How much is it worth to be shareable? BuzzFeed founder Jonah Peretti is hoping for about $1.5 billion.<\/p>\n
BuzzFeed has agreed to go public through an acquisition by 890 Fifth Avenue Partners, a publicly traded company with no purpose except to buy another company. (890 Fifth Avenue Partners is part of a recent wave of special purpose acquisition companies, or SPACs, which some startups are using to go public.) As part of the deal, BuzzFeed is also acquiring Complex Networks, another media company, for $300 million.<\/p>\n
Cast your mind back, if you are able, to the antediluvian era, before the 2008 crash. Peretti, who had graduated from the MIT Media Lab, had taken his expertise in online popularity \u2014 which, in that era, was search engine optimization \u2014 to found The Huffington Post <\/em>in 2005. A year later, he created BuzzFeed as an experiment to discover what content people would share on social networks. In 2011, when AOL bought The Huffington Post<\/em>, Peretti left \u2014 and BuzzFeed became his mission.<\/p>\n This was a significant shift, one that Peretti was quicker to understand than a lot of other web types. In the SEO era, you could fake it based on the right keywords \u2014 \u201cWhat time is the Super Bowl?\u201d \u2014 but people wouldn\u2019t share that kind of thing. People had to intentionally<\/em> share something on Facebook because they liked it or because they liked what sharing it said about themselves. From the jump, BuzzFeed was interested in truly massive scale, and most of its content was aimed at surfing Facebook shares to traffic. <\/p>\n It worked. At first, BuzzFeed focused mostly on quizzes and memes, but in December 2011, Peretti hired Ben Smith from Politico<\/em> to build out a news division. People shared news, too, after all \u2014 and sharing was the point.<\/p>\n \u201cOne thing Jonah was saying very early on that people thought was crazy \u2014 I<\/em> thought he was crazy \u2014 was that platforms were like cable networks, and we had to find distribution on the new networks,\u201d says Smith, now the media columnist for The<\/em> New York Times<\/em>. \u201cUltimately, directly or indirectly, they were going to pay.\u201d This turned out to be true, to some degree; BuzzFeed set up several lucrative relationships with platforms such as Snapchat. Smith declined to comment on whether the news division was profitable while he ran it.<\/p>\n From the beginning, BuzzFeed did headline A\/B testing \u2014 and the headline that got more shares was the one that won. The revenue bet, at first, was on sponsored content since there were no display ads. HBO would pay for a quiz (\u201cHow Would You Die In \u201cGame Of Thrones\u201d?) or Pillsbury would pay for a listicle (\u201c10 Things You Never Knew You Could Do With a Crescent Roll\u201d). People would share things if they liked them or if they thought they were good \u2014 something most people won\u2019t do for other kinds of ads. That meant BuzzFeed\u2019s sponcon traveled further than competitors\u2019 ads.<\/p>\n At the time, BuzzFeed\u2019s dependence on Facebook was seen as savvy: it had unlocked some kind of secret formula, and suddenly, BuzzFeed was everywhere. Other media companies scrambled to catch up with how BuzzFeed was reinventing the culture of a newsroom. BuzzFeed was fun,<\/em> several early news hires tell me. \u201cYou\u2019d be working in the office, and an army of people would walk in,\u201d Charlie Warzel, a former BuzzFeed tech reporter, says. \u201cAnd it\u2019d be like, Tyler the Creator and Grumpy Cat. One day, we were working in the newsroom, and we heard this bellowing. And Tracy Morgan came in, just yelling.\u201d<\/p>\n In 2013, Facebook was sending a lot<\/em> of traffic to publishers. The company had tweaked its algorithm such that traffic spiked a nice 69 percent from August to October that year. Facebook was, at the time, trying to compete with the reporters\u2019 platform of choice, Twitter. In retrospect, this should have been a warning shot, but the party went on \u2014 and BuzzFeed continued expanding after an injection of $50 million in 2014 from VC firm Andreessen Horowitz, valuing the company at $850 million. BuzzFeed moved offices, and it was hard to keep up with the influx of new employees. <\/p>\n \u201cFrom 2013 to 2015, we mostly looked at platforms as playgrounds,\u201d Warzel says. Sure, they\u2019d be volatile, but they were places to experiment and learn. Several people I spoke to for this article described this period as playful. There was a kind of trust in the platforms, they say. If BuzzFeed evolved and changed with them, there would be nothing to worry about.<\/p>\n Plus, BuzzFeed was considered a cool place to work. In 2015, someone wrote to an advice columnist to say, \u201cI hate myself because I can\u2019t work for BuzzFeed.\u201d The letter went on to call BuzzFeed \u201cthe most successful media company of our time,\u201d \u201cthe future of the media business,\u201d \u201cthe most widely recognized media brand among young people,\u201d and predicted it \u201cwill inevitably eclipse the major media organizations and one day become a super-hegemonic media power the likes of which we\u2019ve never seen.\u201d <\/p>\n Later that year, NBCUniversal invested $200 million in the business, giving it a valuation of $1.5 billion, about double its value in 2014. BuzzFeed wasn\u2019t the only new media company with a sky-high valuation; in 2017, Vice was valued at $5.7 billion. Vox Media, the parent company of The Verge<\/em>, was valued at $1 billion in 2015. (Vice is now in talks for its own SPAC merger that would value it at just $3 billion. Vox Media was valued at $750 million in 2019, when it acquired New York Media.)<\/p>\n Around then, Facebook began favoring video content. BuzzFeed\u2019s strategy, up to that point, had been based on YouTube \u2014 to get some ad revenue. But the success of Tasty convinced the company to pay more attention to Facebook, some former BuzzFeed staffers say. The company invested in Facebook Live, Facebook\u2019s livestreaming service. BuzzFeed\u2019s 2016 Facebook Live event of a watermelon being wrapped in rubber bands until it exploded was viewed as a massive success for the company. \u201cThat was massive and exciting in the office,\u201d Warzel says. \u201cLike, \u2018Oh, we figured it out again!\u2019\u201d<\/p>\n But then, Facebook changed its algorithm, deprioritizing video \u2014 and traffic tanked. (Later, Facebook would pay $40 million to settle advertiser lawsuits, after the company admitted it had inflated view counts in 2015 and 2016.) That seemed to sour Peretti and others on the platform. \u201cThere was a sense of \u2018These people are just dicking us around,\u2019\u201d Warzel tells me.<\/p>\n In October 2017, Peretti criticized Facebook\u2019s News Feed for supporting low-cost content. \u201cThe business model of news is changing, and if Google and Facebook take all the revenue but don\u2019t want to pay for the fact checking, the reporting, the more-intensive investigations, who does that work?\u201d Peretti said at a Wall Street Journal <\/em>conference. That year, BuzzFeed laid off 100 employees after missing its revenue targets by 15 to 20 percent, The Wall Street Journal<\/em> reported.<\/p>\n By 2018, Peretti was floating the idea of a merger with other media companies \u2014 to increase their leverage against the platforms and make more money. This struck some staffers as ironic. In 2015, Peretti had told staff, \u201cI don\u2019t think a union is right for BuzzFeed.\u201d Now, suddenly, he was suggesting that media companies should band together, as a group, to increase their bargaining power. But Peretti had clearly been thinking about acquisitions for some time. He almost never said anything publicly that he hadn\u2019t discussed in detail privately, a source says. If he was saying it publicly, he was already committed. (BuzzFeed unionized in 2019.)<\/p>\n BuzzFeed tightened its belt in 2019, cutting 43 journalists\u2019 jobs. It sought other revenue streams, selling merch and investing in affiliate agreements with companies such as Amazon. In November 2020, the company announced its plan to acquire what was now called HuffPo,<\/em> Peretti\u2019s previous company. (That acquisition valued BuzzFeed at $1.7 billion, according to Bloomberg<\/em>.<\/em>) To welcome them, BuzzFeed News<\/em> staffers pooled their money and bought a Cameo of Fiona the hippo. Less than a month after the deal closed, BuzzFeed fired 47 HuffPo<\/em> journalists in the US in an online meeting with the password \u201cspr!ngisH3r3.\u201d<\/p>\n BuzzFeed turned a profit in 2020 for the first time since 2014, according to The Wall Street Journal<\/em>.<\/em> Complex did not; its profits actually fell 14 percent last year.<\/p>\n The deal gives BuzzFeed more cash \u2014 $438 million, about $150 million of which is debt financing. Because it is going public through this merger, rather than an IPO, the company wasn\u2019t constrained from giving future projections. In a slide deck, BuzzFeed projected that its 2021 profit will be $57 million before taxes and $117 million in 2022. Peretti suggested in a press conference that his acquisition spree isn\u2019t over with Complex, either.<\/p>\n Now, staffers are trying to figure out how much their options are worth, two current employees told me. Some people who left and bought their options on the way out are just hoping to break even. <\/p>\n Smith, the former BuzzFeed News<\/em> head, referred me to his New York Times<\/em> disclosure about his stock and declined to say anything further (In April 2020: \u201cI retain stock options in the company, which could bring me into conflict with The Times\u2019s ethics standards. I also agreed to divest those options as quickly as I could, and certainly by the end of the year.\u201d In January 2021, Smith again disclosed he still held some options). <\/p>\n In the meantime, The New York Times<\/em> has been aggressively poaching BuzzFeed journalists. Besides Smith, the former editor-in-chief, and Warzel, who worked as an opinion columnist at NYT <\/em>before launching his own subscription newsletter, Virginia Hughes, Davey Alba, Sheera Frenkel, and Sapna Maheshwari are among the more than 20 journalists the Times <\/em>has lured away. As BuzzFeed announced its SPAC deal, the NYT <\/em>announced that it took one more: Ryan Mac, who recently won a Polk Award for his tech coverage. In the end, it seems an awful lot of the journalists who\u2019d attempted to redefine journalism for the internet age defected to the stuffiest, most old-school journalism institution of them all.<\/p>\n","protected":false},"excerpt":{"rendered":" How much is it worth to be shareable? BuzzFeed founder Jonah Peretti is hoping…<\/p>\n","protected":false},"author":1,"featured_media":1694,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3],"tags":[38,64,62,66,63,65,69,67,71,68,70],"_links":{"self":[{"href":"https:\/\/itparadise.net\/index.php?rest_route=\/wp\/v2\/posts\/1693"}],"collection":[{"href":"https:\/\/itparadise.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itparadise.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itparadise.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/itparadise.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1693"}],"version-history":[{"count":1,"href":"https:\/\/itparadise.net\/index.php?rest_route=\/wp\/v2\/posts\/1693\/revisions"}],"predecessor-version":[{"id":2127,"href":"https:\/\/itparadise.net\/index.php?rest_route=\/wp\/v2\/posts\/1693\/revisions\/2127"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/itparadise.net\/index.php?rest_route=\/wp\/v2\/media\/1694"}],"wp:attachment":[{"href":"https:\/\/itparadise.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1693"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itparadise.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1693"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itparadise.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1693"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}BuzzFeed was an experiment to discover what content people would share on social networks<\/q><\/aside>\n
At the time, BuzzFeed\u2019s dependence on Facebook was seen as savvy<\/q><\/aside>\n
In 2015, someone wrote to an advice columnist to say, \u201cI hate myself because I can\u2019t work for BuzzFeed\u201d<\/q><\/aside>\n
\u201cThere was a sense of \u2018These people are just dicking us around.\u2019\u201d<\/q><\/aside>\n
Staffers are trying to figure out how much their options are worth<\/q><\/aside>\n