The Best One Yet - *Live* at Spotify - Part II: Why Spotify is doing podcasts — Our interview with Max Cutler, Founder & MD of podcasts at Spotify

Episode Date: November 27, 2019

The 2nd half of our Snacks recording live from Spotify. We sit down with Max Cutler, the Founder & MD of Parcast Studios at Spotify — his startup was acquired by Spotify earlier this year. We’re asking about how he first pitched his company, whether podcasts will follow the Netflix strategy, and what his favorite pod is. Ever.Learn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is Nick. This is Jack. And this is Snacks. Daily is Wednesday, November 27. Last day before Thanksgiving, perfect day for a turkey tea boy. We know what you're thinking here. It is the best one yet. The best snacks Daily, Jack, the first story, what have we got over here? Serve it up. Appetizer. Google is acquiring Fitbit for $2.1 billion. Now that's the old news. The new news is that the mysterious second bidder for Fitbit was Facebook. It was Zuck all along. And apparently his final bid was, just five cents a share short of what Google bid.

That's according to CNBC, and that means that if Facebook had paid $10 million more, which is like three minutes of online ads for Facebook, it's like if they stop serving lunch one day. It could be the owner of Fitbit. Tiny bits of money can totally change history. Jack's second story. Dick's sporting good stock had the third best day ever. It jumped by 18%. Now, for some reason, sales unexpectedly rose six.

Jack, can you share with us what changed over that? Guns. That's what changed. Guns. The social activist decision by the CEO to remove guns completely from 125 stores. And Snackers, get this. Those stores sales actually did better than before when they had guns. You thought they would have done worse potentially because some customers would have left and there was less things to sell, but sales did better at those gun-free stores. So shares jumped 18% and hopes Dix can pull off like a Patagonia or REI-style high. hype from customers who stay loyal for its gun moves. Dix might get some customer loyalty. Third and final story, American Express will start booking restaurant reservations for its

ultra-elite card holders. We're talking platinum card and centurion members. They're going to start getting restaurant reservations in the app. It's a funny timing for this. American Express acquired the restaurant reservation booking website, Rezi, in May. Now, the funny thing here is that dining happens to be the number one request when it comes like these Amex concierge services where you try to get someone to just do everything. for you. So this makes sense. You want the high-rolling customers that MX loves. You want them doing more

in their app, including restaurant reservations. That's the goal for AMX. Now, Snackers, this snacks, it's going to taste a little bit different than previous snacks you may have munched on. If you want to learn more about those three stories, check out our Snacks email daily newsletter at Snacks.robinhood.com. But this snacks today, it's actually part two of our live event from Spotify that we covered last week. We interviewed Max Cutler, who founded Parcast Studios which got acquired by Spotify. Snackers, if podcasting was a Jedi Council, this is the guy who's on it. He's doing the stuff where, like, he's reading your mind you don't even realize it.

And since you're listening to podcast right now, we figured you might be interested in his thoughts on the future of podcast. Also, this entire live event, we've made it available in video on YouTube on our YouTube page. That behind-the-scenes video that Nick and I show how we build this podcast every day, you're really going to love that one. You should check it out at YouTube.com. Robin Hood snacks. So Snackers, we want you to enjoy this live interview with Max Cutler. Jack is going to be up in Vermont running through the forest. I'm going to be running through the other forests of Central Park in New York City. It should be a really nice, pleasant Thanksgiving.

This is our last pod before Thanksgiving, but Monday, December 2nd, we'll be back with our normal format. Now, if dinner table convo gets awkward, just drop a snack, snack fact or a snack takeaway. It's going to make the whole thing go smooth. Enjoy this pod. We'll talk to you Monday. the way. It's snacks about the hair ain't food. It's air candy. They don't reflect the views of the Robahood family. It's all informational just so.

We're not recommending any securities. It's not a research report or investment advice. Not an offer or sale of a security. Snacks is digestible. Business news for you. Robohood Financial, LLC, member FINRA slash SIPC. We're excited to begin part two of live from Spotify immediately. Thanks for having us here, Spotify.

You all look fantastic. We are joined by Max Cutler, who is founder and managing director of Parcast Studios at Spotify. Let's give them a welcome. So, Max, Jack and I were chatting about this beforehand, and we haven't done that many interviews, but one thing we were told with interviews is you shouldn't go personal right off the bat. So we want to do the opposite of that and start really personal. We were curious. You started a company, basically with your dad, that has been acquired by Spotify.

Nick and I both have dads. They're both lawyers. And they would have loved if we had started companies with them. But here's the thing. Both of our dads still asked their receptionist to print out their emails so that they can read them. And neither of them know what a podcast is. They think it's like a fly fishing thing. They have no idea.

Can you tell us like what was it like starting a company with your dad? And also, what was your pitch to investors, like that first elevator pitch? Cool. Well, thank you for having me. So I didn't have to. I have an elevator pitch because I started with my dad. He was making a picture. Exactly.

So essentially when I, it's always been a dream of mine to start a company number one. And to work with my dad was something I always wanted to do. In January of 2016, I literally had no idea what I wanted to do with life. I loved audio. I've been a huge podcast fan for a long time. I grew up in a radio household. I went to my dad. I was like, hey, I want to do a podcast.

To your point, my dad's like, what's a podcast? And so that was interesting. And so once I kind of got him into the podcasting space, got interesting. he quickly realized that it wasn't for him and he wanted me to do it. So two weeks in, my dad essentially said, Max, have fun. This is kind of your baby. Go with it. And since then, my dad has been my sounding board.

He's always been there for me to talk to. He's probably the one person I can talk to about a lot of the issues that used to go on at Parkast before we were now acquired by Spotify. And really, you know, the goal behind Parcast when I launched it was to do podcasts differently. And for us, that meant narrative storytelling. I meant out researching the competition. And I meant post-production that I felt was probably the best. on a weekly basis. At that time, the biggest shows were the serials of the world, six to

13 episodes, highly produced, but also took nine months to produce, cost tons of money, and I didn't feel like that was the most profitable model. So I had to think about, like, how do I do this on a weekly basis? Volume is king. I want to build habits. I want to own days of the week. I want to own literally hours now. Like Horoscope today is a prime example of I want to own the first five minutes at somebody's day. You guys do daily podcasts, you know exactly what I'm talking about. You want to build that habit. And so we launched with Unsolved Murders, True Crime, Strait. stories on June 13th of 2016. It's way out there.

There's voice actors. It's almost like an old-time radio play. That's a good feel, that old-time. Yeah, yeah, it's fun. It's different. People in the podcast space remember their first podcast. Ours was May 23rd, 2018. Never forget it.

It's a big day. It's like a birthday. The 13th is actually really interesting. Then serial killers launched on February 13th. And so maybe that's it. Maybe I should be launching shows on the 13th. I'm thinking about loud. But in general, you know, that one show was a huge hit for us.

I literally had enough money for eight episodes. which, you know, because I didn't raise money. Luckily, after four episodes, it was big enough for me to go to a company called Midrall and convince them to sale for us. And then kind of the rest is just kind of falling in place. So one thing Jack and I do with Snacks Daily Max is we jump into the earnings reports and go deep. And we were curious about Spotify's latest earnings report. We noticed they mentioned the word podcast like 13 times or something and the word music only nine times.

What does that mean to you? Well, one, we want to be the audio destination, right? and we're committed to podcasting, just like we're committed to music. However, this year we made a lot of bets on podcasting. We've been open about it. We're spending a lot of money in the podcasting space. We owe it to our investors to tell them how it's doing. And it's great to see that.

In Q3, streaming was up 39%. And it's working. Like, podcasting is really working. It's very additive to the experience, which is really important. So it's not like someone's coming here and not listening to music anymore. They're listening to music and they're listening to podcasts. This is a huge, huge moment from Spotify. I'm going to bring up something that may bug you, Max,

but your dad probably loves it. Americans spend on average an hour and 46 minutes per day listening to the radio. By the way, the same report also told us that Americans spend 45 minutes a day listening to radio and other podcasts like in the bathroom. On the toilet, actually was the word. It was a very revealing survey. What's the deal with this primitive listening device still being so core to American culture? Well, I don't think it bugs me. What an opportunity, right?

Isn't that like amazing? an hour and 46 minutes that we can convert people to podcasts, and that's what's going to happen in the future as technology advances. So, you know, my dad was in radio for a long time. He built his career in radio. And what I got to see in the early 2000s was tons of people being laid off. This is a really unique time that jobs are being created in the podcast space. Audio jobs are coming back. Creators are now able to make a living doing a podcast. That wasn't the case in radio, right? And so I look at this a huge opportunity. I think it's an amazing opportunity from the content side to innovate formats to kind of think about how can we add technology.

That's when Spotify obviously plays a huge role. Now with a playlist, kind of giving you that radio kind of podcast experience. I mean, the future is here. We're working on some amazing technology over the next couple of years that I believe will really eat into that hour and 46 minutes. Well, if you're listening on the radio and you're converting and starting to listen on podcasts, one of the challenges you may face during that transition period you're talking about is discovery, which is funny because one of the things Jack and I talk about all the time

is as a podcast creator, a big challenge we face, is discovery, getting snacks daily out there. How does Spotify, how do you think that problem gets solved? Well, discoverability has literally been broken in the podcast space since probably forever at this moment of time, which is great because Spotify is fixing it. And what I mean by that is we're doing playlists. We now have your daily podcast, right, playlist, which is essentially discoverability personalization for you.

That's going to help creators like yourself be found, be discovered, increase more listening time or downloads. Right now, I mean, this goes back to why a podcast name so simple. It's because I want to own words. I literally want to own conversations. I want to own SEO, serial killers. If someone wants to hear a serial killer podcast, they had to go type in serial killers, right?

That's what you would think. And so now it's really exciting is we are working on ways to enhance discoverability on Spotify, which is going to be not only beneficial for monetization, but also for billion-year audiences. Well, one funny thing that Jack and I have noticed when it comes to, like, actually growing on Spotify, is that when we're listening on Spotify,

sometimes we're a paying customer who's not expecting to hear ads. Yeah, that's, brings up a point as a premium Spotify customer I'm paying $999 per month, but I still get the ads when it comes to podcasts. We're trying to like figure this one out to be honest. Okay, love it. Let's talk about it. So the bottom line is podcast or ads and podcast is part of our DNA. It's been around forever. We can't, we want to enable and help creators make a living with podcasts. For us to go and say take out your ads is just wrong. It's not really right. And so we also know that 60 something percent of

podcast listeners actually enjoy listening to ads and go and actually purchase products that are pitched to them. And so overall, I would make the case that I don't necessarily think ads is a horrible thing in the podcast space. And definitely not when we think of the whole entire catalog business and growing that with creators. Yeah, full disclosure, Jack and I actually had a lot of fun doing ads back in the day. It was our greatest creative challenge to do the 23rd rendition of the Pitney Bowes ad. It's a business machine that can fact stuff. It's like a printer, but way bigger. It's awesome. So next. another question. If I want to watch a Netflix show, I watch on Netflix. To watch a Hulu movie,

you have to watch on Hulu. Disney is only on Disney Plus. In video, content is married to one platform. Is there a future where Snacks Daily has to pick a platform on what we're going to be on and walls are going to go up with memberships? Well, what I would say is let's look at Pardcast as a prime example. Right now, all PARC shows are openly distributed. There's really no plan to change that. I think that in the coming year in 2020, we have to or I have to decide what makes sense to be exclusive to Spotify and what doesn't make sense. Maybe no shows are exclusive to Spotify. Maybe half of them are exclusive to Spotify. But right now, the podcast space as a whole is growing, which is really interesting. Spotify is growing. So when you look at this podcast landscape then where there are a lot of options, you've got Apple, which basically created the concept. You've got Google, which is basically Google. You've got Spotify, which has become a fast-growing powerhouse in the space. but what is the Spotify competitive advantage when you look there?

Oh, well, there's a lot of competitive advantages for Spotify, but definitely discoverability and personalization. We're the best in class. We've been doing that for a long time when it comes to music. We're now going to do that in podcasting. We really haven't flipped the switch as much as like we're going to in 2020 when it comes to that, which is just really exciting. Like when I think about, you know, I think of myself as a creator.

I've created a lot of the podcast shows. And like thinking that my shows now have a better chance to be discovered is like so exciting. And so that's our huge advantage, definitely over the whole time. entire space. Can you tell us, what was the first podcast you listened to in your favorite podcast? That's a great question. Well, you can say snacks daily. You don't have to.

So my favorite podcast is Mistaken Legends. I've always been a huge fan of Miston Legends. I think it's a storytelling is great. I'm engrossed by Jason. In terms of the first one, I believe it might have actually been Joe Rogan a long time ago. Wow. But yeah. And what have you seen change when it comes to the content since then?

Like the style, the formatting. You know, before we were chatting about like five things we think are the ingredients you've got to bake in. What are kind of the things you think you've got to bake in for a successful podcast? Well, there's a lot of things. I mean, hooks that you were talking about that is really important. I think you have to be careful with how you open a show. I think the biggest mistake most podcasters make is they riff for five or ten minutes. You have no idea what the show is. You need to get into it sooner. You need to do it quicker. You need to get the audience's attention immediately. Looking to 2020 and just even now is like form innovation is going to be key. You're doing short,

short run episodes and longer run episodes, even the longer run episodes are what, 15, 16 minutes. Parkast has started to do that. I think people really love snackable content. So Horoscopes today is a prime example today in True Crime, which is the only daily true crime podcast, I believe, 15 minutes length, and then also in 2020, do we want to release episodes depending on time of day? Do we want to look at like Geo-Geotart? There's a lot of things to do. So with 600,000, 700,000 podcasts out there, you have to figure out how to be different from a format standpoint. Congratulations on Building Parkast Studios for selling to Spotify. And for being part of this team that is really pushing forward the podcast industry.

I mean, Nick and I have seen firsthand that Spotify is really focusing on podcast where some of the other platforms, it's a side hustle kind of thing. And we really love the efforts Spotify is making to introduce podcasts to more people. Because, you know, I think podcasts are radio on demand that you can listen to any time and that are wonderful multitasking tools, as we mentioned earlier. So as a millennial who doesn't have enough time, it's a wonderful productivity hack to have a companion in my ear with me beside me while we do things. It's great that you produced so many shows at Parcast and are contributing at Spotify now. Well, thank you. I mean, it's awesome. I know, it's, you know, I wouldn't be at Spotify if I didn't believe in the mission that we're doing here. And I really mean that. It's such, it's just to be such an exciting time. I mean,

the devotion to the audio space to being the content destination is so true. We have more people working on, you know, just a podcast and audio than I could ever imagine. And it's just amazing. Well, Max, thank you for joining us. Thank you, Spotify, for hosting us today and to have Snacks Daily here to sit down with Max. We're actually going to turn this into a digestible podcast episode, which we're excited to get out there. Love it.

Very soon. Snackers, thank you for listening on the podcast. This is the end of Part 2, Snacks Daily, live at Spotify. If this is the first time you heard of us, follow us on Spotify. Check out Snacks.robinhood.com to subscribe to our newsletter. And we'll talk to you after Thanksgiving, actually. We'll be back Monday. It's going to be fun.

Max, thanks so much. Thank you, guys. Snackers, it's making me again. We're back. We cleaned off the makeup. It's just the two of us doing our thing. Thank you for listening to our Snacks live event at Spotify. Let us know what you thought on Twitter and Instagram at Robin Hood Snacks over Thanksgiving break.

And remember to check out our how we build this everyday video. over at YouTube.com slash Robin Hood Snacks. We'd love to see you there. Happy Thanksgiving. We'll talk to you Monday. Can't wait. The Robin Hood Snacks podcast you just heard reflects the opinions of only the hosts who are associated persons of Robin Hood Financial LLC and does not reflect the views of Robin Hood Markets, Inc. or any of its subsidiaries or affiliates. The podcast is for informational purposes only and is not intended to serve as a recommendation to buy or sell any security and is not an offer or sale of a security. The podcast is also not a research report. and is not intended to serve as the basis of any investment decision.

Robin Hood Financial LLC, member FINRA, SIPC.