Recently, in a big splash, FreightWaves sold off its media division to CEO Craig Fuller, who then merged it with his Flying Media Group to form Firecrown. The SaaS portion of FreightWaves quickly became SONAR. Earlier in the year, FMG acquired FindaPilot.com, making it about 35 acquisitions for Firecrown in the last three years.
Acknowledging these giant steps in the B2B media ladder, we reached out to Fuller to examine more closely his thought process for these deals and what he sees in the future. We’re very appreciative of his taking the time to respond for a great Q&A.
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Fuller will certainly be one of the many centers of attention at BIMS 2024,
Feb. 29 – March 1 at the Loews New Orleans Hotel.
While his session is titled Using Content to Drive Commerce,
we’re sure he will be talking about much more,
given all the recent activity. There’s still time to register!
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SIIA Media Alert: You’ve developed all kinds of intriguing business ventures and ideas that are offshoots from the media content. The aircraft financing operation, for example. Can you give us an update on them, including opportunities with the former Bonnier Marine group and with the FreightWaves media unit?
Craig Fuller: [In the] Aircraft Marketplace & Finance [sector]: We have been building a large platform to help buyers and sellers of used aircraft research, appraise, and transact. Over the past two years, we’ve acquired eight different aircraft marketplaces, and we are now the second-largest platform for selling used aircraft in the world. We have connected our aircraft marketplaces with our extensive library of content (dating back to 1927 across over a dozen titles), so the user can research any aircraft make and model, with editorial reviews, accident reports, and performance intelligence.
Additionally, we introduced a pricing assessment solution in our marketplace, which was inspired by Zillow’s Zestimate, to inform aircraft owners, buyers and sellers about current market valuation. There is an aircraft data subscription offering to come from the data we are collecting.
All of this was done to create a platform that helps used aircraft buyers and sellers research, appraise, and transact. Quite often, if someone wants to buy an aircraft, they are also looking to finance the airplane. We acquired a finance business to facilitate this last July. Our finance business has grown by 6x since we acquired it.
E-commerce: We’ve acquired three e-commerce businesses, all tied to aviation. One of them is a print on-demand merchandise business for pilots, providing custom t-shirts, phone cases, hats and other products for over 2,000 makes/models of aircraft and 19,000 airports. That business is up 12x in its first year of ownership.
We acquired a die-cast, aircraft model store that features many of the world’s largest airlines. It took us a beat to get a handle on this business, but we have doubled it in the 8 months we’ve owned it. In late January of this year, we acquired the largest NASA e-commerce gift store. The site offers NASA mission patches, models, t-shirts and other gifts that “space nerds” care about. The overlap of airplane nerds and space nerds is quite large. The site had an email list of 45,000 customers, and we plan on creating a space media property from this community. This time, rather than having a media property that brings us into a commercial opportunity, we are using the commercial property to create a media property.
Real Estate: We have two real estate properties that are under development, both connected to aviation.
The first is known as the Fields, which is a 1,500-acre, master-planned resort community for pilots. The whole project will be a billion-dollar property once it is completed over a 20-year timeline.
Pilots will be able to fly their aircraft into the Fields on a community runway and park their planes directly at their homes. Our plans are for over 212 aviation-connected lots, priced at $600,000 per acre. Our plans are to break ground in May of this year, but we’ve already had 29 buyers that have pre-purchased lots priced at $13 million.
The Fields is located in East Tennessee in one of the most gorgeous valleys in the South. There are four streams, three miles of rock cliffs and a river. The property will include a resort hotel, restaurants, an equestrian park, mountain biking trails, rock climbing walls, fishing, kayaking, boating, hunting, and other outdoor activities.
We already own a fishing magazine and a nationally broadcast TV show that is perfect for helping to promote the Fields. We are actively looking for magazines that we can tie into other activities at the Fields, such as 4×4 off-road, equestrian, mountain biking and rock climbing.
We also have closed on an airport that is also in Tennessee. We plan to build townhomes for pilots on the airport footprint. This 70-acre property will be a $60 million project once completed over the next decade.
Subscription Data SaaS:
FreightWaves was never meant to be a media company. We created FreightWaves Media to promote our SONAR SaaS product, which provides high-frequency data to global supply chain decision-makers. The media business turned out to be incredibly successful and in the process also created a $30 million subscription data product last valued at over $300 million. We’ve now split the media and SONAR businesses into separate entities to allow SONAR to thrive with a management team solely focused on data and market intelligence.
SIIA Media Alert: What other kinds of non-conventional businesses do you anticipate creating from the media brands? Why don’t other media companies pursue these initiatives like you do?
Fuller: We are always looking for new types of businesses to connect to our media properties. We would love to create a subscription data business from our aviation and marine businesses. We are also building out a platform to help pilots advance their careers, including continuing education, job matching and other resources.
I think it requires an orientation based on a concept that I learned in dealing with venture capitalists—the concept of asymmetric risk. If you are wrong about an investment, you are out the amount of your investment. If you are correct, you have the potential to build something that is 10x to 100x greater than your initial investment. That risk-reward potential is an area that I thrive in, although many would not.
Also, if you are private equity-funded, following that concept is incredibly difficult, as these companies are measured on their return on capital. Bets that go south can be detrimental to this model. For bootstrapped businesses, the issue is harder. Media businesses have limited capital for speculative investments; this prevents them from taking chances on new ideas or concepts with unproven outcomes.
SIIA Media Alert: Is part of the reason for this restructuring/divestment the need to focus on what is now a much larger media portfolio?
Fuller: That is part of the reason. However, the main point is that SaaS businesses and media businesses trade at two different multiples and require an entirely different approach to how you run them. Our primary goal is to maximize value for our investors. Our SONAR data business was facing a “conglomerate discount” because of the large scale of our media business. By separating the media from SONAR, it can now trade at a pure play SaaS multiple, with a management team focused solely on scaling the SaaS business.
For media, the goal is to merge resources into a much larger platform. There are so many resources that FreightWaves brings to Firecrown. Over the last several years we built one of the best digital media platforms and teams in all of B2B. That same team is now thinking through our aviation and marine opportunities in the same way that they focused on supply chain.
SIIA Media Alert: If so, would you delegate the day-to-day management of SONAR?
Fuller: As a founder, my number one priority is to develop the management teams that can execute the strategy and vision of my businesses. For me “day-to-day” means working with these leaders to think through opportunities and challenges.
SIIA Media Alert: In terms of ownership structure, FreightWaves lists 12 VC firms among its investors. Does that change in any way now? The press release mentioned that you acquired the FW media group, suggesting to us it might have been an outright acquisition by you without backing.
Fuller: FreightWaves is now two companies—FreightWaves Media and SONAR. The business that the investors backed is SONAR, our SaaS data offering. No shares were sold during the transaction. I also have kept 100% of my shares. In fact, I have never sold a share in SONAR.
I acquired FreightWaves Media without any backing, using my own money. This is a win-win for everyone involved. The media team gets a great deal more attention and focus to execute our media plans. The SONAR team also gets much more focus and greater resources dedicated to executing our data plans. FreightWaves Media will continue to evangelize the SONAR data and provide top of funnel prospects.
Our investors will benefit from a much more valuable pure-play SaaS business.
SIIA Media Alert: Did ownership evolve with the bolt-on acquisitions made by FMG and the more recent acquisition of the marine group?
Fuller: Early on, I provided the majority of funding for FMG. I had two investors that also invested with me. We have been using a combination of my own funds and bank debt to fund many of our acquisitions. This helped us achieve initial scale.
My father didn’t invest in FreightWaves when I founded it and regrets it to this day. However, this past summer, my father sold the company he founded in one of the largest mergers in trucking history and we created a family office out of it. When the marine acquisition opportunity came up, he decided to participate. I brought him in as a minority partner. (He now owns 25% of the company).
But more importantly, we set up a high-yield debt instrument whereby Firecrown can borrow from the family office to fund acquisitions very quickly. For example, we did the marine deal in less than six weeks from start to finish.
The debt is expensive, but it can be drawn quickly, doesn’t require typical debt covenants, and more importantly, my father isn’t going to break my kneecaps if something goes wrong. And it is not dilutive beyond the initial 25%.
We have an internal hurdle rate that we use to ensure that we clear the family’s high-yield debt and pay that down quickly, so we can refinance with bank debt and build equity in the business. This enables us to fund our acquisitions and internal product development without requiring outside capital. It also allows us to move very quickly, since we have an open window to call funds. It is far easier and quicker than raising institutional capital.
SIIA Media Alert: Is the $50 million revenue projection an increase from what those entities were doing as stand-alones under different owners?
Fuller: Our aviation business grew by over 50% organically in 2023. We expect that rate of growth to continue in 2024 through the introduction of new product offerings and better sales execution. We expect the marine business to grow by 20% in the second half of the year because we are still integrating it into our platform.
SIIA Media Alert: How about growth projections for both entities? Where do you see revenue for these businesses in, say, two years?
Fuller: We are very bullish on the future for all of our segments. We have chosen specific markets—in consumer where the audience represents affluent enthusiasts. These are aspirational.
In B2B, FreightWaves covers a market that is constantly evolving and subject to disruptions. The global supply chain is going through massive change and disruptions, as companies reconfigure their sourcing away from Asia and back to the Americas. This will make the news and data that FreightWaves and SONAR offer far more important in the future. Over the next decade, SONAR is easily a $100 million dollar data subscription business, with a shot to far exceed this.
Our goal for Firecrown is to grow to $100 million in revenue by the end of 2026 and $1 billion by 2030. We believe that a combination of organic growth and M&A makes this very possible.
There are a lot of small publishers in the market, which have fanatical audiences and wonderful content, but because of the lack of buyers have not had the opportunity to exit. We believe we can provide that option for them.
We have a playbook that works and want to continue to grow into new verticals and find new ways to serve highly-engaged audiences with compelling content and identify products outside of media that we can offer those audiences.
Thanks Craig! We look forward to seeing you in New Orleans later this month.
