Jerrick CEO’s Week in Review: 01/06/20 - 01/10/20
A weekly recap of the most relevant news, updates and insights from Jerrick, Vocal and across the industry.
Patience and Hard Work
It’s almost two weeks into the new year, and we’re off to a promising start as we continue to work through multiple tracks, including:
- S-1 paperwork
- NASDAQ application paperwork
- Raising capital and growing revenues
- Controlling costs to develop an important proprietary technology platform with tremendous present and future value
There is a symphony of moving parts to pull off the uplist, all of which essentially come down to our continued patience, discipline and hard work.
History and Evolution of Alexa.com
Over the last few years I have often cited metrics from Alexa.com. I can remember doing this as far back as 2012, when I first started to understand the basics of how Alexa Internet works and why it exists.
Alexa Internet was first founded in 1996 by Brewster Kahle and Bruce Gilliat, long before Amazon chose the name of its virtual assistant AI. The name–Alexa Internet– was an homage to the Library of Alexandria, its founders seeking to illustrate the very real parallel between the largest repository of knowledge in the ancient world and the vast store of knowledge that is the Internet.
Initially, Alexa aimed to be an intelligent search engine, offering users a contextualized set of data on the sites they visited and recommendations for sites they should visit next. Soon, Alexa’s offerings grew to include the archiving of web pages. Then, in 1998, Alexa Internet made history by donating a copy of their archive to the Library of Congress, representing the first-ever large scale digital donation. Two years later in 1999, the company was acquired by Amazon for approximately $250 million. When Amazon.com, Inc. had gone public two years prior in May of 1997, trading opened at $244 with an implied market value of $438 million from the IPO raise. At the time it acquired Alexa Internet, Amazon stock was trading between $79 and $105.
In the early aughts, Amazon began opening up its API to third party developers, following a similar path as their contemporaries like Google and Apple (the App Store first launched in 2008). Post the financial crisis, during which time Amazon dropped from highs of nearly $100 to lows in the $40s, Amazon started to shift focus away from Alexa’s search engine and focused instead purely on analytics. In 2009, Alexa Internet redesigned its site to emphasize traffic metrics like average page views per user, bounce rate, time spent on site, demographics and other common web search traffic statistics.
As this was happening, I was paying close attention to both how Alexa ranked websites and valued traffic and understood it to be as powerful a weapon for Wall Street as it was for Silicon Valley. I realized that Alexa metrics act as an empirical data source that could work to demonstrate value to potential investors. While tech founders could articulate their company’s growth, Alexa could actually validate it.
“Information is power—if you have the right tools. Alexa's suite of intuitive analytics products transforms data into meaningful insights that lead to competitive advantage for your company.” —Alexa.com
Over the last 5 years, Alexa.com has evolved into one of only a handful of truly reliable sources for public comparative website traffic data. Alexa Rank is the gold standard with which Vocal and all of our digital contemporaries can assess our value and learn how to improve it. Alexa provides the tools most sites need to understand and better their SEO practices and strategy, as well as to grow their traffic.
The list above shows the top 250 ranked websites in the United States. It should come as no surprise that the bulk of the world’s most important companies reside on this list.
I’ve highlighted below a couple of the top 250 companies along with some commentary. These companies have some degree of commonality with Vocal (as is the case with every platform environment, regardless of what it “does”) but more importantly, they offer relative value metrics that are helpful in analyzing the potential parabolic growth of tech companies.
As described on their website: “Patreon is a membership platform based in the United States that provides business tools for creators to run a subscription content service, with ways for artists to build relationships and provide exclusive experiences to their subscribers, or "patrons".”
Patreon was co-founded in May 2013 by Sam Yam and musician Jack Conte, who was looking for a way to make a living from his popular YouTube videos. Together, Conte and Yam developed a platform that enables audiences (‘patrons’) to pay a subscription fee for access to a creator’s works of art. Patreon raised $2.1 million in August 2013 from a group of VCs and angel investors. In June 2014, they raised another $15 million in a series A round and then, in January 2016, closed on another $30 million in series B funding. Since 2016, Patreon has gone on to gather another $120MM in funding from two different rounds, bringing the total to $166MM. They have used the funding to focus on greater customization for their creators and international expansion.
Patreon is currently valued at between $500 - $600 million.
Patreon's Alexa Rank
Medium is an online publishing platform launched in 2012. Medium was developed by Evan Williams and is owned by A Medium Corporation. The platform describes itself as an example of social journalism, offering content from a hybrid of amateur and professional creators, and open-to-all and exclusive publications.
I have always been a fan of the general editor technology on the Medium platform, though it is not quite as broad-minded as Vocal’s. More importantly, our companies diverge greatly in our varying approach to subscriptions (readers never pay to consume content on Vocal, whereas Medium introduced a metered paywall). Nevertheless, on the whole, Medium is another interesting comparative for us to look at.
Medium is currently valued at $500 - $600 million.
Medium's Alexa Rank
Then, at the other end of the spectrum, I’ve also included a few lower Alexa ranked sites that we regularly follow. Online content portfolios will eventually trade at fractions of current valuations. Acquirors who understand the history of potential targets have the advantage in understanding value.
eHow is a website of how-to guides with many articles and 170,000 videos offering step-by-step instructions. eHow articles and videos are created by freelancers and cover a wide variety of topics organized into a hierarchy of categories. Any eHow user can leave comments or responses, but only contracted writers can contribute changes to articles. The writers work on a freelance basis, being paid by article. This type of system is what is frequently called a content farm.
eHow was acquired by Demand Media in 2006 (now known as Leaf Group). At the time of its acquisition it had 17,000 articles and 5.8 million visitors a month.
In 2010 and 2011 Google implemented changes to their algorithms intending to reduce the ranking and impact of content farms. These changes led to a 40% drop in traffic to all of Demand Media’s portfolio sites.
Leaf Group (eHow’s parent company) trades under the ticker NYSE:LEAF and has a current market cap of $80 million.
eHow's Alexa Rank
“In April 2013, TheStreet Inc. acquired The DealFlow Report and The Life Settlements Report financial newsletters and the PrivateRaise database from DealFlow Media Inc. The DealFlow Report covers microcap stocks, including initial public offerings and private placements, while The Life Settlements Report focuses on life insurance settlements. In November 2014, the company acquired BoardEx for $22.5 million.” - —Source
The Street is a subsidiary of TheMaven, the latter having acquired the former in August 2019 for $16.5 million.
The Street's Alexa Rank
Irrespective of valuations, there is a developing public market for tradable tech that can be validated in a crowded space of data by tools like Alexa, Comscore and Nielson. Smart and efficient management can arbitrage what is going to be a distressed market of old legacy platforms being acquired by new tech that offers the real promise of sustainable revenues.
For Vocal, Alexa has come to be a consistent barometer with which we can track our accomplishments. In particular, Alexa enabled us to see the magnitude of our decision to aggregate our 34 unique website communities powered by a singular publishing technology into a singular domain, vocal.media. The aggregation, part of our 2019 replatforming, led to a substantially rapid and accretive growth for the Vocal platform that, if our math is correct, will not stop anytime soon. Simply put, Vocal is a self-sustaining ecosystem that will continue to expand, and Alexa is an excellent source of data to guide and validate our practice. Much of our structure is quite unique and it makes Alexa’s perspective on our platform well suited to comparative analysis and for extrapolation as to what it implies about our continued exponential growth.
Seller’s Choice Redesign
As we continue to elevate our holding company, we must work to further promote the acquisitions we have made along the way. The launch of the new Seller’s Choice website is an exciting advancement for the agency portion of Jerrick. Upon the launch of this optimized site, Seller’s Choice has fully completed its integration into the values held within Jerrick. This new site is designed to better capture leads and move users along in their customer journey. Most importantly, we created a transparent experience for the user to better understand the way Seller’s Choice can upgrade the reach of digital e-commerce brands. In doing so, we have revolutionized design and content concepts, both in terms of a user’s experience as well as from an SEO perspective. This re-design distinguishes Seller’s Choice as a prominent player within the digital marketing sphere.
JMDA OTC Weekly Report
I continue to be frustrated by our light volume on the OTCQB, but I think it is more indicative of a systemic issue relative to the OTCQB space than of our individual stock. However, I could also reasonably argue that it is a function of that fact that our stock is held by long term investors unlikely to sell in the near term at low values, a trait that is unusual in the microcap space.
Either way, the bottom line is that JMDA must uplist and elevate its profile if it is ever going to begin trading aggressively. I am going to work with our vast network to raise the capital for this endeavour. While we continue to increase investor awareness, I expect that the stock’s liquidity will increase into the uplist as the pricing of the offering becomes more transparent. That said, we have put together an internal working group that will collaborate with a number of IR firms to study whether Vocal can be a helpful tool in their process.
Over the years I have studied almost every existing IR group worth talking to in the microcap/OTCQB space. While I have encountered some very talented teams, even the best are swimming upstream in what is a deteriorating situation for the majority of OTCQB stocks. This is primarily a function of the limited talented people, resources and capital (from non-toxic lenders and service providers) that a microcap company can access while taking an entrepreneurial team from idea inception to revenue generation. It is essentially a race in which your entire network of family, friends, peers and closest relationships, from your intertwined personal and business lives, come together as a single collective, and stand to benefit together from the accomplishment.
Raising the $7 million as publicly filed in our S1 and pursuing the NASDAQ application is my primary goal. I remain confident in the path to success I have outlined. I expect the liquidity in the stock to begin increasing when the market starts understanding both how rare what we are doing is and the potential value inherent in our success.
I am beginning to follow The Maven (OTCMKTS: MVEN) and Leaf Group (NYSE: LEAF) with more intensity than I have in the past. Companies like these need to be a proper singular first party data platform, which is time consuming and expensive to build. Nevertheless, I believe their success is contingent upon their ability to operate multiple properties, simultaneously producing content, gathering data and improving process from it.
They both make perfect collaborative partners for Vocal, providing them with an alternative to having to develop a platform themselves. In fact, any company similar to these two will eventually need to migrate to platforms like Vocal–community created and curated– and move from editorial-based content to community created and curated. Vocal can provide them real-time data, inflight adjustment abilities and a path to multiple revenue streams.
Maven recently announced strong earnings and confirmed guidance.
Meanwhile, LEAF recently saw its value deteriorate as it continues its struggle to put a strong long term growth plan in place. Its stock recently traded with as low as a $70 - $75 million market cap.
When we move a stock from the watch list to Special Situations, it’s because we see distressed assets on the horizon.
When it comes to Cinedigm (NASDAQ: CIDM), I see a basic problem which can be fixed with combining content and proprietary scalable, sustainable distribution processes. Our Vocal platform is literally built to partner with them.
Vocal Staff Picks
Of the numerous stories selected as Staff Picks this week, one in particular stood out to the Curation team: An Open Letter to Lady Gaga by Vocal+ Creator Megan Frost Babb. This was a heartfelt story published by a primary care physician who felt strongly about a statement Lady Gaga had made about mental health. This emotional story was relatable to many, and strongly resonated with Megan’s audience on Vocal. The story had a total of 4,864 reads on its first day of publication, and at one point there were 100 visitors from Facebook alone. This level of engagement follows our ideal Creator Cycle whereby a creator on Vocal shares a story that is not only received positively by their audience, but works to attract new readers onto the platform and into the Vocal network. Take a look at the story below:
The Vocal Curation Team is committed to inspiring and motivating the creative community. To that end, we have highlighted some recent activity that reflects Vocal at its best. This past week our creators shared stories about the fires in Australia, bringing attention to the severity of the matter and asking the rest of the community for their help. The response was quite remarkable, with high traction on Vocal and social media platforms including Facebook and Instagram. Here are a couple of the stories shared:
As data becomes more transparent, the distinction between real and fanciful business models follows suit.
This week brings the end of an iconic early brand in CollegeHumor. I remember enjoying much of their earlier content. But in the end, while content is king, distribution is key. IAC announced enough layoffs to ensure that whatever culture previously existed that made CollegeHumor what it was will disappear, or at best be replaced by mediocre content looking for increased display advertising in a deteriorating-margin business.
The good news is that platforms like Spotify utilize their data to provide an increasingly valuable proposition for the creative community first and foremost. Similar to the Vocal platform, data is used to broaden their discoverability and earning potential.
Jerrick’s Book Club recently completed The Messy Middle, the story of Scott Belsky’s journey to take his company from the startup stages to a $150 million acquisition. His convoluted trek allows for thoughtful reflection of the ways to mitigate the hardest parts of any enterprise. These are three of the most important synergies between Jerrick and The Messy Middle:
Belsky uses a parable to design the way a venture must look upon its vision so as to become infallible in pursuit of it. Having an MVP (Minimum Viable Product) approach to a single concept should be the driving force behind a company’s and an individual’s actions while working toward a goal.
With any enterprise comes the realization that reaching your intended goal will be more difficult than originally anticipated, making for a distinct need to face brutal facts honestly and openly, which reaffirm the MVP approach.
Without the right people in the proper seats, oftentimes it is impossible to grow your venture or move forward as a collective. Without having self-motivated, intelligent, abstract thinkers, you cannot hope to maintain a culture of success, let alone grow one.
As always, for regular updates please follow me on LinkedIn as well as the company’s other social pages: