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Daniel Gulati
Your article call it this concept of outsiders, so entrepreneurs that haven’t grown up in this Silicon Valley, you know, gone down the standard kind of train tracks. I did my CS degree at Stanford. Yeah, exactly.
Scott McGrew
I’m Scott McGrew. Welcome to Sand Hill Road. co founders of a startup called shine one said, You owe it to your company to be as selective as possible about who owns a part of it. You deserve to find your own good ladi What do you supposedly mean by that?
Daniel Gulati
It’s always great to hear feedback from our entrepreneurs like that. I’m not gonna lie.
Scott McGrew
That’s Daniel Gulati, partner for Comcast ventures, Comcast, the cable and TV and movie company investing in entrepreneurs, just like other venture capital firms. We should point out to the listener, both you and I work for Comcast, do you get the free cable the $10 cable?
Daniel Gulati
I get discounted cable Actually, I get $10 Yeah,
Scott McGrew
I don’t know what your discount is.
Daniel Gulati
I get like all come on the $30 plan so they must like you.
Scott McGrew
I get everything I get like the cricket channel. Yeah, yeah, it’s not bad. We’ve talked in the past about corporate venture capital, where a big company has its own venture capital arm in our episode on Salesforce. ventures, we discovered that San Francisco company makes investments in startups that add value to Salesforce. You might think Comcast ventures invest in things that are close to Comcast, heart, movies, TVs, or theme parks. But gladdie supervises investments and things that have nothing to do with cable TV, like a luggage company called away, founded by two people who never worked in the luggage industry. And it’s a company now worth a billion dollars.
Daniel Gulati
That is the importance of this outside of mentality, right that, that you probably couldn’t have built a billion dollar luggage company in three years, if you were if all you would ever done is worked in the luggage industry. And so I think the way the way specifically I think what you had was a couple of folks that came from, you know, Warby Parker that had kind of seen the model work elsewhere that could Work the analogy in what was actually a really structurally attractive category. And they went out and executed and, you know, this stuff is, you know, day after day after day of of execution. But I think if they, if all they had ever done was worked at Samson auto to me, I think it’s unlikely that a way would have been born. And so, you know, I think the exception to that is there are some industries so that I think applies for kind of consumer product, consumer internet, there are some industries that actually do require deep domain expertise, right. And, you know, like, I don’t think this is categorically true, but I’ll put financial services shows an example of like how
Scott McGrew
to start a cyber secure you
Daniel Gulati
know, gonna start is obviously already company you’re not going to start a full stack bank right without having some idea of what the hell you’re doing. And you know, I think I think that that you know, enterprise software as well. is typically one because that tends to be more of a relationship driven type thing where you have a Rolodex that you can sell into. And so that requires some domain experience. So, I think there are some industries where you lean more towards, you know, insiders, and some industries, like, for example, social media or consumer products where, you know, outsiders are actually more
Scott McGrew
either other. You mentioned Warby Parker with eyeglasses, and then away with luggage. Is there another industry out there in which you think, you know, I’ve been waiting for somebody to come in and pitch me on this because this could be the, the Warby Parker of fill in the blank.
Daniel Gulati
Yeah. So I think it’s really dangerous to, you know, do the old MBA thing and take out a list of all the industries and kind of rank them by structural, you know, I think a lot of folks have tried to do that. And what ends up happening is, you kind of come to the conclusion that actually, there are a bunch of categories that could be really attractive, but it comes down to building a brand that can see Is love in that category? Right? So I can, I guess like a to answer your question a great categories kind of necessary but insufficient. And actually the differentiator is, can you build an aspirational brand that consumers gravitate to? Can you execute and serve the customer day after day, which is really hard because it takes a lot of, you know, there are a lot of moving pieces that need to come together for a wise whole model to work. And can you do it over an extended period of time, you know, in a very competitive fashion and, and it’s actually it’s actually those things rather than the quote unquote category that define success, versus You know, this academy. I think there’s a lot of revisionist kind of history in PC. And so we can kind of look back and say, oh, luggage had these characteristics or, you know, depending on which way you land on the mattress industry, the mattress industry have these other characteristics, when really you know Casper Magic because of Kasbah away, he’s magic because of a way in a glossier is magic because of glossier, you know, not because of the category per se
Scott McGrew
Gulati is also an investor in the athletic, a new ad free sports website that charges a subscription. The New York Times says it’s already one of the largest sports media companies in the country. Do you think you can make journalism work in that sense will people pay for quality journalism? I guess we’ve seen that with the growth of New York Times. On the other hand, there is so much information out there that I don’t necessarily need to pay for the best information.
Daniel Gulati
So the the, the insight with the athletic that was kind of a non obvious inside early on was that there is actually an under supply of content for diehard sports fans and And and that was actually that was the inside that that got us really excited. And I kind of go back to what what are the sake one of the secrets of the founders know that the world hasn’t yet caught up to. And at the time, the kind of and you know, the photic started 2016 launched their first markets in 2016. You know, the the common wisdom at the time was that you actually had a oversupply of sports content, you had all this free stuff to your point. But the the the the insight that the founders really brought to the table was because those businesses were essentially built on advertising. It really drove the content that they put out, and the content they put out was really optimized centrally for eyeballs, which meant that you could only really profitably write about certain things, the big national stories, LeBron getting injured, etc. And actually what what fans really wanted to know about was, you know, warriors fans wanted to know about, you know, democ cousins and when he’s going to come, you know, when he will return from injury and they wanted to know about, you know, the backstory of you know how Steve Kerr was hired as head coach. And, and and actually, it wasn’t profitable for those larger brands that relied on advertising as a revenue model to tell those stories. The second really interesting insight was that I think you had some weakness in the local advertising ecosystems where a lot of that stuff was migrating online. And so you had all these great editorial talent that, you know, in many ways was, you know, became available.
Scott McGrew
sports writers were losing their jobs at local newspaper.
Daniel Gulati
And so the athletic was able to kind of put two and two together and say, we’ve got these great value proposition to both the riders and the subscribers to the subscribers, the value proposition was, we’re going to tell stories that matter to you. And we’re going to do it in a way that makes sense. For our business model, and we’re going to do it in a way that’s sustainable. And to the right is the pH was paid come and work at a place where you can do your best work. And I think if you’re a, you know, if you’re a journalist, if you’re a writer, I way back in the day, kind of dabbled in dabbled in writing myself. You know, that is, that’s a much stronger pitch than, Hey, get 10,000 page views yesterday, right and write four stories before 4pm today, right. And so I think that combination of having journalists and writers do work that matters to them and chase stories and tell stories that matter to them. And their fans and their followers and and delivering a superior product to the subscriber, I think is kind of explained a lot of this success today. I think on the media side, if you can build a company that where the customers are paying you directly where the audience is paying you directly, that could be subscription, it could be patronage, it could be a number of different things. I think that feels way more sustainable than starting a, you know, company today that is purely ad supported and competing with all the other free options that are already out there. Right. So I think that’s one. Number two is, you know, we are and we talked about this before the starters, we are incredibly bullish on the audio ecosystem. And, you know, what we see there is, you know, with each quarter that goes by more and more time spent, listening time spent on podcast specifically, you know, audio taking share from other forms of media. And, you know, I think that could there can be and there will be all sorts of different kind of picks and shovels around the audio ecosystem, like if you think about how underdeveloped it is in terms of measuring listenership and analytics and the ability to remarket directly to your Audience like all the things that exist in the digital world, that scaffolding is still being built in audio. And so not only is the kind of studio and production side of audio interesting, like the creative content creation side of audio interesting, I think the ecosystem around audio is becoming increasingly interesting and it always existed but now that you have the listenership it’s kind of adventure scale now. And so like companies like game word and and others, I think it just the starting point on, you know, what this will end up being. And so I think, you know, when I think about Meteor, it’s really those two areas that uh, that, uh, that are most interesting, but then, again, like I always say, like, you know, ad tech is probably the least in favor, vertical right now or category right now in like, maybe all of VC, like now it’d be a great time to find an ad tech company into funding that tech company because no one else is looking. And you know, I’ve got a belief that if you’re starting an ad tech company today as an entrepreneur, you pretty you believe in what you’re doing. You’re not doing it for the headlines. You’re not doing it just to get funded. You’re doing it because you are fundamentally solving a problem. Because it is a it is an out of favor, space, cleantech, probably the same thing. And so often, that often when the pendulum swings the other way, you know, that’s the best time to invest and to start a company. And so when I think when I apply that to media, you know, everyone is down on digital, you know, a lot of folks are down on digital media, a lot of folks down on ad supported media. And so I like to ask myself, the question is now the best time to invest in an ad supported digital media company. I mean, we haven’t, you know, we haven’t seen anything this year that, you know, at the seed stage, at least that we’ve gotten there on but definitely would not rule it out.
Scott McGrew
As someone who is invested in millions Neil, appealing companies and has invested in media and who at least to some degree is related to a large television network. Is there any advice that you would give local television in this age of digital and millennial and all of that information?
Daniel Gulati
Yeah, I think transitioning to digital is really important. It’s actually a lot of lot of what happens on local TV still broadcast and it’s still actually hasn’t transitioned to like a true digital offer, you know, on demand as like a basic first step, but all of the all of the things you can do around that IP, right, so whether it’s following a specific anchor on social media, whether whether it’s offshoots like this that build on kind of existing franchise IP that you know, where you can deliver the content, either by audio or by digital media, I think, going to where the consumer increasingly is is I think critical. And then secondly, I would say new revenue streams. So I think being overly reliant on, I think you’re going to see great media companies that are built off of a very diverse monetization model, which includes some advertising but also includes other forms of revenue, merchandise subscription patronage,
Scott McGrew
something cautious with in journalism, but But to your point, one of the ways that I discover new interesting media is through YouTube because the gu you know, you Google, whatever it is, you’re interested in. YouTube has that video and I find myself more and more and more, getting a lot of really good quality stuff. on YouTube. I have probably more YouTube than I do traditional.
Daniel Gulati
Yeah. And I think that’s to the point of going to where the consumer is right. So if I’m trying to get Scott interested in my content, I’ve got a decision to make, do I, you know, post my content on YouTube where you currently are, and you’re more likely to watch it? Because it’s an experience that you’re used to in your native to you that that you love? Or do I try to, you know, you know, hook you into my platform, my ecosystem, my website, you know, my channel? And, you know, I think I think the right answer is do both right. So I think there are going to be a set of set of consumers set of your audience that are very loyal to your kind of direct channels. And there’s going to be a set of you know, they’re going to be this snapshot folks on the tick tock folks that will only you know, we’ll spend most of the time on those platforms, and you kind of have to figure out a way to get to them.
Scott McGrew
What characteristics are these entrepreneurs that we’ve talked about? What are you finding in them that you might not be finding in Silicon Valley because of number of what we’ve talked about are not based in silicon.
Daniel Gulati
Yeah. So this is something that we look at Look hard for which is your article at this concept of outsiders. So entrepreneurs that, you know, having grown up in this Silicon Valley, you know, going down the standard kind of train tracks of I did my CS degree at Stanford. Yeah, exactly. And, and, you know, I took a job at, you know, Dropbox and I’m now going to start a company. And that’s not to
Scott McGrew
a wonderful company.
Daniel Gulati
Lots of great companies thought that way. But what I find is that in consumer internet, and this is a little bit different, I think from other areas of the world, I think enterprise software is actually very different. In consumer in at the, you know, the next big thing looks nothing like the last. And so you’re really, you’re really trying to predict kind of non continuous innovation right at the end of the day. That’s fundamentally our job. And when you think about who is likely to bring to the world, this idea of kind of non continuous innovation, it’s folks Have a different perspective, by definition, a unique perspective. And who are those folks? Well, they’re probably folks that haven’t been, oh, they just, they’re just as likely to be folks that haven’t been in the industry that we’re talking about, then folks that have been working in real estate or luggage or whatever, for the last couple of decades. And so what I find is that when I look at my portfolio, you know, I look at away which is now you know, over a billion in evaluation, you know, they had no experience in the luggage industry. And in fact, you know, even today there are very few people at that company that have ever worked in the mortgage industry right. Now, another company that I’m lucky enough to be an investor in is company called k health which is, as of today, at least the number one medical act in the US it’s an AI doctor, you know, alone. Amazing entrepreneur. Never had never spent any time actually prior to starting the company professionally in Healthcare but just had a perspective on on a unique solution that could really, you know, change the fabric actually of primary care and and he’s, he’s, he’s on his way to doing that. And so what I find is, when you come from outside a industry, you have not only a fresh pair of eyes, but you also have something to prove in many ways. So a lot of the folks in the industry in in a space a lot of the incumbents will kind of laugh at you tell you can’t do it give you the hundred reasons why it won’t work. And I find that that is incredibly motivating for entrepreneurs that they that they feel like they’ve got you know, I think hunter walk said on Twitter, you know, chips on shoulders, put chips in pockets, and it’s a little bit the same with outside is where you have this idea of something to prove and I think that drive is incredibly important as an early stage entrepreneur
Scott McGrew
Daniel Gulati Comcast Venture Partners For more interviews with Silicon Valley’s most influential entrepreneurs check me out on TV at press here. That’s Sunday mornings on NBC Bay Area and everywhere in the world on iTunes. At it press here TV com Sand Hill Road is produced by Shawn Meyers executive produced by Sarah Bueno, and Stephanie androoni.
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