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Medium CEO Tony Stubblebine announced<\/a> on Friday that the publishing platform has remained profitable since August of last year, when it first achieved this milestone<\/a>. In the post<\/a>, Stubblebine detailed what it took to achieve this goal, which involved a combination of product changes, an investor restructuring, renegotiated loans, unloading office space, layoffs, and other difficult cost-cutting measures.<\/p>\n His post offers a deep dive into what it takes for a startup to achieve a turnaround and the tough choices that have to be made.<\/p>\n According to Stubblebine, the company was losing $2.6 million per month when he joined in 2022. It was also losing subscribers, was out of investor funding, and lacked an acquirer.<\/p>\n He said that left the company with only one choice: \u201cmake Medium profitable or shut down.\u201d<\/p>\n The platform\u2019s difficulties, in part, stemmed from its business model, which offered a single bundled subscription any writer could share in. The company had also experimented with bringing on high-quality professional editorial content, which Stubblebine said began to draw attention away from the amateur writers on the platform \u2014 those sharing their professional or academic work or writing about lessons that \u201ccome from living interesting lives and writing about it.\u201d<\/p>\n When he joined as CEO, Medium\u2019s membership had topped 760,000 but was losing money every month. Stubblebine had to dig the company out of that hole, he said. On the product front, Medium introduced a way to add human expertise to recommendations with Boost<\/a>, changed its Partner Program incentives<\/a> to reward thoughtful writing, and added a Featuring<\/a> tool that allowed publications to curate and promote other stories of interest.<\/p>\n In terms of the finances, Medium owed $37 million in loans, and its investors held an additional $225 million of liquidation preferences (meaning the investors would get their money back before employees saw returns). Its governance was also overly complex and required getting investor approval from across five separate tranches before making major company decisions.<\/p>\n To correct these problems and right the ship, Medium renegotiated its loans, eliminated its liquidation preferences, and simplified its governance to just one tranche of investors. It also sold off two of its acquisitions and closed down a third. <\/p>\n Critically, Medium worked to clean up its cap table by renegotiating with investors, which Stubblebine didn\u2019t immediately want to do, he admitted. But after a year since the idea was first raised, the CEO realized that\u2019s what it would take to save the company. <\/p>\n \u201cThe investor restructuring required a bit of a sweet spot. The business had to look good enough to save, but not so good that there were other options,\u201d he noted.<\/p>\n \u201cThe case I made to the loan holders was to convert their loans into equity or management would walk, and then to create enough ownership for them by going to the rest of the investors with terms for a recap,\u201d Stubblebine explained. Six out of some 113 investors participated in the recap, where the investor stakes were diluted and special rights like liquidation preference and governance roles were given up. (He also shouted out to VCs who were easy to work with as partners, including Ross Fubini at XYZ<\/a>, Mark Suster at Upfront<\/a>, Greylock<\/a>, Spark<\/a>, and a16z<\/a>.)<\/p>\n Medium had to cut costs, too, both through layoffs \u2014 going from 250 people to just 77 \u2014 and through engineering optimization, which cut its cloud costs from $1.5 million to $900,000. It also eventually got out of an office lease that saw it paying $145,000 per month for a 120-desk office space in San Francisco. Employees were granted new equity since their existing equity after the \u201ccram-down round\u201d was likely to be worthless.<\/p>\n The platform, once valued at $600 million, didn\u2019t share its new valuation as a result of all these changes, but it\u2019s considerably lower, of course. <\/p>\n \u201c\u2026I have no ego about what our current valuation is,\u201d Stubblebine wrote. \u201cBut I\u2019m also not going to tell you because I don\u2019t want that used as a point of comparison with other startups. We are profitable and they are not. That\u2019s a comparison point that serves us better,\u201d he said. <\/p>\n<\/div>\n