Time Constraints and Portfolio Strategy

This post may only be interesting to the few die-hard believers in business incubators. During the bubble, everyone wanted to jump in and start an incubator. But most failed, and failed quickly.

So here I am in 2006 running an internet business incubator. Our plan is to use our small staff to test different ideas, see what sticks, and then to invest seed capital (from $20,000-250,000) in the ideas that seem to be the most promising.

Each company then needs to either get to cash flow positive on that initial investment or generate enough traction and revenue from customers that the company looks interesting to angel investors or VCs.

It is hard enough to do that with one company. So why would any incubator team be able to do it with 5 or more at a time?

That\’s where my portfolio strategy comes into play. This is my theory and I\’m betting that it will work.

If our portfolio companies are built on the same core concepts, such as content acquisition, indexing/search, internet marketing (as the primary way to get customers), and online community building, then we don\’t have to be good at everything. In fact, we just need to be great at a few things and then we can share \”best practices\” with the team members in each startup.

Our primary content businesses are:

1. LDS Media (parent of ldsaudio.com and ldslibrary.com)
2. mp3books.com
3. worldhistory.com
4. new genealogy company (to be named)

All four need to acquire content, make it accessible and usable, bring in visitors, and then get our visitors to become members of our community, interacting with one another, contributing content, tagging content, and spreading the word.

But content today means so much more than text. In the early days of Ancestry.com we were just acquiring genealogy records. But now you have images as well as audio and video, and customers expect it.

So we are launching Blastyx, to produce and get online distribution for \”renegade videos.\” We are also acquiring a Web 2.0 saavy web development company, a blogging network, and a podcasting/PR business. We are already developing an enterprise scale SEO technology that we will use to manage tens of thousands of keywords for our companies.

Blastyx is hiring very skilled audio and video and blogging folks, so that we can produce/distribute media in various formats for our customers and get massive online distribution of that content.

All these companies will provide valuable resources to all of our portfolio companies.

But how should I spend my time? That\’s the scarcest resource of all for an entrepreneur/investor.

As I\’ve thought about how I should personally spend my time in an effort to help all of my portfolio companies, I\’ve concluded that I should focus on visits to universities, and try to accomplish the following with each visit:

1. Visit the technology transfer offices to see if Blastyx can use our video and audio story-telling skills to shine a light on the coolest research projects that are going on at the university.
2. Find out if the university (library, press or archives) has any audio or video content that we can license and commercialize.
3. Meet with the leading historians on campus so they can point us to sources that we need to include in worldhistory.com and give us input on this project.
4. Visit the business school to find out more about local angel investors and to invite the people running the business plan competitions to invite all the winners to post their plans to http://www.fundinguniverse.com
5. Speak to business students/computer science students about entrepreneurship or internet marketing, keeping my eyes out for potential recruits or investment opportunities.

While on these trips, I suppose I should also meet with local genealogy societies and experts to see how we can best work with them.

And if we launch an online education company sometime soon, then I suppose I could look for subject matter experts and instructors for it as well.

I\’d like to think that a successful university trip could add significant value to each of our portfolio companies, if I can use LinkedIn and other networking efforts to set up the meetings listed above. I hope to try my first university trip in February or March.

Any suggestions? Which universities would you visit first if you were me?