It used to be that if you owned shares of a public company, you actually felt like you owned shares of that company.  The concept of actual ownership by individuals is long gone.  Shareholders as owners are nothing but a concept , and echo from days gone by.

That shouldn’t be a surprise. It’s just as rare for individuals with less than 10 figures in their networth to even consider actually buying shares as a path to ownership.

But what if this were not the case any longer  ? For those of you that own shares of stocks in companies,either directly or indirectly, would you be willing to take a lower earnings per share, or on the flip side, hold your stock at a higher P/E Ratio if in exchange the company moved their manufacturing to the USA  ?

Would Apple shareholders be wiling to accept Apple moving jobs back and not sell when the announcement was made ? Name a company that you as a shareholder would be willing to hold, knowing that earnings would be lower, but jobs would come back to the USA ?

I don’t directly own shares of any companies that do manufacturing overseas (at least that i know of), so I haven’t had to consider this. I know in my own personal businesses I try not to squeeze every penny out. I just want to be profitable and earn a decent return, but I recognize that a good or decent return is not the maximum return.

I feel the same way about tax free accounts overseas. I don’t have any personal bank accounts in Switzerland. I own a house in the Cayman Islands, but I don’t have a bank account there and I wont put a bank account there. I’m pretty sure that one of the hedge funds I invested in has accounts there, but I’m not involved in its operations. So i don’t have a say.

What do you think ? Would you cut a public company slack if they brought back jobs to the USA ?

Back in my broadcast.com days we had a saying that “bits are bits”.  That once content becomes digital, it is naturally going to become available on any and all digital devices. Based on this, we always made the point to be platform and device agnostic. We didn’t care where or how people saw our content, as long as they saw it and we had the chance to monetize it.

We also knew that our core value proposition to consumers was that on broadcast.com they were able to get content that they couldn’t get on TV. We had Yoga channels, we had cricket live and on demand, we had sports , music, movies, tv, comedy and anything else you could think of available. We had a policy that we never tried to create hits. That we were always going to go wide and create a reason for people to start watching video online.  17 years later. Yep, its been 17 years since we started Broadcast.com (as audionet.com first), Youtube and others are still doing the exact same thing.

Good for them ! Except they are making one huge fundamental mistake, they are trying to create hits. They don’t like the idea that beyond a steady stream of 1 hit wonders they haven’t been able to create a sustainable roadmap to content success. In other words, they have no idea how to drive an audience to specific content. Their hits come out of nowhere. (Im excluding music since that has become the domain of VEVO).

TV doesn’t have that problem. TV has a fundamentally different problem. But before we go there, lets talk about the big lie that the internet video folks like to tell in order to pump their products.

The Big Lie = Online video views is the same as number of TV viewers.

1mm views of an online video is not  the same as 1mm viewers of a tv show. Nope. Not true. First, we all know that an online view is not a unique viewer. But lets get beyond that. When you look at USA Today and see number of viewers of a tv show, that is the AVERAGE NUMBER OF VIEWERS that watch the show. So when it says that SharkTank on ABC had 4mm viewers for a showing on Friday night (btw, SharkTank returns Jan 20th at 8pm EST !). That means on average 4mm people were watching. If you were to look at the total number of households for that showing, it would probably be 8mm or more. In addition, we all know that by definition a household has a minimum of 1 viewer, but it can be higher, so if you want to compare apples to apples with an online video , the starting point has to be Households that watched multiplied by the average number of viewers per household .

But wait , there is more ! The views of a video on Youtube includes all the showings over an extended period of time. The ratings for SharkTank or any tv show all happened during the 1 hour the show was on the air. Which is exactly why TV is still a much more valuable advertising medium. Would you rather have your ad seen by the audience all within one hour, or over some unknown extended period ? Who knows how long it will take for your online video to reach 8mm unique viewers ? It will certainly be more than 1 hour. That is an advantage that TV has and will not lose for the forseeable future. No matter what happens with wired TVs or mobile devices TV gives you an audience right now. (And yes we could take this further by including DVR usage as well)

So lets get back to traditional  TV. Big media is not as stupid as they used to be. Nor are they as stupid as the internet video proponents want them to be. At CES this past week it was popular to hear about the explosion of online content and how people were going to be watching it on TV now that the new TVs have internet connectivity to all the great providers from Boxee, Netflix, Amazon , etc.  These  content distribution companies are not competitors to TV as a lot of folks would like you to believe, they are CUSTOMERS of TV show producers.  They don’t hurt the TV business, they have made the TV business far, far more profitable.  In fact, the competition between all the companies that want to provide content over the internet to your wired tv is driving up the price for content produced for TV.

The Challenge that TV has is not in driving an audience that is bigger than an internet source. That is easy. The challenge is in creating hits that are big enough to maximize revenue and return for that show and to create a promotional platform for other shows.

Now some internet video proponents like to tell you that the audience for broadcast tv is declining significantly with the exception of sports and special live programming, in particular the NFL. They are right. Numbers are down. But what they don’t also tell you is that the financial model has changed. All broadcast networks are owned by  big conglomerates, or have same ownership as a big conglomerate. Because of this, single shows are no longer make or break. Shows are geared towards specific outlets. So you will see shows on USA Network that in the past might have been on NBC. The result is that viewing for cable networks has skyrocketed and the amount of traditional tv watched has continued to increase.

In addition those over the air broadcast networks are now also getting retransmission fees. That second source of revenue will change how they make programming decisions.

But wait there is more ! It used to be that only movie companies got output deals. An output deal is when a TV network pays a percentage of theatrical revenue for the license to show a movie. Today, TV shows are getting output deals and generating lots of revenue across all the different platforms that show TV shows. Its not just syndication,but those online distributors want to make sure they get the best shows and they are committing up front to buy those shows. An output deal. Found money.

The TV business isn’t dead. It really isn’t even morphing. Sure people will watch video online. They will watch it on phones. They will download it. But the videos that online distributors pay the most for will be those that have done the best on traditional TV. Which in turn means more money for the production of shows.

Think of it like an SAT question. Online video is to TV today like DVDs were to Movies in the past. A great revenue source that correlated to the movie’s boxoffice.

Bottom line is that the better the TV business does, the better Hulu and Netflix will do because their primary content will be in greater demand

That’s not to say the TV business is not going to have challenges. It will. It will become addicted to the money it gets from online sources and when some of these sources and the competition between them dry up, they will be caught not being able to reduce their costs. Expect it.

But the online TV content providers have it worse. Yes, there is a business in delivering content via TVs. It will seem very cool that when you hit a button on your remote a list of distributors like Amazon, Hulu , Netflix and others will pop up for you to watch. Some folks will make good money with it. But it still won’t be the competitor to TV that everyone predicts. Why ? Because just like no one took the time to change the blinking 12:00 on their VCRs back in the day, having to hit the internet button on the remote, or even worse, the input  button on the remote will not be the path of least resistance for watching tv. Believe it or not, it will be far too much hassle for most people when compared to just turning on and watching  TV the old fashioned way. And on top of that, distributors like Dish, Directv, Charter, Comcast, etc are working hard to improve their guide experiences which will be faster and easier than their online counterparts.

And last but not least, MOCA, DLNA and good old fashioned wi fi is always going to be a hassle. No one has perfect wi fi at their apartment or house. It always screws up. That may be acceptable to a price sensitive market. But when people want to see Tebow Tebow, buffering just wont cut it.

And let me be the first to describe how Twitter will negatively impact online delivered live TV . Compare the latency of twitter to your phone or Ipad or even TV to the latency of online video over the net to your house, through your house and to your TV. The latency of the video because of all the buffering that is done to reduce interruption of the video will mean that your video feed is behind what you are getting on twitter. Not a problem for ondemand,but not good for communal experiences. So if you all want to watch SharkTank and tweet and FB about it with your friends, its only going to work when you watch on a regular tv feed.

Thats the way I see. Let me know what you think

A quote from my book, How to Win at the Sport of  Business got picked up in multiple stories. In the book I stated effectively that “Startups should never hire a PR firm”.   As you would expect, the PR Industry was not over-joyed at the comment.  Articles were written about how incredibly valuable a good PR person can be to a startup.

Actually, I have no doubt that  a smart PR person can add value to a startup.  The problem is that all things considered, it’s not enough value.

The first problem with hiring a PR firm is cost.  Cash is always in short supply in startups.  Given all the potential places that you need cash in a startup, is the company better served having that cash available to potentially keep the company alive  another day, week or month ?  Or hiring a PR person ? I would rather have the cash.

The next issue is time.

The thing about PR people is this: while they may have great contacts and they can get articles placed, they are not capable of doing a vulcan mind meld.  They don’t automatically know all the elements about your business that you want to convey to media, partners, customers, potential employees and even potential investors.  In all likelihood the entrepreneur doesn’t either.  Knowing the message you want to communicate is always a work in progress.  To have a successful relationship with a PR shop, not only must you have the time to communicate to your PR person what your company is all about, you must have the time to continuously educate him/her about how they should respond to questions from the media people they are contacting. That is a huge time suck .  Far too many meetings .

On the other hand, the same amount of time could be spent communicating directly with the media outlets you want to cover you and using that time to develop a direct relationship.

At this point, the PR pro steps in and discusses how many pitches media people get from entrepreneurs like you every day. How there is no way for a small company can break through the clutter to get the attention of media.  If you are a startup that incorrectly thinks it needs to get on Letterman or Good Morning America in order to be a successful company, then they are right. But the reality is that for  the vast majority of startups, particularly tech related startups, most of the media that is going to benefit you out of the gate is trade  related or local media. And these  people are ALWAYS looking for stories to write. They want to hear from unique companies.

It’s amazing how often a simple email to a writer for a trade publication or local media will get a response.  The key to getting a response is being short, sweet , hyperbole free and to the point.  You have to sell your differentiation in a paragraph.

Subject : Tracking Traffic to Reduce Vacancies

Dear Real Estate Industry Writer,

My name is Mark Cuban. I would love to tell you more about our company motionloft.com.  We have internally developed a sensor that when placed on the side of a building can track in real time the number of people and cars that pass by.  Motionloft is  being used by building owners in San Francisco and New York to lease space by showing potential tenants the exact amount of foot traffic in front of a  store location. Its being used by tenants to determine the best time to open, close and to offer specific products in services.

In one test case we would love to share with you, a tenant decided to rent a store front and go against the conventional wisdom of the area and open for lunch…with great results. They made this decision based exclusively on the data provided by motionloft.com

If you would like to see more information about motionloft.com and how your readers could benefit, just let me know !

all the best

mark

It’s simple. To the point. Far from perfect, but it will work. Notice we never say we are the “best, biggest, fastest, most ” or add any hyperbole. Doing so will get you a quick delete.  The whole point of the email was to get their attention by showing what I believe to be would be of great value to their readership. Help the writer, they will help you.

Just as  important, its the first step in developing a direct relationship with a media person who is right in the middle of the industry that I need to be successful in. Media people are not only great outlets for information about your company, but they are great sources of information as well. If you can develop a strong relationship, they will often be happy to compare notes and to ask you what you think about others in the industry and what they are hearing about them. Knowledge is power.

Not everyone is going to respond. But by making yourself available and communicating in a short simple fashion, you are building awareness that will pay off when you see the same people at industry events or when a customer or prospect mentions your company .

You can also ask your customer and any vendor partners if they have any relationships with media and ask for an introduction. They may even have a PR person that they work with that you can glomb off of for free. Like any good sales process, its about asking for referrals and PR is no different. You just have to hustle.

So back to startups hiring a PR firm. Yes, you can get there from here with a PR firm, but im a believer that you accomplish much, much more with direct relationships than by using an intermediary. And that cash you keep in the bank can be the difference between staying alive as a small business, or not.