18 Mar So Long Old Friend…We Say Goodbye to Gigaom
At the beginning of the year, I wrote about changesacross our local media landscape. It’s old hat now for long-standing publications to fold, extreme layoffs to happen over holidays, and for the few still-standing pubs to merge. Last week marked a different sort of sadness in the media world – Gigaom closed its doors, leaving its beloved readers and even its staff totally blindsided by the news.
Started by Om Malik, the tech media company was so much more than just another blog; it was the place to get technology news since its inception in 2007. Claiming more than six million monthly visitors and staffing more than seventy employees, Gigaom was known for its editorial integrity and deep research and analysis across all of its beats.
Over the last few days, there has been much speculation over the reasoning behind the seemingly abrupt closure. Gigaom released a note on their website that stated the company was no longer able to pay their debts:
“Gigaom recently became unable to pay its creditors in full at this time. As a result, the company is working with its creditors that have rights to all of the company’s assets as their collateral. All operations have ceased. We do not know at this time what the lenders intend to do with the assets or if there will be any future operations using those assets. The company does not currently intend to file bankruptcy. We would like to take a moment and thank our readers and our community for supporting us all along.”
The question quickly became – how is it possible that a company who just raised $8 million in funding a year ago is already out of money? Especially since the company seemed able to run on $12 million over seven years. What happened? A former employee, Michael Wolf, gives a very insightful look at Gigaom’s history and where it (probably) went wrong so I won’t rehash it but do want to make a brief mention of what he considers a major source of the company’s downfalls – money. Monetization is a common problem for many publications. Gigaom’s legacy could provide a few lessons-learned for others trying to navigate through the process.
In 2007, in order to keep content ad-free to readers (as other industry pubs had taken the ad-click through route), Gigaom needed to find other sources of revenue. The dive into events proved fruitful but not scalable. Paul Walborksy was brought in as the new CEO to hone in on a revenue model, he had an eye towards paid content. Paul believed that the genuinely attached readers would be willing to pay for deeper insight into topics like cleantech, mobile and cloud. This would lead to the launch of Gigaom Pro in 2009, later becoming Gigaom Research, where writers and analysts dug into these topics and readers would subscribe and pay for the information. Similar reports from analyst giants Gartner and Forrester are highly sought after, but could cost a couple thousand dollars per report and subscriptions costs tens of thousands of dollars per year, far more than what Gigaom was charging.
In 2009, the company had three lines of business – the blog, events, and research. As a ventured-backed media company, investors wanted to see returns 10-fold. As the company grew each line of business, it meant adding more full-time staff (writers, marketing, sales, etc.), freelancers and part-time analysts. In addition, the company (including acquisitions such as paidContent) had high-dollar real estate that steadily climbed over the years, a reported total of $400k per month for all properties. The rent added to an exorbitant amount of overhead costs and for a company that was seemingly “growing,” had ultimately accumulated a lot of debt. The $8 million that was received just over a year ago quickly paid a large debt payment, leaving them very little to survive on.
Knowing all of this, why didn’t the company try to downsize staff or move office space to decrease overhead costs while it paid down debt? We may never know, but what is known is this tech media company is going to be sorely missed. Social media has been buzzing with tributes over the last week: