Betting on Hometown to Reinvent Local News
In early March, we closed on a new pre-seed investment in Oakland-based Hometown, an exciting startup that is taking on the momentous task of reinventing local news. In the month since, as COVID-19 began to disrupt every aspect of life as we knew it, the need for trustworthy, reliable local news sources has become even more relevant. Like many others in the Bay Area, I’ve spent a disproportionate amount of my time refreshing East Bay Times or other news sites and putting up with pop-up ads, auto-play videos, and clickbait to find the latest news on the shelter-in-place orders and updated coronavirus stats. While CNN, WSJ, and NYT are all great for national news, the recent pandemic has reminded us all of the importance of high quality local news reporting. In fact, while all online news consumption has been up during the crisis, local news has seen the biggest uptick (see below).
Despite the importance of local news for a well-functioning society with an informed citizenry, local newspapers have experienced a precipitous decline in the last two decades as their main source of classified ad revenue has been siphoned off by online players such as eBay and Craigslist. Meanwhile, their move to embrace digital content has largely failed, with the majority of local news sites providing an abysmal online user experience due to pop-up ads, clickbait, and paywalls, while online ad revenue has been mediocre at best. The result has been the closure of 20% of local newspapers in the last 15 years and the emergence of over 1,300 local news deserts where citizens, often lower income, have limited or no access to knowing what’s happening in their communities. Interestingly, while national news organizations have fared somewhat better, local news boasts a higher level of trust among readers.
Hometown aims to breathe new life into local news by dramatically improving the user experience, making local news more relevant and targeted, and rethinking the business model. Hometown is taking a user-centric approach to building a mobile-first, ad-free product that is easy to use and elegantly packaged. One of Hometown’s key product innovations is the Storyline (see below), which enables users to follow a topic that appeals to them and get quick and timely updates. Great examples include getting updates on when the city plans to pave your street or information on local ballot initiatives and candidates, which otherwise require a lot of manual searching online.
Hometown’s product is underpinned by sophisticated algorithms that are trained to crawl all relevant sources of local news, including Twitter feeds and PDFs of city council meetings, which provides relevant content in a timely and automated fashion and will enable the company to cost-effectively scale the model to 100+ metro areas over time. The company envisions local “newsrooms” in each city with a few employees and technology coming together to deliver relevant content to residents. Hometown is also iterating on the traditional ad-supported business model of local news with premium features for heavy users, a subscription model along the lines of The Athletic, and selling data and tools to cities in a B2B model. It’s still early days, but we’re confident that so long as Hometown can continue to build a product that users love (early indications are positive), the dollars will follow.
Hometown was founded by Ljuba M. Youngblom and Rick Marron who worked together at Automatic, a connected-car company where Ljuba was a co-founder and which was acquired for $115M by SiriusXM in 2018. They are the quintessential tech startup founding team: Ljuba is a second-time founder with business savvy, significant product chops, and experience building organizations, while Rick is a talented technologist with years of experience in software and data analytics. Ljuba and Rick are product people through and through, but also bring a deeply-rooted commitment to the mission of fostering local democracy and community. At Better Ventures we believe that mission-driven founders and businesses outperform. We have a high level of confidence in Ljuba and Rick’s ability to both create a local news product that consumers love, and to build a successful and highly impactful company.
Reviving local news represents an enormous opportunity to level the playing field while creating better informed citizens who are more likely to get involved in efforts to improve their communities. We’re excited to be part of Hometown’s efforts to address these big challenges.
