OT.OT. MSNBC article on thestreet.com.
I have to admit that I like Cramer and thestreet.com's style.
The MSNBC reporter interviewed me for the article based on my reposts
of thestreet.com articles on this SI ASND thread.
Alas, my pithy comments weren't included in the article
probably because I was too laudatory and didn't fit the
article's sarcastic slant. I welcome comments on thestreet.com
msnbc.com
Jim Cramer's risky business
Is spending
$10 million
on advertising
too much
for TheStreet?
When James Cramer is not
writing for TheStreet.com,
he's running a $360 million
hedge fund for Cramer,
Berkowitz & Co.
By Barton Crockett
MSNBC
March 30 - It could be "hedge fund guru" Jim
Cramer's riskiest buy - his plan this year to
spend more than $10 million promoting stock tip
site TheStreet.com. Never mind widespread
doubts about online subscriptions. The man once
eulogized by GQ magazine for a
"Shakespearean" range of emotion when
sobbing and vomiting on his 40th birthday,
swears he's onto something hot.
"I'M TELLING YOU this is probably the most exciting non-family thing I've seen in my life," Cramer says. "We're
going to crush everyone."
To be sure, the barons of financial news and
information aren't yet trembling at this challenge from a
36-person Web start-up.
Nonetheless, at least some influential Internet players
say Cramer may be on to something. His mix of high-octane
personality, high-profile marketing, and fast-money trading
could someday become a solid new media publisher that
goes public in a stock offering or is bought out by a larger
media company like The Walt Disney Co., parent of ABC.
"We're very intrigued by what they've been doing, and
by the success they have been getting in acquiring an
audience," the head of a leading Internet venture capital
fund acknowledges privately.
The venture capitalist adds that his firm has been
thinking about making an investment in TheStreet.
FIRST OUTSIDE INVESTMENT
Such a buy could mark the first outside investment in a
company that so far has been funded entirely by Cramer
and his partner, Martin Peretz, a Harvard lecturer and
owner of The New Republic.
Officials at TheStreet say the New York-based
company is seriously working on just such a deal. Not
because they need the money. Instead, the goal is to forge a
strategic tie with a partner that could help the business. They
won't name the possible backers. But they say they are
considering selling about 25 percent of TheStreet to a team
of investors lead by a venture capitalist.
And there could be even more news on the horizon.
Cramer, who's already become a media celebrity as a
regular guest on CNBC, "Good Morning America" and in
online chats on Yahoo!, may be about to become more
visible. (TheStreet has a deal to supply market stories and
columns to ABC News' Web site.)
Knowledgeable sources say he is in discussions to star
in a regular business television show that could be featured
on ABC. TheStreet also is eyeing opportunities to follow
rival The Motley Fool into book publishing, with a series of
books on investing, Peretz says.
That Cramer and his subscription Web site could be
facing such opportunities is a remarkable development,
given the stiff competition in online stock news and
information.
Finance kings; traffic paupers
Top names in Web finance news have modest traffic:
Site
Feb. Reach*
Microsoft Investor
1.6
CNNfn
0.8
BusinessWeek Online
0.7
CBS Marketwatch
0.7
Hoovers.com
0.7
The Wall Street Journal Interactive Edition
0.7
Motley Fool (fool.com only)
0.5
Silicon Investor
0.4
INVESTools.com
0.3
TheStreet.com
0.2
*Percentage of at-home surfers using at least once in the month
Source: Media Metrix, The PC Meter Company
All of the major business bibles, including The Wall
Street Journal, Fortune, Forbes, BusinessWeek and CNBC
(in partnership with MSNBC and The Wall Street Journal)
are on the Web.
Online stock-talk areas like Silicon Investor and the
Motley Fool are also proving popular. And a raft of
subscription services also are available, ranging from
Hoovers company profiles to Microsoft Investor,
Briefing.com and Data Broadcasting Corp., which operates
a free financial news site in partnership with CBS, and also
offers subscription stock data.
A NICHE PLAY
Yet, in the face of such formidable names, TheStreet is
carving out a niche.
It has got 12,000 subscribers paying $9.95 per month
or $99.95 per year, to read what amounts to a mix of daily
market commentary from Cramer and former San
Francisco columnist Herb Greenberg, and stock-oriented
stories from a staff of some 28 editors and reporters who
previously worked for publications like SmartMoney
magazine, The Wall Street Journal and the Dow Jones
News Service.
That's still less than the more than 150,000 online
subscribers to The Wall Street Journal, or the 25,000
subscribers to Microsoft Investor. But after growing at a
snails pace for the first year to what company officials say
was a total of about 1,500 subscribers in September,
TheStreet's readership is surging.
Cramer says that at the current pace, TheStreet.com
will have more than 35,000 subscribers by year-end.
One driver is clearly the partnership with ABC signed a
year ago. In the deal, ABC obtains a handful of columns
and market stories from TheStreet for its ABC News Web
site, and ABC partner Starwave redesigned and hosts
TheStreet's Web site. (ABC also obtained warrants, so far
not yet exercised, to buy a small stake in TheStreet.)
Starwave transformed what had been a creaky online
presence that regularly crashed when Cramer appeared on
CNBC into a relatively stable performer.
But another factor has been Cramer's rising celebrity,
and his exploitation of that in a startlingly expensive
marketing campaign that includes three to four television
spots a day on CNBC, about three spots daily on ESPN
and numerous Web banner ads. That marks a sharp
reversal from last year, when officials say TheStreet spent
little on marketing, at least until launching the television
campaign and redesign in the fall.
Cramer's fame begins with his hedge fund, started in
1987, after a brief career as a journalist and later a
salesman for Goldman Sachs. The fund now has $360
million in assets. It's been closed to new investors for 1 1/2
years, but when you could get in, the minimum investment
was $2 million. A source familiar with the fund's
performance said it gained 47 percent last year. A published
report has placed returns at between 2 percent and 60
percent each of the previous eight years.
Cramer parlayed his writing skills and investing success
into a high-profile sideline as a financial columnist, with gigs
as a contributor to SmartMoney magazine, and later, New
York magazine.
The mix hasn't been without controversy. The
Washington Post in 1995 ran a front-page story questioning
the ethics of his dual role. Distraught after the article,
Cramer was treated by his wife and friends to a surprise
birthday party, where GQ said he was so overcome with
gratitude, scotch and "love" that he was alternately sobbing
and getting sick.
The Securities and Exchange Commission reportedly
investigated, and found that Cramer had done nothing
wrong.
And Cramer's commitment to writing is stronger than
ever. Indeed, he says he is thinking of some day leaving
money management to focus on writing. Meanwhile, he's
attacking online financial news.
Cramer says he pitched SmartMoney in 1995 on
setting up a Web site much like TheStreet. He says he
wanted equity in the venture and SmartMoney wouldn't
abide him. So he set off to develop his own service, bringing
in Peretz as a partner.
To avoid credibility problems, Cramer says he has an
agreement with the SEC not to tout stocks his fund trades in
his Wrong! column in TheStreet or to edit what others
write. Instead, his daily dispatches are a free-wheeling
rumination on his trading day, and his take on the markets
and the spin experts are giving to popular stocks.
THE SPIN: 'TO BUY OR NOT'
TheStreet's coverage features a newsy, stock-oriented
spin they claim is different from the standard fare at the top
business publications.
"We don't tout stocks," says Peretz. "But the
journalism is edited so as to create in the mind of the reader
the quandary, 'should I buy this or not.'"
TheStreet's ads, with the "Blah Blah Blah Not!"
tagline, push both stock talk and Cramer's high-octane
personality. His goateed, balding mug shot is all over the
banner ads. In one TV spot, a woman slips into bed with a
smile after going online, saying "Cramer, you bad, bad
boy."
"They're basically building it around Jim's personality,"
says Larry Kramer, CEO of TheStreet rival CBS
Marketwatch.
Kramer rates this an effective way to sell a publication,
although one that's risky, since it rests so heavily on one
personality.
But does the ad buy benefit the bottom line?
TheStreet's results so far suggest not, at least in the near
term. Company officials say revenues from ads and
subscriptions are just about covering operating expenses,
which recently were running around $350,000 per month.
But that's excluding an advertising budget that dwarfs
the much more modest spending by more trafficked sites
like the Motley Fool, Microsoft Investor and CBS
Marketwatch.
Never mind. This is the Internet. Cramer thinks he
should spend more. And some potential investors and allies
say he's right.
"I think that he's on to something," says Starwave
CEO Mike Slade. "The Net is about building new brands."
James Cramer gets kudos on CNBC March 5th for a good call on
Intel, and also gives his take on Justice vs. Microsoft
Ecommerce BBS
|
