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“leisure travelers don’t scale”

The quote “leisure travelers don’t scale” is from an interview with Rafat Ali (founder of paidcontent) at the Next Big Thing. (At the 6:35 mark in the video if you want to skip over him talking about his new venture Skift, though if you’re interested in the travel industry then you should become familiar with Skift.)

Skift also aims at informing the business traveler rather than the leisure traveler. The business person might travel several times a month. Anyone involved in a travel startup knows that it’s difficult to scale a business around consumers traveling to specific destinations. How many times does a person travel for leisure. Ali says “once, twice, thrice a year”. How many times does a person travel internationally? Only a few people do so even once a year.

Even if you build a loyal customer with your superb guide to the basket weaving of the Peruvian highlands, it’s going to be another year or more (if ever) before that fan buys your insightful, one-of-a-kind guide to the public sculpture of Odessa. Okay, that example is an extreme niche but it’s hard to grow a business by selling content to leisure travelers. You need content to dozens, if not a hundred or more, destinations if your travel content business is to sustain a staff of more than one based on revenue alone.

A core requirement in forming a startup is to spend time reflecting on the product you’re developing and, particularly, what problems are people buying that product to solve? Are there enough customers to actually build a business that can grow, or is the business so narrowly defined that it’s potential is little more than a supplementary income for one person? The latter is not a startup.

In the interview with Ali the moderator Scott Kurnit (found of about.com) asked a wonderful question, “Twenty years into the Internet, why do we get to do something new…why hasn’t it all been done…why wasn’t this done 5 years ago?”

As Kurnit suggests, it’s often because technology has changed (particularly with regards to mobile) or consumers have changed. Ali goes a step further and reveals the forumla behind his successful strategy, “I love businesses that are a layer on top of existing businesses.”

For those of us who lovel travel, Ali offers a vision at the 8.33 mark in the video as to why travel is important:  “travel is a lens that can bring understanding to the world”.

The challenge is creating a livelihood through a travel startup.

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Focus on the vertical niche

Imagine you’re interested in selling a set of how-to guides as e-books on a particular topic. A few years back you could throw up a Web site & find an audience after an intensive amount of SEO. That might also have involved blogging on your topic. Now it’s a lot tougher to find that audience due to the proliferation of social networks and an over abundance of choices among consumers. People rely less on searching the net and more on recommendations that stream in through social networks. Okay, so you add a social network campaign to your mix by making use of Twitter, Facebook, & even Pinterest. But is any of that giving a reason for your targeted audience to come to your Web site?

Your site’s bounce rate is going to be really high if all you’re doing is selling something to somebody. You need to show that you see others as more than just a person whose money you want to take. You need to be part of the community to which you’re selling. A way of doing that in your niche is by offering a service to that community. If you want people to be interested in you, then you need to be interested in what they’re doing and the common interests that you share. Make your Web site not a long sales page on the value of your e-books but put the effort into developing a community around the topic that interests you. Transform your site into a quality destination for a community of interest. Focus on the vertical niche.

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Forming a channel on the Internet

The other day I asked,”What is keeping new networks and channels from forming on the Internet?” The answer, of course, is nothing. The answer, of course, is that there already are a significant number of channels on the Internet. We often just don’t think of them that way yet.

The old-time TV set had a circular dial (remember those?) that you twisted to view the available channels. In my early childhood we only had four channels (ABC, CBS, NBC, & PBS) plus one fuzzy station (channel 17 whatever that was) that always had something interesting.

With cable TV came an expansion of channels but it was (and still is) packaged as a set of choices. With the Internet the options are wide open. Certainly there are dominant brands. We all know about YouTube. And there’s Netflix for traditional movie/TV watching. But how does a newcomer compete with that? Everybody offering anything on the Internet has the same problem: finding an audience.

People have an overwhelming amount of choices. People need a reason to view what you’re offering. What is it that you’re offering that matches their interest?

See where this is all going? Vertical niches. Many TV channels are built around a vertical niche: a cooking channel, a travel channel, a sports channel, a history channel, etc.

A vertical niche is all about creating a community, giving people a reason to not only visit but also to participate. More on this topic soon.