Lessons from the first class of the Project Liberty Digital Incubator [VIDEO]

When the soon-after ousted publisher of Philadelphia’s two largest daily newspapers and Philly.com announced his company would be housing a ‘digital media startup incubator,’ funded by $250,000 from the national, news innovation-focused Knight Foundation, it could have been seen as a simple land grab in a competitive space.

But the announcement was full of unexpected and promising partners: since the Knight Foundation could not directly fund the for-profit Philadelphia Media Network, the state-funded Ben Franklin Technology Partners group was designated as fiscal agent of the two-year grant and celebrated accelerator DreamIt Ventures would provide strategic mentorship. Drexel University was due to offer intern support through its co-op program. (In April, PMN was purchased by a new entity called Interstate General Media LLC, but the actions in this story largely predate the sale, so the acronym PMN will be used.)

“None of us would have anticipated the kind of synergies that have been realized by this partnership,” BFTP’s Investment Group Vice President Terrence Hicks said. (Read about how the first third of the $250,000 grant was spent here)

Though PMN held an open call for candidates, in the end, three graduates of the last class of DreamIt were chosen. Political candidate-recommendation service ElectNext, mobile backend provider CloudMine and digital coupon app SnipSnap moved from University City to the Project Liberty offices, a heavily-branded series of cubicles near the Daily News sales staff on the 5th floor of the Inquirer Building at 400 North Broad Street.

Earlier this month, the Project Liberty’s first class effectively moved out — nearly a year after the grant was first funded — though a PMN spokesman says the program doesn’t technically end until this week. For a project with so much initial PR power, including three of the most promising tech startups in the region, the first class concluded with surprisingly little fanfare to mark what should have been a notable milestone.

It has been a far cry from the press releases, photo ops and events surrounding Project Liberty, which included the hype around PMN’s lukewarm tablet initiative and other digital media efforts previously offered by the still struggling news publisher.

In the coming days, the Project Liberty incubator will announce its next class, to begin July 11, and many involved say this is just the beginning. The two year grant is meant to cover at least two more classes of startups.

Indeed, in interviews, the Knight Foundation’s vice president of journalism and media innovation Michael Maness repeatedly referred to Project Liberty as “an experiment.” If experiments are about testing assumptions and learning from the experience, what have we learned from the first class of the Project Liberty Digital Media Incubator?

At its essence, Project Liberty was intended to cultivate startups that could reimagine digital media in Philadelphia and provide a value-add to PMN’s own efforts in the space.

Looking back on the six-months that coincided with the program, in which another round of editorial layoffs came down, the publishing company was sold for less than half of its 2010 price and CEO Greg Osberg stepped aside, it was either a bold effort to rethink legacy news operations or a desperate attempt at resuscitating the at-times free-falling publisher of the region’s once-most respected media outlets.

At the program’s outset, Knight Foundation Philadelphia program director Donna Frisby-Greenwood said in a BFTP press release: “We’re looking forward to seeing these projects benefit from the Project Liberty Digital Incubator, and ultimately produce models that help strengthen both community news and information here in the fourth largest media market and throughout the country.”

Former CEO Greg Osberg, a huge proponent of the project, was quoted numerous times as saying, “I want us to find the next Foursquare and house it at Philly.com.”

But since the day the three startups moved into the soon-to-be vacated Inquirer building, it’s not clear whether Osberg’s vision has actually come to pass.

During the six months of incubation, the trio received some light mentorship and participated in some early attempts at integrating the startup technologies with PMN’s publications, but many say from afar that the entrepreneurs spent little time there and had limited interaction with the newspaper staffs they were meant to impact. By at least one claim, after launch, Osberg never actually visited the remote incubator space.

With Osberg, the public face of Project Liberty, now playing a minimized role as a Knight advisory board member and new ownership for the city’s beleaguered media company, it’s not clear who even defines success anymore.

“For us, as a company that is now locally owned in Philadelphia and in the region, we feel [it’s] really important [to have] companies and individuals stay in Philly, which is really the mission of Ben Franklin [Technology Partners], if you think about the number of companies they’ve helped support,” toward the end of the first class said PMN’s vice president for external relations Mark Block, who has been kept on so far through new ownership. “That’s exactly what the whole idea of the incubator was. We wanted to have those media startups local.”

But Block mentioned little in conversation with Technically Philly about the startups’ tangible role on the business or editorial side of PMN’s publications — which was the originally stated goal of the project, as Osberg and the Miami-based Knight Foundation had said at the project’s outset. Block did say that the startup founders provided some behind-the-scenes consulting-type intelligence, though he did not go into much detail.

Some of the disconnect has been attributed to the physical distance between the incubator and the people who actually do the business of journalism — the reporters and business development specialists. In a carefully orchestrated Philly Tech Week event organized by PMN in April to herald the incubator’s first class, all three Project Liberty startup founders mentioned being disappointed by the communication gap (below, from that event, watch SnipSnap founder Ted Mann discuss the gap).

http://www.youtube.com/v/MgIbmVXa9Rc?version=3&hl=en_US&rel=0

In defense of the project, Osberg said during the same event that the company’s impending move to the new 8th and Market Street office space means the incubation program will now be on the same floor as both business and editorial departments of the two news publications. It’s a promise Block has echoed.

“We have been challenged in a way to give them exposure and more involvement in what goes on in each of those newsrooms and that is important in the aftermath of the incubator,” Block said. “With our move to 801 Market Street on July 1 we have a blueprint where the incubator sits right in the middle of the business and editorial side of the publication and will be in a much more visible and clearly involved way.”

In actuality, ElectNext was the only company to achieve forward facing adoption by PMN. ElectNext’s voting information widget made it onto Philly.com in advance of the Pennsylvania presidential primary, as Technically Philly reported. Thought it’s not clear how PMN will continue to make use of ElectNext in the future, founder Keya Dannenbaum said the opportunity helped her pitch other media publishers.

“Despite how busy she clearly is in her own role, Wendy [Warren, Philly.com editor] was incredibly proactive about finding ways to work with us,” Dannenbaum said. “In the end, we were able to launch a beta version of our widget in the days before the PA primary in a partnership that was of great benefit to both parties, driving traffic, pageviews and even some revenue.”

CloudMine and SnipSnap have yet to see any direct adoption of their products, though conversations may be in progress to incorporate SnipSnap into the network’s traditional Sunday coupon offering, Block told Technically Philly.

“SnipSnap, through research and technology, they have been able to meet with business side reps and really share with them how the consumer has changed demand for how they use coupons,” Block said. “That has been beneficial to us as we begin to shape how we will provide coupons to our customers, possibly through SnipSnap or other possibilities.”

CloudMine cofounder Brendan McCorkle said his company was “hoping for more visible use out of our interaction,” but that CloudMine’s backend-as-a service technology “was harder to ‘sell’ internally.”

“There was exposure from being in the program and the space was a great place to work for a few months,” McCorkle said, of the free offices. “We have moved on to a larger space that is more appropriate for our stage, but the program was a fine fit for bridging the time between DreamIT and funding.”

Both McCorkle’s Cloudmine and Mann’s SnipSnap have since moved to Callowhill incubator Venturef0rth. Some there confirmed McCorkle and Mann left Project Liberty as early as May, though the pair of entrepreneurs declined to confirm.

Although they haven’t all gained traction with the company that hosted them for half a year, all three companies have seen measurable success.

SnipSnap closed a $480,000 angel round as Technically Philly reported here, with $100,000 coming from BFTP. Tech Crunch reported last week more funding and one million coupons snapped. Cloudmine recently raised its own $480,000 first round, after securing $100,000 from BFTP in January and continues to flourish in other ways as Technically Philly reported today. And ElectNext has signed deals with The Economist, for a widget on the publication’s mobile application as Philly.com reported in March, and with the National Constitution Center.

In a subsequent interview, Frisby-Greenwood, the local Knight Foundation program manager, called the first year a “true success,” considering the strength of the three startups.

But it’s hard to tell which if any of those successes had much of anything to do with being housed at Project Liberty — and none of those successes did much for PMN, nor will they likely offer a positive impact on legacy news in any direct way.

In nearly a dozen interviews, no involved party would cite specifically what programming and mentorship was available to the startups that wasn’t already available to the three DreamIt alumni. Unlike traditional accelerators and incubation spaces, like DreamIt, the Philadelphia Media Network is not well-entrenched in the region’s investment and business development worlds — the well-heeled new ownership of IGM has more traditional regional corporate ties. What partners it had — DreamIt, BFTP, Drexel — were already decidedly in the field of vision of the three startups PMN housed.

http://www.youtube.com/v/NtHKR-QmBEA?version=3&hl=en_US&rel=0

Still, Knight’s Maness said the Project Liberty “experiment” is one the foundation remains interested in enabling.

“We have seen a lot of absorption and uptake at traditional news organizations. While we’ve been creating a lot of projects, products and tools, a lot of the larger, more established news organizations haven’t been as quick to take those up,” Maness said. “We have some exceptions, but one of the reasons we were interested in this as an experiment is this is an opportunity for [PMN] to more easily engage with and think about using these tools.”

From the perspective of that framework, though, the evidence for the success of the program is still glaringly inconclusive.

What does the first class mean for the future of Project Liberty?

To be fair, one could argue that the first class was a trial run. PMN is in a state of profound flux and incorporating new digital technologies on either the front or back end might not be priority number one.

Frisby-Greenwood was ‘nervous’ when she first heard about the latest sale of PMN and Osberg’s stepping down but says now “they still seem really committed” and is eager for the next class of startups to come on.

Still, aside from free office space, it’s not clear what three DreamIt Ventures grads were doing inside a quickly emptying newspaper building, nor is it obvious, aside from a workshop or two, how effectively the first third of a $250,000 grant was spent.

As Technically Philly reported last week, of the first $83,000 spent, programming and consultation directly intended to facilitate each company’s growth only accounted for about 14 percent of the funding allocated to the first class. Although — and this can’t be said enough — in a new age, with an uncommon experiment, it’s hard to know what would be the right rate. With a new class incoming in July, the question still needs to be asked.

Block told Technically Philly the continuation of the grant for future classes was reliant on “the goals being met” and said the Knight Foundation would be doing “a very effective analysis of every incubator class,” so it seems there still may be lessons to be learned once Knight completes that process. Knight may not receive updated grant spending information to review until July, said Frisby-Greenwood.

And of course, the second class and the new Inquirer home may offer opportunities that PMN’s circumstances obscured during the first class.

While there are still plenty of questions about the efficacy of the Project Liberty Digital Incubator in producing companies that can actually enhance the parent news media organization or other legacy media operations for that matter, the three Project Liberty companies, for their part, all said they learned important lessons from the experience.

Here are four key pieces of advice to the incoming class of Project Liberty startups from the founders of SnipSnap, Cloudmine and ElectNext:

1) “Startups and legacy media organizations move at different paces”

“There was friction in moving at different paces,” McCorkle of Cloudmine said. “I would advise companies company in to keep this fact in mind. Make sure you pursue what you want hard and don’t expect anything to be handed to you.”

2) “Learn the structure of a traditional news organization”

“Understand how you can create a product (or at least a product pitch) of the greatest value and least resistance toward establishing effective partnerships,” Dannenbaum of ElectNext said. “Navigating the maze and learning those lessons will make the partnership or sales cycle that much more smooth when you then go out and begin to form relationships at organizations at which you are not an in-house entrepreneur in residence!”

“In our six months, there was maybe one person that poked his head in to inquire. Instead, it was entirely up to us to make something happen,” SnipSnap founder Ted Mann said. “It would be great if a “deal with the Inquirer” came all done up in a bow, alongside the Project Liberty agreement, but you’re going to have to work for it.”

3) “Forget rev-share deals”

Mann said it’s common for startups to angle for deals in which they split the proceeds from the sale of a product with the publisher 50/50, but that’s folly. Instead:

“Concentrate on making the Inquirer’s life a little easier and leveraging its massive readership to help get your product attention/usage/visibility,” Mann said. “Don’t expect to be compensated for this in the slightest; the traction you’ll get is all the payment you should expect.”

4) “Make friends with the ink-stained set”

“The reporters are just downstairs…,” Mann said, though that may not be applicable in the new space. “And after you’ve told your story to enough, one of ’em is bound to put pen to paper and write you up.”

To learn more about each of the companies that graduated from the first class of the Project Liberty Digital Incubator, see our coverage of ElectNext, CloudMine and SnipSnap.

Technically Philly Editor Christopher Wink contributed to this report.