Greetings and Salutations,
The dust is finally settling from a wild first half of the year. So let’s get everyone
caught up on what’s happening and what’s changing in Onionland. Please try to get through
the entire note as it all relates to the company’s growth and change and sooner or later
it’s likely to affect you. I look forward to all of your comments/questions/general input
in response to this update.
REMEMBERING PLANS A, B AND C
It’s been almost one year since we learned that we would not be selling the company. At
that point, we discussed three different Plans (A, B, and C) for the expansion of the
company at the staff meeting in Madison. To review, Plan A was to continue the process of
selling the company to an entity with strong connections to the entertainment industry and
the media we operate in and wish to operate in. Plan B was described as hiring a new team
of managers and executives to run the company. Plan C was to grow using the staff and
resources we have and make the most of it on our own accord.
Regardless of which plan seemed most agreeable, we were to form an internal Onion managing
board made up of editorial, production and business staff to increase communication
throughout the company and discuss operations. This board met in November, December and May
and will meet again in the next 30 days. The meetings have been long and exhausting but
generally productive and meaningful. I extend my appreciation to everyone contributing to
these meetings (Chris, Andrew W, Stephen, Rob, Todd, Carol, Mike and Ryan). I think we’ll
find that a quarterly schedule of the meetings of the Onion managing board will be
sufficient. A schedule on the order of May, August, November and February seems about
The assessment of the best plan to follow, after a year of operations, is to grow the
company in a manageable fashion and preserve the soul and quality of the Onion while
keeping our options open. This means adding all levels of staff to assist in the process
(management and executives included), raising money and raising the bar on how we conduct
business. Taking any of the Plans individually as discussed won’t meet the principles
necessary to keep the Onion afloat and moving forward. Plan A gives us no significant,
on-going input and too much uncertainty over the product and quality control and
preservation. In addition, the last year has been about the worst possible time in years
that we could ever be trying to sell the Onion given the economic conditions, advertising
downturn and Internet implosion. Plan B is important, desirable and unavoidable as we grow,
but is no real viable “plan” on it’s own. Hiring managers and executives is a matter of
careful integration. Plan C is already proven impossible because of the need for more
financial resources and the desire to grow faster than we can on our own.
The result of all these conclusions/realities was that “Plan D” would have to be created as
an achievable hybrid of the first three plans. Putting the variety of desirable elements
from each plan together, here’s what we have moving forward.
[From Plan A] We would like to keep our options open regarding the possible sale of the
company to a highly desired and qualified buyer. That means that we have to maintain our
accounting programs and practices at a level high enough to present our detailed financial
picture to any interested party at any given time. It also means that a working business
plan with real budgets and projections will have to be maintained. Onion, Inc. will always
be in position to take advantage of a selling opportunity if all the circumstances are
right. We are prepared for these situations with our improved accounting, bookkeeping and
financial practices. [Plan B] As part of the working business plan, we have built an
organizational chart for the business department and identified positions that need to be
filled for the Onion to be able to hit our sales goals and projections for Print, Internet
and Radio advertising. These positions include sales managers, local and national,
marketing experts, finance managers, merchandise experts, and seasoned business people.
Most of these positions are new to the Onion and will take time to hire and be effective.
[Plan C] So, maintaining operations on our own is going to require considerable financial
support and resources even if we are to pass the baton to executives with more worldly
business experience. So, with no further ado, I’ll start bringing you up to speed on how
Onion operations are developing in pursuit of Plan D.
To get things done in this life, it takes talent, determination and lots of time or money.
Since talent and determination are bountiful, and we’ve spent a lot of time on this already
[next week marks the beginning of our 14th year of publishing the Onion], then money would
tip the priority scale in its favor. Raising money for a company that is losing money in a
bad economy and a weak advertising market (and a weaker Internet advertising market) is not
exactly easy. This was the single toughest and most pressured task I’ve ever attempted in
all my days. And I have a fine case of the hives to prove it. However, some things for the
Onion just seem to happen in due time. At the eleventh hour, we raised enough working
capital for Onion, Inc. to operate for what appears to be enough time to weather the
economic and advertising storm while implementing Plan D to the best of our abilities. This
feat took a great team effort from Chris, Matt Astbury, Kari Birney, my good friend,
confidant and new Onion Financial Officer, Tim Carroll and our new corporate attorney and
fine businessman, Robb Risch. And as you’ll realize, Scott Dikkers was generous, kind and
true in the opportunities he allowed us to get an arrangement together that benefited
BRINGING IN DAVID SCHAFER
Here’s exactly what happened in buying Scott out and raising money for the company. By way
of a loan from our new investor, David Schafer, Onion, Inc. bought Scott’s voting shares
back at the end of July. David, a very successful New York businessman, all-around good guy
and fan of the Onion, then bought Scott’s voting shares and some non-voting shares at a
price that netted Onion, Inc. a sizable amount of working capital. With some real working
capital in the door, the Onion has the money to move operations forward while remaining
virtually debt free in the short term. Now, we can proceed with strength and speed in the
hiring processes, get the NY edition off the ground, improve our business practices and
infrastructure for all operations per the business plan.
I’ve spoken with a few staffers and shareholders about Mr. Schafer and many of the same
questions keep coming up. How will he be involved? Will he be on the board? Is he going to
be breathing down our necks for nothing but profits? Does he want to flip the company and
sell it for a quick buck? Are we going to meet him? These are all legitimate concerns and
questions and many of the same ones I had asked in previous meetings.
The great things that struck me from the beginning about the possibility of working with
David Schafer were; 1) he understands our quirky company and knows that we need some time
to get to a higher level of operations and sales, 2) he has a simple investing philosophy
of buying right and allowing the value of a company to develop over time and 3) he liked
the business plan we wrote which pretty much contains all the concepts of plans B and C as
we have discussed. Also, David told me in early on in our discussions that he only wants to
get involved in projects that he can appreciate and enjoy. In other words, he’s willing to
see us through the long haul. Needless to say, we have a big fan in David Schafer and he
wants to see us reach our potential. And make a bunch of money! This is far from a
philanthropic gesture on his part. He fully expects us to obtain the sales and revenue
numbers we laid out in the Onion financials and keep the expenses in check according to the
budgets and turn profitable inside a year.
I believe that David brings much more than just financial resources to the Onion. He’s a
sharp businessman. He’s well-connected in NY after working there over 25 years. He’s going
to open some important doors for the Onion. He and I have talked about building an Advisory
Board that would function in addition to the Onion management board as a business
think-tank for future moves . The Advisory Board would be a combination of professionals
with a variety of perspectives from finance to advertising and corporate structure to
publishing and sales to merchandising. As yet, the Advisory Board is in the conceptual
stage and has not added any members officially. This board will likely be Schafer’s place
and point of influence at the Onion. He’ll also be following the finances of the company
very closely and meeting with me periodically. We’ve discussed expenses and budgets and
accounting practices so that we can closely monitor and analyze our spending and revenue
Obviously, everyone would like to meet Mr. Schafer and hopefully, we will find a date and
time soon for a gathering.
THE ONION GETS A FINANCIAL OFFICER
I mentioned earlier that I had brought Tim Carroll in to assist us from a financial
management angle in preparing The Onion business plan for investors and future operations.
He was very instrumental in restructuring our books for presentation over the last several
months and in preparing budgets and projections. He will be employed here at the Onion as
our financial officer. He oversees all financial aspects of the company both internally
(budgeting, financial planning, accounting, financial analysis, cash flow
management, reporting) and externally (maintaining relations with investors, raising new
money when needed, preparing the company for sale or going public). Tim will be working
closely with Chris Cranmer, the business staff and myself.
Tim lives in Dallas, TX and has a Masters degree in finance and marketing. He worked with
GTE for 13 years with the bulk of his experience in business planning and development. Tim
was my manager at the Daily Cardinal for about a year back in college and got me into the
business. And just in case you think I’m playing favorites and he’s just a friend, Tim is
the guy who fired me from the Cardinal later that year! He also introduced me to Tim Keck
for the first time. He’s been following the Onion since it started and has informally
consulted with me all along. I’m making him part of the team because he has an
extraordinary amount of business talent and vision and communication skill. We’re very
fortunate to have him on our side.
Tim’s first mission is to update, organize and improve our internal accounting systems and
monthly financial statements. In order to do this, we’re getting new accounting software, a
sharp, new sales and database program and customizing our reports for greater a much better
understanding our businesses. We’ll be getting a couple of PCs to run the new business
software on and customizing programs to meet our reporting and invoicing needs. Our goal is
30 days for the Onion to have a whole new world of meaningful numbers.
Then he’ll continue helping us coordinate budgets, sales forecasting, interpreting and
analyzing results of operations, and again, customizing the reports we generate each week
and month to track our progress closely. Tim will also contribute to reorganizing the sales
department and building it into a national force and completing marketing ideas. With his
education and work experience, Tim will no doubt add a dimension to the business we have
BUILDING THE SALES FORCE
Since the beginning of this year, our financial crunch has halted progress throughout the
company. It affected office build outs in Madison and New York, hiring of sales reps in New
York, Madison and Milwaukee and the hiring of national sales reps to help sell the Internet
and the Onion Radio News. Now that we can move forward, the structure of the business staff
will change. We’ll be hiring the staff we need at every level of business and the managers
and interns to work with them and assist in the process.
The Onion needs to have a major sales force in place. After all, the sale of advertising is
how we derive about 80% of our revenue. Our plan for the growth of the sales department
includes not only restructuring the organization and adding sales reps everywhere but also
to obtain the resources and flexibility we’ve been lacking for more effective print and
Internet sales. We’re going to have to customize programs and try new things in order to
obtain business from advertisers in this buyer’s marketplace. This means we’ll be asking
for much cooperation from editorial and production in the coming months so that deals can
ADDING SALES RESOURCES
The Onion sales team is in great pursuit of better and more credible sales materials. We
need a more thorough look at the reader, finer presentations, recent and regular updates
and high-quality tracking, delivery and reporting systems. We need help desiging sales
materials and promo pieces that are exciting and different for the advertiser and agency to
look at. We have a great, award-winning paper and business and our sales materials are
lulling them to sleep.
We’re getting a new ad serving system for the Internet called Ad Juggler. Ad Juggler will
make serving flights a breeze and maximize efficiency on our servers. The software should
be set up by the end of the month. We’re also getting a new Internet demographics company
to get us more information on the demographics and habits and particulars of our readers.
In addition to conducting regular reader surveys on line (twice annually).
We’re officially auditing the circulation of the newspapers in each city this Fall. An
official, third-party audit will give us needed credibility with national advertisers in
the evaluation process of our fine publication. It will be neat to have that little logo in
the bottom of the staff boxes. VERIFIED!
The Onion needs to know more about its readers and needs that information documented and
validated. So we’re going to do this a couple of different ways. First we’ll be subscribing
to the Media Audit again. A questionable source but the one that may come through for us
when it comes to selling the tobacco and liquor companies ads next year.
I’ll be looking to the writing staffs to help assemble some sort of an editorial calendar
so we can be in the know when a “best of” issue is on the way or when we can count on a
Summer Music Guide, etc. And compete with the other papers in the market more effectively.
As we all know, much attention and resources were given this year to getting the comedy
staff to NY. The Onion, rightly so, invested a lot of money in moving, raises, offices and
new positions so that the comedy staff can continue to grow media relationships in New
Now that Editorial is settling in to the big city, we need to put as much, if not more,
resources and attention to the Business staff. We need to develop corporate partnerships so
that the Business of the Onion is as successful as its product. To do this, we need
cooperation and respect, in and among, all departments.
With that will come expectations of excellence that have not yet been enforced in every
department. We all know there is always room for improvement, and while some departments
need more than others, we are going to expect that step-up. We will not tolerate
mediocrity. More discussion of expectations of employees and departments will be discussed
at internal board meetings.
• BULLET POINTS •
• The street date for the New York Onion is confirmed for the 27th of September. Come what
may, THE ONION is on the streets of Manhattan and Brooklyn starting the last issue of
• Our circulation manager in New York is Paul Millman. He is working with an assistant
named Erik Burnstein. They are handling everything from ordering and getting boxes and
racks out to obtaining permission from local establishments for distribution. We are just
completing the one-sheet and map for NY distro and it is available for all to see.
• We have two new reps starting this month in NY. Heather Locraft and Jeff Canzona. Heather
has started training. Feel free to send a “welcome” email to her at email@example.com.
Jeff will be working immediately, but will make his first appearance in the NY office
• Dispatches from the Tenth Circle, The Best of The Onion is in stores September 4th. In
promotion of the book, Rob Siegel is booked on The Conan O’Brien Show September 17th (ish).
The book is amazing! There will be plenty of copies in all offices next week.
• The San Francisco sales operation is on hold for now until we stabilize our business. The
plan is still to open in more cities and to do so as resources provide and as the business
• The Madison offices will be in a new and improved location as of the 1st of September.
The new address is 131 W. Wilson Suite 1201, Madison, WI 53703.
• The Chicago office is expanding to include 4 new office spaces and two new parking spots.
Ryan is back in Chicago and Keith Phipps and Phil Meier will be moving there next month.
• New York is getting a new mailing address/PO Box for fear of the crazies visiting
regularly. This will be announced as obtained.
•The Onion is making its first movie! We will be signing a deal with Fox/Regency Films to
write and produce a low-budget sketch comedy film with one of the famous Zucker Brothers
(David) as producer. I’ll let you know more on the schedule of things as we get the
details. No, this not part of the Miramax arrangement. We have, indeed, already begun
pitching them ideas but this sketch movie was in the works before we got in bed with Harvey
I look forward to your comments.