Making money from content is an incredibly tough business to be in, especially in that of niche content - the non-breaking news type of content, which is probably all of the content we tend to cover here on the site. I decided to invite someone who knows all about making money from content, especially since we use Skimlinks here on YHP.
Joe is the co-founder of Skimlinks, a company that provides the technology helps blogs, forums, and content sites earn revenue from affiliate marketing with no technical or admin effort so allowing us publishers more time to focus on writing quality contents and building our community.
I decided to speak to Joe about how he got involved in Skimlinks, originally Skimbit and how the company has grown from that of one that was barely surviving to what it is now (The company raised $4.5M in their Series B funding last November, totalling the amount raised to $7.02M.). We also talked about his background, how he got into entrepreneurship, how the idea for Skimlinks came about and what the company is trying to solve and much more..
Below is the full interview.
Hi Joe, Thanks for doing this interview with me. Can you give you some background information about yourself, were you the entrepreneurial type growing up?
Not at all. Always a risk taker, but not a born entrepreneur. You hear a lot about entrepreneurs selling out lemonade stands aged 10, but I was more interested in technology itself. I’ve always been fascinated with computers & technology from an early age as my father too was always immersed in computers, with a career as an electrical engineer. Studying Information Technology at university in 97-99, I started to learn about web opportunities and took an elective subject “Entrepreneurship & innovation”, so I guess that marked when my interest really was piqued.
Tell me how the idea for Skimlinks came about?
Skimlinks was the result of a pivot from another idea, Skimbit. Alicia Navarro, my co-founder, started Skimbit in 2006 – a social decision making tool. The idea being that you ‘skim’ products, places, images from around the web via a bookmarklet into a single page to help make a decision on a purchase, holiday etc. Think Pinterest, but 5 years ago!
Realising that advertising wasn’t going to cut it with Skimbit, we conceived a system that would convert retailer links, which users were adding from around the web onto their Skimbit pages, into affiliate links automatically. The other benefit of this beyond earning far better money than advertising is that we didn’t need any visible advertising at all to clutter our website.
Struggling to raise money, especially due to the coinciding of the financial crisis, we were faced with adversity. We were pitching a white-label version of Skimbit at websites with little success, and BOOM suddenly realised that we could just offer the monetization system to them to work with the links in their existing content. We worked day and night, and in 2 weeks managed to turn a failing B2C business into a B2B business with a new lease of life.
What were you doing before co-founded the company?
After moving to the UK post-university and having worked in business analysis/product management for 5 years, I followed my other passion, which is music. I joined an independent electronic music label Finger Lickin’ Records willing to do just about anything, and ended up running the new media side of the label due to my technology background. Essentially this was licensing their content to the new digital download services: iTunes, Beatport, eMusic etc.
Doing it for the love and not the money and living in London started to grate, so I was spurred on by a university friend who had been very successful in Internet Marketing to start a business called SiteRefinery. Building, buying and selling websites I built up a lot of knowledge around site monetization e.g. affiliate marketing, Google Adsense, and also search engine marketing. When Alicia offered me to join Skimbit, it sounded exciting and I knew we’d work well together so jumped at the opportunity.
What are you trying to solve with Skimlinks?
We are trying to solve a difficult problem, which is rewarding content publishers for the role they play in causing people to buy online. It revolves around the concept of ‘purchase intent’, and if you are generating purchase intent from your content, you are creating real value, the problem is trying to remunerate publishers for that in an effective automated manner.
Up until recently, if you published a piece of content e.g. a review on the latest digital camera, you were generally only able to earn a fraction of a penny per pageview by surrounding that content with banner advertising. Using affiliate links in your content was an option, but it was highly manual and difficult for web publishers to manage – they prefer automated solutions, like sticking in an ad unit, so that they can focus on their content and community.
Skimlinks today solves two problems where purchase intent is present but not monetized by the publisher: existing links to ecommerce retailers in content, and product references written in content. Publishers either install our technology via simple script or using our API, which automatically converts existing links or adds new links to product references - these links now tracked by Skimlinks so if users click on them and you drive either sales you earn an affiliate commission (CPA), or traffic you earn an amount per click (CPC).
So with Skimlinks, our vision is to reward publishers for the connections they created between the content and ecommerce, or ones we automatically create for them. We are helping them earn by connecting the dots.
Talk me through the first few months of running the business? What would you say was the hardest part of starting the business?
I’ll describe the time when we first started building Skimbit. We were a small team of 4 and we were trying to get the features we thought were important built, trying to drum up income, work on the business model, drive traffic, raise money all at the same time.
The hardest part was attempting to handle all of those spinning plates and continue to create traction. With only a scrap of funding we needed to get to traction, in order to prove both ourselves as entrepreneurs and the model to investors.
It was all hard. I think ultimately what was the most important hardest part was working out the right things to focus on. It is so easy to get excited and pulled in many directions when you are starting up, when some of those really aren’t important in getting you to your next proof point, your next milestone.
For example, we fretted a lot about the site design and which feature we were going to create next, but really we needed to understand whether fundamentally the concept was going to work and were we able to get it to a point where we could either be making money, or have enough traction to justify investment.
We still have similar challenges today of prioritising what to work on, but we’ve got better. Also there are some good methodologies out there, such as lean, which help you to focus on proving your assumptions, iterating, measuring and finding product-market fit early on.
Why did you decide to change it from Skimbit to Skimlinks?
It took us in retrospect too long to realise, but we realised a few insurmountable problems at the time: the model i.e. social shopping was not mature enough, we weren’t able to generate enough revenues in the business, and there wasn’t enough investor appetite at the time. We didn’t really have much of a choice, but being in the thick of it, building relationships with web publishers, thinking about how we could evolve our model meant we had a better chance of creating Skimlinks.
The point is here is that unless you are actually taking the risk, living your idea daily, experimenting and challenging your assumptions, you may not get into that scenario i.e. the fertile zone where suddenly the momentum is there, or you can make that pivot and it starts to work out. It’s also true that innovation comes often when you have constrained resources, and indeed desperation.
How were you able to fund the business?
Skimbit was self-funded by Alicia originally pretty much by her life savings, and then augmented by a few friends and family rounds. It was nearly all over before we got the term sheet for our seed round at the end of 2008, with salary bills to pay, but since we had created that momentum with investors, mentors, team members, potential clients we were able to tie it up quickly and in-time after we moved from Skimbit to Skimlinks. Then we followed with a series A round in 2009 and series B in 2011.
Would you say the initial idea for the company, or that your business model has changed since starting the company?
Completely. We changed from a B2C social decision making tool, to a B2B affiliate marketing aggregator. Even since Skimlinks sprouted in late 2008, we have evolved both the business model and the vision for the company significantly. We now have a much broader vision to build a content monetization platform and from a business model perspective we work beyond the model of affiliate marketing. I think this is normal for any company to evolve the vision over time as you learn more about the problem-definition and the opportunity.
What would you say has been some of the most crucial things that you've done to build the company to this level now?
We have made particular business and product decisions that have been very important, but in a general company building perspective the most crucial thing has been to craft the right team together. Looking at the Skimlinks momentum today, it sounds obvious, but it really has been a result of the team.
We have always been careful to hire the best people possible, even without a lot of resources and have a real diversity of talent. When I say best possible, I don’t mean best universities, grades or most experience, but the right attitude, enthusiasm and cultural fit for the company. I think its important to have everyone in the same room too and be properly aligned – our CTO came on board early, and the tech and product teams work next to each other. Everyone is in earshot, and decisions get made quickly.
Not just about team members we’ve also surrounded ourselves with talented advisors, mentors and peers and talk to them regularly to get their input. Maintaining the balance of getting out of the building and talking to others, networking, pitching is important.
Another thing we’ve always maintained is being pretty bootstrapped and lean, even after a fund-raise. We are careful with money across decisions in hiring, marketing, travel, office - it is so tempting and easy to make a mistake here. Raise more money than you need, but keep a war chest. Don’t be stingy though, the team now all have fast machines and 24” monitors now we can afford it.
Is the business profitable?
Cannot disclose, but I can say that we were revenue generating from day one of Skimlinks
What’s been your most memorable moment so far on your entrepreneurial journey?
There have been many memorable moments when we have achieved a particular product or revenue milestone, won a client, closed a funding round etc but they are always punctuated by the memory of the team celebrating it and recognising that they’ve done it. At different times, its been different sizes of the team, we can still remember sharing a single bottle of champagne in plastic cups around a desk, now the celebrations are a bit bigger.
The most memorable times are when we have whole team together as we are normally split across the world in London, New York and San Francisco. For example, every Christmas we have a crazy mass team scavenger hunt around London followed by a big dinner, it’s the highlight of the year. It really reinforces my earlier point – its crucial to build a great team that get on well with each other, otherwise you are you going to enjoy your memorable moments with?
What pieces of advices could you give to aspiring entrepreneurs out there?
Build something that is inherently scalable. If you want to achieve exponential growth, your idea needs to be big enough that it can truly scale, especially as your blue-sky projections for your idea normally turn out far less in reality. This is of course if you want this, you can be a successful entrepreneur and create a lifestyle business, but make sure your idea fits with your aspirations.
Don’t get too attached to your idea. It’s easy to say ‘well that’s for people with crap ideas, mine kicks ass’, but its not just about the quality of your idea, but whether it’s the right timing, whether you have the ability to execute it better than others, and whether you have the resources to get there. Post-pivot, you always realise that you were a bit too headstrong about the last incarnation even when it wasn’t going to work out. But that’s understandable, you’re a passionate entrepreneur right? Just take some objective steps or outside perspective to evaluate whether the business is still right in its current state right now. I think the best entrepreneurs can instinctively judge this.
Be very open minded when looking for talent, you won’t be able to convince the best when you are not established so spend the time thinking about where you can access talent where others don’t normally look. It’s highly competitive so think about how you can get your competitive advantage, and think about how you can be unique in attracting people – being able to pitch your business to potential clients is only half of it. As we scaled at Skimlinks, we wish we’d actually hired an internal recruiter earlier – if you do it thoroughly, it takes the founder/management lot of time and effort.
What can we be expecting from you and Skimlinks in 2012?
More of everything for existing or budding Skimlinks publishers – more examples of how to use our monetization technology, more cool ways to deploy our technology, more reporting and understanding of their data and most importantly more money earned for the publisher. We are essentially finding and creating more of those connections between content and ecommerce.