Cyclist's Foundation Links to For-Profit
Wall Street Journal

January 28, 2008

The charitable foundation launched by cycling legend and cancer survivor Lance Armstrong -- which four years ago ignited a fashion trend by selling yellow bracelets stamped with the "live strong" mantra -- is making another foray into the for-profit world.

The Lance Armstrong Foundation, which spends about $40 million a year on health programs and cancer research, is teaming up with Web-site operator Demand Media Inc. to launch a health-and-wellness Web site funded by advertising. The site, called "livestrong.com," is expected to go live this year.

As part of the deal, the Austin, Texas, foundation and Mr. Armstrong will take equity stakes in Demand Media, a Santa Monica, Calif., company run by former MySpace Inc. Chairman Richard Rosenblatt.

Neither Demand Media nor the foundation would confirm the size of the equity stakes; Mr. Rosenblatt said they are "significant." Demand Media, a fast-growing but low-profile player in online social networking, was valued at nearly $1 billion by investors last year. Demand Media has raised about $320 million in the past 20 months from investors including Oak Investment Partners and Goldman Sachs.

For the nonprofit Armstrong foundation, striking the for-profit deal with Demand was "something we spent a lot of time thinking about," said foundation President Doug Ulman. He said his group ultimately felt that launching a for-profit site would increase awareness about the foundation and promote its core mission of helping people with cancer.

People who visit the new commercial site will also be directed to the foundation's "dot-org" Web site, he said. Demand Media is giving the foundation a technology platform to add interactive features like chat, blogs and video to its dot-org site. Demand Media will keep the ad revenue generated by the commercial site; Mr. Rosenblatt said his company will reinvest much of it back into the livestrong property. The new site won't run tobacco ads.

"I don't think we've ever met our full potential on the Web when it comes to the livestrong.org site," said Mr. Armstrong, 36 years old, a seven-time Tour de France winner. "But that's not our expertise. Our expertise is fighting cancer." The foundation linked up with Demand Media after Mr. Armstrong got to know Mr. Rosenblatt while both served on the board of sports-drink company FRS Co.

Like Mr. Armstrong's foundation, more philanthropies are linking up with for-profit companies to raise cash and elevate their profiles.

The Susan G. Komen for the Cure charity, which raises money to fight breast cancer, has more than 170 corporate partners, although the nonprofit isn't a shareholder in any of them. Other charities are using for-profit fund-raising tools like so-called investment term sheets and detailed growth projections to snag money from wealthy donors.The Armstrong foundation says it will work with Demand Media to build a Web destination for people who want to count calories, track workouts or connect with other people trying to keep fit. Mr. Armstrong, now retired from competitive cycling but still an avid athlete, will contribute content to the site.

Demand Media, founded in May 2006, has grown by creating niche Web sites focused on certain activities or hobbies. The company, with about $150 million in annual revenue, operates about 60 sites aimed at groups as diverse as hikers, golf enthusiasts and gardeners. Demand Media normally buys these Web sites and overhauls them, spiffing them up with interactive features like video and chat.