Corner Office: F+W Chairman & CEO David Nussbaum on the Company’s Decisive Strategic Shift Toward Ecommerce
When F+W chairman & CEO David Nussbaum joined the company in 2008, he saw which way the wind was blowing in the industry. Recognizing that print revenue was in an inevitable decline, F+W looked for new sources of revenue growth and market space to take its stable of strong enthusiast brands.
Nussbaum also recognized that enthusiasts spend a good deal of money on their passions: Artists buy books, paintbrushes, paints, easels, online education, and more. And it was clear the same held true in craft, writing, design, outdoors, lifestyle segments. With this knowledge, Nussbaum and F+W eyed ecommerce as the next frontier for the company.
The short version of the story is that it worked. Since 2008, F+W has grown its ecommerce business from one store and $6 million in revenue to 31 individual ecommerce stores with expected revenue in excess of $65 million for 2015. And to reflect the company’s strategic shift, in 2014 the company rebranded to F+W, a Content + eCommerce Company, (formerly F+W Publications and then F+W Media.)
Although, looking back, F+W’s shift seems to be quite the decisive move, Nussbaum acknowledges the company’s reconfiguration was challenging. It required functional teams (digital and content, magazine and books) to become more integrated, working to serve their respective communities in concert. And it required the right mix of talent to reflect the new focus—which often meant hiring outside the traditional media industry and sometimes meant parting ways with those not onboard with the new direction.
Content still “sits at the heart of the company,” said Nussbaum at the time of the announcement of F+W’s rebranding. Following Nussbaum shares the role content and ecommerce play in serving communities of enthusiasts and how F+W handled its successful transformation.
What led to F+W’s move toward a content and commerce company?
There were a few factors that went into it. One was that there was no denying that print products were going to be in some percentage of decline in the coming years. Relying on those as a primary revenue driver was not going to be healthy for the company.
Number two is that we serve highly enthusiastic audiences who are very passionate about their hobbies. We felt that audiences were going to be very receptive to more than just selling them a book or a magazine subscription. This is 2009, and we thought that ecommerce was heading in more of a vertical direction. In fact, when we decided to launch our ecommerce stores we visited with Amazon in Seattle for other reasons and I did a presentation on our company, and I told them where we were headed. At that time we were saying we wanted to be the Amazon of our vertical communities. I wasn’t sure how they’d respond, but they said, “You know what? That’s really smart.” They said, “We don’t go deep into a vertical. That’s a very good idea.”
How does F+W build passionate audiences and how does that translate in to ecommerce?
We curate our goods and services for a given audience because we are of the community. In the art group many of our people paint or sculpt or do other things. In our knitting group they all knit. In our quilting group they all quilt. So, they can really curate the goods and services, and that’s really, really important.
Secondly, we understand that when you’re passionate about a hobby, there’s a sense of community that you want, too. If you’re a car guy or gal, you want to go to a rally, or if you love to quilt, you go to quilting events, or [you want] a community online that you can go and ask questions of or learn from and so forth.
Then, finally, we have and we continue to produce really, really great content. That content is in every format you can imagine. It’s magazines and books, but it’s also online videos, it’s PBS television shows, it’s NBC sports television shows, it’s web seminars and live events. That content drives people to our stores, and that’s the place where we can sell them. We can sell them all these goods and services I just mentioned to you, plus, we can sell them the paintbrush or the easel or the embroidery pattern.
What needed to transpire from a cultural and organizational standpoint to make ecommerce a successful part of the business?
From a cultural perspective, this company has gone through a transformation. When I joined the company in ‘08 it was called F+W Publications. We essentially only published books and magazines. We did a few events, but that was it. Very, very little digital. When I joined the company I basically stood up at a town hall meeting and said, “Everybody, I just want you to know, we’re no longer a publishing company.” Obviously, being called F&W Publications and the thing everybody did was publish, it was a shocking statement. This was before we came up with the ecommerce [plan], and I basically said, “We want to deliver our media any which way that the consumer would like it.”
Second, we kind of rejiggered the entire organization and organized by community. [At the time] the business was organized by books and magazines and events. It was interesting to me because when I got to the company, if one person was doing art books on the second floor and another person was doing art magazines on the third floor, you never spoke and you really didn’t cooperate. We said, “You know what? This is one community, and you will all be part of that community, and you will all learn how to be on camera for a video, how to provide content for all formats, how to go to the market to select goods and services, how to build kits.” It took some time, but I think people were really excited about it because it opened up opportunity for them beyond what they do every day. Culturally, that was also really important.
Thirdly, it was no secret to people at our company that the print business was declining—and these are smart people—they didn’t want to be in a business that was going to decline year-on-year, so they were open to the changes.
Finally, there were some people who weren’t, and they left, and we brought in people who would be open to the cultural changes.
How do you approach curating products for a community?
First of all, we have a team of people who do the purchasing because, obviously, the content people are not going to go to all these different companies to purchase goods and services, or to arrange drop-ship. The content people identify trends, identify products, identify something that in a new market is going to be hot. They share those details with the ecommerce marketer and with the purchasing team. That’s how we do it. It’s a bit of a team approach. The purchasing team, they don’t know what’s hot in the market, but the content people do. It’s really a tripartite of people who are finding the proper curated goods and services for the audiences.
Then, our content people do create our kits. The kit business has become a very large one for us. It’s several million dollars. We only launched that two or three years ago. In one kit, it could be a project, it could be a how-to video book with the materials for that, it could be a lot of different things. Each market is obviously different, but it’s something that is offered only in our store—nowhere else. That’s part of curation—offering exclusive goods and services. Our content people really lead those efforts in coming up with the kits and designing the kits. Then, we have an ecommerce marketing team that understands how to market those kits.
What advice would you give a publisher trying to bring about the transformation F+W has realized?
It has to start with the company having a clear strategy and communicating that strategy to the entire employee base and sticking to that strategy come hell or high water, so that the people know this is not just a passing fancy. It’s not just the latest idea to make a little bit of money, but it’s who we are going to become. I think that’s really important. The other thing that we did is intentionally go out to hire digital people who did not come from the media business. These are SEO specialists, they’re merchandising specialists, they’re ecommerce experts.
These people all came from places that didn’t think about magazines or books. They thought about reaching a consumer, marketing, curating, pricing, and those kinds of things. As we brought those people in, and we had them start working with the communities, there was this fairly natural process that happened. It didn’t happen over night, obviously, and some communities took off, and others it took a little bit longer. But I can tell you that in ‘09 we had two or three digital employees, and today we have over 150. Again, their titles would not be titles that’d be recognized by a publishing company. That was a big part of the cultural overhaul.
Then, quite frankly, the people who dragged their feet, or who showed resistance to where we wanted to go, we parted our ways. We understood that it was not something they wanted to pursue for their career. They understood where the company was going. Over time, the people who are here today are people who believe in the strategy and participate in the strategy. The digital and the ecommerce and the content teams speak every single day. They collaborate on projects and ideas and so forth. And we became what we said we were going to become.
What are your priorities for the next 6 to 12 months?
One of the priorities is to continue to search for exclusive product, not only the kits, but going to manufacturers and working with them to come up with products and services that you can’t find anywhere else. That’s a big part of curation. Also, to produce exclusive digital goods and services. We’re going to be launching a digital pattern database that will start off with 45,000 interactive patterns.
Our most precious asset is our people because they’re the best, but maybe our second most precious tool and competitive advantage is our database. We have over nine million names in our database and they’re all very highly segmented. We work with ExactTarget on our email campaigns and managing our email lists. They’ve helped us migrate from a batch-and-blast marketing strategy to one that’s more highly selective. We’re working very hard on that, and we continue to because we want to get to know each customer very intimately, so we really know what they’re like, when they like to buy, where they live, their purchasing habits, so that we can get better and better at having a one-to-one relationship with our customers.
Finally, the third thing would be simply to continue to evolve both our staff and our technology so that we’re offering the most highly curated, most interesting goods, services, and content. Also, launching the best-in-class technology whenever we possibly can. If the average page wait time is four seconds, we want our wait time to be three seconds.