Jason Kilar | Moving the World Through Story

Hi everyone. Welcome to Grey Matter, the podcast from Greylock, where we share stories from company builders and business leaders. I'm Heather Mack, head of editorial at Greylock. Today we're sharing Greylock general partner David Z's interview with Jason Kuyler, who is the CEO of WarnerMedia. Jason is known as a trailblazer and is responsible for some of the biggest innovations in media over the past few decades. In this interview, you, David and Jason discuss the current media landscape, the evolving definition of customer, and how to weigh the pros and cons of disruption. This interview is part of Greylock's Iconversations series. You can find the entire series at greylock.com Iconversations hi everyone.

Thank you for joining us for another installation of Greylock's iconversations, where we speak to the innovators and great change makers in technology, media and our entire world around us. I. I'm David Z, a general partner at Greylock and I'm thrilled today to have our guest, Jason kylar, who's the CEO of WarnerMedia. I've been lucky enough to work with Jason and know him for a number of years now. Jason's spent three decades in media. He's worked for almost every major media company and seen and led incredible innovations all along the way. He started his career at Disney and then moved on to Amazon in the early days, was there for a decade and involved in a lot of innovation and change there. He then was the founding CEO of Hulu. Now Hulu is the dominant player in over the top intelligent programming. But we'll talk about how Hulu was perceived at that time, which many people have probably forgotten, but I remember very well. He served on the boards of DreamWorks Animation and Univision and he co founded a video service called Vessel, which I was involved with in 2013, which we sold to Verizon in 2016 and he joined Warner in 2020. Throughout his career, Jason has ridden incredible waves of innovation and in often cases he spearheaded them and pushed disruption. He launched Hulu before Netflix had even gotten into streaming and was still shipping DVDs and also at Hulu, he was the first company to start original programming. Now of course, it's become the center of many of the services, products and really the future. Jason's also involved in many of the product and business innovations that happened during his time at Amazon. He he's listed as the inventor on nine patents related to digital media and digital advertising. Philanthropically, where Jason also spends a good amount of his time on some very important things. He serves on the Board of Management Leadership for tomorrow. He's been there for over a decade. We both share John Rice as a good friend and incredible supporters of the amazing work that's done there, and he also serves on the board of Habitat for Humanity International. Jason has continued to trailblaz in his current role in 2020. In the midst of the mayhem and the terror of the pandemic that threw all businesses and everyone's lives into all kinds of disarray, he took the incredible, brave and innovative move to break the mold and make Wonder Woman 1984 available on the same day and date, both in the theaters and at home, when we were all stuck at home and theaters were barely open. A month later announced that the Entire slate for 2021 would be released that way. And it marked a major milestone for the industry that had been talked about and rumored and considered for decades. But no one had had the bravery or the moment in time to take that move. And Jason really spearheaded that. It sort of reflects Jason's what I've seen, which is Jason's constant thirst for innovation, his willingness to make bold moves and take great risks when he knows it's the right thing to do, even if it's not always the most popular thing to do. And it comes from what I've seen overall, his career and working with him, which is an obsession about what's right for the customer in the long run and where the puck is going, not where the puck is today. And when Jason talks about the customer, he talks about that in the broadest sense, the customer is the user, the customer as creator, as artist, the customer as distributor, the customer as exhibitor, and also the end consumers. Of course today we're going to talk about the relationship between media organizations and all those customer constituencies and also how it's fueled the various shifts in the industry. We'll also explore how media has been influenced by our increasingly on demand world and how the industry overlaps with other businesses like technology and transportation. And lastly, we'll hear some of Jason's predictions for what's next. And with that rather lengthy introduction to a rather lengthy career and important career, I welcome Jason Cuylar to iconversations. Jason, thank you so much for being here.

Happy to be here, David.

It's great to see you. And like you, I've seen a lot of changes in consumer facing industries over the course of my career, mostly from the technology side toward the media side. You've gone both directions and much of it starts from changes in consumer behavior and expectations. But then there also are major events like we've seen over the last two years here, last year and a half, which have profound impacts on media technology and the on demand economy. So let's start there and then we can work our way back into some really interesting parts in your career and how we got to where you are today. First, let's hear overview of the assessment of sort of where is the media industry today in your mind?

You know, I think that, you know, as you said in your opening comments, David, I think it's in a position of change or a period of change. And you referred to the pandemic and you're right in saying that it really upended every industry. I can't think of an industry that it hasn't upended. And there's no doubt that it absolutely has changed the storytelling industry, which is the one that we're in at WarnerMedia now. And obviously a lot's been written about it in terms of what does it mean for exhibition and theatrical attendance, what does it mean for streaming, what does it mean for production? And the short answer is it means a lot for all three of those things, plus a lot of other things that we do like video games and whatnot. And so I'd say that in terms of where it's at right now, my opinion is that, you know, with the proliferation of screens and having access be as easy as it ever has been in the history of media, that's a good thing for a storytelling company because it means that if you lean into those screens, you can be far more accessed than you were before. And so, and not only that you're able to do it in a way where you can have a direct relationship with the customer. So those are probably two things, David, that I would just sort of tee up because I know that this conversation will probably go a lot of different ways. And I'll follow your lead. But. But I'd say the proliferation of screens and the ability for the first time in this 98 year kind of history of this proud company of WarnerMedia, we have the opportunity to go directly to consumers, which historically we haven't had that opportunity. So those are two things I'm particularly excited about.

Yeah, those are amazing shifts. And I think back in the early days when you would pay for movies mostly on demand at a hotel and there was a question of whether you'd ever be able to do anything like that at home. And the early interactive television trials of Time Warner and other in Orlando and to where we are now today is almost mind blowing. And to have you have been there from the beginning and through it in different ways is really kind of a wonderful opportunity for us to talk about that arc of change. So why don't we step back now? And shifts have been taking place due to a whole bunch of different factors, including what media consumers want, how they want to pay for it, or who's paying for it. But they really happen when people like you and your teams make decisions to lean into them. And I'm more curious about that process. I think it would be helpful to hear about your experience at the different places you've worked at and how they shaped your outlook and decisions that you make today. So why don't we go back and all the way back to Disney? It's interesting because obviously you've been so entrepreneurial during your career and yet you started at what at the time and what still is one of the largest and long standing incumbents. Talk a little bit about that decision and what you learned there and took away. That may have contributed to sort of what we see and how you think about the world today.

Absolutely. And so, and I promise I'll answer the question about Disney, but I have to mention, David, that you're one of the few people on the planet that I could have a conversation with and you actually know about the On Demand trial in Orlando that Time Warner did way back when. So, so kudos to you. You're literally one of probably five people that can speak about that. So that's fantastic.

Well, we know even more. While we're on it, we'll touch. One step is that they simulated the thing by having people on roller skates with V VCRs putting the VCR tapes into it. It wasn't actually On Demand. It was people running around using VCR tapes and pumping them in people's homes to simulate it. So that just tells you another level of how far we've come.

It's amazing.

It's amazing.

I love that roller skate story. So in terms of your question about Disney, I was a kid growing up in Pittsburgh that couldn't have been further away from storytelling and technology, yet I adored both. And so to your question as to why I was very fortunate and lucky to work at Disney as my first real job, well, it was because I wanted to learn from the best. And when I was a kid, Disney very much set the standard in terms of theme parks and storytelling and all the things that were going on there. And it was very much a founder led company for a lot of its history by Walt specifically. So I was Just fascinated about that as a kid. And I tried to do everything I possibly could to learn in Pittsburgh about this entrepreneur. And so I bought every book I could find, I read every article I could find, and then I just tried my best to get an internship at the company. And thankfully, after a lot of letter writing and doing some crazy things to get their attention, I was able to get an internship. And that led to my first real job, to where I could learn kind of from this company and this kind of entrepreneur that had long since passed to try and basically get a foundation for my career. So that's the reason why I went to Disney way back when.

Yeah. And it is true. People think about Disney as a huge, massive incumbent, and it's only grown dramatically under Iger's leadership, incredibly with adding the Marvel franchise franchises and all the other franchises. But it really was the innovator in the early days. It was the change agent. It was the creative driver. And even in Eisner's time, you know, Iger's time, at Eisner's time, before that, I mean, he had an incredible amount of talent that was brought in and worked together, and there was a lot of innovation and strategy work that was doing around the changes in the industry. So it's funny, it is an incumbent, but it is a place where you learn the foundations, and it's also a place that always had to innovate. You know, it's like you don't survive for as long as they do by just being stayed and not making change and taking risks. So I think that's exactly right. And it's. It probably provides a great foundation for understanding the future by looking at the past. Now, let's go to the future. So you made a shift in. In 1997, and you jumped to Amazon, which is a dramatic difference. You went from a big incumbent that you know was an innovator, but dominated its industry by the time you were there, to a tiny company and left actually media and entertainment, such as it was. And at that time, tiny company that was basically selling used books online when the Internet was just getting started. Talk about your time there. I mean, the culture, what you learned from that. I know you did a number of launches and how much the company changed during that time. What did you learn and what caused you to decide to go from Disney over to Amazon, first of all? And then what was the experience there?

I'll start by sharing something that most people don't know, which is Jeff Bezos, the entrepreneur, was heavily inspired by Walt Disney, the Entrepreneur. So that was a shared love that he and I both have had about following this great entrepreneur from the early 20th century. For me, in many ways, I always knew I wanted to go into entrepreneurial ventures and certainly learning from what was and still is, I'd argue, a very entrepreneurial company in Disney. I then really wanted to get close to the metal and as close to a startup as possible. And it was funny because as I was coming out of graduate school, I was either going to start my own company or there was a professor at Harvard Business School that said, I got a better idea. Why don't you go and jump into a startup and that way you can learn what it entails and then you can go start your own company down the road. Long story short, he said, I know you love media and I know you love technology. There's this book selling company out in Seattle and I'm writing a case study on them. And at the time There was only 17 team members when this professor was writing the case study. It had grown in the months afterwards, but there were 17 people. And he said, but the guy who is running it is a really sharp guy and I think you would get along. And so that was a connection that the professor made. And that led to me flying out to Seattle and basically falling in love with this little startup that I just felt I needed to jump on board if they were going to be able to make me an offer. And thankfully they did. And I was so glad I did it because. Because it literally was an exercise in entrepreneurialism, an exercise in focusing on the customer. And as you said, it was just a tiny little bookstore at the time and not a lot of revenue and certainly not a lot of people. But there was a lot of conviction that there could be a better way when it came to selling books to people and then ultimately selling a lot of other things to people. And it kind of went from there.

What was the culture like and what were the things that you took away from both the culture and Jeff Bezos? Obviously you went into this incredibly vibrant moment in time in the world and the Internet and at this particular company that's obviously in the center of it at the early days, was at the edge of it. I mean, we were. I was working at Excite, one of the early search engines, and we were like, well, maybe we should be Amazon, because everyone comes to our search engine to search for products. But selling books, that doesn't sound like so interesting. So we'll let them do that. And, you know, then you blink and now look what it is today. And excite no longer exists.

Or so the culture, it was funny. So at the time it was still very much a toddler in terms of its gestation. I think it's fair to say that we were all still trying to figure it out. But the seeds of the culture that you know, today in terms of Amazon were very much present. And that's a testament to Jeff and his vision and his conviction about what he wanted to build, along with a lot of other great people. And so I think it's fair to say the thing that kind of was the hallmark of the culture was this clear focus on the customer, no matter what, combined with long term thinking, combined with a passion for inventing. And so I think those three things were present in 1997 and they're still present in 2021. And it's really fun to see how it's manifested itself in very different ways in very different industries. But if you condense it in terms of what the seeds of it were and have been, it really is a focus on the customer above all else and a passion for inventing and thinking long term.

It's amazing. I think that is true and I see that in sort of having worked with you, you know, that's been instilled in you. I also think it's interesting how culture ends up being a combination of very high level perspectives on how to run a business like you were just describing or sort of cultural aspects at a high level. But it also ends up being calculated in the stories that this company tells about itself or the store or the ways that a company acts at a micro level. So I remember, you know, there's the classic story of, you know, they couldn't have meetings, there were larger than the number of people that could eat a pizza, right? And one. And I remember working with you in Vessel where you brought some of those things too, which was another small example of like, well, let's write the press release that we're going to do about this product before we do the product. Because if we can't distill it into something that's compelling and explain it and make it compelling to the public, then we shouldn't build it or we're not ready to build it. And I remember thinking, well, it's kind of weird and hokey to write a public press release on a product. Isn't that like, it's sort of like, I think sort of antithetical to sort of the engineering culture of the world of like, let's, let's just Build something great and everyone will come. But it's an incredibly powerful way and it distills a sense of like we're building for the customer and if we can't explain that, then we've got a problem. And let's think about why we're building it or whether we're building it. Right. So I remember I even learned things from you about that culture or the memo. Talk about the memo that starts a meeting.

Yeah. So the memo is basically, it used to be and it still is for most companies. The PowerPoint deck is sort of the main tool and PowerPoint, the tyranny of PowerPoint. And there were many things that weren't good about it that we kind of figured out over the years, which was a. It was, it was very dependent on the quality of the presentation, meaning the presenter. So if they were dynamic and charismatic, they could win over the room. But it might not be for the right reasons. It might be because they're just a really good salesperson as opposed to SBC.

Is never victim to that problem. Entrepreneurs never, never.

And so, so what the memo does, the narrative, the six page narrative is it basically forces the presenter to put their thoughts in writing. An incredible thing happens when it's just you and the printed page and a narrative is all the weaknesses are exposed, all the strengths are apparent and it forces a level of rigor and thinking and discipline that is not required for a PowerPoint. And so there's nowhere to hide when it's just prose and your thinking. And so what happened when we transitioned the company to no more PowerPoints, only six page narratives is the caliber of thinking went way up. It required a hell of a lot more work for the presenter because writing a six page narrative is far more tough to do than to write a PowerPoint. And then the last thing, which I think is a fantastic output of it, is that that document can live on when the presenter is no longer present. And so you can send out the narrative to everybody that couldn't attend the meeting and say, hey, this is what this topic is about. Here's the rationale, blah, blah, blah. And it just is a much more efficient way to information out in front of a large number of people versus, say a PowerPoint deck, where so much is lost through interpretation and presenting skills.

Yeah, it's amazing to see. And you think about how Google is famous for writing down everything. You know, I'm involved with a company called Nextdoor and they picked up things from having worked at Square, where Sarah Fryer was the cfo, where Their decks have this amazing narratives behind it. They have these written narratives that are 600 pages long. I mean, they're going to be massively long. But they force the rigorous and they become. They're shared with the entire company. So it unifies everyone around it and they become a history that's really important. I remember coming to some of the first board meetings with you and you'd hand out these papers and you'd say, okay, we're going to spend the next 10 minutes quietly reading. And I was like, what? That sounds like a weird use of time for us, but it's really powerful in the ways you say. And it also means that coming out of it, it forces the board member to engage and get on the same page. And it also causes everyone to be focused. So when you start the meeting, everyone knows the whole arc. So you don't have that weird thing where the people in the room who are getting it for the first time are, like, waiting for the punchline or jumping ahead or trying to figure it out. Like, everyone hits the ground running in the same way, in this intense way. So I was always really impressed and noticed that you took those things away and thought about those. How did Jason think through early Amazon Marketplace and Prime Strategy when there were no e commerce playbooks written?

Marketplaces that are successful are incredibly valuable. And not surprisingly, a lot of entrepreneurs want to create marketplaces because if you can do it, it can be worth a lot, a lot of enterprise value. But what we learned at Amazon is that it's one thing to say you want a marketplace, and then the other is if you have a right to actually build a winning marketplace. And I'll give you two tales of this. The first, which was a failure for us, is when we looked at ebay and saw a company that was growing like a weed through their auction business and was adding a lot of selection that Amazon didn't have at the time. And we always knew that we wanted to have Earth selection. So we were looking at ebay and like, wow, that looks pretty good. They're able to add all this selection overnight. So we of course did the kind of thing that was ultimately a mistake, which was go and create a Me Too product, which was an auction site called Z Shops and then a general auction marketplace. And it failed. And it failed big time. And the reason why it failed is that we didn't have anything really to offer the suppliers of that marketplace. So they gave us sort of the benefit of the doubt for a couple of months, but then they were like, I'M not getting enough business here. I'm going to go back to ebay. Whereas what changed the sort of, the kind of, the thinking for us was we took a deep breath and basically said, okay, what can we do here? Well, it turned out what we could do is we could actually provide something that would be of interest to book buyers, which is how we got into the used book business, because Amazon got started as a new book retailer and thankfully we had a lot of success with that. So a lot of people that were interested in books came to Amazon. So the big insight for the birth of Amazon's marketplace was don't get distracted by what ebay is doing. Instead, ask yourself, what can you do for suppliers that you uniquely have a strength in? And what we had a strength in was book buyers. And so we then said, well, wait a minute, why don't we welcome people who have used books and they can actually put those used books in front of interested book buyers? And so that was the kind of the connection, the insight that led to a successful marketplace. Now, it was a tiny marketplace at the start, which was new books and used books, but it then expanded very aggressively into music and video and kitchen products and consumer electronics. And so it was a much longer road and it took decades, but it was the right road for us because we failed miserably with a general auction approach and strategy, which was just trying to be ebay, which we were never going to be successful at.

Yeah. Did you see? It also relates back again to this idea of being consumer obsessed, but also understanding the interplay between what the consumer wants and what they give you permission or what you have permission to do and what you're able to do. Right. What your skills allow you to do, versus trying to be someone else that you're not. So that's a great response. Let's talk a little bit about Hulu. That was a big move going from Amazon, just the way going from Disney to Amazon was a kind of crazy move going from Amazon, which is now on a run. I mean, you went from a place that was selling books to a place that was hugely successful. And you said, okay, I'm leaving there and I'm going to go do this thing where we're going to pull together all these studios that, like, are notoriously hard to work with separately, if not together. And we're going to try to create this service that's over the top, that no one believes in. I remember there was like a death watch for Hulu. There were articles that were mocking the concept, saying it would never work. I remember, you know, again, we've all been through this. The classic pain of naming, the naming thing. People were mocked the name, right. It's just sort of like, you know, people mocked ebay when it first came for its name. So these things, now we think of these as like, what a great name that was. And at the time, I remember, people were giving you a huge hard time about the name even. So, like, talk about why you decided to take that risk, take on what is, you know, a lot of people thought was like an impossible task and sort of how you went about doing that.

There is this great saying that, you know David very well, which is value is created at the intersection of non consensus. But. Right. And that was a moment where I felt very, very strongly about something. And it was certainly a non consensus census view, which is, I thought that if you could aggregate premium television and movies and be able to bring it directly to consumers over the Internet whenever they wanted, wherever they wanted, and keep mine in 2007, this was a very, very odd kind of point of view to have. I thought that could make for an incredibly valuable customer experience, which in turn could create a lot of value for artists and creators and distributors and owners of intellectual property. And so not many other people thought that at the time. And so it was very non consensus. And as you said, most people who were very, very wise about the industry at the time thought it was a stupid idea and that it was of course going to fail. But yet I kind of go back to that kid in Pittsburgh that I was talking about earlier, where I used to get off the school bus every afternoon and race home to watch my favorite show at the time, Speed Racer. And I would always get home at like 3:07. And so I'd always miss the first seven minutes of that dang show. And that was very frustrating for me. And so, believe it or not, my conviction for why I thought Hulu was ultimately going to resonate was going back to the frustration I had for so much of my life, where I couldn't watch my favorite television shows when I wanted to. That really was a great unsolved problem. At least it was in my life. And I thought that other people probably had that same frustration. So that began a crazy adventure which, as you said, led to putting a bunch of names on a whiteboard and circling Hulu and then hiring an unbelievable team to go out and try and prove people wrong. And now it's sitting on it looks like a $50 billion valuation. And I'm very, very Proud of everything that's happened over the years with regards to Hulu.

You should be the contrarianism there and again, where the puck was going and taking the slings and arrows during the way there. And I think you touched on another thing which we saw at Vessels. Like you have an amazing team around you and you tracked great talents and you're able to do that to change the world and take hills that people don't think you can take. So congratulations, and it is an amazing story after who you started Vessel, that was acquired by Verizon, and then you went on a number of boards. You'd been on some boards in the media industry. We talked about Dreamwork, Animation, Univision. You also went on the board of health benefits startup Brighter Habitat for you, Handy. You mentioned Wealthfront, the financial services company, and then Open Door, where we are today. Talk about that period. And then how did you get drawn back in and decided to take the role of WarnerMedia in 2020?

So with Hulu, the construct of it was, and this was also sort of subject to immense criticism, which was it was a joint venture. And so it had a lot of people in the boardroom which were typically kind of very strong competitors of each other. And so somehow, some way, we navigated that successfully to be able to create something that ultimately could thrive despite a very unusual construct of joint ventures with direct competitors. And so after we got Hulu to scale, there was a gentleman, Richard Tom, who was the CTO of Hulu and myself, said, hey, wouldn't it be fun if we went off and created something new and different? And so that's what we did with Vessel. And as you referenced it, we ended up selling it to Verizon. And in parallel, I sat on a number of boards, some of which I still sit on today, like Opendoor and Wealthfront for example. And so to your last question about them, then, how did I decide to jump back into it in the context of Warner? Well, that one was a pretty straightforward one, which is I got a phone call and an invitation to head out to Jackson Hole, Wyoming, to go and have a lunch with Randall Stephenson, who was CEO of AT&T at the time. And he put the topic of WarnerMedia on the table. And on my flight back to California, I really just thought about in my career, you know, the way I've made key decisions has always been, where can I have the biggest impact, positive impact on this world with the gifts that God's given me? And it really just comes down to when you're at those points of Intersection, you know, for me at least, I tend to optimize and choose for the path where I feel like there's the highest potential for me to have the most positive impact, you know, in the short time that we're all here on this planet. And so for me, when I looked at the sandbox of WarnerMedia, which includes HBO and CNN and Warner Brothers and, and Warner Brothers games and all these different franchises and beloved worlds and characters like Game of Thrones and D.C. and Harry Potter, for me it wasn't a hard decision. It was. I felt very strongly that I think there's the highest potential to make positive impact on the world by going in that direction. And so that's why I'm here. And that first lunch ended up being quite consequential in terms of my life.

So it's been amazing. I mean, in a short time you walked into Warner and the Pandemic hit, you inherited an HBO Max product that was like, you know, three quarters of the way out. You know, there's a bunch of stuff that was already in process. You know, a culture, again, a culture that, a long, long culture, often known historically for being very siloed and pretty complicated. Talk about like how you approached entering into that and how you, you know, the pandemic hit and that how you adapted to that change and decided to make some of the really brave decisions that you made.

Probably the best kind of analogy I could make, David, is that for a company that has a 98 year history and has about 30,000 full time team members and probably another 30,000 that are working on television shows and motion pictures, it's more like a big ocean liner as opposed to a tiny little speedboat. And what I mean by that is when it gets ahead of steam, boy is it powerful. And it literally is one of the most impressive things to see happen. But if you're looking to make change in terms of direction, you have to be thoughtful and very self aware about what it's going to take to turn that big ocean going vessel. So I've always tried to kind of keep that in mind as I've been thinking about the things that I think were very and are very important for the future of WarnerMedia for the next five decades. And so the mission of WarnerMedia, which is very simply to move the world through story, so I could not be a bigger believer in that. It means a great deal to me and I would go to the ends of the world for that mission and everybody else here feels the same way. So with that as the foundation if you go back to when I first jumped into the role, there were a number of things that I thought were very important for us to accelerate, which is to lean into the consumer by going direct to consumer and going global. And so that was sort of something in my first several weeks that as I got to know people and I got to kind of understand the things that were going on, I just felt that having a bit more urgency around going direct to consumer and going global was very much in order. And so I made some changes in terms of the organization, which I couldn't be happier about. The team is excelling incredibly well with this new structure. We just launched in 39 countries just a couple of months ago throughout Latin America. We're going to be launching in another, a fair bit of countries, I should say, over in Europe in the balance of this year and then a whole much more coming in 2022. And the elevation of HBO Max, you know, leaning into direct to consumer with cnn with a new service that we're working on called CNN plus, and then also the elevation of games and interactivity, which I think is going to be absolutely a hallmark of WarnerMedia for the next five decades. These are the things that we've been working really, really hard on, in addition to these amazing large core businesses that of course we're very well known for across television channels and theatrical exhibition and a host of other things. So I'll pause there because I have a feeling you have a follow up question.

It relates actually to the thread of being consumer focused in all the stops, you know, learning at Disney, seeing it and living it and acting at it in Amazon and then Hulu, et cetera, and all the way through Warner Brothers. How do you think about the trade offs when the different customer constituencies are potentially at odds? So, for example, you know, a classic one in, you know, in the Internet would be the trade off between a consumer's user experience and the advertiser's demand for what they want. Obviously in the present world, in Hollywood, at a place like Warner or any of the players, there's incredible pushbacks inside. Pushbacks between the cable customer, the distributor customer, the artist, you know, and the end user. Is there any rules of thumb or things that you use to think through when your customer focus ends up with a conflict?

It's a great question, David, and I'm smiling just because, you know, there's a whole lot of nuance and this alone could be a long conversation. But I'll shortchange it by saying that in my experience at least, if you don't start and end that debate with the customer, meaning the person that you know, in the case of, say, you know, someone who's buying a ticket to a movie theater, someone who is buying a subscription to HBO Max, someone who's turning on the channel to watch cnn. If you don't start and end the debate with that person, I think it's a recipe for ultimate failure or ultimate disruption by someone else. Because if you're not solving for that, you really don't have, I think, a long term viable business because someone else will serve that need and then everything else will fall apart eventually. So I'd say that you're absolutely right to tee up that this is a very, very important kind of threading of needles and it's successive needles that you have to thread. But I do believe there's a way to do it, and HBO Max is a great example of that, where we have advertising in a version of HBO Max and we thought the right thing to do was to have the least amount of advertising on the market, which is about four minutes per hour. And the response from consumers is very, very positive. And the advertisers, while they'd love to buy twice as much of it versus what we actually have because we have limited amounts, what we're seeing is much more efficacy in terms of the advertising that they do have a chance to run on HBO Max. And not surprisingly, we're able to charge much higher prices because of that efficacy. So again, if you start and end the debate with the end customer, you usually end up in a pretty good spot.

Thinking back on your career now as we talk about that, you've always had a good instinct of jumping into the industries right at the moment where the disruption or the change sometimes that you knew was happening, in the case maybe Amazon, the Internet, sometimes unexpected pandemic causes that opportunity to really come to the fore. Right? Because I think I agree with you that if you start there and work back, eventually that's going to be the winning answer. Sometimes we've seen, obviously periods of time in history where systems have fought against that. They eventually lose and timing matters. But you also happen to have a really good instinct for jumping into industries right when that timing moment happens and having the bravery to make the change that is inevitable by that view and that sort of focus. So congratulations to you. And by the way, while we're on it, if you have not followed Jason's Twitter feed, I would all encourage you to. It is such a wonderful examination of all the passion that he feels for Warner, all the history of Warner, it's like a personal tour guide. The CEO has access to everywhere of the entire organization, whether it's going into the back rooms of the costumes, whether it's the launches internationally and being in the room when they happen. That was a really joyous kind of thing. And you brought it to life by your travels across Europe and across the world for those launches. So thank you for sharing that with us and everyone. It is definitely my version of Must See TV today for that. So it really humanizes and brings, brings a real sense of the richness and the history and the power of media, but also of Warner in particular. So let's push a little deeper in the ways that media is currently being disruptive. I mean, we are, we talked about you, you know, you have this instinct for jumping into at the moment when the change is happening and helping, becoming a change driver. I mean, it is such an extreme amount of change. In the last four or five years. People talked about these things, from original programming being done by service providers like Hulu and then Netflix to being the dominant providers of that in some ways, or becoming more increasingly the dominant redistributors and providers of it in a weird kind of combination, the sort of Cambrian explosion, if you're a content creator, of demand for your product across all these different services and the related Cambrian exposure of those services. So as a consumer, you know, thinking about, well, do I subscribe to Netflix and Disney plus and Peacock and Hulu and et cetera, et cetera, et cetera, should I stay with a cable company or am I cord cutter? It's such a different world and it's moving so fast. How do you think about where that goes? Can the world support so many services? Is there eventually going to be some sort of consolidation or is there going to have to be some rationalization? Will consumers be willing to expand? I mean, we did see an Internet. People expanded places. They used the Internet. And so the time was able to grow larger than people initially thought because they used it on the bus, they used it when they were waiting in their doctor's office, et cetera. How do you think about those changes or what's your perspective on that world that we're in right now in this wonderful kind of, I would almost say like mid early stages of this change, where we see so much foment and change, but we don't know where it's going and where it'll be. Any insights for us or thoughts?

Well, I don't know if they're insights, but I will certainly share thoughts, which is that I don't think the current construct is going to be sustainable over the next several decades. And by that I'm referring to your question about all the different services that you described and the various players. My belief is that if you were to jump into a time machine and get out a decade from now or 15 years from now, what you're likely to see is a relatively small number of services that have achieved global scale and are able to thrive by confidently and with conviction investing in ambitious storytelling. And by that I mean scripted, unscripted documentaries and perhaps sports for some of those players. But I think it's going to be a small list of folks that are ultimately going to get to the other side of that river. I'm biased, of course, but I absolutely believe that WarnerMedia, given the intellectual property sandbox that we have, the brands that we have, and most importantly the people that we have, I feel very, very good about our ability to get to the other side of the river and be one of those short list of players. That is a must have in terms of if you want to be moved through story. And it's funny, David, that you bring up this whole notion of expanding the time that consumers might have to actually want to be moved through story. You're absolutely right that it has expanded over the last several decades because of the Internet and because of the introduction of mobile devices. But yet at the same time there's been the introduction of new entertainment formats, whether it's TikTok or Twitter or whatever the case may be. And that's competing for time as well, because at the end of the day there's only 24 hours in a day. So it really does come down to those moments of truth where how many consumers choose you to entertain them and to move them through story. And obviously that's what motivates us each and every day.

You're obviously been right in the middle of it. I've been an observer and a fan. I had my Racer X poster so I can go all the way back to the Speed Racer part of that and age ourselves again all the way up through being involved with media, mostly from the technology side. And I think I would agree with you too that like if you look at the history of media again, there's these moments of change that come on either because it's the right moment or something forces it. People take risks and they're laughed at, excoriated or whatever. But with the history, with the benefit of time, they were looked back and seen as the innovators and the risk takers and the survivors often because of that. Right. I mean, you can look at a Netflix and you can say Reed Hastings was laughed at multiple times or criticized multiple times. And if they hadn't done the things they'd done, they wouldn't be where they are today. And I think the history of media also has been sort of, and distribution has been fragmentation and then reconsolidation. If you remember the movie theater, the movie business, you know, there was the explosion of the independent small movie creators and there was this like wonderful Cambrian explosion and risk taking in terms of creativity and format and storytelling. And then there was the consolidation of that back down to the strong players that had taken the right kind of risks. Some of which were the traditional players that adapted fast and caught up. Others were some of those innovators that took the step forward and then adapted and kept adapting. So I think that's right. I think it's going to be hard. I mean, right now, you know, as a, as a consumer trying to keep track of how many services you're involved with and if you, when they start to add up the numbers that are involved with and the dollars that are involved with and the number of shows that you can keep up with, I think there's got to be some sort of consolidation play. And it's going to be the innovators and the smart players that navigate that that will come out on top. And certainly Warner has the assets to be one of those players. I'd like to push on it a little bit harder because I think it is such an interesting difference from the past. The TikToks of the world, the user generated content, you didn't used to have that distribution was controlled. The cost of creating content was so high that you really had these barriers that didn't allow this access or this creation. Talk a little bit about how, you know, you think about user generated content. It's just been incredible to see TikTok, we were original investors, early investors in musical ly company that then was bought by ByteDance, TikTok's parents and musically was turned into TikTok. And then ByteDance to their credit, blew it out worldwide. And so it's been an amazing journey for us to watch this little company musically that we invested in become this dominant thing under ByteDance called TikTok and go from, you know, a world where, oh, you know, Facebook was dominant and then Instagram was dominant and then Snapchat was dominant and then TikTok came out of nowhere and Exploded each time it happened faster than the last time and the previous formats to go away, but the new format comes in and goes so quickly. How do you think about that in a world when you're playing with both new assets but also traditional assets? And how do you think that plays out or any ideas or how do you think about that?

I think probably the most important place to start, David, is by making sure that everyone knows there is no rule written in stone that says the only way that people can be moved through story is through television series and movies. I think that's like where you have to start because. And this gets back to your earlier comments about being customer focused because if you just take a step back, take a breath and say, well, wait a minute, what are the different ways that you can move people through story? It turns out that a seven second video that users generate has a tremendous potential to move people through story. So guess what? That's legit. That's fantastic. And obviously to TikTok's growth, as you referenced, that's a great, great example of the fact that people are choosing TikTok at certain moments of the day because that's a fun way to kind of get a smile, maybe a tear or something in between in a very, very efficient way. And so I'm a big believer and a fan of TikTok and the other services that you mentioned because it's a great reminder that when you have open distribution or somewhat open distribution, which the Internet certainly provides, and you have creativity and the conviction to lean into the future, well, it turns out that a lot of great things can get invented. And so that's the reason when I look at WarnerMedia and I think about our gaming business and our interactive business and the intellectual property that we're sitting on, I get so excited about the ways that we're able to move through the world through story in new ways in addition to and alongside motion pictures and documentaries and television series. So you don't want to be so beholden to a format that you can't actually innovate for the customer. So I think that's probably a big lesson that I think most people should learn.

Yeah. And I think that again, plays to your strengths. Right. Which is with incumbents, there's always such a knee jerk reaction to see something as a threat, to lock down, to try to stop it, to say we would never do that. But what you just described is like the consumer and the customer are clearly using this. So how do we lean into this? How do we think about this? With the assets we have, how are we not threatened to buy it? But how do we see it as a wonderful opportunity? And you can see that already in ways that you and others are engaging in. TikTok the ones that are leaning in and trying to take advantage of it rather than fighting it to say like this isn't going away, this is what the consumers are saying and what technology is now enabling for them. How do we make this a wonderful thing? How do we make this a augment the brands that we're creating, make them much more powerful, make them live in multiple ways? Right. I mean, you can see this a little bit in the way that other players have done in terms of taking their franchises and putting them in different ways in different formats. It actually frees you up to take maybe characters that would have died on the shelves or secondary and tertiary characters of a franchise and go and put them in different formats and have them live and thrive in those formats in ways that are kind of magical. So it doesn't surprise me at your answer because I know you that the innovation is something that you don't fear. It's something that you lean into and try to figure out. One question of course always is, oh my gosh, how are we going to get paid? What are the economics going to happen? Are the economics going to fall apart? The classic start point is like oh my God, money, fear, et cetera. And then that usually stops people from taking risk. How do you think the economics will play out? Or how do you think about the economics in these different channels?

And for Warner, I'll share sort of very macro statement in terms of how I think about that subject, which is I feel very, very good that in terms of if you're fortunate to be one of the scaled global players, which I think we're very fortunate in terms of our current position, I actually think the opportunity from a shareholder perspective is larger than it has ever been in the history of WarnerMedia. So I wouldn't be surprised if you see a relatively small number of storytelling centric companies that are worth 400, $500 billion each because the Internet allows for a scale that heretofore was never possible. And I'm not just talking about streaming business models, which of course will be very, very important to our future. But I'm talking about things like video games and interactivity and NFTs and a whole host of other things that have yet to be invented. And it's going to be those companies that a have excellence in storytelling, which we have a whole heck of A lot of thanks to this great team that is here at the company, combined with a conviction and a courage to lean into the future. And so to your comment about business models, I'd say that there's probably two ends of the spectrum when it comes to storytelling, which is if you have to pay for the production of content, if your only business model is advertising, my experience is that's not sustainable enough. You really need to have a more diversified business model than just advertising if you're in the business of paying for the production of content. On the other end of the spectrum, if you have user generated content where for the most part you don't have to pay for the production of that content, you might choose to pay the top layer, the top performers in some way, like YouTube does and others of course have done as well. Ad supported business models can be a fantastic business model. And those are the two extremes. You don't want to be sort of, you know, kind of thinking you're one thing, but you're really another thing. And so when I think about the future of WarnerMedia, I think you're going to see us largely in the business where we are producing content, work proudly and with conviction investing in the production of content, and we probably are going to have very diverse business models that support that. Now, to your comment, it doesn't mean we're not going to participate in ad supported environments that have great reach, because I think there's a lot of kids under the age of 10 who are falling in love with the Batman and Superman and Aquaman and Game of Thrones and all these other things because of TikTok. And that's a great entree into those characters and worlds where then they can get obviously a lot more by going to HBO Max or playing a game that's set in Westeros with interactive and gaming. So that's a long winded answer to your very simple question. So I'll pause there. David.

No, that was great. That was a great way to sort of wrap up, I think, sort of talking about the future and the balance. Because that is these are some of the tricky things going forward that I know you're grappling with and the whole industry is grappling with. And we as outsiders are excited to hear how someone like you and with your stature and history are thinking about. So thank you very much for sharing all of that. I have one last question. I'll make it two last questions. What are you watching right now that we could watch that you find particularly exciting? And what is coming up in your slate that you are particularly excited about to share with us that we should look out for.

So this is dangerous territory, David, because that simple question is going to cause me to feel like I have to point out one child, even though I love all.

Fair enough, children.

But I will do it just because you and I have worked together for so long and I do want to answer your question. So I'll highlight one that anybody can watch right now, which I think is some of the finest episodic storytelling easily of the past five years. And that's Mayor of East Town for those that haven't watched it. It's something that came out earlier this year and I think the layered storytelling, the authentic storytelling, it's just it delivers in so many ways. And the last episode, it's a seven episode miniseries. The last episode is probably the best stick the landing moment I've ever seen in terms of the last five years. And so that would be my recommendation for something anybody can watch, for something that people will be able to watch in the next year. I'd say that Game of Thrones House of the Dragon is something that I'm incredibly, incredibly excited about. I just got back from outside of London where I was able to walk the sets of the Red Keep and all these other great kind of settings for Game of Thrones House of the Dragon and the conflict and the tension and the dragons and all the things that we have in store, they're just remarkable. I get goosebumps thinking about it. I think people are going to be blown away. The team and the caliber of the team that is working on that storytelling right now, it's unbelievable. So I cannot wait for people in 2022 to see what we've got cooking.

Oh, that's wonderful. That's a cruelty is to tell us that you get to go walk those sets. I'm so jealous. And. And for what it's worth, I'll say a couple things. One Mare of Eastwood. Oh, such an amazing, amazing show. Kate Winslet. What an incredible job of taking on and capturing the culture that she has no background in coming from England. And it's incredible storytelling. So I'm so happy you brought that one up. I will also give you some cover here to say if I know from your Twitter feed that it is not one love. You love a lot of the programs and there's a wonderful set of them, Suicide Squad, all the ones, Dune coming up and others. So I know your passion for content and great product is not limited to one. So it was a bit of an unfair question. I appreciate you taking it on, but also check out Jason's Twitter feed, because there's wonderful teases for some really great program you can watch today and also programming that's coming up. Thank you so much, Jason, for this time. You've been really generous with your thoughts, and you've enjoyed extra time. It's wonderful to see you again, as always.

Hey, thank you. And the other thing I just want to reiterate is that there's very few people on the planet that I can have a conversation like this with, where you really have decades of not only experience, both on the technology side and the media side, but you also have a passion, a shared passion. You and I, clearly, in terms of all of this. And so it's really, really fun that we're able to go so deep so quickly. And all of this is not just because you've studied up, but because you've lived it. And so I want to thank you for that, because there's very few people that have that level of passion about storytelling and technology and business models. But you clearly have it. And so thank you for taking the time for the conversation.

It's nice of you to say. It's one of the reasons we have so much fun together whenever we're together. So, Jason, thank you one last time again, and congratulations on all the wonderful things you're doing there and all the wonderful programming that's coming up. We can't wait to watch it.

Thanks, David.

Take care.

That concludes this episode of Gray Matter. If you enjoyed this interview and want to hear more like it, please subscribe to gray matter at SoundCloud, Spotify, or wherever you get your podcasts. You can also find all episodes and other content on our website greylock.com blog, and you can follow us on Twitter reylockvc. I'm Heather Mack, and thanks for listening.