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Aug. 13, 2010, noon

Knight Foundation’s new biz consultant thinks news startups can learn from outside of journalism

When Nick Denton sent out an email to his Gawker empire in April 2008 announcing the sale of the popular political site Wonkette, it came as a shock to those of us who so closely identified Wonkette with the Gawker brand. Not to mention that the 2008 presidential campaign season was in full swing and traffic on political sites was way up. Denton, the founder and owner of Gawker Media, explained that Wonkette (along with two other properties, a travel site called Gridskipper, and a music site called Idolator) “each had their editorial successes; but someone else will have better luck selling the advertising than we did.”

It was a moment when Denton showed his cards: If a site, even one clearly identified with his brand, was a threat to the broader organization, he’ll cut it loose. Here’s the crux of his thinking, in the run-up to the economic meltdown:

Everybody says that the internet is special; that advertising is still moving away from print and TV; and Gawker sites are still growing in traffic by about 90% a year, way faster than the web as a whole. But it would be naive to think that we can merely power through an advertising recession. We need to concentrate our energies, and the time of Chris Batty’s sales group, on the sites with the greatest potential for audience and advertising.

I was reminded of this moment recently after a conversation with a new hire at the Knight Foundation, Benoit Wirz. Knight brought Wirz on board to serve as director of business consulting, where he’ll work with “Knight Foundation staff to develop programs based on realistic business plans.” He’ll also work with individual grantees, including the crop of Knight News Challenge winners. The goal is to get Knight grantees thinking along the lines of Denton: How will my project survive for the long term?

“There are organizations that are struggling with that issue,” Wirz told me. “It would be good to give the organizations we’re working with the best chance to be sustainable.”

Wirz joined Knight from the Florida investment firm USGlobal, where he was vice president for strategic planning and worked with companies ranging from an architectural glass manufacturer to energy firms. I asked Wirz what spurred his interest in working for Knight, particularly on news projects. He said the challenges faced by a news startup are similar to their counterparts in other fields. “My sense is that startups in general face a lot of the same problems, whether they’re journalism or not,” he told me. The solutions aren’t cookie-cutter, but the strategies to get there can work across industries.

The Knight News Challenge, in particular, has always looked for projects that are scaleable, replicable, and in general sustainable, Gary Kebbel, the former journalism program director for Knight and now journalism dean at the University of Nebraska, told me. The new position is an investment in that ideal. “The Knight News Challenge has been used to find and fund new, exciting projects,” he said. “In doing that, it’s made some bets on great ideas.” But, of course, not everyone with a great idea is also an experienced project manager. Kebbel noted that Knight has always offered grantees technical help with basic business functions, like payroll.

More broadly, Knight is looking to make sure its projects and specific grantees take market factors into account. The foundation’s CFO Juan Martinez told me “what he’s really supposed to do is help us evolve our thinking.”

Don’t go Cadillac

Wirz is still new on the job, but we did talk about his broad thoughts on how to get news startups thinking. One of his rare universal points: Forget the Cadillac launch. Journalism might be the first draft of history, but most journalists see their work as something more polished than a sloppy copy. The journalistic process — report, check your facts, edit, copy edit and deliver a product as close-to-perfect as possible — doesn’t always line up with the best mindset in the startup world, Wirz says. Spending too much time and money planning the perfect prototype isn’t necessarily the way to go.

“You want to spend as little amount of money on a product as possible, put it out there, and then get as much feedback as you can,” Wirz said. “I think that model is something that can be useful for journalism startups, in particular, to keep in mind.”

Take the much talked-about new local startup in Washington, TBD. They embraced the attitude that their project is “to be determined,” which is where the probably-too-cute name comes from. The new site launched this week with some nice bells and whistles, like a homepage that can tailor your content via geo-tagging, but the organization fully expects their product to evolve as their audience interacts with them. The site’s general manager Jim Brady told paidContent that in the run up to the launch “we finally just had to say we’ve got to stop throwing new things in here and just get this thing out the door and freeze where we are.” Will the strategy work? Well, that’s TBD.

Pick the right risk

Another broad theme Wirz plans to focus on is managing risk. “The moment you make a business plan, you know it’s wrong,” he said. “You know that it’s wrong. It may be wrong in a good way; it may be wrong in a bad way.” Wirz wants to help startups make sure that the risk of what will go wrong centers on their innovative idea, not the myriad other, more predictable business problems. “There are certain risks that are just inherent in being in a business model. There are portions of business models based on risks. Why I’m here is to mitigate some of the risks that you don’t have to take.”

Friend of the Lab Jeff Israely, who is working on launching his own news startup and writing about it for us, is grappling with this very issue. Israely is a seasoned journalist, not an entrepreneur, who recently described himself as “a well-meaning but lonely 40ish hack with little technical knowledge and scant business experience.”

One of the ways to mitigate risk is to think about sustainability from the get-go, even during the grant application process or the early business-plan development phase. Wirz plans to work with Knight to make sure that groups are already thinking about their long-term plans long before they see any money. And that planning can come from unfamiliar territory. “My hope is certainly to share outside of the journalism world with the journalism community as much as possible,” he said.

POSTED     Aug. 13, 2010, noon
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