The Briefing
By Martin PeersGreetings!
So, BuzzFeed executives are talking about making the company’s news division profitable. And they’re pivoting part of its business after realizing it was too reliant on Facebook to drive traffic. No, you didn’t just wake up in 2018. BuzzFeed executives are really saying the same things they were saying four years ago about some of the key challenges facing the company.
It’s extraordinary that BuzzFeed hasn’t made more progress in that time on those issues. Consider that in 2018, when founder-CEO Jonah Peretti told The Information that BuzzFeed News was “on track” to become profitable, the news unit had 250 employees. Today, after earlier rounds of cuts, it has about 100, as The Verge’s Peter Kafka pointed out, and it plans to eliminate close to 30 jobs through buyouts. BuzzFeed wants the news operation to turn profitable next year, a top departing editor told staff today. Instead of being a vanguard of the digital age, BuzzFeed News is looking more like one of those aging newspapers that has to keep cutting employees as it tries to keep up with declining ad revenues.
BuzzFeed should either sell the news operation—as investors want it to do, according to CNBC—or start charging for access, something Peretti has refused to do. As for BuzzFeed’s reliance on Facebook, that was a problem back in 2018 because Facebook algorithm changes had slashed the number of people watching BuzzFeed videos, so much so that Peretti even admitted to The Information: “We can’t really depend on Facebook.” Today, BuzzFeed blames a decline in Facebook’s audience for hurting the publisher’s relatively new commerce business. You have to wonder, given that Peretti knew four years ago about Facebook’s unreliability, why he allowed the commerce business to also become reliant on the social media giant.
The biggest change for BuzzFeed is that it is now a public company, making Peretti accountable to shareholders in a way he wasn’t before. Sure, he has control, thanks to the supervoting stock he owns. But that stock won’t appreciate in value if he can’t persuade investors he can profitably grow the firm’s business. That’s a challenge he has yet to meet.
Recession? What Recession?
Carl Icahn thinks we could be heading into a “recession or even worse,” vocalizing something that has been whispered for the past few weeks. His comments, on CNBC, came the same day The Wall Street Journal reported that a convergence of short- and long-term government bond yields had suggested the bond market was expecting a recession.
Not that the stock market seems to be too concerned. Stocks have rebounded in the past 10 days or so—the Nasdaq rose nearly 2% today and is up 12% since it hit a low on March 14 of 12,581, at which point it had dropped more than 20% from its November highs.
Would a recession make things much worse than they already are? After all, rising inflation has likely choked off some consumer spending, affecting e-commerce firms, direct-to-consumer businesses and subscription streaming operations. Delivery and ride-hailing firms have had to impose surcharges to offset the impact of rising fuel costs, likely hurting their growth. But a recession could next hit the ad market, already reeling from the impact of Apple’s ad-tracking changes. And it could prompt businesses to cut back on investments, potentially affecting enterprise software firms. Yep, a recession could definitely make things worse.
In Other News…
- Former Andreessen Horowitz partner Katie Haun officially unveiled her new crypto-focused venture capital firm on Tuesday. The firm, Haun Ventures, has raised two funds: an early-stage fund with $500 million in capital, and a second fund focused on more-established startups with $1 billion in capital.
- Yuga Labs, the startup behind the Bored Ape Yacht Club collection of NFT artworks, has raised a $450 million seed round at a post-money valuation of $4 billion, the company announced Tuesday. Andreessen Horowitz led the funding.
- Hacking group Lapsus$ late Monday claimed to have broken into the systems of identity and access management software provider Okta two months ago, circulating screenshots showing purported activity from an administrator’s account. But in a subsequent blog post, Okta’s chief security officer, David Bradbury, said its service “has not been breached and remains fully operational.”
- Nvidia Corp. on Tuesday showed a new technology for linking its growing family of chips, tackling one of the biggest data bottlenecks in artificial intelligence while also targeting the lucrative market for central processors.
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| Andreessen Horowitz, Khosla Back Worldcoin in Deal Valuing Tokens at $3 Billion | By Kate Clark and Berber Jin | Worldcoin, the cryptocurrency startup co-founded by former Y Combinator president Sam Altman, is raising $100 million from investors including Andreessen Horowitz, a previous backer, and Khosla Ventures through the sale of its Worldcoin tokens, according to two people with direct knowledge of the matter. The new investment values the total supply of the company’s tokens, blockchain-based digital currencies that are often issued by crypto startups, at $3 billion, two people said. Just five months ago, the startup, which offers free tokens to individuals who get their irises scanned with a custom-made device, said it raised $25 million at a $1 billion valuation. | |
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