A Post-Mortem for Faneuil Media

A little less than three years ago Theo Burry and I began working
together to create a new business in online news. It’s been a furiously
productive three years, and we’re proud of it, but we have not been
able to build Faneuil Media into a sustainable, growing business. Over
the next few weeks we’re going to be closing Faneuil Media.

Theo
and I are both landing in great places (I joined HubSpot this past week), but I’ll write about that in a
separate post. Here I want to explain why Faneuil Media didn’t work and
what we’ve learned.

On a high level,
Faneuil Media did not work because it aimed to be an
advertising-supported content business. Today forces are aligned
against these businesses. Content producers face unlimited competition
for attention, while their ability to monetize that attention with
interruptive advertising is diminishing.

More specifically, Faneuil Media went through three phases:

(1)
Google Maps Consulting — We started Faneuil Media in the fall of 2005,
building Google Maps projects for Forbes.com, NYTimes.com, Boston.com
and other big news sites. Our work was groundbreaking and
well-received. (Our projects on NYTimes.com in 2005 and 2006 are now in
Google Maps case studies.) But this was consulting work, and Theo and I both wanted to create a business with more potential for scale and growth.

(2) Atlas Mapping Product — In the summer of 2006 we launched the Atlas mapping tool,
a super-simple platform designed for publishers who want to add maps to
their content.  This was the logical way to scale our map consulting
work, and the tool was very successful. We now have thousands of
registered users including many large metro news sites like those of The Boston Globe, The Dallas Morning News, The New Orleans Times-Picayune, The Orlando Sentinel, and The Baltimore Sun.

While
the product was a success, the business was not. Google pay-per-click
ads ran with most of the high-traffic maps, but our click-through rates
were very low, and despite great traffic, we didn’t make enough
money to grow.

We didn’t think seriously
about creating a paid version of the site, because we felt the Google
terms precluded that option. In retrospect, we probably could have
gotten away with it, but I’m still not sure this would have been a
great assumption to build a business on.  Open sourcing the platform
might have worked, although that wouldn’t have been a trivial
process, and it wouldn’t have accomplished our goal: creating a
business in online news.

So, a year ago
we stopped development of Atlas, and began working on 9Neighbors,
a local content filtering project. (Atlas is still live, and will
continue to be after we close Faneuil Media. 9Neighbors will be going offline within the next few weeks.)

(3)
9Neighbors — As we struggled to create a business with Atlas, we grew
excited about the possibility of creating a business in local content
filtering. We saw enormous growth in independent production of local
content, but very few tools for filtering it and providing meaning for
users. We also saw tens of billions of dollars being spent on local television
and newspaper advertising, and assumed that this would eventually move
online.

So, based on Atlas’ product success,
we raised a small pool of angle funding to build our local content
filtering site, 9Neighbors. The first iteration of 9Neighbors, launched
last fall, was a local version of Digg. We populated it with local
content and tried to create a community to supplement editorial and
algorithmic filtering. We assumed that if we created a big enough
audience we’d be able to sell advertising on the site.

We
ran into two problems with this model. First, we weren’t able to build
a community. People weren’t that interested in local news, and to the
extent they were, they were already finding it other places — not at a single competing filter, but all over the web. They didn’t need a news
filter because their web of online services and relationships was already
filtering local content for them.

Beyond
the traffic problem, we began to see that even with traffic, we wouldn’t be able to sell much advertising. Local businesses aren’t spending much money on
traditional online advertising. They’re moving to the web, but not
with advertising — they’re creating blogs, reaching out to bloggers,
and building their own identities the same way individuals do.

These
facts crystallized this spring. We scrambled to realign 9Neighbors as a
marketing analytics service for local businesses, but we didn’t have
much time, and we ran out of money before we could structure our
product the right way.

What Have We Learned?

When I think about learning, I think of one my favorite lines from Umair Haque, one of my favorite bloggers:

Google isn’t revolutionizing media because it "owns the data". Rather,
it’s because Google uses markets and networks to massively amplify the flow of data relative to competitors.

Another way of putting this: It’s not what Google knows, but how Google has structured itself to learn.

This is true of individuals as much as for companies. People will
always know more than you, but you’ll be at a distinct advantage if you
can structure your life around learning. In this regard, Faneuil Media
was an utter success.

I can’t spell out everything I’ve learned over the past three years, but
I can point out the two changes in my intuition that I’m most conscious
of:

(1) Always ask "Who’s paying who for
what, and why?" — A good friend and Faneuil Media adviser asked this
question a few months ago as we were struggling to find a new
business model. It clarified a lot of muddled thinking. We came from
the content end of the news business, and we started
Faneuil Media during a bubbly phase of Internet growth where product
was put before
business. Our answer to this question was not always clear or well
thought-out. If your aim is to create a business, it must be.

(2) Cycle Quickly — The emphasis in a business should
be less on doing things right, and more on figuring out how to do things
right. We did a good job of this at Faneuil Media, but I didn’t realize how central to
your thinking it must be. Nobody knows what’s going to work, so you
have to cycle quickly and learn. You have to plan and analyze, but you
can’t get stuck at roadblocks or indecision. Time you’re not gathering
data and learning is time lost.

Now, on to the next project.

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