On our show Naked Media, produced jointly with Scribe Media, we often take the opportunity to ask entrepreneurial types what it takes to be a media entrprepreneur. Dave Morgan, founder (and $275 million seller) of Tacoda (to AOL) and newly named chairman of the Tennis Company, took the first shot. Then MIchael Wolff of Newser.com and Vanity Fair stopped by with Steven Kotok of The Week, as did Next New Networks co-founder Fred Seibert. We’ll keep adding to this list as we get more and more.
1. Keep control. But know when to give it up. Make sure the capital structure is such that you can keep control of the business, do the things you need to to make it grow, etc. Don’t go for the biggest valuation, but rather the right valuation. If the money you get is too big, and sets too-high expectations, the pressure to generate enough cashflow and create a large liquidity event (meaning get someone to buy the company at a high value) will be a lot of pressure that’ll hurt your ability to make choices you may need to ensure the health of the biz. Don’t take the biggest amount of money, take the best. Corollary: Don’t be the last investment in a venture fund, because then the cycle will be shorter, and they may need to have you sell in, say four years, rather than 7-10. You don’t need that pressure. In other words, it’s not just which venture (or other) fund puts its money behind you, it’s also which of their funds it is. Wollf added: Yes, control is important. But know when to give it up.
2. Hire slow, fire fast. Don’t rush to hire someone just to fill a position, because you need a body. And if someone is not working out, get rid of them quickly, because you probably can’t fix that. Morgan said that after rounds of cuts at Real, his company previous to Tacoda (which was also sold for big bucks and became ad network Real 24/7), the remaining employees eventually did better, were more productive.
3. Always be thinking about the exit?. We’re not sure about htis one. Morgan acknowledged that a day earlier at ContentNext’s EconAds seminar he said one shouldn’t form a business thinking about the exit. But you do have to understand the mentality of the folks putting up money behind you, he said. Yet, Fred Seibert strongly disagreed, saying that if you’re always thinking about the exit you won’t be thinking about doing what’s best for the audience, which ultimately is what makes the business successful. (See pointer below)
Morgan pointed out there are three ways to go out: public offering, trade sale (meaning a company buys you), or shut down. The math is such that it’s nearly impossible to generate enough cash to keep a business going to make more for the investors than if it were sold, he said. Ever hear of a “multiple” in profits?
4. Know your money’s timeline. If you take money from investors, such as venture capital fund, be mindful of the cycle. You don’t want to be the last investment in a fund, because they’ll be near the end of a 7-10 year cycle, and instead of having, say 7-10 years to get your business in shape to sell, they’ll need to create a “liquidity event” in maybe 4 years.
5. Organic growth is fine. Now is a fine time to start a business and grow it organically. IE, you maybe don’t want to go for all this funding, and instead start and grow it yourself.
6. Be careful about who you’re in business with. You’ll be living in the same shirt with them for a long time. ‘Nuf said.
7. Execution is key. You’ve got to run the business, and run it well.
8. Love what you do. That makes the previous point easier to execute. Also, to be a media entrepreneur, you must love media, Seibert says. You must also understand the different kinds of media in the world. For example, YouTube might seem like TV. But it’s not TV, by a long shot..
9. Understand how to find talented people, understand what talent is, and exploit it.
10. Think about, and focus on, what your audience wants. There are a lot of competing interests, and you’ll often be asked to do things that exploit some advantage you have but will make the audience unhappy. Resist giving in.
11. Have a mosaic’ed team. That’s a word Seibert coined. He means that you should have a team of diverse, complementary skills that fits together to make your goals come true well.