Apr 13, 2016 ยท 4 minutes

Earlier this week, Mashable announced widespread layoffs because it said -- I’m not joking-- its foray into hard news wasn’t paying off.

The reality for Mashable is the same as the reason BusinessInsider topped out at a $450m million exit, which many still considered over valued. As I Tweeted at the time: Buzzfeed only makes the playbook of combining listicles and watermelon videos combined with serious news look easy.

A few days later, Buzzfeed itself sort of made my point. Or rather, the Financial Times did, reporting that Buzzfeed had fallen far short of its 2015 revenues estimates, slashing those for 2016 in half. The FT wrote that it projected $250 million in revenues, and generated less than $170 million. (Re/Code quotes chairman Ken Lerer, also a Pando investor, insisting the report isn’t true.)

The media is -- not surprisingly-- reacting in a mix of schadenfreude and just plain getting the context wrong. Vanity Fair was one of many who suggested this could be an end to the “millennial media bubble.” Yeah, that bubble that produced a whopping three content unicorns in an era of extreme over valuing of companies. The same “bubble” that saw a slight decline in media funding year over year, if you take out Vice’s mega-round.

The truth is VCs have still mostly avoided content and those biases have been confirmed of late whether it’s Facebook traffic declining across the board after yet another algorithm change, Mashable’s layoffs, or Buzzfeed’s miss.

This is just a brutal business.

The culprit for Buzzfeed’s miss is the thing that was supposed to be its salvation: Custom content. (Another thing to bolster the case I made last week that relying on one silver bullet revenue stream to “save” journalism is idiotic.) Sources told the FT that it took too long to develop the content and so revenues couldn’t scale as fast as the company hoped. I have no doubt that’s true. I also have no doubt that Buzzfeed isn’t in any real trouble.

Why? Two reasons. The first is it raised a shit load of cash, which means it has time to grow slower than it’d hoped. The second is that Jonah Peretti thrives on media reinvention. He sees how news wants to spread through technology better than almost anyone. He knows when a playbook is about to change better than anyone, and when to jump onto the next bandwagon.  

Peretti told me years ago the reason he was at peace with Huffington Post selling to AOL was a nagging fear: SEO was on the way out, and social was far more important. Worse: Banners would eventually be worthless. HuffPo couldn’t move quickly enough to make the switch. With Buzzfeed, he got to start with social from the ground up.

But Buzzfeed has never been a static thing. What started as a destination site for rewriting Reddit memes, leveraging social media to pull traffic has become more of a story of “reach”-- where the ultimate number isn’t how many people come to Buzzfeed, but how many people interact with its content anywhere.

It’s a change in strategy that’s no less dramatic than when the site hired Ben Smith and started doing serious journalism. And unlike Mashable, Buzzfeed has actually done great journalism. Under Smith-- a politics guy-- Buzzfeed has broken more tech news in the last year than the pure play old guard of TechCrunch, Mashable, and BusinessInsider combined.

To anyone watching, Buzzfeed has already been in the midst of another pivot during the last year-- heavily focusing on video, shifting the company’s center of gravity from print-media heavy New York to video and production heavy LA. Peretti himself relocated.

Internally, this has rankled some of the Buzzfeed New York staff, from what I hear. But the Facebook algorithm is prioritizing video now, so Buzzfeed has to move with it. Not to mention the one digital media company worth more than Buzzfeed is VICE, a company that also adeptly used video to bolster its brand and revenues.

If the trend is away from custom content to television as the Financial Times suggests, Buzzfeed started to address it well before this revenue miss leaked.

That is why the company was funded at the price and valuation it got. It wasn’t what Buzzfeed was doing at that moment, or any near term revenue target. It was a team that already did something few people thought it could: Produce absurdist big hit viral content in the same place as some of the best journalism being done today. A team that gets what “real” journalism is and can hire a team to produce it, yet doesn’t get precious about it, the way it’s delivered or the way it’s monetized.

Journalism purists may hate Buzzfeed and continue to hate it. But reality is it’s still as close as the digital content world has come to producing a 100 year media titan to rival the ones that largely still dominate today.