Advice Line with Jonah Peretti of Buzzfeed

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2:30Hello and welcome to the Advice Line on how I built this lab. I'm Guy Raz. This is the place where we help try to solve your business challenges. Each week, I'm joined by a legendary founder, a former guest on the show who will help me try to help you. And if you're building something and you need advice, give us a call and you just might be the next guest on the show. Our number is 1-800-433-1298. Send us a one-minute message that tells us about your business and the issues or questions that you'd like help with. And you can also send us a voice memo at hibt at id.wondery.com. And make sure to tell us how to reach you.

3:05And also, don't forget to sign up for my newsletter. It's full of insights and ideas from some of the world's greatest entrepreneurs. You can sign up for free at GuyRoz.com or on Substack. And we'll put all of this info in the podcast description. All right, let's get to it. Joining me this week is BuzzFeed founder and CEO Jonah Peretti. Jonah, welcome back to the show. Thanks for having me. So you were first on back in 2017 to tell us a story about how you started BuzzFeed. And that was a long time ago. I mean, we did that live in New York City. It was fun. I had fun. Hope you did. Yeah, it was great.

3:39And if anyone listening missed that episode and you want to go back and listen, it's a great episode. It involves the founding of Huffington Post and Ariana Huffington makes an appearance in the show. All kinds of things happen. We will drop a link to it in our episode show notes. So basically, the BuzzFeed story really began about 20 years ago, back in 2006. For a time, it was the most fun place on the Internet. The site had online quizzes and listicles. And I'm sure lots of you listening remember the famous dress. Was it gold and white or black and blue? I always saw gold and white myself. And over time, BuzzFeed started to be talked about as the future of journalism.

4:16He even won a Pulitzer Prize in 2021. But today, the Internet is a much different place than it was when we first told the story. And BuzzFeed, like many other similar sites like Vice and others, has faced its share of challenges. It was a recent article in the New York Times with the headline, Can Jonah Peretti Save BuzzFeed? So, Jonah, let's start with that question. Can you save BuzzFeed? What's going on right now with BuzzFeed? So I would argue that BuzzFeed is still one of the most fun places on the internet. You know, tens of millions of people every month coming to BuzzFeed. We also have HuffPost, another Pulitzer winning news brand.

4:58That you guys acquired, I think, in 2020. Yeah, so I started it, you know, over 20 years ago. And then it was sold to AOL. And then I had the opportunity to buy it back. So now HuffPost is our news brand. And so we've had a lot of changes over the years. And the way the internet works has really dramatically changed. The biggest difference is that content from publishers used to go viral on Facebook all the time. And everyone used to be on Facebook. Now the social web is really fragmented. Some people are on Facebook, some on Instagram, some on TikTok. Some are quitting the apps entirely and trying to be more intentional with their attention and time.

5:38And so you don't see content from publishers fly across these social media the way you used to. And so our business has radically changed. Now people come directly to BuzzFeed, coming to our front page, coming directly to our site, and building community. So BuzzFeed now has really a very active comments section that we put a lot of attention into. HuffPost has had tremendous growth in membership. the biggest thing we have to figure out as a as a company is some of these legacy things that encumber the business you know some pre-covid real estate that we still have leases on debt payments some of the restructuring costs like all these things have weighed down our business and we we made a lot of progress but we still have more work to do on that and and i think one of the things that you cover in your in your show is is the way entrepreneurs have to continually reinvent their businesses and change what they're doing.

6:34No question. Yeah. Yeah. You know, I think about when you started this business 20 years ago. I mean, you were a younger guy and you've had a lot of experience running a business now for 20 years as the CEO. But, you know, you are in a rocky period. It's not a secret that you've told investors that you guys are at risk of not continuing by the end of this year if you run out of cash. So give me a sense of what the game plan is. I mean, you also have said that you're optimistic about the future of the company, which is important. You should be. You're the leader. Tell me how you sort of plan to turn this ship around.

7:13Yeah, so what happened was we disclosed what's called a going concern. And that is a technical accounting term that means that you have liabilities within the next year that you can't cover with your current cash balance. A lot of companies have had those. We had one a couple of years ago as well that we resolved. So our plan and management's plan is to resolve that going concern and really going back to founder mode of saying, hey, we got to reinvent the company for this near future. And wanting investors to know there's risk to that. But also now we're getting back to what we love most, which is innovating, creating new things.

7:55We launched this new incubator branch office. We have new apps. Yeah, tell me about that. This is all around AI apps, right? Yeah, I mean, I think the apps use AI, but I think anytime you're building something new now, there'll be some AI aspect to it. The main thing isn't that it's AI. The main thing is that it's starting fresh to build things for the world as it exists today. One of the apps that is really fun is if you search in the Apple App Store, is Conjure Camera. You get one challenge every day from a mysterious spirit, and you take pictures with the camera, and it shows you unseen things that are in the world around you.

8:36It's kind of like a Pokemon Go meets Instagram, meets a new thing that couldn't have existed until a year or two ago. And so building things like that are really exciting for me because it It gets back to the reinventing it and creating new things and seeing a lot of excitement in the new models that we're developing around community, membership, programmatic advertising, new AI apps, and new ways of operating. All right. Well, it'll be interesting to follow and see what happens. And, of course, I'm wishing you great luck. Are you ready to take a call from somebody who is looking for advice from us?

9:16Yeah, let's do it. Let's do it. Okay. Welcome to the advice line. You're on with Jonah Peretti, founder of BuzzFeed. Please tell us your name, where you're calling from, and just a little bit about your business. Hi, Guy. Hi, Jonah. My name is Anthony Cortez. I'm calling from Miami, Florida, and I'm the CEO and founder of MotionFlix. We bring movies beyond the traditional theater and into the open air, creating a five-star cinema under the stars with plush seating, personal headphones, and elevated concession service. Wow. Well, thanks for calling in, Anthony. So it's motion flick. So you are a company that mounts outdoor movie experiences, basically?

9:52Correct. Yeah, we pop up pretty much anywhere. The beach, rooftops, backyards, anywhere you can think of. And you bring everything. You bring the screen, you bring the chairs, you bring the headphones. Yes, screen, headphones, concession. We have popcorn attendants that serve throughout the event. Everything that's in the theater comes to you in the outdoors. And you work with like companies hire you? Like who pays for all this? Yeah, so a lot of it is property management companies. They have resident events. As you know, a lot of the rentals now, they put a lot of effort into their experiences and their communities.

10:25That's a big part of our clientele. And then we also work with Netflix and Prime to bring a cinematic experience to their originals since they don't have really presence in movie theaters for their originals. So we've been able to do some great stuff with them. and then also cities will bring us on to do community events in their parks and sponsored events. Nice. How did this business start? Yeah, so I have always had a love for events and my business partner has a background in property management. So during COVID, we kind of were just like everyone else trying to figure out how can we adapt to this new way of living.

11:02And we found that there was a lot of budgets that weren't being used for resident events because of COVID. So we kind of thought, how can we come up with a creative way for people to gather outdoors with proper social distancing and use these budgets that people have? So we kind of came up with the concept. It was supposed to be temporary, and then it snowballs. And now we're in Los Angeles, San Diego, Orlando, Tampa, now just Miami. We're just launched. Wow. That's awesome. Congrats. And tell me a little bit about your business. What did you guys do in overall sales last year? Last year, we did a little over a million.

11:36Nice. Okay. So before I bring Jonah in, what is your question or challenge you're trying to solve? Yeah. Since our business is seasonal, we do outdoor events and cashflow can be challenging. How can we continue launching new markets ourselves while also attracting aspiring entrepreneurs we can invest in to operate and own a share of each market? And is this the right model to scale efficiently? All right. Awesome. Jonah Peretti, I want to bring you in. Thoughts or ideas or questions that you might have for Anthony before we tackle his question? Yeah, I guess one question is how much in advance do you promote a screening?

12:11And do you think it's important that people have a lot of advance notice? Or if you saw that there was going to be some really good weather in the winter or something, could you get people to come more quickly to an event? Yeah, that's a great question. So we're brought on typically by the location. So typically these locations will plan out their schedules way in advance. So typically in January or Q1, they're planning their programming for the year. So we usually already have kind of our set dates. And then we do have weather and what we call weather insurance. If there's rain on the radar, we will move the date at no extra cost to the client.

12:49Anthony, I have a question for you. You mentioned that you're in Los Angeles and Miami and San Diego and a few other places. So your question is around how can we invest in entrepreneurs who want to operate these for us? Are you doing any of that right now? Are you and your partner running all these events in these different cities? We are doing it right now slowly. So the majority of our business, of course, is in L.A. because of the love for film there and the weather. So we do have a really great operations manager, Leanne, there that manages all of SoCal. And then I'm here kind of expanding into Florida and working on that.

13:22My goal is to expand to all major cities kind of in the same business model where we give a salary and then a percentage of net profit to each partner. Got it. Okay. When you're thinking about these entrepreneurs who are doing it in other cities, what is it that keeps them from just going rogue and doing their own outdoor event? And like, what do they get from you that makes it feel like a no brainer to work with you instead of just kind of doing it independently? Yeah, that's a great question. So luckily, because my business partner has the experience in property management, he's managed a few buildings.

14:01We've been lucky to really kind of know how to get fully insured with these properties that are on a national level. So we pretty much already have clientele as we open in each market. It's a really low risk for us and also the partners. So I'm wondering if that's the best way to do it or just having a team and we kind of manage it from wherever we are. You know, we've done a few episodes over the years about franchise businesses. And we did one recently on Wingstop. And what they did well and why Wingstop today is 3 ,000 locations around the world. It's the biggest chicken wings brand in the world.

14:40Why it worked was for three reasons. It was simple, a simple idea, just chicken wings. They create a replicable system and then eventually a brand. And you don't need all three of these things at first, but you do need the first two. You need a simple model and you need a replicable system. And it's the same story if you look at Dave's Hot Chicken or Five Guys. And I'm talking about food because when we think about franchises, oftentimes it's restaurants. And so have you created a system or are you working on a system that can be replicated, that is very clear and that has a whole operations manual and it's just a kind of a turnkey thing?

15:23Yeah, we have. And with just like I always hear on this podcast, everything comes with lessons. So we have gone through a lot that we've documented and we've come up with solutions. We're also working with AI to create a training system that they can just log on through our website and learn how to set up a motion flicks event within a few hours. And so we are trying to come up with those systems to make it something that we can duplicate easily in each market. it. Yeah, I think this would be very hard. But if you could figure out a more real time way of being able to quickly spin up a movie experience, you know, that that feels like something that is could be pretty exciting and defensible where like, there's going to be a good weather day, you know, three days from now and, and you have organizations or real estate or places that you know you can quickly spin this up and people get an alert that some iconic movie is going to show or some special thing is going to show and it kind of like happens in this way that feels magical and fast and and surprising and spontaneous i love that but it also might open up you know when there's gaps or extra you know the way a pop-up store will take advantage of real estate where between like one lease and another they'll find a spot where they get really cheap real estate in a cool spot and do a pop-up.

16:45Like, is there a way to make this almost like a real-time platform where you're able to do this and people can connect to it and grab it and use it for the screening idea they have, no matter where they are in the country, to make something happen quickly? Yeah, that's a great idea. So like a platform, like an Airbnb-type platform. I mean, it's interesting because you could imagine that your business will could become an events business down the road where movies are just one of the things that you're doing. Right. And so your question is about like, how do you scale this? And it sounds like right now the model you're kind of leaning towards is sort of like a company owned hub, right?

17:26Where you guys own the cities, but you have people who are employees, you train them and they run it, which is definitely a model. I mean, there are other ways to do it. You could find people who want to invest a small amount of money, sort of buy into it. And then you guys provide the brand and the systems and the relationships and how to book these events. And then you've got some sort of revenue split, right? Which allows you to keep control over the brand and standards without having an employee. In other words, right? Which could be great, but it's also a liability. There's also a licensing model where you can just license it out, but that's riskier because the people who operate it may not operate it to the standards that you guys expect and want to maintain.

18:16Right. And then there's the marketplace model where you basically have real estate people who say, I have this space that's suitable for this, and I get to put which dates it's open, more like the Airbnb model. And then you have a set of standards that you have for these kinds of things. And then it's like the freelance labor, the real estate, and then your brand all comes together where people can do that. And then partnerships potentially with the streamers that want to show movies too. So you can have selection of which movies you might have the rights to show. And you could potentially have something where it could really scale to be massive, but you'd have the challenges of a marketplace of priming the pump and getting the demand on all the different sides of the marketplace, but it could also be something massive.

19:05Yeah, it's great. I mean, look, in-person events, there's a lot of, in an era of sort of disaggregation and everybody kind of plugged into their computers. There's a lot, I'm sure you know, there's a lot of talk and excitement about the future of live events. And I think that there's something to that because people do want to connect. They want to be around other people. So, and it sounds like you are leaning towards, towards what? Towards, towards actually having people as employees in cities around the country, training them and, and having them run the business in, in different cities. Yeah.

19:38So I guess it's, it's kind of my passion because I was given the opportunity when I was younger to have my first business and someone invested in me. So it's kind of more of a passion thing. And I wonder if that's really something that is scalable is giving an opportunity to people that want to start their own business. And we put up the upfront cost because it's so low to start a motion flicks in a location. And so it's kind of more like a passion, but I don't know if that's, you know, something that's scalable or a good way to. I mean, a franchise model can scale very quickly. It's very risky and it requires a whole lot of work to maintain control over it.

20:15But it can be really successful and it can be a really fast way to scale a business. But you really have to have a clear brand, right? People need to know very quickly what motion flicks means. It's going to mean great snacks and popcorn and comfortable seats and a really great sound system. Like if it means all those things, you have to really establish that in a bigger way. Yeah, totally. Early on. Definitely. uh jonah final thoughts for for uh anthony uh just a random little extra idea which is you should do one in the middle of winter serve soup i love that yeah blankets yeah it gets some social media pickup if uh you know these people went and you know pick the coldest day of the year heat lamps blankets marshmallows like a buffalo bills game but for for a movie i love that that's a great idea.

21:09I'm going to do that. Thank you. Anthony Cortez, a company called MotionFlix. Thanks for calling in. Good luck. Thank you so much. I just wanted to also say that I had this on my goal board to be on this podcast before you guys even had the advice line. I was like, there's no way I'll be on this podcast because I know it's usually really established founders. So this is a full circle moment for me. So thank you so much. Awesome. Well, thanks for calling in. Yeah. I mean, you've talked about this too, Jonah, about live events. You're really bullish on this, like in-person events? I think that you can embrace AI and use it in products, but you also can counter-program AI, which is people are sick of just digital experiences and want to connect with other people in the real world.

21:51And it's also scarce. If all of a sudden software is sort of infinite and anyone can make VibeCode anything, then what becomes scarce? And it's spending time with real people in the world. And so I definitely think it's a good area where there's going to be a lot of growth. We're going to take a quick break, but when we come back, another caller, another question, and another round of advice. I'm Guy Raz, and we've got the answers right here on the advice line on how I built this lab.

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25:28Welcome back to the advice line on how I built this lab. I'm Guy Raz, and my guest today is Jonah Peretti. He's the founder and CEO of BuzzFeed. and we are taking your calls and let's bring in our next caller. Please tell us your name, where you're calling from, and just a little bit about your business. Hi, Guy. Hi, Jonah. Hello. I'm a longtime listener and very excited to be on. My name is Andrew Bruce. I'm based out of San Francisco and the founder of CatSumo, which is a pet company focused on helping cats live longer, healthier lives through products that encourage play and relaxation while also strengthening the bond between cats and their owners.

26:05Okay, so it's a cat products company. Tell me about your products. Yeah, so the first product is an interactive cat wrestling glove that allows you to socially play with your cat. It's like a puppet. Yep, yep, exactly. Okay. So I stumbled upon the idea in large part due to my parents, who have historically and somewhat ironically been ardent dog people. So I grew up in Kalispell, Montana. And as a family, we raised a litter of six Australian shepherds. And I have really fond memories of roughhousing with them as puppies. So it came as a complete shock when in 2023, my parents, they were traveling abroad in Greece.