This Week in Startups - BuzzFeed vs Gawker, AI’s impact on the future of media, and more with Semafor’s Ben Smith | E1733

Episode Date: May 2, 2023

Jason is joined by Semafor Co-Founder and EIC Ben Smith to dive into his new book and explore the current state of media. They break down BuzzFeed vs Gawker, why media unions might not work (29:35), the future of journalism (36:54), and much more! (0:00) Jason kicks off the show (1:55) Semafor's Ben Smith joins Jason (4:27) Ben's career in media (6:19) The previous era of publishing (9:13) The significance of BuzzFeed and Gawker (13:49) LinkedIn Jobs - Post your first job for free at https://linkedin.com/twist (14:53) Gawker's ethos (19:31) The bet on companies like Facebook for media (23:25) BuzzFeed's future (24:51) Vanta - Get $1000 off your SOC 2 at ⁠https://vanta.com/twist (26:07) Vice and Vox (29:35) Unions in media (35:34) iConnections - Get 20% off iConnections Miami 2024 event at https://iConnections.io/twist (36:54) The clash between journalism and business (45:34) Broadcast TV and going direct (46:19) What is happening with Fox and CNN (52:48) SBF and Semafor FOLLOW Ben: https://twitter.com/semaforben FOLLOW Jason: https://linktr.ee/calacanis Subscribe to our YouTube to watch all full episodes: https://www.youtube.com/channel/UCkkhmBWfS7pILYIk0izkc3A?sub_confirmation=1 FOUNDERS! Subscribe to the Founder University podcast: https://podcasts.apple.com/au/podcast/founder-university/id1648407190

Hey, everybody. We've got a great show for you today. Ben Smith. Yes, you know him. The co-founder and editor-in-chief of Semaphore joins us to talk about all things, tech and media. He, of course, was the founder of BuzzFeed News. And he, before that, worked at the New York Times writing their media column. A lot of things went wrong. And he just wrote a book. The book is called Traffic, Genius, Robberly, and the Delusion in the Billion Dollar Race to Goal. This is a book about Gawker and Nick Denton versus Jonah and Buzz. his feed. Both of those businesses have burned up in a just huge barn fire. He was there. He saw it happen. He explains all of that and more. Plus, we talk about the standoff between media

and tech. We talk about VC dollars going into media companies being a bad idea, including the $10 million that Ben took from Sam Bankman Fried of FtX fame. And now he's got to give that money back. Oh, Lord, it's a great episode. Stick with us. This week in startups, is brought to you by LinkedIn jobs. A business is only as strong as its people, and every hire matters. Post your first job for free at LinkedIn.com slash twist. Vanta. Compliance and security shouldn't be a deal breaker for startups to win new business.

Vanta makes it easy for companies to get a SOC2 report fast. Twist listeners can get $1,000 off for a limited time at vanta.com slash twist. and iConnections is a platform to connect and meet with elite capital allocators through their online platform and bespoke events. The first 25 VC funds to sign up for iConnections Miami 20204 event in January of next year will receive a 20% discount. Head to iConnections.io slash quiz to sign up today. All right. I'm very excited about today's guest, everybody. Ben Smith, the co-founder and editor-chief of Semaphore is here. He was the creator and editor-in-chief of BuzzFeed News.

Just recently shut down. We're going to talk all about that. And he was a media columnist at the New York Times. And he's got a book coming out. Today, Tuesday, May 2nd. And this is a book that I was on the periphery of. The book's title is Traffic, Colon, Genius, Robbery, and Delusion in the billion dollar race to go viral.

I mean, described the book as a post-mortem on the aughts media revolution of Nick Denton and Jonah Peretti. I guess I mentioned as an old rival to Nick Denton. Ben, welcome to the program. Thanks so much. I was just talking to your producer that about how, if All In had been as big when I was writing it as it is now, I probably would have mentioned Jason Calcanus a few more times, you know? I've only got one Calcanus reference. in there.

Oh, that's okay. I mean, if we look back on that time, Nick Denton had started Gawker. I started Weblogs Inc. We had a bit of a rivalry. I dominated him in Gadgett, dwarfed Gizmodo and joystick dwarfed Kotaku, I think was his video game brand.

And we had a dogged fight. I sold Weblogs Inc 18 to 24 months after we started it for $30 million. And I think everybody knows he probably we made what, $10 million, $20 million at the end of the day after the whole Kogan stuff? Do you know how much money he actually made on the sale? I do not. How much he walked away with? He sold it years later, though.

It was sold for $150. Yep, but I don't know how much of that he wound up with. Yeah, very little, I think, because he had taken a huge investment, like an emergency investment, as you probably document in the book. But let's start here. I mean, so many things for us to talk about. I want to make sure we talk about your book. I want to talk about STEM4.

I want to talk about media writ large. And I'm sure you have questions for me. This is always problematic for me when I have a journalist on, especially in media, journalists, because you always want to ask me questions. So hopefully we can keep this focused on you, but I will allow a couple of, in the interest of full disclosure. Yeah. And I'm an open book about these things.

But it's fun to talk to you. I feel like I've been talking to you on the internet for years one way or the other. So it's nice to see you. So when did you first get into media reporting or just media in general just to set the stage here? And then when did you get involved with BuzzFeed? Yeah, I mean, I've always been a reporter and really mostly a political reporter. My first gig, I was a summer intern at the Jewish Forward covering the cutthroat politics of the Upper West Side in the late 90s. wound up back in New York covering City Hall in the early 2000s.

And, you know, watching all these bloggers actually for both. the political bloggers like Andrew Sullivan and then Gawker and your guys, the tech bloggers, in, you know, I guess it was 2004, very early. And there was nothing really like that in local politics in New York. And so I started a blog when I was at The New York Observer that covered local politics. And I thought it was really successful, actually. Like it was, it sort of dominated that extremely small space. And I remember once having a drink with Jessica Cohen, who I thought was incredibly cool,

who ran Gawker, which was like a real blog. and asking her how much traffic she got. She told me she got 100,000 views a day and asked me how much I got. And I was sort of like spat out my drink and changed the subject because I got 1,000. I got 1,000 views a day,

but I really had thought that was a big number. Well, how old are you, if I may ask? I'm 46 now. Okay, you're 46. I'm 52. So you're right behind me. You're a Gen Xer. Yep. And what people don't realize about that time

is that for Gen Xers, we would wait in line to be allowed to publish and to get our bylines in print typically and then on websites. And what blogging did was it created a path for people who were overperformers, who didn't need an editor, to go and just talk directly to an audience, which seems sort of obvious in the age of Twitter and TikTok, substack, and other platforms. But at the time, journalists just simply weren't allowed to publish without going through multiple layers of editors, and you have to, like, kind of wait in line in your publication

to be allowed to write a feature story. So maybe you could describe sort of what you think is special about that era of publishing, and specifically the two principles in your new book. Yeah, I mean, another thing about that era that I think it's sort of, you know, it's funny, it's hard to get your head back there because it was so different, was just that, you know, the, we were still, it was an era where, you know, there were a few broadcast channels, a couple cable channels, newspapers, but they,

you know, the end of the New York Times would put out its addition at midnight. And if you wanted to know what it happened, say in New York City during the day, you could wait for that. Or I could,

and that's where I saw an opportunity, or I could just write it down and blog it and you could see it 10 hours earlier. It was a very, in some ways, very easy, competitive environment

if you were on the Internet. And these opportunities to have arbitrage information were just so obvious. But also the media, I think as much as people now sort of have gripes with a much diminished mainstream media, the mainstream media, Condonast, the New York Times, the big networks were very, very powerful and were in the process of really, I think, profoundly discrediting themselves in the Iraq War.

And people, to some degree, felt that then, but then in the aftermath of, you know, 04, 05, 0607, there was this like real alienation from and questions about the mainstream media that I feel like have been a little forgotten, but really did fuel a lot of the anger and reaction against the mainstream media, the eagerness to hear other voices of all sorts from the outside and media criticism that was all over the place in that moment.

And that was a valid criticism, not only of the media, but of the administration, which basically lied to the American public, or just the most cynical as they lied about the wars, the most generous would be they, they were duped or did a poor job of recognizing weapons of mass destruction, et cetera. And we've had this slow veil being removed for all institutions.

And what was previously a conspiracy theory could turn into a Pulitzer Prize, right? We've had many things, you know, that have been discredited at first and then become super award-winning, right? It was this moment of real rage against these institutions that was pretty justified in that moment, actually. Like, it's a little hard to, it's funny. I think that comes gets written out of the story. It wasn't just there was this new tech. It was also, there was an audience that was really eager for alternative voices of all sorts and just interested in new stuff. And you also had the birth of link bait at this time.

So if it bleeds, it leads has existed forever. We can both agree on that. but there was something more pernicious about link baiting, which is it became a science. And it became a science that was mastered by two publications, Gawker and BuzzFeed. In one hand, you had Gawker, which would print things that people were talking about, but maybe weren't fully sourced, I think would be most people's perception. They were a little bit looser with what they would publish things that came into the tip line. And then at BuzzFeed, they were just incredibly good at you won't believe what these 10 cat kitten photos would be.

So maybe you could describe those two publications and why you decided to base a book on those two. Yeah, that's right. These were these two guys, Jonah Peretti, Nick Denton, who had come into this moment when, as you say, suddenly publishers could see exactly who was reading them and coming from where. And it's sort of like everybody had been navigating these aircraft and suddenly they had instruments. and suddenly they could navigate with enormously more precision and all the temptation to pander to your audience to give them exactly what they want, even if it's in some way inappropriate,

had always been there. Like, it's not like the media were saints before, but it certainly allowed us to, for veteran force, just know exactly what people wanted and give it to them. And what interests me so much about Nick and Joan is they're very, they're both very ideological,

actually. Like, they are not people who came out of operating businesses. They were not. I think part of the reason that you sold when they didn't was that you were a business operator who was looking at what was the right moment to sell a company. And they were sort of visionaries for better and for worse, ideologues, who had like really distinct views of what the internet was going to be. For Nick, it was about essentially like ripping off the mask of hypocrisy from society, from the media. You know, if people, if what people actually wanted was pornography, he would give them pornography.

There was a porn site called Fleshbot. And that sort of ran through some of the coverage. It also, you know, and it also meant we're going to print what journalists say to each other in bars but would never really say in public. And by the way, sometimes that was pretty great. There was a lot of like the young women writing for it in the early days, brilliant writers and real outsiders with no power. And so they would like, you know, one of them went to the Condonast cafeteria and wrote this great send-up of this kind of hallowed media institutions, foibles. And there's a tradition of like poking fun at the giant, CalCol. mainstream media.

A lot of it was really great, actually. If you read it, it sort of captures the weirdness of New York in that moment. Some of it was really cruel. Sex tapes, publishing sex tapes against people's permission. Some of them that were assault. Yeah. Including one that looked like a salt.

Yeah, was sort of a logical extreme of that ethos that they did. And it's very hard to even put your head into a place where that could have been possibly considered acceptable. And then there was also outing people, which was one of Nick Denton's passions. was to out, and again, I agree with you about the hypocrisy. I've had many discussions with him.

Yeah, he didn't believe in secrets. I mean, he had a real ideology that sort of, that was about exposing secrets with no limits. And I don't think that's what most people believe. But it was also heartfelt, and it flowed through these things. And it did connect to this sort of unfiltered new internet. And Jonah was, in many ways, kind of the opposite. Like, he particularly a couple years later, really was among the first to see social media coming, to really understand this huge tidal wave coming of Facebook, Twitter,

and start to experiment with what content would work in that context. Those content, as you say, that people wanted to share. Often it seemed really dumb and silly, though actually often a lot of thought and data went into the dumb stuff. Example? You know, I mean, there were, in the early days of BuzzFeed, there was a lot of these silly lists. Like, one of the great ones that was really big early on was, you know,

23 images that will restore your faith in humanity, a great Reddit genre, actually. And the reason, but of course, it was made for a new world where people were going to share things that would sort of make them look good to their friends, among other things, like where the distribution mechanism was people handing content to somebody else. And they had a theory, which was partly true, that it was going to be very, like, positive, light, silly stuff, sometimes really positive stuff like, here's a fundraiser for earthquake victims, things that would make you look good to your friends. that actually one of the things that we really believed at first was that in this public new social

network, nobody's going to be screaming at each other about horrible politics. It makes you look like a psychopath to your friends. I mean, that did not turn out to be how social media worked. All right, everybody, the March to 1 billion users for LinkedIn continues. They're at 875 million people using the platform. Holy cow. Think about how many insanely qualified people are out there on LinkedIn looking for work. The stakes are high right now, right? You need to be. need to fill each of those open positions at your startup or mid-sized company or a large company, even if you're listening here. You need to fill it with the right candidates. You need a bar raisers. These are people who make you better at your job. They raise the bar inside your company. Well,

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LinkedIn.com slash twist. That's LinkedIn.com slash TWI-ST to post your first job for free. Terms and conditions, of course, do apply. There is a fascinating sort of piece to this. So you have Nick who wants everybody to be honest. He's making

a pretty penny running these publications. He's got all these young people working for him. And he was, you know, the king of New York, uh, in some ways media, if you were good at media, having experiences at Silicon Allie reporter, uh, when I covered the dot com era and then engage it, you know, you get, um, a lot of attention in New York and a lot of power accumulates, at least at that time to media folks. I think this might be the last era of that if I'm, and I'm interested in your take on it, owning a media brand. Uh, but their strengths ultimately led to their demise.

Outing people, uh, publishing sex tapes, the, the, the, desire to, you know, have this radical transparency and honesty and fight hypocritical people in New York led to Denton's demise and the dependency on Facebook and doing data analysis and having the headlines and the stories not be driven by morals, ethics, art, whatever you want to base your headlines and you're editorial on, but basing it on data science to get max clicks, when Facebook decided to slit Jonah Peretti's throat, he was helpless to do anything.

And now the company is a $50 million company with $200 million in revenue. And they just shut down BuzzFeed News. So maybe you could talk a little bit about that which makes us strong and that is clever, could also lead to our demise. Yeah, I think I agree with like two-thirds of what you said.

So I'm just going to pick out that part. Let's go. And I think Denton, I think it's really true that Gawker's strength or what brought it down. There's also one other thing you mentioned how much power you have as sort of a media figure in New York. And really at first, like that wasn't true at all. They were

like weirdo outsiders on an internet. Nobody took seriously, as were you, as were we all. And you didn't feel that you had power. You felt like you were a weirdo outsider who people like didn't invite to things. And if you wrote something, you got dismissed as a blogger. And I think that one of the things that actually is pretty true of me, it's probably true of you. Like, when you're in media

at some point you get power. And if you have sort of come up as an outsider, and you don't necessarily know it. And I think with Gawker, they were acting like these kids in the back of the class throwing spitballs, you know, as they grew more and more powerful and as the people they were throw spitballs at went into crisis. And suddenly, you just look cruel, you know, and I think, you know, when you, Gawker in 2012 kicking at Kandai Nast is like, what are you doing? They're falling apart. You're very successful. And I don't think they really, it's easy to see how you don't realize that that dynamic has shifted.

But I think they were acting like outsiders and started to feel to some people like bullies. Such a great observation, I think, Ben. But also there was this ethos. I mean, there were two parts of their ethos that brought them down. One was sort of at some point times, like with the sex tapes, like with the Hulk Hogan sex tape, irresponsibly exposing people who were just no one in society or the court thinks you ought to be able to do that. The other was being really obnoxious to powerful people who can destroy you, in this case, Peter Thiel, who funded Hogan's suit, which.

Token, you know, who financed this lawsuit that I think, you know, was a totally valid lawsuit, but secretly ran a campaign to destroy them and succeeded. And that campaign was based upon Nick Denton outing, Peter Thiel. Teal said, later said it wasn't actually the outing, and the outing, it's a complicated word. Teal wasn't in the closet to people who knew him, so it was, but the thing that he... It was very quiet. Yeah, it was very dangerous for him to be a gay man at that time. It was life or death because he had Saudi investors and he traveled to the Middle East. I don't know if you cover that in the book.

Yeah, it wasn't. He didn't want a sexuality written about and that's something. Yeah, I mean, like, I wouldn't have written that. I agree with that. Well, you have to just think also, this is 2005. It's a different time period. At that time, Tim Cook was closeted. But Teal said, yeah, that's right.

No, I agree. And Teal also later said that if he was perfectly upset that Denton had written in the comments, just about how, that Teal was this weird, like, sort of written something basically kind of mean about him personally in the comments. That was really what triggered it. But in any case, you know, this was a case where actually Gawker had they written something mean about somebody with less power, they would have gotten away with it, but heel had the money and power to go after them.

And that also was, their ethos was saying the unsayable and saying it about really powerful people. And that was the dangerous road for them in various ways, for better and for worse. Yeah. Yeah, the BuzzFeed story, I mean, I was much closer to. And I think you're right. Yeah. The big picture, the biggest picture is what you said.

It was a bet. Really, the very literal sense was that Facebook was the new cable company. They were going to be content and they were going to be paying people for content or somebody would be paying for it, a little hazy, and that those companies would be the new Viacom. Like that was basically the bet. Do you think that was a crazy bet from the start or do you think it would just paned out wrong? So I've had this experience because when I did Mahalo after Weblogs Inc, we became dependent on Google traffic.

and then they cut our traffic, $10 million in revenue, all of a sudden went to $500,000, right? And I know Sergey, I know Larry, I know Marissa Mayer. I knew the people there. They had no problem, you know, cutting off our traffic and killing the company at that time. And so I have been through this dependency issue over and over again. And the mistake is when you have a dependency like that,

what you're supposed to do is use it to collect emails, to collect phone numbers, and to build direct traffic. But building direct traffic is hard as you are learning with some of You have to have actually something unique that makes people type semifor.com into their web browser and go direct. Jonah Peretti got addicted to it. He didn't understand he was outmatched by Zuckerberg and that the relationship-driven media business in New York where people don't shank each other is very different than how Zuckerberg thinks. There is no partner, zero partners who went to bed with Zuckerberg, who didn't wake up with their throat slit. There is no company he's acquired where the founders of those companies don't hate him.

So you have Jonah Peretti coming from the collegial but competitive New York media environment and then ramming into the Silicon Valley cutthroat environment where they don't even pick up the phone to tell you they've shanked you. They don't even watch you bleed out. They just shank you and walk away and drop the knife. These are mafia-based hits. They're not like done in a very like, you know, we're going to talk about it. We're going to negotiate it. I got shanked by Google, as did, you know, E-HOW and countless other content companies that were building content at scale. Yeah. And he got shanked by Facebook.

But by the way, so did Instagram, sort of WhatsApp founders. So did all the game developers, Zinga, Mark Pinkus. John just wasn't paying attention. And he had a dependency of, at the peak, what, 80% of his traffic was coming for social, I think? Yeah. And it was really the core idea of the business. Because I see we were totally aware of the dependency and were in various ways trying to build away from it, but it's really, it's so hard to play with your strength.

And not only did you do that, but you raised money based on that dependency and you sold that dependency and you raised at what, $2 billion from Indreason Horowitz? That was another critical error. I think it was, you were even raised at the valuation. Valuation was about $2 billion back then or something. It was, we raised from NBC at 1.7 was the valuation. And before that, Andreessen Horowitz. And so, you know, media businesses don't get that big.

Right. You know, blogs don't get that. that big. These things don't grow to the moon. You're lucky to get them to low six-figure values. Huffington Post 300, Gawker 150, but... Business Insider 300. Which one? I said Politico, a billion. There's been some inflation through the years. I mean, yes, political. No, but I totally agree with you. These are businesses that are appropriate for someone to think, you know, maybe I'll put in 10 million and take out, you know, 100 million. It's not going 50x. Yeah, exactly. And so that is the core issue, is that.

that people started to try to frame them. I think BuzzFeed tried to frame it, you and Jonah, as a tech business. Tech business, it was not. And so that's another critical era in terms of setting expectations. I think Nick was very good at just like, hey, listen, it's just a little business

that's gonna make, I think he made a couple million dollars a year in profits, maybe $10,20 million at the peak. Yeah, it was a profitable business that was doing all right, yeah. And for him, you know, being able to go, um, you know, on incredible vacations and be a celebrity and do something he loved every day.

and discover new talent. I think that was enough for him. What happens to BuzzFeed now? I understand Jonah has like some kind of superpower ownership over this. So it's like, yeah. Yeah, right. Jonah has, I mean, I don't, it's not, I mean, I'm not the expert on this either, but he has one of these structures where he controls the company.

You know, I don't know. What did your equity in, do your equity in BuzzFeed became worthless, I assume? Like all the writers there? You still are able to get some out? was, you know, it's spacked, remember? Right. So you were able to get some liquidity. Yeah.

Yeah. I mean, I think people were very, you know, not at the numbers that were once promised, but I'm not, but also, I think like a lot of, you know, like, I don't think most people, you know, I don't want to speak. Other services, people were very angry about it. I have obviously. No, the media. I mean, people were promised, you know, hey, listen, you're at the next Facebook.

You're at the next Uber and, you know, journalists who went to work there. Or even if people didn't quite believe that, there was, when BuzzFeeds back, there were execution issues that left people holdings. It was just the whole thing was... Which is what? Like they had six month holding periods and the stock just plummeted? Nothing that sophisticated. They had a...

They had to switch. The paper shares had to be transferred in some way. And during the weeks that was happening. The stock dropped and people were understandably incredibly upset about it. Yeah. I mean, there are lottery tickets, you know, stock options, everybody. And if you, your number hits, great. But your salary is kind of, you know, what this is all about.

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in your thing, but VICE became a $5 billion company this time and collapsed. Yeah. It was another train wreck disaster. And then you have Vox, which Jim Bank, who was an executive VP at AOL when he bought my company Weblogs Inc. And then he took the Engadget team and the joystick team and he created Verge and then started buying stuff and created Vox. Talk about those two companies.

Sure. I mean, two very different to the opposites actually. Vice, you know, an incredible brand that really stood for something and had people who loved it and kind of knew what it was in a way that like great brands do. but really was barely an internet company at all. Like, did not really have traffic, really had hype, an incredible at hype. And spun that hype into being a fairly successful television production company for a time. And did a big deal with HBO to produce a nightly news show.

But when that's a production deal, you know, that's like you think the internet business is bad, right? Like that's cost plus whatever percent. Yeah, you make 10 percent profit. And when the show gets canceled, you're in huge trouble and that's ultimately what happened to them. You got to lay off all those people. which is why people in Hollywood work on a project basis, not on a staff position basis. Yeah, and Shane took an enormous amount of money out of that company.

Matt, we reported a couple of weeks ago that it was more than $100 million. Some people think a lot more. You know, that's from a company that, you know, did not deliver any value to his shareholders and is now, I think, owned by, effectively owned by Fortress, which is the same. Private equity firm. Yeah, which was the senior most investor, yeah, but, you know, creditor.

And then Vox, you know, Vox, it's sort of interesting because Jim is much less ideological, much less and much less of a sort of a fixed vision of exactly how the internet ought to be, put together a bunch of different companies, managed them carefully. I think never had the kind of cultural upset. You know, this would never cut through culturally or sort of at the same exact scale, but is a solvent functioning company right now, which is, you know, I think is pretty impressive, actually. having worked with him and having bought my company, he's an executor, he is management, he is good at managing talent, he's good at managing a collection of brands, which, you know,

Matt, that is one of the hardest issues. Managing a collection of brands, it works against everything that the human brain thinks about consolidation, every MBA has been trained, which is, well, if you own curved and if you own joystick and gadget and Huffington Post and TechCrunch, well, they overlap in these different places. So make it Huffington Post slash video games, which is what they did to joystick. And I'm like, that's death for that brand. You just killed it. That'd be like people making Vogue a section of Vanity Fair or Vanity Fair or a section of Bon Appetit. It's not the cooking section. It's like for people who are obsessed with cooking. You don't break it into

sections like that. I think Vanity Fair was a section of Vogue for a time before they revived it with Tina Brown. But just imagine like then trying to reverse engineer that, which is what like this is what always happens. You buy a collection of brands and then you're like, oh yeah, we'll just redirect that brand over here and then it meant something to 10 million people

and now you keep 2 million of them and, you know, you just, it's hard for people to deal with media people. Media people are hard to manage. Yeah, it's not the world's most rational business. Talk about unions

and Gen Xers versus millennials and Gen Zs in journalism. How are they different? So I don't know, I don't actually totally buy the big generational, you know, sort of stereotypes, but I do think there was this dynamic in, with the, they came with the rise of the internet where sort of the old people who used to dominate Newsroom and's boss everybody around, suddenly were like afraid of the young people who knew all this stuff they didn't.

And there was this like basic dynamic of like boomers being afraid of millennials. And I always thought that like we of Jedd acts had this kind of, we were able to interpret. Like that's our, who we should be bilingual. Code switch, yeah, between, and, and I actually don't so much think that there's some profound generational cultural differences, just literally you had a generation who'd come up with these new tools and a generation that was like deeply freaked out by them and dislocated by them. I don't know. I mean, I think, you know, there are, you know, old media institutions that have, like the times right now that have bitter conflict with their unions and there are, you know, brand new ones like BuzzFeed that have bitter conflict with their unions. And I think, you know, that's more just sort of like a, fairly just how industrial relations works. Yeah, these unions are hilarious to me, because all it does is take what was a competitive environment for salaries and just normalize them.

So if you're an all-star writer who drives more traffic, the folks who now run Fox, BuzzFeed, Vice, whatever it is, that you decided to unionize, will now just point to the pay scale and say, yeah, you're here four years, here's your pay scale, and you'll move up to this level and then in six years you'll be at this level

and the back channel I heard from everybody was this is great. These idiots have now given us a clear path to control their wages and they've actually lost power. What's the back channel on these unions? So I think that like, I don't actually,

I don't think the unions are the only factory but basically what you're pointing to is this huge like tension in these kind of industrial era journalism organizations whether they're unionized or not, between what it's basically this very nice,

egalitarian newsroom culture that people like me came up and really loved. Actually, you don't want to be in a situation where you have stars swaggering around treating everybody else like shit. Nobody likes that. And that is part of the culture.

And then another part of the culture is that, you know, always and increasingly, the readers connect more to some journalists than others, and some work harder, but some don't work hard and they say they do really well. But for whatever, you know, but some generate more value than others. And you have these organizations that are used to operating with the, you know,

Jill Abrams said what said of The New York Times. Some star reporter wanted a raise. And she said, well, look, the New York Times is always the prettiest girl at the deaths. Like, ultimately, the brand matters more than the individual. Got it. And we're in an era when individual voices matter a lot. And it puts a lot of pressure around these brands. Correct in that regard?

I think, I think from, I think if you were at the New York Times, maybe that's true, but it is hard. But Mackey Heberman is a pretty great reporter and a pretty big brand. And by the way, the union contract, it's at the minimum they can pay. It does not set the ceiling. So it makes life more expensive for them. It doesn't actually tell them they can't competitively pay their stars. But it is a big challenge for these companies where, like in some very cold-blooded sense,

the value is being generated by a diminishing number of individuals. It's also hilarious. like, this perception I think people have is like the union's going to protect them. And these unions, like, you watch them tweet and they're like, we are flabbergasted by the layoffs today on BuzzFeed News. And it's like, you have no power union. It is an at-will employment environment in the United States. At any time, the CEO, God, King, or Queen can just take a sword and decapitate whoever they like.

Welcome to capitalism in America. And by the way, the star journalist can leave and start a substack or a podcast, and you can't stop Kara Swisher from doing that. You cannot stop. If there's anything we could agree on, just that you cannot stop Kara Swisher from doing anything. Pretty hilarious. She hates me now. I used to be friends, and now she hates me. Ever since All In, it's like she, like, unfollowed me.

That's just pretty sad for me. I've been friends with her for 20. Well, it wasn't like the intent. I mean, to blow past every other business and tech podcast. in the world. I'm going to stay out of this one. The, no,

I mean, it is problematic. I think if it wasn't as successful, it would be easier because people are like, oh, it's just like four guys talking, but when you become a top 10

or top 20 podcast, I think the jealousy comes out and people are like, that's, that's frankly how I feel about you, Jason. Really? No,

I mean, I am. I was like, I don't think so. No, I mean, what is semaphore and all we'd have to do with each other. Fortunately,

I don't have a podcast, so I don't have to be jealous of you. I think it's a crazy thing for anybody to think. That's why I'm always like, what's the knives out for? I don't get it, but. Yeah, just to go back to the labor thing, because, like, go back to labor. Yeah. I think, like, it was this moment when a lot of people in America, not just did journalism or decisions, felt really unsettled and we're looking for ways to feel more control over their lives. And so unionizing was a way to do it. It does protect you on the downside, right? Like, it means that you get more severance.

You have some predictability when you're getting laid off. That's fairly, you know, that's, that's, that's, I'm forgetting the phrase here, but that's, you know, better to have a great job. Yeah, I think these unions will, it's rearranging the deck chairs on the Titanic. It doesn't ultimately change the structure, these media businesses that are struggling. No. And it's actually the New York Times Union right now is like in where you want to be when you're a union, which is a pretty profitable company. They think executives are getting too high a share of the profits. The union would like more share of the profits.

That's like a nice place to be as a union. You're fighting over the profits. Listen, when you're a fund manager like me, you're trying to raise money, the hardest thing to do is get in front of those elite LPs, limited partners, right? How do you get those connections? Well, IConnections is how you get them. So check out IConnections. This is a platform to help connect and meet elite capital allocators. What a great idea.

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well, just screw it. I'll go direct to my audience. I don't need to be interpreted through journalists. I don't need to hire a PR firm. I'm just going to go direct. And these journalists know 10, 20% of the story, and I can just tell my side of it and give whatever percentage I want. And then maybe add in a little bit about access journalism and how that's changes.

Yeah. I mean, I've thought about this a lot, and I kind of, I mean, I kind of hate it. Like, I think that, I think that, I mean, there's sort of an obvious history here of, like, of journalism and journalists covering kind of the first wave of tech, sometimes in a very promotional way, ultimately being kind of embarrassed and feeling like they'd overdone it. And, and for a variety of reasons, to me, the main one being Donald Trump's election, turning incredibly adversarial. I think that tech founders, for reasonable marketing reasons, often like to portray themselves. when they get really successful as basically like political figures, philosophical figures, you know, men of men and women of like great principle where like fundamentally they're mostly entrepreneurs, like, or at least at their root, their entrepreneurs trying to build businesses.

And I think to some degree the media took them at their word and started covering them basically as political actors and like interpreting decisions as primarily like, does this help, you know, did Facebook make this algorithm change to help republics? And it's really like genuinely misunderstood. No, they did it because they were getting 3.3 seconds of engagement. They were trying to get 3.5 seconds of engagement. Like, to some really, like, I think there was a real misunderstanding and mistranslation. And then I do think, like, the sort of how did we get Trump produced a wave of journalism that looked for culprits?

And nothing. I mean, by the way, I think Facebook screwed a lot of stuff up. And, like, a lot of those stories were really good. Other stories, like iconic stories, like Cambridge Analytica in particular, were, were really like fundamentally not correct. And like that didn't really affect the election and got and went everywhere. And then I think founders and tech people both felt, you know, both rightly and sometimes wrongly.

Like sometimes they did bad things and got caught, felt really, really burned and misunderstood, developed their own kind of counter ideology explaining why journalists do what journalists do that was like from my point of view, like at least equally deranged. And like now we're in this place where like people are speaking totally different languages. Complete dysfunction. People are speaking for each other. I do too. And I think your take is exactly correct.

I think Trump broke a lot of people's brains and it made people feel disempowered. And people felt like maybe, I think that's where advocacy journalism really started to click in, which is we need to fight against this force of evil, which I do think Trump is an evil figure and a horrible human being. But I think that's when people felt like, like the journalists are not covering this down the middle or, you know, reasonably down the middle. And the stuff we were talking about before, I don't think it's like people were like counting the clicks. But one thing that social media really encouraged was you have a huge audience that's just waiting for the next installment of a story that they want to hear.

And there was this really real reward in telling narratives that particularly about Donald Trump or about whoever the designated bad guys were that made them seem worse. And like, you don't need to make, you don't need to feed the narrative to make Donald Trump seem quite bad. but a lot of the stories around Trump and Russia, like it just became this thing where every piece of evidence became more proof and it did not wind up adding up to all that much. I'll have added up something. I mean,

one of the depressing things at BuzzFeed that, like one of the best stories we ever did that totally bombed for traffic was soon after the Cambridge Analytica story. We'd gotten this early version of it from this Swiss media and I assigned a great investigative reporter, Kendall Tagger, to look into it.

She came back and wrote me a memo that was just like, there's literally nothing here. this is nonsense. These are con artists who are claiming to have affected the election and people believe them that it's not true. And I was like, awesome, publish the memo. That's a great story. We published the story and no one read it. No one wanted to hear. It didn't fit the narrative, right? And the narrative, you know, both sides seem to have a narrative. And let's be honest, if you pick a side, like the New York Times went further left, Fox obviously Murdoch only cares

about bottom line. So he went full right and kind of started the trend. Pick a side. you get paid subscribers. And in fact, the Washington Post in the New York Times did marketing that was like, if you want us to do

more investigations like this, I don't know if you saw those ads. Yeah, democracy dies in the dark. There was the right. And it's not, again, I don't think it's like,

they're not like having meetings saying, let's make stuff up about Donald Trump and they are trying to play it straight. Yeah. The poll of subscriptions

is certainly toward telling people what they want to hear. I mean, the poll of media is often that. Tell me about your new company and what your goals were and setting it up.

What's the origin story of semaphore and is this like you watch Jonah do this, you watch me do it, you watch Nick do it, you watch Bankoff do it, and just like, wow, what a great business. This is the highest return on investment business. What a great business for me to bag my head against the world or you just addicted to media like me. It seems like it's like not much work and like no money. Yeah, easy money. Sure. Just like creating SaaS software. Yeah, no, I mean, I guess. It's the worst business in the world. So why would you do it? It's a tough business. And I think, you know, I was at Politico and we started, started some blogs when you were starting

So I've been doing it a while. The one thing you, I mean, it's also, it's a slow moving business where the institutions move slow, but the audience moves fast. And so in these moments when things are changing a lot. And I had left Buzz, he'd really mostly just because I was burned out and gone to the time, said kind of a front row seat to everything that was happening as the media columnist there for a couple years. And you can just feel, again, like how much things are changing.

Like the whole social web is sort of going away. It's being replaced by, who knows what? Like right out of the Drunch Report is like, again, really influential, which is entertaining and wild. Weird. Yeah. And the one thing is my partner, Justin Smith had been the CEO of Bloomberg, CEO of the Atlantic. And one thing that I think I have eventually learned is that there isn't some like one neat trick to make news a great business, but like really smart, experienced business operators who execute really well, you know, are the kind of people you want to be in business with. And so, and I don't see myself as a business guy. And I think whatever flirtation I had with that

at BuzzFeed was not the best data. And so, yeah. And so it's a, so, it's a, so, it's a, so, I think we're trying to, like, I would say the two big things that drive, if you ask people, like, are you happy with the news you're getting? The answer is mostly no. I think the things that drive people most insane or that they feel totally overwhelmed, but just like the sheer amount of incoming. And then sometimes they don't really know who they can trust. And aren't turning to like faceless institutions. They're looking for individual journalists who know what they're talking about, who will tell them, deliver them facts. And also try maybe read a lot of what else is out there and put it into one place for them. And so our model is to

sort of build around, like Liz Hoffman, a great finance reporter, when he was really the best Wall Street reporter at the Wall Street Journal, brought her in Ried, who broke the Lance Armstrong story in his day. Yeah, I agreed. Covering AI primarily out there. And, you know, these are experts on the subject who can break news and also can tell you what they think, but might be wrong about what they think, and they're going to include other voices and other points of view.

That's the basic model. And we also think there's a big global opportunity for this. These are sort of like totally global issues. And the best stories, COVID, social media, the rise of the far right are global stories. So we launched in the U.S. and in sub-S.-Saharan Africa, obviously. Well, that is peculiar as the second market. So explain. You know, the U.S. is obviously the main investments.

I think like 60% of all revenue in the news business in the world is in the U.S. But I think we sort of thought about, yeah, making sure that we were plugged into the global stories at birth. and sub-Saharan Africa, particularly, it's like the fastest-growing demographically, fastest-growing economies, and really kind of wide open in some ways as a medium market. I was going to say, it is wide open.

That would be the reason to choose it. When we did a gadget publication, people were like, there's not enough news about gadgets. Yeah, oh my gosh. Yeah, we'll fix that. I know. It's really hard to remember that here, right?

There's not enough news about gadgets. We're like, yeah, that's okay, because we can do eight stories about the iPhone upgrade, you know, Peter Ross will figure out a way to break... Hi pod, I believe it was. Well, yes, I mean, man, the stories I could tell you about Engadgett fighting with Motorola and Steve Jobs, I mean... It was crazy. I don't hear that name in a while.

Yeah. Let's talk about news media like broadcast TV. Tucker Carlson got fired, Don Lemon got fired. I guess that was kind of coincidental, but what is the theme? here of these talking heads and broadcast media versus say podcasting where subjects are going direct. Priy Braha has an incredible podcast. I pay for it, Cafe Insider, and then he just stay tuned to and Prit. He's also like comments on CNN, but I get two hours of Prit a week. I'm good. I like to go direct and hear from the sources that have publications. I find all this like MSNBC,

Rachel Maddo, Tucker. It's like all nonsense and screaming and just dumb. But what's going on there? Because it does seem like CNN is trying to pull itself to the middle. And then Fox seems like it's at a crossroads and this $800 million settlement. How do you interpret each of those specific news channels? Fox and CNN. So there's lots of very specific tickey-tacky internal politics at play. But the biggest picture is that the same stuff that I think we were talking about before,

this sort of era where what seemed to work was the loudest shouting or the most intense, pandering, or, you know, is kind of over, and I think, you know, advertisers hate it. And I think that's probably weighing on Fox in particular as well as on CNN. But also... Explain that a little bit.

I'm packed back. You know, Tucker, if you watch Tucker Carlson, you were getting only direct-to-consumer advertisements for pillows because brand advertisers just couldn't feel like they couldn't be associated with him. Or does it want to be doing a commercial in between some discussion about

trans rights in January 6th and whatever bitterness because they don't want to lose half the audience. Which race has higher IQs? Yeah. Yeah. Yeah. Stuff that was way, and Carlson was really unusual and that he was taking this Fox audience and sort of leading them out into more fringy stuff. Most of Fox is Republican people telling the Republicans what Republicans should think. And Tucker had caring about whether Republicans win elections, by the way, which Murdoch cares about.

Tucker, I don't think really cared about that. Like, he was off heading some other place. to the far right. And yeah, and I think in a way, this is in both cases, kind of big corporate media like pulling back toward the center,

whatever that is. But the center is driven because of advertising. So if you want to understand the media business, you must understand incentives. Incentives matter. The incentives of subscriptions

are a one category, and the incentives of advertising are a couple different categories. If you go too far to get, If you go far and you get a big audience, you can get great advertising until you break it because you did stunt journalism or stunt opinion that's too edgy and then you lose the advertisers. Or great truth that they can't handle, right? It's not so, you know, like if you break big investigations that are also too edgy, that can freak out the advertisers. It's complicated.

And cable is super weird because most of them, I mean, their most stable revenue stream are these affiliate fees, which are basically subscription. that come from the cable carriers. So it's a, yeah, but it is, I mean, it feels like it's all part of the same trend. And I agree with you toward basically, I mean, one of the really interesting things about the podcast market is, saw some data yesterday that I think the biggest voice in audio is Joe Rogan. And among people who say they have a favorite podcaster, which is a subset of podcast listeners, 5%. He's their favorite.

And that's a very splintered market. Yeah. You think about radio and Howard Stern. You think about TV. They're much more consolidated. And I think it is of where people are tired of this huge wide open space where we're screaming at everybody else and looking for voices that they feel like they connect with and contrast.

But that's probably at a smaller scale. Well, it is like, I think it's a mid-tail, if you look at the long-tail concept. I think it's the mid-tail that is emerging as super viable. So, yeah, back in the day, you listen to Rush, Howard Stern or Don Imas, if you were in New York, or like maybe Zee Morning Zoo, whatever. Now, now it's like you open up your podcasting app and you go to health and wellness. The top 200 are all viable, continuously published, reasonable podcasts. You go to finance or tech, you know, like there's a bunch of really reasonable great tech

podcasts that all get 10,000 to 250,000 listeners each week. And you can have a sustainable mid-tale. In fact, Semaphore is a mid-tail company, right? Like, you're not displacing the Wall Street Journal, nor are you displacing an individual sub-sact. In our dreams, but yeah, no, not right now. And right, and we know, and I think that, like, we're trying to find people who really love what we're doing connect to, and it's not going to be everybody in the world, for sure. And I think people are tired of sharing Twitter.

Everyone is tired, slightly tired of sharing these huge public spaces with everyone else in the world. It is definitely collapsed upon itself, I believe, is, like, what makes you successful in media, I think if there's a theme to this podcast in our discussion, is like, be careful what's made you successful because as you continue to dial it up, it can then crush you, right? The strengths that you have, you know, whether it's understanding the Facebook click streams for Jonah at BuzzFeed or Vice understanding like what HBO listeners want and doing Vice TV and this kind of stuff, and then you do too much of it and you got to build a huge staff and just you collapse on your own weight. Media businesses should be boutique and should be owned

by the principles. This is the conclusion I've come to after 25 years in the business. I will, like this week in startups makes millions of dollars a year. I'm never selling it to anybody and I'm not trying to make, I'm not trying to have it make tens of millions. All would make zero dollars, but it helps me raise venture funds and gives me an incredible flow of founders who want me to invest in their companies.

Like, that's what media companies do at their best is like, stay medium size. Don't be hypergrowth, right? Like that's the, I mean, look at yourselves. You guys raised a ton of money and it blew back on you. Well, that was a very, very, we're talking about San Bank.

Our mutual friend, Sam Bankman, Free of here. Oh, gosh. Yeah. Yeah, I mean, that was obviously an unusual situation. What we didn't do that we actually, and we did raise, you know, I thought a good amount of money, but we. 25 million or something that's a report. $25 million. I mean, that's unbelievable.

I saw the knives come out for that. Man, Karas Swisher was upset about that. A lot of people were upset about you raising that much money, but you raised that a moment in time. We raised it. We also raised it from, we didn't get to take any venture money. And I think like we didn't tell anybody that we were going to get them a thousand X return in four years or that that was a plausible path. We told them we'd run a good profitable business. And we saw a path to being, you know, really good, growing long-term business, but not, I agree with you.

Not that kind of explosive idea, you know, sort of tech company, basically tech company model where you can scale without more people. The media business does not scale, uh, literally. It scales in a linear fashion. You can be smarter. You can be more efficient. There is a lot you can do. But it's not Facebook. It's not Facebook.

Well, let's put a pin in the Sam Bankman-Fried thing. Yes. You put $10 million in. And that was a big portion of your cash. Yeah. I guess you have to give that money back if the courts tell you to. And I think you've been pretty upfront and transparent about that. Any lessons there or is it just bad luck?

I mean, you get a group of investors and the biggest check. happens to be. I think the lesson is you don't raise from one, you don't, you don't, you know, take that much high, I guess, not that I've planned to have a sort of a career startup guy

or somebody you should take startup, lessons from particularly, but like, it did seem in retrospect, unwise to take that high share from one guy. And that we obviously just scrambled to a place. 40% of your raise came from one person. But,

you know, I know how these conversations go. When I raise money for Weblogs, Inc. Mark Cuban. You don't say no, right? Well,

I mean, you're raising money. You're not inclined to. Yeah. Well, Mark Cuban put it. a hundred, then he has to put in 200,000, then he has to put 300,000 in. And that's how we seated it. And he was excited. And we had one investor, you know, and he owned 5% of the

company, and it did great. You know, we returned. And that came out great for everybody. And yeah, came out great for everybody. But, you know, like, I saw it happen. I was like, if Sequoia and Tiger Global and all these other major players don't know that Sam Bankman Freed is running a fraud allegedly, or apparently, pick the word you choose audience, allegedly, obviously, you pick any number of words. I know how to phrase this when I can sue myself,

but I just say that's a bad beat. You get an investor, you know, like, and they turn out to be a criminalist. That's not your fault, but it is definitely, that definitely impacts your plans, right? It feels a little bit like

getting struck by lightning, yeah. Well, you, you, I guess, actually, if the courts asked you to give what remains of the money back, great, but if you've deployed it,

then they just get equity. in your company, so they could just have the core, I think the credit is on the equity, yeah. I think we've said what we were planning to give the cash back. Yeah. That's what we've said. Yeah, but I think the, yeah, I mean, it's the I was not. I would say we were fortunate that we had a pretty strong launch.

And so that put us in a position to replace them. I think it would have been, you could imagine a situation in which we stumbled out of the gate. Oh, you found people to invest in that. And then suddenly, you know, had, that this sort of could have been a really bad situation. How many people you got working at 7-4? About 50. 50's a big number.

Whoa. It is a big number. That's a million dollars a month in Byrne. That's a big number. You know, the thing that's totally different about this business from other, I mean, it's like limited interest. The news business is not like the sexiest topic in the world. But at Politico, which was very successful in the end, at BuzzFeed News, which really, you know, was odd.

In both cases, we had to have a theory about what people wanted to read. and we were journalists or content people but not experienced news business people. Not only did we not launch with real, with a lot of revenue, we didn't even launch with like a strong theory of what the business would be. And I think part of the reason we launched

with a large hour of people is like half those people are on the business side and we're launching with a lot of revenue and servicing the revenue. And, you know, Justin, it's one of the great media business operators hired, like the best revenue person from the New York Times advertising and events right now.

Got it. And subscriptions? Not yet. I think we just didn't want to bite off more than we could chew. We will. Events is an okay business. You can make some... I did events my whole career and they're fun. I'm loving them. Yeah, they're fun. People really like... It's a funny moment, I think. I think it's this sort of COVID bounce back thing. People have been like... The event's been great for us. I mean, we did the All-In Summit last year and it was just like number one. You like to show up. Yeah. I mean, it was crazy how quickly we sold out $7,500 tickets. Like, boom. It's sold out. I mean, they made millions of dollars in revenue. You know, like just crazy.

or listen, congratulations on the book. I can't wait to read it. I get a mention in there, hopefully it's not like too spicy or you don't elbow be too hard. I think it, no, no elbow,

but I do think it may partly be in the context of one of your great investments in the company called Ratter. Do you remember that one? Yes, I did, yeah. Yeah, yeah.

This is before all the stuff came out about it. Oh, yeah. No, it was sort of, it was when it still seemed like the wind was at the back of that.

I thought it was a very interesting idea he had, which was. Brilliant, talented guy. Yeah, and this is before all the stuff had come out in his famous testimony. Yeah. And I was like, Brader's like a really interesting idea. He wants to do investigative journalism.

And he's going to put out like, he had a very great concept for putting out bounties for stories. Yeah. Not bounties as in like steel documents bounties. That would be illegal. But who would like, here's a list of stories that we want to cover. And they would just email it. So instead of having a staff, he would just email his stringers and say, here's four stories we're curating. Anybody want to do them for $1,000.

And I thought it was like had a really good idea there. Me and Mark Cuban had put a little bit in. Not a lot. I think I put $2.50 into it or something from one of my funds and you lose, whatever. What happens with Nate Silver? He's super talented. Yeah, well, I mean, he managed to talk about kind of great media negotiations. He managed to, he basically was hired by ABC and the Huj acquired his company, but also

merely licensed his models, which are the heart of 538. And so I think he'll likely license them to somebody else. and, you know, keep gambling. Keep playing poker. He plays poker, yeah. Play poker with it. He's really good poker player. Yeah.

Listen, continued success. I think we did a good job in our hour together. Yeah, it's good to see. Anything we didn't cover that you wanted to cover? No, I'm feeling good. Just so I appreciate. I appreciate your checking a look at the book. Yeah, yeah, yeah.

I read it. I can't wait to read it. I lived it. So do you do the audio book yourself? You know, I read the first page and the last page, but I just couldn't face reading all my words. Like, I just thought I would just hate myself too much. Big mistake. You got to read it yourself.

Everybody in the age of podcasting wants the principles to read their book. Brutal. Who is the publisher? Penguin Press. Okay, yeah, Penguin is good. A lot of the publishers don't want the authors to read because they think they're not going to be... Professional actors could read better. Yeah, it was more just my insecurity. It's not that hard. I did mine. And you just have to learn how to

when you read it sentences that you were like I hate this sentence I can't believe I wrote it this way you start basically editing in the room and they're like you can't change that I was I know that I just knew I would lose my mind and that's what I didn't lose my mind

to a certain extent but what you have to do is you because of this sinking that Amazon does between audio books and ebooks now where you if you buy both when you're in your Kindle it highlights the word I'd be like

So if you're talking to your VC and they'd be like, talking to your venture capitalists, and they'd be like, okay, if you talk to your VCs and like, talking to your venture capitalists. And it's like same thing. VC venture capital is like, no, you have to say venture capitalists because that's what it says here. Because it's syncing with the text.

And so it's a bit of a rigmarole. But continue with success. Everybody buy the book. And we'll see you all next time in this week's startups. Bye bye. Thanks so much, Jason.