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Jan. 28, 2014, 2:34 p.m.

“I see this as the next CNN”: Jason Calacanis’ Inside.com aims to solve news on mobile devices

Modeled on lean mobile-first startups like Instagram, the reborn Inside.com wants to be your front door to news on your phone — by using humans as aggregators and filters, not reporters.

In the 13-plus years since the original ahead-of-its-time Inside.com launched, it’s been part of a Steve Brill mashup, a dead domain, a planned flagship brand that didn’t happen, and a dormant asset waiting to be exploited. For most of that time, tech publishing entrepreneur Jason Calacanis wanted it. He was finally able to snag it from its most recent owner, Guardian News & Media, popping up a placeholder that stayed up longer than expected. Today, the placeholder came off and Inside came back in a guise few would have predicted: a mobile-first general news app and companion site based on OPJ: Other People’s Journalism.

inside-logoIt’s an evolution for Calacanis, whose own history illustrates the past decade’s shifts in tech journalism and the startup culture. He founded Silicon Alley Reporter, hit the blog wave by cofounding and selling Weblogs Inc. to AOL, founded the startup-centric Launch (conference, subscription newsletter, and podcasts), became an angel investor, bet on SEO-centric Mahalo and lost to Google’s Panda update, and then spent two years trying to figure out how to build a Google-proof business.

The new Inside is his multiple-choice answer to that quandary, his theory about the future of news and a desire to leave a media legacy. Calacanis, never a stranger to ambition, wants nothing less than to build his own CNN, but without journalists — save online news vet Gabriel Snyder, the new editor-in-chief.

It’s built on the corporate frame of Mahalo Inc., keeping the investors and the capital structure, but it is not a relaunch of that site. Mahalo.com and its YouTube channel stay in place, generating about $1 million a year without much effort, according to Calacanis. He asked the investors, which include Mark Cuban, Sequoia, News Corp, Burda, CBS, and Elon Musk, whether they wanted their Mahalo money back. They let it ride on Inside. Calacanis says he has enough runway for three years and enough on hand to run Inside as a free app sans advertising for two years without raising more money.

We spoke at length while he demoed the new Inside during the ramp-up to the launch. Here are some lightly edited highlights from that conversation.

Jason Calacanis: We think the majority of consumption of news is going to occur on smartphones in the future, so that means we have to make the world’s best app for news. And that’s what we’re trying to do.

inside-feedTwitter has the tweet as their atomic unit of content. We have something called an update. This is an editorial format I’ve worked on for the past over a year, actually, at Launch Ticker. It then has about 300 characters, or 40 words, which is just enough to fit on a smartphone screen. About 10 facts is what we shoot for. And we aim to link to the best journalism in the world. We have a team of curators summarizing the top 1,000 stories every day [covering] over one thousand topics. Everything is done in a feed format.

Staci D. Kramer: What’s the organization base?
Calacanis: Basically we’re working from the news backwards. What we do is we put each story into what we think is the most obvious topic for it, then we’re saying, “What other two topics would people most interested in drilling down on in this story?” Of course, you can click on any of these and go to the original source.

We don’t see ourselves as the destination. We see ourselves as the curator of the best journalism in the world, so we’re very specifically only linking to the original journalist. We’re training our curators to understand The Huffington Post or Business Insider, which might do 70 to 80 percent aggregation of other people’s content and 20 to 30 percent original, and how to know the difference. So if Business Insider pulls a quote from The New York Times story and we find it on Business Insider, we’re actually going to wind up linking to The New York Times. We see ourselves as an antidote to the sort of middleman role and people rewriting other people’s content. We’re going to really actually do the work to figure out who came up with the original story.

So if you’re somebody who just reblogs everything out there, you’re probably not going to wind up on Inside.com. But if you’re someone who does original journalism, we’re going to drive a lot of traffic to you.

Kramer: The default view for topics now is “All Topics,” alphabetically listed, right?
Calacanis: Yes, it’s not a hierarchy yet. We may as we go on build a hierarchy, like entertainment → movies → independent → documentaries. We’re going with a flat taxonomy to start, because we’re basically tagging each update three times. I would say we’re not going to get that granular. I would say we’re doing the fat tail and the mid tail, but maybe not the longest part of the tail yet.
Kramer: You say you’re going to link to the best journalism. Who’s deciding what’s the best journalism?

Calacanis: That would be Gabriel Snyder. That’s going to be his call, ultimately. He’ll be looking at what the curators do and saying, “Yes, this is the best take on this story.”

We don’t want to have a Techmeme issue — 30 people commenting on a story about Marissa Mayer firing her COO. We want to find out who did the best original coverage of that, and if that’s Kara Swisher, we should be able to discern that with a little bit of work. We’re not going to be able to do that 100 percent of the time. We hope that Gabriel and the team will get it right 95 percent or better of the time, and then when we make a mistake, we hope we get called out in the comments.

That’s why I brought Gabriel on. He’s a much better editor than I would be. I was planning to be editor-in-chief, chief content officer. After showing him as a friend to get his advice, he was really drawn to it and he felt like this was the future of mobile news and that someone needed to build it, get people to the best stuff — as it were, the Pandora of news, the Twitter of topics.

We have 15 full-time people in the company and they’re all technology/product, and we have dozens and dozens of freelance contributors who we call curators.

Kramer: How much time do they put in?
Calacanis: We don’t give out exact details, but it would be part-time.
Kramer: Are they responsible for identifying the sources, or do they work off a list of topics?
Calacanis: We’ve tested a bunch of different ways. We try to hire people who are obviously news junkies, and some of them you don’t have to tell these are top sources. If they have some depth to their news knowledge we bring them on the team. We do also have an ongoing discussion with everybody in the chat room about best sources. Sometimes they can work from a list of our 10 favorite sources for political news, 10 for cool products and architecture — other times we leave it up to them.

That will be Gabriel’s function in the company, to round out and polish the source list and make sure we’re covering. Even without the direction of an e-i-c, we’re two-thirds of the way to having what I’ll call perfect coverage — anything perfect or awesome. That last third is going to be Gabriel’s job, to make sure those stories, as they’re bubbling up, we get them quickly.

We have to get to the story quickly, so we’re actually tracking our time to a story versus CNN’s or Gawker’s or Business Insider’s or The New York Times’. We’re looking at these things in terms of how quickly can we get to something. We have a big advantage in that we’re not doing the original reporting, so we don’t have to write the story about the Boston bombing — we just have to know who got to it first and point to the best sources.

Kramer: You recently switched Launch Ticker, which was an editorial sandbox, to subscription. Is Launch Ticker again the canary in the coal mine?

Calacanis: The Launch Ticker is a very specific audience of people — I would say maybe 100,000 people who are so in to the technology startup business that they need it. And we’ve already reached 700 subscribers on that — so already $70,000 (at $100 a year) of subscription revenue in just a couple of months. I think there is a chance to do this type of curation in a vertical and make it a standalone product. That’s what I was testing with that product — but that product also had native advertising in it, so that might be a better canary in the coal mine for Inside.

But Inside is general news, right? We will get deep into Bitcoin on inside.com/bitcoin — that was part of the reason I coveted the domain name so much and I pursued this domain name for 10 years. It’s a very definitive URL. There are very few chances to have a definitive brand like Inside.

When you think about a topic like Bitcoin — if we did inside.com/bitcoin 18 months ago when it first started coming up, if we had that, we would have had the definitive URL for Bitcoin news. Inside.com/bitcoin would be the place that’s very easy to remember. We also have @inside on Twitter, using the Twitter handle to interact with the audience and again direct people to the best journalism in the world.

We don’t feel there’s a problem with there not being enough good journalism. I personally believe there’s too much bad journalism. If you can get people a view of the best journalism in the world, they’ll have more than enough good stuff to consume. The problem is they have to weed through the five stories on Business Insider or Huffington Post that are kind of slideshows and link-baiting headlines and just plain false headlines to get the one good Nicholas Carlson story.

Kramer: If I wanted you to invest $1 million as an angel in this, what would you tell me?

Calacanis: As an angel investor, I would be very interested. We had one major media company offer to buy on the spot. When one of the top 10 offers to buy, you know you’re onto something.

Nobody’s figured out mobile news. The great thing about mobile it’s going to be a magnitude bigger than the web. Now that we’re in people’s pockets and we’ve learned what they want to do, we’re going to be able to really optimize people’s experience to get them to the great stuff. If they want all of the news, they can go to the all-update feed. If they want news just tailored to them, I think over the next year or two we’re going to really be able to know, hey, Staci really likes media stories and she’s really into The New York Times and she really likes these five entrepreneurs and this is her favorite baseball team — and these are the five or six types of stories she doesn’t want. She doesn’t want Kim Kardashian in her feed, because she’s voted her down twice, so we’ve never going to show it again in my topics.

I would be drawn to it as an investor, but investors generally don’t like content, which is why I’ve structured it as a platform company. We are not doing the original journalism. Again, even though we write these 300-word updates, these are done by a freelance workforce and we have a 15-person company. I’ve modeled it in a way after Instagram or other small product-based platform companies. We are definitely a technology company and we do some content, but it’s done as a large-scale distributed workforce like Mahalo had or just like Weblogs Inc. had. This is my third time building a large-scale distributed workforce.

Kramer: Are you taking outside investment?
Calacanis: Not right now. BlackBerry invested in the company right before we launched, and we haven’t discussed how much or what valuation. BlackBerry felt it was important to be on the platform, so we took an investment with them, did a partnership with them. The existing investors from Mahalo are the investors in Inside, so it’s it’s the same cap table, same corporate structure — we just sunset Maholo.

For people who are interested in the history, Mahalo became the 140th largest site in the United States, it had 50-60 million uniques in the top month, it was doing a $10 million AdSense run rate at the peak. It was pretty significant. The company hit profitability and we had over 100 employees. When the Panda update came, just like Google made Rap Genius disappear, they really took more than 50 percent of our traffic. They wouldn’t give us any relief, so I realized this was not a sustainable business. I went out and tried two or three different businesses.

We still have some traffic and assets. Some Mahalo assets still make $1 million a year, so you can’t just turn them off, but I don’t think building an SEO-driven business works any more. I don’t think you can really rely on Google not to steal your business like they did to Yelp and others. I basically tried to come up with a business idea that was what I will call Google-proof.

To make a Google-proof company, I wanted to have a killer brand that people would remember and come to like — a product so compelling that it has a repeatable effect. The problem at Mahalo or eHow is you use it for two hours to get your baking recipe, then you don’t use it again for two months — then you use it again for putting up curtains. You really rely on people going to Google.

With news, people will go directly to a site, which makes it impervious to Google. And the app ecosystem is also impervious to Google. They can’t control apps even though they have a big footprint in Android, nor have they shown a propensity to control the app ecosystem on Android. I think they would get a revolt on their hands if they did. We’re also adding an email component to this.

So email, social, and apps are three things that Google can’t control. This is very social — people will share. It’s mobile — Google can’t control that. The email function Google moderately can control.

I was a little agitated about that turn of events — I had to lay off 75 full-time writers after that Google update. I took a lot of those lessons. I picked myself up, and the team, and said, “Let’s solve this problem.”

This isn’t an SEO strategy, it’s an app strategy. We think once you have the app on your phone, you’re going to keep going back to it.

Kramer: Where’s the money in this?
Calacanis: If you look at this feed, it will probably remind you of the Twitter feed or Instagram. The update format would be perfect for native advertising. What I think will be the model is to let advertisers insert updates, then pay to promote them — obviously clearly labeled. If we get any kind of consumption here, the revenue model is baked in.

People can just buy native ads by topic. If you want to market people who are into Sundance, you can be the second or third card on Sundance.

We’re going to get people enough to get them going, but if you’re really a movie fan and you see that story about Avatar, you’re going to want to click through and get all the details, especially if it’s a high-quality journalism site.

We see ourselves kind of analogous to how Google used to run, which was Google would give you a great overview of places to go on the web and then drive a lot of traffic instead of keeping the traffic for themselves, which is their model now.

Kramer: What makes you different than Circa or Breaking News or Yahoo News Digest?
Calacanis: I think there’s a lot of activity around news because nobody’s won the mobile space. If you ask people, and I did this last year, what do you use for news on your phone, the most common answer I got was Twitter.

We started a year before Circa with the Launch Ticker. I looked at the Yahoo thing and it’s kind of just summaries. I think it’s automated by computers. I’ve tested all the semantic software and it doesn’t work, I don’t believe. I think a human has to read the story, understand the story, and write the summary.

We’ll figure out who the winner of the news space is in two or three years.

Kramer: Do you have the money?
Calacanis: We have three years of runway. We don’t have to put any ads on for two years or raise money.

Nobody’s come close to figuring it out. Some people, like Circa, have done a great job. I’m a small investor in Circa. Circa’s not going to do 1,000 updates a day. We’ll actually link to their summaries, which are pretty good — which is kind of meta.

Kramer: What kind of following do you need to gain critical mass for this app?
Calacanis: For me, I always look at any project I make trying to be in the top 200 sites. In terms of in the App Store, we need to be in the top 10 in the first year. If we can be in the top 200 sites in maybe three years, and in the top 10 news apps in a year, that would be a good starting point. Year one, if we were in the top 500 sites in the U.S., that would be good. I’ve built a lot of big lasting brands — Engadget, Autoblog, Joystiq, Launch are still going.

This is like the media brand I always wanted to create. At Weblogs Inc., we almost did this, but the bloggers wanted to have their own brand names. They didn’t want to be gadgets.weblogsinc.com. They wanted to be Engadget. The Engadget people really didn’t want to interface with the Joystiq people, with the Autoblog people. They had their own little islands. What I’m trying to build here is one app that unites all content based on topics and that learns what you like over time.

Kramer: If you were starting Launch Ticker now, would it be inside.com/tech?
Calacanis: Inside.com/startups. The Launch Ticker is really about inside baseball in the technology industry, whereas inside.com/tech would be more like the Wall Street Journal technology column — all technology, as opposed to VCs. That’s the kind of hardcore B2B stuff I think we’ll get to eventually, but we’re general news today. We’re not going after the B2B verticals, although I wouldn’t rule that out for the future.

The line between what is industry news and consumer news has blurred. Steve Jobs told me face to face that Engadget was his favorite gadget site and that he read it every day. So we were servicing Steve Jobs and the industry at the same time as the people Steve Jobs was selling to.

Kramer: Where does Launch Festival fit in with this? Do you see yourself doing Inside conferences?
Calacanis: Launch is a separate company actually. It has nine people working for it. It’s based in San Francisco. I own it, but there’s a CEO and a whole team over there. In a way, Launch is one vertical of what Inside could eventually be.

We don’t have plans to do conferences, but I do like them, so it’s possible. But I really think we’re going to have our hands full trying to win mobile news on apps, and that’s where 100 percent of our focus will be for the next two years. We just want to be the best starting point for news needs. We want to be the starting point. If you start with us, we’re not going to waste your time and we’re going to get you to the best stuff.

Kramer: How much of an investment does it take to do something like this for two years — for more than two years, since you’ve already been doing it for 18 months?
Calacanis: If you want to build a really great product today in the media business on this scale, you probably have to invest low millions of dollars — $2 or $3 million a year for two to three years would be a pretty good estimate. When you compare that to the last big Condé Nast magazine, Portfolio, that was like $30 million [actually over $100 million —Ed.] and it failed. Time Inc., Condé Nast, and Hearst, when they launch a publication, it’s typically $10 to 30 million. Launching a cable channel is a $50 million effort.

Today, to launch a decent blog, it’s a million-dollar effort. If you don’t spend a million in two-three years, I don’t expect it to reach any level of prominence. It’s a fraction of when I started in the business. You’d have to have 100 people. Now you can build something with 15 people that’s extraordinary, because so much of the infrastructure’s there. You have Business Insider, which is worth $200 million, Huffington Post worth $350 million when they sold.

Kramer: If Business Insider was worth $200 million, do you think they’d still own it?
Calacanis: No, but it’s definitely worth $100 million. I think it’s probably reasonable for Business Insider to be worth $100 million; $200 million would be very high and $150 million probably would be fair or okay. Basically, a pretty good rule of thumb is for every million uniques you have probably $5 million in market cap, maybe $10 million.

If you have one million uniques a month, you’re probably worth $5 million to the right person. If you have 10 million in the U.S., you’re probably worth $100 million.

I did okay with my angel portfolio, and I’ve done very well with Weblogs Inc., so I really don’t need the money from this. I’m doing this because I want to build the brand of my career. I’m 43 years old. I’m very proud of the brand I’ve built. But I want to build my own CNN, and I see this as the next CNN. That’s really what I’m optimizing for as an entrepreneur. This is my legacy.

I want to build the brand that is the most beautiful and loved news brand in the world.

This isn’t a quick flip for me. I’ve already had a couple of hits. I don’t need to sell it. I need to build something extraordinary, and that’s what I’m optimizing for.

Kramer: CNN has over the years had an enormous amount of original content and is known for its own journalism and reporting — sometimes for the better, sometimes for the worse. When Ted Turner left, CNN was doing expensive documentaries on the Cold War. How do you compare what you’re doing at Inside to something that is based on original content?
Calacanis: That’s a great question. I think high-high-high-end curation is in and of itself an act of creation. I know some people might disagree with that, but if you do truly great curation of what’s going on the world, I think it can become the actual destination.

If you look at what Matthew Keys did during the Boston bombing, he was the best person to follow during that. He made mistakes and he may be a polarizing individual, but he was a really good person to follow during that.

With so much rabid consumer participation in media and a really great foundation of great journalism going on in the world, the person who can curate that and put it into a feed or product that really speaks to a person is actually creating something. I’m a writer myself and a former journalist, so I know that sounds crazy, but I think that’s what the world needs today. Does that mean we’re not ever going to do original reporting? It’s possible we could. If we saw a category where we said nobody’s covering SeaWorld or Bitcoin, it’s possible we could hire a journalist or freelancer to cover that beat for us, sure. The difference between a curator and a journalist is really one of intent.

I think our success will be largely based on our ability to get rid of noise. Can we not have any spam or not have any reblogging, and can we keep people really focused?

Kramer: Why not go the automated route that Trove started out using?
Calacanis: I tried it. It doesn’t work. It was actually part of our trial. About six months ago, we pulled in automatically three different news sources. I won’t say which ones, because I don’t want to diss them, but when I looked at the results, the quality wasn’t there. I truly believe a human needs to read the story and maybe read two or three stories, write the update, and link to the best one. I don’t think it can be done with machines, at least not the machines we have today.

Ten years from now, 20 years from now, when artificial intelligence takes a huge jump, fine — but I would rather spend the money on the journalists and have the algorithm do the customization. I think that’s a better combination. The Summly team, they have a different approach. They think that using a computer to summarize is a better choice. At the end of the day we’ll see who has a better product, which one people are going to use more. I think our model is going to be better. I think Circa proves that.

Kramer: You’re trying audio conversion of text on Launch Ticker now?
Calacanis: That’s a test. I’ve really embraced the minimum viable product lean startup approach. We’re testing SpokenLayer for two months, asking our paying customers if that’s something they want.

I think there are many chances for us to do additional content [at Inside] if we can get a base of 10,000 to 100,000 daily interactive users.

POSTED     Jan. 28, 2014, 2:34 p.m.
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