Is there a startup accelerator bubble or is the startup accelerator model simply a nascent and fast-growing industry?

As a Tow-Knight Entrepreneurial Journalism Fellow at the CUNY Graduate School of Journalism, I am one of 16 lucky new media entrepreneurs who have access to world class mentors, financial opportunities, industry leaders, venture capitalists and like-minded thinkers. It is difficult to classify the program as a seed accelerator (because no seed funding is provided from the get-go), an incubator (because of the aforementioned relationships and opportunities that go beyond free office space), or an intrapreneurship for in-house academic experiment (because we have no obligations to continue our relationship with the university after the program ends).

What I had not considered before embarking on this adventure was that a major benefit of having the Tow-Knight Center housed at CUNY is that all intellectual property that my colleagues and I create is our own. We don’t have to fork over any percentage of future revenues that we may derive from our forthcoming ventures to the institution or our advisers. I consider us lucky and rare to have this combination of resources without the potential of buyer’s remorse if a project grew but some equity was already distributed.

This morning, I read an interesting INC article that provides an insider’s look into TechStars, the popular and fast-growing startup accelerator. While TechStars and YCombinator are generally considered the Harvard and Princeton equivalents of the accelerator world, I wonder whether the rest of the pack, essentially startups themselves, has equal value. While I enjoyed the INC piece, I was disappointed to learn that some TechStars applicants are accepted because of their relationships with the organization’s leaders, despite having severely underdeveloped or non-existent products. But on the other hand, I recognize that this is the way the world works. In private business, democracy has a very limited role. And merit may have even less. In the startup world, a frequently heard maxim is that venture capitalists invest in personalities and founders, not companies.

With seed accelerators proliferating all over the world, one wonders if the talent pool at each individual accelerator will become severely diluted. Though it is impossible to gain data about the success of companies grown from seed accelerators that have not yet had the opportunity to flourish or flop, one can surmise that more startup accelerators will mean fewer success stories from each specific program. When YCombinator had less competition, it meant that they got their pick of the litter. Nowadays, founders may not want to schlep to Silicon Valley if they are confident that they can still make it in their home cities or countries.

Jed Christiansen, a London-based American who works at Google, keeps track of seed accelerators through a spreadsheet on his personal blog. He defines seed accelerators as follows:

The following are required to be a “seed accelerator”

  1. Open application process; anyone with an idea can apply
  2. Accelerator invests in companies, typically in exchange for equity, at pre-seed or seed stage
  3. Cohorts or ‘classes’ of startups; not an on-demand resource
  4. Programme of support for the cohorts, including events and company mentoring
  5. Focus on teams, and not individual mentoring

Examples of what isn’t a seed accelerator:

  1. Programme where the startup pays for mentoring
  2. Incubator where the startup pays (discounted) rent in return for equity and/or discounted business services
  3. Programme where applications are restricted to certain groups (like students from a particular university)

Because of the rapid growth of seed accelerators, now would be an ideal time for someone (an academic, perhaps, hint, hint) to create a more comprehensive database that keeps track of the success to failure ratio at each of these accelerators. I can already guess that firms that are only given $20K in seed funding in exchange for 7% of their company won’t have the same advantages that firms who are given $100k for an equal stake. In this sense, it will also be important for entrepreneurs to report back on any seed accelerators that are disorganized, don’t deliver on what they promise, or steal intellectual property — all issues that I foresee arising in the near future.

At the end of the day, one must think about Facebook, YouTube, Google, and countless other uber-scalable companies that weren’t working within any set of rules at a seed accelerator when they launched. Investors flocked to them when their products had true growth potential and superb execution.

While some people wonder, what comes first —  the chicken or the egg —  I wonder what comes first — the seed or the flower that creates its own seeds to spread.

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Startups that are trying to create marketplaces that monetize video content. But how will they get people to the market?

I have been researching startups that offer opportunities for original video content creators to monetize their work, oftentimes by creating marketplaces and platforms. Here are some of the more interesting companies I have discovered. (Please add others in the comments section.)

Note: I am not writing about companies that work in music monetization or companies that are video advertising solutions.

1. PlaceVine (Acquired by social video syndicator Alphabird in 2011)

About: “PlaceVine is a service that bring passionate content producers together with marketers and their agencies to create socially engaging branded video experiences. Today, the basic Placevine service enables producers to showcase their concepts and content for brands, and enables marketers to provide talented producers with brand integration opportunities.”

2. Koldcast.tv

About: “KoldCast TV, a division of KoldCast Entertainment Media, LLC, is an international television network which distributes programming to entertainment consumers around the world via the KoldCast TV Network site, found at www.koldcast.tv, via set-top boxes, connected/smart TV’s and mobile devices, and via unique relationships with broadcast and cable TV networks and other television distribution venues around the world. Our programming is largely created by independent television producers and filmmakers from the United States and countries across the globe. The phenomenal growth of independent programming allows KoldCast to be highly-selective in its programming choices. Unlike online video distribution sites like YouTube and those that have followed them, KoldCast specializes exclusively in professionally-produced programming. Our programming slate does not combine user-created videos of cats and dogs playing the piano or riding a lawn mower.”

3. Blur Group

About: “Blur Group has built and operates the world’s largest Creative Services Exchange™. With 14,075 creatives and exchange staff, a unique business model and advanced technology, it radically alters the marketing services space. CMOs, marketing directors, VPs, creative heads and innovation leaders buy the best, most cost-effective creative services from expert providers around the world. The biggest global brands, the coolest startups and all points in between choose this transparent approach for the most cost-effective, real time and relevant design services, marketing campaigns, content programs, original artwork and innovation partnerships.”

4. Talenthouse

About: “Talenthouse provides life-changing opportunities for the creative community. It’s a place to participate in projects with leading artists and brands, gain recognition and virally grow your audience. Talenthouse embraces artists at every level of their career, as well as all supporters of the arts. Attracted by the potential for discovering, collaborating with and mentoring emerging talent, many global brands and acclaimed industry icons are involved with Talenthouse by hosting Creative Invites. Brands choose Talenthouse to engage in a dialogue with their audience in a targeted, relevant and credible context. Talenthouse currently focuses on film, fashion, music, art / design, and photography.”

5. Videolla.com

About: “You simply upload your video to Videolla and set price for it or insert ads into the video. Its simple and free. You will not need any coding skills. Just register, upload your videos and pick if you want to sell them or place ads.”

6. Bozza (South African)

About: “Most individuals in Africa engage with digital communication, information and entertainment through their mobile phones. Content drives the uptake of technology; yet despite the global increase and focus on the value of content, there continues to be a lack of locally generated, contextually relevant content for the African market. Focused on local made-for-mobile content, the Bozza application offers artists, filmmakers and entrepreneurs a mobile platform through which to distribute their content. By doing so these SMMEs earn revenue and users get free access to relevant, premium content (music, written word and videos) that entertains, educates, informs or all of the above.”

7. Poptent

About: “Poptent is a vibrant community of filmmakers (and actors, comedians, grips, animators and more!) who are connecting to each other and to companies that want to pay them for their talents. Through our passions for advertising and commercials, we are exploring a new way of creating branded messages for the Internet age. Poptent members can show off their work, build a portfolio, collaborate with other creators, leverage our deep set of features, and best of all make money doing what they love. Poptent brands are seeking new ways to reach their consumers and create new audiences. They are finding exciting possibilities that save them both money and time while staying just ahead of the curve of competition. They are, in a word, trendsetters.”

The US Senate passed the JOBS Act: How this legislation can improve the quality of American journalism

I recently blogged about the many benefits that I hope will come to America with the passage of the JOBS Act. Now that the US Senate has passed the JOBS Act, the bill has gone back to the House of Representatives for final approval before President Obama signs it into law. Despite my skepticism about the ability of Congress to pass any legislation in this toxic and partisan political climate, I am pleasantly surprised that it looks like the JOBS Act should go through with bipartisan support.

My general thesis is that if the “people” can now invest in new ventures, then they will be more apt to use products and services that cater to small groups/communities, and more likely to shun products, services, and information that comes from large corporations that are geared for the masses. Of course, it may take a couple of years to see these effects, but I am hopeful that fragmentation can create diversity in spheres of life where Americans now have too few choices.

While other commentators have focused on the overall benefits and drawbacks for investors, businesses, regulators, and consumers, I will list potential ways that the new crowdfunding legislation can influence and disrupt journalism. My theories on winners and losers from the JOBS Act:

1. Communities can rally around creating publications that they control, rather than leaving sub-par newspapers in the hands of publishers motivated by the bottom line rather than creating high quality community content. Watch out Patch and legacy publishers! The potential to revive local journalism in places that are currently without local news sources is the most promising development that I see. But legacy media organizations should be on guard, because disruption born out of frustration may be just around the corner.

2. Niche publications will be able to get off the ground more easily. If a fragmented community of  1,000 people — I’m thinking an online community for this example — who were spread throughout America, wanted to hire one person to work to create content, they could hypothetically each donate $30 to a venture that could create a niche publication with a professional or semi-professional journalist/curator at the helm.

3. Television networks and cable channels should be scared because YouTube is already slicing up the market. Enthusiasts of various types of content that don’t achieve the critical masses needed for channels that cater to advertisers may now have their opportunity to band together to create more desirable programming…and make it profitable.

4. Television news should be a prime target for entrepreneurs at the local and national levels, as it has remained virtually unchanged for such a long time. I foresee new formats developing, and I believe the crowd will control how they develop.

5. Crowdfunded radio stations may destroy the traditional for-profit ones. Watch out ClearChannel. Look out for an indy radio explosion…most likely based on the Internet.

6. Lone bloggers and journalists with strong personal brands — or with the ability to build strong personal brands — will now be able to have investors rally behind them. This may create a major revolution for sole proprietors, ending the struggles that freelancers face in terms of tax burdens. Another advantage is that talented people may now be more willing to go off on their own rather than remain with corporations that underutilize talented journalists’ skills and abilities.

The Texas Tribune’s non-profit business model is harming for-profit journalism in Texas and Texas A&M’s corporate sponsorship of The Tribune should have been disclosed in a recent New York Times piece

Update: Click HERE for Texas Tribune CEO Evan Smith’s response and additional notes regarding the post below.

My updated conclusion: Led by the success of the non-profit news model represented by The Texas Tribune, the decline of the for-profit news ecosystem is being accelerated by competition from the non-profit world. The role of a non-profit should be to help increase the quality of journalism, but not at the expense of for-profit organizations.

In journalism circles, The Texas Tribune is generally held in high regard for the quality of its content and its ability to lure top reporters from other Texas-based organizations. It is trusted enough to provide reports to the Old Grey Lady.

While I have been impressed by many of the Tribune’s special reports, data journalism, and coverage in general, it never dawned on me until I had a chance conversation with a reporter from The Austin Chronicle at South by Southwest (SXSW) who accused “The Trib,” as he called it, of creating an unfair playing field for journalists who work at for-profit news organizations in Texas.

Since its formation in late 2009, The Trib has received large donations from foundations and individuals. It has also made many big-name hires: Emily Ramshaw from the Dallas Morning News, Jay Root from the Associated Press, and most recently Aman Batheja, of the Fort Worth Star-Telegram. Batheja recently accepted a buyout offer from the Star-Telegram during its latest round of layoffs, and quickly lined up his new political reporting gig at The Trib.

On the surface, this appears extremely positive, as laid-off Texas journalists may now have a news outlet to call home. The Tribune’s open-source model will now enable other Texas news organizations to access Batheja’s high quality content for free. Therefore, the Star-Telegram no longer has to pay Batheja a salary while still getting his ace political coverage.

Evan Smith, CEO of The Texas Tribune
Evan Smith, CEO of The Texas Tribune

The ideas that a non-profit news organization is not beholden to interests that affect for-profit news organizations (corporations, advertisers, etc.) is also flawed. Because The Trib is subsidized by wealthy donors, it may not create the type of journalism that could harm its financial future. Tribune co-founder and CEO Evan Smith has a strong financial incentive not to ruffle any feathers: According to The Texas Tribune’s 990 form, filed with the IRS in 2010, Smith made a $320,625 base salary and $13,038 in additional compensation. (I guess it helps that he’s also on the Tribune’s Board of Directors.)

From the Texas Tribune’s 2010 2010 IRS filing.

A TT insider, whose anonymity I will protect here, told me that because it is important for The Trib to maintain positive relations with donors, the organization rarely takes strong stances on issues. Smith himself described membership, major donors, foundations, corporate sponsorship, and earned income as the sources of revenue for his non-profit news organization. However, as the screenshot from The Texas Tribune’s homepage below shows, corporate sponsorship and advertising look to be one and the same:

It’s doubtful that The Tribune would now write a damning report against Texas A&M or Austin Recovery. In fact, four days ago, Texas Tribune Executive Editor Ross Ramsey wrote a glowing profile in The New York Times titled “A Master Carver, at Work at A&M” about John Sharp, the new Texas A&M University System chancellor. While Ramsey admits previously working with Sharp in at the Texas Comptrollers Office in the 1990s, he does not mention that Texas A&M is a corporate sponsor of The Texas Tribune today.

Can a startup non-profit news organization that relies on donors, members, and corporate sponsors for growth also excel at reporting that requires it to be non-partisan, as the Tribune claims to be? I argue that the answer is clearly no.

A full list of Texas Tribune donors and members is available HERE, as well as The Tribune’s 990 forms for the IRS.

SXSW – Successful Journalism Startups: Global Lessons

Takeaways from Pekka Pekkala’s sustainable journalism business models talk:

Visit http://www.submojour.net/ for more info. This is a database of for-profit news sites that make money.

Top findings from case studies of profitable journalism startups:

1. This is not a new thing: The average age of money-making web sites is 6+ years (worldwide).

2. Advertising rules: 75%of people interviewed said they make more than 75% of their revenues from advertising. Most journalists sell the ads themselves. They sell weekly or monthly ads rather than CPM-based ads. Avoid Google AdSense.

3. Make money as a consultant. You can earn 3x as much money as you do as a journalist. But make sure you are an expert.

4. Host events.

5. Syndication.

6. Be frugal. WordPress is by far the most popular publishing platform — but learn basic tech skills.

7. Be entrepreneurial: Think about the money from day one.

8. People don’t pay for content…but they are happy to support a cause: This is true in the US, but perhaps not in other countries.

9. Find your niche. Based on geography, taste, interest, or point of view…

10. Pay your contributors: Free citizen journalism is the exception, not the norm. 1 out of 10 contributors stay more than a couple of months, and those people hardly ever write again. You invest so much time and money in training people.

11. It’s about community: It’s not about you. The people who create content have to be a part of the community. (The Patch.com turnover rate was so high that new editors were not able to form relationships with the people they covered.)

An unexpected eulogy, RIP Andrew Breitbart: The only publisher who gave MyTwoCensus.com a chance at syndication and finding a larger audience

I woke up this morning to an e-mail from a friend that informed me of Andrew Breitbart’s untimely death. At first, I thought it was a joke. When I learned that it wasn’t, I came to the solemn realization that a difficult-to-fill void had been created in the American journalism landscape.

That Breitbart was only 43 makes this situation even more tragic, because I pictured Andrew being a ball-buster and rabble-rouser for another 50 years. Whenever I reached out to Andrew to give him updates about the 2010 Census, he always took my calls, which is rare in a day and age where people are generally too busy for in-depth communications. Typically, we chatted while he was driving his four children around LA. But he even made time for me between television interviews as he was breaking Page 1 national news. Though he had no reason to, Andrew Breitbart gave me his ear, listening to whatever I had to say.

As a journalism entrepreneuer, Breitbart was like no other. From his days at the Drudge Report, he realized the direction that journalism was headed, and, ironically, helped Arianna Huffington start The Huffington Post. But he also had the foresight to realize that a liberal aggregator needed a conservative counterbalance. Poof, BigGovernment.com was born.

While I certainly do not agree with many of the tactics that Breitbart sometimes condoned — specifically, the shoddy editing techniques used by James O’Keefe in his “undercover sting” videos and the whole Shirley Sherrod affair — Breitbart created a strong outlet for investigative journalism at a time when such a practice was vanishing across traditional media because of financial constraints. He did his best to provide an alternative voice to what is dubbed the mainstream media. Breitbart was not afraid to take journalistic risks, and for that, he reaped many rewards in the form of powerful scoops, the value of which he was well aware of.

Yes, he was outspoken. Andrew Breitbart did not always agree with the Conservative establishment, as demonstrated by the fact that he joined (and within a year resigned) from the board of GOProud group of homosexual Republicans.

I appreciate Andrew Breitbart because he took a chance on me as a 24-year-old reporter covering a beat (the 2010 US Census) that the mainstream media failed to see as important. Though few mainstream news organizations have reporters covering demographics issues on a regular basis these days, none of the mainstream media organizations that I reached out to wanted to take a chance by partnering with MyTwoCensus.com, even though it may have filled significant gaps in their reportage.

But Breitbart was different. He took me in board and permitted me to publish whenever I wanted. MyTwoCensus.com has certainly been critical of both Democrats and Republicans, but Breitbart never attempted to censor my critiques of the GOP in any way, shape, or form.  Some people misconstrued this syndication on BigGovernment.com as proof that I was “Conservative”  even though I was simultaneously working at ultra-liberal Mother Jones magazine while publishing on BigGovernment.

Andrew Breitbart, you will be missed. Your vision, strategy, and tactics led journalism into the 21st Century. Your feistiness, entrepreneurial spirit, and willingness to take risks will be difficult to replicate. On a personal level, I will never forget that you you gave me an audience to publish for and a sounding board to speak with.