The Global Media Weekly for executives and entrepreneurs

How Payload finds space in B2B

It is exactly a year since the 10-year-old B2B startup Industry Dive was acquired by Informa for a likely eventual price of some $500mn. Its significance was in the way that the Washington DC-based company had applied the new media lessons of Politico, Business Insider, Morning Brew et al to B2B verticals. It exploited the power of the inbox to set the agenda for executives with stylish, punchy emails in business sectors many of whose decades-old trade magazines had been blown apart by the web’s attack on the economics of print. The narrative was that “newsletters are the new homepage of the internet”.

Newsletters challenged the traditional economics that had once governed B2B media: the sheer cost and time involved in printing, paper and distribution had – for decades – inevitably dictated the frequency of publication and its dependance on advertising; readers often came second.

But – in many sectors – the battered legacy of those traditional business models lived on through web sites that were (more or less) digital versions of the print, trying hard not to upstage (or accelerate the decline of) still-profitable B2B magazines.

Enter Industry Dive.

In 2012, it reinvented B2B media without the handicap of having legacy products to defend. It recognised the power of “push” email newsletters at a time when many publishers were still relying on the “pull” of web sites. Industry Dive saw an opportunity in the rapid growth of mobile tech for business people and in the way that niche markets were being under-served by crumbling B2B magazines.

Its core business is now a portfolio of about 30 daily emails of each industry’s key headlines, linking to relevant articles from around the web, recommended resources and upcoming industry events. They are well-written, easy-to-read newsletters which feature original content and analysis as well as being a one-stop-shop of industry news and comment. The teams are small but they employ experienced journalists – and it shows. It is good journalism in a neat package with no pretence about the standardisation involved: “The products we sell are the same. It’s the Southwest (airline) model – buy one type of plane and then everyone knows how to work on it.”

The result is a business model that is the opposite of traditional B2B media in style, frequency, revenue (mostly sponsorship and content marketing) – and the low-cost operations serving audiences which want targeted, tightly-written content. It’s a stark contrast to trade magazines which – especially in their most profitable days – provided reading matter directly in proportion to the volume of advertising. Once the ads started to evaporate, so did the value of much of the content, even in some publications that had been the very definition of authority and reliability in their industries.

A more subtle point is that business audiences especially have always needed to be able to depend on information sources, knowing what each will or will not provide. That kind of implied content “guarantee”, arguably, got lost in the fluctuating fortunes of B2B magazines.

By contrast, business people know what they’re getting day after day with Industry Dive – and schedule their daily quick-read accordingly. It becomes a powerful habit in a world of digital distractions.

There are exceptions, of course, and there are some rejuvenated B2B companies – in the US, UK and elsewhere – operating successfully both in print and digital. But, in so many ways, Industry Dive is the very best illustration of just how difficult it is for traditional media – of any kind – to compete wholeheartedly with completely new business models; they just can’t afford to do it.

A decade ago, that’s what at least some traditional B2B operators simply did not understand as they watched the newcomer roll its business model into sector after sector, producing a portfolio that – at one level – seemed to resemble the multi-market B2B publishers whose pre-digital magazines had once been the highest margin media businesses.

The aging rivals also did not understand the simple Industry Dive virtue of a low-cost model built on low volumes of (carefully targeted, well-written) content – and low staffing (some 2-8 per vertical brand). Even now, you don’t have to search hard to find traditional B2B publishers still quoting the number of people they employ as the “proof” that they are more “authoritative” than Industry Dive in their market.

But, eleven years after it launched, Industry Dive is now enjoying the same 30% profit margins that once defined the very best B2B magazines.

That’s why the advertising-funded superstar of B2B media was able to achieve a valuation of some 15x EBITDA and perhaps 4x revenue, the kind of multiples previously reserved only for subscription or data-rich services – and for a company which eschewed venture capital and launched with just a few hundred thousand dollars.

That’s also why it’s a role model, now inspiring a whole generation of new-style B2B media – and investors.

Take Payload, a two-year-old US digital media company focused on the business and policy of space, a fast-growing industry currently said to be a $350bn market and predicted to multiply four times by 2030. In the US, some 400 new venture-backed space companies were launched during the last decade or so. That’s the market targeted by Payload whose founders say that, for decades, space coverage has focused on the consumer spectacle of space travel rather than on the business and society implications of the industry.

The company was created in 2021 by former consultant and B2B contributor Ari Lewis and onetime investment banker Mo Islam. They met when Lewis turned up to brief JP Morgan bankers on crypto currencies and got into discussing the bank’s new investment in space and how little information was available to help them.

There were traditional trade publications, some still in print. And there was high-value research costing tens of thousands of dollars. But the fast-growing industry, which was  raising billions of dollars each year, was not served by a media company at the intersection of space and investment. So Lewis and Islam decided to start one.

Islam subsequently said “We started Payload out of a personal frustration I had with the lack of quality space media coverage. I worked in space through my coverage at Deutsche Bank and JP Morgan. I had a front row seat to the incredible investment activity and industry momentum, but noticed very little accompanying news and analysis.”

Less than two years later, they raised $850k of seed capital. They started in 2021 with the Payload weekly (now daily) newsletter and their portfolio now includes three weeklies: Pathfinder podcast, Polaris public policy publication, and Parallax space briefing. They have some 19,000 (non-paying) subscribers.

They have also started organising invitation-only events. In Los Angeles, they have been hosting: quarterly “Happy Hours”, 3-4 hour networking events (with a minimal amount of formal presentation or curation) and more conventional summits and conferences, in LA and Washington DC on the public policy and investment issues of space exploration. Most have been attended by 300-400 people.

But here’s the thing.

Payload employs seven fulltime people (all shareholders), three of whom are journalists. It plans to add one or two more journalists this year. In 2023, it will have $1mn of (advertising and sponsorship) revenue, 4x last year. In this – only its second year of trading – the company will be profitable.

The game plan has been to build journalistic credibility, establish networking events and – coming soon – develop subscription revenues. In a strategy that resembles Politico (whose Pro subscription product generates almost all the profit and ‘pays’ for its freely available news service) Payload is preparing to launch its first paid-for “intelligence” product next year.

Although Payload seems capable of growing revenue to at least $1.5mn in 2024 with probably 20% margins and similar staffing, their rapid progress so far – and the pace of expansion in the space industry – is encouraging them to consider a new round of fundraising for their planned subscription publication. Beyond that, they have outline thoughts about expansion into the adjacent markets for defence and geospatiale (mapping).

For the co-founders who regard themselves as ideal, complementary partners with Lewis majoring on “media” and Islam on “space”, these are the agonising times of deciding whether to fundraise again. Or hang on to their majority of the equity, self-fund slower development – but risk the arrival of better-funded competitors.

In a recent podcast, they noted that the US is engaged in the next space race, competing with eastern countries (including India which had a moon landing this week). Elon Musk’s Space X had encouraged more investment in the industry, not least through his creation of reusable rockets. Oh – and you might have to pay handsomely for the privilege – but everyone now knows that (sooner rather than later) you will be able to go to the moon, if you want. It’s all happening.

Beyond the heady economics and creativity of space exploration, Payload is just the latest reminder of the everlasting power of niche media in B2B. The core of any such media business remains quality journalism and the need (increasingly) to raise competitive hurdles by providing information that cannot be found anywhere else. <We’ll keep banging on about the opportunity to develop the competitive gold of pricing, costs and other statistical data right across B2B media…> But it’s low-cost ‘inbox publishing’ that creates 21st century opportunities to develop viable media businesses to replace legacy providers in the increasing number of verticals being transformed by technology. The opportunities will keep coming.

Welcome to the golden age of B2B.