Net Results:Many entrepreneurs dream of the moment when venture capitalists might appear with an offer to buy them out, especially if leaving the entrepreneur in control of the organisation they created with blood, sweat and tears, writes Karlin Lillington.
But I said "no". I still don't know if that was the wisest decision for my bank account, but as more time has passed, I know it was the right decision for me. I'd better step back and give the context for the offer - not just because many people will know I don't run any start-up businesses and will be surprised that I've had anything to do with VCs, but also because the brief tale is indicative of wider moves afoot in the internet world.
In March 2005, I set up an internet discussion board where people could register and post on various topics related to a central theme - in this case, a breed of dogs.
Little did I expect it to also put me in the seat of the entrepreneur, having to make a decision about whether and when to sell the "company"; whether to cede ownership and control in return for investment; whether to try to "monetise" my investment, comprising a minimal amount of cash but a huge amount of time and effort. The board, despite its niche appeal, has grown steadily in its nearly three years of existence. It took me months to reach my first 100 members and almost two years to reach 1,000.
Nowadays, I add about 100 registered users a month (anyone can read the board, but you need to register to post). About 25,000 unique visitors come to the board every month, up to 1,000 a day. By the end of this month, I will hit 2,000 registered members.
These are modest figures, but they represent a very nice advertising audience in a niche area where people worldwide tend to spend a lot of money - dogs. In between toys, foods, treats and accessories, dog owners pump a lot of money into local and international markets. In the US, pet owners spent $38.5 billion last year (mostly on dogs), and several billion more on dog and cat food than baby food. But a board offers not just the static advertising opportunity - but the active community itself. Boards are one of the oldest of the Web 2.0 technologies, enabling people to form social networks faster and more easily than in the real world. They increasingly incorporate newer features - profiles, messaging networks, syndicated feeds and tagging for discussion "threads", photo albums and member blogs.
That makes a board an active microcosm of communication technologies and an advertiser's dream - all those niche interests expressed in profiles, blogs, posts and online purchases! So it didn't really surprise me when I got two direct contacts from entrepreneurs and investors.
In the first case, the entrepreneur, an American who was one of the net's pioneers in the advertising space, is building a community of dog lovers, and a community of advertisers looking for dog lovers, as a proof of concept for a new type of net community and advertising model.
In the second, the contact came from a group of Israeli VCs who wanted to buy my site outright and leave me to run it. When I said no, they returned with more detail and an appeal to discuss things further. It was clear they were thinking about aggregating communities of internet users, like those using boards.
Why? Think Facebook. Recently, the social networking site decided to allow advertisers access to its millions of members, based on information about their activities and buying habits. Such data are lucrative and no doubt the deal was too.
But the resulting outcry, which has made the site backtrack and require members to opt in if they want their information used, indicates the pitfalls (ethical and legal) of certain approaches to monetising your community. And that was the bottom line with my own board community, and why I said no to the VCs and entrepreneurs. In general, net communities are built slowly on trust. I felt it would be a betrayal to hand over control and sell them off. And of course, I also felt if someone else valued them that much, I should value them more.
blog: www.techno-culture.com
