August 17, 2001 3:50 PM PDT
The Industry Standard to stop publishing
Standard Media is planning to file for bankruptcy but has not made a final decision, Editor in Chief Jonathan Weber said. "Nothing is done until it is done," Weber said in an e-mail to CNET News.com on Friday. "There is no hold-up per se, just that life is strange and you never know."
Although employees will not receive severance checks from The Industry Standard, some will be able to keep their cell phones and laptops, and the company will pay them through Monday and for accrued vacation, Weber said in his e-mail.
"It's no secret that we've had a financing issue," Weber said.
According to an a e-mail employees received from investors and the company's board of directors, the company's demise was due in part to efforts to prepare it for its initial public offering. One key element of the IPO preparations was establishing independence from IDG, which involved substantial investment in separate infrastructure, including information technology, real estate leases and liabilities.
"Steps taken in this regard had a substantial financial impact on the company," the e-mail stated. "The severe correction of 2001, coupled with higher fixed expenses, led the company to consume all its cash. With the IPO window shut, the existing investors considered various methods of providing financing for the company but could not conclude negotiations."
Weber said he planned to remain with the company to "help with the next phase." He said the next issue would not be published and declined to say what the cover story would have been.
The Web site will continue with original content. Of 180 workers left, all but 20 will be laid off, Weber said.
They made the decision to shut down the magazine earlier this week.
"I'm very disappointed that we have to do this," he said. "I'm proud of the journalism that we've done. We've created a great magazine."
Employees are on a mandatory vacation this week. At the company's San Francisco offices, a note on the door says, "The Standard will be closed the week of Aug. 13. We will reopen at 8:30 a.m. on Monday, Aug. 20."
The Industry Standard also hosted high-profile business conferences, including one as recently as last month, which attracted such luminaries as eBay Chief Executive Meg Whitman, Microsoft CEO Steve Ballmer and Sun Microsystems CEO Scott McNealy.
Weber said The Industry Standard expected to get a bridge loan to try to sell the magazine, but discussions about financing options with several parties didn't work out.
Investors including majority owner IDG and venture capital group Flatiron Partners were not immediately available for comment. Calls to publisher Standard Media International were not returned.
In January 2000, the privately held publication raised $30 million in first-round private-equity financing led by Flatiron Partners and Chase Capital Partners. Other investors included Morgan Stanley Dean Witter Venture Partners, Pearson PLC, Europ@Web, J. & W. Seligman and Chase H&Q.
The weekly tech magazine ultimately became part of the Internet zeitgeist it covered, taking off with the Internet boom and landing hard when the downturn dried up advertising dollars and put hundreds of companies out of business.
The magazine was launched in 1997 and quickly gained cachet as a hip chronicler of the Internet revolution, with a corporate culture that emulated the extravagance of many of the companies it covered. At the height of its success, the magazine hosted weekly rooftop parties at its San Francisco editorial offices that attracted large crowds of industry insiders and hangers-on.
The party couldn't go on, however, and the company later turned to layoffs and other belt-tightening measures to conserve capital in a bid to weather the advertising drought.
"Our history did kind of track the business we covered," Weber said. "Certainly the very dramatic decline in that business had an effect on us.
"There's 20-20 hindsight in these things," Weber said about The Industry Standard's spending on everything from the Friday-night parties and lucrative salaries to the free sodas. "There are a lot of things people would point to as excesses, but they're immaterial in the large scheme of things."
But Weber says he has no regrets.
"Are there things that, knowing what I know now, would I do differently? Of course. I think we got the big things right," he said. "We had the sort of plan that wasn't appropriate to the current climate."
At their peak, tech magazines such as The Industry Standard were flush with ads, running about 300 pages or more and weighing in at several pounds. Many monthly magazines moved to a biweekly format. But with the slump, there have been widespread cuts and closings.
In July, Business 2.0 agreed to a buyout by AOL Time Warner and laid off most of its staff. In June, Red Herring Communications, which publishes Red Herring magazine and a Web site, announced its third round of layoffs despite receiving $15 million in funding. In February, Future Network closed 20 unprofitable magazines, including new music's Revolution and the U.S. edition of tech gear magazine T3.
The Industry Standard announced several rounds of layoffs this year, in February and again in May.
"This is a shame. We put out some great magazines," Editor at Large Cory Johnson told CNET News.com.
Standard Media Chairman John Batelle joined the company after being deputy editor and a founding staff member of Wired magazine. Wired also faltered in its attempt to go public. Wired tried twice in three months to complete an IPO but called it off, citing market conditions.
News.com's Paul Festa, Ian Fried and Greg Sandoval contributed to this report.
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