SPEAKER_00: okay everybody we have a great show for you today anchor the podcasting company's co-founder mike mignano is with us he joins us for a classic throwback twist founder interview you know like i used to do in the old days well you know mike he founded anchor and sold it to spotify he really helped define the entire podcasting space and level it up and he was on the podcasting team over at spotify for a couple years we had him on because he recently wrote an interesting article about rss standards titled the standards innovation paradox so we had a really deep discussion about podcasting spotify and their role in it and product market fit all this great stuff and molly and i will be back for the news tomorrow i'm back for my rafting trip at a great three days on the river i'll share some photos tomorrow but friday will be big news energy molly and i are back gonna be a great

SPEAKER_02: interview enjoy it everybody this week in startups is brought to you by helpware helps you outsource

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SPEAKER_07: slash twist all right everybody next up on the program we have a great uh guest molly you and i have been

SPEAKER_09: uh doing podcasting since before podcasting existed we did streaming shows back in the day and i'm really excited because i believe our guest reached out to me i'm not sure but we were dming

SPEAKER_07: for some reason and uh i read a medium post that he had written about open standards and

SPEAKER_12: many of you know that anchor is a podcast hosting company that's done very well and was purchased by spotify that raised a decent amount of money and had a great exit so february 2016 they raised 1.6 million in their uh pre-seed uh and did some crowdfunding actually very innovative for that time period uh 2017 a 4 million dollar uh seed round at an 11 million dollar valuation by excel and then in september of 2017 the 10 million dollar series a at a 40 million dollar valuation by gv and excel and then in february 2019 what a great run spotify acquired anchor between 140 and 170 million reportedly who knows uh welcome to the program mike mignano how are you sir good how

SPEAKER_14: are you both doing jason and molly good to see you good to see you nice to see you i'm assuming you can't

Jason Calacanis: tell us what that number was i am not supposed to talk about that we we're not asking we're just assuming okay yeah and uh so let's just let's just congratulations i think congratulations i should say it was a great run just like jason just said thanks yeah so let's get right into it um uh how

SPEAKER_07: come everybody at uh spotify hates joe rogan no we're not going to go in that direction of questioning we know that you just left spotify uh but tell us uh about why you made the decision to start anchor what did you originally see and then why did you make the decision to sell some people might say selling in february 2019 was you know fantastic but not maybe peak podcasting which seems to still be

SPEAKER_26: growing massively so take us through those two inflection points why you started it and why you

SPEAKER_27: sold the bookends yeah for sure so why we started it basically i had become um really excited by this this notion of the democratization of creativity uh i had worked at a company called aviary i don't know if you all remember aviary was a photo editing platform back in the day based based in new york um i ran product there the whole premise was hey we want to make it really easy for people to take and edit photos and be creative and so we had a photo editing sdk that you that you could plug into any product that enabled you to unlock photo editing basically that company uh sold to adobe and i was at adobe and my co-founder a friend of mine who was also at adobe and aviary with me we both got really into podcasts this was like 2014 um kind of when everyone else in the world was getting into podcasts um you know as as cliche as it may sound like cereal got me into podcasts not gonna lie cereal uh grantland network you know i was listening to the startup podcast and we saw it sort of taking off as a medium but when we went to go try to create podcasts of our own we found it to be extremely difficult uh you know you both have been podcasting for a long time so you know what goes into this the expensive mic the you know the the the software the distribution all of it it was hard and we had just spent a bunch of time you know making photo editing on a mobile phone really easy and we thought to ourselves well why isn't it just as easy as taking and editing a photo uh for podcasting and that was really the basic premise for anchor at the beginning it was let's democratize audio you know the the company took many twists and turns along the way a couple of pivots along the way uh happy to get into any of that but um but that was the basic story it was like hey let's democratize

Jason Calacanis: audio that was the uh the the inspiration for starting it it's so i'm overwhelmed by the realization that you know like jason you know we were all doing some version of live streaming we really officially started podcasting i did at least had seen it in 2005 and it was not until 2014

SPEAKER_34: that someone came along and was like this should be a lot easier how which no first 10 years were rough

Jason Calacanis: but but what it makes me wonder is how hard was it to make it easier yeah so what's funny is when we

SPEAKER_27: first started it we we were like oh podcasts are heavy they're complicated they come with baggage they're 50 minutes long they need to be lighter weight they need to be interactive they need to be more shareable and so the first few versions of anchor were actually a social network that we weren't even using the word podcast podcasts were our inspiration but we you know we were inspired by you know snapchat stories at the time was was was everything um you know instagram was obviously everything and so the first few versions of anchor looked almost more like instagram and snapchat than they did podcasting which was cool because um first of all it was it was cool to be in to kind of innovate on the format and let people uh do things with audio that they couldn't necessarily do over rss and you know if i if i think back about the success of anchor in many ways we needed to do all that stuff to go out and be able to fundraise which ultimately led to the pivot to do podcasting which we did because we found it was impossible to get people to download anchor to listen to audio content people were already listening in apple they were already listening in spotify once we made it easy for people to make audio it was impossible for those creators to get an audience on our platform and they said hey let us distribute to apple let us distribute to spotify and and once we did that that really unlocked a lot of growth but that was you know that was to your question molly like that was that was a three-year journey you know that was three years of you know being in the woods and iterating and finding some things that worked and some things that didn't so it was hard to sum

SPEAKER_44: it all up it was hard yeah and mike a lot of times founders will look at the interface they'll look at the user experience which is a great place to start and say hey let's innovate here wow there's so many ideas right and it is very rewarding to do those ideas but when the infrastructure hasn't been built and all of a sudden you're like wait a second people can't we don't even have a foundation here people can't even get their pockets up and running so at some point you had to then say oh all

SPEAKER_07: the sexy fun stuff you had to say your team we're not going to do that but we're going to become plumbers and we're going to really put in a great plumbing system here what was the business model and then how did you get your team to navigate hey i know i told you we're going to like change the world it's going to be like super cool features and all your mock-ups like just put all those on hold

SPEAKER_47: and everybody go under the house into the crawl space with the dirt and the rats and the snakes

SPEAKER_27: and let's work on that boring stuff yeah i mean so what i can say is you know when i talk to a lot of startups so i i invest in a bunch of startups now as an angel and one of the things i always look for is i really always want to make sure that the founders obviously maybe obviously in the team are very very mission driven because um to pull off a pivot like the one you just talked about hey let's not work on the fun stuff let's work on the boring stuff you have to really believe in the mission to be to be willing to sign up for that like it's not about the exit it's about you know changing the world in the way we promised from the beginning and so fortunately we had a small and really mission oriented team um and when we said to everyone hey you know we think what people really want is to make podcasts they don't want to make this anchor format but but the good news is we think we know how to actually do that for them let's do this instead uh we were really fortunate to have an excited and supportive team that was more concerned with the long-term mission than i were i think uh some of the some of the fun near-term interface stuff but the you know the sort of like breakthrough that that made us realize that this is what we had to do was we were doing we were doing our own format inside of anchor we were letting people make audio we were making letting people interact it was really creative it was really fun and like i said a bunch of people were saying hey i need to be able to put this on spotify and apple podcast because uh that's where my listeners are so we basically said hey most of our users don't know anything about rss they don't know anything about distributing to apple what if we just did that all for them what if we let them just tap a button and with the tap of a button they would appear on apple podcasts and when we did that that was sort of the light bulb moment for not only the users and finding product market fit but for the company and that was when we realized oh wait a second uh if you take this process that's super opaque and complicated and technical and you make it magical that can that can unlock a tremendous amount of product market fit and and product delight for again a type of creator that we saw that was growing very very quickly and and that was sort of the turning point in the company i don't know if that answers your question it's a great answer

SPEAKER_09: actually really good answer about you know the mission can keep people engaged when things aren't

Jason Calacanis: fun right yeah or and when you're still when there's uncertainty which a lot you know which sometimes employees have a hard time with yeah how what was the monetization strategy like who were your

SPEAKER_27: customers and who paid you yeah sure so i mean you've both been podcasting for a while so you probably know this but maybe for the listeners that don't know i'll set some context so before podcasting became easy um it was really hard and you had a lot of different providers of podcast hosting in the space so the market was very fragmented because it was actually this ties into probably what we'll talk about later with the the piece that i wrote around standards um basically there was a lot of fragmentation in the market a lot of different players powering podcast hosting um as a result between that and the poor analytics that podcasters can get through our assess feeds there had never been a great way to advertise on podcasts at scale there was no there was no platform there was no solution for sort of rounding them all up and selling them to advertisers well when anchor really reached scale and it happened very very very quickly once we did this this distribution thing i mentioned we quickly became the biggest podcasting platform we all of a sudden had you know the vast majority of all the world's world's podcasts on our on our platform and we realized wow this could be a way to launch a marketplace to connect advertisers with an ocean of podcasters that otherwise normally would never be able to attract advertising because they're too small and podcast advertising is uh too manual because of the limited data that i mentioned so the business model was we launched actually we launched this only right before we sold to spotify we launched a business called uh anchor sponsorships which was that exact marketplace that i mentioned we basically enabled advertisers to buy big campaigns that spread across in some cases thousands of podcasters uh for advertising you think podcasting works best when the

SPEAKER_53: hosts read the ads or when it's just dynamically inserted so i can tell you it definitely works it's more

SPEAKER_27: effective as an ad unit when the host reads the ads but there's so much friction in that process i don't just mean the friction of recording the ad there's so much friction with the tracking the recording the brand safety etc etc it's way harder to scale and so i think for podcast monetization to ultimately reach scale you probably have to do some form of programmatic or maybe some combination of the two we'll let uh we'll let spotify my former employer and youtube figure that all out but um but yeah i mean i think like on a per unit basis i think the host read is more effective i just don't know how realistic it is for that to scale to everyone well it won't scale to every podcaster

SPEAKER_53: but advertisers can skim the cream of the top 25 or 100 i mean i it's funny to hear everybody read uh

SPEAKER_68: there are some ads that they want read verbatim uh and i re i read 10 to 15 podcast ads a week for the last couple of years and it's very interesting when i hear other podcasters read a specific ad read that no words are allowed to change and it's just interesting or like me and bill simmons both have done you know some of the fantasy sports ones and then you have a huge disclaimer at the bottom and i i hear belson is doing every state where you can get help for your you know gambling issues if you if you happen to have them and i thought it just it's pretty comical molly it's funny you have

SPEAKER_71: to do that stuff but i'm sure you also have advertisers that don't want you to follow the

SPEAKER_72: script at all right and they're like just go nuts yeah yeah which are great ones yeah so that's the

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Jason Calacanis: grail stuff right for 10 years jason me every producer on earth jason howell who's now who was

SPEAKER_35: at cnet and is now at this weekend i think who but it's like forgotten more about podcast publishing right than anyone will ever know we're all waiting for these two things one button publish

SPEAKER_77: publish and dynamic ad insertion google ads for audio and then this is the moment that you sell to spotify when you have finally cracked the nut you've blown this sucker wide open how come why i sell yeah why did we sell and did that make them want you more but really more why did you sell i'm

SPEAKER_83: not gonna put two questions in there i only have one question i mean i wish there was like some um

SPEAKER_27: some crazy story here but the truth is we we had spent a lot of time with spotify we had also spent a lot of time with a lot of the other players in the space let's say i won't name them um i'm sure you could figure out who they are and we really believed that there was probably no better company to acquire anchor ever like not just at that moment but in the future than spotify spotify believed in podcasting in the same way we did and it was clear they were investing in podcasting very very aggressively as they they put their money where their mouth is obviously after that you know with all the acquisitions and the investments they made and um and the other thing i'll say without saying too much is like if you think about our business and what i just told you we did this thing where we distributed to all these other places like apple and spotify that is like the textbook definition of a business that has platform risk right you're building a product and a solution in someone else's backyard and those businesses can be disrupted so i think between the potential we saw to deliver on the mission with us and spotify because we had the same mission the potential to eventually be disrupted and um the the unknown of the future the other thing actually which i realized coming into this i've never revealed before but i'll just say it now we we also had a term sheet for our series b on the table at the same time from a great investor we were we were like we were comparing the two we were like should we go raise and go big or should we team up with spotify and i don't know maybe it's because we were slightly older founders at the time we you know we had kids we were like we weren't young and crazy um yeah we said the spotify thing seems to make the most sense uh we're gonna do it it was great for us it was great for our investors it was great for spotify i would argue it was great for podcasting but yeah we didn't you know we'll never know what was behind door number two did you run a just you

SPEAKER_09: know for the founders listening who wonder how these things go down did you run a process did you hire a banker and how does m a work were you like in contact with google apple all the major players over the years microsoft whoever was bouncing around because you had to do work with them right they google's got a pocket you have to basically work with them so you meet people and were they like kicking the tires and you're having lunch with them or did you run a proper

SPEAKER_27: process and hire a banker we did not hire a banker you know people propose that to us but i had always run all of our different transactions and i just kind of felt i don't know i just felt most comfortable doing that sure but i know that there are some founders that don't feel comfortable doing that you know a friend of mine just sold his business a few months ago and they hired a banker and it was great so i think it depends um i also i had i had a great relationship with spotify i had a great relationship with daniel that we built over the course of several years you know it wasn't i think a lot of founders think that big company just knocks on their door and says hi we'd like to buy you um and you know as you both i'm sure know that's not how these things work they they they it takes years sometimes to lay the foundation so we had laid the foundation and and talked to spotify over the course of several years we were as you mentioned also talking to all the other players again i won't name them and um we just felt that spotify was was going to be the best home

SPEAKER_95: daniel just calls you at some point you're having lunch with daniel and he just says hey listen here's do you guys want to sell yes or no did he just put it out there or like some bd mid bd person says hey

SPEAKER_07: do you guys want to open a dialogue about that how is that subtle like we want to propose to you but you know we don't want to be super crude about it that's like the moment everybody wonders

SPEAKER_09: about how does that go down where were you when you got the kind of overture let's say yeah so um

SPEAKER_99: this is funny it's a good story i know it's a good story for every founder it's a great story

SPEAKER_100: it's a great story come on i'm trying to figure out what what i can say hey you can just give us one

SPEAKER_27: broad strokes one thing i will say and i have no problem saying this is the first time i met daniel eck he just cold emailed me um that was right after the first version of anchor launched and he just the earliest when it wasn't even a podcast thing and he said hey i like your product i'm gonna be in new york let's hang and i just went to go talk to daniel and the funny thing um you know we had just launched anchor i had never launched or started a company before so i was you know i was definitely a bit like starstruck by the fact that daniel leck the ceo was reaching out to me i said yeah i'm in new york let's hang out what i what i didn't tell him and only told him later after they acquired us like three years later was that i was actually on a family trip in the virgin islands from my mother-in-law's 70th birthday and i said to my mother-in-law my wife i'm like i have

SPEAKER_42: to go back to new york and they're like what are you crazy you're leaving i gotta go hang with daniel

SPEAKER_68: you're like what do you want me to do um that's that's that's a legit entrepreneur move it's like is yo you're here oh yeah sure i'll just and you just do the 24-hour turnaround because

SPEAKER_53: that meeting that is like uh could be a seminal moment and it turned out it did yeah yeah and so

SPEAKER_49: then to answer your other question you know i don't want to go i don't want to get too specific

SPEAKER_27: into the why or the what but like there were over the years other conversations that happened not just between me and daniel but other let's call them sponsors within the company people that wanted to achieve certain things product leaders hey mike you know we know we've talked in the past maybe we could work together on this maybe we could work together on that and then when we ultimately did choose to uh sell the business it was uh so so my boss who i reported to at spotify for a couple years uh gustav soderstrom chief product officer chief r d officer had reached out and came to visit us at our office and we spent a bunch of time together and basically out of that time spent together i think the like both of us had the light bulb moment where we were like oh we

SPEAKER_07: should put these two companies together this is just gonna make sense this is the key that people don't know about m a so there's top down m a oh daniel x you know just meeting people and you know

SPEAKER_09: being the the elder statesman as it were but then as somebody told me when i saw weblogs inc like who's your rabbi and time oneer and i was like i'm sorry i don't know what you mean who's your champion who's the person who is going to own this after the sale happens and it turned out there was a guy named john borthwick who turned out to be my rabbi a time winner who when people were deciding to buy and gadget autoblog and all that stuff there it is beta works you know john um said yeah jason's the real deal you should totally buy that company um and you had people like that who were the

SPEAKER_44: ones who needed your software who would get the benefit so then they can convince the ceo the board or whatever and say hey this is a viable transaction here's why this is better than us building it ourselves right because that's what you're that's what you're up against uh it's always builder buy

SPEAKER_25: that's that's basically what it comes down to and with these things by the way quick shout out since you mentioned beta works beta works was actually the very first check into anchor no really wow yeah

SPEAKER_27: so i was i was at adobe i mentioned and we were building anchor nights and weekends and having a lot of fun and my co-founder and i had never built a company before but you know i'd heard from all my friends that had they said look fundraising is a full-time job they're they're like you course you sort of have to decide up front if you're gonna go fundraise and start your company or if you're not and i was fortunate enough to get invited to go demo at beta works they used to do this thursday demo night thing people would come and drink or whatever and i demoed anchor and i had never met john borthwick but he came up to me and he said hey we've been trying to fund something in the audio space this is really interesting let's talk and a few days later john was like look if you're looking to leave your job i can write you a check 100 grand right now friendly terms you can quit your job and then in a few months you can go out and raise your proper round so that's what we did we we took that

SPEAKER_53: check quit our jobs was that when peter rojas was there from engadget and he was doing the audio like focus stuff he was so early on audio did you meet peter just joined yeah peter had just joined

SPEAKER_49: right around that time um he joined john and another partner there matt hartman uh john and matt had just

SPEAKER_27: done the john and matt did the investment in anchor and then around the same time they did the investment in gimlet so they did both a content company gimlet and they did a you know a technology company with

SPEAKER_120: anchor both in audio i actually think they've made other bets in the audio space around that time

SPEAKER_121: okay listen take it from me the summer is a great time to grow your small business why lots of people

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SPEAKER_53: conditions apply because they're giving you something for free how come the other major players google and apple haven't just created a hosting company to host podcasts this is kind of strange right yeah

SPEAKER_126: i think amazon recently bought one i think they bought maybe art 19 i could be wrong yeah no amazon

SPEAKER_58: is buzzing around i can tell you that firsthand experience but it's really apple i mean i think we're going to get here in a minute when we start talking about your standards uh piece that you wrote

Jason Calacanis: a medium just recently right july 12th so post departure um but i do want to go as long as we're sort of diving into the past i do want to go into this apple question because i could there is a strong argument to be made that the reason it took from you know when we were podcasting in 2005 until anchor in 2014 to make some progress in this medium is that apple kind of just kept this baby in

SPEAKER_27: a cage for a really long time look i don't i don't know why apple does what they what they do obviously i mean from from the outside looking in if i look at all different apple's different business lines podcast seems quite small even if they were to get it to scale right i mean i'm just speculating here maybe it's just as simple as that i don't really know what i mean what do you both think

SPEAKER_09: apple's slow with software i mean apple takes their time um and so their pace is not going to be uh the same pace as you know overcast you know or spotify so like overcast yeah overcast will go fastest because they're the smallest nimblest they'll have better features than spotify's player then spotify will see what overcast is doing and come with their own innovations they'll go faster

SPEAKER_44: and then apple their you know design uh they really want to get everything perfect and they're going to go slower and like you said how big of a priority is it when airpods are making tens of billions of dollars in profit and it's hard to make a profit from podcasting i think and so for them it was like a nice thing to do and then they know if anybody wants to be avant-garde and do really interesting stuff that's overcast business you know okay or spotify can you know be somewhere in between the absurd power user and the average you know apple iphone user and then spotify may want

SPEAKER_09: to be somewhere between those two right in terms of their interface and what they provide so yeah i

SPEAKER_78: mean i think that'd be my guess right but yes i think being 20 years slow with software is different

Jason Calacanis: from you know i mean it's like i think podcasting is not a business that apple cares that much about and it became this catch-22 for the industry that's less about apple and more about what you were saying mike just now about distribution right apple was the biggest distribution gorilla by far for this whole time but it's not a business they care to be and they're not going to be the ones who you know take

SPEAKER_35: this open standard and turn it into a publishing platform or a proprietary platform for you know making great podcasts they're just kind of like dinking along with it but the distribution power prevented anybody else from getting into it in a real way i think for a really long time and innovating

SPEAKER_27: funnily enough they are starting to do more here now uh i'm sure you both know they have they have uh i don't know what they call it that you know they have subscription podcasts which are as far as i can tell a proprietary format to apple so maybe they are starting to do stuff now maybe let's talk

SPEAKER_53: about that one yeah competition so yeah well the paid thing because we we looked at that we had done

SPEAKER_12: a patreon but you know advertising is just doing so well for us yeah uh that why bother uh charging our customers and our customers don't seem to mind the ads because we read them and they're 75 seconds so it's not a a big problem but do you think that's going to work do you think people want to pay for

SPEAKER_27: podcasts i think it's possible i think it probably depends on the format on the creative format i i agree something like what you both do to me advertising makes all the sense in the world you publish almost every day high volume of content high high listenership that's a perfect opportunity for for for scale and for advertising i think subscription podcasts probably lend themselves something um that's maybe a smaller more niche audience that is willing to pay maybe something that's multi-format where you're subscribing in one place and you're getting access to a bunch of different content a bunch of different mediums um i think we'll see but i i do think and what i've seen you know based on my own work is that creators want monetization flexibility they want to you know they want to have a choice between advertising or subscription or patronage or whatever it might be so i i think we'll see it's still super early but um i i do believe that uh if you give creators the tools there will be there will be some that will find really compelling ways to use them yeah my theory

SPEAKER_12: on it is there is a group of podcasts that are so risque that they're that's true the advertisers don't want to deal with it so my friend sam harris who i got into podcasting when i lived in la

SPEAKER_09: and i encouraged him to start the podcast and helped him do it you know he was talking about

SPEAKER_53: you know atheism uh can you imagine what some religious group that is offended by that or he's

SPEAKER_09: talking about you know radical islamic terrorism like all of a sudden you're gonna get a lot of phone calls if you're like some mattress company and sam harris is reading red which i think he did do

SPEAKER_53: some then uh the red scare uh the ladies at red scare way too controversial they're using you know very

SPEAKER_12: colorful language and then um brady stanellis was advertising base and then he did patreon and then some average some uh tim dylan somebody told me makes a bunch of money so you know it's completely

SPEAKER_16: possible for those folks if they have a really it's interesting it's like you're just sort of

Jason Calacanis: describing like cable versus hbo right it's like once you get on hbo you can say whatever you want and show all the boobs but if you're on cable you got to keep it tight and it's ad supported

SPEAKER_25: i mean only fans what i've heard is that you know vast vast majority of their revenue comes from content that couldn't exist on instagram for similar reasons yeah yeah instagram does not i mean i can

SPEAKER_09: take my shirt off on instagram no problem exactly don't get me started

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Jason Calacanis: let's talk about standards so you've got this piece and i want to talk to you about timing a little bit you've got this piece out uh just you know a few days ago the standards innovation paradox sort of explaining i think for people who aren't that familiar is still i mean we've abstracted away so many of the guts of podcasting that i think a lot of people don't really even understand that we're just talking about rss still real simple syndication like you have this piece breaking down how open standards can enable something to exist in a lot of different ways but then also prevent it

SPEAKER_169: from innovating so walk us through a little bit what you're saying here and why sure well maybe i'll

SPEAKER_27: start with a why i'll go backwards yeah why is is actually um it's pretty simple this is basically something i've been thinking about for the past eight years because i built anchor which as we just talked about was based on a standard then i sold it to spotify and i got to see how it works to to build products based on standards and so you know i got to see it in a startup and i got to see the big company um i've been a creator myself right so i i've seen this from all sides and i'm really fascinated by this paradox which which i've observed and um i'm off for the summer and i've been writing and doing things i haven't been able to do for a long time and i was like i'm going to write about this so that was the why but the what is basically this standards are awesome as you mentioned they enable products to basically find an audience for people that don't know maybe the listeners that don't know exactly what a standard is you the way to think of it is it's just a common language it's a common language for systems on the internet to talk to each other whether it be software or hardware and because this language already exists it's been standardized basically dramatically reduces the barrier to entry for new products or services right so if i want to build a new podcast player or a new email client i don't have to come up with this language to interact with all the different stakeholders and services inside of this type of product environment i just adopt the standard and so like i said this leads to more products which leads to more choice for customers oftentimes data portability lots of other benefits and um and really like most of the great innovations of the internet wouldn't exist without standards the other thing i think is worth pointing out is standards are technically extensible and changeable however and this is where the paradox comes in when a standard achieves scale right when many many stakeholders adopt the standard what you end up with is lots and lots of fragmentation lots of players in an ecosystem and so when a change gets proposed uh you basically have too many people that have to come to an agreement for the change to be adopted and you basically end up in stagnation where no one can agree on anything and the standard effectively becomes fixed and that's why there's a paradox right standards are great they help products achieve product market fit but over time the standard stagnates and all the benefits that you wanted to get out of it in the first place become effectively impossible so um it's it's a very interesting dynamic that has taken place in podcasts and i argue in the piece that this is why there has been mostly stagnation to the format of podcasting over the past 20 years but this has happened lots of times like yeah messaging is another great example right and here's a chart yeah here's a chart um

SPEAKER_173: that you drew which i thought was clever which is you know when you're building with standards um you

SPEAKER_09: know you get this great rush in the beginning but then it kind of becomes hard because everybody's got it got to get consensus around this and this is something that's going to happen in crypto with all these open projects where you have a voting mechanism as well and then you have building with your proprietary tech and the perfect example here would be you know um rss for blogs

SPEAKER_53: versus and versus twitter so you know uh and then it happened with podcasting and for people who

SPEAKER_09: don't understand anybody can put up an rss feed then anybody with a player can grab that rss feed or they can make a database of rss feeds and nobody owns it so the person who wants to compete with

SPEAKER_44: spotify or apple podcasting or overcast or with you know anchor can just grab all the rss feeds and start over now the challenge comes in like you're saying you want to add some feature which anchor did recently or spotify did recently video so maybe you could explain you guys wanted to take audio and video and sync it perfectly so that if a person was listening on spotify in the new beta which we're part of for this week in startups and all in you turn your phone the video just starts playing at the exact same point but the standard didn't allow you to do that or it was a little challenge

SPEAKER_27: maybe you could yeah basically and yeah i i'll i'll i'll touch on that briefly again not being an employee anymore i you know i don't want to be uh confused as being a spokesperson for spotify but just yes but just just just quickly what i'll say is yeah video video podcasts and rss have existed for many years but they don't support the seamless transition between video and audio and so if you go into a standard podcast player and you download a video pod or you go to listen to a video podcast your phone is effectively downloading the entire audio file up front or video file up front which might by the way might be 500 megabytes that might use up like yeah gigantic so although there is support for it there is poor support for it and so to change the way that that operates you have two options one you could go and change the standard of of podcasts but as we talked about given how many players there are that becomes extremely hard or you just do something new now a startup will have a really hard time doing something new because they don't have an existing audience they can plug themselves into but bigger companies that already have distribution channels can effectively leverage those distribution channels to launch new products and i think imessage is a great example of this right so uh history of messaging text messaging sms was the standard it launched uh it was invented sometime in the 80s it didn't even get to scale though until late in the 90s because again you needed all these handset manufacturers and carriers to agree on messaging right um then somebody said hey let's add pictures to text messaging wouldn't that be great but because of the stagnation of the standard you couldn't do it and so a whole new standard had to be invented that was mms took about another 10 years then apple says hey we have this product called the iphone it's got millions and millions and millions and millions of users uh we're just going to do our own thing because we already have a distribution channel to tens or hundreds of millions of people and we're going to call that imessage and that's not beholden to the sms standard and so we can do anything we want we put in full resolution images we put in group features we put in you know voice memos all this amazing stuff and uh and because they were big enough that meant that they didn't necessarily have to rely on the standard to get distribution for new features but obviously startups in that example are at a complete opposite advantage to that they they need the standard so it's it's just a really really interesting dynamic now i will say since we're on messaging i think you know again we said up top that the benefits of standards is that they give consumers choice they give consumers data portability consumers like open standards and so the other thing i think is really important when a company innovates on top of a standard instead of changing it is to offer backwards compatibility which imessage does and we all know this for those of us that have an iphone you message somebody on android what

Jason Calacanis: happens turns green falls back to the standard jesus yeah texts turn green but that's what makes it work not to even that's what makes it work but now there's like the rcs standard that's been taking you know that's taken just as long to get adopted and then imessage lived ahead um okay but so there is a version of this and and you know yes you just said you're not an employee of spotify but there is a version of this that must have been sparked in some way by the conversations in spotify because we talked even on the show jason was you know somewhat strident in addressing daniel ek on this topic because spotify is effectively starting to creep toward breaking podcast standards in order to do some of

SPEAKER_187: this innovation you know uh like i said uh really mike's like yeah let me speak for the pr department

SPEAKER_189: i'm just saying i could speak for mike here's the thing brought it into focus here's here's what

SPEAKER_53: happens this is actually a really good discussion to have the people who are in podcasting don't want to see spotify or apple or google do what uh apple is doing to imessage which is break everything

SPEAKER_44: and take too much control it's better for all of us that there is a fragmented level playing field and spotify has some audience apple has some audience google has some audience overcast and a thousand

SPEAKER_09: flowers bloom and players etc and we're not beholden to anybody so when we had the opportunity to be in the video i said i don't know if i want to do this and i cc daniel on the emails and just said listen i don't want you breaking pockets i don't want you to force me to use anchor i should use anchor if i want to i already have an rss feed and they guaranteed me listen it's going to be backwards compatible and you'll eventually be able to use your own rs video feed with this we're just trying to figure it out or whatever and so i took it on good faith but if spotify overplayed their hand or

SPEAKER_44: anybody did i would just call them out publicly like i'm doing here and that's what all people who are on the other side of this podcasters should absolutely give it to any player any platform that

SPEAKER_09: tries to screw the standard because if they screw the standard then it's we're going to go into zuckerberg land we're going to go into i message land where no more innovation is going to happen and so that is the the key thing here is sure innovate along the margins but mike to your point of these very reasonable but just make it backward compatible and then people can make a decision and then people who are in the industry should be very vocal so adam curry who was you know the podfather has been very vocal about this stuff and you know it's up to the standards committees and for those folks to find consensus molly i think to keep the ball moving forward so that people just don't give up on it because what essentially twitter did at some point was i think they've removed rss support and they were just like yeah you can't you can't subscribe to somebody correct me if i'm wrong here but you used to be able to go to twitter.com jason rss i think where they had some very easy url structure and you could actually subscribe to somebody's twitter in an rss feed i don't know if you

SPEAKER_58: could still do that or not i don't think you can i think they deprecated it and so it kind of sucks exactly and that's like exactly what you're saying which is look rss took us this far and in order

Jason Calacanis: for podcasting to you know i mean because another thing we've been saying about podcasting for almost

SPEAKER_35: 20 years is it doesn't make any money so in order for it to make some money has to evolve it has to

SPEAKER_27: evolve there's another interesting example of this that's happening right now in real time and i've seen a few people talking about it but i don't know if it's been fully acknowledged yet which is with substack right so substack awesome product enables creators to build subscription uh subscription newsletter businesses right and they distribute those newsletters over email right which is by the way a brilliant startup strategy because everyone in the world has email so you have an infinite pool of consumers to potentially tap into but what became i think pretty clear with substack from from my perspective at least is that they would eventually run into uh problems of innovating on the format of the newsletter right they can't do anything dynamic in an email client they can't do personalized discovery they can't do real-time comments they can't do anything dynamic and so um thought it was clever but maybe not surprising that a few you know a few months ago i think it was they launched an app yeah and now if you go to any sub any substack page on the web it says view this in our app and i have to imagine that they can do really really great things in the app right they can probably personalize discovery and ultimately make you know make creators more money by gaining them more exposure so i wouldn't be surprised if you we see them really lean hard into the app but i think what they will also do is respect the standard going backwards they will

Chamath Palihapitiya: probably never get rid of the ability to here's the good news right um when they pulled that um a

SPEAKER_44: bunch of their writers i believe casey newton called them out on it and he is one of the people that they pay to move to the platform and he called them out and he's like hey listen the default is to not get the email i i don't want this i don't want to beg substack to get the emails of the people who subscribe to the app so this is the obscurification and this is the slow boil that big companies do to screw over content creators and i'm not saying substack intentionally did this but somebody who is making product decisions said you know what if we own the emails and casey doesn't have the emails of this group of users and we don't go to their email box we have more control over them and if you know whatever platform now they host your rss feed and they are 49 of your

SPEAKER_09: distribution now they can exert control of it they can say hey you have to we have to read your data and that was the other thing i went to town on daniel was like listen i care about the privacy of our users what are you are you going to resell this week in startups and all in users because i had people do that as well and they assured me they did not because they could just say take all in in this week and startups call it tech business finance and then they just sell the general category of tech business finance and the ad that happens before this week in startups you know when i guess the the the platforms don't insert ads dynamically without permission that would be illegal to do and you get sued but they do have ads before or after in between podcasts for what

SPEAKER_25: it's worth um you know you mentioned this is how big companies screw creators i don't know the substack

SPEAKER_27: team i've actually never met anyone over there but i i i doubt that uh that they have any i don't think that was the intent here i think i think what they want to do and i actually think it's probably um pretty noble is they probably want to help the discovery of smaller newsletter writers that can't find an audience automatically that don't have massive twitter followings yeah and they probably want to figure out how to do discovery at scale which they can only do in an app which i think is probably to the benefit of everyone in an ecosystem i think with that i think it's more

Chamath Palihapitiya: interference i think they want to create a bundle i think they want to charge people 24 bucks a month

SPEAKER_53: to get up to five and then split at five bucks each and then now all of a sudden you are more beholden so this is where the platform's interests can diverge from the top people in the ecosystem versus the bottom people right and so the the platform naturally wants to help everybody and make it simple for

SPEAKER_09: users and push people to the top but then the people who are already on the top are like i didn't sign up for this and so that's the natural give and take where you have to speak up if you are in these

SPEAKER_27: ecosystems and it's a bit of a negotiation right the big the big fish in the small pond never wants

SPEAKER_25: the pond to get bigger you know they never want yeah they never want it to get bigger and and for smaller

SPEAKER_09: fish to be able to take a go ahead or you know they just might want to run their business the way they want it so they don't mind the small fish being there but they don't want to be have their approach compromised like i understand case's position i want to own those emails and i want to be able to move anytime i i can so what's uh what's next for you you you you you leave you start in angel investing tell me uh any interesting angel investments you've landed so far and and and what's next for

SPEAKER_27: you yeah so well one quick one i want to say one more thing on spotify before we wrap up just connected to what i said about substack um you know i'm sure they want to um they they want to help the writers and the and the consumers one of the reasons i loved working at spotify and one of the reasons we sold back to an earlier question is because i truly did feel that like us remember i talked about being a mission-driven startup they were very very mission-driven as well um like you know people see big company big tech company they think you know that it's easy to make that company the enemy or the bad guy but spotify truly is a company that wants to enable you know tens of millions of

SPEAKER_25: creators to be able to live off their art and billions of fans to have a great experience so

David Friedberg: you know uh it's a great company yeah i believe that yeah yeah i mean that just but with great power

SPEAKER_44: comes great responsibility responsibility all of a sudden you you're 30 40 50 of the distribution like susan which has to deal with that youtube now you inherit a bunch of other problems which is

SPEAKER_53: okay if you if you were overcast and you're like i don't want to have i don't want people to be able

SPEAKER_09: to subscribe to this particularly toxic person you know nobody even notices but now you're spotify now you're censoring you know and then spotify's got to say we're not publishers and i'm like really you're not publishers okay you you bought all these podcasts you sell ads on them and you distribute them give me a break daniel you're a publisher like not my problem i'll i'll leave that one i understand why you want to pretend i understand why daniel wants to pretend he's not a publisher because then he can say i'm you know i don't know what's inside of these you know podcasts it's up to them but it's like you're monetizing them you're publishing them you're distributing them you're choosing

SPEAKER_44: promoting them yeah you're making choices it would be different if it was overcast overcast could say

SPEAKER_09: we're not a publisher because they're not you know making any editorial decisions uh moving on tell

SPEAKER_86: me about angel investing what i try to do with that unless you want to jump into the frown

SPEAKER_226: here's the third rail would you i can hand you this stuff on it here's the grenade right here hey

SPEAKER_229: i could toss it back and forth until it explodes in somebody's lap we'll let that one continue in the

SPEAKER_49: comment section uh so yeah angel investing i started a few years ago i mean i i loved being a

SPEAKER_27: founder i love the zero to one stuff i loved you know searching for product market fit positioning all that all that fun stuff and so started doing a few years ago when i was thinking about what i wanted to do next you know i had always really been excited i told you in the beginning of this conversation i love the idea of helping people create you know we did that with photos at aviary we did that uh with podcasts at anchor i view investing as a way to help founders create businesses and so uh i've been really enjoying that and so uh in a couple of months i'm going to be starting up a full-time investing role can't say what it is right now but uh maybe you can have me back if you're

SPEAKER_25: if you're so gracious and willing to do so and i can absolutely welcome to the launch team

SPEAKER_105: congratulations on coming to work here everybody thinks i'm just hiring everybody it's like i just

SPEAKER_07: hired molly literally i'm now getting like tons of people who are like hey you hired molly how about me this is this free i don't have an unlimited bankroll here to hire everybody not yet i'm working on it not yet all right listen uh molly yeah can you can you give us the uh how

SPEAKER_44: people can find i know it'll be in the show notes but how can people find mike and find his piece

SPEAKER_108: because it's really worth reading and meditating on definitely read this i mean this is such a great kind

Jason Calacanis: of uh epilogue you know coming out of what you've built a great uh rumination on the way that tech develops and is going to develop it's just fantastic it's called the standards innovation paradox mignano.medium.com m-i-g-n-a-n-o mike thanks for coming on it's great thanks mike

SPEAKER_00: this is fun thanks mike for joining the show make sure you follow molly and i on twitter i'm at jason she's at mollywood follow the show at twi startups and if you love the show why not give us a five-star review on apple and uh you know i read those and once in a while i reach out to somebody so make

SPEAKER_07: sure you use your full name there uh in the in the review so i can reach out to you and find you on twitter or you can just email me a screenshot of your review uh i always love when somebody does that sometimes i even send somebody a little swag if they do so you know my email jason at calacanis.com for the rest of my life you can slide into my dms and say hello and we're looking for questions for ask jason and ask molly and as zach ask an angel so if you have any questions just at mention me on twitter you can send it to me on twitter or you can email producers at this week in startups.com if you send us a video of yourself asking the question we'll use it on air and you can get a little promotion for your startup uh or whatever you're working on your twitter handle all right everybody we'll see you tomorrow