Over the summer Syntagma hosted a consultancy exercise by retail specialist Gerry Reynolds. You can read some of his conclusions here : #
Since then Gerry has interviewed me for his new business magazine. Parts of the piece are published here with permission.
Gerry : With Syntagma Media’s second birthday approaching in October, what would you say are the qualities required to build a profitable 50-site content network?
John : Tenacity, tenacity, tenacity.
Gerry : Only three?
John : To the power of ten.
Gerry : What else?
John : You need the experience to spot the winners and the frankness to deal with the losers — of which there are many more. To be absolutely frank, the business wasn’t really profitable until I cut down the number of writers we employed from 14 to seven, and the sites from 55 to around 40, which is where we are now.
We had a choice — to run a fat ship or a skinny one. In aiming for a fat ship, we hit a glass ceiling of scaleability. Getting through that would have required us to throw millions of dollars at the network, which would have meant attracting venture capitalists and selling a substantial part of the business. I would then be working for someone else. I can tell you, as a lifelong freelance writer, that didn’t and doesn’t appeal to me. I had enough of corporate boardrooms when I worked as a senior marketing manager for BT (British Telecom).
Gerry : So what did you decide?
John : I decided to run a skinny ship that looked like a fat one.
Gerry : And that’s what Syntagma is?
John : We’ve always punched above our weight — if you can bear yet another metaphor.
In the online original content business, margins are not large, so quantity counts a great deal. A skinny ship with a skeleton crew — I hope that doesn’t sound too much like a pirate movie — opens up the possibility of drawing down a six-figure dollar income. That then requires spending more time on content (writing) and less on innovation and what I call project-dreaming.
Gerry : So Syntagma’s second year has been less sexy than its first.
John : Yes, and probably just as well. In the beginning there was a great deal of excitement around the space. “Blog” networks were springing up in droves and everyone wanted to know what you were doing. I got into long comment discussions with other network owners that took up half a day or more. In one sense, that was good — I learned a lot from them. But in any writing function, your creative energy is limited, so you have to focus ferociously on the words that count — i.e. that earn you money. If that sounds a bit mercenary, it’s really the only way to survive in a small-to-medium business.
Gerry : What then have been the highlights of your first two years?
John : Mostly scaling back, it has to be said. The second year’s business plan involved two massive retail portals, RetailzUSA and ShopShapeUK. They needed at least a couple of million to get them started.
My decision to resist pulling in that amount of cash was based on a precise definition of cost-benefit. Would I be happier earning a six-fig income as CEO of a corporation in which I held a relatively small percentage of the shares and took orders from the money men, or drawing the identical income as undisputed boss of a smaller outfit that was totally in my hands? A no-brainer, obviously.
The genie in the bottle, of course, was whether the business would sell out for the silly millions that the pioneering networks went for. My assessment was that it was unlikely. I haven’t changed my opinion since then. In fact, the current credit crunch could hit valuations very hard, although I expect advertising will go on increasing even in the wobbly climate.
In the end, I think I’ve retained my sanity in holding the business to sustainable levels, while concentrating on revenues in, instead of payments out. This October is a milestone for me because it signals the moment when Syntagma will support my lifestyle without any other source of income. I’m grateful for that, because tenacity doesn’t last for ever.
Gerry : But you still write elsewhere?
John : I’m writing a few books — I’ve always done that. But I’m much more relaxed about it all now. I can happily take time off without obsessing about PageRank or Alexa, neither of which have ever loved Syntagma. Now I know we don’t need them that much anyway, so why bother?
Also, there’s a plan hatching for a local West Country of England subnetwork. As always, I’m taking my time and allowing the project to mature and gain some substance before inflicting it on the world.
Gerry : You must have had other highlights apart from scaling back?
John : Sure. The success of some of our sites has given me a higher profile. This year I’ve been approached by many media companies, national newspapers and film production companies to participate in various events. The recent 10th anniversary of Princess Diana’s death focused attention on our Royal Anecdotes site. I was approached by Sky, Fox News and any number of print titles to get involved as a recognized expert. It makes it all worthwhile, because writing online can seem like an isolating business sometimes.
Gerry : What lies ahead for Syntagma?
John : Our business plan for the third year includes the launch of Syntagma TV. I’ve examined the profitability of this in great detail and I don’t think it’s on at present. That may change, of course, so it’s on the wishlist still. But, just as I rejected Podcasting as non-profitable more than a year ago, and have been proved totally right, so I suspect IPTV still has a long way to go before it can roll in the dollars. When we have 100 Mb/s internet, maybe.
Other than that, our third year will be much more relaxed. We’ll concentrate on placing good content and on the projects that work. You can flog a dead donkey if you want to. I don’t.
Gerry : John, thanks for that. Greatly appreciated.
John : And thank you, Gerry, for the work you’ve done on the Syntagma network and for inviting me along for this interview.
Read the second part of this interview.