Gawker Media founder Nick Denton just told his employees that the company will move into a massive new office space next year.
“Earlier today, we signed a lease for three floors of 114 Fifth Avenue,” he says in a memo to staff. “It’s a long-term commitment funded from our growth over the last three years — and a mark of our confidence in the prospects for online media, and our own trajectory.”
This is just the latest sign that the online media space is booming now. A few years ago, people thought journalism, and media, were in big trouble. Those people seem to be wrong. Last month, BuzzFeed raised $US50 million at an $US850 million valuation. Vox raised $US40 million last year. Business Insider raised $US12 million in March. And now Gawker is expanding.
Denton tells us it’s a 15 year commitment worth $US75 million over the length of the lease. There is an “escape hatch” in year 10 if Gawker wants out. The plan is for Gawker to take over two of the floors and sublet the other floor. Eventually, it will fill all three.
“It’s a huge commitment, I’d love not to do it,” says Denton. “Growth and destiny demands we do it.” He says Gawker is currently bursting at the seams. There aren’t enough seats to bring on new writers, which means Gawker is losing out on talent and revenue.
While the cost is “gigantic and daunting,” Denton says the incremental cost, when you factor in the sublet, is small, just under 3% of Gawker’s annual revenue.
Why does Denton think Gawker is going to be around in 10 years? “Trajectory, we have grown relentlessly un traffic and revenue in last 10 years.”
In his memo to staff, he says “revenues from direct advertising and e-commerce are running 32% ahead of last year. The monthly US audience across the eight core brands hit 80m in August, 63% ahead of a year ago.”
And is there any concern that Gawker is locking a ten-year rate at the top of a hot property market? After all, VC Bill Gurley just warned that startups are locking in ten-year leases, which is a sign that landlords think we’re near a top for rates. (If they thought rents were going up, then they would want short leases to jack up rates.)
“The online media market is white hot right now,” says Denton. “You don’t get to choose when media industry is booming. These things tend to rise in tandem, when you are doing well that’s rents are up.”
Here is the full memo from Denton to his staff:
I have some big news about the company’s expansion and future plans. In particular, we will be moving out of the walk-up Nolita loft space that has been our home since 2008. Earlier today, we signed a lease for three floors of 114 Fifth Avenue.
It’s a long-term commitment funded from our growth over the last three years — and a mark of our confidence in the prospects for online media, and our own trajectory.
But let’s recap where we are first. As a company, we’ve been quiet — and that’s only in part to do with me being away on honeymoon and sabbatical.
We’re a financially sober independent company in an online media sector drunk on cheap finance and its own hype. And we’ve been heads-down, working on Kinja, the platform for bloggers that is our model for the future of independent media.
Our engineers have built the foundations of our own social discovery network, with functions such as follow and star proving increasingly useful signals for content recommendations.
New Kinja-enabled spin-offs such as Foxtrot Alpha and Indefinitely Wild show one can recapture the intimacy and fun of an independent blog, while maintaining the scale of a viable media business.
The forthcoming version of the Editor is the most considered user interface we’ve developed, an indicator of things to come.
And we’re upgrading engineering and product management to ensure our talented developers in Budapest and New York are stretched to their full potential.
I believe, with Marc Andreessen, that software is eating the world. The media ecosystem is no exception; in fact it is crying out for simplification and streamlining through software.
If there’s any eating to be done, we’ll be one of the companies around the table. At stake is not just our own long-term future, but the viability of intelligent independent media in a sector dominated by hype-fuelled ventures, media conglomerates and tech giants. But in the meantime, our eight core media properties are growing fast — and that demands new space.
Revenues from direct advertising and e-commerce are running 32% ahead of last year. The monthly US audience across the eight core brands hit 80m in August, 63% ahead of a year ago. Headcount is 280, up from 230. We are bursting at the seams in both Budapest and New York.
The new New York office will be located at 114 Fifth Avenue. We’ve taken on three floors totaling nearly 60,000 sq feet. We’ll be subletting one of the floors for a few years, with plans to expand into it later. From 17th Street, Gawker Media will have its own walk-up entrance. That will provide the cultural continuity with our longtime Nolita space. (We couldn’t imagine mischievous bloggers going through the main lobby.) For staff coming from Williamsburg and several other Brooklyn locations, the subway commute will be seven minutes shorter.
The office will be on the second and third floors, with a public and performance space connecting the two. That will be open, a thoroughfare designed to promote random interaction. By contrast, the working space will be arranged in what we call studios, spaces contained on three sides designed for teams of half a dozen people or so to collaborate on projects without disturbing others.
A similar concept informs our plans for the new Budapest office, which we are developing together with the design team at Brody House, the organisation that has often hosted us in Budapest. Their mandate is to restore a 30,000-square-foot building at Andrassy ut 66, the former office building of the state railways, in the style that we like so much in their other properties.
Brody will be creating a mixed-use space — comprising a cafe, bar and retail space — on the ground floor. We’ll renovate the other floors to be offices for ourselves and Hungarian media, design and technology startups.
We ran Gawker Media’s Budapest operation for several years out of an apartment in Ujlipotvaros. In New York, we used to work out of my apartment on Crosby Street, and then across the road at what is now a bike shop.
In the New Yorker profile, I explained my reluctance to take on the fixed cost of an office. “If you run it out of your house, then no one expects anything.” We have higher expectations of ourselves now. For want of others seeking the role, we are the guardians of independent media.
It’s a daunting responsibility that I would never have expected. The transition — from model for independent media to platform for independent media — will be a long one. This is the working environment that we deserve.