Originally published in The Industry Standard, July 12, 1999

Outside Looking In
By Jacob Ward
Why can't black Internet executives get in on the boom?

The Web is adopting one of the worst habits of Hollywood: an addiction to blockbusters. It's drunk with phenomenal, if ephemeral, riches. When only billions matter, only the broadest possible target audiences matter. The Web once promised something different - a low barrier to entry and the kind of intense consumer loyalty that only niche content can bring. But investors, it seems, are focused on the mainstream plays.

Don Rojas can't understand it. He's struggled for three years to keep his Web site up, but if he can't make someone understand the promise of the Black World Today by September, he'll have to throw in the towel.

"I'll be 50 years old in October," says Rojas sadly, sitting in his Baltimore office. "It's a critical juncture in my life. I thought that apart from my family, TBWT would be the greatest achievement of my adulthood."

The Black World Today is a daily news Web site for African-Americans, and Rojas, the site's founder and editor in chief, must come up with some way to bolster his meager advertising revenue. The former editor in chief of the Amsterdam News, Rojas has worked for three decades as a reporter, radio journalist and newspaper editor. After a career in traditional media, he decided in 1995 to try to realize the promise of the Internet, figuring that publication costs were low and potential was high - not just for a profitable venture, but for crafting incisive news analysis and distributing it internationally. But since Rojas began, the Web has lost sight of that promise, and he can't afford to keep the site going for much longer.

Rojas is the kind of visionary that made the Web possible. The man works long hours, is unwaveringly devoted to crafting high-quality editorial and won't quit until he's dragged from his desk.

As in Hollywood, though, the funding often depends on the pitch, not the product. Mastering the pitch involves making lots of connections and looking the part. It means confidently articulating over and over again, in the vocabulary of the new-media marketer, speculative business notions like brand, reach and - most speculative of all - revenue. Those who can't talk the talk are left behind.

Venture capitalists attest that it's the executive team that sells the company, which is a serious impediment to Rojas' chances. Rojas doesn't look the part, and he doesn't speak the language. A bearded man with large glasses and a slow, professorial demeanor, Rojas speaks intricate English in a lilting Caribbean accent as he admits, "I'm not a businessman by training or propensity."

Rojas needs someone to mediate between his vision and the VCs'. He needs a strong executive to walk in and convince an investor to hand TBWT what it needs - enough to at least upgrade the site's ramshackle design, which obscures its high-quality editorial. But investors need to recognize the site's potential first, and few seem able to see it.

Why should they look at TBWT? A news outlet that serves African-Americans can create an intensely loyal audience by taking advantage of the community's ongoing feeling of exclusion from mainstream media. NetNoir and Black Voices are the two highest-profile sites, and Cox (dossier) Media's BlackFamilies.com has recently entered the scene, but Rojas believes they are not filling the need that TBWT could. "NetNoir and Black Voices are strong in the community dimensions, stronger than we are, but in terms of the journalism, we are unparalleled," he argues. "People will come to us on a regular basis, because we're addressing a hunger not only for information, but also for an interpretation and analysis of that information."

TBWT has no promotional budget. It has managed to proliferate among African-American Web users solely by word of mouth. Those who do find the site tend to stay - Rojas' 250,000 hits a month work out to around 50,000 regular readers. Seventy percent are college-educated, in their 30s to 50s, and earn more than $55,000 a year. And a group of readers has begun an impressive act of devotion: It's raising money to keep the site alive. "I have visited many other Afro-centered sites since August 1997, and have not found one with the consciousness and integrity that TBWT has," writes Gail Slatter, a New York Times photo editor. "TBWT is special ... and what it offers consistently I have not been able to get anywhere else."

Outside investors, though, don't see much potential. Rojas dreamed of finding venture capital to build an independent international news organization. Last year he approached dozens of VCs around the country. "We are fabulous belt-tighteners," Rojas says, and his investment proposal reflected that: $2 million to $3 million would establish TBWT as an international news presence in three years. "For $3 million, we could have bureaus in 20 cities around the country," he says. "One in London to cover black communities there and in the rest of Europe, and a bureau in South Africa, West Africa and the Caribbean."

But Rojas was turned down by every firm and fund he approached. "I went to the New York New Media Association, which runs a million-dollar fund," he recalls. "Three of us went in to speak in front of five people at a table, and we had 10 minutes. At the end, they asked questions like 'Why approach us? Why not go to wealthy black celebrities?'"

Despite the offensiveness of the question, it has an interesting answer. As have many others before him, Rojas found that black celebrities are not given to speculative investments in new media. "Looking in the black community is really frustrating," says Joel Dreyfuss, a senior editor at Fortune magazine who has solicited funding from the African-American elite in the past. "Most black wealth is first-generation wealth. That's not the money that goes into high-risk ventures."

The NYNMA funding went to another company that presented that day - Bikini.com. Jeanne Sullivan, who runs the New York Angel Investors Program, the NYNMA fund to which Rojas spoke, recalls meeting him. "There's no doubt he had a great team," says Sullivan. "He was smart and articulate, but he didn't have his revenue stream crystallized. Bikini was headed by a dynamic team which has strong links in the entertainment industry. They had syndication, knew how to leverage and make those opportunities work, and we gave them over $1.2 million."

Fritz Jordan, an African-American VC and a cofounder of Vcapital.com, has his doubts about the site. "I'm more intimate with the black marketplace than other venture capitalists," he says. "In the real world, you don't have an enormous number of black consumers buying from black companies." Although he's never met TBWT's founder, he suggests that Rojas may be too editorial-minded and not sufficiently aware of business reality. "He has the vision, the good entrepreneurial vision," Jordan says. "But he needs to treat it as a company, not as a Web site."

Other entrepreneurs have tried to create sites for African-Americans, and most have failed. This happened in part because of an inability to articulate the business logic of their ventures to investors, and in part because of a naive belief that breaking into the industry requires little more than a good idea and perseverance. McLean Mashingaidze Greaves, the president of Web-consulting firm Digital Melanin, ran a much-lauded site for young, urban African-Americans called CafeLosNegroes, until low revenue forced him to close the site down last year. "I was trying to establish a proof of concept," says Greaves. "I had worked for VC firms and software companies, and I knew they would see this as really high risk." After a few years of struggling, a continent away from Silicon Valley and across the bridge from Silicon Alley, Greaves - tired of stepping over drunks on his way to work - decided to cut his losses. "We were out of Bed-Stuy in Brooklyn," says Greaves of his old working neighborhood. "It's hard to build a company and maintain a positive outlook when you have crack dealers and cops with guns on your block."

Fortune's Dreyfuss fought to produce a site called Our World News, but gave up in 1997. "We had initial backing from Dow Jones and some operational financing from the Freedom Forum," says Dreyfuss. "But for 18 months we couldn't raise the money." He blames the peculiar business perspective of the Internet. "The fact that we showed how we could make money was a mistake," Dreyfuss says. "In an Internet business you're not supposed to make money. You're supposed to have traffic."

There is no national black newspaper in existence today, and once-powerful papers like the Chicago Defender, the Pittsburgh Courier and Rojas' Amsterdam News have seen their budgets and circulations steadily dwindle. Venerated magazines like Ebony and Essence (dossier) haven't grown for years, and there is no new significant competitor. But some bright spots are beginning to appear. Recently, traditional advertising agencies have become interested in pursuing African-American audiences. At the beginning of June, Paris-based Publicis bought a 49 percent stake in Burrell Communications Group (dossier), the largest U.S. agency in the African-American marketing sector, and Advertising Age reports that other agencies began negotiations for the second- and third-largest agencies. Young & Rubicam (dossier) is reportedly talking with UniWorld Group, the second-largest African-American agency, and True North Communications (TNO) is discussing a stake in Don Coleman Advertising, the third-largest.

In addition, the Forbes magazine group has had success recently with American Legacy, an African-American history magazine. Rodney J. Reynolds, its founder and publisher, was distributing the magazine through black churches before he arrived at a partnership agreement with Tim Forbes in 1994. He published his first quarterly issue with Forbes in February of 1995. "I'd struggled to publish independently for 15 years or so," says Reynolds. "One of the things I had to do to stay in publishing was establish a partnership that had the human and financial resources I needed." The magazine, with a paid circulation of 85,000 readers, has been profitable since 1996, and its advertising pages grew 42 percent between 1997 and 1998. Even success, however, brings its own issues. When appealing to an audience that has for years been shut out of mainstream media, publishers must consider cultural authenticity. "There's a growing fear that down the line when these enterprises begin to take in revenue, the management might change, the outlook would be different, and there will be no black voice," says Lloyd Grant, publisher of the KIP Business Report, a newsmagazine.

Omar Wasow, a partner with CommunityConnect and a founder of New York Online, a community site with a largely African-American audience, says it's a common concern. "In media there's an issue of representation," says Wasow. "The complexity and fullness of my humanity - will a nonblack institution get it?"

Venture capitalists argue that compromise is inevitable. "When people have social issues about money, it worries me," says Steven W. Bengston, director of emerging company services at Coopers & Lybrand. "It's hard to mix capitalism and socialism. You usually end up with lousy businesses." Reynolds found that having a mainstream media partner didn't compromise the cultural authenticity of his product. "It wasn't a concern,"

Reynolds insists, in large part because American Heritage, another Forbes publication, had an editorial mission closely aligned with what Reynolds envisioned for American Legacy. "We went into it truly as partners. Each partner has to have respect for the other's strengths and weaknesses, because at the end of the day we want to have a great product."

Rojas is in negotiations with Digital Melanin to work together in the future, and a few outside projects - like consulting work for Charles Schwab, which contacted him recently - are keeping him open for business. But he needs an investor. "We don't want to point fingers or say 'They're all a bunch of racists,'" Rojas says. "But there's a trivialization of a growing market here."

Greaves agrees. "It's amazing, because Don has proved his concept and shown he can tough it out and keep the site going without any funding," he argues. "So for me it's a no-brainer, seeing as how there isn't any clear-cut market leader. Anyone thinking of an iVillage-style IPO should be interested."

E. David Ellington, the president and CEO of NetNoir, which took a 25 percent investment from AOL, shakes his head at the situation. "Our market is the size of Canada," he says. "At the end of the day, if you can't figure out a way to make the biggest boom market in the history of the world give us some seed capital, something's wrong."