Month: August 2021

Employees — tired and uncertain from the pandemic — are reevaluating their relationships with work. And business leaders are having to balance negotiating this frontline alongside the day-to-day running of their operations. To get it right, they require the soft skills necessary to humanize the workplace during this bumpy ride.   

We spoke with academic and industry experts to find out what communicative skills are necessary to navigate these new waters successfully and lead happy, productive teams. 

Writing the new playbook 

When it comes to addressing the future of work — specifically remote and hybrid models, as well as a mix of part- and full-time workers — the most successful teams will “write the playbook together,” said Amy Edmondson, Novartis professor of leadership at Harvard Business School. “Virtual work can make it harder to foster genuine connections and build the psychological safety for employees to speak openly with their thoughts. You don’t want people holding back concerns or questions — that are in some cases mission critical — because of interpersonal fear,” she said. 

The first step toward evolving workplace communication involves breaking old habits. Rather than focusing on habitual leadership styles of command and control, the new era embraces positive feedback, transparency and a learning mindset. Such a culture focuses on sharing: concerns, data, methods, successes and encourages people to seek out the perspectives of others. In many ways, it is an art within a science, according to Edmonson. 

In order to achieve these goals, and outgrow old habits, a new method of workplace communication becomes necessary. Edmondson metaphorically described a “linguistic system of science,” that co-opts our communicative habits with parts of the scientific method, creating a culture that says: Here is what I see, here’s some hypotheses and experiments that we could try. Let’s remain open to the data we receive and to others’ ideas. 

“This is a very different mindset from old fashioned management,” added Edmonson. 

Soft touch in a hard world 

For the freelance market, work opportunities ballooned during the pandemic. Companies felt pressed to champion agile strategies in a competitive market and looked to the gig economy for the answer, minimizing fixed costs in the process. 

In light of a more outsourced workplace, having more general knowledge of the people you work with and where they come from is important. “You’re going to encounter people with different varieties of language — whether that is an accent, style or an entirely different language — that you need to mesh well with,” said Alexus Brown, a PhD student of linguistics at the University of Pittsburgh. “Really good communicators reduce stressors and bring in that human component — respect in how you communicate with others — where you don’t just feel like a cog in the machine, you feel like an essential part of a team.” 

If leaders take the time to focus on how they communicate with others, they can capture a critical aspect of humanizing the workplace: softs skills. Brown further elaborated that sociolinguistic style — how you tend to converse and interact with people in a particular setting — influences how connected a person can feel in their workplace, affecting not only their drive to learn the ins and outs of the job, but where they fit into the culture at large.

Technical difficulties

The modern workforce is made up of four generations, from Baby Boomers to Gen Z, and they all have different habits and expectations when it comes to digital conversations. For instance, in each age group the tone and style of writing in a Slack message will differ from that used in an email. This raises the question, what is the appropriate manner to behave yourself through each modality? 

Hybrid and remote work has ramped up the use of communications tools like Slack, Zoom and Teams. In navigating these various communication channels, certain new norms develop in terms of conversation management. “These different modalities [digital tools] are framing devices for parsing out what the stances and styles are going to be,” said Dr. Scott Kiesling, department chair of Linguistics at the University of Pittsburgh. “Different modes have different social meanings and it’s going to be through conversations that people figure out which are most useful for getting the desired message across.” 

Stance and style are two important linguistic factors that can determine the quality of social interactions. Stance is expressive of a person’s attitude or relationship to the people they’re interacting with, including the subject they’re talking about and the language they use. For example, how you express your stance might be clearer in person and video chat, because of body language and tone of voice, than with instant messaging. 

“The time is really right, right now, for what is a bold move to go into the public market,” Federle said.

The key details:

• The transaction is expected to raise about $600 million, with a $200 million cash contribution from Magnum Opus (which it raised from its March IPO) and $400 million raised through a private investment in a public entity transaction (called a “PIPE”) of the combined company, at $10 per share from investors (meaning existing owners can benefit from any share price increase on their remaining stakes).
• The transaction is expected to close in late fourth quarter 2021 or early first quarter 2022. Forbes shareholders are expected to own about 22% of the combined company at closing.
• The investment will be used to build out the company’s tech, investing, consulting and luxury goods offerings, as well as to fuel joint venture and licensing deals, Federle said.
• Forbes generated $180 million in revenue in 2020, a 15% decline year over year.
• Forbes’s audience spans more than 150 million worldwide, and the publisher currently has 23,000 paid subscribers. Its website had 51 million unique visitors in July 2021, according to Comscore.
• Unlike some of the other digital-native publishers that have announced plans to go public in the past year, Forbes is a legacy brand that still owns a print magazine.
• Since 2014, Hong Kong-based investor group Integrated Whale Media Investments has owned 95% of Forbes; the rest of the company is owned by the Forbes family.
• Forbes’ existing management team will continue to oversee operations, under Federle, who will be on Forbes’ new board.

The business breakdown

Forbes’ business breaks down into three revenue streams: media (ex. advertising), consumer (ex. subscriptions) and brand extensions (ex. conferences and brand licensing deals).

This year, Forbes is projected to generate $138 million in media revenue (up 5% year over year), $47 million in brand extensions revenue (up 19% year over year) and $16 million in consumer revenue (up 75% year over year), according to its investor presentation. The company expects its consumer revenue growth to decelerate in 2021 and 2022, while its media and brand extensions revenue growth is expected to pick up or hold steady.

Per the investor presentation, Forbes currently has 23,000 subscribers and aims to eventually attract more than 1 million subscribers, though the company did not provide a specific timeframe for that goal. Another long-term goal is to reach more than 15 million registered users. 

What the public money will be used for

Forbes wants to find opportunities from the content it publishes to launch consumer-focused paid products, in order to grow its consumer revenue from its current standing of 12% to eventually make up 38% of its business. Ad revenue will shrink from 65% of Forbes’ business to 45% (the rest will be made up of brand extensions). 

That’s the idea, at least. Federle said this will take “several years,” but that “significant results” will take shape in 2023, as Forbes won’t be able to fully invest the public money it raises until sometime in 2022. “Consumer revenue is all additive to the ad revenue,” Federle said. 

As an example of what the SPAC funds could be used to develop, Federle pointed to Q.ai, a company incubated and owned by Forbes and that is included in the consumer revenue category. The app uses AI technology to make investment recommendations. Forbes also licenses an online business school called the Forbes School of Business and Technology at the University of Arizona Global Campus. “We have given proof points where we can invest in companies that do very well… and we can enter into new markets, in education, investing, or even luxury and travel,” Federle said.

Another example is Profiles. Forbes’ “America’s Top Wealth Advisors” list ranks the top financial advisors in the U.S. The annual conference from that franchise generates several million dollars of consumer revenue, according to Federle. Forbes then created Profiles, a LinkedIn-style platform for those on the list, where advisors can pay for a premium listing on Forbes and can use it for their own marketing. Forbes’ tech team has built a series of tools to support Profiles as well.

What the public money will not be used for

M&A is not necessarily a focus of the SPAC, according to Federle. “We specifically kept it out of our investors plan as we talked to investors when we were raising the PIPE, because it is easy to say, ‘Hey we are going to do hundreds of millions in new acquisitions to generate hundreds of millions of revenue’ — but that doesn’t really happen until it happens,” he said.

Forbes needs to build a stronger infrastructure (both as an organization and as a tech platform) for acquisitions before it can start looking at what companies to buy and integrate, said Shahid Khan, a partner at management consultancy Arthur D. Little in its Telecommunications, Information Technology, Media & Electronics (TIME) practice. “Before you acquire other companies, you have to have your own house in order,” he said.

Why go the SPAC route?

Federle said a SPAC is the “most streamlined process to going public.” The benefits of going public are that it provides the cash needed to “enact our aggressive growth plan,” without having to take on any debt. No debt “allows us even greater leverage in the future as we look to acquisitions,” Federle said. SPACs are “a great way to raise capital, in a free manner.”

A SPAC is known for inviting less investor pressure compared to a traditional IPO. The shell company goes public with a promise to investors that it will eventually acquire and merge with a private company to take public, and serves as a way for a company to go public and begin selling shares on stock exchanges to raise money.

For every eligible company that a SPAC can acquire right now, there are six to seven SPACs chasing them in the telecommunications and media space, according to Khan. “It’s a big win for SPACs to get Forbes to join them and go public via them,” he said.

Forbes has been leading up to this moment for the last decade, Federle said. In the past 10 years, Forbes has launched a contributor network, added products like its content marketing platform BrandVoice and expanded popular franchises like “30 Under 30.”

Forbes has built out its technology stack and data and analytics capabilities to now be able to segment its audience into cohorts and create products and experiences specifically for these groups of people based on their interests, Federle said. “We intend to create a lot of consumer revenue. It’s not a hard paywall strategy, but a premium product strategy,” he said.

How Forbes going public fits into the SPAC trend among media companies

SPACs are all the rage among media companies recently. Amid the pandemic, investors are looking for opportunities for their money, and SPACs are proving to be a popular alternative to a more traditional IPO. BuzzFeed and Group Nine announced their own SPACs in the past year — both with the aim of acquiring more media companies. Bustle Digital Group, Vox Media and Vice Media are reportedly mulling over going public as well.

Digital media deals, in general, are closing as this summer nears its end. German publisher Axel Springer announced today it was buying Politico, with reports that the deal values the political publisher at over $1 billion. Nexstar Media acquired The Hill last week.

A ‘diverse’ board?

Forbes’ board of directors will have nine members, including Federle. As part of Forbes’ diversity, equity and inclusion initiatives, Federle wants “diversity on the board.” When asked if he had a certain goal in mind, Federle said he does not “believe in quotas” and that the board could be a mix of women and people of color.

“I already have quite a few names of people that I would like to have on the board and that Opus would like to have on the board too,” Federle said.

What Owen found, however, was starting a new job remotely, amidst the renaissance of socializing thanks to the vaccination rollout, came with a new slew of stressors. 

“While I’m happy with my decision to change jobs, I feel like my symptoms of burnout have not been alleviated,” he said. “They have evolved to a new strain of malaise.” 

And not having enough time to see friends and family now that he’s able to safely do so is only contributing to these feelings. 

“I have been packing a year’s worth of missed social opportunities into my weekends while hustling day-to-day working from home and trying to make a good impression on my new coworkers,” Owen said. “Because of this, I feel like my personal time has been greatly neglected, and I still feel very isolated.”

The slow, continuous burnout 

Not everybody left their jobs for the same reasons as Owen during the so-called Great Resignation, but one of his main motivations — burnout — is plaguing the U.S. workforce.

Since March 2020, a myriad of factors have contributed to employee burnout, including trying to stay healthy during a deadly pandemic, dealing with financial hardships from the ensuing recession, and — for many — navigating working remotely. On top of that, the rapidly changing news cycle has inundated people with important, yet mentally draining, events ranging from racism and police brutality in America to the U.S. presidential election.

But new factors have come into the mix following the vaccine rollout this spring. 

People started to feel safe reigniting their social lives, and employers started planning for the return to offices, which has employees reassessing what a work-life balance looks like. But the added COVID-19 variants and slow adoption of the vaccine in certain areas has also kept people from fully embracing life as we once knew it.

“We are experiencing the second wave of burnout and it’s partly due to just the complete lack of predictability happening,” said Sharon Harris, global CMO of digital marketing and communications firm Jellyfish.

What’s more, the readjustment period to socialization is “naturally happening at different paces for everyone,” according to Emily Simonian, a licensed marriage and family therapist at Washington, D.C.-based counseling and therapy group Thriveworks. Therefore, managers and team leaders need to be mindful when talking about a return-to-office plan or reassessing workplace policies in this post-vaccine world.

New rules for managing burnout

Once employees reincorporate a daily commute into an office, managers including Harris, expect productivity will decrease. 

This is partially due to the logistics of shutting down and getting home at the end of the day, but also because employees will have to adapt to a shared work environment for the first time in over a year. 

“There’s a certain amount of pent-up anxiety, like returning to being in the first grade and having to make friends again,” said Harris. “We’ve doubled in size. We have lots of people who’ve never met anyone in our company before.”

Jellyfish is also reassessing its performance monitoring model now that it’s beginning to have a hybrid workforce. It’s meant to ensure that employees who are still at home feel like they have the same advancement opportunities as their colleagues who are in the office, Harris said. 

For example, employees will be able to pitch a business case for themselves to earn a promotion that is more based on the quality of their work than the face time they spend collaborating with others or sheer time spent on a project. 

At strategic marketing firm SalientMG, CEO and founder Mack McKelvey is using employee-centric policy changes to enforce a better balance between professional and personal time, despite the fact that the 14-person staff has already been fully remote for five years. 

“Burnout happens when you’re not cognizant of your people and you’re not empathetic to what they’re going through,” said McKelvey.

Some of the new policies this year include year-round “summer Fridays” where the team logs off at 1 p.m. Thursday mornings are now dedicated to silent work where meetings cannot be scheduled. McKelvey even silences her phone during this period of time to limit distractions herself. What’s more, she closely monitors her staff’s use of unlimited PTO to make sure that each employee is using a minimum of three weeks per year, in addition to time off for the holiday season. 

She also encouraged her team members to move wherever they wanted to without fear that their salaries would change based on geographic location. “I actually practice what I preach,” McKelvey said, adding that she packed up her own bags last year to live on the coast of Lake Champlain in Vermont.  

Despite these changes appearing to limit total work time spent in a year, McKelvey said this employee-centric approach to running her business has enabled revenue to double last year over 2019. She would not disclose hard revenue figures. 

“This is not a time to pretend that it’s business as usual,” said Harris. “Some of the burnout has honestly come from people pretending it’s business as usual and now they’re realizing, ‘I’ve done this for 18 months, I don’t think I can do it for another six or nine more months.’” 

And if The Great Resignation has taught us nothing else, people are not afraid to throw in the towel if they believe this to be true.

* Editor’s Note: Owen is a pseudonym to protect his identity. Digiday granted him anonymity to speak freely under the employee’s fear of retribution.

Despite all being owned by the same company, Politico, Protocol, Insider and Morning Brew are expected to operate independently of one another, according to a source familiar with the deal. And each of the brands’ management structures will remained unchanged, according to a memo that was sent out to staffers Thursday morning and was shared with Digiday.

What appears to be shared between all of the brands, however, is their premium, professional audience, which ranges from an entry level demographic at Morning Brew up to higher net worth individuals at Politico. Not only does this audience provide a good deal of reader revenue from the brands, but it is an appealing group to advertisers who will now be able to access them at scale.

“There’s a certain type of audience, the premium b-to-b type, that Axel Springer has clearly shown an interest in targeting in terms of the type of content they have with Insider or Morning Brew,” said Justin Eisenband, managing director of corporate finance in the Telecom, Media & Technology division at FTI Consulting.

Politico’s audience only spurs this interest forward.

Axel Springer did not reply to a request for comment ahead of publication.

The key details: 

• If the acquisition passes regulatory hurdles, the deal will close in the fourth quarter. 
• Politico is regularly a profitable business. Between Politico U.S. and Politico Europe, the company earned $200 million in revenue last year.
• The 18-month-old tech site Protocol earned significantly less than Politico did last year in what could amount to being considered “a small rounding error,” according to a source familiar with the business. The site is on track to also reach profitability, but is still in the investment stage.
• Robert Allbritton, who currently owns Politico, Protocol and E&E News, will remain on as publisher for those titles at Axel Springer.
• Politico and Axel Springer first partnered together in 2014 to co-launch Politico Europe, where the two companies shared a 50-50 split in revenue. Politico Europe became profitable in 2019, according to a source familiar with the company. 
• Allbritton and Axel Springer CEO Mathias Döpfner have gone back and forth on variations of this acquisition since they began working together in 2014, but the latest round of discussions that ultimately led to signing the papers began in mid-June of this year and rapidly gained steam in July, said a source familiar with the deal. 
• According to the memo sent around to staffers, the day-to-day will not change for any of the Allbritton-owned titles for an indefinite period.
• During the Q&A portion of a staff meeting on Thursday morning, an attendee recounted to Digiday that another staffer asked about layoffs and Döpfner responded by saying “we’re not in the cutting mode, we’re in the growing mode.” Döpfner added that he wants to invest in Politico and will add jobs rather than cut them.
• Protocol has recently been growing itself and currently has about 30 open roles, for which a source familiar with the company said, they are actively looking to fill.

The big picture

While Politico Pro has a high value proposition and Döpfner will be looking for opportunities to scale and broaden that subscriber base, Politico’s overall diversified revenue stream is what appealed to him, according to a source in the staff meeting.

Insider, Morning Brew and Politico represent “different levels of monetization of the b-to-b subscriber, but it’s certainly a premium strategy where they’re attracting a premium paid audience or premium advertisers that want to reach that premium audience,” Eisenband said.

That said, about half of Politico’s revenue comes from its premium subscriptions business, Politico Pro, where the subscription prices sit in the high four-figure range, according to its subscribe page. Many of the subscriptions are paid for by companies for groups of employees in an enterprise subscription model, pulling from a corporate budget, versus a personal budget, enabling the higher price tags.

“As opposed to some recent digital media acquisitions, Politico is further down the road in terms of the news industry’s shift toward consumer revenue. With such a strong subscription business, it clearly would make an attractive target for any publisher seeking to grow share of consumer revenues as part of a portfolio,” said Eisenband.

Compared to the other U.S.-based brands in the Axel Springer portfolio, Politico’s subscribers may be willing to pay more, but each audience base contributes to the scaling up of the company’s professional, b-to-b reach — something appealing to advertisers as well.

In the staff meeting, Allbritton and Döpfner “talked about the value of having impactful, non-partisan journalism that’s available through an ad-based sponsorship model as well and that being a real distinguishing factor for Politico,” said a source present at the meeting.

All of Axel Springer’s content, paid or not, is considered premium content by the company and therefore the entire portfolio could be scaled for big ticket advertisers like Facebook or Amazon, Eisenband said.

What to keep an eye out for

Politico Pro is very much a business-to-business subscription product, but some speculate whether or not Politico will follow a similar path as Insider and take a more business-to-consumer approach under Axel Springer.

According to a tweet from The Washington Post media critic Erik Wemple that documented reports from the company meeting, Döpfner said it is unlikely that paywalls will be installed on free content at Politico as he is “from Berlin. We don’t like the concept of walls.”

“I am curious to see if Axel Springer does try to bring a portfolio approach to this where you can get premium content at Politico, you can get premium content at Insider and use Morning Brew as a funnel to that,” said Eisenband, adding that there are opportunities to move the broader professional audience down the pipeline from Morning Brew to Politico.

Protocol is still working on what its subscription model will look like, which president Tammy Wincup said in an interview from January this year, would happen within two years.

Putting other rumors to bed

In May, it was reported Axel Springer was in talks to acquire Axios, which was seeking between $400 million and $450 million — the same price tag for Insider in 2015.

Due to a lack of revenue diversification at Axios, however, the deal did not go through, said a source familiar with those negotiations.