The Big Ragu
Well-Known Member
- Joined
- Nov 14, 2002
- Messages
- 30,281
Major player may be overstating their impact or viability a bit.
It's still small, it is living off of capital raises (which are very small compared to what the Athletic was able to raise, but the Athletic was active during a frenzy compared to where we are today), and it is trying to establish the kind of business -- a content provider that sells advertising -- that has left a graveyard of others in its wake.
It actually sounds a whole lot like the stuff that used to come from the guys at the Athletic for years before they sold to the NYT. The emphasis on it being cash flow positive . ... which I'm not saying is a bad thing; you don't need to raise more and more capital to blow through to keep from having to shut your doors when you generate cash. But there is a difference between struggling to get by with a relatively small company, and earning money, let alone earning money at much larger scale.
Even if it can be a viable, profitable company, the other question is whether it can ever be big enough to justify the kind of valuation people are buying ownership at right now. There is a chance, at least, that is is just like the Athletic, which basically used its ability to get people to buy equity at higher and higher valuations during a bubble, and then grew aggressively rather than proving the concept along the way with cash it generated through operations. At its worst, it could be like a tiny sports-focused version of Buzzfeed or Vice, which were complete shirt shows, although in the current environment that isn't possible, because money isn't being thrown around as speculatively as it was when Buzzfeed and Vice were living large on other people's checkbooks.
The Athletic raisedcapital at insane valuations in a zero interest rate environment, and got bailed out right as that was ending (albeit at a lower payday than they would have gotten a half year earlier), by getting the NYT to pay an amount for it that it surely regrets now, because whatever plan they had to squeeze out costs still has them sitting on something that loses money.
My question with this company would be, 1) Will they be able to keep raising capital the way the Athletic did? It's a much tougher environment at the moment (higher interest rates have tamped down on some of the malinvestment), but maybe that changes soon. 2) If they do grow aggressively using other people's money, will there be a NYT (or a public offering) that allows them to cash out? 3) And most importantly. ... is another content provider selling advertising really going to fare any better than others usually do? What happens if we have a recession or advertisers scale back while they need to sell more equity using that model?
It's still small, it is living off of capital raises (which are very small compared to what the Athletic was able to raise, but the Athletic was active during a frenzy compared to where we are today), and it is trying to establish the kind of business -- a content provider that sells advertising -- that has left a graveyard of others in its wake.
It actually sounds a whole lot like the stuff that used to come from the guys at the Athletic for years before they sold to the NYT. The emphasis on it being cash flow positive . ... which I'm not saying is a bad thing; you don't need to raise more and more capital to blow through to keep from having to shut your doors when you generate cash. But there is a difference between struggling to get by with a relatively small company, and earning money, let alone earning money at much larger scale.
Even if it can be a viable, profitable company, the other question is whether it can ever be big enough to justify the kind of valuation people are buying ownership at right now. There is a chance, at least, that is is just like the Athletic, which basically used its ability to get people to buy equity at higher and higher valuations during a bubble, and then grew aggressively rather than proving the concept along the way with cash it generated through operations. At its worst, it could be like a tiny sports-focused version of Buzzfeed or Vice, which were complete shirt shows, although in the current environment that isn't possible, because money isn't being thrown around as speculatively as it was when Buzzfeed and Vice were living large on other people's checkbooks.
The Athletic raisedcapital at insane valuations in a zero interest rate environment, and got bailed out right as that was ending (albeit at a lower payday than they would have gotten a half year earlier), by getting the NYT to pay an amount for it that it surely regrets now, because whatever plan they had to squeeze out costs still has them sitting on something that loses money.
My question with this company would be, 1) Will they be able to keep raising capital the way the Athletic did? It's a much tougher environment at the moment (higher interest rates have tamped down on some of the malinvestment), but maybe that changes soon. 2) If they do grow aggressively using other people's money, will there be a NYT (or a public offering) that allows them to cash out? 3) And most importantly. ... is another content provider selling advertising really going to fare any better than others usually do? What happens if we have a recession or advertisers scale back while they need to sell more equity using that model?
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