[LINK] "Gigaom is dead. Long live Gigaom"

[rfmcdonald]

Canadian tech journalist Mathew Ingram writes at his blog about the reasons for the failure of online tech journalism site Gigaom.

Everyone wants to know why Gigaom failed, and what it says about the online media market. And I feel as though I should know, if only because I was one of the site’s media writers, and I have written so many times about the challenges other online outlets have faced. In fact, I’ve heard from more than one person who sees Gigaom’s death as some kind of karmic retribution for my past criticism of outlets like the New York Times — and perhaps it is. Frankly, it’s as good an explanation as any other.

For me, the business realities and technical aspects of Gigaom are all tied up with my feelings about the place, and about my friend Om Malik, who took a crazy gamble and left his job at Forbes to start a blog, and eventually built what I consider to be one of the best teams of writers and editors I’ve ever worked with. As I have said several times, I have absolutely zero regrets about agreeing to leave a comfy newspaper job and join him in that quest, despite the unfortunate way it ended so abruptly. Was it the best online media business ever? No. But it was a pleasure and a privilege to work there, and I am proud of what we accomplished.

[. . .]

I’ve talked to several media outlets about Gigaom’s death — including Digiday and the Poynter Institute and the Columbia Journalism Review — and that has helped me think through some of the issues around it. Was Gigaom killed by its reliance on outside venture capital, as some have argued? In part, I think it was. As I mentioned in one interview, VC money is a Faustian bargain of the first order: it gives you the freedom to grow quickly, but it also puts pressure on a company to show meteoric growth, and there is a harsh penalty for not doing so — and the media industry isn’t exactly known for meteoric growth of the kind VCs like to see.

One aspect that many people are ignoring, however, is that Gigaom also took on debt, via a financing with several lenders including Silicon Valley Bank, in an attempt to juice its growth even further. In a different kind of market or at a different time, this might have worked — but ultimately the company failed to produce enough cash to service that debt, and that is part of what took it down (Peter Kafka at Re/code has more on that). Creditors are orders of magnitude less accommodating than shareholders or equity investors, and they tend to be a lot more nervous as well. When they want their money, all the happy stories about future growth that startups tell VCs mean less than nothing.