This is our 4000-word story as we head into 2016, and hopefully lessons for other companies trying to create their own whitespace in this noisy business world.
This is the exact headline I wrote in my head 18 months ago.
I didn’t know at that time if I would ever get to really write it but we made an insidery joke in our office about this sounding like a headline of a post on, where else, Medium.
We were two years into Skift, having raised about $2 million seed money with marquee names in media-tech early stage investing. The editorial brand had resonated early and quickly, everyone in travel industry was surprised we came out of nowhere — even though the founding team had decades of experience in building media between them — and loved our sharp reporting, analysis and especially opinions on everything in travel. We had become the largest travel industry news site in a record time of 16 months post-launch.
^^ The travel industry embraced us quickly, and loved everything we put out. These annual trends forecast, this first one in Jan 2013, is the most popular thing we do every year.
BUT we were still very early in our revenue buildup and ended 2013 with about $80K in revenues, six months into starting working on sales. The original plan was not to think about revenues for year one and start in year two, and we were on track with that plan. Only, the plan of raising money again to fund future growth was not working.
This was early summer of 2014, and we were about three months away from running out of money at Skift. The race was on: since we had raised seed, it was but written that we had to go out for the next round, and another round after that.
I had been out in the market trying to raise a $3-5 million Series A for about 6-7 months, having endured dozens and dozens of meetings with investors drunk on the dreams of unicorns. The structural issues of Series A crunch were hitting us hard: the round was not big enough for investors we talked to, they wanted to put a lot bigger amount to work. We had a bunch of follow-on money from existing investors lined up and other smaller new investors waiting for a lead to set the terms. And lead we couldn’t find.
By this time our cofounder Jason Clampet and I had secretly made a list of potential buyers of Skift, a soft landing we could engineer among this list of 29 companies. We even emailed it to one of our investors who wanted to start “shaking the tree” to see what they could come up with on interest level among these buyers. We called this “Plan C”, Plan A being raising the round, plan B being cutting back and bootstrapping.
We told investors what they wanted to hear: that we weren’t just sub-scaled media, that we were building the data services that we had talked about from the start. These data services, on paper, would help us scale to a venture-returns-friendly business.
Did we really believe that we had the expertise to build these? Not without a substantial investment and reallocation of resources, and we far from having the capabilities. It sounded great, building media and data together: media to build the brand, data to scale on big revenues. I even coined a term for it that got talked about in the larger media/startup world: mediata.
^^ A slide from our investor deck pitching us as a new breed of data-led “mediata” company.
And this is what I wrote explaining the thesis of connecting media and data together: “What would it mean to scaling of media startups, a group historically seen by the investor class as a low-margin, human-heavy, and purely ad-supported businesses not meant to scale beyond a certain point?”
That word “scale.” I have since revised that word into a phrase, “scale for scale sake” because that is what it is really about, investor-driven frenzy to prove out a model that may ultimately eat itself. Ad blocking, platform dependence, clickbait, every trouble media is in today is a result of this quest of scale for scale sake. We fucked ourselves as an industry.
Back to our story. Late into the fundraising process, our destiny was becoming clearer. It was the third meeting with a large NYC-based investor, we had been pitching data as the center of our company going ahead, and then we added the idea that we would take the model and apply it to other verticals outside of travel. Because that is what the investor suggested in previous meetings, so that is what we said we would do.
I felt dejected afterwards. And dirty for lying we would or even could do all of this, if we had the money. The investor went silent after, as most of others did previously.
^^ The overpromise slide from our investor deck late in the fundraising cycle, when we were desperate to show the bigness, the scale.
The last investor in this process that broke our back was a well-known NYC tech entrepreneur known for starting big companies, big rounds and big exits. He stepped forward and gave us a term sheet to lead the round with substantial personal money of his own, and then, disappeared. Literally. That was it, a sign enough for us to stop and break this cycle of self-flagellation.
At all times, there is a delta between what is needed to grow a company according to the founders vision and what the investors want. There is always a delta. In ideal times, that delta is as small as possible, but when that delta becomes too big, that’s when it becomes a problem. That delta is the hole we had dug ourselves into, by over-promising.
Shortly afterwards in May last year we had planned our first company retreat, a week in Iceland. The idea when we planned it a few months ago was for it to be a celebration of closing our new round, but it turned out to be the best way to celebrate failure and new beginnings.
^^ This became the iconic image from our Iceland trip in May 2014, the Skift team on top of the infamous Eyjafjallajökull mountain.
The previous six months had been the most humbling months of my professional life, an experienced entrepreneur known to almost every VC in the land, unable to raise money.
Iceland was a big breathing-out moment, for me and everyone in the team. The starkness of the windswept landscape lifted some of the fog from our minds about what we had to do: kill the round and behave like a bootstrapped company from here on. I even coined a term for it (you see a theme here right?): Bootstrap+ companies, companies that get a chunky seed round to help fund the product-market fit, don’t go in for further rounds, and focus on building revenues and being revenue-funded from there on.
Later in the trip, we had a full day discussion in the lobby of the Reykjavik hostel where we were staying, where we laid out the options ahead of us and discussed how to fill the revenue gap. The whole experience brought the team together in ways we couldn’t have imagined when we came up with the idea of this retreat.
^^ The Skift team in the lobby of the Reykjavik hostel we were staying in, on May 23, 2014, discussing the options ahead of us after we killed the Series A.
The yoyo ride of the endless pitches and its attendant wildly swinging hopes and emotions was over. For me, that meant turning inwards. That has been a theme in my life for decades, going back to this pair of Indian magazine ads that had lodged themselves in my brain since I was a teenager growing up there, and I had kept these ads with me as I traveled and lived around the world since.
I kept coming back to them over the years for reserves of strength, when I needed them. The biggest import of this has been for me: always, always, do your own thing.
And so we did, to be in the position we are today. As with every meaningful achievement in life, this wasn’t easy or glamorous or quick, we’re still on the path that we’re creating for ourselves every day.
^^ These pair of ads from an Indian magazine that I have kept since I was a teenager.
As we started thinking about what the new path meant for us as a company, I publicly put out our Skift operating principle this summer, after our second annual company trip, this one to Medellin, Colombia:
- Doing less with more is the new doing more with less.
- Going slow to go fast is the new scaling up.
- Less is better, less is deep, less is slow & deliberate, less is human, and humane.
Below, I have documented some of the conscious and unconscious steps we took over the last 18 months.
First, we gave up chasing scale. We took out *all* goals on traffic on the site, for everyone. We could do this because we didn’t have tons of outside money pumping through our veins, and this was a useless pressure we created for ourselves in an effort to show the illusion of growth to investors. And since we weren’t chasing investors, we didn’t need to chase what they would consider scale. It was a vanity metric.
We cut back on spending any money on getting users through Outbrain/Facebook/Twitter. We cut back on the number of stories we were doing on a daily basis, on chasing the tail on disposable news stories. We also cut back on syndicating our stories — in which we put in a lot of effort at the start, publishing on NBC News, CNN, Quartz, Fox News, Business Insider, Mashable and many others, to zero effect on our revenues — and also cut back on publishing useless filler syndicated stories we got from a third party syndication service.
^^ Another slide from our investor deck, touting the useless vanity “metric” of our syndicated stories.
In an era where everyone is tripping over each other to call themselves a “distributed media platform”, we decided to focus solely on building direct channels to our users, which for us meant email. Email, despite all its shortcomings, is that direct promise day in and day out to our users, you see us the first thing in the morning, in the intimacy of your inbox. That is powerful. Also, when you build direct channels to your users, you can afford to be a late-stage early adopter. That means not being in the rat race of always running after any new “platform” that catches fire. That means less panic and less anxiety on the already-hard-enough path of building our business.
If everyone is running towards a distributed world and possibly falling into the platform-trap, going the opposite way with packaged, owned media is worth something, that’s what we are out to prove.
Second, we stopped pretending we knew what we were doing on data. We didn’t want to build something that may not work after significant investment of time and money — and even if it did, it would start bearing fruits couple of years down the line — when we should logically have been thinking about the next quarter, next six months of revenues. We closed down our SkiftIQ data service, but we knew we could always come back to it when we were a larger company, if we decided to.
Third, I focused on revenues and revenues alone, while Jason laser-focused on edit and product. That meant doing things today that brought in revenues today. That meant media, branded content, subscription reports, a conference. We knew how to do this from experience and our team knew how to wrap their heads around it.
^^ The team that pulled off the inaugural Skift Global Forum in October last year.
Fourth, I learned to say no, again and again, to anything that deviated me and our company from the focus. We were a buzzy company in the travel space, everyone wanted to work with us, and learning to say no also meant saying no to anyone asking to “partner” with us. It meant we would only entertain the enquiry if it brought us direct revenues, or emails to build our newsletter list.
It meant saying no to going to random media or startup conferences for us founders. I created a rule that if we didn’t have any customers at a conference (which for us meant the travel industry), we wouldn’t even consider it, and even then we would only go to if we could see direct revenues coming out of spending time there.
It also meant saying no — ignoring completely — any blind introductions to random people in the industry. It also meant saying no to occasional intrusions from our existing investors— “Hey, can you check this startup we’re looking to invest in?” — clearly explained, and they understood and respected our need to not be distracted.
Saying no is an ongoing skill I learn and relearn, and help everyone in our team to learn this important life-skill as well.
Fifth, we learned to ignore the noise coming to us from everywhere, the noise of the startup ecosystem — we stopped calling ourselves a “startup”, a meaningless word that comes with too much baggage — the noise of the “future of media” ecosystem, the noise of competition in our own travel business media, such as it was. We were doing our own thing, which meant I stopped obsessively checking the sites/products of competitors, and had to remind our team not to worry about it. Since we were not chasing on news with churn, we didn’t need to worry about what stories competitors were writing or breaking that we didn’t have; that was a tough editorial discipline to learn.
Sixth, we learned to focus on the efficiency of our effort. It meant doing one big thing a year that brought in big revenues in one go, instead of four small things which took almost 4X more effort but perhaps all added up equal in revenues to that one big effort. That meant we would only do one big multi-million dollar franchise conference a year, not 10 one-day smaller conferences like I did in my previous company.
That meant email newsletters, magazines, PDFs (or equivalent), events or podcasts, with a start & finish, delivered periodically. Sidestep every large existential debate in media — ad block/platform-dependence/clickbait/others — altogether, create your own formats & media.
^^ The first Skift magazine came out on Jan 9th, 2015.
Seventh, for the founders, we dedicated ourselves to making the lives of our team better. That may sound simple, but with so many constituencies pulling at you as a founder, especially if large amounts of venture capital is part of the equation, it is the first thing to fall off in the list of priorities. It meant evaluating every next step and opportunity on how it would affect the professional and personal lives of our people. We have fully embraced the idea of building a humane company.
We chart our own path, we define our own scale, we define our own intensity of work. We work hard during the hours of 8 am to 6 pm on weekdays, and that’s it. We don’t want people in office after 6 pm, we don’t want people working weekends, and I am proud to say in our 3.5 years of existence, we have *never* had to, as a team, come to office on a weekend.
We are building a humane company that wants the best out of people in the hours they give to the company, and build a more balanced life outside of it.
Eight, as part of our “Living The Brand” motto, we have thought a lot about what it meant to be at Skift. There are two ways to think about creating a company culture. It’s either a set of perks and platitudes designed to make employees feel good about themselves for working somewhere — or it’s a strategic function that helps keep your employees aligned with your values, and your values aligned with your users. Unless you make a conscious strategic decision to live a brand-relevant culture, you’ll inevitably default to the same generic lip service as a hundred other companies–and you’ll pay the price in everything from recruiting to retention to market leadership to customer service.
^^ The second Skift annual retreat, in Medellin, Colombia, in mid May 2015.
All of our activities have a travel spirit, directly or indirectly. Our hiring reflects it — we want the Skift team diversity to reflect the diversity of the world of travelers — our work space reflects it, our team lunches reflect it, our offsite days around New York City area reflect it, our big annual trips — to Iceland and Colombia the last two years — definitely reflect it. Most of the people we have hired have never worked in travel industry before, and we hope to make them travel lifers after they leave our company.
In recruiting, this manifests as a set of two discussion points we have with potential employees: What’s your life story? This helps us understand their motivations in life and what led them to being where they are today, and how we can add to their life story going ahead. Second, to see how much they believe in the opportunity, we present working at Skift as a having a transformative effect on their career, not just the next step up in their job history progression. Some get it, some don’t, and we come out better off with the right kind of people to bring on board.
Ninth, we became obsessed with the idea of our utility value to users who swear by us. This is a two-step test as I outlined here, which essentially says this: How much of a personal or professional utility value do your users ascribe to your brand? And how indispensable are you to the ecosystem you exist in? While media companies focused on scale-for-scale-sake talk about unique visitors to their sites, we talk about unique residents.
There are people who build media companies for valuation, then there are others who build media brands for value. Internalizing that difference has made all the difference to us. All of this hides an ugly unspoken truth about media in general: that it is disposable, in so many ways. The key is to move towards making yourself non-disposable, by adding enough value.
Tenth, we strive to do something totally unexpected at regular intervals, even if it looks counterintuitive to our brand (what marketers call “surprise and delight” and tech people call “doing things that don’t scale”). One of the phrases we have heard most often about Skift as we have built it is that we look, read and sound fresh. Part of keeping that freshness as we grow is to continue to find new ways of looking at things, including our own products and how we package it. That is why we launched a print magazine at the start of 2015, came out with two issues in the year and planning to up the frequency to 3-4 times a year in 2016.
^^ Buying the tactile loyalty of our users, the second Skift magazine that launched at Skift Global Forum 2015.
The permanence of print in an age of digital ephemera gives a heft to our boutique brand. We call it “strategically deployed packaged media” which has a much longer shelf life, and with the effort we put into the design of it, has a wow factor as well. It brings in revenues, yes, but more importantly it buys us the tactile loyalty of our users. We will continue to launch new and surprising products – if and only if it has differentiated strategic value to us and our users – because that is part of who we are as a brand.
Lastly, we embraced the idea of being boutique, in the truest sense of that word, and have been loud and proud about it. One of the fallacies of mainstream media coverage of smaller media businesses is that these are just lifestyle passion businesses. Passion about the subject, enough to spend many years of our lives in it, sure. What business engenders loyalties if it doesn’t have passion behind it?
We have, at every step, communicated our underdog story to our users, showing our scrappy, authentic opinionated self, showing all of our warts, and the users have embraced it — including being generous about our mistakes — they have been part of our story.
We have embraced our new tagline, “Skift: Defining The Future of Travel” in all possible ways, we believe we are changing our rather-large corner of the world. The media we are building is a big part of those who care about travel. That for us is scale, to be a big part of the professional lives of the people in the travel industry. That is how we gauge the effect we are having.
^^ Who’s to say defining the future of travel out of our boutique media company is not the most scalable thing to do?
The tangible parts of building the business and revenues are still hard, it is a slog every day, but a joyful, meaningful slog we are doing for ourselves. This thing that didn’t even exist a little over three years ago, we built it from our tiny corner of the world into the largest of its type in the world’s largest industry, we get to dream, live and breath travel 24/7, and lo behold, people all around the world give us money for it! Having that sense of naiveté and wonder has brought us to this place, today.
We have hit our first year of profitability in our second full year of revenues in 2015, with unheard of pace for a media upstart. We have ample cash in the bank — the most we’ve ever had — with low burn rate and revenues approaching mid single-digits millions, and a revenue-per-employee amongst the highest in medialand. We are aiming to double the revenues in 2016, but that’s a self-created goal in which we’re only competing against ourselves. We just did our biggest hire since we launched, our new President, a very experienced media operator who will help build Skift into a lasting global business information company. We are now hiring our 20th employee, moved into a larger office 5 months ago, and are already in danger of outgrowing it in about 6 months from now.
Medialand has always been a game for the long haul, not for the weak of heart, fly-by-night entrepreneurs, you either know how to ride it for years and decades if need be, or you’re just a scenester trying to do the cool media thing because it is what cool kids do.
My personal philosophy in all of this has always been: Perseverance, above all else. Keep your head down, build stuff, focus on building a business, and good things will happen. This world deals a lot in buzz, which can be hugely distracting and your whole existence can get swept up in it. Avoid scene-sters, and surely avoid becoming one.
^^ Skift cofounder Jason Clampet on CNN in Dec 2015, talking about the year in travel.
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Photo credit: The Skift team on stage, at Skift Global Forum 2015.