The Cheezburger Network, which makes blogs like ICanHasCheezburger, FAILBlog and PunditKitchen among (many) others, that exploit the internet’s endless supply of silly memes, has raised a whopping $30 million in venture capital.
Beh Huh started the network in 2007 by buying the first two sites and has expanded it to over 50. With the money he’s going to expand the staff and go international.
It might seem crazy that a lolcats site is raising $30 million, but the economics of the business are actually quite attractive. The vast majority of the content is user generated and curated, with people using the site’s tools to create their own lolcats and other memes, and the site can highlight those that are most popular. And these are the kinds of things that go insanely viral, so distribution is largely free as well. A business whose product is free to build and advertise sounds like a pretty good business. And the Cheezburger Network is a pageview monster, profitable from the start, so they’re doing something right on the monetization front.
The content isn’t exactly Proust, but it’s not potentially damaging to brands either like, say, YouTube, so it might be possible to sell some ads directly instead of through networks, which would give revenues and margins a big boost.
The only question mark is whether the Cheezburger Network can stay nimble and create sites that ride the wave of new memes just as they’re starting, but clearly they’ve done this pretty well since 2007, opening, adjusting and closing dozens of sites. And this is all stuff they can measure.
In a way this reminds us of Zynga, which creates (and often copies) a bunch of popular games, and then fine-tunes and tests them until they’re impossibly addictive and viral. They’ve turned something creative like games into something like a science that delivers hit after reliable hit. You end up with mediocre content but an amazing business.
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