Why isn’t there more investment in new media startups?


There is clearly a mini boom taking place in early-stage high-tech startups at the moment.

That’s what I’m building, so it’s a topic close to my heart. I’ve got some thoughts on that boom that will keep for another post.

But I’ve always been interested in new media businesses too, and it surprises me there isn’t more investment interest and activity around new media-driven startups at the moment.

The conventional wisdom is that media startups and content businesses aren’t attractive, so VCs and angels aren’t interested. I can see how businesses that are built around just putting new content online aren’t going to be appealing.

However, as Clay Shirky’s great recent post outlines, we are going through the greatest period of creative destruction in the history of media.

Existing media businesses are getting smashed. At the same time, there is a lag between that smashing up of what exists today, and the creation of the new businesses that will replace them.

This has been accelerated by the downturn, but it is actually bigger than any single swing of the economic cycle.

Shirky points out that when you look at the introduction of the printing press, the media industry landscapes before and after bear little resemblence. There was no smooth transition or evolution from the old to the new.

The same thing is happening here. The great media businesses of the next century – the News Corps and Disneys – have yet to be created. They will make use of new media technologies that haven’t even been dreamed about yet but many will be driven by ideas around content and audiences. That is, there will be successful companies that are media businesses first, rather than only those that are technology businesses first.

Let me use Facebook as an example. Facebook is a social media business. But I would argue that it was a technology-driven startup not a media-driven startup. Its core competence is providing technology the helps people connect with each other and share stuff that matters to them. That is a business that sits at the intersection of technology and media. But it’s approach, I would argue, is technology first. So it is the sort of sexy company that attracts investment.

I think there will also be great businesses created that are media first.

It’s unlikely today that they would be able to get funding from the venture sector, and are likely to be created in spite of the venture capital model rather than because of it. It may take a few years before we even become aware of what they will look like.

They are out there, however. In the protozoic ooze of a million blogs and micro media businesses, I think there is the early DNA that will turn into the big media beasts of the next century.

My feeling is that they would struggle to attract investment in the way that an interesting technology-driven startup in the media space might, and there will be opportunities missed because of that.

 

A long time between Macs

I used to be a Mac zealot.

At school, I saved for nearly three years working nights, weekends and holidays to buy my first second-hand Mac. I wrote my first articles for Mac newsletters and magazines. I had Apple’s location pinned on a map of Silicon Valley on my bedroom wall.

Then I lost my religion.

Apple strayed from the faith. They shafted Steve Jobs and with every release drifted further and further away from what had made the Mac special.

Until one day the Mac just didn’t seem so special any more. When I started editing a PC magazine, my Mac found itself shunted off into a cupboard, no longer a computer for someone technical, but the sort of computer you get for newbies and arty people who don’t know really know any better.

But then something odd happened. It was nearly four years ago, about the time I bought my last trusty Toshiba notebook. I started noticing developers at technical conferences doing their sessions and presentations on MacBooks running OS X. I found myself quietly wondering if I should get a Mac. But I didn’t. I dismissed the idea quickly and bought my 17in Toshiba for a ridiculously low cost. Macs have always been more expensive for equivalent hardware. PCs had gotten cheaper and cheaper. Macs stayed expensive.

At first I didn’t think much of it – a couple of Rails and web developers here and there surely didn’t mean too much. And corporate developers were still either running Windows and doing .net or running Linux and doing Java.

But lots of smart developers are drawn to languages like Python and Ruby, and the fact they were suddenly using Macs made me question my bias. By then it was a bias. Macs sucked. As a developer, they were a pain to support. Life would be better if everyone just ran Windows XP and IE. That bias stopped me from seeing that something had changed.

It wasn’t just that the impact of Steve Jobs’ return had percolated through Apple’s culture and it was making sexy consumer products. The iMac, iBook and iPod had been beautiful pieces of industrial design and engineering for sure, and game-changing consumer products. But there was more to it.

As Paul Graham noted in Return of the Mac four years ago, the fact that OS X is built on both Unix and on the user experience foundations from NeXTSTEP is a big deal. Here was brains and beauty. Sexy and geeky. Sleek and powerful. All smoothly working together and humming in harmony.

And Paul Graham isn’t the only one to note the change. Smashing Magazine ran a story earlier this week on the top five reasons developers are switching to Macs.

For the first time since I was at school, I found myself going into computer stores just to play around on Macs. And what stores! Apple’s Stores are shining, glorious retail temples. They are magical. Truly, inspiringly magical. And the Macs they sell have some of that same magic as the original Macintosh 128K. It’s not just the startup sound or smiley face icon either. There is magic in the entire experience of using a Mac again.

So when my aging Toshiba laptop died a painful death, I’d already made up my mind that I’d have to somehow convince @mediamum we needed a Mac more than a car or health insurance or groceries, and to help me scrabble together whatever cards and cash we could and — for the sake of our startup — find the cheapest deal on a Mac possible. It was a real and genuine struggle to get this thing, and even with an incredibly cheap deal it hurt us at the moment when we’re struggling to build a startup, especially when a decent PC would have been much less.

But there is another subtle reason too why having a Mac matters with a startup. The two most important things for any startup are the ability to make stuff, and to pitch it. Pitching on a PC sends a subtle signal of dowdiness and “unsexy”. I don’t think that should be the case. But I’ve watched a lot of pitches and reactions, and the Mac thing matters. It’s definitely elitist. It’s not part of the “computer for the rest of us” ethos. I think if anything Mac users suffer from a “the computer for the best of us” mindset. But little things make a big difference.

When you’re throwing heart and soul into making something, you want to use the best tools you can to make it as good as it can be. And when you pitch it as something important and, yes, sexy and hot, you want to make the best impression you can.

So here I am, tapping away on a MacBook keyboard, working with Ruby and Rails and Eclipse, feeling nearly as darned downright excited about the computer I’m using as the first time I lugged home that original second-hand Mac in its big beige carry bag. Between my Ubuntu dev box, and the MacBook I’ll be living on, I find myself only running Windows in a virtual session or through a remote desktop.

I’m glad to be back in the cult, and feel strangely at home again, as though I’ve found a favourite book that was lost, or unpacked a toy from when I was a kid that’s been packed away in storage.

If there’s anything worse than a reformed zealot, then it’s a zealot anew. I’m afraid that a zealot I am once more, and glad to be so.

 

The New York Times serves itself

The normal reaction of newspaper executives to Google’s dominance of web advertising has generally been to complain or cry foul.

Earlier this evening, however, I saw an ad running on the New York Times website that made me say “good on you guys” out loud.

The newspaper has introduced Self-Service Advertising, designed mainly for small businesses. It’s one of the most attractive alternatives to Google AdWords that I’ve seen from a newspaper so far.

Advertisers can upload their own materials, or choose from a library, customizing ad text, appearance, color-schemes etc. And they can choose campaign dates and whether ads should run nationally or locally. Best of all they can choose their financial commitment, and track their ads’ performance.

This is old news for Google AdWords’ customers. But I like the fact that you can target advertising for a premium content brand in context. And I think it adds something appealing to the mix.

I’m not saying it’s perfect, or a panacea to the newspaper industry’s problems, but I do think that this sort of experiment is important. It’s a more effective response to Google’s market dominance than either continuing to do what doesn’t work, or trying to blame Google for the industry’s woes.

And the NYT deserves praise and encouragement for trying new things.

 

About Me

My name is Jed White. I’m a software developer and startup guy with a passion for the future of media.

I’m working on a new startup called TribeVibe, which tracks and measures the impact of content across the real-time social web.

I previously founded itechne, a digital media consulting, services and solutions business working with media and marketing organizations in Australia, and before that was an editor and publishing director for some of the country’s biggest technology magazines and websites.

Coding and media have me hooked. I’ve been writing code and immersed with computers ever since I was a little kid, and a media junkie for nearly as long. I love technology and media, and I get a huge buzz out of being able to work at the intersection of the two.

I believe that startups and entrepreneurship are critical to the world. Most of the world’s great advances are sparked by small committed, passionate teams working against the odds and against the clock. Entrepreneurship is the economic engine room of any advanced society.

If you’re interested in these same topics, I’ve set up some Friendfeed rooms to share interesting stories about them (although I’m on a bit of a hiatus from blogging and social media at the moment while I focus on building TribeVibe.

I love the mountains and the sea, going hiking and biking, and get a thrill from coding for the clouds in the foothills of the Rockies.

Follow me on Twitter or Friendfeed, or connect on Facebook or LinkedIn, or email me at jed [at] jedwhite.com