Publishing – the only metric that matters

Yaron Galai3 Comments

Publishers (and bloggers specifically) tend to measure their business on two parameters:

  1. Page views
  2. Ad revenues

These are fine metrics, but I believe that they are derivatives of a much more fundamental metric which, if ignored, could be devastating to a publisher’s business. Lets call this metric the “Reader’s Goodwill Pot”.

Lets assume an imaginary pot into which imaginary goodwill points can be deposited, and from which imaginary goodwill points can be depleted. Sort of like a bank account for goodwill. Now, as a publisher/blogger, imagine you are running this kind of ‘goodwill account’ with your audience of readers.

Piggy_bank
When you post great content you are adding points into the pot. When you provide your reader with a great user experience you are adding points to this pot.

If you build a big enough goodwill pot, with a big enough audience, then you can dip into that pot occasionally, take some points away and put them in your pocket. That is also usually known as advertising.

As a publisher, with every pixel you put on your site (or ink on paper, or frame on screen, etc), with every piece of content you produce, with every ad you take on your site – this is the single most important metric you should obsess over. Am I putting goodwill points into my piggy bank, or am I taking some away?

Great publishers understand that the need to keep this balance is far more important than the need to track any of the other metrics – PV’s and revenues, for example – in isolation.

As we hit a recession, I suspect many more bloggers and traditional publishers are going to ignore this metric and will try squeezing the lemon as much as possible by cutting on the content and the user experience, and at the same time trying to maximize the number of ads that interrupt the readers. Publishers ignoring the ‘Reader’s Goodwill Pot’ will not survive, not because of the bad macro economy, but rather because they failed to understand the micro economy of publishing.   

{Image CC by: Nieve44/La Luz . Thanks!}

Share this post!

Exit strategies

Yaron Galai7 Comments

Fire_exitIn nearly all the business plans I review for Tevel (the non-profit angel club I volunteer at), the last section outlines the company’s “exit strategy”. I was wondering if that’s some sort of requirement in writing business plans for investors? I don’t remember ever writing anything like this in any of my biz plans.

As I wrote a while back, I think it’s alarming when a company that has not even been funded yet is talking (or even thinking!) about exit strategies. In my book, a startup can only have a single strategy and that’s about how to grow it’s business. If “exit” is your strategy, it is almost guaranteed that you’re building for something small that will be easily swallowed (or worse – crushed) by the acquirers you’re aiming for. That’s a terrible strategy (unless your plan is to get hired to a company via an acquisition), and not one I ever want to invest in.

I’ve learned that exits have 2 inherit properties:

  1. They hardly ever present themselves the way or at the time you’d expect in advance.
  2. Real exit opportunities emerge only when you’re focusing on building a great business, not on exiting.

So my advice to entrepreneurs – drop the silly nonsense ‘exit strategy’ section from your biz plan, and focus on the ‘company strategy’ instead…

{image CC by tracer.ca. Thanks!}

Share this post!

Rating VC answers, part II

Yaron GalaiLeave a comment

Fred Wilson just posted about saying “No” to entrepreneurs. Reminded me of a post I wrote a while back rating VC answers from the entrepreneur’s perspective.

As difficult as it is to have someone not share your excitement with your venture, getting a clear ‘No’ is one of the best outcomes of a VC meeting because it lets you move on quickly.

I’m looking forward to getting many clear “No’s” in the near future!… 😉

Share this post!