Exclusive: Jonah Peretti explains why he sold BuzzFeed

24:17Nilay Patel:I'm talking with BuzzFeed's Jonah Pretti about his decision to sell 52 % of BuzzFeed and step aside as CEO. Under the terms announced by Byron Allen through his company, Allen Family Digital, they're going to acquire 40 million shares of BuzzFeed for a total purchase price of$120 million. That will lead them to owning 52 % of the company's outstanding shares, and it's$20 million at closing, and then$100 million that's going to be due five years from closing. How does that work structurally? At the end of all that, how is BuzzFeed going to be structured? I mean, we're still a public company. It used to be we were a public company that I controlled through super voting stock.

24:54And now we're a public company that Byron controls through the 52 % ownership.

24:59Nilay Patel:So you've given up your super voting stock in this? Yes. That was actually my next question is where are the 40 million shares coming from? They're coming from you? No, we're issuing new shares. OK. But you're dissolving your super voting shares. I just am converting my shares to just be low vote shares or normal common stock. Great. And then of the$20 million, you said this is going to give you some operating cash. How much runway do you get out of$20 million? I mean, I think infinite runway is the plan. I mean, if you look at our cash burn, it's been pretty insignificant. And I think we also announced on our earnings that we plan to do a restructure.

25:40And so I think, 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 coming on top of that profitable platform of our core businesses.

25:58Nilay Patel:So you're issuing new stock. Are any of your existing investors or employees who had equity getting paid out as part of the deal? No, no. This was about bringing capital into the company so that we can have a stronger balance sheet and be able to start going on offense again. You've mentioned a restructure. I noticed there's a restructure in the press materials. This is a show where I ask everybody about structure. What does restructure mean for BuzzFeed after this deal? Well, I think it means a few things. It means looking at our strategy and where we're headed in the future. And so some of it is around understanding how we're going to operate with new technologies that can change the way the company operates.

26:42I 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 20 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.

27:02Nilay Patel:Be more specific. New technologies. You have a new title, President of BuzzFeed AI. is there's something called Branch Office, which was your app Skunk Works, inspired by Nintendo, I think is what you told the New York Times. Is that going to get set up and more capitalized and become less of a Skunk Works? How do you see this working out? Part of it is how do we use AI across the business as a whole? And I can share some things, but not everything. But 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.

27:40And some of the early stuff that BuzzFeed did about social content, I think you could do on this whole nother 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 just 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 Branch 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 using Gen AI.

28:26So it's kind of like 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 specific things that you're joking about and talking about is just a lot more fun. And so we built BF Island for that use case. And then we also launched an app called Conjure, which is 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 pictures to see if there might be U-apps hiding in the sky near where you live or get messages or fortunes or other things on Conjure.

29:10So I think when you think about BuzzFeed AI, it's a combination of things that integrate across the entire company and 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.

29:33Nilay Patel: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 going to read it to you. And I'm hoping you can explain to me how this will work. Here's Byron Allen describing why he's buying BuzzFeed. 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 going to do that? So I think one thing that is pretty exciting about working with Byron is that there are more assets and more resources and more capabilities to do things that we just couldn't do on our own.

30:13And 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 has where he is in the home with local now connected TV app. He's doing a huge amount of production with his studios of making content. 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 so, you know, what would YouTube be if it started today?

31:03What would YouTube be if it was, you know, something that was created in the world of Gen AI? 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 people jump to. But there's different ways that creators could make and play and share. And, you know, we have a lot of stuff to work out and a lot of stuff to build. But I'm excited about, you know, combining a lot of new capacity that we didn't have before to build things that seemed out of reach in the past.

31:42Nilay Patel: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 enough users to 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 just operating leverage?

32:16Nilay Patel:Like you can do more with less. Is it, you can vibe code a YouTube app? Like how does that work? I think you'll have, you'll have to wait and see. Um, I don't want to, I don't want, you know, Neil probably listens to this podcast. So I don't want to, I don't want to, Hey Neil, if you're listening, you're listening, you know, uh, let's go to a Warriors game next year. And, we can share notes. We can compare notes. There's a distribution challenge that all these platforms have, which is somewhat driven by consumption. Vertical short form video became a dominant way people wanted to consume. So then Instagram turned into TikTok and then YouTube turned into TikTok.

32:54Nilay Patel:And then maybe a bunch of people on YouTube didn't want YouTube shorts. And now you have the option to turn YouTube shorts off. And what they really want is long form 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 of these AI tools. And so, you know, a simple example would be if you have a video, you know, having that turn into a BuzzFeed 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.

33:43And so I think that opens up some some some possibilities, you know, in the beginning.

33:50Nilay Patel:My wife reads BuzzFeed every night. It's like I watch her wind down by reading BuzzFeed roundups of social media posts. That to me right now is the BuzzFeed shaped object. Look at what these people are saying on Reddit. 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. Has she played WordChain? I think so, but there are so many Word games going around her house at once that it's hard for me to determine which ones are in style at the moment. Yeah, it's pretty.

34:23I mean, the BuzzFeed games 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 year. And, you know, we've done hundreds of games this year with 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. You know, it's become a big percentage of, you know, big 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.

35:06So that's another example of a sort of AI acceleration of, you know, what is creating new BuzzFeed 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 user-generated video or interactive games or new post formats and quizzes and things like that.

35:33Nilay Patel: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? and 10 years ago, 15 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 and eventually we're going to do a llama in the dress in the same 48-hour span and that's the future of media. That was great. And then the open web has collapsed. There are bigger publishers every day. I think Roger Lynch literally today is saying Google Zero is there for Condé Nast and they are just betting that there's no Google search traffic anymore.

36:08Nilay Patel: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. The question I have for you is you can invest more in BuzzFeed shaped objects on BuzzFeed. Where do you get new readers, new game players from? Because that seems like the hardest problem now for digital media. Yeah, I mean, we have a majority direct audience now. So, you know, some of that is because of declines in other audiences, 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 me on it. It's like we're the biggest publisher in our competitive set.

36:46You know, we're bigger than people. We have a lot of people coming. And when we see new formats, like, for example, these BuzzFeed games that we have been creating, they come back more frequently. They spend more time. They engage more. They send the games using iMessage 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 Conjure will be all across BuzzFeed and BF Island will be all across BuzzFeed to market it and let people play it.

37:34So, 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 launch these new things and and help us help us grow and launch, you know, something that could could be a competitor to YouTube or a 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. So, you know, back to our earlier part of the conversation about was it a mistake for Facebook or YouTube or others to sort of pay less for content?

38:15And 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 that's a big opportunity to build on top of. And that's that's the new kind of distribution. It's more fragmented. It's not everyone on the Internet.

38:49It'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 HuffPost and they they're not like trying to kiss up to the Trump administration and 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 BuzzFeed and know what's going on across social media because, you know, as your wife has realized, it's a lot more satisfying 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.

39:29Nilay Patel:You were always really against display ads, programmatic ads, banners and boxes. I always thought you were correct about that. I dislike them. I think the vast majority of the audience dislikes them. But that's how you monetize a bunch of webpages. To 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.

39:58Nilay Patel: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 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. And then there's the other kind of transactional, which is paying to be a member, subscribing.

40:36HuffPost has a membership program that has been growing really nicely. I think that there's a lot of headroom there where we can grow more with reader revenue and direct revenue. The branch office apps 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 Conjure, if you want to start exploring and photographing more weird things in the world, you got to, you know, become a paid member or, you know, transact with us. So I think that's a good combination.

41:17Nilay Patel:We have to pause here for another quick break. We'll be back in just a minute.

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42:12Nilay Patel:Welcome back. I'm talking with BuzzFeed's current CEO, Jonah Peretti, about the company's future as a social media product. We were playing with BuzzFeed 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. I could just sit here and generate images all day until I had 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?

42:47Yeah, I mean, I think this is pretty established. The freemium model for these kinds of apps is pretty natural. People have shown a willingness to pay for AI services. And so I think... Wait, have they?

43:01Nilay Patel:I mean, like, you know, Chattapete has, what, 900 million users and, like, very, very few of them pay anything. I mean, a lot of, you know, how much revenue is Chattapete generating from subscribers? I mean, you know, it depends how you... Not enough to pay their bills, I would say. But there are a lot of smaller freemium apps and a lot of companies that, you know, have 5 million, 10 million in revenue and are profitable. And, you know, you might not hear about those because they're not big venture backed, you know, companies. But I do think that these kind of midsize and smaller types of apps can be really good businesses.

43:37And in some ways, it's a little bit like a new kind of media business. The economics might be more similar to, you know, a YouTube show or a series or a podcast where, you know, the cost of the talent and the show is a hurdle that the advertising or the subscription needs to clear. But I think there's a lot of there's a lot of examples of that that that I've seen for, you know, talking to talking to other founders and getting this sense of of that market. So I feel like there's a 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 know, you could have a product that that, you know, lost a little bit of money.

44:28But if you wait a year, the processing is cheaper, the costs are cheaper. And AI is progressing incredibly quickly. So anytime we use a new model six months later, 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 BF Island is kind of an idea engine where there's all these cool contexts and things where you might not have thought of that you can then use to delight your friends or play. The cost of that is making those images is going to and has been going down a lot.

45:11And so even a breakeven subscriber six months later is a very profitable subscriber.

45:17Nilay Patel:Are there going to be ads there or are you just hoping for freemium? People are going to pay to unlock different prompts and whatnot. I think there could be some pretty interesting native advertising solutions there. But we're just very early and we're just opening this up to the public now. So we want to get 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 that AI enables, which is the ability to iterate and change a product is just so much easier. And so getting to product market fit becomes a different endeavor if you can, you know, get data more quickly and analyze it and understand it and modify and test features, you know, much more quickly.

46:08And that applies to the monetization side as well.

46:10Nilay Patel:Yeah. It strikes me in this conversation, right? We're going to compete with YouTube with the power of AI and then playing with BuzzFeed Island. This thing is a social network, right? You make images, you share them with your friends. There's incentives to invite your friends. And after all of this time, what Jonah Peretti wants most of all is to just run the damn social networks himself. 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. that 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.

46:50And they took it for a while, but then they kind of went on this 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. Like, I think there's, there's, there's openings to do that. And probably they're 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 a hundred percent. Neil's shaking in his boots. Maybe we'll get to 10%.

47:25So he can, he can still have 90 % of the market.

47:28Nilay Patel: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 again, right? 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, right, that situation. The why I left BuzzFeed video launched a million YouTube careers. You just sold hot ones, which you had purchased and then you sold. Like there's something about BuzzFeed's relationship to the creator economy that at different times was really rich and really rewarding, really, really complicated.

48:05Nilay Patel:And then 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 really awesome for the team that was there because they had all these collaborators. A lot of them came in as interns or fellows. The Try Guys came in that way. A bunch of the talent came in, really almost like interns that got fellowships and then became junior producers and then kind of worked their way up.

48:52The challenge, I think, became when the platforms really started to disaggregate 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. and it kind of started to kind of break the cycle of development because essentially almost every media company if you look over you know the last hundred years there's some stars and they get paid the most but they get paid twice as much or something that you know or three times as much but they're producing 10 times as much value and and then you have a lot of new 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 the sort of, you know, bigger talent.

49:49And 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 sub stack or we'll just do a podcast that we own and take, you know, 90 % of the profits from it or, you know, we'll just make our own YouTube's channel. Then, you know, the process kind of breaks where you don't, 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.

50:28And so I think early BuzzFeed was trying to build essentially like a collective in 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. 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, and, you know, YouTube and TikTok love 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.

51:10And so it really is, you know, kind of broken for a lot of the talent that was frustrated and left, like didn't work out that well. But 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 blow up the media companies. It's one thing 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 Substack.

51:45That's the most, you know, Substack is probably the biggest union busting, you know, like development that exists, even though that's not their intention. But it, you know, 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.

52:23They 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 capture that value for themselves.

52:33Nilay Patel:You run HuffPost. HuffPost has this problem and has this dynamic. You're talking about AI. Are you going to start to publish AI journalism on HuffPost to solve this problem? 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 slop. So HuffPost is a place where talented human journalists who actually do have a sense of collective endeavor and who believe in the mission of HuffPost, they work together and they make content that the audience knows is trusted. Are they receptive to using AI in the news gathering process?

53:13Nilay Patel: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, provide code and create new games and new formats is one example. I don't think a HuffPost journalist would, you know, you remember back when like Snowfall was this like big, you know, story. We did tons of snowfalls on The Verge. Yes. The big, complicated layouts. We love them. Yeah. Yeah. And, you know, that kind of thing is trivial to do now, right?

53:47You can design interfaces that are, it's trivial from a technical standpoint. You don't necessarily need an engineer to do that. You need someone who has a good sense of design and good vision or whatever, and you need the journalism to be good and the story to be good. 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, 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 Cloud 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 of kind of fact gathering and things like that, that you can do is, is something that could help elevate journalism and make journalism better.

54:40But having AI write journalism is, you know, just would undermine the core trust that is the main reason that people are coming directly to HuffPost to get their news every day.

54:50Nilay Patel:Yeah. 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 BuzzFeed Island is a bunch of user-generated content. But the BuzzFeed shaped object today or 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. This is specifically what I'm asking.

55:20Nilay Patel:Do you want to run platforms for users? BuzzFeed was in the talent business, providing healthcare and benefits and professional development and a context and real estate and all these things. And when creators would leave to just go directly to YouTube, you know, they got a rev share. And so some of what we will do in the future will be more user generated, like where you look at, you know, users making quizzes and things like that and creating things for themselves. And, you know, you're played with BF Island. 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 as the joy of creation.

56:00And so I think we'll have a lot, there's a lot more things like that that are 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, all of those all of those things. And so it just depends on the, you know, on the 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 are professionals.

56:38And that shows in the work that they're doing. The same is true at BuzzFeed and figuring out how to do even more to elevate the talented writers and creators and people making things at BuzzFeed, I think is part of what I want to do with my increased focus on AI.

56:55Nilay Patel:Yeah. 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 BuzzFeed AI. Byron's going to be the new CEO. Even, again, in this conversation, it strikes me as you are 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, where you've got to show up and you have to negotiate rights, and maybe the AI company is going to pay you for stuff. There's just a lot of deals to be made in a way that, quite honestly, 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.

57:27Nilay Patel:at the end of this road, you're taking on a new role. There's going to be a new CEO. There's two moments I want to ask you about that could have been previous endpoints. One, in 2013, Disney offered to buy BuzzFeed for what Ben Smith has reported to be$650 million. Do you think he 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,$450 million with an earn out that could get to that$650 million number. and we were just hiring Mark Schuess to build our investigative team. We were just starting with BuzzFeed Video and that whole cultural phenomenon of BuzzFeed Video was kind of just about to take off.

58:11There 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 build and explode and hack culture and influence the internet in a massive way. And I think it would have been harder to do that, you know, 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, windfall, which, you know, you know, was unfortunate that they, you know, 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.

58:54I think selling it two years later would have been. And there was, you know, a lot of interest that people don't know about, you know, in in those sort of subsequent years. And so the Disney deal was the first time someone came and I think Iger 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 I like turned down that Disney deal meant that I would never sell for any price or whatever.

59:28And so that also partly led to never really exploring any of those other types of deals. But in retrospect, if you had perfect hindsight, there's probably some kind of deal we could have made in 2015 or 16 that would have also given us the right partner and resources to fare the next challenging time.

59:51Nilay Patel:You're stepping down as CEO. I've tried to ask about the future, but it feels important to check in on these moments in the past. Especially now, you know, Disney in particular, Josh DeMar with the new CEO is saying Disney Plus is going to be an everything app. And that very much implies user-generated content in a totally different way. And it feels like those things would have been aligned. The other moment I want to ask about, you went public in 2021. That was a SPAC. It was very fashionable at the time. Do you feel like that was a miss? Do you think that that was the right decision at that time?

1:00:21I think the biggest issue was we missed the window. So again, if you had perfect hindsight, if you could do it over again, I think we would have gone public via SPAC and we would have done it without buying Complex and we would have just done it right away because the market was super hot. We could have gotten a lot of capital into the business and we didn't need Complex. Like our business, you know, we were bigger with Complex, but our business was probably better. Our 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.

1:01:01And then we would have been able to have a lot more leeway and latitude to reinvent the company when the market got really tough. And so the problem is when we started to explore this complex acquisition, it slowed down our ability to get 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 so and then we needed to then once we went public, like figure out how to integrate and work with, you know, cultures that were not really well suited to each other. The complex culture was just very different than the BuzzFeed culture.

1:01:44And so in retrospect, I think hitting the SPAC 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. Instead, we missed that window. The SPAC 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 slowly been able to alleviate, you know, first by selling complex, then by selling first we feast.

1:02:22And now with this partnership with Byron Allen and that investment. But it's taken a bunch of time to kind of get back to where we have the balance sheet we need to innovate and operate in a way that's more confident and more deliberate.

1:02:44Nilay Patel:Why did you buy 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 for every demographic. So we were stronger with female audiences and they were stronger with male audiences. And 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 spend more and more with the platforms directly.

1:03:23And 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 programmatic, that really helped BuzzFeed and HuffPost. 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 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 we're like, OK, we now have to take on this debt to buy buy them.

1:03:56But if things go well, you know, that the debt won't be an issue. But when when things went, you know, when things were tougher than expected, the debt, the debt burden really was challenging. And it's one of the reasons why I think people don't realize that the underlying BuzzFeed assets are better than than people think, because they look at the whole thing and it's like that you start backing out pre-COVID real estate and you start backing out 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.

1:04:32And I'm, I'm glad that, that, you know, Byron was able to see that because, and some others were able to see that. So we had, we had an opportunity to, you know, to do a deal 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.

1:04:50Nilay Patel:Yeah. BuzzFeed's greatest strength, I'll call it the millennial era of digital media, was that it was a cultural phenomenon in millennial digital media. I think that's the best way to describe it. There were all those posts about why I left BuzzFeed. 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 BuzzFeed and it kills me every day. And this thing rocketed around. I think Corey Seeker wrote back to them. It was a great digital media moment that I will never forget. It had totemic power in the media ecosystem at that time.

1:05:22Nilay Patel: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 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.

1:06:06I think people love playing WordChain, and I don't think they mind that AI coding tools were used in creating WordChain. And so I think the human agency and human intention is in the product. The person who designed the game 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, or, you know, or like, a lot of people would say, yes, you know, my career is based on,

1:06:48Nilay Patel:do you love mobile? Like the answer was millions of people being like, yeah, I want a whole website about that. Yeah. I mean, there were industry people who, who liked, who liked mobile, but I think most people were like, they liked the things they can do with it and they liked the way that they use it. Or, you know, it was, you know, it's like, do you like microcomputers? 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 I, 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?

1:07:20And there already are many of them. And, you know, it's it's, you know, whether it's using them to do their homework or help them help them, you know, solve problems that they have with personal challenges they have and talking to ChatGPT or Claude 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 like everything is super polarized and everything is kind of love and hate. And 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 is 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.

1:08:08Like, I think that's going to be something that you will 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, that makes people see the power of this new computing platform, but not through the platform itself, but through the through the applications and through the fun things that they can do with it and the fun ways they can connect with their friends.

1:08:26Nilay Patel: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. All right. And then you and Byron are going to have to come back and you're going to 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. 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 to fruition. You're going to have to come back soon. Jonah, thank you so much for being on Decoder.

1:08:52All right. Thanks for having me.

1:08:55Nilay Patel:I'd like to thank Jonah Pretty for taking the time to join me here on Decoder and thank you for listening. I hope you enjoyed it. If you'd like to let us know what you thought about this episode or really anything else at all, drop us a line you can email us at decoder at the verge dot com we really do read all the emails or you can hit me up directly on threads or blue sky we're also on youtube you can watch full episodes at decoder pod and you can watch clips on tiktok and instagram also at decoder pod it's a lot of fun if you like decoder please share it with your friends and subscribe wherever you get your podcasts decoder is a production of the verge and part of the voxing new podcast network the show is produced by kate cox and nick stat this episode was edited by kabir chopra our editorial director is kevin mcshane and the decoder music is by breakmaster cylinder we'll see you next time Support for this show comes from Adobe Acrobat.

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