About two weeks ago, Jon Steinberg and Jonah Peretti had a discussion behind closed doors. Shortly after, Ken Lerer’s phone rang.
Steinberg would be leaving BuzzFeed, Peretti told Lerer. Steinberg had joined the media startup from Google in May 2010 as its 15th employee. Lerer, the chairman of BuzzFeed, wasn’t surprised. He had had numerous discussions with the two heads of BuzzFeed in recent months. Every phone call pointed to this.
One week later, Peretti and Steinberg made the news public. Steinberg would be leaving his day-to-day role as BuzzFeed’s president and COO, where he had grown annual revenue from 0 to $US60 million in four years. He would remain an adviser to the company for the next six months. He’d also be joining Ken Lerer’s investment firm, Lerer Ventures, as an advisor.
The pair painted a rosy picture in a memo they released about Steinberg’s departure: “After four spectacular years at BuzzFeed, Jon has decided it’s time to move on but we will miss him a huge amount,” it read. No replacement was lined up for Steinberg.
Since then, rumours have spread about why he left.
Some say Steinberg was gently nudged out, citing heated final discussions between Peretti and Steinberg. One person suggested that Steinberg may have demanded too much money from the company.
The timing of the departure is noteworthy. Steinberg stayed at BuzzFeed for exactly four years, the normal amount of time it takes for stock options to vest.
Everyone seems to agree that Peretti and Steinberg haven’t seen eye to eye for a long time. A recent exit opportunity — selling to Disney, which BuzzFeed ultimately passed on — may have finalised their divorce.
“I don’t think Steinberg was pushed out. He’ll always have a home at Lerer [Ventures],” one source with knowledge of the situation said. “But there was definitely tension. The, ‘Should we sell?’ ‘No, we shouldn’t,’ caused some angst.”
BuzzFeed Chairman Ken Lerer is emphatic: there was no fighting, he says, no animosity or shouting match during Peretti and Steinberg’s final months as partners. The departure, Lerer says, was mutual and amicable.
Another source agrees, likening the situation to a loveless marriage.
“Some divorces happens because someone cheats,” this person says. “Some happen because you don’t love each other anymore, things over time wear you down, and the spark is gone. This is that kind of a divorce.”
“I don’t think he was having fun anymore,” says another source.
Steinberg and Peretti declined to comment.
Over the past few years, BuzzFeed has had numerous opportunities to be acquired. Three or four serious suitors have come along, the most recent of which was Disney. BuzzFeed was last valued at $US200 million when it raised a $US19 million round of financing in early 2013. Now, that valuation has soared closer to $US1 billion.
Last June, talks between Disney and BuzzFeed began. A source says they were “substantive” and Disney threw out a high price for the media startup. But talks came to a halt in October, and they didn’t dissolve over money. Instead, Peretti decided he didn’t want to sell Buzzfeed.
“Jonah wants to run this company for the next 40 years,” Lerer says, although he declined to comment on Disney specifically. “I imagine I can’t find a price Jonah would sell at.”
Steinberg, who had been committed to Buzzfeed for the past four years, felt differently. He wasn’t sure he wanted to commit his life to someone else’s company.
When Steinberg realised Peretti wasn’t interested in selling BuzzFeed, he began soul searching. He often confided in Lerer and spoke openly with Peretti; each time they had a discussion, it became more apparent that they no longer saw eye to eye. Steinberg was 37 with two small children, and he lacked the financial war-chest Peretti had acquired by co-founding The Huffington Post and helping it sell to AOL for $US315 million. Plus, Steinberg had other ambitions to pursue.
But Peretti could not be persuaded; he would not be selling Buzzfeed.
With the possibility of an acquisition off the table, BuzzFeed was entering a new stage as a company, and it needed its entire executive team to be on board. Steinberg felt unable to commit fully.
“They talked about it for two to three months constructively,” Lerer says. “I was always brought into the conversations — Jon would call me; Jonah would call me. Then it got to the point where Jon had to say, ‘Ok, I’m going to re-up.’ Because maybe BuzzFeed will choose to go on and raise money. Maybe it will buy some stuff. Maybe it will eventually IPO. We kind of had to decide who is in and who is not. That dictated the timing [of Jon’s departure].”
Steinberg notified Peretti that he wouldn’t be continuing at Buzzfeed. Peretti informed Lerer, and within 48 hours, Steinberg’s departure paperwork was signed.
The newly-free agent hasn’t decided what to pursue next. Steinberg has already been approached by large companies for top jobs; he was also named anchor of a new CNBC tech show, Squawk Alley. He’s already helped Lerer Ventures source a startup deal. Eventually, he may become a CEO.
“Jon loves BuzzFeed. It’s a success,” says Lerer. “Why not leave when you’re at the top, and there’s a check mark in every box?”