Arianna Huffington: 'Staying Still Doesn't Work'

This story was written by Staci D. Kramer.
One way to get some almost uninterrupted time with peripatetic Arianna Huffington: talk to her while she's on jury duty, waiting to be picked. (I say almost because she has two cell phones and whichever one she's not on is likely to ring.) We spoke Monday afternoon as news was spreading of the Hufffington Post's CEO change to investor Eric Hippeau from Betsy Morgan, covering a number of subjects including the change, the way the company has handled the nearly $37 million in funding it has raised, and the site's expansion plans.

Huffington, like the board members I interviewed, spoke of Morgan's accomplishments growing traffic and the organization during her 18 months as CEO. Morgan represented the transition from Huffington and Cofounder Ken Lerer as first-stage startup execs. But, she said, "what is needed here is really monetizing the traffic. That is the primary responsibility of our CEO at this stage in our growth." She said Morgan knew the change was imminent.

It's a key part of what she sees as HuffPo's next phase: "In our space, staying still doesn't work. You can't stand still. We need to keep monetizing our traffic at a higher leveland we need to keep expanding. Everything on the internet is accelerated; we need to accelerate. ... You have to think of a company like Huffington Post more in dog years, than human years. The needs of a company change much faster in the current space." That includes the launch of three new already-approved verticals: technology, sports and books. The Chicago site went live last year; next week, HuffPo launches its New York version. 

It's not that HuffPo needs money now. By all accounts, the $25 million round from Oak Investments that closed December has yet to be tapped. Interviewed separately, Lerer said the company has spent about $11 million of the $37 million raised so far. In nearly four years, he added, "We achieved everything we achieved for about $11 million. We are profitable some months; we are not profitable some months."  But it's time to spend some of that moneycarefully.

Traffic has been growing, whether you look at HuffPo's internal count via Google (NSDQ: GOOG) Analytics of 21.2 million uniques in May '09, up 100 percent from 10.1 million the previous May, or the much-lower Nielsen Online, up 157 percent to 8.9 million in April '09 from 3.5 million in April '08. Advertising revenue, a number HuffPo doesn't publicize, has yet to break double digits. I was told by someone familiar with the fund-raising pitch from last year that the site generated about $8 million in revenue in 2008.

Acquisitions: In addition to making sure its expenses, which have grown significantly with the addition of a number of senior staffers and, Huffington says, a salary increase for the staff, are covered, HuffPo has enough money for acquisitions. Is it in the market? Lerer: "We've kicked the tires of a few places over the last couple of months but haven't seen anything that makes any sense. If a perfect fit came up, we would do it." He said prospective acquisitions have become a lot more affordable in recent months.

Advertising: Lerer: "We're beginning to attract the advertisers for suregetting bigger buys, multiple buys, seeing the right brands." The site has been working on its bounce rate, lowering the number of visitors who come for just one story and leave right away.

Photo Credit: AP Images

By Staci D. Kramer