By Joe Pulizzi
According to the SBA, half of startups don’t survive the first five years, and just 30 percent are around in 10 years. To make things worse, OnStartups.com reports that the success rate for first-time entrepreneurs is just 18 percent. Ouch!
Want better news? Henry Blodget, co-founder of Business Insider (among other accolades), places the success rate of one of the most successful startup accelerators on the planet, Y Combinator, at a mere 10 percent or less.
If you are an entrepreneur or startup, you probably know that the odds are already stacked against you. And you’d be right, if you start your business the way nearly every business in the world launches: create a product first, and then try to find your customer base and market fit.
A Better Way to Start
What if there was a better way to significantly increase the odds of your startup success? Well, we just found it. Over the past year, we’ve had the opportunity to interview dozens of the fastest-growing businesses led by entrepreneurs who used a “content-first” business model (more on that in a second).
The more we interviewed, the more similarities we found among their business models. Actually, as we analyzed the businesses, we discovered that each followed the same six steps to building industry-leading platforms. This is what we dubbed the Content Inc. model.
The short story is this: each and every business followed the exact same model and these same six steps. Simply put, they built an audience first, and then launched a product or service.
The Story of Copyblogger Media
Brian Clark, founder of Copyblogger Media, shares his story in both the foreword of Content Inc. and throughout as a case study. Brian, a recovering attorney, had some amazing ideas about how businesses should market online. Unfortunately (or maybe I should say fortunately), he didn’t have a product to sell.
For one year and seven months, Brian developed amazing content on a consistent basis to a targeted audience. He defined his ultimate mission: To create media assets that depended on the permission to contact my audience, not the permission of a media gatekeeper.
In shorthand: Become the expert resource that attracts the right audience without having to buy advertising on someone else’s platform.
And Brian did just that. Today, Copyblogger Media (now called Rainmaker Digital) is one of the fastest-growing SaaS (software-as-a-service) companies on the planet.
The Content Inc. Model
What Brian did, along with dozens of other remarkably successful businesses around the world, is follow the Content Inc. model.
With no barriers to entry into publishing, and the ability to find an audience online, we can now develop a customer list in advance of launching a product. At the same time, because we are serving this audience with consistent, compelling content over time, we begin to understand the needs of that audience better than anyone on the planet. That means that we will learn what this audience ultimately wants to buy and how we can turn our audience into real revenue and profit.
The six steps include:
1. The sweet spot
First, uncover a content area around which the business model will be based. To make this happen, we need to identify a sweet spot that will attract an audience over time. This spot is the intersection of a knowledge or skill set (something in which the business has a competency) and a passion area (something the business feels is of great value to society or inherent value to the target audience).
For example, Andy Schneider has built an entire business around his celebrity persona, the Chicken Whisperer. Andy’s knowledge area is backyard poultry. To put it mildly, Andy knows more about raising chickens in a backyard than just about anyone else. At the same time, Andy has a passion for teaching. Andy loves helping his friends with their backyard chicken-raising whenever he can.
2. Content tilt
Once the sweet spot is identified, the business needs to determine the “tilt” or the differentiation factor to find an area of little to no content competition.
Claus Pilgaard is one of the most well-known celebrity figures in Denmark, all because of the extraordinary way he talks about chili peppers. Claus’s YouTube videos have garnered millions of views, including one where Claus conducts the Danish National Chamber Orchestra playing Tango Jalousie while eating the world’s hottest chili peppers. That video alone has more than 3 million views (that’s more than half the population of Denmark).
Claus’s sweet spot was the intersection of his skill at performance art and his passion for chili peppers. But what Claus realized was that there was an abundance of content and experts around the “heat” behind chili peppers, but a content gap around the taste of the peppers.
Claus always had a passion for chili peppers, but it wasn’t until he started telling a different story that the business model grew legs. The “tasting” addition to the sweet spot was the tilt.
3. Building the base
Once the sweet spot is found and the tilt occurs, a platform is chosen and a content base is constructed. This is exactly like building a house. Before we get into all the paint and fixtures and flooring options, we have to plan and install the foundation. This is done by consistently generating valuable content through one key channel (a blog, a podcast, YouTube, etc.).
The base includes:
- Content type: Text, video, audio, etc.
- Content platform: Blog, iTunes, YouTube, etc.
- Consistency: Same time every day, week, month, etc.
- Time: It almost always takes over a year to build the base enough to be able to monetize the platform.
Today, our company, Content Marketing Institute, offers a print magazine, research papers, podcasts, ongoing workshops, and more…but for the first four years, it was just a blog–the core channel that initially drew in the audience.
The blog originally started as just me, writing approximately three times per week. In 2010, we opened up the blog to additional contributors at five times per week. In 2011, the blog went daily, even on weekends. Not until success was found in the blog (the platform) did CMI diversify to other channels.
4. Harvesting audience
After the platform is chosen and the content base is built, the opportunity presents itself to increase the audience and convert one-time readers into ongoing subscribers. This is where we leverage social media as key distribution tools and take search engine optimization seriously. At this point, our job is not just to increase web traffic. By itself, web traffic is a meaningless metric. Our goal is to increase traffic to increase the opportunity to acquire an audience.
The critical acknowledgment for this area: While many metrics analyze content success, the number 1 metric is the subscriber. It’s almost impossible to monetize and grow your audience without first getting the reader to take action and actually subscribe to your content. In the Content Inc. model, email is king.
5. Diversification
Once the model has built a strong, loyal, and growing audience, it’s time to diversify from the main content stream. Think of the model like an octopus, with each content channel being one of the arms. How many of those arms can we wrap our readers in to keep them close to us (and coming back for more)?
ESPN, originally started as a sports-only cable television station in 1979, began with a $9,000 investment by Bill and Scott Rasmussen. Now, almost 40 years later, ESPN is the world’s most profitable media brand with operating earnings of more than $4 billion, according to Forbes.
For 13 years, ESPN directed its attention to one channel for 100 percent of its audience-building focus: cable television. Then, starting in 1992, the floodgates opened on diversification, first with the launch of ESPN Radio. ESPN.com (originally called ESPN SportsZone) launched in 1995, followed three years later by ESPN the Magazine.
Today, ESPN has a property in almost every channel available, from Twitter to podcasts to documentaries. Even though the channels were limited in the 1980s and 1990s (compared with today), ESPN didn’t diversify until the core platform (cable television) was successful.
6. Monetization
It’s time. You’ve identified your sweet spot. You’ve tilted to find an area of content noncompetition. You’ve selected the platform and built the base. You’ve started to build subscribers, and you’ve even begun to launch content on additional platforms. Now is when the model monetizes against the platform.
By this time, you are armed with enough subscriber information (both qualitative and quantitative) that a multitude of opportunities will present themselves to generate revenue. This could be consulting, or selling software, or keeping customers longer, or having customers ultimately buying more when they do buy.
Rand Fishkin, CEO of Moz (originally called SEOMoz), started his blog on search engine optimization insights in 2004. In less than five years, Moz had over 100,000 email subscribers.
Rand originally monetized the audience through consulting services, but in 2007, Moz launched a beta subscription service for software tools and reports. By 2009, Moz closed the consulting business entirely and focused on selling software to its audience. Moz had less than $500,000 in revenue in 2007. Today, it is north of $30 million.
The best part? Moz and the other successful examples in the book look amazingly unusual, but they aren’t. As the book details, their numbers are typical numbers for a Content Inc.-model business. The key is following the six steps as outlined and being patient enough for the model to work.
Whether you are a startup looking for a business model, or an existing small business looking to build an audience to drive more product and service sales, the Content Inc. model works.
Have we found a new business model for entrepreneurs to take advantage of our current environment? Can we change those horrific startup success numbers and put the odds in our favor? I think so.
The post Most Entrepreneurs Start the Wrong Way–Here’s the Fix appeared first on AllBusiness.com
The post Most Entrepreneurs Start the Wrong Way–Here’s the Fix appeared first on AllBusiness.com.
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