There’s a saying in startups… The only way a startup dies is if the founders run out of money or they give up. So long as neither of those happen, the business can continue.

It appears that is Quartz’s stance and it’s continuing to fight. In a statement on Sunday night, co-founder and CEO, Zach Seward, said:

Quartz is becoming an independent media company again. For the past two years, we have been owned by Uzabase, a publicly traded company based in Tokyo. That was helpful as we navigated a period of enormous change in digital media, but we are better off right now as a startup, freer to chart our own path. I have reached an agreement to acquire Quartz myself and take us private. I’m joined in this management buyout by Quartz’s editor in chief, Katherine Bell, and the rest of our staff, who will share equity in our new company.

While the message is grand, this doesn’t actually change much on the surface. Quartz is still burning through cash and, while it is growing, it’s not monumental growth.

The data is older, but Uzabase reported Q2 earnings in August and we can see that the growth is slow and steady:

For context, in Mar 2020, the MRR was $118,000. In other words, between March and June, it grew its MMR by only $28,000. Assume full price subscriptions and that means it added about 3,360 new subscribers (Math: $28,000 / ($100/12) = 3,360.)

If the growth between Q1 and Q2 was 26% and we keep that constant going forward, we should be looking at monthly revenue of approximately $184,000. Unfortunately, the growth isn’t good enough to counteract the major problem Quartz is dealing with.

Its costs are so much higher. According to the financial report, Quartz lost $11.2 million in 1H 2020. That number will obviously come down because the company let go approximately 60 people or 40% of the company in May. Assume costs drop by 40%, it means 2H losses will come in at $6.7 million.

In other words, Quartz had an ARR of $2.2 million at the end of June 2020, but its full year losses would be $13.4 million post-layoffs. That’s a big burden to overcome. This doesn’t take into consideration advertising, but it’s clear that Quartz is focusing most of its efforts on just subscriptions.

I admire the fight. I really do. However, Quartz needs to change course if it’s going to make this management buyout worth it. It’s especially going to need to change course if it wants to make this work as a subscription business.

Here are a few things I’d like to see Quartz do.

First, it needs to get crystal clear on what it’s trying to do and who, exactly, it is trying to serve. Back in May, when I last wrote about Quartz, I said:

I just don’t understand what Quartz is trying to do. It’s stuck in this weird middle ground where it’s trying to be everything for everyone, so it’s not focusing on any one audience. Let’s look at a few of its obsessions as examples.

One is called The Aging Effect, which is all about the new technology, services and care-giving concepts for an aging population. If that is my obsession, Quartz produced three pieces of content in April to serve me. Why would I pay for that? Instead, I can go to Aging Media and its network of sites. I’ll get way more bang for my buck.

Another example is called Space Business, which is pretty self explanatory. In April and May, Quartz has produced six pieces of content. SpaceNews.com produced a few pieces of content today alone. Again, why wouldn’t I go there?

Quartz is trying to manage a huge number of niches, but is offering no clear cut support for any of them. Effectively, it’s stuck in the middle, trying to compete with mainstream business publications; however, it’s not providing the same value that I can get there. Why pay Quartz $100 when $290 gets me all of Bloomberg News?

Since then, it does appear to have cleared things up a bit. The Aging Effect is now gone. Space Business still exists, but it’s only a newsletter now.

Now it has nine obsessions. Unfortunately, some of these are still seeing greater focus than others. For example, “Rethinking cities” has had two pieces of content in November. It had six in October. On the other hand, “Borders” already has 13 pieces of content in November.

However, quantity isn’t enough. For a subscription business, the content needs to be so much better than what can be found elsewhere. As The Information’s Jessica Lessin says, “it needs to be 10 times better.”

Ask yourself: would readers miss the reporting if it was gone? If the answer is no, then they’re not going to pay for it.

Second, and this expands on the previous few paragraphs, but Quartz needs to make a decision. Is it going to become far bigger—which will require a lot of resource—or is it going to go much leaner and more focused?

Being stuck in the middle, where you’re not big enough to compete with other general business publications, but also not small enough to keep costs down is a recipe for disaster.

My advice? Go smaller and become far more focused.

In the statement, Seward said, “even before this tumultuous year began, an important debate had emerged about the purpose of companies and their obligations to society…” He also said, “we believe companies should solve real problems without creating new ones.”

If that’s the focus, then it needs to cut everything that doesn’t fit within that. This will then allow it to refocus all of its editorial resource on that type of content.

Third, I would increase the focus on the advertising business. This might seem backwards since it has clearly hitched its wagon to the ad business. But there’s a good reason for it…

Every major corporation is going to be dedicating advertising budget to talk about the good things that they do. If the audience coming to Quartz cares about those stories, advertisers will follow.

Other media companies have generated good revenue from these sorts of advertisements—even during Covid—so Quartz should look for some of that money as well.

And finally, it should try to sell memberships to corporate libraries. For the same reason that companies are going to advertise to look good, they are investing to give employees more perks. Could a membership to Quarz be perk enough?

This would likely require an investment in business development managers, but the outcome would be twofold. First, the revenue would be stickier since these sorts of deals tend to last longer. And second, it would increase the number of people that are theoretically seeing the corporate responsibility advertisements.

Quartz is in a tough place. It spends far too much money. Its focus is scattershot. And going private won’t change that. It needs to make hard decisions and do it quickly. I’m rooting for the team.

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Changing course, Digiday wrote a piece recently about Inc’s strategy of letting subscribers text its columnists.

Starting this month, Inc. is testing a new reader engagement avenue to make their editorial talent even more accessible to readers.

Paid newsletters, exclusive conference calls and live or virtual events have been the hot tickets for bringing in the incremental subscription revenue that’s separate from traditional magazine and digital subscriptions.

But the business publisher is taking is a step further by opening up two-way communication between its top columnists and their readers and fans via their phones.

Using subscription text message platform Subtext, Inc. is charging its audience about $5 per month to get daily short-form texts from their favorite columnists, to which they are able to respond. The columnists then select certain subscribers to have a one-on-one text exchange.

The idea, in theory, is interesting. People will pay if they feel that they have access. That’s the basic premise for many of these membership products. But this doesn’t really scale.

At $5 per month, there need to be 5,000 paying subscribers for this to earn $300,000. However, at 5,000 paying subscribers, how many people are actually getting responses from the journalist? Assume the journalist responds to 2 new people per day, after 365 days, less than 20% of paying members will have received a reply.

There’s feeling like you have access and then there’s feeling like you’re sending messages into the void where no one is hearing it. It could actually result in a weaker brand affinity rather than strengthening it.

To fix that, I would increase the cost. One of two things will happen. The business could generate far more revenue from it and is then incentivized to have the columnists reply to far more messages. Or, fewer people sign up and, therefore, are more likely to get a text.

The other issue is that this might lead to confusion. I’ve never been a fan of companies that have different subscription products all in the same experience. For example, Inc. is a magazine. Do I get to text if I am a subscriber to the magazine? Not likely. Therefore, I need separate subscriptions to Inc. That’s confusing. Confusion leads to inaction by the potential customer.

I agree with this part:

Wilpers said he thinks this micro-subscription makes the most sense as an add-on to a larger subscription product because on its own, the revenue stream might not be worth the effort. But its engagement and retention value makes it an appealing way to up-sell people to the larger dollar subscription products.

Community features like this should be deployed as a way to keep higher paying subscribers engaged.

If I had to guess, this idea will be shelved in the next twelve months for the same reason most of these random ideas are forgotten. It takes a lot of work and the revenue will not be significant enough to justify it.

One of the hardest parts of working in the media business is having the focus to stick to what works. Trying random things can be fun, but it also pulls attention away from what works.

We should absolutely be trying to find ways to build community, but it needs to be done in a way that scales and can provide a return on investment.