Lessons From an Implosion: Analyzing Gigaom‘s Demise
It seemed like the technology publication Gigaom had a ton going for it—including a business model that seemed inspired by the world of associations. But the company's problems, now on the surface, don't show weak points in those key elements. Rather, they highlight the kinds of pressures on startups that associations don't often have to face.
What lessons can one take from a corpse as exquisite as Gigaom‘s?
I’ve been struggling with this one for much of the past week, still in shock that one of the most iconic tech news sites totally disappeared in the blink of an eye, with a single blog post informing the world that the lights just went dark. The publication’s most famous current staffer, Mathew Ingram, got 30 minutes’ notice that something was going down.
It was particularly painful from the vantage point of Great Ideas in Orlando last week. As the event ended, I remember feeling really bummed hearing Todd Henry’s closing presentation on organizational innovation and considering that Gigaom, a respected company full of ideas and potential, didn’t have a chance to “die empty.”
Here was a company that, albeit a for-profit publication, was borrowing many strategies from the world of associations (high-priced events with big names, a significant research arm) and apparently doing quite well with them in its effort to reinvent journalism for the world of technology. It was even doing so while avoiding the kind of clickbait that defined its biggest competitors.
Well, it looked like that from the outside. Beneath the surface, all was not well. Re/code last week reported that Gigaom, burdened by millions in debt and not growing quickly enough to satiate its investors, didn’t even have enough money to pay vendors helping to put on its Structure Data conference, which was to take place this Wednesday and Thursday. (It ended up shutting the event down.)
In a last-ditch effort, they tried selling the company, but nobody wanted it in time. (Re/code hints that some parties, like that publication’s parent company, might still want to buy Gigaom, but it’s too soon to tell.)
Force of change
A couple years ago, I wrote about Gigaom‘s paidContent Live conference in New York.
In retrospect, it’s striking how much has changed in the roughly two years since I posted that piece: Jon Steinberg, the then-president of Buzzfeed, is now running the ship for the North American version of The Daily Mail; Andrew Sullivan recently decided to quit blogging; Aereo’s once-rising fortunes have been kneecapped by the Supreme Court and sold off for scrap; and BetaWorks’ once-in-incubation replacement for Google Reader is now one of the most useful tools on the web.
That’s a lot of evolution in a short period of time. Gigaom appeared in a position to stay stable throughout all of this. As it turned out, it really wasn’t.
In the days since the company’s failure became public, some weak points in its use of events and research as revenue generators showed themselves. For one thing, Gigaom‘s success with events drew other media players into the space; for another, the research arm appeared to have problems living up to its potential.
But Gigaom’s failure may have a more simplistic root cause: Due to pressures in the business sector from which it came, it was required to stretch these strong fundamental parts to their limits. The company funded itself through venture capital and debt, and after founder Om Malik left day-to-day operations to focus on venture capital about a year ago, the firm started to waver.
The most insightful commentary on this came from Danny Sullivan, the cofounder of Search Engine Land parent firm Third Door Media, who noted that Gigaom‘s problem may have been its decision to leverage its growth by accepting venture capital. Sullivan’s company has never accepted such funding, but that’s because it’s taken a slower growth strategy.
“There are plenty of great verticals doing fine,” Sullivan wrote in a Medium blog post. “There are plenty of little tech pubs, doing fine. Gigaom’s collapse, while incredibly sad —especially for so many of those great journalists—isn’t necessarily indicative of the future for media publications.”
Sullivan’s firm has a similar model to Gigaom‘s—it, too, runs niche publications focused on lead generation, advertising, and conferences. I would like to think that the point speaks to where associations diverge from for-profit firms attempting to cop some of associations’ best strategies.
For all the talk of wanting to approach things more like technology companies, associations do have a lot of characteristics that companies like Gigaom lack. Associations have the potential to grow at a slower pace, to turn the needle without facing the immense pressure of constant growth.
Sure, associations are always looking to grow membership and nondues revenue, but they typically don’t feel the constant, intense pressure to expand that a Silicon Valley startup does.
“I still believe that this model can work, despite what some might argue is overwhelming evidence to the contrary,” Gigaom’s Ingram noted in a Medium post of his own, where he conceded that there was some truth to Sullivan’s point, but argued that doesn’t mean that taking a slow approach “is the only way to go.”
So, here’s my question for you guys: How do you think for-profit companies could make the meetings-and-membership-and-research strategy, something of a bread-and-butter approach in the world of associations, work for them?
Or are there fundamental things that they might be missing along the way?
Gigaom senior editor Mathew Ingram, left, and founder Om Malik. (Gigaom handout photo)