Think these over before meeting with potential funders from the tech world.
More and more journalist-entrepreneurs are looking to Silicon Valley’s wealth as a potential source of funding for journalism’s next phase. This may be wishful thinking – affluent techies haven’t so far seemed very concerned about the wholesale evaporation of local journalism.
But that’s changing. Recent initiatives by the American Journalism Project, Emerson Collective, and even Google and Facebook are likely to focus more Silicon Valley attention on the need to figure out a sustainable future for journalism, and the importance of journalism to democracy.
If you do get a meeting with a potential donor or investor from the tech world, here are the five questions you should be prepared to answer about your venture, whether non-profit or for-profit. Either you’ll get asked these questions directly, or they ‘ll be thinking them.
1) Can it scale?
Scale is a magic word in Silicon Valley. Because it’s so expensive to build technology companies, funders want the potential market and user base to be as big as possible. Plus, it’s winner-take-all on the internet; bigger players can invest more and grow faster, have the lowest costs, and deliver the most value to end users.
If you’re doing local journalism, you’re probably not going to scale nationally or globally. But you can show that you’re thinking big and ambitiously, and that you understand the advantages of scale. Can you scale regionally if you succeed in one local community, for example? Can you consolidate two or three weaker regional organizations into one stronger one?
2) What’s the revenue model?
The idea of giving money to cover operating losses indefinitely is completely anathema to Silicon Valley. Techies will invest a lot up front to start something or grow it faster, but they’re laser focused on how and when the venture will wean itself from dependence on outside capital.
So having a revenue plan that can come close to covering operating costs over time is crucial. At a minimum, you should be able to talk about revenue in a businesslike way, with metrics. What’s your cost of member acquisition? The lifetime value of a member? Your projected operating margins for the next three years? Churn and renewal rates? How close can you get to cash flow positive? What data and testing are you basing all of this on?
3) Where’s the product innovation?
Innovation is why tech companies succeed. Apple pioneered the smartphone; Netflix pioneered streaming TV. Google invented the best and most automated search. Innovation ‘disrupts’ industries by doing something different, better and cheaper – that’s the whole goal of Silicon Valley.
So how are you going to innovate? What is your ‘product,’ and how is it different and better? Your competitive differentiation can be anything: Technology. Your talent model. Partnerships and distribution. Lower costs. A better user experience. But put a lot of thought into this. Tech people care about it. They know you won’t succeed just by working harder.
4) Is the entrepreneur strong enough?
Silicon Valley has an obsessive focus on betting on great entrepreneurs and CEOs. In tech, everything changes constantly and challenges abound, so the key to winning is the person – the leader – who can figure out how to navigate those changes and drive success.
Potential tech funders will evaluate you the same way they evaluate startup CEOs. Are you hungry and determined enough? Do you have the right energy level and commitment? Will you listen to feedback? Have you run a business before, and do you have the personal and leadership skills to build a great team?
5) What’s the culture?
Startup culture is Silicon Valley’s secret sauce, and almost like a religion. The ideal culture is fast-moving, execution oriented, risk taking, collaborative, relatively flat, full of hardworking ‘A-players’, highly mission-motivated and laser focused on the customer experience. By contrast, traditional non-profit and corporate cultures are perceived by Silicon Valley as moving too slow, with ineffective governance, average talent, and little sense of urgency.
If you’re doing a non-profit journalism startup, you should think and talk explicitly about the startup culture you want to create, and how you’ll do that (e.g. motivate your team with your mission) and sustain it. If you can infuse some startup-like DNA into your culture, you’ll have a big leg up with potential tech donors (and probably in the marketplace too).
One last thing: You can do it.
Hopefully the above list doesn’t freak you out too much.
Yes, these questions make it sound like you have to be superhuman to even walk in the door for a tech funder meeting. And it’s true that Silicon Valley is looking for the next Steve Jobs or Jeff Bezos – superhuman entrepreneurs who can ‘change the world.’
But most of us aren’t superhuman. And you don’t have to be. If you’re smart, passionate and committed enough to something, and willing to work hard at it, you can figure it out, you can innovate, you can find money and build a team and a product. Success is not guaranteed, but you’ll have as good a shot as anyone.
My personal belief (having started software companies and also worked in media) is that the above questions are good discipline, highly relevant to the economic realities of the world we live in. And they will challenge you.
But they’re not the only questions that matter.
If you can pick your funders you should pick those who can also see beyond the Silicon Valley formula and understand the specific nature of media and journalism. You should be able to talk to them about communities and the value of local focus, about access and equity, about journalistic integrity, and the need to pace/sustain yourself personally and organizationally for the long haul.
I hope this was helpful…. good luck!