Supernatural Agency: Online business tales

In the nineties I made a good part of my living writing non-fiction how to books, mostly on business subjects. Once I got involved in web development and online marketing most of my writing went online too. Now, a decade later I am not a writer, I am something called a ‘content creator’. The difference is that I have no intention of handing my content over to a publisher for peanuts. Instead we’re using those skills to make money, something publishers don’t get.

The print publisher model is buy and publish a lot of books and hope one in one hundred is a hit. It’s the ‘throw it at the wall and see what sticks’ strategy, which is about the least strategic business approach imaginable, especially because they excel at finding really good content creators and getting their work for practically nothing. The problem is what they do with that content.

I’m going to give you a specific example. Ten years ago I co-wrote (with my brother Richard) a best selling book on kitchen design. We were paid an advance of $30k which was earned out fairly quickly. We then received royalty checks quarterly and still do though they have dwindled down to a few hundred bucks each. All in all maybe $100k which is not bad for six months work. Or is it?

Now imagine that I take this content, update it a bit (I own the copyright with my co-writer) and build a comprehensive kitchen design web site around it- hundreds of pages of really great information all organized and written. I optimize it and run some PPC and build traffic. The kitchen design business is a $40 billion a year business in the US alone and virtually every purchase is a big ticket item. Once we’ve built some traffic, we monetize the site and I think its likely to make a lot more than a $100k a year (yes it’s in our plan).

Here’s the kicker. There is a ton of similarly valuable content all ready to go sitting there in publishers’ backlists. Why not build a business monetizing this stuff and splitting the proceeds with the owners?

If you’re in the publishing business you might want to give us a call.

Several years ago, at the request of one of my publishers, I wrote a book about motivation and small business. It’s out of print and I’m not recommending it because things have changed drastically, resource-wise, for entrepreneurs dealing with motivational issues. However, staying motivated is still a huge challenge when starting and growing a business. Oftentimes you find yourself working alone on something most other people don’t understand. You are taking risks that most others would never take. And you face the possibility of failure every day. It’s the nature of the beast. And it can create serious motivational mood swings. Anyone who is an entrepreneur knows what I’m talking about.

Think about the word motivation. It means, in it’s simplest definition, movement. If you are unmotivated you are stagnant, unmoving, inactive. For a new business this is deadly, making motivation a critical business resource. Fortunately there are several basic steps you can take to ensure that when motivation issues crop up you have a plan in place for dealing with them:

• Keep yourself and your people healthy. That means exercise, good eating habits, enough sleep and requiring people to actually use vacation time. Those of us developing Internet businesses tend to spend a lot of time sitting in front of a monitor, eating junk food and working long hours. While this may be productive in a crunch time, over the long term it will create a loss of energy and general depression. Break this myth of working long hours fueled by pizza and Red Bull. It simply does not work over time.
• Very specific company and personal goals detailed in writing. This is an incredibly powerful technique that few really use. I have a list of very specific goals that are categorized by personal, business and community. They are detailed. I know how many aggregate page views I want from our sites next year. I have very specific financial goals. We have a detailed list of sites and projects with priorities that we are constantly fine tuning. My personal goals cover a wide variety of things from spiritual health to travel plans. You should create and environment where your people and your company have these goals, write them out including visualization language (“our new office will be a downtown loft by the river with modern furniture, large monitors, an espresso machine, etc.”) and read and review them daily. The last part is important. I carry mine around with me and make sure I read them and fine tune.
• Break down overwhelming tasks into small, easily accomplished tasks. The ideal to do list includes a lot of things that are doable in one sitting. Every time you check one off you are not only one step closer to completing that overwhelming task, you also have a sense of accomplishment. Setting goals that are overwhelming is de-motivating: you must be able to see a clear path to that larger accomplishment.
• If you reach an impasse and can’t seem to find a solution to a pressing problem, let it go. Take a long walk and let your sub-conscious think about it. Don’t be emotionally attached to some options and don’t leave out the hard or scary ones. Simply examine each option and run a scenario: If I do this, what will take place? I don’t know why but walking seems to create the optimal state for regaining perspective. You can take in the scenery, breath some fresh air and let your brain settle down.

Motivation is not a mysterious challenge. If you are lacking motivation because you have doubts about the viability of your plan or are losing interest you may be getting signals that the business you are in is not right for you. There are two options. Get out and find the right project or reinvent the one you have. Most start-ups evolve into something quite different than what the founders thought they were doing. We started out seeing ourselves as a media development company but it increasingly obvious that we are also in the domain business.

Finally, a note about failure. It is a cliche that nearly every successful entrepreneur had several failed attempts before their first success. It is  generally true and I’m no exception. The reason is that entrepreneurship is a very hard thing get right and all the books and blogs in the world can’t duplicate actually doing it. You’re going to screw up a lot and you might fail. Don’t let that de-motivate you. Ask any VC- they fund many people who have failed businesses in their past. It is invaluable to have any start-up experience, good or bad. Your peers will never think the less of you for a few mistakes.

“The other good thing about the tech sector is that it is mostly debt-free. If anything, tech firms are over-capitalized, which is why they’ve been using their huge cash piles to buy back stock during the last few years.
Tech firms don’t have to borrow to fund their growth, which means they aren’t likely to get hurt if corporate credit standards tighten.”

That’s John Shinal from Marketwatch. His point is that in a market meltdown like the one we’re currently experiencing, tech stocks are a refuge because they don’t depend on debt to run their businesses. Why am I writing about this? Because the companies we’re building, and I speak collectively for any Internet-enabled start-up, are fundamentally different than businesses whose ability to function is largely based on their ability to borrow. We don’t make things, nor do we use debt to leverage investments. And neither does Apple, Google, Cisco, etc. They make things but they don’t really. Wha…?

They design and market things. Their computers, iPods, switches and server farms are not made by them, they’re made by contract fabrication companies in Asia. What they make is intellectual property. The interesting thing about IP is it is not capital-intensive, it is brain power-intensive and environment-intensive. By environment-intensive I mean that these companies have created a business environment that nourishes focused creativity, creativity that has a basis in market reality.

The businesses going down this week are banks, mortgage lenders, M&A companies, hedge funds, etc. These businesses are little more than gambling operations. They borrow (or convince investors) and gamble that the can resell the money at an incrementally higher rate. The past few weeks the house has called their bets and the markets have swooned. In the meantime, the tech companies have accumulated piles of cash from selling superior technology and automated digital services and are relatively separate from the fluctuations in capital markets.

Our business model is the same thing, albeit on a microscopic scale in comparison. We provide services that don’t require a lot of bodies and hardware to scale. We don’t need a line of credit, in fact we probably don’t need a real venture round (I may regret committing that to print- wait, there’s always Delete!). We really don’t need anything except time, energy and imagination (and a broadband connection).

Guy has a guest post today from Glenn, founder of Redfin, a web 2.0 real state site. Glenn goes over the crazy things start-up CEOs put themselves though mentally and otherwise.

Here’s some quotes:

“The megalomaniac pleasure of creation,” the psychoanalyst Edmund Berger wrote, “produces a type of elation which cannot be compared with that experienced by other mortals.”

“Start-ups are freak-catchers.”

“Fearless leaders are often terrified.”

“Even in the darkest of the Dark Ages, people were nostalgic for…the Dark Ages. Start-ups are like medieval monasteries: always convinced that paradise is just ahead or that things only recently got worse.”

“If you don’t believe you have any reliable competitive advantage, you’re the kind of insecure person who will work your competition into the ground, so keep working.”

“A Sequoia partner once told me that competition only starts when you hit $100 million in revenues.”

Hoo Ha! Good stuff- read it and reap.