Fresco News, founded in 2014 by John Meyer, was a platform that empowered citizen journalists to sell photos and videos to local media outlets. Initially promising, the startup quickly grew but faced financial instability, leading to its downfall by 2017. Despite raising significant funds, it couldn't sustain operations.
What was Fresco News
Fresco News's main product, the Newsroom Tool Suite, includes Fresco Dispatch, enabling newsrooms to create location-based assignments for users to submit real-time footage. Its unique value proposition lies in empowering citizen journalists and enhancing global event transparency. Notable achievements include raising $7.32M and partnering with major news organizations.
Reasons behind Fresco News's Failure
Financial Mismanagement and Inconsistent Payroll Fresco News missed at least 10 payroll periods between 2016 and 2017, causing significant strain on the business and employee morale. By June 2017, the company was unable to pay employees for a full month, leading to layoffs. This financial instability was a major factor in the company's downfall.
Failed Deals and Investor Issues A multi-million dollar partnership deal fell through nine days after a pep talk from investor Ashton Kutcher. Additionally, the company faced issues with investors backing out at the last minute, which affected their ability to meet payroll and other financial obligations. These failed deals severely impacted Fresco News's financial health.
Internal Chaos and Poor Company Culture High employee turnover and attempts to unionize due to low pay, long hours, and unresolved sexual harassment claims plagued Fresco News. The leadership's inability to address employee demands and maintain a healthy work environment contributed significantly to the company's decline.
Impact on Investors and Market
Fresco News's failure had a significant impact on its investors and the market. Investors, including notable figures like Ashton Kutcher, faced substantial financial losses. The collapse eroded confidence in the startup's management and business model, leading to increased skepticism and caution among investors towards similar ventures, particularly those with inexperienced founders.
Lessons Learned from Fresco News's Failure
Ensure Financial Stability: Consistent payroll and financial management are crucial to maintaining employee morale and operational continuity.
Secure Reliable Investors: Dependable investors are essential. Avoid over-reliance on a few key deals to mitigate financial risks.
Foster a Positive Company Culture: Address employee concerns promptly and create a supportive work environment to reduce turnover and enhance productivity.
Prepare for Contingencies: Develop backup plans for potential deal failures to safeguard against sudden financial shortfalls.
Maintain Transparency: Open communication with employees and stakeholders builds trust and can prevent internal chaos.
Focus on Sustainable Growth: Prioritize long-term stability over rapid expansion to avoid overextending resources.
Learn from Failures: Analyze setbacks to improve strategies and avoid repeating mistakes in future ventures.
Frequently Asked Questions about Fresco News
What was the initial vision of Fresco News?
John Meyer envisioned Fresco as a journalism platform for millennials who don't read traditional news sources.
What were the main features of Fresco News?
Fresco empowered citizen journalists to sell photos and videos to local media outlets and allowed users to respond to assignment requests from media companies.
Why did Fresco News fail?
Fresco News failed due to financial instability, high employee turnover, internal conflicts, and a crucial deal with Univision falling through.
Looking Ahead
As the story of Fresco News illustrates, the journey of a startup can be fraught with challenges. For founders facing the difficult decision to wind down, Sunset offers a comprehensive solution to handle legal, tax, and operational burdens, allowing you to avoid penalties, reduce liabilities, and move on to your next venture seamlessly.
