Interview with Jeff Reifman, CEO of NewsCloud

NewsCloud.com is a social network site for news where people can discuss and share world events.

I’ve always been experimenting with new media and web 2.0 social networking concepts, and over the past year they have evolved into NewsCloud.com. We’ve made the decision to redesign and re-brand it to concentrate our efforts and focus more.

I ask myself that question every day. With all of the growth in web 2.0 efforts and all the venture money, the competitiveness of the space makes me question whether it makes sense to keep doing it, even whether there’s a business model. I’ve been experimenting since last year and I’m really enjoying it. I think we’re making good progress, so I feel pretty good about it. It’s something that I constantly ask myself: does this make sense? Is this the right use of my time? Is this going to take off? Is there going to be an inflection point where everything makes sense?

I’m different than some entrepreneurs. A majority of entrepreneurs are motivated by a creative spirit but they’re also motivated financially. Having had earlier success at Microsoft I don’t have the big personal financial pressures that some people might, so more of my efforts in the past few years have been creative, which is something that I enjoy and feel good about. With NewsCloud I feel like we’re creating a place for news on the web where there’s a more democratic approach to media and I think it can provide an important service over time. If I was primarily focused on making money, I think I might have thrown this business model out the window a while ago.

That’s definitely a pressure that I try to think about quite often. There are so many efforts right now that are trying to do social news and most of them are big. They are usually tracking votes and user comments. What we’re trying to do is encourage different kinds of involvement where people can get involved in issues. I think the direction that we’ll go will show more of that. The other thing is that we try to be very news focused, so when you come to our site it really looks like an on-line news site. If you go to the other sites of the competitors they usually simply rank stories. We’re focusing more on the community aspect, to try and connect people. I’ll be honest with you; it’s still a big experiment. While a lot of groups are spending $20,000-30,000 a month to build their sites, I’m primarily just one person with a couple of people helping out from time to time and we’re just in a very grass-roots experimental phase, trying to see what people respond to and let the site evolve naturally.

It varies. We have a few that are so dedicated it’s a little scary, and I wonder if I’ll meet them someday. Most people typically gather stories from other news sites, and they post them on our site through our submit form. The editors then rank them, and we assemble the site into a daily news viewer where at any moment you should see the news. Some people spend more time commenting on stories than submitting stories. We have a few regulars who, as I said, it’s funny, every day are submitting a ton of stories and they just love it and they’re keeping their own channels where they might be publishing those with friends so people can follow the stories that they’re reading and collecting.

That’s actually one of the big focus areas for us now. If you come to the site you see a lot of the people who are involved in sharing stories. We try to promote the discussions that are happening on the site, and we’re actually in the midst of adding some new features. Any editor can have their own channel where they share the stories that they’re collecting with friends, and then we’re setting up some new group features where people can follow certain issues and there will be a whole bunch of discussion features around issues. I hope to make connections to a lot of community organizations to get involved, to track news that they care about and connect that to the organizing that they’re doing because it’s something that a lot of them are doing already but they don’t have the tools to do it very well.

It’s been a little bit of both. I’d say on a micro level we’ve been promoting it within our circles. We got a lot of attention early on. Boing Boing was one of the first sites to really push it. Smart Mob was another great site to really push it. Then we also set up a music store called common tunes, and a music exchange. Both those got pretty wide play. So we’ve used that leverage to continue to get people who’ve been using the old sites to use the new site. We’re still building a lot of features an experimenting so it’s kind of fun that we’re a little under the radar still and what we haven’t done it push it out with any large marketing effort at a very large level. We haven’t raised venture funds; we haven’t tried to spend a lot of money on marketing or anything like that. We’ve just kind of done grass-roots outreach.

Good question. I’m more insulated from the monthly need for a salary, so I’m able to focus my time on the project for a while and enjoy the process and not worry too much about whether there’s a business plan in the end behind it that takes off. I haven’t gone after venture funds, primarily because I don’t think I have a good business plan filled out yet. But I do think that there’s huge potential for the site and I do think that there probably is a possible financial potential for this site but I think it would be too early to start taking in venture money and trying to ramp that up. That’s a mistake that a lot of the competitors have made. I sort of laugh when I know that they burn up to 20 to 30 thousand dollars a month and I’m really glad that I’m not spending anything like that kind of money. It gives me time to focus on the site and build the community.

Also, it’s not clear that you can really build a successful site without sort of a natural evolution of the community. I think we have started seeing some of the complaints for example on sites like Digg where the discussions tend to be pretty hollow because they’ve reached only one community but they’re not broadening to other communities. I think we’re trying to avoid that by just growing slowly and experimenting.

If the business plan does emerge and the site reaches an inflection point, and I see traffic starts to rise and sort out the business issues, I would certainly not hesitate to go after venture funding, probably looking for someone who’s interested in the social impact of what we’re doing as well so that the values can be measurements in the business plan.

I think that your last question is more personal for me. And that’s one of the nice things about not having a lot of people have a financial stake in the company. On a regular basis, I’m able to look at the personal time and commitment that this project takes.

Where I had initially several sites Commonbit, Commontunes and Commonflick — I decided that that was stretching it too thin and moving to just focus on NewsCloud.

Integrating the key components of the previous site just made sense. Also, it’s the space where I saw the most potential. And so, I think, being nimble, with any entrepreneurial effort is really super important. Also being willing to throw out good work that you’ve done and move in a totally different direction because, to some extent, we got out a lot of effort and investment and code to go with NewsCloud and the new design that we had and it’s been worth it.

I hate saying that ad revenue is the big one but essentially, we’re in the news business and that’s how newspapers work. I do believe that there is a potential for extending the APIs of the site so that other services can use it and possibly licensing access to some of the services that potentially have some subscription fees for certain types of services that we offer to editors or certain things they might want to do.

I think that as the web grows and as more and more people experience news online and do more than read. People pay for blogging services and bloggers are becoming syndicated, I think there’s definitely more and more potential for new business models. What I’m doing now is not draw any lines in the sand and not jump too thin. I think a lot of the money being spent in the social news space is kind of wasted because I think it’s just too soon.

When I was involved in MSNNews for Microsoft and MSNBC I was able see some of the very early online news ventures. I got to see how those models evolved and what the cost factors were. At the very beginning, Microsoft threw money out the window, hand over foot, for a long time before MSNBC ever really developed a following and ad revenue. But it hasn’t evolved in five years, either, so it’s sort of stuck in that mode. I think that part of the challenge of an entrepreneur is to find a business model that would elude their competitors.

NewsCloud is a way for individuals to present stories either from their own blogs or from news organizations from around the world that are breaking through and speaking the truth pretty loudly. So that’s one thing that’s very positive about the internet is that it allows for important stories to really become widely viewed and I think that’s one of the things we’re trying to do with NewsCloud.

For me, I’m a very creative person and I’ve used computers ever since I was 11. I’ve become a web developer over the last five or six years. For me, the process is enjoyable, tinkering with the site, adding new features, seeing how people respond to it, getting feedback from people — it’s a lot of fun.

That said, there is a downside to it, when you decide not to get venture funding right away. I primarily work alone. I have a couple people I work with but they’re more hourly. These days, I work out of a coffee shop. It’s a tough lifestyle. And I think most entrepreneurs who work out of their homes or their garages; they sort of know that early stage.

What’s hard about this is when you don’t have a model that is ready, where you see that there’s a plan in front of you and you’re sort of meandering towards experimenting. It’s harder to know when that cycle ends. And so, you have to have a lot of faith in yourself, a lot of patience. I say that, as an entrepreneur now as opposed to 10 years ago, I think patience and self-confidence are the qualities that really help me now. It doesn’t hurt that I have at least some financial savings. I don’t need to go get a job either. I don’t have those pressures. And I think a lot of entrepreneurs do face those two and that makes it hard for them.

I think allowing something to evolve, talking to customers, getting feedback, but also having a vision and being willing to take a risk, to kind of push on some ideas that maybe people don’t understand right away but you think they might get there at some point.

Also, from a software perspective it is important to know the benefits of building a good architecture. I think one of the things I’m pretty proud of is that NewsCloud pretty much is built by one person and a few interns. By having a really solid architecture and framework now, we were able to step up the site very quickly and be very nimble whereas some of our larger competitors can’t change as frequently. So that’s a big advantage to us.

The other thing is that we’re using all open-source software and so hosting the site is inexpensive, expanding the site is inexpensive. We can often borrow code from other GPL projects. Open source platform has really helped.

One of the challenges that we did run into this year was bandwidth, actually. I think bandwidth is one of the barriers for start-ups now. With Commonbits, we were running a Bittorrent service to share progressive media. For the longest time, we had no problems with that. We were able to keep in with things but all of a sudden, with the growth in the use of Bittorrent, it really started growing exponentially. So we had to make a tough decision that we weren’t going to be in that space anymore and shut it off because where server software is pretty cheap and free, bandwidth isn’t still. And so that could be a challenge.

Both, but I think you have to be very sensitive to how any business model is perceived. If you’re a for-profit institution and you’re pushing some sort of social aspect, it’s fair for people to say, “They’re just trying to make money by doing good.”

So I think you have to be really upfront with what your business is, what you’re doing, why, how it works, and how it benefits the community. When we’re doing the coffee houses, it made perfect sense. People who came to their neighborhood coffee house knew that some of the profits were supporting some of the charities around them. When it was giftspot.com, where people are buying gifts, and people could choose to donate their some of their gifts to charity, I think it was a little bit more gimmicky at times and we ran that risk that seemingly we were just doing it just to grow the business. It’s a hard thing, being transparent. That’s one thing that an entrepreneur can do.

And when you decide to take on a community aspect to your business, really ask yourself hard questions whether you’re doing it more to promote the business and expand reach or whether you’re doing it to really provide a service and do some good.

I’d like NewsCloud to be the number one site where people get their news on the Internet. I think there’s definitely a potential for that. Today, when you go to a new site, it’s a flat experience where editors are selecting stories for you. I think in the future, you’re going to see more dynamic aspects of news which is much more about what your community thinks is important and what they’re saying about the news, and allowing the community to provide more objective than next day’s letter to the editor. I think it’s going to be a much richer dynamic experience than you see today.