Case Study #3 – Evan Williams, serially successful internet entrepreneur

January 20, 2020 | Blog

Track Record of Success
successful serial entrepreneur

Evan (Ev) Williams is a serially successful entrepreneur. He coined the term “blogger” and successfully founded 3 digital publishing (blog based) businesses. His first business was called Blogger, which was acquired by Google. The other 2 reached billion dollar valuations (Twitter [NYSE:TWTR] and Medium). As a result, he has delivered massive returns for his investors over and over again.

Ev has a proven track record of understanding and capitalising on how people want to publish their thoughts together with how people want to consume others thoughts. This has led to 3 back to back successes in the same industry.

He pioneered the publishing/blogging industry for the last 20 years and continues to be at the forefront of how individuals of all abilities publish their thoughts (arguably for the worst with Twitter, and for the better with Medium). 

How is Ev making sure that he builds a product that people actually need instead of making the common mistake of building something they want/need?

Shortly after stepping down as Founder and CEO of Twitter, following a USD20bn Initial Public Offering (IPO), Ev started Medium, an online publishing platform, in 2012.

Ev believes the internet is broken, and frankly if anyone can fix it, he’s the person for the job. 

But why is the internet broken and how can it be fixed?

Because of clickbait factories. High quality publishers cannot compete with sensationalist, extremist and attention seeking content. The reason they cannot compete is due to the business model of digital advertising businesses, which are, as the name suggests, driven by advertising dollars. Instead of producing high-quality content with depth that is informative and balanced, publishers are caught in a vicious downward spiral of competing for a reader’s attention due to the rise of social media.

If a publisher or media organisation only makes money from advertising, then they are incentivised to increase the attention grabbing nature of the content and decrease the cost to create such content. As a result, sensationalist and poor quality content is rewarded.

Given that literally everyone is addicted to consuming information, the publishing market is massive and growing (particularly as people have more leisure time). As such, there is likely to be (at the worst case) a percentage of people who become dissatisfied (as I am increasingly becoming) with ad driven platforms such as Twitter, who will pay for curated source of quality information. These are the people that Ev is building Medium for.

On an ad driven platform only attention is rewarded (e.g. Facebook), while on a consumer-paid one (e.g. Medium) you can reward value, so inevitably people will have to pay for quality content. Essentially, as Ev puts it,  ‘it’s an information diet and people have a choice’ – ‘you have the power to choose the quality of the information you consume’. 

What did Ev do when they realised there are issues with Medium’s business model (a problem that kills most startups)?

After realising that creating an aesthetically pleasing blogging platform and trying to attract readers by getting famous and established writers to use Medium was not going to work, he pivoted toward a $5 per month subscription model to access premium stories. On the other side of the equation, writers are able to generate revenue when their articles get sufficient amounts of reading time (there seems to be a complex algorithm to determine this) and when they get a ‘clap’, which means there has been positive feedback on their content from other users. The idea is to make Medium valuable enough that people will pay for it, and it seems to be working! (I’ll get into how fast its growing a little further down.)

For a publisher who wants to produce high-quality content, Medium’s business model (the ability to generate revenue from positive reader feedback) incentivises them to produce content with quality and depth in a world where sensationalist ‘clickbait’ is rewarded with advertising dollars.

In summary, Medium has the potential to spark the renaissance for great writing. So, we might be seeing the early signs of a paradigm shift (one I’d bet on – if I could!).

How is Ev beating competitors without crashing and burning like most startups?

Ev could be playing philanthropist and retiring to a sunny island. Instead, he is back in the trenches working harder than ever to write his wrongs building Twitter (despite almost everyone else, but him, actually doing the writing).

Facebook, Google and Twitter etc (Medium’s competitors) are all struggling to deal with the increasing backlash over the toxic nature of their platforms. Legacy ad driven platforms are addicted to advertising revenue. This means their content becomes increasingly more shallow. As a result, more and more people will become dissatisfied with the low quality and turn to a platform where the quality of the content is getting better and better.

In response, Ev’s creating a publishing platform that is not addictive. One that is informative and high quality. Medium rewards quality and depth over sensationalism. Ev is playing the long game in an industry he pioneered.

As of late December 2018, Medium was growing at approximately 50% each quarter and has approximately 80m monthly visitors. The company raised approximately USD130m and is valued in excess of USD600m. 

So, what does this mean for you as an investor?

As you can see from the Medium example, successful entrepreneurs make investors more money, more often because they are able to overcome the major reasons why startups fail. This is reflected in the statistics, which found that first-time and failed entrepreneurs had a 20.9% and 22.6% chance of success, respectively, whereas already-successful entrepreneurs had a 30.6%.

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