More: Online, Arianna Huffington reigns supreme

By Richard Siklos, Fortune editor-at-large

The Huffington Post has raised a modest sum of close to $11 million in two rounds of funding. Backers include the venture-capital firms Softbank Ventures and Greycroft Partners, and co-founder Lerer. Small investments also came from his friend former AOL president Robert Pittman, and writer Nora Ephron, a friend of Huffington's.

As editor-in-chief, Huffington is paid a salary and also has a minority equity stake (she says she doesn't know exactly how much she owns) in what increasingly appears to be a more mainstream business. In September, the Huffington Post hired Betsy Morgan, who was general manager of CBSnews.com, to be its first full-time CEO. Willow Bay, the former TV anchor and producer, recently joined as editor-at-large.

The site's potential was far from obvious to Huffington or anyone else back in 2004, except, perhaps, to Lerer. As spotlight-averse as Huffington is not, Lerer had made at least two tidy fortunes during his career working behind the scenes with his own communications firm in the late 1980s and as an executive at AOL and the merged AOL Time Warner (Charts, Fortune 500) (Fortune's parent company).

Having resigned from the company in 2002 amid its postmerger turmoil, Lerer became fascinated with how quickly the Internet was changing the news. And in doing some work with Senator Bill Bradley to campaign against the National Rifle Association, Lerer had come to know Peretti, a graduate of the MIT Media Lab whom he regarded as a prodigy in the realm of using the Internet in innovative ways to distribute information.

In 2003, Lerer was invited to a dinner with Huffington by Tom Freston, then still a top executive at Viacom (Charts), and his wife, Kathy. A year later, Lerer visited Huffington at her Los Angeles home and was struck by her magnetic pull and how feverishly she worked the phones to reach out to people for causes she was championing or articles she was writing.

"It clicked when I saw her doing her thing," Lerer recalls. "I said, 'You know, what you are doing here, we could try to institutionalize it.'"

Soon Lerer, Peretti, and Huffington had forged a partnership and set about raising angel funding of around $1 million from friends and family, including some of Lerer's own money. Huffington did not invest but brought in others who did, among them activist Laurie David and her husband, Larry (from whom she is now separated), star of HBO's Curb Your Enthusiasm.

Laurie David, along with Willow Bay, is part of a group of women with whom Huffington hikes regularly in the hills near her home. David recalls the moment her friend broached the idea for the site. "As soon as she said the idea, it was like, Oh, my God: It was a perfect idea for her," she says. "At the time, everybody was talking about the antidote to the Drudge Report, and from the very beginning she was thinking of that and so much more."

Huffington has had a long, eventful, and sometimes strange journey to the top of the hill where she first told her friends of her nascent web plan. Born Arianna Stassinopoulos in Athens, she fulfilled her first big ambition when she became president of the Cambridge Union debating club. She then fell in love with Bernard Levin, the British writer, who she likes to say was twice her age and half her height. Although her manner can make her seem slightly scattered in casual conversation, Huffington's mind is fast and cerebral, her conversation peppered with allusions to Greek mythology and quotes culled from Colette and Montaigne. She moved to New York City when, as she recalls it, the relationship with Levin did not progress.

Controversy courted her, first in the form of allegations of plagiarism involving biographies she wrote of Maria Callas and Picasso, which she said "are really absurd things." She made a stir on the social scene in New York, and again during the years she spent in the Beltway with her husband, Michael Huffington, a Texas oil heir, when she became an acolyte of Newt Gingrich and was accused of pressuring her husband, a Congressman, into a run for the Senate that failed.

The Huffingtons divorced in 1997, and Michael later revealed he was bisexual. Arianna reinvented herself in Los Angeles, where much was made of her dropping her Republican ties in favor of adopting liberal causes and befriending lefty creative types like Al Franken, with whom she had debated on a cable segment called Strange Bedfellows.

She says the distinctions are more complicated, and in her initial blanket e-mail to recruit bloggers to the site, she promised it "won't be left wing or right wing; indeed, it will punch holes in that very stale way of looking at the world." Huffington now says the portrait of her from her Republican days as a vaguely sinister figure was a form of sexism toward political wives who speak their minds.

Huffington lives with her two teenaged daughters and her author sister, Agapi, in a large house behind a gate. It's a breezy, ornately decorated home with a swimming pool, but it is also the West Coast headquarters of the Huffington Post and all things Arianna. On a recent morning there, we sip pomegranate juice brought in by a housekeeper. Huffington was just wrapping up one of her radio broadcasts. A microphone is on the coffee table in the seating area next to her massive wooden desk. Books are everywhere. Her makeup artist is just leaving. Her usual desk chair has been replaced with a large leather recliner to help elevate her broken foot.

Soon she will catch a flight to New Mexico for the day to shoot a scene in a movie, "Swing Vote," in which Kevin Costner plays a man whose vote will determine the closest presidential election ever. Huffington plays herself. "I have a sex scene with him," she says. "Just kidding."

Up a circular staircase in her double-height study is a gallery and a hidden door to a large room where at any given time three or four twentysomething Huffington Post employees toil away editing blogs and trying to get a handle on their boss's schedule. The longest-serving among them has been working here since December. Andrew Breitbart, who helped launch the Huffington Post and now works for the Drudge Report and runs the news site breitbart.com, says Huffington is a demanding boss from whom he learned a lot. "I was with her for about two years, and that might as well have been 200 years in Arianna-time," he says. "It's a very intense experience."

Lerer says it is now up to Morgan, the company's first real CEO, to figure out the next move, which could include bringing in a media or Internet company as a partner after the election. No one is talking about selling outright, although one person in the venture posited that at this bubbly moment the site could already be worth north of $100 million. (A top dealmaker at a media conglomerate was doubtful that the site is worth close to that. Asked if Huffington could get a huge payday from this someday, Lerer says, "It sounds horribly arrogant if I say yes.")

Perhaps the only thing missing is what Huffington is now preaching -- more balance. In May, the utilitarian-looking site was redesigned to emphasize its ambition to be much more than a site about politics, a subject area that has limited appeal to advertisers. The site added a "Living Now" section offering blogs and articles on such fare as spiritual growth and healthier living, which neatly ties into Huffington's own touchy-feely bent. Her latest book, published last year, is On Becoming Fearless: A Road Map for Women a subject that has made her a popular inspirational speaker.

Her message when she speaks about her emergence as an unlikely queen of the web is partly cautionary. "We need to take time out of our day and recharge," she says. "I pray every day for one hour, except when I'm really busy, I pray for two."

Can the dervish Huffington keep up the pace? It's a personal question as well as a business issue. "The question is sustainability," says Fine, the publishing analyst turned teacher and HuffPo contributor. "You see sites like this become very popular, but it's popular till something else is more popular." For the moment, at least, the Huffington Post is a case of near-perfect casting. Deadpans Al Franken: "This works slightly better than her run for governor."  Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.