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Interview with Rafat Ali, ContentNext

I had the chance to speak yesterday to Rafat Ali, founder of ContentNext (www.contentnext.com), a company that just received a round of venture capital funding from GreyCroft Partners, a new VC fund headed by Alan Patricof. Santa Monica-based ContentNext operates paidContent.org, MocoNews, and ContentSutra, three online news sites covering aspects of the media and content business. Rafat started paidContent as his own personal blog, and I thought it would be interesting to hear the story behind how the blog started, the transition to a standalone company, and now, his venture funding. (Photo courtesy of Martin Schaedel)

Ben Kuo: Congrats on funding! For the readers who aren't familiar with ContentNext, tell me a bit about the business and web sites you operate?

Rafat Ali: ContentNext is comprised of several web sites, including paidContent, which I initially started about 4 years ago. The ad market had just tanked, and people were started to charge subscriptions to web sites, and everyone thought that would be the big trend. So, I started tracking that trend. As you know, it didn't turn out that way--not everyone went to subscriptions, and the ad market came back--and the focus now is the business of digital media. We're now covering everything about online media, including mobile, music, the newspaper industry, the movie industry, and magazines--not just in the U.S., but Europe and Asia as well. That's the broad focus of paidContent. The other two sites we have are MocoNews, which covers mobile content, specifically-- that coverage is much more international. Content Sutra covers the Indian digital media market. It's a huge market, very small, still, but with lots of stuff happening on the mobile side

Ben Kuo: Tell me the story about how you got started with paidContent and your blog?

Rafat Ali: I had worked at a company that closed down a month after September 11, for the reasons that all of us know. I moved to the Silicon Alley Reporter at the end of 2001. However, there the magazine had closed down already, there was the web site, but not much going on, so I was looking for a job at other places--this was when I was based in New York. I started the blog to raise my profile and to get a job. I moved from New York to London because I couldn't find a job. If New York was bad, London was worse because of the job market. Then, somebody emailed me and asked if I would take an ad for the blog. Nobody gave me a job, but the site got bigger and bigger and finally went full time. It grew from there, I moved to LA about two and a half years ago, and have been here since.

ContentNext is now about eight people, and with the funding we are going to hire a few more people, including a journalist in New York, and a conference person.

Ben Kuo: Why did you decide to get funding now?

Rafat Ali: Since I moved here over two and a half years ago, I have received lots of interest from anyone you can think of, from media companies, VCs, to angels, who wanted to invest in us or buy us or to enter into a partnership. The main goal for me was not to lose control. I gave up a small minority of ownership, and took smart money from somebody who has already been in the media industry for a long time. Typically it's difficult for VCs to invest in pure content plays, and more than that, even more difficult for them to invest in journalism sites. The VCs all came from a software background, and even the VCs who invested in content were focused on consumer entertainment and NeoPets and MySpace kind of content. I wasn't comfortable with taking money from those kind of VCs, it just didn't make sense. However, Alan Patricof has been around for a long time, and is a media figure who has invested in a lot of companies who have literally defined the industry. He founded Apax Partners, Patricof & Co., and he wanted to get back to his roots in investing in startups, which is why he started this new fund. Alan has lots of media experience, was one of the cofounders of New York Magazine, sold Details Magazine to Conde Nast, and has also invested in companies like WebMD and Audible.

Ben Kuo: How fast are you going to grow with this investment?

Rafat Ali: We're going to grow fast, but it will be smart. I don't want to have 50 sites in 50 different countries, even though that's possible. The main thing, which you probably understand, is the company was not meant to be a company when it started, so things have been very chaotic. Now is the time to get organized. We want to get our house in order, administrative systems in place, a billing system--all back office things. Also, of the eight people we have, everyone except me is a contractor or freelancer. My goal with the funding and with the organization is to get some of them on full time. There will be lots of freelancers, and we are going to hire a journalist in New York, and start conferences. We're going to hire a conference producer to go beyond the mixers we have been having, like the one we are having tomorrow here where I am right now in New York. We'll keep doing these mixers in other cities, and move beyond that into conferences, research reports, and anything we are expanding into those areas which any media company would.

Ben Kuo: Is this all ad-supported now?

Rafat Ali: Yes, this is all mainly ad supported, as in direct display advertising like you see on our site. The job classified area is doing very well, and that is bringing in a lot of money. That's a focused audience, which job advertisers love. Everyone you can think of is advertising their jobs on our site. If you look at conference and mixer sponsorships as advertising, that's also good too. Our research area is very small now, but we are increasing this within the next few months. We might also develop some premium content or archives, but we'll see.

Ben Kuo: Thanks for the interview, and good luck!