Entrepreneur magazine, one of the country’s best-known small-business publications, is getting a little more, well, entrepreneurial.
The privately held company is days away from announcing it has secured a “sizable” venture-capital investment and a new chief executive for its online subsidiary, which is expected to go public as a separate company by August.
Although Peter Shea, the company’s current chief executive, won’t reveal the identity of the new bigwig, he did say the person is from Orange County. Shea will remain chairman of Entrepreneur Media Inc. and chief executive of the company’s print operation.
The search encompassed the entire country, Shea says, but he had difficulty persuading candidates to move to Southern California.
The company is in the process of selecting an investment banker and revamping the web site for a relaunch. The company recently gained control of the “www.entrpreneur.com” domain name by purchasing it from the registered owner after stopping him legally from using the name commercially.
Shea plans to use the venture money for a national awareness campaign using Internet, print and possibly television, and to attract workers to bolster the technical aspects of the online venture. The biggest challenge so far, Shea says, is finding talented people who are not asking for “outrageous” amounts of stock options.
The Irvine company recently moved into 40,000 square feet at its new headquarters in advance of establishing the online arm as a separate business, but had not announced definite intentions to go public until now. The company will probably seek another round of funding before the IPO.
The 54-year-old race-car hobbyist Shea, who took control of the company 12 years ago by purchasing a majority stake, says he expects the online operation to be a significant source of growth over the next year. This comes despite the lackluster IPOs by other media companies in recent months: Salon, an online technology and politics magazine whose stock never caught fire, and financial news web site TheStreet.com, which has fallen to less than a third of its opening-day close of $60.
Unlike hot chip stocks or online retailing, online magazines have struggled to generate revenue, let alone profit.
But Shea says his company’s online operation will be much more attractive to investors because it won’t be strictly about online media, but actual e-commerce opportunities in the lucrative business-to-business arena. The so-called “B-to-B” segment is much larger than the highly visible business-to-consumer market.
“Consumers will walk across the street to save a dime,” Shea says. “Business-to-business purchasers are more loyal,they just don’t have the time.”
Shea says the company gets 80 calls a month from firms hoping to make co-branding deals with the publication. The company has already concluded a variety of e-commerce partnerships, including everything from co-branded credit cards to outsourced 401K plans for small businesses.
Though the e-commerce deals could introduce sticky ethical issues for a publication that covers the small business services area while simultaneously endorsing specific products, Shea insists that he will maintain a church-state separation between the content and e-commerce sides.
Unlike most media web sites, Entrepreneur.com will charge for some areas of content, taking a cue from publications such as The Wall Street Journal and TheStreet.com, which have been able to sell readers on the idea.
“If you give something away for nothing too long, it becomes worth exactly that,” Shea says.
Entrepreneur magazine has had an online presence since 1992, first through an exclusive deal with online service CompuServe and then through its own web site in 1996. In addition to repackaging content from the print magazine, the web site features an indexed directory of small-business web sites, an ancillary site targeting Hispanic-owned businesses, another featuring events from Entrepreneur’s expo business and others.
For content, the site will use mostly freelance writers and copy from partner news outlets such as Bloomberg and ZDNet.
Shea expects the site to generate about $25 million by the end of the year, roughly the same as the print operations. In addition to several small business publications with a combined subscriber base of more than 1 million, the company publishes books aimed at the small business market.
The web site, meanwhile boasts about 900,000 visitors per month, a remarkable figure considering the company has spent about $5 million on the site so far.
“We’ve got a great brand name, and we’re going to use it,” Shea says. n
