On March 9th a somber note fell over the tech and journalistic community as Stacey Higginbotham, senior writer for GigaOm, announced via twitter that, “As of 5 pm today [GigaOm is] owned by trustees (SVB). They are in charge of our payments and our events.” The death of GigaOm, a trusted and well respected news source for all things tech related, came abruptly and without notice. Not even the well-informed writers at GigaOm anticipated the call that would ultimately result in the site’s immediate closure. What makes this unfortunate loss so unsettling is not the fact that GigaOm has closed their doors, but that there were almost no warning signs of the company’s fate. This makes the whole world of digital publishing shaky at best.
Here’s the truth: Companies these days need to utilize lean start up methodologies that help them stay hyper focused on specific audiences, while using a bevy of digital tools to stay competitive. Greg Waldorf, CEO of Invoice2go exposes the Achilles heel of the majority of today’s small businesses this way: “Small businesses worldwide are united by one common problem: they are so busy running their business, critical tasks like invoicing get left until the weekend.” That which gets ignored, no matter how small the task may seem, starts to pile up and create an avalanche of issues. GigoOm learned this the hard way.
These every day challenges are why major technology advances bring about a new breath of life in the industry. Small business needs technology to help propel it from treading water into profitability and success. Waldorf puts it this way: “This is why launches like the Apple Watch are so exciting – they give us the opportunity to push the boundaries and develop ground breaking short-cuts, which will get right to the core of the problem for small businesses, saving them time, and helping them with cash-flow.”
Here are several lessons to be learned from GigaOm’s premature departure and how to avoid the same consequences for your business (here’s a hint: Start finding the technologies that create shortcuts for your company now or GigaOm’s destiny will befall you as well.)
Slow and Steady Funding Builds a Solid Foundation
One of the more significant problems that led to GigaOm’s failure was the burden of Venture Capital funding coupled with debt from Silicon Valley creditors. Senior writer for the tech site, Mathew Ingram noted, “There is a difference between venture capitalists and creditors. When VCs stop investing, it’s one thing, but when creditors get nervous they want their money back.” If you’re playing with investors, they demand scalability and a measurable return. If a business is not reaching expected goals, it is liable to be closed, sometimes overnight.
The key takeaway from this financial ruin is that this model only works if there is an extremely rapid increase in underlying numbers and revenues. Otherwise, the conservative route of only spending revenue that the company has acquired through more natural channels is the way to go. It may not operate at a remarkably high level like BuzzFeed, but it is a sustainable model none-the-less. Businesses need to either generate astounding numbers of audience growth in a short period of time, or need to be protected from it for fear of being crippled by its weight.
Focus Energies Intensely On a Specific Audience
GigaOm was no doubt a reliable and respected source for all things technology, but did not necessarily have a niche of their own. Rafat Ali who runs now runs the travel focused Skift, is one of the original inspirations for Om Malik, founder ofGigaOm. He commented on the importance of truly honing in on a niche by stating, “How much of a personal or professional utility value do your users ascribe to your brand? And how indispensable are you to the ecosystem you exist in?” Danny Sullivan of the successful Third Door Media also weighed in on this topic by saying, “… Our revenue would be worse if we had a broad audience. We produce content for digital marketers, so you’re typical BuzzFeed reader interested in that dress isn’t going to be much of value to us. And that’s fine. We know our audience; we know the content we’re producing for it, and by growing our audience, our publications become more valuable to readers, attendees and advertisers.”
This means the importance of serving a specific community extremely well cannot be overstated. Focus your efforts on a distinct demographic of people and your content will have much greater value, albeit to a smaller group. Know exactly who the target audience for your business is, and zero in with intense focus on providing those consumers with a premier experience. That is the way to win today’s digital race.
What other lessons are to be learned from GigaOm’s demise? Do you think this was simply a business model failure on Giga’s part, or is this a larger symptom within the digital publications community?