Kenneth Lerer, a prolific investor who helped found HuffPost, has stepped down as chairman of BuzzFeed, the viral-happy website that has lately experienced turbulence after a sharp rise in prominence.
Lerer’s departure, which was first reported by Axios on Tuesday, was confirmed by two people with knowledge of the matter who declined to speak publicly. His investment fund, Lerer Hippeau, has not altered its stake in BuzzFeed, the people said.
A BuzzFeed spokesman declined to comment.
The immediate implications of Lerer’s departure for BuzzFeed were unclear. Jonah Peretti, the site’s founder and chief executive, has been the site’s principal leader of late.
BuzzFeed has struggled in the past few years after a period of significant growth. The bumpy ride has coincided with a broader reckoning for digital media outlets confronting hurdles like the increasing dominance of Google and Facebook in the online advertising market.
In January, BuzzFeed laid off 15 per cent of its staff, including dozens of journalists at its money-losing but prestigious news division, whose employees are now locked in a standoff with management over their efforts to have a recently formed union recognized.
BuzzFeed is among the new breed of digital outlets – others include Vox Media and Vice Media – whose popularity attracted the interest of established media companies that made major investments in hopes of cashing in. NBCUniversal pumped a total of $400 million into BuzzFeed and $200 million into Vox.
The challenging environment for online ads has decreased the likelihood that such bets will pay off. The Walt Disney Co. recently wrote down its investment of more than $400 million in Vice, a sign that Disney does not expect any return on the investment.
In 2017, BuzzFeed fell far short of its revenue goal of $350 million, with sales flat at about $260 million, people with knowledge of the matter said last year. The poor results prompted the company to push off a public offering that had been planned for late 2018. The company is now unlikely to pursue a public offering and may instead seek a sale.
By diversifying its sources for making money – including selling branded cookware at Walmart stores and taking on banner advertising – BuzzFeed was expected to surpass $300 million in revenue last year. The company now hopes to be profitable by next year at the latest.
Lerer, a former AOL executive, has deep ties to the media industry. A one-time consultant to MTV, he was also a founder of Robinson Lerer & Montgomery, a large public relations firm that was acquired by the firm then known as Young & Rubicam in 2000. He was a member of the Viacom board until last year.
In the past decade or so, Lerer, 67, has been part of a wave of entrepreneurs making investments in digital media organizations. In 2006, he, along with Peretti and Arianna Huffington, started the Huffington Post, which preceded his early investment in BuzzFeed.
In 2010, Lerer established a venture capital firm with his son, Benjamin, bringing Eric Hippeau, a former chief executive of the magazine publisher Ziff-Davis, as a partner the following year. In addition to BuzzFeed, the firm has invested in Axios, a newsletter startup created by Politico founders Jim VandeHei and Mike Allen, and Refinery29, a publisher aimed at women. It has also invested in Zuckerberg Media, a marketing business started by Randi Zuckerberg, sister of Facebook founder Mark Zuckerberg.
Lerer is also chairman of Group Nine, a digital publisher behind sites like The Dodo and Now This. The younger Lerer is Group Nine’s chief executive. He and Peretti have acknowledged the challenges facing publishers in recent years, especially the sway that Google and Facebook have over the online ad market.