How Medium turned profitable and told OpenAI to pound sand
How Medium turned profitable and told OpenAI to pound sand
📈 Trending Up: Larger iPhones … Oracle … Google’s day in court … Google’s not day in court … Swiggy’s IPO … AI translation (Smartcat) …UK fintech (Form3) … the ‘spirit of hard work and endurance’ … India-US semiconductor ties …
📉 Trending Down: Chinese stocks (BG) … Dodging taxes … US-China military tensions … Telegram’s willingness to tell authorities to pound sand …
3️⃣ Three Things:
Climate: Climatetech is a hardware paradise, TechCrunch’s Tim De Chant reports. The market for climatetech is growing quickly, but may confound software-focused investors.
Space: The Polaris Program is using SpaceX tech to shoot some humans into orbit and try the first private-market space walk. Hell. Yes. (I volunteer as tribute for a future flight.)
Product-Market Fit: Email startup Beehiiv is now above $1M ARR, not counting around $500,000 worth of other monthly revenue. CO’s interview with CEO Tyler Denk here, including how the company intends to spend its recent fundraise.
How Medium got profitable
I recently interviewed Medium’s CEO, Tony Stubblebine, on the podcast. It took a little while for the episode to make its way out of the queue, but it’s out live if you want to give it a listen. There’s a lot in there about being an intentional CEO, handling financial and ‘north star goals,’ a conversation about AI payouts, writing, and more.
Today we’re going to focus our attention on Medium’s recent financial turnaround, and how Stubblebine and company managed it.
State of the Medium
Medium crossed the one million subscriber mark back in April. In June, Medium started to generate cash. And most recently, the company announced that it is now profitable.
Here’s Stubblebine on the profitability milestone itself, and how it was a little tricky to explain to the team (a big thanks to Riverside.fm for offering free transcription credits):
[Profiability] ended up being a funny milestone to get the company to celebrate, because in order to celebrate it, you have to understand accounting, right? Are we doing cash flow accounting? Are we doing accrual? […]
It's just two different views, two very valid ways to do accounting. We do both because we don't want to run out of money, which is a cashflow question. And yeah, we literally did have that month in May, [the] first time ever in the history of Medium where the bank account went up without investor money coming in. […] But the more standard milestone is the accrual accounting, that's a standard way of doing accounting. And so we are in August projecting — and this is not a controversial projection — we're on track to be in our first ever profitable month.
More than one million subscribers? Cash flow positivity and accrual accounting profitability? Big wins from a company that, let’s be honest, a few years back we’d mostly written off as merely the place where people posted the occasional personal essay when they needed a convenient, stable platform.
So, how did Medium turn things around?
How to turn around
Cost cutting did play a part. Stubblebine noted on Threads in May that part of how Medium managed to start generating cash was getting its cloud bill under control. “We pay writers more than a year ago,” the CEO wrote, and “we pay AWS and Snowflake less.”
But that’s only a fraction of the story. Indeed, Stubblebine was not brought in to simply slash costs, boost near-term revenues artificially, and try to flip the company. Here’s how he described the moment when he took over as CEO: