IBM Watson Transcription of http://www.acquired.fm/episodes/2016/7/12/acquired-episode-16-midroll-stitcher-acquired-by-scripps

raw-transcript.txt

We'd like to thank our one listener that we see in our analytics on 0
Duke and the one listener on stitcher who happens to be. My wife.
Yeah. It's a great way to live as upset. Come back to episode 16 of
acquired. The podcast when we talk about technology acquisitions I'm
Ben Gilbert I'm David Rosenthal and we are your hosts. Today we have a
few notes before we dive into it I wanted to take a minute and say a
huge thank you to one of our listeners David Resnick. I he's known as
the resonator in slack. David is an entrepreneur with a company called ****
but in a former career he was a recording engineer and music producer
David's been helping us tremendously with audio quality so I want to
give a shout out his company. Bester is a platform to share the best
things. Curate your bass into topics with automated images and links.
You can use their wager with your branding embedded on your website
find out more at Bester.co that's .B. E. S. T. R..CO. Which brings me
to my next point. I did not regretting announcement alert yeah do do
do do do do. If this were really high production podcast we would have
some sound effects that's right that's right we wanted to do something
a little bit different. I with this podcast were at about the size
where we could start doing some some advertising I'm actually will
begin to our analytics a little bit later this episode as as part of
the top of the show instead we wanted to do something called community
showcase. And since so many of our listeners are entrepreneurs they're
building things product people at that companies or on venture capital
S. R. finance people really people that are are involved in in
creating products themselves we thought it would be really cool to try
and just do a community focus every episode rather than advertising at
least for now we're gonna experiment with this we're not charging
anything or make any money on this but I we really just wanted to do
it as a thank you to our community and listeners and and especially
those that are really engaged on on the slacks channeling and emailing
us so if you have something you're working on and you want us to talk
about it on the show either hit us up on and in the slack community or
send us an email and data acquired a fan at G. mail.com also on our
website and we will aim to do you start with one and maybe more these
every so let's now we think yeah sure you can hit us up on now on
Twitter too had acquired FM and out we may do more can a traditional
advertising thing later but if you're working on some we'd love to I
give you a shout out on the shelf. So I David writing divan I think
with that all of the preamble here is very appropriate because this
episode is a meta episode did abouts. Podcasts. Yes today are on this
episode 16 we will be covering the acquisition by scripts of both mid
roll and stature. So why am I think will will dive right into it David
you wanna do hick history and facts yeah and I I should say before we
do this the. The theme here was was topic was first inspired by my
wife Jenny wanted to make sure I give her a shout out she was trying
to get to our website and she was giggling acquired a podcast. And
realize that we weren't in the top hits on SCO so this is a unabashed
seed SCO play to get to the top that the top the Google hits on on for
acquired podcast this is the first I'm hearing of this yeah. So EW
Scripps company for those that are familiar is a very old company by
technology standards not a technology company they are a broadcast
media company and historically also been a newspaper publisher but
they are operating number of cable networks and television and radio
broadcast. Stations locally around the country and in the lead over
the last 2 years they've made 2 acquisitions that I made a huge splash
in the business of podcasting space something that Ben and I have
gotten to know a little bit about every last year so the first company
that they bought was a bootstrapped start up a cold mid roll and
mineral has a super interesting history of some of our listeners might
be familiar with parts of the company it was started in 2010 by 2 guys
Scott Aukerman and Jeff Ehrlich. And it was started as complete called
your wolf it was actually a comedy podcasting networks of Scott had a
podcast that was part of was in L. A. in L. A.. And he had a a radio
comedy show that I believe was originally called comedy death ray I
think it would they eventually changed the name of it a as a podcast a
comedy bang bang any other budget comedians on the show and it had a
pretty loyal following and so they decided to sort of start a
podcasting network around it so they added a bunch of other comedy
shows added culture so shows and music podcasts overtime and that yes
it was come the death rate that started as an ended and actually it it
originally the origins of it were in the upright citizens brigade
stand up comedy and that in Hollywood that's got it started doing air
and and then it actually went on a separate from what the company that
became mid roll up comedy bang bang went on to become a television
show on IFC comedies elves so. So interesting routes for what is today
the a giant among midgets in the in the podcasting Arnold. So the
bootstrap this company up for a couple years they were just purely a
content network and then in 2014 they're doing their own advertising
for for all the podcasts in the network they were direct selling ads.
And they started getting approached by advertisers who wanted to buy
ad space on other podcasts there weren't part of their own network of
shows that they're producing. Nick I thought well that's interesting
so they launched a a separate product of that was an ad and and have
network one of the first if not the first had network for the
podcasting industry this is in 2014 they call it mid roll media that
that they give you a sense of how new this whole thing is I mean is is
less than 2 years ago less than 2 years ago which is crazy given that
your podcasting has been around for over 10 years going back to the I
pod yeah prep pretty new to and that an advertising based revenue
model yeah I don't really months issue at all. Yeah and and we'll get
into this in in tech themes and others but you know this industry the
podcasting industry is so fragmented relative tell like how many
people millions hundreds of millions of people listen to a podcast.
Yeah so so from the press release when they once made role he said
this in the new company admiral offers a 360 degree suite of
production distribution and monetization services to artists
entertainers and thought leaders. Advertisers benefit from access to
the talented hosts. Of more than 120 shows and they're engaged
audiences totaling more than 15 downloads a month using the industry's
first user focused self service platform this is crazy this is 2014.
First. Self service advertising platform for the podcasting industry
has 120 shows me compare that to like ad networks for display ads or
other forms advertising advertising of millions and millions of
advertisers millions like this in our midst maybe millions of sites
hundreds of thousands of IBM now primate millions of advertisers this
is like a green of sand. I compared to a lake. Every beach on earth
yeah and and we'll get to the dollar amounts to but again a grain of
sand but they sign up some pretty large podcast to be part of the
network so WTF with Marc Marion which is one of the largest podcasts
out there Barack Obama was on it recently they have bill Simmons's
podcasts and all the ringer podcasts. So about a year after that as
well and and one year ago now scripts comes in and they buy the
company and it was not announced at the time how much they paid for it
but it is since come out reported $5 up front and another $1 now. To
basically take out like the giant in this industry I'm I'm which
pretty good return for forum Scott Jeff considering that you know this
is totally bootstrapping never raised any money yeah yeah. I mean 5 is
is well what's isn't rocket a beater on the bush look into the numbers
now podcast advertising there's not that much money spent right now
and podcasting as a medium according to a yeah a wallstreet journal
article from earlier this year. Advertisers are only expected to spend
about 35 on podcast this year and that's only about 2 percent from
last year yet so the whole industry 35. The cross the whole industry
of which mid roll represents many of the largest podcast but nowhere
near the whole industry I don't know about no where near I think it's
it's it's not ridiculous just to say they're in the majority. Of the
the appetizing spend goes through federal. I'm independent podcast
probably but the largest podcasts are probably not good point at like
NPR This American Life yeah yeah yeah. Good point there was that there
is a quote by the Yom. I'm someone at middle all saying that a handful
of their podcasters gross over $1 a year and about a 30 percent take
rates are actually factoring back it looks like minerals annual
revenue is somewhere in the neighborhood of $2 a year. Yeah. While. So
a script requires this company about a year ago almost exactly your
go. They operate it for a year team stays intact so the CEO the middle
abroad and an outside CEO Adam Sachs I I believe he socio company. And
then just a couple weeks ago the other shoe drops. So one of the
issues which again will get into it that's been holding the podcasting
industry back again relative to how much usage engagement it has has a
media platform with with. People in users out there really the amount
of advertising spending it is. That and they're all pillars of that
the platform are basically completely divorced from one another so you
have the way people listen to and consumed the user experience consume
podcasts your clients or streaming over websites that's completely
divorced from where the podcasts are hosted with me is hosted and that
is also complete divorce from the advertised at all why I as a quick
aside one I give I'm gonna what are stacking process looks like so
people get a sense and and this is not unusual I mean these parts are
swapped in and out but they are the bread they're rarely consolidated.
Just to start the whole process.FM domain names are expensive. So
you're not going out and gotten you know I I the dollar GoDaddy seat
you drop 100 Bucks on picking up your your.FM dumb and domain name
because that's that's the hotness these days so you're out you need
some way to have a consumer facing website so we have we have come.
Squarespace for that so squarespace generates our RSS feed and gives
us a public facing site. Now the way that we deliver podcasts over
almost any client is by submitting that R. S. S. feed to the I tunes
directory now iTunes doesn't host anything they merely have a war a U.
R. L. pointing at your R. S. S. feed which they stand about once a day
unless you manually for set and then they update their directory with
where your MP threes are hosted now we need a place to host MP threes
I'm a lot of people you sound cloud a lot of people use it now and
it's on the iPod track with for a while we were actually hosting them
on squarespace but you don't get a lot analytics that way so then you
hosting service so use lives and for that he's actually been really
great see you you pay for hosting service to host your MP threes at
which your R. S. S. feed points yeah so so now we've got we've got
just to get this this podcast in the in the years of you dear
listeners we have to go through 3 companies yep so that then it's in I
tunes arm and there's up a player that ships with with iOS obviously
that were you can use I tunes on the desktop that that job points at
the I tunes directory but it's made available for others to point to
also so over caster pocket casts or there is a variety of players that
a lot of you are listening to mostly on your iOS devices over 80
percent on on iOS devices and again that's completely decoupled from
all the other pieces of the ecosystem so at the end of the day if
you're advertising on a podcast all you really know is that. Your name
and company was mentioned an MP 3 that got shipped down to potentially
an unknown number of people using an unknown number of platforms and
you never know if they heard it yeah ending compare and contrast that
to other technology enable media platforms like medium for blogging or
Facebook which you talk about about your Twitter or Instagram you know
all of those the consumption of the content by users the hosting of
the content for contempo users and the advertising platform are all
very tightly coupled into one product yep yep and fact it it's it's
there reason that those industries that the incredible measurement and
the very tight coupling of all those components are the reason why
those became dominant advertising platform I mean at it for direct
response adds especially but I'm even brand advertising requires us an
amount of measurement beyond what's available in in podcasting right
now yeah I mean if somebody were to come along in like give better mia
a boatload of money to. Read their advertisements on our show we
basically could tell them nothing about yeah what happened when we
that we actually it sure is this a good time to show that sure what
are our numbers look like yeah let's do let's do that and we'll pick
the story back up cool so here's here's what we could tell them. We
can tell that I'm looking at Arlington episode I'm 2 episodes ago that
we have about 6400 listeners which is not you know unique guy unique
IP is that I've downloaded the U. R. L. we are non representatives
most of the time 60 to 70 percent or higher of I listen they're gonna
come through apple's iOS player we actually have of of that. Rice is
6400 lives about 4100 come from pocket casts sensa they they were kind
enough to feature us on the homepage a lot of your pie listening
through the pocket casts out about 1 from from apple do under 97 from
mark our men's overcast and then it trickling on down from there
through various browsers of people listening on the website but we
basically could tell them yeah I'm a little bit about geography you
know we can tell and the IP addresses then and cities the people are
coming from and and the clients but we have no idea how many people
actually got to that point in the episode. That's that's one of the
critical piece that we we can't tell them how many of you actually
heard what we would be being paid to set right and and everybody you
know you hear those promo codes and in a lot of podcasts that give you
that nice 10 percent off that is literally the only way that the
advertiser has to attribute to that channel so a lot of the times that
I'm you know you might hear I'm out for squarespace and you go to
squarespace new sign up but you don't type in the code that that never
ends up getting attributed to that that Pinecastle loop doesn't get
close now and then so so you get a little bit of a picture of some of
the challenges with the industry so scripts actually and and other
people have tried this before but scripts actually is really 0 here
like they see there's a huge arbitrage right now between the user and
listener that number's engagement on podcasts as a whole medium and
the complete cluster that a is the state of any kind of advertising
rattling looks analytics on the platform and so the way you the only
way you can solve this is. To own the full stack and bring it together
you know one way Ted Ted own any sort of advertising on the back and
would be to be the hosting and to be the analytics but you couldn't do
the measurement less you have that the front end to sew on the web you
can run Java script and understand you know has now been served our
people clicking add and how long is it an on site helmsman show anyway
it in a in a podcast. Do you need to get up player that had a pretty
serious market share in order to actually I I you know I understand
impressions or do anything fancy around you know during this part of
podcast is gonna be something popping up and if you want to tap that
button it'll take you directly to the sites you don't have to remember
to type it in later. Or even just passively to know dislike on
Instagram like did somebody actually sees was hazard is that right so
couple weeks ago. The other shoe drops. And scripts acquires a company
called stitcher a we'd say we suspect many of you know about it and
might be listening to us on stitcher but our analytics tell us. There
is one of you thank you Jenny. That is my wife C. woes stature so
stature is a podcast client up for mobile devices and it was kind of.
An interesting story it was founded in 2008 by 3 guys know shank Peter
Devereaux day and Mike gaffer in and just like now in 2 eat podcasts
were also experiencing a torrid growth apiece and stitcher managed to
raise quite a bit of venture money to go after this vision of
creating. Creating the front door the aggregated user experience
client to become the dominant podcast client pike podcasting client.
So they raised about $25 over 3 rounds first from new Atlantic
ventures and then from benchmark and then from NEA. And unfortunately
it didn't work. So in 2014 about the same time that mineral was
getting launched a stitcher actually ends up getting acquired by the
French music streaming company dis ur the sort of Spotify competitor
and that that didn't work out to greet either it sorta languishes
within within these and then last month scripts bought stitcher back
from desire and we don't know how much these are acquired it for but
we do know it was not choir so probably not much. And so scripts by
stitcher for the princely sum of 4.$5 in cash. Yeah that's them. So
this is a company that had raised $25 as a venture backed startup.
Fields been act were hired by another venture backed start up a and
then now is being bought by scripts for 4.$5 yeah and and so you know
that the strategy makes a lot of sense all the sudden your couple
laying. The ability to really turn on the ad sales funnel with with
mineral with the ability to have a front end client that you could
instrumen and and and do some creative things around said you'd do
advertising. At the end of the day iOS is still the dominant platform
that people listen they're podcasts on it ships with a podcast client
so the challenge ahead is to be able to figure out a way to make
stature appealing to people that they would actually go and seek out
another way to listen to podcasts rather than use the they built an
apple on elegantly scripts gets the slate again this is the play that
you would run if you want to actually unlock the value in the podcast
ecosystem so Adam system and who's the chief digital officer at
scripts who led the acquisition he was quoted in the press release
says basically saying just what bands at dinner that we certainly have
the ad sales force and the connections that make us a leader in the
space. But today we depend almost exclusively on distribution and
other channels this puts in place with a very strong brand. Arguably
worst it's a a very strong brand another piece of the puzzle in the
ecosystem play yeah just after I don't know if it's a bias or if it's
well. Whatever I think stitchers garbage like every time I open the
thing it is is yeah so let's get into why stickers garbage so yeah
the. The tech industry and especially the corner of the tech industry
that is concerned with podcasts or have podcasts of their own
basically like erupted in an outcry when this happens John Gruber
hooks the talk show which might be the largest and most influential
technology podcast hero to blog posts at saying mineral owning
stitcher is not good for the podcast ecosystem stitcher is popular but
my show is not on stitcher because stitcher re hosts the audio
compresses it to hell and unless you opt out in search their own
inserts their own ads that's not how podcasting is supposed to work I
firmly believe podcasting should be open like the web yes so Gruber is
a grumpy old man on this one I mean I think that there is a lot of
things where I don't believe that the user experience delivered by on
by stitcher is is very good and I don't think the fact that they're
compressing the audios is great you know you wanna let podcasters can
have creative freedom on that. I. Yeah I think the way they currently
deliver ads gonna garbage he list goes on however is publishing worse
than it was when you had to purchase your own rack mounted web server
and install your own blogging software like are are we in a place
where if somebody creates the blogger or non media more did the worse
case scenario I had on everyone's mind is the Facebook yeah of of
podcasting is is the world worse I think there's a very valuable
business to be made there and I think you can provide I'm potentially
podcasting to more people than than here today because you come up
with a a real stable business around it there's definitely some
sacrifices that that would have to be made there because I think that
ultimately would be a programmatic ad network with you know a a full
bidding system the way that adwords is or the way the Facebook ads are
and you know maybe maybe that it that upsets a lot of people and
changes the way that that it works a little bit but I think it makes
podcasting. Yeah I don't like that well yes I totally agree I
completely agree Gruber's being grumpy old man here the problem isn't
what stature is doing. It's. That they're doing a really crappy job of
it and like the parallels here I mean I I actually I completely agree
I think the opportunity is huge to create has I'm terrified as Gruber
and Ben Thompson need another one of our folks to tug on the show are
like he has a blog posted about about this ons tech or even talk about
it on his podcast which is excellent exponent of the does with James
Alworth arm there terrified of the Facebook is a sin of podcasts. But
the difference between Facebook and stature is like we talked about in
the instant articles episode. Facebook cares a lot about the user
experience and about making things beautiful and the analogy is is is
exact between instant articles where they're taking content that
publishers have created there's only so self posting it with and
Facebook and then they are serving ads that day Aaron certainly
inserting into it and ensuring that ad revenue with publishers it's
the exact same dynamics. The differences. Facebook acquired push pop
press buttons to do this very very beautifully and stature as a piece
of crap. Yeah I'm here if you know stitches under new management now
so I'm very curious if if made role that role strikes me as a very
I'm. Very tasteful company. And you know better all might do really
good things were stature I worry about it it's kind absolutely but the
question is is there a bunch questions that will dive into. The first
question is what can stitcher but calm as part of mid role in this
part of scripts. And that's interesting you know talk about in the
context of our show we've never really seen something like this at
least on our show go successfully before. We are requiring a product
that you know get more hating on stitcher here apologies to all of the
one stature fans. But you know we've never really seen it up products
be acquired that isn't fundamentally like a good product. At Iowa and
then search is there certainly betting on hope here linkedin. Okay
well that was all different yeah well it but you know like that isn't
like a technology company with a great team behind it gonna capability
within the company to at least deliver I'm you know the minimum viable
product. Sure they're there it's a a small subscale technology company
that's part of an old school media company. Acquiring another vastly
subscale technology company. And what they need to do is build an
incredible technology enabled user interface yeah and have we seen
that I'm an example I don't think we've got an example on the show yet
where a company does. Actually I take that back we sort us out with
office but that we're going as a company does multiple acquisitions
and sort of combines them into it I I kinda classic conglomerate way
to build a new product from combining existing ones and the the
example thing of there is Islam without I'm at the accompli
acquisition building sunrise calendar into accompli but we you know we
have yet to see if that is that a product successor market success yet
yep yep well and they were you know the difference there too is like
that parent company acquiring the mall was Microsoft and you know you
can say whatever you want about Microsoft but they're a lot more their
technology tops are a lot better than scripts yeah for sure so we're
we're obviously biased by being part of the startup ecosystem but I'm
I'm. I'm very excited to see what entrepreneurs come up with. With new
dinner over businesses to to tackle this problem yeah and so you know
we're talking about all the weird forces at play it in podcasting
right now an income of the weirdness of the ecosystem there's sort of
secret meetings going on with apple and and some of the bigger out
bigger publishers and existing podcasters to understand you know
should we make this something where it's actually I I monetize will
platform and they own the ecosystem top to bottom in one of the things
that sort of playing into that why that the reason everyone is making
a big deal is because the cost per 0 impressions of the C. P. M.'s
that podcasting commands at least right now and may be attributable to
the audience that it has. And being a very high value audience but
they've $0 CPM and for anyone in in sort of advertising I'm or is done
online advertising it's pretty unreal yeah the the average YouTube CPM
in 2014 was $14 web display ads can get anywhere from $10 $5 you know
podcasting is is like total break out and you know that's that's the
ceiling with 0 RCP ends and I think for this show would be somewhere
between 25 and $50 but the people that are making their living as sort
of independent podcasters right now are doing great doing great if you
have an audience and you're an independent podcaster you can do great.
Yeah and actually Ben Thompson makes a good case a while ago before
the ringer started about how bill Simmons could move to solely
podcasting how it's a much more economical actually if you're a writer
but you're also on someone who could do a show to write for free and
published as your lead Jan and then monetize your your podcast
audience. Alright let some. Let's maybe dampened acquisition category
yeah. So I mean I think it's pretty clear here this is a product that
does this and that is getting rolled into this suite of products yep
yep gotta be if they can daisy chain these things together correctly
there's a bunch money to be made I think. I think it involves having
exclusive content it's hard for me to imagine a reason to go download
a podcast player to play while it's hard for me to imagine going and
downloading stature to listen to content I can get otherwise but if it
became sort of a Netflix type thing where they're producing original
content and sunny exclusive RTS and you know maybe it doesn't quite
use that model where I'm paying a subscription fee but it does use the
model where I have to be listening on the very place where I can be
advertised to then they might build a crater of business there and and
this is. Very explicitly they've said so this is their plan and so mid
role is already had 2 pieces of the ecosystem together with the
content network and the advertising network in a news article I in an
interview after the acquisition of stature you disconnect came that
middle is just come out with a new premium service called howl which
offers original shows and had free archives of popular podcasts so
they're clearly moving into this kinda Netflix type category and and
they interviewed the that president of the VP of business development
at mid roll Eric dined in them they see it and he says clearly at some
point the 2 will intersect. Yeah. Yeah. Okay moving onto you wanna do
what would happen otherwise yeah I mean I think in in this case like
this is sort of the first. Real splash that's been made of. Somebody
trying to do the obvious and bring the 3 pillars of this medium
together so I think. I think otherwise like we would just continue to
draft yeah stitcher continues to languish mid roll continues to grow
incrementally and is able to sell to. You know the that sell ads to
run some of the big but not network big podcasts. And we continue to
see a lack of consolidation and no money go to podcasting yep and
what's interesting in the. This almost like not what would have
happened otherwise but what will happen now I do wonder if this is
like the sat across the bow that wakes up some folks in the onscreen
Ariel and start up community to realize. And there's a big opportunity
here and build the or attempt to building a what stitcher tried to in
the beginning yeah David feel secure your team the up a little bit we
I'm. We actually give this a go at pioneer square labs and we were
really interested in podcasting just based on the growth trajectory of
the amount of people that have started loosing tete a podcast the last
couple years I'm it's still not a huge number of people but the growth
rates really good and. One of the reasons I mean if for all the
reasons on the show that we party talked about it we we shied away
from it where you know that's it's there's only you know 30 to $4
spent a year on and you can't really stick your toe out with an MVP
you have to be the hosting the analytics you really have to have a
client out there and your client has to have some reason be better
than apple's client. Because you know shipping with the platform is a
huge advantage. There was one thing that we really wanted to do and
that was dynamic ad insertion so that we could sell ads programmatic
we. And. One thing that we felt was super important wise for the host
to be able to read the ads. Because. That's been one of the things
that commands the really high C. PM's. I'm in the world today and one
way that we were gonna do that is have the host go through and and
record ahead of time the the ad reads and then we could insert in the
host's own voice anywhere throughout the yeah the audio it's cool down
that adds so we started you know looking at this we started figuring
out okay cool we can make like pretend MP 3 you are Allison
dynamically generate those I'm episodes with the appropriate ad for
that person at the moment that it gets downloaded by their podcast
clients and it specifically to them which are looking around there
really are some some people tackling this right now is to get a
company called a cast is doing dynamic ad insertion. Actually just
recently I'm nope we launched our our company called megaphone I guess
a product called megaphone.FM and they also were doing the dynamic ad
insertion they've got this cool you why where if you're a an
advertiser ray a host you can go in and and select the spots where you
want to insert the the ads so you know some people making runs at this
I I continue to think that you need to be able to show our show real
measurement from the the young client side but who knows maybe I'm.
Maybe some crazy all change and an apple have an API to plug into for
that you know they're they're suddenly not averse to our. 2 services
revenue well yeah I and and that an advertising model as we're seeing
with I'm changes in the app store and if they can find a way that it
continues to ensure user privacy but makes podcasting more valuable
maybe we'll see a way for apple to open up reporting of of psalm
podcast to advertisers yeah I don't know yet 2 things I wanna I wanna
mention what one does mention real quick I feel like we haven't quite
sharply pointed out yet the other dynamic that's really interesting in
this industry is apple. And I mean apple lake created this medium or
it was created around apple yeah they're still the dominant player but
they don't care about it at all is funny they just they they sort of
found inherited it to people were creating podcasts and sending them
around ad hoc and they were odd people were putting them on their
iPods and finally apple put a podcast section of the I tunes music
store which was just a directory not hosting service for people to do
this and it's so funny that still you know even called podcasting
right like nobody has an I pod anymore and the apples just like
accident we had this knee sent you jobber too dirty on full that that
they're really not taking advantage of because really not an apple
type business you know it's that their apple classically sells
hardware and makes a profit on that hardware and that has software and
services to differentiate experience and that doesn't sound like with
this is that all but in this new kind of shifting apple maybe we'll
see this but not my that would still be on apple letting it doesn't
know and and it also you know I wanna bring up one thing that we
thought about that I've thought about you know it's. Before and in
preparing for this show is like Abella listeners are saying well what
he I mean like what you guys are talking about RD exists it's called
soundcloud. And like that's true to a certain extent but I think I
think soundcloud an apple both like they're very focused on music.
Actually just went right before we started recording the show went to
the. For some reason mild soundcloud account got deleted or something
I I went to the on boarding process. Twitter's investment Twitter's
investment. And and and and and do the onboarding process I get super
clear that sound cloud is about music and the putting people music not
to broadcasting and and same with apple you know they're invest they
bought beats may will cover that the future show you know and we did
apple music they're investing a lot in that. But nobody's really doing
this you know I think you if you're gonna build a really great. Client
and consumer experience like it has to be about podcasts. Yeah. Yeah
I'm agreed seconding elements real quick you bend it this is a great
example since you're talking about PSL like I'm curious about a lot of
our listeners are curiously what's your process at PSLE how did you
guys when you're diving into a podcast like what do you do to validate
the market like how did you look at this. Yeah so a lot of the times
we start with the space that we think is interesting I mean that's
what we did here and I really you know at. I'm kind of a guy that buys
all of our our our ads on social and search and Tom in sort of knowing
exactly how that world works. It was. Kind of like blindly obvious to
me like wait a minute if I want to buy ads on a podcast I have to do
what like manually get into touch with someone at mit role and you
know there's a mirror inside directly yeah it's it's our. You know
it's a completely immature market and so we started pushing on that
opportunity and try to figure out what would it look like if if we
actually pursued this so we we do 2 things we do have a top down and
bottom up. And from a top down and you know we look at what is the
market today and what market forces do we think will make. You know
what what what does it look like in 5 or 10 years and obviously that's
a guess but we try and make that an educated guess and we look at
things like on you know in this who it apple could be either a big
risk or a potentially make this a lot easier on and that it it would
be all about timing so we look at our that top down of okay how much
how much money could this business really make what's a tam there that
we do a bottom up and I think that if we were I VC firm we would we
would come to just do the top down and if I was an entrepreneur we
would just do the bottom up but since we're sort of. Both you know
that that kind of start up studio is responsible for both sides of the
house in the early stages are deciding whether to offer the
opportunity and actually doing some of the building I'm want to kind
of passes that sniff test of this could be a big business which this
one didn't then we start really validating I'm can we acquire
customers for significantly less than the lifetime customer value you
know building at as lightweight stuff as we could and we really can
think of a good way a lightweight test this because again you have to
be that the host the analytics provider ship the client inclined
adoption of the years years long process and you yeah it could be an
interesting business just not one that we could do and sort of a a
short now I'm early validation timeframe which again can brings us
back to this. Dilemma and we know we'll see what happens with this set
of acquisitions from scripts but this dilemma that the industries and
well like. It's kinda hard to just start a company to fix the slate to
start Facebook you know we're just artistic. You have to do a lot more
heavy lifting than they did up front and you have to contend with
these players like apple that are usually dominate in the industry but
I have. Really complex set of motivations right right out you would
have to have a lot of confidence there to to make a big investment in
this that apple was gonna flip some. It seems like while it's not
there we'll house huge risk your business. Yeah I'm at the same time
like there is like let's be clear like as NBC I believe and you
probably believe to bend like. The numbers don't lie like there's a
massive opportunity here that something will happen and podcasting's
not totally clear out all shake out and did the R. RB questioning
greeting this one is do we think it's going to be these guys yeah
what's move onto tech themes and cover that so I'd I feel like we we
were dancing around this a little bit in talking about how that kind
of the distribution of of the audience and listeners is is across the
industry and and different podcasts. My Technium is is the power law
and we see this in so many areas of tech whether it's the app store
and at the top you know 10 apps are responsible for. Whatever you know
except the percent or whatever of downloads you know I'm and it's the
same thing here in the in the podcasting industry so then you had some
stats on this I think was it that the top 10 podcasts are responsible
for 40 percent of. Listeners in the entire industry lots to tell you
how the top 10 publishers because I'm publisher top 10 publishers NPR
This American Life that those sorts I dumped WKYC I believe for W.
WNYC I'm enter your vote WKYC's Cleveland I tell you I see that they
have you know a big portfolio of podcasts and they're sort of just the
the parent publisher but yeah that that the top 10 responsible 40
percent. So you know again a here's another you know puzzle you have
to unlock to to win this industry it is you need those top 10
publishers to be on your platform because. They represent you know by
far the origin of the top 0 publishers they represent by far the
majority of the market. Yeah. Yeah my M. my theme is it's really hard
to compete with the platform defaults. And you know apple ships up
podcasts app even before that they they bundled podcasts into I to
lose I tunes on on the phone and. You know it there's. That Beckett
someone 90 percent of the way there and are they actually going to go
the extra mile and go look for different podcast out. M. and are they
gonna look for your is and is is your is differentiated enough and you
know I think it premium content might be the way to do it but no
businesses of one. Sometimes even illegally over the years because
they were able to bond with the platform a look at yet how you achieve
dominance on windows or are and yeah I did it being shipped with the
platform is a very clear way to win and actually that's a lie it in
the the mobile world pre iPhone Tom. You knows that a really difficult
to install those Java apps on your flip phone and the way that those
companies used actually get there their games and apps distributed was
bundling because if it's on the platform it's gonna get used. And now
I'm. You know it's interesting like that I'm thinking about the
blogging space and you know Google acquired blogger and you could
argue that that's an example of the platform Google owning blogger
owning that owning the having an unfair distribution of the
distribution channel owning the platform but blogger never had the
kind of market share that that iTunes does that that apple does
podcasting yeah it's true. Alright guy great it so we bring this one
home yes I think we should Graham separately you look at look at mit
Rollin and stature release at that's I wanna break mine down I like
that. Mineral while while it is a better company is really it there
really take a flyer on spending 5 on that thing their their revenues
right now are being I think like one 0.5 to 2 a year. And you you
really gotta believe that there is gonna be like up a big change in
the way that you can stick these businesses together to make that
change meaningfully and. Were I a betting man I'd bet against them. So
I make on the other hand though you know in defense of liberal. They
do have you know they are the the advertising network for some of the
biggest I guess. Which as we were saying was was one of the keys to
unlocking yes. Sure sure are I still don't know if it's 5 like I don't
know I I this is to me the old media company that has money lying
around sees their cash pile shrinking and is concerned about the
future and and seize the opportunity and talk to us. Seize the
opportunity but I. $5. For some the makes a you know 2 a year how much
data Facebook acquire push pop press for him we don't know but a lot
less than that yeah. Yeah I minerals D. for me I've mirror of the 2
companies minerals definitely my favorite but god that's a high price
tag. Stature. I. Could they about anything else. I mean like if if
there's another podcast client out there I guess stitcher RD has this
ad pipeline built in that they wouldn't have to sort of do themselves
but. To me it you know yeah it's just pointing minerals ad sales at
stitcher. I have more faith in that as sort of a small business than I
do back of them executing the larger opportunity of creating the top
to bottom ecosystem successfully so I'd say you know I'm I I'd go up
be on the this to track position just because they've already got
mineral and they can they can you know point those ads into stitcher
and I'm sure makes money out of it and get there for a half 0 out but.
I don't think you gonna pull this big shebang off. Yeah yeah the whole
the whole radio. Yeah I think I'm with you looking at them separately.
You know I mean 1 of the things with mid roll I'm not gonna be as
harsh as you it really even though the company was founded in 2010
like mid roll only started 2 years ago so you know. Yes like that was
a very healthy multiple whatever their revenue was like it was a
healthy multiple that they paid for it but I'm sure it's going very
quickly and if they can get a start to get some of the big big
publishers and represent them. Maybe there's more to it you know. I'm
not incredibly blessed but I'd give it maybe. See plus be minus now
you know again that the real issue is tam rate like that the whole key
to this is you have to unlock the tam the total addressable market and
you have to do that to an integrated platform which brings us to
stature rate and we have been hating on Stelzer in this way we can
with a with probably with with good because in this episode but again
like you know what you're just saying that I think is interesting like
who else were they gonna buy. I think what we're gonna do they knew
they had to have a client. And you know this is scripts that were
talking about and mid roll while you're great company a podcasting
companies not tech company to network and it's like a low tech at
network like spoken word you know just just as a people business not
attack business. So then have anybody that they could build this
internally and then who they go by like they're not gonna buy overcast
which I use in love you know that's. It's great my garment it's great
isn't it no way he's going to sell this to anybody went on scraps how
many I wonder how many users was walking past has a apoc account so I
don't know pocket cast could have been a potential one but stitcher
for all of its problems and we don't know how engage these users are
but they had 8 registered users now I bet a lot of those were last
users. But if you do the math they paid for a half $0 for 8 registered
users said they paid just over 50 cents. Per registered user. Yeah.
You know if if we get here. They can magically hire some great people
up to come in and actually build a really good can user experience
here. Like that's fairly cheap for like a pretty big head start again
I don't think they can pull this off so I'd give data I B. E. you know
it's not that we didn't spend much money on on stitcher. Yeah but that
I I'm handicapping the odds of the success who at a low but again if
they pull it off free they're gonna look brilliant ray lake if they
can pull it off I don't think they will they will spend you know 54.$5
to win this category. I don't think a couple of. Yeah. Hey I also just
read out in looking at crunchbase to see if if shifty jelly the
awesomely named parent company behind data pocket casts. If I if they
raise the money and credit crunch base to happen but they are really
an Australian based company so that explains our Australian listeners.
Very cool shout out down under yep you know anything about pocket
casts hit us up a and dislike community or I'm or by email would love
to chat about it okay so we move on to follow ups. And it's time time
alright 3 out quick but super interesting follow up this week first.
Twitch going way back to one of our earlier episodes. We talked a lot
in the episode about the massive unmet volume of of transactions that
are going through the twits platform and in tipping which for those
that are unfamiliar with tipping or did not listen to the episode
filmmaking listed I think is one of our really by one of our best
early episodes it's raw but but as good as any tensing here is very
raw is this amazing phenomenon onto its where people will just give
other people money Selig if you're streaming onto its and them for a
variety of reasons but your audience will just give you money
cultivate and when Amazon acquired twitch a couple years ago all of
this was just happening off the platform through overlays in screen
overlays that broadcasters would use. Yes but coiner pay pallor stuff
to do this they've now brought this on the platform they just launched
it with a feature called cheering on twitch and data and it uses a
virtual currency called bits and super interesting this is gonna
potentially unlock a massive revenue potential for twice the company
that is already happening in the ecosystem and and also want to give a
tip of the hat to you are slack community member James K. who I am
brought the star tension in the in the psyche by had not seen it sets
one to follow up to Facebook instant articles paper. R. I. P. how man
it was the best iOS app ever period hands down. What was so good. High
praise from Ben. Facebook paper is being shut down sadly but the
spirit lives on in instant articles within the main that within the
main apso and you never experienced paper you have until the end of
July to rush out download it play with it yeah so poor one out this
weekend for Facebook paper and and then and then lastly super
interesting we posted this in the slack community the SEC filing for a
link to and detailing all of the ins and outs and blow by blow of the
acquisition process came out and it is super interesting so willing to
this in the show notes and it's also in the select group but turns out
there were actually 5 parties involved in bidding for linkedin's of
Microsoft obviously and then. You know everybody assumed Seto and we
speculated on the so that sales force it's not come out sales force
was heavily involved in the acquisition but there were 3 others. To
have been identified as Google and Facebook the Facebook stories is
pretty interesting apparently I'm. Assuming that Facebook is the party
that is referred to in the filing Reid Hoffman had a meeting with the
CEO widow of the company of party de or whoever it was my second
Reagan. Said Hey you know this actually this acquisition process
filling thin going on like would face but be interested in and Zachary
was like no. Yeah so that was not a. Involved process Facebook. A
Google Paley went pretty far down the path and then so did the
mysterious party see nobody knows the party see is but they also spend
a lot of time looking at length in the other interesting thing in this
filing is the bidding war. So the first bids first bid it that
Microsoft put in for a linkedin was $160 a share. And if folks may
remember it the deal got done at 196. And so what happens and I think
that was about $5 worth of value that said the difference there answer
turned out so sales force and Microsoft were bidding against each
other start at 160 deal was on track to happen Microsoft had won it at
182 per se air. Good merger agreement was being negotiated everything
was going along. And then sales force our party a as it's referred to
in the filing just comes in over the top after after having me
essentially pulled out with a $200 per share bid came out of nowhere
but the bid was not all cash it was mostly stock and so that can it
through the prostate read whole big ranch in the process. The whole
deal with Microsoft had to get renegotiated them and ended up getting
done at 196 all cash. Wow. Great move sales force yeah yeah I mean I
hope that there read Hoffman and Jeff Weiner wrote a you have sent a
really nice bottle of wine to Mike Benny on-again. And and will now
compete against him yes I have should it should be the car out what's
there. I nice I could use week we've actually it's funny we mention
the ringer twice already on this podcast and I've had the ringer
itself has been my car about that the week it launched the Mike about
this week is one of my favorite writers of all time. Announced this
week that he will be starting at the ringer and that is mark Titus
won't mark is a fellow Ohio state alarm who I was known are still is
now on its is Twitter handle as club 0 and Eskimos awesome name of all
time because mark would ride the bench and. Would get put in for 1
minute per game so his stat line read 0. And so. You started this blog
called club 0 bullies and has stayed with the de I'm tagline views
from the end of the bench and he became this phenomenal sports writing
personality you just whole areas to follow on Twitter. And die he
wrote I think you wrote for grant land actually when now bill Simmons
was there so it really excited to see at mark's writing come back to
life at the at the rear. It's awesome a love that was he there when
you were there he was yeah I'd I get to watch is is few seconds again
when they've grown men. Yeah because my car up for the week is
actually a concept the aim management tool self management or of your
team's that probably a lot of you are familiar with called okay ours
objectives and key results and that I bring up because it said we just
past the midway point near so I was doing my. My mid year sort of self
review and check and I've been using okay ours for a couple years
they're really great acid the idea there is a core history behind it
Google uses okay ours and they were introduced to Google when they
were still tiny start up by John Doar from Chyna Perkins who was on
their board and so there's a great willing to in the show notes are
Rick cloud is a partner at Google ventures and had been 8 Google and
YouTube before that gives a great can have our long can overview about
how the day objective and goal setting process works at Google it's
really good I just use it myself I'm but it also is great for teams in
the ideas that you set up a small fine a number of objectives for
yourself in any period and an objective is a high level thing like
someone of mine is you know help my portfolio companies and then you
said K. ours are key results under each objective and that and the key
results have to be. Smart so. Specific measurable actionable realistic
and time bounded I think that's it anyway but still lake won like one
I have is spend at least 15 hours per quarter face to face with each
and founder of its portfolio company work cilic has to be super clear
did you hit this yes or no at the end of the quarter anyway it's a
great system that concept is you should really stretch yourself and
achieve half or less of your key results of their. Shout out to add
okay ours. Awesome well that about does it if 5 if you are currently
subscribed and would like to hear more you can subscribe from your
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for joining us till next time till next time.