[justboxing]

I think the idea of complex algorithms is overplayed. For instance, ViralNova.com was/is a click-baity site very similar to BuzzFeed.

It was started by a single hacker like most of us here on this forum, with 2 part-time writers. Initially it was just a wordpress blog, that he later turned into a custom CMS because wordpress is so inefficient and kept crashing when he had spikes in traffic. Scott (founder) sold it in 18 months for somewhere around 80 Million $.

Source: http://www.businessinsider.com/zealot-media-buys-scott-delon...

> For a while, ViralNova was a one-man startup run entirely by DeLong and two freelance writers. Together they were able to grow their website to Buzzfeed's size and scale — about 100 million monthly readers

Doesn't this mean that BuzzFeed has too much "fat" ( in terms of employees) that cuts into their profits?

Thoughts?

[imjk]

First, I'll start by saying that, personally, I'd rather run a ViralNova than a Buzzfeed. However, to answer your question, the reason that a company like Buzzfeed would add that many more employees is because of the idea that the economies of scale would work in its favor. Let's make up some numbers and say with two employees, Viral Nova was doing $20MM. The idea is that with 100 employees, they could potentially grow to $100MM and the incremental cost of those employees at say a $50K average salary would only be an additional $5MM. And then you add another 200 employees and add another $100MM in revenue for only another $5MM in salaries. Add 500 more employees and you get to $500MM in revenue, etc. Of course there's other overhead costs like office space, etc. but the incremental cost of growing those aspects of the business become less and less compared to the revenue growth. Obviously in this case, the revenue growth didn't scale to the level that they hoped for, but that's the principle behind the growth in employees. There's also many other social and cultural factors as to why you would want to build a Buzzfeed versus ViralNova that could be a full essay of its own.

[marknutter]

Which completely ignores the fact that after a certain point as you add headcount you often deteriorate productivity and communication.

[imjk]

Perhaps the job is to find that point, and they found it. Or perhaps they're nowhere near that point and the management team just did a shitty job scaling the business.

[loader]

Scott started VN with a very small crew, he shared a picture once showing how often he was eating takeout between work sessions, I wouldn't be surprised to find out he was putting in 12+ hour days initially. Leading up to the eventual sale the company grew quickly though. He's been creating profitable sites for years and VN was just the next evolution. The key difference was seeing the potential in taking VN further then just a site run by a couple of people.

I've been told the change was when he hired an executive team to go after bigger ad buys and to shape the business to be more then just a small group operation.

I've been reluctant to ask him personally about the details but this is what I've put together talking to acquaintances. Say what you want about VN, Scott is a top notch guy that has hit it out of the park many times.

[majani]

It highlights one of the biggest issues in tech today. Buzzfeed is one of many tech companies that really should just be a fun little mid sized company that makes enough to go around, but in the end has gotten caught up in the Silicon Valley hype and is biting way more than they can chew with pumped up valuations.