New Patch Owner Hale Running Company in ‘Lean, Entrepreneurial Mode’ | Street Fight

The New News

New Patch Owner Hale Running Company in ‘Lean, Entrepreneurial Mode’

26 Comments 06 March 2014 by

PatchAfter a tumultuous and mostly unprofitable three-and-a-half years under media giant Aol, hyperlocal publishing network Patch was acquired in January by Hale Global, a holding company that specializes in turnarounds, mostly with technology firms. Having lost hundreds of millions of dollars as it mushroomed into a nationwide network of 900 sites, Patch was ready for a turnaround. To find out how and where it’s going after 30 days, I put these questions to Hale Global co-founder and CEO Charles Hale:

What’s the new Patch’s mission?
Patch’s mission is to provide high-quality and highly relevant local news to the towns we serve, and to act as a digital town square that helps users connect with each other in ways that strengthen their communities.

The difference between the old Patch and the new Patch is that we don’t have the pockets of a large corporation. We’ve got to run Patch the way so many of our advertisers run their small businesses – in a lean, entrepreneurial mode.

What’s your model for making Patch work editorially?
We think there are alternatives to the traditional hyperlocal model that starts with a single local editor and sales person in each community and builds coverage up from there. Under that model, you’ve created a great deal of overhead before selling a single ad, and you’re essentially betting that over time you can build that arrangement into a business that can support itself. If that bet goes wrong, and if you make it across hundreds of sites, the losses can add up quickly.

We think there’s an opportunity to start with a steady flow of local news from a slightly higher level [geographically and market-wise] which then grows down into communities that can support it, while still serving communities and clusters of communities with local news, even if they don’t have the advertising base to support a unique editor. We also want to make more of the great stories our editors find in the communities they cover.

There was a belief in the old Patch that a story – even a wildly interesting one – should more or less remain on the Patch where it originated. We disagree. If one of our hard-working editors discovers the next potential viral hit, we want to share it with the world.

Some Patch critics have asserted that local doesn’t scale. What’s your view?
That’s really an ideological argument, not a business one. And frankly, it doesn’t solve the riddle of hyperlocal news. If it’s true that local doesn’t scale, the flip side of that is that communities that can’t support local – either because of their small population or limited advertising base – can’t have local news.

If local can scale — and we know it can — then many more communities can receive a valuable flow of local news, even those that might not be able to support a traditional on-the-ground hyperlocal reporter. There are lots of potential models, and there’s no reason to be ideological about finding the right match between models and communities. The best thing for hyperlocal journalism is a sustainable business model.

Some observers say that news, especially at the community level, can be produced more efficiently, and with no loss in value, if editors spent more time doing what’s been called “high-level curating” and tuning into conversations on social media platforms, like Facebook and Twitter. The idea is that those conversations are often not just a reaction to news but a wholly new product. Do you agree?
There’s a loop between the conversations in a community and the news from a community. News fuels conversation, but conversations about matters of local importance can drive the news.

There are lots of ways to access those conversations. Sitting in a cafe or diner interviewing people is one way. Listening to them on social media or through email is another. Picking up the phone the way reporters have for decades is another. We’re not dogmatic about how our reporters engage with their communities. The most important thing is that they engage, period. And that also means doing original reporting that has value for the community.

Given all the turmoil at the old Patch, and the layoffs during the transition period, do you have a morale problem?
From what we can tell, morale has been incredible. People seem to feel released from the bonds of a big corporation and particularly excited about self-determination. They are also excited by the product innovation our in-house “Patch Labs” team has in internal testing.

We’re a growth company now. We’re hiring. We’re not waiting around for the ax to fall or to have some bad news confirmed. We’re more of a start-up. Everyone at Patch has an incredible amount of responsibility. We don’t have a lot of managers micro-managing our teams – we’re turning loose talented people and telling them “Do your job the way it ought to be done.” And when you have talented people who are freed up from a lot of mindless directives, you can get incredible work – which we have. Our reporters have been doing an absolutely amazing job in difficult circumstances, producing hundreds of stories a day, day-in and day-out.

There’s something else at work here too. We’ve got something to prove. The media has been writing Patch’s obituary for years. We’ve found “Patch is dead” stories that were published in 2011. David Carr wrote Patch’s obituary in The New York Times last fall. After the spin-off from AOL, there were dozens of stories saying Patch was toast.

But in fact we’re doing pretty well. We’ve hired six editors in the last 10 days, and we’re in conversations with several more right now. We produced 900 posts on Patch last Friday. Our ad sales team absolutely crushed it in February. Our traffic is holding up remarkably well. Thousands of users are commenting and blogging our sites every day. Our mobile traffic is robust and our daily newsletters continue to have impressive open rates. We’ve got plenty of challenges for sure — starting with our platform, which we’re completely redesigning — but the mood here is pretty determined and fired up.

Charles Hale

Charles Hale

What’s your model for making Patch succeed as a business, including staffing in smaller markets? Is your network being scaled with “different” Patches, based on the size of the market and other factors?
The problem of hyperlocal always gets back to the cost-of-sale for local advertising. It just costs a lot more to go door-to-door selling ads to small businesses than it does to sell regionally or nationally. Many small business owners aren’t familiar with online advertising, so you have to invest in training them. Many are too busy running their businesses to update their various online or mobile presences. And every town, and indeed every business is unique.So any one-size-fits-all approach is going to have a hard time succeeding.

A great thing about Patch is that we have 900 sites. We can test out various models, such as sharing local revenue with Patch editor-publishers on a handful of our sites, and assess the data before making the decision to roll out a model across the network. We’ve already begun that process.

Do you have separate ad sales programs for local and regional and national?
We do. We have an inside sales team, outside sales, regional and national sales. We only have four weeks of sales data to go on since the creation of the new Patch, which isn’t a lot. But we are very, very happy with what they’ve been able to accomplish.

You clearly have a smaller editorial staff than the old Patch. How big is it now, and is it big enough to meet your mission in the communities you want to serve?
We have around 125 employees at Patch now, the majority of whom are in editorial. We’ve been hiring at a steady clip. We’ve had some of our most loyal bloggers step in to edit smaller Patches. And we’ve given our editors an ability to post relevant news across multiple Patches, which under the old model was discouraged. We’ve worked hard on the mapping to make sure editors are strategically deployed to make the most of their presence near multiple Patches. So we feel pretty good about where we are. At the same time, we know we need to expand and deepen our coverage especially in areas where some Patches have yet to get momentum. So that’s a long-term effort.

You’ve got a month under your belt. How is your audience responding, based on traffic numbers?
We’re holding steady at 90% of pageviews of the old Patch and 85% of unique visitors. And this is coming out of a tumultuous transition, so we’re just getting started.

How close would you estimate you are to becoming profitable?
We were cash-flow and EBITDA positive in February. That’s possibly the first profitable month in Patch’s history.

Will Hale Global be growing Patch in more communities?
Absolutely. But when we expand, it will be through a careful and deliberate effort — into communities we know want a Patch.

Any plans for partnerships with other community news providers?
We’re working on it. One thing we’re committed to trying to change is the idea that Patch is some sort of outside competitor to hyperlocal bloggers or news sites. Hyperlocal is not a zero-sum game. There’s too much unclaimed territory, and even those who have built audiences in individual communities want more readers and better exposure.

There’s no reason a successful hyperlocal news site operator in a given community couldn’t also run the local Patch. They’d benefit from cross-linking on both sites, and might expand their audience and potential advertising base, while also having an opportunity to promote local stories that have national import across a much larger platform. We want to support local voices, period.

Tom GrubisichTom Grubisich (@TomGrubisich) writes “The New News” column for Street Fight. He is editorial director of the in-development hyperlocal news network Local America that will rate communities on their performance across a broad spectrum of livability. He will present the site’s new demo on Charleston, S.C., at the DIG SOUTH 2014 interactive festival in Charleston on April 9-13, 2014.

  • KES

    I find it insulting that Mr. Hale references the company is in full hiring mode just weeks after laying off hundreds of employees. Knee jerk reaction much?

    • http://riverheadlocal.com/ Denise Civiletti

      Maybe the company is “in hiring mode” trying to replace people that have quit since the massive layoffs when HG took over. Some Patch editors, seeing the writing on the wall or hearing the slurping around the drain, quit after that

    • bgilman45

      It wasn’t Hale that didnt the layoffs it was AOL. Hale bought a trimmed down company and is building from the ground up.

  • KES

    I also don’t buy the assessment that the content is still quality and the readership is steady. It’s only a matter of time until everyone catches on that Patch is no longer local.

    • bgilman45

      Agreed. Regional stories will never be as popular with Patch readers as local stories that actually impact their lives.
      Sure, there is the occasional huge story from a neighboring town, but not often.
      Readership suffered dramatically with the first round of layoffs last august when Patch abandoned the one editor one town model.
      Thats not good or bad … it’s to be expected. Simple math.
      But kudos to the men and women still at patch. They are working hard and are committed to their readers.
      It strikes me that those who applaud when hyper local ventures fail just plain dont like hyper local. They thing the only meaningful news is national and state and maybe even international.
      They are wrong.

  • C Hale is greedy

    Hale is a joke. He’s just as crazy as Armstrong. He plans on using old news that was created by comprised editors and politicians who paid into advertising to the fabricated one sided stories that were inaccurate and false. He is recycling crap to feed to the public. I hope he falls just like Armstrong Hale is greedy and foolish why lot get rid if the stories before you get sued for republishing them dummy

  • http://www.arlnow.com/ ARLnow.com

    Of the 11 article links on the Arlington, Va. Patch, only 1 has anything to do with Arlington. Good luck with that model.

    • Mark Holster

      Says the website whose front page top stories are about a Stolen Nintendo and how AAA says Daylight savings time is dangerous for motorists. I love it when competing websites come on here to criticize Patch because they lack mirrors in their basement offices. ARLnow, can you be any more tacky and condescending? But what you’ve seem to have done on your own website is copy a lot of the things Patch did–new listings, poorly written opinion columns, ohh and how awesome you broke the story about Arlington’s skyrocketing commercial assessments. You hurt yourself and brand publicly criticizing a competitor, especially obvious criticism. Sad.

      • Mark Pratt

        What an overreaction to a valid criticism. As someone who lives in Arlington, VA I do read ArlNow in contrast to the Arlington Patch. And for exactly the reason that Arlnow gave. Why are you so touchy about the facts?

        • Mark Holster

          Mark, I am not touchy, and could honestly care less. I personally believe it portrays ARLnow poorly to make such comments when its own site contained such questionable content as its front page news stories. Do I think Patch now is any good? No, it is downright awful. But when a competitor jumps into the fray and makes such comments, it comes off as condescending and tacky. They must find Hale and Patch still a threat or they wouldn’t make such silly comments. Although ArlNow may have “local” information on its site, it is basically a copycat Patch site when Patch was actually doing a lot of local news–the same exact type of local news many media critics, including this site and Romenesko, criticized often. So…

  • Adam Vaccaro

    “We’re a growth company now” that we’ve eliminated almost every position and then hiring six new people. Seriously?

    • bgilman45

      The layoffs were executed by AOL prior to the sale to Hale Global. In fact they were one of the conditions of the sale.
      So Hale bought a slimmed down company and is able to build from the ground up.
      Whether he is successful remains to be seen.

      • Adam Vaccaro

        That’s not true — AOL surely brought the first axe down last year, but Hale laid off hundreds itself shortly after taking charge: http://techcrunch.com/2014/01/29/patch-hit-with-sweeping-layoffs-as-new-owner-hale-global-restructures/

        • Bill Gilman

          Actually Adam you are wrong about that. But it’s understandable because the article you link was wrong about it too.
          The sale of Patch was announced Jan. 15 and we were laid off Jan. 29. But not by Hale. Were were notified by AOL and the severance was paid by AOL … not Hale.
          In other words, one of the conditions fo r the sale was these layoffs to trim the overhead.
          In other words, when the sale was announced Jan. 15, these layoffs had already been decided and were a done deal, probably back in December. We just were not notified in advance this time.

          • Adam Vaccaro

            Ah, OK. Thanks for clarifying–good to know all the same, but I still take issue with his putting it in those terms.

  • West Seattle Blog

    Um, what exactly are you “curating” if you’re talking about a community so small you don’t think you can afford to give it ONE editor/reporter. Sounds like what we expected Patch would eventually become – an automated aggregator.

    • http://www.macaronikid.com MacaroniDad

      I wish them luck, but an automated route is the kiss of death. As I’m sure, you, ARLnow and others in the trenches will agree, you just can’t automate local.

  • Reader

    The reflexive Patch hatred in these comments is pretty shameful, in my opinion. First of all, the alternative to Hale was likely Patch’s getting shut down and sold for parts (which some commenters apparently would have preferred just for the schadenfreude value, never mind how many more people would have lost their jobs.) Secondly, I don’t get why a bunch of reporters running around trying to cover small communities is so threatening to some people. If you don’t like the coverage — don’t read it. But my word, why waste energy with such vitriol? Just wish the reporters there well and move on. Is it that you hate corporate-funded hyperlocal? Ok fine, if that’s your thing, but the corporation (AOL) is out. And for the other hyperlocal news site operators piling on, what is the solution you propose for all those communities out there that don’t have a business community to buy ads to support an individual hyperlocal news blogger? They’re supposed to rely on volunteers (who don’t exist in many such communities) to cover the news or just get no local news at all? Or that’s not your problem, because you’re writing from nice towns (Seattle, Arlington) that do? Gee thanks for your positive contribution to solving the problem. A company that figures out a model to make hyperlocal scale will provide a lot of communities with news they might not have gotten otherwise, and in the process will employ a lot of journalists in places where journalism jobs can be pretty hard to find. I suppose I’m just naive, but that doesn’t sound so evil to me. I for one hope Patch — and other efforts like it — succeeds. If the New York Times or Washington Post moved into hyperlocal, I’d pull for them too. We need more news coverage in this country, not less. And any Patch reporters reading this: don’t let the haters get you down.

  • Peter Weinberger

    I’m not seeing any local news either from the Patch near us. The editor in our area was laid off, so we get a feed from many cities away. It reminds me a little of TV’s version of local news. Let’s cover some crime, a city council meeting from where ever, and a sports story…and then call it a day. I still believe these types of websites only try and suck the business life out of the real local news sites that are vested in the communities they cover. The new business model however, does seem more doable than simply throwing people into all these small towns to manage websites. We shall see.

  • TotalPaas, Inc.

    Patch has a very difficult business model, and the changes may be great but insignificant. The challenge of hyperlocal is more than just a piece of good news coverage, but a local publisher and staff live and breath their community. Things become news because they make it news. They are extremely influential in their community, and they give back to the community in so many ways. The local businesses TRUST this long time established brand and engagement. Beyond these intangible assets, the local newspapers have print that still carries a thread of loyal supporters. Patch doesn’t have this. It is a huge competitive advantage that Patch doesn’t have. All the changes that Charles Hale is making are incremental but not drastic enough. I’d like to see Hale expand his thought on partnering with other community news providers both in content and sales. This is the key to Patch turnaround strategy. For now, I respect Charles Hale for taking on the challenge at hand and appreciate his effort. Patch will continue to evolve, and so will the local community news providers. It will come down to the speed of change, and what we see today is only a snapshot. If Patch could just win in the hyperlocal space that easily, then it would be too offensive to the local community news providers.

    • Randy Hamilton

      The local community news agencies are a trusted brand. Local news is about a trust relationship–built over many years. No matter what Patch does, people and businesses in their local communities immediately trust the local community news agencies– but they do not have that same level of trust for Patch or any other outside brand. I grew up in a small rural community. It is just the way it is. I fear for companies like Patch because once the local news agency wakes up and truly understands the power of their brand and how they can move their model beyond the legacy, it will be unstoppable.

  • Former Piedmont Patch Reader

    The new Patch business model is “a steady flow of local news from a slightly higher level”? My old Patch delivered a wonderful variety of interesting local news stories that I read religiously — and some which made national news. Here are my local Patch headlines now . . . pretty much a weather report . . . so sucks:

    Bay Area Residents Urged to Brace for Strong Winds

    Earthquake Expected to Create Aftershocks for Next Few Days

    6.9 Northern California Coastal Quake Felt Throughout Bay…

    Daylight Saving Time begins on Sunday, March 9 at 2 a.m.

    Movie Review: ‘300: Rise of an Empire’

    Slight Increase in Unemployment Rates in Bay Area

    Slight Increase in Unemployment Rates in Bay Area

    Forecasters Say ‘El Nino’ Summer Likely for Bay Area

    Officials Say Dry Winter to Blame for Highest Number of…

    Did You Feel the Earthquake Near Piedmont and Berkeley?

    Multiple Storms Predicted for Bay Area This Week

    BART Warns Riders to Look Out for Signs of Measles Infection

    Bay Area Needs ‘Succession of Storms Every Single Day to Get…

    Bay Area Prepares for Rain

    More Rain Moving Through Bay Area

    Parched Bay Area Soaks Up Much Needed Rain

    Bay Area Blood Banks Suffering Shortages of ‘Type O…

  • Investigator

    Patch Sucks and is a political paid off site that concocts stories that are used to defame people by politicians who pay patch off in advertising in exchange for political retribution. The editors don’t do fact checking and go by what the corrupt police and elected officials tell them to write.

  • Ray

    Mr. Hale and Mr. Grubisich:

    Here are some suggestions on how Patch can make money.

    No anonymous users. Verified, name address and phone numbers only. You simply must get rid of the anonymous malcontents and the professional cyber bullies.

    Do not hide behind the First Amendment. I have a right to run around your boardroom in the middle of a directors meeting and scream the F-bomb. But I cannot get into your boardroom. See what I mean?

    Have ruthless editors that discourage personal attacks. Have heated discussions.are OK. But suspend at the mere hint of any name calling or personal attacks. Strictly enforce the TOS.

    Recruit local volunteers to help the editor. Journalism majors, high school newspaper editors, etc.

    Take it easy on the one cover story fits all. It is OK sometimes. But not as often as now. Tough choice. Sometimes there is not much going on in town.

    Make a link to a monthly calendar view. Some like more advance planning. Two to three weeks versus days. The list form is not as efficient.

    Patch could be great. But the negativity is causing it ti die in my town. I used to use it two hours a day. But not anymore.
    Too much negativity and name calling.

  • denise meehan

    I was invited to blog about Native Gardening by pre-Hale editor. I was invited to post in more local Patches by another Pre-Hale Editor, and I did. For free. I care about the environment so, I did not need compensation. I was not taking work away from a paid employee.

    Enter Hale. My blogs were almost never “front page” but Pit Bull atrocities are.
    My most recent blog on How To Garden For Wildlife was removed from the Patches I wrote for, and I am now blocked from logging in. So, who decides how important blogs are? Who determines what gets put out there the most?

    And why was I censored and not even Told my contribution had been removed?
    Who has the power to do that at Hale? And on the Patch? I would Love to know.
    If a reader had an issue, I would have been happy to address it. Or was my censorship driven by Advertising Department?

    I think it is deplorable that Hale allows this to happen. I will be sharing my story with folks I know in the Native Gardening and Media communities. I have queried the Patch I wrote for first. Waiting on an answer. My blog was titled “Gardens Gone Wild.”. Even President Obama is in favor of supporting our dying bees, butterflies and pollinators. I wrote about that in the blog I went to upload yesterday, before I knew I had been censored and “fired.”. Looking forward to your reply.

    Signing in with the same email address that was my former registered with the Patch contact, as I do not use Facebook. Just in case Hale pulls the old we did not know how to reach you card

  • Anthony

    George Norcross made a deal with Charles Hale but norcross lost the philly.com papers and his daughter lexie was FIRED

    http://www.metro.us/newyork/news/local/2014/06/02/norcross-daughter-philly-com-former-co-owner-will-assist-daily-news-inky/

Big Things Coming in Local in 2015!


Join us in New York, San Francisco and Denver for Street Fight's industry-leading conferences. Top speakers, great networking, valuable insights, and killer parties.
Click here for dates and details!

Newsletter

Get hyperlocal industry headlines in your inbox every morning. Subscribe to the Street Fight Daily newsletter.


See how brands compare in local presence across areas such as local SEO, data accuracy, social engagement and more. Presented by Where2GetIt and Street Fight. Click here to see the battle!

Free White Paper: Pay-Per-Call’s Role in Improving Marketing ROI

Call campaigns can make the phone ring — or alienate prospective customers. Learn how to get it right: Download "Pay-Per-Call's Role in Improving Marketing ROI."

Produced by Street Fight Insights for Soleo.

Free White Paper: Contextualization

Learn how to deliver better, revenue-driving consumer experiences. Download "Contextualization: Leveraging Location-Based Technology and Mobile to Drive Success for Brands."

Sponsored by Artisan Mobile.

Follow Us

Get the latest Street Fight news, information and analysis via Twitter and Facebook.

The Commerce Graph

The “Commerce Graph” is a new framework we have developed to think about the future of physical exchange. The model offers an alternative to the dominant narrative about the commerce landscape that frames digital networks as an adversary of physical exchange.

The $20 Billion Mobile Marketing Opportunity

Strategies and insights into the landscape of targeting options and how they deliver foot traffic and sales for SMBs.
Check out our 2013 report and get your copy today!

Twitter

© 2014 Street Fight.

Powered by WordPress. Hosting by Page.ly