Mode Media shuts down, leaves bloggers unpaid | Hacker News Reader

Mode Media shuts down, leaves bloggers unpaid

sfchronicle.com

88 pointsdanso37 comments

As someone who is currently in the Bay Area and whose personal and professional network on Twitter/FB/real-life revolves around the tiny, sad shrinking universe that is the media industry, I'll have to admit that the name "Mode Media" did not register a single clue with me. I've heard vaguely of "Glam Media" and I knew of Ning, which Marc Andreessen co-founded, and which was bought by Glam/Mode for a reported $120M-$150M [0]. This is not to say that Mode and its blog/social network was not good (as plenty of good media companies have gone out of business), but it wasn't talked about much in the editorial sphere -- in contrast to even content-aggregators/farms such as Demand Media, ViralNova, etc. Which is weird, because traditional media is desperate for billion-dollar media success stories.

[0] https://techcrunch.com/2011/09/20/glam-buys-ning-andreessen-...

Looks like Ning is offline as well.

Glam did traffic roll ups with and packaging for publishers -- amongst a bunch of other things. If you were on the revenue or ad-ops side you would know Glam.

Edit, here is some more info: http://digiday.com/publishers/rise-fall-mode-media/

I fully expect to see more announcements like this in the media industry over the next couple of years specifically for these digital media "startups".

They are raising money to grow their unprofitable digital business with cost structures that will never make sense... it costs them more to create each piece of content then the revenue each one brings in.

IE... the per unit economics don't make sense and they still won't when they scale.

Not debating your point, but how come in the old days media outlets were able to become profitable when they had (have) both union costs, and costs related to actually printing and distributing a physical good?

Probably because people actually paid for media at the time?

Nope. For newspapers, at least, this accounted for maybe 20% of revenue.

The remainder was ads and classifieds.

Everybody is in trouble.

But people paying for a newspaper barely covered the cost of printing it, and even then, plenty were taking losses on the cover price.

The newspaper was the primary way to get ads into the home. Each city paper had a Google-like position in that city's ad market.

Quality could be higher because ad reach was based in part on subscriber count, not just the attention-grabby-ness of particular headlines.

Two words: classified ads.

Yeah, this. I know Craigslist feels like an entire era ago, but at its peak, it ate up 25% of industry revenues. Media companies were definitely slow on the existential uptake, but I think a lot of industries would have a problem with a 25 percent drop in revenue over 5 years.

And that was just one of the problems that media companies had to track. It'd didn't help that newspapers were just exiting a period of golden complacency in which cities were monopolized by a single newspaper. If you wanted to print an obituary notice for your mom in tiny font in a 4 inch space, you paid $500 because what the hell else were you going to do?. When I was in college one of our professors told us that running a newspaper was like running a printing press that printed money. And he was right. The problem with newspaper companies was that they didn't reinvest enough profit into innovation and experimentation.

On the contrary, I believe that newspaper companies were correct when they didn't reinvest most of the money into innovation and experimentation.

Experimentation and investments would have allowed an average newspaper to become (also) a platform like Mode Media, ultimately a waste of money and also wouldn't change the fact that the whole industry is losing profitability - but taking the profit out was obviously useful to the shareholders.

Most companies exist to make money for their owners. Often the best way to do that is to grow and reinvest into more growth, but there certainly are cases where the best option is to milk an existing revenue stream dry and squeeze until it runs out, and place all that money in an entirely different industry - IMHO newspapers a decade ago is a prime example of that situation.

The media startups that raise tons of money get lots of press. Some of the ones that raise little or no money but bootstrap are doing very well, you just don't hear much about it.

We're profitable, our economics are great, and we're hiring to expand into new verticals.

Completely agree here... we did that. Bootstrap, small team but still at scale (and highly profitable).

Is it just me, or a lot of these never-gonna-be -profitable startups just Ponzi schemes? The first few people that start it eventually take some money off the table as they keep getting funded, and eventually somebody is left holding the bag. If that's how it works, there is no reason for the same people to go out and do it again.

It's disappointing to see a company with such big-name investors, including having Andreessen recently on the board, closing down in a way that screws the employees.

And that's why you keep savings, especially if you work at a startup. In California you're only 1 day away from being jobless and only 30 days away from being homeless.

Fwiw most leases are a 60-day notice to terminate residency in CA, at least the ones for my tenants- I think that is pretty standard in the California Apartment Association. Also many counties in CA have renter protections in place so only just cause evictions.

But still, it's always good to have 6 months of backup emergency funds!

Although Andreesen is very high profile, it is not clear they are performing that well as VCs. Source: http://www.wsj.com/articles/andreessen-horowitzs-returns-tra...

I am not putting them down. I'd take their return on my investments any day. I just think that because they have a famous and outspoken founder it is assumed they are the most successful. Which may or may not be true.

They need to either pay their debts or go bankrupt. Just shutting down with bills unpaid is not an option.

If they can't reorg and continue operating, what would a bankruptcy filing accomplish? They're going to default on all their debts either way.

There may be some assets to auction off, and creditors are entitled to a piece of that.

All of the debt holders will get paid first, which means everyone else will get zero.

Don't unpaid wages get paid first?

As long as they're bonafide employees and not just independent contractors.

Bankruptcy protects the filer from being sued by it's creditors or generally. Even if there are no assets to be distributed you might do it for that reason. It also may help to keep the officers and directors from being sued personally since walking away from a company and not settling it's affairs in an orderly fashion could be grounds to pierce the corporate veil in some cases.

I understand there is a difference between cashflow and assets on a balance sheet but how can a company worth $1bn go bankrupt?

Does bankruptcy means something other than insolvent? Is liquidation or receivership a more accurate term?

Otherwise you would think a bank would lend enough cash to keep the lights on.

Lending from traditional institutions requires a business model that has profitability in its future. Most of these VC backed companies are high risk so even if a few VC funds get together and label a business at $1B in valuation that doesn't mean traditional businesses will.

Step 1) Start a company that makes flurbles.

Step 2) I invest in a billionth of your company for $1.

Step 3) Your company is now valued at a billion dollars.

Step 4) Hire an employee

Step 5) Try to make payroll with that $1

Congratulations, your company is now an insolvent unicorn.

The reality is only slightly more complex, but not much.

next gen underpants gnome logic

A valuation is not cashflow or assets, it is the value of all the shares of the stock of the company.

Assets and cashflow can change, but valuation can change even faster (and be more easily gamed) because it is based on the latest price people are willing to pay for shares of the company.

It might make sense to force employer's to retain insurance that guarantees compensation to its employees/contractors. Executive compensation should be doled out last but is too often doled out first.

Anyone can call themselves a unicorn

I thought it was specifically a word for new-ish companies with a $1B+ market cap that hadn't been bought by a larger, older company.

$1B is easy.

https://signalvnoise.com/posts/1941-press-release-37signals-...

The term is defined in the first sentence of the linked article.

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