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Can Arianna Huffington hold onto that founder's drive?

Arianna Huffington is joining the ranks of millions of entrepreneurs who sell their baby to a bigger business. AOL, one of the oldest online companies around, is buying the Huffington Post, one of the more successful online news sites of the digital content age, for $315 million, much of it in cash. Huffington will become president and editor in chief of the Huffington Post Media Group, a newly created bigger role that will include not only running her namesake site, but all of the company's editorial content and media enterprises.

Many will question how this deal will play out for AOL, which has not been known for making the wisest moves when it comes to mergers and acquisitions in the past. (See old media, Time Warner; and social media, Bebo.) Not only is the Huffington Post seen as having a political slant to the left; its revenues are still relatively small, even if the site says it is profitable. AOL, meanwhile, watched ad revenue, the key to its turnaround strategy, drop 29 percent in the fourth quarter.

What may be the more interesting question is how this deal will play out for Huffington. She'll end up far richer, of course. But will she be able to retain the sense of urgency and entrepreneurial zeal that got her site where it is now?

Huffington has as good a chance as any. For one, she's headed to a company that, while ancient by Internet standards, has developed and maintained an online-focused group of people. AOL sorely needs the Huffington Post, more than it needs AOL, which should give her free reign to continue doing what she wants with the site. And in taking on a much bigger role, she'll face new challenges that should keep her stimulated and give her a place of prominence that many entrepreneurs lack after the deal is done.

This is a rite of passage for many leaders, moving up the food chain from being in charge of a relatively small business to taking on an executive role in a much larger one. Sometimes it ends well, as the once-strapped entrepreneur thrives under greater resources, bigger audiences and better advisers.

But far more often, it doesn't. Entrepreneurs get hemmed in by corporate bureaucracies. They become frustrated by the time it takes to get anything done in a slow-moving large company. And they become a little less driven to scrape their way to the top once they've gotten there.

After all, the deal means that Huffington is going to be sitting on a huge pile of hard cash, rather than the equity most company founders receive when selling their firm. In an insightful piece of analysis, The Daily Beast's Randall Lane describes why this is such an unusual transaction, and what the ramifications might be. "The Huffington Post was hers, from the name up," he writes. "Now, while her name will remain atop the division she heads, AOL's 'Huffington Post Media Group,' she's just an employee. It's the difference between a mother and a babysitter. They both love their kid, but only one will race into a burning building to save it." Let's hope it won't come to that.

By Jena McGregor

 |  February 7, 2011; 1:32 PM ET |  Category:  CEO watch , Change management , Corporate leadership , Women in leadership Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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After just listening to her Davos "rant" that the "system is rigged" against the middle class & working poor(which it is) and then to watch her within just two short weeks go over to the "dark-side", one can only conclude that you never know people until the money shows up and is on the table.


It is a sad fact that the middle class and the working poor have no voice in the face of power because progressives "sell them out" to the highest bidder when the money shows up.

From Bill Clinton to Obama, we are seeing a new post-presidency template devloping in which the President "plays-ball" with the rich & powerful special interests and after leaving office, turns around & then sets up an NGO for the rich & powerful to pay-back all of the special "favors" that the President "doled out" to them while in office.

We are seeing the same "template" taking shape with Obama, who ran for office with a progressive "voice" & is now "catering" to the likes of GE & the U.S. Chamber of Commerce, all under the "guise" of the phiolosophy that if we just make the rich even richer & leave the "tax burden" on the backs of the middle class & working poor, all of us will "get well".

The middle class jobs are gone & they are not coming back. Corporations are sitting on trillions of "tax free" dollars which will be spent in developing their business in China, India & Brazil, not in the U.S.

Progressives need to stop listening to the BS of Huffington & Obama and start talking about running a true Progressive candidate in 2012.

Posted by: mikeconville | February 8, 2011 1:21 PM

BrownShoedSquare

Firstly, any company exists for the benefit of the entrepreneur that started it.

"Any" company?? Perhaps you meant "Some" companies ....

"All companies are sold eventually."
Really? What about the hundreds of long established companies that are still owned by the founder's family?
MARS Candy
SC Johnson


"Expecting an owner to want to continue working 20 hour days is ridiculous"

A successful founder doesn't HAVE to work
more hours than he/she wants.

"...it's all about money stupid (to semi quote Republicans)"

No it isn't. Ask most successful entrepreneurs ... the money isn't the driving force to their success.


There's more behind AOL's buyout of HUFFPOST than it appears ... the price paid is outrageous and unsupportable for a public company to justify.

Posted by: Hazmat77 | February 8, 2011 1:12 PM

She'll leave the AOL mgmt structure within a year. Entrepreneurs always seem to struggle when enveloped by a oppressive corporate bureaucracy. AOL hasn't been at the forefront of IT/Internet for at least a dozen years. AOL is a dinosaur. Surprised it's still around.

Posted by: vagator | February 8, 2011 10:39 AM

From the point of view of business, a glorious coup. She personally is walking away with 100 million in cash plus stocks after only 6 years of work. Good for her.

From the point of view of journalism, an unmitigated disaster. Bad for America. Media conglomeration keeps us stupid and misinformed. Every time an independent outlet gets gobbled up in the name of business, our democracy dies a little extra death.

No need to look too far back to remember when every corporate news outlet got jizz in their pants at the idea of invading Iraq looking for imaginary WMDs.

The only dissenters at the time were independent publications like The Nation-- but thosereach such a small audience that few people got to learn what a scam was being perpetrated on the American people. By 2006 everybody knew- too little, too late.

The Huffington Post then was born during a political dark age to offer a critical view that wasn't matched by other outlets (like the neocon editorial board of the WaPo). It was the left's answer to Faux News, and reached audiences in a way that publications like The Nation couldn't.

This merger will most likely create a vacuum. My prediction is that the HuffPo will become another irrelevant media dinosaur while the internet spawns new alternative sources of information and commentary.

Posted by: alarico | February 8, 2011 10:00 AM

One more comment. What most large corporations don't realize is that most of us hate them. They manipulate, lie and steal from us and we all know it. So, the appeal of a Huffington Post is that we can get news and views free of corporate manipulation (true or not). That's what people want - free news - hard hitting expose journalism - the truth - purity.

Once a draconian, corporate mass manipulator skeleton like Rupert Murdock gets a hold of media, the hard news gets 'absorbed'. This is why it is my opinion that the HuffPost is now yesterday's populist new source. We will all be searching for the new source INDEPENDENT of corporate meddling - meddling which you KNOW is going to happen now that 'the machine' has bought into the HuffPost controlling interest - which is what they always do. This is why corporations are lobbying the government so hard for control of the internet. Take away the pipe, and you take away choice, and create your own truth - which is always the main goal of media moguls...

Posted by: BrownShoedSquare | February 8, 2011 9:30 AM

Zsa Zsa Huffington will now have enough money to corner the market on Botox, leaving Nancy Pelosi out in the cold(cream) so to speak.

Posted by: ariver31112 | February 8, 2011 9:14 AM

Firstly, any company exists for the benefit of the entrepreneur that started it. All companies are sold eventually. Expecting an owner to want to continue working 20 hour days is ridiculous - it's all about money stupid (to semi quote Republicans). So, the fact that Ariana sold out at the peak of her popularity is a credit to her savvy - seeing that 'The Daily Beast' had a similar windfall didn't hurt either. All of you that have a problem with this need to grow up and learn business.

However, this purchase is another nail in the coffin of AOL. Spending this kind of money on an 'internet identity' in 'the hopes' that it will add a new twist to your dying company is poor management and is a reflection of how little regard they have for shareholder value. Money grows on trees in the corporate world and they think they can acquire 'cool'.

In answer to the question if Ariana will add continued value? She has no incentive to once she gets her payout. If on the other hand, AOL management has a brain, they will pace her payout over time, coupled with some performance measure. However, if I were Ariana, I'd reject such a deal. I'd want to be able to walk at any time for any reason...

Posted by: BrownShoedSquare | February 8, 2011 9:14 AM

Ariana selling out to AOL, what a tragedy. With AOL in ownership the Huffington Post will move back towards the center and leave its position as a left leaning media outlet. Yes this will reduce Ariana's drive and ambition now that she is sitting atop a pot of gold. This is a loss for the left leaning news junkies. It would be natural now that Ariana has entered the ranks of the super wealthy that she would drift back towards the right with her new financial means at her disposal. It is natural for a self made millionaire to adopt a more conservative approach to their personal life. I would imagine that Ariana's drive would be cut short and she can stop and smell the roses for a little while. All this will fuel her desire to start another all consuming pastime for her which will bring her drive back to a new project. Perhaps her new drive will be something outside of the news. Maybe it will be in celebritology which is actually a good mix since she is now part of AOL. Congrats to selling out and good luck with your next endeavor.

Posted by: torope | February 8, 2011 8:19 AM

Who cares?

Posted by: jdonner2 | February 8, 2011 8:03 AM

Arianna is just another corporate subsidiary now. She's AOL's hip brand the way Boston Market is McDonald's hip brand. They showed her the money. If Rupert Murdoch had, she'd be part of the Fox Family now. Man the rationalizations, full speed ahead, for her. Abandon ship for those of us looking for independent points of view. Andale, pues...

Posted by: nicojake | February 8, 2011 7:36 AM

Now that Hanoi Jane is out of the picture maybe Arianna can marry Ted Turner – Ted doesn’t seem to be attracted to the fellas. LOL

Posted by: dcn1 | February 8, 2011 5:27 AM

"she's just an employee" ROTFLMAO!

I think the people setting at the top of AOL better start paying very close attention to what is going on. Arianna Huffington is no stodgy Time-Warner and the guys in the Executive Suit are liable to find themselves on the outside looking in.

The Huffington Post Media Group has the potential for bringing massive amounts of money into AOL and based on the way she created HuffingtonPost out of nothing she has to be smart enough to have gotten a contract that will give her some kind of option to acquire stock.

Posted by: mehrenst1 | February 8, 2011 4:12 AM

I don't know how it will end, but I know that I'm quite disappointed. I've never liked AOL or the way they treated customers who wanted to leave. (I was never a customer; I worked in telecom and knew how to navigate the Web early on.)

Also, their forums are full of ugly, mean-spirited, and quite ignorant posters.

{{Shudder}}

Posted by: MadamDeb | February 8, 2011 12:02 AM

With ... AOL??? :-(

I believe she is going to regret as even the mighty Time-Warner did. There is no prospect of happy ending with such an unscrupulous company as AOL is.

The news made me simply recall how undignified I felt when had to cancel AOL dial up, which I had tried just to test how good it was, some six years ago.Couple of weeds ago I read somewhere that AOL still has a good chunk of revenue from dsl customers who forgot to cancel or do not know that dial up is needed to use dsl.

Posted by: rajpol | February 7, 2011 11:46 PM

Remember, Ms. Huffington began her career as a liberal Democrat, then moved hard right for a long while, then moved left again. I think her ambition for personal celebrity and influence trumps any particular ideology.

I predict that the Huffington Post will move to the center, with much less acerbic commentary than before by writers like Dean Baker or Robert Reich. The celebrity gossip will be reinforced, and there will be even more headlines of the type "Lesbian Teen Mom Eats Own Baby."

Sigh...

Posted by: trobador | February 7, 2011 11:26 PM

Didn't read he Huffington post before AOL... wont read it after AOL.

Posted by: markandbeth92 | February 7, 2011 7:12 PM

AOL and HUff-'n'-Puff? Gee, how exciting! (Could it get any more boring or one-sided?)

Posted by: flipper49 | February 7, 2011 6:35 PM

Sad. Huge mistake. Content will slowly but surely drift right. And the Huffington? Just another internet hustler; perhaps after being frustrated by AOL she'll quit and start trading CDOs.

Posted by: jimdim | February 7, 2011 6:01 PM

Can't think of any entrepreneurs who could work for anyone but themselves, that's not a criticism.

Posted by: rperrone | February 7, 2011 5:34 PM

Hey, it's the great American dream; do what you like and sell out for the big bucks! Not that I noticed Ariana and friends looking very poor mind you!

Basically, I'm disappointed as more likely than not it will continue to become just one more commercial gossip source and weaker and weaker on any "news" content and less and less useful for truth and information. I guess we can expect Arianna to make the liberal progression case; but I suspect just like Bill, she is getting tired of trying to get any action out of Americans to cowardly, complacent, and ignorant to care about others and in most cases even themselves!

Posted by: CHAOTICIAN101 | February 7, 2011 4:38 PM

"AOL, which has not been known for making the wisest moves when it comes to mergers and acquisitions in the past. (See old media, Time Warner; and social media, Bebo.)"

For AOL the merger with Time-Warner was a stroke of genius. For Time-Warner...not so much

Posted by: croaker69 | February 7, 2011 4:23 PM

After reading Arianna's "When HuffPost Met AOL: "A Merger of Visions" today, I do wonder were this will lead. I visit Huffpost on a daily basis and over the years i've seen a measureable increase in the amount of celebrity drival while the volume of news and commentary seems to remain stagnant. Taking the site to a "new level" makes one wonder. Will the commentary remain rather free-wheeling and uncensored and will Arianna herself remain opinionated and open-minded...Time will tell.

Posted by: ancientdude | February 7, 2011 4:05 PM

Disappointed, I thought this was about her new hole.

Posted by: sleepy2 | February 7, 2011 2:37 PM

I'm always disappointed when someone appears to be doing something out of commitment to an ideal, and then it turns out to be part of a plan to get rich. This kind of stuff makes a person cynical.

Posted by: dparks2 | February 7, 2011 2:36 PM

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