Clay Shirky says NSFWCORP has unlimited cash. Great! Now we're screwed

By Paul Bradley Carr , written on April 20, 2013

From The News Desk

A few days ago, in an interview to promote his (genuinely excellent) co-written study/manifesto on "Post-Industrial Journalism," Clay Shirky had this to say about me, and NSFWCORP...

You get a lot of people saying that their model is the best and that everyone else has got it wrong. Or they are unwilling to admit what exactly their business model is. Take Paul Carr – I disagree with much of the content of his work, but he’s just a brilliant writer: He never says that nsfwcorp is bankrolled by Tony Hsieh. He doesn’t go out and say, ‘my organization works because a millionaire thinks I’m great and other newspapers cannot necessarily replicate that.’
I can't tell you how grateful I am to Clay Shirky for saying those words. Not just the kind ones about my writing (although, in point of fact, Clay, I'm not just a brilliant writer. I also cook a mean beef stroganoff) -- but also for setting my mind at ease, apropos the Future of Journalism (With Jokes).

To think, for the past few months, I've lived the constant near-panic of a startup founder: obsessing over cash flow spreadsheets (which I update sometimes a dozen times a day), tweaking and re-tweaking freelance budgets, agonizing over healthcare options, and waking in the middle of the night from nightmares of having to close down the entire company because of some miscalculation I've made during commissioning or hiring.

And all for nothing! Because everything is totally fine. Thanks to our millionaire benefactor, Scrooge McHsieh (John D Hsiehafeller? Bill McHsiehates?), I can rip up those cashflow forecasts, tear down our paywall and pour the team another pint of Krug 1928. Happy days are here the fuck again.

Careful readers will have detected my sarcasm in the lines above. I wonder, though, if my anger and frustration are coming through clearly enough?

In just a few smug words, Clay Shirky, one of our most respected media commentators, dismisses the entire business model of NSFWCORP -- our paywall, our print edition, our ebooks, Conflict Tower -- as a gimmick, a fig leaf to distract from the comfortable reality: that NSFWCORP is nothing more than a rich man's plaything. We're not the future of anything. We've solved nothing. At best, we're lucky; at worst, frauds.

That's just the kind of cuttin'-through-the-bullshit, tellin'-it-like-it-is statement for which Shirky is famous, and for which institutions like Columbia and NYU keep cutting him checks. And, by happy coincidence, it allows Shirky to neatly slot NSFWCORP into the broader premise of his report: that no-one has yet figured out a viable business model for journalism in the Internet era. But maybe -- just maybe -- if we follow Clay Shirky's advice, then one day we might. (There's actually a name for institutions -- media pundits, say -- trying to preserve the problem to which they are the solution. It's called the Shirky Principle.)

Few people are better informed on the collision of media and technology as Clay Shirky, even if he is a little obsessed with the idea that EVERYTHING HAS CHANGED. Likewise, he's absolutely entitled to have his doubts about the viability of NSFWCORP. God knows, I share many of them (more on that in a moment). But there's just one problem with his demand that I acknowledge his description of our financial position.

It isn't true.

In fact, it's embarrassingly, infuriatingly, dangerously wrong.

Shirky says I should be honest about how NSFWCORP works, that I should "go out" and explain how the company is financed and what exactly our business model is. Well alrighty then...

NSFWCORP has raised a total of $640,000 from three investors, including Tony Hsieh's Vegas Tech Fund (VTF), all of whom invested on exactly the same terms, as covertible debt. VTF is by far the largest investor, responsible for $600,000 of that total (the other $40,000 came from CrunchFund and Judith Clegg. It's all disclosed here.) VTF's $600,000 takes us right up to the maximum amount the fund invests in startups, and the fund's partners have made absolutely clear: that's it. Indeed, when I last saw Tony and asked for advice on future funding, his advice was that we shouldn't raise any money if we can avoid it, but if we did need to, he could introduce us to another possible investor. That's it. There is no more money coming from Tony or Vegas Tech Fund. We are not "bankrolled" by anyone, except in the same way as any other company that has ever raised a seed round.

(Another important point, and I mean this as a positive thing: since we started publishing I have not once had a conversation with Tony about the content of NSFWCORP. In that regard, he is absolutely the perfect media investor.)

How am I doing so far, Clay? Honesty-wise?

Great! Let's go on...

NSFWCORP was founded with two goals: 1) to create a brilliant news magazine (with jokes), and 2) to prove that it is still possible to build an innovative, independently profitable journalistic organisation: one that treats its journalists well, allowing them to produce great work which readers are willing (eager even) to pay for.

Journalistically, I think we're doing pretty great. Earlier this week, the chancellor of Appalachian State resigned, just days after we published David Forbes' exposé on how the university covers up rape and sexual assault by athletes. On Wednesday, NSFWCORP's Yasha Levine broke the story of how California parents are being "empowered" by billionaires to destroy public education. Our first print edition featured Mark Ames' first-hand account of being spied on by the ADL -- the same issue in which we published the definitive list of the 100 people most culpable for misinforming the public in the run up to the Iraq war.

How about innovation? Our entire publishing platform was built in-house, including our paywall that allows subscribers to "unlock" paid content for outside sharing. We've launched "Desknotes," allowing subscribers to eavesdrop on our internal editorial discussions, and Conflict Tower to ensure transparency for everything we do. We've launched a nightly radio show and a monthly print edition. And that's just the start: our product road map reaches from here to the moon.

Financially -- well, I wish we had a millionaire benefactor. To put our funding in perspective, the total amount raised (converted to/from 2013 dollars) would barely cover the New York Times' weekly payroll in 1916, or the cost of producing a single issue of Scanlan's in 1970.

And yet... Our entire business is perilously close to breaking even, thanks to the thousands of people who have signed up for monthly subscriptions ($3 for Web / $7 for Web and print) or our Conflict Towers membership program. (Conflict Towers "residents" can buy a virtual room for anywhere between $3 and $1500 to support our work. Residents get a lifetime subscription to web and print and a public profile on the site. Starting this summer, we're hosting a series of Future Of... dinner parties for Conflict Tower residents and their guests, in cities across the US and internationally. Buy a damn room already.)

This month, even after paying good salaries to our reporters, paying the hilariously high travel costs required for serious reporting, finally setting up a healthcare plan for full-time staffers and expanding into print, our burn rate will drop to under $25,000. Three months ago it was three times that high. We only need to sell 4,000 more print subscriptions, or a dozen or so more floors in Conflict Tower, and we'll break even.

That -- that, Clay -- is the honest truth about NSFWCORP's business. We, like every other publication since the beginning of time, have raised a relatively modest amount of startup capital, mostly from a fund in which Tony Hsieh is a partner. But what we've built with that startup cash is a real, fiercely independent journalistic enterprise, delivering scoop after scoop (with jokes) for a growing audience across multiple platforms (while, by the way, solving the problem of porous paywalls, and proving that print isn't dead).

So all of the above is why Clay Shirky's comments make me feel like being sarcastic. Now here's why they make me feel frustrated, and angry...

As founder and editor in chief, I am terrified, TERRIFIED of fucking this up. The closer we get to profitability, the more terrified I get. We are so close to pulling this off. So close to proving that it is possible to pay brilliant journalists a good salary (with full benefits) to do great work, in a profitable, sustainable way. And yet, with no immediate prospect of raising more money (I mean, what? Is now a good time to ask Mike Arrington for more cash?), I'm acutely aware that we're going to take this right down to the wire.

All it takes is one unexpected expense -- a rise in print costs, a story that goes over budget, or any one of a thousand other calamities that I failed to account for -- and I'll have to close the doors and lay off the best team of people I've ever worked with, all of whom risked their careers to help prove that great journalism has a profitable future.

It'll only take a few thousand more subscribers for us to reach profitability, but it only needs a similar number to think "oh, NSFWCORP doesn't need my support right now... they have their own pet millionaire" in order to doom us. With the stakes that high, Clay Shirky's blithe, inaccurate claims could become the precise opposite of a self-fulfilling prophesy.

So, Clay, maybe next time you smack me and my business in the face with a velvet-wrapped two-by-four, you could at least pick up the phone first to check that we're really as rich as you think we are.

Or better yet, buy a Conflict Tower room and you can ask me in person at one of our residents' Dinner Parties. Appropriately enough, the first one is themed around The Future Of Journalism. I suspect we'll have a lot to talk about.


Update -- Clay Shirky responds in the comments:

First, let me apologize for suggesting in that interview that you have access to unlimited capital. I shouldn't have used the word 'bankrolled' to characterize investment in a for-profit firm.

I was trying to make a point about the wild variability of business models among media outlets, but I screwed up in this case. I recognize that you are making a go at running a profitable media business, and I hope it succeeds (I am one of your print subscribers), and I'm sorry for seeming to suggest otherwise.

There's a longer conversation to be had about that wild variability, but I'll leave this at an apology for the moment. ...He also adds that he has moved into Conflict Tower. Thanks, Clay! Apology absolutely accepted.

[Illustration by Brad Jonas, NSFWCORP]