BuzzFeed vs Gawker, AI’s impact on the future of media, and more with Semafor’s Ben Smith | E1733

0:09Hey, everybody. We've got a great show for you today. and he before that worked at the new york times writing their media column a lot of things went wrong and he just wrote a book the book is called traffic genius rivalry and the delusion in the billion dollar race to go viral this is a book about gawker and nick denton versus jonah and buzzfeed both of those businesses have burned up in a just huge barn fire he was there he saw it happen he explains all of that and more plus we talk about the standoff between media and tech We talk about VC dollars going into media companies being a bad idea, including the$10 million that Ben took from Sam Bankman-Fried of FTX fame.

0:53And now he's got to give that money back. Oh, Lord, it's a great episode. Stick with us. This Week in Startups is brought to you by LinkedIn Jobs. A business is only as strong as its people, and every hire matters. Post your first job for free at linkedin.com slash twist. Vanta. Compliance and security shouldn't be a deal breaker for startups to win new business. Vanta makes it easy for companies to get a SOC 2 report fast. Twist listeners can get$1 ,000 off for a limited time at vanta.com slash twist. and iConnections is a platform to connect and meet with elite capital allocators through their online platform and bespoke events.

1:40The first 25 VC funds to sign up for iConnections Miami 2024 event in January of next year will receive a 20 % discount. Head to iConnections.io slash quiz to sign up today. All right, I'm very excited about today's guest, everybody. ben smith the co-founder and editor-in-chief of semaphore is here he was the creator and editor-in-chief of buzzfeed news just recently shut down we're going to talk all about that and he was a media columnist at the new york times and i um and he's got a book coming out today tuesday may 2nd and this is a book that i was on the periphery of uh the book's title is traffic colon genius robbery and delusion in the billion dollar race to go viral and describe describe the book as a post-mortem on the aughts media revolution of nick denton jonah peretti i guess i'm mentioned as an old rival to nick denton um ben welcome to the program thanks so much i was just talking to your producer that how about how if all in had been as big when i was writing it as it is now i probably would have like mentioned jason calcanus a few more times yeah i've only got one calcanus reference in there oh it's okay i mean if we look back on that time uh nick denton had started gawker i started weblogs inc we had a bit of a rivalry uh i dominated him uh in gadget dwarfed gizmodo and joystick dwarfed kotaku i think it was his video game brand um and uh we had a dogged fight i sold weblogsing 18 to 24 months after we started it for 30 million dollars and uh i think everybody knows he probably made what 10 million bucks 20 million bucks at the end of the day after the whole kogan stuff do you know how much money he actually made on the sale i do not um how much he walked away with he sold it years later though it was sold for 150 yep but i don't know how much of that he wound up with yeah very little i think because he had taken a huge uh investment like an emergency investment as you probably document in the book um but let's start here i mean so many things for us to talk about i want to make sure we talk about your book i want to talk about semaphore i want to talk about media writ large uh and i'm sure you have questions for me this is always problematic for me when i have a journalist on especially in media journalists because you always want to ask me questions so hopefully we can keep this focused on you but i will allow a couple of uh in the interest of full disclosure and i'm an open book about these things but it's fun it's fun to talk to you i feel like i've been talking to you on the internet for years one way or the other so it's nice to yeah nice to see you so when did you first get into media reporting or just media in general just to set the stage here and then when did you get involved with buzzfeed yeah i mean i've always been a reporter and really mostly a political reporter my first gig i was a summer intern at the jewish forward covering the cutthroat politics of the upper west side in the late 90s um wound up uh back in new york covering city hall in the early 2000s and you know watching all these bloggers actually for both the political bloggers like andrew sullivan and then gawker and and and your guys the tech bloggers um in you know i guess it was 2004 very early and there was nothing really like that in local politics in new york And so I started a blog when I was at the New York Observer that covered local politics.

5:13And I thought it was really successful, actually. Like it was, it sort of dominated that extremely small space. And I remember once having a drink with Jessica Cohen, who I thought was incredibly cool, who ran Gawker, which was like a real blog. and asking her how much traffic she got. She told me she got 100 ,000 views a day and asked me how much I got. And I was sort of like spat out my drink and changed the subject because I got 1 ,000 views a day, but I really had thought that was a big number. Well, how old are you, if I may ask? I'm just curious. I'm 46 now. Okay, you're 46. I'm 52. So you're right behind me.

5:48You're a Gen Xer. Yep. And what people don't realize about that time is that for Gen Xers, we would wait in line to be allowed to publish uh and to get our bylines in print typically and then on websites and what blogging did was it created a path for people who were over performers who didn't need an editor to go and just talk directly to an audience which seems sort of obvious in the age of twitter and tiktok substack and other platforms but at the time journalists just simply weren't allowed to publish without going through multiple layers of editors and you have to like kind of wait in line in your publication to be allowed to write a feature story so maybe you could describe sort of what you think is special about that era of publishing and specifically the two principles in your new book yeah i mean another thing about that era that i think it's it's sort of it's you know it's funny it's hard to get your head back there because it was so different um was just that you know the we were still it was an era where you know there were a few few broadcast channels, a couple cable channels, newspapers.

6:53But they, you know, and the New York Times would put out its edition at midnight. And if you wanted to know what had happened, say, in New York City during the day, you could wait for that. Or I could, and that's where I saw an opportunity, or I could just write it down and blog it and you could see it 10 hours earlier. It was a very, in some ways, very easy competitive environment if you were on the internet. And these opportunities to have arbitrage information were just so obvious. but also the media i think as much as people now sort of have gripes with a much diminished mainstream media the mainstream media condé dast the new york times the big networks were were very very powerful and had and were in the process of really i think profoundly discrediting themselves in the iraq war and people to some degree felt that then but then in the aftermath of you know 04 05 06 07 there was this like real alienation from and questions about the mainstream media that i feel like have been a little forgotten but really did fuel a lot of the anger and reaction against the mainstream media the eagerness to hear other voices of all sorts from the outside and media criticism that was all over the place in that moment and that was a valid criticism not only of the media uh but of the administration which basically lied to the american public or just the most cynical is they lied about the wars the most generous would be they they were duped or did a poor job of recognizing weapons of mass destruction etc and we've had this slow veil uh being removed for all institutions uh and what was previously a conspiracy there he could turn into a pulitzer prize right we've had many things uh you know that have been discredited at first and then become super um award-winning right i mean you only have to it was this moment of real like rage against these institutions that yeah like was pretty justified in that moment actually like it's a little hard to it's funny i think that comes gets written out of the story it wasn't just there was this new tech it was also there was an audience that was really eager for alternative voices of all sorts and just and and interested in new stuff and you also had the birth of link bait at this time so if it bleeds it leads has existed forever we can both agree on that but there was something more pernicious about link baiting which is it became a science and it became a science um that was mastered by two publications uh gawker and um buzzfeed in one hand you had gawker which would print things that people were talking about but maybe weren't fully sourced i i think would be most people's perception they were a little bit looser with uh what they would publish things that came into the tip line and then at buzzfeed they were just incredibly good at you won't believe what these 10 cat kitten photos would be so maybe you could describe those two publications and why you decided to base a book on those two yeah that's right there these were these two guys jonah peretti Nick Denton, who had come into this moment when, as you say, suddenly publishers could see exactly who was reading them and coming from where.

10:05And it's sort of like everybody had been navigating these aircraft and suddenly they had instruments and suddenly they could navigate with enormously more precision and all the temptation to pander to your audience to give them exactly what they want, even if it's in some way inappropriate, had always been there. Like, it's not like the, you know, So, not like the media were saints before, but it certainly allowed us to, for better and for worse, just know exactly what people wanted and give it to them. And what interests me so much about Nick and Joan is they're both very ideological, actually.

10:34They are not people who came out of operating businesses. They were not. And I think part of the reason that you sold when they didn't was that you were a business operator who was looking at what was the right moment to sell a company. And they were sort of visionaries, for better and for worse, ideologues who had like really distinct views of what the internet was going to be. For Nick, it was about essentially like ripping off the mask of hypocrisy from society, from the media. You know, if what people actually wanted was pornography, he would give them pornography. There was a porn site called Fleshbot.

11:08And that sort of ran through some of the coverage. it also you know and it also meant we're going to print what journalists say to each other in bars but would never really say in public and by the way sometimes that was pretty great there was a lot of like the young women writing for it in the early days brilliant writers and real outsiders with no power and so they would like you know one of them went to the cadenas cafeteria and wrote this great send-up of this kind of hallowed media institutions foibles and and there's a tradition of like poking fun at the giant calcified mainstream media that a lot of it was really great actually if you read it sort of captures the weirdness of new york in that moment some of it was really cruel sex tapes publishing sex tapes against people's permission some of them that were assault yeah including one that looked like assault yeah it was sort of a logical extreme of that ethos that they did and it's very hard to even put your head into a place where that could have been possibly considered acceptable um and then there was also outing people which was one of nick denton's passions was to out and again i agree with you about the hypocrisy i've had many discussions with him i mean he had a real ideology that sort of that was about exposing secrets with no limits and i don't think that's what most people believe but it was also heartfelt and it flowed through these things and it did connect to this sort of unfiltered new internet and jonah was in many ways kind of the opposite like he particularly a couple years later really was among the first to see social media coming to really understand this huge tidal wave coming of facebook twitter and he and start to experiment with what content would work in that context those content as you say that people wanted to share often it was like it seemed really dumb and silly though actually often a lot of thought and data went into the dumb stuff example you know i mean there were in the early days of buzzfeed there was a lot of these silly lists like one of the great ones what was really big early on was you know 23 images that will restore your faith in humanity, a great Reddit genre, actually.

13:06And the reason, but of course, it was made for a new world where people were going to share things that would sort of make them look good to their friends, among other things. Like where the distribution mechanism was people handing content to somebody else. And they had a theory, which was partly true, that it was going to be very like positive, light, silly stuff. Sometimes really positive stuff like, here's a fundraiser for earthquake victims, things that would make you look good to your friends. And actually, one of the things that we really believed at first was that in this public news social network, nobody's going to be screaming at each other about horrible politics.

13:41It makes you look like a psychopath to your friends. I mean, that did not turn out to be how social media worked. All right, everybody. The march to 1 billion users for LinkedIn continues. news, they're at 875 million people using the platform. Holy cow. Think about how many insanely qualified people are out there on LinkedIn looking for work. The stakes are high right now, right? You need to fill each of those open positions at your startup or midsize company or large company, even if you're listening here, you need to fill it with the right candidates. You need bar raisers. These are people who make you better at your job.

14:15They raise the bar inside your company. Well, guess what? Those bar raisers are sitting there waiting on LinkedIn for you to contact them. go to linkedin.com slash twist and the first job is free always you got nothing to lose because linkedin knows once you start using their incredibly powerful tools you're going to get better candidates faster that's all i need you to remember for this ad better faster better faster better candidates faster with linkedin jobs once again post your job for free at linkedin.com slash twist that's linkedin.com slash t-w-i-s-t to post your first job for free terms and conditions of course do apply there is a fascinating uh sort of piece to this so you have nick who wants everybody to be honest he's making a pretty penny running these publications he's got all these young people working for him and he was you know the king of new york uh in some ways media if you are good at media having experiences at silicon alley reporter uh when i covered the dot com era and then in gadget you know you get um a lot of attention in new york and a lot of power accumulates at least at that time to media folks i think this might be the last era of that if i'm and i'm interested in your take on it owning a media brand uh but their strengths ultimately led to their demise outing people uh publishing sex tapes the the desire to you know have this radical transparency and honesty and fight hypocrisy hypocritical people in new york led to denton's and the dependency on facebook and doing data analysis and having the headlines and the stories not be driven by morals ethics art whatever you you want to uh base your headlines and your editorial on but basing it on data science to get max clicks uh when facebook decided to slit jonah peretti's throat um he he was helpless to do anything and now the company is a 50 million company with$200 million in revenue.

16:15And they just shut down BuzzFeed News. So maybe you could talk a little bit about that which makes us strong and that is clever could also lead to our demise. Yeah, I think I agree with like two-thirds of what you said. So I'm just going to pick out that part. Let's go. And I think it's really true that Gawker's strengths are what brought it down. There's also one other thing you mentioned, sort of how much power you have as sort of a media figure in New York. And really at first, like that wasn't true at all. They were like weirdo outsiders on an internet nobody took seriously, as were you, as were we all, right?

16:45And you didn't feel that you had power. You felt like you were a weirdo outsider who people like didn't invite to things. And if you wrote something, you got dismissed as a blogger. And I think that one of the things that actually is certainly true of me, it's probably true of you, like when you're in media, at some point you get power. And if you have sort of come up as an outsider and you don't necessarily know it. And I think with Gawker, they were acting like these kids in the back of the class throwing spitballs. you know as they grew more and more powerful and as the people they were throw spitballs at went into crisis and suddenly you just look cruel you know and i think you know right you gawker in 2012 kicking at conde nast is like what are you doing they're falling apart you're very successful and i don't think they really it's easy to see how you don't realize that that dynamic has shifted but i think they were acting like outsiders and started to feel to some people like bullies such a great observation i think ben yeah but also there was this ethos i mean and there were two parts of their ethos that brought them down.

17:42One was sort of at some point times, like with the sex tapes, like with the Hulk Hogan sex tape, irresponsibly exposing people who were just no one in society or the court thinks you ought to be able to do that. The other was being really obnoxious to powerful people who can destroy you, in this case, Peter Thiel, who funded Hogan's suit, which in Hogan, you know, who financed this lawsuit that I think, you know, was a totally valid lawsuit, but secretly ran a campaign to destroy them and succeeded. and that campaign was based upon nick denton outing uh peter teal teal said later said it wasn't actually the outing and the outing it's a complicated word teal wasn't in the closet to people who knew him so it was but the thing that he it was very quiet yeah it was very dangerous for him to be a gay man at that time it was life or death because he had saudi investors and he traveled to the middle east i don't know if you cover that in the book yeah it wasn't i mean he He didn't want a sexuality written about, and that's something, yeah, I mean, like, I wouldn't have written that.

18:42I agree with that. Well, you have to just think, also, this is 2005. It's a different time period. At that time, Tim Cook was closeted. But Teal said, yeah, that's right. No, I agree. And Teal also later said that he was perfectly upset that Denton had written in the comments just about how Teal was this weird, like, sort of written something basically kind of mean about him personally in the comments. That was really what triggered it. But in any case, you know, this was a case where actually Gawker, had they written something mean about somebody with less power, they would have gotten away with it.

19:12But he had the money and power to go after them. And that also, their ethos was saying the unsayable and saying it about really powerful people. And that was the dangerous road for them in various ways, for better and for worse. yeah yeah the BuzzFeed story that I was much closer to and I think you're right the big picture the biggest picture is what you said it was a it was a bet really the bet very literal sense was that Facebook was a new the new cable company they were gonna be content and they were gonna be paying people for content and that or somebody would be paying for it a little hazy and that those companies would be the new Viacom like that was basically the bet do you think that was a crazy bet from the start or do you think it just panned out, Ron?

19:50So I've had this experience because when I did Mahalo after Weblogs Inc, we became dependent on Google traffic and then they cut our traffic,$10 million in revenue, all of a sudden went to 500 ,000, right? And I know Sergey, I know Larry, I know Marissa Mayer, I knew the people there. They had no problem cutting off our traffic and killing the company at that time. And so I have been through this dependency issue over and over again. and the mistake is when you have a dependency like that what you're supposed to do is use it to collect emails to collect phone numbers and to build direct traffic but building direct traffic is hard as you are learning with semaphore you have to have actually something unique that makes people type semaphore.com into their web browser and go direct jonah peretti got addicted to it he didn't understand he was outmatched by zuckerberg and that the relationship driven media business in new york where people don't shank each other is very different than how zuckerberg thinks there is no partner zero partners who went to bed with zuckerberg who didn't wake up with their throat slit there is no company he's acquired where the founders of those companies don't hate him so you have jonah peretti coming from the collegial but competitive new york media environment and then ramming into the silicon valley cutthroat environment where they don't even pick up the phone to tell you they've shanked you they just watch you they didn't even watch you bleed out they just shank you and walk away and drop the knife these are mafia based hits they're not like done in a very like uh you know we're gonna talk about it uh we're gonna negotiate it i got shanked by google as did you know ehow and countless other content companies that were building content at scale yeah and he got shanked by facebook but by the way so did instagram sort of whatsapp founders so did uh all the game developers zynga mark pincus jowner just wasn't paying attention and he had a dependency of at the peak what 80 of his traffic was coming for social i think yeah it was really the core idea of the business because actually we were totally aware of the dependency and were in various ways trying to build away from it but it's really it's so hard to play with your strength yeah and not only did you do that but you raised money based on that dependency and you sold that dependency and you raised that what two billion from andreason horowitz that was another critical era i think it was you were even raised at the valuation yeah it was about 2 billion back then or something it was it was we raised from NBC at 1.7 was the 1.7 and before that in Andreson Horowitz and so you know media businesses don't get that big right you know blogs don't get that big these things don't grow to the moon you're lucky to get them to low six-figure values Huffington Post 300 Gawker 150 but there's been some business insider 300 which one I said Politico a billion there's been some inflation through the years I mean been some inflation through the years I mean yes political but i totally that would be the upper bound with you these aren't businesses that are appropriate for someone to think you know maybe i'll put in 10 million and take out you know 100 million 50x yeah exactly and so that is the core issue is that people started to try to frame them i think buzzfeed tried to frame it you and jonah as a tech business tech business it was not and so that's another critical era uh in terms of setting expectations i think nick was very good at just like hey listen it's just a little business that's gonna make i think he made you know a couple million dollars a year in profits maybe 10 20 million it was a profitable business that was doing all right yeah and for him you know being able to go um you know on incredible vacations and be a celebrity and do something he loved every day and discover new talent i think that was enough for him what happens to buzzfeed now i understand jonah has like some kind of superpower ownership over this so yeah yeah yeah right jonah has i mean i don't it's not as i mean i'm not the expert on this either but he has one of these structures where he controls the company um you know what did your equity in your equity in buzzfeed became worthless i assume like all the writers there you're still able to get some out i mean it was you know it's backed remember right so you were able to get some liquidity yeah yeah i mean i think people were very you know not at the numbers that were once promised but i'm not but also i think like a lot you know like i don't think most people you know i don't want to speak other services people are very angry about it i obviously know the media i mean people were promised you know hey listen you're at the next facebook you're at the next uber and you know journalists who went to work there didn't quite believe that there was when buzzfeed spec there were execution issues that left people holdings it's just the whole thing was which is what like they had six month six month holding periods and the stock just plummeted nothing that's sophisticated they had a they had to switch the paper shares had to be transferred in some way and during the weeks that was happening the stock dropped and people were understandably incredibly upset about it yeah i mean there are lottery tickets uh you know stock options everybody and if you your your number hits great but your salary is kind of you know what this is all about all right founders if you're a sass or services company that stores customer data in the cloud, you need to be SOC 2 compliant from third parties in order to close big deals.

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25:32They all report back that they had an amazing experience. And that one major customer, right, that lighthouse customer, that whale in your system, listen, bottom line, you can't afford to lose sales for something silly like not having your SOC 2. Vanta also helps with GDPR compliance. And, you know, that's a big one. You got to get your GDPR in order because they take it pretty seriously over there. So here's the best part. Vanta wants to give you$1 ,000. All right, that's 10 hundies. Get$1 ,000 off at vanta.com slash twist. That's vanta.com slash twist for$1 ,000 off your SOC 2. There were two other companies that I don't know how much, you know, information you cover in your thing but vice became a five billion dollar company this time it collapsed yeah it was another train wreck disaster and then you have vox uh which jim bankoff who was an executive vp at uh aol when he bought my company weblogs inc and then he took the engadget team and the joystick team and he created verge and then started buying stuff and created vox yes um talk about those two sure i mean two very different to the opposites actually But Vice, you know, an incredible brand that really stood for something and had people who loved it and kind of knew what it was in a way that, like, great brands do.

26:52But really was barely an internet company at all. Like, did not really have traffic, really had hype. An incredible hype. And spun that hype into being a fairly successful television production company for a time. And did a big deal with HBO to produce a nightly news show. But when that, but that's a production deal. you know that's like you think the internet business is bad right like that that's cost it's basically getting paid for salary yeah you make 10 percent profit when the show gets canceled you're you're in huge trouble and that's ultimately what happened to that to lay off all those people which is why people in hollywood work on a project basis not on a staff position basis yeah and and shane took you know an enormous amount of money out of that company met we reported a couple of weeks ago that it was more than a hundred million dollars some people think a lot more you know that's from a company that you know did not deliver any value to his shareholders and is now i think owned by effectively owned by fortress which is private equity firm which is the senior most investor yeah but you know creditor um and then vox you know vox it's sort of interesting because jim is much less ideological much less and much less of a sort of a fixed vision of exactly how the internet ought to be put together a bunch of different companies managed them carefully i think never had the kind of cultural upset you know this had never cut through culturally or sort of the same exact scale but is a solvent functioning company right now which is you know i think it's pretty impressive actually um having worked with him and having bought my company he's an executor he is management he is good at managing talent he's good at managing a collection of brands which you know matt that is one of the hardest issues managing a collection of brands it works against everything that the human brain thinks about consolidation every mba has been trained which is well if you own curved and or if you own joystick and engage it and huffington post and tech crunch well they overlap in these different places so make it huffington post slash video games which is what they did to joystick right i'm like that's death for that brand you just killed it that'd be like people making vogue a section of vanity fair or vanity fair a section of bon appetit like it's not the cooking section it's like for people who are obsessed with cooking you don't break it into sections like that i think vanity fair was a section of vogue for a time before they revived it with tina brown but just imagine like then trying to reverse engineer that which is what like what this is what always happens you buy a collection of brands and then you're like oh yeah we'll just redirect that brand over here and then it meant something to 10 million people and now you keep 2 million of them and you know you just it's it's hard for people to deal with media people media people are hard to manage yeah it's not the world's most rational business talk about unions and gen xers versus millennials and gen z's in journalism how are they different so i don't you know i don't actually totally buy the big generational you know sort of stereotypes but i do think there was this dynamic in with the came with the rise of the internet where sort of the old people who used to dominate newsroom and boss every buddy around suddenly were like afraid of the young people who knew all this stuff they didn't and there was this like basic dynamic of like boomers being afraid of millennials and i always thought that like we of jeddx had this kind of we were that we were able to interpret like that's our bilingual code switch yeah between and I actually don't so much think that there's some profound generational cultural differences just literally you had a generation come up with these new tools and a generation that was like deeply freaked out by them and dislocated by them I don't know I mean I think you know there are you know old media institutions that have like the times right now that have bitter conflict with their unions and there are you know brand new ones like buzzfeed that have been a conflict with their unions and i think you know that's more just sort of like a fairly just how industrial relations works yeah these unions are hilarious to me uh because all it does is take what was a competitive environment for salaries and just normalize them so if you're an all-star writer who drives more traffic the folks who now run fox buzzfeed vice whatever it is that you decided to unionize well now just point to the pay scale and say yeah you're here four years here's your pay scale and uh you'll move up to this level and then in six years you'll be at this level and the back channel i heard from everybody was this is great these idiots have now given us a clear path to control their wages and they've actually lost power what's the back channel on yeah i don't want these unions so i think that like i don't actually i'm think the unions are the only factor but basically what you're pointing to is this huge like tension what in between in in these kind of industrial era journalism organizations whether they're unionized or not between what is basically this very like nice egalitarian newsroom culture that people like me came up and really loved like it was actually you don't you don't want to be in a situation where you have stars swaggering around treating everybody else like nobody likes that and so that is part of the culture and then another part of the culture is that, you know, always and increasingly, the readers connect more to some journalists than others.

32:09And some work harder, but some don't work hard. And they say they do really well, but for whatever, you know, but some generate more value than others. And you have these organizations that are used to operating with the, you know, Jill Abramson once said of the New York Times, some star reporter wanted a raise. And she said, well, look, the New York Times is always the prettiest girl at the dance. Like, ultimately, the brand matters more than the individual got it and we're in an era when individual voices matter a lot and it puts a lot of pressure on these correct in that regard i think i think from i think if you are the new york times maybe that's true but it is you know but maggie heberman is a pretty great reporter and a pretty big brand and how and you know by the way the union contract it's at the minimum they can pay it does not set the ceiling so it makes life more expensive for them it doesn't actually tell them they can't competitively pay their stars but it makes it it does it is a big challenge for these companies where like in some very cold-blooded sense the value is being generated by a diminishing number of individuals it's also hilarious like there's perception i think people have is like the union's going to protect them and these unions like you watch them tweet and they're like um we are flabbergasted by the layoffs today on buzzfeed news and it's like you have no power union it is an at will employment uh environment in the united states at any time the ceo god king or queen can just take a sword and decapitate whoever they like welcome to capitalism in america and by the way the star journalist can leave and start a sub stack or a podcast and you can't stop kara swisher from doing that you cannot stop if there's anything we could agree on it is that you cannot stop kara swisher from doing anything pretty hilarious she hates me now i used to be friends and now she hates me it's ever since all in it's like she like unfollowed me and that's what's pretty sad for me i've been friends with her for 20 well it wasn't like the intent i mean to blow past every other business and tech podcast in the world i'm gonna stay out of this one um the no i mean it is problematic i think if it wasn't as successful it would be easier because people are like oh it's just like four guys talking but when you become a top 10 or top 20 podcast i think the jealousy comes out and people are like that that's that's frankly how i feel about you jason really no i mean i am i was like i don't think so no i mean what what does semaphore and all it have to do with each other fortunately i don't have a podcast so i don't have to be jealous of you i think it's a crazy thing for anybody to think that's why i'm always like what what's the knives out for i don't get it but yeah but i think just to go back to the labor thing because you're like go back to labor you know i do think like it It was this moment when a lot of people in America, not just in journalism organizations, felt really unsettled and were looking for ways to feel more control over their lives.

34:53And unionizing was a way to do it. It does protect you on the downside, right? Like it means that you get more severance. You have some predictability when you're getting laid off. That's fairly, you know, that's, I'm forgetting the phrase here, but that's, you know, better to have a great job. Yeah, I think these unions will, it's rearranging the deck chairs on the Titanic. It doesn't ultimately change the structure of these media businesses that are struggling. No. It's actually the New York Times union right now is like in where you want to be when you're a union, which is a pretty profitable company.

35:25They think executives are getting too high a share of the profits. The union would like more share of the profits. That's like a nice place to be as a union. You're fighting over the profits. Listen, when you're a fund manager like me, you're trying to raise money. The hardest thing to do is get in front of those elite LPs, limited partners, right? How do you get those connections? Well, iConnections is how you get them. So check out iConnections. This is a platform to help connect and meet elite capital allocators. What a great idea. And these are the biggest LPs in the world from every category, endowments, foundations, sovereign wealth funds, and iConnections speciality is building and connecting their global network of capital allocators with a diverse range of fund managers.

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36:40This is the largest capital allocator event in the world with trillions in lp money represented so sign up at i connections.io slash twist i connections.io slash twist let's talk about the clash between uh tech or just business and journalism today and just how adversarial it's gotten i'm curious your take on you know subjects now saying we'll just screw it i'll go direct to my audience i don't need to be interpreted through journalists i don't need to hire a pr firm i'm just going to go direct and these journalists know 10 20 of the story and i can just tell my side of it and give whatever percentage i want uh and then maybe add in a little bit about access journalism and how that's changes thing yeah i mean i've thought about this a lot and i kind of i mean i kind of hate it like i think that i think that i mean there's sort of an obvious history here of like of journalism and journalists covering kind of the first wave of tech, sometimes in a very promotional way, ultimately being kind of embarrassed and feeling like they'd overdone it.

37:49And for a variety of reasons, to me, the main one being Donald Trump's election turning incredibly adversarial. I think that tech founders, for reasonable marketing reasons, often like to portray themselves when they get really successful as basically like political figures, philosophical figures, you know men of men and women of like great principle where like fundamentally they're mostly entrepreneurs like or at least at their root they're entrepreneurs trying to build businesses and i think to some degree the media took them at their word and started covering them basically as political actors and like interpreting decisions as primarily like does this help you know did facebook make this algorithm change to help republicans and it's really genuinely misunderstood no they did it because they were getting 3.3 seconds of engagement they're trying to get 3.5 seconds of engagement like to some degree like i think there was a there's a real misunderstanding and mistranslation and then i do think like the sort of how did we get trump produced a wave of journalism that looked for culprits and nothing i mean by the way i think facebook screwed a lot of stuff up and like a lot of those stories were really good other stories like iconic stories like cambridge analytica in particular yeah were really like fundamentally not correct and like that didn't really affect the election and got and went everywhere and then i think founders and tech people both felt you know both rightly and sometimes wrongly like sometimes they did bad things and got caught felt really really burned and misunderstood developed their own kind of counter ideology explaining why journalists do what journalists do that was like from my point of view like at least equally deranged and like now we're in this place where like people are speaking totally different languages i find it quite depressing i do too and um i think your take is exactly correct i think trump broke a lot of people's brains uh and it made people feel disempowered and people felt like maybe i think that's where advocacy journalism really started to click in which is we need to fight against this force of evil which i do think trump is an evil figure and a horrible human being um but i think that's when people felt like like the journalists are not covering this down the middle or you know reasonably down the middle.

39:58Yeah, and the stuff we were talking about before, I don't think it's like people were like counting the clicks. But one thing that social media really encouraged was you have a huge audience that's just waiting for the next installment of a story that they want to hear. And there was this really real reward in telling narratives that particularly about Donald Trump or about whoever the designated bad guys were that made them seem worse. And like, you don't need to make, you don't need to feed the narrative to make Donald Trump seem quite bad. But a lot of the stories around Trump and Russia, like it just became this thing where every piece of evidence became more proof and it did not wind up adding up to all that much.

40:35So they added up something. I mean, one of the depressing things at BuzzFeed that, like one of the best stories we ever did that totally bombed for traffic was soon after the Cambridge Analytica story. I had gotten this early version of it from the Swiss media and I assigned a great investigative reporter, Kendall Taggart, to look into it. She came back and wrote me a memo that was just like there's literally nothing here this is nonsense these are con artists who are claiming to have affected the election and people believe them that it's not true and i was like awesome publish the memo that's a great story we published the story and no one read it no one wanted to hear it didn't fit the narrative right and the narrative you know both sides seem to have a narrative and let's be honest if you pick a side like the new york times went further left fox obviously murdoch only cares about bottom line so he went full right or and kind of started the trend pick aside you get paid subscribers and in fact the washington post and the new york times did marketing that was like if you want us to do more investigations like this i don't know if you saw those ads yeah democracy dies in the dark there was the right and it's not again i don't think it's like they're not like having meetings saying let's make stuff up about donald trump and they are trying to play it straight but the poll of subscriptions is certainly toward telling people what they want to hear i mean the poll of media is often that tell me about your new company and what your goals were and setting it up what's the origin story of semaphore and and is this like you watch jonah do this you watch me do it you watch nick do it you watch bank off do it and i thought wow what a great business this is the highest great business for me to bang my head against the world or you just addicted to media like me it seems like it's like not much work and like no money so easy money sure just like creating software yeah no i mean i guess it's the worst business in the world so why would you do it it's a tough business and i've been you know i was at politico when we started started some blogs when you were starting blogs i've been doing it a while the one thing you you i mean it's also it's a slow moving business where the institutions move slow but the audience moves fast and so in these moments when things are changing a lot and i had left buzzfeed really mostly just because i was burned out and gone to the times had kind of a front row seat to everything that was happening as the media columnist there for a couple years and you can just feel again like how much things are changing like the whole social web is sort of going away it's being replaced by who knows what like right now the George report is like again really influential which is entertaining and wild weird yeah and the one thing is my partner Justin Smith had been the CEO of Bloomberg CEO of the Atlantic and one thing that I think I have eventually learned is that there isn't some like one neat trick to make news a great business but like really smart experienced business operators who execute really well you know are the kind of people you want to be in business with and so and I don't see myself as a business guy and I think whatever flirtation i had with that at buzzfeed like was not the best data um and so yeah and so so i think we're trying to like i would say the two big things that drive because if you ask people like are you happy with the news you're getting the answer is mostly no i think the things that drive people most insane or that they feel totally overwhelmed but just like the sheer amount of incoming and then simultaneously don't really know who they can trust and aren't turning to like faceless institutions they're looking for individual journalists who know what they're talking about who will tell them deliver them facts and also try maybe read a lot of what else is out there and put it into one place for them and so our model is to sort of build around like liz hoffman a great finance reporter one of the moves was really the best wall street reporter at the wall street journal brought her in reed albergatti who broke the lance armstrong story in his day covering ai primarily out there and you know these are experts on the subject who can break news and also can tell you what they think but might be wrong about what they think and they're going to include other voices and other points of view that's the basic model um and these are and we also think there's a big global opportunity for this these are sort of like totally global issues and the best stories covid social media the rise of the far right are global stories so we launched in the u.s and in sub-saharan africa obviously well that is peculiar as a second market so explain just see you know the u.s is obviously the main investments i think like 60 percent of all revenue in the news business in the world is in the u.s but i think we sort of thought about yeah making sure that we were plugged into the global stories at birth and sub-saharan africa particularly it's like it's the fastest growing demographically fastest growing economies and really kind of wide open in some ways as a media market say it is wide open that would be the reason to choose it you know when we did a gadget publication people were like there's not enough news about gadgets yeah oh my god yeah we'll fix that i know it's really hard to remember that hero right there's not enough news about gadgets we're like yeah that's okay because we can do eight stories about the iphone upgrade uh you know peter rojas will figure out a way to break ipod i believe it was well yes i mean man the stories i could tell you about in gadget fighting with motorola and steve jobs i mean it's motorola it was crazy i don't hear that name in a yeah uh let's talk about news media like broadcast tv uh tucker carlson got fired don lemon got fired i guess that was kind of coincidental but uh what is the theme here of these talking heads and broadcast media versus say podcasting where subjects are going direct pre-prara has an incredible podcast i pay for it cafe insider and then he does stay tuned with it's also like comments on cnn but i get two hours of pre a week i'm good um i like to go direct and hear from the the sources that have publications i find all this like msnbc rachel maddow talker it's like all nonsense and screaming and just dumb uh but what's going on there because it does seem like cnn is trying to pull itself to the middle and then fox seems like it's at a crossroads and this$800 million settlement?

46:30How do you interpret each of those specific news channels, Fox and CNN? So there's lots of very like specific ticky tacky internal politics at play. But the biggest picture is that the same stuff that I think we were talking about before this sort of era where what seemed to work was the loudest shouting or the most intense pandering or, you know, is kind of over. And I think, you know, advertisers hate it. And I think that's probably weighing on fox in particular as well as on cnn um but also but also explain that a little bit i'm proud i mean you know tucker if you watch tucker carlson you were getting only direct to consumer advertisements for pillows because you because brand advertisers just couldn't felt like they couldn't be associated with it want to be uh doing a commercial in between some discussion about trans rights and january 6th and whatever bitterness because they don't want to lose happy audience which race has higher iqs yeah yeah like stuff that was way and carlson was really unusual in that he was taking this fox audience and sort of leading them out into more fringy stuff most of fox is republican people telling the republicans what republicans should think and talk caring about whether republicans win elections by the way which murdoch cares about tucker i don't think really cared about that like he was off heading some other place to the far right and and yeah and i think in a way this is in both cases kind of big corporate media like pulling back toward the center whatever that is but the center is driven because of advertising so if you want to understand the media business you must understand incentives incentives matter the incentives of subscriptions are a one category and the incentives of advertising are a couple different categories if you go too far to get a lot if you go far and you get a big audience you can get great advertising until you break it because you did stunt journalism or stunt opinion that's too edgy and then you lose the advertisers you know or great truth that they can't handle right it's not so you know like if you break big investigations that are also too edgy that can freak out the advertisers it's complicated and cable is super weird because most of i mean their most stable revenue stream are these affiliate fees which are basically subscription that come from the the cable carriers so it's a yeah it's i mean it but it is i mean it feels like it's all part of the same trend and i agree with you toward basic i mean one of the really interesting things about the podcast market is saw some data yesterday i think the biggest voice in audio is joe rogan and among people who say they have a favorite podcaster which is a subset of podcast listeners five percent he's their favorite and that's a very splintered market you think about radio had howard stern you think about tv they're much more consolidated and i think it is a where people are tired of this huge wide open space where everybody's screaming at everybody else and looking for voices that they feel like they connect with and contrast but yeah probably at a smaller scale well it is like i think it's a mid-tail if you look at the long tail concept i think it's the mid-tail that is emerging as super viable so yeah you know back in the day you listen to rush howard stern or don imus if you were in new york or like maybe z morning zoo whatever you know now it's like you open up your podcasting app and you go to health and wellness in the top 200 are all viable continuously published reasonable pockets you go to finance or tech you know like there's a bunch of really reasonable great tech podcasts that all get 10 000 to 250 000 listeners each week and you can have a sustainable midtown in fact semaphore is a mid-tail company right like you're not displacing the wall street journal nor are you displacing an individual subsac in our dreams but uh yeah no not right now and right and we know and i think that like we're trying to find people who really love what we're doing connect to and it's not going to be everybody in the world for sure and i think people are tired of sharing twitter everyone is tired slightly tired of sharing these huge public spaces with everyone else in the world it is definitely collapsed upon itself i believe um is like you you what makes you successful in media i think if there's a theme to this podcast and our discussion is like be careful what's made you successful because as you continue to dial it up it can then crush you right the strengths that you have you know uh you know whether it's understanding the facebook click streams for for jonah uh at buzzfeed or vice understanding like what hbo listeners want and doing vice tv and this kind of stuff and then you do too much of it and you got to build a huge staff and just you collapse on your own weight media businesses should be boutique and should be owned by the principles this is the conclusion i've come to after 25 years in the business i will like this week in startups makes millions of dollars a year i'm never selling it to anybody and i'm not trying to make i'm not trying to have it make tens of millions all in make zero dollars but it helps me raise venture funds and gives me a incredible flow of founders who want me to invest in their companies like that's what media companies do at their best is like stay medium size don't be hyper growth right like that's the i mean look at yourselves you guys raised a ton of money and it blew back on you well that was a very very we're talking about sam bank our mutual friends and bankman free of here gosh yeah um yeah i mean that was obviously an unusual situation what we didn't do that we actually and we did raise i you know i thought a good amount of money but we 25 million or something as a report 25 million but we know we didn't unbelievable i saw the knives come out for that man kara swisher was upset about that a lot of people were upset about you raising that much money but you raised at a moment in time we were and we also raised it from we didn't get it take any venture money and i think like we didn't tell anybody that we were going to get them a thousand x return in four years or that that was a plausible path we told them we'd run a good profitable business and we saw a path to being you know really good growing long-term business but not i agree with you not not that kind of explosive idea you know sort of tech basically tech company model where you can scale without more people the media business does not scale uh literally it scales in a linear fashion you can be smarter you can be more efficient there is a lot you can do but it's not it's not facebook it's not facebook well let's put a pin in the uh sam bankman freed thing yes you put 10 million in and that was a big portion of your cash yeah i guess you have to give that money back if the courts tell you to and i think you've been pretty upfront and transparent transparent about that any lessons there or is it just bad luck i mean you get a group of investors and yeah i think the lesson is you don't take you don't raise from one you don't you know take that much high i guess not that i've planted it i'm sort of a career startup guy or somebody you should take startup um lessons from particularly but like it did seem in retrospect unwise to take that high share from one guy and that we obviously just scrambled 40 of your raise came from one person but you know i i know how these conversations go when i raise money for weblogs inc mark you don't say no right well i mean you're raising money you're not inclined to yeah yeah but mark cuban put in a hundred then he has to put in two hundred thousand then he has to put three hundred thousand and that's how we seeded it and he was excited and we had one investor you know and he owned five percent of the company and it did great you know we returned that came out great for everybody and yeah great for everybody but you know like i saw it happen i was like if sequoia and tiger global and all these other major players don't know that sam bankman freed is running a fraud allegedly right or apparently depend pick the word you choose audience allegedly obviously you pick any number of words i know how to phrase this right i'll get sued myself but um i just say that's a bad beat you get an investor you know like and they turn out to be a criminalist that's not your fault but it is definitely that definitely impacts your plans right it feels a little bit like getting struck by lightning yeah well you you i guess actually if the courts ask you to give what remains of the money back great but if you've deployed it then they just get equity in your company so they could just have an equity you'd have the court i think i i credit equity yeah yeah we i think we've said what we were planning to give the cash back yeah um that's what we've said yeah but i think the yeah i mean it's the ives i would say we were fortunate that we had a pretty strong launch and so launch that put us in a position to replace them, I think it would have been, you could imagine a situation in which we stumbled out of the gate.

55:04Oh, you found people to invest in that? And then suddenly, you know, had that, this sort of could have been a really bad situation. How many people you got working at 7.4? About 50. 50 is a big number. Whoa. It is a big number. That's a million dollars a month in burn. That's a big number. You know, the thing that's totally different about this business from other, I mean, it's like a limited interest. The news business is not like the sexiest topic in the world, but at Politico, which was very successful in the end at BuzzFeed News, which really, you know, was not. In both cases, we had to have a theory about what people wanted to read.

55:38And we were journalists or content people, but not experienced news business people. It did not, not only did we not launch with real, with a lot of revenue, we didn't even launch with like a strong theory of what the business would be. and i think part of the reason we launched with a large number of people is like half those people are on the business side and we're launching with a lot of revenue and servicing the revenue and you know justin is one of the great media business operators hired like the best revenue person from the new york times advertising and events right now got it and subscriptions or not yet i think we just didn't want to bite off more than we could chew we will uh events is an okay business yeah you can make some i did events my whole career and they're fun loving them yeah they're fun people really like it's it's a funny moment i think i think it's a sort of covid bounce back thing people we've been like the events have been great for us i mean we did the all-in summit last year and it was just like no like to show up yeah i mean it was crazy how quickly we sold out 7500 tickets like boom sold out i mean think millions of dollars in revenue million you know like just crazy um all right listen congratulations on the book i can't wait to read it i get a mention in there hopefully it's not like too spicy or you don't you know i just realized i I think it, no, no elbow, but I do think it may partly be in the context of one of your great investments in a company called Ratter.

56:52Do you remember that one? Yes, I did, yeah. Yeah, yeah, yeah. So, you would, some of you lose some. Yeah, this is before all the stuff came out about it. Oh, yeah. No, it was sort of, it was, it was when they, it still seemed like the wind was at the back of that. I thought it was a very interesting idea he had, which was. And he was a very brilliant, talented guy. Yeah, and this is before all the stuff had come out in his famous testimony. Yeah. And I was like, Ratter's like a really interesting idea. he wants to do investigative journalism and he's going to put out like um he had a very great concept for putting out bounties for stories yeah not bounties as in like steel documents bounties that would be illegal but who would like here's a list of stories that we want to cover would and they would just email it so instead of having a staff he would just email his stringers and say here's four stories we're curating anybody want to do them for a thousand dollars and yeah i thought it was like had a really good idea there me and mark cuban had put a little bit in not a lot i I think I put 250 into it or something from one of my funds and you lose, whatever.

57:47What happens with Nate Silver? He's super talented. Yeah. Well, I mean, he, you know, he managed to talk about kind of great media negotiations. He managed to, he basically was hired by ABC and they, who acquired his company, but also merely licensed his models, which are the heart of five 38. And so I think he'll likely license them to somebody else and, you know, keep gambling. He playing poker. He plays poker. Yeah. I play poker with him. He's really a good poker player. Listen, continued success. I think we did a good job in our hour together. Anything we didn't cover that you wanted to cover?

58:22No, I'm feeling good. I appreciate you taking a look at the book. Yeah, yeah, yeah. I can't wait to read it. I lived it. Do you do the audio book yourself? You know, I read the first page and the last page, but I just couldn't face reading all my words. I just thought I would just hate myself too much. Big mistake. you gotta read it yourself everybody in the age of podcasting wants the principles to read their book brutal who is the publisher penguin press okay yeah penguin is good uh a lot of the publishers don't want the um authors to read because they think they're not going to professional actors could read better yeah it was more just my insecurity it it's it's not that hard i did mine and you just have to learn how to when you read it like sentences that you were like i hate this sentence i can't believe i wrote it you start basically editing in the room and they're like you can't change that i was i know that i just knew i would lose my mind and that's what i did lose my mind to a certain extent but what you have to do is you because of um this uh syncing that amazon does between audiobooks and ebooks now where you if you buy both when you're in your kindle it highlights the word i'd be like so if you're talking to your vc and they'd be like uh venture talking to your venture capitalist and be like okay if you talk to your vcs and like uh talking to your venture capitalists and it's like same thing vc venture capitalists like no you have to say venture capitalists because that's what it says with the text because it's syncing with the text and so it's a bit of a rigmarole uh but continued success everybody buy the book and we'll see you all next time in this week in startups bye bye thanks so much jason Thank you.