Can the heir to the Inc. fortune make money by giving it away?
By Mark Wellborn
It was 2005, and Ben Goldhirsh’s Good magazine was still in the planning stages when Max Schorr, the magazine’s publisher and Goldhirsh’s high school friend, came to him with an unprecedented subscription model: donate each subscriber’s twenty-dollar payment to the charity of his or her choice.
“I thought it was crazy,” Goldhirsh recalled.
Schorr continued to make his case to Goldhirsh and Good’s creative director, Casey Caplowe. He did not see the point in funding an effort in which information about the magazine would be sent out to millions of random people and the response, in the form of subscription orders, would almost certainly be minimal. Instead, he thought that the best way to attract subscribers was to create a subscription model that illustrated Good’s sensibilities. After some prodding and a few arguments, he persuaded the other two to go forward with the campaign.
The model, called “Choose Good,” was simple: every subscription payment would go to the subscriber’s choice of one of twelve charities with which Good developed partnerships. The goal was to attract 50,000 subscribers, which would bring in $1 million.
For the campaign, Good partnered with such notable organizations as UNICEF, the World Wildlife Fund, and Teach for America, as well as lesser known nonprofits: Ashoka, Creative Commons, Donors Choose, Generation Engage, Millennium Promise, Oceana, Room to Read, Witness, and City Year.
Choose Good fit in well with the publication’s humanitarian orientation. Launched in 2006, Good is a bimonthly for “people who give a damn,” according to its founder—a magazine for people who want to better the world through good works. The content of the first issue included a photo essay illustrating the ongoing immigration debate on each side of the United States-Mexico border, a piece by New Yorker writer James Surowiecki analyzing how the rest of the world interacts with the United States, and, at the end of the issue, a short article by economist Jeffrey Sachs exhorting future generations to end poverty.
The Choose Good strategy brought the magazine media coverage it might not have received via the traditional route. In the weeks leading up to the magazine’s launch, Goldhirsh appeared on ABC’s Good Morning America, and there were articles about Good in the New York Times, the Wall Street Journal, and the Los Angeles Times.
Despite its altruistic slant, Good is a for-profit endeavor. Eight months after the first issue hit the newsstands, the energy and hype surrounding the launch has subsided, and the magazine now must face up to the realities posed by the question, “Can a charitable drive be the catalyst for a successful business?”
Choose Good is a product of both innovative thinking and a certain naïveté. The majority of Good’s staff had never set foot inside a magazine office before joining the publication and knew very little about the business. Ben, however, was born into it. His father, Bernie Goldhirsh, started Sail, a magazine for sailing enthusiasts, in 1970, and sold it a decade later for an estimated $12.5 million. With that money he started Inc., a magazine for budding entrepreneurs. In 2000, Inc. was sold for a reported $200 million.
The elder Goldhirsh had a philanthropic streak of his own. Once Sail was successful, he provided the seed money for a Boston-based program called School Ship, which taught teenagers about sailing and oceanic research and culminated in a sailing trip around the world.
Bernie Goldhirsh died in 2003 after a long battle with brain cancer. In the year before his death, he used a portion of his fortune to set up the Goldhirsh Foundation, a brain cancer research center. He also created a trust for Ben and his sister Elizabeth, specifying that, except for regular payments for Ben and Elizabeth’s general welfare, the money could be used for only two things: to start a company or for philanthropic undertakings.
Ben, now 27, set out to do the former and then incidentally fell into the latter. When he came up with the idea for Good, he called up Schorr and Caplowe, a friend from his college days at Brown, and they set to work on a business plan. Goldhirsh declined to share many specifics about the plan, but he did say that the $1 million for Choose Good was included as a marketing expense.
They took the plan to Boston and presented it to the board of directors that oversees the Goldhirsh trust. The board consists of Bernie Goldhirsh’s close friends: a lawyer, John Strong; an entrepreneur, Richard Thielen; a psychiatrist, Dr. Philip Cutter; and the longtime Inc. CFO John Reardon, now an independent magazine consultant.
Reardon was a little taken aback when he heard about Choose Good. “My initial thoughts were, ‘This is a little quirky,’” he recalls. “But, to be honest, I am amazed with the exposure that they have been able to get.” He also noted that, in his experience, spending $1 million to get 50,000 subscribers is a worthwhile investment. “When you use a direct mail campaign, you can expect to get back a positive response of about 1 percent,” he explained. “The cost of acquiring subscribers can be substantial, so if they can get five times the standard, that would be impressive.”
Other veterans of magazine start-ups have divergent views of Goldhirsh’s unconventional approach.
“I think the subscription model is a very clever idea,” said Sam Schulman, managing director at the media investment firm Desilva and Phillips. “It’s a great way of targeting people with their message. Advertisers like to hear that too.”
Nevertheless, Schulman did not think Good would break even any time soon. “If it is aiming to be self-sustaining, then it has a lot of work to do. [Goldhirsh] can do things like this because he is in the happy position of being a semi-charity himself.”
Frank Lalli, former editor-in-chief of George magazine, offered a more skeptical assessment. “Are they trying to make money?” he asked. “When I look at magazines, I look for as many revenue generators as possible: advertising potential, online platform, circulation. If they are closing one of their revenue streams, that’s a tough proposition.”
Goldhirsh and the Good folks, however, see their gift to charity as a discounted platform from which they can increase circulation, and raising circulation will in turn attract advertisers. Goldhirsh recently developed what he hopes is the first of many corporate partnerships with a company called Helio, which produces mobile phones with video and internet capabilities. Good content will eventually be available on the Helio devices. Goldhirsh hopes that by developing more of these partnerships while upping the circulation numbers, the magazine will break even around 2010.
It is difficult to move through the Good offices on Sunset Boulevard in Los Angeles without being reminded that the magazine has closed off a revenue stream. The rooms are sparsely furnished, and white pieces of paper with monthly Choose Good subscription goals are taped on the walls.
The goal listed for July 1, 2007, is 35,000 subscribers. As of April 2, Good had approximately 16,500 subscribers according to the magazine’s circulation manager, Christine Soto. The deadline that everyone has their eye on is August 31, 2007. By that date, they hope to have reached their target of 50,000.
One of the main reasons that Goldhirsh went forward with Choose Good was that he hoped the charities would be marketing avenues for Good, promoting the magazine to their members. By Goldhirsh’s own admission, this strategy has not panned out the way he had hoped. “Some of the organizations, like City Year and Witness, have really pushed us to their members by mentioning us on their websites and in their newsletters. Some haven’t.”
Goldhirsh noted that the first contract with these nonprofits was very loose. “It was a written version of a handshake deal that essentially said, ‘We’ll do this for you guys and you do your best to push us from your end.’” When Good renews the contracts, said Goldhirsh, they will be much more rigid and will outline specific standards that the charities must meet. “There are certain charities that will likely not be Choose Good members next year,” he added, although he wouldn’t specify which.
Goldhirsh realizes that some of the initial subscription benchmarks may need to be revised. “We’re behind right now, and I do not like the trajectory of our curve,” a clearly exhausted Goldhirsh conceded recently. “I can’t share specifics, but the energy surrounding our launch and the novelty of Choose Good drove significant subscriptions, and now we need to generate that energy ourselves.”
The directors of the Goldhirsh trust are very keen on seeing the numbers increase. “They’ve got to pick it up on the revenue and distribution front,” John Reardon said recently. He was very clear that those numbers would dictate whether the funding continued. “In order to keep funding, the growth in circulation has to be pretty substantial. They’ve got to get into the several hundred thousand circulation neck of the woods in three to five years. Advertisers do not like to spend nickels; they like to spend hundred-dollar bills. Half a million in circulation becomes the hundred-dollar bill area.”
Goldhirsh does not dismiss these words, but he also does not completely buy that line of reasoning. “These guys are looking at it totally from a bottom-line business perspective,” he said. “The people who were raised in the business have a very
traditional ide as to how things should progress: come hard and
very strong right off the bat, get there fast.”
But that’s where Good’s problem lies. In a country where many scions of families with large fortunes end up on the gossip pages for unbecoming reasons, it is refreshing to see someone with such resources putting them toward an earnest venture. At Good, however, the line between making money and giving it away is very blurry. Goldhirsh wants to continue his philanthropy, but he also wants to see his magazine succeed.
“We’re hoping to keep the Choose Good campaign around next year and even beyond,” Goldhirsh said proudly. “We originally thought of cutting it down to 50 percent, but we would like to keep it at 100 percent.”
At the same time, Goldhirsh wants to see the magazine and its employees make money. “Not everyone here is in the fortunate circumstance of having resources surrounding them through arbitrary birth,” he said. “Everyone here is going to be participating in the profits of the company.”
Those Good employees who are now working fifteen-hour days would certainly be happy with that arrangement. Although their knowledge of the industry is growing rapidly, their lack of magazine experience has to be factored into any presumptions of future success. I asked Frank Lalli if he knew of any publications that had thrived with a staff of neophytes. “Sure,” he said. “Sail magazine.”
Click here for a Good review.
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