Do business magazines have an effect on SMBs?
2012-06-01 04:18 - 793 reads
Lynne Johnston is a 20-year-old girl who is campaigning for a ban on airbrushing in women’s magazines.
She blames glossies such as Elle and Cosmopolitan for her anorexia.
‘I spent all my money on magazines,’ she told the Daily Mail recently. ‘I’d buy them on the way to school, then hide them in my bedroom’
‘Other girls were buying shoes and make-up, but I’d spend my money on all the weeklies and two or three monthlies — any magazine with someone on the front who I thought looked skinny
‘I looked at the photographs of celebrities and would tell myself: “You don’t look like that.”
‘As I flicked through the pages, my mood would drop, then I would self-harm.’
Strong stuff. And it made me wonder: what effect do business magazines like Forbes and Fortune have on entrepreneurs?
Are they, in the same manner, harming our entrepreneurs?
It is almost impossible to read these magazines without the same sense of inferiority teenage girls get looking at airbrushed supermodels.
Every edition is packed with profiles of stunningly successful business and entrepreneurs. The latest edition of Fortune has a story on the Instagram founders Kevin Systrom and Mike Krieger who made $1bn in under two years.
It has recently written about the founders of Omgpop cashed out to Zynga for $180m only a few years after founding the firm.
Or how about Mark Zuckerberg, who is getting wall-to-wall coverage? He’s got $19bn in assets and cash. He’s 28 years old.
What were you like at 28? Remind me how many billions you had in the bank…
Even the deals are intimidatingly big. They focus on firms like Playfish, which got $17m from Accel Partners and Index Ventures, before being gobbled up by EA for $400m a year later.
Read story after story of these relentless success and you soon start to question your own performance. “Why is my firm not growing at 30% a month? Why do I not have tens of millions of investment? Why are the press not reporting my every move?”
But here’s the thing.
It is insane to compare yourself to these guys. Doing so will make you ill.
For starters, not everyone can be a Mark Zuckerberg. He is a freak. A one-off. To yearn to emulate him is as futile as a middle-aged woman wishing to have the same complexion and physique as a 6’2” teenage model.
Furthermore, business magazines use airbrushing of their own.
Favoured firms are given adulatory write-ups. Their blemishes are hidden. When they fail, there is never the same level of coverage.
Take SpinVox. It raised $200m in funding and founder Christina Domecq became a celebrity on the business pages. She won a slew of awards before SpinVox started to crumble. It lost £36m with a revenue of merely £2m. The following year it lost £49m. Eventually the firm was sold for a stonking loss.
The business had never been viable. It never came close to making a profit. But it did Christina Domecq hand back her European Entrepreneur of the Year Award? Hell no.
Or Bebo: sold by Michael Birch to AOL for $850m, then flipped on for a fraction of this sum a few years later. Or Cobra Beer: darling of the press, won founder Karan Bilimoria a peerage. In fact the firm accumulated huge losses and had to be saved from administration by Molson Coors.
These firms got absurd levels of praise from the business press.
If you want to see the madness in its full majesty then find a business magazine published five years ago and marvel at the sort of firms they were heralding as the new Google. Believe me, your morale will be instantly raised.
The truth is that if you want to find out about real success you need to put down the shiny magazines and look elsewhere.
Read the Fast Track or Hot 100. These rankings use Companies House data to identify the fastest growing firms in the UK. They use revenue, not market sentiment, as their guide. And they only feature profit making firms, so we know we are dealing with proper companies via genuine metrics.
You’ll see that achieving growth of 40 per cent year on year is hard to sustain. Of the UK’s 4m firms only a hundred or so can manage it.
After a year or two of growth at this rate they run out of puff and mature into slower growth firms.
If you are ambitious, these are the firms you should be wanting to emulate.
Or try reading a magazine like Shares or the Investors Chronicle. These publications genuinely search for the truth – identifying underperformers, painstakingly pointing out strong firms weak-points and telling the real story behind the headline figures.
They will give you a sense of reality.
Feed yourself a diet of Zuckerberg, Buffett, Gates and Branson and you’ll wind up feeling no better than the girls who idolise supermodels.
The difference is that you are probably old enough to know better.