Wednesday, March 12, 2014

Vice: The billions in bro culture

Remember when Dennis Rodman went to North Korea for a personal appearance at the birthday celebrations for Kim Jong Un?

Or when software magnate and the world’s oldest 'dude' John McAfee went on the lam, sneaking out of Belize and into Guatemala after being bizarrely slapped with murder charges

Who was there for both of these wild walkabouts? Why, it was Vice, also referred to as “America's coolest counterculture brand and millennial marketing vehicle.”

About a week ago around the office coffee maker I was having a conversation with one of the bosses, about a project I’m currently working on, and he said to me..."oh, you might find this interesting", referring to an interview with one of the founders of Vice he had listened to in the car that morning. We were talking about how much content production and broadcasting had changed over the years and he said "then you have to find the interview with the Vice guy." And so I did.

“We stumbled upwards” is what Suroosh Alvi, Vice co-founder explained in the interview, and that phrase stuck with me. Indeed they did. Alvi was fresh out of heroin rehab when he and a group of friends started the company that seemed like little more than a middle finger to mainstream society. I remember Vice from its earliest incarnation in the mid-90s, when the then new Montreal-based alterna-paper filled the free racks at coffee places, record stores (yes, those existed then), and boutique-y skate shop slash art gallery places of my old hometown of Vancouver. I’ll give any free paper a try or two and so I did with Vice. And wa wa wee wa, as Borat would say. I felt almost embarrassed for the ink on the page. Sexist, juvenile, homophobic, racist, idiotic, and across the board offensive. Am I missing anything? No, I don’t think so.

I didn’t really think about Vice too much after that. I had heard rumblings that they had moved from Montreal to NYC and didn’t really have the need to pay much attention to them. A few little blips on the radar screen here and there, but that's it. And that makes perfect sense, as I’m not an 18-34 year old male of the bro persuasion, therefore their stuff really shouldn’t be reaching me. 

Until the John McAfee and Dennis Rodman incidents. Then everything changed. Vice was getting tons of attention. Because they were doing something truly different. And not just different in the offensive and boundary-pushing way that I remember. This was different in the I can't believe they're getting cameras into those places way. It was also around this time that media mogul Rupert Murdoch invested $70 million in the company, bringing Vice’s valuation to $1.4 billion

Also last week I came across a story about the new, reinvented Vice and posted it on Facebook. The torrent of comments that followed were illuminating. A sampling follows here. Meet Melissa, a Montrealer in her late 20s, Bill, a Vancouver-based writer and filmmaker, and Jesse, a television writer and producer now based in Los Angeles, with whom I used to hang out when we were neighbors and he was 10 or so. He was the absolute coolest kid. He wrote a screenplay when he was 11, he was into David Cronenberg movies, and I remember going to an all ages gig with him around the same time. I was so happy he chimed in on this post as Jesse would have been a teenager around the time that Vice showed up on the floors of indie retail in the mid 90s. Though I had lost touch with him when he was around 12, all these years later Jesse is an ideal commentator on the Vice phenomenon from back in the day (to use the overused bro term).

Click to enlarge

Click to enlarge
Click to enlarge

Great data from the field. "It seemed like it should be illegal". What more could kids want? And in the case of Vice they stayed in the game long enough for the world to catch up with them.

Obviously I had missed a huge chunk of their history. You don’t just go from being bad boys with a sex and drugs and rock and roll tabloid paper you give away for free to getting investment from Rupert Murdoch and a billion dollar plus valuation. You just don't. In addition to being a magazine and a website they are also record label, book publisher, TV and film production company, family of YouTube channels with hundreds of millions views, and live event producer. Their content and event partnerships include some of the world's biggest companies --  Intel, Time Warner, and Google, to name just three. By 2007 their revenues were reported to be $28 million (which just happens to work out to .02% of their billion dollar plus valuation, just six years later).

So how did they do it? As is often the case, it wasn’t just one thing. At a time when everyone else was putting money into platforms that produced no original content, they placed their bet on original content. And content that nobody else was touching. Their terrain was almost exclusively the stuff way out on the periphery. And they had grown up, moving from misogynistic and racist jokes alongside the underbelly of rock and roll culture to 'extreme journalism' and travelogues of some of the world's weirdest and most dangerous places.

Their timing and choice of place was also good. When they left Montreal in 1999 they relocated to Brooklyn, and not just anywhere in Brooklyn, but Williamsburg, the neighbourhood we can thank for all things hipster, including the word itself. But in 1999 it was proto-hipster and the Vice crew got in on the ground floor. 

Also on the rise at this time was what I’ll call ‘bro culture’. Beavis and Butthead and Tom Green paved the way for Jackass' Johnny Knoxville Jackass, which paved the way for Tosh.0, Epic MealTime, Man. Vs. Food, Riff Raff, and before we knew it we were surrounded by all things 'epic' and 'fail'.

And as all this was happening media executives were watching. One in particular, Tom Freston, one of the creators of MTV and former CEO of Viacom was watching particularly closely. He completely got what the Vice crew were doing and helped open doors that led to a a round of investment estimated to be between $50 and $100 million in 2011. Global advertising giant WPP and media merchant bank The Raine Group were behind the cash infusion, along with Freston himself. Later that year Vice surpassed $100 million in revenue for the first time. 

Fast forward three more years, to today, and Vice has 35 foreign bureaus, with a stable of more than 4,000 contributors. The company is expected to make $500 million in revenue this year, with a profit margin of 25 to 30%, unusually high for a media company. Is this mostly advertising revenue, which we always hear is the magic bullet for online and media companies? No it isn't. Vice's revenue base is extremely diversified. Sure there is some revenue from advertising, but they make most of their money  from licensing their content, for TV, film, mobile, and online, as well as through sponsorships and partnerships with the likes of Sony, Nike, Google, Intel, Dell, and Microsoft (even though the relationship with Microsoft didn't quite work out.

Yes, the one time dictionary definition of underground culture is in demand with the most deep-pocketed and straight-laced of corporate entities. Vice proved that they know how to talk to a demographic that had either given up on mainstream media, or had tuned out entirely. They made out of control and bad for you their brand. They went everywhere kids were. Not to the safe center, but to the margins. And in the end the safe center ended up coming to them.

Blog Bonus Section Part 1: Oral History of Vice, from Jesse Brown's Canadaland...Listen here.

Blog Bonus Section Part 2: See David Carr of the New York Times give the boys from Vice a bit of a verbal beatdown.