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.
February 7, 2011; 1:32 PM ET |
Women in leadership
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