Medium’s CEO explains what it took to stop losing $2.6M monthly

Tony Stubblebine, CEO of Medium, revealed on Friday that the publishing platform has achieved profitability since August of last year, marking a significant turnaround from its previous financial struggles. In his announcement, Stubblebine provided insights into the rigorous measures taken to reach this milestone, which included product adjustments, restructuring investor relationships, renegotiating debts, reducing office space, and making tough personnel cuts. When Stubblebine took charge in 2022, the company was facing dire circumstances, losing $2.6 million each month while grappling with a decline in subscribers and dwindling investor funds. The gravity of the situation left him with a stark ultimatum: either make Medium profitable or face closure. The challenges were compounded by Medium's business model, which offered a bundled subscription service for writers. Stubblebine noted that attempts to introduce high-quality editorial content had inadvertently shifted focus away from the amateur writers who form the platform's community. At the time, membership numbers had surpassed 760,000, but the financial losses were mounting. To steer the company back on course, Medium made several strategic product enhancements, including the introduction of a Boost feature that leverages human expertise for content recommendations and a revamped Partner Program that incentivizes quality writing. Additionally, a new Featuring tool was implemented to help publications highlight compelling stories. Financially, Medium was burdened with $37 million in loans and faced a cumbersome governance structure that required investor approval across five separate categories for major decisions. To resolve these issues, the company renegotiated its loans, eliminated liquidation preferences, and simplified governance to a single investor tranche. Medium also divested two acquisitions and shuttered a third, streamlining operations. Stubblebine acknowledged that reforming the investor landscape was challenging but necessary. After a year of deliberation, he concluded that restructuring was essential for survival. He successfully negotiated with loan holders to convert debts into equity, which led to a recapitalization involving a fraction of the investors, resulting in diluted stakes and relinquished special rights. The company also underwent significant cost-cutting measures, reducing its workforce from 250 to 77 employees and optimizing engineering processes to lower cloud expenses from $1.5 million to $900,000. Furthermore, Medium exited a costly office lease that had previously incurred monthly payments of $145,000. While Medium’s valuation has undoubtedly decreased from its former $600 million status, Stubblebine expressed no concern over current figures. He emphasized that the focus is on profitability rather than valuation comparisons with other startups, saying, "We are profitable and they are not. That’s a comparison point that serves us better."