The Messenger

It's been an era in which it's been relatively easy to raise large sums of money. The "capital raise + burn through the cash" thing hasn't just been limited to publishing. The Messenger is a little different, because it came to that party really late. But in order to justify burning through cash when your business isn't becoming profitable, you have needed a really good "story" in order to keep raising more and more cash to burn through.

With investment yields so low in what was a zero interest rate environment for so long, those "stories" could keep valuations of startups rising as money being robbed of yield chased sillier and sillier things. And that has kept that environment going for a long time -- companies were becoming more valuable on paper, which brings more and more money chasing returns and blowing bubbles.

It always seemed to me that the media companies like Buzzfeed, Vice, even the Athletic, were dealing with such a shitty business tradtionally that selling BS (the story) was a more difficult task than a shared office space company or a ride sharing company or a dating app or a nonsensical idea with AI terminology slapped on top of it.

In the case of the Messenger, Jimmy Finkelstein started raising money in late 2021. By then the punch bowl was already close to empty, but apparently he didn't know the party was ending. The Fed began what has turned into 8 rate hikes in March, 2022. With real yields rising, it has tamped down the desperate money that will buy into any story. And he was pretty much doomed from the get go. You all know the media industry well, he probably was never going to have success that led to profitability. But if he had gotten going earlier in the party -- say in 2016 instead of 2021 -- he might have been able to keep it going longer than less than a year. He would have been able to keep hitting the capital markets or borrowing really cheaply the way scores of other unviable companies did.

 

True. Though this doesn't seem like a journalism failure as much as a business disaster.