BuzzFeed plans layoffs as it aims to turn profit
BuzzFeed, often hailed as the future of publishing and a leading producer of digital content, plans to lay off 15 percent of its workforce, or about 200 employees, according to a memo sent to the staff Wednesday night.
The company’s management team, led by the chief executive Jonah Peretti, has been working on the staff cuts over the past few months, two people with knowledge of the plans said. They asked not to be named because they were not authorized to speak on the matter. The cuts will affect the international and web content departments, including the news division, led by Ben Smith.
Peretti sent a note to employees at 6:30 p.m. Eastern time with the subject line “Difficult Changes.”
“Hello BuzzFeeders,” he wrote. “I’m writing with sad news: we are doing layoffs at BuzzFeed next week. We will be making a 15% overall reduction in headcount across the company. I’m sending this tonight because I wanted you to hear it from me directly instead of from the press.”
The move is meant to trim costs and maintain growth as the company aims to hit profitability this year. BuzzFeed, which employs over 1,300 people, generated more than $300 million in revenue in 2018. That was a jump of better than 15 percent from the previous year, but the company still loses money.
BuzzFeed declined to comment.
Known for its mastery of the viral arts, the site relies on an army of editors, producers and journalists to produce thousands of pieces of content each week, as varied as cooking videos and breaking news reports.
BuzzFeed News came under scrutiny in recent days after publishing an article reporting that President Donald Trump had instructed his former lawyer, Michael Cohen, to lie in his testimony to Congress. In a rare public statement, the special counsel’s office denied the report. Smith has said he stands by the article.
Publishers across the web have suffered as shifting reader habits and whimsical-seeming algorithm adjustments at Facebook have cut into revenue. Vice Media reduced staff last year in a bid to reach profits, and Mic, a site aimed at younger readers, cut the majority of its staff before being sold off in a fire sale to a competitor.
Advertisers generally pay less to reach online readers than print devotees, but investors were banking on the idea that online ad rates would significantly rise and digital publishers would dominate. That hasn’t happened as Facebook and Google continue to siphon the majority of ad dollars.
BuzzFeed’s board recently agreed that the company needs to start turning profits, the people said. The site has lost money for most of the years it has been in operation, not unusual for a startup. Venture-backed companies like BuzzFeed often spend big at first in a bid to expand. But as the company closes in on a decade in business, investors want to start seeing profits.
In his note, Peretti said “The restructuring we are undertaking will reduce our costs and improve our operating model so we can thrive and control our own destiny, without ever needing to raise funding again. These changes will allow us to be the clear winner in the market as the economics of digital media continue to improve.”
BuzzFeed has raised nearly $500 million in venture funding, with $400 million coming from NBCUniversal.
Peretti, a graduate of the MIT Media Lab and a founder of HuffPost, began BuzzFeed in 2006 as an experiment and turned it into a genuine business by 2011. He amassed a large following by hitting on a formula that took advantage of the new publishing platforms on Facebook, YouTube and Twitter. BuzzFeed’s monthly readership is nothing to LOL at: 690 million, a figure that has made it the envy among digital publishers.
That still may not be enough. BuzzFeed took a hit when Facebook introduced a sweeping change in 2016 that significantly reduced the visibility of articles and videos from professional publishers in its News Feed, its main artery of content.
In a November interview with The New York Times, Peretti proffered an audacious solution: a series of mergers with five or six top internet publishers, including Vice, Vox Media, Group Nine and Refinery.