We’ve all been hearing a lot over the last couple of years that pure digital companies are shifting the paradigm of business. You see it everywhere. Public digital companies are valued much higher than analogue companies. Digital companies can scale must faster using the relatively free resource of the internet. (think magazine publishing. It’s the difference between putting ink on paper and shipping magazines to hitting the publishing button in a browser.)
Certainly, the paradigm has shifted. But has there been a bit too much hype? I get a chance to see a lot of business plans here in Boulder. Everyone seems to have the philosophy that if we raise a few million dollars, write some code, launch an app, then millions of customers will come. I’m not so sure. I was especially interested in New York Times article about Groupon.
Sure, Groupon has made an old business, couponing, more efficient but is it so paradigm shifting that it’s value defies gravity? After reading the article it sure feels like the business proposition that Groupon and other deal sites are built on is flimsy at best.
The news yesterday of Federated Media and Lijit merging (disclaimer: I was on the Board of Directors of Lijit.) makes me think that there is a rise of a new type of organization, The Hybrid Organization. John Batelle and the Federated Media team have done an amazing job of connecting brands to the best of the independent web. That kind of connection takes a lot of human relationships. It’s strategic thinking, problem solving and creativity. Those aren’t easily digitized. Lijit, on the other hand, has created an amazing digital advertising engine.
Seth Levine, a managing director at Foundry Group and fellow Lijit board member explains the combination the best.
The Federated Media/Lijit combination harnesses the best of the old and the new, the digital and the analogue, to create this new Hybrid Organization.
There’s no doubt that they will be successful.
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