For media businesses worldwide, the Covid-19 pandemic represents an existential crisis, adding to their woes after years of pressure on advertising and subscription revenues from digital transformation. But not every business in the sector is feeling beleaguered – Adam Sandow, the serial entrepreneur behind Sandow Media, insists that with a focus on innovation, it is still possible to build fast-growing media companies.
Sandow launched his business in 2003, initially getting off the ground with a single magazine, New Beauty, aimed at the beauty industry. Today, Sandow Media owns well over 100 magazines, has a large digital footprint and runs a flourishing events business. But Sandow says it is a willingness to experiment and innovate that is the key to powering growth.
“Right from the start when I looked at my business, I knew I couldn’t build a multi-billion dollar business just by adding more magazines,” he recalls. “I knew that in order to achieve the kind of growth I was aiming for I would need to develop new types of business.”
The latest of these ventures may prove to be the most successful of all. Last year, Sandow launched Material Bank, which promises to do for the design and architecture industry what services such as Expedia have achieved in the travel sector.
Sandow knows the industry well, having run a suite of specialist magazines such as Interior Design for more than 15 years. He hit upon the idea of Material Bank after seeing the frustrations of designers and architects who are continually trying to identify and source new materials for their projects – everything from paint to luxury textiles and marble finishes. With hundreds of potential suppliers, there was no single marketplace on which to browse for inspiration – and when potential suppliers are identified, designers had to wait days to secure samples, which might or might not be suitable for their projects.
Enter Material Bank. It operates as an aggregation platform on which more than 300 leading materials suppliers now list their stock, with high-end photography that enables designers and architects to shop around to their heart’s content. “We’ve turned what was hours of work for designers into something that takes minutes,” Sandow says.
Alongside the platform, the business has built a huge physical facility in Memphis, right next door to a FedEx sorting centre. Suppliers provide their samples to Material Bank and when designers want to check them out, they ask the bank to despatch what’s needed. Orders placed before midnight are fulfilled by 10am the following morning.
It’s a remarkable logistics operation, powered by state of the art automation technologies. And Sandow is keen to stress its sustainability credentials. Previously, designers ordering samples would receive endless boxes from suppliers all over the country, many of which were never returned. With Material Bank, they receive a single box containing all their samples, together with instructions on how to send everything back when they’re done. Sandow reckons the industry will use a million fewer sample boxes this year because of the initiative. “That’s vital, not only for environmental reasons, but also because sustainability has become so crucial to this industry,” he says.
The bank’s business model is straightforward. Designers pay nothing to use the service. Instead, Material Bank charges suppliers a relatively modest monthly fee to list their wares on the marketplace, plus it takes a slice of the revenues when designers and architects place an order for materials.
Investors are hugely excited by the project. Material Bank has raised $55m since its launch, including a $28m Series B funding round lead by Bain Capital Ventures that was completed in April.
That represents validation of a view that Sandow has had from the earliest days of his business. “We were in media, but to build a really large media business, we knew we would have to go beyond media,” he says. “We believe that if you can build a platform with readers, users, trust and authority, you can then add new tools and services that will boost growth.”
The company followed that rationale from the start. Sandow points to Test Tube, a service launched by New Beauty well over a decade ago, well before subscription boxes became ubiquitous. The idea was to offer readers the chance to subscribe to regular deliveries of beauty products they might like to try.
Crucially, however, Sandow believes that in order for media businesses to move into new areas, they must have trust and credibility in their own backyards. Material Bank works because Sandow has spent years working with the potential users of the service, on both sides, through his magazines. In other words, without the media business – despite scepticism about the industry’s viability – the new ventures would not be possible. “The brands that are trusted and get the eyeballs will always be able to monetise that,” he says.
Such revenue streams also provide valuable diversification benefits, he points out. While advertising revenues at Sandow Media have taken a hit during the pandemic, Material Bank – providing a crucial service that has enabled parts of the industry to keep functioning – has performed very strongly. “We expect to emerge stronger and smarter than when we went into Covid,” Sandow reflects.