It was an investor meet last month…
I was talking to one of the investors there. He is from a very large media house.
“We have startup program.” He smiled.
“So, how to work with you? How do you support startups?”
“Well. We come in only after you prove success. Then we give advertisement currency. ”
“So, this is free advertisement to support?”
“Hmm.. It is not. For every $100 of currency, you need to give us $200 worth share”
Now I stop talking. For you to determine the ‘$200’ worth of share, you need to first do the valuation of the company. The valuation of startup is quite stupid. Every founder thinks that it will become a billion $ company in 5 years while everyone else bets that it will close down within 2 years. In the initial days, there is no objective valuation possible.
Then once it starts making money, the company’s existence is guaranteed.
This investor goes on “We have funded unicorns like BYJU’S , PAYTM etc.”
It is still an interesting option, if there is not too much energy to be spent on negotiating the valuation. But now I have options other than mainstream media/investment. i.e. I could look at tech and social media companies. Let us look at some of them:
Support for startups – Mainstream Media vs Tech/Social Media companies
- Microsoft Bizspark : Get 18 months of free credit to use its products and services. Their cloud services cover virtually everything.
- Amazon Startup LaunchPad: They give free credits to the cloud services. More importantly help to get discovered through amazon e-commerce platform.
- Google Cloud: Free cloud credits i.e. to host, use the AI services and many more for up to 3 years and 200 k $.
- IBM Alpha Zone: 20 week program. IBM provides lot of things from cloud credit of (120k$ per year) till space.
There are many more. Facebook also has its startup program.
Compare this with what I heard from the media house guys. None of the tech companies demand equity at this stage. Also all of these are willing to support from very beginning. Tech helps in startups which are passionate for tech. Shouldn’t media be helping some, at least aligned to their business?
Advertisement Costs & Revenue – Mainstream Media vs Social Media
Leaving alone the funding, let us think about adverting cost for a moment. With Facebook for $0.25, you could reach 1000 people in India and $7 in USA. And these can be targeted to specific people and the value for money would be higher.
The mainstream media advertisement costs would be much more, for the same.
The advertisement revenues bagged by tech companies is $100+ billion. Without these companies, most of these would have gone to mainstream media.
This puts media and social media tech companies in direct competition. i.e. mainstream media has a lot against tech and social media.
Monopoly of Mainstream Media in influencing public opinion is massively challenged by social media
Apart from ad revenue the media’s power lies in the control over public opinion on various issues. While I am not privy to any information, it is an easy guess that this power can easily be translated to money or be used to further ideological pursuits.
In ideal world the media of all kinds are supposed to publish all the information to people and help in forming opinion individually. However, the media has taken the role of opinion maker. i.e. it can take sides and publish selective information. This has same effect as fake news. Surprising that world has accepted it. Media wont question itself. why would it ?
Now, the social media has provided alternative. i.e. it also delivers correct and fake news.
The trust and control over public opinion directly helps in advertisement revenues and also in powerplay
So, what should the media do to fight for its business interests? Do everything possible to discredit tech and social media companies.
Now taking a look at the data scandals and tech companies
Recent times the biggest news maker was the the testimony of Mark Zuckerberg. While all of us watched in awe the full video of testimony, what he said and what he evaded. Many people wrote articles on why facebook account should be deleted and shared on facebook :). Due to mounting negative publicity, Cambridge Analytica decided to close down. Still the media’s attack on social media is continuing. Why? Now you know the answer.
Take-away is just this – we should all stand up for privacy, data protection, eradicating fake/partial news etc. But be mindful of the different battles. So, we should seek to apply same standards to every entity that can influence public opinion.
Tech and social media helped in democratizing things. These have helped small businesses and startups like never before. In the rush to punish only the tech, hopefully the benefits they bring won’t be killed.
Tech companies have swung into action
But I am not sure if media is going to be transparent about opinion making campaigns, who funds, who benefits, the involvement in toppling governments and so on. Hopefully it happens too.
Be careful what you wish for
Read every news about data and tech. But do not be disproportionate in demonizing the tech companies.
For me, I still might go for the media investor I talked about. thanks to Tech companies, my dependency has reduced to great extent. If the trust on social media totally reduces, then the value of advertisements would reduce. Then everyone has to bow to the monopoly of media moguls.
I do not think it is in anyone’s interest.