A $20,000 Proof of Concept
College Startup was recently approached by an investor with a very simple proposal:
I’ve been following your blog for a while and I have a proposition for you. I’ve been wondering whether the web can offer similar or better returns than the stock market. In some of your articles, you hint at this possibility. I’d like to take $20,000 and invest it with the sole purpose of gaining an annualized return of 15% over 3 years. That means that at the end of three years, you should have recouped the initial investment of $20,000 plus $10,417. The final sum should be around $30,000.
The only caveat to this proposition is that you will need to present to me a proposal detailing how you’d use the $20,000 to acheive the equivalent of an annualized return of 15%. Notice that you are at a disadvantage because not only do you need to generate the 15% return, but you will also need to recoup any of the $20,000 spent on this project. While I have little interest in anything but “proof of concept” for the idea that investing in web content makes sense, you will need to convince me that you have a legitimate plan in place if we were to move forward.
We’ve gotten permission, via phone conversation, from the investor to make this proposal public on our blog. Part of the proposal not included in this blog post would reward us with a guaranteed share of the returns, a bonus in the five figures for acheiving the goal, plus the potential for significantly more money to work with down the road. To put things mildly the prospects of doing this are both thoroughly exciting and nerve-wrecking When you’re working for someone else, it’s put-up or shut-up time, if you know what I’m saying.
We’ll keep you posted on how things proceed. Right now, we’re putting together multiple business models that could loosely be broken into three categories: 1) Put all your eggs in one basket 2) Put all your eggs in 2-3 baskets or 3) Put your eggs in dozens of baskets. Right now, we’re leaning towards 1 or 2. One allows us to put all of our energies into a single project, which increases the chance of producing something REALY successful. Two provides some backup protection, but still requires some degree of success with each site. Three provides security in numbers, but would also keep us from producing anything truly worthwhile.
Any thoughts or suggestions?
Related Articles:
- Forbes $100,000 Business Plan Competition
- Content Business Models: Diversify or All-In-One-Basket?
- Revenue & Equity in Websites
- Do Online Business Owners Feel the Recession?
- Applying the 80/20 Principle to Your College Business
this is the most interesting post I have read for a long time.
I think diversification is the key i.e. option3 Sounds very exciting. Wow all this just from writing the college-startup blog? Gives me lots of ideas
The biggest winners of the new economy will be those who can develop the infrastructure and provide the content ( all the while keeping your overheads very low)
Good Luck and please give updates of this project!!