Nothing about that article surprises me regarding G/O but there is one point that Zach makes about his transaction that he is wrong about:
"Thanks to G/O's stubborn insistence that it only wanted Quartz's assets and not the corporate entity"...
this is not stubborn it's quite common and is absolutely the right thing to do for many companies interested in another business. If they buy your entity (stock transaction) it comes with all the legal liability.
Zach probably doesn't understand how much more likely his deal was to close as an asset purchase rather than a stock purchase. A stock purchase comes with lots more diligence and legalese. If they are buying your stock they are buying all your baggage and potential legal matters, it requires a lot more work including a laundry list of representations by the seller. G/O did everyone a favor by sticking to an asset purchase and getting the deal done. that's where the positives end it seems.
> If they buy your entity (stock transaction) it comes with all the legal liability
For dying companies, most of the time it's fraudulent and illegal to create a transaction divesting the good assets from the bad debts. Why is that potential problem not an issue for a proposal to sell off everything good and leave behind an insolvent shell?
That's not how these things work. When a company sells an asset the funds go back to the company that sold that asset. So if the "seller" has debts or other obligations those still remain and proceeds from the sale would go towards satisfying those. However, in this case it sounds like the deal was largerly about the employee costs + some cash to the sellers.
I mean, this is literally what an Assignment for the Benefit of Creditors (ABC) acquisition is (or an Article 9) and the specific goal of an ABC is to allow for some semblance of the company's assets to persist unencumbered by an acquirer and without creditors having any further rights to their debts, aside from what they can claim from the proceeds of the ABC.
It's an alternative to bankruptcy that allows for the continued functioning of the business in many cases, and it absolutely leaves behind an insolvent shell. (And acquirers will go through great pains to avoid incurring "successor liability.")
He also states the corporate entity was quite valuable for complicated accounting reasons. I take that to mean he was not paid for the quite valuable thing since it wasn't transferred. After the money and assets were transferred, I take it that he eventually realized that a corporate entity has no actual value by itself, the buyout price can be anything and could have included the value of the corporate entity if he wanted, even if it wasn't transferred, and that statement was just a trick to pay him less money.
I took it to mean that the corporate entity had some favourable tax treatment (perhaps from losses in previous years, which could offset against future profits). Which indeed means the corporate entity has no value by itself, but it has some value if you can turn it back into a functioning business.
G/O either had their own tax shelters that meant they wouldn't benefit additionally from the favourable tax treatment, and/or didn't want to take the risk of assuming unknown liabilities (which Zach Seward could have known didn't exist, but would have required more DD from G/O to rule out).
Lack of a viable business model is precisely what Zach points to in the article, which doesn't preclude him from feeling a bit sad about how it was stripped for parts.
Reporting news accurately is a very difficult business model in a world full of oligarch-backed papers that constantly lose money to further their own agenda, plus social media which is increasingly indifferent as to whether the links they circulate have any truth in them or not.
It's tempting to blame oligarchs and social media, but I'll argue that readers' own tastes are the most daunting challenge that mainstream journalism has faced for the past 20 years.
People will spend a lot more time (and money!) reinforcing their existing beliefs/prejudices than learning about something new.
> it. In the subject line of his email announcing the deal, he spelled our name "Quarts," and that set the tone for the level of care in what he had bought.
This little detail seems to sum up so much about this kind of acquisition.
Zach nails it. He is the reason why I was involved briefly at the start and for where I am today.
It was my first time leading a product team. We tried a lot of things that seemed strange at the time; no homepage, no app, native ads (done well imho), a scrolling stream instead of pages. Some of that broke. Some of it worked. A lot of it stuck around.
Yeah, you might be right. I was gone by then so not 100%. Sam Williams was behind that app. I’m not a fan of chat apps but that was done really well and I was surprised by it.
The "Roshamon Effect" always kicks in when people share their personal perspectives about time working at a turbulent organization, but even so, I was surprised that this piece made no mention of Quartz's founding editor-in-chief and co-CEO, Kevin Delaney.
I'd overlapped with Kevin during a different period, and he was always a fountain of fascinating ideas. At Quartz, I though he showed great skill in championing expertise in niche areas, under the banner "Our Obsessions." He (or his team) were uniquely bold online in the way they let memorable photos carry more of the weight.
Once Kevin left in 2019, at least from my reader's perspective, all the air went out of the balloon
> The Paycheck Protection Program, for small businesses affected by the pandemic, helped keep us afloat.
In the grand scheme of PPP shenanigans it’s nothing, but how was an online-only _news_ website negatively impacted by perhaps the most globally relevant, urgent, and ongoing news story of the internet age?
I remember browsing Quartz back in 2014-15 and being impressed that there was finally a current affairs focused "digital media" startup that wasn't styled like the odiously click-chasing Business Insider. The website design felt fresh, with a widescreen layout as opposed to the amateurish, single-column blog-like designs of Gawker and Buzzfeed.
But things seemed to change not long after. Paywalls appeared everywhere, so while I could "see" the topics they covered, I couldn't read them. Over time I kept coming back to the website, remembering its cool design, and was disappointed to find fewer and fewer new articles.
Just took a look at the site now, and sadly it just resembles any of those dime-a-dozen "content aggregator" sites like Forbes.com.
Readit News
"Thanks to G/O's stubborn insistence that it only wanted Quartz's assets and not the corporate entity"...
this is not stubborn it's quite common and is absolutely the right thing to do for many companies interested in another business. If they buy your entity (stock transaction) it comes with all the legal liability.
Zach probably doesn't understand how much more likely his deal was to close as an asset purchase rather than a stock purchase. A stock purchase comes with lots more diligence and legalese. If they are buying your stock they are buying all your baggage and potential legal matters, it requires a lot more work including a laundry list of representations by the seller. G/O did everyone a favor by sticking to an asset purchase and getting the deal done. that's where the positives end it seems.
For dying companies, most of the time it's fraudulent and illegal to create a transaction divesting the good assets from the bad debts. Why is that potential problem not an issue for a proposal to sell off everything good and leave behind an insolvent shell?
It's an alternative to bankruptcy that allows for the continued functioning of the business in many cases, and it absolutely leaves behind an insolvent shell. (And acquirers will go through great pains to avoid incurring "successor liability.")
G/O either had their own tax shelters that meant they wouldn't benefit additionally from the favourable tax treatment, and/or didn't want to take the risk of assuming unknown liabilities (which Zach Seward could have known didn't exist, but would have required more DD from G/O to rule out).
Investors didn’t kill Quartz—they stopped subsidizing losses once it was clear Quartz couldn't become self-sufficient.
The "cynical" narrative obscures Quartz’s fundamental flaw: lack of a viable business model.
Calling Quartz a victim overlooks that it repeatedly failed commercially, despite many chances and significant investment.
Ultimately, Quartz’s fate wasn't about cynicism, but about investors deciding to stop throwing money into a losing bet.
So would you say that the investors… became cynical?
People will spend a lot more time (and money!) reinforcing their existing beliefs/prejudices than learning about something new.
This little detail seems to sum up so much about this kind of acquisition.
It was my first time leading a product team. We tried a lot of things that seemed strange at the time; no homepage, no app, native ads (done well imho), a scrolling stream instead of pages. Some of that broke. Some of it worked. A lot of it stuck around.
RIP Quartz.
I'd overlapped with Kevin during a different period, and he was always a fountain of fascinating ideas. At Quartz, I though he showed great skill in championing expertise in niche areas, under the banner "Our Obsessions." He (or his team) were uniquely bold online in the way they let memorable photos carry more of the weight.
Once Kevin left in 2019, at least from my reader's perspective, all the air went out of the balloon
In the grand scheme of PPP shenanigans it’s nothing, but how was an online-only _news_ website negatively impacted by perhaps the most globally relevant, urgent, and ongoing news story of the internet age?
Even Google froze hiring.
It was a good time to have a conservative balance sheet. I bought some good stock on the cheap, and hired my best programmer.
And they're still around? Or moved on when hiring defroze again, to get a non covid salary?
But things seemed to change not long after. Paywalls appeared everywhere, so while I could "see" the topics they covered, I couldn't read them. Over time I kept coming back to the website, remembering its cool design, and was disappointed to find fewer and fewer new articles.
Just took a look at the site now, and sadly it just resembles any of those dime-a-dozen "content aggregator" sites like Forbes.com.