15 ms·

Venture capital is going to murder Medium

108 points by tortilla 10y ago

acconrad 10y ago
Written on medium
- Bartweiss 10y ago
  > "It’s the best writing environment on the web, and they sweat the details like nobody else." > "Especially for anyone who moved to Medium but hedged their bets by keeping their own domains." The claim here isn't that Medium is bad, or even not excellent. It's that they took >$100 million in VC money with no real plan to monetize, and so they're doomed regardless of product quality.
- draw_down 10y ago
  And?
- khazhou 10y ago
  That's consistent with DHH's message: the product is fantastic, but the business story was artificially propped up by VC $$$.
draw_down 10y ago
Wow, somehow I didn't realize they'd taken on that much funding. I have to agree, I don't see how they make their way out of this. Would love to be wrong, though.
- Bartweiss 10y ago
  My first thought was of the Silicon Valley episode about asking for a lower early valuation. $132 million is a stunning amount of money for a company with an online publishing platform and no real revenue, and I'm a bit shocked they let the numbers climb that high.
  - wyldfire 10y ago
    "no real revenue" -- I don't think I've ever seen an ad. So what is their business model?
    - epmaybe 10y ago
      I'd imagine it wouldn't be too hard to start putting in ads once you've built a userbase
      - WalterSear 10y ago
        I not so sure. You might not die immediately, but you would start bleeding to death right away.
        wyldfire 10y ago
        Worked for YouTube.
        scriptkiddy 10y ago
        The only reason it worked for youtube is that they were the only service offering reliable high quality video. Other video hosts had problems with loading times and reliability. Youtube is arguably a more valuable service in that it takes way more infrastructure to run a video hosting site than it does to run what is essentially, a simple blog. It would probably take no more than a year of development experience to build a site like Medium(leaving out scaling concerns). Youtube, on the other hand is a beast. I can't even imagine beginning to build an application like youtube. Youtube can push ads hard without bleeding users because they offer quality so many orders of magnitude higher than the alternatives. Medium has only one thing to offer: nice design.
      - Bartweiss 10y ago
        I'm skeptical for Medium in particular. As a reader, their only advantage over other platforms is a clean, well-structured reading environment. I'd be very displeased if they did anything to damage that.
minimaxir 10y ago
I noted on the original discussion thread that Medium became the de facto place for easy-setup-startup blogs after Tumblr faded from consciousness. If the same things begins to happen to Medium as they chase an exit strategy, do these startups have a Plan C?
- koolba 10y ago
  Plan C is to get acquired by Yahoo.
Kinnard 10y ago
I wonder if medium could partner with Brave Browser
WalterSear 10y ago
While I appreciate the value that Medium has provided, I'm unclear how its product could take $132 million dollars to create. Could someone elucidate me?
- markbnj 10y ago
  I don't have any inside knowledge but it probably didn't take that much to _create_ the product. They're getting rid of 50 positions described as mostly business and sales, so they obviously have built up some costs around pursuing whatever revenue sources they thought they were after.
  - WalterSear 10y ago
    Ah, yes. So, it may not have been the product that cost $132 million, but the spectacularly underwhelming monetization strategy.
- batbomb 10y ago
  75 people employed for 4 years at ~$200k/head + rent in the heart of SF for 4 years at Market and O'Farrell + Amazon + ...
  - WalterSear 10y ago
    >75 people employed This just shifts the question down the resource pipeline :)
wonko1 10y ago
Feels like we'd only just forgot about Posterous. At least Posthaven is already there to accept the fallout? Nice to see ten times as much money was raised this time though. Such a shame though, would be nice if there was a better way of extracting value from these viable but non-unicorns.
dexwiz 10y ago
How long before SV reinvents the paid magazine subscription? Advertising seems to have an adverse effect on content quality, mostly because it puts focus on the wrong metrics. An alternative is needed. Medium is in a perfect position to introduce a subscription service. They have a community of both publisher and consumers, a leading platform, and the backing of VC. Turn Medium into a Patreon for writers. This does not mean a paywall. This means things like locking comments to subscribers only, direct tips to authors, chat sessions with authors. Twitch managed to take a primarily ad based platform and layer subscriptions and donations over the top of it. Their stroke of genius, is that any subscription locked content is left up the creator (streamer) such as emotes, sub-only chat, sub games, etc. It is possible. It also helped that Twitch Prime piggy backs on Amazon Prime, but Medium may be able to find another similar service to partner with. Also all things are cyclic. We are seeing a low point for paid subscriptions (newspapers), but that doesn't mean it won't come back in another form. Enhancing the social experience, not the content, via subscriptions may be a viable path.
- komali2 10y ago
  Locking comments to subscribers only is an awesome idea. I always thought reddit gold was a pretty good idea as well. Reminds me of Something Awful - 5 bucks to register kept out the worst commenters. Mostly.
- 6stringmerc 10y ago
  Patreon is already the Patreon for Writers though and for Medium to chase that type of audience is counter-intuitive. As a conduit to larger audiences, I think Patreon is about as useful as selling photocopies on a street corner. Medium has a much larger footprint which, in my perspective, allows them to be more of a Curator / Publicist / Rights Management entity than a skim-off-the-top-pseudo-serfdom-model like Patreon.
- michaelchisari 10y ago
  How long before SV reinvents the paid magazine subscription? I would love for the opportunity to subscribe for a nominal amount, if it meant supporting writers and journalists, while also eliminating ads and my data being sold. It's the principle of "Cheap is better than Free" that we're all relearning.
leggomylibro 10y ago
While I've personally incorporated an LLC for dealing with institutions that don't like doing business with individuals, I'm starting to think that anyone starting a new business should seriously consider making it a Public-benefit Corporation. It lets you define alternative motives for the company besides pure profit, essentially writing the flowery "mission statements" that most companies espouse right into the company charter. It's much harder for an activist investor to demand more profits RIGHT NOW if you can point to your charter and say that you're focusing on your corporation's stated goals - maybe in Medium's case, that could be something like 'supporting quality citizen journalism throughout the world.' I guess that might make your startup less appealing to VC initially, but I'm sure SV will happily put its money where its idealistic mouth is, right?
- dandare 10y ago
  What is SV?
  - thesehands 10y ago
    Silicon Valley
- lj3 10y ago
  Can't the VCs change the charter after they get a sizable chunk of ownership?
  - jrochkind1 10y ago
    If you are incorporated as a 'public benefit corporation', you can't just change the charter to no longer be so, it's part of your incorporation. But it's unclear to me if 'public benefit corporation' is actually anything more than marketting, I don't know if it really constrains your corporation in any way.
    - basseq 10y ago
      Externally, it's mainly marketing: the stated mission of a nonprofit with the equity and operating ability of a C-Corp (and the taxation that goes along with the latter). Internally, being a PBC adds "protection" of the mission in two ways: 1. Directors are protected from shareholders (e.g., VCs). Since shareholders are not primary to stakeholders in a PBC, directors can make business decisions that may not be in the "best interests" of shareholders and be protected from lawsuits. 2. Shareholders are protected from directors doing the same. Shareholders are able to demand external auditing of the mission and bring lawsuits alleging breach of the mission. There are a ton of details depending on the state of incorporation.
michaelbuckbee 10y ago
It's interesting to think what the other non ad based models might be: 1. SAAS Freemium: It's free to write on Medium, but if you want a real domain and a few more features pay $10/mo 2. Patreon-ish: Direct monthly sponsorship (subscription) to individual authors 3. Fractional Payment: Overall subscription to Medium as a service payed by readers. Authors are paid according to a formula for how many people viewed their content each month. Any I missed?
- scriptkiddy 10y ago
  >1. SAAS Freemium: It's free to write on Medium, but if you want a real domain and a few more features pay $10/mo I think this is a fantastic idea. It has worked on many other platforms such as shared hosting before. >2. Patreon-ish: Direct monthly sponsorship (subscription) to individual authors This is also a great model because it allows readers to pay for content that they consider worth while. It has the capability to increase overall content quality, become a platform for new writers, and medium could scrape some small amount of dough off the top for the service they are providing. >3. Fractional Payment: Overall subscription to Medium as a service payed by readers. Authors are paid according to a formula for how many people viewed their content each month. I don't think this is a great idea to be honest. This is essentially how click farms already work and has lead to the uprise in clickbait. I see this as the primary reason why sites like Buzzfeed exist.
  - cryptoz 10y ago
    Medium should be an AI-first company. Instead of the suggestion above for "formula for how many people viewed their content each month" it should be investing its time into generating the best of humanity's thoughts and writings and ideas with the vision that AI content generation will be the future of publication.
    - scriptkiddy 10y ago
      I agree. It would be fantastic to have access to a writing platform that focuses entirely on content quality as it's product.
CoffeeDregs 10y ago
Ev was right about social (micro-) blogging with Twitter and the VCs backing him did well as Twitter figured out how to monetize content. Ev says he's got wind of a similar opportunity in long form blogging. I'm not sure why we'd be surprised that VCs would back him strongly, even while they understand the monetization risk. Actually, the lead investor says it better: https://knowledge.sparkcapital.com/our-investment-in-medium-right-tool-right-network-right-time-e081438d30f https://knowledge.sparkcapital.com/our-investment-in-medium-...
payne92 10y ago
This, unfortunately, is the entrepreneurial version of the "second system syndrome": https://en.wikipedia.org/wiki/Second-system_effect https://en.wikipedia.org/wiki/Second-system_effect The pattern: an entrepreneur achieves some level of fame/fortune. Then, they overcapitalize their next company (to various degrees) from high-expectation investors. Next, they are reminded how fricking HARD startups are, and how much LUCK was really involved in their first success. Some compound the pain by presuming the second will go like the first, and they run things fat and expensive from the start: high headcount, expensive office, high salaries, over the top perks, etc. And then when reality hits, the "corporate lifestyle downgrade" is especially painful. (I'm speaking from hard-learned personal experience, and I see this pattern over and over...)
- CPLX 10y ago
  Perhaps. In fairness Ev Williams had two massively successful ventures before this one.
- k__ 10y ago
  "Next, they are reminded how fricking HARD startups are, and how much LUCK was really involved in their first success." I have the feeling this is hauting my life. Jobs, relationships, everything. When I got something, it didn't feel that hard to get it. When I try to get something it feels impossible.
- ibejoeb 10y ago
  > presuming the second will go like the first, and they run things fat and expensive from the start: high headcount, expensive office, high salaries, over the top perks Nailed it. It's tough to resist, though. In the moment, it feels like "doing things right this time" rather than running fat.
- vmarsy 10y ago
  While Second-system effects seems to be describing software, the "human" version of it is apparently called Sophomore slump [1]: A sophomore slump refers to an instance in which a second, or sophomore, effort fails to live up to the standards of the first effort. It is commonly used to refer to the apathy of students (second year of high school, college or university), the performance of athletes (second season of play), singers/bands (second album), television shows (second seasons) and films (sequels/prequels). The second company of a previously successful entrepreneur seem to match that definition! [1] https://en.wikipedia.org/wiki/Sophomore_slump https://en.wikipedia.org/wiki/Sophomore_slump
Gaessaki 10y ago
I apologize if the answer is obvious, but could someone explain to me the rationale behind a blogging platform taking 132M in venture funding? This isn't critique of their strategy or anything. I'm genuinely curious as to why they would do that. I'm sure their engineering is great, but does it really take that much money to build and scale such a product? It seemed like most of their marketing was organic too. I'm just trying to understand the situation better.
- jkestner 10y ago
  They've paid a lot of money to have their own content created. For example, https://backchannel.com https://backchannel.com
  - Gaessaki 10y ago
    So they outright paid content creators and writers? It seems that Backchannel is owned by Wired/Conde Nast. Have they contracted them to keep Backchannel publishing on Medium?
aub3bhat 10y ago
I will offer a counter opinion, the problem with Medium (or to some extent Quora) is not that they raised too much funding but rather they bet incorrectly on the content. As much as readers on Hacker News might want to believe otherwise, light/low-intellectual-effort content such as memes, listicles, gifs, images are far far more profitable than wordy blogposts & articles. Sure you might get lucky and have a viral article once in a while, but low effort content delivers far better median return. Regarding the funding, consider that Buzzfeed has raised 446.3M$ and Giphy has raised 150.95M$. The money raised is consistent with the kind of site he had envisioned, the issue is that there isn't a market for it.
- chrisabrams 10y ago
  I concur with you that they bet too much on their content. The question then is: did the vicious cycle start from raising too much, or betting incorrectly?
  - aub3bhat 10y ago
    When you are worth few hundred million to a billion dollars. The only rate limiting condition is the time you have left, and the window of opportunity. From his perspective (and correctly) there isn't any point in bootstrapping. Medium is not the first such example, you also have Path (where sadly one of the co-founder was not as rich), Quora, and as a counter example Uber.
- __derek__ 10y ago
  > The money raised is consistent with the kind of site he had envisioned, the issue is that there isn't a market for it. It seems that it wasn't necessarily too much money but too much too soon. It's like Tumblr redux: the product was (intentionally or not) built to put ads in front of lots of loyal eyes, but the founder refuses. In that sense, they lack real product-market fit.
- jsjohnst 10y ago
  Not that I disagree with you, but Tumblr, among others, disproves that money can be made on sites that focus on the "low effort" content.
6stringmerc 10y ago
The one pivot Medium could do - and potentially reap large fiscal revenues & find profits in turn - would be to become a Writing Talent Incubator. They have the Ecosystem. They have the Banner. If they have cash, then they can get into the Rights Management sector and pursue the sources of almost every modern Media or Communication Content: Writers. Compared to Engineers, Writers are dirt cheap. Funding in the tens of thousands of dollars per writer - or unicorn hundred thousand for some really promising ones - is the pathway to getting Content that can be monetized. If they play nicely with Writers and not make the "Indentured Servant Musician Record Label Contract" a staple of their model, it could attract a lot of attention in a good way. Mutual long term benefit = good business. Unfortunately the Hit-to-Miss ratio isn't something I'm confident Medium wants to buy into. As in, if the most popular Writers sling pretty unappealing material (ex: Self Help, Conspiracy Theories) then it could take a lot of work figuring out where the gold might be. Having lots of data and pieces to examine through their systems certainly provides an advantage at the outset. It's still all about risk and reward though. The big hits are what cover for the bad bets. It's a viable business model, until it isn't. Which, honestly, goes for a lot of other types of businesses too (times change, tastes change, regulations change, etc) so it's not out of the realm of consideration. Basically I see Medium as right in the sweet spot where Netflix turned the corner. Licensing content and being the distributor is grunt work. The real money comes from owning the fountains. In a perfect world Medium would buy-up Script Revolution tomorrow, specifically the founder/creator, and begin the Content / Writer Incubator attempt with sincerity with his cultivated pool of writers, and see how it turns out. Such a pivot definitely has some appeal to me as both a Content Creator and Consumer, and is, dare I say it, a bit more innovative than figuring out a new part of the donkey to pin the ad tail on.
- jrochkind1 10y ago
  And "big hits" for authors, especially non-fiction authors, aren't really all that big. With _very_ occasional exceptions. I'm not sure this would work.
  - 6stringmerc 10y ago
    True, selling "texts" is a busted model. I wasn't advocating that particularly; I think the revenue model is in the downstream rights management, not the actual text. Audio book rights. Film rights. Translation rights. I'm not the biggest fan of the Copyright system in the US as it stands now (specifically Term Length) but pointing out all the different avenues for compensation via multi-media exploitation is a forward-looking business model.
vonnik 10y ago
It's a pleasure to see DHH pat himself on the back each time his stopped clock overlaps with the hour. He shows the palpable schadenfreude of a man, sitting on the sidelines, who won't shut up about the players in the game. But I notice another flaw to his prose aside from the self-congratulations. Many people who stumble into a certain amount of fame and adulation, like him, get sloppy when they write. They start to repeat themselves. They don't offer evidence to back up their claims. They don't dig deeper than the insight they offered in the last five columns. In short, they don't do the work any more. DHH's post show all those symptoms. He lacks a good editor, and probably thinks he doesn't need one. It might be interesting, for those who want to do the work, to consider why VCs invested more than $120M in Ev. One answer is that VCs tend to invest in strong founding teams, and he is about as strong as a founding team gets. Personally, I would never invest in a media company, but abstracting away from the sector, Ev looks like a very good bet. Secondly, investments fail all the time. Medium might be one of those. Our understanding of the world doesn't change much if that's the case. None of this is really news.
- untog 10y ago
  > Personally, I would never invest in a media company, but abstracting away from the sector, Ev looks like a very good bet. Which is absurd. "The chocolate teapot industry is difficult, but boy, Ev really knows what he's doing, even though he hasn't actually made a chocolate teapot before". Silicon Valley has the strangest issue with personality cults sometimes.
  - vonnik 10y ago
    The absurdity conceals a reality you don't understand yet, which is that VCs often have to make investments not according to their deep understanding of a specific market, since there are too many markets to study, but by using a few signals that apply to all startups. Those are traction with users, social proof from other investors, and the track record of the founders. Startups are all organizations in search of a business model, as Steve Blank puts it. So you want someone leading the organization who is adaptable enough to figure that out, no matter what initial idea they start with. That's why VCs go with strong founders.
pweissbrod 10y ago
Honest non-nvestor question: How is it that investors valuate and front hundreds of millions into companies with a functioning app, a user base and no clear path on how to monetize? I saw this recently with yik yak as well and it confuses me.
powera 10y ago
It's not venture capital. It's the standard reason 150-person organizations die; they have no revenue of note and no plan to get more.
mathattack 10y ago
I don't think Venture Capital is killing Medium. Spending that much money no matter what the source is the problem.

108 points by tortilla 10y ago

acconrad 10y ago

Written on medium

Bartweiss 10y ago
> "It’s the best writing environment on the web, and they sweat the details like nobody else." > "Especially for anyone who moved to Medium but hedged their bets by keeping their own domains." The claim here isn't that Medium is bad, or even not excellent. It's that they took >$100 million in VC money with no real plan to monetize, and so they're doomed regardless of product quality.
draw_down 10y ago
And?
khazhou 10y ago
That's consistent with DHH's message: the product is fantastic, but the business story was artificially propped up by VC $$$.

draw_down 10y ago

Wow, somehow I didn't realize they'd taken on that much funding. I have to agree, I don't see how they make their way out of this. Would love to be wrong, though.

Bartweiss 10y ago
My first thought was of the Silicon Valley episode about asking for a lower early valuation. $132 million is a stunning amount of money for a company with an online publishing platform and no real revenue, and I'm a bit shocked they let the numbers climb that high.
- wyldfire 10y ago
  "no real revenue" -- I don't think I've ever seen an ad. So what is their business model?
  - epmaybe 10y ago
    I'd imagine it wouldn't be too hard to start putting in ads once you've built a userbase
    - WalterSear 10y ago
      I not so sure. You might not die immediately, but you would start bleeding to death right away.
      - wyldfire 10y ago
        Worked for YouTube.
        scriptkiddy 10y ago
        The only reason it worked for youtube is that they were the only service offering reliable high quality video. Other video hosts had problems with loading times and reliability. Youtube is arguably a more valuable service in that it takes way more infrastructure to run a video hosting site than it does to run what is essentially, a simple blog. It would probably take no more than a year of development experience to build a site like Medium(leaving out scaling concerns). Youtube, on the other hand is a beast. I can't even imagine beginning to build an application like youtube. Youtube can push ads hard without bleeding users because they offer quality so many orders of magnitude higher than the alternatives. Medium has only one thing to offer: nice design.
    - Bartweiss 10y ago
      I'm skeptical for Medium in particular. As a reader, their only advantage over other platforms is a clean, well-structured reading environment. I'd be very displeased if they did anything to damage that.

minimaxir 10y ago

I noted on the original discussion thread that Medium became the de facto place for easy-setup-startup blogs after Tumblr faded from consciousness. If the same things begins to happen to Medium as they chase an exit strategy, do these startups have a Plan C?

koolba 10y ago
Plan C is to get acquired by Yahoo.

Kinnard 10y ago

I wonder if medium could partner with Brave Browser

WalterSear 10y ago

While I appreciate the value that Medium has provided, I'm unclear how its product could take $132 million dollars to create. Could someone elucidate me?

markbnj 10y ago
I don't have any inside knowledge but it probably didn't take that much to _create_ the product. They're getting rid of 50 positions described as mostly business and sales, so they obviously have built up some costs around pursuing whatever revenue sources they thought they were after.
- WalterSear 10y ago
  Ah, yes. So, it may not have been the product that cost $132 million, but the spectacularly underwhelming monetization strategy.
batbomb 10y ago
75 people employed for 4 years at ~$200k/head + rent in the heart of SF for 4 years at Market and O'Farrell + Amazon + ...
- WalterSear 10y ago
  >75 people employed This just shifts the question down the resource pipeline :)

wonko1 10y ago

Feels like we'd only just forgot about Posterous. At least Posthaven is already there to accept the fallout? Nice to see ten times as much money was raised this time though. Such a shame though, would be nice if there was a better way of extracting value from these viable but non-unicorns.

dexwiz 10y ago

How long before SV reinvents the paid magazine subscription? Advertising seems to have an adverse effect on content quality, mostly because it puts focus on the wrong metrics. An alternative is needed. Medium is in a perfect position to introduce a subscription service. They have a community of both publisher and consumers, a leading platform, and the backing of VC. Turn Medium into a Patreon for writers. This does not mean a paywall. This means things like locking comments to subscribers only, direct tips to authors, chat sessions with authors. Twitch managed to take a primarily ad based platform and layer subscriptions and donations over the top of it. Their stroke of genius, is that any subscription locked content is left up the creator (streamer) such as emotes, sub-only chat, sub games, etc. It is possible. It also helped that Twitch Prime piggy backs on Amazon Prime, but Medium may be able to find another similar service to partner with. Also all things are cyclic. We are seeing a low point for paid subscriptions (newspapers), but that doesn't mean it won't come back in another form. Enhancing the social experience, not the content, via subscriptions may be a viable path.

komali2 10y ago
Locking comments to subscribers only is an awesome idea. I always thought reddit gold was a pretty good idea as well. Reminds me of Something Awful - 5 bucks to register kept out the worst commenters. Mostly.
6stringmerc 10y ago
Patreon is already the Patreon for Writers though and for Medium to chase that type of audience is counter-intuitive. As a conduit to larger audiences, I think Patreon is about as useful as selling photocopies on a street corner. Medium has a much larger footprint which, in my perspective, allows them to be more of a Curator / Publicist / Rights Management entity than a skim-off-the-top-pseudo-serfdom-model like Patreon.
michaelchisari 10y ago
How long before SV reinvents the paid magazine subscription? I would love for the opportunity to subscribe for a nominal amount, if it meant supporting writers and journalists, while also eliminating ads and my data being sold. It's the principle of "Cheap is better than Free" that we're all relearning.

leggomylibro 10y ago

While I've personally incorporated an LLC for dealing with institutions that don't like doing business with individuals, I'm starting to think that anyone starting a new business should seriously consider making it a Public-benefit Corporation. It lets you define alternative motives for the company besides pure profit, essentially writing the flowery "mission statements" that most companies espouse right into the company charter. It's much harder for an activist investor to demand more profits RIGHT NOW if you can point to your charter and say that you're focusing on your corporation's stated goals - maybe in Medium's case, that could be something like 'supporting quality citizen journalism throughout the world.' I guess that might make your startup less appealing to VC initially, but I'm sure SV will happily put its money where its idealistic mouth is, right?

dandare 10y ago
What is SV?
- thesehands 10y ago
  Silicon Valley
lj3 10y ago
Can't the VCs change the charter after they get a sizable chunk of ownership?
- jrochkind1 10y ago
  If you are incorporated as a 'public benefit corporation', you can't just change the charter to no longer be so, it's part of your incorporation. But it's unclear to me if 'public benefit corporation' is actually anything more than marketting, I don't know if it really constrains your corporation in any way.
  - basseq 10y ago
    Externally, it's mainly marketing: the stated mission of a nonprofit with the equity and operating ability of a C-Corp (and the taxation that goes along with the latter). Internally, being a PBC adds "protection" of the mission in two ways: 1. Directors are protected from shareholders (e.g., VCs). Since shareholders are not primary to stakeholders in a PBC, directors can make business decisions that may not be in the "best interests" of shareholders and be protected from lawsuits. 2. Shareholders are protected from directors doing the same. Shareholders are able to demand external auditing of the mission and bring lawsuits alleging breach of the mission. There are a ton of details depending on the state of incorporation.

michaelbuckbee 10y ago

It's interesting to think what the other non ad based models might be: 1. SAAS Freemium: It's free to write on Medium, but if you want a real domain and a few more features pay $10/mo 2. Patreon-ish: Direct monthly sponsorship (subscription) to individual authors 3. Fractional Payment: Overall subscription to Medium as a service payed by readers. Authors are paid according to a formula for how many people viewed their content each month. Any I missed?

scriptkiddy 10y ago
>1. SAAS Freemium: It's free to write on Medium, but if you want a real domain and a few more features pay $10/mo I think this is a fantastic idea. It has worked on many other platforms such as shared hosting before. >2. Patreon-ish: Direct monthly sponsorship (subscription) to individual authors This is also a great model because it allows readers to pay for content that they consider worth while. It has the capability to increase overall content quality, become a platform for new writers, and medium could scrape some small amount of dough off the top for the service they are providing. >3. Fractional Payment: Overall subscription to Medium as a service payed by readers. Authors are paid according to a formula for how many people viewed their content each month. I don't think this is a great idea to be honest. This is essentially how click farms already work and has lead to the uprise in clickbait. I see this as the primary reason why sites like Buzzfeed exist.
- cryptoz 10y ago
  Medium should be an AI-first company. Instead of the suggestion above for "formula for how many people viewed their content each month" it should be investing its time into generating the best of humanity's thoughts and writings and ideas with the vision that AI content generation will be the future of publication.
  - scriptkiddy 10y ago
    I agree. It would be fantastic to have access to a writing platform that focuses entirely on content quality as it's product.

CoffeeDregs 10y ago

Ev was right about social (micro-) blogging with Twitter and the VCs backing him did well as Twitter figured out how to monetize content. Ev says he's got wind of a similar opportunity in long form blogging. I'm not sure why we'd be surprised that VCs would back him strongly, even while they understand the monetization risk. Actually, the lead investor says it better: https://knowledge.sparkcapital.com/our-investment-in-medium-right-tool-right-network-right-time-e081438d30f https://knowledge.sparkcapital.com/our-investment-in-medium-...

payne92 10y ago

This, unfortunately, is the entrepreneurial version of the "second system syndrome": https://en.wikipedia.org/wiki/Second-system_effect https://en.wikipedia.org/wiki/Second-system_effect The pattern: an entrepreneur achieves some level of fame/fortune. Then, they overcapitalize their next company (to various degrees) from high-expectation investors. Next, they are reminded how fricking HARD startups are, and how much LUCK was really involved in their first success. Some compound the pain by presuming the second will go like the first, and they run things fat and expensive from the start: high headcount, expensive office, high salaries, over the top perks, etc. And then when reality hits, the "corporate lifestyle downgrade" is especially painful. (I'm speaking from hard-learned personal experience, and I see this pattern over and over...)

CPLX 10y ago
Perhaps. In fairness Ev Williams had two massively successful ventures before this one.
k__ 10y ago
"Next, they are reminded how fricking HARD startups are, and how much LUCK was really involved in their first success." I have the feeling this is hauting my life. Jobs, relationships, everything. When I got something, it didn't feel that hard to get it. When I try to get something it feels impossible.
ibejoeb 10y ago
> presuming the second will go like the first, and they run things fat and expensive from the start: high headcount, expensive office, high salaries, over the top perks Nailed it. It's tough to resist, though. In the moment, it feels like "doing things right this time" rather than running fat.
vmarsy 10y ago
While Second-system effects seems to be describing software, the "human" version of it is apparently called Sophomore slump [1]: A sophomore slump refers to an instance in which a second, or sophomore, effort fails to live up to the standards of the first effort. It is commonly used to refer to the apathy of students (second year of high school, college or university), the performance of athletes (second season of play), singers/bands (second album), television shows (second seasons) and films (sequels/prequels). The second company of a previously successful entrepreneur seem to match that definition! [1] https://en.wikipedia.org/wiki/Sophomore_slump https://en.wikipedia.org/wiki/Sophomore_slump

Gaessaki 10y ago

I apologize if the answer is obvious, but could someone explain to me the rationale behind a blogging platform taking 132M in venture funding? This isn't critique of their strategy or anything. I'm genuinely curious as to why they would do that. I'm sure their engineering is great, but does it really take that much money to build and scale such a product? It seemed like most of their marketing was organic too. I'm just trying to understand the situation better.

jkestner 10y ago
They've paid a lot of money to have their own content created. For example, https://backchannel.com https://backchannel.com
- Gaessaki 10y ago
  So they outright paid content creators and writers? It seems that Backchannel is owned by Wired/Conde Nast. Have they contracted them to keep Backchannel publishing on Medium?

aub3bhat 10y ago

I will offer a counter opinion, the problem with Medium (or to some extent Quora) is not that they raised too much funding but rather they bet incorrectly on the content. As much as readers on Hacker News might want to believe otherwise, light/low-intellectual-effort content such as memes, listicles, gifs, images are far far more profitable than wordy blogposts & articles. Sure you might get lucky and have a viral article once in a while, but low effort content delivers far better median return. Regarding the funding, consider that Buzzfeed has raised 446.3M$ and Giphy has raised 150.95M$. The money raised is consistent with the kind of site he had envisioned, the issue is that there isn't a market for it.

chrisabrams 10y ago
I concur with you that they bet too much on their content. The question then is: did the vicious cycle start from raising too much, or betting incorrectly?
- aub3bhat 10y ago
  When you are worth few hundred million to a billion dollars. The only rate limiting condition is the time you have left, and the window of opportunity. From his perspective (and correctly) there isn't any point in bootstrapping. Medium is not the first such example, you also have Path (where sadly one of the co-founder was not as rich), Quora, and as a counter example Uber.
__derek__ 10y ago
> The money raised is consistent with the kind of site he had envisioned, the issue is that there isn't a market for it. It seems that it wasn't necessarily too much money but too much too soon. It's like Tumblr redux: the product was (intentionally or not) built to put ads in front of lots of loyal eyes, but the founder refuses. In that sense, they lack real product-market fit.
jsjohnst 10y ago
Not that I disagree with you, but Tumblr, among others, disproves that money can be made on sites that focus on the "low effort" content.

6stringmerc 10y ago

The one pivot Medium could do - and potentially reap large fiscal revenues & find profits in turn - would be to become a Writing Talent Incubator. They have the Ecosystem. They have the Banner. If they have cash, then they can get into the Rights Management sector and pursue the sources of almost every modern Media or Communication Content: Writers. Compared to Engineers, Writers are dirt cheap. Funding in the tens of thousands of dollars per writer - or unicorn hundred thousand for some really promising ones - is the pathway to getting Content that can be monetized. If they play nicely with Writers and not make the "Indentured Servant Musician Record Label Contract" a staple of their model, it could attract a lot of attention in a good way. Mutual long term benefit = good business. Unfortunately the Hit-to-Miss ratio isn't something I'm confident Medium wants to buy into. As in, if the most popular Writers sling pretty unappealing material (ex: Self Help, Conspiracy Theories) then it could take a lot of work figuring out where the gold might be. Having lots of data and pieces to examine through their systems certainly provides an advantage at the outset. It's still all about risk and reward though. The big hits are what cover for the bad bets. It's a viable business model, until it isn't. Which, honestly, goes for a lot of other types of businesses too (times change, tastes change, regulations change, etc) so it's not out of the realm of consideration. Basically I see Medium as right in the sweet spot where Netflix turned the corner. Licensing content and being the distributor is grunt work. The real money comes from owning the fountains. In a perfect world Medium would buy-up Script Revolution tomorrow, specifically the founder/creator, and begin the Content / Writer Incubator attempt with sincerity with his cultivated pool of writers, and see how it turns out. Such a pivot definitely has some appeal to me as both a Content Creator and Consumer, and is, dare I say it, a bit more innovative than figuring out a new part of the donkey to pin the ad tail on.

jrochkind1 10y ago
And "big hits" for authors, especially non-fiction authors, aren't really all that big. With _very_ occasional exceptions. I'm not sure this would work.
- 6stringmerc 10y ago
  True, selling "texts" is a busted model. I wasn't advocating that particularly; I think the revenue model is in the downstream rights management, not the actual text. Audio book rights. Film rights. Translation rights. I'm not the biggest fan of the Copyright system in the US as it stands now (specifically Term Length) but pointing out all the different avenues for compensation via multi-media exploitation is a forward-looking business model.

vonnik 10y ago

It's a pleasure to see DHH pat himself on the back each time his stopped clock overlaps with the hour. He shows the palpable schadenfreude of a man, sitting on the sidelines, who won't shut up about the players in the game. But I notice another flaw to his prose aside from the self-congratulations. Many people who stumble into a certain amount of fame and adulation, like him, get sloppy when they write. They start to repeat themselves. They don't offer evidence to back up their claims. They don't dig deeper than the insight they offered in the last five columns. In short, they don't do the work any more. DHH's post show all those symptoms. He lacks a good editor, and probably thinks he doesn't need one. It might be interesting, for those who want to do the work, to consider why VCs invested more than $120M in Ev. One answer is that VCs tend to invest in strong founding teams, and he is about as strong as a founding team gets. Personally, I would never invest in a media company, but abstracting away from the sector, Ev looks like a very good bet. Secondly, investments fail all the time. Medium might be one of those. Our understanding of the world doesn't change much if that's the case. None of this is really news.

untog 10y ago
> Personally, I would never invest in a media company, but abstracting away from the sector, Ev looks like a very good bet. Which is absurd. "The chocolate teapot industry is difficult, but boy, Ev really knows what he's doing, even though he hasn't actually made a chocolate teapot before". Silicon Valley has the strangest issue with personality cults sometimes.
- vonnik 10y ago
  The absurdity conceals a reality you don't understand yet, which is that VCs often have to make investments not according to their deep understanding of a specific market, since there are too many markets to study, but by using a few signals that apply to all startups. Those are traction with users, social proof from other investors, and the track record of the founders. Startups are all organizations in search of a business model, as Steve Blank puts it. So you want someone leading the organization who is adaptable enough to figure that out, no matter what initial idea they start with. That's why VCs go with strong founders.

pweissbrod 10y ago

Honest non-nvestor question: How is it that investors valuate and front hundreds of millions into companies with a functioning app, a user base and no clear path on how to monetize? I saw this recently with yik yak as well and it confuses me.

powera 10y ago

It's not venture capital. It's the standard reason 150-person organizations die; they have no revenue of note and no plan to get more.

mathattack 10y ago

I don't think Venture Capital is killing Medium. Spending that much money no matter what the source is the problem.