How Medium went from financial crisis to focused innovation

[00:00:11] Jim Freeze: Welcome to Right Decisions, Right Now, where we explore the choices that define a leader's career. I'm Jim Freeze, Chief Marketing Officer at Anaplan, the only AI-driven scenario planning and analysis platform designed to optimize decision making in today's complex business environment. In each episode, we unpack a pivotal decision. What drove it, what impact it had, and the human story behind it. You'll hear from leaders at companies like Gap, Zevia, Citi, and more, sharing details about impactful decisions, bold breakthroughs, tough calls under pressure, and the moments that shaped their careers and their companies. Our guest today is Tony Stubblebine, the CEO of Medium. Tony has a unique career narrative, from helping build Twitter in its earliest days to taking on the ultimate challenge at Medium, a company with great potential but also one facing serious financial challenges. Today, he'll share the principles and pivotal decisions that allowed him to turn a financial crisis into a model of focused innovation. Tony, welcome to the show.

[00:01:17] Tony Stubblebine: Jim, thanks for having me. I always like to talk about decision making, especially if we can be honest about it because it's messy.

[00:01:24] Jim Freeze: Yeah, let's be honest about it. So to start off, for our listeners who may not be familiar with Medium, can you tell us just a little bit about the company?

[00:01:31] Tony Stubblebine: Medium is a writing platform that comes from a long history of writing platforms on the internet. Our founder Evan Williams founded Blogger and that really made blogging popular originally. And then he founded Twitter and I was part of that team, we called microblogging at the time, and then he took those lessons that he learned there and tried to perfect them with Medium. And then along the way, we stumbled, and we learned that perfecting them wasn't going to be a trivial task.

[00:01:57] Tony Stubblebine: And I took over as CEO of Medium three years ago and pulled it out of a financial difficulty, and now we're back on track to provide a place for everyone to write on the internet.

[00:02:11] Jim Freeze: When you took the helm at Medium, the company was facing some pretty substantial financial challenges. An interesting start for any CEO. Can you tell us how you navigated the first few months?

[00:02:23] Tony Stubblebine: I'm incredibly fortunate to have a lot of prior experience with Medium. I'd been an advisor and then a user and then a partner. Absolutely their biggest partner. And as an advisor, someone who just knew the full history. So I knew what I was getting into and what I was getting into was a difficult financial situation paired with a difficult product situation.

[00:02:44] Tony Stubblebine: So the financial situation is that we were losing $2.5 million a month at a time when the entire investor ecosystem froze, so there was no further money or no place to sell the company to. It was either make this business work or go bankrupt, basically. In the technicalities of a financial turnaround, there were also all the investor relationships leading up to it, and that was a big overhang for us.

[00:03:11] Tony Stubblebine: Then separately, our mission is to deepen people's understanding of the world. This is what Evan meant by perfecting it. We wanted to get out of the attention economy and somehow we had fallen back into this world of misinformation, disinformation, divisiveness, clickbait, and that just wasn't on mission. So even if we succeeded as a business, we didn't feel like we were succeeding on mission. So we had to change both at once.

[00:03:38] Tony Stubblebine: And the strategy is have a plan, find people that are aligned with that plan and build confidence. Because the number one thing that goes into a turnaround is that you're entering a situation where people have lost all confidence, right? It's a series of failures. And in between every failure, is a big pitch about how the next thing we do is going to work.

[00:04:01] Tony Stubblebine: So from the team's perspective, I'm just the next big pitch that's going to lead to the next failure. The confidence building is really the key to it, but you need to find enough early allies to get some win that gets people to see, oh, this is going to be different. We're actually going to succeed this time.

[00:04:18] Jim Freeze: So that's interesting. Based on experience, any time a company faces serious financial challenges, invariably the company is faced with downsizing. And it's interesting because a lot of companies do it in waves. You didn't. You decided to do one single reduction in force as opposed to waves. How did that impact the culture consistent with what you were just talking about?

[00:04:38] Tony Stubblebine: Clear is kind. The reality of the situation is either we cut some costs immediately or we all lose our job and there's nothing nice or good about a layoff. It's sensitive to talk about because it is such a financial impact for the people who are impacted, and it's also emotional, and it's just this really harsh thing for people to go through.

[00:05:00] Tony Stubblebine: And unfortunately, we're in the situation where if we don't do some major cost cutting, then the whole company will lose their jobs. And I think that logic, you know, makes it at least morally acceptable in a way that might not feel as morally acceptable if it's just been done to boost existing profits in an already profitable company. And that's just the nature of capitalism. Like we have to make our numbers work or the whole company disappears. The thing that I come in a little bit different from Silicon Valley, where most people in this industry are used to working with investor dollars. And I had spent a long time as a CEO working on bootstrapped companies, and so I just had already a preexisting sensitivity to the value of every dollar.

[00:05:47] Tony Stubblebine: And that essentially every role in the company should make money for the company. There has to be a plausible theory. And my number one goal is not a reduction in force. My number one goal was role clarity. Go through every role in the company and help people figure out how they can contribute to the future growth of the company. And that was one of the things that was pretty loose when I showed up.

[00:06:10] Jim Freeze: Yeah. So it's interesting. When we chatted in preparation for this episode, it struck me that you have a pretty strong moral compass. How has that affected your leadership style, and are there any specific principles that guide you through difficult decisions?

[00:06:25] Tony Stubblebine: I would never claim to have a strong moral compass. It just seems so dangerous.

[00:06:29] Jim Freeze: That's alright. I'll claim it for you. I'll claim it for you.

[00:06:32] Tony Stubblebine: We're doing our best, right? We're doing our best. I think that over the course of my career, I just came to gravitate towards. We want the double bottom line or the triple bottom line to always be working, that it's not enough to make money. We also want to do good in the world, but it's not enough to do good in the world if you don't also make money because you won't be able to keep doing it.

[00:06:54] Tony Stubblebine: And that's true too for staffing, I put more of my emphasis not in doing the layoff, it's in preventing the layoff and how much upfront work and confidence can you do before you hire someone because you're making a commitment to that person. And yeah, sometimes it doesn't work out, but you want to be really confident that you're bringing them into a situation that's going to work out for them. Or alternatively, be really clear that you're bringing them into a sketchy situation.

[00:07:24] Tony Stubblebine: And, you know, I come from startups, I'm used to sketchy situations. We join a company a lot of times assuming it will fail. And we all know we might lose our jobs, but that's well known, right? You need the staff to either understand that a) you're going to take care of them and really take that seriously, or b) you're not able to take care of them, and you're really clear about that. Based on the feedback I've gotten from people that have left Medium in the past, a lot of times it just didn't seem clear that they were being brought into an experiment.

[00:07:53] Tony Stubblebine: And that experiment by definition, might fail. It's like one or the other. And I would characterize those as the moral way to do business. And I have seen other entrepreneurs fake it til they make it by hook or by crook. Get people to work for them. The reason I don't like to say that it's moral. I've also found that it's practical.

[00:08:10] Tony Stubblebine: Right? We have long careers in this industry. The industry is not that big. A lot of my career is based on relationships and long standing relationships. Even this job I have right now is because I worked with the founder in 2005.

[00:08:24] Tony Stubblebine: Right. And you can't maintain those long relationships unless you do behave in some upstanding way. The cynic in me says it's not moral, it's just practical.

[00:08:33] Jim Freeze: Oh, I'd like to think the two are hand in hand, so I'll still give you credit for a moral compass.

[00:08:38] Tony Stubblebine: I appreciate that.

[00:08:39] Jim Freeze: So, when you joined Medium and you kind of talked about this earlier, the company had a lot of debt. And it was falling behind, I think you said to the tune of 2.5 million per month. Take us through some of the financial decisions you made to course correct the company.

[00:08:54] Tony Stubblebine: Job one is to see who was in a role or could be in a role that would contribute to the growth. I'd seen all the financials, I'd seen the staff, and we knew a layoff was likely. Everyone's assuming a layoff and it's better to just get that out of the way so they can stop worrying about it and know that it's done and we move forward. And then we looked at it in two other ways: where else can we reduce costs, so we just kept chipping away at our hosting costs, our server costs, our lease on an office, assets that we had purchased that we could sell off.

[00:09:26] Tony Stubblebine: The basic financial blocking and tackling. And then most important is that we had to grow. There was no point in doing this unless we could grow. And that's why even when we did a layoff, we knew we couldn't lay off too many people because we needed to have a team that could innovate. I think that this is maybe what makes a turnaround like this uniquely hard is you have to do both.

[00:09:48] Tony Stubblebine: You have to cut costs and still innovate. But cutting costs works against innovation because you're losing capacity. You're creating actually a lot of fear. Even if you say, hey, we're not going to do this again. I think there's a lingering fear that it will happen again and that isn't actually motivating or constructive. You know, basically, it came down to those three ways that we got from losing $2.5 million a month to being profitable.

[00:10:13] Tony Stubblebine: And then again, a separate thing. We had investors, including debt and a lot of equity and preferences around that equity that just didn't make any sense. And if that wasn't cleaned up, we were either going to default on our debt or the staff would stop working because it undercuts all of their incentives to come do this kind of heroic turnaround.

[00:10:33] Jim Freeze: You talked earlier about one of the things that you had to do was invest in innovation in particular. Something that really helped the turnaround was the launch of Medium's Boost feature, which highlights and promotes high quality, impactful stories. My understanding is that was pretty critical to the turnaround. Can you talk a little bit about that?

[00:10:51] Tony Stubblebine: Sure. Medium is uniquely interested in substance over attention, but people want to pay for and what we want to deliver to the internet is real stories from real people about their lives, and especially how to live well, how to be good at your job. You know how to be healthy. All of those things are often coming from experts or personal experience around the world, but it's hidden behind the attention economy. All this attention grabbing nonsense. So that was our intention.

[00:11:18] Tony Stubblebine: We just weren't delivering on it. And the way that we pivoted to deliver on it was to uniquely change what writing succeeds and thrives on Medium. And that meant rebuilding a recommendation system to have some amount of expert signal. So it's not just purely what gets clicks, it's also what is thoughtful and informed. And we had to design some human systems to elevate that content.

[00:11:46] Tony Stubblebine: And as a result, the commercially successful part of Medium is people learning how to do their job better. I mean, there's nothing more valuable than hearing someone else who has the job you want, explain how they do their job. Like even as a CEO, like, I love to read another CEO and realize, oh, I could do it better and I would pay for that. And a lot of people on Medium do pay for that.

[00:12:09] Jim Freeze: Well, that actually is a nice dovetail into my last question, which is when you look back at all of your high stakes, career defining moments across companies you founded or at Medium, is there a lesson you'd like to share with other leaders?

[00:12:23] Tony Stubblebine: Usually the one I lean on is persistence matters, right? Like a lot of my decisions didn't work out. For example, I could have stayed at Twitter and been a middle manager there and probably made a huge windfall on the IPO. But there was something about that situation that didn't look right to me at the time. And instead I went on to start my first company.

[00:12:46] Tony Stubblebine: I did get that company to be profitable, but it was really a pretty mediocre company, and I wasn't that good at the job, and I just kept grinding away at what it means to be a CEO and to try to be better and better. I had some patience and I gave myself some grace that maybe it would take a while. So 15 years later, you know, I ended up in a situation where I think I was able to make a case to take the chair at Medium, and I don't know how I rank in the world of CEOs, but I'm certainly quite a bit better than I was on year one of that journey.

[00:13:18] Tony Stubblebine: And I attribute everything that I'm doing now to having the persistence and the integrity to evaluate, like how well I was doing and constantly trying to do it better.

[00:13:29] Jim Freeze: That's a powerful story about the right decision. Tony, we very much appreciate you joining us. It's been wonderful talking with you.

[00:13:36] Tony Stubblebine: All right. Thank you Jim.

[00:13:41] Jim Freeze: Thanks for listening to Right Decisions, Right Now. If you've enjoyed today's conversation, follow the show so you don't miss our next deep dive into the decisions that make or break great leaders. For more insights on decision excellence and its impact on the financial performance of leading organizations, visit anaplan.com. I'm Jim Freeze. See you next time.