How Shane Smith turned anarchy into a $2bn online media empire

Canadian media hipster Shane Smith

In 1994, three young Canadians bought a tiny government-funded community magazine in Montreal and set about turning it into something rather more anarchic, says The New York Times.

The choice of name was simple enough: they struck out the ‘o’ in Montreal Voice and Vice magazine was born. Written for urban hipsters by urban hipsters, it could have gone the way of thousands of similar indie mags.

But under “resident wild man” Shane Smith, it has grown into a global multimedia empire, encompassing news, sport, technology and music. And all the big boys want a slice. Last week, Time Warner indicated it may buy a 30% stake, valuing Vice Media at $2bn.

Smith, 44, presents himself as an “ageless slacker” and “party animal” – and he can certainly still put back the booze. Yet he has become a key “conduit for corporate America” to reach the elusive “millennial” generation, who don’t read or watch established media.

As his friend, film director Spike Jonze, observes, he is the embodiment of the “gritty” Vice ethos, “but he can also turn around and sell it to the suits”.

Smith likes to relate how, in 2012, he took Rupert Murdoch to a bar in Williamsburg, New York “and got him drunk” on tequila. “I know why I’m sexy to them,” he told the FT. Indeed, he enjoyed spelling it out to Murdoch.

“I have the future, you have the past.” Three months later, Murdoch’s 21st Century Fox acquired a 5% stake.

Smith dislikes descriptions of his brand of journalism as ‘gonzo’ (see below). But he admits Hunter S Thompson, the genre’s 1960s founder, was an early influence.

While growing up in Ottawa, his father, a computer programmer, gave him a signed first edition of Fear and Loathing in Las Vegas. The teenage Smith hung out with a hedonistic, druggy crowd, and began writing seriously in the early 1990s when travelling in Europe.

He covered the war in Yugoslavia (an “exciting” mix of ecstasy-taking and machine guns), before moving to Hungary, where he freelanced for The Budapest Sun and Reuters while running a lucrative sideline as a currency hedger.

“Real cowboy capitalism. I was hanging out with lots of seedy dudes,” he told the FT. But he couldn’t take any of the money out of the country, and so returned to Canada to form Vice.

There were two big milestones in the magazine’s progression to a global media brand. First, the 2001 move to the emerging hipster capital of Williamsburg, from where Smith launched a successful print assault on “the cool kids” in London, Berlin and Stockholm.

Second, the move into online video, which won Vice a new audience, and new advertisers. “We went from a Gen-X company as an indie mag to a Gen-Y company online.”

Does he ever fear Vice itself becoming “legacy media”? Doubtless “some kid will come up and eat our lunch”, he told The New York Times. But at present he’s still aiming to become the largest digital network in the world.“It’s our time now.”

From an attitude to a “real business”

Not long ago, Vice “was more an attitude than a real business”, says Jeff Bercovici in Forbes. Yet by 2011, it was in more than 80 countries and had over $100m in revenue. So how did a cadre of Williamsburg hipsters “blow off the worst economy for media companies since the Great Depression”?

Part of it was good instincts: Vice bet on original web video years ahead of giants such as Google and Yahoo! “We saw that everyone was spending all their money on platforms, but none of it on what you put in the pipe,” says Smith. He reasoned it would only be a matter of time before “everyone’s going to need content”.

The company’s first big deal in 2007 was a joint venture with Viacom. The new online TV network, VBS.tv, featured mini-documentaries and news reportage, much of it shot on location in the world’s danger zones, and formed the template for later deals.

These days, Vice has a news show on Time Warner’s HBO network, a branding agency producing campaigns for Vodafone and Nike, and is churning out around 70 news-driven video series, says Matthew Garrahan in the FT.

Smith, who remains the largest individual shareholder, insists he isn’t motivated by money. But he has “an innate ability to grab headlines”.

Most notoriously he took the Harlem Globetrotters to North Korea and arranged a meeting with Kim Jong-un. Other video reports range from the “hard-hitting and serious”
to the bizarre. A recent piece was filed from an upmarket dog show “by a correspondent on LSD”.

Vice and “its tribe of skinny jeans-wearing Hunter S Thompson wannabes” has “captured the imagination of the young and languid”, says Emma Haslett in Management Today. That makes it a valuable asset. Still, all things are relative.

After all, WhatsApp is worth $18bn; Vice Media just $2bn. “Compared with the lucrative world of mobile apps, even trendier-than-thou media seems like a long, hard slog.”

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