The board accepted Lewis and Donohues proposal in early December. Indeed, it was the most detailed business plan for Voice to date, and they were running out of options. Woolley in particular was anxious to see the project succeed and was willing to invest in leadership. As of December 2005, Voice of San Diego had been in operation for less than a year, and still relied on Woolley for most of its fundingwhich had so far come to almost $700,000 in startup costs and operating expenses. [1] Lewis notes: That isnt a lot of money in the grand scheme of what philanthropists are accustomed to doing in communities. But it was still a substantial amount to spend on an enterprise that had yet to prove itself.

Despite Voice s difficulty finding its feet, there was reason for hope. Start-ups of all kindsfor-profit, nonprofit, Web-based, or otherwisetypically spent a good deal more money than they earned in their first two to five years. [2] Voice s nonprofit status theoretically bought Lewis and Donohue even more time to experiment with the format. Lewis explains: Theres never a point where a nonprofit has to go out of business as long as its backers remain willing to provide funds.

However, under the 501(c)(3) public charity provision for diversified sources of funding, VOSD could not rely on Woolley as its main backer beyond December 2008the date the IRS had set. So Lewis and Donohue had to fix two urgent problems: rationalize the editorial product and diversify the funding base. They decided to focus first on editorial issues. Then in their mid-twenties, the two were poised to take over an experiment in the future of news, and it was still unclear whether the model would work. With the boards approval of their plan came sudden responsibility for a range of interlocking financial, technological, and editorial decisions.

Cutting costs. They got started at the end of 2005. While they could count on Woolley for the next years funding, the purse was not bottomless. The board required Lewis and Donohue to remain within a budget of $300,000. If they wanted to improve the news product by hiring more reporters, that meant cutting other costs. Both felt that, given their budget constraints, a tight focus on reporting should be their guiding principle. Donohue explains: We are not a technology company The gap we were created to fill is the gap in high quality news. And we need to find the cheapest and most efficient way of doing that.

Listen to Donohue describe deciding how much to invest in technology.

They started by canceling the Associated Press news feed the site displayed, which cost $1,200 a month and showed national, rather than San Diego-specific, headlines. They also decided to lay off an administrative assistant, whose salary they felt would be better spent on a reporter. Moreover, they were paying $3,000

$4,000 a month in Web development and maintenance costs to an outside contractor. By switching to a rented website template and content management system, they reduced that expense to $900 a month. This last decision yielded savings, but also unintended consequences. Lewis recalls:

I had a night where the site went down, and I didnt know what to do

I had no clue, and it just made me fundamentally, to my bone, nervous that I didnt understand it at all.

Despite that experience, Lewis felt VOSD could not afford in-house technical support; the salary alone was the equivalent of two reporters salaries. Their solution was for Lewis to devote himself to learning as much as he could about running the website. That was a crucial point for us, notes Lewis. It became clear that [site maintenance] wasnt necessarily Chinese. I could maybe break this code a little bit.

By September 2006, nearing the end of their first year in charge of Voice of San Diego , Lewis and Donohue had managed to cut nearly $30,000 from their annual Web development budget and had squeezed out thousands of dollars in savings elsewhere. Their reward: they were able to hire an additional reporter.

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[1] IRS Form 990, Voice of San Diego , 2006.

[2] Mark Hendricks, Charting Your Business Timeline, Entrepreneur .