Gawker

Documented cause

Gawker was founded in December 2002 by Nick Denton, a British journalist and internet entrepreneur, as a gossip and media criticism blog covering New York City and the media industry. Under Denton, Gawker Media expanded into a network of highly influential blogs: Deadspin (sports), Jezebel (women/feminism), Kotaku (gaming), Gizmodo (technology), Jalopnik (cars), and Valleywag (Silicon Valley). At its peak, Gawker Media attracted approximately 50 million monthly unique visitors and had established a distinctive brand of aggressive, irreverent, often invasive journalism. In October 2012, Gawker published a clip from a sex tape featuring Hulk Hogan and the wife of his then-best friend, Bubba the Love Sponge. Hogan sued Gawker for $100M for invasion of privacy. What Gawker did not know was that Peter Thiel, co-founder of PayPal and an early Facebook investor, was secretly funding Hogan's legal case. Thiel's motivation: in 2007, Valleywag (a Gawker property) had outed Thiel as gay against his wishes. Thiel spent years identifying cases against Gawker that could be funded to trial. He invested approximately $10M in the Hogan litigation. On March 18, 2016, a Florida jury awarded Hogan $115 million in compensatory damages and $25 million in punitive damages — a total of $140.1 million. Gawker appealed. The interest accruing on the judgment made the financial position increasingly untenable. Denton had been offered the chance to settle for $1.5M before trial and later for approximately $10M; he declined both times, confident in his First Amendment defense. On June 10, 2016, Gawker Media filed for Chapter 11 bankruptcy protection. In August 2016, Univision acquired the network's properties (excluding Gawker.com itself) for $135M. On August 22, 2016, Gawker.com published its final post and went permanently dark. Nick Denton filed for personal bankruptcy. Peter Thiel's involvement was confirmed in May 2016 — before the final acquisition — and sparked a national debate about billionaire-funded litigation as a form of censorship.

Lesson

Failure anatomy