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Full transcript: Oath CEO Tim Armstrong on Recode Media

“It’s all going mobile.”

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Oath CEO Tim Armstrong Asa Mathat

This week on Recode Media with Peter Kafka, longtime internet media guy Tim Armstrong stopped by the studio to talk about his successes, failures and challenges. As employee 100 at Google, he could’ve stayed on and had career there, but he chose to find other opportunities where he could learn and grow.

You can read some of the highlights from the interview here, or listen to it in the audio player above. Below, we’ve provided a lightly edited complete transcript of their conversation.

If you like this, be sure to subscribe to Recode Media on Apple Podcasts, Spotify, Pocket Casts, Overcast or wherever you listen to podcasts.


Peter Kafka: This is Recode Media with Peter Kafka. That’s me. I’m part of the Vox Media Podcast Network. I am here in the Vox Media studios with Tim Armstrong, who is CEO of Oath. It’s a new title for you. Welcome, Tim.

Tim Armstrong: Peter, good to see you here in the former Goldman Sachs building, 85 downtown. Amazing that you guys are here. The office looks spectacular.

We’re here. There’s a WeWork upstairs where Goldman used to be.

Wow.

Things have changed.

Times are changing.

One thing that’s not changed for the last 20 years, you’ve been working in internet media.

Yep.

You used to be running sales at Google.

Yep.

You’re the first sales guy, first revenue guy at Google.

One of them.

Ran AOL forever.

Yep.

Still run AOL.

Yep.

Now, you also run Yahoo. They’re two separate entities, but they’re now under the Oath umbrella at Verizon.

Yes.

Did I get it right?

Yes. We have a house of brands under Oath, which is part of Verizon.

House of brands.

There you go.

I like house of brands. We’re talking to you in late August, which is when I think this thing will run. Here’s my first question for you. Why does it make sense for Verizon, which sells me cellphone service, to own a house of brands? Why does Verizon want to own content?

Sure. One thing that Verizon has in its favor is a position in mobile, which is pretty amazing. If you are a believer that mobile and mobility in the future will become more important in people’s lives.

Cellphones are not going away.

Cellphones are not going away. Even if they did go away in the future, Verizon’s in a position where their network and the power that they bring to connecting humans and devices together will be more important in the future than less important. As part of that, Verizon’s strategy has been to provide the connectivity. In the last few years, they’ve also started to build services on top of the connectivity in the future. One of them is media. That’s where Oath fits in. There’s a global strategy to have media brands and advertising and commerce-related activities on top of Verizon that go direct to consumer. Then there’s a focus really on other areas of Verizon’s business model capabilities, which are telematics, which are bringing more connectivity to cars and fleets of cars and trucks overall. There’s an investment at Verizon in that.

You’re not in telematics business, right?

I’m not in telematics business.

Good, because I don’t wanna say telematics again.

I’m in the Oath media business.

Back to media though, just so I get the strategy, is it that Verizon thinks, “Media is a good business. We should layer that on top of the existing business we have”? Or does Verizon think, “There’s something about us owning media that will make that media more valuable because we also own pipes”?

It’s really about Verizon owning pipes and being able to deliver media direct to the Verizon consumers and the fact that media can be a non-Verizon business, also meaning that we can deliver on other people’s pipes a value and a business model.

There’s two different aspects of the business. One is the owned and operated strategy, how we deliver better media, better experiences to Verizon customers. The second part of the strategy is how do we deliver better media and better advertising models to other people’s customer bases as well and give them a business model. It’s really a platform play for Verizon on-network and off-network.

I get tacking in on another business, that part makes sense. I don’t get ... I asked the folks at Time Warner and AT&T about this as well, other pipe owners. The pipe business seems great to me. It’s pretty hard to disrupt it. In some cases, if you’re at Comcast or at Charter, you either have a little monopoly or duopoly, wireless guys. There’s four, maybe less by the time this thing is done. Media seems like a really rough business. The stuff that Yahoo! and AOL put out, the stuff that Time Warner, HBO, CNN put out has to be available on all the other platforms. That’s the point of it, right?

Yes.

It’s widely distributed if it’s ... The idea that there’s gonna be something special that happens when you connect via AT&T to HBO or you consume Huffington Post or — sorry, HuffPost — on AOL, that’s the part where I get confused. HuffPost and Verizon. I don’t get what makes it special as part of the platform.

Right. The special part is actually the global platform ability. While we will deliver all of our services to Verizon and all the services to other carriers and other people, which we’re doing today, the special part comes down in building a substantial business in the new economy. I think one of the things that Verizon has been very forward thinking on is if you go out five or 10 years, where is it likely that the value is gonna go, that consumers are gonna go and that money is gonna go.

The reason that we’re making a bet on digital and mobile media and advertising and subscriptions is if you just look at the consumer base today that’s connected to the internet or mobile or connected to linear TV, there’s one very clear throughput, which is it’s all going mobile. As mobile continues to change, it will all go network-IP delivered. Verizon has an ability in their business today to have their network business head in that direction, but secondarily, a real opportunity to build a new global business that’s not just connected to the Verizon network.

The specialness for Verizon is their customers are gonna get access to content and services that we can bring them. The second piece that’s more important is building a global franchise platform business that could be a substantially large business in the future and pull a lot of value from in the future.

That works whether someone is accessing it through AT&T or Comcast.

Yes. I’d fully expect — and we do today — to have deals with other carriers and other distributors overall, and Verizon expects that also, so we have to, we have to. Yeah.

You have to. You have to keep this HuffPost. Is it now HuffPost? It’s HuffPost, right?

HuffPost, yes.

You could only get a version of HuffPost through Verizon. HuffPost is much less valuable.

Yes.

Even if you said, well, we’re gonna make parts of HuffPost available only to Verizon subscribers, that makes it less valuable, I’m assuming?

Yes.

Okay.

We would love to have HuffPost be on every platform everywhere in the world.

It’s on the internet?

Yes. It’s everywhere now. We were gonna keep it going everywhere. The other thing I would just point out is there’s roughly 3.7 billion people connected today. That number is gonna double. Another 3.7 billion are coming overall. Even if you’re one of the networks or distributors that has 100 million consumers, it’s a very powerful paid relationship that they have. In the future, you’re gonna wanna make that 100 million subscribers, 200 million, 300 million, 400 million because the scale of the world is gonna get so big in terms of the connected consumers.

That’s another opportunity for Verizon here is to have us touched ... We touch over one billion consumers every month right now, for us to even scale that further and then drive a much bigger membership mentality over time of how do we continue to have more and more consumers that authenticate and become members of our services overall.

All right. I wanna come back to the pipes content discussion later, but I wanna talk to you about how you got here. Like I mentioned you’ve been doing this basically your entire professional life, right?

Yeah.

Working on the internet selling ...

I started in newspaper.

Started in newspapers.

Yes.

Got out of that?

Yes.

You started doing what in newspapers?

I first wanted to go work for a bank because I thought I wanted to get into more investment banking, but after I was there for a few months, I realized that was not the career for me.

You can be a good banker.

What?

You can be a good banker. You sell.

I don’t know. No, I don’t think so. It wasn’t a passion point of mine. I decided to leave and was always super interested in media like when I was in the high school. I used to read probably 15 magazines related to business. I read tons of business biographies, things like that. I was always interested in entrepreneurialism and things like that. I think once I got out of college and I went to this bank, I realized it’s probably not the right place for me. I started to look around. The idea of starting a newspaper came up, and I did it for a couple of years. Started one, we bought another one.

This is where?

This is in Boston, in Cambridge head office, in Cambridge Square, actually right next to the Click and Clack brothers on NPR, as a matter of fact, their nextdoor neighbor is our office.

Are they still around?

They’re still around. I don’t talk to them, but I assume they’re still around. Then in those travels, I had run into seeing Mosaic, which is really the first more commercial internet browser.

This is mid-90s?

Yes, early ’90s, probably 1994. The day I saw it on the spot, the first time the browser fired up, and I asked, “How do you get the information into the browser?” They described it. I thought, “Wow, this is like 10 times better than the newspaper business.”

Your eyes got really wide.

Yes. I literally after that meeting went back and we started trying to put our newspaper online. Then I realized that it might be better just to go do online stuff overall if I was really passionate about it and learn it from scratch. That’s what I did. That started my journey.

You started off as a publisher?

Yes.

Then at some point, moved ... I remember encountering you, you were at Snowball.

Yes.

Most people do not know what Snowball was. Tell us what Snowball was.

Yeah, sure. Well, I left the newspaper business, went up to the West Coast and worked for Paul Allen, which has a company called Starwave that launched ESPN.com, NFL.com, ESPN.com.

Paul is one of the Microsoft co-founders.

Microsoft co-founders. Then that company got bought by Disney. I ended up moving back to New York to work at Disney for a couple of years. Then I have one interim stop before Snowball, which was Rick Scott, who is the governor of Florida now, was the CEO of Columbia/HCA. It was the largest health-care company in the world. He bought a company called America’s Health Network. I went there with two other people to start a cable internet company. That got sold to Rupert Murdoch. I ended up working at Fox.

You touched every media conglomerate in a span of a couple of years.

Everybody. Then the people who had been at Star, a couple of people, Rich LeFurgy started IAB, started a company called Snowball. We started it basically from scratch.

It was what?

It was a media company targeted at basically millennials at that time period.

What do you call the millennials?

Gen X. It was called ...

Gen X. That’s me.

It’s you.

Yeah.

Did you use any IGN?

I think I bought drugs from somebody at Snowball.

You did?

Yeah.

You mean online or offline?

No, I think I went to the office or outside the office, and someone gave me a bag or something.

It wasn’t me.

No, it wasn’t you.

We had a bunch of internet properties that were targeted at Gen X. The company actually did very well. As a matter of fact, 85 Broad, where we are. We went public. We’re the last internet company to go public before the crash.

This is when every internet company went public.

This is when everyone was going public, and we had the whole shooting match. We pressed the button at the Nasdaq. A few weeks later, two weeks later, the market crashed. We had built up a fairly successful audience company and a successful revenue model there. Of course, we’re still running it, and then Google popped up about six or eight months after we went public. I ended up going to Google.

Google pops up there. When they popped up initially, they were this weird search engine. I don’t think they were articulating they were a search engine at the time, right?

Right.

Did you see immediately, “This is going to be a big deal”? Or, “This looks interesting, let me try that”?

All right. I’ll tell you a story, which I haven’t really told publicly that much. When I was at Starwave and Disney got bought by Starwave, I got put on a team of consultants. A few of us internally and then some, I think, it was McKinsey consultants who were now to look at all the internet businesses that Disney was buying and then all the available businesses to look at to invest. When we went out, we met with all kinds of companies and all the companies that Disney was investing in. I, at this time period, had done a lot of internet content and done a lot of internet advertising. It wasn’t that much. It was a small industry then, but I had spent a lot of time on it.

We went to an Infoseek meeting. At the Infoseek meeting, there was a giant ... We had a discussion with an Infoseek team. Two of the senior people in the business side got into an argument over how valuable the keywords were. At that time period, out of all the companies that went to see the Infoseek meeting ...

Infoseek is a search engine.

A search engine.

Yeah.

When I started asking like, “Why are you arguing over the keywords and the value of them?” Then we got deeper and deeper and deeper into the keywords. It always stuck in my mind, this is two years before I went to Google, that out of all the ad models and business models that search might be the most effective, immediate way to connect to advertising and the information. When we went back to do the giant, it would turn out to be the Go network, which Disney launched, but we were on the team helping build the strategy.

Sometimes you’ll randomly end up on a Disney site like ESPN and there’ll be a “go” and the URL. That’s the heritage.

Go and the URL. That was a project I worked on. When we got into the room with all the consultants and a bunch of the executives, they went around the room and said, “What did everybody see?” I said, “Hey, I think we should be in search. Search strikes me as high-user intent, high-user interests. It works well.” I told the story about Infoseek. In the room, I got voted down. We ended up doing calendering and email and a bunch of other things like that. In the back of my mind, I always had that part in the back of my mind.

I had been using Google. Google’s callback Robin. It was called Google. I was a Google user. A person from Starwave actually had told someone at Google about me, and they had called ... Omid Kordestani called. He’s the chairman of Twitter now. I met him in New York. He asked me what I thought about advertising on the internet and about search. I think I told him that story. I said, “Look, here’s why I’m having a meeting with you is because I use Google and I think that the experience I saw — internet advertising for search — seems to be one of the things that’s really clear, really fast and has a really potential high ROI.” Google had been testing, advertising a little bit at that point. Long story short, I ended up going out to meet with the founders, with Omid and ...

Larry and Sergey.

Yeah.

What was being a revenue guy, sales guy at Google like both early on and throughout the career, a company that’s dominated by engineers? I think you see clearly now, Larry and Sergey really are not engaged with advertising as a business. They’re not terribly interested, it seems like. They understand the value of it. It seems like that sort of ethos is up and down the company.

My experience there was probably different because I was there so early. When I was there, we basically ... everyone sat together, so we would all be in the same area. The engineers, Larry and Sergey, probably, Larry and Sergey were highly engaged in building advertising when it started.

They understood this is the thing that will allow us to keep doing what we’re doing.

Just to go back to ancient history, Yahoo had bought IntoMe and GoTo. When they did that ... When I got to Google, Google’s main revenue model was licensing search to the companies. Yahoo bought two companies and then started giving search licensing away for free. Advertising, all of a sudden, search licensing went away and advertising became the main thing. We were able to get some of the best engineers at Google who are working on search licensing to come work on advertising. The whole company got engaged on how do we build an ad model.

They needed to do advertising because their other business, licensing, had gone away.

The business model was essentially going away. That’s one of the untold stories about Google people forget is, they think Google did search, and they’d gone to advertising and wham, it took off.” Reality, what happened is Google was in search licensing, having people pay them a license their search technology. Yahoo bought two companies, put them together and started giving it away for free.

Google had to pivot. This is when they’ve rolled their eyes when they hear “pivot,” but it’s a thing that even literally the most successful company does at some point.

Yes. By the way, there was a lot of tension inside of Google because advertising ... If you’re in a company that’s doing search licensing and you have the small little business with advertising in it, and ads can be distracting on search results. It took us a long time to figure how to do them properly. It wasn’t like, “Great, we have advertising.” It was like, “Oh my god, we’re gonna have to put ads on the pages now and we’re gonna have to figure that out.” There was a lot of tension about that inside.

I would also say that it was ... Google’s very, very ... I still think they’re this way today. They were very good at being very focused. The focus on advertising came into play, and then we literally used to spend hours and hours and hours on individual campaigns, individual advertisers, individual pages, test everything. You had a very eclectic crew of people working on it, engineers, Salar Kamangar who ended up going to YouTube; Susan Wojcicki, who’s running YouTube now; Omid, who’s at Twitter; a guy named Dave who’s really a phenomenal business person. Overall, there was 10 or 15 people that we are all constantly engaged in it. Then it started to work. Once it started to work, we’re like, “All right. Let’s put the pedal down.” That’s when we really started hiring and scaling.

The way people described your role to me when you were there was you were the guy, you were a human, not a robot/engineer. You could go speak to people outside of Google, especially in the media world. You were also the translator. Were you aware that that was consciously your role, that you would go talk to really brainy guys like Salar, but Salar would never come to a podcast, right? He wouldn’t wanna be talking to really anyone versus ...

He’s actually super personable. Yeah.

No, you know what I’m saying. He’s not an outgoing person.

Well, at the time period, when Google ... when I went to go to work at Google, the first building outside of Mountain View was my apartment in New York City at 16 Columbus. The plan was eventually they wanted me to move to California, but what happened was because I had all the relationships in New York in media, I was able to instantly bring Google into the advertising agencies. What I ended up doing is I would fly back and forth every other week. At first, it was every week to California. I spent a huge amount time with the engineers and the product people helping figure out the ad model. Essentially, what we did is we worked as a collaborative team just to figure out, figure it out, figure it out, figure it out.

My relationship was twofold. I understood I had built a lot of technology myself in those other businesses overall. Then over time, basically, my relationships externally were really, I think, they were helpful. Also my translation of understanding what was happening on the product and engineering side and be able to be a translator for that was helpful.

You were conscious of it.

Also I was one of the people, one of the few people, I think, who were tip of the sphere in terms of the understanding where the opportunities were. When things like AdSense came up or other things like that, we had such deep knowledge in the marketplace of understanding customer pain points, and I understood the product well. I was being able to bring some of those types of ideas with other people back into the company. We literally had like a phenomenal, probably three-, four-, five-year run during the company where product engineering and sales were all humming at the same time. Eric Schmidt came in. I started about a year before Eric started at Google. Eric came in ...

What number employee were you, do you know?

I don’t know. It was probably around 100 or so.

Around 100 at Google?

Yeah.

You’re around 100 at Google.

Yeah.

They go public.

Yeah.

You get paid really well because you’re the revenue guy at Google and also your number is 100. You’re making an enormous amount of money. Then at some point, you leave Google. It seems like, like you’d mentioned, Susan Wojcicki, Salar, they’re still there. Why did you leave?

I have a personal philosophy, which is I’m somebody ... I’m an extreme learner, like I have to learn. I’d say this to other people when people ask me career advice, they say, “Why did you make changes? Why did you do it?” Typically, every time I made a change, I felt like that, from a personal standpoint, I wasn’t learning as much. I think when you’re a leader and the leader is not learning as much, I think that becomes a problem for the organization also.

I felt like, for Google, I had been there for, basically, 10 years. I had accomplished a lot of what I wanted to accomplish. The company was really successful. Have a phenomenal group of people that I worked with and I felt like that at that time period, if there was another challenge that I could go do, that would be really challenging. I write personal goals down every year in Thanksgiving week. A year before — or months before — I went to AOL, I had written down basically either at Google or someplace else, find the most challenging thing I could find. That would be the hardest thing to do. When the AOL thing came up, my mind was already in that mode. It seemed like that was something that might be a hard challenge.

From the outside, it seemed like, well, Tim ran revenue, superpower, but he hasn’t been a CEO. Well, he can be the CEO.

It was private and it was spun out.

It was gonna be spun out.

Yeah.

That — the title and being able to run an entire operation — was the attraction for you? You were saying that plus the fact that it was in bad shape, it needed to be fixed.

Yeah. Also I think it was ... I’m a big Warren Buffett disciple. I like to read about what Warren Buffett says. One of the things he says is a lot of business people forget that there’s more puffs left in the cigar. At that point, it’s hard to remember now because AOL merged with Verizon and we have the Yahoo deal and those things, but back in those days, everyone had written off AOL.

When I looked at it, I thought the future of content was gonna be big. I thought Silicon Valley would take a long time to figure out content and that maybe there’s an opportunity, go to AOL, build on differentiated business that was not copying Silicon Valley going down the content and brand advertising path, and that, frankly, that people had counted on AOL so much that we’d get some leeway time to figure it out.

Then I think trying to be a first-time CEO, I went out and visited with a lot of other CEOs before I started, just to get their advice. I think really it was the challenge, it was the fact that I thought content and things like brand advertising were an open space versus Silicon Valley, and that we maybe figure something out that would work overall.

I wanna ask you about AOL and your experience there, but first we’re gonna hear from an advertiser because we love advertisers here as well in Recode Media.

We love them.

Be right back.

[ad]

Back here with Tim Armstrong, CEO of Oath. We’re talking to you about one of your earlier jobs, which is running AOL, which you’re still doing. When he took that job, I thought, “All right. I know what Tim Armstrong is doing here. He was running revenue at Google. Great job. He’s going to take over AOL. No one has ever successfully turned around a consumer internet company ever.” Priceline, maybe.

Priceline, yeah.

“He’s a smart guy, so he knows he can’t fundamentally turn around a declining internet property. What he’s gonna do is he knows sales.” AOL used to have one of the best sales operations. It’s been systematically destroyed by the current previous managers. “Tim Armstrong will fix sales. He’ll show some increase and then he’ll declare victory and be able to say, ‘I improved the fortunes of AOL. No one’s ever done it. I’m done.’”

Instead, when it seemed like, instead of just fixing sales, you went and stripped the whole thing down, made a whole bunch of acquisitions. I think you tried a bunch of different strategies. It seems like you had a much more ambitious approach to AOL that really made sense from the outside.

Yeah, there were two strategies we could have taken, I think. One was to basically milk it and the other one was to essentially see if you could take the model and tweak the model and change it and see if you could get it back to growth again. We tried a lot of things.

From the outside, what was your grand going-in written-down plan?

Super simply, it was to basically become a super large content engine overall and then tie that to a differentiated ad model overall that would more heavily lean on content-related activities and really, what programmatic ended up being into a programmatic advertising. Then try to pick a bunch of spots that look like they were open on white spaces. I’m a really big believer. You have no competitors. Your competitor is yourself. If you’ve already read it in the newspaper and you’re gonna be able to do something, that opportunity is probably gone. Let’s choose some spaces that nobody is in. We took a more aggressive approach to try to turn the company around by trying to grow it rather than milk it.

Weren’t there wise guys like me counseling, I bet, who were actually smart with counseling and saying, “Tim, this is way too ambitious?”

Yes.

You got a public company here. All you got to do and all you should be able to do is improve it marginally, stock will go up, everyone’s a winner.

Yes.

You get out.

Yes. You wrote many articles to that effect over time.

Yeah. You read them.

By the way, I think it ...

I mean, not jerks on the media ...

None of them.

Like actual people you talked to who had influence or people on the board or investors saying, “Slow down. Just do this one thing.”

Yes. There was a lot of focus on just incrementally improve it and maybe something will happen and it won’t end up being like a catastrophe overall.

Which should give, again, a victory, if you could do that.

Also going back to the ambition, you don’t attract a lot of talent doing that, No. 1. No. 2 is that opportunity in the future was so much bigger than just incrementally trying to change the company. We weren’t for it. By the way, you covered it. We had very big ups and downs in the cycle of it. The stock, we went public at 24, it went down to 9 at one point. We paid the price for a lot of that risk that we took overall. The thing I’m happy about is that we turned it around from revenue and profitability in 2.7 years overall, which is pretty amazing considering what shape the asset was in.

Then the second piece is by the time we exited with the Verizon deal, we basically had outperformed the S&P 500 for those years that we are running AOL. Then two is I think our strategy parts of it really worked. I think that was a lot of ... It was super difficult, but it was a lot of fun. It was also a lesson though in ... we have a bunch of Navy SEALs that worked with us and have for a few years and one ...

The actual Navy SEALs.

Yes. One of them says ... has a great saying, which is it’s always darkest before a dawn. I think our leadership team, I think, learned a lot of lessons about staying with a strategy. If there’s a real consumer value proposition against it, you’re gonna go through periods where things get really dark but as long as you know what the value is you’re adding, eventually the sunlight will come out. A few other things that we did, a few ... the sun finally shone through the clouds and we had good results.

It seems like from the outside that you tried a bunch of different things, that you weren’t on a path and you know you were going this direction. You bought HuffPost, you bought a lot of content, you bought a bunch at adtech. You sold a bunch of patents, $1 billion. You were in local media with Patch. It seems like you tried a bunch of different stuff. Were you conscious that you were trying a bunch of different things, and one of them wouldn’t work? Or was, in your mind, this is all the same path?

Our strategy was basically, I believed that the front-end consumer businesses over time, you’d be able to build mega communities around things. When we bought the HuffPost, it had 20 million users. It now has 227 million. That over time brands would matter. One of bets we made, I was in the house of brands mentality, will end up with a bunch of big consumer front-end brands. Then the backend systems will end up getting consolidated by technology and you’ll have data, and the ability to target things. My grand plan was build a whole bunch of super-large differentiated consumer front-ends and then have back-end platforms that consolidate all the data and consumer usage.

A bunch of different ... Well, we used to develop websites and then brands.

Yes.

Huffington Post, but also TechCrunch and Engadget.

Yes, TechCrunch, Engadget. Yeah, Patch was one of the things that we put ...

Different people come to them for different reasons. There’s different ad propositions within the back end now with the same technology.

Yes.

It sounds a bit like Vox Media.

Yes, it does. It’s very similar to Vox. Our premise is that if you’re an advertiser or the way we monetize, you may be looking for millennial moms that like technology, that if you go through all of our properties like today in that example, you probably find five million or 10 million women who like technology who are in that age demographics. For an advertiser to one input like I have to say about Oath is, Oath is consumer front-end touchpoints with one input to reach all the audiences, which is the Oath. That’s what we’re building out right now.

That’s always been the vision that we’ve been on. I think that some of those consumer front-ends, things work well, some of them we had to change. Then the ad system side has evolved very rapidly. We’ve always had one vision there, but we have to continue to update that One mobile video programmatic. Those things really hit.

What’s the single deal you made do you think was most successful during that? Was it buying HuffPost? Or that wasn’t the biggest one.

It wasn’t the biggest one. I’d say HuffPost was the one where people were shocked, investors were shocked. We were on the investor call ...

Funny, it was 300 ...

It was 315 million.

Nothing.

Here’s what happened. We’re on the investor call and our head of Investor Relations at the time was our head of FB&A, Owen Ryan was across the table from me. We got an analyst call and I announced we’re gonna be acquiring the Huffington Post. Owen, he’s Irish. He turned totally red immediately as soon as the call started. I looked across the table. I said, “What’re you all red for?” He put up his fingers and he said, “Two.” I said, “We’re down 2 percent.” He said, “No, we’re down 22 percent.” I would say that’s the moment where investors said, “Oh my god, Tim Armstrong might be really ... The stuff he’s been talking about. He actually might go do.”

That was the point of ... some investors wanted from us just the incremental returns in those. Then they saw, “Oh my god, we might actually go on a much larger vision.” I say HuffPost was a turning point because it really was a first time we put it down. I’d say the other deal that really mattered a lot was the patent deal. That was super helpful for us. It was something that we had in the background. We negotiated the patents coming out of Time Warner. We have that asset. Julie Jacobs, who’s our general counsel, deserves all the credit for that. She basically kept her eyes on the marketplace.

I get that’s important just because it gave you $1 billion when you get to $1 billion.

Yes. She came with this. We sold them in January or February, but the previous June, Julie had come to me and said, “Hey, Tim, those patents that we own, I’ve been keeping an eye on the market. They’re gonna reach maximum valuation. If we’re gonna start this process, we should start it now.” Julie is just ... her judgment is impeccable. I said, “All right. Let’s do the full research, get outside firms to value it for us.”

By the time we basically got to the point we’re selling the patents, the patent market had took off. At that time period, we had an activist investor who was on us. I think the activist investor was really pleasantly surprised that we actually had very thoughtfully — and the company — financially thought about the company. As we were spending all this money, we were also thinking about how to harvest things to continue the spending. We did the patent deal. It was an amazing deal for us.

How long did you run AOL for?

Running AOL?

Yes.

For about six years.

It’s a really long time. Again, you guys were not crashing it for six years, right, up and down, back and forth.

Right, yeah, up and down.

You got hammered a lot.

Yeah.

Pressed investors.

Yep.

I know that you worked with Navy SEALs and someone said dark before the dawn. At some point, you go, “This is a real headache. I could do something else.” People would still get ... Again, no one’s gonna fault you for not turning AOL around.

Yep.

Because again, no one has done it. I thought the same thing for a long time. At Yahoo, like why put up with that headache? Again, you were very rich when you took the job. You didn’t need that money.

Yeah. I would say there’s two things that I focus on all of the time. One was the people I work with and I felt a huge commitment because they ... If you were at AOL at that time period, you have bought into our strategy. We told you what we’re gonna do. Everybody has a family at home, you have friends, you’ve told people why you work in that ... every time we got bad press, I’m sure people outside the building were asking people at work, “Why are you working there? Why are you working there?” They stuck with it. One, I wasn’t gonna let those people down.

The second thing is one of the decisions I made early on was to actually invest my own money in the company. From my standpoint, investing my own money in the company made me focus my attention and energy that every one of investors, every one of the employees, everybody who was involved with us was basically putting the same skin in the game that I was. I had told people like investors, a lot of investors asked me now, when things got tough, they said to me, “You’re not gonna leave, are you? You’re not gonna pop out?” I said, “No.” I didn’t sell one share of stock the entire time I was there.

I felt like from a standpoint of what I’ve verbally committed, and it’s something I tell my kids all time, I said if you’ve verbally committed to something, you might as well write a signed contract about it. I told everybody I would stay in the pocket and the team would stay in the pocket. I think one of the things I look back on that I’m happy about is during the AOL time period was essentially for the investors, I did what I said I was gonna do. Even when times were really tough, we didn’t take our eye off the ball. I feel like that was a huge ... those two things were big drivers.

We’ve been alluding to tough times and criticism. What’s the one move you wish you could have back? I’m sure there’s a bunch, but what’s the one where you’re like, “Man, that one I could have saved myself some pain?”

I think one is, Patch is profitable now and has been growing. Yeah, we invested ...

This is the local news site that you ... company you created and then bought at AOL?

Yes.

Say, ‘We’re gonna reinvent local news. ‘

Yeah. The theory there, which is playing out in the U.S. right now actually, is that my theory, there wasn’t Jon Brod, the co-founder, was over time, the internet is gonna end up really making the local news environment really painful, local newspapers, those things. It was hard to see how the economics would work out there. That’s gonna leave this giant white space of opportunity to bring in local news and information to communities that really need it. I’ve had many, many instances across the U.S. where things have happened to people I know, and staying connected to your local community is super important.

You say, “Local news is gonna be a big trouble. That’s an opportunity for me both because people need local news and also because there’s gonna be a business there.”

Yeah. There’s a business and also there’s a bunch of math behind it all. We studied it for two years before we launched Patch, which is how often an average person moves, how much ... We studied all the individual towns. How much there’s an economy in an individual town. There’s some amazing statistics. There will be a super significant business in local in the future.

When I look back on the decision on Patch was there was two things with Patch that were problematic. One was it was a massive bet inside of a company that was a turnaround company, and investors, when they look at it is, I’m gonna ... It was almost like a pure VC bet at scale inside of a shareholder base. That was like, “Wow, this is a significant bet on a really risky area.”

They were hammering you, “Cut it loose, cut it loose.”

Everyone on the planet, everyone in the media was saying, “Patch isn’t gonna work, Patch isn’t gonna work, Patch isn’t gonna work.”

It wasn’t working. You were losing ton of money.

Yeah. Well, we were ... I looked at it differently. I’d say we were investing a ton of money. Patch is like a 10-year-type investment in a company that probably ...

That’s your point about it being a VC deal. It’s gonna take 10 years for this to work out.

Yeah, it’s gonna take a long time. The second thing is that there’s a great business lesson, by the way, I learned in Patch, is we had very positive metrics on very small amounts of the property overall. Over time, it got used as the thing of Patch as successful. It works in these following areas.

You point to Montclair or some place in Connecticut.

Yes. Over time, what happened was the lesson was we should have tightened way further down on the towns that were working and then made sure they were exactly getting replicated out in the market. The other area that was a challenge was making sure that Patch was a platform, that people could input information as well as get information. A lot of the early tech was built for outbound information that we would ...

Yeah, the pitch was always that you really run the local bakery, and you’re gonna be able to go to Patch and buy an ad in the locals, but never really pushed ...

Yes. It works now. Patch is ... Charles Hale and Warren St. John and the team running Patch now, they get huge kudos. They’ve actually taken the original vision and turned it into a reality. I think you’ll see Patch be a really successful, long-term, outcome company. We were in the middle of doing a giant turnaround. Patch was only one of the things we’re doing. We’re gonna spend a lot of money on it. Frankly, my attention, time and ability to focus on it was not what it should have been. I looked back on it, and I said I probably would handle that in a slightly different way.

You’re one of these guys that says, “I’m gonna do it. This is what I’m gonna do. My word is bond. I’m not gonna back on it. It’s a verbal contract. It’s a real contract. We’re doing Patch.”

Yeah.

Sportsmen tell you we’re going, but everyone is telling you don’t, don’t, don’t, don’t. They were right to tell you not to do it.

Right.

How do you balance that impulse where you’re like, “I’m going down this path, follow me,” charging, versus, “Actually maybe these guys are right that I shouldn’t go down this path”?

Yeah. Well, I think the tweak I would make on that is I think people saw local as an opportunity, but they were afraid we were going after it too quickly and we’re too much abandoned.

Personality-wise, how do you go ... how do you balance the idea of like you’ve set your mind, you wanna do this, you’re serious, you got to go all-in versus taking in people who actually turns out they were correct?

Yeah, well, here’s what I’d say. When we did the Yahoo deal, one of the things I went back, and as I went back and looked at a lot of those situations, and I’d considered my job blank from scratch. I’m like, “Once the Oath thing comes together, I’m starting a new job. What do I need to learn from the past and what are the things that I need to look forward to in the future?” I’d say a few of the lessons that you’re pointing to is there’s two sides of the coin. One is listen to everybody and two is listen to nobody. The reality is what you need to do is listen to the best judgment you possibly can and try to look at the best data you possibly can. Then there’s gonna be some unknowns.

The reality was, Patch is an opportunity. The Hale brothers have turned it profitable and they’ve run it the right way. The judgment changed and the mistake I made was going exactly what you said, too bullish down a path without making sure those early positive metrics were actually coming true in all the other markets. We should have tightened down on it earlier. I would say you have to be aware and listen to what everybody’s feedback is overall. You have to try to get sound business judgment yourself and with people around you.

Then the other thing that we’ve been really focusing on AOL the last few years, which has helped us a lot, is I would say managing reality. Inside of a corporation, there’s a lot of non-reality that happens. Your job as a CEO or a leader of a group or a manager is to actually take a step back and say, “What’s the reality in this? Where are we? What do we need to change?”

Going back to that situation, we probably did roll out too quickly. The criticisms we were getting, a lot of them were probably accurate. We could have done a better job out of the gates narrowing that focus. That’s really helped me since then, I think, improve my style of management but also just the judgment piece of like how to correctly make judgements about things overall.

Can you think of something that has happened since where you said, “Go in this way” and someone tapped you in the shoulder and said, “Tim, I got to talk to you.” You said, “Yeah, you’re right.” That wouldn’t have happened prior to that.

Yeah. There’s situations I’m dealing with right now. We’re doing 2018 planning. We have a process that we’re running through, four people coming in with investment ideas. There’s been a couple of the investment ideas that have come in, which on their own merit are places that I think are business opportunities. I think there’s white space. I think we could probably go after them. The mixture of what’s already there today and what we could potentially get done doesn’t strike me as executionally possible, even though if you ask me point blank, do you think there’s a big opportunity there? I’d say, yeah.

If you were a VC, you’d put the money in.

I may put the money in, but today I know that with our capabilities, we probably can’t do it.

Even though you’re at Verizon, which doesn’t have unlimited resources, but close?

Yeah. Well, Peter, here’s one thing we decided to run the company on. Inside of Verizon, which we could have chosen not to do, but has been a huge benefit. One of the things I studied over the last couple of years is zero-based budgeting like the 3G model and those things. AOL is probably ...

I think I know what those things are, but tell me.

They are a model where basically every business unit has to justify ...

Its existence.

All of their expenses and existence every year. It’s not where you’re saying, “My budget was this last year. I want 3 percent more.” AOL internally is probably more stringently run than when we’re a public company, and our results, we had better earnings results inside of Verizon. We probably could have chosen to take more advantage of Verizon’s assets and do other things, but we decided to get very focused on operational excellence.

All of these ideas that are coming in right now, I’m putting through this very stringent filter with the management team. We’ve got a great combined management team. The results that we will end up getting as a business, we’re ahead of plan this year, we’ve been well ahead of plan, are coming from our discipline. If you trace it all the way back to the Patch days, a lot of those lessons are things that I’ve been implementing myself. I’m listening to our management team about running that way. I think that’s a big benefit for us for the future.

Just so I’m clear. Verizon is spending a ton of money on video. They may or may not launch it in IoT thing. They’re buying a bunch of stuff. We’re going 90. That’s not your deal, right? That’s Marni Walden?

We are working on those things together. Go90 has been run separately, although, that is now ... there’s a co-strategy on go90. I think one of things you’ll see from us in the future is a more cohesive strategy in terms of the total video investment and in terms of matching that video investment where there’s distribution. I’m really super bullish on that opportunity for the Verizon Oath connection to have the more cohesive strategy going forward. We’re really on top of that right now.

Everyone in digital media is competing against Facebook and Google, right? Whatever stat you’re looking at, 70 percent, 80 percent, 90 percent of each new dollar goes to them. A lot of folks are looking at that and saying, “I’m gonna opt out of that fight. I’m gonna do something else.” It looks like you’re headed straight into it. We were just having this whole discussion about charging in and people saying don’t do that. How do you avoid the Patch problem again, which is not the ... you can be very conservative in your budgeting, but it just seems like look, these are forces of nature. It doesn’t seem like how well you execute it, you’re gonna be able to pull ad dollars away from them.

I would say I’m in violent agreement with you. I think the worst thing that we could do is ... Facebook and Google are Olympics athletes with gold medal performances and let’s say they’re on the high bar or one of those Olympics things are diving. We’re not gonna become divers. We have a differentiated strategy to partner with Google and Facebook, but not directly compete with them. We may compete in the advertising dollars, but our strategy and advertising is not the same as Google and Facebook’s.

Because the biggest won every dollar, right?

Right.

You want presumably the same and won’t be very happy to settle for five cents.

Yeah. I’m not gonna go deeply into our strategy, but we have a different distribution model, different measurement model and different data model that we’re gonna have. I think you will see us over the course of the next 12 months roll out a series of products that are differentiated from Google and Facebook.

This is also not a winner-take-all market as big as those guys are. They are big and they are ferocious from a competitive standpoint. There is so much opportunity left in the world, both on the consumer side and on the advertiser side, that I believe our spaces will be differentiated. We did a good job of this up front with programmatic. I see the same opportunity for us in spaces outside of Google and Facebook overall.

You were early at Google, super successful. You ran AOL. Now, you’re at Verizon, giant telco, but you’re not running Verizon. What’s the personal upside for you at staying at a giant company where you don’t have full control over what you’re doing?

Yeah. I grew up playing a lot of athletics. There were teams that I was captain of the teams. There’s teams I’ve been owners of. There’s teams I’ve been the coach of those things. I’m the type of personality ... I’ve been a public CEO, I’ve done a whole bunch of others, I’ve done startups, I’ve sold startups overall. I’m not somebody who looks at whether or not I’m in charge or not. I look at the team the same way I was in athletics growing up. There are people who are true team players who actually get excited for other people to win also. That’s my personality. I love being on a team where we have people who are gonna win.

I’d say at our company today, Oath, whether it’s Jeff Bonforte who runs the Communications or Simon who’s running content or all of the people, Tim Mahlman running platforms; Ralph, who’s running DMS, all of the people that we have at the business, Allie Kline, our CMO; Julie Jacobs, our GC; Holly Hess, our CFO, inside of Verizon, we have a great team in our company. We have an amazing team and opportunity around us. Everyone on our team, I believe, are team players. Whether it’s good for me or not, it’s good for me because I love playing on the team.

Do you wanna run a public company again?

I don’t think about that now. I honestly don’t because if you told me five years ago, we had the opportunity we had today, from starting from AOL where we are today in terms of being able to potentially get in the marketplace with Google or Facebook over time, this has been the ideal outcome for me and I think for our team. I don’t have any wandering eyes or wandering things. When I write my goals down, my goal isn’t “run another public company.” My goal is “let’s build one of the largest multi-billion consumer platforms in the world and, hopefully, give back to the world also.” I think that’s another thing we’ve done a really good job.

Politics, does that appeal to you?

No. I don’t know why everyone always ask me that.

Everyone asked, so that’s why I got to ask.

I would say everyone asked me that.

You get successful business. You have a lot of money. It seems like you could go do something else.

Yeah. My life and focus is pretty much the opposite of that. I don’t know. I always get asked about that. That rumor started like a few years ago. I don’t know why people asked me. I have zero interest in that.

Maybe one day your answer will change. We’ll be rewarded for asking.

This could be the moment, but I don’t think it’s gonna happen.

Tim Armstrong, your publicist here is just bouncing up and down, she must get you out of here. We’ll let you go. Thank you for your time. I appreciate it.

Thanks for having me, Peter.


This article originally appeared on Recode.net.