Tag Archives: strategy

Investing in Media? Junk Traditional Models

The business of media, especially news media, is a curious one. You wield a lot of power, but often the economics of running the business is tricky. It is a business that delivers above-normal returns to the top 2-3 players, and practically nothing to the rest.

The reason is that success is dependent on the quality/quantity of content and the TG reached – each feeding off the other to form a positive feedback loop – something that lesser players will not be able to replicate. But, on both ends, you need to pump in a lot of money and keep at it.

Unlike a content aggregation and curation business, which may be more of a play on content marketing and tech, core content creation is extremely human-skill-intensive.  Therefore, typical success parameters like revenue, efficiency ratios, margins, active users, returns, exit opportunities, etc. will all come to naught if one doesn’t add Editorial Talent & Patience to the mixture – These two require investment and conviction.

A content-heavy media business is not amenable to the regular cookie cutter method of investing/business modelling. There are three essential components – content creation (input), content discovery & engagement (output).

Creation

Let’s face it quality news/informative content is inherently not exponentially scalable, regardless of the technology that you might deploy. This is because one requires human skills that can identify trends, smell out stories, contextualize them and produce compelling content (text, videos, pictures, infographics, etc.). This means you need to seriously invest in good talent and then give them time. Every time you wish to ramp up quantity of content, you need invest in more talent, and so on and so forth.

Yes, there’s user generated content & citizen journalism, but if you are a serious player you would mandate serious fact-checking and editing. That implies equally dedicated editorial process/teams. Curation is an option but there’s no long term benefit, as you would want to own the content and the associated value chain.

Discovery/Distribution

The next leg, discovery of content, is perhaps where one could apply a traditional business prism of marketing and audience building. Discovery is dominated by platforms like Facebook, WhatsApp, YouTube, Twitter, Snapchat, etc. and stories are being discovered by contextual shares.

Therefore, you need to be (1) creative; (2) iterative; (3) able to crunch data; (4) repurpose content; and (5) most importantly, prepared to spend money. Given constant algorithmic tweaks by discovery platforms like Facebook, pumping up organic reach is not easy and paid reach is getting expensive. Hence, one needs adequate funding and a healthy disregard for instant gratification.

Moreover, you need to focus on where the trend is, where your TG hangs out, how the content fits in that spectrum, and what is it that will drive discovery into engagement. Once again, it boils down to investing in talent that can straddle content creation and community building, and empowering that talent to do so every day.

Engagement

Home pages are no longer the entry point, which means that you need to figure out more meaningful UI/UX across your entire product. It also means being able to create an affinity with your content in the time it takes to scroll from one time to the other on the feed of any of the discovery platforms.

Need I mention it again that it boils down to the right talent? Content businesses need leaders & teams that can integrate tech and content in a way that they are able to tell a story and distribute it across several channels for maximum impact. And the talent that can do that is scarce.

Ultimately, it all boils down to a founder’s/investor’s commitment to the cause and her stamina to run the course every day of her life. The shelf life of news/informative content is low and one cannot afford to take their eyes off the meter even for a day.

The question is how does one sustain such a business? Constant fund raising is not the solution. It calls for looking for revenue sources outside of regular advertising & branded content. Can we put the bad genie of free content back in the bottle? Can our wish for patient capital be fulfilled?

India’s Tier 2: Incentivize Hidden Liquidity

I’m back from a yet another trip of one of India’s holiest cities – Allahabad – a city with deep historical and mythological underpinnings, yet fast trying to embrace modern India’s newest fads. It’s a city I grew up in and therefore I have had the chance to observe social and economic opportunities first hand. On this trip it seemed that everyone in the place was buzzing with the promised conversion to a “smart city”.

However, what could easily derail any “smart city” dream is the lack of basic necessities, infrastructure, education, growth mindset and talent drain. Sure there is enough economic growth as anecdotal evidence from local business that are proxies of consumer spending & confidence like entertainment, food, consumer goods, etc. suggest. But the growth is ad-hoc and haphazard. There has been growth in transactions and economic activity, but not HDI. I don’t think a “smart city” can be made without effecting change in fundamental mindset, infrastructure and employment dynamics .

But here’s an idea. Why can’t such mid-sized cities build an eco-system which nourishes a variety of new businesses spanning areas like social, infrastructure, education, medical, consumer, entertainment, information & media, transport, etc? Why not put the huge amounts of idle cash/hidden cash to good use by incentivizing the hoarders of such money?

The problem is that this liquidity is either invested in real estate through legal and illegal means or it is spent on consumer purchases & entertainment outside the city (typically in big cities or abroad). But hardly any of it is ploughed back to be reinvested for the good of the city.

It is my belief that such liquidity can fund a lot of new start-ups in a variety of areas – there are plenty of higher educational institutions churning out bright students. But lack of exposure to new ideas, the absence of a viable guiding platform and the fear of such cash coming under the taxman’s scanner are holding back many bright ideas. Therefore for the youth, the only way to progress is to move out of the city after graduating.

So when one can have tax amnesty schemes like voluntary disclosure of incomes, why can’t we have another such amnesty scheme which mandates the pooling of money into an fund that bankrolls new business ideas that will make a difference to the city, generate employment, discover new talent, change mindset, and truly prepare the Allahabad to usher in the “smart city” tag.

Tying In HR With Business Development

Human Resources is still finding its strategic bearings – especially in Indian media businesses. And till it does so, all companies will continue to suffer from mismatched skillsets with work profiles and hence, higher attrition rates.

Even as the rest of corporate India is moving ahead on this count, the HR department at most media houses remains more of a support/administrative outpost. It is because of this status that it doesn’t attract leaders who are practicing cutting edge personnel management.

In fact, HR’s role in business development is as critical as the business team’s. Talent management/sourcing along with other traditional functions like remuneration et al are important, but maybe some part of an HR team’s KRA should be tied in to the actionable outcome (ie: has the overall business grown or not).

Moreover, I feel that the HR-round of interview, which is deployed by most organizations as the first checkpoint, ends up being a formality and is sub-optimal use of resources. It may be effective in screening out junior level roles, but not when you are selecting candidates for mid-senior managerial posts. The reason is that the concerned HR person ends up mostly checking off a list of criteria without any macro/strategic outlook. So a candidate with huge strategic potential may get marginalized just because he/she doesn’t fit the boxes of “preferred experience”.

Of course, there are some other areas where there have been significant improvements in the recent past – employee training & re-skilling, addressing grievances & career counselling, among others.

Fundamentals Of A Good Business Plan

In my line of work, clients, business partners and prospects often ask me what a good business plan looks like. I don’t have a straight answer to that because each business, each category and each industry has its own idiosyncrasies and it’s hard for me to generalize. I’m sure that I could offer a standardized answer if I put my mind to it, but I like to feel my way into engagements rather than check off items on an objective list of things-to-be-done.

My work is a delightful mix of business development, strategy consulting, category creation, market expansion, brand management, forging partnerships, financial analysis, and portfolio management. All of it becomes even more exciting given that I am not constrained by any sectors. Hence, my belief in co-creating businesses by fusing my lateral experiences with the vision & mission of the entrepreneur.

Very often the most basic issue with business plans is that owners fall in love with their product and/or ideas so much that they fail to justify the existence of the business from the prism of an investor. And that’s very crucial. There’s nothing wrong in really believing in your business, but one should always strive to answer a few critical questions:

What unmet needs are being addressed? Why now? And, what is really different?

There are many I’ve met who believe that their product/service is the best or first of its kind or not replicable. But what is the main customer pain point that you are addressing and is the time ripe for it? Many businesses die an early death simply because they are ahead of their times, or because an ecosystem to support the business or expand the market has not matured adequately. For instance, online grocery shopping may not have worked in India five years ago, but today with technology, logistics, payment mechanisms in place it seems to be a viable method.

However, the toughest part, and the one that requires maximum attention, is to identify the one or two strongest customer propositions. This is what defines your business in the market place; this is what your entire business strategy will be based on; this is what each and every employee in the organization will align towards.

Do you understand the chosen industry and competitors well?

Are you trying to be an entrepreneur because it’s sexy to be one, or are you entering this having done the necessary research? Passion is important, but that alone doesn’t pay the bills. It goes without saying that unless you do understand the forces at play, the outcome will at best be mediocre. Will you be able to both open up a new market/category and sustain market share? Or will you be the guy who opens the market, educates the audience, only to see others with deep pockets rush in and edge you out?

What are the key factors that will keep the business in business?

You obviously know where the revenues will come from and may have even formed very scientific assumptions to predict future revenues & costs, but you might have to consider every tangible and intangible aspect that will keep you going. You need to be adaptable to evolving needs; in fact you should be able to proactively cause people to change their needs & habits. That’s a very important skill. For example, if you are a healthcare company, are you going to choose only the unwell as your target client, or do you want to inculcate a habit of regular check-ups among the larger population and thereby create a much larger catchment area for yourself. Similarly, you should be aware of how government policies can affect you, what wind is blowing politically and how that could shape the policy environment. Is your universe of target audience expanding or shrinking; and what adjacencies to explore?

Do you understand your potential investor?

The potential investor is probably reviewing several plans simultaneously. She/he may not have the time to do detailed research on the businesses at this early a stage. So try to present her/him with as many relevant information nuggets as possible, with due reference. If you are presenting a certain market size & dynamics and you got the numbers from Report XYZ; please do mention – after all you don’t want anyone to think that those numbers were pulled out of thin air. Tell the investor why you are the right person to back, who are the others that take decisions in your company and what are their backgrounds. Support your financial projections with rational assumptions and go into as much detail as possible.

And don’t forget the most important aspect that any potential investor looks at – a successful exit. Every investor will want to engage with a player who has a definite plan to provide an exit – whether through buybacks, IPO, trade sale. So it comes to 3 things: Ability to Scale, Ability to Execute and Ability to Exit.

The list can go on, but the fact is that a well-researched business plan, that showcases the entrepreneur’s passion and gumption, always wins. The trick is to tell a compelling story, grounded in rationality, which excites everyone!