Full transcript: Media heavyweight Ken Lerer on Recode Media

On this episode of Recode Media with Peter Kafka, Ken Lerer came by the studio to chat about where media is heading. And he should know. Lerer co-founded the Huffington Post, worked at AOL and MTV back in the day, sits on the boards of BuzzFeed and Viacom, and invests in seed-stage startups through his company Lerer Hippeau.

You can read some of the highlights from the interview at the link above, or listen to it in the audio player below. We’ve also provided a lightly edited complete transcript of their conversation.

If you like this, be sure to subscribe to Recode Media on Apple Podcasts, Google Play Music, TuneIn, Stitcher or SoundCloud.

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Peter Kafka: This is Recode Media with Peter Kafka. That’s me, and we’re part of the Vox Media Podcast Network, talking to you from the Vox Media Auxiliary Podcast Studio. I think it’s actually a video studio, but it works for today. I’m here with Kenny Lerer. Kenny? Kenneth? What’s the best way to address you, Mr. Lerer?

Ken Lerer: Mr. Lerer to you.

Mr. Lerer.

I’m kidding. Ken or Kenny.

If you spend any time thinking or writing about media like I do, you’re going to encounter Mr. Lerer. I write about old media and new media and the way that those two things intersect, and you’re kind of the definition of that in your career, in terms of what you’ve done in the past, what you’re doing now. I was just going to read through your entire Wikipedia, but it’s a pretty short Wikipedia. It’s missing some stuff.

I don’t believe in editing one’s Wikipedia, for good or for bad.

Among other things Mr. Lerer has done in the past, he was a co-founder of Huffington Post.

I was teasing about Mr. Lerer, you know.

Yeah, I know.

Okay.

He is currently chairman of BuzzFeed, a major investor there. You invested in a bunch of media properties which your kids ran, which you’ve now sold to Discovery?

We didn’t sell to them.

A joint venture with Discovery?

They invested.

They invested. You’re on the board of Viacom?

I am.

What else am I missing? You were an early AOL executive, both prior to and after the Time Warner merger?

I wasn’t actually an executive until a little bit before the merger. I was a consultant for a while.

A consultant at MTV?

At AOL.

Yeah, no. You were a consultant at MTV at one point?

Oh, when I was four.

We’re going way back.

Yeah.

You started what was one of the bigger, more prominent PR firms, Robinson Lerer & Montgomery. Have I got the name right?

You do.

At one point, if you ...

This makes me very tired listening to this.

If you’re very old, you’ll know the name Michael Milkin, you used to do work for him.

This is so sad.

Now we’re done. We’ve done the entire life story.

Okay. Thank you.

The point of this was to give people who don’t know you — and they should know you — just a sense of the scope of what you’ve done, what you’re seeing, and why you’re here. So thanks again for sitting through the bio.

My pleasure.

You’re literally just yawning and falling asleep as we talk.

It’s okay.

I want to talk about politics first. Perk you up.

It’s depressing.

You’re a prominent Democrat. Prominent supporter of Democrats, prominent Obama fan.

Big Obama fan.

Just curious, because we’ll talk about media eventually, you’ve supported Democrats for a long time, have you ever thought about getting into politics yourself?

No, I’m much too shy and don’t have the patience. I’m probably not nice enough to shake hands with all those people.

You’re half right about the shy, right? I mean, your profession prior to becoming a wise man of digital media was public relations. So you were on the phone, you were talking to people, but you’re not sort of a glad-hander?

No, I’ve always pretty much stuck to myself and my family and a few friends. The company we had, Robinson Lerer & Montgomery, wasn’t a typical public relations company. It was a corporate communications company where we spent most of our time keeping people out of the press or keeping companies out of the press, not seeking press.

Or shaping the way the press talked about them, right? If they were going to be in the press anyway?

Well, helping the story become more accurate.

If you could see it, there’s a big smile on my face. You’re not a showy guy, you don’t want to be in politics.

No.

Did you imagine when you were starting off in PR that you were going to end up as sort of ... I’m trying to find a way of putting this without making you immodest, that you’d have the sort of position where you’ve got ... The reason I’m having you here is you’ve got tremendous insight into the way old media works, new media works, you’ve got a lot of influence, your relationships with things like BuzzFeed ... Did you see that path ahead of you? Or did you stumble into this?

No, I sort of stumbled into it. I didn’t start my career at Robinson Lerer & Montgomery. I was a journalist on Day One.

And you wised up?

I went broke. Sorry.

[laughter] ... Oh, by the way, among other things, you were an investor in Business Insider.

Yep.

I was an investor in Business Insider.

So we both did well.

We both did well. So congratulations to us.

I started in politics and as a journalist. I went back and forth a few times. I always was intrigued with media from either side, or from any side. So in the corporate communications firm we did, I learned to understand how stories were written and what went into them.

Where did you start off in journalism?

I wrote some pieces for Village Voice as a freelancer, and then I actually had a contributing editor job at New York Magazine.

Back when those were both things?

Well, since New York Magazine is still around ...

New York Magazine is still a thing, yes.

I won’t agree with you.

They do very good work.

But Adam does great work, I think they’ve been doing great work actually.

Agreed.

So Village Voice, and I wrote about politics. Then I was one of the writers who wrote a column called “City Politic” for New York Magazine for a couple of years.

So you got to see how the machinery works. See the inside of the sausage-making factory.

Yeah, I liked it a lot. Then, like I said, I was ... I had a contract to pay me $11,000 a year, then I said, “This isn’t going to work,” and I went to the business side and worked on the business side of New York Magazine for a couple of years. That was my journalism firsthand experience.

Then you wised up. I don’t want to go through your entire career, because again, you would walk out.

No, I didn’t mean to go through any of my career. I’m just saying, I’ve been lucky enough to see media from different perspectives, which has helped me think about it.

Sometimes when I talk to you or hear you talk or there’s a famous quote that’s attributed to you, I get the sense that you don’t have a terrible amount of respect for most journalists, that you think they are not very good.

No, that’s ... First of all, that’s a quote that is made up.

Yeah. This is the one in Nina Munk’s book about AOL. You can look it up yourself.

Oh, that I didn’t see. She didn’t write that. She picked it up, actually, from Jim Stewart’s book.

Okay.

See how you didn’t even say it — thank you — and I remember it?

Yeah, you can Google it.

It’s horrible, and it’s not true. Jim and I have since become friends and it was made up out of whole cloth and for those people who know me, I don’t talk like that. I don’t think like that.

The other thing it put in my head, I went and saw you do an interview with Michael Lynton, who’s still at Sony but now the chairman of Snapchat, a friend of yours. You were talking about the Sony hacking incident, and at one point, you sort of were encouraging him to be ... Basically, you were saying the press was irresponsible with the way they handled that.

No, I said were they.

Were they.

I asked him the question.

Yeah.

I have to correct you on two points before we keep going. I think you slipped in that I don’t have respect for journalists. I don’t know if you said that or not.

I got the sense sometimes that ... Then I qualified it some more.

Yeah, that’s totally wrong from every perspective. I can’t even ... I don’t want to get in a fight with you in the first five minutes of our interview, but it’s totally wrong. I can’t imagine why you would say that, so I take offense at that. Anything but. No. 2, I asked Michael what he thought. I didn’t give an opinion. So you’re wrong on both counts.

Okay.

Now we can continue.

Noted. It’s on the record.

I hope so.

Thousands of people will hear it.

At least a thousand.

No, more than that. We keep our numbers to ourselves. Beth is encouraging me to boost my numbers. I want to ask you about when you worked at MTV back in the day. You were consulting for them.

Yes.

Are there things you ... You were working for MTV back when MTV was a very, very big deal.

I was working for MTV on Day One, almost.

On Day One. So you saw the beginning of this thing that was a defining cultural media company for a decade or more. Now you’re on the Viacom board. Are there lessons that you learned at MTV or things you saw back then that are relevant now?

So, I didn’t know it at the time, because when you live through something it’s hard to figure out what’s important, but looking back on it now ... I’ve thought about this a lot the last couple of years as it relates to launching digital content companies: MTV was always about the brand. It wasn’t about an individual video. It wasn’t about an individual recording act. It was all about the brand. I remember around the office, the phrase that was always repeated was, “It’s about the brand.” Always went back to the brand. That’s the one lesson, my one takeaway from MTV, which is an important one which you ... If you forget about that, you have a harder time building a media company or a media property.

What do you think BuzzFeed’s brand is if we zoom all the way to the present tense? You’re chairman of BuzzFeed, helped start it.

Thank you for that. I forgot. Well, Buzzfeed is successful, I guess, for a bunch of reasons. Every company that’s successful is successful for a bunch of reasons. One of it is they’ve, Jonah has established a strong brand that ... I don’t know what the age is, I won’t put an age on it, but from high school up, people go to it tons of times and love the vapid to the serious and everything in between. It started out, I think, as a leisure brand for ex-demo ...

“Bored at work” network, I think Jonah would call it, right?

Leisure college, maybe? Like when you’re not studying. Obviously, they broadened that out an enormous amount over the last three, four years, building a significant news brand, a serious news brand. Today, it’s ... I guess it’s a combination of leisure and news.

Curious, I wrote a piece, I co-wrote a piece during ... I guess right before Trump was inaugurated, right around the same time. They published a dossier, the infamous dossier, and what I was curious about was sort of what the reaction was like among BuzzFeed’s advertisers, investors, people who are backing the company. What did people think about that idea? Because it put that company in the crosshairs. From what I can tell, reported, Ben Smith just basically went ahead and published it, so I think Jonah knew he was going to do it eventually. Did they talk to you about that or that kind of idea in advance?

They sometimes talk to me about some ideas in advance, but they didn’t talk to me about that in advance. I saw it when you saw it.

So when you saw it, you see that dossier and you got a sense of what that means, and it’s the beginning of the Trump administration, what’s your reaction?

My reaction was I would have done the same thing.

Yeah?

Yeah. I’ve thought about this a lot, obviously. So yeah, that’s what I told them when they asked me. But they didn’t ask me. When I saw it, they said, “So what do you think?” I thought about it for a little bit, and I said, “I get it. I would have done the same thing.”

So you know a lot of people, a lot of them work for establishment media companies, I’m sure some of them have come to you and said, “What are you guys doing?”

Some did and some said the opposite.

To the ones who said, “What are you doing?” what did you say?

“Who, me? I’m chairman. It’s not my publication, after all. Call Peter Kafka at Recode. He’s a know-it-all.”

Thank you.

It’s okay. Thought I’d just get you back.

But you know, you had grown-up publications, right? The New York Times, CNN saying, “You’ve crossed a line here. We appreciate the impulse here but this is not what you should do if you’re a responsible organization.”

You know all the arguments, I won’t go over them about ... Ben did a bunch of TV interviews at the time and explained why he did it, and I think it was a cogent argument and I get it. I supported it then, I support it now. I can understand why some didn’t agree with it. Let’s say the purists in journalism — and there are a lot of them and thank goodness — they didn’t think it was the right thing to do. But an equal number disagreed and thought it was. I’d say it was split 50/50, from the people who talked to me.

The thinking that you’ve been doing about it since then, it’s not you going back and forth, thinking, “Oh, maybe that wasn’t the right thing to do.” It’s you just sort of rolling it around in your head?

You know, I think about a lot of stuff all the time and I go back and forth and back and forth, and I think by myself when I’m sitting in my office. I’m comfortable with the decision.

Sometimes we talk about business here. There’s been two stories about BuzzFeed in the last couple of weeks. One just came out and it’s in Businessweek, so it looks like ... Obviously done in conjunction with BuzzFeed, so I’m assuming ...

I didn’t see it.

You’ll see it eventually.

Okay.

It says you guys are on track to do $350 million in revenue this year, looking for an IPO next year. Do you think this company will really IPOs next year?

I think it’s a combination of the macro markets and then the digital markets and then the BuzzFeed market. So it’s too early to predict what happens next year.

When you started this company with Jonah, did you think, “This is a company that I would like to run ... I’d like to see this go public at some point”? Or did you think, “Ah, this is something ...” You know, you sold HuffPo to AOL, that you’d have a similar exit like that? Eventually someone else would take this thing off your hands?

I guess it’s ambitious and arrogant to start a company on Day One and even imagine that I’m going to go public one day, so no, I never thought of that. I don’t ... Most of the companies I’ve started, I’ve started because of a passion, some kind of passion. I’ve never ... This is going to make me sound incredibly stupid, I’ve never sat down and worried about ... I’m not smart enough to know where it’s going to go. Most people maybe make-believe they are, but I know I’m not. So you have to pivot, you have to take advantage of the environment, you have to see what your strengths and your weaknesses are, and then you make decisions on the fly. But you don’t ... I’ve never started a company and thought, “Oh, wow, this is going to make me $1 million.” Never in my life.

It existed while HuffPo existed, right?

We started it while we had HuffPo, a skunkworks for Huffington Post to try out different products and projects.

I think sometimes people, maybe even you have described it to me as, “Well, we did this as a way to keep Jonah engaged and occupied and this would be something he could go do.”

No, no.

He was the former CTO and also a co-founder of HuffPo with you.

Yeah, I wouldn’t say to keep him occupied. He wanted to do it. He’s brilliant, and it seemed like if he had some good ideas that he could apply to Huffington Post, great, and why not?

So what I was getting to in my mind but I didn’t say it out loud is — since you sold Huffington Post for a bunch of money to AOL, it’s a big, successful exit for you — how does that affect the way you look at the next company you’re investing a lot of time and money in, BuzzFeed, in terms of how long you’d want to keep it to yourself, whether or not you’d consider selling it, what success looks like ... If you’ve had a success like HuffPo, how does that go into what you think about the next big project?

Let me talk generically and not about BuzzFeed.

Sure.

Because I’m more comfortable doing that. First of all, when you start a company, you have outside investors, VC investors, funds. Funds want to get out after five, six, seven years. Ten years is a long time for a fund to stay in. They start having LP pressure. So companies we invest in, similarly, to companies we start, you kind of think about a six, seven, eight year exit. But you don’t ... I don’t, ever, at the beginning think, “What’s the exit going to be?” If I’ve answered your question. Then as you get closer, you take a look at your options. Then you make decisions based on what you think the employees would like, and management, and the board, and like as I said before, the environment, and the economy.

Specifically, sometimes, what I think about you guys, BuzzFeed, what I think about BuzzFeed is the fact that you and Jonah — right? He’s the CEO, it’s his company — have been very successful already changes the way they might look at what happens to the company ultimately.

Okay.

That’s a good, non-committal okay.

Well, no, I don’t know. What was the question?

Eh.

No, what was the ... You didn’t ask a question.

Well, I did ask a question. You said, “I don’t want to talk about BuzzFeed.”

No, I didn’t say I don’t want to talk about BuzzFeed, I said, specifically, I don’t want to talk about BuzzFeed’s exit strategies. They obviously, you know, you could count it on one hand, right? You can go public.

Or you can sell the company.

Or you can sell the company strategic. Or you can buy your current investors out and put new investors in and keep going. Or you can sell your company to a PE firm. That’s, I mean, I guess that’s about it.

Yeah. I guess the question is, I’ll just rephrase it one more time. Do you think you have more options because you and Jonah have had success prior to this at Huffington Post? Or, put it another way, had you not sold Huffington Post for a bunch of money to AOL, do you think you would have already exited?

Yes, and no. To your two questions.

That is a fair answer. Now you’re smiling at me and I think you’re going to stick around.

No, no. I’m almost done.

All right. So we will hear from the sponsor. We’ll be right back with Kenny Lerer.

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Should we talk more about Huffington Post?

Sure. Whatever you like.

What do you think about that thing being owned by Verizon, which is now combining with Yahoo? What do you think the future holds for that company?

Well, I still have great affection for the Huffington Post since Arianna and I started it together, and it’s clearly gone through a lot of changes over the years. We started it, in my mind, to have a competitor to the Drudge Report, which seriously affected the Bush-Kerry race. At that time, Drudge controlled the internet and conservative radio controlled radio. My goal with The Huffington Post, Arianna might have had a slightly different one, was to create a digital content company that could help a Democrat get elected four years later.

Right. You were explicit about that.

I was. We were lucky enough to do that. We also expanded beyond politics, obviously, more quickly than I thought we would. Then, when the company got bigger after we sold it and went to AOL, I think that it lost some of its currency. Not anybody’s fault, it just got bigger and AOL was there. I don’t know the new editor, but I hear she’s fantastic.

She’s great. She’s really smart.

I’ve never met her. That’s what I hear. Every single person who’s met her says she’s a superstar. She’s got her work cut out for her, because now she’s with AOL and Yahoo and Verizon? Good luck.

Do you think that Verizon can be a good steward of a publishing asset fundamentally?

If they choose to be.

That’s interesting. Because there’s a bunch of folks, I know one of them, who are talking about, “We should build a Breitbart for the left in 2017.” Then one of the things I always think is, “Well, that’s kind of HuffPo.” Right? Do we need a Breitbart for the left? Does the left need a Breitbart?

So, what’s happened since The Huffington Post launched, besides what I said before, the whole business model has changed to distributed content. Huffington Post is by and large an old business model. I think that the left needs a digital content company that’s distributed, so the answer’s yes. The Huffington Post isn’t that.

So not just a big/left-leaning publication, but one that understands Facebook and how to get stuff out on Twitter and how to figure out Snapchat.

I wouldn’t launch a new content company now with the model of 2005 or 2010. You can’t succeed. You have to use the new model, which we did with The Dodo. My daughter did, rather, with The Dodo, and which we did with NowThis News. We’ve invested in a bunch of other ones with the new model and that’s the only way to invest in digital content today.

So you think there is a model, you understand what it is, this is how you work, and then the big, broad idea is generally to push yourself out to as many places as possible? And figure out a way to monetize when those things are viewed, engaged with off of your site? Off of your property?

I mean, that’s slightly inarticulate, but sure.

Yeah, well, that’s me, so give me the articulate version.

No, you got there. But it’s just not that simple.

No, it’s not that simple.

If it were, you and I could leave here and go start a new one right now. It’s very difficult to do and it’s not just “pushing your stuff out.” So in the traditional magazine business, there’s a way you treat your content and a way you don’t treat your content. There’s an image that you put on the cover which will sell X and there’s a different image for the same story that will sell Y.

Right.

Correct? So in digital content, there’s a way to create a video with the same substance, the same content that might be more viral and interesting on Facebook than not. Same with Snapchat. Same with Instagram. Same with Google. So it’s not just pushing your stuff out, you have to figure out what piece of content you want to create and then spend a lot of time figuring out how to translate into different social feeds.

Right. If it was just hitting the button and then sending it to eight different places ...

Everybody would be successful. Yeah.

No one would want to see that stuff. Speaking of things that aren’t simple, right? So now, this is one of the ones I think about. This is something that we talked about, I think, right when you were launching and because I’m inarticulate, I think was describing as, “Oh, this is a digital CNN.” But I think you guys had a different conception of what it would be too. I think more of a news organization than what it became, right? Can you talk about how you pivoted through various stages of that company’s life?

Yeah, so you’re partly right and partly wrong, because I still think part of it as real news. No, I think it is. So I made a bunch of mistakes when we launched NowThis News. For one, in hindsight, we were too early, and timing in business is ... I don’t know if it’s 51 or 99 percent, but if you’re too early, you run out of money. If you’re too late, it costs too much money. You need to nail it if you’re lucky enough to nail it.

We thought that we saw what was going on with digital video, and we thought we saw it exactly right and in fact, we were a year and a half too early. Luckily, we had enough money in the bank and raised enough money and I think did a follow-up that we were able to stick with it. So, that’s first mistake. Second mistake, we had great people working for us, but I made a mistake in that I hired traditional media executives.

Yeah, guys from CNN, I think.

Well, we don’t need to ... We like them, so ...

Yeah, but the point is, you went and hired people from traditional media organizations and then sort of created a new newsroom, essentially.

Bad mistake. It’s really hard for people to learn something new when they’re not 15. So we finally got it right. We hired the right people who were all in their 20s who didn’t grow up at ABC or NBC or CBS or CNN or any of those places, and then the timing caught up with us because it hit Facebook perfectly, etc. So it’s doing terrifically well now. We went from one Facebook feed to probably ... I don’t know how many we have now. I mean, I’m not involved day to day anymore. Probably eight or nine or 10. But our political vertical is doing exceedingly well. So we still do a lot of very hardcore news all the time.

But the model did change, right? You had people in a studio giving sort of a newscast.

Oh, no, we did that for about a week and a half.

Okay, that’s the part I saw.

Yeah, that worked literally for a week and a half. That was my mistake, but I covered that mistake immediately.

How difficult is it for you to see your own mistakes when it’s your own money and it’s a project like this that you started as opposed to just investing in something and someone else is running it?

Really easy. I question myself too many times during the day. Yeah.

You don’t distinguish between something you’re deeply involved in versus something where you just have a sort of passing interest in it?

No, no, I do. Obviously, when we make investments, you’re not the CEO, you don’t run it, and you have to know your place.

But you can see it equally well? It’s not that you’re blinded by the fact that you’re close to something?

Oh, no, I’m not blinded because I’m close to it. I see it better if I’m close to it. Sometimes, when you invest and you’re not close to it, you can’t see it. You miss it.

We’ve been talking about this, but I should be more explicit. In addition to the other things we’ve been talking about you doing, you also invest through a venture capital organization. It’s your organization, or ...

Well, I’m partners ... Lerer Hippeau. I’m partners with Eric Hippeau and my son Benjamin and Taylor Greene. Four of us, we’re partners.

You’ve what, raised a couple hundred million bucks, more than that at this point?

No, more than that.

Yeah. Seed-stage investing?

Seed, and we just did one to follow up on A rounds.

So I mostly talk to you if you’re doing something in media, but you’re not just strictly media for this stuff?

No, no, not at all. Media’s maybe 20 percent.

Mostly in New York, or have you expanded beyond that too?

I’d say 85 percent New York. I’m making that up, but we’re the most active VC in New York state.

Basically, if there’s a deal that’s happening in New York, you’re probably either in it or you looked at it.

Well we’re not in it, but hopefully we’ve looked at it or else we say, “Hey, why didn’t we look at that?”

I used to spend time when I talked to VCs saying, “Oh, are we in a bubble? Are we not in a bubble?” I stopped asking, because we got the same answer for years. They’d say, “Well, everyone else’s investments are bubbles. Not mine.” Do you spend time thinking about where we are in the market?

Not a lot. Eric spends more time thinking about it than I do. I think the important thing is to not be in a hurry if you don’t see what you like.

How much of this is you looking at something and saying, “My gut says yeah, let’s do it,” versus using your advisers, asking folks who have domain knowledge about something?

No, we always ask. Always.

So you’ve never just looked at someone and said, “Yeah, let’s do it.”

Yeah, I have.

How did those work out? Better or worse than others?

They worked out okay. There’s a lot of stuff that comes across that you have to get expert advice on, because ... I mean, I’m an expert in nothing, but there’s a lot of stuff that you just have to ask questions about and do a lot of due diligence and a lot of vetting. You have to vet the individual who brings it to you, you have to vet the idea. You have to look at what’s going on in the industry and competitive issues.

But I’ve never seen a company at the seed stage, or almost never, I have seen a few, that said, “I’m going to do X,” and did X. Part of this is a pivot. So a founder, if he or she doesn’t have the capacity to pivot, they won’t succeed. That’s really important, and you don’t know that when you invest initially. You meet enough people that you get kind of good at it, but if they can’t make that pivot, they’re not going to win.

“I know you’re headed in this direction, I also know you’re going to turn 90 degrees at some point and if you don’t, it’s not going to succeed.”

“By the way, those financials you showed me a year ago? They’re meaningless.” So when you take a look at financials at a seed round, I mean, they should make common sense and they have to add up and you have to use your judgment and apply your knowledge to it, but to think that those are really the financials of the company? Never.

Do you have an acid test for being able to assess an entrepreneur and saying to him or her, “Yeah, I think that you are going to have this flexibility,” or, “No, I can tell you don’t”?

I wish I did. No.

Save you some money?

A bad handshake is not a good sign. My dad taught me that.

That still works?

That still works. For me, it does. That’s not really a good test, but it still works.

Do you remember giving advice to Henry Blodget, by the way? Back when he was running what was then Silicon Valley Insider and then Business Insider? Because I remember him being really deeply influenced by two people, you and Nick Denton.

Oh, really? I didn’t know that. I didn’t know that about Nick. No, Henry and I talked constantly. Not daily, but weekly, and met all the time.

Had you known him prior to ...

I did, because he was an analyst.

Well-known Wall Street analyst, yeah.

With what firm? Merrill?

A bunch. Oppenheimer, and then yeah, I think he ended up in Merrill, yeah.

So no, I knew him when I was consulting or with AOL, and he covered AOL so I got to know him then.

Do you remember one particular piece of advice that sort of helped him succeed at Business Insider? Other than “Let Peter Kafka go”?

No. I love Henry. He’s done a great job, and I hear that ... Axel Springer bought it, I joined the board for a year and then I realized, “Well this is kind of silly. There’s ... Axel Springer owns it, why is there a board?” So I left.

Oh, there was a Business Insider board post-acquisition?

Yeah. I mean, you know, I was like, “Why am I doing this?”

Even I think that’s weird.

I love Axel Springer and Henry, but it didn’t make sense so I left. But no, they’re doing very well. No, no big advice. I just would ... Henry and I would really do deep dives all the time.

The reason, I think in addition to you giving him time, right, the reason he spent a lot of time thinking about the way that you viewed the world and the way that Nick viewed the world, those were the two successful digital publishing models at the time, right? Gawker and HuffPo.

Yeah, and like I said, I got to know Henry, so we were friends. We trusted each other.

Since we still have trust here, we’ll take one more quick ad break so we can hear from our sponsors. We’ll be right back.

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We’re back here with Ken Lerer who is still in the studio, so I’m going to take advantage of all I can. You know, I was trying to get you on this podcast, you said, “I don’t want to talk. What would we talk about?” I said, “Here’s one of the things I want to talk about. I want to get your” ... What do you think the world looks like to a big media company, to an NBC, to a Discovery, to a Viacom ... I’m bringing those up specifically because you were associated with all three of those companies, but you could make up a different name. You could put in Disney there if you want.

So the ... Those worlds are changing a lot and fast. Faster than I thought they would. The sand is shifting.

Faster than you thought they would even though you’re basically ... Your business model is based on the sand shifting? Or your thesis, right? As a digital investor and entrepreneur?

Well, so look, the two of us can agree that the world 10 years from now, that my grandchildren are not going to consume media the way my kids did.

Agreed.

Then so the question is, “Okay, how fast is that going to change?” I thought maybe seven, eight years a while ago. I think I’m kind of cutting that in half in my mind now. The cable-cutters are real and increasing.

Or the cord-nevers.

What do they call it?

Well, both, right? They’re either cutters or nevers, right?

Yeah, right. Nevers a lot, right? Facebook has effectively become as powerful as all of the cable companies were altogether in the 1980s and 1990s, operators, so ... Video coming to the phone. All of these pendulums have swung more quickly than I thought they were going to swing. That is not good news for the traditional cable networks and traditional media companies, and they’ve got to figure it out. It’s not dissimilar to what we saw when we launched The Huffington Post for print. Now you’re seeing it for video.

Right. This thesis, this is something that people have been preaching for a long time. For years, it seemed like it was, like you said, years off.

It’s not years off anymore.

Then it showed up really quickly. I’m sure you’re not going to tell me what Viacom’s going to do or Discovery, probably don’t know about NBC. Let’s do generically, Fox. Let’s just use them as a generic, big multinational media company. There’s lots of smart people who work at these companies. What does someone like a Fox do, because they can see this as well as you can? What moves do they have?

Somebody smart said to me, “It’s flying a plane and fixing it while you’re flying it.” It’s much easier to land the plane and bring it into the hangar and fix what’s wrong. You can’t do that. You have to fly it and fix it at the same time. So you have to A) say, “Okay, how fast is the sand going to shift and my business going to change?” B) “How fast and how effectively can I launch,” if you will, quote unquote “over the top,” right? And C) “How fast and how much revenue can I build around digital?” Because distribution first, content second and advertising third. That’s always the way it works. There’s a big lag time.

Still?

Still. Oh, sure. There’s a big lag time between building a content company and then having advertising follow it. You know, you need to raise enough money for it to catch up. So if I’m Fox or one of these other make-believe companies that we won’t have a name for, I have to do all three. I have to do all three things and it’s really hard.

I mean, the thing that all of those companies have in common though, right, is they have a business ... They have a giant business today. They’re usually very profitable, they certainly have a ton of revenue, and that revenue’s not going to fall off a cliff in the next couple of years.

So maybe we should look at this and say, “How old is the CEO?” No joke. If the CEO of X Media Company is 68 or 70 ...

Which most of them are.

He or she is going to say ...

“That’s someone else’s problem.”

“The next CEO’s going to figure it out.” Right? I’m serious about this. But if the CEO is 55 or 45, they’ve got to fix it. So you might be able to take a look at media companies and see how old is the CEO, and that might help you figure out how fast they’re going to have to pivot.

It’s an interesting way of looking at it, right? Because if we’re talking about Fox specifically, Rupert, not young, but basically is starting to hand the company over to his two sons who are in their mid-40s and presumably it’s going to be their company and their problem. I think most of the companies you’re looking at, these are older CEOs.

Most of them. Not all of them. So if I’m Fox, I’m still making a ton of money with news, but I’m worried about it because of what Ailes and O’Reilly and others did to hurt it, No. 1. I’ve got a massive culture problem. No. 2, my average viewer, I’m making this up, is 71. They’re probably going to be dead sooner than later. Young people aren’t coming on because they’re cord-cutters or, as you said, nevers. That’s a problem. I don’t have a real digital presence at all. I’d be very worried long term about the Fox network.

So you buy your way out of that problem? Can you build an asset? Is it plausible for a company like that to build an asset, or they have to go buy a BuzzFeed or a Vice or a Vox Media?

If you buy Vox, you have a 80 percent chance you’re going to wreck it. Right?

That’s the track record, right.

Yeah, that’s the track record. Building it is very difficult too, because you don’t have the DNA to do it. I guess you have to do both and push forward as hard as you can push, and maybe do it off balance sheet so it doesn’t hit your P&L for a while and build the brand, and then bring it back in after you build the brand and you have revenue against it. That’s what I would do.

Yeah, to me, the short version of this is you’re Time Warner and you sell. Right? You find someone who has even more money and you say, “We’re going to get out of this business. Hand it over to you guys, good luck.” You don’t say that last part out loud.

No, that’s exactly right. Yeah. That makes it somebody else’s problem.

Can you make any argument for marrying distribution and content together like AT&T and Time Warner are doing, like Verizon is doing with AOL and Yahoo? Does that make sense in this world?

Makes a ton of sense.

Oh, okay, I thought you were going to ...

No, it makes a ton of sense. Some are going to succeed, some are going to fail. Is the AT&T acquisition of Time Warner going to succeed? I think yes. Is the Verizon acquisition of Yahoo and AOL going to work? Maybe not, because neither AOL or Yahoo are strong brands today, and I guess I read they’re changing their name to Oath. Spectacular name. I wish I had thought of that for one of my companies.

I think they’re saying they’re going to keep the core names, but they’ll put it under this umbrella.

I see, I see.

But no, it’s not a great name.

Well, name an internet company that had a very weak brand over time and was able to bring it back from near death. You can’t.

No, there are zero successful consumer internet companies who’ve lost ... The only exception, and it’s not ... There’s an asterisk by it, is Priceline. Literally just one.

Okay, so I said there was none, so now I’ve learned. But that’s a lesson. Now, could they do it? Sure. But are the odds against them? Yes.

Okay. I think you and I are in agreeance, as Limp Bizkit would say, on AT&T Time Warner. I think they can not screw it up.

They’ll figure it out.

It seems to me like they don’t actually want ... Like it’s not a matter of Randall Stephenson wants to get into movies.

No, and by the way ... Time Warner assets versus AOL and Yahoo assets? I mean, please.

Well, they also ... It’s a different price tag too, right?

Well, yeah, but Verizon may have been better off buying Time Warner.

Are you getting counseled ... When Viacom brings you onto the board, what do they want to hear from you? Do they want this kind of advice?

Which kind of advice?

The kind you’re offering free to our thousands of listeners here.

I don’t think I’ve offered any advice so far. Sure, I speak up at the board meetings. I listen and then I give my point of view. I hopefully can help them with digital a little bit. Maybe not, I don’t know. Being a board member is ... You meet once every three months and ...

Sort of nod your head?

No, you listen and you speak up, but you’re not intimately involved in the day-to-day operations of the company. So maybe help on digital, maybe help on cable networks, because I worked with them for a long time.

Yep. Let’s bring it back to news one last time before we go. You don’t dislike journalists. You have great respect for them.

Thank you. It took you a half-hour to apologize, but I’ll take it.

I think longer than that. Do you think that fake news is as big a problem as we’ve been hearing about for the last few months? If so, is there anything we can do about it?

Clearly, fake news is a problem that I think has been exacerbated greatly by Trump’s campaign and Trump’s presidency. He’s created, he’s built on something that existed but wasn’t a major problem, and he’s built it into a much bigger problem.

Him and his campaign, specifically?

Him and his campaign. By talking about it all the time, he’s created an enormous amount of fake news, in my view.

By simply using the word “fake news” as opposed to creating fake news?

Both. Both. Without a Trump presidency, I would be less worried about it. I used the word pendulum before, I think we’d pendulum out of it. I think Facebook was caught off guard and they take it seriously now, as do some others. But we’ve got to get out of this political cycle, which may be another three years. Probably will be another three years, in order for things to hopefully get back to some normalcy.

But you think this is something that Facebook is tackling, wants to tackle and should tackle?

I think they have ... I don’t think they have a choice. I think they have to tackle it.

This is because, like you said earlier, they are ... We won’t play the tape back, basically, you said, “Look, these guys are as important or more important than all of the cable operators were back in the day.”

And I think that they’re ethical, good human beings on top of it and want to do the right thing.

We’ll leave it at do the right thing, how about that?

Deal.

Is that a good up note?

Deal. Thank you.

Thanks, Mr. Lerer. I appreciate it.

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This article originally appeared on Recode.net.