How a media holding can launch 12 successful startups a year
Let’s say that the media holding decided to create a business incubator to create startups and expand its market due to the existing audience on the holding’s media resources. For example, by placing ads on their new resources in related topics or information products on non-repurchased areas of their sites by advertisers.
In such a situation, the holding can quite clearly represent the audience of resources, its segmentation, interests, sources of the audience and, possibly, has the results of a fairly thorough analysis of its most targeted segments. If there is none or the audience’s understanding is insufficient, then there are enough competencies either to independently work out the issue, or to attract professional marketers and formulate the research objectives for them.
On the other hand, a media holding company that has entered the Internet has a well-known stable development department. We will not make assumptions about the quality of this department, the organization of processes and the qualifications of developers in it, because there are different cases. The only thing we will assume about the development department is that it fully manages to support existing resources. Moreover, the phase of active growth due to development was passed some time ago - otherwise the task of development through the created media startups for the holding is irrelevant.
In other words, we are considering a stable organization that has deep competencies in terms of marketing, some competencies in supporting existing media resources on the Internet and financial resources - own or borrowed. And she wants to resume active growth due to growth in new directions, possibly related to the main profile.
It would be wise for such a media holding to create a dedicated unit of several small, 3-4 people, risk development groups. Each such group could consist of an Internet marketer with deep Internet analytics skills, a layout designer with good front-end developer skills, and a backend developer with server and database administration skills. The indicated business triple is minimal and at the same time a development team that is very effective in terms of internal communication. Its distinguishing feature should be the speed of setting up experiments on the flow of visitors and testing a variety of hypotheses.
The leader of 3-4 such groups makes sense to put an experienced person who can explain to business which startup business ideas should be tested in the first place, able to help teams conduct more experiments, have the courage to quickly abandon bad ideas and able to reveal the implicit potential of a bad start project. The ability to assemble such teams, maintain their spirit and help to survive constant failures should also be his strong competencies.
Failures. Failures will be. Startup and startup, the most likely result of its launch is failure. So, in honest startup business plans, it should say: “we have just started, so with a 95% probability you will lose the money invested” - and this will be an optimistic assessment.
On the other hand, the media holding has extremely valuable competencies that can radically reduce risks. Firstly, this is an understanding of the audience, or at least the target segments. Secondly, it is not just smart money, but smart money with a deep understanding of the market. Thirdly, the technical competence of the existing holding development unit is enough to maintain and gradually develop existing sites, which means that the technical risks are not high either. These three competencies allow, with the due skill of the head of the startup incubator, to bring the risk to 70-80 percent in a year, that is, to succeed at the level of one of 3-5 projects with growth to the level of 10 projects from 25-30 projects. Below we will see how many successful projects a year are and how to minimize losses from failures.
The business process of the incubator makes sense to build as follows. At the entrance, organize a priority-sorted register of business ideas. For each idea, you should indicate the main business case, a description of the target audience, potential profit, target indicators for assessing the success of a startup, some integral assessment of the attractiveness of the project and a seasonality window for an optimal launch. The usual list of worked out ideas sorted by current priorities - project charters and expected KPIs at different stages of testing ideas.
Teams take ideas from the list in turn, check the availability of the market, check the assumptions about the potential product, develop the minimum product, check the performance of this product for the given market, optimize it for the market and transfer the successful product to the already existing development unit for more smooth development of the tested product with confirmed market. Then the cycle is repeated for the next idea.
At each stage of the cycle should be tested need to fix losses either because the idea was initially bad or good potential, but the market for it yetno, either creating a product for some reason is problematic, or the proven market size is not interesting for a media holding. During the initial development of each idea, KPIs should be determined in advance, which allow at each stage to decide on the termination of work or their continuation. Such termination or continuation of work should not be automatic, but should be accepted by the investment committee. The investment committee will protect a good idea with poor timing and stop working on a project with a random spike in performance on the day the decision is made.
Early fixation of losses allows the team to increase the number of successfully completed projects per year. A team can work out only one successful idea per year with the effectiveness of selecting ideas one successful out of four, from the cycle of launching the idea to optimizing the MVP for the market for 3 months and deciding on the fate of the project at the end of the cycle. Moreover, if bad ideas are rejected on average in 1 month, then this will already allow, firstly, launching 2 successful ideas per team per year, and secondly, gaining the competence to quickly drop bad ideas in the first weeks of putting ideas into work .
In fact, 3 months for the minimum viable product in the framework of such development is quite a lot. Development time will be reduced both due to the development of solutions by the teams, and as a result, the development of skills to reduce the amount of minimum sufficient functionality. Many developers and product owners are surprised to realize how minimalistic a product designed to test an idea can be without causing reputational damage to a business.
Target indicators at the end of the first year are: the average time for rejecting an unsuitable idea at the level of 3 weeks, the average development time for the minimum viable product is about 2 months, and the success rate of the idea taken from the pool to work and not rejected from the threshold is 30-40%. That is, about 3-3.5 successful startup projects per year per team, taking into account 4 weeks of vacation. Given that we consider traffic for experiments to be free - it comes from non-purchased advertising space - the investment efficiency is at least 3-3.5 times higher than according to the original scheme, even with a 25% probability of success.
4 teams will help maintain speed at the level of 12-15 successful startups per year. The basic competence of the team for this is the speed of experimental separation of successful business ideas from unsuccessful ones.
In such a situation, the holding can quite clearly represent the audience of resources, its segmentation, interests, sources of the audience and, possibly, has the results of a fairly thorough analysis of its most targeted segments. If there is none or the audience’s understanding is insufficient, then there are enough competencies either to independently work out the issue, or to attract professional marketers and formulate the research objectives for them.
On the other hand, a media holding company that has entered the Internet has a well-known stable development department. We will not make assumptions about the quality of this department, the organization of processes and the qualifications of developers in it, because there are different cases. The only thing we will assume about the development department is that it fully manages to support existing resources. Moreover, the phase of active growth due to development was passed some time ago - otherwise the task of development through the created media startups for the holding is irrelevant.
In other words, we are considering a stable organization that has deep competencies in terms of marketing, some competencies in supporting existing media resources on the Internet and financial resources - own or borrowed. And she wants to resume active growth due to growth in new directions, possibly related to the main profile.
It would be wise for such a media holding to create a dedicated unit of several small, 3-4 people, risk development groups. Each such group could consist of an Internet marketer with deep Internet analytics skills, a layout designer with good front-end developer skills, and a backend developer with server and database administration skills. The indicated business triple is minimal and at the same time a development team that is very effective in terms of internal communication. Its distinguishing feature should be the speed of setting up experiments on the flow of visitors and testing a variety of hypotheses.
The leader of 3-4 such groups makes sense to put an experienced person who can explain to business which startup business ideas should be tested in the first place, able to help teams conduct more experiments, have the courage to quickly abandon bad ideas and able to reveal the implicit potential of a bad start project. The ability to assemble such teams, maintain their spirit and help to survive constant failures should also be his strong competencies.
Failures. Failures will be. Startup and startup, the most likely result of its launch is failure. So, in honest startup business plans, it should say: “we have just started, so with a 95% probability you will lose the money invested” - and this will be an optimistic assessment.
On the other hand, the media holding has extremely valuable competencies that can radically reduce risks. Firstly, this is an understanding of the audience, or at least the target segments. Secondly, it is not just smart money, but smart money with a deep understanding of the market. Thirdly, the technical competence of the existing holding development unit is enough to maintain and gradually develop existing sites, which means that the technical risks are not high either. These three competencies allow, with the due skill of the head of the startup incubator, to bring the risk to 70-80 percent in a year, that is, to succeed at the level of one of 3-5 projects with growth to the level of 10 projects from 25-30 projects. Below we will see how many successful projects a year are and how to minimize losses from failures.
The business process of the incubator makes sense to build as follows. At the entrance, organize a priority-sorted register of business ideas. For each idea, you should indicate the main business case, a description of the target audience, potential profit, target indicators for assessing the success of a startup, some integral assessment of the attractiveness of the project and a seasonality window for an optimal launch. The usual list of worked out ideas sorted by current priorities - project charters and expected KPIs at different stages of testing ideas.
Teams take ideas from the list in turn, check the availability of the market, check the assumptions about the potential product, develop the minimum product, check the performance of this product for the given market, optimize it for the market and transfer the successful product to the already existing development unit for more smooth development of the tested product with confirmed market. Then the cycle is repeated for the next idea.
At each stage of the cycle should be tested need to fix losses either because the idea was initially bad or good potential, but the market for it yetno, either creating a product for some reason is problematic, or the proven market size is not interesting for a media holding. During the initial development of each idea, KPIs should be determined in advance, which allow at each stage to decide on the termination of work or their continuation. Such termination or continuation of work should not be automatic, but should be accepted by the investment committee. The investment committee will protect a good idea with poor timing and stop working on a project with a random spike in performance on the day the decision is made.
Early fixation of losses allows the team to increase the number of successfully completed projects per year. A team can work out only one successful idea per year with the effectiveness of selecting ideas one successful out of four, from the cycle of launching the idea to optimizing the MVP for the market for 3 months and deciding on the fate of the project at the end of the cycle. Moreover, if bad ideas are rejected on average in 1 month, then this will already allow, firstly, launching 2 successful ideas per team per year, and secondly, gaining the competence to quickly drop bad ideas in the first weeks of putting ideas into work .
In fact, 3 months for the minimum viable product in the framework of such development is quite a lot. Development time will be reduced both due to the development of solutions by the teams, and as a result, the development of skills to reduce the amount of minimum sufficient functionality. Many developers and product owners are surprised to realize how minimalistic a product designed to test an idea can be without causing reputational damage to a business.
Target indicators at the end of the first year are: the average time for rejecting an unsuitable idea at the level of 3 weeks, the average development time for the minimum viable product is about 2 months, and the success rate of the idea taken from the pool to work and not rejected from the threshold is 30-40%. That is, about 3-3.5 successful startup projects per year per team, taking into account 4 weeks of vacation. Given that we consider traffic for experiments to be free - it comes from non-purchased advertising space - the investment efficiency is at least 3-3.5 times higher than according to the original scheme, even with a 25% probability of success.
4 teams will help maintain speed at the level of 12-15 successful startups per year. The basic competence of the team for this is the speed of experimental separation of successful business ideas from unsuccessful ones.