When to Accelerate

Why podcasting? Why build a business in the category? This is today. Today we're, you know, Spotify has invested about $500 million into podcasting. IHeartRadio talks about beating one of the leading podcast companies. As far as how they're describing themselves, the podcast market is big and growing and very exciting today. Two to three years ago, people didn't necessarily have that perspective. I think they thought of it as kind of niche. It's kind of off to the side. It's not the same type of content as tv. It's not the same type of content as publishing. But knowing sort of what I knew as a fan and having the interactions I did with my friends who all loved the space, I knew the content was special. And as the last couple years have gone on, it's become very clear that podcast is a big deal. 62 million people today listen every week. On average. They listen for about an hour a day. And 144 million people in America have listened to a podcast. It's growing really rapidly. The challenge with podcasting from an investor perspective was that the economic model was lagging. The consumer adoption and the consumer engagement. So what this chart shows here, the average hour of listening from a podcast listener generates 2 cents of revenue. You look at radio, Spotify and radio streaming and satellite radio, and it's significantly more revenue than the podcast space for a very similar type of content. When we were looking at investing in the space, we tried to figure out why that is. And our business, which we mentioned before, is really about great podcast content and how to build a business and monetize around it. And so we landed on the subscription model. Due to this podcast ad rates are actually pretty good. $35 cpm, which is a cost per thousand impressions of an ad compared to $13 on radio. But the ad load in podcasts is very low. 3 minutes of ads per hour on average, radio is about 18. So in order for podcasting to catch up to these other businesses, either you had to introduce a new model and you had to introduce a new revenue stream, or ad load had to go from 3 minutes per hour up significantly, which would have been a negative for the user and ultimately would have led to the cost per ads coming down. Similar to radio. We got very excited about the opportunity to build a subscription business in the space, and as Lauren mentioned, did some extensive research about the viability of a subscription business and ultimately came to the conclusion, after talking to thousands of users, thousands of listeners, that podcast content was no different than TV or film or music or publishing and that if you had great premium content, there was an audience that would pay for it, and there was an appetite to pay. And so we set out to build a business. We founded Luminaire in January of 18, and in the fall of 2017 is when I went to Lauren, I said, you know, this feels like a really big opportunity. We've been able to raise some capital from a few different investment firms, including my old firm, to go after it. And it's very clear to me that the most important thing that we're going to need to do is is hire a great team and move really fast. And as a result, having a head of talent, a partner who's running the people operations function on the co founding team was really important to me.