Despite the fact that he has just launched a new company and is working harder than ever consulting media and internet companies, the formidable, self-proclaimed Recovering Journalist, Mark Potts (someone I’ve long admired and respected) found time in his busy schedule to talk with me about his new endeavor. GrowthSpur, is a company that provides tools and ad networks to help local Web sites succeed.

What is the barrier to entry for launching a a successful local news site with a hyperlocal focus, that actually makes money?

There’s almost no barrier to entry of launching a local news site; with blog software, it’s very easy and cheap. But making it successful require a solid business model and a vigorous ad sales effort, including considered several different kinds of advertising revenue (banner, directories, pay-per-click, search, e-commerce, etc.)

Can one person, or a group of people who are passionate about a local community and committed to showcasing news and information from the area, compete with journalists and create a successful local news site?

Sure–just start small. You can’t cover an entire metropolitan area with just one or two people–but you can cover a specific niche, such as a particular town or a specific topic like health, education or crime.

Let’s talk a bit about the dynamics of traditional news organizations which can be counterproductive for a community effort. What is the mindset that needs to go away to see real success.

You have to be entrepreneurial, you have to be flexible and open to new things, and you have to think about ways to do things efficiently and cheaply. Embrace the audience–even let them contribute–rather than holding them at arm’s length, and be more open about ways that advertisers can participate.

With your new venture, GrowthSpur you indicate that you don’t get paid until your clients get paid. You are either one risky guy or extremely  confident in the suite of tools you’ve developed. Which is it?

This isn’t a charity–our model is that we take a percentage of revenue you make by using our services. We expect that that a site will make a considerable amount—six figures in revenue a year—using our tools, training and networks, and we take a percentage of that.

As a pioneer in the hyperlocal space, with Backfence.com, tell us what you know you did right.

We created opportunities for the residents of the towns we served to share their local knowledge and opinions with each others. And we brought advertisers together to pay to reach those residents, who are their best customers.

And what if anything wasn’t right at the time? Were there forces beyond your control?

We made mistakes, as every startup does, but Backfence failed primarily for internal reasons that I’m not at liberty to discuss. But the model we followed of hyperlocal news and advertising was correct, and we were on the right track–we just ran out of track.

Are you seeking out existing entities like West Seattle Blog and others, or are you waiting for them to express interest on their own?

Both. We’ve reached out to several sites, and we’ve had inquiries from dozens of others.

I’m intrigued by the concept of “citizen-ad sales.” How did you come up with this particular model and why does it work?

We expect to empower local entrepreneurs and companies already dealing with small businesses (Realtors, insurance agents, Web design firms, etc.) to sell ads into the local networks we create. It’s a model several companies are looking at, and we hope to prove that it’s effective to add revenue through such citizen ad sales.

You wrote on your blog, Recovering Journalist, that a well-run, sophisticated local site can bring in more than $100,000 a year in revenue from advertising, e-commerce and other sources. What are some of those “other sources?”

The primary revenue source will be advertising, but we want to get way beyond banner ads into search, directories and other forms of advertising. We also want to help sites understand how to make money by offering local businesses e-commerce, mobile services, coupons, etc.

Describe the ideal candidate who will run with the idea and have wild success. What attributes must they possess in your opinion?

Great local contacts and high energy. They should want to be the 21st century version of the classic local editor and publisher.

I love your title of CEO and chief instigator. Do you expect to be involved with all aspects once your clientele soars, as I’m sure it will?

My title is actually just CEO, but I did pull together the group that came up with the company, hence the crack about being chief instigator. Like any startup CEO, I’m involved in every aspect of the company, from answering the mail to raising money–it’s part of the job description.

One selfish question here: Are you going to stop blogging? (Please say no, please say no…)

The RecoveringJournalist blog will continue, though maybe not quite as regularly–I’m very busy! But I expect to keep blogging about the enormous changes affecting media.

So let’s say I own a domain “Citynews.com” because the news orgs in my city didn’t seem to want it, and I want to become a destination source for all things in my city. What kind of staff do I need, and where do I start?

You can start with a blog and cover the city yourself, then add contributors, community elements, videos, etc.–always paying attention to getting word out about the site and pursuing revenue to support what you do. It takes time to build a successful local site, so you need patience and determination.

And finally, as one who lives and breathes community, what role does community interaction play in the success of a hyperlocal news effort?

As Dan Gillmor says, the audience–aka the community–knows more than you do. Bring them into the conversation, give them ways to share and contribute, and you’ll have a far richer site than if it’s a one-way lecture by you.

If you’d like to learn more about GrowthSpur, check out the website. And on a personal note, I’d encourage you to start reading Mark’s blog, “Recovering Journalist.” He can rant with the best of them, but every rant is backed up with experience, facts major insight.

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