Reflecting on Past Strategic Decisions

We all do it You have a night for yourself but don't like the sound of the silence, so you turn on the TV just for the ambiance It's a little trick that helps you feel like you've got company and aren't alone And other insurers well, they may make you feel alone. But when you switch to GICo, you've got clas reps available around the clock So whenever you need, you'll have people around to help. And let's turn on the washing machine, just for good measure Isn't that soothing? It feels good to have support. It feels good to Gaeio Hello andlcome to Decoder. I'm Nil Pellll Eeditor and Chief of Verge and Coder is my show about big ideas and other problems. Today, I'm talking to Jonah Peretti, who is technically still the CEO of BuzzFeed. Al that will be coming to an end very soon. Just days before we spoke, Jonah agreed to sell fifty percent of Buzzeed for a total of one hundred twenty millars to Byron Allen. who owns the weather channel, a number of broadcast stations, and several other websites. The deal is a bit of a life raft for BuzzFeed. The company was once valued at one point six billion dollars. Just last quarter, the company told investors I was at risk of running out of cash. Now there's a new lease on life and new leadership. As part of the deal, Jonah himself is stepping down as CEO and taking out a new role as president of Buzzfueite AI Bpyr Allen himself will become the new CEO of Fuzzfeld. That's obviously a huge structural and organizational change and a really big decision. This is prime to Coderbit And of course, I've always been very interested in what digital media companies are doing to adapt and survive in an information landscape dominated by algorithmic social platforms. After all, I've been saying for a long time that the original sin of digital media was Jonah and Buzzfeed, betting they could so consistently go viral Platforms like Facebook would pay them for content just like cable companies pay carriage fees for channels like ESPN. This was the big bet for a lot of companies, all chasing Buzzfeeds influence and valuation It has all come crashing down. Most of those companies don't exist anymore. Buzzfeed just faced the brink. So I really wanted to know if Jonah had reflected on that bet and how he saw the work of building audiences and influence now. I also really wanted to talk to Jonah about his new role, leading AI Buzzfeed In the press release announcing the sale, Byron Allen says Buzzfeed will now compete with YouTube through the power of AI. That's quite an ambition, and I was very curious to find out exactly what it means. Jonah is also making lots of games and apps with AI, and we talked about some of that including his new hybrid of a meanine generator and social network. BS island Of course, we also talked about moments where things might have gone differently, including Joonah's decision to take Buzzfeed Public and his decision not to sell the company to Disney There's a lot going on with this one, and Jonah was pretty open about it all. I'm still not sure I understand what's going on with that YouTube clan th. Youon me. Okay, Jonah Prey, stillill for the moment, CEO of Buzzfeed. Here we go Jonah Bretty, co founder, and of today, still technically the CEO ofuzzfed. Welcome to D Coder. Thanks for having me. I'm excited to talk to you. It feels like BuzzFeed and Vox Media and the Verge have all come up and weathered all kinds of storms together in digital media. And I say that you are still as of today, the CEO of BuzzFeed becausecause just a few days before we're speaking here, younou'ced a huge deal to sell fifty two percent of bus fee to Byron Allen And you are going to take a new role as president of BuzzFeed AI. Explain what's going on there. Yeah, so we were looking at a few possible deals that were transformative for the company And I'm very excited. We ended up with Byron. He is you know, a force of nature He incredible media mogul. He owns all kinds of different assets. His skills are very complelmentary to mine. I mean, he's in the mix and with advertisers and with partners and with sources of capital in a way that I, you know, never really have been. And so it's super exciting to have him come in It also provides liquidity for the company and resources And the thing that I've been most excited about working on is really trying to reimagine what should a company operate like in a world where these new AI technologies have gotten so much more advanced And so I'm going to have the opportunity to spend more time on that, which is the thing that I'm most passionate about. So it's been a really great week and we're happy we We were able to close close this deal and It's going to be transformative for the company One of the reasons that I originally scheduled this interview with you. was because there were some quarterly earnings, there were some statements in your financials about Buzzfeed's ability to continue operating, whether or not you had enough cash. There was some speculation that the company was rety close to bankruptcy. But the brand is strong. I mean, Bzfeed is one of the most famous brands in digital media, if not all with media Did you have incoming suitors after that last set of financials, or was this something you were talking about for a long time I mean, it, you know, it was frustrating. We had a going concern statement. U which means essentially as a technical accounting term, meaning that we didn't have enough capital to cover our expenses for the year, which obviously is a serious thing that we wanted and needed to disclose to investors But simultaneously, we had a lot of inbound interest in our assets and in partnerships and you know, we were talking to creditors, we're talking to all the people you would imagine about injection of capital and things that could be really transformative for the company. But of course you can't talk about You know, you can't talk about things that aren't signed that aren't done. And so u And so during that period, it was quite frustrating because I saw a lot of exciting prospects that we had and you know, this deal with with Byron is one of those and it's really exciting to be able to, you know, move forward with more swagger and more confidence and be able to start to reimagine the company and really do a more fulsome turnaround to create a business model and approach that is for the next five years inst instead of you know, an earlier era of digital media Take me inside Byron's pitch. Was it I'm just going to give you money. you can do what you want Is that I have a plan to reboot the entire company compared to the other folks you were talking to what made his pitch seem like the winner I mean, to me, what was most exciting is that he's a better media executive than I am and he could be a media executive and that could allow me to be more of a tech executive. And so that's always what I've loveved the most, the intersection of tech and media. And so And really being able to think about what are these new technologies enable us to do in the future that wasn't possible U that plus the The capital to actually fund a turnaround and to restructure and re you know imagine the company. So those two things together were very enticing. hisis ability to bring things to the company that we just were lacking was a, you know, huge part of it I've know a lot of media executives, you've know a lot of media execives.'ve just evaluated two of them. You've said you're not a good media executive and he's a good media executive. What in twenty twenty six separates a good media executive from a bad one I mean, I think we're in an era right now where deals really matter a lot. and so deal focused executives are having a a lot more success than trying to just build organically. The connections with advertisers and the connections with partners and marketers and being able to see from their perspective and sell them things that they get excited about and inspired about is really important Um, I think You know in the kind of peak growth period of buzzfeed kind of twenty thirteen, twenty fourteen, you know, in that era Really understanding the technology was the key to being able to build a good media company because the technology was changing so quickly with the rise of social and social platforms. that You know, you really needed to be deep on the tech side and there was tons of organic growth available. Like the platforms were very open in a way that allowed you to drive tons of organic growth I think today, you know, if you look around the landscape, it's a lot more about deals and partnerships and business development and things like that. and that can be really transformative for a company. Whereas the kind of organic growth on the big platforms is really just, you know quite anemic and there's not as much there in terms of sending traffic to publishers and platforms and content When you say the technology at that time, twenty thirteen, fourteen fifteen, What you mean is social media platforms were growing, they were aggregating a bunch of users and then they would send traffic out What specifically was the technology that you needed to understand at that time that Buzzeed successful Well, I think, u If you look at sort of pre social media and what media was about, there was newspapers, magazines, broadcasts, of None of it was really social. You know, you'd watch a TV show Maybe there'd be some word of mouth where youd talk about it with your friends read a newspaper article or magazine article, but you really couldn't share content And I think the world didn't quite realize that once everyone was connected together by these social platforms and once you could connect where you could use media as a way of connecting with other people and sharing with other people, that the kind of media that would thrive and succeed would change. And we saw that really early and that was what allowed us to grow so rapidly and build such a big brand. And so I think the technology drives a change in the media. and so Social media became a new medium that wasn't possible before. And I would say there was also the convergence of social and mobile. So it was not it was mobile was the perfect personal device that was also a social device plus the social media and those trends converging really changed what media became And so I think we're seeing the beginnings of a similar shift now where AI is going to start to create new a new medium for content that wasn't really possible before. And so there's part of the media industry now where understanding tech is really important. and that's the part that I'm most excited to focus on. There's the new thing you're going to build. I want to talk about that. I do want to talk about the structure. I just want to stay focused on twenty thirteen, fourteen A for one more turn here I have Because I think a lot of media companies have made all the same mistake. and Restuit is like the vanguard of making the mistake. And I have often described the original sin of digital media is you, Jonah Preti, betting that you could go so viral so often that Facebook would pay you money that the social platforms would pay for the programming. And in particular, BuzzFeed was great at programming the social networks of that era I will never forget watching people put rubber bands around a watermelon with like ninety million other people, right? There There was something about your understanding of the dynamics of those platforms at that time. that made a lot of people bet Mark Zucker would pay you a carriage fee the way that the cable networks paid ESP and a carriage fee. that Y your content would make their platforms compelling, such that they owed you money At some point, I think they all woke up and realized there was an army of teenagers who would work for free. in that they could get the same dynamics without paying anyone any money. And then all of our business has changed and Bzzfeeds business changeed maybe the most dramatically at that specific moment. What was that experience like for you were when you went from top of the world where we think we have enough leverage to get Mark Zuckwerg to pay us money to Ohh no There's an army of teenagers who will work for free Yeah, so I mean, first just as a factual matter We did paid millions of dollars by Mark Zucker So The prediction that they would pay for content was accurate. It just was short lived. So we got paid for that exploding watermelon. I mean, we were we were paid for But those were all those pilot programs like stand up your Facebook live team.' We'll give you the seed funding to buy cameras. There is never payment for content There was no ongoing revenue relationship Oh, there was there absolutely was. We got we got paid repv share for video on Facebook. So you know, tasty the short tasty videos that that that initially blew up. There was no payment for that But then when Facebook realized they needed to make longer content so they could put midroll ads know, there were programs that generated millions of dollars for our company where we were making longer form video for Facebook and we were getting Revhare payments on that. Millions of dollars from YouTube. It's not that it didn't happen. it did happen. The newews tab was another example of it. We got paid millions of dollars for putting news on Facebook So I think S What you're saying is accurate in the sense that Um It went from free distribution and sending traffic to a site to hosting content on their platform and getting paid for it and revshare for it to then an explosion of creators, which made the value content and the platform's willingness to pay much lower And so It was It was happening and it was working and it was exciting And I actually believe that It was a mistake for Facebook and Mark Zuckerberg and and, you know to not continue with the news tab to not continue to pay professional content creating creators. I think having a diversity of content, have creators, have professional entertainment, have professional news You know, these these platforms have way, you know, have tons of resources and could have you know, spend a couple of billion dollars a year on that sustain a vibrant media ecosystem U really owned media in a way thatm, you know was would would have been incredibly powerful for them and given them charisma and relevance and authority that they just don't have today, like now most of the you know, you look at the lawsuits about addictive behavior, you look at all the kinds of toxic content on the platforms, like they didn't have to do that. They could have they could have just continued to pay and even ramping up ramping up the amount they paid to professional content and to news content. and they would have own the world. It was actually a mistake that they didn't continue it. They did it and they should have continued it And the fact that they didn't Um I think shows just a huge blind spot that the tech industry has. like having a small percentage of your revenue going to underwriting a robust, diverse, trusted ecosystem for content and news and other things would have been a great decision for them and would have long term been much better And And so I think There is some parallel universe where they didn' they don't get this wrong. They started on a good path. They were paying content creators. It was expanding. and then it was like, up, let's Get rid of the news tab. Let's, you know, stop doing Revhare or, you know, let's show vertical video where we don't have Rev share instead of longer form video where we do. And over time Um, you know, just you know really messed up the digital media ecosystem in a serious way and led to you know, the world we have now which Although I love a lot of creator content, you know the sort of battle to get into the feed and being the most extreme and saying things that are just completely false and outrageous or whatever has been a huge missed opportunity for those platforms. It's not that I don't agree with you, They won' anyway, right? They stopped investing in news. they piddled away however many billion dollars on VR headsets. and they are in fact, now the gatekeepers to all of media. It didn't matter whether or not they paid for news. And a bunch of Cgresspeople yelling at them has had no meaningful impact on their business whatsoever And Yeah, I mean, I'm certainly not arguing that that they didn't have tremendous financial success and maybe a couple of billion extra in in profits is is is worth it worth it to them But I think that being an influential company with real relevance and and more charisma and cultural muscle is something that a big tech monopoly could certainly afford and and and I think ultimately it would have been better for them in a bunch of different ways. And I think the biggest risk of the big platforms right now is essentially a PR risk the public turning against tech, the public thinking tech is making the world worse the feeling that any new technology is suspect because look what happened in the last round of technology. And so Um So I don't think it's good for them, even if you, they' may be a little bit more profitable. I think being marginally less profitable and having a buffer against this major backlash that is brewing where you know kids are trying to get off their phones and delete their apps and things like that and feel like it's an addictive product that they're trying to battle with. I mean, I think they could have avoided a lot of that just by operating differently So they have one. I'm not arguing that, but I think that They could have u They could have won in a deeper sense if they had if they had continued that That basic process of helping to underwrite quality content and news and information entertainment, which which they certainly could have done I'm only sitting on this because honestly how many other people have lived through all of the twists and turns and have made the decisions. And it's been a real journey. And I guess I'm looking at it now with a little bit of distance talking to you and I am so like nuclear opposed to being dependent on the platforms. likeike the Verge has always wanted to be its own thing, especially because we cover these companies and you just have a different perspective. And I think my response to all this is like, Sh you build a business on These handful of billion dollars will make people like us more'ore in the long term Or was there ever a point where you felt like you actually had the leverage? to make the social platforms pay you real money in a sustainable way If you look at the cable industry, you know, and now u By you know, Byron Allen owns the weather channel and ye, you know, the weather channel was was part of this amazing history of cable where compomanies were These media companies like the Weather Channel were paying for carriage. They were like, I'll pay you a dollar per subscriber so I can get the weather channel in homes when cable was new and And the cable operators, I think, at certain point realized If they're all paying us a dollar to reach to reach the home They're going to have a really bad business and they won't be able to invest in content and then people aren't going to sign up for cable. So're like, why don't we switch it? Why don't we pay you a dollar? U Now they didn't have to do that. They could have just said, we're only going to carry channels that pay us. But instead, they said, whyy don't we pay you a dollar per customer And makeake your programming better. And when you make your programming better, more people will be like, oh, I really want to watch cable. And so the weather channels switch from paying a dollar to getting paid a dollar. And that wasn't because the cable operators didn't have leverage. They were the only way that they could even get into the home. They did have leverage. They just saw on a deeper level that having better content would in the long run be good for everyone and then the whole pie grew because of it Um And so I think that The answer isn't did individual content companies have the leverage to dictate terms to Facebook or to YouTube we certainly never did The question was is there are there leaders who have enough market power and concentration to see that it's in everyone's interests, it's in society's interests, it's then their interest to grow the pie and and pay, you know, pay for content to have different kinds of content. And you know, I think early on talking to the You know, the tech leaders, they didn't really even understand or think about the cost of producing content. So I would say like, hey, You know, news costs a lot more, doing fact checking, calling people up, doing, you know, doing interviews. So if every piece of content is competing against every other piece of content, there's no incentive to ever make any news. You should just make you know, the cheapest, most popular types of click bait content or something like that. likeike that's not good. That's a race to the bottom. That makes your platform worse Um And I think they started to get it like, oh, let's add a news tab or let's do some know programs to make sure that there can be you know, different kinds of content. So I think it was less about having the power to dictate terms and more about U you know, looking at the history of media and saying, there's ways that the pie can be grown for everyone and the economics needs to work for everyone and the incentives need to be right for everyone. And when that's the case the whole market gets bigger. and that's something that I think you know, they they they Did They kind of wanted to do at some point, but ultimately you know, when things got tough, they decided to just sort of focus on their own profit growth and not they're paying less and less for content today. I mean, TikTok pays nothing effectively, right? Like this is the creators have to go become little ad agencies themselves, whichich is something thing you pioneered, right? The idea of the branded content studio that you would distribute advertising onto these platforms in a way that went viral Even that got sort of outsourced to an army of influencers and creators who are now all standing up businesses with the same kind of dependencies that you experienced Yeah, I mean, but the, you know, you look at Instagram and there's good content. I consume content on Instagram, but you know, you kind of feel like you're just you're watching The actual editorial content is ads where creators are promoting themselves or products they're selling. And then in between that you have ads. And you know, so you're kind of like having a like You know, a billion plus people just hanging out on an ad network all day And I think there's a better vision for media than that that we could have all built together. but You know, now Soince that didn't happen We have pivoted really hard to direct traffic. I mean, I'm so happy that Huffpost has so many people coming direct to Huffpost's front page every day and getting the news from an independent source that tells it like it is is like you know something that people are really hungry for. M of, you, the majority of Bzzeed's traffic now is direct U And so we're really realizing you can't you know, you can't have a someone between you and your customer and That's a huge. thing that Byron Allen also, you know, one of his rules of business is like, don't let anyone get between your you and the customer and that's part of the reason I think he was interested inuzzfeed. It gives you gives him a way to you know, to go direct to to audiences and for all of the ambitious things we want to do in the future, we want to have that ability to go to tens of millions of people directly from our platform. We have to take a quick break. We'll be back back We've all been there. you pop into the shop for five minutes and all of a sudden you've forgotten where you parked. Car Car! Unfortunately, that lost feeling is what it's like trying to manage your policy with other insurers. Here car, come out, come out wherever you are. Please. With GICO you can use the app to easily manage all your policies in one place Did this parking lot have a waterfall? I think you've wandered too far, mate. It feels good to find what you're looking for. It feels good to Gaio Welcome back I'm talking with Buzze's Jonah Preredty about his decision to sell fifty two percent of Bzzfeed and set aside as CEO. Under the terms are announced by B Allen through his company, Allen Family Digital. They're going to acquire forty million shares of Bzzfeed For a total purchase price of one hundred and twenty million They're going that will lead them to owning fifty two percent of the companies that seitting shares, and's twenty million at closing and then one hundred million that's going to be due five years from clothing closing. How does that work structurally? At the end of all that, how is Buzzeed going be structured I mean, we're still a public company. It used to be we were a public company that I controlled through supervoting stock, and now we're a public company that Byron controls through the fifty two percent ownership So you've given up your super voting stock in this. Yes. That was actually my next question is where are the forty million shares coming from? They're coming from you No, we're issuing new shares. Okay. And but you're dissolving your super voting shares. I just am converting my shares to just be you know low vote shares or normal common stock And then of the twenty million, you said this is going to give you some operating cash. How much runway do you get out of twenty million I mean, I think infinite runway is, you know, the the plan I mean, if you look at our cash burn, it's been, you know, not pretty prettyignificant and I think We also announced on our earnings that we plan to do a restructure and U So I think, u you know, setting the company up to operate profitably and to do that for the long term and then have a strong foundation that we can build on top of. so new initiatives are are coming on top of that profitable platform of our core businesses.. So' issuing new stock, are any of your existing investors or employees who had equity getting paid out as part of sale This was about bringing capital into the company so that we can you know, have stronger balance sheet and be able to start going on offense again. You've mentioned a restructure. I noticice there's a restructure in the press materials. this is show, we're asking everybody about structure. What does restructure mean for Buzz feeed after this deal Well, I think it means a few things. It means like looking at our strategy and where we're headed in the future. U And so Some of it is around understanding how we're going to operate Um with new technologies that can change the way the company operates I think some of it is about just making sure that we have enough buffer to weather ups and downs in this industry. And so being profitable enough so that you know, if traffic goes down twenty percent or if revenue or ad markets you know shift or change, that we're in a strong position so that we can you know, continue to continue to operate Be more specific, newew technologies you have a new title at president of BuzzFeed AIs There's something called Banch Office, which was your app skkunkworks inspired by Nintendo I think is what you told New York Times. Is that going to get set up and more capitalized and become less of a skunkworks How do you see this working Part of it is how do we use AI across the business as a whole? And I can share some things, but not everything. Part of what I think AI is really good for is it's almost can be like a nervous system that is able to understand and detect, you know what's working and what's not working and how content is being shared and engaged with. And some of the early stuff that Buzzfeed did about social content, I think you could do on this whole 'nher level when AI is able to actually understand the content and then push challenges to creative employees to make new things, but they're making new things with a lot more information about how people are engaged with the content. So U J to put it in more simple terms, using AI to help our core business and help our people be more creative So that's one part of it. Another part of it is building entirely new apps. And so brranch office is an incubator that creates new apps We just today launched BF Island, which is a new kind of messaging app that allows you to play and message and talk with your friends they, you know, using using GAI. So it's kind of like a an inside joke engine, we found that You know, making AI content and posting it on Instagram or TikTok just kind of feels like slop but making funny things with your friends that are about the know, specific thingsings that you're joking about and talking about is just a lot more fun. And so we We built BFI in for that use case. And then we also U launched an out called Conjure, which is a a camera app where you get a challenge every day to take a picture and kind of discover a mystery every day you can for example, take take pictures to see if there might be you apps hiding in the sky near where you live or get messages or fortunes or other things on conjure. I think when you think aboutF Buzzfeed AI, it's a combination of things that integrate across the entire company and help help our teams do their jobs better And then it's also new apps and new experiments that allow us to test AI as a new medium That could potentially lead to new businesses or new apps that break out There's what you're saying here, and then there's this quote from Byron Allen about what buzzfeed is going to be I'm just gonna to read it to you, and I'm hoping you can explain to me how this will work. buyer now and describing why he's buying buszed As of this moment, with the power of AI, Buzzfeed is officially chasing YouTube to become another premier free video streaming service How are you gonna to do that So I think one thing that is pretty exciting about working with Birment is that there are more assets and more resources and more capabilities to do things that we just couldn't do on our own I don't want to give away too much, but there there's you know, he's doing a lot of things in, you know, in these wholly owned businesses that he that he he has where Um He is in the home with local now connected TV app. He's doing a huge amount of production with his studios of making making content Um there are conversations and deals and partnerships and things that he's able to access. And so I think what that means, you'll have to wait and see, but putting together pieces and Combining that with new technology and making something that doesn't exist is why I'm so excited about this deal. and Um And so you know, what would YouTube be if it started today? What would YouTube be if it was you know, something that was created in the world of GenAI, I think it would be pretty different It might not be what you know every listener is imagining. it's certainly not just making a bunch of AI slop videos or something like that, which I think is the thing that peopleump jump to. But there's different ways that creators could make and play and share U and U you know, we have a lot, a lot of stuff to to work out and a lot of stuff to build, but I'm excited about combining a lot of new capacity that we didn't have before to build things that seem that seem out of reach in the past You know the folks at YouTube. I know the folks at YouTube. I have my own complaints about YouTube. they've heard them all endlessly But if I had to put myself in the shoes of Neil Mohan, the guy who runs YouTube, I would read this and say, good luck It's very hard to chase YouTube. TikTok had to spend like a billion dollars a minute on Facebook ads to get users to chase YouTube I understand that you can't give it all away. I'm just saying, with the power of AI, Buzzfeed is officially chasing YouTube is a pretty big ambition And I'm curious what the power of AI means there. Is it operating leverage, I can do more with less is it You can vibe codea YouTube app with How does that work I think you'll have to wait and see. I't don't want, you know, Neil probably listens to this podcast. so I don' I don't want to hey Neil. you're listening You're listening, you know, Let's go to Wars Game next year and we can share notes. We can compare notes, you know. Like there's a distribution challenge that all these platforms have which is somewhat driven by consumption R Vvertical short form video became a dominant way people wanted to consume. So then Instagram turned it into TikTok and then YouTube turned into TikTok. And then maybe a bunch of people on YouTube didn't want YouTube shorts and now you have the option to turn YouTube shorts of and what they really want is long forerm creator video and the economics are better there I'm just saying, what is the opening that you see that this market needs a new competitor in this way It's going to be a lot easier to put your content more places more easily and to have content take different forms and different shapes. because because of of these AI tools. and so Um You know, a simple example would be if you have a video having that turn into A buzzed shaped object that could live on our platform and be optimized for our platform feels feels like something that would have been a lot of work and challenging a few years ago, but it's kind of trivial now. And so I think That opens up some some possibilities, you know in the beginning My wife reads Buzzfeed every night. It's like I watch her wind down by reading buuzzfed roundups of social media posts. That to me right now is the buzz feeed shaped object. Look at what these people are saying on Redit Look at what these people are saying on Twitter There's some value there, I think curation and taste and Being able to see the trends and bring them out together in some kind of synthesis has value. Is that H she played worord chain I think so, but there are so many word games going around her house at once that I It's hard for me to determine which ones are in style at the moment. Yeah it's pretty. I mean, the Bzz two games have have really exploded recently. And that's another great example of the fact that writers can buy code games. so instead of, you know, The New York Times launches one game every every every year and you know, we've done hundreds of games this year with withith creative people who are writers and not programmers, having a toolkit that allows them to build in that space and We've had a bunch of breakouts. know, it's become a big percentage of you know, big person percentage growth in time spent and the comments on the, you know, from the audience are just like that they love them and it allows us to iterate and evolve them more quickly and change them more quickly. So That's another example of a sort of AI acceleration of, you know, what end what what is creating new buuzzfeed shaped objects And so I think That level of being able to iterate more quickly and mutate and evolve content, I think is something that allows us to play in new spaces, whether that's That's, you know, user generated video or interactive games or or new post formats, things like and quizzes and things like that The challenge there is always distribution. I mean, this is where we started talking with Facebook and the other platforms. How are you going to get new users to consume the stuff you make you know, ten years ago fifteen years ago, it was we're going to put up links on the open web and they're going to drive a bunch of traffic to links Eventually we're going we're going to do llama and the dress in the same forty eight hours span and that's the future of media That was great. And then you know, the open web has collapsed. You know, there are bigger publishers every day. I think Roger Lynch literally today is saying Google Zero is there for Condy Nast and they're just betting that there's no Google search traffic anymore Roger should give me credit for that phrase, by the way, but we'll come to that in a different episode They do all listen U The question I have for you is you can invest more in things buzzfeed shaped objects on Buzzfeed. Where do you get new readers, new gameplers from because that seems like the hardest problem now Yeah, I mean, we have a majority direct audience now. So you know, some of that is because of declines in other audience, you know, but tens of millions of people, you know Every month, you can look at our comm scores. You don't have to trust trust me on it. It's like We're the biggest publisher in our competitive set. You know, we're bigger than people. we We have a lot of people coming and when we see new formats, like for example, these these buuzzfeed games that we have been creating Um They come back more frequently. They spend more time, they engage more. They send the games using message to friends, so you have this new kind of social that's more personal, that's more private And so we have distribution that Like if someone was creating a new company and trying to do any of these things, it'd be very hard to achieve you know, we haven't really started promoting our branch office apps, these new AI apps, but soon Conger will be all across Buzzfed, and B F Island will be all across Buzzfeed to market it and let people play it. so Um You know, we built a lot of distribution in a different era and we have millions of people consuming our content and that is the distribution that can help Um launch these new things and help us help us grow and launch, you know h something that to be a competitor to YouTube or competitor to some of the other big platforms for people who are getting sick of these big platforms and want smaller places that feel more at home that they can go directly to and spend their time on Back to our earlier part of the conversation about was it a mistake for Facebook or YouTube or o to sort of pay less for content U I think that it did result in a lot of more people going direct to other platforms and smaller platforms that they probably never would have if they could have gotten quality news on Facebook or Instagram or other places. But now people do go to those places and you know, it hurt to have a lot of that referral traffic taken away, but now we have the direct traffic and That direct traffic is people wanting something different that the platforms aren't giving, and that's a big opportunity to build on top of. And that's a new kind of distribution. It's more fragmented. It's not everyone on the internet. It's not the dress. But it's millions of people who really, truly value the content coming directly, saying, I get my news every day from going to the front page of Huff post and they they're not like trying to kiss up to the Trump administration and like you know, worrying about mergers or whatever, they're just reporting the crazy stuff that's going on in the world. And I go directly to bus We to know what's going on across social media because You know, as your wife has realized, it's a lot more satisfying to to see roundups of what's happening across social media on buzzfeed, than to be in these toxic environments for hours scrolling you know, doom scrolling through the sort of raw sludge that's on these platforms. You were always really against display ads, programmatic ads, banners and boxes. I always thought you were correct about that. I dislikeed them. I think the vast majority of the audience dislikes them All But that's how you monetize a bunch of web pages. T this day, it's still the thing you do You have a bunch of direct traffic. It's growing. You think you can create more direct traffic. you think there's opportunity there But the monetization was lagging such that You know, last quarter, you were saying there was substantial doubt about your ability to continue and you needed to take investment How are you going to monetize all that direct traffic in the future in a way that's sustainable I think a combination. I mean, I think that there's sort of a floor which is driven by programmatic advertising, then there's transactional types of revenue. So transactional revenue, I kind of mean that abstractly. So it might mean commerce where people are spending hundreds of millions of dollars U on BuzzFeed shopping where they click through and discover products and buy them and we're getting an affiliate fee. so we can actually show that we're driving direct value U And then there's the other kind of transactional, which is paying to be a member, subscribing You know, Huffpost has has a membership program that has been growing really nicely I think that there's a lot of of headroom there where we can grow more with reader revenue and direct revenue U the branch office apps are are really natural for freemium models where you can have fun on the apps to a point. but if you want to go deeper and you want to You know, with Cjure if you want to start exploring and photographing more weird things in the world, you got to know become a paid member or know transact with us So I think that's a good combination. We have to pause here for another quick break. 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W H A T N O T in the app store, download and you can start selling right away Wcome back. I'm talking with Buzzfeed's current CEO, Jonah Pret, about the company'suture is a social media product We were playing with Buzue Allen today. I generated a bunch of pictures Our producers put a clown nose on me. that was delightful. I thank them for that. It just occurred to me that I could burn enough tokens to make my use of the app unprofitable today R I could just sit here and generate images all day until I definitely cost you some meaningful amount of money How does that work before you monetize it? Who are your model providers? What's your rate of spend on letting people use the app versus when you think that will return in any kind of monetization? Y. I mean, I think this is pretty established. that the freemium model for these kinds of apps is is pretty natural. People have shown a willingness to pay for AI services. And so I think wait have work I mean, you know, Tity has what nine hundred million users and like very, very few of them pay anything I mean a lot of, you know, a how much revenue is is fe generating from subscribers. I mean, you know depends on not enough to their bills, I would say. But there are a lot of smaller freemium apps and a lot of companies that, you know, have five million, ten millionars in revenue and are profitable. And you know, you might not hear about those because they're not big venture back you know companies, but I do think that these kind of mid siz and smaller types of apps can be really good businesses. And in some ways it's a little bit like a new kind of media business. It's the economics might be more similar to you know, a YouTube show or a or a a series or a podcast where, you know, that the cost of the of the talent and the show and, you know is is a hurdle that the advertising or the direct or thecribe subscription needs to needs to clear Um But I think there's a lot of there's a lot of examples of that that I've seen for, you know, talking to talking to other founders and getting this, you know, a sense of of that market. So I feel like there's a bunch of different ways to monetize. It's also like reminiscent a little bit of the earlier era when you had Moore's Law making everything cheaper and you just, you know, you could have a product that U That you know lost a little bit of money, but if you wait a year, you know, the processing is cheaper, the costs are cheaper and AI is progressing incredibly quickly. So Anytime we use a new model, you know six months later, that the cost of it is like a tenth of what it was. And so if we could lock in a bunch of users to an experience that's not about creating the most beautiful images. It's about joking with your friends, getting ideas for what to make and it's a you know BF Island is kind of an idea engine where there's all these cool context and things where you might not have thought of that you can then use to delight your friends or or play, the cost of that is, you know, making those images is going to and has been going down a lot. And so Even a breake even subscriber six months later is a very profitable subscriber. Are there going to be ads there or are you just hoping for freemum? People are going to pay to unlock different prompts and I think there could be some pretty interesting native advertising, you know solutions there. but you know, we're just very early and we just we're just opening this up to to the public now. so we want to we want to We want to Devin. real people using it and then iterating and changing and evolving the app very quickly. And so I mean, this is I think the other thing AI enables, which is the ability to iterate and change a product is just so much easier. And so gettingetting to product markets fit becomes a different U a different endeavor if you can get data more quickly and analyze it and understand it and modify and test features much more quickly. And that applies to the monetization side as well. Yeah. It strikes me in this conversation, right? We're going to compete with YouTube with the powerower of AI and then plan with B Street Island. This this thing is a social network R? You make images, you share them with your friends. There's incentives to invite your friends And after all of this time What Jonah Pereti wants most of all is to just run the damn social networks himself Like that's what this looks like to me. is you're building social products because the ones you were relying on screwed you over so badly Yeah, there's a little bit of that for sure I feel like I gave them advice from the perspective of someone who cared about content and culture and news, but also spoke their language in terms of tech and social platforms And They took it for a while, but then they kind of went on this other other direction. And so Building really good community, building really good social platforms, building really good content networks where people can share content with each other and consume content and have great things to talk about. I think there's there's there's openings to do that and probably there's smaller in some ways smaller businesses. So you know, We might only be a tenth the size of YouTube, you know Maybe you're right that we can't get to one hundred percent s Neil shaken in his boots.' get to ten percent. So he can still have ninety percent of the market. The turn of the modern social network is creators. That's the other kind of theme that's been showing up in this conversation over and over R? There was professional content. There was the idea that maybe we pay for it. The creators showed up and they upended the content economy in a million different ways Buzzfeed in many ways was also at the vanguard of that problem. that situation, the YA left BuzzFeed video launched a million YouTube careers. You just sold hot ones, so you wish you would had purchased and then you sold. L there's something about Buzzfeed's relationship to the creator economy Different times was really rich and really rewarding. really, really complicated and for many at the end, really poisonous What have you learned from that? If you're going to stand up new social networks, how do you bring new creators along with you and Was there ever a time when you could have salvaged the creator relationships you had at Buzzfeed Yeah, I mean, when you think about Buzzfeed video, it was it was Really awesome for the team that was there because they had all these collaborators They A lot of them came in as, you know, interns or fellows, you know, you know, the tri guys came in that way, you know bunch of of the talent came in Um you know, really almost like interns that became fellow got fellowships and then became junior producers and then, you know, kind of work their way up The challenge, I think butame when when when the platforms really started to So to disaggregate the the media companies like essentially having individual creators create their own channels without media companies It meant that the very top creators could make more money if they left Um And It kind of started to kind of break the cycle of development because Essentially Almost every media company, if you look over you the last hundred years, There's some stars And they get paid the most, but they get paid twice as much or something. you know, or three times as much, but they're producing ten times as much value A And and then you have a lot of, you know, new talent coming in and they're learning and maybe they're working their way up, but they're getting kind of subsidized by by the sort the sort of, you know, bigger talent. And so it creates this like natural tension in these businesses where The whole process of having a community and an organization and professional development and new talent coming in and you know like all of that kind of breaks if the top talent is like, we'll just do a substack or we'll just do a podcast that we own and take you know ninety percent of the profits from it or you know, we'll just make our own YouTube channel thenen you the process kind of breaks where don you no longer have that like redistribution that sort of helps the next generation learn the young reporter or the new video producer or whatever. And so I think early Buzzed was trying to build essentially like a collective and an organization And at a certain point, some of the talent was like, I'm making too much money. I mean, I'm not making enough money. I'm going to go create create my My my own thing. Um And, you know That worked for some of them. A lot of them found that it really sucked to try to Be a YouTube creator and having to call in friends and favors and not having resources and not having collaborators and the loneliness of it and the burnout and you know, YouTube And TikTok lo to give, you know the trending designation to new talent. but then a year or two later, it's like, They don't get that anymore. And And so it really is, you know, kind of broken for a lot of a lot of the talent that that was frustrated and left, like didn't work out that well U But for some for some talent, it works great. And so I think, I don't know, that's one of the core challenges, I think with media companies and this sort of platforms that are trying to just completely completely blow up the media companies. it's one thing if If you're a news organization you know with a union, it's one thing if the top talent is stuck to that news organization. It's another thing if you collectively bargain and the people who want to make the most money just go to sububstack. That's the most, you know, sububstack is probably the biggest union busting, you know, like development that that exists, even though that's not their intention, but it, you know, there there's this contract of the top talent you know, only capturing part of the value to help support the up and coming talent. And I think I think that is, you know, poorly understood and is one of the reasons why the media environment has got been somewhat impoverished because you have a lot of creators who've gotten big and podcasters who've gotten big, but never came up through a system where they had smart peers and editors and people who could help them get better at their job, they just came up through a system where they're trying to game the algorithm to get attention and get big enough that they can then you know capure capture that value for themselves Youan Hfpost HuPost has this problem and has this dynamic. You're talking about AI. Are you going to start to publish AI journalism on HUuffPost to solve this problem? No no, we're not absolutely not. The reason people come to Huffpost is because they can get trusted content that they can't get on the platforms that are full of AI slops So HuffPost is is a is a is a place where talalented human journalists who actually do have a sense of collective you know endeavor and who believe in the mission of HuffPost They work together and they they make content that the audience knows is trusted Are they receptive to using AI in the news gathering process? Is that something that you want them to start doing? You're taking on a new role as president of AI. This is the conversation in journalism Yeah. I mean, I think that there's things that AI can do in journalism. I think it's you know the example of being able to you know, buy code and create new games and new formats is one example. I don't think U a Huff post journalist would, you know, you remember back when like snowfall was this like big, you know, story We had like tons of snowfalls on the verge. Yeah. Yeah. And they' big complicated layouts. We love them. Yeah. ye. And You know, that kind of thing is trivial to do now, right? You know, you can you can design interfaces that, you know are are You know it's trivial from a technical standpoint like you don't necessarily need an engineer to do that. You need someone who has you know, good sense of design and good vision or whatever, but and you need the journalism to be good and the story to be good. But So I think a lot of it depends. It's like how can you use AI to elevate journalism, to promote it better, to connect people to it, to research and find Um you know, like crawling the web is something that, you know, how many times have journalists spent three days going around to websites or whatever? And now with clouog code, you can basically say, I need this data source, I need this data source, I need this data source. I wanted them all in folders. Okay, I want to cross reference them. you know the kind the kind of fact gathering and things like that that you can do is something that could help elevate journalism and make journalism better. but having AI R journalism is you just would undermine the core trust that is the main reason that people are coming directly to Huff Post to get their news over I guess I'm just curious how much of the talent business you still want to be in in this new world, right? Where you're apparently going to run a thing that competes with YouTube I assume that means user generated content. You're running Buzfeed Island is a bunch of user generated content But the buzz feed shaped object today are roundups of user generated content on other platforms, how much of the talent business do you want to be in in the future? Well, I think what's kind of amazing about YouTube and some of these other platforms is that they're not really in the talent business. Likeuz This is specifically what I'm asking. you want to re Yeah Iz Buzy was in the talent business, you know, providing health carere and benefits and professional development in a context real estate and all these things And Yet when creators would leave to just go directly to YouTube, you know, they got a rev share. And so some of what we what we will do in the future will be more user generated, like where you look at you know, users making quizzes and and things like that and creating things for themselves. And you know, you've played with BFIland, that's something where the user creating is actually the entertainment. It's not like they're creating you know, they're creating content not the as the joy of creation U And so I think we'll have a lot There's a lot more things like that that are possible. But then when we do have talent that work for us I think it's important to find people who want to be part of a collective, who want to be part of something that they're doing together, who want the professional development, who want the resources, who want the peers, who want the health insurance, who want, you know, those all of those things. And so it just depends on the you know, on on the business. but I think if you look at Huffpost It makes a lot of sense to have journalists who work together in some cases for over a decade who really know what they're doing and aren't our professionals. and that shows in the work that they're doing same is true Bzzfeed and figuring out how to do even more to elevate the talented writers and creators and people making things at usV, I think is part of what I want to do with my you know, increased focus on AI You're at the end of one kind of road here, right? You're stepping away from being CEO, you're going to become the president of BusVedDI Byron' is going to be the new CEO. Even again, in this conversation, it strikes me as you were the right CEO for what you would call the open distribution era. and he might be the right CEO for what you're calling the deals era. whereere you got to show up and you have to negotiate rights and don maybe the AI company is going to pay you for stuff There's a lot of deals to be made in a way that Quite honly, it feels bittersweet for me. Like the open web era is also where I came up. and I feel very strongly about that thing in a lot of different ways A the end of this road, you're taking on a new role. There's going be new CEO There's two moments I want to ask you about that could have been previous endoints One In twenty thirteen, Disney offered to buy buuzzfeed for what Ben Smith has reported to be six hundred fifty million dollars Do you think you should have sold back then So I mean, from a financial standpoint, it's hard to say that that wouldn't have been a good deal to take. It was I think four hundred and fifty with an earnout that could get to that six hundred fifty number and Um You know, we were just hiring Mark Schus to build our investigative team. We were just starting with Buzzfeed videoide and that whole cultural phenomenon on a buzzfeed video was kind of a just about to take off There were a bunch of things that I'm really glad we got to do as an independent company and I wouldn't really trade those years where we were able to, you know build and explode and hck culture and and influence the internet in a massive way. And I think it would have been harder to do that you know, inside of inside of Disney I think it would have been a great financial deal and I do wish that you know my partners and investors and others had been able to have that financial you know, w wind fall, which, you know Um you know, was unfortunate that they that, you know, they that we weren't able to sort of live up to that The other thing I would say is that I don't think selling the company at that moment would have been the maximization of value I think selling it two years later would have been. and there was a lot of interest that people don't know about, you in those sort of subsequent years. And so the Disney deeal was the first time someone came and I think Eiger was ahead of the curve and saw that there was a lot of growth and excitement there. But I think we could have we could have done a transaction for for more than that even if we, you know, two years, two years later There was a weird thing that there was this view, I think, from the board that the fact that Id like turned down that Disney deal meant that I would never sell for any price or whatever. And so that also partly led to never really exploring any of those other you know, types of deals, But you know, in retrospective, you had perfect hindsight, you know There's probably some kind of deal we could have made in twenty fifteen or ' sixteen that would have also given us you know, the right partner and resource resources to fare the next challenging time. You're stepping down as CEO. I got I got to I've tried to ask about the future, but it feels important to check on these moments in the past U Especially now you know Disney in particular, Josh Tamarow, the N UCO is saying Disney pllus is going to be an everything and that very much impies user generated content in a totally different way. and it feels like those things would have been ae The other moment I want to ask about You went public in twenty twenty one, that was a SPAC. It was very fashionable at the time. Do you feel like that was a miss? Do Do you think that that was the right decision?? I think the biggest the biggest issue was we missed the window So Um Again, if you had perfect hindsight you know, if you can you know, do it over again. I think we would have gone public via SAC And we would have done it without buying compleplex, and we would have just done it right away because the market was super hot. we could have gototten a lot of capital into the business And we didn't need complex. like our business You know, we were bigger with compleomplex, but our business was probably probably better ourur numbers were probably better without complex than with. And so we could have just done the deal more quickly and had more cash on the balance sheet and And then we would have been able to have a lot more leeway and latitude to reinvent the company when the market got really tough Um, And so, u, The problem is when we started to explore this complex acquisition, It slowed down our ability to to complete the SPAC transaction because we needed to agree with you know, on a sale and agree on all these terms and negotiate, I mean, with Hearst and Verizon who co owned it and And so and then we needed to then once we went public like figure out how to integrate and work with, you, cultures that were not really well suited to each other, the complex culture was just very different than the buuzzfeed culture. and so In retrospect, I think hitting the stock market while it was hot, bringing in a bunch of capital, doing it with just Buzzfeed and then using that to reinvent the company as a public company. We would have been in a really exciting position and we would have had capital to do acquisitions and things like that U Instead, we miss that window The stock market got ice cold. We were already kind of far along on the complex deal And so we ended up with debt instead of cash. And so the debt to buy to buy complex basically has been a burden that we've, you know slowly been able to alleviate, you know, first by selling complex, then by selling first we feast and now with this partnership with with Byron Allen and that investment. But it's taken it's taken a bunch of time to kind of get back to where we we have the balance sheet we need to innovate and operate in a way that's more that's more Um you know, more confident and more more deliberate. Why did you buy a complex if you didn't think it was the right choice? I mean at the time, the strategy was let's consolidate the digital media industry, let's give advertisers something U for every demographic, so we were, you know, stronger with with u female audiences and they were stronger with male audiences Um, and you know, they had a lot of great properties. And so we thought this would be a one stop shop for advertisers. What ended up happening was Both the value of digital media and the traffic that we've been talking about was challenging. But in addition Advertisers started to you spend more and more with the platforms directly and the programmatic buying became a bigger and bigger thing. Complex just doesn't have that much distribution. they were premium but smaller audiences. and when more shifted to programatic, that really helped Buzzfeed in Hufffpost. But it meant that Complex was really dependent on this direct sales channel, which was becoming weaker for all digital media companies. And so I think that things didn't go the way we had hoped with Complex, but we were excited at the time, and that's partly why. And then it was like one of those things where like, okay, we now have to take on this debt to buy them. But if things go well you know, the the debt won't be an issue, but when when things went When things were tougher than expected, debt the debt burden really was challenging. And it's one of the reasons why I think people don't realize that the underlying buuzzfeed assets are better than people think because they look at the whole thing and it's like But you start backing out pre COVID real estate and you start backing out Um, the debt the debt burden and you start backing out some restructuring costs and you kind of look at like what is the actual business and how you know, and the pieces of that, I think it's doing better than people think. Andm I'm glad that that, you know, Byron was able to see that because and some others were able to see that. So had we had an opportunity to to do a deal that that that makes a makes a big difference and allows us to unlock that value and not have it just be kind of captured by our current structure Yeah Fuzzfeed's greatestrength, I called the millennial era of digital media, was that it was a cultural phenomenon millennial digital media. I think that's the best way to describe it. There were all those posts about YLF Buzbed, but before that I will never forget the letter to the editor at the All where it was just the poor digital journalist who was like, I don't work at Bzzfeed and it kills me every day, right? And like this rocketed around. I think Corey Siker wrote back to them. And it was like a great digital media moment that I will never forget. Like it had Totemic power in the media ecosystem at that time. There's a reason Disney wanted to buy it. You're talking a lot about AI I think my last question for you, how do you get back to that cultural relevance When I look at the polling from Gen Z in particular and they dislike AI Right? If AI is a thing that's going to accelerate you back into relevance, but the younger demographic dislikes it so much How do you connect those dots and solve that problem? Yeah. I mean I think that u A lot of what we do does not read or appear as AI. I think people don't like certain things about AI. If you just ask them in general, what do you think of AI? you know there's a lot of pretty negative responses Um I think people love playing Word chain and I don't think they mind that AI coding tools were used in creating Word chain. Um And so I think The human agency and human intention is in the product. A person who designed the game was is obsessed with making a really fun game. The people playing it really like it the creator of the game is in the comments talking to them and they're like, when are you going to make the next one? And I love this. And so I just think that saying, do you love AI? It's kind of like saying back in the day, do you love mobile, you know, you know, or like a lot of people would say yes, you know, my career is based on do you love mobile? Like the answer there are millions of people being like, yeah, I want a whole website about that Yeah. I mean, there were industry people who who like who liked mobile, but I think most people were like They like the things they could do with it and they like the way they use it or You know, it was, you know, it's like, you like microomputers? It's like, well, no, I like that I can do spreadsheets now and I don't have to have, you know,, you know, like So I think if you think of AI as a computing platform, it's the question is what are the apps built on top of that computing platform that Gen Z will like? And there already are many of them. you know, It's it's u you know, whether it's using them to do their homework or help them help them, you know, solve problems that they have with, you know personal challenges they have and talking to ChatBT or Claud or whatever. Like I think there is a lot of love for AI and a lot of hate for AI. And I think we just live in a world where everything is super polarized and everything is kind of love and hate. Um, So I think fighting for a new way of using AI and a new way of thinking of AI that puts people first, that is creative, that magnifies people's agency that is not about feeding everyone the same slot, but is about like helping people have a more personalized and connected experience and connect with their friends, like I think that's going to be something that you we'll have to fight for because there'll be all kinds of dystopian uses of AI. But I think we can build something that is special makes people see the power of this new computing platform, but not through the platform itself, but through the applications and through the fun things that they can do with it and the fun ways they can connect with their friends. Yeah I'm excited to see how that all plays out. When does the deal close? What's the timeline You know, hopefully, we'll get it closed by the end of the month And then you and Byron are going have to come back and you have to show me this AI powered YouTube that's going to make Google. Yeah. You'll have more fun talking to him than me, so. I've talked to him before. He is quite a character. I'm honestly curious. You've described some big products and some big vision I'm eager to see them come fruition and you're going to come back soon. Jonna, thank you so much for being out a cutter All right, thanks forving I' like to than Joonn Predt for taking time to join me in Dakoter and thank you for lening. Iope you enjoyed it. If you'd like to let us know what you thought about this episode, or really anything el at all rop us line. You can email us at deccoder at the Vverge. com. You really do read all the emails, or can hit you up directly on Threads or Blue Sky. We're also on YouTube, you can watch full episodes at DeoderPod and you can watch clips on TikTok and Instagram, also at Cod Its lot of fun. If you like to Coder ple share friends and subscribe or v to your podcast. Coder' P productuction Verge and part of thex Mia Podast Netork The show is produced by Kate Cox and Nxtstat. This episode was edited by Kabir Chopro Our editorial director is Kevin McChe and the decoder of music is by Break Master Cylinder. We'll see you next time. When I got a new car, I thought my insurance premium would increase and empty my bank account If P won the lottery. I've invested most of my winnings in chicken tenders because they're bnd But bro, I bought a house and it's sick, bro I'm thinking the floor is going to be all trampoline broke telepad on the roof The contractor said it's structurally unsound. They're just big babies. But switching to Geico saved me hundreds, so my bank account is safe. It feels good to say some hard earned cash. 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