Editor’s Note: Each year, I send out a State of the Union, much like my peers at larger competitors like Buzzfeed or GroupNine. It’s a mix of industry trends and mainly, inside baseball operational things. This year, I am breaking it up into two, this one is more about the macro landscape, so I am sharing it here with a few slight edits and additional thoughts. Some may find it interesting.
With November here, we are now in the final 60 days of the year, and decade. Yes, it’s just another day on the calendar, but it’s an opportunity to ask ourselves questions, make changes, and live the life we want to live.
I will be sending out the annual State of the Union closer to year’s end, the execs will be helping me on the Survey, and reviews are around the corner. To avoid the SOTU being too long, I’ve broken it down into two parts.
When we celebrated WatchMojo’s 10-year anniversary in 2016 we embarked on our WM2020 initiatives to diversify, expand & grow and as we get to 2020, it’s time to take stock of those efforts while putting them in context of where the world is, where our industry is headed as things continue to change at a dramatic pace.
On Friday, an individual from our friends at [redacted] emailed me saying:
Hi Ash, hope you’re well! Just wanted to let you know that as of today I am no longer working at [redacted]. If ever WatchMojo [has openings], I would love the opportunity to join your team!
I spoke to the individual who confirmed [redacted] underwent a series of layoffs, again, as it continues to experiment at a rapid pace. We should never rejoice when companies – let alone our competitors – falter. For one, unlike tech, content/media isn’t really a zero-sum game. But, it’s also bad karma! Anyway, the individual gave me a lot of info and stressed that amongst other reasons, he valued our consistency throughout the years.
My worldview is what it is
I’ve frequently mentioned that I make decisions to avoid laying people off or being forced to shut down the business. One could argue that for all of my risk-taking, I am perhaps driven as much by fear. Fair observation. When our COO returned from YouTube’s summit, he wondered how we have remained “small” despite being in our 13th year. Also fair. Is it by design? No, but it’s a trade-off to have the culture we have. This year I shifted my focus back to internal affairs and throughout many discussions with various colleagues, I am very happy with where the company is at with regards to culture and communications.
While his comment post-YT Summit was based on his observations of massive enterprises like Complex Media (owned by Verizon and Hearst), GroupNine (backed by Discovery Networks and Axel Springer) et al., but [redacted] is a comparable. They seem more focused on marketing efficiency and financial effectiveness. There, we are very different. We care more about content, and put people ahead of profit, and profit ahead of revenues (that may not be sustainable or replicable).
But in light of everything that’s happened this year and I anticipate will happen next, it’s also clear to me that we need to embrace change, and that means holding ourselves more accountable and being more aware of how the world functions.
What the hell happened in 2019?
While hoping that our peers (aka “comparables”) do indeed “crush it.” The reality is the year has more or less gone as I forecasted last year in our State of the Union:
- GroupNine still isn’t profitable and had to raise funding from existing investors to become profitable,
- Vice merged with Refinery29 in a deal where they will try to cut costs on their way to profitability,
- Vox Media merged with print-centric NYMag to try to find revenue synergy while – again – cutting duplicitous costs,
- Rooster Teeth – a decent quasi-comparable for us, laid off 50+ people out of a team of 400 after its parent Fullscreen was folded into OtterMedia, which was folded into AT&T, which folded all its digital assets into WarnerMedia’s digital assets, which it bought in a whopper $75 billion deal, as it totally changes its business to compete against Netflix, who competes against Disney (more on this below).
- From the “don’t you forget about me” department, formerly print/newspaper-centric businesses Gannett-GateHouse merged to cut their way to a sustainable business, letting go 10% of its headcount.
- The dramedy known as G/O Media (formerly Gizmodo Media Group, formerly Gawker) shut down money-losing political site Splinter, and basically soiled itself this week with the total meltdown at “sports” brand Deadspin, which made money but not may not even exist in the new year. On a related note, the following is a good read on why our model makes sense and the few who do complain really need to just be more realistic, because we have full-time salaried employees when there’s now a whole term for the general trend in content/media/storytelling online: “The Mavening”.
- HuffPo laid off more people (11) from their video department, despite the fact that “video is the future”, after parent Verizon let go 750 people earlier in the year.
- Even those who aren’t in video and have websites (which some of you clammer about) haven’t figured out a model that makes sense, i.e. Culture Trip.
- And this is all not solely based on media/content, even one-time darlings like WeWork and Uber have failed to create sustainable business models, with WeWork being a borderline fraud. WeWork will lay off 2000 people – but they had wonderful foosball tables, I am sure.
- Bustle adds properties to grow but that comes with its unique challenges.
Meanwhile, we will continue to have invested in many new areas, and will – G-d willing / knock on wood / insh’allah / puh-lease – finish the year with higher revenues while operating in the black (i.e. profitable) for the 7th year in a row!
Do I wish that some things were different? Yes, I am a sentient human being. But, I will take it. If at the beginning of the decade or the year I was presented this “option” and said “deal or no deal,” I would take it every day of the week and twice on Sundays (especially if added that we remain independent with no outside investors – which actually comes at a cost and has trade-offs).
This is the greatest time to be a story-teller. But, the near-term remains choppy. I take everything everyone says with a grain of salt, but one CEO of a large competitor of ours said “I think the market is on the upswing,” while another cautioned: “2020 will be another rough year ahead for anything mid-market.” In some ways, they’re both right. They’re both very smart and accomplished individuals.
Those who valiantly read my 2018 State of The Union report may recall me saying that some of our larger unprofitable peers like Vice were wishfully thinking that they could achieve profitability through attrition may be wondering, did that happen? I wrote:
You saw Vice’s decision to reduce 15% of headcount via attrition. We started this ourselves earlier this year. When people leave, we don’t rush to replace them. Our needs change. We evaluate their roles, tasks, and make a call on what the best move is. We peaked at about 75 FTEs/consultants, we’re now at 65 FTE (mainly by not renewing consultants).
Well, that was indeed not possible since 15% attrition of a total 2000 employees means 300 people voluntarily quit in this climate. Yeah, unlikely. Thus, as I hinted (“decision to reduce” and “attrition” don’t go together; since companies decide to terminate but employees decide to quit – but I digress), Vice realized that wouldn’t cut it and let go people as early as February 2019. A lot of people. I assure you they are now currently planning more cuts as they look at integrating Refinery29.
To be clear, I am not planning any cuts, we will likely continue to look for smart and sensible ways to grow, but those will come at the expense most likely of some of the WM2020 initiatives. That’s reality.
And, sure, since one person asked me to address attrition, I shall: while on a personal note I don’t like to see anyone leave, overall, if I remove the emotion out of the equation and cross-reference the ambitious initiatives we undertook as part of our WM2020 plans and actually look at the results, then the one word I kindly beg you to afford me to use is… I was relieved that people whose time had come to leave decided to leave. That is life. It’s healthy. It was one of the most significant lessons of my life: the same way I learned not all of my RBC Visa clients will be happy, not all of our dear WatchMojo viewers will agree with our lists (“Dislike! Unsub! Die!”), and no, not all of you will agree with me.
Some will leave. The reality is we historically tried to create promotional pathways for all but as we become wiser, we also realize that’s not realistic and will all be covered in year-end reviews which will also mark a culture shift (and shock to some).
We are now 50 people and that is a manageable, healthy size operation. At 75 people (hundred-plus including freelancers), we were too small for me to blend into the night and too large for me to know everyone personally and help you. I feel much better about where we are, hence, again, “relief.”
I will add that there’s more nuance and texture since no sane person would put all of the departed into one profile/bucket. The only thing they have in common is that I wish them well, but the stat remains the same: I have never had to let anybody go due to financial reasons. No one can say that in our industry.
So where do we go now & what does it mean to me?
When we launched, in 2006, I would refer to that magical content pyramid and explain how and why a lack of economic incentives discouraged traditional media rights holders from embracing the web. Well, times have changed.
The biggest fundamental change today isn’t only that celebs are embracing YouTube but that entire media companies are blowing up their business to reposition themselves online.
The best entrepreneurs see opportunities and strengths where others see threats and weaknesses. This new world order we find ourselves presents enormous challenges & opportunities, even arguably bigger than the ones I saw in 2006. Then, we were a small team and I was hands-on because we had no choice. As we grew, I empowered and delegated. Laying out a broad vision, we punted on acquisition offer after acquisition offer because I wanted to empower you all to grow, but today, while I am extremely hard on myself for each failure but attribute each success to you, I find that when I raise concerns about under-performing initiatives, I am blamed for both the strategic decision to begin with and the lacklustre results when the people who were entrusted with the initiative didn’t for whatever internal or external reason deliver. One reason I was relieved with the attrition was because I could devote more energy and attention to our initiatives and our people. (This is why I am elated to going back and interviewing new candidates).
If you go back to that word from the terminated [redacted] employee used: consistency. That’s one.
Indeed, despite having spun out
- [some] celebrity content from WatchMojo to MsMojo
- UK franchises to WatchMojo UK (then launching 25 intl editions including the standout WM Español and now, MsMojo Espanol)
- gaming content to MojoPlays
- removed more risque content to adhere to brand-safe standards on YouTube
- de-emphasized music-based editorial due to record labels’ abusive ContentID practices as other rights holders like movie studios, TV networks and gaming publishers show us more and more love,
- while launching new verticals to “go wide” in travel and entrepreneurship which expand opportunities in documentaries and events
all of which would adversely weigh on its growth rate, the flagship English-language channel WatchMojo had another very good year: we are at 21 million subscribers and 65 million global uniques spend close to a billion minutes each month on the channel. It still accounts for 1/2 of our total reach on YouTube (37M subs, 115M uniques, 2B minutes of watch time).
If you go back to that analogy “if YouTube is replacing TV, then our position on the platform as a well-established early-moving brand puts us where MTV and ESPN were on cable in 1985,” the value of cable grew and MTV/ESPN’s value grew in tandem, even though market share wise, more people watched other cable outlets.
That same thing is happening now: in some ways our slice of the YouTube pie is smaller since there’s more clutter and competition than ever… but that YouTube pie is larger while new pies are being formed (i.e. Snap). We had a number of rising stars in addition to YouTube, of course: Snap being one of them. Overall, the purpose of all of this is that we want to put the company and its people on a path to succeed… but that means holding people accountable instead of my historical viewpoint (give credit to others, but #LiveandLearn where others stumble or fail).
Anyone else in my shoes as CEO or owner would make that change and to avoid a culture shock, I am making these changes with the management team proactively.
As we close 2019 and the decade (!), in light of
a) the possible economic recession which will adversely affect advertising
b) the above-mentioned, forthcoming period of further layoffs and consolidation in the industry
c) the ongoing, well-documented challenges of the YouTube platform
d) not all of our initiatives being where I wanted them to be,
Then we will be making changes between now and the end of the year to come out stronger in the new year to be able to continue to invest as the world changes.
There are no sacred cows.
We have devised, implemented and fine-tuned a system and model that works. But different times call for different strategies/tactics… we continue to invest and expand, but where we do so will change. What will also change is the people we call on to help management make those changes. Results matter. It was clear to me that a few have developed an ease to criticize without knowing all of the facts but then deflect instead of taking accountability. I will change that.
For all intents and purposes, it’s business as usual because as mentioned, the business had a fine year. But if/when we meet with you to go over some of these changes, this is all background context for you to have the right perspective to avoid coming across as lacking awareness.
I hope to continue to run WatchMojo for decades to come, as overall, we are in the “end of the beginning” phase of digital video. This is why historically we have favored remaining independent, but remaining independent is a privilege you have to fight and make sacrifices for.