In building the Huffington Post, Thrillist, and JackThreads, I've invested a lot of venture capital into building tech platforms. Even though we were media and commerce companies, we described ourselves as tech companies. VC's loved that description. It absolutely helped increase our valuation in every round. Our pitch decks always had some slides on our tech stack, and investors were consistently impressed by the size and quality of our product and engineering teams.
And to a large extent, our custom-built CMS and commerce platforms were critical to the growth of our businesses. There weren't third party solutions at the time that we could have relied upon to publish at scale or to create an effective checkout funnel.
But just as the evolution from server farms to cloud computing enabled companies to shift hundreds of millions of dollars out of investing in hardware, there are enough third party tools out there to allow you to build your media or commerce company without investing your precious resources in building a ton of custom software.
- It's incredible to see what can be built on top of CMS platforms such as WordPress or RebelMouse.
- I would have loved to have had a platform like Shopify back in the early days of JackThreads.
- There is a myriad of email solutions to choose from, the best of which can connect to in-house and third-party data solutions to power customization and retention efforts.
- Using Google's data science cloud solutions along with out of the box BI reporting tools allows you to focus more of your investment on the smart analysis and use of the data, rather than on building expensive data science teams and homegrown tech stacks.
In the build vs buy decision matrix, there are two really important considerations here to consider.
First, if you want to scale your engineering team, can you find the best talent to build the quality of tech you need ? Hiring great product people and engineers is more challenging than ever. If you hire a team with less experience, they are going to spend a lot of time figuring out the solutions to problems that others have already solved. Will the team you can afford to hire outperform engineers at companies such as WordPress or Shopify?
Second, is that the best use of your cash? Whether you are in media or ecommerce, there are two critical areas of investment that have to remain a priority as you build your company.
- Your product, whether that's the merchandise you sell or content you create.
- Your marketing and customer retention, with a focus of pulling new readers or customers into your marketing funnel every day, and then turning them into loyal consumers of the products you create.
Every dollar that isn't invested in these two areas represents investment diverted from building your brand in an increasingly noisy marketplace and then creating the kind of customer/reader experience that builds the level of engagement and retention you absolutely must have to scale your business.
Will these solutions scale beyond $100 million in sales? $250 million in sales? Maybe. Maybe not. But that will be a wonderful problem to have to deal with when you get to that size.
And your odds of getting there will improve dramatically if you make smart decisions about how to invest every dollar you raise along the way.
