Co-Founder, Editor-in-Chief and CEO of The Daily Dot
Reprinted with permission from ATLAS, a quarterly publication on entrepreneurs from Acton School of Business
If you don’t live by your values even when doing so can hurt you, then you don’t really have values.
I don’t remember where I first read that, but when we were recently forced to restructure the Daily Dot, it was something I thought about a lot.
When we started the Daily Dot in 2011, we operated under the assumption, informed by plenty of industry research, that the best business model for a premium publisher was advertising sold directly to clients, and that in order to sell advertising, a media company first needed an audience. By the beginning of 2015, we thought the Daily Dot had reached sufficient critical mass and we staffed up big and fast. Our burn was huge, but we expected that to be temporary: we believed that revenue would ramp quickly.
We had the usual frustrations of tweaking the details of our pitch and sales staff turnover, which extended our timeline. By mid-2016 though, it had also become clear that the market had moved and direct sales were simply not the best strategy any more. In response, we had found two other strategies that could work, and identified several other models worth trying, but the shift could only happen with some tough decisions.
THE NEW MEDIA REALITIES
We came to the conclusion that we needed to dramatically restructure, laying off about half of the company in the process. It was painful because we’d built a great team that we believed in, but also necessary in order to organize ourselves around the strategies that were working and put ourselves on a cost structure that could be profitable in the near term.
I did not sleep through the night for months as the problems with our direct sales strategies were becoming clear, but as difficult as it was to have to lay so many people off, I also knew that it was the right move for the company. We carefully made our plans and we had every expectation that we were shifting our strategy with enough time to make the transition and come out the other side as a sustainable, profitable company.
Then, three days before the restructuring was to take place, I got a call from my CFO. She had only joined the company about a month before and she had to tell me that our cash position was much worse than either of us had understood it to be. It was so bad that she thought we only had just enough cash to wind down the company.
I felt like the rug had been pulled out from under me and it was bad. I felt slapped by fate. I felt like I was an utter fool.
I had poured six years of my life and all my money into this company. If it failed, I would have wasted the money of people who believed in me and have lost more myself than I could afford to lose.
And I was terrified.
Naturally, I could not allow myself to give up. I owed every last idea I had and every last bit of effort in me to my employees and the friends and family who had invested in the Daily Dot, and invested in me. I worked as hard as I could to figure out how to stretch cash, and by the time we announced our restructuring, we figured that we had about six weeks of funding left.
When you’re forced to make layoffs, the staff is naturally freaked out, and your instinct is to reassure everyone. And when you have just six weeks to find some new investment, you need the entire team in their seats, doing their jobs and producing the best possible results so that you have the ammunition to convince investors that you’re on the right track. You only have one chance at that moment and if everyone’s scared and looking for other jobs, then being honest with people feels like you’re going to harpoon your company. That would leave you and your investors blown up, and your most loyal employees will end up the most screwed.
I have rarely in my life so strongly felt the urge to lie, or at least prevaricate in the extreme.
But as a news organization, our first and most important value is what we call “the relentless pursuit of the truth.” And that includes being transparent and open, because not telling the whole truth, as Ben Franklin put it, is often a great lie.
So in our all-hands meeting, after explaining why we were making the strategic shift and why I thought it was the right thing to do for the company and why I thought it set us up for a successful future, I also told everyone exactly how much runway I thought we had.
This was of course not what anyone wanted to hear. Rather than being able to say that the worst was behind us, we had to admit that we were staring into the abyss. Most people responded by working very hard. Many people started looking for jobs. My best guess is that the majority did both. I don’t blame them, of course—they have families too.
This situation did not relent. We met two weeks later, and I had to tell the group that we now had a month of runway. We were all on edge, burning the candle at both ends. Every member of the company was waiting for me to tell them that it was going to be okay.
And I couldn’t.
CONTROL ALT DELETE
We had a great October, and that extended our runway. We doubled revenue over the previous month and increased it by 25% over the previous year. How often can a company cut itself in half and then immediately turn in its best revenue month ever? It was an extraordinary feat, and yet no one felt much like celebrating. We had six weeks again. We had gotten a brief reprieve, but we were all fully aware of how brief it was.
I wanted desperately to reassure people. We continued to lose great team members when we needed them most, and the people who were staying were living in constant worry and uncertainty.
They also wished I would just give them a straight answer. The reality is that fundraising is not a straightforward process and runway is a function of a lot of changing and interdependent factors. So I couldn’t tell people exactly how it was going to work, exactly how much time we really did have left, or make clear how much progress we’d actually made. Being open about what was really going on made it sound like I was being wishy-washy.
I certainly wasn’t perfect, but I did my best to tell them exactly what I saw. It wasn’t pretty, but I also saw a way through. It was narrow, and it was precarious, but there was a path and I tried to show that to everyone as well.
Finally, in the second week of November, we got a bridge loan that should enable us to reach profitability.
VALUES DURING VOLATILITY
I wish I could simply say that we held to our values and it all turned out hunky-dory. It didn’t. Because I was honest with people, we lost some valuable members of the team when we could least afford to lose them. Being honest put the company and all the jobs of the people who were most committed to it at risk.
You start a company because, in some variety of ways, you want your company to be different. You want it to be better than all those companies you worked for in the past or that you see in the world around you.
But being “better,” whatever that means to you, can’t be a luxury item. It can’t be something that you worry about only when you have all the profit in the world. If you don’t maintain your version of “better” when you know that it’s going to hurt you, when no one is going to tell you that you’re doing the right thing or how noble you are, then you don’t really believe in it. Then your “values” are really just so much marketing, and all you’ve succeeded in doing is creating another company like all those that you wanted to be better than.
There is a certain kind of recompense. When we laid off so many people, I was expecting to deal with a few nightmares. Yet every single person that we laid off was extraordinary in response. They were lovely and inspiring. Many told their managers how sorry they were that they had to do this, and waited to give me a hug before they left. Many posted on social media that it was the best job they’d ever had. And former employees rallied to help people find new jobs.
I’d like to think that none of that kind of thing would happen if we weren’t the kind of company that lives our values.
Sticking to those values may not have materially improved the ensuing weeks of uncertainty, but it provided the sense, even in that most difficult time, that as much as things had not worked out as we had wanted, we had spent the time we did have together well.
No one was sorry they’d come to work at the Daily Dot. What people always say is that they love working here because it is a great group of people. In the end, your values are about how you treat each other. And if you can’t say you go to work every day with people that you like and respect, then all the money in the world can’t justify the time you spend there.
Editor’s note: This article first appeared in Atlas, a magazine published by the Acton School of Business in Austin. White is the co-founder, Editor-in-Chief and CEO of The Daily Dot.