Amazing story of BI’s Henry Blodget: From Wall Street Exile to Media Mogul

The rehabilitation of Wall Street’s fallen dotcom icon will inspire everyone who needs a second chance. In the late 1990s, Henry Blodget was the brightest of the investment analyst stars at then Wall Street giant Merrill Lynch. A former journalist, his skilful application of exuberance and excellent communication skills fed hype around investment into the discovery of our lifetimes – The Internet. A positive report from Blodget was enough to send share prices soaring. He was the guru of gurus – or the one eyed man in the market’s greed-induced blindness. When it all came crashing down in January 2000, scapegoats were required with the unfortunate Blodget singled out. His crime was that he was found to be privately sceptical about some very publicly expressed bullish opinions. That was enough for ambitious New York attorney-general Eliot Spitzer (himself later disgraced) to bring charges that banished Blodget from Wall Street. So Blodget started again in digital media – with spectacular results. – Alec Hogg   

Henry Blodget - being banished from Wall Street was the spark that turned him into a digital media mogul
Henry Blodget – being banished from Wall Street was the spark that turned him into a digital media mogul

By Matthew Garrahan in New York

Henry Blodget is a dotcom bubble survivor who turned Wall Street exile into digital gold. Twelve years after the former analyst was barred from the securities industry following the settlement of civil fraud allegations, he has sold Business Insider in a deal that valued the website at almost $390m.

The size of Mr Blodget’s stake is unclear yet as one of Business Insider’s three founders, he is due a hefty payday. He is not planning to go elsewhere to enjoy his spoils, though, having signed a long-term contract with Axel Springer, the company’s new owner. He will stay with the company “indefinitely” as chief executive and editor.

Read also: The reason Japan’s Nikkei paid R16.4bn for FT: its digital strategy

Business Insider has built a large audience of readers, launching sites in multiple international markets, diversifying into technology coverage and starting a paid-subscription service.

As editor, Mr Blodget shaped its quick-fire, irreverent style. He started his working life as a journalist but it was another industry that propelled him to notoriety, rising to prominence as a securities analyst during the dotcom boom of the late-1990s and riding a wave of bull market enthusiasm for technology stocks.

The Blodget family has a record on Wall Street. According to family lore, Mr Blodget’s great-grandfather was on the Trans-Siberian railway when he lost his fortune in the Wall Street crash of 1929.

Mr Blodget was to have more success – at least initially. He predicted that Amazon’s share price would rise from $242 to $400 within 12 months (the stock passed his target in three weeks) and, after starting at CIBC Oppenheimer, he quickly became a star analyst with Merrill Lynch.

But when the market crashed, Eliot Spitzer, the then New York attorney-general, began looking into some of his stock recommendations.

An examination of private emails found that Mr Blodget had disparaged some of the companies about which he had been bullish in research notes: Mr Spitzer published an email that revealed the analyst had dismissed one such stock as a “piece of junk”.

Mr Blodget did not admit the allegations but paid $4m to settle the charges (“a very painful number”, he told the Financial Times in 2013) and was barred from Wall Street.

He began looking for something else to do and returned to journalism, writing some articles for Slate, and publishing a book on investing. He also started a financial blog, which evolved into Business Insider.

The site, which began by aggregating news from other sources, expanded into original reporting, publishing quirky lists – such as a ranking of the sexiest chief executives – alongside articles.

Mr Blodget’s writing often deviated beyond core business reporting, such as a post about the bathroom practices at Balthazar, a trendy restaurant in Manhattan’s Soho. The piece, entitled, “The Awful Restaurant Practice Of Having Bathroom Attendants Who Watch You Pee”, prompted a change at the eatery, with Keith McNally, the restaurant’s owner, saying he would reassign the attendants. Mr McNally added that being given advice from Mr Blodget was “a bit like receiving a lesson in business ethics from Bernie Madoff”.

His background did not deter high-profile supporters from investing in Business Insider, with the business attracting backing from the likes of prominent venture capitalist Marc Andreessen and Amazon founder Jeff Bezos.

While woe continues to surround the print publishing industry, Mr Blodget has remained upbeat about the prospects for journalism in a digital age.

“The reason we’ve been able to do things as well as we’ve done is because everybody here is 100 per cent focused on digital,” he told the Financial Times. “If you come to it with a print mindset you’re only going to scratch the surface.”

(c) 2015 The Financial Times Ltd.

Visited 188 times, 2 visit(s) today