Social Networks: Why Tech Entrepreneurs Seeking Investments Should Steer Clear Of Them
Social networks? “The time for that is kind of over,” says pioneering Black tech investor Angela Benton. She advises tech entrepreneurs to steer clear of them.
Benton moved to Silicon Valley and launched the NewMe Accelerator in May 2010 to support startup entrepreneurs of color. In 2016, NewMe relocated to Miami‘s Wynwood Arts District with $191,000 in new funding from the John S. and James L. Knight Foundation to help expand programming.
NewMe has raised more than $25 million in funding for minority entrepreneurs.
In a Bauce interview, Benton talked about what works, what doesn’t, and what turns her off when she thinks about investing in entrepreneurs.
From Bauce, a lifestyle site for the self-made woman. Bauce creates and curates content that helps ambitious women from multicultural backgrounds build empires, achieve financial freedom, and look good while doing it.
You’ve been a veteran in tech. You started out as a designer-developer. What have you seen as the evolution for women and people of color in tech?
Benton: It’s better than it was. When I started Black Web 2.0 in 2007, I had already been working for years as a designer and engineer before that. So, I was always kind of the lone black person on the technology team. At that time the development teams were housed as an engineering unit within marketing. Now most engineering and marketing teams have their own separate divisions. I was always the only Black person.
You launched NewMe Accelerator to help solve the problem around diversity in technology. How do I get your attention to invest in my ideas?
Benton: I have made “investments” into entrepreneurs that might not even have a product but I’m willing to give them my time and energy. They’re just somebody that I believe. They might be trying to kind of figure it out and testing different ideas. I think a lot of other accelerators tend to focus on “the exit” and what kind of return they’re going to get from a particular idea. I just focus on the individual. NewMe is like a family — we invest in the people, not just the ideas.
What makes you say, “Hey — I think I want to work with this person?”
Benton: The easiest way to get my attention is to do what you say you’re going to do and then follow that up. I’m always transparent with what folks need to do. The entrepreneurs that I tend to work closely with tend to take my advice and execute on it and then they come back to me for more advice. It’s a very iterative process. I have one person I’ve been working with for a little over a year in this way. He wasn’t even a part of NewMe to begin with. He just had this idea. He was non-technical, he didn’t even know how to get it started. Most accelerators won’t even take someone that’s non-technical and doesn’t know how to get an idea started. And that’s kind of what’s different about me and what I do. Working with minorities, we’re kind of at a deficit and not from a skill perspective but purely because there’s a saturation in non-technical founders. So you have this large group of folks who want to start businesses that are not technical, and they may not know how to start. They may not know what an MVP is and all of that. So that’s kind of where NewMe comes in and where I come in. I come from a similar background as a lot of these entrepreneurs.
What is the biggest mistake that new entrepreneurs often make?
Benton: A lot of times you can run into someone who might have a good idea but they’re just not coachable. And so you can’t really work with someone who’s not coachable because you’re going to try to give them advice but it’s literally not going to process for them at all. It just ends up either turning into a combative situation or a missed opportunity on the entrepreneur’s part and nobody wants to really deal with that.
Are there specific industries you wouldn’t invest in or you’d advise your entrepreneurs to steer away from?
Benton: Yeah — social networks! Do not say you’re building a social network. Like, the time for that is kind of over. The players that are in the space for that are in the space, so…not that. And also not ride-sharing.
See what ends up happening in entrepreneurship and startups is that you will get some companies that are hugely successful and then, all of a sudden, everybody else is working on a similar thing and it literally makes no sense at all. When Facebook was really rising, everybody’s pitch was, “I’m building a social network — it’s going to be the next Facebook”. Now, Uber is hot. It’s a billion-dollar company. And so now everyone is building “the next Uber” or “ride-sharing company for xyz”. And from an investment standpoint, if that’s the kind of business that you’re trying to grow where you want to actually get investment, it’s going to be challenging because the people who are going to invest in this space are already invested.
It’s going to take longer to actually be successful because you’re competing with a huge company at that point, and you just don’t have the resources. Like take for example a “black Uber.” It might be something that you want to use, but … it’s going to be really hard to grow and sustain.
You started a digital media company after launching Black Web 2.0. Can content companies still make money as they did in the past?
Benton: Media companies are hard because advertising is kind of the main revenue stream for them (or some kind of sponsorship), and in order to get that you need eyeballs and page views. It’s a chicken-and-egg problem. Content companies need to think about how to also become product companies and product companies also need to understand how to become content companies. The two worlds to me are kind of converging. Most of the product companies that are really good from a marketing perspective have some kind of storytelling. They have a blog, Instagram or YouTube or they’re publishing some type of content that people are sharing, that people are engaging in. And then folks who are running content businesses need to look at how can I come up with a product that this specific audience will buy. The leverage that content companies have is that they already have a captive audience and so people will come back to the site. And that’s for everything from a website to an Instagram or Facebook or Snapchat platform. Despite whichever platform that content company is focusing on, you still have to be able to drive people to give you money for something. And I think that’s the piece that a lot of people miss out on.
I kind of learned that myself running Black Web 2.0 because we were very small, and we had a niche audience that a lot of people didn’t really believe in at the time. We were almost too early for what we were doing and now everybody is interested in technology and “blerds” and this subculture of being black. We had some success with charging a higher CPM (on ads) because our audience was professional and they made a certain amount of money. But it wasn’t our regular stream of income. We had to do a lot of other stuff. We had to do events and take different types of sponsorships. We even started launching these integrated campaigns that are really popular now but weren’t so much back then with folks like HP and some other bigger brands. But it was very, very hard at that time to try to actually generate consistent streams of revenue even though the brand was so popular.
Now, I think it’s easier because a lot of stuff has been commercialized. I mean you have people buying subscription boxes and people have subscriptions for everything they don’t even remember they haven’t purchased subscriptions for.
So if you can figure out a way for your business to be able to charge for something that your audience might like, I think having a content company is well worth someone’s time.
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