Gimlet 21: Diversification of Worry
October 6, 2016
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The Story StartUp is back! And we’re kicking Season 4 off with an update on what’s happening here at Gimlet Media. Since the start of the year, Gimlet has more than doubled in size. And while growth is often the goal for a startup, it also costs a lot of money. In this episode, Alex and his team ask themselves some very scary questions: How are they going to pay for all this growth? And what will happen if they can’t? With a larger staff and six new shows launching in the fall, this feels like a particularly pivotal moment at the company. There are big decisions to be made, with potentially even bigger consequences.
The Facts David Herman mixed the episode. Our theme song was written and performed by
Mark Phillips. The special ad music, Microliters, was written and performed by Build Buildings. Our logo was designed by Elias Stein. Additional music from Jupyter and the band hotmoms.gov.
ALEX: One, two, one, two, one, two. Hello, hello.
NAZANIN: Is it working?
ALEX: Yeah. It’s working. Even though we haven’t used it in a long time. How does it feel to be back on mic on the way to work?
NAZANIN: Um… It feels as awkward as ever!
ALEX: Hello and welcome to StartUp, the podcast about what it’s really like to start a business.
I’m Alex Blumberg. And we are back! That’s right. This is season 4, for those keeping track. Does anyone keep track? We do. It’s season 4. And this season… you can think of it as a two course meal. The main course is going to come a few episodes from now—I’m not going to tell you too much about it. Except to say, it’s a fascinating 7 episode series on a startup that you probably have not heard of, but with a founder you probably have heard of. Lisa Chow, the regular host of StartUp, will be kicking that off a few episodes from now.
But I am here, with a short 3-episode starter course, about what’s going on here, at Gimlet Media: The company that produces this podcast, and many others. The company that my co-founder Matt Lieber and I started two years ago...in a process which we documented in season 1 of startup. You guys remember that? The very first episode of that series started with me, about to go to one of my first ever meetings with an investor. But before going out the door, my wife Nazanin stopped me to ask about my footwear:
NAZANIN: They’re fine, they’re just… There’d be a higher chance that he’s gonna give you money, if you’re not wearing running shoes. Don’t you think that’s true?
ALEX: These are the only shoes that I can wear that my feet don’t hurt in...
ALEX: That exchange happened in April of 2014. Before Gimlet even existed, before I’d met my co-founder Matt Lieber, before we raised a dime of investment, or found an office, or hired people, or launched some shows, or hired more people, or found a bigger office, or raised more money, or launched more shows, or found even more office space.
And before my wife, Nazanin, came to work at Gimlet,
ALEX: So where are we right now? How long have you been… How long have our new lives been this way?
NAZANIN: Uh, our new lives have been this way for… almost a year?
ALEX: Now, before coming to Gimlet, Nazanin was a TV producer on the Rachel Maddow show. Before that, she was a public radio producer, so most of her life has been spent doing journalism. But when she came to Gimlet, she made a career switch. She became head of our Creative Services division. Which means that she runs the team that makes the ads in all our podcasts. And makes all our branded content, that is podcasts that we make for companies and other entities.
ALEX: What’s the most unexpected thing about your new job?
NAZANIN: I mean this sounds -- this sounds so stupid to say, but when I took the job, or like when I was thinking of… You know when I, like, started, I don’t know, the stakes were so much lower. You know?
ALEX: What do you mean?
NAZANIN: It just… It just it felt like, you know, of course we wanted to do a good job and get big accounts and stuff. But if we didn’t… Something else would come along or… Now, it just feels like there is a… There’s, like, a big organization to pay for. And, if we do an ad campaign for some company and they don’t buy another one, like, that’s kind of on me. Um. And I just didn’t think about. I just didn’t. I don’t know I just didn’t think about the stakes that way. I don’t know. It just didn’t feel real for a long time, you know? And now it feels very, very real.
ALEX: This is the sound of the Gimlet bi-weekly all-staff meeting. It’s mid-summer and the room is packed. People are sitting on table tops, leaning against the walls, hanging out cross legged on the floor. There aren’t enough chairs for everyone. There are about 60 of us now at Gimlet. In fact, that number, that’s what Matt wants to talk about at today’s meeting:
MATT: We wanted to just give a-- do a snapshot update of where we are in terms of growth of Gimlet. We have grown a ton in the last seven months. Like, an unbelievable amount. We were 23, 24 people on Jan 1. We’re currently 57 people. That’s like over 130%. That is a lot of new growth to digest. Does anyone feel that way?
MATT: Raise your hand if you feel that way.
ALEX: Almost every hand goes up
This growth, this is what Nazanin’s talking about when she says, it’s getting real. And it’s also the subject of our 3 part miniseries on Gimlet. Growth. It’s exciting, it’s super fortunate, it’s awesome in many ways, but it is hard to manage.
Over the course of these episodes there will be tense words, there will be uncomfortable silences, there will be tears. There are also a couple of bad words, so if you’re listening with kids, you know, take appropriate measures. We will talk about how growth thrusts employees into unfamiliar roles, how it makes managers out of people who’ve never managed anyone before, and how it’s changing MY job.
But in this episode, the first one, we’re going to be talking about the thing Nazanin alluded to-- perhaps the scariest thing about growth: how much it costs. And how you pay for it. And how that need for revenue forces me and Nazanin and my co-founder Matt to make a tough decision. A big decision, with lots of money on the line. That is coming up, on today’s episode of Startup.
ALEX: Jim Grau…
ALEX: How’d you like to be on StartUp?
JIM: Always someone walking around with a mic in this office, I swear to god.
ALEX: Alright, so, the guy I just ambushed with the mic? That’s Jim Grau, our VP of Finance. So, yes, we actually have a VP of Finance, now. Also, a National Sales Director. And they, along with my co-founder Matt and me, are often the ones that deal with big financial questions. Which I bring up to point out that this is going to be something of a corner office episode. Jim actually sits in a corner office-- though, I should say, his office also happens to be the smallest room in our new space. And he shares it with two other people.
Anyway, Jim came to Gimlet a couple months ago, from the Boston Consulting Group--BCG-- where Matt used to work. They were former colleagues. And Jim is a contradiction, because he’s one of the nicest, most laid back guys in the office, but …
JIM: I have, I have a tendency, and probably especially in my role here, as VP of Finance, um… I have a tendency to have a very concerned look on my face probably more often, more often than I should because I’m constantly staring at spreadsheets and concerned about… um… guarding-- in part-- guarding Gimlet against the downside scenarios. And so I probably think about that more than the average person here.
ALEX: Downside scenarios, like, for example, what if advertiser demand, which has been very strong, all of a sudden dries up. Or what if advertisers are no longer willing to pay the rates they paid in the past. Jim thinks about this stuff, models it, plugs it into a spreadsheet row called downside scenarios. And for a while, these worst case scenarios were theoretical. But just this month, in mid-July of 2016, Jim’s face was looking even more concerned than normal, because some of his theoretical scenarios were becoming real:
JIM: The audience numbers for the past few months, which had been growing like gangbusters before that, have, um, plateaued and even kind of fallen for, um, pretty much-- almost all of our shows.
ALEX: Sampler, Surprisingly Awesome, and this very podcast, StartUp, the numbers were flat or declining. The only show that was continuing to gain audience was Reply All.
Now the declines weren’t huge, and in the case of Startup, individual episodes from the last season did way better than previous seasons. If you’re curious, the two big hits of Season 3 were the episode on Grooveshark, and the one on Bento. But overall, the trendline for the season was flat.
Matt, who shares that office with Jim, heard our conversation, and turned around to chime in:
MATT: The question is, what happens if the shows, the audience… You’re catching us at a particularly paranoid moment because all of the fucking shows are not growing. So, of course, you extend the last two months to the next six months, and if we continue the way we are, we are like F-U-C-K-E-D.
ALEX: When you say we’re F-U-C-K-E-D, I mean I think that’s behind all the anxiety, right? Like, is this whole project gonna go belly-up?
JIM: Uh… I mean yeah I guess I like… We’re only… We’re only fucked if all this bad stuff-- mildly bad stuff-- over the past month continues to happen consistently to all our properties and, even then, like, F-U-C-K-E-D looks like -- like laying some people off and refocusing on core shows. It doesn’t mean blowing up the business.
MATT: Look, I’m telling you—
JIM: You’re giving me eyes there…
MATT: He’s gonna put this in StartUp and it’s gonna, like, completely terrify the staff…
ALEX: I’m not gonna put it in StartUp…
MATT: And by the way--
ALEX: I would only put--
JIM: We’re not live, are we? I’m trusting our eminent CEO to make the right decisions.
MATT: No I know, I-- Trust me, I’ve seen this movie before. It’s like, you think you’re-- and then, it’s like: ‘Oh, but it’s such good tape because you’re so terrifying!’ Like: ‘How could you--’ And then you’re gonna be like, ‘I don’t wanna stand in the way of a great episode.’ Um… No but seriously I think the fact that we’re even sitting here talking about layoffs is like… I’m not saying it’s a dirty word. Like, businesses lay people off. But I don’t-- I think that we’re having this conversation-- This is the moment we’re in, right? It’s so much uncertainty? And I don’t think that’s gonna happen. I think we’re in this particularly paranoid moment.
ALEX: And part of what’s making this moment especially paranoid has nothing to do with what’s happening to our existing shows. It’s also because of the 6 new shows that are set to launch by the end of the year. We have to pay for those new shows and we have no idea how they're going to perform.
This conversation was happening, right at the end of our hiring boom, which had taken us almost to 60 people and brought on those unruly seating arrangements at our all-staff meetings. And most of these new hires were working on shows that weren’t coming out for another couple months. So, we’d tripled our payroll, but the number of shows that were up and running and generating revenue, were the same as at the beginning of the year.
And sure, that was all about to change. The launch of Science Vs, the first of that slate of new shows we had coming, was just weeks away.
But at this particular moment, with audience numbers dropping and so many shows yet to be released, things just felt uneasy. We still had several million in the bank, but at 60 people, that wasn’t the cushion it once was. 60 employees. That costs about a million dollars a month.
So the worry, it’s understandable. But, it shouldn’t have been unexpected. We’d known that with all these shows in development, we were going to hit this uncomfortable period of high spending and low revenue at the end of the summer.
ALEX: So at the beginning of the year, we had a goal to make 7 million in revenue and we had a goal to spend something like, what? 9 million? Something like that, roughly?
JIM: So, I would say we’re still on track to hit the revenue number, but the cost number is gonna be 10 million probably, give or take? And so that doesn’t feel that much worse, right, overall, than the picture we projected in the beginning?
ALEX: I also feel like, we knew this was coming, this whole- this whole time.
MATT: We have the chart where you can look at our revenues, our costs, and our cash-flows. And we projected them out and we’re hitting them month after month after month. We’re just at the low point because we’re spending so much on new shows, and they haven’t come out yet. So everyone’s edgy, including us.
ALEX: Yeah, yeah. But this is-- this always was gonna happen. Like this was the moment. Like you could see this- you could see this moment of anxiety in the spreadsheet way back in January, right? Like, we’ve spent so much money. Our burn rate is at the highest it’s gonna be. And like, we’re, we have two weeks…
MATT: Well, not quite.
JIM: Well, no. No.
MATT: September, October…
ALEX: Yeah, right. But it’s almost at the highest it’s gonna be, and like we’ve got, like, two weeks til the show launches. We don’t know what’s going on. The only thing that’s different about it is that, like, we weren’t predicting this downturn in audience that we’ve hit and that’s… that’s… that’s fucking scary. Yeah.
ALEX: For me, there was another anxiety lurking beneath this conversation. And that was … , the realization that the decisions you make a long time ago, were just now revealing their consequences.
So, from today’s vantage point, launching so many complicated, ambitious, expensive shows at the same time seemed like the wrong decision. But we hadn’t made the decision now. We’d made the decision over a year ago, back in mid-2015, when we were still in our old offices, and we’d just raised 6 million dollars, and launched 3 hits, and it seemed like yes! Concept proven, let’s take this thing to the next level!
But now, here we were, poised to take it to the next level, and our audience numbers were drooping. The question, wait, why did we do it this way? It kept nibbling away in our brains.
And it was right around this time, that an opportunity presented itself. A very complicated opportunity, with a very attractive bankroll.
Anna Sullivan, our National Sales Director, got me and Nazanin and Matt in the studio, to tell us about it:
ALEX: So what are we…
MATT: What are we here to talk about…?
ANNA: The Department of Defense wants a branded podcast.
ALEX: The Pentagon wanted us to make a podcast for them. The rest of that conversation, coming up after the break.
ALEX: Welcome back to StartUp, the show about what it’s really like to start a business. And we’re gonna pick back up, right where we left off, in the studio, just after our National Sales Director Anna Sullivan told me and Matt and Nazanin that the Department Of Defense was interested in doing a branded podcast and they wanted to get a proposal from us.
Now, regular listeners to the program may remember previous episodes where we talked about branded podcasts and whether that was something we even wanted to take on. And that’s how Nazanin ended up here, running Gimlet Creative, the part of the company that deals specifically with branded content and ads.
Gimlet Creative had done exactly one other branded podcast. For eBay. Nazanin and her team had released it several months earlier and it had been a big success. The audience had more than doubled what we’d promised. eBay loved it, and said they wanted a second season. And it had been the perfect show for us to enter the unfamiliar waters of branded podcasts with.
Because eBay, as large companies go, is pretty non-controversial. The military on the other hand, is a different story. And we just didn’t know what kind of stories they’d want us to tell. Would we making podcasts about how military innovation and how it leads to cool things like the internet? Or would they want stories about drone warfare and lethal weaponry? Okay, back in that meeting, here’s Matt:
MATT: For me, the question is, like, is this story something where… A) like, whether we’re promoting something that, like, broadly within the organization, we may feel or people may feel like we don’t want to be on the side of—
ALEX: It seems pretty obvious that eBay is in one camp which is pretty non-controversial, pretty straight-forward. And, the Pentagon’s in another category which is, a lot of people have a lot of thoughts about it, very controversial. And I think this gets to, for me, a bigger question of, sort of like, how do we make these decisions? Are we making them based purely on optics? Are we making them based purely on our beliefs? I want for some sort of, like, clarification of how we should even think about it.
MATT: I think it is both how do we, as a company, feel about it, and then also, how do we think our audience is going to perceive it. Like, what is the impact that it’s gonna have on the brand and how people feel about Gimlet, that’s a very legitimate question.
NAZANIN: In the end, the goal of this podcast, in some very broad and general way, is to have people hear about the defense department and have a more nuanced, sympathetic or empathetic feeling about them, right? That’s the main question…do we want to be part of the defense department’s marketing strategy? But I feel genuinely conflicted about that question, ‘cause I feel like, maybe? I’m not against it, I just feel like that’s kind of...the question we should try to answer.
ALEX: And the thing about the military and like, like many things that people have strong opinions about is that it’s, like, too vast and complicated to be just one thing, I think. And I think, you know, to a certain group, the pentagon is seen very negatively, but then to a whole other group it’s seen very positively, like, I think there’s a whole bunch of listeners who might be hearing this and being like, why is this even a question? Like, that—
MATT: Of course you would do this—
ALEX: Of course you would do this because—
MATT: One of our great American institutions.
ALEX: We had logistical questions as well. First of all, we’d have to get the job, which means we’d have to do a ton of research and work and put together a proposal… and there’s the opportunity cost.
MATT: We have enough other demand that if we say yes to this, we’re saying no to a bunch of other things that I think are ultimately, like, make more sense for us strategically. Um…
ANNA: We have to...so I just... that’s hard for me—
ALEX: Again, Anna, our national sales director.
ANNA: —because, it’s like, yeah, we have the demand of people reaching out, but, like, how many of those actually come to fruition? This one’s actually like, we have $500,000 and we need to spend it right now, or else we don’t get it next year. And really, it’s some of us getting our money back…’cause it’s, like, taxpayer dollars. As the sales person in the room, just like a thing...but um—
ALEX: Just out of curiosity, how many...if you guys had to decide right now, can I just go around the table and figure… like, what would you say? If you’re like, yes or no. Should we do it? Anna?
ANNA: It’s a yes.
NAZANIN: Oh really? Shit. I think I would say...right now if I had to decide, I think I would say no. But, yeah.
MATT: How about you?
ALEX: [pause] I th...I think I would...I don’t know. I’d probably say no. But I’m not, but I don’t know...I feel like that’s a, something of a chicken shit decision.
ALEX: Do you remember when former president George W. Bush said that thing? “I’m the decider.”
GEORGE W. BUSH: So I hear the voices and I read the front page and I know the speculation, but I’m the decider and I decide what is best—
ALEX: At the time, he caught a lot of flak for it. It’s an awkward phrase. Belligerent and childish at the same time. Or so I thought back then. Now, I think it’s a perfect description of what it’s like to be in charge. Of anything. The most powerful country on the planet in George Bush’s case. Or a small podcasting startup in mine. There are just so many decisions to make, all the time. And all with such imperfect information. And such a huge time lag before you can tell if the decision was right or wrong.
Half a million dollars from the Pentagon would ease a lot of the pressure we were facing, getting out our new round of shows. But, what if we look back a year and a half from now, and wondered, what were we thinking?
And so a week after that first conversation, I got the team together on a conference call.
ALEX: I don't know. I've been, like, thinking, like, man, I don't know if it's worth all the headache. What are you guys thinking?
MATT: I'm...I'm very sympathetic with the, like, it's not worth the headache argument. I mean, to me this isn't about principle, it's about practicality and practically it's not worth it.
ALEX: I'm ready to sign off on that.
ANNA: Goodbye half a million dollars.
ANNA: No, I...that's fine. It's...we can always find money other places. It's fine.
ALEX: How do we all feel about that? Bye half a million dollars.
ANNA: I mean, I don't feel good about it. But, you know, I'm not supposed to.
MATT: I feel good. I feel good, I'm ready to move on and get to work on—
ANNA: I'll go cry in my pillow.
ALEX: Uh, we’re about the walk by the concrete plant. God, Brooklyn is loud.
NAZANIN: It’s so loud
ALEX: In moments like with the DOD, when there’s all this pressure to make a tough choice, it’s nice to have a partner in the decision. Matt and I rely on each other for this. Almost all the decisions we make, we make together. And one of the best things about Nazanin working at Gimlet is that she can be a voice in making some of these decisions as well. It’s nice. It’s comforting.
But on the other hand, it means we share almost all the same anxieties.
NAZANIN: You know, like, there are, there is a part of me that misses, the diversification of worry. You know, like, I had my worries and you had your worries, and I didn’t have to, like, head on interact with your work worries.
NAZANIN: I never have before, like...you know, I didn’t before you started Gimlet, and like, I didn’t after you started Gimlet until I started working here. And now, it’s like, all of our worries are the same worries. Like, every single fucking worry. Our kids, we have the same worries, our work, we have the same worries, our, like, aging parents. It’s just, like, every worry is the same worry! Like, maybe I’m more worried about, you know, losing 7 pounds and eating carbs than you, but, like, that’s pretty much it. Do you ever feel that way? I don’t know.
ALEX: Uh, I feel that way a lot. A lot. No, I mean it’s like, when we come home and like, before it used to be… like I never had the feeling before when we were at home and talking, aw man, let’s just change the subject.
NAZANIN: I know! Me neither! I wish I could come home and just be like, my boss in an asshole, you know what I mean? I don’t know! Just something, like totally unrelated.
ALEX: But for better or worse, we share almost everything now, including our anxieties about work. And right now, a major shared anxiety was the fact that we’d just passed on half a million dollars from the Defense Department.
And then, just a few weeks later, the first of our new shows launched.
Science Vs published their inaugural episode. Somehow, the only documentary evidence we have of this is a 10 second cell phone video that our editor Annie-Rose Strasser took. It shows Science Vs host Wendy Zukerman hitting the publish button to upload the first episode.
WENDY: Ok. Doo-doo-doo-doo-doo. Is it there?
MATTHEW: You did it.
WENDY: We did it!
ALEX: Wendy was nervous, of course, about her show, and how people would like it. But I don’t think she had any idea how closely Matt and Jim and us corner office people were watching how it performed.
ALEX: Hey everyone. We're going to say...I want to say a couple of words. Just a few.
CAITLIN: Few words!
ALEX: Um, this is just...we're all gathered here to celebrate the, um, launch of Gimlet's newest show Science VS!
ALEX: It performed very well. In fact, it was the most successful launch in Gimlet’s short history. Reaching almost 300,000 listeners in just a few days, rocketing up the iTunes charts.
The team was thrilled. I was thrilled. But I wondered, what did Mr. Downside Scenario, Jim Grau think of all this?
ALEX: So...how are you feeling now? What are you fr...how, how...are you less freaked out, more freaked out, the same amount of freaked out?
JIM: Uh...I would say...less freaked out. Marginally less freaked out, because of the Science VS launch which I think is just proof that the core thesis that we have still works.
JIM: But I think my concern has migrated to, um, selling these things now
ALEX: Another consequence of launching all these programs at once. We have to find a lot more advertisers to fill all the ad spots we now have available. It’s just a lot more supply. And it was proving harder for Anna and her team to sell spots on a podcast that hadn’t come out yet. That nobody could listen to. So all of this had Jim still concerned -- despite the early success of Science Vs. -- about hitting our revenue goal for the year.
ALEX: What do you think the chances are that we’ll get there?
JIM: Uh, I would put it at...65/35 we’ll get there.
ALEX: Ok. All right.
ALEX: 65/35 chance that we’ll make our goal? from mr downside scenarios, I guess I’ll take that. Don’t have a choice, right?
ALEX: How do you manage your anxiety?
JIM: [laughs] Pretend it doesn’t exist
JIM: Uh...yeah, I don’t, I don’t...I don’t have a good answer for that. I think, uh… I think you’ve gotta, like, lean into that a little bit, and, like, appreciate the roller coaster ride for the downs as well as the ups. Like, I actually consciously think now when I’m feeling, like stressed out about something for a week or whatever, like, yeah, this is, like, part of the ride.
JIM: And I sort of, like, in this really, um, masochistic way, kind of like [laughs] I don’t like it when things are bad, obviously, but it’s, like, I like the fact that I hate it when a big ad deal falls through. Like, once I...if it ever gets to the place where, like, I don’t feel something negative when negative things happen to this company, that would be a sad place, I think.
ALEX: Right. Right.
ALEX: After the launch of Science Vs. we premiered our next show up, Heavyweight, with host Jonathan Goldstein. And it also did very well. Went to number one. As of this recording, we have achieved our revenue goal, and we’ve still got several months left in the year. The point is, that once that show launched, it further relieved some of the anxieties of some of the corner office folks like Jim. But it added to the anxieties of another group of people, a group of people that is trying to launch a podcast that hasn’t come out yet and a podcast that will be judged against the success of the ones that already have. That’s on the next episode of StartUp.
And one more announcement before we come to a close here: Today, we made the very sad announcement that Gimlet will no longer be producing Mystery Show. Mystery Show, for those of you who don’t know, was a show we launched last year with host Starlee Kine. And, I can honestly tell you, it was one of the most amazing podcasts that I have every had the privilege of being associated with. She’s an original and her show broke all sorts of new ground. On this podcast, we are transparent about a lot of things. But there are certain things that simply need to remain private. What I can tell you is that, I’m really, really sad. And I wish Starlee all the best.
Okay. We’re gonna have scenes from the next episode of StartUp, after these words from our sponsors.
ALEX: Coming up on the next episode of StartUp, I sit down with one of our young producers for a conversation about job performance. Mine.
ALEX: I didn’t realize that you were under so much pressure.
ALEX: Should I know that?
ERIC: Are you asking do I want you to know that or are you asking is that something you should know as like the…
ALEX: As, like, the person who’s like created the company to try to help you do this thing that is making you cry -- has something gone wrong that that’s happening?
ALEX: That’s next time, on StartUp.
Today’s episode of StartUp was produced by Stevie Lane and Simone Polanen.
It was edited by me, Peter Clowney, Molly Messick, Bruce Wallace, Kaitlin Roberts, Lisa Chow, and Luke Malone.
Mark Phillips wrote and performed our theme song. Build Buildings wrote and performed our special ad music.
Additional music from Jupyter, and the band with the greatest band name ever, hotmoms.gov.
David Herman mixed the episode.
To subscribe to the podcast, go to iTunes, or check out the Gimlet Media website: GimletMedia.com. You can follow us on Twitter @podcaststartup.
That’s it. Thanks for listening. We’ll see you next week, on StartUp.
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