This story appeared in the 1/16/12 issue of FORBES.
Shane Smith is trying to order drinks. It’s not going well. “There was a bottle of red wine that’s kind of like a rosé that they chill down,” the CEO and cofounder of Vice Media tells the waitress at a retro-chic Brooklyn cocktail lounge that doubles as his company’s after-hours conference room, his thoughts victim to a boozy, just completed trip to his company’s offices in India, Hong Kong and Japan. “You know what I’m talking about?”
Vice’s Shane Smith on What’s Wrong With Canada, Facebook and Occupy Wall StreetJeff Bercovici Forbes Staff
She doesn’t. Eventually, the 41-year-old settles on a Gewürztraminer and a request. “Sometimes they make the little bread into toasts for the caviar,” he says. “We’ll get the caviar with extra crème fraîche and extra onions, and if you can just toast those little bastards, that’d be great.”
It’s an interchange that neatly encapsulates Vice. Just five years ago it was more attitude than real business: basically a free magazine for the tattoo set, where the cure for jet lag and a hangover is another drink. At Vice’s core that drink would be a can of ironically bad beer. But the company has reached a wine-and-caviar plateau: more than 800 full-time employees in 34 countries producing video, books, magazines, live events and music in partnership with some of the world’s biggest companies, including Google and Time Warner. In 2011 it surpassed $100 million in revenue for the first time, according to people with knowledge of the company’s finances. For this year it’s forecasting twice the revenue and 20%-plus margins. If it can hit those numbers, privately held Vice is likely worth $1 billion.
So how did a cadre of Williamsburg hipsters blow off the worst economy for media companies since the Great Depression? Part of it was great instincts. Vice made big bets on original Web video years ahead of giants like Google and Yahoo, which are racing to license as much of it as they can now. Part of it was luck. Who could have foreseen that the neighborhood where Vice set up shop in 1999 would be the taste-making capital of the world a decade later? But the real secret weapon was a seriously connected grayhair, Tom Freston.
The former CEO of Viacom helped create the last great youth media company: As head of marketing for a nascent cable network in the early 1980s, Freston oversaw the creation of the “I Want My MTV” campaign.* For the next quarter-century he was instrumental in turning MTV Networks into Viacom’s cash cow. In 2007 Sumner Redstone rewarded Freston, famously, by firing him, citing his failure to bid successfully for MySpace—a decision that ultimately saved Redstone hundreds of millions of dollars.