Digg for the Press: Publish2 Gets Funding
New Media tech writers (Metue included) usually reserve some airtime to cover the freshly funded. Such newly flush startups are powerful fuel for talking about developing trends or as barometers for the next (or not likely to be next) new thing. Every now and then though, when the funding size is extravagant or the recipient a peer, the financial press gets buzzing.
This relatively quiet news Monday, the blog side of tech news buzzed about the Series A financing of press-centric startup Publish2. Per the company’s own announcement, they closed a $2.75m first round with money from Velocity Group.
The service being funded, which is currently in Beta, aims to be another peer driven news aggregator like Digg or Reddit. The difference is Publish2 is targeting their service at the news media. They’re aiming to be a business to business (B2B) equivalent to their consumer to consumer (C2C) peers.
At this point, not much more is clear about where the company is heading. The beta test remains invitation only and a condition of the invitations (which are only available to journalists) is that Beta testers not “write a review or critique of the service until [they’re] out of private beta.” It’s the equivalent of a gag order.
Given the rapidly changing nature of a beta test, I can’t say I blame the company. I’ve applied for a Beta invite and if granted, will honor the terms too. They don’t, however, preclude evaluating the company is from the vantage point of a potential investor. To fund? Or not to fund? Does the company appear a sound investment opportunity?
Judging by some of the criteria used at Sequoia Capital the questions break as follows:
The Sequoia rule: “Pain Killers”Pick the one thing that is of burning importance to the customer then delight them with a compelling solution.
There’s no question traditional media is cutting costs and hurting for creative new solutions. There’s obvious pain. A web-based ticker service that reaps some of the rewards of Web 2.0 technologies might well be an R/X for fixing one part of it. On the other hand, capital expenditures are being cut for these companies. If Publish2 aims to be a fee-based service, the pricing structure could be a sticking point if not well managed. Additionally, as a matter of culture, much of the traditional press remains averse to some new media technologies. A recent Pew Internet Poll showed a majority of journalists felt aggregation services were bad for the industry. Will they feel the same way if they and their peers are the only participants using the aggregator? I’d want to do some serious due diligence before making that judgment or betting money on it.
The Sequoia rule: “Large Markets” Address existing markets poised for rapid growth or change. A market on the path to a $1B potential allows for error and time for real margins to develop.
As noted above, the press is struggling. There’s both a loss of audience and margins. It’s not a growing industry though change is afoot. Maybe new tools will make newsrooms more efficient and that will make them desirable, but the counter question is how much of a priority are they going to be? And how many of the assorted papers and press outlets will find enough unique value for a service of this kind over an AP Wire or Business Wire to justify participation? Hard to know, but a big question.
The Sequoia rule: “Rich Customers” Target customers who will move fast and pay a premium for a unique offering.
Not clear that’s this market as noted above. And looking at history? This has been the tortoise not the hare in measurement of decision speed.
The Sequoia rule: “Think Differently” Constantly challenge conventional wisdom. Take the contrarian route. Create novel solutions. Outwit the competition.
If anything, this is the strength. An industry recoiling is not where many would target a solution. Publish2 is bucking the trend. Good call? We’ll find out over the next year.
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