Henry Blodget's comeback complete after $343m sale of Business Insider

Just a decade after he was charged with fraud and banned for life from the financial industry, Blodget’s star is stratospheric – and so is his bank account

Last time the tech market really blew up Henry Blodget was one of its biggest losers. This time the analyst turned media mogul looks like he’s come out on top.

As the dotcom bubble was rapidly expanding in the late 1990s and early 2000s, Blodget was arguably the world’s most famous financial analyst, named Institutional Investor’s “all-star” analyst three years running and taking home a salary of $12m from Merrill Lynch.

But Blodget’s star crashed almost as quickly as the dotcom bubble burst. He was charged with fraud for publicly tipping internet stocks while privately describing them as “dogs” or “POS” (pieces of shit). He was fined $4m and the Securities and Exchange Commission (SEC) banned him for life from working in financial services industry.

Now, little more than a decade later after the “personally devastating” scandal, Blodget’s star is stratospheric and his bank balance is far larger than it would have been if he’d been able to stick at it on Wall Street.

Blodget on Tuesday announced the sale of Business Insider (BI), the financial news and gossip site that he founded just eight years ago, for $343m (£226m).

The sale to the German publisher Axel Springer – which values BI at $442m (£291.5m), almost twice as much as Amazon founder Jeff Bezos paid for the Pulitzer prize-winning Washington Post – will make Blodget tens of millions. Exactly how many millions is unclear as neither side has made public the size of his stake prior to the acquisition, but sources have suggested he held between 10-15%, which works out as a payout of $44-66m.

Axel Springer, which bought a 9% stake in BI in January at a valuation of less than half of what it’s paying now, will own 97% of the company. The remaining 3% is owned by Bezos’s private investment fund.

Blodget, who rises at 5.30am every day to dress in the suit-and-tie uniform of a Wall Street banker rather than the scruffy jeans and T-shirt favoured by other new media start-ups, thanked followers for their support on Twitter where he is known for posting more than 30 times a day but was uncharacteristically quiet on Tuesday.

“Thanks, everyone! Very kind. So grateful to our readers and clients and so proud of our team. Axel Springer an amazing company.”

Blodget’s phoenix-like return lit up Twitter. “Henry Blodget wins. Who says there are no second acts in American life?,” posted by Shane Dingman, a tech reporter at Globe and Mail.

Matthew Campbell, chief business correspondent at Bloomberg, said: “Henry Blodget selling a startup at a huge valuation has a certain...poetic justice, perhaps?

“Quite seriously though, congrats to @hblodget. Building a media brand in this day and age no easy thing.”

Blodget hasn’t always enjoyed quite so much support from the financial community.

When he was appointed editor of BI, a commentator on financial blog site Motley Fool wrote: “In other countries, he and many others would have had their fingers chopped off by now or still been in jail.”

Blodget, a former Ivy League tennis ace, has previously told the Guardian that he “thought my professional career was over. I decided to spend every day that I had from then on trying to earn back the trust that I had lost … fortunately a lot of people have given me that chance.”

Blodget commands his empire from a standing desk in the middle of the newsroom of BI’s head office on the 13th floor of 257 Park Avenue South, near Union Square in Manhattan. The boardroom of BI – which was was recently described by the New Yorker as what the illegitimate child of Bloomberg and Fleshbot might look like – is labelled the “war room”.

As part of the deal with Axel Springer, which owns German tabloid Bild and broadsheet Die Welt, Blodget and his chief operating officer Julie Hansen will be tied to BI for 10 years in return for stock options.

“We have tremendous respect for Axel Springer’s commitment to independent journalism and its global vision for the future,” Blodget said in a statement on Tuesday, which was written up on BI as the 11th most important thing to know before the US markets opened. “It is a pleasure and privilege to join forces with such a smart, forward-thinking team. We look forward to working together to build a major global news organization for the digital century.”

Mathias Döpfner, chief executive of Axel Springer, said the acquisition was part of the company’s drive to expand into English-language digital journalism as it looks for growth outside of Germany. The company was recently outbid in its attempt to buy the Financial Times, and has previously failed to buy the UK’s Telegraph Media Group.

“We are reaching a pivotal point in media, seeing new digital media being built,” Döpfner said. “We definitely want to be a player.”

The price of the BI deal, for a company that made revenues of just $20m in 2013 (the latest publicly available), eclipses the previous new media record of $315m AOL paid for the Huffington Post in 2011. Insiders told the Wall Street Journal that Blodget turned down a $125m takeover from AOL two years ago. Blodget looks like he called that one correctly.

• This article was amended on 29 September 2015 to correct the amount Business Insider sold for. The original put the amount at $442m, which is the company’s valuation, not the sale price.

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