Sometimes, the fastest way to grow a business is to take it slow, especially when that business is trying something new or otherwise exploring uncharted territory.
Case in point: AOL’s Patch. The “hyperlocal” news site had aspirations of blanketing the nation with a network of online small-town “newspapers.”. But, after bleeding some $300 million and already shedding half of its 1,000-person workforce this past summer, parent company AOL this month gave up control of the news network to an investment firm for an undisclosed amount.
The problem? It grew too fast. It started as a small network of community sites in a handful of New Jersey communities but, after AOL acquired it and started dumping money into it, it wasn’t long until it was a network of 900 sites across the country.
The problem was that Patch’s business (and news) model hadn’t yet proven itself. As the news business has been shaken up, reinvented and shaken up again in the digital age, business models for news are not only varied (advertising-based vs. subscription-centric, for example) but also unstable. To build the model, they have to offer news that will attract readers, which, in turn, attracts advertisers. These sites need real reporters talking to real people in these communities, sitting in their meetings and attending their functions. Delivering that sort of community news and building relationships in the community takes resources (read: staff), money and, most importantly, patience.
When I started Geebo, there were no online marketplaces – and certainly no national networks of marketplaces – so the best approach was still anyone’s guess. Instead of trying to build a site that focused on categories – such as cars or real estate for sale – I chose to target a specific community. At the time, I was living in the Sacramento area – so that was Geebo’s first site.
After launch of that site, I could have started eyeing the next geographic market but instead, I focused on building relationships with potential buyers and sellers in Sacramento. By the time it came time for me to break into new markets, I had an established marketplace in my community, as well as some visitor metrics that I could point to.
Today, 13+ years later, Geebo’s listings are available in 1000’s of communities, the result of a slow-go approach. Just a few years after acquiring Patch for $7 million, AOL had shed a chunk of Patch’s workforce and has now handed over the reins to a group of investors who will do who-knows-what with what remains of the company.
For sake of disclosure: Patch approached me about my classifieds listings a few years ago but ultimately decided to go it on their own. That was certainly their choice – but here’s why it was an example of a bad business decision that eventually led to its demise. They were trying to reinvent the wheel in some parts of their business. If you’re trying to build something and someone you know has built a part that you need, why would you try to build that part from scratch?
No one is arguing that AOL should have moved at the same pace as a site like Geebo. I’m a small company with limited resources. They are a huge mega company with deep pockets. Still, at some point on the road to 900 sites, wasn’t there an opportunity to pause, take a step back and assess the business model to see if it’s working?
If they had, they might still be churning great ideas into strong business for the handful of sites that could eventually pave the way for others. Instead, potential readers will go another day without knowing how their planning commissions voted or whether the basketball team at the local high school won or lost.
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