Chapter 9

NEXT STOP STARTUP-VILLE

My investing in Serious Eats is not a given. I’m not going to just give you this money for a blogging network, whatever the hell that is. I’m going to treat this like any other investment Carol and I make. Do your homework, write a business plan, and then, when you think it’s good enough, bring it to me and we’ll go through it line by line.”

Mike and I were sitting at the bar of the old Union Square Cafe having a burger. Actually he was chomping contentedly on his superb bacon cheeseburger, and I was practically choking on mine. Before the burgers, I had convinced myself that getting Mike to invest was somehow going to be a linear, quick, and anxiety-free process. Then why was I having trouble breathing, much less eating a cheeseburger?

Mike picked up one of the perfect burnished-brown fries before continuing. “And you’ll probably get mad at me, because I am going to ask a lot of questions. You’re going to need money from other people as well, and they’re going to want the same answers that I do. Pretend you’re getting a doctorate and you’re defending a dissertation. You want other people’s money, this is the deal. People don’t part with their money easily, no matter how much of it they have, especially if you’re asking them to invest in something so risky and so new that they don’t even really understand what you’re talking about.”

I was counting on Mike’s investment for Serious Eats. And I was even counting on him to school me in the ways of business as he knew and had learned them, first as president of the now-defunct shuttle-like New York Air, then as dean of the Yale School of Management, and finally as the chief marketing officer of Northwest Airlines.

I was also counting on Mike’s counsel, which I had depended on for a long time when it came to career and money matters. Mike had serious business chops. Northwest Airlines was in real trouble when it recruited Mike to be its chief marketing officer in 1992. His innovative pricing, marketing, and route strategies saved the company from bankruptcy. But Serious Eats was a content- and technology-based startup, and those were not Mike’s areas of expertise.

Mike was first and foremost an ideas person, another missionary Levine up on a soapbox. Before diving into the airline business, he had been a teacher and scholar, an academic whose field of interest was airline deregulation. He even got to practice what he preached. When the Carter administration deregulated the airline industry in the seventies, economist Alfred Kahn, the Civil Aeronautics Board head, brought in Mike as the price controls director at the CAB to help design and implement the deregulatory changes.

That he ended up making a fair amount of money in the airline business was in some ways a happy accident, a product of someone in a boardroom in rather desperate straits giving him the opportunity to put his ideas into practice. Don’t get me wrong. Mike enjoyed the life his newfound money afforded him. There was always at least one sports car in his garage; Krug champagne at occasions big and small; and expensive stereo equipment in the living rooms at his abodes in Manhattan and outside New Haven. But he had also enjoyed his life of the mind on an academic’s salary.

I admired Mike for his fierce intelligence, his passion for his work and his family, and the gusto with which he lived his life. The man ate a one-pound Carnegie Deli pastrami sandwich in four bites, six tops. He in turn admired me for blazing my own path, for pursuing my dreams, and for being able to work with all different kinds of people. Our mutual admiration society in the years after my parents’ passing had drawn us quite close, the inevitable disagreements notwithstanding.

That was how I convinced myself that it was okay to mix family with money and business. That conclusion was certainly not drawn from my father’s experience managing a lumberyard for his brother-in-law, my uncle Abe. My dad didn’t much care for my uncle or his job, and he wasn’t very good at it.

Mike had seen for himself the ugliness that punctuated my father’s work life, so I can’t imagine he was positively predisposed to this idea.

I convinced myself that he would be amenable because I had to (I wasn’t all that confident about other financing possibilities for Serious Eats) and also because I thought that no matter how bad things might get, when push came to shove Mike would never pull the rug out from under me. I had heard and read so many stories about investors, usually VCs, pushing out founders when things didn’t go according to plan. Tumultuous as our relationship could be, I knew that Mike would never do that.

My relationship with Mike was solid but painfully built after our parents died. I knew he could be difficult, demanding, even unintentionally hurtful, but I figured that I had learned how to handle and manage him as well as anyone could. His daughters Anna and Sara regularly told me, “You are Dad’s favorite child.” My response: “That’s a scary proposition.” Mike was tough on just about everyone, but maybe the circumstances that brought us together, the early deaths of both our parents, enabled him to cut me a tiny bit more slack.

I was going to try to raise the startup capital I needed from other sources, but I hoped against hope that if all else failed Mike would come through. Though, optimistically, I didn’t think it was going to come down to that. In 2006 investment money was flowing freely to content sites and blogs. Venture capital firm Greycroft Partners’ Alan Patricof, a seminal tech investor who had provided early-stage investment for companies like Apple and AOL, put money into ContentNext Media, a blog publisher whose blogs included paidContent. His rationale: “I look at blogs as the hyper-interactive magazines of the future, only with far greater ability to create communities and expand into new areas.”*

Shortly after Alan Patricof made his move, the seminal political and general-interest blog the Huffington Post announced that SoftBank Capital was making a $5 million investment in what was at the time a year-old site that mostly aggregated and curated content rather than creating it. It was launched in May 9, 2005, by Andrew Breitbart (yup, that Breitbart), Arianna Huffington, former AOL communications honcho Kenneth Lerer, and Jonah Peretti. The latter two went on to cofound BuzzFeed.

Peretti, an MIT Media Lab graduate, was obsessed with the question of what kind of online content went viral. So HuffPo and later BuzzFeed were both dedicated to that proposition. His devotion to engineering viral content paid off. In 2006 HuffPo’s traffic had grown like kudzu on the side of a gardening shed in Mississippi. How much kudzu? By Christmas, eighteen million people were logging on to HuffPo every month.

How did HuffPo do it? It was a combination of first-mover advantage; access to big names like Nora Ephron, who blogged for free in exchange for a small piece of equity; using an army of unpaid contributors in search of a larger audience of their own; and, perhaps most controversial, walking right up to the edge in terms of aggregating, summarizing, and publishing other media outlets’ stories before linking. Many of its competitors thought it in fact stepped over the edge.

Was this practice ethical and legal? Many people had their doubts. HuffPo had (accidentally, according to Jonah Peretti) published and linked to entire concert reviews from the Chicago Reader on HuffPo’s new Chicago site. In a story in Wired magazine Peretti defended the practice in general by claiming, “The Huffington Post’s intention in aggregating other publications’ content is to send traffic their way.” Peretti said, “You tease, you pull out a piece of it, and then you have a headline or link out. Generally publishers are psyched to have a link.”*

A New Orleans–based journalist begged to differ in that same story: “In other words: professional newsgathering organizations have paid professional writers to do professional work, and then Arianna comes in, creates links to their creations, and sells ads on her own page. How progressive.”

In the New York Times in 2011, then–executive editor Bill Keller weighed in on this issue: “Aggregation can mean smart people sharing their reading lists, plugging one another into the bounty of the information universe. It kind of describes what I do as an editor. But too often it amounts to taking words written by other people, packaging them on your own Web site and harvesting revenue that might otherwise be directed to the originators of the material. In Somalia this would be called piracy. In the media sphere it is a respected business model.”*

In any event, the marketplace settled the dispute instead of the courts. The blogosphere’s currents had simply become too strong to fight, even for the likes of the New York Times. The Huffington Post was eventually sold to AOL in 2011 for $315 million dollars.

Ad dollars were starting to migrate from print, TV, and radio to the web. In 2005, according to the Interactive Advertising Bureau (IAB), marketers spent more than $12.5 billion advertising on the web. And that number was growing by at least 30 percent a year.* I had researched this revenue migration while trying to launch Gusto.

This content and revenue migration to the web spelled trouble and caused major agita for even the best of the old-media publishers, like the New York Times and Condé Nast. They were befuddled by the internet, and rightfully so. Their reasoning seemed solid. Why should they give away their content on the internet for free when consumers were still willing to pay for magazines and newspapers? It is a question that is as vexing now as it was then, especially for sites like Serious Eats, which has no paywall.

Food news seekers were starting to turn to early food news blogs like The Food Section and Sauté Wednesday, which aggregated and curated the food news of the day and linked to the source material in a generally more responsible way than the Huffington Post.

Recipe seekers went to sites like Condé Nast’s Epicurious, the would-be Gusto content partner that was mostly a repository for all the recipes generated by its magazines; Allrecipes, a user-generated recipe site started by a few cooking-obsessed technologists in Seattle; and a rapidly proliferating array of cooking blogs. The result was that food information seekers could find just about everything and anything they wanted free and fast.

Content was king, or so the pundits said, and the rush was on to seize the crown. A friend of mine in finance told me, “The capital markets are flush with cash sitting on the sidelines looking for content companies to invest in. There’s a lot of easy money out there.” I very quickly learned that it’s only easy when you don’t need it. Furthermore, the only people telling you about easy money are folks who aren’t trying to raise it.

I needed a business plan pronto, for me, for Mike, and for anyone else who might invest in Serious Eats. I bought half a dozen books on how to write a business plan. My favorite for obvious reasons: The One Page Business Plan. I still have that book, but it didn’t turn out to be all that helpful. The one thing I learned from all those books was that, by year three, your revenue had to hit some all-but-unattainable number to entice investors. Aggressive but plausible, as Mike would say.

I had the incredibly slick hundred-page Gusto deck to use as a model. But the difference in the Gusto days was that I’d had MBAs on my team who actually knew how to use Excel to do financial projections. Even today my Excel skills are nonexistent. When I started Serious Eats it was just me, a knish-loving journalist and accidental MBA who barely made it through introductory accounting and finance courses.

In fact, in business school, my bow-tie-clad professor in what was called “Baby Finance” pulled me aside after a few weeks and said, “You wrote down on your class questionnaire that you were planning to be a double major in marketing and finance. If I were you, Mr. Levine, I would seriously reconsider the finance concentration.” I guess he had noticed my eyes glazing over while he explained the capital asset pricing model. I just couldn’t get excited about it then—or now, for that matter.

To mitigate the risk for potential investors and prospective employees, and to fill in the many holes I had in my digital media game, I knew I needed to put together a crew of experienced digital publishers, thinkers, technologists, and business folks to work on Serious Eats. Blogging for fun and a few extra bucks for an individual was one thing. A lot of people could do that and were in fact doing it. Making a living as an individual food blogger, like Simply Recipes’ seminal food blogger Elise Bauer, required a much higher degree of computer literacy than I had or could even develop over time. Elise had gotten an MBA from Stanford before working for Apple and then starting her recipe blog in 2003. I had eaten a thousand slices of pizza in a year and written a book about it. Talk about two different skill sets. I may have been naive, but I knew I needed a team that knew how to do what I didn’t. Steve came to the rescue again. He knew a kick-ass coder who had collaborated on various projects. The fact that said coder, David Karp, was barely old enough to drive didn’t worry me that much. In fact, David got his license a few months after we met. He then bought himself a Lexus, and he could very well have paid for it in cash.

Sure, he was a high school dropout (his teacher mother did make him get his GED, I told myself), but by the time he turned sixteen he had already made his first quarter of a million dollars as the chief technology officer of online parenting forum UrbanBaby, after its sale to CNET. Before that he had spent a year in Japan on his own working for another technology company. That was some serious cred as far as I was concerned, as it was $250,000 more than I had made from any enterprise, digital or otherwise, and I’d never been to Japan for any reason.

I agreed to pay David a monthly retainer when I found the funding. In the meantime he worked for the burgers I bought him at Shake Shack, which had just opened in Madison Square Park. The line at Shake Shack was our de facto conference room. And what a conference room it was, filled with incomparable Shack burgers, with their great crusty, almost-caramelized exterior; Chicago-style hot dogs with neon-green relish made with sport peppers; and fantastic eggy soft-serve that made the Carvel I had grown up with seem like custardy Play-Doh. Shake Shack pro tip: order a coffee malt and ask for extra malt powder. It will be the best malt you’ll ever drink.

Over a couple of perfectly browned Shack burgers and two of those blessed coffee malts, I agreed to make David chief technology officer of Serious Eats, which of course didn’t exist yet. Hell, I was thrilled to have a CTO, even if I didn’t have the money to pay him (not wanting for cash, David was willing to wait until I had raised money) and wasn’t sure what he was supposed to do. Didn’t matter. I was putting together my crew.

Other members of the soon-to-be Serious Eats team were also readily available in Steve’s office. I solicited Steve himself. “Of course I’m in,” he said when I asked him. “Whatever you need. I just want you to be successful.” I was gleeful to have a silver-tongued futurist like Steve on my side. He was and is a provocative contrarian and a masterful media idea salesperson. Steve had once convinced MTV that the great then-septuagenarian singer Tony Bennett should be the star of its new ad campaign. Tony Bennett selling MTV? That’s some serious salesmanship.

Bill (not his real name) had also hooked up with Steve. He was Steve’s hard-core business colleague and right-hand person at an animation studio Steve had run for a couple of years. Bill had the proper swagger of a new media executive. He spoke with absolute authority about anything and everything concerning new media. He certainly convinced me of that. Of course, I was a pretty easy mark.

I thought I was sitting pretty. I had the beginnings of my dream team, three people who could supply business chops, new-media expertise, and clear-eyed objectivity to go along with my food cred, old-media chops, and passion.

I still needed to get my own digital media rap down cold, both for my own edification and for my prospective investors. After all, I was going to be the front man, the face of Serious Eats. I took a deep dive into the blogosphere in general and food blogs specifically.

Eater launched on July 21, 2005, as part of the Curbed network of blogs. It began publishing at almost exactly the same time that Gusto crashed and burned. Its welcome screen and initial post: “Welcome to Eater. The paint is just about dry, the banquettes arrived last night from Budapest (customs is a real bitch), and it looks like the chef is done experimenting with the menu. So, come in. Can we take your coat?”

Eater was founded by Lockhart Steele and Ben Leventhal, neither of whom was a food writer. Steele had been the editorial director of the Gawker network, one of the first blog networks launched as a business. He even kept that job for a while after Eater’s launch. The Curbed network was named after Steele’s first for-profit blog, a real estate blog that grew out of his personal blog about his New York City neighborhood.

Leventhal, now the cofounder of the restaurant reservations site Resy.com, had started a blog/online newsletter, She Loves NY, where he gave restaurant and nightlife tips. But he still kept his day job, which was working at the cable network VH1. He and Steele were entrepreneurial technologists first and restaurant aficionados second. And they were twenty years younger than me.

Eater’s subject matter was the restaurant scene and its celebrities, not the food that came out of the kitchens. As Ben Leventhal told me at the time, “Eater was all about creating heroes and villains. Nothing more, nothing less.” And, oh yeah, it was all about business. At that point Eater was resolutely opposed to opining about food or even offering restaurant recommendations. All it cared about then was what’s hot. I couldn’t care less about what was hot—in fact, I preferred undiscovered gems. All I cared about was what was seriously delicious.

But Lock—as he liked to be called—already knew his way around the blogosphere businesswise, thanks to his experience at Gawker. Even before Gawker he’d already had a failed startup under his belt—a learning experience. “Fail early and often” is a Silicon Valley mantra that I never heard until it was too late. Actually, it didn’t matter that I never heard that mantra. At my age I had one shot. Failed digital content entrepreneurs over fifty were not perceived favorably.

Lock had also learned a ton at the feet of the original blogger/businessman, Gawker founder Nick Denton. One thing he learned: a blogging network should include many different subjects or verticals. Why? Different verticals gave you a bigger pool of potential advertisers to pitch. At any given moment Denton had a minimum of six blogs going, covering everything from gadgets to sex to media gossip to travel. Lock had real estate (Curbed) and food (Eater) and later shopping (Racked). Me? When I eventually launched, I had pizza and burgers and New York victuals, which were actually all part of the same vertical, food.

Denton started his career as a journalist in London. His coverage of technology led him to digital media entrepreneurship. He was able to self-fund Gawker because he had sold his first two digital startups, First Tuesday and Moreover Technologies, for a reported combined $89 million, according to the New York Times.* So he had no outside investors to worry about.

Eater and Gawker shared a similar smart, confident, and snarky voice. They had the same mission, creating heroes and villains. But a few other business-savvy folks saw the financial promise of blogs. In September 2003 Jason Calacanis, the founder of defunct trade magazine Silicon Alley Reporter, founded Weblogs, Inc., a network of up to ninety niche blogs, with the help of a few outside investors, including Dallas Mavericks owner Mark Cuban. The only one of his blogs I paid attention to was Slashfood, which was not known for its journalistic excellence or rigor. The blog that put him on the digital map was his gadget and tech blog Engadget. Calacanis and Denton were fierce competitors. How fierce? Calacanis stole Peter Rojas, the editor of Denton’s most profitable blog, Gizmodo, by offering Rojas a huge piece of equity. That piece of equity turned out to be worth millions.

Two years later, in 2005, just as I was launching Ed Levine Eats, Calacanis sold Weblogs, Inc., to AOL for a reported $25 million. On one level this occurrence gave me pause. AOL had lots of resources to put behind Slashfood. On another level, it would be a favorable comparison to put in our investor deck.

But I was mostly focused on Eater, just because it seemed to have the mechanics of food blogging down pat. One of Eater’s best-known series was “Death Watch,” in which the editors tried to predict the demise of certain restaurants. I respected the hell out of Eater (I still do), but I was repulsed by “Death Watch.” Why? It was doing a play-by-play on people’s dreams. I was much more interested in keeping deserving restaurants and food shops and food purveyors’ dreams alive.

Serious Eats was not competing with Eater at this time. In fact, in the years after the launch of Serious Eats, Lock and I would often have lunch to exchange notes, along with Apartment Therapy founder Maxwell Gillingham-Ryan. There was of course a limit to how deep the note exchanging went. Certain trade secrets were not shared. After teaching at a Waldorf school for a few years, Maxwell had started Apartment Therapy in 2004 with his new-media executive brother Oliver. Its mission: “saving the world, one apartment at a time.”

Maxwell unsuccessfully tried to start blogs in other verticals but did succeed along with his now-former wife, Sara Kate Gillingham, in launching the food blog The Kitchn, which mostly focused on simple, homey food that could be prepared with minimal fuss and prep time. Eventually The Kitchn, by dint of its huge audience and slick design, did become one of Serious Eats’ greatest competitors.

But in April of 2006 there was no one doing anything on another blog or medium that scared me. This was probably irrational bravado on my part. The thought that I would finally have my own soapbox to climb on, armed with my own megaphone, obliterated all the rational concerns I should have been thinking about.

In the meantime I had to keep feeding the ELE beast. I was told I had to have ELE growing sufficiently to have “proof of concept,” as they say in the money-raising trade. ELE was the business petri dish for Serious Eats, which of course didn’t exist yet. On ELE I blogged about my favorite pies in New York, including Yura Mohr’s incomparable pumpkin pie, with its buttery, crisp crust and custardy filling. Yura is one of New York’s great unheralded bakers and purveyors of elevated comfort food. The day after my post went live, my phone rang. It was Yura. “What did you do, Ed? Out of nowhere there was a line around the block for my pumpkin pies.” Ed Levine Eats was moving the needle. More and more people were reading it. I put the Yura anecdote in the business plan.

Labor Day weekend of 2006, six months after the Union Square Cafe burger meeting, Vicky and I stopped at Mike and Carol’s outside New Haven on our way home from Martha’s Vineyard. Along the way, we had gone to Frank Pepe Pizzeria Napoletana, known as Pepe’s, to pick up a large clam pie and a large sausage and mushroom.

(Mike was firmly in the Pepe’s camp, but not because of the pies. He knew that Sally’s Apizza was consistently better, except for its clam pie, made with canned clams, but he hated the fact that Sally’s regulars could skip the line if they had the very private reservation number.)

It was a gorgeous late-summer day. Carol’s garden was positively resplendent. I thought the flowers were a sign from the heavens that something good was about to happen, that Serious Eats was going to bloom. I hoped the scent of the flowers would cover up my sweat-ridden angst. Mike summoned me to the back porch of their rambling colonial house. I felt like one of those guys in The Godfather about to ask Don Corleone (Marlon Brando) for a favor on his daughter’s wedding day. Like all those guys, I came bearing gifts, the boxes of pizza I set down on the table.

He had a copy of the business plan in his hand. “I still have a lot of questions about this, and frankly I don’t understand much about the internet, much less the blogosphere, but I’m going to invest $500K in your business, which you clearly have great passion for. I don’t know if I’ll ever get any of it back, but I’ve talked to Carol and it’s something we want to do. This is your shot, Ed. We will put the money in a separate checking account, and anytime you think you need some money, you’ll have to come over to our apartment and sign a ledger sheet.”

Holy shit. I had $500,000 for Serious Eats. I was so excited I was practically vibrating like a tuning fork. I couldn’t believe that Mike had enough faith in me to invest that much money. I calmed myself down by telling myself that even if I failed, the money that Mike and Carol had lost wouldn’t cause any change in their lifestyle. But that was before I understood a fundamental truth about individual investors: just because someone has made enough money to invest in a speculative venture like Serious Eats doesn’t mean they won’t be upset if they lose it. That goes double if they are family. People who have made money usually didn’t make it with a casual attitude about money in general.

I didn’t fully think through the ramifications of having to go to my brother’s apartment to sign out money. All I knew was that I had the cash. Maybe, just maybe, that moment on Mike and Carol’s sun-filled porch was really going to be the start of something great.

When you raise the first tranche of money for your startup, you feel a great sense of accomplishment, like you completed an arduous journey. And it is in fact a real achievement. But then you realize that the money just gets you to the starting gate, not the finish line.

Nevertheless, I had everything I needed. I had my team. I had my brother’s blessing, which was the hardest thing of all to earn. We were in business.