The app builds publications based on a user’s personal interests.
On Tuesday afternoon, we chatted with Zite CEO Mark Johnson and KC Estenson, general manager of CNN digital, about the past, the present, and bright future.
How did the deal come together?
Johnson: We were looking for venture capital. Zite was a very successful product launch. We were looking to capitalise the company. KC came to us as a real passionate user, talking about how we might work together. It turned into a talk about acquisition. Zite had a lot of really interesting opportunities in terms of how to get financing for the company. We just found a great fit in CNN. It’s a company that understands our vision and where we’re going, one with lots of great opportunities in media and lots of great expertise in mobile. CNN has 12 million apps in the mobile market right now and we can leverage a lot of their great expertise as part of the CNN family.
KC, what did did you see in Zite?
Estenson: I think I first spotted Zite in March shortly after the launch. I started using it and just fell in love. It’s a really incredible product. As we got to know more about it, the technology that sits behind the app is even more incredible. These guys have spent six years creating it. It really found an overt consumer relevance when the iPad was created.
There are two pieces to this acquisition. One is the app itself, which we think is great. As Mark said himself, our goal is to get behind these guys and give them the capital and the head count they need to grow Zite significantly. There’s also the technology, which speaks to a trend that is a bona fide reality. People are discovering content in ways beyond traditional search engines. I felt it was really important for CNN to have a stake in that field, for us to be able to infer what people’s interests were and serve them up content that was personally relevant to them. The Zite technology does that better than anybody.
There were some legal issues in the past. Are those gone now?
Johnson: Those were solved very shortly after we got the cease and desist. We transferred all of the parties that wanted to out of reading mode into web mode. Since then, we’ve had very interesting discussions with publishers. They see the value on site. They realise that articles are getting in front of people who really want to read them. People are seeing things they wouldn’t have otherwise read. People do a lot of sharing on Zite. About 10% of our articles are shared. All of that is really valuable to the organisation.
Estenson: From my perspective, we have a lot experience at CNN Digital with content partners. We obviously create a lot of content ourselves and we are very protective of that. I think what we saw in Zite was an ability to help them navigate and move through the bushes out there and make a great business that would benefit everyone. I look at Zite as the newsstand of the future.
The figure floated by a few publications was between $20 and $25 million. Can you comment?
Estenson: We’re not commenting on the valuation at all. What I can tell you was that I did not write a personal check for it.
Is that figure in the ballpark?
Estenson: We’re not commenting on it. Everything that is out there is pure speculation.
Mark, why did you go the acquisition route and not raise more money?
Johnson: We saw a really awesome business here. We saw a lot of usage in the application, and we were looking for a way to capitalise the company. One of the things that a larger company brings with it is all of their expertise. E-expertise. Technology expertise. Distribution expertise. We saw the combination of our technology, our platform, and our great product with their expertise and capital being a better than going at it ourselves.
How does Zite change in the next six months?
Johnson: You’re just going to see Zite improve. We have lots of ideas, more ideas than we have the ability to code right now. We’re looking for top talent. You’re going to see a lot of improvements to the flagship iPad application. We have a history of listening to our users, and we can’t wait to show them some of our innovations there. The core personalisation algorithms is obviously bread and butter for us. One of the reasons people continue to come back to Zite is that people get great articles, and you’ll continue to see those algorithms refined. And finally, one of the things users are clamoring for is Zite on additional devices. We’re really looking forward to letting people accessing their Zite not just on the iPad but on phone, the web, and other devices. Those are the big plans over the next six to 12 months.
What’s your expected total headcount?
Johnson: We have eight people right now. As a company focused on technology, the goal is to hire top talent, so it’s hard to predict exactly what our head count is going to be but I would expect our headcount to double in the next six to 12 months.
How are you going to monetise Zite?
Johnson: We’re going to take our time. The goal is to continue to build a product that people love and get it into the hands of as many people as possible. It’s been my experience that if people are deeply engaged and they are passionate about it, the business will follow that.
Have you talked about monetization?
Johnson: There are definitely discussions we’ve had with CNN. Ultimately, I have responsibility for the P&L of Zite as a concern. That being said, I’m completely in alignment with KC that the most important thing is to build a great product. When we do include something like advertising, I want it to be an enhancement to the product not a distraction.