Spirited Media’s year of momentum: How being good for our word was good for our business
The great thing about being an entrepreneur is that you never stop learning. My latest lesson came as I was preparing for Spirited Media’s Series B fundraising round.
Before pitching new investors, I wanted to make sure our existing investors had a chance to review my plan for how to best tell our story. I’d spent countless hours refining our pitch deck, feverishly adding, deleting, redesigning and editing slides until they told a story I thought best reflected the excellent year Spirited Media has had, one that’s seen us reduce our monthly burn by more than 70 percent. It’s a year in which we’ve:
- Launched membership, which is now bringing in recurring revenue from more than 1,500 members. (Nieman Journalism Lab recently wrote about our membership program.)
- More than doubled the non-grant revenue we earned in all of 2017, and that’s with more than three months still left in the year.
- Opened up a consulting operation that’s quickly turned into a six-figure business for us, with a major announcement coming soon that will put us in the middle of an important local news project while also delivering significant revenue to Spirited Media.
- Increased our year-over-year events revenue by 61 percent.
- Developed an interesting model for expansion into new cities that we’re currently pursuing in multiple markets.
All in all, I thought it was a pretty good story. So, I’m not going to lie; I was quite self-satisfied after I presented the pitch to one of our investors. And he looked up at me and said, “You’re missing the most important thing.”
What could I possibly have missed, I wondered? After a few seconds of awkward silence, it became clear I had no earthly idea, so he filled in the blank: “You did what you said you were going to do last time you raised money. You need to say that.”
Most of the companies he invested in hadn’t stuck to their plan, he noted. To be fair, that’s not always a bad thing; entrepreneurs often need to pivot when opportunities arise or circumstances dictate. But when we raised money last fall, there wasn’t much wiggle room. Sticking to the plan was crucial. That meant launching membership to open up a strong new line of revenue. That meant doing some painful cost-cutting to reduce our burn. That meant renewing our focus on events and de-emphasizing standalone advertising. And while I knew we’d successfully done all those things — and also seized some new opportunities that arose along the way — I wasn’t aware how much weight our investors had put on us being good on our word.
This anecdote is yet another example of how raising money doesn’t come naturally to most of us who came up in newsrooms. But this is my third go-round raising money for Spirited Media, operator of the fine local news sites Billy Penn, The Incline and Denverite, And I’m now much better at it. More importantly, Spirited Media is in far better shape than it was a year ago when I made the painful decision to lay off staff and cut expenses to stabilize us. It’s been a hell of an effort by everyone at our company, and I’m incredibly proud of the entire staff and what we’ve collectively accomplished.
The end result of the past year’s success is that there’s now clarity around our model: We are a company that will eventually derive most of its revenue from consumers, but based on passion, not page views. We don’t ask readers to give us money to access our sites; we ask them to give us money to support our work. And that highly engaged audience will allow us to continue to make money from events, via both ticket sales and sponsorships. And though we haven’t built our sites around display ads, we will indeed continue to sell advertising so others can reach our audience — 50 percent of which is millennial.
As one of the leaders in the local digital space, Spirited Media is also realizing there’s a market for what we’ve learned in our four-plus years of existence. Recently, we began a consulting arrangement with Graham Media Group and its six local TV stations to help those newsrooms improve their digital operations and processes. We’ve completed the first wave of visits, and are now discussing plans for a second phase of engagement. Encouragingly, we’ve also been approached by others who either want advice on how to start their own local sites or are interested in partnering have to jointly launch in new cities. (BTW, if you’re interested in having a Spirited Media-like site in your area, let us know. As I noted earlier, we have an interesting concept on how we can do that.)
Finally, there’s the big project I alluded to earlier. I can’t get too deep into the details yet, but the short version of it is that a few companies — including Spirited Media — will soon join forces to tackle a longstanding obstacle for local digital news operations. It’s a really exciting project, and one I look forward to talking more about when it’s formally announced.
UPDATE: Journalism being what it is, about 15 minutes after I published this, news of the project I referenced above was featured in Ken Doctor’s latest Newsonomics column at Nieman Journalism Lab. Here’s the key paragraph:
WordPress is developing a cloud-based content management system on WordPress.com (with partners including Spirited Media and the News Revenue Hub) aimed at the needs of small-to-medium local news sites. The system would incorporate a variety of innovations developed by leading news publishers. The idea, as with Arc: provide integrated services to publishers and drive continued development more quickly and inexpensively than can be done on individually hosted instances, whether of WordPress or other platforms.
So, as you can see, it’s an exciting time.
While we’ve made massive progress since last fall, we’re not in the black yet. So we’re out now trying to raise $2–3 million to allow us to keep pushing forward. And because of the success we’ve had reducing the burn, that capital would give us — by far — the longest runway we’ve had in our history. It will also allow us to expand into new cities, hire a seasoned revenue lead and begin to actually market our sites. To this point, we’ve tried to grow slowly and smartly, and that’s meant being frugal about marketing and cautious about hiring a true business lead until we had a better sense of what our revenue mix needed to be. We now have the answers we need and are excited to charge forward.
I’m happy to talk to anyone who wants to learn more, whether you’re a potential investor, someone interested in our consulting services or an entrepreneur looking for advice. We’ve got plenty to give and, as our investor noted, we’re good on our word.