Rafat Ali will be speaking at Digital Media Strategies USA this September. For more information on speakers, the agenda and the venue, follow this link.

The perils of a venture capital approach to publishing start-ups only grow more evident every year. As we see ever-increasing amounts of VC funding flooding into the market the opportunity for a media start-up to grab a slice of the money is a serious lure – and one that comes with serious ramifications if it fails to live up to the expectations of its backers. As a result, many of the players who attracted investment because of their niche propositions feel the need to become generalist in order to scale, and end up losing something in the transition.

That’s the contention of Skift founder Rafat Ali, whose travel-industry focused site has resisted the allure of much VC funding and is instead, he says, looking to remain true to its original mission:

“We haven’t raised tons of money; I don’t want to raise tons of money. I’m not building this for investors, for an exit.

“I think that the expectations that venture has in general, because of the outsized exits and valuations that have happened in the larger tech world…will have deleterious effects on the expectations that VCs have of these companies and what these companies will have to do to meet those expectations.”

Growing to scale

Skift, which positions itself as a conversational travel site which an attendant conference and business information site, has a tripartite monetisation structure. In 2014 – the first financial year for which Skift has full results – the revenue was split essentially an equal three ways between its branded content, subscriptions and conference strands. Ali says:

“Obviously I want subscriptions to be the largest part, it’s the most stable for the revenue, it’s [also] the most scaleable in terms of revenues. I think this year the conference will be bigger part just because the conference last year was so big for us. I want subscriptions and ads and branded to be much bigger.”

And while data-led services such as the Skift Trends Report make up a significant proportion of the overall revenue, Ali is keen to stress that the diversification into branded content and events isn’t an abandonement of a data-led strategy, but the natural progression of many publishing businesses:

“Obviously [Bloomberg] came a long way from being a data company to now doing media, so I think everyone has been heading towards one or the other and then adding elements of the other.

“We will do more, deeper research, for our Trends Reports. I think that’s how we’ll grow our coverage of the sector as an industry.”

Remaining at large

Ali, who previously launched the tech blog PaidContent, has the daunting task of keeping the conversational, niche style of Skift consistent even as it has grown to be the largest player in travel publishing. He also faces the challenge of keeping Skift in that dominant position, despite a “relatively small” team and primary US focus. Skift’s big advantage, he says, is that it’s achieved such scale in that vertical that it is is unassailable for the near future:

“We are the newest kid on the block, but the people who existed historically in the B2B travel, business information world, we care zero about. Obviously we compete with them a little bit on the business side for selling branded content.

“[We’re] so much larger than any of these people that it’s mind-boggling how crappy they were before we came along. I think the progressive big picture voice that we have in the industry, we’ve completely taken over.”

Those are strong words, and it would be hubris to assume that simply because a company is in a dominant position now means it will always be so. In fact, Ali accepts that as venture capitalists and media businesses recognise exactly how much money is in the travel vertical more players will inevitably enter the market, some of whom could accept VC funding that would allow them to grow extremely quickly. So what other advantages does Ali believe Skift can leverage to remain strong?

“Expertise, I’m here and my co-founder’s here and there’s a certain amount of that. We are three years ahead and we understand the market. I think talent matters quite a bit.”

It’s incumbent upon Skift to stay in that postition, then; as a leader in the vertical the advantage is theirs to lose. And it’s a particularly difficult maze to navigate, growing to scale while remaining niche. But with many media commentators putting smart money on Ali’s ability to walk that path and concrete plans to expand and grow Skift’s subscription services, it’s certainly possible Skift will be a serious player for quite a while.

Rafat Ali will be speaking at Digital Media Strategies USA this September.

 

Image courtesy of David Francis via Flickr used under a Creative Commons license.