Motley Fool Hidden Gems Investing - Axios CEO on Media’s Existential Crisis, Entrepreneurship, and Luck

Episode Date: July 7, 2024

What happens to a publisher when an AI personal assistant can just give you the news? Jim VandeHei is the CEO of Axios, the co-founder of Politico and the author of Just the Good Stuff. Mary Long caught up with VandeHei for a conversation about: The “aha” moment that created Politico. How AI changes our relationship with information. Practicing good times paranoia and bad times optimism. The case for teaching kids how to play poker. Companies mentioned: ABNB, JPM Host: Mary Long Guest: Jim VandeHei Producer: Ricky Mulvey  Engineers: Desiree Jones, Austin Morgan Learn more about your ad choices. Visit megaphone.fm/adchoices

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Whatever lies ahead, don't change your morning. Let your morning change you. Discover Coffee Plus on Nespresso.com. So we have, we spent a lot of time just trying to figure out, and that's our job, is to figure out like, where's the world going? And what happens when you have machines that can synthesize, process, sort, and then convey information as well, if not better than humans? And I think that's where we're headed.

I'm Mary Long, and that's Jim VandeHei, CEO of Axios, the co-founder of Politico, and author of the new book, Just the Good Stuff. I caught up with Vande Hei for a conversation about his career, how media is changing, and what investors can learn from journalists about working in high-pressure environments. There's a moment in 2006 when I've heard you talk about this before. You say that you're working at the Washington Post, And you say that if someone had asked you in May of 2006, whether you'd ever start your

own company, you'd have looked at them like they were totally crazy. But then maybe like a month later, you have an aha moment. And it starts with Google buying YouTube. How did that purchase change the way that you looked at a newsroom? Yeah, it's funny because I never thought of myself as an entrepreneur. Now when I reverse engineer it, I see that I was entrepreneurial, but I never thought of myself as an entrepreneur. But I was always asking questions. And when Google bought YouTube, I could tell things were changing in the industry. And I remember having this conversation with John Harrison, just saying, man, like looking around the Washington Post is like, I love the post, but we're not that great. There's like a couple of us, I think, break news a lot.

Like imagine that we banded together and Eric Schmidt said, how many people do I need to be able to be really interesting and to be able to compete in politics? I said, not that many, maybe like six superstars and six young up and comers. And if you hook yourself up to cable TV and hook yourself up to the Internet, you could be competitive if you had the right people. And it's like lightning in a bottle. We're like, whoa, well, let's do that. And then we took it to, you know, I didn't even know what venture capital was really at that time. took it to some venture capitalists. Everybody we talked to was like, yes, that's a good idea. I would back that or yes, you should do that. And it took on a life of its own. And from the

aha moment to going live with Politico was literally six months. It wasn't a long process at all. It just went bang, bang, bang. And had it not gone so quickly, it might not have happened. It happened and then that took on a thrust of its own. And I've always been willing to take risk and I like doing different things and I'm naturally like super duper antsy to this day. I was just laughing with someone. I just went on a vacation with my daughter and she's probably the only person who could vacation with me because like all I want to do is like get up and run. Then I want to work out. Then I want to go fish. Then I want to go hike. Then I want to go hunt. And so like I am interested in a lot of different things. And so being an entrepreneur really fed into that.

The people and talent piece that you mentioned that was like so central to this beginning of Politico is something that's a theme throughout your most recent book, but also just kind of throughout your whole career in life is like finding the talent and finding the right people. So, okay, you're leaving the Washington Post, you're talking to venture capitalists, you're getting this new thing, Politico started. How are you A, spotting talent? And then B, what are you saying to them to say, oh, wait, leave your steady, I'm ready to deal with risk, But you, too, leave your steady job, your salary and come over here to this to this upstart. Yeah, and it was a hard sell back then because people still love the post, loved institutions, didn't believe in digital media.

So it was a difficult sell. I, you know, I had been a reporter now at that point for a decade. I knew who was good. A lot of these people knew me. And so there were some people I just had a personal relationship with or John Harris had a personal relationship with or Mike Allen or, you know, we'd start to hire people and they had relationships with people. And then, you know, we and once you got past that, we hired a lot of people from the New York tabloids like back then, Thrush, Maggie Haberman, Ben Smith, a lot of people. We were looking for people who came from hyper competitive environments. And we believe that most reporters weren't that great. So if you could get a couple of really good reporters who are maniacal about their craft, that we would that we would be good. And it took on a life of its own. And we did a lot of bravado and like we're going to crush the post, be part of a movement.

And I think for some people that works, especially younger people. But it's a little bit of all of that. And eventually you end up with this team of people and we delivered the goods. It was a mess and it was crazy, but we were successful from the get-go in terms of people were paying attention to us. Some people hated us. A lot of people hated us. Some people didn't. Some people loved us and advertisers eventually learned to love us and it worked out really

nicely. Why did people hate you? We were new, number one. Like I think deep down journalists in general were worried that, oh my goodness, is the world changing and is do they stand for that to a little bit me i was a little cocky back then and so there was a lot of bravado and i remember like i got crushed on uh from people because i said something like we're going to be better than the washington post which i again like i didn't maybe that was too much for like a new company but i honestly believed that eventually we would be and

we were better than the washington post but i think people saw that as cocky and and wanted to root against us. And, uh, and then we, you know, we did things differently. We wrote with voice, we wrote with speed. We, we would really like, we'd really, really promote. There was like a PT Barnum side to myself, to Harris, to others. We'd promote the hell out of our stuff. It annoyed people. Expand on that PT Barnum piece a bit before, because I was listening to your, how I built this episode in preparation for this. And you made a similar comment about like having a little bit of P.T. Barnum in you. So what do you mean by that? What I mean is like, I don't and I've still struggled to get reporters to see this. You can have a good story. You can have a great

story. But if you don't write it with this enough edge and put on the right headline and know when to drop it and then how to promote that to Morning Joe or the Drudge Report or to X or to Facebook, it could be the difference between a thousand or ten thousand people reading it and a million and so i think all the time about the brand about our journalism about our people how do i and how do we get maximal public attention for the work that we're doing because fundamentally we're a public company we don't have a a paywall you know we're based on traffic we're based on the power of the brand the halo of the brand and so the whole pt barnum idea is like proudly market yourself proudly market your company proudly market your best work why would you hide it like i i never

understood that mentality and it's helped us a ton i think you know the the success of politico and then later axios a lot of it is like we were good at building a brand because we knew what we stood for. And we proudly trumpeted it loudly through traditional and now social media. The economics of media are hard, but there's also like an existential crisis within media right now as we talk about the future of technology and how AI can impact journalism. I listened to another conversation you did on another podcast where you mentioned a recent trip you and Mike Allen took to Silicon Valley. And on that trip, you got to talk with leaders at Anthropic, at OpenAI, Microsoft, app you could name all the companies better than i can but the purpose of this was to get a sense

of the coming shift in the relationship between humans and information what did you learn number one you did not get a 1.491 grade point average in college because i can tell you're a 10 times better student than i am uh you do your homework um so we have we spent a lot of time just trying to figure out and that's our job is to figure out like where's the world going and what happens when you have machines that can synthesize, process, sort, and then convey information as well, if not better than humans. And I think that's where we're headed. I think that I'm in the camp of people who believe that in the not too distant future, that we're going to realize AI was as big or a bigger deal than us looking at a phone or the creation of the internet.

In terms of how that changes our relationship with information, it's going to change it like radically, radically. I'm doing everything I can to scramble to get our company ahead of what I think will be a massive, massive, massive change. Because what I think will happen, and you already see it if you play with ChatGPT, play a little bit with perplexity, is that we're all going to have a personal assistant that is going to be able to answer most of the queries we have about news, and they're going to be able to answer it in a language that comports fluently with the way we want to ingest information. So for you, it might be longer form. You might want someone to sing it to you. You might want it in poetry, whatever you want it, you're going to get it the way that you

want it when you want it. And so a lot of the things that you would ask Google for or search the internet for, it's going to answer it for you. And pretty quickly is going to know based on your habits, because we're not that sophisticated of a species, it's going to know kind of what you're interested in and when you're interested in, it'll start to give you things before maybe your brain even realizes you want it. And so anything that is commoditized, anything that's general interest, anything that's just okay, which is most journalism, if people are being honest, it's dead. Not dead today, but it's dead soon. The only thing that I think will have value will be true expertise, telling people stuff they don't know that no machine could tell them

Because you either have such a passion for a topic, sourcing no machine's ever going to have, historical understanding, or the nuance of having talked to a lot of people and being able to create a composite that contextualizes news and information. And so we're in the process of doing a profound transformation at Axios to put all of our resources into that expertise and finding more readers who will forever rely on that level of expertise, regardless of how good the machines are. And I think any company that's not doing that is going to pay a huge price for it. And and and and I don't say that lightly because I love journalism. I love journalists. I love the media. I'm not I could give you critiques of the media. But in general, I love the idea of it. I love that I live in a country where I was able to and still to this day can ask presidents or presidential candidates anything I want. I don't have to worry about going to jail for it. I can write whatever I want.

I don't have to worry about being punished for it. I can get a pretty big audience to read it if I package it correctly. And so I don't say it with any glee. I just say it as a I'm trying to sound the alarm that it's going to get a lot worse than people realize. And really, it's going to be a survival of the fittest. Are you smart enough? Are you quick enough? Are you fast enough? Are you fearless enough to make really, really difficult decisions? I don't want to ask you to share any Axios trade secrets, but what are some specific examples of the ways in which, okay, you're embracing this technology, you're trying to like meet the moment, get ahead of the moment, but you're also trying to center the talent and the humans and build that trust with humans rather than just a machine. Yeah, right now, the truth is, if you play with the technology, there's moments where it wows you and then there's moments where it totally underwhelms you. So the technology itself is not usable today. It doesn't reach the efficacy level of humans. So I would not use it in most instances today, other than maybe with part of the thought process. What I tell people is you got to just play it out, though. They're going to fix it. You've got four or five of the biggest companies that are essentially the size of nations.

So you have nation states pouring capital into perfecting that technology. And it doesn't take that clever of a person to figure out where this ends. You can see where it's going to be good. So there's just a lot of things that the machine is going to be able to do. It's going to be able to help with editing. It's going to be able to do visuals. It's going to be able to do data viz. It's going to be able to copy edit.

It's going to be able to help with marketing. It's going to be able to help with distribution. What it can't do, and where we're reorienting ourselves, which is just around the people, is I want as many experts here as possible. I want anyone who's here who's not an expert to prove to us that they could become an expert. Otherwise, I don't think it's a terrifically bright future for a lot of reporters. You have to have that in your DNA and in your repertoire. And, you know, yes, you might be able to go to The New York Times. There might be a couple of places that have some general interest dimension left.

but I don't think it's many. I really don't. You have had throughout your career and to this day exposure to a lot of big people, right? Famous people and business leaders in particular. Is there anyone, the CEO of a company doesn't have to be in a certain sector, doesn't have to be in the media space, who does a really good job at kind of nailing all these nuances that we've just discussed and, and communicating internally, but also externally to other watchers, what's going on within the company and kind of how they're, how they're tackling big issues. You know, I don't know if there's anyone that embodies all of it. And to be honest, like I'm so busy focused on Axios, I don't have a chance to study them, but there's people like

that I watch from afar. Like it feels like Brian Chesky at Airbnb does a pretty nice job of, you know, being pretty open with people when he's making big decisions and being pretty honest when he's communicating. So I think that's admirable. You know, Jamie Dimon is someone like I've long admired just for kind of his self-confidence and talking about the combination of like, how does the world interact with your business? And so I think that's something I paid attention to. Tori Burch, who's somebody I've gotten to know over the years who I deeply admire, who I just think just cares deeply about her brand and her people. And I think it shows in the way that she lives her life and the way that she

presents herself to the world. And so you pick up these things, right? You're like, there's not, I'm not a big fan of like the, like, Oh my God, that one great person did this one great thing. I just think it's BS. I was like, sure. Like Elon, but he's like a, he's like a once in a lifetime person where he's had ideas in five or six different spaces and willed them into existence. Most people are merely mortal. They're just like normal people who ended up in a position of power and maybe they worked a little bit harder. Maybe they were a tiny bit smarter. But ultimately, we all benefit from the people we're around. We're

all stealing from each other. There's no real new idea. It's looking around and, oh, that worked well for you. Maybe a version of that works well for me. And there's an element of luck too, right? As investors, we think about that a lot too. You can have a really rock solid thesis for why you want to invest in a company. And still for something to work out, there's an element of luck that's at play. So how do you think about that when you look back on your own career, but also when you look out onto the stories of others? What role does luck play? it's just a time it's just like that's where when people i read these books or i read these stories and these people become so delusional about like how special they are and they might be special there's attributes of them that are special there's a lot of really special people who we've never heard of who really could have been great at like the ball of life bounce in a slightly different direction and so like luck like serendipity meeting somebody at a certain time

being at the right place at the right moment. There's a moment where an idea would work because just the confluence of things happening around you, that same idea five years earlier, five years later might have been a dud. And so you can't underestimate that, like the luck, the serendipity, the running into the right people at the right time. And I think that should give all of us like a natural, maybe more humility than you see from leaders. We all should have the humility to realize like we're just not that special right like there's like I know it doesn't mean I'm not confident like I'm confident there's certain things I think I'm quite good at but I'm also very aware that if like 10 people were around this table playing Trivial Pursuit I'd get my

butt kicked because I just like my recall of history or of trivia just isn't as good as other people's mainly because I'm always thinking about the future or what's happening in the moment does that make me dumb? I don't think it makes me dumb. It just makes me not that great a trivial pursuit and pretty good at media, I guess. Your book is basically a collection of life advice. And it's really interesting to read in the context of your career, which we've discussed a lot throughout this conversation. But also, as I'm reading it, as a retail investor, it's really interesting because we at The Motley Fool talk a lot about mindset and how do you stay sane when there's a bunch of noise out there and when your portfolio is in the red. And so much of this book,

I thought, this is really great mindset advice for investors. So it's life advice, but it can also be tailored to something more specific. You are really familiar with working in high pressure environments. The newsroom is a hectic environment. Washington is a hectic environment. Investing can be a hectic environment. What advice do you have for separating the signal from all of the noise that's out there, especially in really high-pressure, high-stakes environments. Yeah, I mean, I put a lot of this in Just the Good Stuff, which is the book that you mentioned, and I hate the idea of like, oh, it's a self-help book, and people call it a self-help book. I hate that because it just feels so, I don't know, so arrogant to think like you, oh, I've figured

stuff out. But yeah, I really tried the book to be like, no, here are things like I was screwing up with or that I struggled with, that because I have this laboratory of companies that we started that I've been able to put to the test, and this is what worked. And hopefully, and I think every chapter has like, here's four or five ways to apply this specifically to your team or to your company or to your specific problem. At the end of the book, I do get into the question you reached, which is like, I do live in a stressful world. We all do. And media and politics and Washington or stressful. And the older I get, the more I do think about how do I perform optimally? How do I do this without either burning out or becoming irritable? And how do I make sure I keep

a clear mind? And I will say the older I get, and I wish I knew this when I was younger, all the pieces of life tie together, right? Like all the decisions that I make on any given day in terms of like, what do I eat? What do I drink? How much booze do I slam? How often do I work out? what type of workouts am I doing? Do I pray? Do I meditate? Do I read? Do I have quality time with my wife? Am I, am I really focusing in a, in a meaningful way on my three children? Have I checked into my parents? Like all those things work together to make me, me and make me much better at work. So when I've got everything else cooking and my mind is clear and I'm, I'm in a good groove working out and getting good sleep and all that, I'm just a much more

effective person. And so I think that differs for each person, right? Each person has a different spirituality. Each person has a different relationship with food. Different people do different things to work out or to clear their mind. My point in the book is what I don't accept is like the whiny, oh, woe is me. There's nothing I can control. Life dealt me a crappy hand. I don't buy it. I think that all of us, no matter what our circumstances, like we wake up every day and there's a whole lot that we can control. And the things that you can control, it is not selfish to put a lot of thought into how can you control those better so that you really can be a better husband or partner or friend or colleague or manager or leader. Another thing that you talk

a lot about is learning from the times when things go to crap. So you learn a lot from mistakes, right? When things don't go the way you expect, there's often a lesson that comes from that. what was your last or most recent things have gone to crap lesson it you know again and part of this is like maybe my existential crisis with my own aging process like uh it's like i'm like most of what i've learned and like the things that i'm probably proudest of really do come from just awful stuff in life it i mean and again like and i'm getting i'm in my early 50s so i'm starting to have people who are sick, people who are dying. And like, and, and most of what the hard stuff is that, right. I have a, my wife, I write in the book has been sick for, for some time and

really dealt with some like funky illnesses and still, still does. And like in it, like you would say, oh, that sucks. And it does. And it's awful. But as a result of it, it's, it really forced me to grow an even deeper relationship with each of my three kids to make sure that they stay in a good place, we're all in college, one just graduated. And like, there's a beauty that comes from that. And there's also like a wisdom that comes from that. And so I've learned a lot from that. I learned a lot just from like watching my colleagues in terms of like, how can I be a better leader? How do I make sure that we are creating an environment that's dynamic, but that people do feel included and do feel like we value them regardless of what their

background is and that they are treated or they are paid equitably. There was this debate on X, or maybe it's still going on about DEI and should we throw it out? It's just one of the most moronic debates that I've ever heard. How are you going to throw it out? You live in a country that only 60% of people are white and you run a company in a free market. Don't you want the best and brightest people regardless of their background working for you? So of course you better value diversity and don't you want to treat people fairly that's all equity is and don't you want people to feel like when they come to work that they're part of something bigger than themselves that's called inclusion and like did some people overreact and do some silly stuff because they

wanted to get pr points they did but that doesn't make it a bad idea it actually makes it a really good idea there's many pieces from it that lead to a more dynamic uh company especially a capitalistic company in a free market and so i i learn a lot about that and i don't i'm a straight white guy. I don't necessarily come from all of the marginalized backgrounds, but that doesn't mean I can't talk to employees all the time about what are they going through? What are they thinking? What motivates them so that I can incorporate that into how I lead? You've got a chapter in the book with the title, Be Goldilocks. And the idea here is, I'm going to use your words, that you have to be able to, quote, modulate and moderate your

reactions in tense times. Okay. So we've talked about high pressure environments, tense times. you go through and kind of give more specific ways that a person might do this. And that's be aware, know thyself, tame thyself, and then practice good times paranoia and bad times optimism. I think, as I've mentioned, there's lots of parallels between the things that you say here and how they're applicable to investors. I'm going to pose a question and kind of let you take it in whatever direction you want. We're recording this on July 1st, 2024. Are you more so practicing good times paranoia or bad times optimism right now probably a little bit of both right now because i think like listen like axios is doing fine and there is obviously a healthy

news cycle and so there's reasons for excitement but there's also uh there's also i'm trying to be very honest with people about how hard it's going to be for media and i don't want to lie of them. I want people to know. And so I am constantly paranoid about like, are we making quick enough changes that are smart enough to stay one step ahead of where the consumer is going? So it's often a mix of those two things. But in modulation, this idea of like the Goldilocks idea, you can teach yourself. Like I only ran hot 15 years ago. Like I could see why I exhausted people and probably annoyed people. I was either like, whoa, whoa, whoa, or I was super bummed and thought the world's going to end. It wasn't a good way for me to live, but it's also what you realize

the more you move up in leadership, everyone's feeding off of you. I want to make my own decisions. Most people don't. They really want to follow a leader. They really do. And even if they don't want to follow a leader, they're all paying very close attention to you. They're watching your every move. So if things are really bad, you have a responsibility to like, it's going to be okay. This is what we see. This is what we're going to do. We're not going to overreact. Or when things are going gangbuster, to say, yes, they're going gangbuster. This is going great. But remember, like, these are the things we need to be keeping in mind. These are where things could go. And it's very relevant to investing, right? You have to have that mentality all the time. When

we've seen it all the time, you get seduced by, oh, my God, it's a good time. The market's going through the roof every dollar i invest is turning into two like yeah but like logic says it's not going to last forever and so what you want to do is you want to be able to calibrate and i think you can teach yourself calibration one by being aware of it but two by practicing it but also by finding other releases to to really like that idea of like are you doing other things in your life to balance you out so you're not just so fixated on investing or so fixated on media that your whole value is determined by it, right? If you think about the people you've met in your life

who kind of turn out to be miserable human beings, it's often because they invested themselves wholly in one thing. They cared about their public perception. They cared about their investing portfolio. They cared about this relationship, but they didn't diversify, right? You gotta diversify.

I'm gonna let you close, or I'm gonna close this out by letting you expand on a piece of parenting advice that you drop in the book, which is that parents should encourage their kids to gamble with real people for real money at a real poker table. Why is that so important? I learned a lot from playing poker, and I've encouraged my kids to play, mainly because it's a great way to learn emotional intelligence, right? Because the thing about poker is you've got to, it goes to your highs and lows. You've got to be able to modulate yourself even when you're winning. You can't give up on yourself

when you're losing. You have to be able to read a table. You have to be able to read the rhythms of momentum, which I think there's a momentum to life, a momentum to activity, a momentum to investing. You have to be able to read it. You have to know when to quit. And if you really want to have fun, you got to know how to banter. And if you're bantering with people, often you're talking to people from all kinds of different backgrounds, right? That usually the poker table is a bunch of people, maybe some you don't know, and you want to be able to interact with people. So there's a lot that you learn in doing that. And it's one of the things that we've really tried to teach our kids.

And everything else that we got right with our kids was my wife, including like reading. The most important thing now watching, especially watching my daughter on our most recent vacation, who just graduated from Chapel Hill, was my wife from the day they were born, read to them adult books in an adult voice. And to this day, even when kids don't read books, I was just on vacation with my daughter for two weeks. She read six books, 2,500 pages. She's a voracious reader. Because there's this, her brain was taught to think that way, and she attaches it to a happy part of her childhood. Jim, it has been an absolute pleasure getting to talk with you. Thank you so much for spending the time to share your insight, your experience, and your career with the listeners of Motley Fool Money.

Really appreciate having you on. Thank you. I appreciate it. Thanks. As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Mary Long. Thanks for listening. We'll see you tomorrow. Thank you.