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Imagine for a moment that you're a venture-capital investor.
You spot an entrepreneur who built a massive audience on social media by posting attention-grabbing content after studying algorithms and trends. They've started making lots of money from advertising and brand deals. They're even experimenting with launching their own products.
Sounds like YouTube's top creator MrBeast (Jimmy Donaldson), right? It also sounds a bit like BuzzFeed cofounder Jonah Peretti, says Sam Lessin, general partner at the VC firm Slow Ventures. In a recent post on X, the investor said MrBeast's growth story closely mirrored that of BuzzFeed, which also cracked the code of social-media virality but ultimately fizzled out.
"This is literally the same story all over again," Lessin told Business Insider in an interview.
What do MrBeast and early BuzzFeed have in common?
Both built large followings on social media by posting viral, general-interest content, Lessin said. Both are reliant on platforms to reach their audiences, which can tweak their algorithms on a whim. And both post content that is relatively easy to imitate and attracts a broad audience instead of a niche community of fans, he said. That combination can be tough to monetize in the long term, as BuzzFeed has learned. Its stock price is currently trading around 90% below its 2021 public debut.
"BuzzFeed was wrong to believe that you could growth hack your way to a valuable audience, and that audience, if it was really big, would be really valuable," Lessin said. "If it's really broad and big, but not specific and high spend, it's not valuable, which is partially what has collapsed them."
Lessin argued that for creators to build a lasting business, they need to specialize in a particular content vertical, attract a dedicated audience of fans, and then leverage their platform to sell an outside product or service that generates meaningful revenue. That type of more niche creator is exactly who Slow Ventures is targeting as part of its creator equity investment program.
"Media is great, but candidly, from a venture-capital perspective, it just doesn't provide the return," Lessin said. "Media is an input to the system. It's important. It's about credibility building. It's about the authentic brand. It's about having a relationship. It's not how you monetize."
MrBeast seems to understand this. He's made plays at selling a variety of products outside YouTube, including his burger brand and chocolates company Feastables. BuzzFeed has similarly dipped its toes into products with its Tasty line and Hot One's sauces, though neither product was a runaway success for the company.
Lessin's viewpoint on this particular point is shared by some other creator-economy investors, who say startups in the category need to leverage creators as marketers for other businesses, not necessarily as a product onto themselves.
"I think of the creator phenomenon as a very kind of broad through line across a lot of different verticals and sectors," Rex Woodbury, founder and managing partner at the VC firm Daybreak, told BI earlier this year. "The venture-scale generational companies are, yes, creator companies, but they're also typically fitting into another bucket."
The MrBeast-BuzzFeed comparison isn't a perfect analogy.
Creators have taken on a much bigger role in the broader media ecosystem since BuzzFeed first rose up on Facebook virality. And there's no doubt that MrBeast will comfortably make a gobsmacking amount of money in the next few years from YouTube ad revenue alone. Facebook abandoning media was also a particularly bad break for BuzzFeed (and other digital-media companies of that era).
But MrBeast's team would do well to consider what lessons it can learn from BuzzFeed's fall from a dominant social-media player to a much smaller media company.
MrBeast "did all the things that BuzzFeed did effectively in its era," Lessin said. "It's so competitive that it's hard to stay on top forever."
A spokesperson for MrBeast declined to comment for this story. BuzzFeed did not respond to a BI request for comment.
