Media is the New Moat
What I Learned | Season 4, Episode 6
Hey, y’all!
Hope life is good on the other side of this screen. Next month it will be the 2-year anniversary of the first Covid lockdowns in the US. I can’t tell if it feels like it’s been 2 months or 10 years. Time is wonky lately.
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Here is what I am unpacking today: I believe that every software company should have a direct line of communication with their customers. This should be completely separate from their company blog, and should not require renting eyeballs from Google and Facebook Meta.
“Data is the new oil” was true in the 2010s; I’m predicting “attention is the new oil” in the 2020s.
If startups want to be relevant to their customers, the best product is no longer good enough. You need distribution. And that can only be accomplished with the scarcest resource right now: attention. Owning a dedicated media business is the best path for your company to have your audience’s attention. My bet is simple: building a moat for 2030 is less about features and functionality, and more about community and attention.
Let’s get into it.
Media is the New Moat
Own a media company, or be owned by one.
-Balaji Srinivasan
A year ago I wrote an article titled: Why DTC is Eating the World (a play on Marc Andreeson’s now-famous article: Why Software is Eating the World). In that article, I argued that the retail concept of direct-to-consumer (started with mattresses, and now you can find a DTC brand for just about anything) will bleed over into other aspects beyond just retail. The primary example I gave was how Clubhouse (oops! 😬 ) was allowing creators to talk directly with their audience.
Another Balaji quote from his reference to Tesla in October: “Every company is now a media company. Go direct if you have something to say.”
I believe this to be true. And now that I’ve started a software company that I plan to be working on for the next decade+, I’m starting to think deeply about how to put this insight to work.
Media is the new moat.
Having a direct line of communication with your audience is crucial. You can either rent an audience or own one. And when I say a “media company” I’m not talking about a marketing department that does webinars and company-centric blog posts. I mean hardcore industry experts who are currently in the trenches. No “thought leaders.” Thought leaders are good at telling people what made them successful. But many thought leaders in B2B SaaS are now running a consulting company, and that is very different than running a sales team at a fast-growing SaaS company, so it’s hard to learn tactics from them since they’ve been out of the game for years.
One of my favorite phrases in crypto is “alpha.” There are a lot of other funny terms in crypto. Traditionally, alpha represents the outperformance generated by the skill of an asset manager versus “beta” (the market's performance). Consider this in the context of what type of content your company is sharing with its audience today. Here is how Coindesk defines it:
In my opinion, this should be the north star of a media company.
Especially in a new frontier like PLG where there is no playbook yet. Everyone is figuring it out together. And since information should be free, I believe a media company can find a lot of success by finding the people at the bleeding edge, and highlighting what they are doing.
In other words, I plan to build a media company that will curate and create “alpha” around the topics our audience cares about. Right now, that’s PLG (product-led growth), but more generally, and over time, that will broaden to all areas of the modern B2B SaaS go-to-market teams.
We are making a big bet to build a media company.
After we go out and raise our next round of funding, we have budgeted about 20% of that funding into the initial experiment around building a media company alongside Groundswell. As our resources grow, the more we can invest into better content creators, curation, partnerships, types of content, etc. The first little product SKU in this media company experiment is ProductLedSales.substack.com. It’s a small experiment into a much bigger vision. In the future, there will be dozens of niche blogs, podcasts, a standalone website, and a dedicated budget to grow the media company. Again, the key here is that it is not under the Groundswell brand.
Why now
1/ Rising CAC
It’s no secret there is a full-on battle for paid acquisition right now. Some estimates show as much as 30% of venture capital funding goes directly to Facebook and Google ads. No wonder these are a couple of the biggest businesses in the world. Picks and shovels!
In other words, “when they zig, we zag.”
Anand does a great job outlining more of the LTV:CAC argument in this thread:
2/ New tooling
New tooling has also enabled this shift.
It was not previously possible to go direct to your audience and have wide distribution. Now it is. On the creation, distribution, and monetization, there are examples like Descript (editing), Canva (content), Rev.com (transcripts), Zoom (recordings), Substack (publishing) and social media (distribution).
3/ Standing out in a crowded world
The reality is we’re living in a world of infinite options.
Every software company has five direct competitors now. Code is becoming commoditized. And I am looking for unique ways to stand out in this crowded new world. Loyal readers and an engaged community are sure-fire ways of staying top-of-mind to your customers.
The community flywheel
There is another benefit of building a media company alongside a software company. I call this the community flywheel. Here is my (work-in-progress) thinking around a flywheel that owning a media company enables:
This is the modern-day content marketing machine. And it’s a pretty magical experience when done right.
This flywheel also gives me and my co-workers the luxury of learning what the smartest customers are thinking about right now. We have super short feedback loops into product development and the latest trends in our space. Oh, and we now have access to the smartest thinkers in the space (though we will tread lightly here — trust is key).
Community
As I think about building a media company, “community” is top-of-mind. I am fighting the obvious urge to throw a bunch of people into a Slack group, hire a “community manager,” and hope for the best. I have nothing against these communities. It’s just that I personally haven’t given them much of my attention. So I’m not sure that’s the best place to focus my efforts (at least right now).
With that said, it is important to consider the difference between building a community vs. building an audience. Seems similar. But it’s not.
Audience is not bad. But know the difference.
A few examples: I read almost every article that Packy writes at Not Boring. I listen to a lot of the My First Million podcasts. And I enjoy reading books. With all of these, I have little-to-no interactions with any “communities” associated with them. But I am giving plenty of my time, and would say I am “loyal.” I bring this up to say, media can take many forms. Attention is the key element here.
The only “cheat code” I’ve observed for gaining loyal attention: consistently create incredibly high-quality content, they will come.
Watch what they do, not what they say
But don’t take my word for it.
Check out a few examples of software companies that made acquisitions of media companies in the last couple of years:
HubSpot bought The Hustle
Zapier bought Makerpad
Stripe bought IndieHackers
Vendr bought Capiche
Outreach.io bought Saleshacker
Pendo bought Mind the Product
Penn National Gaming bought Barstool Sports
Robinhood acquired MarketSnacks
DraftKings bought VSiN
DigitalOcean acquired Scotch.io
One final idea here:
And that’s it!
Building a moat for 2030 is less about features and functionality, and more about community and attention.
That’s why I believe that “media is the new moat.”
A few interesting corners of the internet I’ve been exploring:
Building American Dynamism (oh, btw, this was published on a16z’s media company that they launched last year ;))
Frank Slootman’s (3-time CEO, now at Snowflake) wrote a book: Amp It Up! that everyone is raving about, I’m halfway through and highly recommend reading it. But, if you want the interview overview with snippets, here you go.
Also, you can read his original article, which inspired the book: Amp It Up! ← Start here! You won’t regret it.
Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail. TLDR: America is losing to China. Alt route: listen to this fascinating interview of Ray Dalio, by Lex Friedman (YouTube). Ray is definitely not flawless, but his ideas are quite compelling.
As always, if you enjoyed it, tell a friend or two.
See you next time. ✌️
-Brendan
[Written while listening to Dijon]
Absolutely spot on! We are witnessing the emergence of a whole new model whereby the community-media intersect and become a whole new GTM. In doing so, we will see the convergence of marketing-sales-customer success. It's an exciting time to be in GTM/sales as the next 2-3 years will see massive disruption and new models emerge that will transform the way all companies execute their sales-GTM motions. Enjoyed your article!