It’s great when your company becomes the Next Big Thing. The tricky thing, though, is that there’s always a Next, Next Big Thing. What happens when formerly- explosive growth stalls, the buzz fades, and investors still expect big returns? Mike Keriakos, co-founder of EverydayHealth, lived through it and managed to get his company back on the fast-growth track.
In 2003, Keriakos and his co-founders partnered with Dr. Andrew Weil, author of The South Beach Diet, to launch the book’s website. Keriakos’ company, Everyday Health, was founded with the idea that they would license the use of big brand names in health, then sell subscription content, from newsletters to fitness and diet regimens.
With Dr. Weil as a partner, the team initially experienced meteoric success. Within weeks, the The South Beach Diet was on the New York Times bestseller list. When Weil began appearing on talk shows such as Oprah, sales exploded.
To drive as much traffic to the Web site as possible, Keriakos and his team “were buying keywords left and right on Overture. I would hit my credit card limit by 1PM then my partner’s by 5PM. Every morning we would start all over again,” he says. “We were probably the poorest people ever invited to the Amex Centurion club because they thought we were high flyers. We grew from under $100,000 in revenue in January 2003 to $3,000,000 per month by end of that year.”
And then it ended. In 2004, revenue was $30 million, the same as it had been in 2005. But Everyday Health was venture backed, and therefore under intense pressure to show big year-over-year revenue growth. As sales stalled, the company made investment aimed at holding on to customer for longer – eight months instead of seven – but by 2006 revenues hadn’t budged. Eventually, Keriakos realized that the churn wasn’t going to go away. People quit diets and workout regimens after a few months, regardless of what new features Keriakos’ team launched. The business model would have to change if he wanted to recapture that early growth.
Keriakos had to figure out what his company’s greatest asset was, who would value it, and at what price. The company’s greatest assets were the 20,000 visitors who completed health profiles on its Web sites everyday. If he could successfully aggregate this audience, would it be enough to allow him to build an ad-supported media business?
This sort of pivot was risky, and Keriakos knew it. “We were good at licensing brands, building and then marketing subscription products,” he said. “That’s a very different skill set than building an ad sales business.”
Here’s what he learned along the way:
1. Don’t try to punch above your weight. People have to want to be recruited. “You have to find seasoned executives who are ready to roll off what they’re doing,” says Keriakos. “If you’re launching a brand new line of business and you’ve been flat for two years as we were [at the time], getting someone who is in midstride and crushing it at their job might be barking up the wrong tree.” To recruit a top tier ad sales team, Keriakos poached talent from businesses that were also struggling. When he did find ideal candidates, he applied a full court press, turning every reference call into a sales pitch. He asked investors, peers, and friends to place calls and share their conviction in the new strategy. The strategy helped woo Scott Wolf from Muzak.
2. Understand what your customer values. Keriakos realized that “The only thing a brand manager cares about is how many pallets are shipped, the ROI of his spend, not how cool the program sounds.” So instead of pitching splashy custom graphics like many other publishers were at the time, he invested heavily to develop tools that would measure the effect his company was having on his advertising clients’ sales. He plugged into customer loyalty programs through partnerships with Dunnhumby and Crossix.
These strategies helped EverydayHealth recapture its early growth. Since 2006, the company has tripled its revenues and is projected to generate over $100M this year.