Direct funding alone does not make a news business more sustainable

How strategy, structure and consistency are essential for revenue growth, and other lessons learned from our Revenue Growth Fellowship

December 6, 2023 by Lisa Heyamoto

Photo courtesy of pocorex via iStock
Photo courtesy of pocorex via iStock

If there’s one thing our members have consistently told us, it’s that they want more direct funding to help make their news businesses more sustainable. An influx of cash, the thinking goes, is just the catalyst a publication needs to build its team, increase its impact and grow its bottom line.

This seemed like a compelling theory to test, so we launched the Revenue Growth Fellowship in 2021 to provide 12 LION members with a two-year direct funding runway to hire someone in a revenue-generating role. The plan was for this person to generate recurring revenue for the news business, which would kickstart continued growth and development.

But like so many other aspects of news entrepreneurship, we learned it wasn’t quite that simple.

Direct funding, it turns out, is not the silver bullet we imagined it to be. It can give news leaders the confidence to make bold decisions, launch a big effort, or keep them afloat during a rough patch, but new dollars alone do not accelerate a news business on the path to sustainability. 

We gave news organizations between $65,000 and $89,000 in funding in successively smaller increments over two years, and our measure of success was that the revenue hire would eventually bring in enough money to cover their salary by the end of year two. Yet just six of the 12 organizations said that ended up being the case — a 50 percent success rate. 

That led us to one of our biggest takeaways from this program: Without taking the time to create a strong operational infrastructure, thoughtful employee recruitment and management and a focused revenue strategy, no amount of direct dollars will make a news business financially healthy. 

Tellingly, news businesses that experienced higher levels of strategic and operational volatility were much more likely to say their hire did not bring in the expected revenue. Characteristics of these publications include:

  • News businesses that changed their revenue strategy mid-program
  • Outlets that experienced turnover in the position due to a hasty hire or a poor fit
  • Leaders who struggled to shift their focus from editorial to the business side
  • Publications that hired for a part-time rather than full-time revenue role
  • Organizations that underwent a merger during the program

It all adds up to our top-level insight, and one that will continue to guide our work at LION: News businesses need to be ready for direct funding in order for it to be truly catalytic. Here’s more of what we learned about what accelerates and hinders revenue growth that every news business can benefit from.

  1. Revenue growth won’t happen without operational readiness 

One lesson we’ve learned repeatedly (and seen play out across our membership at large) is that a strong operational infrastructure is absolutely critical for gaining any traction with revenue growth. 

We started the Revenue Growth Fellowship program with the assumption that news businesses would be ready to jump right into the hiring process. But participants had some urgent operational needs to address to be in the best position to hire. 

So we worked with publishers to set and track goals, assess organizational risk, level up financial management practices and build an infrastructure for revenue growth. Of particular focus was developing systems for hiring, onboarding, retaining and managing employees. 

“When I think about how [we have] grown thanks to this program, revenue is not the first thing that comes to mind,” a founder said. “[It was] operational growth. That is, establishing policies, documentation and procedures to support a growing team. The support we received in this area at the start of the program was incredibly valuable and set us up for success once our organization began to grow in staff.”

Leaders initially struggled to make time for this operational work, but came to value its importance and ended up applying these operational best practices increasingly more often over the course of the program. They put in place hiring and revenue processes that they continue to use and build on, and many reported that these efforts have become less scattershot and more methodical and consistent. 

“If I did it again with the knowledge I have now but the same financial reality, I would have built more process and reporting into the member revenue program,” one leader said. “But I’d be realistic about the time and capacity it might take to make that a well-oiled machine.”

  1. Revenue growth efforts stall without a clear strategy, a consistent approach and significant leader involvement

Growing revenue is a marathon, not a sprint. And organizations that planned for the long haul and stayed the course saw significantly better outcomes than those that experienced disruptions. 

News businesses that focused on growing the same revenue stream with the same revenue hire throughout the two-year program were the only publications that saw consistent revenue growth quarter over quarter. These participants had a clear-enough revenue strategy to enable them to make and support the right hire, who could consistently build on their efforts over time. And these organizations were able to leverage that stability to improve other aspects of their business; despite differences in size, age, tax structure and focus, they saw concurrent increases in full-time employees, cash on hand, runway and net revenue.

Key to that stability was significant involvement in the revenue growth efforts by the founder or key leader of the organization. Many news entrepreneurs come from a journalism rather than business background, and lack the experience or desire to focus on growing revenue. We’ve heard many of our members say if they could just hand off that work, they would be free to do what they do best: produce journalism. 

But it’s precisely that deep understanding of an organization’s mission and values that makes a founder the best person to make the case to financial supporters, whether a potential foundation,  advertiser or reader. Of the 12 program participants, half ended up shifting the revenue generation work back to the founder, even after hiring someone to be in the revenue role. We learned alongside participants that the founder, or primary leader, of early-stage news businesses, in particular, simply needs to be the face of revenue generation efforts.

“[If I had this to do over again,]” one founder said, “I would switch roles early on and focus on revenue myself while assigning the editorial work to others.”

Another key learning, and one we failed to mitigate against, was that a part-time revenue hire is particularly unlikely to achieve the desired results without a strong revenue strategy already in place. We originally gave organizations enough funding for a part-time hire if they did not have any other full-time employees (including the founder). We reasoned that these organizations, which tended to be younger, needed more time to build the operational structures to support a staff member. But that ended up being true for all cohort members. And while the intention was always for organizations who initially hired part-timers to bring them to full-time, those that hired part-time revenue help were especially likely to say that they ended up doing most of the revenue work themselves, regardless of whether that was the plan. None of these organizations said their part-time hire brought in enough revenue to cover their salary.

“I found that, for this role, it was hard for someone as an employee to achieve ambitious goals on a part-time salary,” a founder said. “I think I went into this thinking, ‘Okay, it’s doable. Something is better than nothing, and the employee will have enough passion to grow with us.’ For both folks we hired, I found that, to them, it was a job with a mission they liked, but they still had limited time to do their job correctly. It was hard to ask them for much flexibility because they had to do other things to supplement the pay.”

  1. Revenue growth hinges on hiring the right person to do the work (and being ready to support them) 

Making the right hire rather than the right-now hire makes all the difference. Many news leaders initially underestimated the time, planning and strategic alignment required to be fully ready to make their hire, and the person they brought on turned out to be a poor fit.

“It was a lot of lessons learned,” one leader said. “I should have taken more time to recruit. It was a challenge to figure out what to prioritize first, having minimal experience with a business at the time.”

A big decision point for cohort members was determining what role to hire for, and how much experience the candidates should have. News leaders who saw the most success with their new hires had a focused vision for the person’s responsibilities, and designed the role and the hiring process accordingly. One organization knew it wanted to attract highly experienced and networked applicants, so it supplemented the program’s funding to hire at a salary range that would yield those candidates. Another founder knew they couldn’t afford someone with that kind of resume in their market, so they created a role focused on supporting revenue operations rather than directly generating revenue. 

News leaders found the most success building in areas where they already had traction and an operational foundation — in other words, where they already had a clear strategy. For example, one organization had ambitions to build its nascent advertising/sponsorships stream, but saw better results once it decided to level up its membership program instead.

“We have realized we aren’t quite set up to manage sponsorships/sponsored content/advertising yet,” they said. “We’d need to do a lot more work to create a foundation for that area of revenue. We’re further along with our membership capability and have the metrics to track against those growth goals.”

But it’s not enough to simply make the right hire — you must be ready to support them. Hiring new personnel without ensuring that the leadership can effectively onboard, train, and retain them can lead to overburdened leaders and counterproductive outcomes. News leaders were most successful when they devoted time and energy to ensuring their team members had what they needed to meet their goals and empowered them to make decisions and take calculated risks. 

“I feel like I’ve learned a ton about managing and onboarding and am proud of the documents and processes I’ve created for our team,” one news leader said. “But managing this position was much more difficult and time-consuming than anticipated.”

How this program has informed our work at LION

The Revenue Growth Fellowship program was the most ambitious program LION had attempted when we launched it in 2021. And it was our first foray into being a funder. We learned a lot from the experience, including that our support is most impactful when we’re helping news businesses strengthen their foundation for growing revenue rather than providing direct funding to help grow their bottom line — an insight that underpins our five-year strategic growth plan

Here are some other insights from the program that have influenced our work: 

  • Led us to develop asynchronous trainings for our News Entrepreneur Academy focused on building operational practices like setting goals and managing finances
  • Shaped the curriculum of programs like this year’s Sustainability Lab, which centered on readiness for revenue growth
  • Informed our Sustainability Audit metrics and maturity model to map the path to sustainability
  • Influenced our strategic decision to offer holistic, bespoke support to our Focus Members — BIPOC and LGBTQ-led organizations — through a case management approach

We’d like to extend a heartfelt thank you to all the publishers who participated in this program and candidly shared their wins and challenges so we could learn how to better support our members. We hope this level of transparency will encourage other publishers and support organizations to learn from and adapt to the lessons we highlighted here.

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