June 4, 2024 • 1hr 4min

Adam Sandow - The Power of Print Media - [Invest Like the Best, EP.376]

Invest Like the Best with Patrick O'Shaughnessy

In this episode, Patrick O'Shaughnessy interviews Adam Sandow, chairman and CEO of SANDOW Companies and founder of Material Bank. Sandow has built an ecosystem of media, technology, and logistics businesses across industries like beauty, design, and luxury. The conversation explores Sandow's unique approach to building innovative business models on top of media properties, his focus on solving industry pain points, and his philosophy on nurturing an ecosystem of complementary businesses.

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Key Takeaways

Build innovative business models on top of media properties - Adam Sandow has found success by using media brands as a foundation to build larger, more valuable businesses that solve industry problems
Focus on quality over quantity - For media properties, Sandow prioritizes having the best readers and highest quality content rather than chasing mass audiences
Identify and solve industry pain points - Sandow's approach is to deeply understand industry problems and engineer innovative solutions, like Material Bank for the design industry
Create unique value propositions - When launching new businesses or media properties, Sandow emphasizes having a truly differentiated offering that fills an unmet need
Build an ecosystem of complementary businesses - Rather than focusing on a single company, Sandow has created an interconnected ecosystem of media, technology, and logistics businesses that compound value
Leverage trust and relationships - The credibility and relationships built through media properties allows Sandow to more easily launch new ventures in those industries
Invest in operational excellence - For businesses like Material Bank, mastering complex logistics and operations creates a strong competitive moat

Introduction

In this episode, Patrick O'Shaughnessy interviews Adam Sandow, chairman and CEO of SANDOW Companies and founder of Material Bank. Sandow has built an ecosystem of media, technology, and logistics businesses across industries like beauty, design, and luxury. The conversation explores Sandow's unique approach to building innovative business models on top of media properties, his focus on solving industry pain points, and his philosophy on nurturing an ecosystem of complementary businesses.

Topics Discussed

Building a Media Empire (4:12)

Sandow describes how he started building media properties about 22 years ago, beginning with magazines:

Started with a beauty magazine in 2005, which was profitable from the first issue
Focused on injecting innovation into the media business model from the start
Saw the threat of digital advertising coming but didn't abandon print
Looked for ways to build innovative business models on top of media properties

"I always thought that we could build very innovative business models into everything we did," Sandow explains about his approach to media.

The Birth of the Beauty Subscription Model (6:01)

Sandow shares how he invented one of the first beauty product subscription businesses:

Identified pain points for beauty brands around getting samples to qualified customers
Created a subscription model where readers paid to receive curated product samples
Leveraged the credibility of the magazine to get brands to provide free full-size products
This model predated companies like Birchbox by many years

"We invented this beauty subscription business, which today there's now so many of them," Sandow notes about being first to market.

Revolutionizing Magazine Circulation (9:56)

Sandow explains his contrarian approach to magazine circulation:

Focused on quality over quantity of readers
Charged premium prices ($10) for magazines to attract the best readers
Invested heavily in newsstand distribution rather than cheap subscriptions
Prioritized having engaged, high-value readers over mass circulation

"What I want are the best readers," Sandow says about his circulation strategy.

The Contrarian Approach to Media (14:46)

Sandow discusses how his media strategy differed from traditional approaches:

Didn't chase mass audiences or rely on programmatic digital advertising
Focused on building trust and relationships with high-value readers
Used media properties as a foundation to launch other businesses
Prioritized quality content and engaged audiences over pure scale

The Origin of MediaJet (16:08)

Sandow tells the story of creating MediaJet, his private airport magazine distribution business:

Bought up rights to put newsstands in private airports 17 years ago
Initially just to distribute his own magazines to high-net-worth individuals
Became a "secret weapon" for reaching ultra-premium audiences
Locked in long-term exclusive agreements at private airports

"It's my secret weapon, because you can't imagine how many magazines...I want 25,000 copies a month going into the people getting on an airplane burning $10,000 an hour to fly," Sandow explains about MediaJet's value.

The Future of Print and Digital Media (18:35)

Sandow shares his perspective on the future of media:

Print will continue to exist but in smaller quantities and higher quality
Visual, luxury-oriented content still works well in print
Digital is better for news, investment information, etc.
Print provides a distraction-free, focused reading experience
The key is building an ecosystem with print, digital, events, etc.

"In ten years from now, there will be print, it's going to be a lot less, it's going to be a lot higher, and it's going to be beautiful objects," Sandow predicts.

The Genesis of Material Bank (27:25)

Sandow describes the origins of Material Bank, his B2B marketplace for design materials:

Identified pain points around sampling in the design industry
Envisioned a platform to streamline the sampling process for designers and manufacturers
Leveraged relationships from media business to get buy-in from the industry
Created an innovative business model inspired by Google AdWords

"I said, how can I build a model? Because I know the designer, I know the demand side will be there if I can do it. Hard to do, but if I could. But how do I create a model that is compelling for a manufacturer?" Sandow explains about developing the Material Bank concept.

Building a Compelling Model for Manufacturers (35:23)

Sandow outlines the value proposition of Material Bank for manufacturers:

No upfront costs - Material Bank handles all data, samples, warehousing
Manufacturers only pay when qualified designers request samples
Provides detailed lead information directly into manufacturers' CRM systems
Eliminates sampling costs and inefficiencies for manufacturers

Innovative Logistics and Partnership with FedEx (37:26)

Sandow discusses the operational innovations behind Material Bank:

Set up operations in Memphis to enable midnight order cutoff with FedEx
Partnered with robotics company Locus Robotics from day one
Built custom packaging and logistics systems to handle complex materials
Achieved 99.99% on-time delivery rate for next-day samples

"You can order tonight at 11:58, 89 pieces of material from 25 companies and you'll have it at 10:30," Sandow says about Material Bank's capabilities.

The Importance of High-Quality Content (40:32)

Sandow emphasizes his focus on editorial quality in media properties:

Hires and retains the best editorial talent in each industry
Gives editorial teams autonomy to produce high-quality content
Avoids chasing clicks or compromising quality for mass audiences
Uses expert advisory boards to maintain editorial integrity

Building and Buying Media Properties (43:49)

Sandow discusses his approach to acquiring vs. building media brands:

Prefers to buy established brands with heritage when possible
Looks for opportunities to resurrect and reimagine legacy brands
Still builds new brands but acquisition can be easier
Focuses on brands that fit into his broader ecosystem

Creating Unique Value Propositions (46:01)

Sandow emphasizes the importance of differentiation when launching new businesses:

Focuses on solving real problems and pain points in industries
Avoids "me too" businesses or following trends
Looks for underserved niches or missed opportunities
Develops innovative business models and value propositions

"The world doesn't need another whatever. So what are you doing that's unique and special?" Sandow advises about launching new ventures.

The Role of Print in the Digital Age (54:22)

Sandow shares his perspective on the enduring value of print media:

Print provides a focused, distraction-free reading experience
High-quality print products still capture readers' full attention
Print works well for visual, aspirational content like design
Print should be part of a broader media ecosystem

"I am more curatorial than ever of what I will do that with," Sandow says about being selective with print media consumption.

Nurturing an Ecosystem of Businesses (58:41)

Sandow discusses his approach to building an interconnected business ecosystem:

Focuses on building and holding businesses long-term rather than quick exits
Uses cash flow from established businesses to fund new ventures
Looks for ways new businesses can complement and enhance existing ones
Maintains control and flexibility by mostly self-funding growth

"I've always taken a long term approach to every single thing I do in my life. I have never built a business going, okay, I'm going to start it, and here's my exit plan," Sandow explains about his philosophy.

The Kindest Thing Anyone Has Ever Done for Adam (1:03:37)

Sandow reflects on the constant support from his parents throughout his entrepreneurial journey:

His parents provided unwavering support through successes and failures
This gave him confidence to take risks and persevere as an entrepreneur
He tries to provide the same support to his own children

"My parents were always incredibly supportive of success and failure. And it's something that's always stuck with me," Sandow says.

Conclusion

Adam Sandow has built a unique ecosystem of media, technology, and logistics businesses by identifying industry pain points, leveraging trust and relationships, and developing innovative business models. His contrarian approach to media - focusing on quality over quantity and using media properties as a foundation for larger ventures - has allowed him to succeed in challenging industries. By nurturing an interconnected portfolio of businesses and maintaining a long-term outlook, Sandow has created significant value across multiple sectors. His story provides valuable lessons for entrepreneurs looking to build innovative, ecosystem-driven businesses.