Great headline isn’t it. First off I’ve been watching the Soprano’s way too much. Tonight I cracked a beer put my feet up on the coffeetable and ate Qdoba and watched another year of the Soprano’s. I began to realize the deep truths of business being shared to me with this new season. Yes, it has everything to do with New Media. And while I don’t actually have 4 Million Dollars to buy a new company here’s what I would do if I had the millions to spend.

The Second Coming of the Internet
Basically this second wave of big business deals, mergers, “alternative IPOs”, and media grabbing attention is a result of money that has always been there but untapped. But rich traditional media, and brick and mortar entrepreneurs being flush with cash and wanting to dump it into a product they didn’t develop to attempt to squeeze the lifeblood out of New Media until every ounce of dignity has been sucked from it. The competitors are buying so now we have to buy too. It’s the me too approach of business. Fox buys MySpace. Google buys everyone. Microsoft forgets about its competition passes bong around the room and realizes oh yeah people need a web browser. People need an operating system. Shit we are behind blame Robert Scoble. It’s his fault. All that funny blogging he’s been doing. He’s the face of the company. Again its because Bill Gates is busy in the garage smoking the ganja. Back to the wisdom of Tony Soprano. We now know the Second Coming of the Internet is upon us. The New School of Internet Gangsters have arrived all wanting to
join forces with the Old Crime Family (cash in), while others are happy being a slim majority who collects and organizes trash. Yet others are happy hyping shit that never seem to launch. If I was from the Old School here’s what I would do with my 4 million.

I would buy one company. And one company alone. I would base my decision on one litmus test. That is if they followed

The Big 5

1) They picked the right enemy. And didn’t get their ass kicked.

In business you have to pick the right enemy. Calacanis and Denton didn’t have to worry about enemies per se. They created each other as the enemy. Their wasn’t any other competition in commercial blogging. So their “played out” dramas were purely for the sake of the consumer. It was fun to watch. It kept us coming back. Kept us watching their products. In new business you have pick the right enemy. Eric Sink has a great article about this very topic. Here’s why 90% of the blog networks will fail in the next 7 years:Picking the wrong competitor as your goliath can be suicide. (via Eric Sink) Everyone including me picked the wrong competitor. Yes, I made a huge mistake in the business world. I picked an enemy. And they were too big. It was suicide. Not this site. But the failed Erati venture. I could have fought harder. But what’s the point. Get out while you still can and feel good about it.

2) They not only created a new brand, but a new brand segment.

Let’s talk success for a moment. Let’s talk about burritos. Not only was I watching the Soprano’s when I started blogging about this. I was eating burritos. Actually it was a Naked Burrito, with Tortilla Soup and drinking a Dr. Pepper. I begin pondering the big burrito wars of the early 00’s. Chipotle vs Qdoba. Both were started in my boyhood home of Colorado. In fact both menus where developed by the same Chef. And if you blind fold the average consumer and drag them into one and then the other. They could hardly tell the difference. They also choose an easy enemy. Taco Bell, and created an enemy. Each other. And rode an easy horse to victory. This parallels The Gadget Blog War that happened when Peter Rojas left Gawker and joined Weblogs Inc a few years ago. Both Calacanis and Denton were hugely important in developing this blogging industry. They created pretty much on their own a brand new segment of the Internet. Commercial Weblogs. Pretty simple they were innovators.

If I’m going to buy a company. Or start a new venture you can be sure about one thing. Their isn’t going to be a hell of a lot of competition in that segment of the industry. And the competition is going to be Big and Stupid. (Again your gonna want to read Eric’s article to understand this point). I’m going to have to go out there and create a new brand. Branding is hugely important. Especially with new products. Not only am I going to want to create a new brand. But I’m going to need to create a new brand segment. Here’s a good example:
Michael Dell didn’t create the computer. That happened much earlier. Some would say Charles Babbage, or Konrad Zuse. Michael Dell merely changed the way people acquired computers. He networked with some retailers who had left over parts from being forced to overstock by IBM and started selling them via Newspaper Ads, and Computer Magazines. He sold them 10% or more below retail prices. From this fledgling project started in his dorm room he moved up. He started a company that cloned IBM computers using the same components essentially called PC’s Limited. It took off. But he had a lot to learn about business management. By now he was a college dropout, who had stumbled on to a new brand segment. Selling Computers direct to consumers and skipping the middle man.The retail store. He chose his competition. He created a new brand “Dell Computers”, and established more importantly a new brand segment. If I’m going to start a new venture, or if you are. The best thing to do is plan smartly, but also be open to stumbling accidentally into great ideas and concepts. Most of the time businesses set out on one path only to stumble onto new market segments with weaker enemies. Dell, Ebay,Coca-Cola, Jet Blue. All great brands. But even better brand segments.

3) They are 110% model businesses.
10% of business is great planning, 90% is accident. The other 10% is supporting cast. 201 years ago 2 fellows by the name of Lewis and Clark started planning. They set out to explore the Louisiana Territory. They planned a great deal. But great planning isn’t half the battle. It’s maybe 10%. 90% is the unknown. I like to consider this shit accident’s waiting to happen. The other 10% is supporting cast. Dell was accident. Ebay was an accident. The Pacemaker also an accident. . These two blokes set out to explore. No solid model on what was going to happen. Chart the events. Explore and learn along the way. They surrounded themselves with people smarter than themselves and empowered them. Yes, Lewis and Clark were hugely empowering innovators. Here’s proof:

“When the expedition reached the Pacific the party voted on where to spend the winter. York, Clark’s slave, is allowed to vote, nearly 60 years before slaves in the U.S. would be emancipated. Sacagawea is also allowed to vote, more than a century before either women or Native Americans are granted full rights of citizenship.”

Source. Every project you set out on, or I set out on should be a 110% model. Be a strong planner. Be open to accidental success, Chose a great supporting cast and empower them along the way.

4) They found a way to keep the smart people in the family.
I worked a number of years in the restaurant industry. It’s a great industry to be in. However its plagued by a lack of stability. It has a massive amount of turnover. I’ve seen great people get tossed to the wolves. Others exterminated by stupid regional managers. Mostly the brightest and hardest working folks are neutered. 99% of the Food Service Industry has no understanding of an ability to hold on to its best and brightest people. There is an exception out there. One Colorado based company I worked for in the past as a manager started giving away their restaurants essentially cutting the costs of setting up franchises and allowing managers to take over existing stores as franchise units. Manager retention rate skyrocketed. They found a way to keep their brightest stars. And became one of the fastest growing franchises in the United States.

Yet another company Yum Brands which probably operates one of the following stores in your area of the States: KFC (previously Kentucky Fried Chicken), or Pizza Hut, or Taco Bell,or A & W, or Long John Silvers. Was having massive retention problems when they morphed from Tricon Global Franchising after the big split with Pepsi in 1997. So they started offering stock options to their managers. In the restaurant industry this is a rare thing. All of a sudden not only are they retaining management, but they become hugely profitable and the largest franchise operator in the world. Bigger than even McDonalds. Yet you probably hadn’t heard of them. With 34,000 plus restaurants their brand remains stable only by keeping their best people. Since they started offering stock options same store sales have increased nearly every quarter.

Lesson to be learned: Reward your employees and do what it takes to keep them in the family. Any company, business, or venture I set out on will have this at its core. This is another lesson I think blog networks have totally messed up. There just isnt any loyalty. No rewards. Even with Weblogs Inc, or Gawker. Both of these guys have found it hard to retain people. Although Gawker probably does it better than most. Yes, I know. I hear all the screaming coming. New Industry. No stock options. Etc. Etc. Shhhh. Listen. Do you think I want to hear that crap. Peter Rojas was given equity by Calacanis. Now look at the millionaire. If you believe in your people enough. Hand over the equity. Put your faith in them. And let them drive your car to the money.

5) They are profitable in multiple arenas.
Much of New Media is still locked into advertising dollars. The money is in products people. Do you only have one product? If that’s true your probably going to flounder. If you are going to win in this New Media Industry you have to cross over. We have old school companies like Wal-Mart crossing over. If you are going to be truly successful you have to cross over. You must have multiple streams of income. Starbucks is a great example.

When you think of Starbucks you think they are selling coffee. Truthfully this is going to be a massive Multimedia Company when my kids are teenagers. I’m going to remember them for coffee and the kids will remember them as the place to hang out and listen to music,surf blogs, and what not. It’s always been about bait and switch with them. Now they own radio stations. Coffee,Record Labels, now Radio Stations. Each venture has been profitable because they are willing to innovate and reach out to leverage the power of their network. Starbucks is just a massive global network of people wandering into their stores. Smart businesses innovate and hold down multiple streams of income. If Starbucks was smart they would start by opening up an online music store. Give away a single or two when you buy the coffee. Think little code on the cup. Then they can move in and take away a huge segment of the iTunes market. They already have guaranteed WiFi in the stores. Lot’s of WiFi people, and lots of whitespace on the cups. They have access to the music. Secondarily they ought to think about starting a blog network. We all talk about Net Neutrality like its an evil thing. Damn it. It’s a forced reality. It’s going to hit us hard. But. It’s not going to come non-voluntarily. Imagine Starbucks, or Panera bread offering Free WiFi. One of them already does. Think if they offered free access to sites they operated. Starbucks News, and Commentary. And charged for access to the rest of the net. I imagine I would sit down order my coffee pay for 30 minutes of Wifi access. Start surfing and boom. Time runs out. So I head over to blogs.starbucks.com and begin randomly surfing and reading here. I figure they have me suckered in for a few minutes automatically. Not bad for a coffee joint that’s actually a multimedia joint. Especially considering if they were wise they would give me free music downloads just for commenting, or staying on their sites.

I’m not saying your company has to start selling a product outside its bread and butter. I’m saying that your company needs to start thinking about innovative ways to leverage the resources you have in Amazing Ways.

Next Post Teaser—- My next post is part of a new dynamic series entitled Chief Innovation Officer
Where is your blog network going? Are you so blind you can’t see the hills in front of you because you are too busy running your damn network? No worries. Imagine I was named The Chief Innovation Officer of your company or network. That’s what going to happen. One Day. One Network. One at a time until I’m so bored I could vomit.

Network Name: Federated Media
CEO: John Battelle
What’s Right- Big Names, Big Franchises …........
What’s Wrong- What the hell are they doing with all that cash? .......

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