naturally curly attracting investors

[Gabriel Balcavienga 0]

You guys may know about this already but I dont spend much time here anymore and when I saw the article this morning I couldn't believe my eyes and had to share. I wonder how many of the 180,000 readers are fftoday fools...From the NY Times

 

 

http://www.nytimes.com/2007/05/21/technolo...amp;oref=slogin

 

 

FOR many entrepreneurs in the first dot-com boom, the name of the game was “portal-matic.” Spin a wheel, pick a niche interest group, build a comprehensive Web portal aimed at that group’s needs and cash a venture capitalist’s check.

 

While many of the venture-backed portals were quickly shuttered, some other sites, often built by amateurs, have survived. Thanks to a surging online advertising market and an Internet audience accustomed to clicking to find an authoritative voice on obscure topics, their reward may finally be coming.

 

Take NaturallyCurly.com for instance. The site, founded in 1998 by two journalists in Austin, Tex., as a resource for curly-haired people, has grown its readership to about 180,000 monthly readers, without marketing. More impressively, it has built a stable of hair care advertisers, like Aveda, Paul Mitchell and Redken, among others, and generated annual revenue in excess of $1 million (although the founders won’t disclose how much).

 

The site is a throwback to the late 1990s, in that it follows the “three C’s” of Web site development — community, commerce and content. Alongside stories about managing curly hair is an online store with frizz-taming products and a discussion board for parents of curlies and people looking for advice. The site also offers a way for readers to find salons that have won praise from curly-haired customers.

 

Now the site’s founders, Gretchen Heber and Michelle Breyer, are poised to bring the site to a wider audience. The pair recently attracted $600,000 in financing from, among others, James Treybig, the founder of Tandem Computers, a computer manufacturer bought by Compaq in 1997.

 

NaturallyCurly, Ms. Heber said, will use the money to hire a seasoned marketing professional and some support staff, improve its Web technology and expand its shipping and handling operation to keep pace with the brisk growth in product sales. They will also expand its related Web sites, CurlyKids.com and CurlMart.com, an e-commerce site.

 

Ms. Breyer said that because the company has funneled revenue back into the business, it is not yet profitable, but business has been good enough to allow the pair to quit their jobs at The Austin American-Statesman in 2004.

 

“It was evident that to really realize our potential, though, we needed more capital,” Ms. Breyer said.

 

The financing may be modest, but Ms. Heber, who oversees Web site design for the seven-person company, suggested that more is not necessarily better.

 

“Venture capitalists want to give you too much money, take too much of your company and take too much control,” she said. “They wanted to give us $2 million, $3 million, and we didn’t want that much.”

 

Finding investors to provide that level of financing is not necessarily easy, said Mr. Treybig, a partner in the venture capital firm NEA. (Mr. Treybig, who is also based in Austin, serves as NaturallyCurly’s chairman and invested his own funds in the company after helping connect the business with other investors.)

 

Not only do venture capitalists prefer to make bigger bets on companies, Mr. Treybig said, but they often lack the kind of experience with consumer markets that would help them recognize the value in a site like NaturallyCurly.

 

“A lot of this has to do with things that are harder to predict than a technical product,” he said. “And who in the high-tech market knows anything about curly hair?”

 

Indeed, Mr. Treybig said that it has become so easy and inexpensive to create a polished Web site that the online industry could see the rebirth of another late ’90s animal: the Internet incubator. Back then, businesses like IdeaLab and CMGI provided facilities, money and technology help for dozens of small online companies, with the hope of producing a few breakaway winners.

 

Many of those businesses focused on e-commerce, which to succeed, required a larger market than existed at the time. The e-commerce sector remains much bigger than the online advertising market, by a score of $146.5 billion to $17 billion last year, but online advertising is growing more quickly, and is generally seen as having a bigger future, than Internet retail.

 

Perhaps as a result, companies that have begun resuscitating the incubator model are doing it with an eye toward online media. Take RIVR Media, which produces television programming for cable channels like A&E, Nickelodeon and the Nashville Network, among others.

 

The private company last year said that its Internet division, RIVR Media Interactive, would create 15 online-only channels featuring video content aimed at niche interest groups by the end of 2008. Last week the site introduced the first of those, Needled.com, devoted to tattoo enthusiasts.

 

The site, which last week was still encountering occasional technology hiccups, offers video clips of tattoo artists and multimedia histories of various tattoo techniques.

 

Even if the site attracts only the inked crowd, the potential audience is big, according to Meg Lonon, RIVR Media Interactive’s vice president for marketing. About 67 million Americans have had a tattoo, she said, including 34 percent of the nation’s 18-to-34-year-olds.

 

Ms. Lonon said that the company plans to run video advertisements for “cars, motorcycles, beverages — you name it. Big brand advertisers. We haven’t secured any yet, but we’re very encouraged by the people we’ve talked to.”

 

RIVR actually purchased the site for an undisclosed sum from a blogger, Marisa DiMattia, a professional journalist and lawyer, and Josh Rubin, the editor in chief of Cool Hunting, a Web site devoted to art, design, technology and culture.

 

Ms. DiMattia, who will continue as the site’s managing editor, said she and Mr. Rubin, who started Needled.com as a blog in May 2005, had hoped to build high-quality video into their site themselves, but lacked the money to do so. “RIVR had the money and facilities, we had access and knowledge,” she said.

 

As a blog, Needled turned down many advertisers, Ms. DiMattia said, because they approached the tattoo market in an “exploitive” way.

 

“We didn’t go into this to make money,” she said. “Which is what’s so great about this. Because in the end, we did.”

[phillybear 364]

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