I’m taking a temporary break in conference coverage (don’t worry – there will be more next week) to poll some of the smartest people I know (that’s you, SEOmoz readers), about an issue that’s been keeping Gillian and me up plenty of nights during the past 3 months.
SEOmoz is at a tipping point of sorts – we’ve gone from being primarily a search marketing consultancy business to one that’s heavily focused on an SEO product – premium content & membership. In the 6 months since launch, we’ve had approximately 1800 people sign up for our premium membership, of which ~1200 are members today (looking at our subscriber details, it appears that many folks will sign up for one month, cancel, then sign up again 3-4 months later).
Right now, SEOmoz membership and content isn’t for everyone. If you’re someone who regularly works on multiple site campaigns, the tools are terrific. If you need a little bit of strategic consulting or experienced professionals to bounce ideas off, the Q+A is great (BTW – sorry for my slower than normal responses due to the conference). Even novice search marketers can get a lot of benefit out of the guides & tips. However, there are certainly folks for whom premium membership isn’t a terrific value – our goal is to change that.
We’ve recently been working with a venture capital firm, thinking about investment from them, as well as considering other options like private financing. Why? Well there’s a lot of things we want to do, like:
- Cool new tools
- More experimentation & reporting
- Greater tracking abilities for member websites
- More premium guides
- Marketing & advertising
- 70+ specific projects that are probably very unwise to share publicly
To do this, we need to hire more people, add hardware, grow our marketing budget & put investment into R&D. Inside SEOmoz’s offices there are two extra-large whiteboards, filled to capacity with all of the products and services we’d like to launch (both free and premium). At our current development rate, it would take between 18-24 months to roll out all these great ideas, but with investment capital, we think we could probably do it in 6 months. Not to mention the fact that we come up with about 10 great ideas per week that generally go on the shelf.
We’re looking at our financial & growth projections and thinking that something between $750K and $2million (for something between 10-20% of company ownership) should take us where we need to go at this point. While this is a rare amount for VC participation, we’ve had some interest even at this small level.
And so, the question fundamentally becomes – do we take outside investment and grow fast, scale up and use marketing to expose more people to premium content? Or, should we continue to grow slowly, reject external financing and keep a tight marketing budget?
Pros of taking outside financing:
- Build content/tools/services more quickly (with more people)
- Have funds to conduct marketing activities
- Build greater formalization into the company
- Form relationships that may help the company achieve goals
Cons of taking outside financing:
- Give up some portion of control of the company
- Experience pressure to accelerate growth very quickly
- Lose a percentage of financial benefit from growth
- Invest significant time in appeasing and working with a board or investors/directors
What do you think we should do?
p.s. Yes, I know you’re never supposed to share this stuff outside the company, but that’s what makes us different 🙂
