Money

When Jane and Louis returned to New York in 1990, after closing down Electric Word, they had many good ideas but no money to fund their development. Unfortunately, it was not only Murdock's bankers who were closing the purse strings on new media projects, but the media industry as a whole was entering a slump. Jane and Louis spent nearly two years searching for funding, until they finally found their angel.

In January, 1992, Nicholas Negroponte, head professor of M.I.T.'s Media Lab, became Wired's first investor with a $75,000 investment. In addition to his money, Nicholas brought his network to Wired, which soon proved to be an even more valuable resource. In June, 1992, Charles Jackson, CEO of Silicon Beach Software and friend of Nicholas', invested an additional $150,000. The money allowed Jane, Louis, John and Barbara moved to San Francisco and to start looking for people to help create Wired.

Still, by the time the magazine launched its premiere issue in January, 1993, the company had spent everything and was broke. But Wired had been working with a small investment banking firm, Sterling Payot, to raise some venture capital. Wired's banker at the firm, Andrew Anker, remain completely committed, and he was able to deliver the money by the end of January.

The next infusion of money occurred in March, 1994. S.I. Newhouse Jr., chairman of Conde Nast Publications, invested $3 million to $5 million for a 25 percent stake in Wired Ventures Ltd. This was a purely passive stake. Neither Newhouse nor Conde Nast has any editorial or management involvement in the company. When asked about the deal, Newhouse replied,

"Wired is a magazine of great quality and interest, and has achieved a remarkable penetration for a young magazine. I didn't need an exhaustive study of all the details."
At the time of the Newhouse investment, March, 1994, Wired's circulation was about 100,000, which many considered too small for such a large investment. But most of the money was used for direct-mail campaigns to increase circulation. By August,1995, the circulation has risen to 240,000.

As Wired is still a private company, its financial numbers are not published. But a rough estimation of its revenue based on circulation and advertising pages is nevertheless still possible:

120 advertising pages per month x $14,000 per page x 12 months = $20,160,000 in ad revenue
+
240,000 paid circulation x $40 average per year = $9.6 million in magazine sales
=
$29,760,000 in estimated annual revenue
Eighteen months later, it appears that Newhouse knew what he was talking about.....


PEOPLE HEART CULTURE BUSINESS

last updated 4 April 96 SJS - shannon@well.com