Exclusive: Jonah Peretti explains why he sold BuzzFeed

Support for this show comes from Adobe Acrobat. PDF Spaces in Adobe Acrobat is changing the way we're sharing and interacting with files. No more endless follow-ups. No more confusing pings. No more wondering if anyone's even seen your attachment. You can do all that with Acrobat. Keep listening to hear more about PDF Spaces later in this episode, and learn more at adobe.com dothatwithacrobat. Hello, and welcome to Decoder. I'm Nilay Patel, editor-in-chief of The Verge, and Decoder is my show about big ideas and other problems. Today, I'm talking to Jonah Peretti, who is technically still the CEO of BuzzFeed, although that will be coming to an end very soon. Just days before we spoke, Jonah agreed to sell 52% of BuzzFeed for a total of $120 million to Byron Allen, who owns The Weather Channel, a number of broadcast stations, and several other websites. The deal is a bit of a life raft for BuzzFeed. The company was once valued at $1.6 billion, but just last quarter, the company told investors it was at risk of running out of cash. Now there's a new lease on life and new leadership. As part of the deal, Jonah himself is stepping down as CEO and taking on a new role as president of BuzzFeed AI. Byron Allen himself will become the new CEO of BuzzFeed. That's obviously a huge structural and organizational change and a really big decision. This is prime Decoder bait. And of course, I've always been very interested in what digital media companies are doing to adapt and survive in an information landscape dominated by algorithmic social platforms. After all, I've been saying for a long time that the original sin of digital media was Jonah and BuzzFeed betting they could so consistently go viral that platforms like Facebook would pay them for content, just like cable companies pay carriage fees for channels like ESPN. This was the big bet for a lot of companies, all chasing BuzzFeed's influence and valuation. And it has all come crashing down. Most of those companies don't exist anymore, and BuzzFeed just faced the brink. So I really want to know if Jonah had reflected on that bet and how he saw the work of building audiences and influence now. I also really wanted to talk to Jonah about his new role leading BuzzFeed AI. In the press release announcing the sale, Byron Allen says BuzzFeed will now compete with YouTube through the power of AI. That's quite an ambition. And I was very curious to find out exactly what it means. Jonah is also making lots of games and apps with AI, and we talked about some of them, including his new hybrid of a meme generator and social network called BF Island. Of course, we also talked about moments where things might have gone differently, including Jonah's decision to take BuzzFeed public and his decision not to sell the company to Disney. There's a lot going on with this one, and Jonah was pretty open about it all. I'm still not sure I understand what's going on with that YouTube plan, though. You tell me. Okay, Jonah Peretti, still for the moment, CEO of BuzzFeed. Here we go. Jonah Peretti, you're the co-founder and, as of today, still technically the CEO of BuzzFeed. Welcome to Decoder. Thanks for having me. I'm excited to talk to you. It feels like BuzzFeed and Vox Media and The Verge have all come up and weathered all kinds of storms together in digital media. And I say that you are still, as of today, the CEO of BuzzFeed, because just a few days before we were speaking here, you announced a huge deal to sell 52% of BuzzFeed to Byron Allen, and you are going to take a new role as president of BuzzFeed AI. Explain what's going on there. Yeah, so we were looking at a few possible deals that were transformative for the company, and I'm very excited we ended up with Byron. He is, you know, a force of nature, incredible media mogul. He owns all kinds of different assets. His skills are very complementary to mine. I mean, he's in the mix with advertisers and with partners and with sources of capital in a way that I never really have been. And so it's super exciting to have him come in. It also provides liquidity for the company and resources. And then the thing that I've been most excited about working on is really trying to reimagine what should a company operate like in a world where these new AI technologies have gotten so much more advanced. And so I'm going to have the opportunity to spend more time on that, which is the thing that I'm most passionate about. So it's been a really great week, and we're happy we were able to close this deal, and it's going to be transformative for the company. One of the reasons that I originally scheduled this interview with you was because there were some quarterly earnings, there were some statements in your financials about BuzzFeed's ability to continue operating, whether or not you had enough cash. There was some speculation that the company was pretty close to bankruptcy. But the brand is strong. I mean, BuzzFeed is one of the most famous brands in digital media, if not all of media. Did you have incoming suitors after that last set of financials, or was this something you were talking about for a long time? I mean, it was frustrating. We had a going concern statement, which means, you know, essentially as a technical accounting term, meaning that we didn't have enough capital to cover our expenses for the year, which obviously is a serious thing that we wanted to, you know, and needed to disclose to investors. But simultaneously, we had a lot of inbound interest in our assets and in partnerships. And, you know, we were talking to creditors, we're talking to all the people you would imagine about injection of capital and things that could be really transformative for the company. But, of course, you can't talk about, you know, you can't talk about things that aren't signed, that aren't done. And so during that period, it was quite frustrating because I saw a lot of exciting prospects that we had. And, you know, this deal with Byron is one of those. And it's really exciting to be able to, you know, move forward with more swagger and more confidence and be able to start to reimagine the company and really do a more fulsome turnaround to create a business model and an approach that is for the next five years instead of, you know, an earlier era of digital media. Take me inside Byron's pitch. Was it, I'm just going to give you money and you can do what you want? Is it, I have a plan to reboot the entire company? Compared to the other folks you were talking to, what made his pitch seem like the winner? I mean, to me, what was most exciting is that he's a better media executive than I am and he could be a media executive and that could allow me to be more of a tech executive. And so that's always what I've loved the most, the intersection of tech and media. And so, and really being able to think about what are these new technologies enable us to do in the future that wasn't possible. That plus the capital to actually fund a turnaround and to restructure and reimagine the company. So those two things together were very enticing. And his ability to bring things to the company that we just were lacking was a huge part of it. I've known a lot of media executives. You've known a lot of media executives. You've just evaluated two of them. You've said, you're not a good media executive and he's a good media executive. What in 2026 separates a good media executive from a bad one? I mean, I think we're in an era right now where deals really matter a lot. And so deal-focused executives are having a lot more success than trying to just build organically. The connections with advertisers and the connections with partners and marketers and being able to see from their perspective and sell them things that they get excited about and inspired about is really important. I think, you know, in the kind of peak growth period of BuzzFeed, kind of 2013, 2014, you know, in that era, really understanding the technology was the key to being able to build a good media company because the technology was changing so quickly with the rise of social and social platforms that, you know, you really needed to be deep on the tech side. And there was tons of organic growth available. Like the platforms were very open in a way that allowed you to drive tons of organic growth. I think today, you know, if you look around the landscape, it's a lot more about deals and partnerships and business development and things like that. And that can be really transformative for a company. Whereas the kind of organic growth on the big platforms is really just, you know, quite anemic and there's not as much there in terms of sending traffic to publishers and platforms and content. When you say the technology at that time, 2013, 2014, 2015, what you mean is social media platforms were growing. They were aggregating a bunch of users and then they would send traffic out. What specifically was the technology that you needed to understand at that time that made BuzzFeed successful? Well, I think if you look at sort of pre-social media and what media was about, there were newspapers, magazines, broadcast. None of it was really social. You know, you'd watch a TV show. Maybe there'd be some word of mouth where you'd talk about it with your friends. You'd read a newspaper article or magazine article, but you really couldn't share content. And I think the world didn't quite realize that once everyone was connected together by these social platforms and once you could connect where you could use media as a way of connecting with other people and sharing with other people, that the kind of media that would thrive and succeed would change. And we saw that really early and that was what allowed us to grow so rapidly Rubber bands around a watermelon with like 90 million other people, right? There there's something about your understanding of the dynamics of those platforms at that time that made a lot of people bet that Mark Zuckerberg would pay you a carriage fee the way that the cable networks paid ESPN a carriage fee, that your content would make their platforms compelling, such that they owed you money. At some point, I think we all woke up and realized there was an army of teenagers who would work for free and that they could get the same dynamics without paying anyone any money and then all of our businesses changed and BuzzFeed's business changed maybe the most dramatically at that specific moment. What was that experience like for you when you went from top of the world, where we think we have enough leverage to get Mark Zuckerberg to pay us money to, oh no, there's an army of teenagers who will work for free. Yeah. So, I mean, first, just as a factual matter, we did get paid millions of dollars by Mark Zuckerberg. So the prediction that they would pay for content was accurate. It just was short-lived. So we got paid for that exploding watermelon. I mean, we were paid for. But those are all those pilot programs. Like stand up your Facebook Live team. We'll give you the seed funding to buy cameras. There was never actually payment for content. There was no ongoing revenue relationship. Oh, there absolutely was. We got paid rev share for video on Facebook. So, you know, Tasty, the short Tasty videos that initially blew up, there was no payment for that. But then when Facebook realized they needed to make longer content so they could put mid-roll ads, you know, there were programs that generated millions of dollars for our company where we were making longer form video for Facebook and we were getting rev share payments on that. Millions of dollars from YouTube. It's not that it didn't happen. It did happen. The news tab was another example of it. We got paid millions of dollars for putting news on Facebook. So I think what you're saying is accurate in the sense that it went from free distribution and sending traffic to our site to hosting content on their platform and getting paid for it and a rev share for it to then an explosion of creators which made the value of content and the platform's willingness to pay much lower. And so it was happening and it was working and it was exciting. And I actually believe that it was a mistake for Facebook and Mark Zuckerberg and, you know, to not continue with the news tab, to not continue to pay professional content creators. I think having a diversity of content, have creators, have professional entertainment, have professional news. You know, these platforms have way, you know, have tons of resources and could have, you know, spent a couple billion dollars a year on that, sustained a vibrant media ecosystem, really owned media in a way that, you know, would have been incredibly powerful for them and given them charisma and relevance and authority that they just don't have today. Like now most of the, you know, you look at the lawsuits about addictive behavior, you look at all the kinds of toxic content on the on the platforms, like they didn't have to do that. They could have just continued to pay and even ramping up, ramping up the amount they paid to professional content and to news content and they would have owned the world. It was actually a mistake that they didn't continue it. They did it and they should have continued it. And the fact that they didn't, I think shows just a huge blind spot that the tech industry has. Like having a small percentage of revenue going to underwriting a robust, diverse, trusted ecosystem for content and news and other things would have been a great decision for them and would have long-term been much better. And so I think there is some parallel universe where they don't get this wrong. They started on a good path. They were paying content creators. It was expanding. And then it was like, let's get rid of the news tab. Let's, you know, stop doing rev share or, you know, let's show vertical video where we don't have rev share instead of longer form video where we do. And over time, you know, just, you know, really messed up the digital media ecosystem in a, in a, in a serious way and led to, uh, you know, the world we have now, which although I love a lot of creator content, you know, the, the sort of battle to get into the feed and being the most extreme and saying things that are just completely, um, you know, false and outrageous or whatever has, has, um, has been a huge missed opportunity for, for those platforms. It's not that I don't agree with you, but they won anyway, right? They stopped investing in news. They piddled away however many billions of dollars on VR headsets. And they are in fact now the gatekeepers to all of media. It didn't matter whether or not they paid for news and a bunch of Congress people yelling at them has had no meaningful impact on their business whatsoever. Um, yeah, I, I mean, I'm certainly not arguing that, that they didn't have tremendous financial success and maybe a couple billion extra in, in profits is, is, uh, worth it, worth it to them. Um, but I think that being an influential company with real relevance and, and um, more charisma and cultural muscle, um, is something that a big tech monopoly could certainly afford and, and I think ultimately would have been better for them in a bunch of different ways. And I think the biggest risk of the big platforms right now is essentially a PR risk. The public turning against tech, the public thinking tech is making the world worse, the feeling that any new technology is suspect because look what happened in the last round of, of technology. And so, um, so I don't think it's good for them even if, you know, there may be a little bit more profitable. I think being marginally less profitable and having a, having a buffer against this, this major backlash that is brewing where, you know, like kids are trying to get off their phones and delete their apps and things like that and feel like it's an addictive product that they're trying to battle with. I mean, I think they could have avoided a lot of that just by operating differently. So they have one, I'm not arguing that, but I think that they could have, um, they could have won in a deeper sense, uh, if they had, if they had continued that, that basic process of helping to underwrite quality content and news and information and entertainment, which, which they certainly could have done. I'm only sitting on this because honestly, how many other people have lived through all of the twists and turns and have made the decisions. And it's been a real journey and I guess I'm looking at it now with a little bit of distance talking to you and I'm so like nuclear opposed to being dependent on the platforms. Like the Verge has always wanted to be its own thing, especially because you cover these companies and you just have a different perspective. And I, I think my, my response to all this is like, should you build a business on these handful of billion dollars will make people like us more in the longterm or was there ever a point where you felt like you actually had the leverage to make the social platforms pay you real money in a sustainable way? If you look at the cable industry, um, you know, and now, uh, you know, Byron Allen owns the weather channel and, you know, the weather channel was, was part of this amazing history of cable, um, where companies were, um, these media companies like the weather channel were paying for carriage. They were like, I'll pay you a dollar per subscriber so I can get the weather channel in homes when cable was new and, and the cable operators, I think at a certain point realized if they're all paying us a dollar to reach, to reach the, the, the home, they're going to have a really bad business and they won't be able to invest in content. And then people aren't gonna sign up for cable. So they're like, why don't we switch it? Why don't we pay you a dollar? Um, now they didn't have to do that. They could have just said, we're only going to carry channels that pay us. But instead they said, why don't we pay you a dollar per customer and make your programming better? And when you make your programming better, more people will be like, Oh, I really want to watch cable. And so the weather channel switched from paying a dollar to getting paid a dollar. And that wasn't because the cable operators didn't have leverage. They're the only way that you could even get into the home. They did have leverage. They just saw on a deeper level that having better content would in the long run be good for everyone. And then the whole pie grew because of it. Um, and so I think that, um, the answer isn't, did, did individual content companies have the leverage to dictate terms to Facebook or to YouTube? Um, we certainly never did. Uh, the question was, is there a, a, are, are there leaders who have enough market power and concentration to see that it's in everyone's interest? It's the society's interest. It's in their interest to grow the pie and, and pay, uh, uh, you know, pay for content to have different kinds of content. And, you know, I think early on talking to the, you know, the tech leaders, they didn't really even understand or think about the cost of producing content. So I would say like, Hey, you know, news costs a lot more doing fact-checking, calling people up, doing, you know, doing interviews. Um, so if every piece of content is competing against every other piece of content, there's no incentive to ever make any news. You should just make, you I consume content on Instagram, but, you know, you kind of feel like you're just, you're watching the actual editorial content is ads where creators are promoting themselves or products they're selling. And then in between that, you have ads and, you know, so you're kind of like having a, like, you know, a billion plus people just hanging out on an ad network all day. And I think there's a better vision for media than that that we could have all built together, but, you know, now, since that didn't happen, we have pivoted really hard to direct traffic. I mean, I'm so happy that HuffPost has so many people coming direct to HuffPost's front page every day and getting the news from an independent source that tells it like it is, is like, you know, something that people are really hungry for. More of, you know, the majority of BuzzFeed's traffic now is direct. And so we're really realizing you can't, you know, you can't have someone between you and your customer and that's a huge thing that Byron Allen also, you know, one of his rules of business is like, don't let anyone get between you and the customer. And that's part of the reason I think he was interested in BuzzFeed. It gives you, it gives them a way to, you know, to go direct to audiences and for all of the ambitious things we want to do in the future. We want to have that ability to go to tens of millions of people directly from our platform. We have to take a quick break. We'll be right back. Support for this show comes from Adobe Acrobat. The new standard for document sharing is here. With PDF spaces and Adobe Acrobat, you can land your message every time by bringing together files, ideas, and a personal AI assistant into an interactive experience. What does that mean exactly? It means you can give your clients the full picture with custom intros and audio summaries and give yourself full visibility into who seen and interacted with your files. It's time to rethink how people interact with your files and give them the visibility they've always needed. You can do that with Acrobat. Learn more at adobe.com slash do that with Acrobat. Welcome back. I'm talking with BuzzFeed's Jonah Peretti about his decision to sell 52% of BuzzFeed and step aside as CEO. Under the terms announced, 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. They're going to, 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. And now we're a public company that Byron controls through the 52% ownership. 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. Okay. And then, but you're dissolving your super voting shares. I just am converting my shares to just be normal, you know, 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, you know, the plan. I mean, if you look at our cash burn, it's been, you know, not pretty insignificant. And I think we also announced on our earnings that we plan to do a restructure. And 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. So you're issuing new stock. Are any of your existing investors or employees who had equity getting paid out as part of this deal? No, no. This was about bringing capital into the company so that we can, you know, 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 how to structure. What does restructure mean for BuzzFeed after this deal? Well, I think it means a few things. It means like looking at our strategy and where we're headed in the future. And so some of it is around understanding how we're going to operate with new technologies that that can change the way the company operates. I think some of it is about just making sure that we have enough buffer to weather ups and downs in this industry. And so being profitable enough so that, you know, if traffic goes down 20 percent or if revenue or ad markets, you know, shift or change, that we're in a in a strong position so that we can, you know, continue to continue to operate. Be more specific. New technologies. You have a new title at president of BuzzFeed AI. There's something called Branch Office, which was your skunkworks 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 skunkworks? 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 not everything. But part of what I think AI is really good for is it's it's almost can be like a nervous system that is able to understand and detect, you know, what's working and what's not working and how content is being shared and engaged with. And some of the early stuff that BuzzFeed did about social content. I think you could do on this whole 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 that, 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, you know, using using Gen AI. So it's kind of like a an inside joke engine. We found that, you know, making AI content and posting it on Instagram or TikTok just kind of feels like slop. But making funny things with your friends that are about the, you know, specific things that you're joking about and talking about is just a lot more fun. And so we 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 take pictures to see if there might be you apps hiding in the in the sky near where you live or get messages or fortunes or other things on Conjure. So I think when you think about BuzzFeed AI, it's a combination of things that integrate across the entire company and help help our teams do their jobs better. And then it's also new apps and new experiments that allow us to test AI as a new medium that could potentially lead to new businesses or new apps that that break out. There's what you're saying here. And then there's this quote from Byron Allen about what BuzzFeed is going to be. I'm just gonna 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. And I don't want to give away too much, but there there's, you know, he's doing a lot of things in, you know, in these wholly owned businesses that he that he he has where he is in the home with local now connected TV app. He's doing a huge amount of production with his studios of making making content. There are conversations and deals and partnerships and things that 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 and making something that doesn't exist is is why I'm so excited about this deal. And and so, you know, what would YouTube be if it started today? What would YouTube be if it was, you know, something that was created in the world of 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, 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 to build things that seem that seem out of reach in the past. You know, the folks at YouTube. I know the folks at YouTube. I have my own complaints about YouTube. They've they've heard them all endlessly. But if I had to put There's a distribution challenge that all these platforms have, which is somewhat driven by consumption, right? Vertical short-form video became a dominant way people wanted to consume. So then Instagram turned into TikTok, and then YouTube turned into TikTok. And then maybe a bunch of people on YouTube didn't want YouTube Shorts, and now you have the option to turn YouTube Shorts 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 like something that would have been a lot of work and challenging a few years ago, but it's kind of trivial now. And so I think that opens up some possibilities, you know, in the beginning. My wife reads BuzzFeed every night. It's like the way 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 our house at once that it's hard for me to determine which ones are in style at the moment. Yeah, it's pretty... I mean, the BuzzFeed games have really exploded recently. And that's another great example of the fact that writers can vibe 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 from the audience are just like that they love them and it allows us to iterate and evolve them more quickly and change them more quickly. So that's another example of a sort of AI acceleration of 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, you know, user-generated video or interactive games or new post formats and things like that and quizzes and things like that. The challenge there is always distribution. I mean, this is where we started talking with Facebook and the other platforms. How are you going to get new users to consume the stuff you make? And, you know, 10 years ago, 15 years ago, it was, we're going to put up links in 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. And that was great. And then, you know, the open web is collapsed. You know, there are bigger publishers every day. I think Roger Lynch literally today is saying Google Zero is there for Conde Nast and they are just betting that there's no Google search traffic anymore. Roger should give me credit for that phrase, by the way, but we'll come to that in a different episode. They do all listen. 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 com scores. You don't have to trust me on it. It's like, we're the biggest publisher in our competitive set. You know, we're bigger than people. We have a lot of people coming. And when we see new formats, like, for example, these 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. So, 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 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 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 other to sort of pay less for content? And 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. It's not the dress, but it's millions of people who really truly value the content coming directly saying I get my news every day from going to the front page of HuffPost and they, they're not like trying to kiss up to the Trump administration and like, you know, worrying about mergers or whatever. They're, 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, 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, the sort of raw sludge that's on these platforms. You were always really against display ads, programmatic ads, banners and boxes. I always thought you were correct about that. I 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, you think you can create more direct traffic. You think there's opportunity there, but the monetization was lagging such that, you know, last quarter you were saying there was substantial doubt about your ability to continue and you needed to take investment. How are you going to monetize all that direct traffic in the future in a way that's sustainable? I think a combination. I mean, I think that that there's sort of a floor which is driven by programmatic advertising. Then there's transactional types of, of, 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 from on BuzzFeed shopping where they click through and discover products and buy them and we're getting the 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. You know, HuffPost has a 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, you got to, you know, become a paid member or, or, you know, transact with us. So I think that that's, that's a good combination. We have to pause here for another quick break. We'll be back in just a minute. Support for this show comes from Adobe Acrobat. We all know sending a file is easy. Making sure your clients understand the file is the hard part, but with PDF spaces and Adobe Acrobat, you can give your clients the full picture with custom intros, audio summaries, and a helpful AI assistant. So if you want to stop the endless follow-ups, do that with Acrobat. Need to make your docs crystal clear? Do that with Acrobat. Want to make sure your clients get everything they need to hear? Do that with Acrobat. Learn more at adobe.com slash do that with Acrobat. 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 Island today. I generated a bunch of pictures or pretty just put a clown nose on me. That was delightful. I thank him for that. It just occurred to me that I could burn enough tokens to make my use of the app unprofitable can be really good businesses. And in some ways it's a little bit like a new kind of media business. It's the economics might be more similar to, you know, a YouTube show or a series or a podcast where, you know, that the cost of the talent and the show and, you know, is a hurdle that the advertising or the direct or the subscription needs to needs to clear. But I think there's a lot of, there's a lot of examples of that, that I've seen for, you know, talking to, talking to other founders and getting this, you know, a sense of, of, 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 just, you know, you, you could have a product that, you know, lost a little bit of money, but if you wait a year, the, you know, the processing is cheaper, the costs are cheaper. And AI is, is progressing incredibly quickly. So anytime we use a new model, you know, six months later, that the cost of it is like a tenth of what it, 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, and it's a, you know, BFI is kind of an idea engine where there's all these cool contexts and things that where you might not have thought of that you can then do use to delight your friends or or play. The cost of that is, you know, making those images is going to, and, and has been going down, you know, a lot. And so even a break-even subscriber six months later is a, is a very profitable subscriber. Is, are there gonna be ads there or are you just hoping for freemium? People are gonna pay to unlock different prompts and whatnot? I think there could be some pretty interesting native advertising, you know, solutions there. And, but you know, we're, we're just very early and we just, we're just opening this up to to, to the public now. So we want to, we want to, 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, the ability to iterate and change a product is just so much easier. And so getting to product market fit becomes a different a different endeavor if you, 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. And that, that, that applies to the monetization side as well. Yeah, it starts in this conversation, right? We're going to compete with YouTube with the power of AI and then, you know, playing with Buzzfeed Island. This thing is a social network, right? You, you make images, you share 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. Like that's what this looks like to me, is you're building social products because the ones you were relying on screwed you over so badly. Yeah, there's a little bit of that for sure. That I, I feel like I gave them advice from the perspective of someone who cared about content and culture and news, but also spoke their language in terms of tech and social platforms. And they took it for a while, but then they kind of went on this other, other, other direction. And so building really good community, building really good social platforms, building really good content networks where people can, 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 there's smaller, in some ways smaller businesses. So, you know, we might only be a tenth the size of YouTube, but you know, maybe you're right that we can't get to a hundred percent size of YouTube, but maybe we'll get to 10%. So he can, he can still have 90% of the market. The turn of the modern social network is creators. That's the other kind of theme that's been showing up in this conversation over and over 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. So you, 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. 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, it was really awesome for the team that was there because they had all these collaborators. They, a lot of them came in as, as, you know, interns or fellows, you know the Try Guys came in that way, you know, a bunch of, of the talent came in, you know, really almost like interns that became fellow, got fellowships and then became junior producers and then, you know, kind of worked their way up. The challenge I think became when, when, when the platforms really started to to disaggregate the, the media companies, like essentially having individual creators create their own channels without media companies, it, it meant that the very top creators could make more money if they left. Um, and It kind of started to kind of break the cycle of development because essentially almost every media company, if you look over, you 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. Um, 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, by the, the sort of, you know, bigger talent. And so it creates this like natural tension in these businesses where the whole process of having a community and an organization and professional development and new talent coming in and, you know, like all of that kind of breaks if, if the top talent is like, we'll just do a Substack or we'll just do a podcast that we own and, and take, take, you know, 90% of the profits from it or, um, or, you know, we'll just make our own YouTube channel. Um, 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. And so I think early Buzzfeed was trying to build essentially like a collective and an organization. And at a certain point, some of the talent was like, I'm making too much money. I, I mean, I'm not making enough money. I'm going to go create, create my, my, my own thing. Um, and you know, That worked for some of them. A lot of them found that it really sucked to try to be a YouTube creator and having to call in friends and favors and not having resources and not having collaborators and the loneliness of it and the burnout. And, you know, YouTube and TikTok loved to give, you know, the trending designation to new talent, but then a year or two later, it's like, they don't get that anymore. And, and so it really is, you know, kind of broken for a lot of, a lot of the talent that was frustrated and left, like didn't work out that well. Um, but for some, for some talent, it works great. And so I think, I don't know, that's one of the core challenges I think with media companies and the sort of platforms that are trying to just completely, completely blow up the media companies. It's one thing if, if you're a news organization, you know, with a union, it's one thing if the top talent is stuck to that news organization. It's another thing if you collectively bargain and the people who want to make the most money just go to Substack. That's the most, you know, Substack is probably the biggest union busting you know, like development that, that, that exists, even though that's not their intention, but it, it, you know, there there's this contract of the top talent, you know, only capturing part of the value to help support the, 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 gotten been somewhat impoverished because you have a lot of creators who've gotten big and podcasters who've gotten big, but never came up through a system where they had smart peers and editors and people who could help them get better at their job. They just came up through a system where they're trying to game the algorithm to get attention and get big enough that they can then, you know, capture, capture that value for themselves. You run HuffPost. HuffPost has this problem and has this dynamic. You're talking about AI. Are you going to start to publish AI Like cross-reference them, you know, the kind of fact-gathering and things like that that you can do is something that could help elevate journalism and make journalism better, but having AI 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. Yeah. I guess I'm just curious, how much of the talent business do 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 are roundups of user-generated content on other platforms. How much of the talent business do you want to be in in the future? Well, I think what's kind of amazing about YouTube and some of these other platforms is that they're not really in the talent business. This is specifically what I'm asking. Do you want to run platforms for users? Yeah, I mean, BuzzFeed was in the talent business, you know, providing healthcare and benefits and professional development and a context and real estate and all these things. And yet when creators would leave to just go directly to YouTube, you know, they got a rev share. And so some of what we 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've 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. And so I think we'll have a lot. There's a lot more things like that that are possible. But then when we do have talent that work for us, I think it's important to find people who want to be part of a collective, who want to be part of something that they're doing together, who want the professional development, who want the resources, who want the peers, who want the health insurance, who want, you know, all of those things. And so it just depends on the, you know, on the business. But I think if you look at HuffPost, it makes a lot of sense to have journalists who worked together in some cases for, you know, over a decade, who really know what they're doing and are professionals. And 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, you know, increased focus on AI. 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 were the right CEO for what you would call the open distribution era. And he might be the right CEO for what you're calling the deals era, where you got to show up and you have to negotiate rights and I don't know, maybe AI companies are going to pay you for stuff. And 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. 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 you should have sold back then? So, I mean, from a financial standpoint, it's hard to say that that wouldn't have been a good deal to take. It was, I think, $450 with an earn out that could get to that $650 number. And, you know, we were just hiring Mark Shutes 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. There were a bunch of things that I'm really glad we got to do as an independent company. And I wouldn't really trade those years where we were able to, you know, build and explode and 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, was unfortunate that they, you know, we weren't able to sort of live up to that. The other thing I would say is that I don't think selling the company at that moment would have been the maximization of value. I think selling it two years later would have been. And there was, you know, a lot of interest that people don't know about, you know, 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 done a transaction 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. And so that also partly led to never really exploring any of those other types of deals. But, you know, in retrospect, if you had perfect hindsight, you know, there's probably some kind of deal we could have made in 2015 or 16 that would have also given us, you know, the right partner and resources to fare the next challenging time. So you're stepping down as CEO. I got it. 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 tomorrow, 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? Well, I think the biggest, the biggest issue was we missed the window. So again, if you had perfect hindsight, you know, 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, 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. And then we would have been able to have a lot more leeway and latitude to reinvent the company when the market got really tough. And so the, the, the problem is when we started to explore this complex acquisition, it slowed down our ability to get to, to complete the SPAC transaction because we needed to agree with, you know, on a sale and agree on all these terms and negotiate, I mean, with Hearst and Verizon who co-owned it. And, and so, and then we needed to then, once we went public, like figure out how to integrate and work with, you know, cultures that were not really well suited to each other. The, the complex culture was just very different than, than the Buzzfeed culture. And 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, 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, you know, slowly been able to alleviate, you know, first by selling complex, then by selling first we feast and, and now with this partnership with, with, with Byron Allen and, and, and that investment, but it's taken a, it's taken a bunch of time to, to kind of get back to where we're, we have the balance sheet we need to innovate and operate in a way that's more, that's more, you know, more confident and more, more deliberate. Why did you buy complex? If you, 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, you know, stronger with, with female audiences and they were stronger with male audiences. And we, you know, we, we, and they had a lot of great properties. And so we thought this would be a one-stop shop for advertisers. What, what ended up happening was both the value of digital media and the traffic that we've, we've been talking about was, was, was challenging. But in addition, advertisers 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 the thing that's gonna 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. I 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. A 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 gonna 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, do you love the iPod? But a lot of people would say yes. You know, my career is based on, 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 liked, who liked mobile, but I think most people were like, they liked the things they could do with it and they liked the way 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, like, so I think if you think of AI as a computing platform, it's the question is what, what are the apps built on top of that computing platform that Gen Z will like? And 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, you know, 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 magnifies people's agency, that is not about feeding everyone the same slot, but is about like helping people have a more personalized and connected experience and connect with their friends. Like, I think that's going to be something that we'll have to fight for because there'll be all kinds of dystopian uses of AI, but I think we can build something that is special, 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. 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 have to show me this AI powered YouTube that's going to make Google obsolete. Yeah, you'll have more fun talking to him than me. All right, 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. All right. Thanks for having me. I'd like to thank Jonah Preddy 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 decoderattheverge.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 DecoderPod. You can watch clips on TikTok and Instagram, also at DecoderPod. 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 Vox Media Podcast Network. The show was 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. PDF Spaces in Adobe Acrobat is changing the game when it comes to file sharing. You can make your PDFs an interactive experience, track who's interacted with your files, and even offer insights with a customizable AI assistant. You do all that and more with Acrobat. Learn more at adobe.com slash do that with Acrobat.