Mar

19

I guess ‘value’ depends on the kind of investment you want to make

March 19, 2007 |

You know, perspective really is everything.

It matters not just in terms of the angle from which you view things, it also matters in terms of how much you can actually see from that angle and how much value you place on what you do see.

Over the weekend, I came across an article in the NYT that pointed me, in turn, to this post from a blog maintained by VC firm Lightspeed Venture Partners.

(Note to NYT: learn to permalink directly to the post you reference instead of just linking to the blog and making us fish. I’m sure you guys can handle the extra technical know-how required.)

Here’s something I notice about big-money investors, corporate execs and analysts: they lack imagination.

Or, if they have any imagination, they are very good at writing things that make it sound like they don’t.

What is striking to me about all this is that these accounts are written as if there are two possibilities: either you build a staff and produce content and aim for $50 million or so in revenues, or you are a “hobbyist” intent on creating a “lifestyle business” that will, hopefully, make just enough money for you to live on.

There is, evidently, no in-between.

As a content producer, I also find it interesting to note the underlying assumption among these folks that the ad-supported business model is the only option (or even the best option) for online content producers.

These guys need to get out more.

Yeah, it does take an awful lot of traffic to generate enough ad revenue to support anybody in the style to which they’d like to become accustomed. But, with easy access to the technology needed to produce e-content that can be made once and sold again and again, there are undoubtedly countless ways to re-package said content for various audience segments and purposes and re-sell it to bring in additional revenue.

And that’s just one example of the multiple revenue streams that become available when you bring a little imagination to bear in the situation.

There’s also the fact that, when you’re not building a huge organization to produce your online content, you can be profitable at much lower revenue levels. And when you’re selling product that has low, fixed production costs but can be sold to an infinite number of customers, you can potentially realize some fairly astronomical profit margins.

That said, it’s probable that all of the above generally wouldn’t produce the kind of income that would interest somebody like Lightspeed Venture Partners.

But that’s okay, because microbusiness content producers generally aren’t interested in starting a business just so they can sell it and make a bucket of money. Most of us aren’t that kind of entrepreneur.

In that sense, I guess everybody’s happy.

It’s just irritating, as always, to be written off as a “hobbyist” by people who talk like they despise us for not sharing their ambitions.

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Comments

2 Comments so far

  1. Jeremy Liew on March 19, 2007 3:25 pm

    Hi Dawn.

    You’re absolutely right that any single blog post has to oversimplify situations, as does mine on the Lightspeed blog that you link to and reference. As noted in some of the comments to the post, you’re right that there are plenty of other ways to make money beyond advertising.

    My post talks about the sort of companies that might consider taking venture capital, and its in that context that we talk about a $50m revenue aspiration. I certainly don’t write anyone off as a hobbyist, nor do I despise people who don’t share my aspirations. I’m saddened that you got that impression, and also a little puzzled as to how that happened as neither point is made in my posting. In fact, exactly the opposite is true - I celebrate risk takers and entrepreneurs, regardless of what outcome they achieve, as I note in my post http://lsvp.wordpress.com/2007/01/24/failure-is-an-option/

    My perspective is a simple one. Do what you believe in and are passionate abbout. You spend enough time at work that you should enjoy it. But for those who are thinking about taking venture capital, the mechanics of the process create certain dynamics that make some companies easier to fund than others. My post only relates to those cases.

  2. The Journal Blogger on March 19, 2007 10:09 pm

    My bad.

    A lot of what I wrote in this post was actually in reference to what that smart NYT staff writer (who couldn’t be bothered to link directly to the post on your blog he was talking about) wrote.

    As it happens, I don’t have anything against making money. My secret ambition is to build my own revenues into the $100 million revenue range, just to prove that a nonemployer business can do it.

    It’s just that I spend so much of my time listening to people dis microbusinesses for being microbusinesses that I’m probably a little hypersensitive on the subject. I’m afraid you got caught in the crossfire.

    Nice post you link to here, btw. One of the things I learned from my trip to Spain in February is that the European perception of the biggest reason why the U.S. is so much more entrepreneurial than the EU is our willingness to fail. It’s a particular kind of courage, I think; I found their perspective interesting.

    Anyway, thanks for taking a moment to stop by and deliver that well-deserved facer. I probably should try not to write posts when I’m mad. :)

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