This article ran in CJR’s March/April 2012 edition as a sidebar to Sean Roach’s cover story on the Patch hyperlocal news network.
It is rare to find a big-company CEO as invested in a single corporate initiative as Tim Armstrong is in Patch. Then again, Patch was literally his idea. He cofounded it with Jon Brod (currently EVP of AOL Ventures) in 2007, and after he joined AOL, the company bought Patch for $7 million, although according to SEC filings, Armstrong voluntarily declined to take a profit, and chose to recoup his original $4.5 million investment in AOL stock, awarded once the divorce from Time Warner was complete.
Despite the media pile-on in recent weeks, Armstrong remains steadfast in his support of the project. “I co-founded Patch because local information and journalism improve people’s lives,” Armstrong told CJR. “If we succeed, Patch will be one of the best businesses, both from a brand and financial perspective.”
In a New Year Eve’s pep-talk memo to his team, he wrote, “We must be a culture centered on the principle of Kaizen, the practice of constant improvement—and that applies to all of our products as well as all of our corporate services.”
“Patch is not a pet project,” he told Wall Street analysts on an earnings call in February. “Patch is a business that meets deep consumer needs and advertising needs. We are serving the highest GDP towns in the United States with high-quality information and services, and we’re expecting to make a lot of progress on revenue in 2012. 2011 should also be the high-water mark for our Patch investment, and I would expect to see meaningful improvements on the economics of Patch during the year.
“We believe this is a great investment for our shareholders, and we remain very excited about the Patch opportunity.”