Friday, February 12, 2010


So, I've been reading a lot the past few days about what's called "hyperlocal" news. The idea is that instead of showing news that happens all across the world, media companies, particularly web start ups, are creating news outlets that show whats going on in a neighborhood; literally. The idea is that people will be more inclined to search the news if its ultra relevant to them (about their kids' schools, the YMCA club, new businesses etc). The main source of revenue (for now) is through advertising. The big catch there being that small business, who normally wouldn't advertise on the internet, can now be players. Estimates are that this is a $100 billion market opportunity.

My thoughts on this? I think its a great idea. Right now the industry seems to be having some trouble (several major newspapers have tried this and failed) due to the fact people cant seem to get the business model right. For instance, some use computer algorithms to pull information from police reports etc., others use volunteer and freelance journalist, while still some, employ editors (my favorite). The trick comes in when it gets down to figuring out the revenues needed to support such an operation since, by nature, the audience being reached is small.

For now, I wont go into my ideas about the industry (definitely will later), but I want to put the business model out there and I want to build on it.

Ok, so lets go to my offices a few days ago. (its about to get vague cause its a deal, but go with me). We're looking at investing in a franchise. Our franchise plays in big cities and takes a high number of customers to break even. A competitor plays in small towns and requires very, very few customers to breakeven. So what does this tell me. First the example reminds me of hyperlocal and got me thinking that there is definitely something to this idea of getting really intimate with a small group of customers (remember 1000 true fans...). At first I always thought of trying to create some sort of lifestyle, more premium thing that would attract customers, but lets explore the hyperlocal, small town/rural concept some.

The small town is a real factor in America and many people live in small towns still. I would argue that these are "hick towns" like you might be thinking because its 2010 and people have iPhone and stuff so they have the internet etc. Also, I don't think these towns are broke because in some cases they're locations where people who work in big cities live. I do think the rent for these places is probably pretty cheap for a commercial business.

Now all that being said the real question is "What business would do well in a small rural town". In my opinion, it has to meet a few requirements:

1. Can't take up a large space (rent would get too high)
2. Has to rely on a small number of transactions (so cant be dirt cheap stuff i.e, beat wal-mart)
3. Has to be franchise-able (to make real money anyway)

I use point 3 because if you / I create a franchise concept then we can make tons of money off franchise fees / agreements, overhead etc. plus it creates a business that is quickly scalable. The other issue this deals with is getting to all of those small towns which would have been a problem.

As an aside, one I think there is real money / value to be made in the white space of 1. small towns and 2. sub segments of large cities by ethnicity so applying the concept to urban, black neighborhoods could also be an idea. For now this is just something to ponder on and think about, but it might be the way to go...

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