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Hey, Acquired LPs. It is Ben. We wanted to share with you today an interview that I did with friend of the show, Gary Tan, at CollisionConf recently. When we set this up, I asked the folks at CollisionConf if it would be okay if I shared our interview with LPs, because I thought it would be really neat to be able to share that more broadly than just the conference, especially as this topic very much relates to a lot of the things we talk about on the show. And the good people there were kind enough to say, of course.
So here is an interview between myself and Gary about owning your own media stream. And as a lot of folks probably know, Gary started at a YC company back in the day, Posterous, or I think maybe Posterous, I don't quite remember, and then was a partner at YC and is now the co-founder and partner at Initialize Capital. And
And so it's a fun interview where we talk about how he thinks about a direct relationship with audience as a VC and as a YouTuber, and how he sees that playing out for startups that have their own sort of owned media channel with their audience too. So hope you enjoy.
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Like Vanta's 7,000 customers around the globe and go back to making your beer taste better, head on over to vanta.com slash acquired and just tell them that Ben and David sent you. And thanks to friend of the show, Christina, Vanta's CEO, all acquired listeners get $1,000 of free credit. Vanta.com slash acquired. Gary, great to see you. Ben, it's so great to hang out with you as always, and especially on a super cool topic like this one.
I know. No kidding. I'm imagining us in big armchairs on a stage somewhere in Toronto, but I'll take on Zoom for today. Yeah, it'll have to be poutine next year. For sure. For sure. Well, Gary, it's funny. As we were preparing for this, we had a lot of different topics in mind, and I got to sort of thinking, and in our prep conversation, I realized you're really one of the best people in the world at talking about
what it means to have an owned media channel and an owned media stream and a direct relationship with an audience versus say earned media or paid media. And I just want to start off sort of with an introductory question. How do you think about the differences between those things and how do you sort of define it?
Well, I guess Andreessen talks about it as going direct, right? And I think the funny thing is people have been going direct for an incredibly long time actually. And even for my story to come into tech and founding a company, that was part of watching someone else go out and have a direct relationship with founders and builders and engineers. And that was Paul Graham with Y Combinator.
He and his essays taught me that
I should go and I wasn't meant to have a job. I, as an engineer, could start companies. And he used his own direct experience being exactly that, a computer scientist who went to sell a company for tens of millions of dollars to Yahoo. And it was him talking about his own experience and the things he learned from that that became that magnet. And then on the back of that, he built Y Combinator, which is...
now created, you know, $400 billion worth of startups that including mine, which was a very, very small part of that. But, um, you know, to think about the magnitude of, you know, wealth that could be created based on literally essays. I mean, that's really powerful. And I think there was a whole generation of the legends in our business, whether it was Fred Wilson, um,
you know, Mark Suster, you know, there's so many people who Naval Ravikant even, right. Like with venture hacks, like these are people who through the printed word were able to, you know, teach an entire generation. And, you know, for me coming up behind these legends, I'm like,
it's 2021 or 2020, you know, when I first started looking at YouTube as a viable platform, actually late 2019. I was like, in 2019, you know, I could make another blog, but, you know,
what is the more direct way? And I realized, oh, well, I already have all this camera equipment and I love video and I love photography. Why not invest in, um, learning how to edit and learning how to write a script for myself. And so vlogging became like sort of my experiment that required many years to, um, actually develop. And, uh, I still feel like I'm at the very early end of, um,
How to go direct. But, you know, and that's and it's fun. I don't know. It's fun to do it that way, you know, and you've been doing it for quite some time with your podcast as well. Yeah, certainly. It's I'm curious. Yeah, I'd love to turn it on you. You know, how do you think how did you start podcasting? You know, what made you decide to do that?
Well, so Acquired's, as you know, a six-year-old podcast where we tell the stories of great companies just really started as a passion project. And I think we were in the right place at the right time where now there's sort of the 100,000 folks out there in our tech and investing ecosystem who listen to Acquired on a monthly basis. There are all sorts of interesting returns that show up from that, but I don't think it –
It was not premeditated. The premeditation was this would be fun to do with my co-host David, and I'm interested in learning. And it is funny how it can end up at this place where, well, now I have a way to talk to all these people, even when I have no news to announce. If we had to go through traditional...
media, you know, we would, it would only be if there was a story that we could tell a journalist, Hey, you should cover this story about this thing I'm doing. Um, and now, you know, I think the same way with, with you and YouTube, it is remarkable how you get that high frequency, high fidelity touch point with an audience, even when you don't have something newsworthy that, that sort of, uh, would have been required in the old world.
Yeah, absolutely. I mean, that was definitely a big part of it. You know, wanting to shine a light on in particular founders that I really believe in or startups that I really believe in. And you can always do like the back channel email and try to cultivate relationships. And we still do that because, you know, there are a lot of incredible reporters, incredible, you know, tech,
tech influencers out there who have huge audiences themselves and it's a privilege and honor to be able to get them to pay attention to the things you think are interesting. But yeah, there's always that moment where you're like, can I get someone all the way over? And it
it's so much, it's super fun to be able to just say, well, you know, we're going to do all that stuff and call our favors for this founder we backed, but I'm also going to talk about why I backed it. And for you to be, you know, in the conversation and to have a direct relationship with people who follow you, it's, you know, it is a two-way street, right? Like you have to be really careful about what you put out. You know, it's,
you can't just put out things that just because we funded it doesn't mean it should go on the youtube channel yeah i want to look at things that are actually useful for the person who might be watching it and um and it's interesting because i see that in what people click on and you know it sucks to be a little bit ruled by view count it's almost um a part of being a creator is now what i realize you know you get that extreme dopamine hit when you get that you know all the
all-time high you know number one video that you know the best video you've done in 10 videos and it feels horrible when people don't click so it's interesting to see the effects even internally on what you put out but yeah you know i put out a video for instance with a portfolio company called cohere which is doing amazing work letting you go in and do a uh superhuman style onboard
through your web browser and they're just adding audio and video as well so you can actually pop up and just say hello to your user. It's just a really powerful new service that founders should know about and so I did a launch video with their TechCrunch and all of that when we invested and the coolest thing is I got an email from the founders they said they got 20 pretty much
you know, they got something like two dozen customers paying off of just that video. And I'm like, that's awesome. That's, you know, if I can do that, I want to do that like a thousand times more. And then that, that helps me as an investor, because that becomes one of the reasons why people should take money from initialized actually. Yeah.
Well, yeah, it's interesting you talk about YouTube there. As I think about levels of directness with an audience, there's a relationship where you literally have their email address and you can email them. And maybe even closer would be like a phone number. And then you sort of have YouTube where it's a platform. There's a little bit of disintermediation there, but they're following you on that platform. There's this emerging platform, Clubhouse, which feels like maybe one more layer of indirection where...
of course people are following you, but it being so ephemeral and in the moment, it's not as tightly coupled as a direct relationship. I'm curious to hear how you think about all the experiments that you've run on Clubhouse and how you use the platform and how you'd sort of compare and contrast it against your experience on YouTube. Oh man, I love Clubhouse. You know,
small personal investor and a really big fan of Paul and Rohan and just the whole team there.
I remember trying it like as one of the maybe the first hundred people to try it back in April of last year and it hit perfectly because we're exactly a month into the pandemic and I was sort of desperate for you know contact with other smart people yeah just you were everyone was so isolated and um
You know, I think I actually sort of went overboard on it. And that's one of the really tricky things when it comes to some of these platforms. You know, I think I was on it for going on five to 10 hours, maybe 20 hours a week at times, you know, especially in the first part of this year. And it's funny to go on Twitter and see people sort of say, oh, I'm just not into it as much.
And I would argue that it's actually more important for Clubhouse to be something that is one to five hours a week and not 20 hours a week. Because back in the day, I actually funded a company that had that sort of 10 to 20 hours a week extreme engagement program.
Um, with like beyond Facebook level cohort retention, uh, you know, I mean, it was like 50%, you know, week on week retention. And, uh, it was called secret. If you remember that, um, sort of the semi anonymous social network. And it was, you know, again, also like absolutely insane rounds, round after round and, uh, insane retention. But, um,
The downside to having that kind of retention is people burn out. And that's what we saw in those cohorts. Like at six months, people would go from 50% retention to like 5% or 2% retention because you couldn't turn it off. The dopamine hits were too strong. And people had to go into rehab, which is like deleting the app. So I would say that Clubhouse had that and is actually really smart to have people
you know, continued engagement, but you don't want 20 hours a week. You want people at like every, every single week, one to five hours. And so, yeah,
I would say that's what I've also had to treat myself to. And the good thing is I'll go on one to four hours a week, one to two hours a week now, and I have a ton of fun on that time. And then that's sustainable. That can fit in my life. And I think that that's better for Clubhouse long term. You'd rather have long, long cohorts that are in there for a sustainable amount of period, basically for the rest of their lives, than...
you know, crazy, like drug addiction level engagement, and then like rehab. That's a great point.
I'm curious as a creator for you, when you think about all the different places you could invest your time in terms of media, types of media to create and types of, you know, effectively marketing activities to do on behalf of you or initialize your companies. Is there something from Clubhouse that you can get that you can't get from other platforms?
Yeah, I think you can get actually real community. And we're seeing that in other portfolio companies that have huge communities as well. You know, I'm on the board of Career Karma, which is this insane thing that everyone should check out. And if you have friends in your life who want to break into tech but don't know how to, Career Karma is literally the community for that. And, you know, they're helping tens of thousands of people find the coding boot camp, but also PM boot camp, data science boot camp,
that's like sort of right for them. But the really interesting thing about it is a lot of the fellowship and community is actually happening
through audio voice rooms. So they launched that within, Clubhouse happened, they basically home-rolled their own Clubhouse and it's growing the platform massively. And it's turned into another place where people are, it's like a vertical special purpose community around how do I break into tech? And Ruben Harris, one of the founders of Career Karma, he's a really great story of being able to do
Exactly that, becoming a creator and then founding a community and startup off of that. You know, what he was able to do was he was actually able to
to build a eight figure a year ARR growing business, they're growing like five X a year right now, it's completely insane. And they started with a podcast which was called Breaking Into Startups. And so that blew my, that blows my mind. Like it's sort of like the perfect, taking what we were saying earlier is like go direct, have like something of value that,
people really sort of rally around and learn a lot from. And then he turned it into a huge startup that's growing super fast that itself looked at audio rooms and it's like audio rooms are actually the next evolution of
sitting around a campfire, being able to build community with people who you've never met. I feel like I've made dozens of friends who I never would have met in any other context because we can just go into this clubhouse campfire every night and you don't know. And there's like 100 different campfires you could join and you never know what you're going to get.
It's interesting thinking about that social audio room as the community layer for all these different types of applications. And as I...
there's different types of community modalities. I was thinking about this in the acquired context. We blast out an episode, tens of thousands to 100,000 people listen to it. But before we started our Slack community, which has 7,000, 8,000 people in it, you never really got that tight feedback loop with a community. But once you introduce that signal that flows back upstream, then there's all this goodness that can happen. And of course, in the podcast business, it's
sponsors that reach out through it or people who give you guest ideas or companies that we've invested in that sort of come through that channel. And it...
I think the thing that you're describing is a huge insight for every startup that turning your customers instead of just your customers, but really into your community, be it through social audio rooms or text-based audio rooms. I mean, we just saw that huge funding announcement of the Seattle Company Common Room. The notion of customers are...
smart companies are turning customers into community, I think is really powerful. Yeah, I think that's like sort of the defining evolution of business right now. I mean,
You know, Mr. Beast, who we've got to hang out on Clubhouse a bunch and I've gotten to know him better, which is like not something I expected to ever do. He's, you know, in his early 20s, has built the most dominant YouTube channel that's ever existed. We all basically think he'll be the first YouTube creator billionaire. And he created a burger chain that was, you know, trending number one on the App Store basically overnight. Right.
like spending zero dollars to do it. And, you know, he created Mr. Beast Burger, which has more downloads and more credit cards than,
You know, you could imagine like any other fast food, like, you know, take Burger King, take even McDonald's. And I would argue that he has more installs and more credit cards. You know, he basically could stand up something that maybe rivals DoorDash or Uber Eats like overnight. And then he has a direct. Did he build that on like a cloud kitchen type thing? Like, did he leverage infrastructure of a distributed sort of ghost platform?
backend restaurant system. How does that work? Yeah. He said that he made, went out of his way to find real mom and pop restaurants and never use ghost kitchens because, and so he's, you know, very mission driven as well. And so that's the interesting thing, right? To your point, you know, I think the modern time is more alienating than it has ever been. And corporations and a corporate face like Burger King, you know,
probably doesn't care about you that much. It's the big faceless corporation. But Jimmy, Mr. Beast, who millions of people hang out with for an hour a week every single week, they can have a parasocial direct relationship with them, right?
And and so he can spin up a brand that rivals that of large corporations basically overnight. And, you know, I think that that's a really powerful thing. And, you know, to go back to Paul Graham with Y Combinator, you know, he didn't the essays helped him start YC, but then he created Hacker News.
And then Hacker News taught me so much and gave me so many, you know, I have hired people off of, you know, Hacker News, some of my best friends came out of that. And, you know, it's really cool to hear about what you're doing with Slack and Acquired because that's actually the same sort of trend. It's like, you know, you as the creator with the Acquired podcast, you're attracting a set of people who are
are interested in this. And then those people, if they get to know each other, they can do anything, right? There's like self-selecting set of people who are among the smartest and most driven in our society. And I'm like, that's amazing. That's super, you know, more Hacker News, more YC, more Acquired Podcast. Like, you know, I need to start my Slack or my Discord. I'm trying to figure out like which to use actually.
Well, I'll tell you, a big part of that inspiration is our lead investor at Pioneer Square Labs is Foundry Group. And Brad Feld always talks about within the CEO group there that as much as it's hub and spoke between Foundry and their CEOs, they really try and cultivate this mesh network community. And I think that's a wonderful and nerdy way to put it, that if we can create...
the connectivity between people who listen to acquired, um, or any company who creates those relationships where people are engaging with each other around your brand, around your company, around your mission, that's exponentially more powerful than all the, the, the connections that could possibly happen back to the central node. And I think that that just gives a business so much leverage. Yeah. That's Metcalfe's law right there. Totally. Totally. Totally.
Of course, it gives up a little bit of control, but we in technology are very much in the business of trying to sacrifice ultimate control to get that kind of leverage and make the biggest change in the world. That sounds right. Yeah. Well, Gary, this has been super fun. I think it's about time that we toss it back to the Collision folks in Toronto, and hopefully we'll get a chance to check in in future years.
Yeah, we will. See you in Toronto next year. See you next year.
