The Crunch

TechCrunch+ Termination
Layoffs hit TechCrunch...

With the unfortunate news of layoffs at TechCrunch last week, this post attempts to look at the why – and in particular, what went wrong with "TechCrunch+", the site's premium tier. With the large caveat that I was at TechCrunch a decade before Crichton, it all rings fairly true.

If you had asked me to extrapolate out where the site would be nearly 15 years after we sold to Aol (which itself went on to be acquired by Verizon, and then merged with Yahoo – Oath! – and finally sold to private equity, whew...) I honestly probably would have predicted roughly this trajectory. On one hand, it's impressive that TechCrunch is still alive (again, especially given all the parental changes), on the other, this is basically what tends to happen as publications age and try to maintain growth while "remaining true to what they are".

I was at TechCrunch through what many would consider to be the "heyday" – the 2008/2009 timeframe – but that was largely because the tech ecosystem was so much smaller then, and the tech publication ecosystem was much, much, much smaller. At one point, we still tried to cover every startup. Then every YC startup. Then it was just impossible to keep up. At the same time, many of those startups grew up – notably, Meta (née Facebook), which was right around the corner from our office in Palo Alto at one point.

And so coverage expanded to encapsulate more or less all of tech. I, of course, took on the Apple beat (which I had been doing previously at VentureBeat as well). And undoubtedly because tech itself began to permeate everything, and more people knew about the large companies versus the small startups, as Crichton notes, that coverage started to dominate site traffic. At the same time, there was a very concerted effort that startup coverage needed to remain the lifeblood of the site, as it were. TC founder Michael Arrington got this exactly right, even as the site scaled. Because again, the founder/entrepreneur ecosystem is what bestowed authority upon TechCrunch.

Writing up an article on the latest ravings of Elon Musk might take about 15 minutes (there usually wasn’t that much to say other than his statement, after all), but that one article could drive 100,000 page views or more. That was the secret treasure that funded the real in-depth reporting: cheap coverage of a big tech company coupled with the lucre of comparatively extraordinary ad revenue.

For the business side, TechCrunch’s focus on startups required second-order thinking. Startup-related articles got a fraction of the readership of an article on Apple, since no one is searching on Google for the name of a startup they have never heard of before. So why bother? Indeed, many of TechCrunch’s now-dead competitors didn’t bother. The key insight though is that these articles attract the startup CEOs and founders, and it is precisely this demographic that is so valuable for advertisers. Startup coverage was a form of service journalism, and one that happened to create a perpetual revenue machine.

And again, while most startups failed as is their nature, some would go on to become YouTube, Twitter (née Twttr née Odeo), Square (née Squirrel), Instagram (née Burbn), Uber (née UberCab!), etc. Having that historical context was incredibly important to the site's credibility.

Subsequent editors would say (and even believe!) the right things about keeping true to that mentality. But it's obviously much easier said than done. Both with growth and again, the game of hot potato the acquiring companies were playing. Even many of those large companies say the right things at times, but the incentives are never going to remain aligned. They're just not.

And when an org becomes large enough, as TechCrunch did, there are even factions within the entity that necessarily have to battle, for resources and mindshare, if nothing else. As so a TechCrunch that's covering startups, and large companies, and doing events all around the world, and doing ad sales, and doing a paid tier, and doing newsletters, and doing video... It's just, a lot. A lot of pieces tacked on to a scaffolding that's two decades old, built for a different world, in a different time.

The unique economics for TechCrunch around advertising and events funded the organization well, but they have an obvious flaw: they don’t really scale. There isn’t an infinite universe of big tech companies or venture-backed bubble companies willing to spend lavish sums on ad space. As for events, they rarely get better with ever more attendees, and it’s hard to replicate the scarce thrill of a flagship event multiple times per year. If TechCrunch’s business leverage was graphed as a parabola, it was holding steading at the optimal maximum for years — not growing, not shrinking, but as sustainable as a digital media company can be this century.

You either die a hero or live long enough to become CNET.1

Also, every media entity in the world now covers and in many cases is dominated by technology coverage. And those technology companies are now the largest companies in the world. I recall doing by-the-minute coverage of Apple passing Exxon to become the most valuable company. In 2011, both had around $400 billion market caps. Today, Exxon still has a market cap of $400 billion. Apple has a market cap of $3 trillion. So does Microsoft. Alphabet (née Google) is at $1.8 trillion. So is Amazon. So is NVIDIA! Meta is at $1.2 trillion. Poor guys.

At the same time there are way too many startups that launch every week and month for any single site to possibly hope to cover. And technology publications are now either large and broad (i.e. The Verge, part of Vox Media) or they've broken into a thousand individual newsletters. A few players from the early TechCrunch days still exist, but almost all are owned and operated. A few, like TechCrunch, many times over. The rest are gone and dead.2

And yes, the individual economics trickled in...

What was missing, in the end, were the writers themselves, a sociological puzzle that took about two years for me to understand. Thanks to digital media economics the past two decades, business journalism had been wrecked by downsizing, limiting or outright ending the careers of thousands of reporters. A small proportion of them still thrived at major financial publications like Bloomberg or The Wall Street Journal or The Financial Times, but they were obviously unavailable to write for TechCrunch.

And worse, the younger, up-and-coming generation, those would would be best equipped to cover the industry, would often opt to work in it instead.

Even if you can find that talent, then the challenge becomes one of compensation. If someone understands the venture industry well enough, then they can almost certainly get a job at a VC firm and make a multiple of their media salary. Reporting on cloud infrastructure? They can triple their salary working at Amazon Web Services, without the daily doom of media layoffs looming over their overworked typing hands.

Crichton is now working at a VC firm. "TC-to-VC" became a thing. I left to become a VC a dozen years ago (to be fair, we did try to merge the worlds – an idea that now seems quaint – with CrunchFund, but that was quickly shot down by... yes, Aol).

1 Still alive, and still for sale!

2 Kudos to VentureBeat, where I worked before TechCrunch. Still alive -- I just linked to them yesterday!