It is quite revealing that all three of the businesses we have heard from this morning have built their businesses through partnerships and licensing. These are things which traditional media companies find really, really hard.

For example Healthline is building out a vertical ad network where they traffic targeted ads to the network of sites they partner with. I wonder whether this is something which Flightglobal.com and our other bigger vertical sites shouldn’t be considering.

The day kicks of with Affinity Labs. CEO and founder Chris Michel is talking. He talks about how he started military.com in 1999 at the height of the boom. He raised $39m capital and wasted $25m, he says. Then, in 2000 the crunch came, the staff was cut from 80 people to 11 people. At that point the site was down to its last $50k. "We fired the professional management, went on the road and sold some business."

Then the company was sold to Monster in 2004.  Joined Monster. The idea was to take Military.com and do the same thing in loads of sectors. It would be a totally separate entity and Monster would have a call option for one time revenues. However, the ceo resigned and the idea was withdrawn.

So he left the company and set up on his own. The scalable technology allows for a new vertical every few weeks. "Four months after we got funded we launched policelink.com – now it is the largest police site on the web." The plan is to launch 30 high value communities which they manage and then hundreds of self-managed communities. One key is that you can scale to pursue opportunities when they occur, he says. Affinity uses SEM to ensure that the money which is spent on marketing is profitable on day one. Currently Alchemy runs 11 portals with 30 people. "If we have to choose we will always choose someone who gets the internet, rather than someone who gets the particular subject." He says they can get a site up in two weeks. Within the portal they consider the segments within – people who want to be a police officer as well as people are already. "We do have great content, we just licence it."

He went out on his own in October 2006 and sold it back to Monster in January 2008 for $61m. Now trying to run Affinity Labs within the corporate environment. "What works is accountability and responsibility in single individuals."

His view on Reed Elsevier: " You guys aren’t getting enough value out of your content."

The big brake on innovation in corporates is that the innovators don’t get the rewards that they can on the outside.

Soundbites:

"There is no such thing as an FTE – a full time equivalent."

"Large companies have a broad distribution curve of people."

"Every Monday at noon the resumes spike on Monster – it is the world saying "I hate my job."

"The reward for innovation is eclipsed by the penalties for failure."

"Never confuse activity with outcomes. Focus on what really matters. For example buying media – does a NYT story really matter? The really expensive is management bandwidth."

"I am a linear innovator. I don’t invent, I exploit."

"I’m looking forward to the imminent collision between LinkedIn and Facebook."

According to CNET Demand Media, the web community aggregator which bought Airliners.net last year has bought Pluck.  The report goes into some details about Demand’s plans, but it would be a pity if the functionality was removed from the broader market as a consequence of the deal.

Off to San Francisco tomorrow for a whistlestop tour of some innovative companies courtesy of the Reed Elsevier Innovation team. We’re going to be based in the J W Marriott in Post Street and will be hearing from Affinity Labs, Allbusiness and Healthline before heading off to Palo Alto to visit Media X and Palantir. Day two we’re off to see Yahoo! and Frog Design. I’ll try to blog my experiences as they happen (I’m hoping to take advantage of Google’s famous free wireless, but we’ll see… ) If there’s anything you want me to ask any of these guys, leave a comment and I’ll do my best…

Technorati Tags: innovation, social media, startups

I’ve recently subscribed to a podcast called HBR Ideacast where luminaries from Harvard Business School talk to luminaries from elsewhere. Episode 76 which I was listening to on the drive home last night featured John Boudreau, the co-author of a book called Beyond HR, the new science of human capital. Mostly it was all just common sense – one of the "big ideas" was that you should incentivise things which are "pivotal". He uses the example of Disney Land – there’s not much point in incentivising the sweepers to sweep better – as they are already pretty good and if they did a bit worse, it wouldn’t be pivotal to the success of the enterprise. But if they did something about the queuing – that would be a different matter. Bonuses and performance management should be used where it really makes a difference and not in a blanket way. Simple, but not a bad conscience call.