Prior to this week, Gigaom would have been a tech publication that we, at ICT Pulse, had hoped to emulate. With its closure earlier this week, here are three of our most immediate takeaways.

This past Monday, widely respected tech blog/media company, Gigaom, abruptly closed its doors, after nearly 10 years of operation. In statements issued on the publication’s website and by its founder, Om Malik, the firm had been  unable to pay its creditors in full, and as a result, its assets were now being controlled by its lenders (Source: Mashable).

Though Gigaom was known for its insightful articles, its main sources of revenue were advertising, a premium research and papers publication service, and the tech events it organised. However, it still needed external funding to survive.

As a popular and much respected online tech publication, Gigaom would be one of platforms we, at ICT Pulse, might have hoped our modest publication could become. However, this latest news has given us cause to pause. Below are some of our early thoughts/takeaways.

1. Popularity does not translate to viability

At the time of its closing, Gigaom had almost 6.5 million month readers, many of whom would be regular daily, or even weekly, visitors to the site. That readership would have placed it in an enviable position with advertisers, which was a source of revenue for the firm. Further, it was a strong tech brand, with loyal followers. However, the publication still struggled to make ends meet. Hence though it might have been a popular, and was widely read and cited, this did not automatically translate into a profitable business.

2. At some point, a business must become viable

As stated above, Gigaom had at least three revenue streams, and it was still being bolstered external funding, the most recent of which was secured in 2014. However, perhaps the question must be asked, “when should a tech business be able to stand on its own two feet?” This year June, Gigaom would have been10 years old. However, should it still be at a point where it needed external funding to help it meet its routine operational expenses/obligations?

3. Many of the popular business models used by tech firms might be shaky at best

Across tech, many businesses, including those in software applications development, and those offering a broad range of online products and services, tend to rely on advertising as their main source of revenue. Depending on the size of the business; the size of its customer base or audience; and the amount of traffic an app or website generates, for example, advertising can be (relatively) lucrative – provided optimal levels are achieved. However and until such time, the revenues generated can be inadequate to support the business, and may need to be supplemented.

Having said this, developing the products and services that could become additional sources of income require resources – particularly funds and manpower – which again require money to be available in order to successfully implement and maintain those initiatives. A catch-22 can ensue. Although it might be possible to get external funding to launch those new ventures, again, they ought to, at the very least, become self-sustaining, but ideally profitable for the business.

In summary, the loss of Gigaom has been a sobering realisation of how difficult it can be to survive in the tech space. Although it would not necessarily be considered a start-up, and it would have had access to expert advice and guidance that most businesses would not have experienced, it has met the same fate as so many that have gone before.

 

Image credit:  Wikipedia

__________