Middle CEO Tony Stubblebine announced On Friday that the publication platform remained profitable since August last year, when it first achieved this milestone. To positionStubblebine describes in detail what it took to achieve this goal, which included a combination of product changes, investor restructuring, renegotiation loans, unloading office spaces, redundancies and other difficult cost cutting measures.
Its position offers a deep dive to what it takes to start starting to achieve a recovery and the difficult choices to be made.
According to Stubblebine, the company lost $ 2.6 million a month when it joined 2022. It also lost subscribers, was off the funding of investors and had no buyer.
He said he left the company with a single option: “Make middle profitable or close.”
The difficulties of the platform, partly, emerged from its business model, which offered a single subscription that every writer could share.
When he joined the CEO, Medium’s participation had exceeded 760,000, but lost money every month. Stubblebine had to dig the company from this hole, he said. On the front of the product, the Medium introduced a way to add human expertise to recommendations with Pushchanged it Partner program incentives to reward the stochastic writing and add a Has Tool that allowed publications to clean up and promote other stories of interest.
In terms of finances, the average was due to $ 37 million loans and its investors possessed additional $ 25 million clearance preferences (which means that investors would get their money before employees saw refunds). His rule was also overly complicated and required investors approval of five separate installments before making large decisions of the company.
To correct these problems and correct the ship, the middle renegotiated its loans, eliminated clearance preferences and simplified its rule in a single installment of investors. She also sold two of her acquisitions and closed one third.
Critically, the Medium worked to clean his table with renegotiation with investors, who did not want Stubblebine to do immediately, he admitted. But after a year since the idea was first set up, the CEO realized that it would need to save the company.
“The restructuring of investors required a little sweet spot. The business had to look good enough to save, but not so good that there were other options,” he noted.
“The case I made to loan holders was to turn their loans into shares or management they would walk and then create enough ownership for them by going to other investors in terms of review,” Stubblebine explained. Six of about 113 investors participated in the review, where investor bets were diluted and resigned rights such as liquidation preference and governance roles. (Also shouted in VCS that were easy to work with as partners, including Ross Fubini at XyzMark Suster in In advance; Green; Spark; A16Z.)
Medium had to reduce the cost, both by layoffs – from 250 people to just 77 – and through engineering optimization, which reduced its cloud costs $ 1.5 million to $ 900,000. He finally came out of an office lease that saw it paying $ 145,000 a month for 120-Desk office in San Francisco. Employees received new share capital since their existing shares after the “Cram-Down Round” were likely to be useless.
The platform, just estimated at $ 600 million, did not share its new valuation as a result of all these changes, but it is much lower, of course.
“… I have none I for what our current valuation is,” Stubblebine wrote. “But I’m not going to tell you why I don’t want what is used as a comparison point with other newly established businesses. We are profitable and not. This is a comparison point that serves us best,” he said.
