Manage your operation with the language of numbers

IJNet has recently launched its Media Entrepreneurship Toolkit to help journalists make their own projects financially sustainable.

My contribution was an introduction to some of the basics of accounting and budgeting.

Some of the key points to keep in mind:

• There are some free online budgeting and accounting software packages that can organize your financial information for you.
• If you are just starting out, make a list of all the monthly expenses you think you might incur.
• Consider the possibility that you might use inexpensive or free digital tools at the beginning to keep costs down. 
• Make sure you know how much you are spending each month. This is called the burn rate. If you don't bring in any more money, how many months do you have before you run out of cash?
• Digital advertising is unlikely to produce much revenue for a small startup. Consider sponsorships, native advertising, donations, and other sources. 

There's nothing to be afraid of. Even English majors can learn how to do the basics.

Versión en español

Other articles in the Toolkit are by Jeremy Caplan, Director of Teaching and Learning at CUNY's Newmark Graduate School of Journalism in New York City:

What to do if your startup fails
5 ways journalism startups can engage an audience
7 challenges to overcome in launching a startup
Qualities of successful entrepreneurs

If you don't have money, use social capital

Image from MCMcapital.com

Digital media entrepreneurs often lack the financial capital and business savvy to launch and sustain a high-quality news operation.

They could improve their reach, impact, and sustainability if they knew how to harness social capital in the form of partnerships with universities, broadcasters, foundations, for-profits, and nonprofit organizations.

Most digital media startups have trouble raising financial capital. They can't get loans because they don't have anything to pledge as collateral other than their personal home and auto. They can't get investors interested because they lack a business model with a promise of profit.

 What is their social capital?

• A veteran journalist has a reputation in the community as a trusted source of information. Their name is their brand with readers and potential sponsors.
• They may have a relationship with a university where they have occasionally lectured or even taught entire courses. A university could provide volunteer labor, equipment, and even broadcasting facilities for a startup. The startup would be a teaching laboratory for students.

Sage advice from Spain's 'mastermind of startups'

Antai Venture Builder nurtures startups. Photo by Caterina Barjau, in El Pais.

Miguel Vicente was an industrial engineer with a hefty salary when he decided to throw it all overboard nine years ago and launch a coupon site.

He gave some memorable quotes that should be heeded by any entrepreneur during an interview with Daniel Verdu of Spain's prestige daily newspaper, El Pais.

"It's like the two pills in Matrix, you have two options: the blue one is for a secure paycheck at the end of the month, the support of a big group that will help you, nice vacations and weekends. And the red pill is the one for entrepreneurs: you won't have anything you had before and you won't even know if you will be around the next day. But you will be the owner of your destiny. That feeling, plus the notion that you cannot fail, makes you pull out the best of what you have inside." 

His first startup was called Lets-Bonus. He sold that and eventually he and two partners launched Wallapop, a mobile app with location technology for buying and selling second-hand goods with nearby users. It is similar to a CraigsList for Spain and has reportedly attracted more than $100 million in investment. Some speculate that its market value might be $1 billion, unicorn territory.

On 5 continents, thousands of digital media startups

Versión en español.

As traditional media organizations cut back on staff and coverage, thousands of new digital media are popping up all over the world to fill the gaps.

I've compiled 14 lists of startups below. Some startups are included on more than one list. Can you think of any lists that I've left out?

Many of the organizations that compile lists also share tutorials, especially on revenue-generating models, to help others launch and sustain their news sites. Sustainability is the Holy Grail. Part of the reason digital media are springing up is because of the gaps left by cuts in coverage and staff at major media (graphic below, from Mark J. Perry's Carpe Diem blog via Clay Shirky's Medium post, "Last Call").

Mark J. Perry's graphic shows newspaper decline. A digital opportunity?

United States

1. The Pew Center has done a study of 178 nonprofit journalism websites with a detailed breakdown of their business models, "Nonprofit Journalism: A Growing but Fragile Part of the U.S. News System."

Gigaom followed up with an analysis of the study, and the Knight Foundation sponsored a roundtable discussion on the topic, with videos of the sessions.

For digital startups, dealing with extreme uncertainty

Versión en español.

When you are starting out with a digital product, it makes sense to get advice from experts. But experts can't help you learn as much as you can on your own.

In fact, most of the successful digital entrepreneurs I know give the same advice: develop a prototype as quickly as possible. A business plan or a powerpoint is fine, but you need to put your actual product into the hands of the public and test your theories. See if they work.

Video with subtitles in English of six digital journalism entrepreneurs.

See also the comments of Gonzalo Costa.

The thinking of these entrepreneurs has gotten its most eloquent expression in Eric Ries's book The Lean Startup. The idea is to save time and money on product development by introducing a  minimum viable product to the target customer, measuring response, making adjustments, and trying again. (Some examples for journalists are below.)

What venture capitalists like about Latin America

Versión en español.  

Venture capitalists in Latin America are looking for digital media startups with rapid growth, a plan for monetization, and international potential.

Francisco Coronel: digital media well positioned

Obviously, most new media don't fit that profile. But startups with these characteristics are starting to attract angel investors who provide the first rounds of capital, says Francisco Coronel, CFO and cofounder of Nxtplabs, an incubator of digital companies in Buenos Aires, Argentina.

Digital media have extra potential because there is a growing demand for content that these companies are positioned to satisfy at lower cost than traditional media, Coronel told me in an interview.

(Disclosure: I just spent two weeks at Nxtplabs training three digital media teams under a contract with the International Center for Journalists.)

Land of opportunity in digital news: Buenos Aires

Miranda Mulligan, right, and me, left, with the startup teams.

Versión en español aquí.

We hear a lot about the next Silicon Valley, but we don't hear much about the Valley of Death. That is where 80 percent of tech startups go to die.

Startups die or join the walking dead mainly for two reasons: they don't have enough cash or they don't have enough knowledge to get to the next stage of development. They are unable to show investors that their project could be commercially viable.

The Media Factory News Accelerator, based in Buenos Aires, Argentina, wants to change those odds of making it across the Valley of Death.

CUNY aims to incubate new media

Stephen Shepard, dean of CUNY

 Journalism School: "We are

 researching ways to support quality

as the old financial order erodes." 

Second in a series on entrepreneurial journalism programs at universities and media organizations.

City University of New York's Entrepreneurial Journalism program aims to be an incubator of new media projects as well as training the next generation of digital journalists.

To that end the faculty research is aimed at helping entrepreneurs directly, as with its survey of 500 local businesses' the online presence and marketing needs; its students do apprenticeships at startups that need help solving a problem; and each student develops a capstone project that could be a business plan or new media prototype. 

In addition, the school hosts events where some of New York City's digital entrepreneurs can present their projects and get feedback. “We want to play a role in the community,” says Jeremy Caplan, director of education for the program. “We want to be a place where people will come and share their ideas.”