Shoshana

March 20, 2006 issue - Last October, the question of whether blogging could be a business was pretty much decided when AOL paid a reported $25 million for Weblogs, Inc., a network of almost 100 blogs on topics like technology, travel and parenthood. The founder of Weblogs, who will still run the company, is 35-year-old Jason Calacanis. A Brooklyn kid with relentless hustle, Calacanis made a splash in the '90s with publications (like Silicon Alley Reporter) that tracked the dot-com boom, and when the bubble burst, he—like the companies he covered—didn't get the expected giant payout. But in 2004, Calacanis got a second chance by setting up a company to generate dozens of ad-supported Weblogs, largely written by freelancers who split the loot with him. His most successful is Engadget, a real-time guide to gadgetry run by Peter Rojas, who jumped from rival blog concern Gawker Media. Calacanis, who now lives in Santa Monica, Calif., talked to us on a trip to New York to visit the Time Warner mother ship.

LEVY: Why did AOL buy Weblogs?
CALACANIS: We had really phenomenal earnings—not just revenue but earnings. The margin on the business is very high. And the growth was spectacular. AOL has this incredible machine that the right property can plug in to, and make back whatever they spend on buying something incredibly quickly. They promote it for a couple days on the home page, and all of a sudden there's a couple of thousand more users or, in our case, more page views. You've seen that boost already?
It's definitely happening. In two or three months, we've had a lot of our sites go from 10,000 or 20,000 pages a day to 50,000 pages.
Anyone can start a blog. Why couldn't AOL have started its own blog network?
I think they were thinking of doing that. But we knew how to find the bloggers, launch the blogs, grow them and manage them. Entrepreneurs are uniquely qualified to focus in on something new, to make the mistakes quickly. Big companies are good at scaling. What you're seeing in the marketplace is that the bigger companies, the Yahoos, the AOLs, the Microsofts, the Googles, are getting better at buying smaller and smaller.
Does Time Warner have any concerns about your content and the unfiltered nature of blogs?
When the magazine industry or the newspaper industry looks at blogging, they say over and over again, "Where's your fact-checking process?" AOL looked at us and said, "You're like a message board or a chat room, except you pick the bloggers!"
But you don't think of your top blogger, Engadget's Peter Rojas, as a guy in a chat room. You claim he's a top journalist.
I look at [mainstream] journalism as like Carnegie Hall. It is very regimented. There are strict rules—a symphony plays there, and they get everything perfect. You can have one of those symphony members go somewhere and play jazz piano or folk guitar, and it's just as compelling an experience. I think Peter's a top journalist who went acoustic. Now he has the freedom to say that [a company] sucks. Mainstream journalists, with very few exceptions, don't have the ability to use that word. Journalists are rebels—they're supposed to be fighting against the Empire and getting the truth.
But, Jason, you're part of Time Warner. You are The Man.
I work for a big company, but they don't tell me what to do or what to blog. I say to my bloggers that the day [AOL] tells me what to do is the day I leave, and the day I tell you what to blog should be the day you leave. I don't think I'm The Man at all. And I think we've changed the culture of AOL a little bit. I think you're going to see AOL become a very transparent company.
Do your bloggers get health care?
Not yet. Most of our people are not doing this for a living. They were doing this for the passion, they were doing it for free on their own personal blogs. The fact that we started paying them, they started making a couple hundred to a couple thousand dollars a month from us, is incredible.
You've been through a boom and a bust. Are we in another bubble now?
It's frothy. And I'll tell you the thing that makes me nervous. When I hear entrepreneurs talk about how many more pages they have than another group, or how many more connections per user they have in their social network, that's when I realize that they don't have that strength to go farther. The scoreboard for me is always earnings. When I see people basing the scoreboard on something else, I realize that they're not real entrepreneurs.
You've gotten a lot of criticism during your career for your unabashed hustle. Does this huge deal vindicate you?
Where I grew up, the only way you got on the news was if you jumped behind the camera when somebody was doing a stand-up report. Even though I didn't have the home run with Silicon Reporter that most people anticipated, I was in New York Magazine, I got on "Charlie Rose," and to my mom and my dad, that was the greatest success you can ever have in the world. For me, it was never about money.


© 2006 Newsweek, Inc.