By now, you've probably heard that BuzzFeed raised $50 million in new venture capital from Silicon Valley megafirm Andreessen Horowitz, valuing the plucky web company at a formidable $850 million. There are a few interesting nuggets in the funding announcement — like the fact that BuzzFeed's video division will start producing full-length films, and the fact that the company's new BuzzFeed Distributed unit will make "content that lives entirely on other popular platforms," cutting out BuzzFeed's website altogether.
But the key to BuzzFeed's fund-raising prowess can be found in this sentence, spoken by investor (and new BuzzFeed board member) Chris Dixon: "We think of BuzzFeed as more of a technology company."
In that sentence, Dixon tells you everything you need to know about why Andreessen Horowitz decided to rain money on BuzzFeed and not another media property. Media is a poisoned word in today's tech landscape. It connotes old, money-losing print publications, and as David Carr points out, the investor class hates those, which is why media conglomerates are ditching them as quickly as possible. Even "new media," the buzzphrase of the mid-aughts, is dicey territory.
BuzzFeed is certainly a new media company, even though it does have a certain amount of proprietary technology that has helped it grow. (That proprietary tech remains mostly a mystery, but presumably has something to do with capturing the social sharing habits of users.) Its biggest moneymaker, so far, has been native advertising, the now-pervasive practice of allowing brands to create marketing copy that looks like a staff-written post. Native ads are the current darling of digital media, and BuzzFeed's dominance is the main reason why.
But no self-respecting tech investor would fund an ad-based media company in 2014, no matter how impressive its back-end operations are. So "technology company" it is. It's the same semantic sleight-of-hand tech VCs used to justify investing in Blue Bottle Coffee ("Blue Bottle Coffee isn’t just about coffee drinks; it’s about so much more") and the Melt, a Bay Area chain of grilled-cheese restaurants. ("To be sure, the Melt is a tech company in addition to being a restaurant.") Partly, this is a pragmatic move; by virtue of the agreements they make with investors, tech VCs are limited in the kinds of investments they're allowed to make – a VC normally couldn't use his LPs' money to, say, invest in coal mines – but if the technology is brought to the forefront ("it's not a coal mine, it's a platform for crowdsourced mineral extraction!") the desirable company is suddenly in bounds. And partly, it's a desire to make investments appear as grand and forward-looking as possible.
The premium placed on tech businesses is why so many websites now play up the magical properties of their CMS (content management system; the technology platform on which all editorial websites sit) as much as the journalism it enables. Vox, Vice, and Gawker know that if you want a tech-company valuation, you can't come to the negotiating table with a media-company pitch deck. And BuzzFeed founder Jonah Peretti, who understands the VC mind-set better than most media moguls, has been adamant all along that the back-end is what matters: "We're a tech company that presents ourselves as a media company, as tech is something people don't understand as much as great stories," Peretti has said. Andreessen Horowitz, at least, is buying the line. The latest fund-raising round, as Peter Kafka notes, values BuzzFeed at something like ten times trailing 12-month sales, a multiple more reminiscent of Facebook than the Times.
Lest I come off as a hater, let me point out that investing in BuzzFeed could be a great idea for all kinds of reasons. It's a money-generating traffic behemoth that is producing good journalism. It's just interesting to note the extent to which the company's new investors feel compelled to distance themselves from the economics of even the most successful new media companies. When newspapers start calling themselves "high-latency content distribution platforms," you'll know they've gotten the message.