Indie Electro 02/21/2009
 

The emerging indie electro scene has really been doing it for me lately. It mixes the fundamental production values of electronic music with some of the more mainstream appeal of indie music, like lyrics, for example :)

One of my favorite songs is "Cold Dust Girl" by an artist called "Hey Champ" that I can't seem to find anything about (bar a few songs on the Hype Machine). Friendly Fires, who's more well known, also has some pretty cool stuff too, as well as Cut Copy.

Hey Champ - Cold Dust Girl

Friendly Fires - Paris

Cut Copy - Lights & Music

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SynthaSite, one of our competitors, just released news today that they have closed a $20M round of financing. Now that this is public, I think it's very interesting to examine the difference in strategies we are taking.

We're a big fan of capital-lean businesses: those that are able to accomplish a lot with a little. They have a few large advantages: they're generally better for the entrepreneur, who maintains a larger ownership of the company, and for the investor, who sees their (relatively) small amount of capital used to build maximum value per dollar.

A different strategy, that can also be successful, is to raise as much money as possible, and then buy your way to the top. But buying your way to the top doesn't reduce all of the business risks -- it's just rolling the dice with higher stakes.

The downside for the entrepreneur, in this case, is closing doors: the option of a successful exit at smaller ranges is completely closed. In SynthaSite's case, with $20M raised and a likely $30-60M post money valuation, they will likely not be able to exit successfully for any less than $100M. Not to say that it isn't possible, just that it's much more difficult.

What's most interesting about this comparison is contrasting to Weebly's story: We raised $650k in April 2007, which brought us to profitability with a medium-sized team. Our team is very efficient. We're constantly working hard to improve the service, and we're accomplishing a tremendous amount.

In every sense, we're ahead of SynthaSite for the time being: a larger user base, more pageviews per month across all user sites, faster organic growth, and significantly more revenue. The question I would be asking as an investor in this most recent round is: "Why is there such a disparity between the capital needs of Weebly and SynthaSite?", or "Why did SynthaSite need to raise $25M to get to a similar point Weebly has with $650k?"

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I've picked up a few hints here and there that the holiday season was either good or bad for various companies, so I figured I'd share our December growth:

Interestingly, our December traffic, for the most part, showed a small, slowing decline until Christmas day, when it took a dive off a cliff. Even so, revenue for December did not decline from November numbers.

It's also worth noting that the bottom of this graph does not represent 0 new users per day, but represents a sign-up rate about 40% of average.

It then ramped back up over the next few days, and recovered in early January. Towards the middle and end of January (not featured), traffic jumped way up and has stayed up, to even a bit more than we would have projected given our existing growth rates.

So I figured I'd ask: "How did your site fare over the holidays?"

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