I was privileged to spend an afternoon on a panel discussing angel investing and entrepreneurship for the Bloomberg Conference on Alternative Investments with Michael Maples Sr., Eric Corl, and Michael Sidgemore earlier this summer. It was a great conversation with a very positive response.
Two seemingly unrelated stories over the summer of 2013 should seriously wake you up.
At face value, it wouldn’t appear these events are connected but pause and think about them and realize the implications.
- The New York Times sold The Boston Globe sold for $70 million to a local businessman.
- Snapchat raised $80 million from venture capitalists at a valuation of $800 million.
The Boston Globe was founded in 1872. It is the dominant newspaper in America’s oldest city with nearly 3x the circulation of its rival. There are apartments in Manhattan for more than the price Mr. Henry recently acquired The Globe for from the New York Times. Think about this – it was owned by the New York Times, arguably the single most well known newspaper company in the world, and it couldn’t survive. Oh, and they paid over a billion dollars for it in 1993.
Meanwhile, Snapchat started as a student project at Stanford at the end of 2011. Its creators, Spiegel and Murray, were basically dismissed by even fellow students for the notion of a social network based on impermanent pictures.
(Background on Snapchat: users take pictures that last for between one and ten seconds on the recipient’s phone).
The average user of Snapchat is 13 – 23 years old and the majority of “Snaps” are selfies, where the user takes a picture of him or herself. It’s no secret that a healthy percentage of “Snaps” are not safe for work, as a subtle description. Within one year, one billion photos had been shared with twenty million photos shared per day. While Snapchat doesn’t reveal its user base, its users are now sharing 200 million pictures a day. Until early 2013, Snapchat was still operating out of its founder’s father’s house and had less than ten employees, including the founders.
The amount of money Snapchat just raised is more than an almost 150 year old newspaper in one of America’s biggest cities with over 25 Pulitzer prizes just sold for. Let that sink in.
What are the implications?
- Content: People demand content – and a lot of it. Some newspapers have done a great job of moving to mobile and creating a wider array of content (albeit a bit belatedly). There’s a time and a place for all content – even ephemeral and seemingly nonsensical. Certainly there is a difference between reading a random blog and the Wall Street Journal, but the “content kings” of the media no longer control all that is seen and heard.
- Consumption: The ways in which people consume content will continue to evolve. It’s no longer enough to just have mobile and a Twitter/Facebook account if you want to connect with everyone. You can choose not to engage with new platforms (whether it’s Pinterest, Snapchat, or whatever’s next), but you may do so at your detriment.
- Value: Gary Vaynerchuk wrote an amazing piece for Medium last week entitled “Value is Subjective. Even When It’s a Little Ghost.” His point was that you may think Snapchat is stupid (disclosure: I do), but there is a huge number of people who find value in it, so don’t write it off. You can examine it and choose to pursue other routes as the best way to move forward with your time, money, or business, but think back to how many people said Facebook and Twitter were stupid. Early adopters of these new technologies and networks, like Gary himself, have created enormous advantages for themselves.
- Opportunity: Lastly, take heart in knowing that an idea dismissed by many at its inception is now worth almost a billion dollars (relevant context restated: Snapchat is now almost worth what the NYT paid for the Boston Globe in 1993). Get off your butt and go create something, anything. You have no excuse not to. While I don’t buy in to the inflated valuations of Instagram and Snapchat – and I recommend you not chase them or bank on them as your only option – shouldn’t it prove to you that an incredibly simple idea, even one that seems foolish, could be something huge?
On that final note, something to remember about the difference between an idea and execution.