Saeed Jones and Isaac Fitzgerald, replying to tweets during a commercial break on “AM to DM,” a weekday morning show produced by BuzzFeed News. The show is paid for by Twitter.CreditDavid Dee Delgado for The New York Times.
Today’s New York Times article Founder’s Big Idea to Revive BuzzFeed’s Fortunes? A Merger With Rivals contains a number of great lessons for virtually any startup, not just web content publishers like Buzzfeed. Here they are:
You can start you venture as a “side hustle”
Side hustles, or starting a new venture without giving up your day job, have become a startup meme for good reason. While the general population thinks being an entrepreneur is all about taking risks, the truth is just the opposite. Venture capitalists and other investors want to see the four types of risk be mitigated as the company grows. And so should the entrepreneur who started the venture. Joshua Peretti started Buzzfeed while he was employed at another web publisher, The Huntington Post. While this strategy obviously worked for him, I’d be careful about starting up a venture that could be perceived as a competitor by the company which currently employs you. From my experience publishers tend to be more open about this than most, perhaps because most of them lack trade secrets that high tech companies guard so jealously.
Buzzfeed was an experimental project by Joshua Peretti. Startups are successions of small experiments, it’s how founders learn and find the elusive product/market fit.
“BuzzFeed has always been very experimental,” he said. The ethos that led to its viral content and mining of memes to explain the day’s news is now being applied on the business side, he said, “to consider commerce and advertising and even donations.”
Choose your company name with care
Buzzfeed is a great example of compounding two evocative short words into one for your company name. Microsoft may have been the first tech company to do this. It still works and is far better than creating monstrosities like iFoobarystas.ai.
Starting small doesn’t mean starting with a minimal viable product, or one that can barely has a pulse. It means two things: one, creating a minimal remarkable product and two, launching a product you can learn from.
Have multiple revenue streams
As a colleague pointed out to me, monocultures are highly risky in the world of tech, where the environment can change overnight. Just one change to Facebook’s newsfeed can and will cut revenues of publishers drastically. Buzzfeed has very diverse revenue streams.
BuzzFeed now sells cookware at Walmart and accepts banner ads on its web pages. It runs a morning show on Twitter, a weekly one on Facebook and another on Netflix, all of which are paid for by the platforms. Its newsroom and its entertainment studio churn out thousands of videos and articles each week, to an audience of 690 million people every month. The company also gets a commission when a reader buys a product on Amazon or other commerce sites after clicking through from one of BuzzFeed’s recommended product links, known as affiliate marketing. And on Monday, BuzzFeed News announced a membership model that provides exclusive access to newsletters and behind-the-scenes content for $5 a month.
Virality is essential in B2C startups
The cost of customer acquisition tends to be greater than customer lifetime value in a consumer facing company, so you need to build virality into your product. Virality literally jumpstarted Buzzfeed, as by accident as an email spat between Mr. Peretti and Nike went viral via email. It eventually reached millions of people. Mr. Peretti ended up appearing on the “Today” show debating labor issues with a Nike executive.
Diversify as you grow, not as you start
As the saying goes, more companies die from indigestion than starvation. Focus is the name of the game in startups. But growth is also the demanding taskmaster. The trick is to grow and diversify without losing your core values and the focus on your mission.
As BuzzFeed’s audience has grown, so has the diversity of its content. Hard-hitting investigative journalism lives alongside listicles, quizzes and cooking videos
Money is a means to an end
Whah? You ask. The great entrepreneurs, from Steve Jobs on down, realize that they need capital to realize their vision. Money is a way to fund progress towards that mission. If you are only in it for the money find an easier way than founding a company. Startups are just too hard. Go to Wall Street instead. Profit is a byproduct of creating a great product and serving customers well, not the sole purpose. This ethos has survived at Apple beyond the death of Steve Jobs.
Be willing to hide your ego
These lessons on how to start and grow a company are incidental to the Time’s article throughline, which is that web publishers may need to merge in order to obtain greater economies of scale and negotiating power. Mr. Peretti and his colleagues at web publishers like Vox Media, Refinery29, and Group Nine see a merger as an opportunity, not as the loss of their personal autonomy.
Philippe von Borries, a co-chief executive of Refinery29, said that in the next year or so there might be “an opportunity for the leading media and entertainment companies that emerged over the past decade to come together,” provided all parties could settle on a shared culture and vision.
While these lessons are all extracted from an article about web publishing, they are applicable to virtually any startup. But one last lesson: lessons are contextual, they are not commandments. In the language of programmers they are local, not global. It’s up to you as a founder if and how you apply these lessons to your own venture.