Austin startup Scribe Media LLC, which helped people write and publish books and other content, abruptly shut down May 24.
The company said it laid off 90 people as a result of the decision, according to a notice the company sent to the Texas Workforce Commission.
Executives of Scribe Media couldn't be reached for comment. The company's explanation hinted at funding issues, but provided little detail on why it had to shut down so suddenly.
"Based on unforeseen business circumstances and faltering business based on unavailability of additional capital, Scribe is forced to shut down its operations and lay off employees at 507 Calles Street on May 24, 2023," the company said in its letter to the state.
The startup was founded by author Tucker Max and entrepreneur Zach Obront in 2014 as Book in a Box. Max fired himself from the CEO role in 2016 and named to the position JeVon McCormick, previously president of Headspring Software. Scribe Media went on to make headlines for its radically transparent culture, as well as its impact on what could be considered a staid industry in the social media age. In 2019, Max predicted the company would one day be valued at over $1 billion.
Scribe does not appear to have raised outside venture capital funding, according to a search of Crunchbase and Form D filings. But records show it received a $707,000 coronavirus-related Paycheck Protection Program loan from the Small Business Administration in April 2020.
The company went on to grow to more than 100 employees, as of February this year.
Several employees wrote posts on LinkedIn indicating that the company didn't offer severance or other benefits.
"I'm one of the freelancers affected by the Scribe Media dumpster fire," one person wrote. "Our first inclination of anything wrong was a missed pay check (which has still not been resolved, BTW)."
Meanwhile, someone started a petition in hopes that if the company sells any remaining assets, the proceeds be used "to ensure financial justice for those individuals who played a crucial role in the company's past achievements."
The petition had gathered 87 signatures as of the afternoon of May 30.
It's unclear what caused Scribe's collapse. But it comes at a time when many startups have struggled to raise venture capital funding. Austin startups closed 63 startups deals in the first quarter of 2023, down from 102 deals in the fourth quarter of 2022 and the lowest deal count since 2016, according to the latest Venture Monitor report put together by PitchBook and the National Venture Capital Association.
Meanwhile, generative artificial intelligence has emerged as a hot new tool that can make writing blogs, books and other content significantly easier. Generative AI startups, such as Austin-based Jasper, have been landing massive funding deals and are threatening to attract business away from or dramatically augment many writing roles.
In May, Crunchbase reported that more than $20 billion has been raised by startups using "AI" in 2023.
Editor's note: This story has been update with a new photo.
