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Dark days for Patch as investors grow weary and editor-in-chief resigns

patch deadAs Aol continues to try to reassert itself amid its slow and very public fade into Web oblivion, the company has hung its hat on a couple of tentpoles – one of them being Patch. The hyper-local blogging platform has been Tim Armstrong’s baby, and the veteran company has invested in the site even throughout its financial struggles.

But Patch has been through a lot, and now it’s been dealt another blow, as editor-in-chief Brian Farnham has resigned from his position. “Taking leave of Patch ain’t easy, but let me try to boil down why I’m doing so: it turns out I really love creating things from scratch, and while Patch is in a continual process of truly fascinating evolution and only a toddler of a company, it has definitely left ‘scratch’ in the dust,” he said in a statement. “So I’m heading off to explore some other startup opportunities.”

Farnham has plenty of good things to say about Patch in his leaving, including the claim that “Patch is enjoying such palpable momentum as a business.” Then why does this feel like Patch is taking another beating?

Probably because the people on the ground level of the business rarely have good things to say about it. Patch ad salesmen with horror stories are constantly coming out of the woodwork. One commenter who says he’s in ad sales with the company told us that while he enjoyed working there, the pay was bad and the business model unsustainable. And last month another sales person contacted BusinessInsider, echoing the idea that the site’s ad sales agenda isn’t working. “Someone who used to work here is out telling my local advertisers that they can sign up on Google’s self serve ad thing and choose patch.com to advertiser [sic] on along with their keywords.” He almost says he doesn’t know how Google can sell ads to Patch cheaper than the platform itself, but it’s eroding business.

The fact that Aol still has to prove itself to its board, despite its recent massive patent sale, also doesn’t bode well for Patch. According to Dealbook, the billion dollar sale wasn’t enough to inspire confidence in Aol, and was more of a last resort than a way to establish a profit plan. Worse yet, Patch was pinpointed as a weak link. Starboard Value, which owns a 5.3-percent stake in Aol, is less than pleased with the money the company sinks into Patch – it estimates that amount to be about $150 million a year. “We remain concerned that shareholder capital will continue to be used for poorly conceived acquisitions and investments into money-losing initiatives like Patch and other Display properties,” the company says.

Which makes things pretty clear: great job on that billion dollar patent sale, now stop pouring funds into Patch – it’s just not going to work. We know you want it to work, we know at one point it might have worked, but the moment of opportunity (if there ever was one) has passed.  Also contributing to the Patch fear-mongering is that fact that responsibility for the site has been placed squarely on Armstrong’s shoulders – Arianna Huffington, more or less, doesn’t want to touch it with a 10 foot pole. So its success or failure could have large implications for Armstrong’s role within Aol. Revitalizing the site doesn’t make a ton of sense: it’s currently only available to coastal regions, for the most part, and hiring enough writers to sustain these areas and expand would translate to a pretty serious investment. 

It sure seems like Patch is on the chopping block. And if that’s to happen, it means even more layoffs for Aol. It’s decision time, and throwing more money at Patch – which has already seen about $200 million come its way – really doesn’t sound like a way to appease investors that are growing weary of plan that’s had little payoff. 

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