The invitation-only subscription magazine for the super-rich
Spear's Wealth Management Survey has confounded the critics. After surviving 'a very hairy financial roller-coaster ride', publisher William Cash reveals the secrets of its success
Monday 30 July 2007
Spear's what? It won't work," replied of one of Condé Nast's highest profile editors after he asked me what I published. It was a Saturday early last June and the champagne was flowing. I was lunching in a box at Royal Ascot as a guest of Bentley who had invited a small group of VIP hacks to enjoy the racing – chauffeured up in Bentley Continental GT Coupés, of course.
I went on to explain to this glossy editor that Spear's Wealth Management Survey, which had only been launched two months before in April 2006, was different from any other magazine targeting the growing army of super-affluent UK readers in that it wasn't available on news-stands. Our distribution was to an exclusive database of the 30,000 wealthiest, most successful and influential people in the UK: from Rich Listers to royalty; hedge fund managers to serial entrepreneurs; oligarchs to internet moguls; cabinet ministers to Sir Alex Ferguson. "You can't just walk into WH Smith and buy it," I said.
The editor took a swill of champagne and looked at me quizzically. "You mean it's free?"
"No," I said. "It's only available by subscription invitation and costs £25 a copy."
At which point he looked at me as if I was truly mad and started talking to our host from Bentley.
To be fair, he had a point. Anybody who launches a magazine in today's highly competitive market has to be partly crazy. Especially if they are a journalist (in my case, a former foreign correspondent for The Times and The Daily Telegraph in America turned magazine writer) without any investors, without the least experience of consumer or business publishing, who has never set eyes on a set of management accounts, has never been near a printing plant, or a repro house, and who thinks a "liquidity event" is a lunch at Soho House with their editor.
Such were my qualifications when I decided to launch Spear's WMS last year. But I knew there was no other magazine that was talking to the growing high-net- wealth (HNW) community who were descending on London. With UK assets under management having risen to over £380bn, and London (dubbed "Switzerland-on-Thames" by Spear's), the idea was to create a New Yorker-style wealth management magazine that spoke to HNW readers in their own language – with articles by witty and engaging writers, from Peter York to Martin Vander Weyer, on the best tax lawyers to best private bankers in Lichtenstein. Instead of boring readers with worthy articles about "good family planning" (that means who gets to inherit what in HNW-speak) we wanted to make the prospect of being super-wealthy at least partly enjoyable.
The HNW community, I realised from my experience of writing about the super-rich for the Evening Standard's ES Magazine, (being married to a luxury goods brand heiress provided some useful insights as well) had particular needs and issues that nobody was catering to.
Spear's launched last May – with a party in the HQ of HSBC Private Bank in St James's where Prince William once worked – with a start-up budget of around £150,000. We were a year ahead of Condé Nast launching Portfolio (their new finance magazine) out of New York with a budget of around $130m. Much of our budget went on mistaken hirings and building our exclusive database of 30,000 HNWs. Financial data companies are expensive but worth it. Companies House was a treasure trove of information and we trawled newspapers for anybody who was selling their business, movers and shakers, from football team owners to property moguls.
Why some new magazines commercially surf the zeitgeist while others – like James Brown's ill-fated Jack – crash is a tricky media science. Earlier this year Tina Brown gave an interesting talk in London. She discussed why Talk, her New York start-up glossy magazine, which tried to rival Vanity Fair, failed. The main reason was that her backers – the Weinstein brothers of Miramax fame – didn't have the same financial balls as the Newhouse family who had stuck with Vanity Fair even when it was losing millions by the month.
The Sportsman, a British sports betting paper backed by the likes of the Irish tycoon Dermot Desmond, folded after six months despite having raised £12m. "We were just starting to make a profit and turn the corner," journalist turned publisher Charlie Methven told me. "Some of the investors just didn't have the stomach for the long term."
My theory is that the more money raised pre-launch, the less likely an independent title is to succeed. The Sportsman's decision to spend weeks moving into fancy offices and doing endless dummy editions was money wasted. We never had any money to waste so we just got on with it. We were helped by a brilliant sales head called Wendy Coumantaros who has no reservations about calling up the CEO of a private bank at 7am on his mobile.
I know the title Spears WMS sounds a mouthful but having the golden phrase "wealth management"' was critical. With private banks marketing themselves as luxury brands – see the new Barclays Wealth campaign – I knew from my contract publishing experience in the high net wealth sector that advertisers (and agencies) understand super-wealthy consumer readers (their Holy Grail) are not going to drop by WH Smith to buy a personal finance mag. So, much better – as Spear's does – to put 10,000 copies per issue into BA First Class and Virgin Upper Class lounges and those of other leading airlines for a fraction of the cost.
What I knew – from my experience as a contract publisher of Annabel's Magazine which published the pilot edition of Spear's as a supplement in 2005 – was that while trying to extract advertising out of fashion houses and luxury brands can be like trying to squeeze Charlotte Church into a sample dress, there are an entire cohort of private client financial services companies – private banks (loads of them), asset management firms, lawyers, HNW insurance companies, off-shore tax advisors – queuing up to spend money targeting the UK's fast-growing HNW community.
They didn't like to advertise in retail glossies such as Tatler, Harper's or even The Spectator or FT because they were too mass market (Condé Nast titles are largely aspirational) and could pollute their discreet and elite image. The private banks didn't care that the circulation of the pilot was only 15,000 members of the Annabel's clubs group – it was who they were reaching that was important.
The key to the success of Spear's is that it is not aspirational. What I realised from contract publishing is that a publication sent to the homes and offices of the super-rich – from Philip Green to Arkie Busson – is far more appealing to many advertising brands than blindly spending £15,000 per page on a glossy retail title that is largely read by would-be post-Sloanes and patients and secretaries in Harley Street waiting rooms.
The Spear's wealth management pilot edition – with articles ranging from why not to get divorced in London by the lawyer Sandra Davis to a survey of the best private security firms – pulled in nearly £95,000 in advertising in about two weeks, making a gross margin profit of almost 65 per cent. I knew we were on to something when, shortly after it went out, I got a call at 9am from a distraught sounding Annabel's member whose housekeeper had mislaid his copy.
"I am thinking of getting divorced and the article by Sandra Davis has scared the life out of me," he spluttered. "I'm sending over my driver right now. Can I have six extra copies?"
Six months later we launched Spear's WMS as a stand-alone proprietory title with a circulation of 30,000. We knew retail would be a disastrous idea – so we decided to go down the subscriber route, charging £175 a year (discounted to £100) for just four issues.
Sounds a lot? That's the whole point. If you look at the cover price of hedge fund journals they cost between £50 to £100 per issue. And, of course, most of our super-rich "subscribers" are people we have simply given "complimentary" subscriptions to. Do you think somebody like Roman Abramovich is going to call up our Notting Hill offices with his credit card number to take a subscription? Of course, not.
My journey with Spear's has been a very hairy financial roller- coaster ride that ended up costing me my marriage and making me homeless (sleeping arrangements ranged from Elizabeth Hurley's bunk bed to the office sofa) for three months while I negotiated a possible sale with the likes of Andrew Neil over a bottle of red wine in The Business boardroom (the Barclay family are looking to expand their magazine titles).
Another negotiation was with a secret emissary from the billionaire Holzbrinker publishing family (the Newhouses of Germany who bought Macmillan and own various newspapers) whom I met furtively in the Notting Hill Starbucks. Finally I ended up selling to Luxury Publishing, which is backed by a US private equity fund called Nectar Capital.
I did the seven-figure-plus deal because it allowed me to keep 30 per cent of the title as we roll the wealth management media brand out globally. And they are putting in another £1m. So hopefullly, in a couple of years, when Nectar want to sell to one of the global publishing big boys, there will be another "liquidity event". At least I know what that means now.
Oh, and the above-mentioned Condé Nast editor is now publishing a major article about what in his next issue? Yep, the wealth management boom. I know, because his deputy came by for a chat and left with his briefcase stuffed full of Spear's WMS.
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