Why politicians want to buy the news

In December 2020, in the relative lull between Donald Trump’s defeat and Jan. 6, 2021, a right-leaning biotech entrepreneur named Vivek Ramaswamy joined a call with two billionaire titans of the right’s battles over speech and technology: Peter Thiel and Elon Musk.

The subject was a plan to roll up a new tech giant that would be wide open to the speech, from extreme partisanship to vaccine skepticism, that had been pushed off platforms like Facebook and Twitter. The company would build a new cloud services alternative to Amazon Web Services, and swallow smaller startups like Parler, a Twitter alternative associated with American conservatives. Ramaswamy, his would-be partners suggested, could be CEO.

Ramaswamy discussed the previously unreported call with my co-host Nayeema Raza and me on our show, “Mixed Signals,” last week. “I briefly was intrigued by media,” he said — but, understandably, “I decided to go the direction of financial services as my next stop.”

But Ramaswamy’s presence on that 2020 call suggests his activist purchase of more than 8% of BuzzFeed last month didn’t come entirely out of the blue.

In our interview — you can listen to the podcast or see the full transcript here — Ramaswamy also dismissed critics who said he had no path to wrest control of BuzzFeed, whose dual-class stock gives its founder, Jonah Peretti, a majority of the voting power.

“This is a company that has more debt than cash. That debt comes due this December. So anybody who thinks that Jonah Peretti is the person in control of this business because some piece of paper says he has voting rights over the shares is delusional,” he said, suggesting that he could negotiate with BuzzFeed’s creditors to buy its debt and threaten to — or actually— force the company into bankruptcy and take control of it.

Ramaswamy also said he’d consider trying to take the company private. “Somebody who has basic intuitions of how those situations play out would maybe rethink the idea that Jonah actually has full control of this company.”

Peretti, for whom I worked from 2012 to 2019 — when he brought me in to build a news division that the company couldn’t ultimately afford — declined to discuss Ramaswamy’s bid. His public response has been limited to a cordial but skeptical letter and an offer to meet.

But he and I have been talking about the economics of media for more than a decade, and he agreed to let me quote from a text exchange we had last week on the broader subject.

Ramaswamy and Raza seemed to “think BuzzFeed disappeared with BuzzFeed News,” he wrote, after listening to our discussion.

“For elite audiences especially, adding news sharpens a brand and increases relevance,” he wrote. “Unfortunately News is an expensive way to gain relevance and probably not the best way to build value.”

People who talk about BuzzFeed’s site and app (as distinct from BuzzFeed the company, which owns several media brands) “don’t realize we have a profitable web/app service with a billion page views and millions of millennial women who love celeb news, quizzes, memes, and new AI games. The true populism in media is making entertainment content, not MAGA content :),” he wrote.

“We didn’t retreat from news entirely, we made BuzzFeed into an entertainment outlet that is becoming more like Snap, Pinterest, Reddit as we implement AI powered features. And we focused our news efforts on HuffPost as a destination. Combined with selling Complex and restructuring, we expect to see lots of improvement in our overall business because of these shifts.”

I wrote a whole book about the social news era, and I won’t bore you at too great length here with my BuzzFeed News post-mortem, or with a list of the mistakes we made along the way.

But Peretti is obviously correct that we and the investors in our generation of the internet wildly overestimated how big our business could get. We built a news division that brought BuzzFeed relevance at a cost we couldn’t afford, and failed to create a smaller, standalone news business. Peretti said he’s optimistic he can fix that with HuffPost, which “was built as a front page and destination and we’ve been able to use that loyal audience to create a profitable business.”

More broadly, however, his comments and Ramaswamy’s reflect an underlying conflation of the news and media businesses. In fact news is a tiny, tough segment inside the larger business of media — but one with outsized impact. And as I told Ramaswamy in our conversation, just as journalists often project political motives onto entrepreneurs, politicians often conflate media and journalism with pure politics.

Ramaswamy was right to reject a round of sneering from journalists lecturing him about equity structure. But his analysis of the media business was itself quite naive. His proposal for BuzzFeed — to turn it into a platform for video-makers across the spectrum, a kind of YouTube with a higher quality standard and commitment to editorial openness — describes a decade-long graveyard of startups, some of which make BuzzFeed look like a runaway success. Rumble, which adopted more or less this model, lost $116 million last year. The handful of exceptions, like Nebula, operate markedly different businesses and grew carefully out of the creator economy. (Ramaswamy was an early investor in Rumble.)

Ramaswamy’s own experience — making media that didn’t generate him money or votes, but which made him extremely relevant — doesn’t describe a business. It describes politics.

And that’s always been another reason to buy the news. The most interesting thing Ramaswamy said in our interview wasn’t about mere return on investment: “When you think about driving change to the private sector, there’s two sets of rails that really matter: communications and financial services,” he said.

Musk, who executed this maneuver on a far larger scale when he bought Twitter, has seen the company’s value sink as he moved it further from a struggling advertising business to a thunderdome for confrontational politics. But he also had the profound effect he sought on the American political conversation, helping to turn back a progressive wave and widening the space for a new, mostly right-wing populism. He got his money’s worth.

It’s less clear what the trade would be at RamaswamyFeed. The company’s stock is in the toilet — but you could always do worse! And the entrepreneur seemed unduly confident that he wouldn’t sacrifice the company’s main assets: a large audience at BuzzFeed and other properties that doesn’t have much interest in politics at all, and a big progressive audience at HuffPost.

But then, BuzzFeed is a lot cheaper than Twitter, and perhaps the risk of losing mere millions is worth the — political, attentional — reward.

A Free Press newsletter challenged Ramaswamy’s media dreams: “While Americans are understandably fed up with partisan media, is a party politician really the guy to fix the problem? It’s bad when Jen Psaki goes straight from the White House to a cushy gig hosting her own show at MSNBC. It’s also bad when a presidential candidate tries to fix the media ecosystem. A healthier political and media environment would be one in which politicians are politicians and the media is the media. Vivek—which team do you want to be on?” he asked.

We put that to Ramaswamy, who misunderstood the question when we asked him, but followed up in an email (included in the transcript):

“I see no philosophical problem with someone who aspires to public office becoming a publisher of content, or a publisher of content later running for public office. Our Founding Fathers certainly didn’t see a problem with that. Alexander Hamilton founded the New York Post. Thomas Jefferson or Benjamin Franklin would certainly count as a ‘publisher’ or ‘content creator’ in modern times — not to mention engineer, inventor, and entrepreneur too. They were polymath intellectuals who weren’t confined to the lane of ‘politician.’ I think we could use more of that Renaissance spirit in the class of people who lead our country today.”

• The most disappointing part of Ramaswamy’s BuzzFeed approach (to me!) was his scattershot criticism of some of the journalism, which we discussed in a section of the interview that didn’t make the pod: It read as though “somebody had sort of googled ‘criticism of BuzzFeed stories,’ a lot of it actually from the left, and almost totally at random,” as I said. It felt “facile,” particularly for someone who wants to employ journalists.
• The Information’s Martin Peers is unimpressed. The bid “should be seen as Ramaswamy’s way of reminding Trumpers that he is on their side ahead of the Republican convention.”