The NYT and The Athletic

You're talking about the quality of product. ... which is subjective anyhow, even if I agree with any of your perceptions. It has nothing to do with whether it is succeeding as a business or is going to succeed.

I don't know what it was "supposed" to be. The two founders basically started something on the premise that newspapers were dying, but the piece of the newspaper for which there might actually still be demand. ... was sports. They believed that sports fans would pay for good sports writing on a clean app that had no ads. And they started in one city, Chicago, I believe.

They launched into a cheap-money environment, in which they could raise a lot of capital that wouldn't have been available in other times. ... and they tried to grow quickly, before fully proving the concept. And they started spreading to other cities. The state of newspapers allowed them to poach a lot of talent. And they didn't have to actually do it in the cost-conscious way viable businesses are forced to operate, because they raised a ton of capital that allowed them to live a fantasy for several years.

There have been a lot of businesses (an idea, readily available mispriced debt or capital) like this over the last decade, and there has been (and is going to be a lot more) failure. If they had been forced to first figure out how to make what they were doing profitable (which proves their idea works), and then use that money they earned in order to expand into new markets and try to become something national in scope, they probably would have found that like a lot of subscription-based revenue models in the past. ... it's a tough way to do business, and you really need to offer a ton of value (that is costly to provide) in order to make it work.

Which is why they never turned a corner. Right before the bubble that fed them a lot of venture capital to expand started to pop (we are now in a higher interest rate environment), they found a buyer. ... at a very generous valuation (although not as generous as it probably would have been if they could have sold earlier). Good for the guys who founded it, I guess.

But the Times knew the site was losing money when it bought it. Whether they were making a good purchase or not, whether they way overpaid or not, they also have seemed to have a plan to integrate it into the offerings they want to create bundled packages around, cut costs dramatically (the VC money days are gone; now it is something that loses money, not being valued as "potential" growth in a cheap-money environment). ... and find a way to bring in more revenue beyond selling subscriptions (which I am sure hit a wall; even before the sale they realized that the amount they need to charge to pay for what they were doing was never going to garner the readership they needed to be profitable).

I can't tell you if ultimately the NYT is going to be able to turn it into something that can earn them something. But if they can, it's going to be a balancing act of some sort. ... like all successful content-provider businesses. In order to make money, you need to offer enough value of some sort that makes enough people interested. But you need to make it so that the cost of providing that content is constrained and allows you to profit. You need to be able to monetize it. ... revenue.

As a start up, none of that was happening. They were working with what seemed like monopoly money to them, and they grew quickly, poached talent by offering higher salaries, and weren't being forced to worry about actually generating income. The pressure to start earning a return on the money others had put up to create their business was just starting to weigh on them. ... and now it's the Times' problem.

There is nothing yet, though, to suggest it is "floundering." In fact, when I read the COO talking about how they are exploring all kinds of ancillary revenue sources, I was thinking the opposite, like, "Finally, they are being forced to figure out how to make the thing actually work."

But sure. They are trying to manage the costs of the product. The thing loses money. So I wouldn't be surprised if they have trouble figuring out how to make the quality of the product high. That much coverage, of so much, is costly. We'll see if they can get it right and whether there actually is something that can work. I think the jury is still out.