Associated Content Featured in The Denver Post - "Startup Stepping Up In A Big Way"
Monday, May 24, 2010
Posted by: Su Hawk
Startup stepping up in a big way
By Andy Vuong
The Denver Post
Posted: 05/23/2010 01:00:00 AM MDT
One of Colorado's most successful Internet startups sits smack in the middle of tony Cherry Creek, sharing a four-story office building with an H&R Block tax-service shop and a youth learning center.
Silicon Valley, this is not.
That puts more shine on the story of how first-time entrepreneur Luke Beatty turned a simple idea — creating an eBay-like service for online articles, photos and videos — into a $100 million acquisition for technology giant Yahoo.
The Denver native founded Associated Content in 2004 about 15 blocks from where he grew up, far away from the venture capital and networking-rich regions that nurtured other Web 2.0 firms such as Facebook and My Space that drive much of today's Internet activity.
"I knew I was starting behind the 8-ball because I was starting in Denver," Beatty said from a snug corner office that overlooks Macy's and the east parking lot of the Cherry Creek Shopping Center. "There was no real startup like this in Denver."
The fresh-faced 39-year-old beat the odds with determination — repeated phone calls landed a meeting with a prominent Silicon Valley angel investor — and the right connections — his college roommate, a former Google executive, was his first investor.
"Only about three of 10 venture-funded companies exit successfully — where founders, employees and investors are financially rewarded," said Denver entrepreneur Jon Nordmark, founder of eBags. "This looks like one of those rare and highly fortunate events."
Freelancers get a public outlet
Yahoo announced plans last week to buy Associated Content, whose Web-publishing platform gives 380,000 freelance contributors a public outlet.
They write about how to remove scratches from sunglasses. They muse about Miley Cyrus' lap-dancing controversy. And, sometimes, they cover actual news.
This so-called crowdsourced content can attract as much, if not more, readership as content from traditional media outlets. And it comes cheap. Some freelancers write for extra cash, typically earned based on the popularity of their posts. Others just want the audience.
Meanwhile, the Internet traffic — 16 million unique visitors per month, according to comScore — generates millions of dollars in revenue for Associated Content.
"The company pioneered this whole crowdsource content industry," said David Ko, a senior vice president for Yahoo. "They've also built the leading platform for sourcing and delivering that content."
The entrepreneurial drive wasn't always in Beatty's blood. He double-majored in education and anthropology at Connecticut College and earned a master's degree in education administration from Harvard University.
He worked as a high school teacher and lacrosse coach on the East Coast before coming back to Denver in 2000. To return, he took an internship at a startup called Wand, which provides online directory services for phone companies, trade associations and other businesses.
It was there that he hatched the idea for Associated Content.
"We were classifying all of this content that wasn't made for the Web," Beatty said. "It wasn't made to be on the Internet."
So he left to launch a business that allows users to create content designed specifically for the Internet, complete with tags that determine its shelf life and help it appear prominently in search-engine results.
The first investor was his roommate at Connecticut College, Tim Armstrong, now AOL's chief executive. Together, they poured in $200,000.
In 2004, Beatty flew to Palo Alto, Calif., for a lunch meeting with the "godfather" of angel investors, Ron Conway, who has had a hand in successful tech startups such as Google and Facebook. Conway agreed to sit on Associated Content's board of directors, giving the company instant credibility.
Working from the basement of Beatty's duplex during the first year, the site attracted contributors virally.
By 2007, it had 50,000. The company raised $20 million in three rounds of venture capital, led by Softbank.
Although the surroundings of its headquarters may not resemble a tech scene, the interior cries startup. Monitors are crammed together in several makeshift offices. Most employees bike to work.
Photographed with D-list celebs
Dressed in a Yahoo T-shirt, jeans and sandals, Beatty boasts about photos of him with D-list celebs MC Hammer and former Denver Bronco Bill Romanow ski. The latter is an Associated Content contributor, writing about sports and weight control.
"It's all about passion points, and everybody has them," Beatty said. "The Web allows people to distribute those passion points in ways that they can either get the exposure they're interested in or the profits they're interested in."
The company pays contributors $2.50 per 1,000 page views. Some receive $2 to $100 upfront. Beatty says a top freelancer has earned $68,000 since July 2006.
Associated Content is on pace to generate more than $15 million in annual revenue, Beatty said. It became an acquisition target as companies searched for ways to engage users through social media tools and content.
AOL, rumored to have been interested in Associated Content before spinning off from Time Warner late last year, has launched a similar service called SEED. Another crowdsource-content provider is Demand Media, co-founded by former MySpace chairman Richard Rosenblatt.
Associated Content has about 50 workers in Denver who handle editorial and engineering. A staff of 20 in New York covers marketing and business development.
Beatty's first employee was Leonardo De La Rocha, a former Web producer for the now-defunct Rocky Mountain News. De La Rocha said he decided to jump ship after Beatty and Armstrong convinced him that "without great risks, there's no great rewards."
The rewards will soon come as Beatty says every employee has stock in the company and will be compensated by the Yahoo deal.
Associated Content's success, however, reverberates far beyond its walls.
"Associated Content acts as a carrot for new entrepreneurs," said Nordmark, who oversees a business training program that will feature Beatty as a mentor. "All local entrepreneurs, plus people thinking about starting a business, look at what Luke's team has done and they realize it's possible."
Andy Vuong: 303-954-1209, firstname.lastname@example.org or twitter.com/andyvuong
Title: Founder and president, Associated Content; vice president and general manager, Yahoo.*
Education: Bachelor's degree in education and anthropology from Connecticut College; master's degree in education administration from Harvard.
Family: Wife, Susan, and 11-month-old son, Cash.
Hobbies: Fly-fishing, lacrosse and yoga.
* After Yahoo completes acquisition of Associated Content