David Smooke is the CEO of AMI, a blog network of 13,000+ contributors, 365,000+ subscribers, and 4,500,000+ monthly pageviews (numbers updated 6/12/2017). AMI’s top blogs are Hacker Noon, Fit Yourself Club, Athena Talks, ART plus marketing, P.S. I Love You, and Extra Newsfeed. We had a chance to talk with David and hear about his thoughts on business plans, his opinions regarding company presentations, and his advice for entrepreneurs. A shortened version of this interview originally published on Caycon.com.
Tell us a bit about your background. Why made you decide to start creating new companies and websites? And why did you choose to create your own company instead of working for a more established company?
David: There’s never been so many ways to distribute stories. We quickly forget how much of the history of media distribution has been consolidated into the hands of the privileged few. Building digital storytelling destinations has for whatever reason, just made sense to me.
I want stories to be told and shared in a certain way. Because I’m particular, I had to make it my own business. When I did work for a manager, I often thought my contributions were undervalued. I was a big part of a seed funded company growing through series A, B and B+, and I saw the discrepancy between value created and value attributed. So in terms of working for another entity or my own, I chose to trust my own abilities.
Now, I make more money and own more assets than I could being an employee of a venture-backed company. Think about it: employees are the ones who build companies, but the Silicon Valley venture capital model is based around an employee option pool of 10–15%. If you want to make more money, look for trends in how the rich are getting richer. For an entrepreneur, there’s always a balance between serving those with money and learning from those with money.
So, entrepreneurs don’t necessarily need to look for funding sources?
David: Funding most definitely can help, but it’s not a necessary milestone by any means. It’s always about what your business can achieve. Sometimes it’s about what your business could achieve if it had more money. A business that makes money today has a clearer path of making more money tomorrow. My business is bootstrapped, and I’ve yet to put any effort into fundraising. Every growth step you make without someone else’s money is another percentage of the company you own. It’s simple risk and reward. In our case, we’ve tried to hit reasonable increases in monthly revenue, and put as much as we could into growing the business itself. So if I do want to raise money, I’m in a much stronger position than I was 9 months ago because since then revenue is higher, our traffic increased by +500% and our subscriber base increased by +700%.
Equity is an owner’s lifeblood. If you’re building a tech or media business (low overhead) and it can’t generate revenue — or at the very least, demonstrate strong traction — in the short term, why bother fundraising? I’m a realist. Prove that the business works first, then execute scaling.
Finish this sentence: “To maximize the chances of success, a funding presentation must…”
David:… not be the lead of why people invest in you. Your business, your reputation, and the offerings are the lead. The presentation is just a guide to understanding that. But what do I know? I’ve never built a pitch deck.
When negotiating with a potential investor, what concession should you almost always refuse to make?
David: There is no such thing as a concession that can’t be made. If someone offers Tim Cook 10x of Apple’s current share price, he sells the company. Everything and every company has a price. When it comes to growing your own company, know what you are willing to pay for specific labor, talent, assets, and money before the negotiation starts.
Could you provide some tips for designing a business plan for someone who has never done it before?
David: First, define what you offer to whom. Define the simple microeconomics of how this business will grow. Then work your way to the business’ macroeconomics. What major milestones do you need to achieve to get where you want to go? Divide those milestones into smaller steps and add firm timelines. All in all when you’re starting a business, it can be easy to think all day about the big picture, but a business plan should be built around the real month to month and day to day unit economics.
What element of a business plan should an entrepreneur spend the most time on?
David: It entirely depends on the business. But it’s better to be elite at one thing than average at many things. The most time should be dedicated to how you will solidify your competitive advantage.
When it comes to making financial forecasts, what types of variables do entrepreneurs commonly forget to take into account?
David: I commonly see entrepreneurs massively guestimate the lifetime value of a customer. I have seen many investors fall for that. There’s always been a problem of the rich thinking they own people’s time. Customer lifetime value is earned. Smart investors want to see customers that really value the experience you offer, i.e. investors are trying to weed through the b*llshit to find accurate forecasting for customer stickiness.
Do you have any advice for company founders and what they have to do to get their businesses to succeed?
David: Success is a function of will and timing. Tell the story of your will and it will increase the quality of your timing. Happy to help, by reviewing your founder story for publication on Hacker Noon :-)