Lessons from the demise of BuzzFeed News

Note: Transcripts are automatically generated from episode audio, and are not fully corrected for spelling, grammar, and formatting.

JONAH PERETTI: I’m very proud of the work that Buzzfeed News did. One thing I’ve noticed in business is when something is happening and people start talking about it nostalgically even in the present, that you probably should be focusing on what’s coming next in the future. 

That metaphor of surfing a wave, if there’s a good wave, you got a good shot if you can ride it, and you know, sometimes surfers get smashed by the waves, but I would rather be in a place where there’s some really nice big waves than to be just sitting out there with nothing to ride, you know?

BOB SAFIAN: That’s Jonah Peretti, CEO of BuzzFeed, the digital content company that 

encompasses brands from HuffPost to Tasty to Complex. Jonah recently announced a big round of layoffs, including the shutting down of BuzzFeed News, which was recognized with a Pulitzer Prize just two years ago.

I’m Bob Safian, former editor of Fast Company, founder of The Flux Group, and host of Masters of Scale Rapid Response. Jonah has appeared on this show twice before, in the darkest days of the pandemic, when BuzzFeed’s revenue evaporated, and a year later, in the midst of a rebound that led to a public listing via SPAC.

I wanted to talk to Jonah again, because having successfully navigated one on-the-brink moment, he is now facing another one.

Many digital media businesses that once seemed future-proof find themselves under heavy pressure, as evidenced by Vice Media’s move toward bankruptcy. BuzzFeed is not at that precipice, but Jonah has seen the company’s stock price fall by some 90%, and he’s faced significant heat for giving up on BuzzFeed News.

Jonah talks with me about how and why he made that decision, and what he thinks will be required for BuzzFeed to rebound. He talks about how the company is taking advantage of shifts in the creator economy, and the big bets he’s making on generative AI.

Despite his regrets about BuzzFeed News, Jonah says he is optimistic. His perspective about the risk of not taking risk is instructive for any entrepreneurial leader.

[THEME MUSIC]

SAFIAN: I’m Bob Safian, and I’m here with Jonah Peretti, the CEO of BuzzFeed. Jonah, thanks for joining us. 

PERETTI: Thanks for having me.

Copy LinkWhat’s changed since Jonah Peretti’s last appearance on Rapid Response?

SAFIAN: You recently announced some significant staff cuts and the shuttering of BuzzFeed News; your stock price is way, way down. So, what has happened since the last time we talked?

PERETTI: There certainly has been some ups and downs and, you know, talking through all of the changes and shifts we made in the dark days of the pandemic, to be able to rebound and achieve significant profits and get the business in the right direction was, you know, it was a lot of work that the team did. And now we’re in a different situation, which is, we’re looking forward to what the Internet’s gonna be a year from now, two years from now, five years from now. And we’re seeing that what once was a hot and exciting, new technological development of social media is now just the way everything works in the world. It’s not a growth area.

And, you know, unfortunately some of that shift is saying, “Hey, we can’t do things the way we always have.” And BuzzFeed News is I think the best example. It was a premium news brand that was based on social distribution, with the most of its audience coming from Facebook. And as difficult as it was to shut down BuzzFeed News, it made a lot of sense because the social networks are going to be more about entertainment and fun and joy, which the BuzzFeed brand provides. The BuzzFeed brand is 10 times bigger than the BuzzFeed News brand. So in terms of our scale and our audience, BuzzFeed lists and quizzes and games — all of that is what the future is going to enable and what audiences want. And so we need to really prioritize on what’s gonna be big a year from now, and not just, you know, the way we’ve done things in the past.

SAFIAN: When we talked previously, you said that having BuzzFeed News as part of BuzzFeed wasn’t about profits — that there were other kinds of benefits to the organization and the brand. And did that change? How did that transition about the way you think about that kind of property adjust to where you are now?

PERETTI: Yeah. The change was the idea of how you can build sustainably for the long term. With the rise of TikTok, with the kind of decline in tech valuations with a new focus on cost cutting across all the big tech platforms. And also frankly, without a real deep appreciation of journalism and what it takes to sustain quality journalism, we lost a lot of the kind of support from the platforms. The news tab deals were all getting canceled on Facebook.

And I think long term, you can’t build a business because it’s good for the brand or it’s philanthropic or something like that. You need to build something sustainable. And then when you build something sustainable, you can do really great work. And what we saw over at HuffPost, another one of our properties, was a big front page, solid profitability, double the size of the audience, something that people were navigating to directly, where you weren’t dependent as much on the big platforms to surface the news content to the audience. And that felt like a sustainable model with quality journalism and a great service to the audience. 

There was a period with social where people really loved having their news and their entertainment and their friends and family content, like all together in one feed. People kind of want to compartmentalize more. They still want news, but they want to go to HuffPost and figure out what’s going on in the world. Then they want to go to their, you know, TikTok or Facebook feed and find fun, entertaining content. So partly what we’re doing is, you know, there’s the bundling of different types of content together. And now we’re having this period of unbundling, where people wanna have a little more separation and boundaries between different types of content and not just have one algorithm feed them everything.

So when you look forward to the future, you gotta plan for: what does this sort of post social world look like? And some of the trends that we are seeing are an explosion in AI and generative AI in particular, and the way that that’s gonna change content creation is really dramatic. And we need to start to plan for that, both BuzzFeed Inc. but also the industry.

SAFIAN: There are some people who are like, “Jonah sort of lost the courage of his conviction behind what BuzzFeed News was about.” Is there some element of that, like, now as a public company, the pressure is different on making sure the elements of the business are profitable? If you were private, maybe could you still be going forward? Or, is that not really the case? Because you love BuzzFeed News, like, I know you loved so many of the things that it was doing.

PERETTI: I’m very proud of the work that BuzzFeed News did. And I think, one thing I’ve noticed in business is when something is happening and people start talking about it nostalgically, even in the present, that you probably should be focusing on what’s coming next in the future more. And I think that BuzzFeed News felt a little bit stuck and in some ways a prisoner to the original vision of BuzzFeed News, where the news would find you wherever you are.

If you look at what’s happened to Twitter, I mean, Twitter used to give you this general sense of what was going on in the world. And now if you’re in the tech industry or you’re into NBA basketball or you know, certain topics, Twitter has lots of stuff, but it doesn’t have that kind of comprehensive view. And so people are wanting to be able to go places where they can get a sense of what the big picture is. And I think BuzzFeed News never really excelled in that type of work. It was always more about shooting off stories that would kind of travel around the Internet on these social platforms.

SAFIAN: For people who are nostalgic about BuzzFeed News, who are sad about its demise, what do you say to them? I mean, there’s a business reason for why you’ve made the decisions you’ve made, but there’s also a cost to that that reverberates and has implications for the people who work there and for other people in the news business.

PERETTI: I feel sad about it. They did great work that was meaningful to a lot of people. Most people in the news industry that I talk to, their starting point is, oh God, I don’t know if the work I do really has financial value. I know it has social value. I know it has, you know, societal political value, but, you know, the industry’s so tough. I fought hard for a long time to make BuzzFeed News as successful as it could be. Doing Pulitzer winning journalism is challenging and hard and expensive and there’s moments when there’s platforms or models that can sustain it. But, a lot of times it’s a labor of love and it’s a moment in time and it’s hard to do that forever.

Copy LinkHow Jonah Peretti made the decision to end BuzzFeed News

SAFIAN: Hmm. And on the day you made the decision that this is what needs to happen, did you immediately act or did you sort of sit with it to try to figure out like, how am I gonna talk to people about it? Because there’s no one who was a bigger proponent and supporter of BuzzFeed News than you, and yet, you know, you also have to be this sort of shepherd to the end.

PERETTI: One thing that I think people don’t necessarily appreciate is that, you know, I will go through the emotions of these kinds of decisions. But the emotions you go through often happen earlier, and by the time you’re having the conversation, you’ve already had time to process it. And so I think with BuzzFeed News, you know, I had been struggling for a while with some of the challenges and just not having that core belief in my heart that social news was going to be the way people got their news in the long term.

I talked about the Paris Cafe, where everything’s mixed together and you have your newspaper and your food and your croissant. You’re flirting with someone at the next table and petting the dog under the table, and it’s like everything has merged together. People like that in the early days of social, but after all the toxicity and the Trump years and Covid and all these other things, it just was clear that the social platforms had gotten exhausted with news.

And so I think once you have that conviction, it’s harder to move forward pretending that you don’t, you know? To move forward saying, oh, I’m pretending that I think this could work. And you realize like, this is not where the world is headed. And the cultural impact of all of our brands is so great, and the people who work at the company are so motivated by the cultural impact they’re having. It would be malpractice if we jeopardize that.

SAFIAN: Even if BuzzFeed News hadn’t been shut down right now, we’d still be talking right now about the pressures that your business is under. I remember during the pandemic we talked about how like the business has evaporated, but the audience was bigger than ever. Your audience is still large, the stock price is way down. Like, is the advertiser marketplace less interested in the audience or it’s not convinced that you’re gonna be where the business is in the future?

PERETTI: I think that having a clear vision for what’s coming next in the future is still rare. To me, it seems pretty clear that certain trends are gonna be important in the future. And I think when the market sees that, you’ll see the benefit in our stock price.

I think when you look at the creator economy, creators partnering up with media companies is something you’re gonna see more of. The sort of independent creators have gotten burnt out and frustrated. They don’t have colleagues and support and great opportunities. But then people who work at traditional media companies feel stifled that they’re locked into contracts and they don’t have the freedom of an independent creator. I think there’s a kind of best of both worlds there that can happen when creators and media companies partner, and we started that with Tasty, and we’re expanding it to Complex and BuzzFeed and other places. And so I think that’s gonna be very exciting in the next few years.

[AD BREAK]

SAFIAN: Before the break we heard BuzzFeed CEO Jonah Peretti explain why he shut down BuzzFeed News, and how new user habits have forced the company to refocus. 

Now, he goes deep on BuzzFeed’s embrace of AI and how it is already amplifying content creation. He also explains how stock valuations can impact strategy, even when you’re not focused on stock price as a leader. Plus, he shares lessons on the risks of not taking risk.

You said to me, when we talked previously, that founder-led companies are sometimes better in a crisis, than when it’s a steady-state business, that the environments of change are good for you. Is that what you feel about this period? And on the other hand, are there things you learned, about when things are more stable, that the business might approach differently?

Copy LinkLeading in stable times vs crises

PERETTI: I think that often, founder-led companies do well in inflection points, and we’re certainly at an inflection point in the media industry right now. It requires going back to first principles and experimenting and creating new things. And that’s something that entrepreneurial leaders are good at doing. They don’t have to be necessarily a founder, but a lot of the more entrepreneurial people at the company are very excited right now about building for a new future.

I do think that in times of stability, one thing that I could improve at is to make sure we have a stronger buffer of profitability, so that we are operating very efficiently with a lot of financial discipline and rigor, which gives you more of a buffer for changes. That’s something that really experienced seasoned operators tend to be good at. They might not be able to innovate, create new products, but they can run a business in a way that, you know, maximizes profits. 

SAFIAN: When things are more stable, of course, your impulse might still be to look for the new things to do.

PERETTI: Yeah. And it was frustrating that there weren’t many exciting technological trends for a period of several years. You know, there was the rise of mobile and the iPhone and then there was a rise of social media. More recently you had Web3 crypto stuff and you had the metaverse sort of VR/AR stuff.

And to me, those trends both felt like they were not quite the right thing for us to grab on to. We did a little bit of experiments in both of those, but they didn’t feel transformative for us, whereas generative AI really does truly feel transformative. And so, I think part of it was, you know, felt like a surfer that was waiting for another cool wave to come, and it was like, oh, that’s not a very good wave.

Whereas generative AI is something that, you know, can touch everything we do in a really profound way. 

Copy LinkHow Jonah Peretti is thinking about AI

SAFIAN: When you look at how you adapt your business to generative AI, is it technological for you? Do you have to become experts in the AI itself or is it more about how you apply the tools that others are using, because there’s a war out there for AI talent, which is very hard for a lot of folks to compete with?

PERETTI: I think AI is becoming another platform you can build on top of. And so there’s a question of who’s gonna build the models that win, but then there’s a question of who’s gonna build the creative applications on top of those models to make new forms of content.

And so our tech team, you know, as they start standing up some of these systems and a lot of it is built on APIs, and they kind of write a few prompts to try to test it out. And then one of our writers comes in and starts writing super creative, totally unexpected things to an engineer and creating all these interesting new experiences. And so I think there’s a massive area of growth in that creative layer of what sits on top of all of these new AI technologies. 

There’s a big advantage to have both distribution that we have, the brands that we have with BuzzFeed, Complex, HuffPost, Tasty, Hot Ones, First We Feast — brands that are trusted and known, and then the creative teams of people who can make new formats and new approaches to content creation, under those brands with that distribution. And the cost of it is not the billions of dollars to train a model. The cost of it is the time of really creative people to interface with the models and develop new formats and create new ideas.

My experience with the AI, generative AI space, is that the people who are kind of not into it have generally not used it much. They’ve typed in one or two little things, but they haven’t really played with it. They haven’t pushed it, they haven’t tried to inject their own creativity or their own ideas or own will into it and then seen what they get back. And the people who are most excited about it are the people who spent the most time with it. And so, that’s a really good sign, when you see that the people who are most invested and they’re spending the most … you know, investing most of their time into a new technology, are the ones who like it the most.

Copy LinkThe fear around Artificial Intelligence

SAFIAN: There are some high profile tech types that are calling for federal regulation of AI. You know, Adobe has a content authenticity initiative, right? Trying to address the source of digital content, what’s being created, what’s “real” or not. Are these types of things worries for you when you think about how content and AI are gonna work together? Or … cause you seem very optimistic and not particularly concerned about the risks.

PERETTI: Well, I think there’s a lot more risks in news than there is in entertainment, right? So people will talk about the fear that people might not know what’s real and that that could confuse people on social media, but you don’t hear that when people watch, you know, Marvel movies or something like, oh, it’s so, looks so realistic. Like, people are gonna think Tony Stark is a real person. It’s clearly entertainment. And so when you have entertainment as a frame, I think it really changes the view on a lot of these things. Or when it’s business efficiency, it’s clear, we can do a better job of delivering for our clients, using these tools. That doesn’t feel dystopian.

I think in search, which is where it’s gotten a lot of attention cuz of the Open AI, Microsoft partnership. People get worried about that because the context is, can I get accurate information? But I think that what’s cool to me about generative AI is it is creating new things. And if those new things are fictional or those new things are spurring your creativity or pushing you to, and challenging you to, you know, play back and forth with your ideas, that’s all really exciting. The BuzzFeed quiz, which is a staple of the Internet, has now become a collaboration between the creativity of our audience, our writers, and the AI to make new quiz formats and new infinite number of possible quiz results. You know, that’s very exciting.

SAFIAN: You went public in part to have currency for acquisitions. We talked about this a little bit last time, because you saw the digital media business consolidating. Is that still the plan? It’s a little harder now with your stock valuation, obviously.

PERETTI: If you believe that your stock price is undervalued, then spending your stock is less appealing. And if you believe your stock is fairly valued, then making acquisitions with it makes a lot of sense. We are fortunate to be able to buy HuffPost and we are fortunate to be able to buy Complex. And I think that was a moment in time where you could do deals like that and there will be opportunity to do more deals in the future as well. But you have to be somewhat opportunistic and the market has to be right, and the conditions have to be right.

Copy LinkRemaining optimistic for the future

SAFIAN: As a leader in this moment, you’re walking a little bit of a tightrope, right? Because on the one hand, you do have to retrench and you are doing that for financial reasons and strategic reasons, but you also have to be optimistic about the future, which is a little awkward at the same time that, you know, you’re having a proportion of your staff leave and you’re cutting back in some ways.

PERETTI: That metaphor of surfing a wave, I think, it doesn’t mean you’re inevitably gonna be successful, but if there’s a good wave, you got a good shot if you can ride it, and you know, sometimes surfers get smashed by the waves, but I would rather be in a place where there’s some really nice big waves than to be just sitting out there with nothing to ride, you know? And I think that my optimism is really rooted in the very significant advances in generative AI and the amazing work that we’re seeing and results that we’re seeing early on, building on top of these platforms. And I think if there’s any company that should be well positioned to take advantage of these new trends, the company that has been defined by merging tech and media, understanding the tech platforms, but then building really great consumer creative content on top of it. We should be the ones to be able to win in this space. I don’t see lots of venture-backed new media companies forming in this market. I don’t see a lot of the big traditional media companies understanding the space and understanding what’s coming. And so if any company is in a good position, the company that has BuzzFeed, Complex, HuffPost, Tasty, Hot Ones, you know, should be in a position to benefit from these amazing new trends that are happening in the market. And so, that’s what we’re gonna do.

SAFIAN: And if the big wave comes and you wipe out, that’s just the game you’re in.

PERETTI: I mean, there’s a paradox, which is people who are constantly terrified of failure, you know, seem to fail more. You have to take some risk and go after things, and I think your chances of succeeding are much higher if you are earnestly focused on: what’s the world gonna be like in a few years from now and how do you build something great that the audience will love and the consumer will love? That is where we focus.

SAFIAN: Well, Jonah, this has been great.

PERETTI: Yeah, thank you. Appreciate it. 

SAFIAN: I want to thank Jonah for sharing with us at a delicate time for BuzzFeed. In listening to him, the big takeaway for me is that we all have assumptions about how our business can flourish, theories that we’re testing in the marketplace, and when those theories aren’t panning out, we have to be aggressive in addressing the weaknesses.

Ultimately, the lesson is about taking risk — not holding on to past business decisions for reasons of nostalgia or inertia, but moving toward where you believe opportunity will be most robust in the future. 

There’s risk in standing still and in moving forward. Ideally, we can act intentionally in choosing the risk we believe makes the most sense. I’m Bob Safian. Thanks for listening.