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Jason sits down with Noah Shanok to talk about the future of online content and the podcast industry.
1:05 How long have you been running Stitcher and how many downloads to date?
1:20 Do you have more Android or iPhone downloads?
2:15 What is the business model of Stitcher?
2:40 What can you use Stitcher to listen to?
3:30 What was the first podcast you listened to?
5:05 How do you manage the relationship between content owners and advertisers?
6:30 Have you had content producers complain and want their content removed?
11:00 Are you thinking of having a paid subscription service?
13:15 What did you think when Apple launched their Podcast app?
14:10 How do you differentiate yourself from Apple’s Podcast app?
16:15 How do you manage the conversation when something like Apple’s Podcast app debuted?
17:00 How did you get Stitcher installed with Ford? And how does that relationship work?
18:20 What price point do car makers need to charge for an Internet connection in your car?
19:30 Do you give a warning about bandwidth usage?
20:10 How big is the company and where is it located?
21:00 What’s the future of the business?
23:00 Have you thought about exclusively partnering with content producers?
24:00 Does not having to sync your podcasts get rid of the problem with podcasts?
25:50 Superfan — Want to transcribe the show? Email email@example.com! $100 per episode available.
27:15 How do you help podcasters with the monetization problem?
28:30 Will you be a podcasting roll-up service?
29:15 Do people click on the banner ads?
30:10 Do you dynamically serve the banner ads between the different networks?
30:30 How much money does a show like “This Week in Startups” make Stitcher?
31:10 Do content providers get a portion of the advertising revenue?
33:15 Is the car traffic meaningful?
34:10 What about home systems like Sonos?
35:45 Will Stitcher support video?
37:00 Could you add clickable integrated ads that mirrors the content?
38:00 How many active users do you have?
40:00 How will you structure the sponsorships?
42:00 What’s the best category for podcasting?
43:15 Do you work with content partners to get them more subscribers?
44:00 What is the best way for you to acquire customers and get downloads for the app?
45:10 Can I buy the featured spot on Stitcher to get more listeners?
46:00 What about studio space? Will you ever open up a studio?
48:30 What’s the best audio equipment?
49:45 How are you doing on acquiring talent?
50:30 Have you thought about starting an office in another country like Brazil or Bulgaria?
51:00 Is this your first startup?
51:30 How much did you make on the HubSpot exit?
52:45 Did you try to poach talent and how did you go about doing it?
55:00 How did you come up with the idea for Stitcher?
57:15 Do you think Yahoo will buy the company?
58:30 Is there a sense of pressure to sell the company?
60:30 If you’re looking for a sales/engnineering job contact first name @ stitcher.com.
61:30 Follow @NoahsArk
63:00 Join the 8M+ and download Stitcher!
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Jason: Hey everybody, Noah Shanok is with us. The CEO and founder of Stitcher Radio. Over 5 million downloads and counting. It’s a really compelling company, doing talk radio, radio apps. All that kind of good stuff. The stuff your listening to right now. It’s going to be a great episode, where we talk about the future of media, radio and apps.
TWiST title sequence.
Jason: Hey everybody. Noah Shanok is with me, today. He is the CEO and… founder or co-founder?
Jason: Co-founder. I always gotta be careful about the co-founder, founder thing. It can get people’s feathers ruffled. Co-founder of Stitcher Radio. Which, I know a lot of the people who are fans of ThisWeekIn Startups use and actually, we are in the top, I don’t know, one, two, three, four, five hundred talk shows on your own app.
Noah: You are.
Jason: Tell me about the app. How long have you been doing this? How many downloads now? I know the last I heard was four or five.
Noah: So, we launched on the iPhone in 2008. We’re up to 8 million downloads.
Noah: iPhone and Android. Yep.
Jason: Holy cow!
Noah: It’s going really well.
Jason: Is Android outpacing iPhone, now? Which do you get more daily downloads from?
Noah: iPhone is still outpacing Android, but Android is catching up.
Jason: What is it? What’s the race? Is it 60… 100. 2-to-1? 1-2? What do we got?
Noah: Probably 65-35.
Jason: O.K. So, it’s catching up. When do you think it will break even, surpass? This year or the next six months?
Noah: Tough to know. I mean, a lot of it also is like, how often we’re featured and, then there are big spikes, then. But, it’s coming along. It’s coming along.
Jason: Yeah. So, obviously, I’m a fan of the app. I use it. I think it’s a great app. I wanted to have you on the program. So, how has the company been funded to date and what’s the business model? I mean, Anybody who’s used the app understands, or used the podcasting app, which, we should get into in a little bit, that Apple just released, or any of the other radio programs, understands the value proposition of it, pretty easy. You open it up and you have a directory of shows.
Noah: Yep. And the price is right, because, it’s free. As a listener.
Jason: It’s free? So, what’s the business model, here?
Noah: So, it’s an advertising base model, similar to the radio or Pandora. And you obviously have the ability to do a lot more with the internet, in terms of, frequency capping, targeting. All sorts of fun stuff.
Jason: Is the app focused just on talk radio or can you get other radio? Can you get live radio? Cause I’ve only used it for subscribing to podcasts.
Noah: Yeah, so, we are focused completely on spoken word. Everything other than music. We do have some live streams and sometimes there’s music in them. There’s also podcasts or on demand radio about music or with music in it. But, primarily our focus is spoken word.
Jason: And why is that? Why did you make that decision?
Noah: There are a lot of folks focused on music and it’ really cool and it’s come a quite a ways. I’ve always been a fan of, sort of, the first version of podcasting 1.0. I saw what you could do with this two internet connection.
Jason: Yeah. What was the first podcast you listened to?
Noah: My gosh, I don’t even remember. Maybe Adam Curry or something.
Jason: Yeah, yeah. Sure.
Noah: Something from way back in the day.
Jason: Dave Whiner, Adam Curry were two of the podfathers.
Noah: The Podfather. Yeah. But, I was just thought it was amazing there was all this great content already out there, but it was really hard to listen to. Cause you have to download and sync and discovery is difficult. It needs to be an automated experience. Because, you’re listening while you’re primarily on the go doing other things. So, we focused on it, one, because it’s a huge opportunity into itself. Like in terrestrial radio, 35% of listening is to stuff other than music. So, we wanted to be the best at this area. We figured we’d leave music to other folks. By focusing on this, we’ve become the leader and it’s coming along well.
Jason: So, you think banner ads and targeting that way. Let’s talk about the harder issue of who owns the content and who gets to advertise around it. Obviously, with Pandora, they’re paying a specific license fee for that music. They’ve negotiated with the four or five major players and, I’m guessing some smaller ones. But, you never came to me and said “Hey, can I advertise on top of THISWEEKINSTARTUPS. How is the relationship different there and how do you manage it, right? Not that I’m upset about it, I’m glad to get the users at this point. But, obviously some people might be. And some people might say, “Hey you’ve got ads on top. When my shows playing, there’s ads. How do you manage that?
Noah: So, from the beginning we’ve wanted to work hand and hand with content producers. The nice thing about us, relative to the music side, is there isn’t this sort of middleman of labels. We want to build a relationships directly with content providers. Some large media companies, we’ve had formal agreements with. There’s a long tale also, and so we have taken an approach where we have a content portal that a content provider logs into. They sign a terms of service. Through that we’re able to negotiate anything that needs to be negotiated. You own the rights to the content as a content producer, obviously.
Jason: Obviously, yeah. I don’t remember giving them to you. (both chuckling)
Noah: Actually, I think you did or you or somebody…
Jason: By loading the app, I get to give you my content.
Noah: Some representative of yours, I think, signed the terms of service.
Jason: Oh, O.K.
Noah: So, now we’re officially partners.
Jason: What are the terms of service? What are you saying, that I give you the right to stream it?
Noah: Yes. We have the right to stream it. You can remove it at any time, for any reason. You own the content. It’s very content producer friendly.
Jason: It needs to be, doesn’t it?
Noah: Yes, it does.
Jason: Are people particular about this? Have you gotten people who are like, “What’s going on, here?”
Noah: Some folks are most, especially relative to what we understand on the music side, it’s much more hand in hand. It’s much more, as we’ve grown, we’re the second biggest in terms of on demand besides iTunes. As we grow there’s been some friction, but we’ve been able to work through it. I can count on one hand the number of cases where content producers have been like, “No, take our content off and never put it on there again.” Maybe it’s two hands but, it’s not three.
Jason: What’s their argument? What do you think their position is? I mean, they’re getting the listeners and… can they turn the ads off or do the ads have to be on, currently?
Noah: So, The ads have to be on, except in the case of a public radio, for instance.
Jason: Got it.
Noah: We have a different deal with public radio.
Jason: So, the ads are the little banners ads at the bottom served by a network?
Noah: Right now, and eventually, it will be an audio/display combination.
Jason: Like a pre-roll or something or will it interrupt my program?
Noah: It would always be a pre-roll. We will never interrupt the program.
Jason: Can I opt out of that if I want to? Because that would be a hard ‘No’ for me, if I couldn’t turn off the pre-roll. Or, would I negotiate that in private?
Noah: You would. You would also, potentially, be able to opt-in to do more of a live read. Then, we’d work together, cause there’s a lot of inter-active stuff we could do on Stitcher, that would be cool, if you were plugging something.
Jason: Ah, so, while it’s playing we could have people take a quiz or submit their email.
Noah: Who do you think is going to be the MVP of the World Series, vote now. It’s sponsored by one of your sponsors, and then, we work it out together.
Jason: I think that’s the key because, the content owners want to feel like they have control and that they’re respected. So, opt-in, obviously we’re not opting in to the service, in order for you to aggregate it, you’d have to just do it without our permission. You know, aggregate it all together. But, it’s all freely available on the web. So, it doesn’t feel that it’s too much of an infringement. But, obviously these six or seven people did. What was their argument? Without naming specific names.
Noah: Yeah. So…
Jason: Adam Corrolla. Is Adam Corrolla on or not?
Noah: Adam Corrolla is on.
Jason: O.K.. So he wasn’t one of the seven.
Noah: Two things. To answer your question about why they might not want to be on stitcher or in other places. A lot of them will come out with their own app and maybe it’s a paid app.
Jason: Yeah. We’re doing that.
Noah: And, usually, what we see is, they’ll talk about, “Hey, maybe, we don’t want to be in all these places cause we’re going to pay for this app, then they realize that the app business is pretty tough, and that people actually want to listen to a bunch of different content. So, apps are good, because they have more than just audio for a particular content producer. We encourage every content producers to have an app but, they should also be everywhere else. So, that’s the biggest argument.
Jason: So, they have a dedicated app, that people are paying for, and they’re like, “hey, you put it for free,” and they can’t get it… Why don’t they just put the archive as paid?
Noah: Well, in some cases, like, “This American Life”, you can only get one episode, both on iTunes and Stitcher, and then, for the entire archive, you would go to them.
Jason: So, that’s the best of both worlds.That’s what I’m planning on doing. I’m planning on taking the archive of the show, maybe things that are older than 10 or 20 or 30 episodes and putting them in a paid app. I still want to get the Stitcher people for the last 30 days.
Noah: Right. Yeah.
Jason: And, I think Apple, I don’t have any inside information but, I don’t not have inside information… is that…
Noah: So, what is your non-inside information?
Jason: They’ll have… and I don’t have the same non-information about YouTube but, it’s pretty clear that those guys would do well to have a subscribe button and a paid subscription service. Are you thinking of having a paid subscription service into the app, built in?
Noah: So, we right now have a way for content producers that have a paid show, for instance, we have deals with Fox and Premier, and some of the conservative hosts. Like, if you’re a Rush Limbaugh fan club member, as part of that, you get Rush Limbaugh on demand and, as part of that, with your credentials you can log into Stitcher and listen to your content there, on Stitcher. So, you can’t buy it on Stitcher but, we’ll send you to the right place to buy it and then you can listen to it.
Jason: It seems to me like that’s a huge opportunity. I mean, if somebody’s listening. There needs to be a subscribe to a podcast service or a standard. Where, anybody can subscribe to any podcast and consume it anyway they want just by logging in through credentials so, why doesn’t that exist yet?
Noah: We don’t know.
Jason: That’s on your roadmap, it’s gotta be, right? I mean it’s so obvious, low hanging fruit.
Noah: There are elements of it that are.
Jason: What, donate, maybe or buy pay-per-view episodes?
Noah: The other thing is, with Apple, it’s a bit tricky. They want to extract 30% and content producers, in many cases, don’t want that to happen.
Jason: I wouldn’t care about 30%. Seems reasonable. I’d rather it be ten.
Noah: But, for one click, that’s not…
Jason: But, I mean for the size of their audience… we pay it for apps. It does seem heavy, but then again, when you think about the resale of cds or books, they sell those and they mark them up 100% in the stores. So, 30% seems kinda low, when you compare it.
Noah: So, that’s one of the issues that we come up against and also, we’re working to understand where Apple is coming out in terms of that.
Jason: So Apple launched their own podcasting app.
Noah: They did.
Jason: When you saw that that day, as an entrepreneur, who has been working on this problem, for how many years…?
Jason: So, in year five, you see, finally, Apple separates it. The product was kind of kludgy, but getting better. Does that just send shivers down your spine or does it validate what you’re doing? You see it’s number one, two, or three in the free app list everyday.
Noah: Yeah. So, Apple’s been, frankly, a great partner of ours. Their editorial team has featured our app quite a lot. And, this is a space that is in its infancy. From our perspective, to have a company like Apple come out with their own app, it validates and hopefully, gets more people listening to on demand shows and so, that’s great. We like that.
Jason: That’s a very diplomatic answer but, I have to call B.S. on it. This is a direct competitor and they’ve been nice to you about featuring it but, now they’ve come in, and they will be the default on everybody’s phone. They don’t need to download Stitcher. What is the added functionality that you’re going to have that is going to let you compete against them?
Noah: Well, we do a number of things that they don’t do now. Maybe, they’ll do them in the future but, they don’t do them now.
Jason: Right. What are those? I mean the design is obvious. I think your design is better. I’ll be honest. I like your interface and UX better and that is, I believe, a distinct advantage that you have.
Noah: One thing that we do which, we’ll get back to that other question about the content producers who weren’t happy with us, one thing that we do is we can press most of the content where we have formal relationships with folks, down to a bit rate that streams reliably over mobile networks.
Jason: That’s a big deal. We need that.
Noah: You have it.
Jason: So, we just have to go in there, we check a button, you take my file and, you make two or three copies of it. One at 14 kilabits, one at 28…
Noah: We, actually, just do it at 32 and that’s it.
Jason: Oh, Ok.
Noah: We worked hard to get the sound quality good at 32 and be able to compress quickly, cause we need to be able to do that. That makes a huge difference, both, in low coverage areas and as there are becoming, sort of, more and more bandwidth caps. That’s one thing. We have a pretty robust social integration. And none of these are things that Apple couldn’t potentially do but, but they have a great business building hardware and they’re pretty good at it.
Jason: Right, If you look at a lot… we could be having the same discussion about Apple Ping, inside the social network, inside of iTunes. So, there’s no guarantee they’ll even continue supporting or evolving this product. But, I don’t get the sense that. I get the sense the Apple podcast app is here to stay. How does your board and your investors, as an entrepreneur- the audience is mostly entrepreneurs, would-be entrepreneurs, soon-to-be entrepreneurs- how do you manage a conversation like that, when it comes out. Do you proactively email everyone and say, “Listen, the podcasts thing comes out, here’s why we’re not worried, here’s the future roadmap.” Or, do they start calling you in a total panic. What happened when the app came out? Honestly.
Noah: Yeah, honestly. We’ve had some moments before but, this wasn’t one of them. One, there’s been rumors that it was going to come out for a while. The other thing, we sort of built out functionality wise like: robust recommendations engine. We are the furthest along besides Pandora and getting into the car. We have deals with, like, Ford, GM, and BMW.
Jason: How do you get a deal with Ford and GM to be on that display? Is that pay for play? How does it work?
Noah: No. It’s similar to the radio, which, no money exchanges hands. They sell more cars because they have Stitcher and we get more users.
Jason: How does the 3G/4G work in those cars? Do you have to pay a monthly fee or is it built in? I mean, I just have an IP enabled car for the first time in the last two months with my Tesla.
Noah: In most cases, the phone continues to do the heavy lifting, but through bluetooth or through connecting it has a much more robust integration on the dashboard. So, you get into the car, you still have the phone in your pocket but, Stitcher pops up on the dash and basically, acts like a radio and you have all of the benefits of a two-way connection.
Jason: So, you have to have a phone for it to work, It’s not going to just work in a stock Mustang?
Noah: You do. But, there’s already a hundred million internet connections in cars, in the U.S., through their license.
Jason: So, you think that’s the model: I get in the car, it connects over bluetooth and, I use my phone’s connection, as opposed to having another connection in the car? And paying another internet bill?
Noah: It’s hard to know. I think it, partially, comes down to how easy carriers and auto companies make it. So, if you just bought a car and your at the end of the whole rigamarole, your checking boxes, and it’s just another 5 dollars on your Verizon or Sprint account, that’s pretty different than a whole new $24.99 per month kind of thing. We’re prepared either way.
Jason: What is the price point it needs to be? What do you think for cars? For it to get mass adoption. Less than $5 a month? Five or less.
Noah: For mass adoption, probably $5 or less. Especially, because there already is an internet connection, in the car, through the mobile device.
Jason: Right, so, the convenience of not having to connect through bluetooth?
Noah: There’s also some other benefits to it. Like, the phone is a piece of hardware that has an average life of a year and a half, verses a car, which is seven years. There’s over the air upgrades, that are happening all the time, with iOS6 or whatever it is, verses a car, which is much more difficult.
Jason: This has already happened for me, with the Model S. The Tesla has 3G. They gave it to you free for the first year. But, my understanding is that it is going to be able connect with your phone in the next version, soon. It came with 3G. It didn’t have LTE because, LTE wasn’t ready, or whatever, when they were designing the car. But, when it connects to my phone, over like a mi-fi or wi-fi, I guess, I’m going to have LTE in my dashboard. Which is 20 megabit. The whole idea of having to compress goes away, then.
Noah: It does, if it’s not capped.
Jason: Yeah people are concerned about caps. And you’re starting to give warnings. Do you guys give warnings? I got the warning on the Sirius app. Like: “This could eat your data, pretty quick.”
Noah: We’ll give a warning to a user, like: “This uses bandwidth.” The amount of hours that you would need to listen to Stitcher for it to move the needle at 32 kbs is a lot of hours. You’d be listening to Stitcher all the time, relative to video or music, where you need to hear it in a higher fidelity. So, that’s a really big benefit.
Jason: How many people in the company, now? How big is it? Where are you based?
Noah: 35. Sandwiched between Michigan and Howard.
Jason: Oh, perfect size.
Noah: Yeah, 35 is a good size.
Jason: You know everybody and you met everybody before you hired them.
Noah: Of course.
Jason: But, that’s going to change when you hit 50, 75 or 100. What’s the future of the business, do you think? Because, it does seem like your company is now five years, $15 million, or so, raised, I’m not sure exactly, the numbers.
Jason: But, really, what a great group: Benchmark, New Atlantic, New Enterprises, which is a great V.C. firm. You’ve got plenty of funding and with only 35 employees, you’re only burning half a million a month, and you’re covering that or a portion of that with the advertising. What’s next? What’s the future of the business? Where do you see this going? Are you going to become an original content producer? Do you see people like YouTube funding content in advance? It seems to me the technical issues are going to be solved? The issue is monetization for people who make content. That is the big opportunity. Is it not?
Noah: The big opportunity is monetization. We’ve seen this before in every industry that has gone, kind of, digital. We’re, kind of, in the second inning of the radio dial moving to digital for all the benefits of the two-way connection, verses, the one-way connection. Right now, as an industry and, also, as Stitcher, we’re in a focus on: product enhancements being everywhere that a user wants to listen to us, have the easiest, most robust listening experience possible, continue to add great content to the service. But, we’re, also, starting to hit the era of monetization. It needs to happen.
Jason: It seems to me, with YouTube funding content in advance, you could be, raise another round or by providing subscription based services or a donate button or even coming with big advertising buys, could do what YouTube is doing, which is, YouTube is going out to market, full disclosure, Mahalo is a YouTube partner of a funded program that you know about which is a different company than ThisWeekIn, they’re going out in advance, with a slate of programming, selling an upfront, collecting that money and, then, splitting with partners. And giving traffic, I guess, to those partners, directing a certain amount of traffic.
Jason: Feels to me like you’re a mini YouTube. If you went to ten talk show hosts and said, “Hey, we’re going to make a business channel and we’re going to sell it out, and we’re going to go in advance to American Express and sell it at a high CPM. We’re going to do it better than you could do. We’re going to keep 45%, like YouTube does and, we’re going to advance you some production money, against that. This could be an amazingly powerful model for you, could it not?
Noah: It could be. It’s something we’re definitely talking about and could be potentially dabbling in.
Jason: Yeah. Because, a lot of the podcasters stopped. I just pulled up Stitcher and one of the related shows was Venture Voice. Venture Voice hasn’t published since 2009. Right? So, it seems that it’s easy to start a podcast. Let me tell you something: I’ve been doing it for three years- this is not easy. Three years and 300 episodes later, we’re doing 100 episodes a year, basically. It’s hard. A lot of people give up.
Noah: Yeah. A lot of people do. But, there was this, sort of, first coming of podcasts and it was early, and now it’s really hitting it’s stride, cause it’s internet radio and the connectivity is there and monetization takes a little bit of time.
Jason: Was syncing the problem, do you think? Now that we’ve resolved the syncing issue, because we’re not syncing anymore, we’re streaming. Was that the real impediment to mass adoption?
Noah: That was a big piece of it. The other piece of it is discovery and having the experience. Especially, when you’re on the go, you”re doing other things, which is when you listen to this type of content. You, basically, just want to press the “entertain me” button and that’s what the radio does. We can do it better, obviously, because, we…
Noah: Yeah. We know things about what you already like to listen to.
Noah: Location. What you listen to. What other people that like stuff you like like to listen to. What your friends are listening to. So, we know a lot more and we can build an experience for you. A unique experience that’s better than terrestrial radio but, we need to get to that point where it’s basically like the one click “entertain me” button.
Jason: Yeah, and with talk radio, these people talk to long. These shows go too long for you to do a mix. It’s one thing for YouTube to do a mix, based on, 3, 5, 7 minute videos. My show goes an hour, an hour and a half, sometimes. These other podcasters go two or three hours, sometimes.
Noah: You need to start chapter tagging or at least segmenting it up.
Jason: Yeah, that’s true. Does that exist as a format, officially: Chapter tagging?
Noah: It does and there are also more…
Jason: Cause we do minute by minute recaps. We have the minute by minute in our YouTube descriptions and on our website here is every minute and every question Jason asked. And, we’re looking into, correct me if I’m wrong Jason, having a transcription done? I don’t know why we don’t have… cause the super-fans would do that on the wiki. Maybe we should just give the super-fans… what would it cost? 75 or 100 bucks? Why don’t we just give each super fan a hundred dollars to… if there’s a super fan out there with no job or… just broke and living somewhere where they have plenty of time and watching the show anyway, if you want to transcribe the show, we’ll give you $100 to do it. Done. Super fans email: firstname.lastname@example.org.
Noah: We’re seeing a lot of content producers, NPR, as a prime example, is sort of at the cutting edge of making mini episodes of their bigger stuff and it makes sense.
Jason: Oh! It costs so much money to do that, though. We tried it for a while and it was like… we used to cut our shows up into like 20 questions or whatever, but it would take like two or three days of editor time so, you’d spend 600 bucks and you’d never make it back.
Noah: Just have natural transitions and then, put little insets…
Jason: I know. It took two or three days, though. Take an hour show, cut it up. It takes a couple days. $500 in cost, a thousand dollars in cost, whatever it winds up being, per week for us. It has to be some way to make that money back.
Noah: Could be. I may be a bit naive about it. But, we’re seeing more and more folks doing it and it seems to… it doesn’t seem to cost that much. But, I’m not on the production side.
Jason: Yeah. Well, just in terms of editing, you’re talking, all in, about 200 bucks a day for an editor or something, so it can add up to cost. But, this gets us back to monetization. If this is going to become a sustainable business… look, my show show is very sustainable. I’m very lucky to have great advertisers, thank you, but it took years to get there. Most shows are not sustainable. They can never get the flywheel going of compensation and, then investment and, then more revenue, more investment. I mean we keep investing and investing in this show. These microphones alone and the compressors and travel. We spend a lot of money producing this show. Other people, they can’t get started. How do you solve it?
Noah: Yeah. There has to be platforms that do the selling for them, in the case of really small shows. A lot of them, you know they start out as enthusiasts. It’s like Joe’s Bass Fishing Show.
Jason: Sure that’s how this started.
Noah: And, maybe it only has a small following, but boy, do they love the show and they listen all the time. So, it’s just a matter of time before it’s rolled up and we want to be able to provide that service to content producers so, they don’t have to go do it themselves.
Jason: Have other people tried to become like… there were a couple of companies that thought they were going to be like, the podcasting roll up company. I guess, PodShow, Adam Curry’s. That didn’t seem to work.
Jason: Odio was going to be a software platform but, not monetization. What was the other one? Podtracker does metrics. Somebody else was like, “Hey, here’s a whole podcasting suite.” Are you going to be that podcasting suite or is it that you’re more cherry picking winners?
Noah: Well, we have 12,000 plus shows on now and we can see that, for every user, they listen to some stuff that’s really popular and some stuff that’s really long tale. We think it’s important to have all of that content. So, to the extent that, our primary focus is making the best experience we can for our listeners and by doing that, we want to have great content partnerships, because that’s how we’re going to get great content producers to come on.
Jason: Do people really click on those little banner ads?
Noah: They do.
Noah: Which is surprising. It surprised us initially because, we thought… well, people just… the phone is in their pocket and…
Jason: What do you use, like, an ad network? Do you use, like, Google?
Noah: Mostly ad networks.
Jason: Which one works best?
Noah: It depends on who’s running the grand CPM stuff at the time.
Jason: Got it.
Noah: Because, our click through rate is good, we tend to get more and because, now we…
Jason: So, who are the top two or three? Is it Google and…?
Noah: It’s the ones you’d expect and then, some others.
Jason: I don’t even know, is it Google?
Noah: Yeah, Google is usually at the top.
Jason: And, there are other startup companies that provide those ads, too?
Noah: There are some.
Jason: Is TapJoy one of them?
Noah: I think so. There’s a whole…
Jason: Do you dynamically serve them? Can you dynamically serve between networks, like which ones are performing best? Or is it like, Google, where you have to manually switch it the next day?
Noah: No. It’s course. Basically, it pulls from whoever has the top at the time and if they don’t, then, it goes on to the next one.
Jason: So, how much money do you think a show like mine makes Stitcher?
Noah: Well, right now…
Jason: Well, you, actually, know the number. How much has my show made Stitcher? Hundreds? Thousands?
Noah: I actually don’t know. But, I could…
Jason: You could look it up.
Noah: Yeah, I could look it up and figure it out.
Jason: I’m just curious what the three hundredth or four hundredth show is worth in terms of revenue.
Noah: So, right now, we have mainly been focused on user growth. We don’t have a direct sales force and, so, we’re relying on third party ad networks. We’re starting to get a significant number of inbound requests for direct sales.
Jason: Do I get a piece that? Those ads?
Noah: You do. Yeah.
Jason: So, we can just log into the portal and just pick it up. What percentage do I get?
Noah: It depends. In this case, we basically sell. So, I think you get something like 30 or 40 percent. In order to do that you would need to, not only the partner portal, you would need to just come to us. You’re in the top…
Jason: 35? You get the majority?
Noah: In the instance where we sell. In the instance where you sell, you get the majority.
Jason: On YouTube, I get 55. On AdSense I get 68.
Noah: So, maybe we’ll negotiate.
Jason: Yeah, that’s got to be… no, it should be a disclosed rate. I mean, you should match the large player: YouTube. But, it’s not a meaningful amount of money, yet, for you guys?
Noah: It isn’t. It’s not.
Jason: So, we’re talking about a moot point, today?
Noah: That’s right. Not entirely moot, but…
Jason: Well, the thing is, this is the type of conversation that would occur behind closed doors, like if I was calling you. And, I’m trying to put it out there because, I am a fan of it and I would like you to be very successful. So, I think that the thing that would be great is if there was this, like, open transparency and I could just turn on: I want banner ads but, I don’t want the pre-rolls/ I want pre-rolls but, not banner ads. I could see it monetizing.
Jason: And, if I got a referral for every client and person that I sent to Stitcher. So, I say, “Download Stitcher at this URL or you can find us here, I should get a dollar.
Noah: There is. We have an affiliate program.
Jason: How much do I get for every download?
Noah: You, actually, get a dollar.
Jason: Jason Demont, take a note. We get a dollar per download?
Noah: Yeah. It’s something that we’re piloting now and, we’re just seeing whether or not it will work.
Jason: Wow! So, you right on target with me. Cause, I think that people would, as a content provider… you know, I’m very reasonable about it. I look at this as this is where our audience is. I want you to have enough money to keep building your business. I want it to be fair. I want it to be sustainable. It’s the relationship I’ve got with Google. The relationship with employees. Whatever. You want it to be sustainable, fair and, transparent. Also, to have control is what I think content people want is… control.
Noah: Yep. They do.
Jason: So, is the car traffic in any way meaningful yet. Is it like, low thousands of people a day, tens of thousands of people a day? Do you have anyway to knowing?
Noah: We do know. It’s not in the grand scheme of our total listening. It’s not hugely meaningful.
Jason: Single digits? Low singles?
Noah: It’s in the thousands. They’re just starting to roll out. By 2014, if they execute and we execute, there will be 4 million Stitcher enabled vehicles. Now, there’s still some steps you need to take. You need to connect with bluetooth, you need to…
Jason: Sure. But, if ten percent do it, that’s 400 thousand people, potentially everyday, tuning in.
Jason: Could be meaningful.
Noah: That’s not insignificant.
Jason: Not at all. That’s a great start, in fact.
Noah: Especially in a car.
Jason: What about home systems, are you on the Sonos system?
Noah: We are on the Sonos.
Jason: I gotta go find you guys in there, because, I do Rhapsody and Pandora on my Sonos but, I didn’t see you. I’m a five year Sonos user. Does that provide meaningful traffic? Is it sticky traffic or do people not use talk radio on their Sonos, they just use it for music?
Noah: So, actually, the reason we decided to work with Sonos, and we haven’t done other integrations is because, people listen to talk at home in the bedroom, when they’re getting ready for work, or going sleep. In the kitchen, while they’re making dinner. Just, not so much in the living room, where they would listen to music and watch T.V.. So, Sonos was a great match for us because, you have units throughout your house. The numbers for Sonos are similar, probably, a little bit higher still for automotive. A lot of them are Stitcher users, already. Now, they’re listening on Sonos. Since I integrated Stitcher on my Sonos, I listen on my iPad some but, I just listen on Sonos and it’s a cool experience.
Jason: Now, what about video? Now, you have a lot of podcasters who are taking on the challenge of video. We are one of them. When we first started, I originally had a podcast called, CalacanisCast. You can look it up and, it’s just audio. We did about 30 or 40 episodes. Ron Conway was on, Evan Williams was on. A bunch of cool people. But, then, we said, “it has to be video.” People really want to see what’s going on and we’re having the conversation, anyway. But, it does add a magnitude of cost. Your app doesn’t support video, yet or does?
Noah: Does not. We don’t have any plans to support video.
Jason: Wow. Why is that? Is it just based on the statistics that people just like to listen in cars and gyms?
Noah: It’s that it’s a completely different consumption paradigm. We want a user experience focused on listening while you’re on the go doing other things. If you’re in front of a… and there are plenty of folks… YouTube being one of them, solving the video problem and making video where, you’re sitting in front of it and you can make active choices about what you’re doing. So, we want the best user experience for audio. So, we had to be pretty religious about that.
Jason: Tell me about the integration in the app between the shows and advertising. I think that, obviously, that’s a pretty compelling place to start. So, if I’m listening to the show… if there were watermarks… not watermarks, time-stamps of like, I say right now, “How many people use Stitcher,” and people could vote at that moment, like a survey monkey, or something. You know, there could be some interactivity. So I can look down at my phone and say, “Hey, if you’re using Stitcher, make sure you go do ‘this’.” Hey, if I do the ad for MailChimp or the ad for SendGrid or SquareSpace and say, “Hey, if you want to start a free trial, just click here.” You know, that kind of stuff could be very compelling, as well.
Noah: Yeah, we could do it. We can do it in your show.
Jason: Is it custom, right now, or is it platform?
Noah: Right now, it is custom.
Jason: So, you’re trying to ‘platformatize’ that? To make up a word.
Noah: Yeah, that’s a good word. But, sort of, in a semi-automated… We have a partner portal, now, and like you were talking about being able to opt-in for certain things and opt-out for certain things. That’s one where you, potentially, would be able to opt-in for it. It does, from an opts perspective, though, there’s a little bit more heavy lifting because, we don’t know… there’d have to be a link. So, right now it’s experimented with it, in a few cases. We’re looking for content partners to experiment with it, more, because, it’s hugely compelling.
Jason: It’s very compelling to me. You’re at 8 million downloads, now. Which means, I’m thinking, at least 20% of the people use it, monthly. So, that means, you’re at 1.6 million monthly users. And, I’m thinking, on a daily basis, it’s got to be at least a third of that. So, I’m thinking, you have a couple hundred thousand people a day using the app. Am I in the ballpark?
Noah: Pretty good.
Jason: Pretty good?
Jason: O.K. That’s what I do for a living. So, if you have that kind of traffic, now is the time to start selling. When are going to have your own dedicated sales team? And, is that the, sort of, 2013 plan, now that you’ve got your C round, you got that nice big chunk of change. Get that New York office, get the Chicago office, get the San Francisco, L.A., ad sales team going?
Noah: It is, and right now, we’re speccing. We have, kind of a, rudimentary ad platform, but, kind of speccing out what the next phase of it is. And, then, starting to hire a sales force in Q1.
Jason: How hard is that to do? Have you done it before? I mean, you were the V.P. of Sales at StubHub, so you’ve done sales, obviously, before, but at StubHub, was there a sales team there when you joined?
Noah: It was a pretty different type of sale. It was much more, kind of, business development at StubHub, and working with teams to get them to use StubHub, as a platform.
Jason: Right. So, it’s a one year sales process with a lot of golf games and Nick’s games, and expensive sushi dinners.
Jason: You spend ten thousand dollars courting a client, then finally, they say, “O.K., you can resale Chicago Bulls tickets.”
Noah: So, this is my first experience on the advertising…
Jason: …’grind it out’, ad sales.
Noah: ‘Grind it out’ ad sales. I’ve learned a lot, but it’s all theoretical until you’re out doing it. Luckily, we’ve got good venture folks, behind us…
Jason: …who’ve done it before.
Noah: …who’ve done it before. And, they’ve seen it a lot and there helpful. We’re building an advisory board of folks that can help us out. I’m sure we’ll make some mistakes but…
Jason: Do you think it’ll be a Federated Media type sale, to use the name of a company here that has been successful at this, sort of generalized sponsorship and embedded advertising, if you will? Or, do you think it’ll be like, here’s your banner, here’s your pre-roll. Go.
Noah: No. It’ll be… our user base, as you can imagine, it’s an affluent, professional, high-income. On mobile, people are also looking for advertisers. Especially, brand advertisers. are looking for things that are a bit different and we can provide that. We can provide a sort of, cooler, more robust experience. We also, have relationships with content partners so we can do stuff together, which is really cool. So, it will be much more of a customized approach. There will be, with those buys, of course, the banner ads and the basic stuff.
Jason: Yeah. Just, as a concept, I would be very much open to you coming to me, saying, “We’re working with American Express Open Business,” and we say, “We have a call scheduled, but haven’t gotten there, yet.” You say, “As part of this, we’re going to put you on the top level and we want to do 20 episodes, 10 minutes per episode, of answering a tough business question. We’ve got them on board for 10 thousand dollars per episode to do this and we’re going to send this much traffic. It’s a $10,000 ad buy per episode, you know, whatever it is, $400,000. Would you be up for doing it?” We’re up for it. We would do something like that. But, nobody’s calling about that. Although, I have a relationship with Federated Media, for Mahalo, that is similar to that. There going to start looking at our apps and shows and, sort of, suggesting these big $250,000-$5,000,000 consultative, 360 campaigns.
Noah: Yep. Good. Well, you’ll be on our…
Jason: …short list?
Noah: On the short list.
Jason: Is business the best category? What’s the best category for podcasting? If you could have three daily shows, right now, to work with and you represented the advertising, what three would you want to have?
Noah: A lot of it depends on the advertiser, themselves, right?
Jason: So, what do they want?
Noah: Yeah. The shows that fit. The categories that are popular are technology, obviously, business and finance. Politics, right now.
Jason: That’ll go away.
Noah: Yeah. But, it was before we got into the election.
Jason: Oh, interesting.
Noah: Then, sports, but, kind of, geeky sports. Like, fantasy football, fantasy baseball, that kind of stuff. And then…
Noah: …social commentary. Which, is sort of a broad swath of…
Jason: Oh. Social commentary? So if I got on there and talked about race and religion and all that type of good stuff that we talked about in the pre-show…
Noah: Yeah. You could start another show.
Jason: Like, ThisWeekIn Atheism. It’s got to be a better term than ‘atheism’. We need like, a term that is not like, “I hate religion.” It’s got to be more like… ThisWeekIn Spirituality.
Noah: ThisWeekIn Spirituality, there you go.
Jason: I don’t believe in God, but…
Noah: You gotta start it. That may not be your intro, “I don’t believe in God.”
Jason: So, what about marketing? Do you work with partners to help them get more subscribers? Is there an opportunity there for you to come to somebody like me and say, “Hey, you want to get 10,000 more sponsors, pay us a dollar per subscriber. We’ll put you at the top. Or, pay us this amount for the top slot and we’ll get you another 10,000 viewers per week? Cause our show is doing really well. I’d like to introduce you to more people. Maybe, I can be your client.
Noah: We have a number of content partners, already. We were talking about Stitcher, as the platform of choice to listen to. And, that’s what we were talking about, a little before, about the affiliate program that we’re piloting, right now. That was a way to be able to enhance it. It’s happening, anyway. Which, is great.
Jason: Yeah. I’ve mentioned Stitcher. I like Stitcher. Listen, I like the iTunes podcast thing. I think, Stitcher is better. You know. Both of them work, but I think, Stitcher works better.
Noah: And, we obviously, have to be careful, especially while we’re, kind of, in the infancy of monetization, ourselves, because we want to pay it forward as much as we can, but…
Jason: Well, you don’t want to wipe it out. Because, if I tweeted, all of sudden, ‘Download Stitcher,’ you might get ten thousand people. But, I suppose if you got ten thousand of my listeners, you wouldn’t mind paying the ten dimes, because, you’re probably paying three dollars to other places to acquire customers.
Noah: Yeah, we’re actually… we do use acquisition tests but, the best… so far the growth has come organically. Which is great because, otherwise, user acquisition cost is high. And, then, through content partners. That’s been what’s most successful. It’s like the only app, you’ve maybe not heard of, in the top ten of the news category of content on iOS.
Jason: Well, that makes sense. If the content provider is promoting it, if you’re listening to a podcast, you’re going to be a pretty qualified lead for Stitcher.
Noah: That’s right. As long as you have a smart phone, there’s pretty much no reason you wouldn’t.
Jason: So, what about selling listeners and promotional spots to us. Like if we paid you money to get us another 100,000 tune-ins a week. Can I buy the featured spot on the business category and be number one?
Noah: That’s a good question. That’s an area we haven’t gone into, yet. Partially, because, we want to be agnostic. We’re a platform, so we want listeners to trust us. And so… but, we certainly could. I mean, Google does it. Everybody…
Jason: Everybody sells the top slot: CitySearch, Yelp, everybody. As long as it says it’s a partner. Sponsor, partner, ad: whatever.
Noah: It’s probably something that we will do at some point.
Jason: I know for us, we’re ,sort of, like: we want to get more people to listen to the show. The show is making money and we would love to invest in a smart way to get more listeners. It would have to… obviously, just like you’re concerned with, “Hey, am I really getting downloads that will convert?” But, maybe we can just trade it. I’ll bring up your product in the show and you just feature us at the top of the list. We just do swap. We just monitor it. It’s pretty easy. We can easily track how many clicks a link got for us.
Noah: That’s the great thing about the internet.
Jason: It is pretty neat, isn’t it?
Noah: Especially, relative to radio.
Jason: What about studio space? Are you going to do a studio, ever?
Noah: I was talking to Jason about this very thing.
Jason: Oh, my Jason? I want to open a San Francisco studio.
Noah: We have a small studio…
Jason: … a broom closet.
Noah: It’s a glorified broom closet. It’s a little bit bigger than that. You might need more space. We have some local podcasters that’ll come in and do some shows. Sometimes, out of work radio folks, when they’re between gigs, like Fernando and Greg, for instance, that was, actually, in our broom closet, in our old office. Since then we’ve got a bigger broom closet. We have a space. We record some content, ourselves, like: Stitcher Tips. New features that are in the app, etc. You’re more than welcome to use our broom closet.
Noah: With audio, you need quite less equipment wise to get something that’s usable.
Jason: You can set up a proper studio for ten grand, no problem. I mean, video, you start to get into a hundred grand. So, it’s ten times as much, if you want to do a proper video. Speaking of proper video, can we get these cameras upgraded. These JVCs seem a couple of years old, Brandis. Maybe, we need to get new cameras. Are there better cameras out there, that would make the picture look a lot better? I don’t know how old these cameras are. O.K., spend 15 grand, get us some new cameras. See, that’s how I do it. Right in the middle of the show. I’ve got money to spend. I’m trying to increase the quality of the content. That’s what I’m constantly in a race to do. To see if I can make the quality better.
Noah: Good. And, that’s both, through the content, itself and…
Jason: Yeah, it’s like, you get better guests, better microphones, compressors.
Noah: These seem like pretty good mics.
Jason: These Shure mics are the best you can get for talk radio. There’s one other one. What’s the other one Brandis, that’s $3500 that Howard Stern uses? The Nonin is like $3500 that, Howard Stern uses. But, then I listen to a test test online of the Nonin verses the Shure.
Noah: And, you couldn’t tell?
Jason: I couldn’t tell and I was like, if I can’t tell then…
Noah: In this room it’s important because there’s no sound barrier.
Jason: Well, you know, the last time we did the episodes up here, we were at RocketSpace, another co-working space, that’s not an invite only one, and they were kind enough to host us but, we didn’t use these microphones, we used lavalieres. And, I think, that’s the key in podcasting: you use lavalieres and it’s going to sound like, a seven out of ten. You use the Shure microphone, you’re at a nine. And then, if you get the sound mix right, you can get that nine and half, ten quality sound.
Noah: It’s important.
Jason: User interface on yours is amazing. How are you doing acquiring talent? Obviously, you have a lot of open positions, I’m sure the business is growing. But, from what I’m hearing, there’s absolutely nobody left to hire in San Francisco. True or not true?
Noah: Luckily, we have great designers, product folks and, engineers. We’re always looking for more.
Jason: It’s getting harder to hire people and the salaries are insane. So, what do you do?
Noah: We are doing some more out of state recruiting.
Jason: Oh, you’re recruiting some people to come here? So, you get somebody from Boise, Idaho to come here?
Noah: Yep. Or, Arizona. I think we have an Android engineer, starting next week.
Jason: What about starting an office in Brazil or, in Bulgaria, or, something like that? Have you thought about that?
Noah: We’ve thought about it. But, the thing about it is that it’s a tight small team and they’re all in the same place and they talk and it’s important.
Jason: So, you don’t buy into this, sort of, outsourcing? It doesn’t sound like a great idea?
Noah: We don’t. I think it’s important to be… especially when we are at the cutting edge of something and we’re trying to solve important problems… to have a place where folks get together.
Jason: Is this your first startup?
Noah: I was early at StubHub and that was a great ride
Jason: They went public or got bought?
Noah: They got bought by Ebay for a good sum.
Jason: What was that number?
Jason: Oh, that’s nice. You were the V.P. of sales?
Noah: I was early, the V.P. of sales.
Jason: First year, second year? Employee number?
Noah: I think it was ten.
Jason: You were employee number ten? Alright, so watch Jason do math, right now. Let’s see V.P. of sales, tenth employee and, you got you’re second grant…
Noah: There’s going to be a piece of math that’s going to take that number down.
Jason: I’m going to get 2.5% to start, then, 3 rounds of dilution down to… you had 1point, 2 points. You made 4 million dollars.
Noah: So, the only part you’re missing in the calculation is, that I decided to go to business school at the end of year 2.
Jason: Oh, so you got half of that. You got a half point and you made 2 million bucks. I’m proud of you. That’s awesome.
Noah: Thank you, very much.
Jason: That’s awesome. You paid for the loft. That set you up for now.
Noah: That’s hilarious.
Jason: Am I that close?
Jason: I’m totally, far off?
Noah: I’m not going to answer that. You gotta be kidding me.
Jason: I just do this funny thing now, where I’m so good at math… not that I’m so good at math… I’m so good at guessing business stuff, cause I’ve been through so many board meetings of other companies and been through these conversations: Oh V.P. of sales. that’s 2.5, if it was an early guy, second grant… I just want to do it in my head.
Noah: You end up doing it in your head, anyway. I do it all the time, myself. But, you call it out on the show.
Jason: Yeah, I probably shouldn’t do it on the show but…
Noah: It’s pretty funny. It was an awesome experience. Jeff Fleur, who is one of the co-founders is on our board.
Jason: Well, that’s a good sign: the co-founders then, followed you to your company and, like, wants to support you. Was he an angel investor, too?
Noah: Well, the nice thing about doing an angel round, starting a company around the time that StubHub was getting sold is that, the whole management team invested. But, recruiting was tough. So, I was not successful on that front.
Jason: You’re not allowed to poach. That’s for sure. Can’t steal anybody.
Noah: Well, it had been a little while. I tried.
Jason: You gotta be graceful about it. How do you tackle that?
Jason: Do you call them up and say, “Hey, these guys wanted to come here.”?
Noah: I wasn’t allowed to poach.
Jason: So, they have to come and find you? You can’t, actually, call them and say, “Hey, come join the company…”, but, if they do apply… California law…you’re good.
Noah: I did try to poach and I don’t know what the law were. I was just aggressive as heck about it.
Jason: I think the laws are… well, it’s not the law. it’s if you sign an agreement not to poach, then you don’t poach.
Noah: I didn’t have such an agreement. It had been a while.
Jason: Well, if somebody applies to your company there’s a California, non-compete. Non-competes are a silly idea, anyway.
Noah: Yeah. It is silly.
Jason: Actually, on the east coast, you can enforce it. I remember hearing this story about a hairdresser of all things. Where this hairdresser had a non-compete for a certain number of years and, she or he, I can’t remember which, couldn’t work within a 100 miles of the hair salon. Or fifty miles, or something, then, she went to work across town and then, had move to another town. I think it was like Boston, or something. I mean, it was crazy.
Noah: Here, it’s fair game.
Jason: … and it was, like, a two year, non-compete, and they weren’t paying her during those two years.
Noah: Where do you read this stuff? Or, did you hear it on Stitcher?
Jason: No. All I do is read. All I do is read and then, talk to smart people. You learn a lot that way. That’s what this show is about. Me pumping you for information so that I can build my businesses, better. Take little notes and figure it out. So, you’re a first-time entrepreneur but, you learned a lot on the job at StubHub?
Noah: It did. It was, also, when I realized that building it is what I loved. Seeing it as an opportunity. It was a no brainer to me when I heard the idea. The co-founders had just left Stanford Business School, Jeff dropped out and I knew a little bit about… I had been a trader… so, I knew a bit about markets and I worked briefly in the ticket industry. When he told me the idea, I said, “That’s brilliant.” I said I have to do this. It’s like a better mousetrap.
Jason: Did you advertise on radio? StubHub was on radio, all the time. Did that inform your thinking about the power of radio?
Noah: We did. It may have sub-consciously. With Stitcher, it was more… at first I saw that there was all this, kind of, great random audio content out there that was not in podcast form. It was like, angry ex-girlfriend voicemail, best man speech kind of…
Jason: Yeah, the viral
Noah: And there really wasn’t an audio home for it. And, with audio, it really needs to curated. There can’t be like a YouTube of it, because you’d rather watch a video, in most cases. So, just for fun, I hired a comedian and we started doing this podcast that was, basically, an America’s Funniest Home Video for audio. People would send in stuff, this funny content, and you’d vote on what you thought was the best one. Through that, I saw there was already, all this great podcast content but, it was impossible to listen to. I remember, being on the phone with my mom, late night, and trying to explain to her how to get my “radio show” on her iPod and I thought about the mobile internet and I thought that deliver mechanism makes sense. I was also an early adopter of Pandora. I saw, on the music side how much better an experience can be. So, that’s what happened. A light bulb went off and there’s no question, this is the absolute future of radio. With two-way internet connections.
Jason: Is Yahoo going to buy this company, do you think? Seems like a perfect purchase for Yahoo. 35 great people in San Francisco, advertising, technology, mobile. All the ‘sugar’ that they don’t have, right now. I was about to say the ‘s’ word and I got the swear jar, it’s going to cost me 10 bucks.
Noah: I don’t…
Jason: This is the perfect purchase for Yahoo. Have they contacted you yet? If they contacted you, right now, and they were like, “Here’s $100 million,” do you think you would sale?
Jason: That would be too small because, you raised 10 million in the last round. So, let me do my math…
Noah: There you go, again.
Jason: 10 million with 50 million posts for 20 percent. You’ve got to get to 200/250 for your V.C.s to feel good about it, today. But, you’re long?
Noah: If we are going to be acquired, and we’re heads down and we’re building a business, we really want to see a future for this. And, there are some acquirers where there wouldn’t be a future. I don’t know if Yahoo’s one of them or not, frankly. There’s some where it would be and some where it wouldn’t be.
Jason: If you’re five years into the business, don’t investors, your early investors, start getting a little antsy and they’re like, “Hey, it been five years. We usually, like to get a return in 4-7.” You’re, kind of, in that window where, It needs to either explode… which it has, it’s had moderate growth, you’d probably not say explosive but, really solid growth.
Noah: It’s coming along.
Jason: But, coming along, now and smart phones are so nascent and still, a lot more to go. Is there pressure, now or, do you feel a sense of pressure, like, I’ve got to get a return for my investors? I really should start looking at M&A.
Noah: Well, one nice thing about having investors is… and, I’ve seen a lot of this, before… is that it takes time. We hear about the Facebooks and the Pinterests… and Instagrams of the world because… for obvious reasons, everybody wants to write and read about hockey stick, fast exits out. The reality is that these things take time. StubHub took a while. The average venture turnaround is, I think, eight years. We didn’t take our first venture money until 2008. So, by that standard we’re halfway to the average venture return. The pressure’s there, clearly. We have very high expectations for ourselves and we’ve raised money at a high cost of capital. But we’ve stayed heads down and building a business.
Jason: Yeah. Continued success. I’m a big fan of the product. Everyone should download Stitcher, right now. Even though, I’m not going to get a dollar per download.
Noah: We can make it retro-active.
Jason: No. I’m not worried about it. At some point (imitating The Godfather) Someday, I’m going to ask you for a favor. Follow him @noahsark.com.
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