You must have missed that Escape Collective was massively successful and fully funded the whole enterprise from private subscriptions in like a week.
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100%ā¦at least for many firms. They try and slash costs to the bone, raise prices where they can in order to show a quick financial improvement and sell the company. This is not a new strategy, or even a surprise. Consolidate services, cut costs and sell. Almost no PE firm buys companies for the long-term.
I have opined many times re: the need for readers to pay for journalism, as well as the mistakes media has made by giving away content for freeā¦however, the previous CyclingTips and the current Escape Collective (along with other groups such as DNVR / CHGO Sports, The Athletic, et al) show that people will pay for good content.
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Having been at several places that were taken over by PE, this is absolutely the business model. Iām not sure how this can be unclear at this point.
They go in, reduce costs and raise prices as much as possible to increase revenue, grab as much money as they can, then hope to either sell the company or file Chapter 11 to avoid paying debts. They tend to drive companies into the ground because they only think of their HR budget as a liability (good people are expensive) rather than what actually keeps the company running.
Theyāre not looking for long-term investments, theyāre looking to show increased revenue for the next quarterly reporting. Theyāre essentially high-dollar smash-and-grab operations. Have you seen what theyāre doing for the US housing market?
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The PE business model is to do anything and everything that generates max returns to the PE firm, and just enough return to the LP investors to keep them investing. Success of the underlying companies, their employees, and their customers is not high on that list.
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As I recall, Bike closed down. Writers from bike were then at Beta, which was under outside. Outside then closed Beta.
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Not so affectionately known as āputting lipstick on a pigā.
For the investors, it can be a fine model. For the employees and customers that want a viable and interesting business, it can be a downward spiral to mediocrity.
Iāve been through this recently with a tech company. In discussing the acquisition with the new CEO, they emphasized that they donāt want to fix everything. Do enough to show value, but leave room for the next acquirer, so they have some upside too
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I work in PE, and it absolutely is NOT the business model.
Your model assumes that the PE firm is ultimately selling the acquisition at a higher price than it paid for it, but the company is less valuable than it was previously.
So youāre saying the PE business model depends on idiots buying worthless companies from PE firms?
And yet so many of us are intimately familiar with the outcomes and consequences of PE firmsā actions. Strange world we live in for it to be so completely disconnected, eh?
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You may think youāre āintimately familiarā with what you think are the outcomes, but those are generally headlines from people that were running inefficient, unprofitable and non-viable businesses. PE firms have a strong track record in doing very well for both investors, founders, and companies they invest in, but āeverything is going greatā stories donāt capture eyeballs. So youāre only going to read about the cases where things didnāt work out.
The primary incentive for any PE firm is to make companies more profitable, and that means more efficient. There is zero incentive for a PE firm to needlessly gut the business - how does that make money for the PE firm?
Do you really think that āslashing costs and raising pricesā for a few quarters will be sufficient for the PE firm? You think a short-term bump in margins will offset the money invested in the company to acquire it? And if the company is now losing clients, how is the PE firm going to be able to sell it for more than it paid for it?
Iām intimately familiar because two companies I worked at were bought by PE and run into the ground within a year, causing a lot of people to lose jobs they loved. This is not something I read in the news, itās something I personally experienced.
They gutted HR budgets, laid off entire product teams, and tried to run the companies on skeleton crews while looking for buyers who were too smart to bite. Iām sure they were just the bad guys.
Intentions and results are not the same thing, and Iām sure the folks at the PE firm felt really bad about so many people losing their jobs. PE makes bets - sometimes they pay off, sometimes they donāt.
Honestly, this is way out of the bounds for a bike forum, so Iāll stop. But feel whatever you need to feel about what you do, and Iāll do the same.
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this sounds more like my experience with large technology companies buying up small companies and then killing them out of stupidity. The smart ones leave and start another company, which 5-7 years later the same large tech companies buys up again. Rinse, repeat, and if you start young enough, retire in your 40s or 50s.
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Iāve been there, too! 
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Yeah, itās odd to invalidate the experience so many of us have lived through. I get that your PE firm might do their best to purchase and keep businesses alive, but a lot of us have seen (other?) PE firms do the opposite.
Going back to the point of this thread, Outside bought up several popular companies, gutted them, took the life out of them, and then expected people to pay for the new lifeless and regurgitated articles. Escape Collective took many of the best and most loved employees from those dead companies and ran a startup that funded well enough to pay for all employees and even expand into new areas in something like a week, so there IS an audience that will pay for quality cycling content.
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And nobody wants to admit that they were unproductive, inefficient and part of a non-viable business.
Always easier to blame the evil PE guys, right?
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Iām just disappointed you had to remove the personal pic to show your true self. But I get it, the outrage of the plebes is certainly too much to be borne.
Although to be fair, the media world being what it is, those companies (other than cycling tips) might well have failed on their own. There are lots of problems with how PE works, and lots of problems with how Outside has done things, but I am not sure how much that Venn diagram overlaps.
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How many businesses were productive, efficient, and viable, before they were purchased, loaded with debt and PE management fees, and then went out of business? The heads I win tails you lose structure where PE always wins but investors and businesses donāt is also problematic.
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Didnāt you see? Those people were all just lazy. 
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Is Outside Inc. owned by private equity? I see that Robin Thurston is the millionaire mastermind behind this. From my outside looking in perspective, he seems to have wanted to corner the market on outdoor, fitness oriented media.
Iām not sure what his game plan was. Corner the market and raise advertising rates? He lost me when he bought Velonews and it went down hill. He lost me again after Cyclingtips was ruined.
But maybe Outside Inc is rolling in subscriptions and ad revenue from its other titles? Itās hard to believe that any of this was a brilliant investment on his part.
Outside took a bunch of VC money when it started buying up the market. Those investors included everyoneās buddy He Who Shall Not Be Named and Did Not Win 7 Tours.