Bezos Invests In Business Insider – How Soon Will He Expect Profits? founder Jeff Bezos is one of the newest investors in digital publication Business Insider. Henry Blodget, the former former Wall Street analyst who co-founded Business Insider, announced it saying:

Bezos Expeditions, the personal investment company of Jeff Bezos, has led a new round of financing for Business Insider. Many of our existing investors, including Institutional Venture Partners and RRE Ventures, also participated. The new capital–$5 million–will allow us to continue to invest in our editorial, technology, and client teams and make Business Insider even better.

On a personal note, I will add that we are totally stoked about this.

Jeff Bezos’s leadership, vision, and philosophy at Amazon over the last two decades have inspired a whole generation of startups and entrepreneurs, including me.

Bezos invests in digital publication Business Insider

A New Breed of Digital Publication

Business Insider started out in 2007 as Silicon Alley Insider, a reference to Silicon Alley, an area in New York with a concentration of  Internet startups.  A few years later it rebranded as Business Insider. It expanded its focus to cover general business, not just the Manhattan startup scene.

Business Insider is one of the new breed of online-only publications.  It’s known for its provocative headlines and freewheeling mix of breaking news, analysis and entertainment. It’s sophisticated in the topics it covers, yet casual and scrappy in how it covers them. As one example, notice the headline in the image above.

In an age when so many traditional publications are declining (my local newspaper, the Cleveland Plain Dealer, just announced it will cut home delivery to 3 days a week), digital publications are growing.  Today’s digital publications are  spontaneous and fast on the draw.  They are more conversational, participatory and edgier than traditional newspapers and magazines.

It’s a formula people seem to like.  And no wonder.  News can be delivered in minutes or hours, versus days and weeks for print publications. You can access it whenever you want  — versus TV news that’s delivered on a schedule. It’s fun and  informative.

Digital publications can easily rival or exceed the reach of traditional news outlets.  At 24 million monthly unique visitors, Business Insider has a bigger reach than CNBC, according to the New Yorker.  Even a niche publication like ours here at Small Business Trends, where we get under a million monthly unique visitors, has a larger reach than most midsize city newspapers and trade publications, where circulation is in the tens of thousands to low hundreds of thousands.

What It Takes to Grow a Digital Publication

Henry Blodget has been open about the financials for Business Insider.  One year he wrote about the company’s financials on Business Insider. A few months ago he gave a terrific behind-the-scenes look at Business Insider including traffic numbers and PowerPoint deck.

Quartz did a quick summary of Business Insider’s financial situation.  I include it here because of the fascinating numbers behind a high-growth digital publication:

  • The Bezos investment brings the total raised by Business Insider to about $18 million.
  • When it last raised money in 2011, the company was valued at $50 million. We’re still trying to pin down the new valuation. Blodget told AllThingsD it’s “above” $50 million and told me it’s “double super-secret.” Many of BI’s competitors are valued at much more than $50 million.
  • Business Insider had $4.8 million in revenue in 2010, turning an Amazon-like profit of $2,127 — yes, two thousand dollars. Revenue grew to about $7.5 million in 2011 and $10 million in 2012, but as the company expanded, it ended up losing $3 million last year.  ***
  • The company has spent about $7 million of the venture capital it has raised.

It doesn’t surprise me that Business Insider lost money last year.  It takes money to grow in today’s competitive online news space.  Even in a self-funded news site like ours, we plow every penny back into the business.

Most outsiders don’t realize how much cost and labor is involved with running an online publication. True, digital publications are not saddled with the high costs of printing and distributing a print publication or broadcasting on television. But you still have to hire people, invest in technology, market the business, pay salespeople and cover all the  functions it takes to run a business such as bookkeeping and legal.

So, will this investment be enough for Business Insider to turn a profit, and how soon?  Amazon’s Bezos certainly has the kind of long-term patience I’d want if I were looking for an investor.  Amazon was unprofitable for the first 8 years of its history.  By that metric, Business Insider has at least until 2015.

See related coverage at Techmeme.

Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.