Medium’s Ceo Explains What It Took To Stop Losing $2.6m Monthly

Medium CEO Tony Stubblebine announced connected Friday that nan publishing level has remained profitable since August of past year, erstwhile it first achieved this milestone. In a post, Stubblebine elaborate what it took to execute this goal, which progressive a operation of merchandise changes, an investor restructuring, renegotiated loans, unloading agency space, layoffs, and different difficult cost-cutting measures.

His station offers a heavy dive into what it takes for a startup to execute a turnaround and nan reliable choices that person to beryllium made.

According to Stubblebine, nan institution was losing $2.6 cardinal per period erstwhile he joined successful 2022. It was besides losing subscribers, retired of investor funding, and lacked an acquirer.

He said that near nan institution pinch only 1 choice: “make Medium profitable aliases unopen down.”

The platform’s difficulties, successful part, stemmed from its business model, which offered a azygous bundled subscription immoderate writer could stock in. The institution had besides experimented pinch bringing connected high-quality master editorial content, which Stubblebine said began to tie attraction distant from nan amateur writers connected nan level — those sharing their master aliases world activity aliases penning astir lessons that “come from surviving absorbing lives and penning astir it.”

When he joined arsenic CEO, Medium’s rank had topped 760,000 but was losing money each month. Stubblebine had to excavation nan institution retired of that hole, he said. On nan merchandise front, Medium introduced a measurement to adhd quality expertise to recommendations pinch Boost, changed its Partner Program incentives to reward thoughtful writing, and added a Featuring instrumentality that allowed publications to curate and beforehand different stories of interest.

In position of nan finances, Medium owed $37 cardinal successful loans, and its investors held an further $225 cardinal of liquidation preferences (meaning nan investors would get their money backmost earlier labor saw returns). Its governance was besides overly analyzable and required getting investor support from crossed 5 abstracted tranches earlier making awesome institution decisions.

To correct these problems and correct nan ship, Medium renegotiated its loans, eliminated its liquidation preferences, and simplified its governance to conscionable 1 tranche of investors. It besides sold disconnected 2 of its acquisitions and closed down a third.

Critically, Medium worked to cleanable up its headdress array by renegotiating pinch investors, which Stubblebine didn’t instantly want to do, he admitted. But aft a twelvemonth since nan thought was first raised, nan CEO realized that’s what it would return to prevention nan company.

“The investor restructuring required a spot of a saccharine spot. The business had to look bully capable to save, but not truthful bully that location were different options,” he noted.

“The lawsuit I made to nan indebtedness holders was to person their loans into equity aliases guidance would walk, and past to create capable ownership for them by going to nan remainder of nan investors pinch position for a recap,” Stubblebine explained. Six retired of immoderate 113 investors participated successful nan recap, wherever nan investor stakes were diluted and typical authorities for illustration liquidation penchant and governance roles were fixed up. (He besides shouted retired to VCs who were easy to activity pinch arsenic partners, including Ross Fubini astatine XYZ, Mark Suster astatine Upfront, Greylock, Spark, and a16z.)

Medium had to trim costs, too, some done layoffs — going from 250 group to conscionable 77 — and done engineering optimization, which trim its unreality costs from $1.5 cardinal to $900K. It besides yet sewage retired of an agency lease that saw it paying $145,000 per period for a 120-desk agency abstraction successful San Francisco. Employees were granted caller equity since their existing equity aft nan “cram-down round” was apt to beryllium worthless.

The platform, erstwhile weighted astatine $600 million, didn’t stock its caller valuation arsenic a consequence of each these changes, but it’s considerably lower, of course.

“…I person nary ego astir what our existent valuation is,” Stubblebine wrote. “But I’m besides not going to show you because I don’t want that utilized arsenic a constituent of comparison pinch different startups. We are profitable and they are not. That’s a comparison constituent that serves america better,” he said.