Why MrBeast could get into big trouble and become “BuzzFeed 2.0”

“This is literally the same story all over again,” Lessin said in an interview with Business Insider.

What do MrBeast and early BuzzFeed have in common?

Both have built large followings on social media by posting viral, broadly interesting content, Lessin said. To reach their audiences, both rely on platforms that can adjust their algorithms at their whim. And both publish content that is relatively easy to imitate and appeals to a broad audience rather than a niche community of fans, he said. That combination can be difficult to monetize in the long run, BuzzFeed has learned. The stock price is currently about 90% below its 2021 IPO price.

“BuzzFeed was wrong to think you could grow a valuable audience through growth hacking, 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 has high spend, it's not valuable, and that's partly why they failed.”

Lessin said that to build a lasting business, creators need to specialize in a particular content vertical, attract a dedicated audience of fans, and then use their platform to sell an external product or service that generates significant revenue. This is exactly the type of niche creative Slow Ventures is targeting through its creator equity investment program.

“Media is great, but from a venture capital perspective, frankly, it just doesn't give the return it needs,” Lessin said. “Media is an input to the system. It's important. It's about building credibility. It's about the authentic brand. It's about building a relationship. It's not about how you make money.”

MrBeast seems to understand this. He has tried to sell a variety of products outside of YouTube, including his burger brand and his chocolate company Feastables. BuzzFeed has also made its first forays into the product space with its Tasty line and Hot Ones sauces, though neither product has been a runaway success for the company.

Lessin's view on this particular point is shared by some other creator economy investors, who say that startups in this category need to leverage creators as marketers for other companies and not necessarily as products of their own.

“I think the creator phenomenon is kind of a broad thread that spans many different industries and sectors,” Rex Woodbury, founder and managing partner of VC firm Daybreak, told BI earlier this year. “The multigenerational companies in the venture-scale space are creator companies, but they also usually fit into another category.”

The comparison between MrBeast and BuzzFeed is not perfect.

Since BuzzFeed first went viral on Facebook, creators have taken on a much larger role in the broader media ecosystem. And there's no doubt that MrBeast will comfortably make an incredible amount of money from YouTube's ad revenue alone over the next few years. Facebook's exit from media was also a particularly bad blow for BuzzFeed (and other digital media companies of the era).

But the team at MrBeast would do well to consider what lessons they could learn from BuzzFeed's decline from a dominant social media player to a much smaller media company.

MrBeast “has done all the things that BuzzFeed did successfully in its day,” Lessin said, adding, “The competition is so fierce that it's hard to stay at the top forever.”

A spokesperson for MrBeast declined to comment for this story. BuzzFeed did not respond to a request for comment.