Ripping up the rules of management

When Arianna Huffington launched the Huffington Post in May 2005, plenty of naysayers dismissed the conservative-turned-progressive popularist's plan to make a business out of a political blog. Such websites were about politics, not profits.

Two years later, Huffington is looking mighty shrewd. Her Huff-Po is the fifth most popular blog on the Web, according to Technorati, with about 3 million unique visitors a month. Contributors include Deepak Chopra, Nora Ephron, Al Franken, Gary Hart, and Norman Mailer. Even media critic Nikki Finke -- who called HuffPo the blog equivalent of "Gigli, Ishtar, and Heaven's Gate rolled into one" -- now pontificates on the site she once disparaged.

The site "arrived in the midst of a perfect storm for a political news and blog platform," Huffington says. It has also scored its share of political scoops; it was first, for instance, to unmask the creator of the Hillary Clinton/1984 ad mashup as an employee of an Internet strategy firm working for Sen. Barack Obama.

It's sweet vindication for Huffington's tricky public reincarnation: She was a Newt Gingrich Republican while married to Michael Huffington (they divorced the year before the former California congressman disclosed his bisexuality) and then transformed herself into something resembling a Hollywood liberal.

While the Huffington Post wasn't the first political blog, it was the first to start acting like a real business. Last summer Softbank Capital and Greycroft Partners led a $5 million round of venture capital funding for the site. "Arianna came up with the perfect model for an Internet-bred news site," says Softbank managing partner Eric Hippeau. "The site has breaking news and leads with personality -- hers and a host of others -- and then surrounds it with community. It already had all the ingredients of a successful business."

"The news business is in the midst of a major transition," Huffington says. "The days of publishing poohbahs dictating what is important are over. The future will offer a journalistic hybrid combining the best aspects of traditional newspapers with the best of what the Web brings to the table." The VC money will allow the Huffington Post to add more video and investigative reporting. In December it hired its first chief revenue officer, James Smith, formerly chief of publisher services at Advertising.com. HuffPo has begun offering integrated sponsorship and targeted video and display advertising.

Huffington says the site is already breaking even and is "tracking ahead of our initial expectations." She credits her cybersuccess to being in the right place at the right time -- and to the fact that she ignores her critics. "I don't set out to reject the prevailing wisdom," Huffington says. "I call them as I see them, and if that puts me outside the mainstream, I have no problem being there."