What a major leadership change means for Politico’s global ambitions

Jim VandeHei, co-founder and chief executive of Politico, will leave later this year. (Photo courtesy of Politico)

Politico is accustomed to watching staffers depart through its ever-revolving door. Its most prolific blogger left in 2011 to run a growing viral site called BuzzFeed. Its managing editor went to CNN Politics in mid-2014 to build out a digital juggernaut. Three top Politico reporters took their talents to The New York Times in a span of 19 months. Such departures have added periodic exclamation points to the constant churn that has become a defining characteristic of Politico.

But a coming exodus that includes co-founder and chief executive Jim VandeHei looms larger than any before it. VandeHei announced in a memo Thursday that he’ll depart after election season concludes, as will Playbook author Mike Allen. A trio of key business executives will also leave this year. Susan Glasser, editor of Politico’s Washington operation, will decamp for “a vital strategic role” in Jerusalem in 2017, owner Robert Allbritton added in a memo of his own, leaving the main newsroom in search of leadership. 

Politico has been in a period of constant expansion and rethinking since its launch nine years ago by the duo of VandeHei and John Harris. It now faces the question of whether change at the top will produce change in the operations VandeHei has spearheaded. Allbritton may offer up hints to that question in a personal address to the newsroom planned for this Wednesday.

VandeHei’s announcement stoked whispers of internal disagreement between him and Allbritton over Politico’s expansion into state capitals. VandeHei denied those rumors at a staff meeting on Friday, saying he’s eager to build a new venture once again. Harris, Politico’s editor in chief who now adds the title of publisher, also dispelled the notion that the shakeup was evidence of any broader change in strategy.

“I don’t care if people think [VandeHei and Allbritton] have a sort of rough-and-tumble relationship,” Harris tells CJR. “But I do care that there’s a sense that there’s a big strategic gap between the two, because I know it not to be the case. If there were, my own role would be virtually untenable.”

The official line is that the transition from VandeHei’s leadership “has been under discussion for nearly a year,” as Allbritton wrote last week. Anticipating his own departure, VandeHei helped put in place many of the breakneck expansion plans Allbritton will address in his talk. “Those conversations were already advanced with Jim, and have been for some time,” Harris says. 

The company’s strategy to this point has been threefold. In Washington, an army of more than 100 Politico Pro journalists provides blanket policy coverage to the political class, whose high-priced subscriptions add to revenue produced from live events and advertising in its free newspaper, magazine, and website. Politico bought the small outlet Capital New York in 2013 in an attempt to establish a similar model in state capitals around the countrry. And it partnered with German publisher Axel Springer last year to launch a Brussels-based outpost to do the same in the European Union.

The overarching goal is to draw half of the company’s total revenue from the “Politico Pro” paid subscriptions, custom-made information streams sold to lobbyists and regulators for sums that reach well into six figures. As of last June, more than 1,800 such subscriptions accounted for about 40 percent of all revenue, outgoing Chief Revenue Officer Roy Schwartz said at the time.

With a business model reliant on this elite group of deep-pocketed subscribers, Politico has grown to nearly 500 employees. The privately owned company does not make its financial performance public. But in his memo to staff last week, Allbritton said revenue has ballooned roughly seven-fold since 2008. SEC filings back then put revenue near $11.4 million, suggesting that annual revenues now should be hovering around $80 million.

Maintaining this trajectory will require more Pro subscribers in new markets. And Politico’s transatlantic blitz to reach them stands out amid most news organizations’ retreat from both international and statehouse bureaus. “We’re headed toward a large, global, interconnected conversation where politics and policy loom exceptionally large at a time where there’s no one really connecting that conversation or informing that collective group of people,” VandeHei told me last year. “That’s the new ambition for the place.”

Launched in April, Politico’s European operation now numbers about 50 editorial employees, in addition to roughly two dozen on the business side. Current and former staffers who’ve worked on the nascent venture claim it’s hitting early benchmarks for web traffic and Pro subscriptions. A recent third-party survey suggested it was the most widely read news organization for 249 Brussels “influencers” polled, though this group still ranked The Financial Times, BBC, and The Economist as having more influence in day-to-day decisionmaking.

Current and former staffers said Allbritton had a special interest in establishing the Brussels operation. In his memo to staff last week, he applauded Politico Europe’s “highly successful launch,” adding that it’s on a path to become “the continent’s most influential publication for politics and policy.” 

VandeHei has directed much of his attention to Politico’s US expansion. According to Allbritton, the management team will continue with its aggressive state capital expansion, though he was less rhapsodizing in discussing this operation.

Politico New York, seen as the model for this cross-country growth, was not profitable when I sat down with co-editor Tom McGeveran in May, nor did that seem to be a particular goal at the time. “All the decisions we make are geared toward reaching revenue neutrality,” McGeveran said then. “I’d say the runway [to profitability] has not been a particularly hot topic of conversation internally lately. We’re in expansion mode.”

The state-level push now counts about 50 journalists. Newly hired reporters in California, Massachusetts, and Illinois have launched Playbook-style morning newsletters, while New Jersey and Florida now boast full-fledged outposts of a half-dozen journalists apiece. “If [New Jersey and Florida] work, and I firmly believe they will work, you can do this in every state,” VandeHei told me last year. “Maybe our calculations are wrong. I don’t think they are.”

Of course, such states are obvious choices for the first round of American expansion, given their size, political economy, or proximity to New York. Whether there’s demand for Politico products in the likes of Mississippi or Arkansas remains an open question. For now, Harris says, early returns are “strong enough to warrant further expansion.” 

Then there’s Washington, where Politico has struggled to replace VandeHei in the newsroom since he left the executive editor’s post in October 2013. The Rosslyn office’s three arms—smashmouth news reporting, more nuanced magazine writing, and a Pro service that spans 14 subject areas—all have different styles and coverage strategies. And coordinating their distinct, yet complementary, missions requires an extra level of communication among staff.

All this comes as Politico faces increasingly stiff competition for eyeballs. CNN’s revamped politics team trumpeted 25 million unique visitors in December, more than double what Politico drew that month. Politico’s web traffic is now roughly similar to that of The Hill, a smaller publication that has put new emphasis on fast-paced reporting. A reinvigorated Washington Post, meanwhile, has changed the balance of power in who’s driving the conversation within the Beltway.

Then again, Politico focuses on a tiny group of insiders for whom politics is a business—not mass audiences. In a note to subscribers on Friday, Politico Pro assured its customers that despite instability at the top of the organization, “nothing changes for us here at Pro…Explicitly, there’s no editorial or leadership change at Pro.” 

Politico has weathered turnover before, though perhaps never in such a competitive environment. The market for political journalism is as crowded as any point since its 2007 launch, with large and small publications alike emulating the edgy, incremental coverage that has long been Politico’s trademark. More importantly, competition for labor has grown tighter as various outlets bolster their political teams.

Company brass claim that the gradual nature of the forthcoming changes will smooth the leadership transition. In his memo to staff, Allbritton cast the departures of his chief executive, chief operating officer, chief revenue officer, VP of expansion, and public face of the company as “fundamentally good news.”

“What I want above all is for Politico to work as a team,” Allbritton wrote, “an inclusive, ambitious, generous corps of like-minded people who like one another.”

David Uberti is a CJR staff writer and senior Delacorte fellow. Follow him on Twitter @DavidUberti.