It was a dark 48 hours for Daily Voice. Unable to convince investors to wait on profitability at the rapidly growing regional network of 52 news sites, CEO Zohar Yardeni resigned last Friday, along with his COO and marketing director. Faced with uneasy investors and a cash burn of $500,000 a month, the company’s founder Carll Tucker wondered: “Is this it?”
Tucker’s self-questioning came amid ominous drumbeats that were reverberating through a hyperlocal publishing industry fixated on sustainability. In the early weeks of the 2013, NBCU shuttered the 19-city EveryBlock network of neighborhood data points; Chicago hyperlocal pioneer Mike Fourcher announced he was looking for somebody to take over his two highly-regarded-but-financially-struggling sites; and AOL’s Patch dug in for another round of cost-cutting and repositioning.
But for Daily Voice, the dark weekend suddenly began brightening early Sunday afternoon. After 48 hours of number crunching, Tucker had produced a one-page document that he was convinced would be the company’s passport to a secure future. At 12:26 p.m., a now-confident Tucker went into a phone conference meeting with investors and showed them how, through substantial cost-cutting that brought the cash burn down to $150,000 monthly, Daily Voice would achieve profitability in six months to a year.
Based on what Tucker showed them, the company’s investors are now “absolutely” committed to taking Daily Voice to the point where it could attract “a major strategic partner” who would have the wherewithal to expand the network nationwide, he told me. “They saw a model that would work,” he added. “All the business indicators are now moving in the right direction.”
During the Sunday conference call, Tucker re-assumed the titles of CEO and president that he gave up in the fall of 2011 when Yardeni came on board from a top job at Thomson Reuters rebuilding the financial service giant’s Web platforms. This time, Tucker will take those jobs without any pay. (He received “modest” compensation the first time around.)
To cut costs immediately, Tucker closed Daily Voice’s 11 community sites in Central Massachusetts, reducing the size of the network to 41 sites — concentrating all of them in the affluent suburban counties of Westchester in New York and Fairfield in Connecticut. He also eliminated almost all the corporate staff and closed the high-rent New York City office in TriBeCa. [As noted on Gawker yesterday, these layoffs were not executed with much tact.]
Other cost savings will come from additional streamlining of news operation — what Tucker calls “Web 2.0.” Press releases and other such content that doesn’t require major reporting will be produced “more economically” by a “redeployed” editorial staff. Good stories in competing publications will be aggregated with full credit. “I’m perfectly willing to curate a story from the Stamford Advocate [a competing publication owned by Gannett],” Tucker said.
Daily Voice already outsources the preparation of obituaries – a top reader feature – to India. Weather stories are being provided by a syndicated service that doesn’t have to be paid overtime during snow storms or hurricanes. Earlier cost-cutting included reducing the top editorial management for the New York and Connecticut operations from 10 people to six and consolidating the two counties’ four newsrooms into two.
Tucker said the editorial model he created in 2009 was based on print newspapers: “It was too expensive, and it didn’t work for the Internet,” he said. “I want to build something that provides quality news to the community, but the only way you can do it is with a sustainable business model. There is no freedom of the press unless it’s profitable.”
Despite the ongoing cash burn, Tucker said Daily Voice was performing well in all user metrics.
“There has been an astonishing growth in traffic,” he said. “We serve a population of 1.5 million men, women and children, and, with our 432,000 unique visitors in New York and Connecticut per month, we serve one out of three of that population. We have just a hair under 2 million page views per month.”
“The difference between Daily Voice and many other noble experiments in local online news is that we’re actually on target without having to cut back what we’re doing for the community, or change our mission” he said.
Tucker and his wife, personal finance journalist Jane Bryant Quinn – a close adviser – praised remaining Daily Voice staff for how they reacted to the weekend corporate crisis. “Everybody is very up,” Quinn said. “The team is in,” Tucker said. All 40 Daily Voice staff members are part of a company profit-participation plan that will be strengthened to offset dilution from the “financial reset,” Tucker said.
Tucker, a longtime community journalist who sold his Trader Publications to Gannett in 1999, founded the network under the name Main Street Connect in December 2009. The first site was in Norwalk, Conn. It quickly grew to 10 sites, and then, in early 2011, with more financing from investors, grew by another 32 sites that spread the network to neighboring Westchester. The 11 now-closed Central Massachusetts sites that were added at the same time grew the chain to 52 communities. When Daily Voice was on its expansion tear in early 2011, Tucker talked about building out a national network of 4,000 sites by the end of 2014.
For earlier Street Fight coverage of how Tucker shaped Daily Voice and built it into a regional network, see Q & A and article by Tucker responding to critics. There is also this interview with then-CEO Zohar Yardeni forecasting that Daily Voice would be profitable before its competition.
Tom Grubisich authors The New News column for Street Fight. He is editorial director of LocalAmerica, which is partnering with InstantAtlas to develop sites that will present how communities rate in livability. Local America is featured on the Reynolds Journalism Institute’s Pivot Point site.