July 3, 2018

Quartz had reason to break out the party hats Monday as the six-year-old venture was sold upstream by Atlantic Media to a similar Japanese business site in a deal worth at least $75 million and up to $110 million if it hits performance targets.

Quartz had grown in its short life from 22 to 225 staffers and zero revenue to $30 million a year.

Fundamentally, it has flourished because it was — and still is — a good idea, well-executed. The shoals are littered with the remains of magazine launches that flunked one or both of those tests.

From the start, Quartz was conceived as digital-only and designed for smartphones and tablets. It cast its lot with the then-newfangled sponsored content/native advertising model (as did Vox), thus avoiding the annoying clutter of banners, drop-downs and auto-plays that pollute so much of the digital user experience.

Executive editor Zach Seward spoke with me Monday afternoon about how the publication grew and prospered, beginning with that good idea.

"The one-sentence summary is that we are a guide to the new global economy," Seward said. "So we are focused on explanation" — not so much investigations or event-driven news breaks.

"Also, we have a bias against the status quo," he said. "Not everything is interesting — even some whole industries."

Content is organized around themes, "obsessions" in Quartz parlance, with topics like media, tech and an assortment of others getting attention, but not in a traditional beats and lines-of-business way.

An early obsession, maybe the first, Seward said, was "the next billion" — people coming online for the first time, that is. 

"That's multi-disciplinary… a tech story but also a finance story and a health care story," he said.

Quartz also qualifies as a disruptor of the status quo in business journalism. Both Seward, for a short time, and editor-in-chief and co-CEO Kevin Delaney, for a long time, were with The Wall Street Journal's digital news operation.

Quartz stories also have a distinctive tone — plainly written, often short, and free of the inside baseball terminology of the genre (not to mention tired metaphors like "inside baseball").  A representative sample from Monday was "Six reasons why your workplace's sexual harassment training will fail."

With that approach, Seward said, editors have found some users "tell us they like reading about other industries, totally unrelated to their own."

More than one viewpoint went into thinking Quartz up. In Seward's mind, "it was much to the credit of [parent] Atlantic Media and [CEO and owner] David Bradley.  He had turned around the Atlantic and could have stopped there… but he chose instead to invest the profits in our launch."

Though Quartz is recognizably a sibling of The Atlantic with its varied side ventures and revenue streams, its management has been largely independent by design.

"That has been underappreciated too," Seward said. Atlantic Media "is really run like a holding company. So we have the benefit of talking to our colleagues there about shared issues, but we handle day-to-day operations by ourselves."

Quartz doesn't embrace the term millennial, Seward said, but its audience does skew younger than competitors. 

"We try to serve the next generation of business leaders, the person the CEO turns to for advice."

The Quartz story has not been one of uninterrupted triumphs. 

"We do celebrate our failures," Seward said. "We thought we could innovate on comments with an annotation format. Great concept but the readers didn't use it much. I experimented with a blog about my obsession, which is the future of TV, but that didn't catch on either."

Some years have been profitable for Quartz, others not, as resources are directed instead to investments in growth. Revenue was off a little from 2016 to 2017. Quartz, despite a target of class rather than mass audience numbers, felt some of the impact of the big platform companies like Facebook and Google vacuuming up available digital ad dollars.

This year the company is on target to grow 25 to 30 percent, its release announcing the sale said. That's a result of "doubling down," Seward said, on well-executed sponsor and native advertising messages, produced together by an in-house studio and the advertiser.

Buyer Uzabase is another young, digital-only company with a single founder-owner, now publicly traded on the Tokyo Stock Exchange with a market capitalization of $870 million. The entire Quartz crew has been invited to stay on and the name will stay, but there will be changes.

Quartz's main site is free, Uzabase's requires a paid subscription. The probable post-acquisition adjustment will be to keep the basic offering as is but build new premium vertical sites on top. Still, that is probably an indicator that while Quartz is different in many ways, it shares in the current industry consensus that the next phase of growth will come from readers rather than advertisers.

Owner Bradley, who sold a controlling share of The Atlantic and associated ventures to Laurene Powell Jobs' Emerson Collective a year ago, explained in a letter to staff that the sale fulfilled an agreement with his adult sons to sell all of Atlantic Media before he turned 70.

Bradley is only 65, but both deals came together more quickly than he had expected, he wrote. The Quartz sale evolved from earlier conversations about collaborating on content and English-language extensions of Uzabase's sites.

Bradley will stay on in a consulting role and the company will continue to own the National Journal and Government Executive groups, marked for eventual sale too.

The news caused me to revisit why Quartz is called Quartz. The initial announcement in 2012, explained, not altogether convincingly:

"Because it embodies the new brand’s essential character: global, disruptive, and digital. Quartz, the mineral, is found all over the world and plays an important role in tectonic activity."

But the founders also conceded that they were taken with a short word that included both a "q" and "a."  The name and qz.com would both be memorable. Like those who re-christened John Rockefeller's Standard Oil Co., Exxon, they were right. Also, Quartz is a whole lot catchier than, say, tronc.

Note: Quartz will be a stop on Poynter's Media Innovation Tour this year.

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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
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