Gimlet Media, which aims to be the HBO of podcasting, could likely become that. This is mostly great news for journalism and startups
While washing dishes on a Friday evening, happy to see that a brand new episode of the radio series StartUp was ready, this reporter heard the big news as she put her last cup on the drying rack: Gimlet Media, a podcast company that had only been around for a year and a half, had succeeded in raising a $6 million Series A at a $30 million valuation.
Where Sarah Koenig’s Serial, a long form spin-off of This American Life, made narrative radio storytelling into a mainstream art form, Gimlet Media’s co-founder Alex Blumberg — also an alum of This American Life and later, a co-host of Planet Money — made it into a business.
StartUp chronicles Alex Blumberg’s process of starting his own podcasting company, Gimlet Media. While most stories about founders focus on their success, StartUp is refreshingly vulnerable. In the first episode, you hear him make a fool out of himself in front of prominent Silicon Valley investor Chris Sacca and in many episodes, you hear earnest discussions with his wife Nazanin about the company and their future.
Gimlet Media has had an impressive run thus far. Within half a year of launching the StartUp podcast, which accumulated hundreds of thousands of listeners per episode, Blumberg and Co-Founder Matt Lieber raised a $1.5 million seed round. Since then they have started three new shows, Reply All, Mystery Show, and Surprisingly Awesome, all of which have garnered similar followings to that of StartUp.
Graham Holdings, the Washington Post’s longtime owner before Jeff Bezos bought it, led Gimlet’s Series A round, putting in $5 million alongside previous investors such as Chris Sacca. Gimlet supporters also took part, adding another $500,000 to the mix. Graham Holdings’ Chief Executive Tim O’Shaughnessy, who also was the co-founder of daily deals website Living Social, will join Gimlet’s board.
Radio’s economic future? Native advertising
But investors don’t just like good content. Gimlet also has an innovative business model built around native advertising.
Instead of doing standard radio ads, Gimlet plays their ads within the shows that are actually interviews with employees or customers of the advertised companies. The revenue from these original ad spots helped the company become profitable within its first year.
While almost every large media organization, including the New York Times, Atlantic, and BuzzFeed, has native advertising, it is not an ideal revenue stream. Also known as sponsored content or branded content, stories that companies pay for inherently blur the lines between editorial objectivity and advertising. While StartUp itself has tackled the ethical issues around native advertising, it’s a thorny source of income and content. Since Gimlet is not a nonprofit like NPR, it needs to play more ads during its shows to keep the lights on. Gimlet has succeeded in taking an otherwise annoying part of listening to a show, and turned it into an opportunity to do some great story telling while paying the bills. Still, it’s a compromise the company has made in order to succeed.
It is also risky to depend largely on advertising. As Geektime has written about a lot in the past six months, the adtech sector has been going through a downturn and its bubble likely has already popped: Public investors like Fidelity have severely devalued adtech startups in their portfolio such as content recommendation engine Taboola, which they downgraded by half.
Considering ad blockers have ruined the banner ad industry, one must also wonder when there will be ad blockers for all sorts of advertisements, including radio ads. Hopefully Gimlet will have found other sources of revenue when that day comes.
What can startups learn from the series ‘StartUp’? Co-host Lisa Chow speaks with Geektime
For Geektime readers, many of whom probably waste time perusing listicles like “These 10 tips will help you launch a successful startup” (this reporter is also guilty of this), StartUp is a candid peak into what happens when a company is flourishing rather than failing. Despite all the self-deprecating comments, semi-intimate conversations, and awkward pitches, StartUp’s first season is a shining example of why Gimlet is eventually able to succeed. The podcast itself demonstrates Blumberg’s ability to create captivating radio — what better a proof of product of than that?
We don’t want to share all of the show’s nuances here, but in Season 1, you’ll learn a lot about the three key ingredients for building a successful startup: deep experience in your field, a profitable revenue model, and most importantly, a service or product that is truly excellent.
While Blumberg was not able to provide a comment for this article, we were able to speak with Lisa Chow, Blumberg’s co-host for StartUp’s second season, which she largely produced. She kindly spoke to us soon after the birth of her son Eliot: also known as StartUp’s youngest fan.
— Lisa Chow (@lisaechow) July 5, 2015
In this season, they profiled Dating Ring, a dating app that early twenty-something founders Lauren Kay and Emma Tessler started in New York City. After receiving some media attention and participating in Y Combinator, arguably the most prestigious accelerator in Silicon Valley, the company was recommended to Chow as worthy of checking out.
And for those out there wondering, the simple answer is yes, sex sells better than e-commerce even on the radio.
Dating Ring’s mission is compelling. Dating apps, much like actual dating, are for the most part terrible. Almost everyone desperately wants to find true love, and the company promises to combine human matchmakers’ guidance alongside tech algorithms to churn out better matches.
When we asked Chow why she chose them, she focused on their vulnerability. “They’re kind of open to their detriment in some respects,” says Chow. “They’re very shockingly open, more than Alex and Matt were. Alex had the luxury of recording things in real-time.”
Not surprisingly, “There were things that we wouldn’t want revealed. When you cover yourself you have the luxury to pick and choose,” Chow explained, adding that, “They were putting a lot at stake with us.”
However, included in this openness were their limited tech capabilities, challenges in signing up the number of users they needed to grow, problems with advertising, and obstacles in raising funding.
Chow noted that she could not tell whether or not Dating Ring would succeed. “I had no clue. I was really looking for a compelling story. I wasn’t necessarily looking for a breakout success.”
Either way, she thought they were going to be “good tape.” She said, “I did play out this scenario: If they’re a success, this is how it could turn. If they were a failure, you rarely hear a failure story. There was a fear of mine that it could fail. But then I talked to Alex about it, and if they fail, that’s another story, we can tell that story.”
We won’t give away the big plot lines of the Dating Ring season because there are just so many lessons that can be draw from following their struggles. The show covers a wide range of topics, where you get to hear episodes about race issues in dating apps, what Dating Ring’s co-founders have to put up with as women in tech, and even own their personal romance sagas.
Ultimately, this season shows that a strong startup is not just based on a good idea, a hunch about what’s wrong in a market, and some decent press. With Dating Ring, you see all the struggles they encounter from raising money before doing the most important thing: making their product excellent.
Blumberg figured out his business, i.e. the secrets behind good radio, long before broadcasting his personal struggles to the world. Let that be a cautionary tale to whichever startup we meet next year when Season 3 finally hits the podcasting airwaves.
Featured Image Credit: Topher McCulloch / Flickr