Y Combinator Startup Podcast - #126 - Chris Best and Jonathan Gill

Episode Date: May 15, 2019

Chris Best is the cofounder and CEO of Substack. Substack makes it simple for a writer to start a paid newsletter. They were in the Winter 2018 batch of YC. You can check them out at Substack.com.Jonathan Gill is the cofounder and CEO of Backtracks. Backtracks is a podcast analytics and hosting platform. You can check them out at Backtracks.fm.Chris is on Twitter @cjgbest and Jonathan is @jgill333.The YC podcast is hosted by Craig Cannon.Y Combinator invests a small amount of money ($150k) in a large number of startups (recently 200), twice a year. Learn more about YC and apply for funding here: https://www.ycombinator.com/apply/***Topics00:00 - Intro1:03 - Paid vs advertising in podcasting3:33 - Are advertisers overpaying for podcast ads?6:13 - What percent of the market will ultimately be paid content?8:13 - Payment mechanisms9:48 - Price anchoring12:28 - Individual creators vs brands17:23 - Deplatforming18:53 - Spotify20:23 - Discovery and growth in newsletters22:53 - Public and private feeds25:23 - Apple's role26:38 - Will education be the driver of paid content?30:23 - Educational podcasters in China32:23 - How are their newsletter and podcast customers growing?36:18 - Jack Ryder asks - In 5 years time, are personal newsletters going to replace social networks like Facebook?38:13 - Debdut Mukherjee asks - Do podcasts actually work? If so, how do startups calculate the ROI & the CAC?43:38 - Measurement45:23 - Best practices for new podcasters and newsletter creators

Hey, how's it going? This is Craig Cannon, and you're listening to Y Combinators podcast. Today's episode is with Chris Best and Jonathan Gill. Chris is the co-founder and CEO of Substack. Substack makes it simple for a writer to start a paid newsletter. They were in the winner-2018 batch of YC. You can check them out at substack.com. Jonathan is the co-founder and CEO of Backtracks. Backtracks is a podcast analytics and hosting platform. You can check them out at Backtracks.fm. Chris is on Twitter at CJG Best, and Jonathan is at J Gill 333. All right, here we go.

So, Chris, what do you do? I'm the CEO of Substack. We make it simple to start a paid newsletter, and also you can put audio in it now. And Jonathan? I'm Jonathan Gill, co-founder and CEO Backtracks. We help audio content creators know and grow their audience and their revenue. And you guys have two different strategies, paid versus average. advertising.

Yes. What's your take, Jonathan? I think from the current state of the podcasting market, ad-supported sponsorship is one way forward when people are used to free products versus television and cable where they're used to different tiers. So there is subscription revenue. There is al-a-cart, but from our view, the podcast ecosystem at large is not really ready for subscription content.

And I think there's those alternate viewpoints of that? Yeah. Yeah, I think that's actually an interesting way to put it. I mean, obviously we think that paid content, paid relationships even, is sort of the way to go as a huge missing force in like the media in general. We started with newsletters. We think the default assumption that everything has to be free is kind of something that's like breaking the world in a couple of important ways. And it may well be true that with the existing podcasting ecosystem, especially in the U.S., that it's really hard to do. paid stuff in a compelling way just because of the way that it kind of evolved and the way that the people control the ecosystem. But I think that the podcast market that can be supported by advertising is small and sad compared to the audio market that could be supported if we had an effective way to pay for it. And the kinds of things you're seeing happen in China right now sort of hint at that. Yeah. And in terms of the Chinese market, the Chinese market's a little

different than the U.S. and worldwide in that they're used to paying for audio content. Some of it is richer in quality. They pay for educational content. The ecosystem for podcasting and paid for content in China is much greater than even the U.S. It's like 10 times a size. Exactly. Yeah. It's different historically.

And I think there's a good blend of there's content that works that's ad supported. There's directly attributable. And you even see it through Patreon. You see sponsorships where people are paying for that content by being a fan, by being a patron, by the direct payment systems. But then I think there can be a mix. I think in the U.S. market in the current state, sponsorship is one way. There's private paywalled content.

There's the blend of the two. And kind of our viewpoint at backtracks is, on the advertising standpoint, people don't like advertising when it doesn't fit with the content and the messaging. But advertising can add value if it's actually in relation to the content, if it's not in the creepy factor that Google and things have. But you can basically blend the two for a healthy ecosystem. it doesn't need to be one way or the other. Can I ask a question that I'm genuinely curious about? Is are advertisers today overpaying or underpaying

or paying about the right amount for podcast ads in general? So it depends on the particular piece of content, the particular advertiser. One of the problems in the industry is measurement and how do you uniquely measure a listener and how do you know engagement? It feels a little bit like podcast downloads are almost like the banner ad impressions of the early internet.

So we have a, a spec and technology that's around measuring the actual engagement. And so should you base your advertising spend on a metric like downloads or more engagement or other if you're doing advertising, but I think in terms of the industry, the metrics aren't there in the same way video and tech star. And that's part of the tech stack that we have is you can directly measure how long someone listen to a podcast in a certain case. But we, okay, but we saw that change a few years ago with the biggest podcast anyways, because a lot of these companies

are using, like, affiliate codes now. Exactly. So that's how they actually track it, right? Because if, you know, you're just like, I'm going to sponsor Joe Rogan. You're like, are you willing to pay for like, whatever, 10 million downloads? I don't know how many it is.

Yeah, and those direct response codes, there are certain types of advertisers and sponsorships. It doesn't apply to everything. And some things, maybe from your viewpoint, are advertising may not be the way forward for that, but there's also brand awareness campaigns. that are harder to do if you can't measure the metrics.

And podcasting in general, despite its popularity, still has a lot of growing up to do that people like us can help make the way forward a little bit different than some of the problems of previous industries. Do you encounter any resistance from people who have ads today and are sort of charging based on a download metric that if they had more accurate measurement, they might not be able to charge as much?

Yeah, we have people not use us because we detect fraud, we remove things like, But in the ecosystem, it's healthier, and that's, you know, biased viewpoint. But if you can actually have an ecosystem or the advertisers, the publishers, and the audience are better off, because you're not doing things the same way as before in terms of that measurement statistic, people don't like that our numbers in general are lower. I will say that. But for the long-term health of the ecosystem, some parts of it are the quality of the content, which you can have in various ways, whether it's behind. to paywall how it's paid for can be various mechanisms as well as just getting accurate measurement for the ecosystem. It's one of the core tenets of our business. You need to know that audience

in a way that's not there where you're not selling on download metrics. You may be selling on other metrics. Yeah. But on the paid side, Chris, so what percentage of the market do you think it's going to end up being? Because right, I think obviously the answer to this question is it's going to be a blend, right? There's just going to be like a bunch of mass market stuff. And then, like just what happened with cable, people are going to want to pay for HBO and they'll go that route too, I assume. So where do you think it's going to ultimately fall? It's a really interesting question. And it's sort of the gets at like the root hypothesis of substack. I mean, we have this kind of radical idea that in the future, people are going to pay a lot more for a lot more content overall.

One of our core hypotheses is that if you look at sort of like the amount of culture in the world and the amount that we're investing in it as like a proportion of our overall GDP and, you know, what we're paying for it. You know, is that too low, too high or just right? We think it's way too low. We think there's basically a market failure where all of society would be richer if there was more efficient mechanisms to like allocate more resources to creative people that are making kind of culture writ large, whether that's writing, whether that's podcast or other audio

content, whether that's videos, whether it's like lectures or entertainers. or whatever. You know, we think there's kind of like a few places where the business model really works and you see a flourishing of like serial TV and stuff. But overall, we're paying basically way too little. There's a massive market failure. People would feel richer in their lives if they could pay and have more better stuff. And so whether, whatever the proportion of it, we think there's going to be kind of this massive area of culture that people are paying for. And I think that's especially interesting in podcasts because of the amount of time you invest. invest in podcasts. You know, podcasts tend to be like hours long. Like you're, if you think of like,

it's like a book in this way. If you think of how much of your life you're investing in a podcast and then how much money you ought to invest if you could like make that relatively better, you'd almost be really irrational to not want to spend money to make it better if there were a way to do that. So in terms of kind of the payment mechanisms and how that exist in other parts of the world that are not the U.S., there's micropayments, there's ways to facilitate that sort of ecosystem. How do you view that just in the current infrastructure for direct payments to the creators and or subscriptions that aggregate that? How would you solve that in the U.S. market? Not trying to be U.S.centric, but I mean some parts of our way of consuming content

or maybe reversed the rest of the world. Yeah. And some of the, I mean, some of the sort of laws of nature are different, right? Like in China, everyone has payment like we pay and all the stuff. The friction for payment is much lower. So the thing that we've been doing, with newsletters to sort of a shocking degree of success from our perspective is charging subscriptions. So saying, hey, you know, this is going to be five bucks a month or whatever. And the unit of value that you're subscribing to is the individual sort of creator, a culture creator. So I'm saying I really like Craig Cannon's viewpoint of the world.

I get a lot of value out of his podcasts. You know, I want him to be like independent and be able to like make the best content possible. So I'm willing to go and fork out five bucks a month for that relationship, basically. And subscriptions are kind of magical because they both feel a little bit less expensive than they are. Like if you ask someone to pay five bucks a month or pay like $20 flat fee, like more people would pay five bucks a month. But then they wouldn't actually quit it. They'd keep doing it. So they'd end up paying a lot more.

Are there like weird perverse anchoring issues around, you know, Netflix being 10 bucks a month? my newsletter being 15 or something like that. I think it depends on the content. So you'll see more technical content, more niche content that people will pay for, not just in podcasting, but just in general, I'm sure on the newsletter angle, that if you have a very particular niche content that is not widely covered, but is of extreme interest to you, people would in general pay more, but that basket of collection in terms of anchoring, it can be hard depending on how you judge the quality of the content. So some part is, do you want the long? long tail of any content and you want as much of it as possible? Or do you want a curated experience

that could be subscriptions that you're picking and choosing? It can be podcasting. In large part is people picking and choosing what they listen to. And that's part of the power and the magic of it of it's not someone leaving YouTube on and just auto playing video to video. They've chosen the podcast that they're listening to and they're very engaged. You can do it without a screen. You can do it in all these ways. And just when you hear someone talk about a podcast. And even in the advertising side of it, they can remember the ads, but it's not just the repetition. It's the connection with the audience and the voice. And sometimes the host will read an ad and it's not what the sponsor exactly wanted, but that's part of the magic of it.

And then people remember just the storytelling aspect, which I'm sure is the same from these letters in writing where that deeper connection, it's more direct where the creator to the audience, there's less middlemen involved. And then however you can support that ecosystem, a blend of ads and subscriptions or however it's done, I think is healthy. And to your point, I think we do underpay for content, however it's paid for. And when you think of the time and value people get from the business of culture, people on the advertiser as well as direct consumers would in general pay more if they think about the value they derive from all that content. And especially if you take kind of a long view, even if you think today we pay the right amount

for culture, if we're moving to a future where like more and more of the physical a gets automated over time and there's sort of like ever increasing number of things that are like the things that are people's jobs now that can be automated. Surely in the future, if the things we're not automating are a culture creation, assuming that's true, surely we would hope that we would spend a larger and larger percentage on the kinds of things that people are then unlocked to do. But if we insist that sort of cultural output can't be monetized directly, we kind of like break the future economy in an important way. Yeah. No, I, I I'd buy that. So do you feel that it's going to be more of these like individual, individual brands, individual people who are like striking out on their own who are making a sizable income? Or are they going like, are they going to be like YC type things where YC podcast is paid for or whatever and it turns into its own business? My, I mean, I'm sort of biased on this. I think we will see what feels like a shocking increase in the number of people who are kind of atomized and unbucked. Like this idea that almost this is the part of this whole thing that kind of is new is for the first time you can effectively subscribe to a person. Yeah. Where, you know, there's been paid subscription publication. That's not a new thing that's been around for every adiata. But this is kind of like because we have this internet technology and all this stuff now, it's a relatively new thing that it's like I'm, well, I'm a person. I'm going to write this newsletter. I'm going to produce this podcast. I'm going to sort of like have this. Yes, it's a brand, but the brand is like a very direct expression of who I am. And people can kind of like pay to subscribe to that as like a human to human very direct relationship. I think that is very valuable to people. Like people love that. Both the audiences that feel like they have this

direct human connection and the creators that feel like they have this sort of like unmediated thing where they're answerable directly to their audience, where they get to have intellectual freedom, where they get to kind of like be as weird as they, want, that thing is very powerful. And there's a huge amount of pent up energy of people that want that. And there hasn't been a great mechanism in the past. So I'm not saying that everything's going to be individuals and there's not going to be any big sort of media things. But I think it's going to look like there's a meteoric rise of individual creation. Well, because I'm curious about that hypothesis. Because if you look at YouTube and who's actually earning on YouTube a living,

is not that many people. Right. YouTube is terrible for a mona. Like this is the whole thing. This is where this energy comes from. YouTube is terrible for making money as a person that's more famous than Brad Pitt to like young people. Right, right, right. Yeah. I mean, like Casey Nistad does okay, but like some other people, not so much. Like if they're, say he's number 10, like someone who's number 1,000 is not earning a living. And especially if the shape of it, like if you're someone that has a lot of people that are like a little bit into you, that's great. But if you're someone that has, let's say, 10,000 fans that find you completely irreplaceable and wouldn't want to go on living without you because you're the most amazing thing in their life. But

only 10,000 of them, you're never going to make money on YouTube. Whereas if you could charge subscriptions, it's easy, right? If you charge five bucks a month, I'm 10,000 like that, it just works. There's an alternate model. So sometimes in advertising and podcast specifically, it's not the size of the audience, it's the quality of the audience. So if you are selling something to a very niche audience and you're sponsoring a show about particular content, you may disregard the numbers in terms of absolute size of the audience, but you know the quality of the audience for your fit, the right message, the right time, the right audience. You're not going to pay correlated to the audience size. You're going to pay correlated to the audience quality where

if you sell one of your widget or one of your thing or even just the connection of your brand with that content is worth far more than the audience. That's definitely true. And that's true even to the point where big podcasting studios will like tailor their shows. We're like, oh, we're going to make this show because this show is going to attract this audience of people that's very valuable to advertisers. And so if you're in a demographic where the things you like are valuable to advertisers,

that's a great deal. If you're someone that isn't in that or doesn't want that arrangement, you're kind of out of luck. Because if you have 10,000 really dedicated fans that have some money but they aren't good for this kind of average,

whatever, you're just not connecting those dots. There's no way to bring that content into the world. And I think there's a lot of that. Yeah. And we see people using the data, that backtracks provides in ways that they're producing very on-topic, trendy content for that particular purpose, and it doesn't age well in terms of evergreen, useful content.

And then you can be so data-driven that the creativity is removed from the process. And part of the magic of newsletters of direct relationships between a maker and the audience is that you can make things they didn't foresee they would enjoy. And then the data doesn't force, there's the magic of that creation process. And there's a philosophical thing. Like, who should be choosing what podcasts get made? Should we be making the podcast that advertisers want? Or should we be making the podcast that people want?

And I think there's a big difference there. There can be. Sometimes people are the advertisers. Sometimes you want the same. Sometimes you get, there's times when it works. But our philosophy is if you make what people wants, everything else falls in place. And that's basically the YC philosophy as well. I mean, I think you can treat product and content in the same way.

Absolutely. But like there are people who have been like pushed off of platforms who are making something people want, but the platform doesn't necessarily align with them. That's the problem with the centralization or the perceived centralization of things. So YouTube is absolutely centralized and controlled by the big G. And then podcasting is still largely decentralized. And while it appears centralized through the view of a listener, how do you maintain the control of your means of monetization, that connection-wide? the phone or device. People think about it as it's coming from Apple, it's coming from a certain podcatcher, but it's all these independent brands and creators getting their voices into the world, and how do you have the...

maintain that health to where a strangle on the ecosystem doesn't boot people from their freedom. So some people will tell us that podcasting and even... I probably say newsletters, it's one of the last ways to get direct free speech from someone's mind out into the world, and people will say, things in a podcast, they couldn't print or they can do something in a newsletter. They couldn't

do in a certain publication and your independence and your control of your means of monetization, whether it's through sponsorship or subscription bases. How you can maintain that, the strength of you as a brand and you as a company going forward. However, you can do that is in your best interest. And it's way less mediated by other people's algorithms. Yeah. Right? Like when somebody subscribes to your podcast, if you make another episode, they're going to get it in most good podcast players, whereas if someone follows you on Twitter and are they going to get your next tweet, like you never know. How freaked out are you about Spotify? I'm curious.

Well, we're an official partner with Spotify. So not at all freaked out and everything's perfect and nothing could go wrong. But in terms of freak out from the general idea of public strategy of people that have consumers' attention and that can window that down and that can create content similar to other content. The Netflixification of podcasting can be good or bad depending on how you view it. And just from a personal standpoint, I like niche topics. I like the freedom of podcasting that you can literally be in an office podcasting about anything you want, be at home. What I don't know from the consumer standpoint is will people want very highly produced content all the time,

meant to meet certain metrics because metric-driven content production that's very professionally done sometimes loses the magic of podcasting. Well, I think that's why YouTube's in many ways become really shitty on like the popular side. Because like oftentimes I think that people don't even know why they're doing certain things. And it's just the algorithm has like favored one thumbnail style or one titling style. And then it becomes a trend across all of YouTube. And I could see that very much happening with Spotify podcast. We know the show's popular.

We're not really sure why. So we're just going to keep knocking it out. Yep. But on the podcaster side, like, the discovery is so valuable for us. That's why we do YouTube. So one of the problems that people constantly bring up is discovery and podcasting. And newsletters, I'm sure it's even more difficult. How do people discover newsletters in a better way or discover podcast?

It's a very hard problem both ways, but I'm curious here. Newsletters are a lot easier. Oh, kind of weirdly. I mean, just A, because text is really. easy to like, you know, if you have like a web page, you can share it. And if you get an email, you can forward it. And so we often see, this is something I think you don't see in podcasting. But if you have a newsletter that like people are consistently reading because they like it, if you do nothing, it kind of will grow at some rate because people will tell their friends word

a mouth, but they'll also like the forward an issue. Yeah. Or they'll like, there's a share button. They can link to that on the web page or tweet about it or whatever. There's kind of like a built in sort of mechanism by which people who want to share something can in a really low friction way where you can do the same thing about podcasts. Like people meet up and be like, oh, I'm listening to this podcast. You've got to listen to it. And you're just like, the amount of time I would have to have in my life to like try the podcast you're recommending to me is so much higher than like, oh, you just tweeted this

link and I clicked it and now I'm reading it and I love it. So we have a solution for that. All right. Well, I'm thrilled to hear about it. But I do think it's different. And I think it's something that we have to do even more, like obviously discover is kind of like the biggest thing. And if you're charging for it, it's like, well, how many people discover it? And then how many like it? And then how many of those people pay? It's tricky.

So you have to like, you know, you have to have that whole funnel. What do you advise writers? So like, yeah, they have all those private content. Like how do they build their newsletter? Yeah. So we, the way the substack works is every time you choose to publish something, you either can make it subscribers only or you can make it public. And so it's kind of like the Ben Thompson model where you have some stuff that's free and some stuff that's paid. And the advice we give people is basically take your best, most accessible, most focused stuff and make that free, right? Like, make your sort of like your very thoughtful essay on a specific topic free, because that's how people are going to share it. That's how people are going to find out about it

and learn that they like your stuff and want more from your brain. And then you can take your, like, sort of like more inside baseball stuff or your wonkier stuff or you're like less filtered, more raw stuff and send that to subscribers because those are the people that love you the most. they're happy to get like the unfiltered unpolished stuff. Do you have people running multiple feeds on backtracks? Yes. Okay. So basically if you're a brand, you have multiple podcast, you can see all your data together and separate and you can do private and public content as well. How many people, yeah, how common is private? I don't think I subscribe to any private feeds. So private in terms of backtracks terms, you can be behind a paywall for like a traditional

publication, which is not so traditional that it's online. So imagine you log into a newspaper. The same concepts are present there and that there's public content, private content, but who has access to the private audio is the same. And you will see public and private feeds or within the same feed, content that's pulled out that becomes private. And then that means a monetization is subscription and it's a mix and a blend of what do you allow into the public ecosystem of podcast discovery? What do you want behind your paywall or your login?

And some of those same decisions come in of, well, do I want the incentive? content behind the paywall because I know someone's going to share it and then come back in. And then everybody wants to get access to this content that they need to pay for. Do you want it public to grow the audience to increase the funnel size? So how common is it, the private feed? For us, it's not very common. Yeah. But in podcasting, currently, it's not that common.

Yeah, I think in podcasting in general, there's kind of like this pent up. We wish we had other monetization mechanisms, but because of the historical context. We call it podcasting because we used to download it to our iPods when we connected it to our computers, right? Like it's this very legacy kind of a thing. And the world that it's in now is kind of a tough place. It's hard to create a good consistent user experience for subscription podcast, even if you do it really well, which I'm sure you guys do. And we probably will at some point, you know, do more of the actual podcast feed stuff. It's just like it, no one's, it's not that many people are doing it yet in general, even if it would be a good idea.

for them. Yep. And there's even simple problems slash solutions of I'm interested in this topic of podcast. I don't care what series it's in or what show. Exactly. Give me topics about this that are curated to my taste and based on some criteria, I

think I will like this. Send that to me. And that's a discovery problem, but it's harder than people realize but I would, it's like, find someone that loves podcast that wouldn't want that salt. And then it's like, give me my feed that's personalized for all the content, but not in an algorithmic, you know, big company way.

Right. Well, even just in the beginning, listen notes was so valuable because you can just do search. Yeah. Like what it's weird to think about, but like Apple released their product without any kind of search. Yep. Right.

Well, for a long time, they had like three people on that team or something. Literally? I didn't know that. I don't quote, I mean, don't call me that. I don't know if that's the exact number. But for, I think it's a little bigger now, but for a long time, it was shockingly small. Yeah. And the way that as outsiders,

viewed it was podcasting was a way to sell devices and then the way they viewed the market despite that Microsoft lost that name blogcast could have been what we're talking about but uh that team was highly effective but they were small and then depending on how it's viewed within apple uh maybe that's changing but it's also people have their gripes with with every interface to every piece of content right but it's still 60% of podcast plays something like that apple very high yeah and then kind of the view into that can change depending on if you have your own podcatcher. But a lot of people use defaults and then Google podcast exists now, but largely is catching up on feature set and what needs to be there. But kind of feature parity is what people are going for.

But Apple Control is a large part of the end distribution to the listener. Have you used Himalaya yet? The Chinese podcasting app? I'm not. It's wild. Yeah. And so it's a big, you know about the company? Yeah.

Yeah. Yeah. It's a huge company. So they've grown. through a lot of educational content, which has got me wondering, like, is that maybe the angle people start taking, right,

for this paid small, like, I'm wondering about what even the content is for your average paid newsletter. Like, is much of it paid? And is that the path forward for a lot of people. It's just educational.

I think education's a big, a big area that people are willing to pay for. I mean, you see people paying for, like, sort of, you know, people won't pay for videos, but they'll pay for online courses, which are just like a couple of videos.

Right, yeah, masterclass or whatever. I think in general, people are more willing to pay for something that they think is going to like make them better in some way. Like if I'm sort of like this, by having this in my life, I'm going to be a better person for whatever value of better I care about. That's something that makes me automatically more willing to pay. And education is obviously a big piece of that for a lot of people. I don't think it's the only

thing. But it's definitely like that. We see that instinct being very powerful. And we see that as well. And then harkening back to the Chinese market, one of the reasons it's so big is they value educational at a higher price point than maybe other parts of the world. There's a distrust-free content I've heard. There's a sense of like, oh, if it's free, it must be like for the Roobes, which they're not necessarily wrong about. And if it's paid, it must be good kind of thing. Again, there's some truth to that.

Part of the kind of marketing aspect of it of that is marketing, getting people to want a better version of themselves or to improve themselves. And so whether that's done with paid for content, content you listen to, a lot of podcast consumption is for learning purposes, which is odd when you think about people still consider podcast entertainment, but it's learning entertainment. And then even on the narrative podcast, kind of the highbrow, lowbrow dividing line, people place podcasts a lot higher and how they view it in their entertainment and media consumption versus what they listen to in podcasts and what they watch on television or movies. They tend to not be that closely correlated,

but there is some overlap, but I think in general, the educational content, and you'll see it with Audible, with great courses. Podcasts can actually get longer. So Joe Rogan may be three hours, and you can actually get longer, more well-produced content that people will consume in chunks because they don't need to consume it in the same day. And then it becomes, well, is it actually worth hundreds of dollars for this piece of content? And how will I pay the hundreds of dollars? Will it be there's grades of tiers of interest? of how you consume it? Is it released on a course that happens every week?

Is it released all at once, bin style? Is it that I can pay a mix of I get some advertising? And then I get a reduced cost on the subscription. Is it a try before you buy sort of scenario? And then all of that's still Wild All the West in a lot of ways. But the educational content angle, I think it's that same marketing, the same angle. Same content presented a different way. Let's people think about it in a whole.

different light. Yeah, because I've just been so fascinated by like the, like the Dan Carlin phenomenon. Like you've listened to Hardcore History before. He does it windowed, right, where it's like they're all free, but if you beyond a certain period, you have to pay to get the back catalog. Right. Yeah. So every time I like break my phone, I lose all the old ones and I have to buy them again. That's a business model. Yeah, that's my, Apple's real business model is me breaking my phone. But yeah, I've just been so curious. And wondering, you know, as colleges change, you know, things like Lambda school start, where are all these professors going to end up? And it feels like there should be way more Dan Carlin's, yet there aren't. And so I'm wondering if you guys are noticing

these people like kind of come out of the woodwork and build audiences. Yeah. So not to push too much on China, but there's been basically professors that have quit their teaching positions to be full-time podcasters because they quite literally make millions of dollars podcasting. And then when you think in the U.S. market to make millions of dollars podcasting requires a certain style content, a certain size audience. And then to say that for educational content in the U.S. that you could make close to double-digit millions a year would be pretty hard to foresee right now. But in a future with multiple modes of monetization where it's really a brand and then maybe it's educational content, imagine professors as the sport stars of the future where, oh yeah, what are you wearing?

what are you sponsored by? But that sort of means of monetization and where it's going for educational content. We think that that personal brand will become more important and whether that's your own site or you band together. And essentially, you're a group of professors

that have started your own mini-university as a brand. And it has to be paid in that world or for almost all of it, I think it has to be paid. Like there's some stuff that may be mass market enough, but just the value that you can give to like a small number of people, like the best way to get capture some of that value is to just ask them to pay you. And I think this is something that like used to be the case that we had this weird cultural

moment where like everything on the internet has to be free. I think like a huge sort of cultural misstep with the early days of the internet was like let's not bring effective ways to monetize into this. And I think the pendulum's really heavily swinging the other way now. Like people that were sort of like my generation were like the least likely to want to pay for stuff. And we are getting increasingly more likely to want to pay. and then younger generations are even more likely still.

And there's kind of this rising idea that it's okay and even smart and desirable to pay for like high quality education, cultural output, all the stuff that we kind of care about. And as soon as you have that cultural shift, there's huge swaths of content that could not otherwise exist that become not just possible, but like massively profitable. And, you know, the world gets richer and everything's happy. Yeah. Yeah. So I was curious about you guys in terms of where you. you're seeing growth happen. Like, how are your newsletter writers and podcasters getting growth, especially in the context where maybe they aren't that big so they can't do paid campaigns?

I think you can handle newsletters. Yeah. So newsletter growth, like, make good stuff free and like make it easy for that to share on the, on the web. So like we send emails, every time you publish a free thing, we'll send an email to everybody. But there's also like a version on the website that's like searchable, that's got the right share metadata for everything. So that if people do want to like share it on social media or on wherever, it can kind of like make the rounds and then just have like effective calls to action when someone shows up, like let them see the content they're there to see that they like, but then also ask them for their email in a good way. And then the other thing that we're doing, a lot of newsletters grow by is by some sort of referral program, right? So having

some explicit way in which people that are like you're super fans of this newsletter can easily and effectively share it with other people. This is how like the skim and stuff grew had a really cool like referral program. We're trialing something very similar, but on the paid side. So we're, you know, with some newsletters, we're doing a trial where if you're a paying subscriber, not only do you get to have all of the paid content and you get a member of this community, yada, yada, but you also get a certain number of like free gifts that you can give out. That's like a couple months of subscription, which is actually quite valuable. Sometimes this is like worth 20, 30 bucks. But you can like give that to your friends who they might not have like gone from zero to subscribe.

but they're like, yeah, sure, like if you're giving me something, it's worth something, it's free, you're saying it's good, like, I'll give it a shot. And then those people subscribe. And some of them are like, I really love this and I'm happy and I'm going to subscribe. And then I'm going to give the gifts to my friends too. I think from our perspective, it echoes that. And don't forget your other channels and means of distribution that it may be outside of the podcast. So that's newsletters, that's tweeting.

That is that whole cycle of how you interrelate and then how you share your actual content. So the ability to preview the quality of the content. And one aspect that people forget in all content creation is there is large amounts of copycats in content creation, but also quantity is not always as good as quality. And don't forget that if you drop on quality, people will notice. And one way to grow your audience is to actually spend time designing your content, designing your show, producing it well. It's not always by the most expensive equipment, have the most expensive way of doing something. at the end of the day, there's many great stories that are very simple, very low to produce, and podcasting as a medium is a storytelling medium, and don't forget to have a good story.

And that's in everything from startups to podcasting to all content. What's the actual story? Is it good enough for someone to tell someone else about? And when you get there and you can find a way to summarize that, so part of it for us is a lot of podcasts just start and there's no lead in and you're not someone that does that. but in particular, actually having a quotable, shareable, summarizable content that people can share. Like, oh, you mean like the little clip it in the beginning? The little clip in the beginning.

The intro summarizes the entire show. And that intro and lead in depends on the style of content, but it's very useful for shareability, for just people remembering the story. And just from our standpoint, people actually do remember what they hear, 36 to 39% longer than what they see and what they read, which is actually a video advertiser hidden piece of research. But that auditory component of storytelling

is very powerful. And don't forget that. Even when you're a content creator, quality can really trump a lot of quantity, for sure. And then don't forget where your audience is. They don't live in one app. They don't live.

No one uses the internet by pulling up 500 different websites and different browser tabs. Well, I do, but most people do not do that. I got to find how you're controlling your tabs. So, Chris, Jack Ryder asked you a question. This might be a softball. But he says, in five years time, our personal newsletter is going to replace social networks like Facebook. That's a great question.

I actually think no. I think he probably was like, maybe Chris will think yes. I think the answer is it won't replace the social network aspect of it. The thing that Facebook and the social networks are great at, is having the relationship between you and like the people you know in real life and having like those sort of like rewarding real world relationships mirror like that's the thing that really works there. That's the grain of truth that makes Facebook what it is. The part of it that should absolutely be replaced is where we're conducting our culture in there. So the idea that the

place where not only do I get my updates of baby pictures, but I'm going to get my news from Facebook, that should 100% be replaced because it's it's a disaster. for the world. And it's, I think, increasingly a disaster for individual people that kind of feel bad about it. Like, the number of writers are Twitter power users. And the number of writers I talk to that's like, I'm addicted to Twitter. And like, it's actually really bad for my life. Like, I'm not joking. It's like I actually, like, I use it too much and then I feel terrible. Like, there's a lot. That's a real thing that happens. And so I think that yes, the way that it's yes is it will replace how people consume a lot of cultural content. That's news, that's public intellectual

thought, that's storytelling, that's entertainment, that's sort of like at a cultural level rather than like a, hey, I know you because you're in my family level. That is what should be replaced and what I think newsletters and things that have this aspect of a direct personal connection will replace it. So we have a question about advertising and actually advertising spend. So debut, Mukergy asks, do podcasts actually work? And this is in the context of advertising. If so, how to startups

calculate the ROI and the KAC? And I guess that also means a startup potentially doing a podcast like you guys have done. So maybe you can shed some light in that as well, Chris. Yeah, so podcasts do actually work for all those reasons, but I don't have a biased answer at all. So

how they generate the ROI and the KAC so if you have a direct response, so enter off for code XYZ at checkout, that enables people to track the effectiveness without measurement like backtracks as in place. You can also tie things together. And depending on what you want to do, brand awareness, the same way that you would for a radio campaign, you can actually measure how your overall conversion is growing based on what you're doing and your marketing and your ad spend.

So in a radio sort of corollary, people may not be able to directly attribute that that radio advertisement corresponded with the increase in sales. but stop your radio advertisement and then see what happens, which is a dangerous game to play. But one way to calculate it is to eliminate the variable from your current ad spend if you can do it. So if you know what your mix of marketing is and podcast is a branded piece of content for you as a startup in the terms of this question,

if you stop doing it and you eliminate it, there's a risk to your business, but if that's the only one variable that you're changing, you can isolate its contribution to your particular CAQ or ROI in that case. So some of it is direct, some of it is indirect, some of it is there's value in perception. So the way that the audience of the podcast perceives the company

can be increased for all those reasons. If it's a well executed piece of content, they may think this company is well run, full of smart people. And then how do you actually correlate what that means? And then it's, yeah, We have very biased be points on you should absolutely podcast for your company. Get your voice out. It's your direct line to your audience, whether the audience is potential customers, investors, the industry that you're in. There's no filter when you produce the podcast content. And that's a great place to be for your brand. So you guys are a startup. Do you buy podcast ads? We have. Yeah. We do buy podcast ads. Are they worth it? They are worth it. And then sometimes they're underpriced. Sometimes they're overpriced. But they are very much worth it. And if you stop

doing it, you notice. But we are, we are not podcast producers because we are not skilled in the art of content. But you guys are. I guess we are a little bit. Yeah, it's an interesting question. I'm, I mean, obviously I'm a little bit more skeptical about podcast advertising. I would be, like, to me, if you're a startup that's thinking about doing it, I would want to have a really good thesis for why this would specifically work for you. Like, I am a podcast company is probably a pretty good one. Not to say that it's never worth it, but it's hard to make good use of like just raw advertising money as a startup.

And if you can figure out how to do it, then, then great. I suspect, as I kind of hinted before, that there's a lot of podcast advertising that's in a little bit of like an emperor's new clothes state where like too much is, it's overpriced. And because there's just not metrics there, it's just like waiting for like someone, like the other shoe to drop and like some, the per, the per download rate is going to go down a lot at some point, which as an advertiser would signal maybe do less of that. You mentioned that we did a podcast, which we did. And this is actually maybe related to the reason why advertising would be good, which was we found the trick with substack when we were bringing writers on, especially in the early

days, was we had to like meet with people in person, like to just sort of like tell them what we were doing and why. And when we were doing that with writers in the early days, we had like this really good rate of people sort of like seeing why we were doing what we were doing and getting excited about it and buying the religion and being like, I want to do this too. This is so exciting. Of course I'm going to make all this money and then going on to make all the money. And we couldn't convince them to do it over like email and stuff. And we're like, well, there's only so much of us. So we're going to have to at some point do this at scale. We're going to have to be able to tell this emotionally resonant story at scale. And one of the best ways to do that is probably

not a shock is a podcast. And we're like, even before, this is before we even had an audio feature. We're like, we should just do a podcast because it's a way for us to like give this message in a emotionally resonant way that we believe it without having to like individually meet with thousands of people. Yeah. And as a founder, how do you go about budgeting for that? So you did it in-house, right? Yeah. And we, you know, we're fortunate. One of our first employee is Nathan Bashaw, who was previously head of product at Gimlet media. He's like a podcasting guy. And he's like, here's how you do all of this stuff. And, One of my co-founder, Hamish, is like a journalist and has done tons of interviews and like just they kind of like knew a bunch of we sort of had in house a bunch of like the pieces you would need to do it well, which we were just fortunate, I guess. Yeah, I don't know. Did you put a monetary value like this is how much we're willing to spend on this and because we expect a conversion of why? No. I mean, that's maybe maybe people run their companies that way. I don't we're not at that level of sophistication for like quick things like that. Right. Well, because I think that this is. This is.

a really common question that I get. It's like, I'm going to do a podcast. What should I expect? So in terms of measurement, so a portion of backtracks is the analytics and the measurement, and we do that in various ways. And then if you have an existing podcast and you're doing maybe a new season or you're rebooting, you can have comparative metrics. But then you can actually know if you're trying to target certain markets, if people are listening in those markets, you can change your, basically run A, B, test on release cycles, content structures. So all of that's in our product of, well, are we doing a three-person panel? Are we doing a one-on-one Q&A? Is it what's the structure of the content that's working? And then you analyze as metrics, not just downloads, but playback. And then

where those playbacks are occurring, depending on your company, if it's a startup that has a very social media focus and your audience is on Twitter, is that audience listening to your content on Twitter, are they coming to your site? What's your metrics? So one thing is to know your metrics when you start before. Don't wing it afterwards or kind of reverse your way into it. If you're thinking about it that way, one part is podcasts are a good way to sell yourself, sell your product, and then do you need to actually concretely measure that? You'll probably want to know how you're doing relative to are you improving or is your audience growing. There's ways to do that. but a very fine-tuned metric-driven way of producing the content where there's absolute

ROI in KAC. The way that we think about it is there's a difference between attention and opportunity and sometimes at the early stages of something, being able to measure it at a certain absolute way is not always the best way to treat it. And how do you guys, so both for newsletters and podcasts, like a lot of the questions we also got are about people who are curious of getting started. And so I think like best practices on like how to actually get going. and what to expect would be worthwhile talking about.

So if I'm, you know, we were working with you guys pretty early on. So I think I had done a podcast before the YC podcast. So I just kind of winged it. But like someone comes to you and like, hey, we're going to do a podcast or we're going to do a newsletter. What do you tell them like you have to start with these things? Like this many episodes or whatever you might suggest. So it's a simple answer.

But why and why do you want to do the podcast? What is your podcast about? Now, if you can't answer that, that's a bad sign, but also that helps dictate how many episodes you can do based on the topics. Are you going to exhaust the topic? Is it a frequency that you want to do one a week? You want to do one a month. Are there monetary constraints?

Are there? So you can first start with the content and then how professional do you want to get on scheduling? So are there certain things in your industry or in your company or you as a person? I want to get out an episode before this holiday. that helps. You can back your way into what you need to do before then.

So the most important thing to us is always, why do you want to do this? What do you want to do this for? And what are the topics? And then people always ask about equipment and things like that, but there's lots of answers

on the internet for that. Newsletters are great because for newsletters when people are like, how do I start a newsletter? We're like, just start it. Just go.

It's not. Especially, you know, we tell people like, if you're not sure what you're doing, like start a free one. what you can do on sub-sac. We don't charge you anything.

Just like literally make your first post. Yeah. And then like tell people about it and like add your like mom and a few other people from your Gmail contacts like into your list and just go. You know, it's good at some point to develop like an editorial strategy about like, here's what I'm doing and here's why people would listen to it. But it's kind of like startups and that it's like you have one idea and that's not what works and you change a bunch of stuff.

And for us, the one reliable predictor of success we see is like, do you do it consistently. And if you do, then, and you know, pay any attention to the feedback you get, you're going to eventually find something that's good. And the way that most people fail is the same way they fail when they're doing like a blog or something is they do one post that's like, I'm starting a blog and they do one other post and then there's never another one. Right. Sorry, it's been a while. I'll try to do these more often six years ago. Yeah. But for newsletters, it's literally just do it. Just do it and like, you know, if it's good, people will give you the feedback you want and you can and it'll grow. And the other cool thing we found is if you find

that, if you get to a place where you have a newsletter that people are regularly reading, like if they're just regularly opening it, um, chances are you'll be able to charge for it if you want to at some level. Because it's actually harder to make something that's good enough that people regularly want to consume it than it is to like convince some fraction of them to pay. That's a great takeaway. Yeah. So it's it's yeah, for newsletters, if you think about starting a newsletter, just start it. Go to substack. dot com. It's really easy. It's, yeah.

And then in podcasting as well, if you've never done it before, you can get a few practice episodes in. No one actually has to learn in those mistakes. Some people just start. It needs to be perfection from the beginning, but treat your content strategy when you're just starting in a new medium like you would a startup. You don't know exactly what's going to work, but start and have a thesis and try it. And then no one needs to necessarily know the first iteration.

But they'll say, oh, this is the greatest newslet I've ever received. This is the best podcast. They don't know that you've been practicing doing this for so long and you've improved over time. But part of that is it is just going. And then as you get going, you can change your structure based on what you've learned. And then, yeah. I think that's great.

All right. Thanks, guys. Thanks for coming in. Thank you. Thank you. All right. Thanks for listening. So as always, you can find the transcript and video at blog.

dot ycombinator.com. And if you have a second, it would be awesome to give us a rating and review wherever you find your podcast. See you next time.