Nov 8, 2022 - Economy

The Recount sheds most staff and pursues fire sale

The Recount co-founders John Heilemann (left) and John Battelle (right). Photo: The Recount

Around a dozen staffers are left at The Recount, a video news startup that launched in 2018, after the company's latest round of cuts last month, four former staffers told Axios.

Driving the news: The outlet, created by veteran journalists John Battelle and John Heilemann, is trying to sell itself for a nominal sum, two sources familiar with the efforts told Axios. It lost $10 million in 2021 on $1 million in revenue, according to two other sources with recent knowledge of the company's finances.

The big picture: The Recount raised a lot of cash but never found a profitable business model and faces difficult straits during an economic downturn that's challenging many media companies.

  • The outlet raised $31 million from venture and strategic investors across two rounds in 2020 and 2021 and raised a bridge loan of more than $3 million over this past summer.
  • At this point, The Recount's founders are just looking for a home for the brand, multiple sources told Axios.

Details: The Recount restructured last spring, cutting around half of its staff of 75 at that time. Some staffers were laid off and others took a one-month severance.

  • Then, last month, another round of cuts again sliced its staff count in half. Staffers were again given a one-month severance option.
  • Today, roughly a dozen staffers remain, with around 9 left working on content, the former employees told Axios.
  • CNN reported last month that the company was planning layoffs and exploring a possible sale.

State of play: Staffers were told a few weeks before the most recent cuts that the company had secured enough funding to carry it through the year's end, two sources said.

  • That funding, Axios has learned, came via a bridge loan of over $3 million led by Union Square Ventures (USV) and other investors over the summer.
  • USV led the company's $13 million series A round in 2020. The Foundry Group led its $18 million series B round in 2021.

Between the lines: The company has never been profitable, and its revenue has never been high enough to justify its costs. It pivoted its focus a few times, burning through cash quickly.

  • It pivoted away from costly live video operations in the spring. Only one of its five podcasts is still active, after most ended last year.

The Recount's most reliable revenue streams have been its ad revenue partnership with Twitter and its newsletter sponsorships, according to two former employees.

  • They also told Axios that Google sponsored the Recount' newsletter for $400,000 this year. The company made some money on its podcasts and events, as well as some passive ad revenue splits from platforms like Snap.

The bottom line: The Recount is likely to end the year with less than $3 million in revenue, according to a source familiar with its finances.

  • The company has few monetizable assets other than its Twitter following (359,000) and its newsletter, which has 100,000 subscribers.
  • Its Wire product, which aggregates news video content, is still being updated, as are videos on its social feeds across TikTok and Instagram. But those channels don't bring in much revenue, sources told Axios.

Dan Primack contributed to this report.

Editor's note: This story has been corrected by removing a reference to the future of the Recount podcast.

Go deeper