What went wrong at Mashable?
Oh Mashable, you had such lofty ambitions. The digital publisher has been sold at a fire sale price–less than $50 million according to a source of Recode to Ziff Davis, a digital media subsidiary of tech company J2 and will now being laying off 50 employees. Not too long ago, Mashable was valued at $250 million after Time Warner’s Turner led a $15 million investment in the spring of 2016. The sale price of Mashable to Ziff Davis is literally one-fifth the valuation the company had a year ago. I want to examine what went so terribly wrong for Mashable.
Let’s turn back the clocks a bit to July 19 (my birthday!) 2005–that’s when a guy named Pete Cashmore started blogging from his home in Scotland about technology and social media. At the time all this stuff was still relatively new to most people, especially social media. Cashmore capitalized on this new trend, covering new startups and apps, building a following over time. Everything was going well, Cashmore turned the site into a business, generating revenue primarily from display ads. But then in September 2010 something big happened–something that really was the sign of an end of an era for upstart digital media companies: AOL acquired TechCrunch for around $30 to $40 million (note the price, it’s eerily similar today’s Mashable price tag).
I said this back then and I’ll say it again now:
The era of major independent blogs, news sites, etc is coming to an end. Mainstream media and content providers will start to acquire more of these “new media” sites and what is currently new will be old, and what is old will be new. Independent sites will have a much more difficult time competing due to lack of resources, capital, and ability to easily scale.
And it seems I turned out to be pretty spot on.
The next four years were interesting for Mashable as it looked for ways to keep growing, the company started diversifying itself by bringing in new kinds of coverage. The site, which was known mostly for tech and social media coverage was now a giant mess of varying topics from tech to social to entertainment to viral videos to lifestyle to pretty much anything and everything. In my opinion this is when Mashable lost its way, it lost its focus and in an attempt to scale and be everything to everyone, they started what would ultimately be their death spiral.
In 2014 as Cashmore & Co. were continuing to look for ways to be bigger than TechCrunch (and by that I mean, get a sale price much higher) the team apparently decided to take outside investment for the first time. So in March 2014, Mashable raised a $14 million Series A led by Tribune Digital Ventures and so the scale at all costs mission began. Then less than full year later, in January 2015, Mashable raised an additional $17 million Series B round. This investment was earmarked for video content and a push towards creating much more video because advertisers are willing to pay a premium to advertise against video content. And finally, in late March 2016, two years after it took an initial investment of $14 million, Mashable was able to raise an additional $15 million to stay afloat and pray that their video pivot would work (quickly). All-in the company raised $46 million and sold for less than $50 million. Ouch.
The problems at Mashable were fairly simple: too wide a range of content (meaning the audience never really knew what to expect from them), too much jumping from one hot publishing trend to the next (e.g. writing about social media to viral videos to entertainment news to anything that would get a page view), and a pivot to video that came way too late.
As of right now, Mashable has been using this as their mission statement: The leading media company for the connected generation and voice of digital culture.
What does that even mean? Could it be any more broad/general? The company has had an identity problem for years.
It seems Ziff Davis thinks so too. According to the Recode report I read earlier, Ziff Davis plans to keep Mashable running but wants to refocus the company on tech and tech-lifestyle content. Finally, some focus.
I think the story of Mashable is one to learn from: Keep focused when building your product and make sure you perfect one thing before moving onto the next. Additionally, I think the sale price is probably more inline with what the company should actually have been valued and I can’t help but wonder how this will affect other giants in the digital media space such as BuzzFeed, Vox, and Vice in the short and long term. I have a feeling that term sheets may be harder to come by and that more layoffs may be on the way.
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