NSFWCORP's race to survive… The results are in
On Monday, I wrote about my "Brewster’s Millions"-style struggle to close NSFWCORP’s latest round of funding before we were forced into a unwanted “pivot."
Raising money for media companies is comically hard, especially post-launch, and it’s only thanks to this week's change in open solicitation laws that we were able to announce publicly that we were running close to empty. The big question was: would we be able to close the round before our week-end deadline?
Today’s the day that we have to confirm the printing of Issue Seven of our magazine, and also the day when our end of month payroll is debited. After that, without the additional funding confirmed, I’d have to start making significant changes to the business to ensure NSFWCORP will survive.
So... let me tell you what happened over the past week.
First off, I knew that writing candidly about our struggles was an incredibly high risk strategy. If, after being open about our fundraising needs, we failed to meet them, there would be no room for bullshit or bluster about how actually we’d always planned to pivot from day one. No. We’d have failed, and everyone would know it.
But, the potential benefits of transparency are significant. For one thing, radical honesty gets a lot of attention, by virtue of being so fucking unusual. And attention is a really useful thing when you’re looking for new investors.
As it turned out, another benefit (despite extreme cynicism from some quarters, which I’ll get to in a moment) is that, by being honest about our difficulties, we united our team and our subscribers in determination to get NSFWCORP out of the woods.
Hoping that @nsfwcorp & @paulcarr get their funding. Been doing great work lately. Also hate seeing good journalists out of work.
— Micah Singleton (@MicahSingleton) September 26, 2013 Of course, I’d already shared details of our cashflow crunch with the team before I wrote my post, but seeing the response from subscribers – the emails of support, the Tweets urging us not to give up – renewed everyone's (including my) enthusiasm for the company we’re proud to have spent almost two years building. What doesn’t kill us, and all that.
Assuming, of course, that it didn’t kill us.
But if the well-wishers gave us hope, it was actually the small number of ill-wishers that really stoked our determination to survive and thrive.
A personal note on that, because it really shook me: I don’t care how much you hate me, how much it irks you that I was able to raise money from my "rich friends" to start a company, or the extent to which the prospect of my personal failure brings you to the brink to schadengasm. I don't care about any of that. No amount of animosity towards me personally can excuse the vile gloating I saw from some writers at “rival” publications at the prospect that a dozen fine journalists, developers, illustrators, and support staff – several with young children to support -- would soon be out of work.
Salon’s Alex Pareene, on hearing that we may have to lay off our staff, tweeted a single word in response: “aahahaha.” Gawker’s deputy editor, Max Read described the news as “BEAUTIFUL” (emphasis his).
If I should run into messrs Pareene or Read, perhaps while taking a late night stroll through the lowest circles of hell, I’ll be sure to ask them how they’d have felt reading Tweets like that about their colleagues and friends. But of course, the answer to that question presupposes a capacity for empathy or even basic humanity.
To quote one member of the NSFWCORP editorial team when he read those Tweets: “those fuckers had better hope we don’t survive.”
Much less vile, but still pretty surprising, were the Tweets from fellow journalists who tutted that I was being “too transparent” and that there were things that readers are better off not knowing. Most prominent amongst those was Jason Pontin, Editor in Chief of the MIT Technology Review.
I think this sort of "candor" likely to alienate readers and investors, and scare partners. http://t.co/WJHOs3L7iO
— Jason Pontin (@jason_pontin) September 24, 2013 Pontin also advised: “…don't air your difficulties with [investors], nor spook [employees]. Don't do it in public, so that the venture seems unsure…" Adding: "It's your business. But if I can be condescending again, you'll learn: this is not the way it's done.”
I disagree. And, as reader Danny Page responded, it’s weird to hear a journalist advocating for less openness in business "mere years after the last recession."
More importantly, if we’re going to solicit for investment, it seems obvious to me that we have a duty to lay out all our cards from the start: The fact that we might not survive without new money is clearly important to share, as is the fact that we are on less-than-great terms with two of our investors, due in large part to us having written unflattering stories about them. Our willingness to report without fear or favor is definitely something potential investors need to understand from start. The notion that either employees or existing subscribers would be “spooked” (whatever that means) by my honesty was quickly dispelled by those same employees and subscribers…
@jason_pontin @nsfwcorp 's candor is what I subscribed for. A meaningful read. You don't want them to go the Rupee Murdoch way now, do you?
— Ishki (@Ishki) September 24, 2013 …but we’d know soon enough if it would frighten away investors. As Pontin put it, “It's a real-time experiment. If over-sharing is a good strategy for a founder-editor, the market will tell us.”
Which brings me to the deeply buried lede here: I’m afraid I have some bad news, at least for those who were hoping for our demise.
The investor response to my post was swift, and overwhelming. Within just a few hours, half a dozen potential backers had asked for an introduction to NSFWCORP, either directly or via AngelList. By the end of Monday, we had our first $10,000 committed. Over the next 48 hours, accredited investors committed additional amounts ranging from $2,500 to $50,000. The result: as of yesterday morning, it was clear that, yes, we were going to reach the amount we needed to keep NSFWCORP in business.
In fact, we knew we were safe slightly before that: Erik Moore and Kirby Harris at Base Ventures, who invested $250,000 earlier this year, agreed to transfer their additional $50k immediately. “You shouldn’t have to go down to the wire,” said Kirby. May everyone have investors as supportive as them.
Rest assured we're going to repay the faith people have shown in us. Over the next few months you’re going to see us doing the best work of our lives, with a revamped print edition, continued roll-out of product features (we just launched the ability to send gift subscriptions) and, of course scoops a-plenty.
And, per my realization that it’s impossible to raise too much money for a media company, we’re going to keep pushing ahead with fundraising, starting with $250,000 to ensure we never find ourselves in this jam again. (Accredited investors, you know where to go.)
In the meantime, all that’s left is to thank everyone who responded in our time of terrifying need. Not just for the kind words, the advice, the subscriptions and the investment… but also for showing the cynics that transparency is always the best policy, even for a company that’s on the ropes. Especially for a company on the ropes.
If start-ups like NSFWCORP have any hope of making journalism a viable business again, it’s vital that we’re able to be honest about the challenges and the missteps, if only to help others avoid the same dramas. It serves no one for companies to suddenly “pivot” or fold without being honest about the missteps and crises that brought them there.
Paul Carr is a regular PandoDaily contributor, and CEO of NSFWCORP.
[NSFWCORP shares two investors with PandoDaily: Vegas Tech Fund and CrunchFund.]
[Illustration by Brad Jonas]