What’s the news?
Acquisitions are the talk of the content business industry. Earlier this year, HubSpot, the marketing and sales software company, acquired The Hustle newsletter in a deal some valued at $27 million.
Next week, the first chief media officer Brian Angielot starts at the sports-wagering company DraftKings. His job? Overseeing the company’s content creation and media strategy. “He deeply understands how the virtuous circle among sports, gaming, and content has the potential to boost engagement,” the DraftKings co-founder and CEO explains.
It’s not just big brands. In Entrepreneur, Frank Wazeter says the small business model of the future is based on people: “Social capital, also known as the amount of people you can reach with your message as an entrepreneur, is worth more than its weight in gold.”
As he explains: “People are the product: The business model of the future puts media as its primary product. Its secondary product is the actual product/service sold.
Why does that matter?
They’re all signals that content businesses designed to build and grow an audience are increasingly valuable. Businesses will be more interested in acquiring new audiences by purchasing content businesses rather than building audiences themselves.
HubSpot CMO Kipp Bodnar says he sees big opportunities for media (i.e., audience-focused content) companies as tech companies seek to educate and inform their audiences: “(T)here’s only a very limited number of really awesome media companies out there. So it’s not going to be a daily thing, but based on what you’re seeing in the market, I wouldn’t be surprised if a few months from now we saw a similar deal happen.”
Phoebe Bain, who interviewed Kipp, says she sees The Hustle acquisition “illustrates an industry-wide shift as marketers go from being channel-oriented to media-oriented.”
The Tilt Talk and Advice
Why should content entrepreneurs care?
Now is the time to think about your exit plan for the business. We know it may seem odd, especially if you’re just starting out. It’s a must for any entrepreneur who wants long-term success.
Are we recommending you sell?
No, not at all. We’re saying you should plan the ending you want. It could be years away, but knowing your destination allows you to make decisions to move you along that path. You’ll be more deliberate in what you do and why you do it.
For example, The Tilt founder Joe Pulizzi had an exit strategy when he created the Content Marketing Institute – he knew his personal goal was financial freedom. Thus, he set his business goal as selling the company. He knew his minimum price and the target year to sell (it was eight years away. A year out from his target sell date, he knew the business’ valuation wouldn’t net the price he set. So he acquired two properties and an email database. (Spoiler alert: He did sell one year after his target year at above his minimum price.)
What exit options should be considered?
You have several overview options: (1) Pass it down to a family member; (2) Merge with another company; (3) Sell your business while continuing to work in it; (4) Sell the business with the intention of leaving it; or (5) Sell a stake to an investor or partner.
What are unique exit challenges for content entrepreneurs?
Often, you are synonymous with the content brand. Many of your businesses may literally be your name. That means it’s even more important to think now about your end goal. Detail what will make your business most attractive in achieving that result.
For example, think about how to make your brand related to but not identical to you. For example, Ann Reardon uses her name on her cookbooks, but she’s evolved her brand identity to include How to Cook That.
The value of your content is in your audience, not a product or physical assets (real estate, equipment, etc.) That can feel trickier to value, but it really isn’t. It’s still all about revenue and profit.
For a content-based business, anything from 1.5x to 2.5x revenue seems standard — or 5x or 10x profit depending on your revenue mix.
If your content business isn’t large enough or profitable enough yet, you could determine the price on a per-subscriber basis or downloads over a certain period.
The most important thing? All value comes from the audience in one way or another (The New York Times isn’t valued on how much content they develop. They are valued on the buying power of their audience.)
Always build your audience to increase your business’ value.
What should a content entrepreneur do today?
Here’s Joe’s advice:
- Write down your vision of what the business should become. (Dream as big as you want.)
- Detail your preferred way to exit the business.
- Pick the date to achieve that goal.
Then, every day read your vision, exit plan, and achievement date. It should serve as the basis for all the decisions you make about your business.
Exit planning is one component of the Content Inc. business model. Joe goes into detail in the newest edition of the book by the same name coming out this May.