Wallstrip is a site which produces short online video pieces
covering stocks. Born of the blogosphere, it’s a fascinating and
unusual business, so we thought we’d take an in depth look at it.
Wallstrip is a company founded by a venture capitalist who
says he never intended to run it as a long-term business. It was funded
with seed capital and sold less than a year later, so the
company fairly screams “test project”.
The fact
that it was sold to CBS
for $5M (as reported
by Techcrunch) a mere nine months after launch proves that
the test was successful.
Investor/advisor Fred Wilson reports that he met founder
Howard
Lindzon on blogs, and Howard told me that he met the show’s
producers
Adam Elend and Jeff Marks the same way.
Fred, Brad Feld and others
invested $600,000 and the production team was sent off with a mandate
to produce a short video every business day for less than $1000, and to
cover high-flying stocks with humor.
Interviews conducted: Howard Lindzon, founder and Adam Elend,
founder/producer.
Key success factors
Build the distribution mechanism into the content
itself
Adam stressed to us that it is not enough to create content,
post it
on YouTube and hope that people will like it.
From the beginning,
Wallstrip was designed around the idea that (flukes and one-hit wonders
aside) content should reflect the community it is made for, delivered
to the places where the community can already be found, and should
encourage viewers to pass it around.
Wallstrip did this in several ways. First, it picked a single
subject to cover: high-performing stocks. This was a conscious and
careful decision. Focusing on one subject let the company target a
specific audience, the online financial community.
Their stated goal
was to become an “instigator of conversation” about
the stocks covered
within that community.
Second, it enlisted a group of prominent financial bloggers
from day
one to comment on Wallstrip, the videos and the companies Wallstrip
features. These people were able to deliver the message about Wallstrip
with credibility to their own readers.
Third, Wallstrip made its content searchable. The company
recognized
that video is harder to search than text and compensated by focusing on
stocks, where ticker symbols and other key terms can account for a big
portion of search requests.
Furthermore, the type of content that
Wallstrip would produce would not go stale over time, unlike other
stock news that is highly time dependent. Wallstrip videos can continue
to be relevant for three months or longer.
Reaching The Influencers
Reaching the influencers, and building the content
they like to see
Wallstrip focused on reaching specific groups of people rather
than
simply going after high viewer/subscriber numbers.
In the interactive
web’s syndication-based environment, traffic reports can show
how many
people viewed a stream, but very little about who those people are or
even whether they watched the whole thing.
Feedburner and other tools
also help to aggregate the data, but there is no one-stop shop and
information needs to be pulled from various sources.
Audience statistics, therefore, are fragmented and short on
detail,
making them hard for content creators to gather and use meaningfully.
Wallstrip figured this out from the start and decided that instead of
focusing on total readership, it would concentrate on reaching specific
viewers – the “influencers” in marketing
terms.
To
launch Wallstrip the
team leveraged Howard Lindzon’s personal relationships to
engage and
involve approximately 10 bloggers (each with 3,000 – 10,000 readers per
day) to write about Wallstrip.
They not only helped the company reach
out to wider audiences, but more importantly served as a sounding board
for what the larger financial community would like to see.
As Adam put it – if the influencers (in this case financial
bloggers) don’t like the content it’s a pretty good
indicator that
either (a) you are targeting the wrong audience, or (b) your content
isn’t right for the audience you are going after.
Bloggers
are in need
of quality content. If you can provide them with this content, then it
is a win-win situation for everyone. Thus, the key is to understand
what bloggers will find valuable. Wallstrip did a great job of
incorporating feedback from bloggers into its content.
Exit analysis
It became clear to us that the Wallstrip team showed
tremendous
savvy and a remarkable ability to articulate Internet marketing
strategies – and to carry them out. CBS will no doubt gain tremendously
from the team’s expertise.
CBS told Howard and Adam it liked
the team-
and especially the fact that they “knew how to get things
done on the
Internet” as well as the content and the communities
Wallstrip built in
its short history.
The motivation behind the acquisition boiled down to
three main things:
- 1) CBS liked the content the Wallstrip team produced
and viewed it as a way to re-enter the financial news arena (CBS
previously sold Marketwatch to Dow Jones) - 2) They valued the online
influencer community that had developed around Wallstrip. - 3) They
valued the team’s expertise.
The Wallstrip team felt that CBS
would be
a great partner because CBS understands that media distribution has
evolved, as witnessed by their efforts to build a distributed content
network. Wallstrip plans to leverage these automated systems and
partnerships.
The return on investors’ capital in under a year is
a solid result,
noting that the $5M total payout didn’t make a home run for
any
individual.
The compressed timeframe almost certainly also produced the
“short-term capital gain” effect that Jeff
Clavier has also griped about,
where the exit comes within one year from investment so that the entire
gain is taxed as ordinary income at the maximum rate rather than the
lower long-term capital gain rate.
Sour grapes for the professional
investors, perhaps, but probably more unfortunate for the production
team that saw a big bunch of its stake go to the IRS.
Food for thought
Wallstrip was founded to target a specific community with
specific
content. The company attracted the attention of top bloggers in that
community, worked with them from the outset to develop content that
appealed to them, and quickly built its name from there.
This is another way to say that Wallstrip laid out its
business plan
and then executed on it near-perfectly. They are probably among 5% of
companies able to do that without iteration, re-starts and changes in
direction. What helped Wallstrip to hit the mark so well?
I believe that foremost was its very tight focus. Wallstrip
set out
to accomplish a single, narrowly-defined goal: produce and distribute
one short, humorous video clip per day on financial news.
This let them
research the audience carefully and custom-tailor the content to the
audience, figuring out what the audience wanted to see and where they
wanted to see it.
Many other factors went into the success. Adam talked
extensively
about the show’s intimacy and authenticity, the company
worked hard on
distribution mechanics, and judging from viewer comments host Lindsey
Campbell is a huge draw.
But I believe the real key was that Wallstrip
knew its audience intimately, developed relationships with key people
in that audience to help refine the content, and then gave the audience
something it really wanted to see.
It sounds simple in hindsight, but
Wallstrip accomplished all these things better than most.
Originally written by Jay Parkhill for startup-review.com, a blog that analyses internet start-up success. Some Rights Reserved
