SHOW ME
THE MONEY
NOTES FROM THE FRONT LINES
OF MEDIA ENTREPRENEURSHIP
Mark Potts
KDMC Boot Camp
May 18, 2011
SHOW ME THE MONEY
 Getting started
 Finding a business model
 Raising money
 Making money
 Measuring success
 Failure
 Lessons learned
A CAUTIONARY TALE
So You Want To Do a Web Startup
WHY JOURNALISM STARTUPS
AREN’T LIKE JOURNALISM
 Math is required
 You have little or no control
 Mistakes are tolerated; failure is
celebrated
 If you’re VERY lucky, you can
make a lot of money
GETTING
STARTED
WHAT YOU NEED
 A great idea

However: “Execution matters more than the idea”
— Union Square Ventures’ Fred Wilson
 Great people

“Talent attracts capital, not the other way around”
— NYC Chief Digital Officer Rachel Sterne
 Money

Optional, but preferable
 A business model

Not optional
 Gumption, fortitude and patience
FINDING A
BUSINESS
MODEL
BUSINESS MODEL VS.
BUSINESS PLAN
BUSINESS
MODEL
How an organization
creates, delivers and
captures value
 A series of educated
guesses about a customer
problem and the product
solution
 Ideas and assumptions you
can test over and over
BUSINESS
PLAN
An exercise in
creative writing
 Your business model,
in
presentation/written/spr
eadsheet form
 Where do the numbers
come from? You make
them up!
 Still: An important
exercise, to think
through and present
your idea
DEVELOPING YOUR
BUSINESS MODEL
 Your business model is just a set
of hypotheses

They need to be tested and verified (preferably with
customers)
 Ask yourself difficult questions

Listen to the answers! Your worst, nagging fears are
invariably correct
 Take time to think through
alternative possibilities

Odds are, where you wind up won’t be where you
started out
QUESTIONS YOU
NEED TO ANSWER
(Adapted from Business Model Generation—Osterwalder & Pigneur)
 Who’s your customer?
 What’s your value proposition?

What problem do you solve?

For-profit? Non-profit? Eyeballs first? Revenue first?

Investors? Loans? Grants? Revenue? Bootstrapping?
 What’s your basic model?
 Where’s your startup capital coming from?





What skills do you need besides yours?
What other resources do you need?
How are you going to get the word out?
Who are your competitors? (Honestly)
What could possibly go wrong? (Honestly!)
FOR-PROFIT?
OR NON-PROFIT?
Non-profit is a tax status, not a
business model
 Either way, you have to break even. At least
 Successful non-profits are run just like businesses
 There’s no free lunch—or free money
FOR-PROFIT?
OR NON-PROFIT?
FOR-PROFIT





Raise money from
investors
Beholden to customers,
subscribers, advertisers
Have to answer to
investors
Revenue provides
working capital
You get to keep what’s
left over
NON-PROFIT





Raise money from
foundations, donations
Beholden to funders
(just ask NPR!)
Regular trips to the
fund-raising well
Fewer sources of
revenue
You can’t keep what’s
left over
THE FACTS OF
BUSINESS MODEL LIFE
 No business model survives the first
customer contact
 Don’t build your company until you’ve
verified your business model
 Adapt and iterate your business model
until it works

Try, try, try again. Rinse. Repeat.
THINK BIG (ENOUGH)
 Properly assess market size and
potential
 Plan for growth
 Dare to dream
 Don’t undersell—or underprice
 Think like a businessperson, not
a journalist
TURNING A BUSINESS MODEL
INTO A BUSINESS PLAN
 Tell your story
 Keep it direct, clear and simple
 Highlight your strengths
 Be positive: You’re selling yourself and your idea
 Don’t overhype
 Cover all bases (and beware gaping
holes)
 Where possible, show, don’t tell
 Demos/screenshots are worth 1,000 words
 Prepare for rejection
 Iterate and fine-tune
RAISING
MONEY
SOURCES OF
STARTUP MONEY
 Bootstrapping

When you love it so much you’d do it for free
 Family and friends

Remember, you can lose their money
 Loans
 Grants
 Government funding
SOURCES OF
STARTUP MONEY
 Incubators
 Angels and seeds
 Venture capital




Find the right VCs
Prepare for rejection
Prepare to be micromanaged (not a bad thing)
The art of keiretsu
 Wall Street
 IPO!
A HARD FACT:
RAISING MONEY AIN’T EASY
 Find the right people to pitch to

Connections help. A lot
 What are the odds?

A VC’s week:




Hundreds of plans
A couple dozen pitches
98% rejection rate
Knight News Challenge, 2007-2010:


10,000 plans submitted
50 funded
 Prepare for rejection
 Constantly revise and hone your pitch
MAKING
MONEY
A FIELD GUIDE TO
REVENUE SOURCES
THE USUAL SUSPECTS
 Advertising







Ads you sell
Self-serve ads
Google
AdSense/contextual
ads
Ad networks
Directories
Sponsorships
Deals of the
day/coupons
 Subscriptions
 Memberships
 Syndication
A FIELD GUIDE TO
REVENUE SOURCES
OTHER REVENUE STREAMS
 Advertiser services






Data
Website/Social media help
Mobile advertising
Conferences, events, classes
Selling stuff
Donations
MEASURING
SUCCESS
POP QUIZ: WHICH OF THESE ARE
SUCCESSFUL BUSINESSES?
 The Washington Post
 HuffingtonPost
 YouTube
 Twitter
 Patch
 Facebook
WHAT IS SUCCESS?
 Not buzz
 Not Twitter followers
 Not Facebook fans
 Not scoops
 Not even a devoted audience
(though all of these are components
of success)
WHAT IS SUCCESS?
 Success is still being around
in five years…and beyond
 Success is building a
sustainable business
BE SURE YOU KNOW HOW
TO MEASURE SUCCESS
 Covering ALL costs
 Paying a living wage (and benefits)
 Reaching a loyal audience
 Satisfying customers (advertisers)
 Providing value
 Turning a profit
 Satisfying investors/funders
FAILURE
IN JOURNALISM,
“FAILURE” IS A DIRTY WORD
 You got scooped
 You blew the story
 You missed a deadline
 You misspelled a word in a headline
 You missed a key detail
 You screwed up somebody’s name
IN STARTUPS,
IT’S OK TO FAIL
 It happens 90 percent of the time
 Failure is a teachable moment
 In Silicon Valley, failure is a badge
of honor
 “This one didn’t work out. That’s OK—the next one will.”
— Legendary VC John Doerr
 VCs often prefer to fund failed entrepreneurs rather than
newbies
 Learn from failure and mistakes
HOW TO FAIL
 Fail fast
 Fail smart
 Fail graciously
STARTUPS:
LESSONS
LEARNED
10 THINGS YOU NEED TO
KNOW ABOUT STARTUPS
1. Startups are really, really hard work
2. They’re not for everybody
3. It’s a constant roller-coaster
4. Things never move quickly enough
5. Prepare to be discouraged
10 THINGS YOU NEED TO
KNOW ABOUT STARTUPS
6. Listen to what people tell you (but don’t
believe all of it)
7. Have a sense of humor and play
8. Get comfortable wearing many different
hats
9. Be flexible about EVERYTHING:
something will always change—radically
10.Startups are really, really hard work
MISTAKES I’VE MADE
 Hiring the wrong people (and not
firing them)
 Moving too slowly
 Inflexibility
 Not asking for help
 Being too early to the dance
 Not enough runway
“WHY DO YOU KEEP
DOING THIS?”
 It’s a great challenge
 You get to call your own shots
 The chance to create something new
 The (slim) chance to make a lot of
money
 It’s great fun
THE FUTURE OF JOURNALISM
BELONGS TO ENTREPRENEURS
 They’re more innovative
 They’re more flexible
 They’re passionate
 They’re not encumbered by
legacy thinking and problems
 They’re fearless
MICHAEL CORLEONE ON
STARTUPS (from Godfather II)
Michael: [about the unrest in Cuba] We saw a strange
thing on our way here. Some rebels were being
arrested, and instead of being arrested, one of them
pulled the pin on a grenade he had hidden in his
jacket. He took himself and the captain of the
command with him.
Guest: Ah, the rebels are insane!
Michael: Maybe. But the soldiers are paid to fight;
the rebels aren't.
Hyman Roth: What does that tell you?
Michael: They can win.