[Additional reporting by Paul Carr]. Back in the heady days of 2007, flush with what was officially announced as $4.5m in funding from incubator Brightstation Ventures, UK Blog network Shiny Media held an event for advertising agencies to come and see how the new world of blogs would change their entire business strategy.
But in a scene straight from The Office, the company’s commercial manager stood up and dismissively told the assembled media luminaries that they were “all sheep [who] should stop following the big media herd and advertise with Shiny… the new wave of blogs”. “Bah!” said the sheep from major media agency Carat, and promptly walked out in disgust. Since then Shiny Media has been, many times over, lauded as the UK’s great new hope of blog publishing. But the shiny exterior of the operation appears to have been quite different to the reality.
Founded in 2004 by journalists Ashley Norris, Chris Price and Katie Lee, Shiny followed the Gawker/Weblogs Inc “blog network” model so fashionable at the time. The company was best known for its Shiny Shiny (girly gadgets), Tech Digest (technology) and Shoewawa (footwear) blogs. It had also expanded into other vertical titles, but attempts to break into the US market had been limited. Many have remarked that despite their efforts, Shiny Blogs had few stand-out publishing brands, that the blog designs had lurched from middling to worse, and that despite a few bright spots the company rarely attracted sufficient raw writing talent. Their passion for .tv domains also didn’t help.
Around the same time other UK entrepreneurs were trying their hands with blog networks like Mink Media and MessyMedia but none lasted – most citing the inability to scale to large traffic numbers in the UK. Shiny apparently thought they could buck the trend.
Sure enough, in January 2007 Shiny won its “$4.5 million” from Brightstation – headed by long-time UK entrepreneur Dan Wagner – for a 50pc stake. Or at least that’s what was said by the company at the time and consistently since. It appeared to be doing well; according to sources close to Brightstation, by November 2007 traffic to Shiny media was 3.5 millions uniques and revenues were in the hundreds of thousands of pounds per annum.
And yet, fast forward to 2009 and Shiny was limping. The company laid off half of its 17 staff in February, citing a tech advertising downturn. Norris, the original CEO, had departed in August 2008 to start experimenting in online video publishing and had become CEO of online men’s publisher Anorak Media. Katie Lee left in February 2009, at the same time as Shiny’s period of layoffs and cutbacks.
Recently, Anorak, under Norris, acquired a blog he founded, WhoAteAllThePies from Shiny, which then mothballed the title. Norris resumed blogging with Shiny.
Then on July 21, TechCrunch Europe folllowed up on a story broken by a former employee, that Shiny Media had gone into administration. Unknown to us at the time – but subsequently leaked – the day before, co-founder and director Chris Price had sent this email to all employees and freelancers.
From: Chris Price
Date: Mon, Jul 20, 2009 at 7:33 PM
Subject: Shiny Media
I am very sorry for the events of the last 24 hours. Unfortunately
Shiny Media has been unable to continue trading because of mounting
debts in the business and a decision was taken at a board meeting on
Friday afternoon to put the company into administration.
Although the business received a cash injection of 80K through the
sale of Bag Lady and Shoewawa, the bank was unwilling to renew the
existing overdraft without imposing much more punitive terms on Ashley
and myself (including higher interest rates and our houses as
collateral) and general trading continued to be difficult.
At the same time as the company went into administration on Friday the
assets of Shiny Media were sold to a new company, comprising the
majority shareholders of Brightstation Ventures and the founders of
Unfortunately one of the former directors of Shiny Media who is a
small stakeholder in the business has taken it upon himself to indulge
in criminal activity including breaking and entering into the
premises, changing the locks without the landlord’s authority,
accessing emails and other passwords, deleting email accounts
(including mine), deleting users from the Movable Type network, moving
over Domain Names into his own name and switching off business mobile
Not only is this damaging any future for the business, it also reduces
any amount of money left for Shiny Media’s creditors – including
freelance journalists, some of whom are yet to be paid. I also
understand he has been intimidating staff.
He has now received a letter from our lawyers in which we have asked
him to stop his disruptive and illegal behaviour and allow us access
to the building for which we have a licence to occupy. I am hoping he
will come to his senses tomorrow before we are forced to contact the
police, but unfortunately we have seen this irrational behaviour
before with other businesses he has been involved with.
Once again please accept my apologies – I was hoping to get in touch
with everyone at 12pm today. I will now update you all with more
What publicly emerged, uncovered by TechCrunch Europe and sites like PaidContent UK, was that Shiny had indeed gone into administration the previous Friday, allegedly due to growing debts. Shortly afterward, the assets – including all websites with the exception of Bag Lady and Shoewawa – were bought by a new company, Shiny Digital. According to the Companies House registry in the UK, the equal shareholders in this new company were Shiny Trends (incorporated by Shiny co-founders Chris Price, Ashley Norris and Katie Lee last year) and Cansas Digital Ventures (a new registered name for Shiny Media’s venture funder Brightstation since August 2007).
Clearly there was something going on. Why had Price’s email and mobile been “switched off by one of the minority shareholders in the business”? Was there a disagreement going on at board level about the new structure? At any rate, an administrator had been brought in and many Shiny blogs had stopped updating.
That same day co-founder Katie Lee (who had left Shiny in February but remained a shareholder) confirmed the story on Twitter, saying in a tweet that “Looks like everyone knows Shiny Media has gone into administration. Still not entirely sure what’s going on tbh. Sorry for all writers.”
Lee also Twittered: “Just to clarify, because it’s always bugged me, Bright Station did not put $4.5m into Shiny Media.” She went on: “It was incorrectly reported in the press and we were told to stick with the story. Was mortified.”
Of course, this itself wasn’t quite correct. The press had simply reported what Shiny had told them. For years. And what it was still saying on their corporate blog, i.e. “How to spend $4.5 million.” It also appears that Brightstation itself never attempted to correct the record. Bright Station’s founders were interviewed in The Times in January 2007, again mentioning the $4.5 million figure.
A day later on July 22, co-founder Chris Price gave a more accurate picture of the company’s investment to The Guardian, saying Shiny had received “under a million pounds”. Sources close to the deal have confirmed this to us.
Lee continued to Tweet on the matter. She said the status of Shiny was up in the air and that “[I] Don’t know who administrators were. All presented as fait accompli”.
She also said “As far as I know, Shiny Media has already been bought [before I even knew it had gone into administration]. So hopefully some jobs OK.”
This suggested that the company had been put into administration and then bought almost immediately in what is normally referred to as a Pre-packaged sale. In a nutshell, this means that a buyer is lined-up – often the company is selling to another company where the directors are similar, if not the same – and a sale is made almost immediately after administration. However, a legal requirement is that the company for sale is advertised somewhere (and we’re not talking in some disused basement here, we’re talking somewhere public and online).
So was Shiny Media advertised for sale? If it was we can’t find any evidence of this to date.
On July 22, The Daily Telegraph followed up. Dan Wagner, CEO of Brightstation told the newspaper he was disputing the administration order for Shiny Media, the UK blog publishing house. He said the company was performing well and the administration was not necessary.
He said: “Shaa Wasmund and I, as directors of Shiny Media Limited and representing over 50pc of the shareholding in the company, are currently contesting the appointment of the administrator and the alleged subsequent sale of the assets. We are firmly of the view that Shiny Media was a solvent company on Friday July 17, in good shape and trading well.”
However, the company appointed to the administration told a different story. Wilson Field in Sheffield said Shiny Media had been left with no option but administration and said “Legal advice shows the appointment is valid.” A spokesperson said “We are satisfied that the company was insolvent as defined by Section 123 of the Insolvency Act 1986, as it was unable to pay its debts as and when they fell due. HM Revenue and Customs had threatened… proceedings. The administrators are currently considering taking legal remedies against Dan Wagner.” Shiny Media refused to comment at that time.
That day Price posted an early comment on PaidContent UK, reasserting his view that the company had gone into administration, saying “Every effort was made to continue trading, including selling of assets, redundancies, downsizing offices and, in the case of the directors, substantial pay cuts.”
The Guardian newspaper also reported that Price had emailed them, saying, again, that most of the assets of Shiny Media had been bought by a new venture, Shiny Digital. Again, this had shareholders including Norris and Lee, and Cansas Digital Ventures, the new vehicle for Brightstation.
In other words, it seems that Dan Wagner is contesting the fact that Shiny Media is not in administration, when a company he owns, Cansas Digital Ventures, is now part owner of all the old Shiny Media assets. Curiouser and curiouser.
The next day, July 23, Paidcontent reported that Ashley Norris had telephoned them to say “I’m completely heartbroken with the way it’s turned out. I’m disappointed we’re having to maintain radio silence and not comment – but it’s for legal reasons – we hope to be much more candid in the next few days.”
That day also, Katie Lee came out fighting. In a very long blog post (almost as long as this one) on The Daily Telegraph she said a number of things, including that the sale of the Shiny Media company’s assets to Shiny Digital had left her with less equity and some other early writers with none.
However, the most interesting part was this: “The pre-pack has certainly left a bad taste in my mouth and having any shares at all is making me uncomfortable.”
In other words she confirmed that this was a pre-packaged sale. Again, was it advertised in accordance with UK law? A UK government report has found that in 35% of pre-packed sales, the administrators breached the rules.
In addition, further information has been passed to us about what happened at Shiny.
TechCrunch has been told by inside sources that Price and Norris “voted another person onto the board” in order to pass through a motion of insolvency. This prompted the “shareholder”, referred to in Price’s email to employees, to start locking down the company offices. This shareholder is believed to be Brightstation.
In fact, our sources say staff turned up on Monday and were confronted by some angry representatives from Brightstation. We also understand one freelancer was given the phone number of Brightstation by someone at Shiny, only to be told by Brightstation that it would be bringing to bear “all the legal might they could muster”.
We’ve also been told that Brightstation told in-house Shiny staff to go to the offices, and take whatever make-up (they had blogs about fashion and beauty), gadgets and fashion samples they could get their hands on. Comedic scenes apparently ensued when Price and Norris appeared and police were called thinking there was some kind of break-in going on.
The questions that arise from this affair are innumerable.
Why does Dan Wagner of Brightstation call this an “alleged sale” if Brightstation already owns part of the company that the assets were sold to. Wagner has declined to comment further.
Was Brightstation given the option to buy the assets or to invest further money by Shiny Media prior to is pre-pack sale to Shiny Digital?
How much were the assets sold for?
What attempts were made by the administrators to find another buyer for the assets? Was there any advertising? We’ve called the administrators but they have not returned our calls.
Some freelance Shiny writers say they were still waiting for payments owed prior to Shiny entering administration. Some are owed at least £4,000. This could substantiate the administrator’s view that Shiny Media “was unable to pay its debts”.
Who is this mystery additional shareholder that voted for administration?
Was Brightstation aware of the whole process?
We’ve spoken to Ashley Norris. He told us “We can’t speak because of various ongoing legal situations.” But he did say the administrators had been happy with the process to date and will be issuing a press release in due course.
We have another, well placed source that suggests a further twist. They tell us that Brightstation themselves didn’t put the money into Shiny Media, but in fact acted as a middleman between Shiny and another company (as yet unnamed) which provided the money to power Brightstation. That company made most of its money from sub-prime mortgages so when the market tanked last year, so did their financial muscle. As a result they weren’t able to give Shiny Media all the money they were promised, which may have further exacerbated the company’s woes.
The source suggests that it was these financial problems which caused a breakdown in relations and communication between all parties, leading to the chaos we’ve witnessed this week.
Finally, it is worth recalling who Dan Wagner is. This is a tough entrepreneur and investor who is best known for running the Maid online information business in the 1990s, and turning down an opportunity to invest $1m (£510,000) for 30% of the fledgling Ebay — a stake that would now be worth many billions. He also bought the assets of Boo.com for a reported $375,000 back during the dotcom crash and turned it into the successful ecommerce player Venda. And his Wikipedia page suggests that he is not one to take things lying down.
Perhaps it would be generous however to end on a lighter note. The shiny, flock wallpaper in Shiny’s Central London office (which they shared with fellow-Brightstation-backed OSOYOU) cost £80 a sheet. Isn’t it shiny?
Picture of Shiny founders: The Guardian