In 7 months, 360 million yuan was burned, and the sudden death of a star start-up company was recorded

"They rented the entire 26th floor of a skyscraper in downtown New York, and nine out of ten of them were empty. ”

作者 | Amelie

Edited by Vine Week

The first hit in the startup tech world in 2024 comes with the news of the closure of startup media company The Messenger. Not only the entire Internet new media field, but also Wall Street and even the global news industry is in an uproar.

A new media start-up with a veteran industry experience, who threatened to have 100 million readers and an annual revenue of $100 million by the end of 2024, collapsed in an instant.

As soon as The Messenger was launched in May last year, it received $50 million (equivalent to 360 million yuan) in financing from investors such as Josh Harris, co-founder of Apollo Global Management. Clearly, CEO Jimmy Finkelstein and investors believe The Messenger can quickly become a dark horse in the news media world by focusing on reporting accurate, balanced, non-partisan news and news.

Finkelstein, who is now 75 years old, gave a number of high-profile interviews to The Messenger last year, and was sharply ridiculed by some members of the media for his remarks, which he described as "not just hanging out by the pool, but as a legacy." And by comparing his new media to Vanity Fair and 60 Minutes, he aims to create a very serious and valuable publication.

Source: TheWrap

Many of the reporters and editors under his command thought they had already weathered the cold winter and Christmas at the end of 2023, but they did not wait for the spring of 2024 to recover.

The news of the closure came suddenly, with many of the site's employees saying on their social media platforms X.com that they only learned they had lost their jobs after reading the New York Times report on it last week.

As a new media startup that was founded only six months ago, The Messenger has developed very rapidly in the early stage.

In a very short period of time, 300 employees were hired, many of them sophisticated journalists poached from other mainstream media companies, and their salaries were higher than the industry average. The company spent money in the early stage, signing office lease contracts of millions in New York, Washington and Florida, and threatening to achieve more than 100 million monthly website traffic.

But according to the Associated Press, The Messenger had only reached a quarter of its target at its peak.

Some media people pointed out that the website's business model has been lackluster since its inception, relying too much on social media distribution and hot search to attract attention.

In a new notice to employees, Finkelstein blamed the decision to close the company on ongoing economic pressures in the media industry.

He further explained that the notice was so sudden because "there was a fight for sufficient funds until early today (last Wednesday)". What's even more surprising is that The Messenger did not pay any redundancy compensation and severance pay to its employees, and the entire website was shut down shortly after the employees received the official notice.

01

Lack of ability?

The years have never bypassed anyone.

Some people may say that if you want to serve old age, you should enjoy your retirement at the age of 70, and you should be old in your old age. But Jimmy Finkelstein is clearly not one of those people. As a seasoned media investor, former owner of The Hill, a long-established newspaper and digital media company, and an "old money" on New York's Upper East Side, he is fond of the media industry.

图源：The Daily Beast

The Messenger began with ambitious plans to quickly expand its 550-strong news team and expect $100 million in revenue in 2024. The ensuing story is that the media world was shocked by the brutal layoffs that began with a very substantial salary and then followed by a brutal layoff season at the end of the year, less than five months later.

Throughout 2023, the company will be unable to make ends meet, with annual revenue of only $3 million.

Naturally, this has angered many media peers, such as Gregg Birnbaum, who submitted his resignation shortly after working for The Messenger, who accused the site of being "greedy and blindly and desperately chasing traffic".

Finkelstein made about $18 million in profits by selling The Hill, a U.S. newspaper and digital media company, to Nexstar in 2022 for $130 million. He invested the profits in the operation of The Messenger, and he was full of confidence, and with the participation of other investors, he could work this new business.

He even calculated that after the reporters and editors were fully equipped, the traffic would definitely grow fission-likely, and then he would search for advertisers extensively, and it would not be a problem to expect direct sales to reach tens of millions of dollars in the first year.

As a medium, it can also host various business events. For example, The Hill, which he previously helmed, makes $3 million a year through a political roundtable show called "Rising." Naturally, the Messenger program includes this type of commercially valuable activity. Not only in the offline stadium, but also on the official website of YouTube and The Messenger for digital "TV shows".

At the same time, premium membership services are essential. Launching "premium" components that readers have to pay for, and the exact scope and content of the payment requires further careful planning.

"In short, we will have a lot of revenue streams. Finkelstein told the young people who came to interview.

When the project was about to launch last March, Finkelstein told The New York Times, "I remember when I was a kid, I would sit in front of the TV with my family and we would all watch '60 Minutes' together." Or we all can't wait to get our hands on the next issue of Vanity Fair or any other magazine you're interested in. Those days are behind us, and the truth is, I want to help restore those days. ”

02

Shadow under the AB surface

Dan Wakeford, editor-in-chief of The Messenger, describes his site's mission as "demystifying misinformation and providing unbiased and objective journalism."

Other media people are not willing to buy it.

Vanity Fair's Joe Pompeo, a journalist for Vanity Fair, gave his insights in an interview with Finkelstein, who described The Messenger as more of a "populist, center-right editorial perspective, with a target audience of the general public, not the elite, and a mix of scoops + original stories and all sorts of popular reprints, like a hodgepodge of headlines." ”

Finkelstein retorted: "First of all, it's not center-right. One of the things I do is look at the brand and make sure it's in the middle. People on the right can respect it because it's true. And The Messenger is positioned to be a very serious publication, in which there will also be a lot of interesting articles. ”

From the controversy at the beginning of its establishment to the current bankruptcy, it seems to confirm the doubts of some people before.

So what do insiders who have been through this journey think about this sudden collapse?

A lot of media veterans are clearly unrelenting, and that's the case with Jordan Hoffman. In his essay "Killing The Messenger: My Last Days in the Midst of the Disaster," he details the various details of what he experienced in less than a year. Hoffman described the saddest Christmas party at the end of 2023, and everyone was pessimistic about the current state of the company, with CEO Finkelstein even ranting that he would never let his child go to an Ivy League school today, apparently referring to the anti-Semitic controversy. He thinks Finkelstein is a very wealthy man living on New York's Upper East Side, but he still decides not to pay his employees severance.

Jordan Hoffman｜图源：X

Another journalist, Madeline Fitzgerald, shared her experience on X.com that she had not received any notice until she read in the New York Times that the company was going to fail. As the news got in, she was quickly kicked out of Slack, an instant messaging app, leaving her with only a few hours to back up her published work.

And Eli Walsh, after facing a sudden job loss, broke the news that the company's operating model is not working at all, and he has produced 630 manuscripts in these 7 months, but the most of the work he has done is copy and paste.

03

Alerts in failure

Don't take the advice of the loser lightly, he is an authority on what not to do.

The Messenger was short-lived, but it has its value, especially for the growth of startups, which is full of inspiration.

For example, whether the need for financing for startups should be prioritized over the advantages of their own business model.

The Messenger launched with $50 million in funding, which is undoubtedly a big hit among the startups. In the early stage, the crazy enclosure of people, all kinds of extravagance promotion, and operation to build momentum. In fact, the new business model that has been praised cannot stand scrutiny, not to mention the old, and there is not much newness. Within a few months of its establishment, management began to get out of control, and at the end of the year, layoffs began to take a sharp turn. The situation has not completely improved after the year, and it is more difficult to achieve a new round of financing under the pressure of layoffs.

图源:CIO Bulletin

As an investor and entrepreneur in the media industry, Finkelstein is clearly at the top of The Messenger. If you don't rely on external funders, save upfront expenses, realize various revenue streams first, and then finance through a combination of internal cash flow and financially intelligent capital under their control, you may go further. And once you seem to be short of money, when you beg for money, the rich people will deliberately stay away from you or take advantage of you. Finkelstein has little financing advantage in the unfavorable start of the US media industry in 2024.

Also, don't paint your dreams too big and illusory, they will look even more fake.

If the startup itself has no concept of industry data, it is completely a "entrepreneurial suicide performance". The predicted figures for The Messenger's early days have been questioned. Investors of all kinds have vivid memories of FTX founder Sam Bankman Fried and Elizabeth Holmes, the "Silicon Valley Fraud Heroine", and the investment market is filled with a strong air of suspicion. Finkelstein's age and experience are still not a sign of the promise of its business model, and The Messenger website appears to have attracted only 12.5 million unique visitors in November, a far cry from their projected goal of 100 million.

Startups, in particular, should use every amount of money given by investors to the best of their ability.

It's not always better to raise money faster and more, and by reducing the need for more rounds of venture capital, founders have a chance to stay ahead of the curve and minimize equity dilution. How every dollar raised is just as important as creating a company's commercial advantage. Instead of extravagance and waste after getting money, showing off without substance, and poaching people with high salaries and not being able to do their best.

The Messenger has offices in New York, Washington, D.C., and Palm Beach, and costs $240,000 a month in rent.

Executives at The Messenger have leased the entire 26th floor of a skyscraper in downtown New York, nine out of ten of which are empty. Most office areas are just rows of spotless, expensive-looking desks that can be turned into standing workstations at the touch of a button.

Reference Sources:

1.Jimmy Finkelstein, Low-Key Media Tycoon, Looks Beyond The Messenger’s Rocky Start. (Vanityfair)

2.Killing The Messenger: My Final Days Working at a Disaster. (Intelligencer)

3.Unlocking Your Unicorn: 7 Lessons From The Messenger’s Collapse. (Forbes)