Blogging as a Source of Profits

Scott Kirsner asks in the Boston Globe yesterday whether venture capitalists should blog. The general feeling is that the ones who do blog can't imagine not blogging: it's a great way of finding ideas, and ideas of course are the lifeblood of the VC industry.

The VCs who don't blog, by contrast, seem to be stuck in a zero-sum world where information is more valuable if it isn't shared. But there's one other interesting comment:

Charley Lax, managing general partner of Grand Banks Capital in Newton Centre, says the limited partners who put their money into venture capital funds think blogging is "stupid. They want you to be working on your portfolio companies and looking for the next great deal."

This is something which is going to change only veeerrry slowly. I am an avid consumer of blogs, and there are many blogs which I trust and admire on certain subjects much more than any major media outlet. In fact, I think it's fair to say that for pretty much any subject, if you look hard enough, you'll be able to find a blog which covers it with more informed intelligence than any newspaper. But among people who don't read blogs for a living, the reputation of blog is still pretty dreadful: they're often known primarily as partisan players at the dirty edges of political campaigns, or else as simple gossip merchants.

Venture capitalists, of course, are paid to be ahead of the curve, so it's maybe not surprising that its among their ranks that we find the first individuals who are making real money from blogging – not by investing in blogs, not by selling advertising on blogs, but simply by blogging themselves and using that information flow as a source of profit.

It'll be very interesting to me to see which executive will rise above the popular prejudice and be the next person to proudly blog. Most corporate blogs are bland to the point of unreadability, especially if they emanate from a public company, so I suspect that the next person to consider his or her blog a major contributor to corporate profitability will be an entrepeneur or the CEO of a privately-owned company. But I can't wait for that kind of blog to become much more commonplace, especially outside the technology industry, where it's most needed.

In fact, there is a good example of exactly such a blog in my blogroll to the right: The Big Picture, by Barry Ritholtz. Barry is a very busy hedge-fund manager, and I suspect that he uses his blog as an opportunity to think through and discover potentially profitable investment ideas. Barry? Would you say that your fund is more profitable as a result of your blogging?

(Via Fred Wilson, of course.)