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Illustration: Rebecca Zisser/Axios

Last week's triple-digit layoffs at BuzzFeed and Vice were blamed, in many digital media quarters, on unrealistic growth expectations by those companies' venture capitalists. Kind of like what we heard after Mic shut down, except louder.

Yes, but: It's more complicated than that.

  • Let's start with the obvious conflict: I work at a VC-backed digital media startup. And we're not even 2.5 years old yet, so what follows could really come back to bite me in a few years. After all, neither BuzzFeed nor Vice were doing layoffs so early into their existences. So please delete this email immediately after reading.
  • Media, like mattresses, isn't software. It doesn't scale the same. And if either VCs or entrepreneurs don't recognize the distinction, they're both going to be in for a world of hurt. Or at least their non-core employees will be.
  • But digital media startups can generate returns that satisfy VCs, founders and early employees.
  • One recent example would be Business Insider, which raised around $55 million over 7 years, with a $7 million pre-money on its Series A in 2008 and a $166 million pre-money on its Series G in early 2015. Later in 2015 it was purchased by Axel Springer at a valuation north of $440 million (it's a bit complicated with cash on hand and Jeff Bezos rolling over his shares).
  • Yes, Business Insider got lucky that Axel Springer had just lost out on buying The Financial Times, but it was still well-positioned as a consolation prize.
  • Business Insider founder Henry Blodget tells Axios: "We assessed our 5-year plan carefully with every raise. We wanted to be confident that we could generate a compelling return. We also didn’t want to take more than we needed to. In hindsight, that approach worked well."
  • Blodget adds that he doesn't "think it’s categorical that more capital is necessarily bad," pointing out that both BuzzFeed and Vice have built large, highly-valued companies. But the reality is that they've raised around a combined $2 billion, so even achieving Business Insider-level returns for later investors is extremely daunting. Again, this isn't software.

Go deeper

3 hours ago - Politics & Policy

Senate Democrats target billionaires

Illustration: Annelise Capossela/Axios

After failing to get a deal on other planned tax increases, key Senate Democrats are pivoting to a billionaires' income tax to pay for President Biden's social spending.

The big picture: No advanced economy has attempted anything similar on such a scale.

Anti-abortion activists' Supreme Court dreams are coming true

Photo illustration: Annelise Capossela. Photos: Kevin Dietsch/Getty Images

This is the moment the conservative legal movement has been building toward for decades: The solidly conservative Supreme Court is about to hear two major abortion cases within a month of each other.

Why it matters: All of this is likely to end with significant new restrictions on abortion and a clear path for Republican-led states to win the next big abortion cases, too — the culmination of a long and bitter fight for control of the judiciary.

Felix Salmon, author of Capital
8 hours ago - Economy & Business

Trump's volatile return to the stock market

Expand chart
Data: YCharts; Chart: Axios Visuals 

Donald Trump this week became both a meme stock and a social-media entrepreneur at the same time, by announcing that a new company called Trump Media & Technology Group was going to merge with an existing company listed on the stock market.

Why it matters: The medium-term promise of Trump's media company is that it will replace Twitter for anybody wanting to keep track of Trump's messages. The short-term promise is that it can be a hot new speculative vehicle for people wanting to get rich quick in the stock market.

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