BuzzFeed Shutdown reason: What went wrong with Billion-dollar US media portal's news operation?

BuzzFeed announced Thursday that it was shutting its news division as part of cost-saving cuts, signalling the end of one of the most notable news websites of the internet era.

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While the internet is filled with stories of 'Rags to Riches' which inspires people around the world to pursue their dreams, the story of billion-dollar (then) US media portal BuzzFeed is the story of 'Riches to Rags'. What came as a shock for not only Americans but for the world when BuzzFeed announced Thursday that it was shutting its news division as part of cost-saving cuts, signalling the end of one of the most notable news websites of the internet era. The company cited challenges including recession in the tech sector and the struggling stock market, with CEO Jonah Peretti admitting he was partly at fault for the closure. As per a memo writer by CEO Jonah Peretti BuzzFeed decided to cut almost 15 percent of the workforce which will ultimately cripple its news operation. " We are reducing our workforce by approximately 15 percent today... and beginning the process of closing BuzzFeed News," wrote Peretti in a memo as reported by US media. Notably, mass layoff is hitting the world like a curse. While the economy of the world are slowly steadily coming back to track, companies, especially tech are involved in mas layoffs around the world, however, the case of BuzzFeed is somewhat different and that is why it won't be wrong to write, "The Curious Case of BuzzFeed". So, the question arises, what went wrong with BuzzFeed, or why Buzzfeed is shutting down its news operation for which it was widely followed? To know the answer continue reading-

What went wrong with BuzzFeed?

Before understanding what could be the inside reason, let's know what Jonah Peretti said first. As soon as Pereti announced shutting down its news operation, BuzzFeed shares plunged more than 20 percent on Wall Street following the news.Peretti said the company had come to the conclusion that it "can no longer continue to fund BuzzFeed News as a standalone organization." He added that it would now concentrate its news output on its HuffPost website. Jonah Peretti also cited the coronavirus pandemic, less capital, a decelerating digital advertising market and "ongoing audience and platform shifts." "Dealing with all of these obstacles at once is part of why we have needed to make the difficult decisions to eliminate more jobs and reduce spending. Jonah Peretti conceded that he could have reacted better to the challenges. "I also want to be clear: I could have managed these changes better as the CEO of this company and our leadership team could have performed better despite these circumstances," he wrote admititng that he had decided "to overinvest in BuzzFeed News because I love their work and mission so much."

"This made me slow to accept that the big platforms wouldn't provide the distribution or financial support required to support premium, free journalism purpose-built for social media," he further wrote.

BuzzFeed's declining business and revenue

As per Vox, BuzzFeed is currently valued at about $100 million, which is way less than the $437 million in revenue it generated last year. It’s even further off from the nose-bleed valuations it got when it was on the way up: $850 million in 2014 and $1.5 billion a year later. Peretti was able to goose the company’s value — unintentionally, he says — earlier this year when he announced that BuzzFeed was going to start using AI to make content, but that was short-lived. Today’s layoff announcement included a bullet point noting that “no jobs are being replaced by AI.”

Where Peretti went wrong?

Reports suggest that when BuzzFeed was on the way up, back in the 2014-2016 era, founder and CEO Jonah Peretti used to talk about his company as if it were a tech company, not a traditional media company. This was in part to help land investments from venture capitalists like Andreessen Horowitz, which traditionally avoided media companies but put $50 million into BuzzFeed in 2014. One indication that no one thinks of BuzzFeed as a tech company anymore: When actual tech companies announced layoffs in the recent past, investors rewarded them by bumping up their stock prices. But when the BuzzFeed layoff news broke today, BuzzFeed’s sub-$1 stock dropped another 20 percent, and is still there now. From past few years, BuzzFeed was indeed a high-prestige company but in a money-losing news operation. However, it made a lot of money from its quizzes and other pop culture and entertainment operations.

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