What Venture Capital Got Wrong About Media
Tech titans chased growth at all costs, forgetting about content until it was too late
For a zero-growth business, media sure gets a lot of love from an industry that is obsessed with growth at all costs. To this point, the results haven’t been great.
Venture capital is getting lumped in with private equity as a two-headed corporate boogeyman that is destroying the fourth estate. This is fundamentally unfair. Private equity firms, such as Alden Global Capital, follow a methodically bloodthirsty pattern: They pounce on wounded media companies, rip out vital organs while the animal is still alive, and then try to sell the carcass at a tidy profit. For more ethically dubious private equity firms, neutering publishers serves a dual purpose: They can turn a profit while simultaneously cutting down pesky gatekeepers who might expose that they’re in the business of, say, eviscerating Toys R Us.
Venture capital has no such incentive structure. While its growth-at-all-costs mentality may not align neatly with the reality of media, it needs to back winners to make money. But this hypergrowth mindset has proven dangerous; the profile of the media company that VC firms have chosen to fund is pretty homogenous and follows more in the likeness of Facebook than Financial Times…
