Bay Citizen, a non-profit news startup, blows $5 mil in one year

http://sfppc.blogspot.com/2010/12/bay-citizen-to-spend-5-million-in-one.html

by freejoe76 • 16 years ago

20 16 16 years ago

sfppc.blogspot.com

adaugelli• 16 years ago

It's amazing how much money is like time.

If you have a ton of excess time, you are far less efficient and it simply takes you longer to complete relatively simple tasks.

Having tons of money before you can prove product-market fit just leads to misallocated spending and inefficient uses of money (because people force themselves to spend to justify the amount of money they've raised.)

This is the reason programs like YC & TechStars work - it doesn't take a ton of money to build an early product and prove your model works.

Once the model works - then you should spend like crazy to scale - but because you've spent the time with very little money - you understand the value of each dollar and the positive affect of each additional dollar.

Edit: For examples, check-out most of the startups that blew up in the late 90s. They raised a ton of money because they could, but it was spent on domain names, really expensive office space, executive talent, and building proprietary software for non-core functions.

My favorite example is the story of the Industry Standard - Check out "Starving to Death on 200 Million" by James Ledbetter if you want to learn more.

jessevondoom3• 16 years ago

This just kills me. I run a nonprofit building open tech for the music industry. While we're not without reach or connections, but it's still challenging as hell. No investors, a long road to true 501(c)3 status, and the reality is that finding millions from a wealthy benefactor doesn't happen for most.

I guess my point is that most startup nonprofits don't get the benefit of healthy salaries or even seed money. It's a labor of love — not unlike any entrepreneurial venture, but without the potential payout at the end of the road. I think new and innovative nonprofits have a real place in our economy, but hearing about $400k salaries for unproven CEOs at a first-year nonprofit doesn't win new people over to the side of innovative philanthropy.

If they blow it and don't make it past this first year (and it sounds like there's a good chance of that happening) then it could be a real black mark on new model nonprofits...

dasht2• 16 years ago

You have to understand that it is mostly one guy and one extended family that self-funded Bay Citizen. Those hefty salaries just signal that their approach is to give some of the core group they've hired some breathing room to experiment and incubate. It's just not a good comparison to a grass roots NPO.

jessevondoom3• 16 years ago

That might be true, but $400k is a whole lot more than breathing room.

But regardless...my point is that this doesn't help instill public trust at all — especially in a massively down economy. My worry is of the double-edged sword: if they fail with a big cash influx it's easy to point to them and say that new thinking in/around nonprofits interfacing in mainstream industry is a failure.

They were given enough capital to last beyond one year...I just hope the gamble pays off so we don't see experimentation in the space end with them.

dasht2• 16 years ago

Journalism and politics are sort of aspects of the same thing. Neither is too far from money. People should understand Bay Citizen in that mode of thinking.

[aside: I have a really clever start-up idea for a journalistic venture in Berkeley, CA and would like to find some partners. (lord -at- emf.net) Here's some back story to the linked story, though.]

In the Bay Area, the journalism industry has crashed pretty hard. Papers have failed, others shrunk considerably. A lot of government operates under far less scrutiny than T any time in living memory.

Historically, news moguls have had enormous political power. The movie Citizen Kane gives a cartoonish sense of the Hearst news / political machine. (The S.F. Chronicle is currently a Hearst paper. The real world Hearst castle that corresponds to the one in the movie is in these parts. Etc.)

The Hellman's (Bay Citizen's main benefactors and instigators) qualify, in this region, as "old money". The first Hellman to rise prominence here was a major player. If you read the society pages (what's left of them) you'll sometimes see the Hellman's and branches of that family like the Dinkelspiel's come up. They are Big Shots in these parts.

Thus, Bay Citizen could be characterized as "old money" swooping into to fill a journalistic void, in part motivated by a recognition of the political power represented in that void. I want to be clear that I'm absolutely not saying that Hellman is an egotistical power-grabbing Kane type or anything so cartoonish or anything so ethically simple minded. I'm just saying that it's not so surprising that when the regional journalism industry collapsed... one of our prominent and well established families would step up and try to get something going in that area. If it wasn't Hellman money, why, then, there's a short list of other family names that would have been next in line.

I won't comment on the editorial politics of Bay Citizen or some of their partner sites because I'll both get myself in trouble and bore most HN readers with too much insider Bay Area politics but I will skip to a prediction:

Bay Citizen isn't about to go under. The highly paid execs, I bet, mostly won't be tossed (if any will at all). Or if it gets rebooted and lots of people tossed ... it'll still be booted up and resume. Some funding will be renewed and the experiment will continue a few more years. The political power stakes are too high to just walk away. The money amounts are very low relative to those stakes. The tentative successes of Bay Citizen (e.g., a modest amount of syndication, etc.) look promising on paper. Nobody seriously expected a self-sustaining operation at the end of one year (especially given the peanuts they said they pay stringers).

Right now, Bay Citizen --- journalistically disappointing as it has been, in some of our views --- is nevertheless one of the loudest journalistic voices in a news-starved region. $5M was a bargain, so far. The project is an easy to make fun of tentative success, as far as I can tell, in the eyes of its main sponsors.

anmol• 16 years ago

ceo is a ex-mckinsey partner who draws a $400k salary. what do you expect the internal culture is like?

jeffreymcmanus• 16 years ago

It's important to distinguish journalism from the business of journalism. Journalism is doing well thanks to the internet. The business of journalism is doing poorly, also thanks to the internet.

kvs• 16 years ago

1999

philipn• 16 years ago

(I run a 501(c)3 non-profit startup)

The Bay Citizen is taking in nearly all of its revenue from one source. As a 501(c)3 organization, you can't do that for very long or you'll end up being classified as a Private Foundation (and lose the ability to take in tax-deductible donations). In order to survive for more than just a few years, Bay Citizen will need to diversify their revenue stream. So a shift toward membership-based fundraising doesn't mean they are hard-up on cash or think their burn rate is too high -- this is just something they have to start doing.

There's a bunch of information here if you're supremely curious: http://www.sharinglaw.net/npo/PublicSupportTest.htm

Bay Citizen, a non-profit news startup, blows $5 mil in one year

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