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JASON: Hey, everybody. It is “This Week in Startups.” Today, on the program, Sarah Lacy is the founder and CEO of PandoDaily. Stick with us. It is going to be an amazing episode.
JASON’S AD: Hey, everybody. It is Jason Calacanis here. And what a great episode we are having. Thanks so much to my friends @mailchimp, first and foremost, for making a great product, that I use at Inside.com, that I used at “This Weekend in,” that I use at Launch conference, that I have been using for years now. And I have had a great multi-year relationship with MailChimp as a partner оn “This Week in Startups.” And they have really supported us. Let me tell you something. Social networks, they change. One year, it is Facebook, MySpace, Ryze, Path, et cetera. All those different services I have used. Do you know what email address I used for those? Jason@calacanis.com. That has not changed. I may have changed what service I use. Back-and-forth, Twitter, Facebook, Path, About.com. The email has stayed the same all this time. It will be for the rest of my life. Email is not going anywhere. Just like the web is not going anywhere. Email is for life. And you really want to build an email relationship. At Mahalo/Inside.com, we have been using email to find the top fans of our shows on YouTube. Once we identified the top 100-200 fans, and we start emailing them every week about what we are working on. You would not believe, it is 60-70% of people open their email. How do I know that? MailChimp provides this great statistics, mobile friendly email templates, drag-and-drop file uploading. That is the other great thing. I used to have to go to my tech department and be like, “Oh, let me have an expensive developer send this email, let me get the design department involved.” It was a multi-step process. Not anymore! MailChimp. I could put a writer. A writer, just a lonely old writer, like myself, can get in there, pick a template, put in the text, and do it myself. It is the truth, just a regular, around-mill writer can do it. 2000 subscribers and 1200 emails per months for free. What? That is right. Their free plan always includes the ability to manage lists with up to 2000 subscribers and send 12000 emails per month. Why do they do that? Why do they give this free service away? Because they know that your service is going to grow, and you are going to love it, and then, you become a paying customer. The free plan is always free, and you pay as you go, there is no contract. A lot of other services like, “Oh, you cannot find the price. Oh, let me get you on the phone with the salesperson.” Whenever somebody will not give you the price of something, that is when you know you are screwed. MailChimp allows you to pay as you go, no contracts. Great! I love it. What a great-great product. I use it all the time. It is delightful, because you log in, and all of a sudden, they have some new feature, you have not heard of. It is a great company, what can I say? I tried to invest, but they were too good, they do not need my money. Thank you, @mailchimp. Go ahead and thank @mailchimp. And please, go use the product, try it. I would not steer you wrong. As you know, on “This Week in Startups,” we are sold out. Advertising sold out 4-6 months in advance. We pick, which sponsor we are going work with, which partner we are going to have, and I just made a list of 10-15 favored products. And guess what? They are the sponsors of the program. I guarantee you, you will love MailChimp. EE-ee-EE [imitating a chimp]. MailChimp! Let us get back to the program.
JASON: Hi, everybody. Welcome to the program. This is “This Week in Startups.” Today, on the program, Sarah Lacy, the founder of PandoDaily, is with me. If you do not know what this program is about, read the title “This Week in Startups.” It is about startups, founders, putting a dent in the universe, making something. And Sarah Lacy has been covering the space for years, and is a founder herself in her own rights. Welcome to the program!
SARAH: Thank you and welcome to the founder club.
JASON: And welcome to the founder club! Exactly. Just how brutal is it?
SARAH: It is pretty awful.
JASON: It is pretty awful, isn’t it?
SARAH: I had to say, I felt like a dick for always asking this question as a reporter. Because the question that pissed me off so much in the last year is, “Are you having fun?” No! I am not having fun. I am not having fun at all. Are you joking? The highs are much higher than fun, and the lows are certainly not fun.
JASON: No. And you have fifteen people or twenty people working for you? And every day, a half of them have a problem? And so you start adding that up, and every week, there are the twenty hardest problems that the fifteen smart people, you hired, cannot figure out. That is my experience.
SARAH: Right. And that is also like, you have bent over backwards so much to do things, that you think, “Oh! This is great. The team is going to love this.” And they are just b**ching about something. And you like, “Oh!”
JASON: And you like, “Me-e, I thought that everybody was going like the Keller’s chips. And everybody hates the mango Keller’s chips. What have I done?” When did you start as a journalist? I am trying to remember when I first read your work. I think I first became aware of you, when you were doing a column for TechCrunch.
SARAH: No. The Kevin Rose cover was in your first order, at BusinessWeek.
JASON: All right, sure. Absolutely. BusinessWeek! Right. That was the famous cover of this kid is worth a hundred million dollars or something.
SARAH: Which sold fifty percent more copies than any other. August has a deadest week of the year, by far the most successful cover. Very controversial, like a lot of things I have done.
JASON: People do not know that as the journalist you have very little input into the cover, and you probably did not even see that headline.
SARAH: No. Not at all. In fact, I did see the report, and I told them not to use it, I told them all the reasons not to use it, but they do not care. And, in fact, that was in a shoot, when Kevin did the thumbs up, and I said, “Do not do anything like that, because they will use that.” I have been a journalist for real, I mean, I have been covering entrepreneurs for about fifteen years. I started, when I was twenty years old, an intern in college.
JASON: Where did you start?
SARAH: In Memphis, I worked for Memphis Business Journal in covering finance.
JASON: Ah! As a part of the Advance Publications.
SARAH: They used to be ACBJ [American City Business Journals] chain.
JASON: ACBJ. People do not know this, that was the chain, that is part of ‘Conde Nast’.
SARAH: Right. The less sexy part of it.
JASON: Advance Publications makes their money from all these business journals everywhere. And a lot of B2B journalists cut their teeth at these regional publications.
SARAH: It is great, because it really is like a farm system. Everyone on those publications either on their way up or on their way down. And it is sort of, which one of you? It still lets some interesting dynamics inside. I started covering business in Memphis, which is great. It seems like is not, because what does it do with tech? But, there are a lot of really powerful private companies, which do not want to talk to anyone. You have always pressed enterprises. You have cotton brokers. You have FedEx, who does not view itself as a Memphis company. You have really scraped to get news out of them. I really learned how to be a reporter there. When I was coming up, no one got hired by the Wall Street Journal in their twenties to blog. You know what I mean. You have to work for at least ten years to get to that level and maybe be hired.
JASON: Ten years and, maybe, you can get a meeting and interview at The New York Times.
SARAH: I think that model was so much better for reporters, because you did not make an a*s of yourself on that stage. You know what I mean. You really learn at publications, which seemingly do not matter as much, how to do that job, before you got there.
JASON: Smaller audience. If you make a mistake, there is somebody to look over your shoulder.
SARAH: You got a lot of mentorship. It is really hurt this generation’s bench of reporters.
JASON: They are not really like reporters, are they? It is not as if anybody ever told them what fact checking is, or how to behave on the blog.
SARAH: No. But also, I mean, it is not even just fact checking, that is kind of obvious, that is just building sources. It is not really their fault, when you should do six posts a day, you do not have three hours to go to have lunch with someone, for no meaningful story, you are going to get.
JASON: Except for the fact that when you are at a coat-check getting your jackets and leaving, they give you some tidbit, which is golden. That is when the good stuff happens, that is when you are saying good-bye.
SARAH: Yeah. I mean, it is always the meeting, where you are, “I do not think I am getting anything out of this. But, I am going to do it.” It winds up being the beginnings of these amazing stories.
JASON: Here is the Kevin Rose cover. Poor Kevin. And what a great entrepreneur he is, though. What do you think about Kevin? Do you like his career?
SARAH: I think Kevin is a little bit like what Paul [Carr] says about you. I think he does not play to his strengths.
JASON: Oh! Really?
SARAH: Kevin is actually a great media guy. And I think he wants to be the next Mark Zuckerberg.
JASON: Yes. You are speaking specifically when Digg went from ‘being a community of awesomeness’ to ‘let us try to chase Twitter or Facebook’. That was his mistake.
SARAH: Yeah. I think the other thing with Kevin is, he always felt a little bit like he was not quite CEO material, and did not quite trust his gut enough. So he had Jay Adelson, he listens to other people, but he would get upset when they did not. You got to commit and just do it. Or you got to not do it, and he was always a little half in and half out of that role. I wrote this in my book, that came out of the cover. I think they always had a leadership vacuum. Jay was on the East Coast. Kevin was sort of half in and out of being that you were really commanding that moral authority as the founder. We asked Reid [Hoffman] in a PandoMonthly [interview] earlier this year, “Of every angel deal is ever done, what was the biggest shock of a company that either made it, or did not make it?” And he said, “Digg.” He is never seen a company, that have something and grow that fast, and then just lose that.
JASON: Yeah. It was very sad.
SARAH: So he is a good entrepreneur, that I think he comes up with great ideas and he gives a great design sense, but it is almost he does not trust himself enough. Then he blames other people, when it goes wrong. He might be blaming that cover. He keeps doing that, saying, “Not ever there be a BusinessWeek [interview]. No, thank you.”
JASON: Wait. Is BusinessWeek still around? I do not know it is still around. Wow! This is interesting, because we were just upstairs in the pre-interview wondering, what we are going to talk about, and we just started the show with that. Sorry, Kevin. I asked of you as a great entrepreneur, because I think you are a great entrepreneur. I had no idea.
SARAH: I should have lied. I need to work on that.
JASON: No. I think it is a part of your charm is your bluntness. Wait a second, you threw in there that I do not play to my strengths. Well, Paul Carr says, I do not play.
SARAH: Paul said that you don’t.
SARAH: I blame that on him. I think we never thought Mahalo was the business you should be doing.
JASON: A lot of people did not think that.
SARAH: You are such a P.T. Barnum. You are such a media guy.
JASON: I am a media guy. That is right. I think that might be fair. This is the thing. I saw the problem in search, and I saw the solution, and I pursued it. Google got there quicker than me. Quicker than anybody else, but the interesting thing is, I think that you are right. And Nick Denton said the same thing, that, probably, I am not the right guy to have done a search engine or to evolve the search space. That is probably true. But sometimes you just get caught up, like me, I think I can solve that problem. You know? I think that is the nature of entrepreneurship.
SARAH: If you were always trying to do what you have done before, you would never start a business.
JASON: Right. That is true. I will have a last laugh at Inside.com. I mean, the interesting thing about that is, the criticism is, the business is actually done much better, than most companies have. We have over ten million dollars in revenue of those couples of years.
SARAH: You, guys, are around. I mean, it would not have been, still be around, if it has been an abject failure.
JASON: That is one of the things about entrepreneurship is that you can have moderate success and in a space like this with this tremendous success, moderate success is almost worse than failure.
SARAH: Yeah. Now, it is true, because the people are, “Oh… You are still doing that thing.”
JASON: Still doing that thing. Still banging your head against the wall.
SARAH: I mean, I think one of the things that, unlike Kevin, who was a reporter and saw what entrepreneurs are doing, and was, “I have got to do that.” And I feel like a lot of people at TechCrunch always wanted to be VCs or entrepreneurs. I have never had the thing of wanting to be a VC or an entrepreneur. I love being a reporter. I think I had the best job in the world. It is just so happened, I was at the point, that there was no place for me to work, so I started a company.
JASON: You are functionally unemployable. Your blood has caught up with you. What is it about journalism?
SARAH: I mean, particularly, for covering business, and for covering entrepreneurs, I get to meet with most fascinated people in the world, who are highly emotional, highly volatile, who have huge personalities, who were building things that either fail dramatically or become these things that change all of our lives. I frequently get to meet with them, before anyone else, super early on, I get to closely watch how they grow, and develop, and build these things. I get to be the person who is not their yes-man. I got to be with them on equal footing, and I get to tell them, what I think, and they have to put up with that. Who would not want a job, where you spend all of your day with the most dramatic, interesting, intense, and brilliant people in the world? It is awesome.
JASON: It is pretty awesome. But, now you have decided to actually start your own publication and raise money in PandoDaily. I think you really made a name for yourself at TechCrunch as much as any place. What was that like? How did you wind up even at TechCrunch?
SARAH: It is a funny story. Mike [Arrington] started really trying to convince me to come there, when I was working on my book that grew out of the cover. When he read the book “Once You are Lucky, Twice You are Good,” he really obsessively tried, because there are so many deals, and acquisitions, and things in that book, that even though he had been covering Web 2.0 closer, than anyone else, he had never known about. Therefore, he was, “OK. This is someone, who may be more tapped in than me.” I think the key would be working with Mike is, he has to feel like, you are slightly better at something, that he values, than he is. And you have a very different dynamic.
JASON: I think I have that dynamic as well. There is a couple of us who had it for a time.
SARAH: So he has been trying to convince me to go there for a long time. I thought [that] Mike and I had way too big of egos to fit in the same room. There is a lot that I loved about TechCrunch. There is a lot that I did not like about TechCrunch. However, what really changed my mind was, you remember that year that he got spit on at Davos. It really upset him.
JASON: Yeah. It was crazy. I think that changed him in a big way.
SARAH: I think it did too. So he took a month off, suddenly. He would never take any time off. So just as a friend, I reach out to him, “Is there anything I can do?” And he said, “Can you fill in for me for a month?” I was contracting for a couple of different places, doing a column for BusinessWeek, doing a show for Yahoo, but I did not even necessarily work full-time for TechCrunch, just a couple of posts a day. And the thing that struck me was that, what he had built was totally different than anything else that I have ever seen in the media world. I think Mike did not totally appreciate it, because he was not a media person. BusinessWeek, when I was writing for them, was a largest circulation business publication in the world. Unless you are on the cover, it sat on a coffee table. People did not read it. And people just consumed and devoured TechCrunch, and loved that brand.
JASON: What was it about it? Was it that it was just so blunt? Was that as if you did not know what Mike could say next? You know that sort of Howard Stern thing.
SARAH: I think it was a couple of things. I think there is this misconception, that people think that powerful people want you to be nice to them. And they do not. They want you to be honest, because they want you to be honest to their competitors as well. I think obviously that current TechCrunch does not get that. I think Mike obviously got that really well and, even when people, even who had financial ties with, really tried to bully him, that is what he would dig in and really write. He was as if you just could not control what he was going to do. He always had a reputation to be somewhat vengeful, but I never particularly saw that. I think actually, he was very fair. I think that was part of that. I think he was covering something that no one was paying attention to. The East Coast media have never wanted to cover consumer web again. So I think that his love for it and intensity was the big thing. The big thing they did, that we are frankly trying to replicate, is rather than focusing on a mass audience and huge page-views, focus on getting everyone really doing s**t reading your publication every day, and that will go out in concentric circles. When I was traveling for my second book, which was about emerging markets, I met little kids, who were grown up in slums in Brazil, who read TechCrunch and felt that, they identified with it, because they were a part of the start-up aspirational class, and that is why I think the emotion came in.
JASON: So writing to the top two-three hundred people.
SARAH: Yeah. And people were feeling like, I am reading the same thing that Marc Andreessen reading.
JASON: Yeah. Interesting. Why would that person spit on him? I have never remembered.
SARAH: Nobody knows. He spat on him and left. I am thinking no one knew. Probably, he knew he could have thought it was someone different.
JASON: It is quite possible too, but I do remember that isolated Mike a little bit. I think he felt very, like, under assault.
SARAH: That was the first time that he just really withdrew.
JASON: Yeah. He always felt that he was under assault, because people wanted to get something from him. I guess, that TechCrunch became very powerful at that time.
SARAH: I think Mike had a pattern of trusting the wrong people frequently too. And CrunchPad stuff.
JASON: Yeah. That was weird. That was another weird one.
SARAH: There were a couple of times where, for everything people said about him being a solid hard core, he can be very trusting and very vulnerable. I think there are people who took advantage of that.
JASON: Yeah. I have always found him very sensitive.
SARAH: He is hypersensitive.
JASON: Hypersensitive! When Loren Feldman was making fun of him with puppets or whatever, just Loren went to town on him, the puppeteer from 1938media, who had totally destroyed me like a thousand times over. I thought it was hysterical. I was tweeting you, but when he started to take on Mike. Mike was like, “Can you get him to stop?” I was like, “Mike, getting him to stop? You are the guy, who just whales on everybody relentlessly and never takes your teeth out of wound.”
SARAH: And that is the thing. I mean, that is the s**tting thing with media, which you know, if you are going to dish out, you should be able to take it as well. But, anyway, I was blown away just by actually doing it. And then, I got to sort of more, and more sucked in over time.
JASON: Because you were a columnist for a while.
SARAH: So I have this editor-at-large role, because I was working on a book, so I was already committed to that. And so I kept kind of doing more, and more, and more, and then, Mike for many years told me that he thought that I was the only person, who could take it over after him.
JASON: And how that worked out? Not so well.
SARAH: Erick Schonfeld’s ambitions got in a way, just a bit. However, it worked out great for me. The reality is, over the time that I was on maternity leave, when all that went down, TechCrunch declined so much, that it would have been more of a turnaround.
JASON: Yeah. It lost half of the traffic.
SARAH: Yeah. Coming in and also trying to put all the work to rebuild that, and do it for AOL, versus start from the scratch and build something from your vision. It just was no contest, which I would rather be doing.
JASON: And you have luckily built up such a tremendous reputation over the last couple of years. I would say, based on your words, I mean, I think you are an excellent writer, so I think you have earned the respect of the people, like Marc Andreessen, and Peter Thiel, and other people, who realized you are a great writer. And they just offered to back you, didn’t they? How did they become about?
SARAH: They have literally been trying to get me to do this since 2008. When I finished my first book, Andreessen did. He does these things, where he just summons people and tells them, they need to start companies.
JASON: Oh! Really?
SARAH: Yeah. It is almost like an intervention.
JASON: How come Marc has not summoned me? What happened, Marc?
SARAH: Three interventions with me and the third one finally took.
JASON: I have always had a company. Right. Exactly.
SARAH: Yeah. He tried to convince me to do this as did many of the other people, who backed me. Actually, a lot of my investors were not very happy, when I went to TechCrunch. A lot of them had issues with the way Mike did things. So when TechCrunch fell apart so quickly. And when it did, I just poke my head up, and I talked to Marc about it first, talked to Mike about it at the time, and then talked to some other people, and people were just so grateful. People had seen how important it was to have something, that both liked the community, but showed the community a lot of tough love.
JASON: Yeah. Honest. An honest voice.
SARAH: When that was gone, it was scary. I think my timing was really good.
JASON: It was. So you raised a bunch of money, but you had everybody invested in this round. How many individual investors?
SARAH: I think twelve or thirteen.
JASON: Is it kind of a mistake looking back or a good thing? Because, I mean, you are a great journalist, I have told you that before, and putting aside even journalism, you are a good writer, but to have thirteen of the most influential people as investors on that you are covering, is in a way, the worst money you could take, because it makes everything so convoluted. If you write about Marc, the criticism would be, “Can anybody take you seriously, when you write about Marc Andreessen?” How do you answer it?
SARAH: Well, I think, frankly, we have answered through our work. I mean, that criticism has not really stuck to us. So it is like, look at who we have been the most brutal on this year. Uber, backed by Menlo and a couple of others, who are also investors in us. BeachMint, another of LA, what we have been beating up on, backed by Accel [Partners], who also put money in my company. When you have all the biggest investors, it is a zero-zero ball game again.
JASON: I see what happens.
SARAH: Because you are offending everybody.
JASON: Right. In a way, it is like a mutual fund, so you cancel everything out.
SARAH: Exactly. So if you are going to raise money, my theory was, look, I had a kid, I needed a nanny, I wanted to hire real reporters and pay them a professional wage.
JASON: You needed funding.
SARAH: We needed funding. And if I am going to raise money, it is way worse, if I raised all from Andreessen Horowitz.
JASON: I think you are right. If I was critical or concerned, when I was, “Well, how do I take you seriously, because I do know that those people will call you?”
SARAH: Amazingly, they do not. I think they do not for the same reason, which they did not with Mike, because they know me well. Everyone, who I raised money from, I knew really well, and they know that I would then make that part of the story.
JASON: You then make the fact, that they called you, part of the story. I guess that is true.
SARAH: I would literally never have a single investor write and b**ch about something. And I actually was a bit surprised with Uber stuff, because we are so extreme on that one.
JASON: What was the Uber criticism? I am an angel investor in Uber. What is the criticism?
SARAH: I mean, Paul Carr just ripped their throat out.
SARAH: I guess the whole libertarian stuff. It is the dis-ingenuousness of the company. Because he was going to New York, it was the surge pricing with the natural disaster, and then, they tried to say, we had to do to get people on the road. That was their defensive of charging people of 10X during a storm. Then they came out later and said, “Well, if we had not done that, they would have driven to someone else.” Oh! So it was not about getting them on the road. It is about taking that money yourself.
JASON: Right. I think Paul is a bit of the cynic. That is the sort of brand. Right? I will say that Travis [Kalanick ] does have, knowing Travis from the better part of two decades, he does have a mission type approach, and I think it is genuine. However, I guess, Paul thinks it is more of thrift.
SARAH: I think it is disingenuous. Come on! Do not tell me you are a f**king Robin Hood.
JASON: You own $30 to the swear jar.
SARAH: I know. I have no money.
JASON: I have no problem of taking it off of the pregnant woman. PayPal is accepted here.
SARAH: I need diapers. I have no salary. I have a startup.
JASON: Forget about diapers. You are going to send me some formula, and next PandoMonthly is going to be right here. I am taking the profit right off the top.
JASON: So you are saying that he [Travis Kalanick] is just using [the surge].
SARAH: Do not pretend you are Robin Hood, when you are delivering expensive cab rides. I think the surge price was, in general, genius. I think doing it in a national disaster is not.
JASON: It was a mistake.
SARAH: Suck it up and apologize. And say it was a mistake. That is the thing with Travis, he digs in his heels. And he has done this holding how corrupt everyone was, “We would never do back-room deals.” What does he do? He turns around and does backroom deals. If he was just own up to what they were doing, I would not have a problem with him. It is dis-ingenuousness. Now, Paul thinks that he is just an evil randroid. He is more extreme than I am.
JASON: That he is an evil randroid. Did Paul come with that word?
JASON: That is a pretty good one. I have to say that Paul is a great writer, and I love Paul, because he slugged me better than anybody ever in his life. You know the story, right?
JASON’S AD: Hey, everybody. It is Jason Calacanis. Here, on “This Week in Startups.” What a great episode we are having. I just wanted to take a moment to thank our friends at ShareFile by Citrix. What a great product, you can share files instantly of almost any size, access files from any computer or mobile device in a safe and secure environment. It is built for business. And really I love this great feature, that you can request the file, so let us say I need a file from you, but you are not using ShareFile and I just say, “Hey, listen. Here, I am going to email you. You get a link and you can put it in my little request file, and then, again email alert, when you upload or download files. So you can share large video clips. It just works. I have been using it here at “This Week in…” The audit trail is amazing, when you start looking at your files, and you are able to see, who opened stuff, who opened these asset files, and who has the rights to them. This is really cool stuff, that they are doing, especially, with the audit logs. Incredible. And with request files, it is a really industrial strength file-sharing. So visit ShareFile.com, click on the radio microphone button, and use the promo code TWIST. That is the essential thing, you need to do. TWIST for a thirty-day free trial. No credit card required. That is the sign that they are so confident, that you are going to use this product. Go to ShareFile.com, click on the radio microphone button, use the promo code TWIST. 30-day free trial. Thank you so much @ShareFile. What a great product from Citrix. If you want to, go ahead. If you have already gone and get ShareFile at ShareFile.com, thank @ShareFile on your Twitter account. Just say thanks for supporting “This Week in Startups.” @ShareFile is really cool of you to do that, because I get so much out of it. It is a great product, it is a rock solid, it is industrial strength. If you really want to know, like, “Hey, when our investors downloading this pitch deck and how often they are downloading, et cetera?” I am going to request them to get the term sheets back, sign the documents, whatever, request the files, have them put in that secure [place], and built for business, safe and secure. Yes, thank you @ShareFile by Citrix. Let us get back to the program.
JASON: I mean it is so genius.
SARAH: Yeah. You should tell the story for people who do not know.
JASON: You tell it.
SARAH: I mean, you were in London.
JASON: I am in London. I just sold my company.
SARAH: You have been like you are Tom, padding around and being like badass Jason Calacanis.
JASON: I have sold my company and just raised a bunch of money. I was on top of the world. It was not like, I got my a*s kicked by doing Mahalo for the last three years, thinking that Mahalo was going to change the world.
SARAH: Right. So you went there and you went to the event, and you are being very Jason Calacanis-y, and this is, when Paul was drunk, and so some of this might be exaggerated as well.
JASON: Paul is unique, when he is drunk.
SARAH: Yeah. I am glad those days are over. I have enough of drunk Paul for my whole life. Anyway, he, basically, what did he do? He put the whole bar’s tab on your card or something.
JASON: So here is what happens. We went to a place called Adam Street. And so, I was in London. As an entrepreneur, sometimes you are hot, sometimes you are not. So I was in the hot, I was peaking in hotness. So all of London is throwing breakfast for me and dinners. It was really fun. Adam Street is a private club. They have a private reception for me. Twenty top CEOs are there, or a dozen of them, I do not know. So I am, “Let me buy a lot of drinks.” And Paul is trying to come up to me to talk to me, because he is trying to raise money for his venture. I think I might think that he was the waiter. I gave him my card. When he came up to me, I was, “Do me a favor.” I now remember, my card was already in a bin. So he comes over and says, “I just wanna…” – “Oh, Yeah. Gives us four more Macallan-18s, it is a $30 drink. I am, “Four more Macallans.” He is, “Uh… OK,” and goes over, and orders four more Macallans. [He said], “And do me a favor. It is on this guy’s card. I got his card. Just buy all ten people at the bar a drink as well.” He pulled like four hundred dollars on my card. I got my card back, I just gave a damn, “Oh, whatever. I do not know. It is London expensive, I guess.” But, he put it in his book, which is the best part. [Bringing Nothing To The Party by Paul Carr, p.217]
SARAH: Which is! Yeah. I mean this is the difference between you and Arrington.
JASON: I loved that. The great story.
SARAH: You loved that is in the book.
JASON: Oh! Common.
SARAH: Other people would hate to be in a book.
JASON: If you cannot laugh at yourself, I mean, you have to be true to your own self. Right? Self-awareness is very much required if you are going to be in this business, I think.
SARAH: Yeah. For sure. I was not supposed to be in Paul second book. That was actually the ground rule of our friendship, that he could not write about it. I am the largest character in his second book.
JASON: Which book is that?
SARAH: Upgrade. [Upgrade: A Cautionary Tale of a Life Without Reservations]
JASON: Oh! I did not get that one.
SARAH: You have not read that one? It is about him getting sober.
JASON: Oh! I got to read that.
SARAH: And living in hotels, and spiraling out of control. The only thing I will say in his defense, that I played a large role in getting him sober. It would have been disingenuous not to include me, but I did not see it until the draft.
JASON: That is these things about these writers. I cannot tell you how many writers I have over the years, who just love the booze. It is very weird.
SARAH: I definitely like booze a lot.
JASON: Not that much. Paul was out of control.
SARAH: I have not had in two years. That parasite is living out of me. There is a difference. I have lived that very intensely with Paul. The thing that would freak me out is, when I would have evenings, that I would drink too much and do something stupid, it would be over a seven-hour period, and it would just simply be by the factor of the end of the night, it is 3:00AM, we are still talking, and I have had a glass in front of me the whole night, that I am now a stupid idiot.
JASON: [You meant,] “And I have said something that maybe was a little too blunt or brutal, I should not have said.”
JASON: We have it tossed over a table of drinks.
SARAH: Yeah. Whereas with Paul, it would take fifteen minutes. I was in London with him, when he got laid off by the Guardian. He writes about this in the second book. And we are all hanging out, it is brunch and we have not had brunch already, I think I had one Bloody Mary, I think he had nothing, and he went to the bar to get around, and he came back and could not stand up. And I physically do not know how he consumed that much alcohol in that period of time.
JASON: Yeah. Give me a double and give me a double.
SARAH: He would get so drunk so quickly, that was really scary about it.
JASON: I have to read that book. Where is the business today? You have fifteen people working there.
SARAH: Fifteen people. We are about halfway through the money we raised. We had about two years, a little bit more of runway. We have just her first-year birthday. And the first year was really focused on building a really great editorial product, and putting together the compelling event series.
JASON: Yeah. Well, mission accomplished on both.
SARAH: Yes. Both of those went better, than we thought. I mean, the event series, we nailed very from the beginning. The editorial team was harder, I mean, this summer we ended up getting rid of about half the staff and rebuilding a little bit. We definitely did a lot of tweaking.
JASON: Why is that? Because there is not a lot of, like you are saying before, trained up writers, and such a competition in the Valley for the ones who are good.
SARAH: I mean, I think there is not even that many that are good in the Valley.
JASON: But if you are good, if you are Om Malik or Sarah Lacy, you are going to start your own.
SARAH: Yeah. Exactly. And then, there are some that are good, but they are way overvalued.
JASON: Sure. Nick Bilton. He is like getting paid some hundreds of thousands of dollars by The New York Times reportedly.
SARAH: Yes. It is ridiculous.
JASON: Who got offered a million by Wall Street Journal or something.
SARAH: Which is not totally true.
JASON: What is the truth? He probably got offered half-million dollars or something like that.
SARAH: I mean, I think it was one of these things, where a part of it was a CBS deal, and this deal, and you have got a three-book-deal. You know what I mean. I think it was all of those [packages].
JASON: Oh! It was like a Walt Mossberg package, [or] Kara Swisher package.
SARAH: Exactly. All those pieces could have led to [that], but, still, [he's] making a ridiculous amount of money.
JASON: I mean there are journalists in the tech space making quarter-million dollars a year, which is incredible to me. A journalist in New York can be paid [much less].
SARAH: I was making that, when I was just hosting a show for Yahoo.
JASON: Yeah. The tech scene is crazy, it is whacked down.
SARAH: Because it has gotten so binary, because there is no bench. We talked about that old media publications do not do it anymore. New media does it neither. And Mike would always say to me, “Why you and I, the only two can break the news?” I am like, “You are not letting anyone. You are not letting anyone build sources. You are not letting anyone build those relationships, so they cannot pick up someone, and call them, and ask them, if something is true.”
JASON: That’s a big part of your success is your ability to network. I can remember having dinner with you in Paris, with Tyler, and your husband, and everything, you are exceptional at taking the time to get to know people. I feel like I could trust you. You came in here, and I did not look at you as a journalist, I am just looking as a friend, and I told you all the stuff, that was going on.
SARAH: It has been a knock against me as well too, though. People always feel like I am too close.
JASON: Yeah. You still write everything.
SARAH: I am still blunt.
JASON: Yeah. You are still pretty good [as a writer], but you have gotten better as an interviewer. You have been famously fried for your Zuckerberg interview at South-by-Southwest [SXSW]. What was that about?
SARAH: I am so glad I redeemed myself on PandoMonthly.
JASON: That was terrible. I saw a part of it.
SARAH: I think that I had a great reputation as an interviewer before that, as well.
JASON: But that was live on stage with Zuck.
SARAH: I have done live stuff on stage before.
JASON: That was the biggest interview, you have done alive up to that point.
SARAH: For sure.
JASON: Were you nervous?
SARAH: I mean, look, I have not gone back and watched it.
JASON: You cannot go back and watch this. It is too of a train wreck.
SARAH: I do not want to. However, I would maintain it was not as bad as everyone thought.
JASON: It was bad.
SARAH: It was not as bad as everyone thought.
JASON: You have got now that your [interview], it is not so ‘inside baseball’, it was very ‘inside baseball’. It was more about your relationship with him than him. Too cozy!
SARAH: Possibly. I mean, that was the way it read to you. That is what matters in an interview, frankly. It does not really matter, what I think.
JASON: That was the general consensus.
SARAH: Well, let us say what the general consensus was. I mean, there was someone, who actually did a study of this. Sixty percent of these hundreds of tweets were sent by three people. It was a mob. I mean, it was a mob.
JASON: Oh! Really?
SARAH: Yeah. Actually, what happened was, Mark and I went up on stage, and we had no idea. I mean, towards the end of our show, there have been hackling. He and I were both confused. And we got upstage, and because the front, like a third of the room, was very friendly.
JASON: Right. So this is one of that live blogging. What do they call that? The Backchannel. These Backchannels can ruin an event. So they were like torturing you on the Backchannel.
SARAH: He and I, both went through a thirty-minute thing after getting upstage of just being in shock, because we actually did not think, it was that bad. It was a learning experience though. You know what, there was less a learning experience of how to do the interviews, because I have maintained that, sometimes my interview style works, and sometimes it does not, and I think I have gotten better at it, but I do not have to dramatically change how I do interviews. I think I have been luckier. That was just a particularly bad gig for whatever reason. Moreover, I think the South by Southwest was at that time, where they were going between being developer focus to business focus. They told us not to take questions, and everyone was mad, that we did not take questions. There was a lot of weird stuff that played into it. However, I totally own up to whatever, because I have probably benefited from it more than anyone. Nevertheless, you have seen every year since then, there has been a keynote blooper at South by Southwest. Part of that is that atmosphere.
JASON: People on drug. Those three people could have been drunk.
SARAH: It was so valuable in terms of just getting the s**t kicked out of you, And get back up again.
JASON: Did it hurt your feeling? Did you take it personally?
SARAH: Oh! My God! You have hundreds of people saying everything from ‘how awful you are’ to ‘they are going to gang rape you in a back alley’.
SARAH: I mean, that was hardcore.
JASON: That is kind of weird. I have to say, do you think it has to do with being a female? Sometimes these guys get particularly vicious towards women. You know the contingent I am talking about.
SARAH: The viciousness and the sexuality are definitely coming out with the woman.
JASON: That is so weird.
SARAH: I do not think I was attacked only because I was a woman. I think it is the way you get attacked is different.
JASON: It is interesting. If they were going to attack Mike, they were going to do it differently. Right? They are going to spit in his face and they are going to say they are going to gang rape you or something equally disturbing.
SARAH: Yeah. When the Kevin Rose cover appeared, it actually felt much worse, the controversy after that, because that was the first big controversy I went through.
JASON: And the interesting thing was, that was totally not your fault. Right? That is just totally out of your control.
SARAH: Yeah. Although, even the story, which if you look back and read now, was pretty conservative. One of the things we said that YouTube could sell for five hundred million. It sold for three times that. But people were so emotional about the Dot-com bust. Marc Andreessen was always said that was generations’ Vietnam.
JASON: Not a great analogy, but yeah.
SARAH: It is. It is not a PC [politically correct] analogy. It is the haunting of it.
JASON: And you know what, when people lose their retirement savings, they are going to take it pretty bad.
SARAH: And the other thing was that analysts and journalists, all felt really duped. And they felt really stupid for believing in it. This was one reason, that cover took six months to come out, because there were a lot of debate inside BusinessWeek about it. The first time it has started to be on the cover since then. It was one of the first national publications saying, “No. Consumer web actually is back, and it is going to make tons of money.” And that was a really radical thing to say at that time.
JASON: You have been offered to be a VC, you said no, why?
SARAH: I mean, again, I have the best job in the world.
JASON: I did not know that, by the way. I just assumed.
SARAH: I think I have said that before.
JASON: No. But, yes. I gotcha. See, that is a professional interview. Right there.
SARAH: I did not say you were bad at it.
JASON: Just lie.
SARAH: That was brilliant. I think I have the best job in the world. I think a lot of journalists, even if they are really good at calling companies this early, I first interviewed Mark Zuckerberg, when he was nineteen. I thought he was really interesting for a lot of people. I have got a lot of loyalty with him, which is great for me.
JASON: He is a very low [profile] guy.
SARAH: But, on the other hand, that is very different than me putting money in, and being successful. You know what I mean. I think a lot of journalists feel like, “I am so good at calling that stuff, I will be a great VC.” It is a really different skill set. I think you need to build a company.
JASON: Yeah. I mean, you do think that, right?
SARAH: I do. I cannot tell anyone, they need to fire someone. I cannot tell someone they need to do layouts. I cannot tell someone they need to do that one, that I have not had to do it myself.
JASON: What is the most difficult thing, now, that you have actually had to hire, fire people? Is that the firing, hiring, and the human capital stuff?
SARAH: The hiring was really hard in the beginning, for sure. Now we are doing well. So it has gotten easier.
JASON: Was it?
SARAH: I think, on the editorial side, we have a lot of people, who want to work for us. And we do not really have any open positions now.
JASON: Scarcity plus some respect of the product.
SARAH: Yeah. It is the part of it is the product, the part of it is people feel like our writers get to do work, that other people do not, because they do one to two posts a day, not six to eight.
JASON: And the posts are like research. You are insisting people make phone calls.
JASON: How embarrassing was, when TechCrunch…? I mean for you, as TechCrunch alumna, I think, you are as associated with TechCrunch, as your PandoDaily at this point. I am sure, it will change over the years, but still. When they report that Google bought a company for four hundred million dollars, and they did not. What do you think, when you see that?
SARAH: I have long since gotten over the emotion of watching TechCrunch decline. And this is one of the places, when Paul and I are unique from other people, who have left TechCrunch. I think, a world in which the people are leading that blog, it is so divorced from what we have built. At some point, it is like a sports team, where you are rooting for the jersey. Because it is not the same place, it is run by AOL, it has a totally different strategy, even on the business side. Heather Harde left. They are not there anymore. They, all those people, left. So I just do not have that same thing, but it is funny.
JASON: It is going to make you laugh, when Alexia [Tsotsis] writes a drunk post.
SARAH: I actually think it is sort of horrifying.
JASON: Why that? Tell me, explain this.
SARAH: Look, I went through this with Paul, and even Paul did not write drunk. I think when you, particularly as a young woman in an industry, write openly drunk on a blog, and your company is not doing anything about it, I think it is scary.
JASON: Who is mentoring her?
SARAH: It just shows how much AOL does not give a f**k about that brand.
JASON: Yeah. It is kind of weird.
SARAH: They are letting these people self-destruct in public. It is unseemly.
JASON: When I saw that I just immediately said to her, “Do not do that.”
SARAH: So many people have reached out.
JASON: I was, “Why would you [do that]? It is not funny.”
SARAH: And there is weirder stuff behind the scenes. Because we are still friends with a lot of them, people will call us and tell us these things.
JASON: What about the stuff were, like,…? Obviously, we know the kid. What was the kid’s name, who took the laptop?
SARAH: Daniel Bru [Brusilovsky]
JASON: Daniel Bru. OK. So the stupid kid, or whatever, was doing stuff there. It was a bit of a free for all on the editorial, people could write whatever they want.
SARAH: That was. That is when we were very different.
JASON: But, the free for all, in a way, made it so unpredictable and unique.
SARAH: Yeah. There are so many things about TechCrunch, that created the value of that company. This is actually my trepidation always in taking over after Mike. There were things about the brand, that I did not like, but they were clearly a big part of the value. And so when you are going to take over after someone, who is as iconic founders as Mike, and try to take that company to the next level. How much can you trust your gut, when your gut is telling you, some of the stuff is just really bad? That was another reason, which was actually sort of comforting, to just start fresh. Although, I would say with Daniel Bru, as soon as we knew, it was handled. That is the difference between TechCrunch now, and TechCrunch then.
JASON: Yeah. Absolutely. And Mike owned it, “Hey, listen. We accepted a laptop for a story, here are all the posts, we brushed up. We are letting interns have their shot and post off, and this is the risk.”
SARAH: I think the part of the big thing is, because we still give reporters a lot of
JASON: Wait a minute. Are people allowed to post without you, without being read by an editor?
SARAH: They are allowed. I mean, “allowed” is a funny word. Yeah. They are allowed to, but everything goes through…
JASON: As a routine, it does not go through.
SARAH: Usually everything is looked at by another set of eyes. Usually it is a copyeditor or the managing editor, who is the copyeditor. I certainly do not.
JASON: So you keep a little bit of a tighter range, if you will.
SARAH: We do. So everything will go through Nathan, who is a managing editor, who is mainly looking for, “Are you making your argument? Is there a flaw in your argument?” You know stylistic stuff, that kind of stuff. And that is for more senior writers, the ones that were still developing, we want me or Adam Penenberg to read their stuff.
JASON: You have got Penenberg!
SARAH: Is that crazy? I still cannot believe I got Penenberg.
JASON: He is like twice the journalists of both of us put together.
SARAH: I know. There is a f**king movie made about Penenberg.
JASON: I know. Shattered Glass. It is amazing. Peter Sarsgaard.
SARAH: The second I hired him, we are in New York, Paul and I went back and watched Shattered Glass, and I just could not believe this guy works for me. This is phenomenal.
JASON: Unbelievable. Look at you! And he was teaching journalism. He is a journalism teacher at NYU.
SARAH: Yeah. So much of what we want to do, is around mentoring and developing talent. We just think that is a massive hole in the industry, and that is how we win this thing.
JASON: That is how you level ultimately.
SARAH: To hire someone, like Penenberg, it is phenomenal.
JASON: For those of you who do not know. Shattered Glass is a story of, essentially, somebody, who made up stories, that in The New Republic, Steven Glass. It is an incredible film. Peter Sarsgaard got the role of Lane, and Steve Zahn is Adam Penenberg. But, basically, the Forbes online team… Forbes or Fortune?
SARAH: No. Forbes online. It was called Forbes Digital Tool. Can you imagine the worth name?
JASON: Yes. We are the Digital Tool. Please, make fun of us now.
SARAH: What is so great about that story…
JASON: By the way, this is one of the best episodes ever.
SARAH: We can talk about media all day long. In the history, people forget how reviled and unrespected online journalism was then. There you were even just struggling to be taken a half as serious as something in print. The New Republic was like the snudliest of all print media. We are an Air Force One. And so, for Adam Penenberg, this online reporter from Forbes Digital Tool to call out this guy, who had fabricated dozens and dozens of stories. It was like the first big seminal moment for online journalism. It did not have the national implications by any stretch, but it was sort of a Woodward Bernstein moment for online journalism. And to have that guy, working for us, is phenomenal.
JASON: He is fantastic, a great journalist.
SARAH: And he is just a sweet guy.
JASON: A sweet guy, but he is like legit, more legit than anybody in tech journalism. I guess, Steve Levy, John Markoff, like those levels of legendary Walt Mossberg journalist, but he is up there with them.
SARAH: He is. He is such an ethical champion. And I think to a degree to which, the only complaints about us are going to be, raising money from people we cover, and “Am I too close to the industry?” Having a number two, like Penenberg, that gives us a lot of trust.
JASON: It is a savvy move, savvy move on Sarah’s point. You and CrunchFund had a falling out, what happened there? Because Mike was on the board, and you have to do a blog post. And by the way, I already told Sarah in the preinterview, we did not need to go into Mike and I is disagreements, but you have your own disagreement with Mike, and it would be remiss of me not to ask for the audience. So, what the hell happened? Did you have to kick Mike of the board? He double-crossed you.
JASON: What happened? Explain.
SARAH: I will not go into the details, because, look, Mike and I had a very close friendship. There are a lot we did for each other for many years. I had his back for many years. He had my back for many years. There is a level on which I handle it the way I handle it, because I did not want to invite the world into our drama, and I did not want to, sort of, disrespect our friendship by that.
JASON: Unlike myself, you know.
SARAH: Yeah. And that can be very different.
JASON: We have a very different approach.
SARAH: I know. What was funny, as that is playing out, there is some conversation between him and someone on our side, and all you are going to do, is to milk this for cheap page use. I said, “You so do not understand me.” That is exactly, what we did not do. I think it is pretty obvious from looking at what has happened. Mike wound up deciding that he was going to accept hundreds of thousands of dollars from a direct competitor to do things, that he had promised to us as a part of a financial deal. It was to me a blatant violation of his fiduciary duty as a board member, as we agreed on it. I had a really good relationship with Mike. We had a very different relationship. But, I certainly saw a lot of people, he used to bully too, and Mike would be the first to say, “I am a hammer and everyone else is a nail.” And I think with bullies, when you let them get away with it once. It changes that dynamic forever. So I always made a promise to people, who are even concerned that I had Mike in my life, that I would never let that dynamic start. So it is much about that, as it was the betrayal. Nevertheless, it was shocking.
JASON: It is kind of shocking. I mean, that parallels my experience exactly, without getting too much into, but I have really cared for Mike. And I considered him like a very close friend. I have almost felt like he was my little brother or something. Like, I had to look out for Mike. And when people would say, “Oh! Mike is this bad guy.” I am just, “You listen to this, Mike misunderstood” and I have always tried to go to bad for him, then he totally threw me under the bus.
SARAH: It got a lot nastier between you two though.
JASON: Well, because I am not going to sit over, I was, “I cannot let you steal from me.” He just looks me straight into an eye and said, “I am going to take the conference, I am renaming it, you are going to get nothing, and if you do not like it, sue me.” I said, “OK. That is all I will do. You are telling me to sue you. Fine. I will sue you.” And I sued him. Then he called every single potential sponsor of the Launch festival, and said, “If you speak at Jason’s festival, if you go there, you cannot ever be in TechCrunch again.” So I called AOL and said, “By the way, are you making threats against me? Because if you are making threats against my ability to commerce, then I may need to be in a lawsuit with you, Tim Armstrong.” That I was, “OK. Well. I raise the ante. I am rich too. I can afford lawyers. Let us go.” But, then, at a certain point, I was, you know what, this is getting too crazy and there was starting to be collateral damage, which was the startups in the event. And the startups in the event were, “TechCrunch reporters will not come to the event!” And then, that was like, I sort of felt like, you know the scene from Superman, where Zod realizes, “Oh, I do not have to be a superman. I can just kill all the humans that he loves.” I am not into it to make money, I was never going to, I love the startups, I love the co-founders, and so, I am, if you are going to attack them. And he started attacking the founders of the companies coming to Launch, and telling them they would never be in TechCrunch.
SARAH: It was war.
JASON: And I said, “You know what, Mike. Fine. I drop the lawsuit. I am out.” You know what, the best thing I ever did. I should have taken your approach, because now Launch is tremendously successful.
SARAH: And I have to say. I have probably learned a lot from watching other feuds that people had with Mike. I was very much on Mike’s side during that whole thing. So my view of the situation was not surprisingly different, but like, “Who knows?” I have heard versions of what he has told people about us. So, God only knows.
JASON: How do you think he is going to be as an investor? I mean, Do you think he is going to be successful?
SARAH: I think he can be. I think sometimes Mike is his own worst enemy. I will tell what surprised me. M.G. [Siegler] is turned out to be a way better VC. I have talked to so many entrepreneurs, who really love his feedback and think, he adds a ton of value.
JASON: I always thought, he was very smart.
SARAH: Yeah. But, it is not an easy leap to make from reporter to VC. It is not taking away from him. I have been impressed at what a reputation he is built for yourself.
JASON: I have invited him to the Launch festival as a judge for years. I know, Mike and I can never do that. He never responds to my email, but I would feel like, for the community, I should be the bigger guy and invite him to come, even if Mike and I, certainly, will never work out our deal. Not that I want to, exactly. I have a sort of approach you do, if you screw me, if you steal from me, I cannot really get over it.
SARAH: You know how the Valley is, it is like you have these intense things that people always would make up. There are now all these people that are trying to get to Mike and you to make up. It is honestly not that I hate him. I think that the lot of the anger gone. It is just kind of hurt.
JASON: He was supposed to help you build that brand. He invested, and he was going to do all live events.
SARAH: And he was on the board.
JASON: On the board. And he went back to TechCrunch.
SARAH: It is a lot of trust. It is a lot of trust and when someone just…
JASON: It sounds like I am kind of a bulldog about the trust thing.
SARAH: And it is one of those things where it is not that I am wanting him to die. It is not that I hate him. It is not that I wish him ill will. It is just, “I do not need you in my life.” I have a very crowded life. I do not have a lot of time, I just do not want someone, I cannot trust, around me. My company is too important to me.
JASON: Yeah. I always thought, the turning point for Mike was, when he got that spitting in the face was one, because that really riled him, but the other one was, when he got into the Time 100. Because he felt like an outsider. He always had this little chip. I said, “By the way, this is a really big deal, and it also means nothing, at the same time.” Because there is a bunch of journalists in a room, and they pick these things, they just say, “We need somebody from tech.” And they say, “We need three tech people. We got three dance people, we got two artists, we got five music people, we get two people from the movies, we need two wild card, we need five academics, we need three tech. Who is the biggest name in tech? OK.” They might have said, “Who can we rile up by putting on the list? Who is our wild card from tech? And that was you. So just be totally magnanimous about it. And just be humble. You have arrived. Just enjoy it.” He could never enjoy the success, he felt like everybody at the conference was trying to attack him. And I was, “Just go out and shake everybody’s hand. Wash it, put Purell on it, I get it, and then, be thankful, they are paying two thousand dollars to come to the event. And just pretend you are interested in their law firm, or their bad idea, or whatever. Just pretend. And be thankful, that people come out. Be thankful, that people coming out.” Your event series has been so good.
SARAH: Oh! When I was a reporter before, I always had a little bit of antipathy for readers, but I think, when you are actually building something, the fact that people love us as much as they do. The fact that our events sell out, the fact that people read, it is such an emotional connection, because you are building something. Anything with a consumer can be so maddening, because you can be the smartest person, you have the most success, you have the best investors, you cannot force people to love your product or read your product, and when they respond to it, it is just like, “Oh! My God! Thank you!”
JASON: Yeah. You are a success. Right. You have read my work. I mean, the greatest moments for a journalist, I think, are when the comments or the reply comes in. Or you are just in an airport, and somebody comes up, “You are Sarah Lacy” and they mention, something you wrote. And that had an impact on them, changed their lives.
SARAH: That is what was so great about my first book. It did fine. It did not sell as well as Penguin would have liked by any stretch. I think it was a little early, frankly. I have met over the years literally thousands of kids who decided to start companies and move to Silicon Valley, because of reading it. Which is actually a little scary, because it is like, “I hope that goes well.” Hahaha. But, people will come to signings, and like, they had every corner dog-eared. It was by no means the best-selling business book that year, but it was like the same thing about TechCrunch, it was devoured.
JASON: Yeah. Hey, listen, everybody who is in the audience. Go ahead and go to PandoDaily.com/events. And I highly recommend it, especially, if you are one of those business people, with one of those corporate cards, go ahead and support PandoDaily by buying a subscription, becoming a member. So worth it. What a great interviewer she has become. She was good, but she has become excellent. She is really good at it. And look at the line-up: Josh Kopelman, Drew Houston, Danny Rimer. Holy cow! All-star, all-star, all-star.
SARAH: Later this year, we would have Dick Costolo, John Doerr, Marc Andreessen, Fred Wilson. We would have a ton of great people.
JASON: And just twice a month. And this is the business model. It feels like to me. Ads are one thing.
SARAH: It is one of them.
JASON: This is a great one.
SARAH: It is good. I think at some point, we will do a big three-day conference, but I am not rushing into it.
JASON: Well. It is a lot of work.
SARAH: I think there is something special about that monthly events, because we just had Brian Chesky in January, and he looked to me, and he was, “This is the first time I have done, when people come just for me.” And there is something about it, because we have one speaker. There is not a cramp thing, it is not twenty minutes on stage, and we are trying to drive news out of you. It is like, “This evening is about you, and we are going to hear your story. You are going to tell us s**t, no one is ever said before, and you are going to be interesting, and you are going to be funny, but we are not out to get you in this interview, somehow. We are not out to trick you to say something, or whatever.” It is just a very different dynamic. We are capturing a history of what is happening in these three cities at this point of time. Every time I get done with one of these, I just think, I wish I could watch one of these videos of Jim [James H.] Clark in his heyday. You know what I mean. And be able to see early Jeff Bezos for two hours talking.
JASON: Yeah. Marc Andreessen. Yeah. Sergey or Larry.
SARAH: You miss these moments, because these guys change so much, and they can never even really remember what they were like back then.
JASON: No, it is really capturing history. Continued success. Obviously, I am a huge fan, and really great to see you build such a great brand. Having built a couple of these, I admire the way in which you are doing it. You are doing with the methodical real intention, real-intentionality, I would say, and I think, that is coming out in the results of it. I think you are playing a long game, which, I think, is smart.
SARAH: Don’t you think some of that is being an older entrepreneur? I am an interesting, because you have done both, about being an older entrepreneur.
JASON: Yeah. I do not think that Sarah Lacy needs to prove anything. So therefore, I feel like this is your great work of your life, it shall be.
SARAH: I think, it is also, every place I have worked in, I want to do it better than previous one. So much of the way I build the newsroom is what I hated in newsrooms as a reporter.
JASON: Right. I am totally informed what are you doing. Entrepreneurs take the approach, this is the world, I want to live in. Right? That is one of the great things about being the entrepreneurs. You get to create the world you live in. If that means, we have this type of coffee, or we are not going to have these types of people in the company, and we are not going to have this type of complaining, but we are going to be honest about these kind of things, or we are going to hire Penenberg, we are going to give you the time to actually go have lunch with people, I am going to insist, that you do five meetings a week here, if you want to be a great journalist, you got to go to five attendees a week. You are creating your version of the world, and now, it is manifesting itself, and that is really the thing, what entrepreneurs should have.
SARAH: The best part is, that people responded to it, because you can do it all day long. I mean, I say the one thing that I heard is a knock, when we are raising money, was that people were like, “You are really known for doing deep reporting, and long-form journalism, and do people want a whole side of that?” I think that we have more than that, but that, certainly, what is we known to be. When we did a reader survey, when we were working on our redesign, and far more people filled out, than I thought would, and it was, “You do not have to leave your name,” so I was expecting that people just be jerks. But I would say greater than 90% of the respondents, when we asked, what was the thing they liked the most about PandoDaily, they also liked long-form, really well-written journalism, not afraid to call people out, which is the thing, the people are like, “Do audiences really want this?”
JASON: There always be a place for well researched material.
SARAH: People are not stupid on the web as people tend to think they are.
JASON: No. Just because of Pinterest or whatever, I am not being dick to Pinterest, just because some lighter form of consumption exists, it does not mean that this old form goes away. You have published my email newsletter once in a while, thank you for that, and I write 5000 words, 7000 words, 3000 words, and people read to the end. People do want long stuff.
SARAH: It is stunning to us how many people watch the videos, the PandoMonthly interviews, which is two-three hours. And people watch them all the way through.
JASON: Of course, where can you get that from? We have that same phenomenon here. Where can you get the interview? This is the first hour-long interview you have done about your career. I got you early. I get to you, what you are doing to these kids. I got you earlier, Sarah.
SARAH: I know a lot of it, and I am always scared to be on the other side. I know the tricks the journalists play.
JASON: So which firm did offer you the job as a VC?
SARAH: I am not answering. You assumed that it was the only one.
JASON: No, I said, there are many. Which one were you closest to do it?
SARAH: I was not close to any of them, honestly. It was a very very flattered, and I was stunned, frankly. But I knew that was not what I wanted to do with my life. This is the thing. I am not a particularly modest person. I think I am easily one of the best tech journalists working today. Because I am putting the time, and I work my f**king a*s off.
SARAH: That was a forty dollar sinets.
JASON: That is OK. I totally put you into the top 50. Top 5.
SARAH: Let us even say Top 20. Let us say my biggest critic would put me there.
JASON: I easily put you in Top 10. I am trying to determine, where in Top 10 right now.
SARAH: I would not, in no way, be in the Top 10 VCs. If I am going to do something, I am going to do the best in the world.
JASON: Can I ask you any questions about gender? Let me think about. Alan Powell[?] and Marissa [Mayer]. I am just seeing all the gender issue, so hard to find women founders these days. And I am always trying to think about, if any of those issues is relevant. Marissa gets a ton of attention over this baby stuff. What do think of that?
SARAH: I think it is so s**tty. I think, what pisses me off about it, is women who say, if she went to take a maternity leave, [those] women will be, “Oh! Why are you taking maternity leave? You are a CEO.” When she does not take maternity leave, “Now, none of us could never take maternity leave, you have set the precedent.” When she came out and said, “Oh, it is so hard having a baby.” Women would say, “You are rich, you have nannies. How can it be hard?” So she comes and says, “We were really blessed, we have had a pretty easy baby, and it is manageable.” People like, “How dare you to say having a baby is easy.” It is just, shut up and take ownership of your own life. I mean, there is this weird thing around.
JASON: These people seem to be obsessing about her pregnancy, and you have been pregnant twice, during the birth of this [company]. Three pregnancies in two years. How do you that?
SARAH: I know. I did not have a nanny, when I decided to do Pando. So I took Eli fundraising with me, so he went to every office on Sand Hill Road, and had a huge blowout at Andreessen office. Marc Andreessen is the world’s biggest germaphobe. That is amusing. Hahaha. No one thought it was weird. Even Andreessen, who was awkward around babies. I gave him a term sheet…
JASON: Here is your term sheet, baby. Here you go.
SARAH: David Sze picked him and throwing in the air. You can see all everyone responded to differently. Other times he just sleeps in the room, and it was fine. But, I think, if there is true sexism in Silicon Valley, a woman showing up with a baby and saying, “Can I have two and a half million dollars to go start a media company.” Someone would have said, ‘No.’
JASON: Yes. You feel, it is overwhelmingly a meritocracy, even though it is filled with a lot of men.
SARAH: Absolutely. And whatever I said, people say, “Oh! It is just because you knew them.” I say, “OK. That is a different problem.” And then, it is a networking problem, it is, maybe, a gatekeeper problem, but it is not a gender problem.
JASON: Right. And, is there a gatekeeper problem? I mean, if everything is so open.
SARAH: Look, I showed up in Silicon Valley, in 1999, working for a no-name publication, a little girl from Memphis, Tennessee.
JASON: You made it happen.
SARAH: I have been a reporter, and it is, “Yeah. I just made it.” There is no reason for anyone to ever do anything for me. And so, I do not know, I mean, I looked at people, I looked at immigrants who come to this country, and what they have built, and what they have accomplished, and they do not have the cultural background, they frequently do not have the language background, they come and do it with nothing. Really? We supposed to feel sorry for women, [didn't we]? It just bothers me.
JASON: Yeah. I was interesting in asking that question, because I always felt like the industry is such a meritocracy. And you watch VCs, like, they would literally kill their own mothers to get shares in Facebook in the ramp up. If a woman has a hot company, a man has a hot company, if somebody, who has whatever color skin, has a hot company, these VCs want to have funded. They would not care if Zuckerberg was male, female, Asian, black, white, Hispanic, or otherwise, they care about the growth curve. They are mercenary in that way.
SARAH: It is also, there is now thing like, “Oh! A woman can do e-commerce, because women are buying it.” I run a site, where our audience is 90% male.
JASON: What is that has to do with general stuff?
SARAH: But I will say, I do think it is definitely a challenge that women biologically have, when it comes to having kids. Because look, there are at least a couple of days, I am going to be in the hospital. There is nothing I can do.
JASON: Yeah. And not every woman has pregnancy, which allows them to travel, really. Some women get grounded for three-four months in LA, that is it for you.
SARAH: I have had super easy pregnancies both times, which has been great. I have never thrown up in either of my pregnancies. I mean, I have always just powered through them. I think I would say that, other than Sheryl Sandberg, I think I have the only other marriage in Silicon Valley, that truly is 50/50. I mean, my husband is [on it]. He is a very engaged dad. He is not one of those people that is, “Oh! Sarah went away. What do I do with this kid for the next week or so.” And we have a phenomenal nanny. People ask my advice on it, it is, “Do not be afraid to get help. Do not think that you are a failure to get help. Do not feel it threatens your relationship with your kid.” I have never had any of those things. It is not because of me, it has been doable, it is because of the people around me. And I think, there are advantages. I mean, when you talk about Penenberg, we also hire this phenomenal woman, named Keelin Linehan, who had been in Gawker [Media] before. She is sort of my number two on the business side. I think she is really going to be like Heather [Harde] of this business. Although, I do not plan on giving up the CEO job. But, I think she would probably grow into the COO. Maybe, it is a news story, if she is listening. Hahaha.
JASON: By the way, soon, someday, you will be the COO. Congratulations!
SARAH: So far, you are doing well, do not push it. But I feel like, being pregnant and knowing, that I had this clock. It was like, this s**t I am going to fix in this business in the next nine months. And that is when I get serious about fixing the editorial, that is when I brought number two on both sides of the business.
JASON: Sense of urgency. You do not have the time to…
SARAH: And I think a lot of founders, they are trying to overcompensate for the weaknesses in their companies too much, and I knew, I cannot do that. And I think it is so important with the blog, because the biggest weakness of the first generation of blogs, as they were really dominated by a single personality.
JASON: Yeah. Single personality and infrequent publishing. Bad combination, you know. If somebody goes away for a month, and blog is not worth reading. You have to have a collection of voices.
SARAH: So we look really carefully at even our IDU. The staff does not look at it, because I do not like the staff look at metrics, and it can get into your head, as a reporter. But, I look really carefully at even whose stories are the most read. Mike’s stories were always the most read at TechCrunch. It did not matter, whom he wrote in. It was so him, which was a lot of the success of it. But, I think, it was always going to be limited from being bigger, and, actually, when I see weeks, when my stories were the least read, it might bruise my ego a little bit, but I know we are on a right track as a company.
JASON: That is good. It means you are doing your job as a CEO.
SARAH: And an editor in chief. We really work. I mean, in a lot of days, I sacrificed my story, so to help with other [people's stuff].
JASON: Punch up other people’s [material].
SARAH: Yeah. And I mean, kudos to my team, by the way, because Adam and I are f**king tough on these guys. I mean, this is like old-school editing, that we got coming up, that people do not have anymore. And I say all the time, you hate me right now, but you love me in some month.
JASON: I would terrorize my journalists at Silicon [Alley] Reporter. I would make them come to a meeting, I would look at their stuff, whichever one was the weakest, and [say], “Why would not you read your stuff out loud. I do not have time for everybody to read out loud, but how about yours. Read it out loud. Or actually even better, I will have somebody else read your stuff out loud.” And then, they read out loud and some sentence does not make sense. I say, “I am sorry. Sarah, this is not making sense. What did you mean here? There is no comma.” And this person is, “Oh.”
SARAH: I hope my team is listening, I could be such a bigger a*shole.
JASON: Seriously, if you make someone read their [stuff]. All I can do is that once in every couple of weeks, somebody reads their stuff, “Let me read it out loud. I want to just hear it.” You laid back.
SARAH: We will sometimes do that in editing sessions, but I would not do it in front of the whole team.
JASON: Oh! I would. I would.
SARAH: Look, we are not asking anyone to do, I think we did not do in our career. My first three months at BusinessWeek. Oh! My God! I was brutalized! I mean I was brutalized.
JASON: Yeah. Because the whole publication is reputation is at stake.
SARAH: We would move the markets. We would move the markets these companies.
JASON: Look, what Jayson Blair did to The New York Times. What is it, ten years ago? And the first thing, if The New York Times makes any mistake, the first people say, “Jayson Blair! Jayson Blair! Jayson Blair!” They are never going to stop saying, “Jayson Blair!” Jayson Blair is going to be one of the top five journalists of all time at The New York Times forever. Congratulations!
SARAH: So depressing.
JASON: No. You say, “Name five journalists at The New York Times.” People say, “OK, well, there is Jayson Blair, and there are these four people, who actually did work.”
SARAH: Or they will be, “That guy, who lied.”
JASON: That guy, who lied, and then everybody else. Right? There is a lot at stake. Hey, listen. Everybody, go check PandoDaily. Sarah, you have been a wonderful guest. Thank you for being so honest and bringing sixty bucks in the swear jar. And everybody said, “Wow!” Wait, you did Nasty Gal last night, how did that go?
SARAH: It was good. She was great. It was first of it, she is done. And it was sold out in less than twenty-four hours. We had more than hundred people write, and ask to come.
JASON: What do you get 100-200 people for these things?
JASON: Four hundred?
SARAH: LA event suited four hundred, New York we did at one fifty. We have to do you in LA sometime.
JASON: I do not know if people ever want to hear from me. I am, kind of, down right now, because I have no big successful projects. I guess, the Launch festival is successful.
SARAH: I am not sure the audience cares necessarily about big successful stuff. I think they like hustlers and people, who work hard and people doing s**t. You know what I mean.
JASON: Yeah. I think, maybe the second half of the year, when I get inside.com, because I will get people a lot to talk about.
SARAH: Yeah. We will do LA quarterly.
JASON: Fourth quarter. I will have inside.com out.
SARAH: We have Brian Lee next, which is going to be crazy, because I have been hardcore on ShoeDazzle.
JASON: Well. It has been a complete train wreck. I mean they went to other CEO, they get rid of subscriptions, the whole thing collapsed, nobody wants…
SARAH: It really tells the million women, who are happily paying $40 a month, “We do not want your money no more.”
JASON: Right. And everybody else, who is doing a subscription-based business, and now, the whole well got poisoned. These poor other subscription-based services are, “Nobody will invest in my business, because that stuff happened.”
SARAH: I mean, I was a big fan of Brian, and, in fact, the first story I did, when we opened, was the exclusive on Honest [Company] launching. And I have been a big fan of his, and I have just ripped into that.
JASON: Is there some of the ADD issue? He just went from business to business. Too ADD [Attention Deficit Disorder]?
SARAH: I do not think he is too ADD, but I think the problem is, what actually worked really well with LegalZoom. And as you know, the entrepreneurs tend to extrapolate something that worked well for them, to this is how it works.
JASON: Sure. Previous success is not an indicator of future [success].
SARAH: And look, they picked the wrong guy. They hired the wrong guy. And it is not just the Brian’s fault, it is the board’s fault. People do not blame boards enough.
JASON: Hey, listen. There is the only one right person, it is the founder. It is very rare, that you find Jeff [Jeffrey] Weiner or somebody else to come to run the business, who is as good as the founder.
SARAH: Do you believe that?
JASON: I do, actually. I have just seen it too many times. I mean, if you look at truly great businesses, it is very rare that somebody else comes in, who cares enough, and has the long vision. Go through the list.
SARAH: Well. I mean, look, there is EBay, there is Google, there is Yahoo.
JASON: Although, how Yahoo and EBay have done? Thank you. Thank you for those examples. And then, someone would argue, that Google put Eric Schmidt is only because Wall Street would not have accepted Larry and Sergey ten years ago. And now, I am sorry, but did Google not just hit the new high today? If you look at Larry’s leadership, that place had cleaned up.
SARAH: He surprised me.
JASON: Oh, yeah. I was not surprised at all, because I know him.
SARAH: I was surprised.
JASON: He is very long. I mean, I cannot bring that word. He has got a very long view of this and he is, “Sergey is going to do Google X, that is super long. That is 5-10-15 long and I am going to do 5 to 15 months long.” It is almost like he is sacrificing doing the interesting stuff, to make sure that ad business grows, to make sure it is molded with Chrome and Android.
SARAH: Right. I think they have become one of the most interesting companies, and this time last year, it did not feel that way, because I felt like, they are in so much cheese stuff with how they were pushing ‘Google+’ and I felt like, they really had this little Zuckerberg envy and were personally sort of threaten. I think, over the course of the year, that obviously went away.
JASON: Yeah. The whole concept, that Facebook was going to dismantle Google, is laughable now, but that was the whole discussion two years ago. I do not understand that. I do not think advertising gets social networks.
SARAH: They are fundamentally different businesses.
JASON: Yeah. And advertising at social networks, I am not sure. Do I really want to be interrupted for TurboTax, while I am looking at pictures of my kids?
SARAH: Well. It is like, I mean, look, people mistake that, what made Google so powerful as a company, was its business model, not how many people were using it.
JASON: No. It is the intent of typing a word in a box, and then, being able to serve an ad. What do you want? A Volvo in Santa Monica? Great. But, what do you want, when you go on Facebook? It is like, “I do not know. I just want to see my friends.”
SARAH: Yeah. You cannot advertise on pictures of the kids.
JASON: Zuckerberg seems to be doing a good job, or a bad job, or an average job?
SARAH: I think he is doing a good job. I think, given the situation, he has done a good job. I think people do not blame NASDAQ enough for what happened. I think you can never go back, and have the working platform, and not start that chain reaction of events, and see what would have happened. So I do not think it was all NASDAQ, but I think we can never know, how much of it was NASDAQ, and people blame the company too much. I think that, from what I understand, inside the company, he is really rallied the team. There is not licking wounds, there is no feeling sorry for themselves, or just wandering around, like, “Oh! My God! We are hosed.” He is galvanized them and made them feel like an underdog again, and I think he does well in an underdog position. I think he is going to be a ‘Jeff Bezos.’ I think Wall Street will never understand him. I think he will have a long-term view. He will do things that do not make sense. I will tell you the only thing, that worries me, is that they are managing to show Wall Street that they can make money off mobile, but Facebook crashes on my phone every time, I have opened it. I mean, I do not understand fundamentally, why they cannot fix their mobile app.
JASON: But, I also do not understand, is it sustainable for every time people open the mobile app to see an ad? Like, oof… [I do not like it]. Their Dots feel like ads, because they are so hidden there in ad, I cannot tell the difference.
SARAH: You are lucky. I literally cannot open the app on my phone. I have reinstalled it three times. It crashes every time.
JASON: It is interesting. I have not had it with the app.
SARAH: When it did not crash, it is slow, you cannot find…
JASON: They are not good at mobile. They are just figuring out mobile, they are doing the rest alright.
SARAH: What worries me is that, I think, that they are focusing on figuring out mobile monetization and not the product.
JASON: Yeah. There is a better mobile product.
SARAH: And that worries me.
JASON: It was weird too, when they copy Poke. That Poke, the Snapchat copy was just like, “What is the goal there?”
SARAH: But, he has done that before. He did that with FourSquare. He did that with Quora. He has done that with a lot of stuff.
JASON: And he coded it, and he did the code himself, and this is his voice, and we did it in twelve days. It was almost like, “We try to send a message to startups, that we are going to roll over you, we are hardcore, f**k you, guys.”
SARAH: Yeah. I think it was the messaging around that that was so creepy.
JASON: Correct me if I wrong, but the fact that he coded, the fact that it is his voice in Poke, those are intentionally placed PR [Public Relations] tidbits. Those are not like, “Oh! Sarah Lacy figured that out.” Somebody said, he did code it, he did make the Poke sound, and they did it in twelve days, that is being fed to you by the PR machine.
SARAH: Oh, yeah, for sure. And they have a very sophisticated PR machine.
JASON: Yeah. Backchanneling and…
SARAH: Yeah. I mean, probably, the one of the most sophisticated ones in the Valley.
JASON: When they do that, they did the whole stupid thing, when they try to…
SARAH: The Burse and Marcelo[?] thing. Nobody got fired for.
JASON: Well. If that is their strategy is, to do that kind of hardcore, deceptive, whatever, then you want that person on the team. If you think I get caught, who cares, I will do it again.
SARAH: I do not think, they will be that extreme again, or at least be wobbled for what they do.
JASON: Alright, that is it. I will try to end the show one more time. I am trying to end the show. Here we go. Thank you, once again, Sarah Lacy, PandoDaily, for being on the program.
SARAH: Thank you.
JASON: See you next time, everybody.