In previous posts I’ve looked at creating a digital network out of own-resources – bootstrapping — as a way of avoiding the venture capital squeeze — bear-hugging. Now it’s time for some specifics.

Lately, we’ve been looking back over the past 16 months of Syntagma Media’s existence and attempting to work out the full cost of the operation in monetary terms. Remember, it’s been done without VC finance, bank or Angel loans or equity sales of any kind. The only aid has been a credit card, which is cleared at the end of every month. Clearly someone must have borne the full cost.

We calculated all the costs of setup, fees for advice, authoring, design, general tech, plus all the usual business stuff. I also added in my own cost and resources at my standard consultancy rate. The sweep mainly included Syntagma Digital, but also the much smaller liabilities of Dial Publishing — our incubating print arm.

The total cost to my personal exchequer came to $250,000.

I must confess I was a little taken aback by that number. I hadn’t realized I had that amount of loose change floating about. But accountancy doesn’t lie.

Of course, there has been a good deal of income, especially in the past 6 — 9 months. All of that has also gone back into the business. So the bottom line sits on the question : is Syntagma Digital worth more than a quarter of a million bucks?

I’ll let you into a secret, I was offered more than that around four months ago, but the deal involved running someone else’s British business.

Setting up a digital content business then doesn’t come cheap. The fact is, we could have spent considerably more as, for example, our near contemporary b5media has. It’s very much a matter of priorities and some fine calculation of whether a particular expenditure will be cost-effective or not. In my experience (16 months worth) most expenditures are not.

Refining the art of spending is therefore top of the agenda when it comes to bloodsucking your business — I use that term instead of bootstrapping here because it helps to know that it’s your blood the business is sucking. That knowledge alone concentrates the mind wonderfully.

Finale : Sixteen months in, $250,000 down, working like a sugar-cane cutter, no end in sight. Is it all worth it? Wait for the book*. All the killer facts are there.

* The Syntagma Story by John M Evans to be published by Dial Publishing later this year.

If you have ever dreamed of moving to an exotic, sun-kissed location overlooking a sapphire sea, you’ll want to follow the adventures of Guy Adams who did just that. Helpfully he’s now writing about it in Syntagma Digital’s newest webtitle : Where Lizards Play, part of our LifeTimes network magazine.

Guy, his partner Debra, and their two children moved from England to Spain’s Costa Blanca with a view to a view — over the Mediterranean, that is. Now read on …

Guy Adams is a full-time professional author and writer, as well as being a partner and senior editor in a publishing company. His reasons for moving to Spain are quite simple :

Everyone’s doing it you know. We’re all moving out here now. Where once you couldn’t move for thick accented fishermen and ‘Marias’ beating their front step clean with their noble mops, the Costa Blanca is filling with escapees from other walks of life. And why not?

I now live my life with the ocean in front of me and mountains to the rear. I live and work in the shade of mountains…this, for me, cannot be understated as a fine reason to swop England for the Costa Blanca.

Life is an adventure, always, this will be where I share mine.

How could you resist?

Strange thing, human nature. Ever since I announced I was writing a book called The Syntagma Story people are being very nice to me. I wonder why?

Maybe they think I’m going to write nasty things about them.

Well, it’s one way of getting people to buy a book. Needless to say, the first edition of this one will not have an index, so you won’t be able to look yourself up at the pre-checkout side of the bookshop. You’ll just have to buy it and read it from cover to cover.

As Syntagma is both Syntagma Media’s business website, as well as my personal jabberboard, I’m permitted to jab at whomever I like, so long as it shows a profit. Selling our own books counts twice.

Jo Vitale is said to be the master at moving business books off the shelf. But his method is all about skyscraper ads full of pratful patter and positive thinking. As far I as know he never used raw fear as a sales aid.

Ach! I knew it was a mistake to read our newest webtitle this morning : Guy Adams’s The Dark Room, devoted to the bloodcurdling arts of horror. If I go on reading this stuff, I may have to write a sequel to The Syntagma Story. Maybe I’ll call it, Marketing Books the Vampire Way.

Hang on to your clotting factor, it’s going to be a bumpy ride.

The great benefit of being open about the building of Syntagma Media as a business and as a digital network is that the posts I write here can easily form the kernel of a book. Indeed they do : The Syntagma Story, to be published by Dial Publishing later this year.

The other less obvious advantage is that it may, in some small way, help others following along the same path. There are lots of pitfalls in this business and sometimes a word to the wise can avert an inevitable disaster.

None more so than in the area of finance. So here are a few notes — nothing more at this stage — on this potential minefield for all businesses.

I’ve long been an advocate of self-dependence in business, particularly at the startup and early stages. This is sometimes called “bootstrapping” in the sense of “pulling yourself up by your bootstraps”.

I’ve always preferred “self-resourcing” — using own-resources for the seed funding stage. Thereafter, in an ideal situation, income will fund growth and the business will be self-financing. All other sources of spending muscle introduced into the pot should be treated like fissile material — with great caution.

The power of own-resources can vary, of course, but every time you use the resources of others, whether debt or by share sale, you reduce your power to control the business. Indeed, once the venture capitalists move in you’ve set yourself up for eventual sale or an IPO (Initial Public Offering on the stock market).

Either way, you can no longer look forward to building a business that can be handed down the generations. Unless, of course, you do what Evan Williams did with Odeo and buy back the shares from investors. He had recently sold Blogger.com to Google so was not short of a bob or two. [Update Feb 20 :] Evan Williams has just put Odeo up for sale.

Another own-resource you’ll need to use early on is your brain. Many of the tasks in even a simple business are expensive to outsource. Building a digital network is painstakingly complex, so you’ll need to be up to serverside delvings, setting up websites, understanding Wordpress code, even designing your own inventory. Add to that, the ability to write the first few webtitles, and it comes down to an intimidating package of learning curves to master.

That takes time, and you just have to grin and bear it. Later, you’ll have the cash to induct new writers and splash out on fancy designers, but not at first, unless your credit card limit will bear it.

Those first few sites — Syntagma had 12, all written by me — will mature in the first year and provide the income to grow thereafter. If you bring writers in from the start, you’ll not generate that early supply of funding, especially as a new network needs to offer a good share of the pot in order to attract dependable authors.

If it’s just making money you’re after, you may think the VC route is no bad thing. But if, like me, you build a business for the sheer challenge and exhilaration of it (and as an aid to your writing career), you may not wish to sell chunks of it to often fixed-tracked minds with very different aims from your own.

I’m not saying that VCs are primitive people necessarily, some are extraordinarily civilized : Rick Segal, Fred Wilson and Jason Calacanis (now with Sequoia Capital) spring to mind.

Bootstrapping, though, is not for someone looking for very quick results. If you really are a digital farmer looking for a big buyout, go the venture route by all means. Be aware though, the pitching period is gruelling and long, maybe up to four months even for a relatively small sum. This is because the VCs are already anticipating further rounds of funding. First they put masking tape on your mouth, then they start cutting lengths of twine to restrain your hands, followed by thick ropes to thoroughly encase the rest of your body.

I’m told some people enjoy being trussed up like a turkey, but you may have other ideas.

Bootstrapping a business is for the buccaneers, those swashbucklers who could just as easily appear in a pirate movie. Or else they’re so cashstrapped, there’s no alternative to penny-pinching their way to the top.

So it all comes down to those old antagonists : Time and Money.

If you’re time-rich but cash-poor, bootstrapping is made for you — make sure you have a decent limit on your credit card, though. If you’re cash-rich but time-poor why on earth would you want to start a business in the first place?

Unless, of course, you’re a pirate with a pen — like me.

A Life of Bodhidharma by John M Evans. The Zen Masters Series.

For all those readers following the Zen Masters series over on our webtitle, Spiritual Nirvana, we’re now starting the third : A Life of Bodhidharma.

Following on from the lives of Bankei and Dogen, we now go right back to the first days of Zen — then known as Ch’an in China after the tea plant which monks used to keep themselves awake during meditation. Bodhidharma is reputed to be the founder of this now venerable school of Buddhism, which down to this day has an elaborate tea ceremony.

It is said he arrived in China from South India around the time of King Arthur in the West. From his practice of sitting for hours staring at a wall, the whole Zen movement takes its cue.

Read : A Life of Bodhidharma — Part One.

When I started writing about our network magazine project, it was greeted with some disbelief in the publishing netosphere. Now that the roll-out is nearly complete, folk are realizing that we really do mean business here at Syntagma.

So, being mildly provocative again — and as it’s Sunday — here’s a list of our projects going forward as far as 2009, including the till-now ultra-secret iSyntagma.

Network Magazines
We have created the portals for our three initial network magazines, Allusionz, LifeTimes and 21st-century Phi, and are now adding four new Thord Hedengren designs to all of our 50 sites. We’ve completed a quarter of them, the rest will follow over the next two weeks.

We’ve also embarked on the final step in the process, which is to aggregate our stats-capture by magazine, in addition to by individual site. The reason is that from now our advertising will be sold per network mag rather than by webtitle.

In other words, we’re moving away from 10,000 page-view pitches to a composite pitch for 20 or so similar and related webtitles. This bridges the gap between offering single sites to advertisers, or the whole inventory, which is so diverse only the most general buyers would be interested.

We’ll still carry our classified ads at the top of the posts (see here), and on a per site basis, since we’re looking for $200-$500 a month per webtitle for this space and the classifieds are running ahead of any alternatives at the present time.

Our business plan specified six network magazines by October 2007 — our second anniversary. Since our two shopping portals have been put on hold (see below), I expect we’ll now have four working network magazine titles by October.

Shopping Portals
I wrote a bit about this here a day or two ago, specifically the glass ceiling we encounted when trying to break into the big-ad retail markets in North America and the UK.

Our two shopping portals : Retailz USA and ShopShape UK required much more input than our current strength allowed when relying on own-resources. Talks with possible partners fell down because they were all stronger than we were, and inevitably had their own ideas on how it should be done.

I’m not temperamentally suited to being a junior partner in anything, so we’ve put these projects back until we have sufficient internal strength to be at least the major determiner in the project. The portals are now scheduled for late 2008 or spring 2009.

Dial Publishing
Dial Publishing was my first attempt at being an independent print publisher. It concentrated on educational books and courses, and was successful until the market went pear-shaped (see here for more details).

Now it’s being refurbished as the print arm of Syntagma Media, and will publish its first titles in the second half of this year. Two to watch are, The Syntagma Story, and Superdemocracy – The Art of Corporate Governance, both by yours truly. They will be followed by other titles by other authors.

iSyntagma
Now we come to our biggest project of all, the top secret iSyntagma, which we’ve been researching and working on for a while under a cloak of invisibility. If you go to isyntagma.com you’ll just see an untouched Wordpress Kubrick shell. Amazingly it has a PR of 4.

To prove that my forthcoming book, The Syntagma Story is really going to be worth reading, I’ve decided to spill the beans on this rocking more-than-an-aspiration-more-an-inspiration projectile.

We’ve decided to vault over the podcasting scene completely — too much like blogging, too many amateurs, and too primitive compared with what’s on offer by the broadcasters. And it will never show a profit.

Instead, iSyntagma will launch … trumpets and drum roll … Thank you, orchestra, a bit louder next time. Will launch :

Syntagma Television will be an internet TV channel, broadcasting live TV and video from the West Country of England to a select few, niche audiences, among which will be the tech crowd. It’s a serious project and is well underway.

Just log on to SyntagmaTV.com or SyntagmaTelevision.com sometime in 2008 and we’ll be beaming at you wherever you are.

As a Bob Cringely reader I know of the current bandwidth problems, but also how Google among others are working on the solutions. If 2007 is the year the net collapses under the weight of video downloads (Bit Torrent currently takes more than 50pc of bandwidth resources), 2008 will see new opportunities emerge, and Syntagma Television will be unveiled in that more temperate climate.

Again, we’re going to try to do this within own-resources. If you’ve got a million bucks to invest, do not offer it to us — I might be tempted.

So there you have it. Our future starkly portrayed in all its impossible glory. One thing you should know : we revel in the impossible.

In reflective Saturday mood, I want to continue the discussion of the last two days on digital networks. This time not singling out specific networks or people. I’m also restricting the networks to those that start off as microbusinesses and build to at least mid-market positions.

This is the question : How do we measure success in a digital network?

The simple response is : against the goals set by the founders when the network was started.

That’s a bit fuzzy because goals can change; ambitions can grow or recede; new horizons can beckon; the original goals may have been unattainable or too easy because of lack of experience in the founders.

So we need an objective measure. I believe there are two :

1. The network sells to a deep-pocketed buyer, leaving the founders rich and satisfied.
2. The business becomes a viable company, paying salaries and fees to others, and a tidy income to the founders, while also growing asset value as time passes.

I suspect many an online publisher would settle for either, whatever way their initial preference leaned.

There are other measures too. For example, a business may not make much money, but gain credibility and respect among the audience it serves. The founders may then launch ancillary careers as consultants or advisers. But here we’re concentrating on publishing income from content delivered, so we’ll eliminate these sideline activities.

I’m guessing that anyone who becomes an online publisher starts out with one of the above two objectives as their main goal. What then do they need to do to reach digital Nirvana?

1. If you’re rearing a business for sale you are essentially a digital farmer. Agricultural methodology should be built into your plans.

For instance, be aware of the weather, by which I mean the internet climate, which can go from euphoric (1999) to dustbowl dismal (2001) in very short order. Sniffing the digital wind should be an important part of your day.

At present there’s a general feeling that Web 2.0 is in a mini-bubble state, with no-one currently launching IPOs on their startups. There’s also a dangerous belief that Google, the classic 2.0-timer, will protect everyone else in the space with its long coat-tails. Not a good frame of mind to adopt.

You also need to get your product right. Is it a generic thing made to be branded fully by someone else after purchase? Or is it an exotic offering that needs good branding now? I can think of examples of both out there as I write.

If it’s a shell of an idea, it will fail or succeed by the state of the market at the time and should be brought to sale as quickly as possible and in the right conditions. Such mass market fruit ripens quickly and begins to rot before you know it.

If it’s the exotic variety, it requires a unique selling point to carry it into the arms of an eager buyer. In many ways this type of network is more suited to Objective 2 than to 1. However, it can be very attractive if its branding is well-thought through and admired in the marketplace.

So, as a digital farmer you’re either selling raw chicken carcasses or chill-counter Chicken Kiev. You definitely need to know which it is, or you’ll end up giving someone indigestion.

2. If you are incubating your network as a viable business you should attend to all the things that such businesses require, from infrastructure to branding and product excellence.

This is the slower path as your objectives are longer-term. But it’s the traditional path. Few people in the past built businesses to sell under bubble conditions, catching the big wave as it forms. Only the surfing, internet generation has specialized in this kind of California dreaming.

Conditions are never less than dangerous for those who venture out into the swell. Such people really do need a gameplan for when it all goes horribly wrong. Like an alternative business plan that allows them to morph easily from Objective 1 to Objective 2, with scarcely a flutter of attention from eagle-eyed onlookers.

In the interim, success is measurable by where you are now in terms of the market conditions, the grasp you have on the situation, and the positioning you’ve achieved in the light of the outcome aimed for.

If that sounds complicated, it’s so because, until the wished-for outcome is met, you are still in no-man’s-land, that messy hinterland where the future is dark and the present edgy.

Taking home a good paycheck is some consolation for these uncertain times. In its absence, it should at least be imaginable sometime soon, or you’re in the wrong business.

And Syntagma Digital? Where do we stand? … Maybe I’ll tell you one day.

The former editor of The Blog Herald, Abe Olandres, has had to relinquish his post because of an allegedly malicious legal case brought against his small web hosting business. The fault was not his, but has already cost him the price of a house in legal fees.

There’s a fund being set up at The Blog Herald to offset some of the pain of this case. If each BH reader sends $10 via PayPal, it would go a long way towards that. Syntagma Media has contributed $100 to the fund. If you want to contribute, the PayPal address is:

theblogherald(at)gmail(dot)com

Here’s Abe’s story :

I run a fairly small start-up web hosting here in the Philippines. One of our former clients runs a forum that we used to host. Several members of that forum were throwing vindictives against a their former employer. That employer sent us a demand letter thru their law firm demanding that we terminate the site or be charged with libel as well. The client moved out from us the following day. However, the employer/complainant has now filed several libel law suits against us claiming that we are the owner of the domain and the operator of the site. The site is still up and running though hosted somewhere else, the domain was also transferred away from us. Still, the complainant is alleging we should have enforced some sort of regulations or control over the content when it was still with us.

It could happen to any of us who publish user-generated content on the internet.

If you read my piece yesterday : Twenty Million Bucks to Build a Digital Network, you’ll be aware that Jason Calacanis has sharply critiqued the “b5media model”, which is a wide, distributed, multi-domain network of “blogs”, divided into 14 channels by niche overlapping.

Jason commented : “b5 media has great people, and I don’t mean to pick on them, but it’s the wrong model. I know this because I tried it back in the early days of WIN.”

Jeremy Wright countered with an excellent, and lengthy, review of b5’s philosophy and business strategy. Essentially, he says : “… the truth is that both Nick [Denton] and Jason came at this as a publishing play. Which is fine. That’s their background. It’s how they do things. It’s worked in the past, and it worked this time around. … When we started b5media, we didn’t do it as a publishing play. We did it as a community play.”

At the risk of sounding like a Calacanis groupie, I’ve got to go with Jason on this one.

A while back I critiqued b5 for lacking publishing skills, basing itself purely on geekery, and lacking proper branding. “What is a b5media, Mommy?”

Believe it or not, I did this as constructive criticism, not oneupmanship, as I’m sure Jason did yesterday. It’s very easy to get tunnel vision when you put so much of yourself into a project that you couldn’t bear to retreat and start again from a System Restore point. At Syntagma, we’ve done that a few times already.

However, I’d like to take up Jeremy’s distinction beween a “publishing play” and a “community play”. What does it mean?

We’re all online publishers, so the distinction falls at the first hurdle, except that if you ignore the publishing part, as b5 has to some extent, you end up with a bland, brandless, savourless soup of a project.

In terms of community, what does that mean? Jeremy divides it into three :

1. Community of Bloggers. The b5 approach leads to a daily tidal wave of exciteable internal communications. I know, I’ve been there, and my inbox still has the stretch marks.

If the authors are putting so much into internal squabbling, they are losing force for their real work, filling up the webtitles. Syntagma has avoided this road by taking on serious, professional writers who plan their time and have no interest in endless forumizing.

2. Community of Readers. Communities of readers build for a variety of reasons. We have sites which haven’t had a single comment since the last Ice Age, and probably won’t till the Earth melts. That’s their nature.

One of our strongest webtitles, Royal Anecdotes, which gets up to 20,000 unique visitors on good days, has been hijacked as a forum by its readers. If you scroll through the posts, you’ll see many with 100 or so very passionate comments.

We never set out to become a “community play”, it just happened because the material struck a chord with a sizeable niche audience.

3. Community of Advertisers. Well, somehow I don’t think of advertisers on specific sites wasting time forumizing amongst themselves. Not sure what this means, other than having good relationships with your ad space buyers. All successful publishers do that as a matter of course.

So a “community play” is an artificial distinction and a bit of a luxury for a business. It may even divert energy from its real needs, and is a false category when set against the craft of publishing, which is what b5 does, whether they think so or not.

I still hold my ground on the point that b5 doesn’t pay enough attention to its publishing side and its overall image and branding. Jeremy is an ultra-smart guy. He won’t be unaware of the constructive critiques out there.

Someone said at a conference recently that certain brands should never invite user-generated content because they would be desecrated in the ensuing material. He cited AOL and one or two other big names.

It’s a demonstrable fact that b5media also invites a lot of hostility from its peers and other less well-informed people. Jason’s remarks on b5 are just rubbing in his conference point — for it was he who made them.