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Beyond Obama, the future of Funny or Die

FORTUNE — “Why would you get the guy who created the Zune to make your website?”

That was one of several questions posted by comedic actor Zach Galifianakis to President Obama, who made a surprise appearance on Funny Or Die’s Between Two Ferns program to plug the Affordable Care Act. Not only did the video immediately go viral, but it also has become the day’s top referrer to Or, put another way, whoever in the White House press office approved this “interview” is breathing a giant sigh of relief.

The video’s popularity also is a big shot in the arm for Funny Or Die, which was launched in 2008 by venture capital firm Sequoia Capital and a Hollywood production company whose principals include Will Ferrell and Adam McKay. The lead investor for Sequoia was partner Mark Kvamme, who has since left Sequoia but remains chairman of the Funny Or Die board. I spent a few minutes on the phone with Kvamme earlier today, talking about Funny Or Die. An edited transcript is below:

FORTUNE: It’s been nearly seven years since Sequoia first invested in Funny Or Die. How does it eventually exit?

MARK KVAMME: A lot of Silicon Valley guys don’t understand the value of content. Take Between Two Ferns. We’ve probably shot between 16 and 18 episodes, and people keep watching episodes we filmed a couple of years ago.  In fact, around 50% of our traffic is for content we own and invested in a long, long time ago. It’s kind of like a studio model with a back catalog, where the content value continues to increase.

It’s going to turn out to be a very good investment for Sequoia… Not a WhatsApp sort of multi-billion dollar exit, but a nice multi-hundred million dollar exit sometime.

Most likely to an established entertainment company?

Probably, yes.

It’s pretty rare for VC firms to back professionally-produced content companies, and when they do it’s almost always some form of journalism. Why has this one worked?

FunnyOrDie was started with this question about what would happen if Hollywood and Silicon Valley worked together from the very beginning. So all of the content is created in Hollywood, but around half of the company’s employees are actually in Silicon Valley. And these guys use social media in a way that only a tech company uses social media — not in the way a traditional entertainment company uses social media.

Any concerns that the Obama appearance makes Funny Or Die look partisan?

No. When he goes on The Tonight Show, does that make NBC look partisan? He had something to market. Kind of like when Charlize Theron did Between Two Ferns, because she had a movie coming out. If someone like John Boehner wants to do a piece, he’d be welcomed. And one thing that’s important is that people know they’ll be presented well. This isn’t College Humor.

Funny Or Die hasn’t raised venture funding since 2008. Does that mean is cash-flow positive?

Yes, it is very profitable. From an investment perspective, you’re right that it has raised VC since 2008. But two years ago it did sell sell a minority stake to Turner Broadcasting.

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