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Community site sold, concedes it wasn't making profit

One of my favorite community publishing Web sites, PegasusNews.com, has been sold to ensure it stays alive. The buyer is Fisher Communications, a Seattle-based communications company.

In a post about the sale, founder Mike Orren said the site had run out of money months ago and staffers were working for free.

You (hopefully) know that we are a tenacious, dedicated lot. What you probably don't know is that while still working on our longer-term plans, we ran out of cash back in February. This group continued to work tirelessly to build this service from then until June without a nickel of pay. I'm a little verklempt even as I type this -- This amazing group stuck with this for nearly four months without paychecks (and a couple months prior knowing that the dry spell was impending).

These are not rich kids, or people with trust funds or cash cows at home. These are real people who struggle to make rent and keep gas in the car. And they stuck in -- even when success was not assured, and even while we took our time to make sure we were making the right partnership.

There have been many, many days in the past year that I personally have been tempted to chuck it in -- not because I didn't believe in what we were doing and not because I didn't think the business was on the right track -- but because it was so hard trying to build a battleship out of plywood. And then I'd come into the office and listen to the team trade stories of evading landlords and where to buy Ramen noodles, and I knew, for the moment, that we would make it.

I'm glad the site was sold rather than taken down. Pegasus' "Daily You" product, a dynamic personalized approach to delivering the news, is truly innovative and should become a model to larger sites. CNN.com has started something similar.

For those of us not familiar with the Fisher company, find comfort in knowing that Mike and team will stay on staff, ensuring Pegasus continues its individually tailored approach to covering the news.

Comments (3)

"concedes it wasn't making profit"?

Been practically screaming it ;-)

Of course, only 7 months post-launch, we weren't projected to be there yet. Sure working as hard as we can to get there, though...

Thanks for the kind words on the Daily You. Hopefully we'll be able to spread it wider now...

You all can't be too far from profitability, or must have made an outstanding pitch to Fisher and others, because it seems there were multiple suitors.

The Pegasus traffic is healthy for a small upstart, but it's not gigantic, so I'm guessing your innovative approach is what attracted so many folks.

I have loads of questions about the financial plan, none of which would I expect you could answer, Mike.

For example, if you didn't expect to be profitable by the seventh month, then were you always expecting to sell to a larger company? Did you expect to run out of money in February or was that not part of the original plan?

We know how you plan to grow traffic, but how do you plan on making money? Will any of it come from non-banner revenues?

We had a group of angel investors, and the expectation from the start was that they would carry us to the point that we could either attract venture capital or a strategic investor. An acquirer wasn't in the plan, but Fisher was really simpatico with us and that's what they wanted to do. We were in negotiations with a couple VCs and another acquirer, but decided this was the right course for the business.

And all of that took longer than we (somewhat naively) expected, hence the lack of capital towards the end. We actually expected to run out of cash sooner, but were able to stretch.

I'd argue that for a single-market site that has spent less than $1k on marketing to date, our traffic is pretty significant.

(Compete is pretty dramatically undercounting compared to what WebsideStory and Google Analytics tell us... but the sad and inconsistent state of web metrics is another discussion altogether. If you want a closer view, though, I suggest: http://quantcast.com/pegasusnews.com)

The majority of our revenue is expected to come from banners, text links and newsletter placements, but not just standard ROS or contextual. The same mechanism that drives the Daily You for content can also deliver highly behaviorally targeted advertising. If you're the Dallas Opera with unsold tickets and I can run an ad (of any ilk) specifically to people whose Daily You indicates a strong affinity for opera AND that they live on the Eastern half of the metro... Well, we think that has tremendous value.

Let me know if you have other questions. I'll answer what I can...

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