Startups #nofilter sits down with Boaz Berkowitz, CEO & Founder of TalkMarkets, a revolutionary social finance website. TalkMarkets is using an innovative equity model, in which contributors earn equity in the company in return for providing content and promoting the site.  

1) TalkMarkets offers financial content that’s customized, optimized, and socialized, plus the innovative and unique aspect of earning equity. What compelled you to create this site and community?

It goes back to my time at Seeking Alpha.  I had the privilege of being on Seeking Alpha’s management team for a number of years, reporting directly to the CEO. I first joined the company when it was very much a startup and enjoyed helping to grow the site into an industry leader. 

Yet, as much as I’m a fan of the site, I always felt it never reached its full potential. Seeking Alpha is very focused on a specific kind of user, and therefore, limited in its growth potential. This contrasts greatly with sites like Yahoo Finance, which has over 1 billion monthly pageviews. Yahoo Finance is able to achieve such a high level of traffic because due to its broader coverage; it tries to have something for everyone.  But the drawback to that is it can be difficult for users to find what they’re after, and 99% of what they see on Yahoo Finance’s homepage is not even relevant to them. And of course, the best investors tend to shun the site. There’s simply too many amateurs on the site and much of the content is geared towards them.

I consulted for several startups in between Seeking Alpha and TalkMarkets, and in every case they all chose one of two strategies – to focus on a narrow segment of the industry, like Seeking Alpha, or to focus on the entire industry, like Yahoo Finance. All made a trade-off of mass appeal vs. relevancy. That was the catalyst for TalkMarkets; we created a site that’s the best of both worlds – a site which covers the entire breadth of the financial industry, like Yahoo Finance, but which customizes what its individual users see based on their interests, preferences and level of investment sophistication.  This creates a unique browsing experience which is quick, easy and personally relevant.

2) It still says "beta" in the logo – what new features will the final product have?

We have big plans for the future, most of which we’re not ready to make public yet. But we’ve already integrated the best social tools of the web and are building a few of our own. For example, we were the first site that lets you have both a one-way connection with others (e.g. being a fan or following an author) as well as the two-way mutual connections popular on sites like Facebook and linkedin. We also just launched an activity feed which integrates Twitter and Facebook functionality to the site and more.  You can also see tweets by those you follow right on TM without having to leave the site.  At the same time, you can tweet or post status updates to TM and have that activity automatically appear on 3^rd part sites like Twitter as well, saving time while maximizing your reach. You can also see which other members just joined the site, connect with other users who share similar interests, etc. We will be building this out much more in the near future.

3) Why is social important and how is TM different than all the other social sites out there.

Social is here to stay and will only become increasingly crucial.  As a result, countless social networks have popped up all over the web. And existing websites have all touted their “new social functionality.”  In fact, every company I’ve ever interviewed at, consulted for, or worked with, all said the same thing, “we’re going to be the Facebook of Finance.” But whenever I asked what kind of innovative social tools they were building, they invariably would reply with “You can follow an author, or share an article on Facebook or Twitter.”  There’s nothing new about that, and hasn’t been for some time. Every site worth its salt has been doing that for years. If you share an article on Facebook or Twitter, the conversation isn’t even on your site anymore.

We’re not a social network and don’t claim to be.  What we’ve done, however, is taken the best elements of social networks and have integrated them into our site, features you won’t find on other financial sites. And the most popular social networks aren’t optimized for the financial industry nor do they address the delicate balance needed for both transparency and privacy.  But we do.

4) TalkMarkets touts that it’s the first-ever Contributor owned website. Tell me about the contributor model that TalkMarkets uses and why it’s unique.

Currently there are two ways of being a contributor to other sites, regardless of the industry:

    1. A contributor can allow a site to republish his/her work in the hopes of getting more exposure, but isn’t compensated for that work in any way.  Even worse, Google usually assumes the individual authors copied their article from the larger contributor site and hits them with a “Duplicate Content Penalty” forcing the author’s own site lower in search results which actually hurts their business.  Or alternatively:

    2. Some websites will pay for contributed content, but only if it’s exclusive to that website. Meaning it can’t appear anywhere else, not even on the author's own site.  They’ve effectively sold the rights to that work, and the paying site can change the article any way they’d like. If they ever have a falling out with a contributor, they can delete their articles with a click of a button, effectively erasing them from history since they can’t be republished elsewhere.  And a quality article can take several hours to research and write, meaning that authors are sacrificing all this for what often comes to minimum wage or less.

Generally speaking, authors are not happy with these two options and there has been a long debate over whether to pay for contributor content, and if so, how much.  You may recall back in 2011 when Huffington Post was sold to AOL for $315 million.   At first its writers were ecstatic and took great pride in being instrumental in the company’s success.  But when they asked what their cut was, they were told they get…. nothing!  The authors essentially responded “but we created all the content, without us, there’d be no Huffington Post.”  But they got nothing. There was even a lawsuit, but HuffPo was in its legal rights and the authors ended up with nothing. 

While the law may have been on their side, it is simply wrong for these companies to have such one-sided relationships with the contributors who provide their content and give them a reason to exist. Contributors have become little more than minimum wage tools; ends to a means.  Had Huffington Post followed our model, their authors would have earned millions for their equity share.

But it’s not just all about the equity either. Our authors appreciate our overall model, value their relationship with us and also enjoy more tools and controls over their content than with other sites.

4) Surely you can appreciate why a writer wants to contribute to the Huffington Post, even for no money or equity.

Of course, there is value to having the added exposure, and authors get that on our site as well.  We have partnerships with top companies such as Reuters, Nasdaq and more. But that’s all they get on other sites, and even then, sometimes that exposure is minimal. When quoted the author is often treated as if he’s a staff writer with the credit going to the site, rather than the individual author. And to clarify, I’m not saying that Huffington Post promised anything. But I don’t think the model is particularly fair and most content creators would agree.

What’s really interesting is that sites either don’t realize or don’t want to admit how much power contributors have. If a contributor gets frustrated with a website, most sites respond by saying “let them leave, it’s just one contributor among thousands; the loss won’t hurt us.”  And while that may be true, contributors will eventually realize they have the real power, if they band together. For example, if they ever agreed to boycott a site, any site they target would lose all of their content overnight and traffic would fall to zero in a matter of days. That won’t happen to us because contributors are aligned with our interests.  What’s good for us is good for them and vice versa.

Many contributors have actually told me that working with these sites is “a necessary evil.” That’s not how I want to our authors to view our relationship. We want to work together with writers and can go far when we pair their content with our expertise and connections - we have a powerful management team that had pivotal roles at other major companies. We can replicate our past successes in a fraction of the time and cost. And our success has been telling, already we have partnerships with major distribution channels and hundreds of contributors, including top names in the financial industry and even celebrities, such as Rachel Fox, Than Merrel and Mark Cuban. These are people who would not typically partner with a startup, but they love our model and have faith in our team.

5) Does TalkMarkets have any competitors? What sets you apart from them? Do you consider Seeking Alpha a direct competitor?

I wouldn’t say any particular site is a direct competitor. Currently, no one else is doing exactly what we are, but there are numerous different sites in our space. We are on good terms with Seeking Alpha and are not looking to directly compete with them. We’re interested in different things and headed in different directions. There is some overlap, but there’s no reason an author can’t write for both sites. In fact, we’re in the middle of negotiating a partnership agreement with Seeking Alpha.

6) When can someone cash out with their equity?

We created an innovative model, based on the frequent flyer plans: authors are issued equity points. They earn these points for various activities that help us grow. For example, for the pageviews their content generates, for helping to drive traffic to the site, and for referring new readers and authors. In fact, they’ll earn an additional 10% on all the equity earned going forward by the contributors they’ve referred. This has helped us go viral. For example, one author who recently joined the site has already referred 40 new contributors to us.  All quality names who have large followings on other sites.

Authors can see how much equity they’ve earned in real time and at time of liquidity event, (IPO or acquisition), they can cash out. Until then, there’s no tax liability for them.  This model is very unique and has never been done before and our contributors love it and see the value - Bleacher Report sold for $200 million. Huffington Post for $315 million. A financial media site like ours could be worth even more.

7) If you keep adding more contributors, won’t authors’ shares be diluted?

That’s an excellent question. The short answer is yes, but what authors understand is that if they were the only contributor, they would own 100% of the equity, but it wouldn’t be worth anything.  By contrast, when there are hundreds of contributors, all providing quality content and driving traffic to the site, then they may own a smaller slice of the pie, but the pie itself is far larger.  A great example is the Ehud Shabtai, founder of Waze (a GPS app purchased by Google in 2013).  He ended up with only 6% of the company, but when it sold, his 6% was still worth $78 million.  If he held onto a full 100%, it probably would have been worth nothing.  So sharing the equity to leverage our various authors’ strengths makes a lot of sense.

8) How do you acquire new authors?

Ironically, that’s the hurdle most startups never get past.  But for us, it’s actually the easy part.  We’ve worked in this space for a long time and have excellent existing relationships with thousands of authors.  In fact, we haven’t advertised yet, it’s all been word of mouth. All the authors on the site we’ve either worked with in the past, or were referred to us by existing contributors. But once word gets out and we start promoting it, we’ll get a flood of people who will say “this is a better way of doing it”.

And it’s not easy to replicate. The big companies are too greedy and will never hand away equity if they are already successful. Other startups don’t have the expertise and contributor relationships to build a viable site – the equity only has value if the authors have faith in the management team.

9) What is one regret you have since your startup’s inception?

It’s difficult to answer that since we’ve actually been pretty lucky.  Our site immediately resonated with contributors, readers and investors and since we’re so familiar with the industry, there was very little uncharted territory where we might make mistakes.  That being said, the startup life is portrayed as glamorous and exciting but even the best ideas in the world – if you don’t have money to support it –  won’t go anywhere. I had some opportunities early on for investor money, but they didn’t want to leave much equity for employees or contributors. So instead I took my own money and funded it that way. Savings meant for a mortgage – very risky and very stressful.

When people contemplate launching a startup, they read about the successes; it’s always the entrepreneurs with a big success who score the interviews.  Those who end up bankrupt and divorced don’t get as much press.  It’s important for people to fully know what they are getting into. Any startup is a challenge but even successful ones can ruin one’s relationships or health. I’m lucky to have such a supportive wife and children.

10) Do you have any growth numbers you’d like to share with our readers?

Startups can’t attract traffic without top quality content. Yet they can’t attract top content producers without serious traffic, It’s a catch-22. The best contributors won’t give their content to just anyone. They want a quality audience to be heard and they zealously guard their reputations. They are reluctant to work with a startup that doesn’t have a trusted brand name and with good reason - most startups will publish anything from anyone, even pumper and dumpers. Contributors don’t want to be associated with those sites. It’s rare for a startup to attract authors from the get-go. Yet we publish over 100 articles a day from nearly 650 authors and that number grows daily. To date we’ve accumulated millions of pageviews and tens of thousands of registered users.

11) As CEO how do you envision TalkMarkets in 10 years?

Who knows, in 10 years we can all be in flying cars. But we’ll continue to grow and be even more successful, ideally we’ll be the go-to site for finance. And we’ll continue to be as innovative as we are now – that’s part of our model. Startups are agile and fast to implement new ideas. But big companies are slow to change. The threat of new startups can turn the tables on the larger, slower guys. But we’ll continue to be a leader in innovation. We can do that because unlike traditional companies which have small senior management teams, we have access to top minds – every contributor has my personal phone number and email address and we encourage them to reach out with their best ideas. There is power in numbers. Crowdsourcing has proven itself and we are utilizing it to build a company.

12) Why do you think Yahoo Finance remained so popular over the years, despite Yahoo as a whole not keeping up with the times?

With all of Yahoo’s other areas, like search, people wonder what happened? The answer is simple, an upstart named Google came along and did it better. But finance is a different kind of beast and for whatever reason, no one came up with a better way of doing it. Until now.

Yahoo Finance is not particularly original. They offer virtually no customization or social tools and the best investors often shun the site.  But they have a massive amount of content and get over 1.1 billion pageviews per month.  With that many users, they have staying power. But I believe we could eventually overtake Yahoo, as they are mismanaged as a whole, bloated, and inefficient, they lost that innovative edge from its early days.

13) For Fun – What website do you go to when you need to check if your internet is working?

Google – it has a quick, clean interface and loads almost instantly. I am a news junkie so I read CNN frequently but it takes longer to load.

14) Do you have one piece of advice for my startup, “Startups #nofilter?”

Decide early what you’re doing this for. If you’re doing it for fun because you enjoy it, then go for it. If you’re doing it to become a viable business, then know what you’re getting into. Also speak to others who have been in the space for a while and can share what happens after the launch. When things grow they get more complicated. When things stop being fun and start being work, you need to take a step back and evaluate.

I’d also recommend seeking out advice from other startup professionals - not just the ones that succeeded but also the ones that failed. And sharing those stories with your readers would add real value to other budding entrepreneurs.  Good luck!