BuzzFeed is published on the Nasdaq. Now what?

The transformation from a startup to a public company is envisioned to be a very big deal.

So let’s start by recognizing that BuzzFeed, launched 15 years ago as an internet experiment, has reached an important milestone: December 6 is the day you can buy and sell BZFD stock on the Nasdaq.

We can also admit that BuzzFeed’s transformation was much more complex than we would have liked. Last week, when it formally went from a private company to a public company (using “SPAC” – a bit of financial engineering that was very popular a year ago and is now out of fashion), investors gave the company a thumbs down. … That meant he raised just $ 16 million instead of the $ 250 million he hoped to raise earlier this year. On top of that, 61 BuzzFeed News employees – about 5 percent of the company’s total workforce – left work last Thursday to protest the progress of union contract negotiations.

But let’s step back a little further. It’s worth noting the fact that BuzzFeed exists at all, let alone publicly traded, with all the financial transparency and investor expectations.

BuzzFeed is arguably the most famous member of the cohort of digital publishers created in the past decade, and for a while it looked like they might usurp traditional media companies. Their rise scared existing publishers and briefly convinced investors to quit. billions of dollars their way.

Then their main strategy – to focus on Facebook and make a profit when the social network exposed their content to billions of eyes – collapsed about four years ago when it became clear that Facebook was more of a competitor than a partner. And then many of them dropped sharply or disappeared together.

So the fact that BuzzFeed is still around and big enough to exist as a public company … that’s something.

It’s not as sexy a story as it was six or seven years ago, when the existence of BuzzFeed – along with other publishers like the Huffington Post and my employer, Vox Media – bothered the New York Times so much that the newspaper created internal report “what we are doing now” dedicated to repelling militants. Or when BuzzFeed seemed to be so deeply into digital culture that Ben Smith, then editor-in-chief, boasted that. “the world has moved towards us… “Or when he told the world that he was going to take what he learned by creating viral content and use these ideas to turn Hollywood

Fast forward to the present, and BuzzFeed’s ambition has diminished significantly: like everyone else in the media, it tries to sell projects to studios and streamers who need content. But the idea of ​​creating BuzzFeed Motion Pictures seems like a stretch. it seems that is why the company no longer has a division with that name… It turns out the New York Times didn’t need to copy the viral content strategy that BuzzFeed helped implement. Instead, he thrived by creating great journalism and asking his readers to pay for it, which they seem to be happy to do. And he was able to use that money to hire stars from digital competitors like Vox and BuzzFeed. Including Ben Smith.

A more specific way of phrasing it: BuzzFeed was valued at $ 1.5 billion last week – less than the $ 1.7 billion investors thought it was worth back in 2016, although it has since acquired both HuffPost and Complex, both major publishers in their respective countries. own the right.

Or, another, more practical way to highlight BuzzFeed’s low-key expectations: For years, BuzzFeed CEO Iona Peretti has said that he is comfortable with the fact that his BuzzFeed News unit is not making money because it is doing important work that he happily subsidizes. … … But that has changed in recent years. In 2019, BuzzFeed had major layoffs for the first time in this group, and now Peretti says he wants BuzzFeed News to lose less money. Hence the contract negotiations, which lasted over two years.

“I’m still comfortable [with BuzzFeed News losing money]… Exactly. But this is not the same as it was in the past, ”Peretti told me on Friday in an interview for Recode media podcast. “And so I think people expect that what we have done in the past in terms of massively subsidizing news, we will continue to do at the same level. And we can do that to a certain extent. But we need to make sure we build a sustainable, profitable, growing business so that we can do this journalism for years to come and have such a huge impact. ” You can listen to all interviews by this link, or below.

But even the abbreviated BuzzFeed is good because we need more publishers, not fewer – even though Peretti’s ultimate goal when it goes public is to bring other digital publishers together under BuzzFeed. The more options, the better for you, the person who looks to the media to help you understand the world around you. It’s also good for existing publishers who may be using repetitive competitive kicks in the pants. It’s also good to have business models for publishers that don’t depend on having an international subscriber base of 10 million or benevolent billionaire patron

This is the big picture. Now let’s zoom in and talk about what public BuzzFeed means to different groups:

For people working at BuzzFeed:

Some of them are going to make some money. BuzzFeed’s offer means that their shares or options in a formerly privately held company can now be traded on the open market. Peretti’s stake in the company he founded, for example, will be worth millions.

Some of the lower-level employees who received options after the last round of BuzzFeed funding in 2016 may not see any prospect yet: public investors will have to decide that the company is worth at least $ 1.7 billion before these financial instruments are worth. something. Meanwhile, some ex-employees, especially those who came early, might have a decent amount of money, but not windfall profits: “It won’t be a down payment on the house, but it might paint the house,” a former editorial staff told me. BuzzFeed.

For the people who run BuzzFeed:

Peretti has said for many years that he would like digital publishers to consolidate. In theory, the fact that BuzzFeed is public makes it easier for him to combine them, since he can sell shares in the company to public investors or find other ways to access capital. The deal that brought BuzzFeed to the public has already kicked off the process, providing them with the money to acquire Complex, a lifestyle publisher best known for its hip-hop culture stories and conferences, and the famous people TV series Hot Ones. there are very spicy chicken wings. But BuzzFeed’s ability to buy other companies will depend on its performance as a public company, so Peretti’s plans have yet to be determined.

For people who run publishers not named BuzzFeed:

Privately, digital publishers who compete with BuzzFeed love to complain about BuzzFeed: They find fault with Peretti constantly moving from story to story, describing BuzzFeed’s strategy and tactics. One last thing: he’s going to make a lot of money from “commerce,” which currently primarily means adding affiliate links to history (which Vox Media also does). Publicly, they wish him all the best. But they all know that their story is also the story of BuzzFeed: if everything goes well, maybe they can.

“Right or wrong, fair or unfair, all digital media companies will be heavily tied to BuzzFeed,” says Brian Goldberg, CEO of Bustle Digital Group, which would also like to go public. “The fate of BuzzFeed will determine the fate of many other companies.”

This does not mean that today’s BuzzFeed stock performance will determine whether Goldberg, or companies like Vox Media, will go public in the very near future. But if, over the next year or so, public investors decide they are not interested in BuzzFeed, then it will be much more difficult for the Goldbergs around the world to make their presentation. This is why posting a BuzzFeed can make a big difference and it doesn’t matter at all. We will not know the real answer for a while.

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