Jun 25, 2015 · 12 minutes

 Stop me if you’ve heard this one before: One of the most promising young companies of the new journalism revolution just ran out of money and closed its doors -- likely forever. 

The victim this week is Circa, the San Francisco-based news app which launched in 2011 with an intrepid “mission to fix journalism” but that now appears to have spent the last of the $5.7 million given to it by investors without ever figuring out a business model.

During that time the startup built a bold product worthy of its valiant ambitions, pioneering an unprecedented new format for storytelling comprised of atomized bits of information delivered via push notifications to mobile phones.

This vision won over some of the world’s most high-profile investors, entrepreneurs, and venture firms –Lerer Hippeau, David Karp, Russel Simmons, Matt Mullenweg, and dozens more helped fill Circa’s modest but supremely well-connected cash coffers. And to go along with its murderer’s row of backers, the company enlisted impressive names in the content industry to work on both the editorial and technology sides of its business, like Reuters’ social media svengali Anthony De Rosa and the CEO of the Cheezburger Network Ben Huh.

At the time of its debut, many commentators swooned over Circa – present company excluded – and why wouldn’t they? Audaciously ambitious, stacked with talent at all levels of the organization, and driven by a rare and genuinely original central conceit, Circa looked to many like one of the safer bets among the content gold rush of the early twenty-teens, when venture capitalists finally overcame their allergy to investing in journalism.

What could possibly go wrong?

As it turns out, a lot. As for the specifics surrounding his company’s annihilation, Circa CEO Matt Galligan is being incredibly cagey. He even added a postscript to his shutdown announcement that read, “In the interest of continued negotiations around Circa, we will not be speaking to the press about ceased production.” (I reached out to Galligan anyway to ask if he would at least speak to me about the broader climate surrounding venture-backed news startups. He didn't reply.)

But no matter the exact factors leading to the erstwhile media darling’s demise, the final score is the same -- and should ring familiar to anyone who’s ever watched over a dying startup: Not enough users and no way to monetize them.

Maybe it will come out later that Circa had all the makings of a big, successful company, but that like what seems to have been the case with another recent VC-backed news casualty – GigaOM - poor management drove it into the ground. Or maybe Galligan and his team were merely the victims of circumstance and bad luck, the effects of which were exacerbated by the digerati’s impossibly high expectations of the startup.

But evidence, hindsight, and an understanding of the new content economy suggest that, barring an acquisition or a major pivot, Circa never had a chance. And while some will surely see this as a harbinger of doom for other VC-backed journalism startups – namely, the same single-minded observers who predicted Armageddon when GigaOM and ReadWrite went under – Circa’s failure, like most startup failures, is an extraordinarily unique disaster.

What Circa’s death fails to offer in bad omens, it more than makes up for in valuable lessons about the content industry.

* * * *

To have a truly bold idea usually means going against the grain of your peers. This is emphatically true of Circa, a company that saw where most other journalism organizations and content providers were heading before sprinting off in the entirely opposite direction and never looking back. 

Most digitally-savvy news organizations, for instance -- whether they’ve been around 150 years or 150 days -- are now convinced that it’s not enough for their content to be accessible from every major platform; it must fully inhabit these ecosystems. From the New York Times to NowThis News ($15.6 million in funding) outlets will increasingly publish early or exclusive content on platforms like Snapchat, Facebook, Vine, and whatever platform infiltrates the attention of the masses next.

Circa, on the other hand, relied heavily on carefully-timed push notifications, the ability to “follow” individual stories, and other singular features unique to its own app in order to function optimally. You wouldn’t go to Twitter to find Circa stories – in fact Circa was specifically designed as an antidote to Twitter and its unwrangleable chaos.

Consequently, Circa often felt as self-contained as a newspaper. It made no difference whether or not the company had a presence on major social networks, blasting out links to its story summaries. That’s because the core usefulness of the product only manifested itself through the Circa app, not anybody else’s. Sure, Circa’s push notifications could reach users no matter what platform they were surfing. But because Twitter and Facebook already offer tremendous value by operating as both connecting hubs and content delivery systems for virtually every news site on the planet, the prospect of convincing readers to make Circa their dedicated news destination was an impossible sell.

The numbers bear this out. According to the Verge, Circa was only downloaded 100,000 times ever on Android and hasn’t even cracked the top 1,000 most-downloaded iOS apps in 2015.

Circa’s lack of traction, however, was only one ingredient of its poison pill. Even more deadly was the company’s struggles to monetize the users it already had – struggles that would likely have persisted even if the company had found a way to scale to tens of millions of users. In fact, scaling might have made the problem even worse. The real issue was more systemic: the company’s core business model – a model which, from an outsider’s perspective at least, was massively out-of-sync with how content companies make money in today’s digital economy.

* * * *

There are basically two breeds of digitally-native news startups that attract investor dollars in the current climate, and neither of them describe Circa.

The first are platform plays. The key distinction for platforms is that the lion’s share of the content they produce is dirt-cheap; either because the platform’s users produce it for free or because it hires poorly paid, overworked bloggers to aggregate content from other outlets virtually for free. The platform scenario that beats all others, however, leans on advertisers to produce a growing share of the content. Not only will brands do it for free, they’ll even pay for the privilege.

The second breed are the more pure content plays – companies that spend a colossal amount of time and money producing high-quality journalism that readers can’t find anywhere else. This is a bit trickier because “quality,” after all, is a subjective concept. But outlets that do it right can court brands and other partners at higher ad rates because the content can reach readers on a deeper, more intimate emotional continuum. The returns are even better if your readers make up a demographic that’s either notoriously difficult to reach -- like young people – or, on the opposite end of the spectrum, if your readers possess disgusting amounts of disposable income.

This isn’t a simple dichotomy; black or white, platform-focused or content-focused. No, news startups are rarely just one or the other. Buzzfeed ($96.3 million in funding) and Medium ($25 million in funding) are more like platforms, but they’ve also hired some big-deal journalists to produce fantastic content. VICE ($570 million in funding) is more focused on placing carefully-crafted packages of content in front of jaded but potentially high-spending millennials, but they too offer an attractive platform for branded content. Meanwhile, Upworthy ($12 million in funding) is in the process of pivoting from the former model to the latter.

But despite cross-pollination, these models -- big open platforms and high-quality enthusiast sites -- make up the two overarching dynamics at work in the new content space. And Circa not only failed to fall into one of these groups, it also embraced the least attractive elements of both platform plays and content plays.

Much like content sites that focus on great writing, Circa's “journalism” was expensive to create. Those little information nodules may look cheap to produce, but according to De Rosa’s parting post from yesterday, Circa had a whopping 13 editorial staffers on its team. That’s bigger than the founding editorial team of the “Buzzfeed-but-just-about-animals” site the Dodo ($6.7 million in funding) which even at launch produced far more stories than Circa and reached one million monthly readers in its first month, according to Fast Company.

Once again, there’s nothing inherently wrong with producing relatively expensive content that reaches relatively modest numbers of readers. If the content is good enough, there’s always a way to monetize it, whether through smart ad deals, subscriptions, or syndication deals.

But while Circa’s atomized information bits may have been painstakingly constructed, they were so lifeless and undistinguished that, on the surface at least, they looked like they were written by robots. This isn’t a knock on Circa’s writers. A lack of style and emotion were baked into Circa’s whole value proposition. And I have to assume that, thanks to the thought and talent informing the work, Circa’s story summaries were far more elegant than what a robot could have come up with. But on first glance, who can tell? And in the hypercompetitive war on the Internet to capture readers’ attention, “first glance” is all that matters.

The core problem was that Circa’s per-story production costs made it resemble companies that craft winning pieces for small but dedicated audiences. But Circa’s content itself – informative and intentionally unremarkable -- made it more akin to a pure tech company, not a high-quality journalism outlet. Its content was the opposite of special. And while that was clearly the point, there’s simply no way to monetize an audience with content this unengaging -- not unless Circa began to operate on a massive scale to millions of readers. And even then, considering the fairly high number of staffers Circa hired in order to service even the modest audience it had, it’s difficult to imagine the company scaling comfortably, sustainably, and profitably. 

Which brings us to the killing blow – the mortal wound that sealed Circa’s fate practically the moment it stepped out the gate…

* * * *

Thanks to the growing power of Facebook and other networks that possess unprecedented capacities to drive traffic to news content, optimizing stories for social sharing has become the name of the game. This tactic shouldn’t be done all the time – though God Bless Buzzfeed for trying -- but ask any web editor and she’s likely to say that the most-read story on her site that week, month, or year, boasted a strong emotional foundation that could be played up on Facebook -- if not in sacrifice of information then at least alongside it.

But again – and more importantly, by design -- there was nothing even remotely emotional about Circa’s story summaries. It was all substance, no style, making the dry, stoic AP look like Gawker on Ice. To quote a woman who knows a thing or two about going viral on Facebook, "Ain’t nobody got time for that.”

* * * *

In terms of conception and execution, Circa was working from a totally different playbook than its more successful peers. But there’s something else you might have noticed that set Circa apart: It only raised $5.7 million, which is half of what Upworthy’s raised, one-tenth of what Business Insider’s raised, and one-nineteenth of what Buzzfeed’s raised. It’s not a requirement for news startups to raise enormous checks from VCs – Pando has only raised around $4 million – but while $5.7 million is a truly life-changing sum, it pales in comparison to the investor hauls brought in by many of its competitors. And the amount feels particularly low for a company like Circa that is more akin to a technology company than a media company.

When a startup operates on ideas and concepts that are so diametrically opposed to basically every other entity in the space, that company has the potential to shake the earth and change the broader landscape to fit its vision. And Circa deserves a massive amount of credit and respect for so bold an undertaking. But when the bank balance hit zero, audiences hadn’t followed Circa into the abyss. Instead, they went with the flow dictated by the industry trendsetters above. Maybe the world simply wasn’t ready for Circa. 

Furthermore, in some ways, Circa did change the broader landscape of digital journalism. New York Times and Buzzfeed have each launched their own apps that bear a striking resemblance to Circa, which Galligan proudly alludes to in his shutdown announcement. 

But these apps exist not as standalone companies but as small components of broader strategies that seek to reach audiences no matter where they are and no matter what app they’ve got open. Furthermore, it remains to be seen whether these gambits will be any more successful than Circa’s, or whether they’ll be abandoned and left to rot in the shadow of innovation. 

It’s tempting to draw broader conclusions about the respective demises of Circa, GigaOM, and Readwrite, citing these flame-outs as evidence that the bubble surrounding VC-funded content sites is about to burst. But what these three unique cases more convincingly prove is that the space is finally starting to grow up. For the past few years, journalism has been stuck in a sort of prolonged adolescence, like the teenager who dresses like a goth kid one day and a hip-hop head the next, in search of a tribe and an identity. And for these experiments to pave the way toward maturity, it requires a person – or an industry -- to hold on to the ideas that work and reject the ones that’s don’t.

And Circa just didn’t work.