A trend to watch: HubSpot acquires The Hustle

HubSpot announced today that they are acquiring The Hustle for what Axios has reported to be $27 million. The Hustle is a 1.5 million reader strong eNewsletter business targeting entrepreneurs and business owners. In commenting on the acquisition HubSpot highlighted the overlap between The Hustle’s readership and parallels with the resources and audience that HubSpot has been building on its blog as well as the overall fit with its customer base.

Anyone who has considered HubSpot is likely well aware of the amount of best practice content they offer their customers and prospects. Adding an engaged audience of potential HubSpot customers and a distribution channel for that content makes tactical sense.

So why does this matter beyond what seems like a smart – albeit expensive – marketing play? I’ve long been a proponent of pairing Software as a Service (SaaS) businesses with content. And it’s a trend to watch as SaaS businesses become more sophisticated in their customer acquisition and deepen their value proposition beyond simply offering a software toolset.

Combining SaaS and content means including content as an essential part of a software product or by adding digital media communities or conferences to the front end of a SaaS business model. It was a major factor in the acquisition of the company I founded – Praetorian Digital – and its merger with Lexipol in the public safety learning and compliance space. In this case, The Hustle offers HubSpot content, a conference footprint and a fledging subscription data product.

For SaaS businesses

If you follow SaaS businesses or have operated one, you know that the beauty of a SaaS business is in its clear metrics such as such as LTV/CAC (ratio of lifetime customer value to customer acquisition cost), payback period, and net churn that supports rapid scaling. Done right, adding digital media decreases CAC by creating an ongoing channel to a captured audience to which you can market your solution and builds brand authority and thought leadership. It provides a warm list for your lead or sales development reps to call and allows you to map lead capture to relevant articles even gating content that closely correlates with purchase intent.

More importantly, it also allows you to map content to all stages of the customer lifecycle, which  improves core metrics like usage and net churn. Taking this one step further, content paired with a SaaS platform presents opportunities for new product features or add-ons. For HubSpot, this could be a premium subscription for customers either at an additional cost or as a value-add to support annual price increases. Learning management system businesses have long applied this strategy by offering course content along with their platform and authoring tools.

Finally, the data from content engagement can create intriguing opportunities to pair software usage data with industry trends. In this case, the Hustle already offers a data product – Trends – that will only grow in value within the HubSpot ecosystem.  

For Digital media operators

Digital media has largely been struggling to find its way over the past several years to compete with social media and the rapid changes in content consumption. For digital media businesses in or around verticals where workflow tools are important, there are important implications. SaaS businesses, who may be some of your larger customers, could be future acquirers or could begin to compete as they build their own blogs and newsletter lists. Think differently about the SaaS businesses you have as customers and look for partnerships and deeper relationships to test the waters.

Alternatively, digital media businesses are in a unique position to swim upstream and add SaaS or workflow solutions to their offerings as I did at Praetorian Digital when we built an enterprise learning platform for first responders to extend our digital media communities. That effort ended up generating nearly half of our annual revenue.

Though doing so is a heavy lift and requires a major shift in culture and different skillset but is well worth the effort when comparing relative valuations and the opportunity to embed your business within your audience. And with software becoming easier to build and manage, the deep domain experience, engaged potential customer base, brand trust and content resident in any digital media or traditional media business presents a set of competitive advantages that will only become more important as we’re seeing here with HubSpot.

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Quote: “The first responsibility of a leader is to define reality. The last is to say thank you…”

“The first responsibility of a leader is to define reality. The last is to say thank you. In between the two, the leader must become a servant.” – Max De Pree, Former CEO Herman Miller

servant leaderI came across this quote in Harvard Business Review recently and it rings true. Its central message goes hand in hand with building trust with your team. I’ve always believed that as a leader, you must set a clear path and direction for your organization by defining where you are going and why. You need to then make sure you give people the tools and freedom to execute by removing blockers and barriers to their success. Finally, never take the results for granted and say thank you a lot.

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Quote: There is a tide in the affairs of men.

julius-caesar-aThere is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures.

Brutus – Julius Caesar Act 4, scene 3

If you’ve run a business, you’ve probably likened your company to a ship and thrown out eye-roll inducing sailing analogies from time to time. Sometimes it feels like you’re out in the middle of the ocean steering without a compass. At other times, you’re riding high with the wind at your back.

This quote from Shakespeare’s Julius Caesar offers a valuable lesson and aptly sums up those rare points in time where your business gains incredible momentum and the wins keep building upon themselves. For example, you’re raising capital and the more interest you generate in your round seems to lead to even more interest from investors. Or, you launch a new product and each new customer seems to lead to five others.

Keep an eye out for these moments and as Shakespeare suggests ‘take the current when it serves’ and double down because these moments are extremely rare and magical. They can mean the difference between greatness and mediocrity or between plodding along and rapid growth.

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6 Steps to Drive Innovation at Your Media Company

innovate your media company

Innovation: it’s a necessity for anyone who is looking to grow their business in the rapidly changing world of media today. Judging by the recent ABM and Industry Information Summit I attended, at which innovation was a key theme, I’m not alone in that belief.

Across media, companies are investing in new technologies, launching platforms and experimenting with new business models, as well as creating a wide range of data products, workflow automation tools and native content and marketing services offerings—all in the name of innovation. Innovation creates opportunity and in a world where change is the only constant, it’s a required capability to survive and thrive.

It’s easy to talk about as a concept, but innovation is incredibly difficult to institutionalize within your company or organization. I’ve been drinking the innovation Kool-Aid for years and have worked hard to position my media company, Praetorian Digital, as an innovator within our markets.

But what does it mean to be an innovator? How do you successfully pursue innovation? What tactics do you use? How do you make it part of your company’s DNA?

After a thought-provoking keynote on innovation in media by Don Hawk, executive director and co-founder of TechTarget, I was asked those questions and, candidly, it took me a while to answer.

With the benefit of a long plane flight to better consider my response; here are six tactics that we’ve used to drive growth through innovation:

  1. Build innovation into your company’s DNA

Make innovation a focus by creating a culture that recognizes and rewards continuous improvement. It starts with emphasizing creativity and initiative as a path to success during new employee onboarding. It includes reflecting innovation in your company’s core values. It’s solidified by praising examples of innovation across the company, and by recognizing the effort even in failed attempts.

At our company, we give employees a lot of freedom to experiment with ideas, whether it’s an editor with an idea for a new content feature, a salesperson with a strategy for messaging around a new opportunity or an accountant with a new process to streamline collections. We limit the layers of bureaucracy and approvals, making it easier for employees to conceive of and test pet theories.

The goal is to get your employees focused on improving just one thing every day, no matter how small. Incremental innovation can be very powerful if scaled across a team or company.

  1. Drive innovation top-down by setting parameters

A culture of innovation comes from the top. But as a leader, you can’t micromanage innovation. Challenge your team and company to innovate by presenting problems broadly, providing guidance but avoid placing  narrow parameters to define success.

For example, if product growth is slowing for a key part of your business, present the problem to the team. Offer guidelines for solutions and areas to work on, such as uncovering unmet customer needs or identifying areas to investigate, but don’t prescribe details. As they roll out ideas, make sure your culture allows people to fail fast, change direction and iterate quickly. Finally, celebrate wins.

  1. Create ownership for innovation

As a leader or CEO, it’s likely that you have jumped into the fray to drive innovation– particularly as your business has scaled. But as your company grows, innovation becomes much less about you as the driver and more about how you get your team to deliver. This can be particularly challenging when the opportunity is cross functional or sits outside the confines of existing teams or roles, which is often the norm for innovation projects. The key is developing ownership—and accountability.

Here are two tactics we’ve used to develop a plan of attack after identifying an area for innovation:

  • Task a single project owner:I make it a point to deeply understand each person on my team and where they are trying to go with their careers. Where they start within the company may not be where they end up, and sometimes a really good person may not be in the right role or might need a change in focus. Understand their skills, and be open-minded about tasking them with solving a problem or advancing toward an opportunity—whether it falls within the parameters of their role or not.
  • Take a SWAT team approach: Build a SWAT team of a few of your top performers with complementary skillsets and task them with pursuing an opportunity. Give them the guiderails and objectives and let them run with the details and create a solution. Set deliverables and timelines, create visibility for the project across the company to build esteem and accountability, and make sure they stay on target.

For example, we recently identified an opportunity to build advanced behavioral targeting for our media model and a Software-as-a-Service (SaaS) platform for rolling it out. To do so, I’ve created a SWAT team from sales, content and technology and will be making it a top company objective for the second part of the year.

  1. Make tuck-in acquisitions

Targeted, small acquisitions small can be a great way to bring innovation under your roof, bring in needed skillsets or help scale an innovation you’ve launched. For instance, we’ve heavily invested in online learning—a key innovation area for our company—and have made two acquisitions over the past couple of years to scale the opportunity and bring innovative distribution and content models to our efforts.

  1. Get out there

One of my mentors in B2B media once commented that it was great to see me come out from under my “bushel basket” when I told him I presented at a conference. I still don’t really know what a bushel basket is, but the meaning of his comment hit its mark and I’ve taken it to heart.

If you want to innovate, you need to get outside of your walls. You need to network, bring experts in as consultants, and not be afraid to hire new blood. Attend conferences like the Folio: Show, join associations like ABM/SIIA and offer up the same opportunities for your team. Buy someone a glass of wine and pick their brain. However you do it, get out there.

  1. Have an innovation strategy

Finally, have an innovation strategy that maps to where you are in your company’s growth trajectory. What does innovation mean for your company? Where do you want to innovate?

If you’re smaller (sub $10 million in revenue), innovation is about throwing a lot of sh*t against the wall and seeing what sticks. If you’re scaling from $15 to $100 million and beyond, scope down and use innovation to strategically build upon what you do well in a way that scales fast. Build from your base, innovate but don’t stray too far afield from your core competencies.

If you’re larger, figure out how to stay agile and activate the power of a large organization by harnessing entrepreneurial energy within your company or by acquiring core competencies that align with your strategic direction.

There are many paths to innovation and a lot of philosophies about how to get there, but regardless of your strategy, I’m a firm believer that you can’t just hang around and wait for opportunities to appear. Faced with a rapidly changing media landscape characterized by unprecedented challenges and opportunities, media companies need to be proactive and employ innovation tactics at all levels to navigate change and manufacture growth.

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Why B2B Media Companies Should Consider Online Learning

Originally Posted by FOLIO for my column on FolioMag.com.

By Alex Ford

onlinelearningAs digital media has evolved over the past 10 years, one of the themes – particularly for those of us in the B2B space – has been the need for publishers to add new business models to augment their advertising platforms and diversify revenue streams.

At Praetorian Digital, one of our most successful platform expansions has been into online learning, a business that shares key similarities with that of digital publishing. By developing our own learning management platform and making two meaningful acquisitions – one in the local government space, and the other in fire/EMS – we’ve positioned ourselves well within what is a high growth industry.

LinkedIn recently acquired Lynda.com for some of the same reasons that we’ve expanded into the space: we see online learning as a logical extension of our mission and – in our case – an initiative that builds upon our core competencies as a digital-only publisher, from content creation to targeted marketing.

We’ve built the largest online audience in public safety and local government in large part by taking an authoritative approach to content creation with a focus on actionable editorial that helps our public safety audience stay abreast of trends, navigate modern threats and better protect their communities.

Our path toward online learning was part strategic, part organic. For years, we’d had discussions with police sergeants or fire captains who had taken to packaging up our content into informal training programs delivered at roll call or during briefings, with our articles or training tips serving as a centerpiece for instruction. We began to look at that use case and consider how we could leverage our content more effectively in an online training environment for both organizations and individuals, and we began to invest in both course content and a technology platform.

And though we’ve long been a big fan of online training as a business model – particularly if you can offer mandated or accredited training, we’ve continued to be surprised at how well it fits our business model and strategic objectives as a B2B publisher.

Here are some of the top reasons why B2B publishers should explore adding online learning to their portfolio.

1. It offers attractive underlying economic fundamentals and valuation

If you talk to any private equity firm or read the general business media, establishing a profitable, growing Software as a Service (SaaS) business model, with recurring billing and reliable revenue, is akin to discovering the Holy Grail. Online learning is a great example. It’s based on a hosted, cloud-based software – which can either be bought or built – and requires development of great content and training workflow tools.

Unlike advertising sales, which is incredibly tough to make recurring, online training provides stable, predictable recurring revenue with great visibility for revenue and sales planning. Doing it right means having great content with tracking and reporting of data, which isn’t easy. But it can be incredibly sticky once achieved – with high switching costs, renewal rates in the 80 and 90 percent range and contracts that renew automatically. Additionally, the business model allows you to bill customers upfront and often realize average time outstanding for AR of less than 30 days.

Accordingly, the repeatable and reliable nature of these businesses is highly valued by investors; we’re seeing valuations of some comparable businesses in the 3-to-10X revenue range.

2. It leverages core competencies

As a publisher, we have an inherent leg up on most startup businesses in online training. We have an incredibly large and engaged audience, count many of the leading experts in our markets as contributors, and possess a robust library of content – from articles to technical white papers and videos. We also have recognizable, trusted brands and the marketing expertise and reach to bring new products to market both for individuals and organizations.

Despite these advantages, it hasn’t been easy. We’ve had to develop some new competencies, such as a more sophisticated approach to technology and the ability to scale an inside sales force calling on our audience.

3. It creates tangible audience value

Online learning provides meaningful, tangible value to our audience and takes much of the informal learning that goes on within our media sites – reading about new trends, analysis of current events and introduction of new products – and places it within a structured environment.

From awareness-level courses that help an individual or organization improve a job skill to formally mandated or accredited compliance training, quality online training leads to a better educated and more effective professional audience. In many cases, it also mitigates risk, lowers insurance premiums and decreases liability.

4. It supports your core business model

Finally, we’ve found online learning to be a 1 + 1 = 3 scenario. For every organization we sign up for online training, we add members to our sites and newsletter circulations and scale our reach. We also gain additional industry data that’s highly valuable to our advertisers. A larger, better segmented and more engaged audience means a stronger advertising business model.

Plus, we’ve found ways to reuse content across both our publishing and online training platforms, leading to content creation efficiencies and lower overall costs. More recently, we’ve been able to incorporate some of our largest advertisers into online training via sponsored courses or by creating custom product training programs.

Ultimately, by adding online training to our portfolio we’ve created another way for our audience to engage with us daily and get the content they need.

Success in online learning is not easy – it requires publishers to master and manage a Software as a Service (SaaS) business and all of the challenges that come with a complex business model (link). We still have plenty of room to grow and improve.

But in four years, we’ve been able to build a dynamic, mid-seven figure online training business that covers three markets – police, fire and local government – and is not only growing in excess of 50 percent per year, but is creating incredible value for our audience as well as number of our largest advertisers.Why B2B media companies should consider online learningWhy B2B media companies should consider online learning


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6 Things for B2B Publishers to Worry About in 2015

This article originally appeared as a two part series for Folio Magazine’s new Web site launch.

For many, the New Year is about new beginnings, but if you’re running a media business, it’s about solving the problem of how to build upon what’s already in place. For us, it’s a time for budgeting and planning for growth – financial, audience, traffic and engagement – as well as setting fresh expectations for the team.

For me, it’s also a time of worry. What are the major risk factors affecting my business? What opportunities do I not want to overlook?

The media industry in 2015 continues to be in a state of rapid change and evolution. Media consumption behaviors continue to shift from print to online to mobile. As a digital-only B2B media company, we’re lucky enough to be in the right place, but there are plenty of meaty challenges to grapple with. Here’s what’s keeping me up at night as we kick off 2015 and how we’re approaching each challenge.

1. Responding to nontraditional competitors and programmatic buying

As publishers, our competitive landscape has rapidly expanded over the past 10 years. From Google to Facebook to SEO and beyond, advertisers have more options than ever for investing their marketing dollars. Plus, more companies are adopting the “brand as publisher” mentality, investing in improved capabilities for in-house content creation, web design, and marketing automation – limiting their reliance on agencies and publishers alike.

Additionally, programmatic buying is becoming more prevalent in digital media, accounting for $10 billion in US display ad spend in 2014; it’s projected to account for 50 percent of spend by 2017 according to eMarketer. This trend presents a major threat to advertising spend for publishers and requires us to consider to what degree we should participate.

At Praetorian, we’re exploring DMPs and DSPs, and investing in our audience segmentation and demographic data capabilities so we can maximize monetization of unsold inventory, but also so we can be smarter and better engage larger advertisers directly with premium inventory.  More broadly, we’re assessing how we, as a publisher, can better compete, and how we expand our product line and rev our value proposition to capture a growing share of spend in light of what promises to be an increasingly competitive media environment moving forward.

2. Adjusting to an increasingly mobile audience

Every publisher is grappling with how best to capitalize on the growth in mobile traffic, as well as mitigate the negative impact on ad revenue. In a given month, more than 50 percent of our traffic might come from mobile. That number seems likely to grow in 2015.

Addressing the mobile trend isn’t as simple as blowing up your site and converting it to a responsive WordPress-style blog. We’ve seen publishers react hastily and overhaul their sites abruptly, introducing a dramatically different user and advertiser experience. This has, in some cases, led to significant traffic drops and audience erosion.

Our approach has been more measured. We’ve been careful with our redesigns, striving to make necessary upgrades while preserving a familiar user experience and avoid negatively impacting desktop use cases such as product research that are often most valuable to our advertisers. It’s an iterative approach that has been more gradual, but has allowed us to monitor impact from smaller changes and collect user feedback. Early returns have been positive, and 2015 will be a year of continued analysis and experimentation.

Solving the mobile problem carries with it significant rewards, but it’s a delicate balancing act to optimize for one user experience without negatively impacting others.

3. Growing recurring revenue

There’s nothing worse than coming off of a strong year of revenue growth and having to start the New Year at zero, re-pitching last year’s clients and trying not just to match but exceed last year’s performance.

In publishing, one-time revenue and annual planning are a reality we all face, but as publishers, how can we move our advertisers towards recurring programs that deliver consistent results and renew automatically? What data, technology or subscription products can we offer our advertisers or our audience that leverage our content capabilities and industry expertise to address pain points or unmet needs?

For me, it means always looking for and being open to ways – whether via acquisitions or in-house projects – to expand the scope of our business model. We actively track our percentage of revenue that is recurring and are constantly investing in developing that segment, from enhancing our current advertising products and developing premium user subscriptions to launching new businesses, such as online training and grant assistance for vendors.

4. Bracing for Facebook changes

There is a state of general unease among publishers around Facebook’s changes of the past year. It’s no secret that Facebook is more tightly restricting organic distribution of posts, and pushing page operators to supplement with paid promotion.

The impact of reduced organic reach has been felt more squarely by marketers thus far, but there’s apprehension about whether the changes will start to impact publishers more meaningfully. For us, Facebook is a key organic referrer of traffic to our sites, as well as an important channel for promotion of various initiatives.

As a result, we’ve implemented tight controls over page operations and content to stay on the right side of policy changes, like the recent announcement about the limiting of “promotional” posts in users’ news feeds. We’ve expanded and closely evaluated our paid Facebook advertising program, supplementing organic results and gauging what a further expanded program would cost. We’re also continuing to invest in bolstering our alternative channels, from email to other social media.

5. Better leveraging editorial expertise

Like many publishers, one of our core competencies is our ability to create high-quality editorial content. But as we’ve expanded our business model beyond media and into other products and services, we haven’t always maximized the established skills and processes of our editorial team to guide content creation and product development. Fundamentally, the principles that drive good content creation are universal regardless of the format – whether articles, videos, custom content or online training courses.

However, it’s too easy for content creation to happen in silos and to miss opportunities to leverage our editors’ skills and established processes to improve content quality and limit duplication of effort. One of our goals in 2015 is to tear down the walls between our content-producing teams and improve cross-functional collaboration. Similar to the challenge many publishers faced getting print journalists to adapt to digital, we’re trying to effect a shift in mindset and encourage a broader understanding of digital content and the expanding opportunities to monetize it.

6. Motivating my team and creating a growth mindset

A successful year – like many of us had in 2014 – inevitably requires a lot of team energy and focus, which often can lead to a flat start to the following year. To maintain momentum as we start the New Year, it’s critical to gauge the mindset of the team and find ways to maintain and grow that reservoir of energy and excitement.

I ask myself a series of questions. Is my team reinvigorated or are they tired coming off of a year when we stretched to grow the business almost 20 percent? Are they aligned with objectives for 2015? Do they have their sales targets and are they tracking to hit January numbers? Does the company have a distinct and evolved mission for the year, and has that been messaged effectively to all teams?  Is there a growth mindset in place?

It is increasingly important to keep employees engaged, growing professionally and motivated to thrive, so it’s critical to come out of the gate fast, build off of the prior year’s success and use the New Year to reset expectations. We conduct a companywide kick off during the first two weeks of the year to announce a company growth target and make sure everyone has their sales targets and goals as soon as possible. We’ve also had success with an annual “company challenge” that identifies a year-end target metric for each team and motivates them to work both individually and collectively to hit it, with a set of prizes at year end if those goals are met or exceeded.


Ultimately, worries are part of the game in the rapidly evolving landscape of digital media. But addressed properly, they can be the fuel to propel improvement in key areas – particularly if you approach each New Year with eyes wide open, ask hard questions and anticipate what challenges and opportunities the year is likely to present.

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3 Steps to Become a More Decisive and Respected Leader

As the leader of a company – regardless of the size – you’re always communicating. Sometimes that may be to an internal audience in front of your entire team or in a one-on-one meeting. Or, it might be externally to a board or client. The medium might be in person, via phone or digital.

Across all of these, your ability to message and deliver information with strength and authority is critical to your success of as a leader and your company’s ability to execute. Try these three simple steps to become a more decisive and respected leader.

Step 1: During the next week, monitor your communication closely to both groups and individuals. Count or be cognizant of how many times you use terms that indicate vagueness or uncertainly. Keep an eye out for the following and you’ll be surprised at how much often they appear in your communication:

  • Respected-Leader“I think…”
  • “I believe…”
  • “It seems…”
  • “Probably…”
  • “Maybe…”
  • “It should…”
  • “It might…”
  • Finally, watch out for credibility killers such as “Um”, “Like”, “Right?” and “Ah”.

Step 2: Start eliminating these phrases in your communication unless you strategically want to convey uncertainty or hedge your messaging or commitment. Uncertainty is appropriate in a brainstorm or addressing a sensitive such as a personnel issue but otherwise creates doubt.

In particular, focus on being more decisive in situations in which you’re giving feedback, summarizing statistics, evaluating performance or setting direction even if you may not be sure. As a leader, you don’t “think” someone did a good job, they either did or did not. Eliminating uncertainty allows you to be concise and direct and is an easy way to increase respect and authority.

An example:  

Uncertain messaging – “For the next month, I think the best area of improvement for our company should be improving the frequency of our client outreach.”

Certain messaging – “It is critical that we improve the frequency of our client outreach and it will be our area of focus for the next month.”

Step 3: As you eliminate uncertainty, insert calculated pauses after your statements to let your message sink in. Be sure not to insert fillers like ‘Um,’ ‘Right?’ or ‘ah.’ As a confident communicator, be comfortable with a pause or silence after important statements to make sure your audience hears and internalizes your message.

Of course, confident communication cannot mask a lack of knowledge. Confidently communicating an erroneous message will greatly damage your ability to lead. Do your homework, weigh your options and make the right decision about when to communicate a point.

Overall, uncertainty, doubt and questioning are realities we face as balanced and thoughtful leaders, but to inspire and lead there should be no doubt, no hesitation, and no question about where you want to go or how you want to get there. Want to get there faster? A good place to start is by evaluating your communication.

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Now Trending: The Digital Media Company

The world of media has changed radically over the past 15 years. It’s expanded in scale and scope and has gone digital, mobile and social. And it’s gotten a hell of lot more complex. Traditional lines of separation between publisher, application developer and technology provider have blurred. The other day, I told my cab driver I ran a digital media company, ‘If it isn’t hardware, it’s media.’ I don’t think he was too far off.

The Digital Media CompanySo what’s a digital media company? How do you define companies like Amazon, LinkedIn, Salesforce, Comcast or even Google? Amazon hosts many of my company’s servers, delivers digital content, and sells sponsored advertising within its e-commerce platform. Comcast wants to provide me a video feed to monitor my home as well as deliver content. LinkedIn sends me articles. Salesforce aggregates apps and sells data. And Google is, well, Google.

In the online space, it used to be that being a media company meant you had to be a dotcom. You had a portal or, if you were really lucky like me, a ‘vortal’ (vertical portal). You created content, you marketed your site, you built a base of users and you grew your business through advertising. You competed with and tried to displace traditional media companies like print publishers or television broadcasters. Now, as lines continue to blur, it takes a lot more to build a successful online company.

Building a Successful Digital Media Company

With the growth of mobile and the increasing importance of social media, what used to be online media has been transformed into digital media. We’re in a period of rapid change. Social media and mobile usage have decreased the barriers of entry for customer engagement. Technology costs to launch sites and products are lower. The number of players competing for eyeballs is increasing. With the resulting downward trend in CPMs, it’s important for companies to monetize customers in a number of different ways. 

I believe that online businesses can no longer be narrowly defined as businesses which just sell advertising or create and distribute content.  Companies should aim to extend their business models to encompass a wide range of functions, from traditional content delivery to mobile applications to social to e-commerce.

Definition of a Digital Media Company: The definition of ‘Digital media’ is digitized content that can be transmitted over the internet or computer networks, including text, audio, vide, and graphics. However, it is important to understand that a true digital media company is one that develops and delivers both content and functionality as defined as text, video, graphics, code and applications to customers across all electronic media, from online to mobile.

But what does that mean? On the surface, my company runs content-driven websites. We’re an online publisher, but we also provide SaaS-based technology for organizations. We’re big into social media and creating social networking tools. Over the past 10 years we’ve gone from being a dotcom to a portal business to a web publisher and then an online media company.  We’re now a digital media company because we offer SaaS-based technology solutions and develop apps and online tools in addition to being an online publisher.

For us, it has been critical to our evolution and success as a company that we haven’t conformed to how the industry ’defines us’ (such as solely a content or traffic aggregator). We have evolved with the trends as a platform by adding multiple products and multiple distribution channels and customer touch points:

2005 – Online advertising – (Military1.comPoliceOne.com)

2007 – Product research, market research (PoliceOne – Body Armor)

2008 – Video (BLUTube.comFlashoverTV.com)

2009 – Government grant assistance (FireGrantsHelp.com)

2010 – Mobile, social (FireRescue1 Facebook)

2011 – Online training and records management (PoliceOne Academy)

2013 – Lead generation and qualification (In Progress)

Why is this important?

Traditional media companies – whether they be newspaper companies, magazines, TV broadcasters or even content-focused online publishers – are really good at building a highly targeted or qualified base of customers, viewers or readers through an established channel to distribute content.  Traditional software companies like Oracle or Intuit are exceptional at creating new technologies and building products that solve problems for both consumers and businesses.

Digital media companies need to do both. With the proliferation of channels to reach potential customers and declining CPMs, it’s no longer enough to just have the channel or the content; you also need the solutions. Google’s move into mobile with Android is a case in point. Bottom line is that in the digital economy:

1. If advertising is your only focus, you’re dead.

2. If you only create software or hardware, you better be really specialized or really good.

Digital media is about solving business problems. It’s about aggregating a network, building a platform with multiple digital distribution channels and solving real life problems. In terms of business models, it’s about multiple points of monetization and maximizing revenue per user or customer. It’s also what makes creating and running viable digital media companies so difficult and at the same time so thrilling. Stay tuned.

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Tip: Focus on Nurturing Problem Solvers Not Solving Problems

tipIf you’ve started a company or have been promoted up through the ranks to a management role, chances are that you’re really good at doing things yourself and controlling every detail. Early on in our careers, it’s often what makes us exceptional performers. The same skill set that leads to effective execution as an individual performer can be counterproductive as a manager. This can result in teams that are less able to solve problems themselves and reports that feel suffocated and ‘micromanaged’. Learning to let go of the need to manage every detail is something I’ve had to learn:

Tip: Instead of fixing problems yourself, focus on nurturing problem solvers by turning ‘Do this’ into ‘What do you think we should try?” Seek the joy of watching others succeed by doing something their way rather than trying to do everything yourself.

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5 Rules for Successful Partnerships

5 Rules for PartneringBack in the dotcom days, there was almost nothing as important as a good partnership and most start-ups spent a lot of time developing them.  At a minimum, a partnership provided a press release opportunity and demonstrated legitimacy and tangible momentum in what was a very confused and crowded marketplace. Plus, they gave you something to pitch to Venture Capitalists since you likely didn’t have much in the way of revenue.

From my perspective, many of these partnerships were part of the house of cards that came tumbling down in mid-2000 as often the companies that started to fail had partnerships with each other but limited revenue. My company was no exception. We had executed 30 plus partnerships and though beneficial, not one of them helped me survive the post-dotcom crash nor provided game-changing results that people were talking about at the end of the day.  As a result, I struggled with the idea of partnerships for a longtime thereafter.  The question I kept circling back to was, for a small business or startup, are partnerships worth the time and hassle?

After executing more than 100 partnerships and strategic alliances in the past 15 years – some of which failed miserably – I’d say yes, partnerships are important to develop but only if executed in the right way. Here are five rules my team and I adhere to:

Rule 1: Keep it simple and have narrow objectives.

Even the most straight-forward of partnerships require attention to manage, so regardless of the size and importance of the partnership to your business, keep them simple. For me, partnerships that are low risk, small, manageable, and meet specific, narrow objectives – i.e. reinforcing your brand presence or reaching a targeted customer segment -have worked best. I’m a firm believer that you should enter into as many of these partnerships as possible, but make them easy to execute and low risk.  As a start-up or a small company, you want to minimize the number of things you need to manage or follow up on. The last thing you want to be doing is fixing a marketing partner’s website on Christmas Eve (yes, I’ve been there).

For instance, I’ve had a lot of success in developing partnerships with associations, charities and publishers that are designed to build legitimacy and market presence for my web sites. We trade some website logo placements, put out a press release, share content and offer light promotion. They create momentum in the marketplace and can be a powerful talking point with investors and customers particularly as you’re growing. And they don’t take a lot of time and energy to manage.

Rule 2: Put dollars in the mix or identify a tangible metrics like new members or customer acquisition to which you can associate value.

When push comes to shove, while partners matter, it is only natural they fall lower on the totem pole – below investors, customers and employees. They are the last thing a company will worry about when sh*t hits the fan or sometimes, when things are going really well as they may not be needed. A great partnership should be designed to scale and operate independently, but often that’s not enough. To achieve this, make sure to set specific metrics that need to be met and turn your partner into a customer or alternatively, make yourself the customer of your partner.

As an example, we identified a company that had a customer segment we wanted to target as members of one of our websites. Instead of creating a joint marketing program based on trading services that would have been difficult to execute, we set up a partnership deal where the partner offered membership as a free benefit to their customers and in turn, we spent $500 per month on advertising and gave the partner promotion within our network.

Because we were spending dollars, we immediately became a customer for the partner and 1 year later, we had 15,000 new members for which we would have otherwise paid $15,000-20,000. The result was a partnership that ran smoothly, delivered results and didn’t need significant oversight to be successful. In most cases, I’ve found that even the smallest amount of dollar exchange changes the psychology of a partnership to that of a meaningful business relationship and leads to better execution as both parties are more invested.

Rule 3: Acknowledge that partnerships are really tough to make work; make sure expectations are aligned and plan for the worst.

Sometimes a partnership opportunity comes up where you want to swing for the fences and change your growth trajectory as a company. Maybe it’s entering a new market, creating a new product or feeling out a potential acquisition target. When you start talking joint venture or strategic alliance and you’re executing a deal that you’re hoping will have a big impact on your business, it’s time to be very careful. A good indicator that the partnership is more of a joint venture or strategic alliance is if you include the results in your financial projections.

I’ve found larger, more meaningful partnerships are incredibly difficult to execute, particularly for start-ups or smaller companies. In the best case scenario, meaningful partnerships take a lot of time and mindshare to manage. There’s a lot of risk betting on one company. With a partnership, you have twice the execution risk. Changes in personnel or corporate strategy, financial hardship, or even acquisitions are all realities that could derail even the best structured partnerships.

For instance, I’ve had an important partnership fall apart when the principal passed away and a competitor bought the business. Even with larger companies, which you assume are stable and with whom you’re working well, I’ve experienced change that comes from several levels above my contacts and rapidly derails the relationship.

Though objectives may change throughout the course of a partnership, the best way to combat this risk is to make sure expectations are closely aligned between both parties from the start. As a founder, I try to understand what the other side is trying to get out of the partnership and encourage my team to do the same. For instance if one party is interested in branding and you’re looking to generate revenue, you’ll have a greater risk of problems if you don’t know and acknowledge that upfront.

Rule 4: For large, critical partnerships, treat them as a business unit with a dedicated team and resources.

If you’re developing a major partnership, it’s critical to manage it as a business unit and build in multiple levels of accountability.  I’ve had elegantly designed, complex partnerships that looked perfect on paper fail because there were too many shared responsibilities and no one had clear accountability if results were not met. After a partnership has been executed, it’s easy to lose track of goals and it’s only logical that both parties will spend more time on revenue streams of which they own 100% over those of which they own 50%.

To best align incentives, I’ve found the more you treat an important partnership as its own business unit, the more likely it will succeed. Give it a dedicated manager or project lead. Track it as a separate P&L. Limit shared responsibilities. Staff and invest accordingly. Make sure sales and revenue responsibilities are crystal clear and there negative consequences in place if they are not met. Even consider creating a stand-alone LLC owned jointly by both parties.

Rule 5: Plan for disengagement

See number 3. Partnerships end, so be sure that you’ve planned for the worst case. Make sure you can extract the value you’ve created. Give yourself an out. Always engage an attorney if the partnership is significant, a critical component of your strategy or a joint venture. I’ve found adding an option for disengagement by either party after six months is a good out and gives both parties enough time to test the relationship.

Perpetual partnerships sound good because they tie both parties together, but can often be problematic; if it’s not working, you’re forced to spend more time than a partnership might be worth. To avoid this, be sure to include minimum performance metrics for both parties which, if not met, allow for the option for disengagement. It’s important to have the difficult conversation about who owns the customer or the jointly created assets if the partnership doesn’t work out before the partnership gets executed. What happens if either party is acquired or goes out of business?

Overall, I’ve found that partnerships can be a double edged sword.  If you can minimize risk and keep them small, I’ve found there is a lot of value, particularly in terms of legitimacy and market presence. When you’re considering larger, more complex deals, first ask if you can acquire the assets you’re seeking. I’d much rather own assets than partner or trade for them. That may not always be an option, so if you are determined that you really need the partnership, make sure to set up the program for success by ensuring clear accountability and dedicated resources. Be careful to not fall in love with your own deal. Plan for the downside, because there is a reasonable likelihood that a partnership won’t meet expectations. And make sure your company is protected if things don’t work out.

Curious if anyone has any other partnership best practices to share? Anyone have a different set of experiences with partnerships they’ve executed? Any good success stories?

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