Inside GigaOm’s VC-driven demise

But building a media business is hard. (Just ask Say Media, which quit publishing last year and reverted to its technology roots.) Insiders said GigaOm’s website and events were profitable, but that research failed to meet its goals.

“I think there was a sense that we were not reaching research targets, but those targets were quite aggressive,” said Mathew Ingram, senior writer at GigaOm. “Investors started questioning its potential for growth or more of a return than we were able to produce.” (For his part, Malik declined to comment, saying in an email: “Way too emotional today to talk.”)

Outsiders were quick to reinforce Ingram’s narrative. Rafat Ali, an outspoken critic of VC funding, warned that backers’ expectations are often unmatched by the business realities. “Media companies get seduced by that idea that if they operate in a startup environment, that they believe the hypergrowth story,” said Ali, PaidContent founder and a former member of GigaOm’s advisory board. “That’s not the reality of the media business. Yes, the digital media business grows much faster than traditional media — but media companies are seven-to-10-year horizon games, at minimum. There’s no hockey-curve growth in B2B.”

Michael Wolf was the founding vp of research for GigaOm. In a series of tweets, he wrote that GigaOm started by trying to convert its readership to paid content. But that wasn’t workable given the expectations of the company’s VC backers. So GigaOm went after corporate deals but neglected the single subscriber in the process.

Lessons of @gigaomresearch – If you want to do paid content, you need to have appropriate cost model for your native audience size.

— Michael Wolf (@michaelwolf) March 10, 2015

If @gigaomresearch started with larger reader baseline like @Forbes a research business our size would have scaled/been hugely profitable

— Michael Wolf (@michaelwolf) March 10, 2015

In the interview last year, Walborsky hinted at other challenges. GigaOm had tried e-books, but they required scale to succeed. Both research and events business became tougher as more rivals got into the game. After GigaOm founded its research arm, he said in a 2014 interview, “Then other companies began doing the same. We saw Politico Pro come out, then Business Insider came out with research.”

Events can be a distraction, pointed out Ali. At his new company, travel publisher Skift, he decided to narrow his focus to one conference. “It’s all in and high-touch,” he said. “It’s a lot of stress on business and management and sales. When I did my first conference, the company stopped for two months.”

There were other pressures. While GigaOm might have eschewed press release-driven coverage for deeper, insightful pieces, the competition grew up around it with an explosion of technology blogs and mainstream news outlets adding tech news coverage. GigaOm avoided news coverage and focused on niche areas of technology such as data and cloud computing.

It also can’t have helped that GigaOm was operating without its founder and a CEO for much of the past year. Malik left the company a year ago after it raised $8 million, to become a partner of the backers, True Ventures. Walborsky departed in September. The exits continued this year, with Tom Krazit leaving as executive editor at the end of February.

Ingram believes the three-pronged revenue model would have worked if given time and leeway, pointing to others like The Economist as proof. “It definitely is a Faustian bargain,” he said of VC funding. “It’s basically a shortcut to growth.”