Cheezburger all dressed with memes

Starve the little kitty? On the surface, it does appear frivolous that a company occupying itself with the creation and distribution of memes over the web would attract deep-pocketed interest from venture risk capital investors. The Cheezburger network received $30 million in financing. For humorous pictures of cats with cute explanatory captions. But there is some coherence here. Ben Huh, a former journalist who started the company draws over sixteen million viewers per month who share half a million pictures and videos on his stable of web-sites. Obviously, its been interpreted that there is a lot more catnip to be made in memes. The investment was about 7x revenues, and is all on the back of user generated content. The payroll: $8,55/hr or $17,784/yr for thirty employees on contract. Almost $4 million in cash flow after wages….

--- Madrona's Gottesman has tracked Cheezburger from the early days, calling the company's ability to surpass more than four billion annual page views and hundreds of millions of video views "incredible." "There's less than a handful of sites that have been able to generate that kind of traffic on this little amount of capital, and if you look at what they have done, there are still some huge areas where there are opportunities," said Gottesman, an avid viewer of FailBlog. "Even though the traffic is absolutely incredible, it could be significantly larger than it is and there are opportunities to monetize the traffic that they have more significantly than they have to date."--- photo:

Brier Dudley:…”The biggest meeting was after lunch, when Huh, 33, and his team gathered to discuss how to ramp up growth using the newfound cash and still preserve the 3-year-old company’s culture and nimbleness. Huh already has built a profitable media company using $2.25 million from angel investors to create a network that draws more than 16.5 million people a month and generates more than 375 million monthly page views. Boulder, Colo.-based Foundry Group led the investment. Also participating were Avalon Ventures, SoftBank Capital and Seattle’s Madrona Venture Group. It’s too soon to discuss any plans for an IPO, Huh said.

“The financing aside, the size of what they’ve built with such limited capital, so few people, is really impressive,” said Greg Gottesman, Madrona managing director and longtime fan of Cheezburger’s Fail Blog. “This is a great sort of entrepreneurial story about a good local team that’s done some incredible things on the media side.” Other sites in the network include Memebase and The Daily What.Read More: a

David Twiddy. ---KCBJ: What is your advice for people looking to create an online brand like this? BH: I think consistency is key. Someone was telling me, ‘My coworkers just want to create things that are viral. Let’s make a viral video.’ I keep trying to tell them that’s really hard. Not only is that really hard, but viral content tends to be not worthwhile. It’s worthwhile for the viewer because it’s interesting; that’s why it went viral. But for the person who created it, you really don’t get much out of it. As a business, that’s not a sustainable model. We’ve been able to do that because we’ve built this huge audience, so even things that don’t need to go viral, go viral. That’s because we built this audience over time by being consistent with what we do. Read more: Online guru talks about turning user-submitted content into profits | Kansas City Business Journal.

Meanwhile back at the ranch, err, traditional advertising agency; they are in the opposite camp of Huh and are trying to engage the consumer with a top-down model in the hope it will become “viral” for them and result in memes being created around it. They are still with their industry events and looking at the web like its betting blindfold at a racetrack:

“The gala crowd loved it. So if John St. executives didn’t end the night with any of the top awards, they may have gone home with something more valuable. That’s because this week, after someone at the agency posted the video, called Pink Pony, the global ad community put aside its tendency toward reflexive envy of others’ great work and sent the thing viral. A tweet from Contagious Magazine said the video was “currently trending in the Contagious offices.” Someone else called it “the best piss take of a Cannes case study film ever.” AdFreak, the hard-to-impress AdWeek blog, called it “a must-watch.”… The video ends with a prototypical bit of agency self-importance: “We didn’t just create a birthday. We created a birthday movement.”…But viewers, alas, also included someone in the Arcade Fire camp, who called up and asked the video to be taken down, as the band’s song Wake Up had been used on the soundtrack without permission.( Simon Houpt) Read More: a

---We like the meme machines that Ben Huh’s “I Can Has Cheezburger” network provides. They’re goofy, they’re funny at times, and they often drive some pretty interesting trends online. What we don’t like, however, are his wages. What’s essentially a job in a profitable niche media industry is treated as if it’s a struggling startup. Gawker has been all over this the last few days, after Huh himself backed his company into a corner thanks to a frank admission.---

But this is the key point that they acknowledge, and it revolves around Huh’s dynamic that he is able to offer the opportunity to create culture and participation….

“On Wednesday afternoon, John St.’s president Arthur Fleischmann acknowledged that, like the creators of other viral successes, he didn’t know quite how to capitalize on the frenzy. “The ROI (return on investment), we’re still evaluating it,” he joked. “Do we expect it to lead

nything? It starts a conversation,…” ( Houpt ) read more:

How do you make money?

Ben Huh: Advertising. Licensing – books. Merchandising. It’s not rocket science.

Do you think your users will ever tire of making you money?

They try to create a system where people enjoy making content. As long as they can make users feel good about creating content, the train of content coming in won’t stop. It should be fun to add value to their business. He thinks they’ve done that.

When you have a single product, the entry to barrier is very low. If you’re making money, then halfway down the road your competition will join the fray. Then what?

Competitors look at your simplicity and make it more complicated. They shoot themselves in the foot right out of the gate.

What do you feel is the next evolution of meme shirts?

The nature of memes is that its hard to predict.

It’s been a hard year for content owners, are you purely ad-based or do we need to do other rev models?

They’re not purely ad-based. They had projected a 48 percent fall between Q4 of 2008 and Q1 of 2009. It actually felt 56 percent. They cut back fringe benefits and were able to ride out the storm. It gave them a real shock and made them start branching out aggressively. If you’re a publisher, you should find other forms of revenue. Find different people to give you money. Always diversify. Read More: a

Huh: The battle for dominance between these two cultures is playing out today, pitting users and tech companies on one side (Internet Culture) and big media companies on the other (Popular Culture). Full disclosure: As the CEO and Founder of the Cheezburger Network, we firmly put ourselves on the side of Internet Culture. Popular Culture is economically and socially the opposite of Internet Culture. In fact, they occupy almost polar-opposite positions when it comes to ownership, filtering and creativity.... photo:

KCBJ: What is the future of Cheezburger?

BH: I think we’re going to expand more and more into Internet culture areas. We have a new website we’ve acquired in the last year called The Daily What. It’s what we call Internet culture news. … The idea is that there’s an entire generation of people who are growing up around this idea of Internet culture — the idea that we’re no longer consumers of the Internet but participants in the creation of the Internet. That’s a profound difference in the generation. It’s not age-driven; it’s mentality-driven. The Daily What is a central repository for everything news that is interesting to these people.

“…With its ability to remix content, satire and criticism, Internet Culture is slowly chipping away at the cultural fortress built by television, radio and other forms of mass media—commonly referred to as Popular Culture. While many of us casually participate in this process online, we’re unaware of the sea change that’s occurring. Status updates, social networking, blogging and other habits have given rise to Internet Culture and now, internet users have created more content than mass media has created since the invention of the printing press. We have started to take control of the culture that molds our world view—taking the control away from the powerful in the media and giving it to our unwashed peers”.( Huh ) read more:

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