Acquired Episode 16: Midroll + Stitcher (acquired by Scripps)
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We like to think our one listener that we see in .

our analytics on zoo and the one listener on sitter who .

happens to .

be my wife, great.

Wait you, wait you, wait you. Who got? Easy you, easy you with you, sit me down, say.

Welcome back to episode sixteen of acquired the podcast where we talk about technology acquisitions. I'm been gilbert. I'm David s, and we are your hosts today.

We have a few notes before we dive into IT. I wanted to take a minute and say huge thank you to one of our listeners, David reznik. He's known as the resonator in slack.

David is an entrepreneur company called beter, but in a former career, he was a recording engineer and music producer. David's been helping us tremendously with audio quality, so I wanted to give a shout out his company. Best is a platform to share the best things, create your best into topics with automated images and links.

You can use their widget with your branding embedded on your website. Find out more at best. Dot co, that's W, W, W, D, B, E, S, T, R. Dot C, O, which brings me to my next point, David, I regrading .

announcement alert. yeah.

Do, do, do, do, do, do. If this were really high production podcast, we would have, that's right. We wanted to do something a little bit different. Uh, with this podcast. We're at about the size where we could start doing some, some advertising and actually begin to our analytica little bit later the episode as as part of the topic of the show. Instead, we wanted to do something called community showcase and said, so many of our listeners ers are entrepreneurs that are building things, product people at companies or or venture capitalists, or 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 going to experiment with this. We're not charging anything or making any money on this. But um we really just wanted to um do IT as a thank you to our community and listeners and and especially those that are really engaged on on the slack channel and and emAiling us. Um so if you have something you're working on and you want us to talk about IT on the show, I do hit us up in the slack community or send us .

email and that's a acquired F M at g mail 点 com also .

on our website and h we will aim to do， uh start with one and maybe more of these every show. Let us know what you think.

Yes, true. You can hit up on on twitter to add acquired FM and we may do a more kind of traditional advertising thing later. But if you work in on something, we'd love to give you a shout on the shell. So David.

ready to dive in. I think with that, all of the preambles here is very appropriate because this episode de is a matter episode. Did a about podcasts?

Yes, today, uh on this episode sixteen, we will be covering the acquisition by scripts of both mineral and stitcher. So um I think we will dive right into a day if you want to do history .

in facts and I and I should say before we the theme here was was topic was first inspired by my wife Jenny, I wanted to make sure I give her a shout out. SHE was trying to get to our website and he was googling acquired podcast and realized that we weren't in the top hits on seo. So this is a unabashed seo play to get to the top the top of the google hits on for acquired podcast.

This is the first time hearing of this.

Um so uh E W script company, for those that are not familiar, is a very old company by technology standards. Ds is not a technology company. They are a broadcast media company and historically have also been a newspaper publisher. But they uh Operate a number of cable networks and television and radio broadcasting stations uh locally around the country.

And in the over the last two years, they've made two acquisitions that have made a huge splash in the business of podcasting space, um something that then and I i've gotten to know a little bit about over last year. So the first company that they bought was A A bootstrapped start up a called mid role and mineral has a super interesting history, a some of violence stener might be familiar with parts of the company. Um IT was started in two thousand ten by two guys, Scott OK men and jeff earlier.

And IT was started as a company called airwolf. IT was actually a comedy podcasting network. So Scott had a podcast that was part of N L A L A.

I had A A radio comedy show that I believe was originally called comedy depth. Ray, I think. And they eventually change the name of IT as a podcast, a comedy bang bang.

And he had a unch of comedians on the show, and he had a pretty loyal following. And so they decided to sort to start a podcasting network around IT. So they added a bunch of other comedy shows, uh and culture shows and music podcast over time.

And yes, I was comedy death ate that started as and and actually originally the origins of IT were in the upright citizens parga ade stand up comedy and in the hollywood, uh, that's got that started doing there and and then I actually went on separate from what the company that became mural, uh, comedy, bang bang went on to become a television show on I F C, A comedy television show. So interesting routes for what is today, the giant among midges in the in the past, the world, so that the boots trapped this company. Uh, for a couple years there were just purely a content network.

And then in two thousand and fourteen, they were doing their own advertising for for all the podcast in the network. They were direct selling ads and they started getting approach by advertisers who wanted to buy ad space on other podcasts that aren't part of their own network of shows that they are producing. They kind thought, well, that's interesting. So they launched A A separate product, uh, that was an ad and an add newt, one of the first, if not the first, add network for the broadcasting industry. This was in two thousand and fourteen.

They called IT mid role media. That gives you a sense how knew this whole thing is. I mean, is is less than two years ago.

less than two years ago, which is crazy given the, you know podcasting has been around for over ten years. You going back to the ipod.

yeah pretty new to a the an advertising this revenue really, really something .

at all yeah and and will get into this in tech tims and others. But you know this industry uh, the podcasting industry is so fragmented relative to like how many people millions, hundreds of millions of people listen to podcast.

Ah so from the press release when they are launched in role, this the new company uh mid role offers a three hundred and sixty degree sweet of production, distribution and monodist ation services to artists, entertainers and thought leaders. Advertisers benefit from access to the talented hosts of more than one hundred and twenty shows, and they are engaged audiences totally more than fifteen million downloads a month using the industry y's first user focused self service platform. So this is crazy.

This is two thousand and fourteen. The first self service advertising platform for the podcasting industry has one hundred and twenty six. I mean, compare that topic ad networks for display ads or other forms of advertising, advertising.

you know, millions and millions .

of advertisers, millions like this.

maybe millions of hundreds of thousand and millions of advertising.

This is like a Green of sand compared to like every beach on earth.

Yeah and and IT, we'll get to the dollar amounts too. But again.

a great to stand. But they sign up some pretty large podcast to be part of the network. So WTF with mark marine, which is one of the largest podcast out there, barack obama was on IT recently. They have built sions podcast and all the ringer podcasts. So about a year after this and one year ago now, script comes in and they buy the company. And he was not announced at the time how much they paid for IT but has since come out uh reported fifty million dollars up front and another ten million dollar earn out to basically take out like the giant in this industry, which pretty good return for for um sarten jeff, considering that you know this was totally breached to everything.

never raised any money. Yeah, yeah. I mean, fifty million is is. Well, let's where I to beat her on the bush. Walk into the numbers now. Podcast advertising, there's not that much money spent right now in podcasting as a medium, according to A A wall street journal article from earlier this year, advertisers are only expected to spend about thirty five million on podcast this year, and that's only up about two percent from last year yeah whole industry.

thirty five million across the whole industry of which mineral represents many of the largest podcast but no where near the whole industry I don't .

know about nowhere near. I think it's it's not ridiculous to say that the majority of the the advertising spend goes through .

middle of the independent podcast probably, but the .

largest podcast are probably good, like P, R, american. Yeah, yeah. Good point. There was a quote by the um um someone at mitral saying that a handful of their pod casters grow over a million dollars a year and theyve about a thirty percent take rate. So actually factory back at that looks like mitral and revenue is somewhere in the neighbor .

d of two million dollars a year. Yeah wo so uh script requires this company about a year ago, almost exactly a year ago, um they Operated for year. Uh team stays in tax. The C E O um the middle brow n in a an outside CEO adam sack, I believe he's still A C E O the company. And then just a couple weeks ago, the other shooter rops.

So one of the issues which again will get into that's been holding the podcasting industry back again relative to how much usage and engagement IT has as a media platform uh with with people and users out there, the amount of advertising spending IT is the the all pillars of the the platform are basically completely divorced from one another. So you have the way people listen to and consume the user experience, consume podcast via clients or streaming over websites. That's completely divorced from where the pakistan are hosted with media host, and that is also completely divorced .

from the vert as a quick decide what I of our stack and process looks like. So people get a sense and and this is not unusual. I think these parts are swapped them out, but they are they they're rarely consolidate just to start the whole process.

D, F, M domain names are expensive, so you're not go out and get you know, uh, a dollar, go at you drop p one hundred bucks on picking up your your data FM domain name because that's as the hotness these days. So uh, you need some way to have a consumer facing website. So we have we have.

Square space for that. So square space generates our R S S feed and gives us a public facing site. Now the way that we deliver podcast over almost any client is by submitting that R S S feed to the itunes directory.

Now itunes doesn't host anything. They merely have A U R L pointing at your R S S feed, which they scan about once a day unless you manually force IT and then they update their directory with where your M P three are hosted. Now we need a place to host empty trees.

Um a lot of people use sound cloud. A lot of people will use a similar pod track for a while. We were actually hosting them on square space, but you don't get a lot analytics that way.

So then you need a hosting service. So we use libin for that who who's actually been really great. So you you pay for a hosting service to host your M P3 es at which you R S S feed points。

So so now we've we've got just to get this this podcast in the in the years of udal listeners, we have to go through three companies.

Yeah so then it's in itunes um and there's A A player that ships with with IOS. Obviously that or you can use itunes on the desktop that that points at the itunes directory, but it's made available for others to point to also. So uh, overcast or pocket cast or there is a variety of players that a lot of you are listening to, mostly on your IOS devices, over eighty percent on on I O S devices.

And again, that's completely decoupled from all the other pieces of the 一个 system。 So at the end of the day, if you are advertising on a podcast, all you really know is that your name and company was mentioned at an M P three that got ship down to potentially an unknown number of people using an unknown number of platforms. And you don't even know if they heard IT.

Yeah and comparing contrast that to other technology abled media platforms like medium for blogger or facebook, which you've talked about a bunch or twitter or instagram, you know all of those the consumption of the content by users, the hosting of the content for uh, content producers and the advertising platform are all very tightly coupled .

into one product. And in fact, IT, it's it's the reason that those industries is the the incredible measured and the very tight coupling of all those components are the reason why those became dominant advertising platform. I mean, uh h for direct response ads especially but um even brand advertising requires .

a of measure beo d available sting, both load of money to read their advertisements on our show. We basically could tell them nothing about yeah what happened.

We actually is this a good time? Should we share to share what our our numbers look like here?

Yeah, yeah. Let's do. Let's do that memo.

Pick the story back up. cool. So here's here's what we could tell them. We could tell them. I'm looking at our linked in episode two episodes ago that we have a about sixty four hundred listener's, which is you know unique a unique ips that have download of the URL.

We are non representative most of the time sixty to seventy percent uh or higher of of listens are going to come through apples IOS player we actually have of of that. Uh, why is sixty four hundred about forty one hundred come from pocket cast? They they were kind enough to feature us on the home page.

So a lot of you are play listening through the pocket test APP about a thousand from apple, two hundred ninety seven from mark s overcast and then trickled on down from there through various browsers of people listening on the website. But we basically can tell them um a little bit about geography. We can tell the I P addresses in cities that people are coming from and the clients, but we have no idea how many people actually got to that point in the episode.

That's one of the critical pizza. We can tell them how many of you actually heard what we would be being paid to say.

right? And and everybody you know you hear those promo codes in a lot of podcast that gave you that nice ten percent off. That is literally the only way that the advertiser has to attribute to that channel. So uh a lot of the times um you know you might hear uh uh an ad for square space and you go to square of space, you sign up, but you don't type in the code that that never ends up getting attributed to that that podcast.

The loop doesn't get close then. So so you get a little bit of the picture of some of the chAllenges with the industry. So scripts actually other people have tried this before, but scripts actually is really brilliant here. Like they see there is a huge arbitrary right now between the user, listener, uh numbers and engagement on podcast as a whole medium and the complete cluster that uh is the state of any kind of advertising rattle and analytics on the platform. And so the way you the only way you can solve this is to own the false stack and bring IT together.

One way to to uh own any sort of um advertising on the back and would be to be the hosting and to be the analytics. But you couldn't do the measured unless you have the the front end two.

So on the web you could run java script and understand, you know has an add been served, people clicking IT how long has have been on side? How long has have been show? Anyway, in a in a podcast, you'd need to get a player that had a pretty serious market share in order to actually understand impressions are doing anything fancy around.

You know, during this part of the podcast, there is going to be something popping up. And if you want to tap that button, it'll take you directly to the sites. So you don't have to remember that type IT .

in later or even just possibly to know, just like on instagram, like did somebody actually see that, right? So a couple weeks ago, the other shoe drops and scripts acquires a company called stitch. We'd say we would 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.

Jenny is my wife. He loves stitcher. So stitch is a podcast client, uh, for mobile devices. And IT was kind of an interesting story. IT was founded in two thousand eight by three guys know a shank, Peter divo and mike Jeffery. And just like now in two thousand eight, podcast war also experiencing A A tred growth piece.

And stitcher managed to raise quite a bit adventure money uh to go after this vision of creating creating the front door, the aggregated user experience client to become dominant podcasting podcasting climb. So they raised about twenty five million dollars over three rounds, at first from new atlantic ventures and then from benchmark and then from any a. And unfortunately, I didn't work.

So in two thousand and fourteen, about the same time that mid drawl was getting launched, a twitter actually ends up getting acquired by the french music streaming company, deer, the sort of spotify competitor. And that didn't work out too grade either. IT sort of languishes within within deese. Er and then last month, scripts bought stitcher back from diesel, and we don't know how much diesel required IT for, but we do know that was naqua ghe. So not much and so scripts by a stitcher for the prince ely sum of four and and a half million dollars .

in cash yeah that so this is the company that .

had raised twenty five million dollars as a venture back start up failed, been acquired red by another venture back startup and then now is being bought by scripts for four and a half million dollars yeah .

and so know the strategy makes a lot of sense. All the sudden your coupling the ability to really turn on the ad sales funded with with mitral with the ability to have a front end client that you could instrument and do some creative things around to do, do advertising. At the end of the day, IOS is still the dominant platform that people listen to the podcast on in its ships with a podcast client. So the chAllenge ahead is to be able to figure out a way to mix picture, appealing to people that they would actually go and seek out another way to listen a podcast, rather than use the the guilt apple one.

And again, like script gets like this is the play that you would run if you want to actually unlocked the value in the paksas ecosystem. So adam sistema, who's the chief digits officer at crypts, who let the acquisition he was quoted in the press reality says basically saying just what happens at know um we certainly have the add sales force and the connections that make us a leader in the space.

But today, we depend almost exclusively on distribution into other channels. This puts in place with a very strong brand, arguably with stitching very strong brand. Another piece of the puzzle in the ecosystem .

play yeah just I don't know it's a bias or if it's whatever I think the stitching is garbage like every time I open the thing .

IT is is yeah so let's get into wise teacher is garbage. So the the tech industry and especially the corner of the tech industry that is concerned with podcast or have podcast of their own, basically like erupted in an outcry when this happens. John gruber, who hosts the talk show, which might be the largest, most influential technology podcast, he wrote by post h saying, mineral owning stitcher is not good for the podcasting o system.

Stitcher is popular, but my show is not on stitch because twitter repost the audio compresses IT to hell. And unless you up in search their own, in search their own ads, that's not how podcasting is supposed to work. I firmly believe podcasting .

should be open lib. So ruber is a rumpy old man on this one. I mean, I think that there's A A lot of things where I don't believe that the user experience delivered by um my teacher is is very good and I don't think the fact that there are compressing the audio is great. You know, you wanna let pod casters can have creative freedom on that. I think the way they currently deliver add this kind of garbage.

I the this 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 we in a place where if somebody creates the bloggers or medium or the worst cases, everyone's mind is the facebook a of podcasting is the world worst? I think there is a very valuable business to be made there, and I think you can provide a potentially podcasting to more people than than here today because you come up with A A real sustainable business around IT.

There are definitely some sacrifices that, that would have to be made there because I think that ultimately would be a programmatic ad network with. A full betting system, the way that Edwards is or the way that facebook ads are. And you know, maybe that that upsets a lot of people and changes the way that that IT works a little bit. But I think IT makes .

podcasting. And yes, I totally, completely degree group is being a grumpy old man here. The problem isn't what stitcher is doing, it's that they're doing a really crappy job of IT. And like the parallels here, and I actually I completely to agree, I think the opportunity is huge to create as terrified as gruber and ben Thompson, you know, another one of our folks we talk about on the show, or he has a blog posted about about their sons techy and talks about on his podcast, which is excEllent exponent, that is with James all worth, they're terrified of the facebook ization of podcast. But the difference between facebook and stitcher is, like we talked about in the instant articles episode, facebook cares a lot about 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 their host self hosting IT within facebook and then they are serving ads that they are in inserting into IT um and then sharing that ad revenue with publishers. It's the exact same dynamics, the differences facebook acquired. Push pop press to do this very, very beautifully. And the ture is a peace crap.

Yeah here you know, statured s under new management now. So i'm very curious. Mima strikes me as a very, very tasty company. And you know, mitral might do really good things with teacher I worry about and it's great. But the question .

is there a bunch of questions that will dive into um the first question is what can stitcher become as part of mid role in this part of scripts? And that's interesting. You know talking about in the context of our show, we've never really seen something like this, at least on our show goes successfully before.

We are requiring a products that you know, again, we're hating on stitcher here. Apologies to all the one stitcher fans, let's need to this. But we've never really seen IT a product be acquired that isn't fundamentally like a good product. And then so they're sort of .

like betting on hope here.

okay. Well, that was all different. But you know like that isn't like a technology company with a great team behind IT and the capability within the company to at least deliver him the minimum viable product here. There there is 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 abled user interface.

Yeah and have we seen um an example? I don't think we've got an example on the show yet where a company does actually take that back. We sort assault with office, but that where is going as a company does multiple acquisitions and sort of combines them in a of a classic conomo to uh, build a new product from combining existing ones. And the the example thing there is, is with a uh the a complete acquisition building sunrise calendar into a company. But now we have yet to see if that is a product success or market success yet.

Yeah yeah well and there you know the difference there too is like the parent company acquiring them all was microsoft. You know you can say whatever you want about microsoft, but there are a lot more their technology chops are .

a lot Better than scripts yeah for sure.

Um so where we're obviously biased by being part of the data picker system, but I am very excited to see what entrepreneurs come up with a with new the nova businesses to tackle this problem.

yeah. And so now we're talking about all the weird forces at play podcasting right now. And in kind of the awareness of the ecosystem, there's sort of secret meetings going on with apple and and some of the bigger a bigger publishers and existing podcasts ers to understand you, should we make this something where it's actually A A motorized platform and they own the ecosystem top to bottom?

And one of the things that sort of playing into that, what the reason everyone's maintain a big deal is because the cost per thousand impressions of the cpm that podcasting commands, at least right now, and may be attributable to the audience that IT has being a very high value audience. But they've hundred dollars C P, ms. And for anyone in in sort of advertising um or who is done online advertising, it's pretty unreal.

Yeah the average due to cpm in twenty fourteen was fourteen dollars. Web display ads can get anywhere from ten dollars, five dollars. Podcasting is is like total breakout.

And you know that's that's the ceiling with hundred doors cpm. And um I think for this show we'd be summer between twenty five and fifty dollars. But the people that are making their living as sort of independent podcasts ers right now are doing great.

doing great if you have an audience and you're an independent power castle, you can do great.

yep. And actually ben Thompson makes a good case a while ago before the ringer started about how bill Simons could move to solely podcasting how it's uh much more economical actually if you're a writer but you're also um someone who can do a show to write for free and publish that as your legion and then modified your your podcast .

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thanks to huntress may be jump in the acquired category. So I mean, I think it's pretty clear here. This is a product acquisition that is getting rolled into this sweet of products. Yep, yep.

Gotta be if they can day he change these things together correctly, there's A A bunch of money to be made. I think I think IT involves having exclusive content. It's hard for me to a region a reason to go download a podcast player to play well. It's hard for me to imagine going and downloading stitcher to listen to content that I could get otherwise. But if IT became sort of a netflix type thing where they're producing original content and signing exclusive artist, 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 be a .

critical business there yeah and and this is very exploitable, theyve said. So this is their plan. And so, mid row was already had two pieces of the ecosystem together with the content network and the advertising network。 In a news article, in an interview after the acquisition of stitcher, this kind of came the middle is just come out with a new premium service called hole, which offers original shows and ad free archives of popular podcast.

So they're clearly moving into this kind of netflix type category and they interviews the the president of the V P. A. Business development in mid role erda. And they say and he says, clearly, at some point the two will intersect.

Yeah, yeah, yeah. okay. Moving on to do you want to do what would have happened otherwise?

yeah. I mean, I thinking 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 three pillars of this medium together. So I think I think otherwise, like we would just continue to drift.

Yes, stitch continues to languish mid role, continues to grow in grammer and is able to sell to you know the sell ads to um some of the big but not network big podcast. And um we continue to see a lack of consolidation and no money go to podcasting. yep.

And it's interesting in the this almost the like, not what would have happened otherwise, but what will happen now. I do wonder if this is like the shot across the bow that wakes up some folks in the entrepreneur and start of community to realize and there's a big opportunity here and build or attempt to build. You know what's teacher tried to in the beginning?

Yeah, David feels like your team. Me up a little bit. We we actually gave this a go at pine square labs, and we were really interested in podcasting just based on the growth trajectory of the amount of people that have started liking to to podcast in the last couple years.

Um it's still not a huge number of people, but the growth rates really good. And one of the reasons I mean for all the reasons on this show that we've already talked about IT, we we shed away from IT where you know that is there's only know thirty to forty million dollars spent years on IT. 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 um because you know shipping with the platform is a huge vantage. There was one thing that we really wanted to do.

And that was dynamic ad insertion so that we could sell ads programmatically. And one thing that we felt that was super important was for the host to be able to read the ads because that's been one of the things that commands the really high cpm um in the world today. And one way that we were going to do that is have the host go through and and record ahead of time the um the ad reads and then we could insert in the host own voice anywhere throughout the the audio that's cool the ads.

So we started you looking at this when we started figuring out, okay cool. We can make like ten M P three U L S and dynamically generate those um episodes with the appropriate ad for that person at the moment that IT gets download by their podcast clients. And it's specifically to them.

We started looking around the really awesome some people tackling this right now is a company called a cast that's doing dynamic ad insertion. Actually, just recently, a panoplie launched uh uh a company called mega phone or I is a product called mega one dt F M. And they also are doing the dynamic ad insertion.

They've got this cool U I, where if you're a an advertiser or A A host, you can go in and and select the spots where you wanted. Insert the the ad. So, you know, some people are making runs at this. I I continue to think that you need to be able to show our show real measured from the the client side. But who knows, maybe maybe some crazy al change and an apple have an A P, I to plug into for that there there are suddenly not diverse to um um to .

service revenue.

Well yeah and and an advertising model as we're seeing um 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 uh of podcast advertisers. I don't know.

Yeah two things I want to I want to make one just mention real quick. Um I feel like we haven't quite sharply pointed out yet. The other dynamic that's really interesting in this industry is apple. I mean, apple like 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. It's funny. They they sort of inherited two people were creating podcast and sending them around at hawk and they were people were putting them on their ipods.

And then finally, apple put a podcast section of the itunes music store, which was just a directory and not a hosting service for people to do this. And it's so funny that it's still know, even called podcasting, right? Like nobody hasn't I pot anymore.

And the apples just like accidentally had this naca huge opportunity unfold that they're really not taking an advantage because really not an apple type business there. Apple classically cells a hardware and makes a profit on that hardware and then has software and services to differences that experience. And that doesn't sound like what this is at all. But in this new kind of shifting, apple, maybe we'll see this. But my bet would still be on apple letting yet.

Just know. And and also, you know, I want to bring up one thing that we've thought about i've thought about you know before and preparing for the show is like a Better lot of listeners are saying, well, hey, I mean, like what you guys are talking about, our exists it's called sound cloud um and like that's two to a certain extent but I think I think sound cloud and apple both like they're very focused on music um actually just right before we started recording the show went through the um for some reason my old sound cloud account got delivered or something and I went through the .

on boarding .

process twitter's investment twitter er's investment and and and and do the on boarding process like it's super clear that town claud is about music and they pushing people in music not to podcasting and and saying with apple you know they are invested bought beats uh maybe will cover that in the future show you can read IT apple music they are investing a lot that um but nobody is really doing this you know I think you if you're gna build a really great client and consumer experience like .

IT has to be about podcast yeah yeah.

Second thing I want to to to real quick um you know but this is a great example since you were talking about psc. I'm curious a bit a lot of our listeners are curious like what's your process of p sl? Like how did you guys when you're diving into podcast? Like what did you do to validate the market? Like how do you look at this?

yeah. So a lot of the times we start with the space that we think is interesting, and that's what we did here. And I really you know, i'm kind of a guy that buys all of our our social and search and um in sort of knowing exactly how the 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 touch with someone at at mineral and there's a mining.

right?

Yeah it's uh it's a completely imaging market. And so we started pushing on that opportunity and trying to figure, okay, what would that look like if if we actually pursue this? So we we do two things we do of the top down, on the bottom up and from the top down.

Um you know we look at what is the market today and what market forces do we think we will make? What does IT look like in five or ten years. And obviously, that's a guess, but we try and make that an educated guess.

And we look at things like, you know, in this, apple could be either a big risk or a potentially make this lot easier and that IT would be all about time. So we look at the sort of that top down of, okay, how much how much money could this business really make? What's a temper? And we do a bottom up.

And I think that if we were A A V C firm would just do the top down and if I was an entrepreneur would just do the bottom. But since we're sort of both you know that the kind of start up studio is um responsible for both sides of the house in the early stages, a deciding whether to go after the opportunity and actually doing some of the building. Um once I kind of passes that sniff test of this could be a big business, which this one didn't, then we start really validating um can we acquire customers for significantly less than the lifetime customer value? You know, building a as light weight of stuff as we could and we really can think of a good way to light weight test this because again, you'd have to be the the host, the analytics provider ship decent clined adoption at the years years long process. And IT could be an interesting business, just not one that we could do in sort of A A short um early validation, timely m.

which again kind of brings us back to this dilema we know will see what happens with the set of acquisitions from scripts. But the dilema that the industries in where like it's kind of hard to just start a company to fix this, like to just start facebook, you know, or just start instagram, you have to do a lot more heavy lifting than they did a front.

And you have to contend with these players like apple that are huge, sly, dominant in the industry. But a really complex set of motivations. I would have to have .

a lot of confidence there to make a big investment in this that apple wasn't going to flip some switch because IT seems like while it's not their real house, huge risk to your business.

Yeah at the same time, like there is like let's be clear, like as A V, C, I believe and you proud, I believe, to band. Like the numbers don't lie. Like there's a massive ve opportunity here.

Yeah something will happen in podcasting. Not totally clear out of shake out and the are are big question increase. This one is do we think it's going to be these guys?

Let's move on to tech teams and cover that. So I feel like we were dancing around this a little bit in talking about how the kind of the distribution of the audience and listeners is, is across the industry in different podcast. My tech name 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 fino ten apps responsible for whatever you know x seventy percent or whatever of downloads you know um and it's the same thing here in in the podcasting industry. So but you had some stats on this, I think was that that the top ten podcast are responsible for forty percent of listener's in the entire industry.

The yeah the top ten publishers because the top ten publishers and P R, this american life, those sorts, W K Y C, I believe W W N Y C um I think do you do K Y C is clever, do you N Y C that they have a you know a big portfolio podcast and their sort, the parent publisher. But yeah the top ten a responsible .

forty percent. So you know again and here's another no puzzle you have to unlock to um to win this industry is you need those top ten publishers to be on your platform because they represent you know by far or you know the top hundred publishers they .

represent by far the majority the market yeah yeah my my theme is it's really hard to compete with the platform default and you know apple ships podcast APP even before that they they bundle podcast into uh itunes on on the phone and um you know there's that that get someone ninety percent of the way there. And are they actually going to go the extra mile and go look for a different podcast APP?

Um and are they going to look for yours and is yours is differentiated enough and know I think premium content might be the way to do IT, but you businesses have one sometimes even illegally over the years is because they were able to under what the platform may look at ah how I E achieve dominance on windows or or um yeah being shipped with the platform is A A very clear way to win. And actually that's a in the the mobile world pre iphone. Um you know a really difficult to install those java apps on your flip phone. And the way that those companies used to actually get their their games and apps distributed was bundle ling because if it's on the platform .

is going to get used. And you know it's interesting like the i'm thinking about the blogging space and. You know google acquired blogger um and you could argue that that's an example of the platform google owning blogger owning the oil, having an unfair distribution of the distribution channel, owning the platform um but blogger never had the kind of market share that um that itunes does that that apple does podcasting.

Yes, that's true. All right.

I great IT.

Should we bring this one home?

yes. So I think we should .

get him separately. Look, look at mid role, and then stitch at least that I want to break mine down. I like that literal. While IT is a Better company, is really they're really taken a flying on spending fifty million on that thing. Their revenues right now are, I think, like one and a half to two million a year.

And you you really gotta believe that there is gonna be like A 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 on the .

other hand though, you know in defensive literal, um they do have you know they are the a the advertising network for some of the biggest biggest, which as we were saying was was one of the keys .

on locking this sure sure. Ah I still don't know if it's fifty million like I don't know this is to me a old media company that has money lying around, seized their cash pile shrinking and is concerned about the future and and .

sees the opportunity in see the .

opportunity. But fifty million dollars for something that makes you know two million a year.

How much to do a facebook acquire, push pop press for we don't know.

but a lot less than that. Yeah, yeah, yeah. Minerals at d for me, made of the two companies. Middles, definitely my favorite. But god, that's a high Price tag. Um stitcher, could they have bought anything else? I mean, like if if there's another podcast client out there, I guess stitcher ari has this ad pipeline built in that they wouldn't have to sort of do themselves.

But to me, you know, just pointing minerals ad sales at stitcher, I have more faith in that as sort of a small business than I do of them executing the large opportunity of creating the top to bottom of system successfully. So i'd say, you know i'd go a bee on the um this data acquisition just because they've already got me all and they can they can you point those ads into teacher and i'm sure makes some money out of IT and get there for a half million out. But A I don't think they're going to pull .

this big show bang off yeah yeah the whole whole radio um yeah I think i'm with you looking at them separately. You know I mean one of the things with mid role, i'm not going to be as harsh as you really even though the company was founded in twenty ten, like mid roll only started two 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 growing very quickly. And if they can get start to get some of the big, big publishers and represent them, maybe there's more to IT. You know i'm not incredibly bullish h, but i'd give IT maybe A C plus b minus.

Now you know, again, the real issue is tam, right? Like the whole key to this is you have to unlock the time, the total addressing market, and you have to do that through an integrated platform, which brings us to stitcher, right? And we have been hating on stature and this with with probably with with good cause um in this episode.

But again, like you know what you are just saying that I think is interesting, like who else where they are gonna buy what were they going to do? They knew they had to have a client and um you know this is scripts that were talking about and mid role. Well, the great company in the podcasting company is not attacked.

Company is add network um and it's like a low tech at network, like spoke in word, just reduces the people business, not a tech business. So they didn't have anybody that they could build this internally. And then who are they going to buy like they're gna buy overcast to which I use in love.

You know that it's great. Mark arman is great. He's not no way he's gona sell this to anybody. Let descripts how many?

I know how. Uh.

power cast? H, I don't know. Power cast could have been a potential one, but stitcher for all of its problems. And we don't know how engaged these users are, but they had eight million registered users. Now I bet a lot of those were last users.

But if you do the math that they paid four and half million dollars for eight million registered users, so they paid just over fifty cents per registered user yeah, you know if if big of here, they can magically hire some great people to come in and actually built a really good use. Your experience here, like that's fairly cheap for like a pretty big heads start again. I don't think they are going to pull this off.

So i'd give that A, B, you know, it's not tired. They didn't spend much money on on stitch, but i'm handy capping the ads of the success low. But if they pull IT off for, right, they are gonna look brilliant, right? Like if they can pull IT off, I don't think they will. They will spend you know fifty four and a half million, lars, to win this category. I don't think they are .

going to pulled off. Yeah hey, I also just figured out in looking at crunch base to see if if shifty jelli, the assembly named the parent company behind pocket cast, if a if they are raising any money and according to crush base, they haven't but they are a an australian business company so that explains our australian .

listeners very cool. Shut down under yeah you know anything about pocket cast? Hit us up on the slide community or um or by email we'd love to out about IT. Okay, should we move on to .

followup this time?

Time are IT three uh 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 master volume of of transactions that are going through the twitch platform in in tipping, which for those that are unfamiliar with tipping or did not listen to the episode, go back and listen to I think is one of our really one of our best early episodes.

Uh it's raw but um but IT was good. So tipping is very wrong, this amazing phenomenon on twitch where people will just give other people money. So like if you're streaming on twitch and um for a variety of reasons, but your audience will just give you money uh called tipping.

And when amazon acquired twitch couple years ago, all of this was just happening off the platform through overnight screen overlays that broadcasters would use, could use bit coin or paypal ers stuff to do this. I have now brought this onto the platform, and they just launched IT with a feature called cheering on twitch. And and IT uses a virtual currency called bits.

And super interesting, this is going potentially unlock a massive revenue potential for twitch, the company that was already happening in the ecosystem. And and also wanted give a tip of the hat to our slack community member, James k, who brought this our attention in in the cycle be I had not seen IT. So that's one to follow up to facebook. Instant articles, paper. R I P H.

man, IT was the best IOS ever. Period, hands down. That was so good.

High praise from then. Facebook paper is being shut down, sadly, but the spirit lives on in instant articles within the in within. So if you .

never experience paper, you have until the end of the lies, you rush out download to play with him. Yes.

so poor one out this weekend for for facebook paper. And then and then lastly, super interesting. We posted this in the slack community.

The sec filing for a linked in detAiling all of the ins and outs and blow by blow of the acquisition process came out. And IT is super interesting. So willink to this in the show notes and it's also in the slack group.

But turns out there were actually five parties involved in bidding for linked in. So microsoft, obviously, and then you everybody assumed, you know and speculated on the show that sales force is now come out. Sales force was heavily involved in the acquisition, but there were three others to have been identified as google and facebook.

The facebook story is is pretty interesting, apparently assuming that facebook is the party that is referred to in the filing, reid hoffman had a meeting with the C. E. O.

You of the company of party, dear whoever IT was um mark I bergan said, hey, you know this actually this acquisition process filling in going on like would facebook be interested? And psycho was like, no. So that was not A A involved process in facebook, but google apparently won't pretty far down the path.

And then so did the mysterious party sea nobody knows you party see is but they also spend a lot of time looking at linked in the other interesting thing in this filing is a bidding war. So the first bids first is that the microsoft put in for linked in was one hundred and sixty thousand as a share. And if folks might remember, the deal got done at one hundred and ninety six.

And so what happened? And I think that was about five billion dollars worth of value that the the difference there. And so IT turned out.

So sales force and microsoft weidner against each other started at once. Sixty deal was on track to happen. Microsoft had won.

IT had one eighty two per share. The merger agreement was being negotiated. Everything was going along. And then sales force or party a, as it's referred to in the filing, just comes in over the top after after having essentially pulled out a with a two hundred dollar per share bid kind out of nowhere, but the bid was not all cash IT was mostly stuck. And so that kind of throw the process through a big in the process, the whole deal with microsoft had to get renegotiated and ended up getting done at one ninety sex or cash.

Wow, great move. Sales force.

Yeah I hope that um they read hofman and jeff rote sent a really nice bottle of wine to .

mark benton. We will now compete against him. Yes, you shoot the car out.

Let's do IT very nice.

I have a quickly this week. Um we've actually finally we mentioned the ringer or twice already on this podcast and I have the ring itself has been my carve out the the week that I launched. But my car 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. Mark is a fellow, or how state alone, who was known, or still is known as twitter handle as club trillion, and is the most awesome name of all time, because mark would write the bench and would get put in for a one minute per game. So his deadline read one zero zero zero zero, zero zero zero.

And so he started this blog club trillions, while he at a house state with the the tagline views from the end of the bench. And he became his phenomenal sports writing personality and just hilarious to follow on twitter. And he wrote, I think he wrote for grand, actually, when bill simmons was there. So really excited to see mark's writing come back to life at at the ringer.

That's awesome. I love that we see there.

When you were there, he was, yeah, i'd get to watch his his few seconds again when they throw .

them about of my car out for the week. Is a actually a concept, a management tool, self management or of your teams um that probably lot of you are familiar with called O K R S objectives and key results. And I breaking up because it's we just passed the midway point in the year.

So I was doing my my middle sort of a self review and check in. I've been using OK ours for a couple years. They're really great. So the idea there's a cool history behind IT uh google uses OKR and they were introduced to google when they were still a tiny started by jon or from clinton perkins who is on their board.

And so there's a great willington IT in the showed tes, uh, rick law, who's a partner at google ventures and had been a google on youtube before, that gives a great of hour long kind of overview about how the the objective and goal setting process works at google. It's really good. I just use IT myself, but IT also is great for teams and the ideas that you set A A small finding number of objectives for yourself in any period and an objective is a high level thing.

Like, so one of mine is to help my portfolio companies. And then you said, K, R, S are key results under each objective. And the and the key results have to be smart, so specific, measurable, actionable, realistic and time bounded.

I think that anyway, but so like one, like one I have is spend at least fifteen hours per quarter face to face with each founder of each portfolio company worked with silk has been 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 for a less of your key results. Anyway, shout out to to .

O K S asm.

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Yeah, fanta is the perfect example of the quote that we talk about all the time here and acquired jeff basis, this idea that the company should only focus on what actually makes your beer taste Better. I E spend your time and resources only on what's actually gonna, move the needle for your product and your customers and outsource everything else that does IT. Every company needs compliance and trust with their vendors and customers. IT plays a major role enabling revenue because customers and partners demand IT, but yet IT add zero flavor to your actual product that IT takes care.

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So whether you are start up or a large enterprise and your company is ready to automate complaints and streamline security use, like fanta, seven thousand customers around the globe head, go back to making your beer taste Better. Head on over to vantage outcomes sh required and just tell them that then. And David sent you, and thanks to friend of the show, Christina anta CEO all acquire listening ers get a thousand dollars of free credit vent to become slash acquired. Well.

that about does IT if if you aren't currently subscribed and would like to hear more, you can subscribe from your favorite podcast client. And if you feel so incline, we'd love a review on itunes or to tell your friends on twitter or facebook too. Thanks much joining us. So next time till next time.

Easy, you busy, you busy, you who got the true.