big mainstream media outlets and the independent journalists can coexist. I think it only works because the frictions and the costs and the barriers to entry to becoming an independent writer has come down significantly.

9:58So let me ask you a sort of abstract question about Google search as a source for new readers or new blog followers or whatever. Cory Doctorow uses the phrase platform crapification. And we've certainly seen that with Google. I find myself using Google far much less. The whole genius of page rank seems to have gone away. I don't want their AI answer. I have perplexity on my phone. I don't need them. If I want an AI answer, I know exactly how to get it. What I want is show me the top 30, 50, 100 sites that have this phrase or this topic. And I just don't get that anymore. It's just festooned with so much garbage.

10:48So the question I want to ask you is, has the slow, I guess it's too early to call the death of Google, but has the crapification of Google harmed writers who are looking for an audience, or are people no longer relying on it and word of mouth is helping people looking for an audience? Yeah, I would actually say it's probably helped. Really? I think it's made, it's hurt the large media companies significantly. I think Wall Street Journal had an article, fabulous article about this in terms of how much search traffic digital media sites were getting from Google, and it's all has been shrinking.

11:27It's collapsed, right? It's collapsed, yeah. It's a nightmare. But that also means if people are spending less time being drawn to these mega properties, well, where are they going for their news and their information? And maybe they're gravitating toward something like a newsletter that they signed up because one of their friends shared something and they saw something good here. So Google SEO is not a job anyone should be thinking about. That was a real job, certainly since the 90s and 2000s, hey, if you can optimize for Google search, here's a firehose of traffic, just hope they never change their algorithm.

12:06Yeah. I mean, I think passively, I try to be conscious of things that help improve the SEO of anything I publish. But I'm not going to lose sleep over it because I might get a couple more clicks. It's so diminished today from what it once was. So what's been the most surprising part of this transition to hanging out your own newsletter? What's been the most difficult part? The most difficult part is very easy. All of the other resources you get from working at a large company, you realize you took all that stuff for granted. Having access to really great healthcare for a very cheap price, that's number one.

12:48Two, when you have tech issues, you're not on the phone. And when you're employed by someone, you're not the one on the phone with Verizon. Someone else. Someone else is taking care of that for you. And you're here today because you're Verizon modem. Yeah, that's a whole other nightmare. But yeah, all that stuff. Like the AC doesn't work in my apartment. Who's paying for the snacks and all this kind of stuff. And then there are other things that are intangible value that I really do miss about working at larger media companies, which is being surrounded by people who are passionate about what they're doing.

13:23They're curious. You can bounce ideas off and have something, you know, crushed or really developed, you know, in a room with people. So I think, you know, it's a trade-off, though. The other thing being that as an independent writer, I'm not in nearly as many meetings as I used to be in. You're not wasting as much time. So final question. Someone thinking about a career change, thinking about hanging their own shingle, what's the most important lesson you can impart to those people? You just have to go out and give it a shot. It doesn't cost anything to start a website or a blog on any of these newsletters, especially if you start off free.

14:04And you might actually find you have a passion for writing. Some people think that they want to be a writer. They give it a shot. They find out that they don't want to be a writer. It's a lonely grind. It can be at times. It can be very lonely. And then some people find that it's therapeutic or it's a way to keep themselves organized. You know, I've actually talked to a couple of financial advisors who have started newsletters for no other reason than to help them keep themselves organized and have found an audience for this because what they're doing for themselves is actually benefiting someone else.

14:33Fascinating stuff. I think it's just worth giving it a shot. So to wrap up, if you're thinking about changing careers, you should be paying attention to technology, what it's doing to your field's revenue and profit models. Understand how technology is changing the way business is being done. It's usually better to jump than to be pushed. I'm Barry Ritholtz. This is Bloomberg's At The Money.

15:07As our use of AI expands, how do we make sure it doesn't end up breaking the internet? I'm Hannah Fry, host of The Exponential Era, a series that explores the real-world impact of future network technology. And I sat down with two experts to discover how we can support the massive connectivity needs of AI. Find out what I learned at bloomberg.com forward slash Nokia. Thank you.