Facebook cofounder Chris Hughes explains what he learned from sinking $25 million into a business venture that ultimately failed
- Facebook cofounder Chris Hughes ultimately made $500 million for helping his Harvard roommate Mark Zuckerberg build the company in its first three years.
- Hughes bought The New Republic magazine, a long-running liberal journal, in 2012, with hopes of making it a financially stable mainstream success.
- After investing $25 million into it and losing three quarters of his staff over editorial changes, the magazine barely added any readers, and he sold it in 2016.
- Hughes told us it taught him that ambitious goals should not require radical means to achieve them.
Chris Hughes was feeling at the top of his game in 2012. He cashed out his remaining stake in Facebook, the company he helped his Harvard roommate Mark Zuckerberg build in its early days, for a total of around $500 million when it went public in May. He also still had clout from his success as a digital strategist for Barack Obama's 2008 presidential campaign.
And so in his new role as the owner of The New Republic magazine, which he bought for a couple million in March, he "came in guns blazing," he told us in an interview for Business Insider's podcast "Success! How I Did It."
"I loved the journalism that The New Republic had done for decades, nearly a century at that point, and really believed that more people should be reading it," he said.
Four years and $25 million later, however, and Hughes had lost three quarters of his staff and was trashed in the media. He was forced to sell.
Hughes is now the founding CEO of the Economic Security Project, a nonprofit advocating for a guaranteed income in the United States, and he used his recent book "Fair Shot" to finally speak about The New Republic fiasco. He said that it actually taught him a valuable lesson about expectations and risk that he's since been mindful of.
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"I took those early lessons from Facebook and the Obama campaign and set really unrealistic goals," he told us. "Those goals I do regret. I wanted to take the journalism and move it to an audience of millions, or tens of millions, and, in the process, skipped over the fact that The New Republic was a small print magazine with a circulation of 35,000 when I bought it."
After Hughes bought the magazine, he envisioned it as a magazine that could be relevant in the mainstream and still smart. He moved its offices from Washington, DC to New York and made editorial changes that ramped up production of daily stories and revamped the magazine's layout and website. Much of his newsroom rejected these changes, casting him as a patronizing tech millionaire trying to commoditize journalism and destroying it in the process.
Twenty employees and 36 of 38 contributing editors resigned. Many of them vented their anger publicly, and Hughes' years of glowing press turned sour.
In his book, Hughes said that he felt that he was once again being cast in an extreme light. As he saw it, he wasn't the hero people wanted him to be in the Obama campaign, and he wasn't the villain people wanted him to be at the New Republic. He was, he explained, trying to save a beloved magazine from extinction by transforming it, and doing so in a way that was ignoring the desires of his staff.
On top of the drama, the needle barely moved in terms of subscriptions and online readers. The attempt had failed.
"And I think I would have been better served and the institution would have been better served had I adapted more modest means to the enterprise," he told us. He was writing checks for $500,000 each month and digging himself deeper into a hole. "If I'd invested that kind of money, but over a longer period, and instead of trying to reach tens of millions all of a sudden with a somewhat niche kind of magazine, trying to reach a smaller and more engaged audience," he'd have had a better shot at enhancing the magazine without prompting mutiny.
He doesn't see it as a total loss, noting that he's proud of a lot of stories published and user experience changes made under his tenure, but sees where he made mistakes.
"I mean, that's why I didn't start an organization to campaign for UBI right off the bat," he said, referring to Universal Basic Income, a system in which every citizen receives a guaranteed income regardless of their circumstances. Instead, Hughes' organization is advocating for a guaranteed income of a monthly $500 sent to working Americans making under $50,000. It is certainly quite ambitious, but one Hughes doesn't see as impossible, and he is willing to support policies that gradually ease into it.
As he wrote in "Fair Shot," his failure at the New Republic taught him that, "just because an idea is bold does not mean that the means to achieve it need be. A prosaic and incremental approach can be a more effective way to put poetic ideals into practice."