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Thursday, April 18, 2024

My Latest Blunder

Introducing “Business Blunders,” a captivating newsletter by renowned business writer, editor and friend, Al Lewis. With decades of experience exploring corporate missteps, Al brings his unique perspective and engaging storytelling to this must-read publication.

My Latest Blunder

Lessons from an epic failure at The Messenger

“It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.” – Warren Buffett

I lost my job last month at an overly ambitious digital media startup that billed itself as “The Messenger.”

Remember that line from Sean Parker, co-founder of Napster and the first president of what was originally called ‘The Facebook?’ He famously said, “Drop the ‘The’. … Just Facebook.”

Well, at The Messenger, West Palm Beach media mogul Jimmy Finkelstein, has been getting similar advice: “Drop the ‘… enger.’ Just call it ‘The Mess.’”

The Mess has gone down as one of the biggest blunders in digital media history (no paywall). My thoughts on The Mess in a bit. But first, a bit about my latest project.

Business Blunders

Welcome to the inaugural issue of Business Blunders. You’re on the list because we’ve interacted in the past over pieces I’ve written in major publications, including The Denver Post, the Houston Chronicle, CNBC and The Wall Street Journal. Or maybe you’re a former colleague, a news source or a valued friend. So glad you’re here. Please stay.

Business runs the world and this is a newsletter about making the business world a better place.

Business is great, until somebody blows it

Everyone makes mistakes in business, but blunders require exceptional stupidity, utter recklessness, willful ignorance, unchecked egos, or a complete disregard for the rules.

A mistake in chess – a game that is often evoked as a metaphor in business – can be defined as merely missing the best move. But a blunder is a serious error, resulting in lost pieces, a decisive advantage for the opponent, or … you know … checkmate.

I am building an online community of investors, entrepreneurs, business owners, executives, employees and everyday consumers who are interested in learning from the mistakes of others. I also want to do my small part in making the world a better place to do business.

You could help by staying engaged and by sharing this newsletter. And you could really help by upgrading to a paid subscription. For $5 a month, you will ultimately empower me to expand this effort and get full access to the newsletter and publication archives. You’ll also be able to comment, chat with me, and help expose the latest blunders as they take their toll.

And now a bit about my latest blunder.

The Mess

Most journalists my age have suffered a blunder or two. I once worked at a newspaper where the editor dismissed the Internet as the “CB Radio of the 1990s.” I worked at other media outlets with publishers who thought giving away the product for free, and relying on search engines and social media for distribution, was a keen business model.

The Mess took those failed strategies into the modern age. My mistake was believing in founder Jimmy Finkelstein, who inherited a media empire from his father and sold The Hill for $130 million in 2022. 

He has deep pockets and I figured he’d raise funding for a year or two. Heck, even a guy starting a hot dog stand gives the business at least a year to succeed. 

Like most observers, I never understood the business model, but I counted on Jimmy to eventually pivot to a winning strategy once we built up the traffic.

If I had to put a succinct headline on The Mess it would be “Florida Man Starts Website,” in a nod to Jimmy’s West Palm Beach lifestyle and the notorious idiots who consistently drive wacky headlines in the Sunshine State. It was a mishmash of solid, original and unbiased reporting buried too deeply in curates and clickbait, yet still with plenty of journalistic promise to show for itself.

The Mess by the Numbers

  • $100 million – The revenue Jimmy projected for 2024. Some publications reported he claimed The Mess would bag this amount in 2023, or in its first year, but he said 2024 – which isn’t going to happen now.

  • $3.8 million – The revenue The Messenger reportedly brought in in 2023.

  • $50 million – The startup capital Jimmy is reported to have blown through in eight months. This may not be accurate. A regulatory filing shows he only ended up raising $36.8 million.

  • Four years – The financial runway some editors say Jimmy claimed The Mess would have when he hired them.

  • 500 – The number of journalists Jimmy said he would hire. He stopped hiring around 270.

  • 89 million – Page views in December, or so we’re told.

  • 11.3 million –  Unique visitors in December, reportedly.

Jimmy’s first mistake was starting off undercapitalized, relative to his goals.

His second mistake was spending wildly on high salaries (thank you, Jimmy), office space and unnecessary expenses before generating sufficient revenue.

His third mistake was making projections no one would believe – making it difficult to raise a second round of funding.

From there, it was one act of boardroom buffoonery after the next, which has all been richly chronicled by finer journalists than I (see links below).

In the end, Jimmy’s bluster lost its luster and his Mess lasted all of eight months.

So how did I fare?

I’m just fine, especially compared to many of my colleagues who left lucrative jobs at stable media outlets, or who signed pricey leases in New York City to commute to a largely empty corporate office, or who feel like The Mess is an ugly stain on their resumes.

I remain somewhat proud of The Mess, and it was fun while it lasted.

My editors allowed me to work from home, and all I gave up was a few freelance gigs to sign on. I unfortunately never met most of the diligent people I worked with, beyond Slack and video calls, and I thankfully never had to deal with Jimmy, who swiftly became legendary for his editorial meddling.

I count myself lucky. Some of my colleagues had to apply for SNAP benefits and other social services. A fast-acting employee group even launched a GoFundMe campaign, which Jimmy said was “wonderful,” once he heard about it, further cementing his image as an empathy-free bossman.

Jimmy left his employees swinging in the wind. On Jan. 31, everyone had health care benefits. On Feb. 1, no one had them. The company shuttered its health care plan and offered only a month of pricey COBRA benefits, which usually run 18 months. I didn’t even know this was legal – another lesson learned.

Oh, and severance pay? Zero. The Messenger has so far even refused to pay severance to people who had severance assurances in their contracts. For many others, accumulated paid time off is also going unpaid, so far.

Employees learned about their losses, not from Jimmy, or CoAdvantage – the bureau-corp that ran human resources at Jimmy’s JAF Communications – but from the New York Times. The Mess immediately went dark, turning everyone’s hard work into digital dust bunnies, making it harder to apply for new jobs.

The biggest issue for me was that I had zero health insurance for the month of March. No snowmobiling. No skiing. And no crossing busy intersections. (Thanks, universe for not smacking me down with a heart attack in March.) I also had to cancel a scheduled surgery and several medical appointments, forgo some medications, and then shell out thousands for new plans with high deductibles.

 Oh, well. At least now I have time to write Substack newsletters on epic blunders.

It might have worked a decade ago

“The failure was one of vision, not execution by a talented team of roughly 300 writers and editors,” writes Slate. “The Messenger’s founders built a website for a world that no longer exists.”

The company relied too heavily on programmatic advertising, which draws in fractions of pennies per click, and failed to woo big advertisers on its own. It never launched paid subscriptions, a promised TV network, or a slate of lucrative networking events.

It’s not these rookie mistakes and a spectacular implosion that makes The Messenger a blunder. What makes it a blunder is way it went down, jilting investors, vendors and employees, ensuing lawsuits and generating ill-will for years to come.

Employees have filed a class-action lawsuit, alleging violations of Workers Adjustment and Retraining Act, demanding unpaid PTO, benefits and severance, etc. We’ll see where that goes. Meantime, everyone keeps up with each other on Slack, and boy, you should see what they text about Jimmy. (I’m actually being nice here, by contrast. I’m still thankful for what little employment Jimmy gave me.)

But Jimmy’s biggest blunder was declaring that The Messenger would be his legacy before it even got started. “I really feel that if I have a legacy, it is to create a media site that is not only enjoyable to go to, but is completely fair,” he said in April 2023.

Jimmy’s Legacy

You would think a media mogul would live by the classic ethical proscription: Don’t do anything you wouldn’t want to read in the newspaper. Not Jimmy. 

Headlines are Jimmy’s legacy, and here I’ve taken pains to preserve it.

March 10, 2023: New York Times: The Messenger, a Media Start-Up, Aims to Build a Newsroom Fast

May 2, 2023. Axios: The Messenger to launch May 15 with 150 journalists

May 20, 2023. New York Times: Tensions Flair Inside The Messenger, a Fledgling News Site

May 25, 2023. Vanity Fair: Jimmy Finkelstein, Low-Key Media Tycoon, Looks Beyond The Messenger’s Rocky Start

Dec. 17, 2023. Semafor: A fight over Trump and “balance” at The Messenger

Jan. 3, 2023. New York Post: The Messenger shoots down report of news site’s demise: ‘Beyond absurd’

Jan. 4, 2024. New York Times: The Messenger, Which Aimed to Transform Media, Faces Dire Financial Straits

Jan. 4, 2024: Axios: Scoop: Conservative buyers eye The Messenger at a $60 million valuation

Jan. 5 2024: The Wrap: Talks for The Messenger Heat Up as Conservative Group Makes Offer: ‘Breitbart 2.1 Is Not the Move’

Jan. 10, 2024. CNBC. The Messenger is counting on a sudden and dramatic advertising turnaround to survive

Jan. 14, 2024. Washington Post. Inside the Messenger’s money-torching bet to make media great again

Jan. 30, 2024. New York Post: The Messenger fighting to avoid shutdown as CEO scrambles to secure funding: sources

Jan. 31, 2024. New York Times: The Messenger to Close After Less Than a Year

Jan. 31, 2024. Washington Post: The Messenger closes down after blowing millions on ill-fated news site

Jan. 31, 2024. The Wall Street Journal: The Messenger Is Closing Less Than a Year After Its Launch

Jan. 31, 2024. Daily Beast:  The Messenger Didn’t Bother to Tell Staff Before Shutting Down

Jan. 31, 2024. Politico: The Messenger shuts down amid industry-wide layoffs

Jan. 31, 2024. The Wrap: Who Killed The Messenger? Jimmy Finkelstein Doubled Down on a Failed Media Business Model | Analysis

Jan. 31, 2024. New York Intelligencer: Quixotic News Startup The Messenger is Shutting Down 

Jan. 31, 2024. Puck. Jimmy’s Quibi

Feb. 1, 2024. New York Post. Inside the meltdown at the Messenger: Out-of-touch brass, outraged staffers and pure pandemonium

Feb. 1, 2024. New York Intelligencer: How The Messenger Bled Out $50 Million

Feb. 1, 2024. Neiman Lab. “Economic headwinds”? No, The Messenger’s flop is the result of one man’s blindness to his own bad ideas

Feb. 2, 2024. Observer: How Jimmy Finkelstein’s The Messenger Burned $50M In Less Than a Year

Feb. 1, 2024. Fortune. Journalism’s apocalyptic January ends with sudden shutdown of The Messenger, throwing 300 more out of work

Feb. 1. 2024. Slate.  A Buzzy Media Startup Suddenly Imploded. It Might Not Mean What You Think.

Feb. 1, 2024. Politico.  Former Messenger employees sue shuttered news site

Feb. 1, 2024: Hollywood Reporter. The Messenger Sued by Ex-Workers Over Mass Layoffs Without Notice

Feb. 1 2024: The Wrap: Ex-Messenger Staffers Sue Shuttered News Site Over Mass Layoffs

Feb. 2, 2024. Tech Dirt: The Messenger’ Implosion Once Again Shows The Real Problem With U.S. Journalism Is Shitty Management By Visionless, Fail-Upward Brunchlords

Feb. 3, 2024. Daily Beast. Deliberately Cruel’: Staffers Torch ‘Sociopath’ Jimmy Finkelstein Over Messenger Implosion

Feb. 3, 2024. Politico. The Messenger’s Brutal Demise Didn’t Have To Be This Cruel

Feb. 6, 2024. Hollywood Reporter. How to Burn Cash and Alienate People: Behind The Messenger’s Implosion

Feb. 9, 2024. Washington Post: Opinion: The Messenger and Bad Media Owners

Feb. 10, 2024 Airmail. Killing the Messenger

Feb. 13, 2024. Vanity Fair: How Jimmy Finkelstein Wooed Me to The Messenger — And Left Me High and Dry

Feb. 13, 2024. Axios: Exclusive interview: Finkelstein tells how Messenger spent its way to oblivion

Feb. 13, 2024. Daily Beast. Jimmy Finkelstein’s ‘Brooding’ in Florida After The Messenger’s Collapse

Feb. 13, 2024. Axios: Exclusive: Messenger CEO Finkelstein says he’s weighing severance options, may restore site

Feb. 14, 2024. Poynter: Opinion | Jimmy Finkelstein defends The Messenger’s business model, claims the company was on track to break even

Feb. 14, 2024. Awful Announcing: Jimmy Finkelstein reveals absurd The Messenger details, from LAT sale to profit plans to spending $20 million over six months with no website

Feb. 15, 2024. Daily Beast: Messenger CEO Jimmy Finkelstein Lauds Jilted Staff’s ‘Wonderful’ GoFundMe Plea

Feb. 29, 2024. Daily Beast. Messenger Execs Sue Failed Startup for Reneging on Big Payouts Promised to Them

March 11, 2024 Daily Beast. – Top Messenger Editors Say Jimmy Finkelstein Protected Pals From Coverage: Lawsuit

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