3Qs with Andy Robinowitz of Social Knowledge
February 1, 2008
This week I posed three questions to more than fifty CEO/founders of startups in the Dallas area. Throughout the week I will post the responses of the best ones. If you are interested in participating in the future just drop me a line. Andy was the first founder/ceo that responded to the ‘3Qs of the Week’. Here are his responses:
Question One: Given the uncertainty in the financial markets (weakness of the dollar, high cost of oil, sub-prime mortgage mess, growing unemployment, possible recession) what changes (if any) will you make in your business?
We will continue to make every effort to keep our operating costs as low as possible. Our members entrust us with their time and posts, we want to make sure that we continue to be financially stable. It’s important that our members feel confident that their community is not going to disappear because of difficult economic conditions.
Question Two: What advice can you offer to ‘would-be’ entrepreneurs who are thinking about starting a business in the current economic climate? Would you start your business today? What would you do differently?
I would advise ‘would-be’ entrepreneurs to keep your burn rate as low as possible. Building critical mass needed to support ongoing operations of a new company can take years. If you don’t have the financial resources to stay in business beyond your projections you are going to jeopardize your efforts. Always plan for the worst and hope for the best. Too many entrepreneurs plug variables into their finical models that are overly optimistic.
I started my first online community in the wake of the first dot.com bust because I was passionate about the topic. I focused on keeping expenses low because I wanted to make sure the members felt confident that the time & knowledge they invested was not going to be lost. Rates for advertising on online communities have historically been very low because members are engaged in discussions (low click through rate) and not in “surfing mode” where they bounce from site to site (higher click through rates). That means the cost-per-click revenue model yields less revenue per page view for online communities when compared to content sites. Recently brand advertisers have been more interested in connecting with consumers through social networks and online communities which has lead to an increase in ad revenue since they are willing to pay on a cost per thousand (CPM) basis.
If I were going to start the same company again, I would focus on acquisitions instead of building an online community from scratch. The amount of time it takes to foster an online community from scratch into a self sustaining entity is enormous. Back in 2002 advertising rates were lower so I was able to reinvest earnings into advertising to fuel growth. Now advertising is much more expensive making organic search engine results more important. When you buy an online community you can optimize the content for search engines leading to new members without having to advertise which helps keeps costs low.
Question Three: Are you using Facebook, MySpace, LinkedIn? What are you using these social networking tools for? Prospecting? Recruiting? Other?
I have an account on most of the social networks. I use them to keep in touch with colleagues, members of my communities, friends and family. I don’t consider them a big part of my business strategy but I have used LinkedIn to find people with certain skill sets for various projects I have worked on.
Company Background:
Company Name: Social Knowledge, LLC
Year Founded: 2005
URL: http://www.socialknowledge.net
Key Personnel: Andy & hundreds of passionate moderators and administrators
Invested Capital: Thousands of hours of time and about $200,000
Primary Investors: Bootstrapped
Revenue: Not disclosed
