As one of the first companies in the country to recognize and embrace social media, I am asked why ThePort Network has not achieved a fraction of the financial success attributed to the Facebook, Twitter and LinkedIn and other social networking companies. It is a fair question and the answer is mulitifacted.
Some answers relate to funding, business model and luck. But an overriding thought comes down to this: all of those other businesses took the approach to build their user base first and worry about monetization second. To do that, you need to have significant capital to purchase infrastructure to handle growing online traffic. You need to have patient investors who are willing to look at very little revenue while growing expenses rapidly. You need money to build some brand awareness to attract investors. Basically, you need venture investors who are looking for big homeruns and are willing to commit millions to make that happen.
Compare that to self funded or angel funded ventures, which characterize most of the start ups in Atlanta. Mine included. If you are using your own money, or money from friends and family who trust you, it is incredibly hard to build a business that is not focused on acheiving revenues. To drive revenues, you are forced to work with “early adopter” customers who can literally bankrupt your company as you try to be responsive to their ideas, many of which are not well thought out but they are paying so you scurry around and try to respond. Contrast that to well funded venture back companies who don’t get pulled off course by early customers, who can just keep adding individual users to the service and simply focus on improving core functionality. “Grow the base first, monetize second” provides a simplicity and a focus that is not there for Atlanta start ups. We here lose time, focus and expend tremendous energy chasing dollars down every little opportunity while California venture backed companies are achieving huge audiences, brand recognition and raise even more money at continuously inflated valuations and many are just now focusing on monetizing.
Please note that our Atlanta model has, can and will work. We will continue to build substantial companies that produce great products, create profits and a good return for our investors and accomplish things that we are proud of. We just are not going to build many companies who have valuations that start with a B.
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