UP039: Backtracks // data analytics for podcasters (feat. Meb Faber of Cambria Investment Management)

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Jonathan Gill 0:00
The time that podcasting took to really start to take off has benefits to have, that time allows it to be decentralized. The quick decisions that the music industry made that allowed them to lose some control of their destiny. Were not made in podcasting, because basically, people thought there was no money in it.

Jay Clouse 0:19
The startup investment landscape is changing. and world class companies are being built outside of Silicon Valley. We find them, talk with them and discuss the upside of investing in them.

Welcome to upside.

Eric Hornung 0:47
Hello, hello. Hello, and welcome

to the

upside podcast. first podcast finding upside outside of Silicon Valley. I’m Eric corner and I’m accompanied by my co host, Mr. live audience himself Jay Clouse Jay

Jay Clouse 1:00
we’re here we have the people you are making uncomfortably strong eye contact with me.

Eric Hornung 1:04
We are live together. You, me and David Sherry in one room. I think that the live the word live is being used a little bit loosely in the podcast world. What do you mean people people are living it up out there?

Jay Clouse 1:21
This is not being broadcast live? No.

Eric Hornung 1:23
Well, nothing is broadcast live in podcasting.

Jay Clouse 1:23
That’s not true.

Eric Hornung 1:23
I guess if you’re on Twitch,

Jay Clouse 1:23
Yeah, something like

Eric Hornung 1:23
YouTube.

Jay Clouse 1:23
It can be live streamed.

Eric Hornung 1:27
But you’re not if you’re not going into the Apple App and listening to things

Jay Clouse 1:27
live. We are here IRL together in the same room, which is just not common for us

Eric Hornung 1:27
and I’m still staring at you.

It’s uncomfortable. uncomfortable eye contact it’s like the Bo Burnham comedy special where he has a little bit about pro long eye contact.

I have no idea what you’re talking about.

Jay Clouse 1:51
eye contact…

Eric Hornung 1:52
you know, it’s weirder than me staring at you doing this intro while we have someone else sitting in the room. This is the first time that’s ever happened.

Jay Clouse 1:58
Oh, that’s what you’re saying? By live studio audience.

Eric Hornung 2:00
Yeah, I was working on it. We were getting there.

Jay Clouse 2:02
Yeah,he’s here. I tried to turn his mic line on so we could even say hello but while recording it does not turn on. But David is here with us in spirit and in body,

Eric Hornung 2:10
mostly in body.

Jay Clouse 2:12
Isn’t this fun? It’s fun to get everyone together. We’ve been following David’s launch of his new podcasts, new money, and we just record a couple segments for him, one of which will drop here and a couple of minutes before we head into the interview. But today we have an exciting interview thats related to podcasting. We are talking with Jonathan Gill, the founder and CEO of Backtracks. Backtracks is an analytics and hosting platform that helps podcasters know and grow their podcast audience backtracks is an audio oriented, highly technical team that have worked on 30 plus albums, voted in the Grammy Awards, worked on NASA Space Station software, hold multiple patents and built a massive e commerce and payment

Eric Hornung 2:53
system. This is going to be the most we know about any company that’s come out before and like the actual ecosystem. The problem, I feel like this space, we are the potential customer which is a weird position to be in. It feels personal. It does feel personal.

Jay Clouse 3:11
I almost I almost go in like almost defensively, like what do you know about my industry? What are you going to tell me about podcasting? But honestly, Jonathan probably knows it better than we do.

Eric Hornung 3:18
I imagine being a VC and having someone come in and pitch you on like VC enterprise software, and you’re like, Wait a second. That’s how I feel like this interview is going to go It’s weird. It’s weird because we live this we’ve recorded 60 plus of these podcasts now

Jay Clouse 3:33
recording on new equipment right now.

Eric Hornung 3:36
Live at SXSW. Like that Jay we’re live

Jay Clouse 3:38
love it. backtracks was founded in 2016. It’s based here in Austin, Texas, where we are sitting seems that they’ve raised about $100,000. To date. We haven’t dipped into Texas all too much. We did talk to share share outside of Dallas and McKinney. And we talked to the folks at Capital factory. We talked to Astro AR here in Austin. So it’ll be good to add more layers to our understanding of Texas as an ecosystem as well.

Eric Hornung 4:04
Alright, well, let’s jump into the interview.

But before we do that, let’s bring in Devin Spencer, and employment attorney at Taft Stettinius and Hollister teach us about handling employee matters. Taft is a full service firm known for assisting entrepreneurs across the Heartland.

As a reminder, the following remarks by tapped attorneys are for informational purposes only and are not legal advice is information is not intended to create and receipt of it does not constitute an attorney client relationship. No person or organization should act upon this information without first seeking professional counsel.

Jay Clouse 4:42
Devin, thanks for coming on. How are things going in Columbus for you?

Devin Spencer 4:46
Thanks for having me on today. Things in Columbus are great. It is sunny. We’re getting a teaser of spring. And the bigger picture is a great time to be a business owner in Columbus

Jay Clouse 4:58
couldn’t agree more about living in Columbus. I love it here. Devin, something that comes up a lot with founders I talked to in Columbus and outside of Columbus is the difference between contractors and employees. And when it makes sense to hire one or the other. Can you help us to understand that difference in when a founder should consider hiring a contractor versus an employee.

Devin Spencer 5:18
Your company must classify or treat workers as either independent contractors or employees. You also have to further classify employees as exempt or non exempt, but I won’t go into that with the time we have. Employees generally must be paid minimum wage and overtime pay and the company pays employment taxes and social security for employees. independent contractors are not subject to those minimum wage and overtime pay requirements. And the company doesn’t pay those employment taxes for independent contractors. wrongfully classifying or treating employees as independent contractors can be a major source of very expensive liability. Unfortunately, there is no bright line test to determine whether an individual is an independent contractor or employee. The short answer is that it is all about your company’s oversight in control of the nature of the work and how the workers performance. If you are only controlling the results of the work, you may have an independent contractor. On the other hand, if you retain oversight over the method in the manner of the work, it is likely an employee the law not you decides whether you’ve hired an independent contractor or an employee, you must structure the working relationship to either retain or relinquish control to the worker over the nature of the work and how they perform it. If it is a task where it makes sense to only care about the result, not the means to that result, you may have an independent contractor. If your company controls the nature of the work and how the workers are performing it. You probably have an employee. I will say the Department of Labor which enforces these laws has been cracking down on misclassification like crazy lately, your company could end up paying a lot of back pay taxes and benefits if you get it wrong.

Eric Hornung 7:03
Devin, if people want to learn more about Taft or yourself, where should they go?

Devin Spencer 7:08
Our website is www.taftlaw.com And you can search by practice group or individual attorney. If you search my name, you will find my bio that says a little bit more about the areas I practice in. And it also has my contact information. So shoot me an email or give me a call.

Jay Clouse 7:33
Jonathan, welcome to the show.

Jonathan Gill 7:34
Thank you

Eric Hornung 7:35
Jonathan. On upside, we like to start with the background of our guests. Can you tell us about the history of Jonathan?

Jonathan Gill 7:42
I started my first company when I was 14 was a music portal called True funk calm. It was punk and hardcore. So I learned how to program HTML, if you want to call it that and markup and websites to create this portal and I would say a mid middle age internet and 99 the eight. And so back then you would still have to go to the library look up how to do things, even though it was on the internet somewhere a little bit harder to find that it is now. And then so went from just static HTML pages to dynamic pages to a site with a staff and four countries as arguably a child. But then I started my second company as an offshoot of that when I was 16, a record label will call in sounds released over 30 albums and loaded in the Grammy Awards and went on tour and lots of things worked for a band called remix PX and the band. Yeah, Mike from x px now has moved to Texas so long. And I put out his first two solo albums many years later. So then when I was 17, moved to Austin, where we are now started University at the University of Texas at the business school there and my degree was in management information systems, which is a combination essential Business and Computer Science. So I knew from a very early age that my interest overlapped and kind of computer science and entertainment and business. And largely I figured out that my business is really culture. And then there’s nothing I can do that always points me back to helping in that regard and helping to disseminate some view of culture, music content creation out into the world. And so solo true punk calm when either 20 or 21 worked at AMD after that semiconductor company which is a little bit of a joke, but when very technical became attack from architect on the software side at AMD. Then after that was the third person in the company called mosey, which is now called Kibo. It was startup within a startup so of illusion is in a SAS offering for e commerce similar to Shopify. And so illusion was wanting to do more than mom and pop shops and smaller ecommerce offerings. And this was going to be an enterprise e commerce offering when you have complicated Tara flows, logistics franchisees even so we powered experiences for like jelly bellies, e commerce, Tesla accessories, blue fly, basically 100 million dollar run rate companies. And so I was team member three and my co founder at my company now I met their mothers who he was team member for. And then we grew that to 54 people that was acquired by VISTA Equity Partners. And then I took some time off. Sounds well deserved. Yeah, yeah. So I had a pretty rapid fire. And then I did a quite a few months of trying to take a break and travel. And again, I just everybody can find some enjoyment, I think and travel in different cultures. But so I traveled around with a backpack went every place that I wanted to go, visited my family, and then was in the desert in Joshua Tree with my former stepfather. But sometimes we will find interesting, but we still talk all the time, almost every single week. And then we were on a road trip together. And then people were calling me to essentially, it happened a few times before, but then I really put it together on that trip of people were calling me to analyze listening behavior that should have other people to call. And they were musicians on major labels that were launching singles. And I was just like, you realize I barely have a cell phone signal. I’m basically living out of a backpack, and you’re calling me to run your business,

Jay Clouse 11:36
they wanted you to like analyze their on the fly like, Hey, here’s a track

Jonathan Gill 11:39
on the fly or a single that was going to be released. So essentially know what markets was doing well in are going to do well. And so throughout that time, I’d always done audio analysis, since I was very young. So it analyzed the content of essentially music and audio. But what are the volumes like what’s the mastering like or the silences. So in music, a different master is actually may do better in different markets around the world. So something that’s louder, would do better. In US rock radio, something that’s more dynamic might do better in Spanish, national radio or something like that.

Eric Hornung 12:16
Or they’re different, like the same track, or they mastered differently, to get a sense of

Jonathan Gill 12:21
Depends on how how crazy you want to get in terms of in general. Now, these these days now, but there are different masters, there’s a different Master, even though most of the audience may not be able to hear but there’s the one for vinyl, there’ll be one for digital one for CD. And they’re the same source material that they’re actually mastered differently. And then somebody will do a radio Master, it will do different style radio masters, different market masters. So there’s the content analysis side. And then there’s the listener behavior side of so who’s listening to this, and this was in the time of digital, unlike radio is there’s a two way signal. So who’s listening to this? Where For how long? Where is it doing best? What is it about this, if you can try to glean the insight that is making it do well or making it not do well. And so that happened there where I was hopping cell phone towers essentially help somebody analyze listening behavior that a Iran, one of the five major labels in a very well known group, and this is kind of crazy that you’re trusting,

Jay Clouse 13:24
I was gonna ask how much of that is even known to and the responsibility of the artists versus something I would have assumed is all behind the scenes label work?

Jonathan Gill 13:33
Well, I think now artists take more of a role and managing their careers in that way. So I think part of it is they were on a big label one there is a public company. And so their opinion of how to use data to steer their careers and their opportunities was different than the label, but they have some leeway. So it’s like go call the guy with a backpack shopping cell phone towers, because that’s what we think we need for this product, this song, this release. And then now I think the labels are, are in alignment. But I think there’s also the power of the internet and digital creative that you can be ahead of the curve. And it can benefit you and the entire industry. And then now using data to power insights in music and audio is not uncommon thing. But that’s essentially where what I do now at backtrack, started where I was doing this, and then people would call me every few weeks to do this audio analysis. And then podcasters started finding my number and saying, Can you do basically, can you do this for podcast, and then I didn’t know if it would work. And then they started using the software to do the same thing analyze listening behavior and content for for podcasting. And then at first I was complaining to somebody that these people are calling me at 2am 3am, because they don’t know what time zone I’m in. And they said, That’s not a problem. That’s an opportunity. And so I signed could probably have get a problem. So I thought about it did a lot of research on the market I was a podcast fan is but you know, sometimes on the outside and the inside or different perspective. And so took a few months to really synthesize that a, this is a real problem for podcasters more so than musicians actually. And my viewpoint. And so which content is doing well, which can do better? What structure of the content Q and A’s panels, what audio qualities, the same problem of who’s listening to the content, where on what platform is for how long if you want to do something like book, a tour, a live podcast, or you do need to know where people are listening and where it would be maybe best use of your time because not all of your audience is going to respond to a survey or an email. So in a way, backtracks is my whole life applied to something that didn’t exist when I was 14 years old. So podcasting, you know, it’s been around a long time, it’s decentralized, and a lot of ways has a lot of of the problems that music had early on. And then I think a lot of that is a benefit to me, going through the most complicated accounting, you could ever do run a record label where you split a penny 16 ways so that it goes to all the rights holders and then have to analyze smaller amounts of data there when I was at Moes, who was the architect on the analytics and checkout experience, so got used to dealing with really large amounts of data.

Jay Clouse 16:27
So while we’re here, I have a lot of questions about your music background, I want to touch on them. But while we’re here, how do you describe what backtracks does today?

Jonathan Gill 16:35
So backtracks helps audio content creators and brands know and grow their audience and then ultimately, their revenue. And so the reason that we say audio content creators and not podcast specifically is because our technology works on any digital audio signal. So the same problem I mentioned have, soon as I can get it to a digital signal. So I can Europe, radio, and countries with fewer words, it’s digital. And then the US may digital radio outside of satellite, or if it’s audio coming out of a computer, I can do the same thing for all of the other than podcast, there’s audio book platforms, there’s streaming radio that whether or not it’s time shifted, it may be a podcast, we can do it on the audio and video. But we think in terms of connection with an audience and how you create content, there’s something special about audio that it’s a voice in your ear, and the engagement of the audience is much larger. And we’re super biased. But uh, that’s how we describe backtracks. And then the way that we approach it is a lot of people don’t have a strategy in the space, they don’t quite have a difference in their mind a video and audio and then we can help bring some experience in that regard, or, or what do you do when you have all this data? How do you make decisions on the data? Should you release your podcast at 2am? on a Tuesday for pm on a Thursday, doesn’t matter. And then you can guide people through that process, depending on where they are in their creation journey. And we really are, yeah, excited for the opportunities in the industry. And how’s the technology work?

Eric Hornung 18:11
Walk me through how this works. Because podcasting, like you said, is so decentralized. And I feel like, do you just need one? I don’t know, I’m just really interested to hear.

Jonathan Gill 18:22
Yeah, so we sit in the stream if you’re a customer, and then you don’t have to host with us, but you can. And then we are able to analyze the data as it flows through us. Or we can sit on the front end. So you’ve got a website, a little bit like Google Analytics, and we will capture all the audio traffic coming out of your website. And so got something like a player doesn’t have to be our player, which is beautiful and responsive and works well. And I highly recommend, try it out. We can capture all the audio and tell you that this person in this postal code, listen for this long to content about blockchain, your specific episode, they skip this section, their volume was at this level, their network connection was like this. So if you see some drop off, is it because they had a bad network connection? audio quality side? Is it that they can’t hear what you’re saying or that you if you have short content, and then the levels aren’t really equal. And so as people are transitioning between your episodes, they want to listen to more, but they’re constantly fidgeting with their the equivalent of their volume knobs. We can help normalize that and things like that. But basically, we sit in the stream. And so anytime there’s a signal that we can insert ourselves into, we’re able to enrich that with more more data about

Eric Hornung 19:34
Is there anywhere you can’t get data right now like, can you get Apple Spotify anywhere that anyone listens? Or are there certain players that will allow you and certain players that don’t

Jonathan Gill 19:43
are us all of those, because of the way podcasting works, it appears that to the listeners for the most part that when they listened through Apple podcast, and they hit play or download, it’s Apple serving the media, but Apple doesn’t actually serve the media, it’s more akin to when Yahoo had a curated directory, or there is a directory with search, but you click through to the links, just like search results, they don’t make any of the content on the other side. So same thing with Apple is that directory is searchable. You can find podcasts, they have charts, but then when you click through, the media is coming from somewhere else. And that’s how we’re able to do it. Because all of podcasting works like that. And there’s scenarios like re hosting, where we have partnerships. It’s very different than video or in a YouTube land where Google might control the ecosystem. And it’s really going through that provider. there’s pros and cons of centralization. But podcasting peers centralized but is decentralized, but in a way that we think it’s better for their creators if, if they continue to do what they’ve done. And podcasting, as an industry has learned a lot from video and music and realized, well, if we’re going to centralize our means of monetization, it needs to come with a benefit to us versus I think in music, it was just a, let’s just go do this. And the forethought and what you get out of it, or what you lose was not there. But podcasters are well. So I have a direct connection with my audience with no buddy in the middle. There’s a lot of freedom of speech there. And then when it centralized is around these big entities, if they were to host my content, do my advertising, do my analytics, the equivalent of amp, what do I actually get out of it? And then I think podcasters in general, are are sharper about thinking long term on the ecosystem and how they set themselves up for the future.

Eric Hornung 21:34
So you mentioned earlier, an individual like how deep does this thing go, we use inspect blood to see web traffic come in. So we can see like one user come in how they click where they click, is that a good proxy for this from the podcasting space where I can see volumes go up volumes go down? What do I see in the listener experience, like an individual basis, or is this aggregate data,

Jonathan Gill 22:02
it’s both but we tell your company stands to not capture personally identifiable information. So you can know an aggregate you can know a person, but it will never know that it’s Eric. And so while you’re able to say so this person that kind of looks like this, and that they’re in this postal code, we’re not cooking the person, we’re not doing that, you’re able to capture all of that. So and we work with some of those inspect foot type companies where they’re an analytics company, but they’re using our audio analytics, because they do more web page analytics. And you can kind of combine the info while we may take the company stance that we don’t do that maybe inspect lead or something like that. They may know who the person is, and but they’re able to enrich it with the data that we have. But we do that so that we can work on any platform any country GDPR not, we just think there’s a way to actually provide insights without being creepy, if that makes sense.

Jay Clouse 22:51
Yeah. How is that insight delivered? Is it we are understanding what this data means or giving you very common sense explanations? Or is it a data dashboard that’s getting like the raw data, and I’ve got to kind of figure out for myself what that means.

Jonathan Gill 23:03
So it’s both. So you have a dashboard and reporting that you can basically free form, explore the data, or data is also real time and non sampled. So one thing that, as podcasters will see with apples podcast analytics, if you have lower numbers, and you may use something like backtracks, and then you’ll say Why do the numbers, different Apple samples and their analytics. So if you’re basing advertising revenue only on that, it’s the numbers usually going to be lower than what is your true number. And so part of our value is that we never sample and we never delete data. And your data is your data, not our data, you can always take your data out, you can always explore it, you can call it with an API, you can see and share the data in different ways. And then there’s some insights that we give you. But the insights will improve over time, there’s some prescriptive, your business news podcast that has an audience like this, you should release 2am on Thursday, and then there’s some background that have well, you might think time shifting or when you release a podcast doesn’t have an impact on audience, some of the what we do is a little bit of education, or even from us just looking at all the data. It’s always full of surprises. But okay, I thought my audience was listening and this platform, but delivering on my website over half the time, which is great. So maybe I should optimize my website experience more. Or maybe I should have other content on my website or link to merchandise or it’s great for when that sort of case happens because then someone that’s building a brand or instead of sending someone outside of their website to go subscribe somewhere else, they know that their audience likes to stay on their site. And then people can have different flows like driving traffic, their newsletters, so we can track also where people came from. So if you send a newsletter out link to your podcast on your website, that the play came from that flow, so that attribution is very easy. And saying, well, that’s how I drive traffic or it comes from Twitter, our player renders natively on Twitter and read it. And then you get the data back from that. And so you don’t have to take someone out of their out of the field, essentially. But it looks like you’re a brand inside of Twitter. And then again, because of the Switzerland nature of what we’re doing, it’s like the data can pass through us. And then Twitter may know who you are, we don’t know who you are. We don’t actually want to know who the listener is. If you are, you know, very left wing, and he listened to very right wing content or right wing and left wing, it’s like, no one’s going to target you on that on vectrix.

Jay Clouse 25:35
So we are just constantly frustrated by how archaic the analytics and information for podcasting seems. What is it about you guys or about podcasting in general, that makes you guys able to do things differently? Why is it so far behind?

Jonathan Gill 25:50
There’s a lot of a lot to unpack there. But I think, despite its age, podcasting was largely a hobbyist sport for many years years. And some of that the time that podcasting took to really start to take off has benefits to have, that time allows it to be decentralized the quick decisions that the music industry made that allowed them to lose some control of their destiny, were not made in podcasting, because basically, people thought there was no money in it for a long time. And so it kind of evolved into this thing that was more natural. I think there’s a downside to that is because people, they weren’t looking at the analytics very loud, it was more like they were beer cast, there is more of the fun and the it was novelty it for entertainment, education. And then you see all these different forms come over time, the narrative podcasts are relatively new in the in the history of podcasting and the long form, you start to see the production values go up. And then I think in terms of why that is, think some of it is us as out ciders, in a way add value. So from my history as a person like this makes total sense for what I’ve done before. And then I think there’s not that many people with a very similar history in that way. And then sometimes looking at an industry from the outside, you can see the problems differently than when you’re too close. And then podcasters. Now how bad the analytics are. And then it’s how do you improve that? or Why do you improve that and some people that you’re collecting way too much data, like data is not worth anything in this industry is like, Well, I think you’re actually wrong. And then this is why and this is why everybody that actually produces the content gets benefit from our particular way of doing it. So I think if you are a platform like a Apple podcast for a listening platform, or Spotify, the certain amount of data that’s useful for you to have, that maybe is not useful, or they don’t want the podcasters to get there’s also just how people thought about the data. There’s no uniform way to record it. People were first trying to get any audience, then I think our benefit is thinking about what what will podcasting look like in years from now, like, people used to make fun of us for our specification for recording analytics as the very last sentence, like how this would work on Mars. And then why we record time in this way why we record the IDs and people are like, I would you do that? It’s like one day somebody is going to go to Mars, they’re going to listen to something that I want. Like…

Jay Clouse 28:28
Is Elon…is Elon, a podcast listener?

Jonathan Gill 28:29
I don’t know, I’d like to find out. But I was like, we’ve thought through that odd scenario, which is not so I don’t you start to say, Well, how are people going to listen to audio over time? How are you going to keep that data relevant? As people change hosting providers change their podcast years go by, without reprocessing that data? How do you record it in a way that’s, in a way future proof?

Eric Hornung 28:54
So I think you mentioned this idea of being an outsider and coming in and kind of taking this perspective, kind of questioning things differently. The three of us sitting here right now are all kind of deep into podcasting. And as I’m thinking through this interview, for the listeners sake, one thing we usually do is kind of give a have some sort of baseline understanding of what this is. And I think we might have jumped a little bit into the weeds a little quick, so we can step back for the listener. And just, if you could explain how a podcast works to someone who’s only ever been on like Apple podcast I got from creation to analytics, just kind of walk us through what one episode looks like on the back end.

Jonathan Gill 29:31
Yep. So podcast could have been called blog casting, if Microsoft had their way. They obviously did not want the branding to be so closely associated with iPods. Essentially, it is recorded audio. For the most part. There’s also video based podcast but recorded audio that is released for someone to download or play on a device. And then when you’re listening through Apple podcast, essentially, it’s the industry of podcasting is organized around feeds of data. They’re called RSS feeds. For the most part, there’s different formats as well. But when you’re subscribing to a podcast, through any app, Apple podcasts, that data basically comes from a feed. And think of it like a shipping manifest or a packing slip, it tells Apple podcast what’s inside. And then that’s the shipping manifest or packing slip for an entire podcast. So inside of it are these 14 episodes. And then so when you go look at that you’re like this episode has this skew or UPC 123. And so what is 123 it’s in this regard, a unique ID. And then it has some information like a description of the item, a title of the item. And then it has a link to imagine that the items virtual, it’s not physical. So instead of you pulling out of the box, when Apple goes look at it, they get the virtual box, they get the packing slip, they know all the data, the title, the description, the unique ID, that instead of going and pulling the item out of the box, they go into pull it out of a virtual box, which is the address essentially to go get it. So when you search for a podcast is a listener, and anyone of the listening apps and they’re called pod catchers and in podcast land, because they’re going in collecting and catching all these podcast. And so when you search for a podcast or you subscribed to it, what it’s actually doing is looking for changes in the shifting manifester, the packing slip. And then as a new item gets added, it automatically goes to you and then you listen to it. And then so Apple, while it looks like it’s similar to YouTube, and that it’s there, they’re curating that experience it’s centralized. all they’re doing is that they’ve collected the RSS feeds, and then the content that lives inside of the packages is still owned by the creators, or the equivalent of like, the store that you bought the items from.

Eric Hornung 31:50
So why is there such a race for players luminosity? So the new one just came out luminary, luminary, luminary luminosity, I just feel there’s so many players? Because coming out, why is that the place that most people are starting in your opinion?

Jonathan Gill 32:03
I think a lot of people have a focus on consumer behavior, because they themselves are consumers. And you understand, think a lot of people are focusing on subscription based revenue, exclusive content, that’s just where their minds are. And I understand a lot of people want to be the Netflix of podcasting. And I think it’s from understanding from attention. And then for the larger companies, that’s where they can raise money on is on that vision. Now if their vision becomes a reality of if you can truly turn that into a sustainable businesses, maybe a different question. But I think that’s why all the attention is there is they see the growth in podcasting, and they’re trying to capture that and listener side. And you know, podcasting and listener side grows, over 50% year over year, can grow like that forever. But more than half the US population is let’s do a podcast. People listen, on average, five hours a week, more people listen to podcasts, and even open Spotify. So a lot of those stats are knowing the industry, but are surprises to outsiders. And that’s essentially why I think people are focusing there is there’s so much growth in the listener side. But the monetization is lagging behind. So how do you how do you capture that and pass that on to the ecosystem.

Eric Hornung 33:20
How does backtracks make money?

Jonathan Gill 33:22
so we make money off a platform access fee. So we have these these pillars and components, you don’t have to use all of them, you can use some or all of them. And I think we often get confused with some of the hosting providers, but you don’t have to host with us to do what we do. And then we just have a stats of hosting should be a commodity and arguably should be free over time.

Jay Clouse 33:43
I was going to ask you that because doing research on backtracks I saw okay it’s a hosting an analytics platform. And now you’re saying we sit in stream we handle anything goes in and out. You don’t have to use our hosting platform and reminds me of pod tracks. And then we use that’s probably in a similar space to you. Why is the marketing towards hosting them analytics versus I guess, I guess you could just go towards analytics and market that more and hard. But what is hosting mean for you guys as a company?

Jonathan Gill 34:07
Well, some people need hosting, this is table stakes, depending on where they’re at in the org. As you get more advanced, you may take care of your own hosting or if you’re a large publishing company, or the equivalent of you have a publishing workflow with approvals and you have a staff, you start to say, Well, we’ve got this solution that is already in place, or are we need to do it this way. Because we’re part of this larger media org that, you know, our videos get approved in the way that our audience needs to get approved. So I think for us, we’re ahead of the market and a lot of our technology. And then if we were to market it in a way that is more of a closer match to the technology, I think a lot of people wouldn’t resonate with. So people will get in and they say you guys do a lot more than I thought you did. And then the marketing definitely doesn’t match up with what we’re really doing. But that’s one reason is no one wants to think about what happens when you listen to podcasts and Mars except us. I think there’s a disconnect there. And it’s purposeful, just because of where the industry is. And I think over time will more closely match our tech stack.

Jay Clouse 35:14
When did you have the first version in market in in working with a show?

Jonathan Gill 35:19
2017. So it took because we took a platform approach and you can everything’s real time, you can use API’s, you can build it into things, it took a little bit to get the platform going, but then we can just build on top of it. And then in terms of how we first got those customers is cold emails, people, I think undervalue the strength of a well written email and then that’s still something I think I value on the recipient side as well as sending is okay somebody sent me an email that the bothered to look through what I’m doing. And then they identified problems and some solutions and then I know that they put some time into it doesn’t even have to be a long email. But that’s essentially how we got initial customers was I see you’re doing x y&z maybe not the best on your podcast, we can help you? Or have you thought about this? Yeah, that’s really how we started.

Eric Hornung 36:12
Doyou need permission to look at any any analytics for any podcasts? Like if you wanted to look at upsides analytics, without our permission, and like, send us a customized email saying, Hey, I noticed that here’s some things you could change very specifically, because we have the data is that like data, you have access to this out there? Do you need our permission?

Jonathan Gill 36:32
we need your permission. So you need to flow through us, there’s a indirect ways of knowing. So if we know where you are, where you’re trending in some way, we know every charting position of every podcast, we don’t know your number, exactly for downloads, but we know your number 27,000 or something in this particular ecosystem, and that you’re trending up and down. And so we constantly know that how do you know that? That’s a little bit secret sauce. But uh, yeah, we, we do know that

Jay Clouse 37:03
because we don’t even know that.

Jonathan Gill 37:04
Yeah.

Eric Hornung 37:06
Seriously.

Jonathan Gill 37:07
Yeah, we will have something that that comes out that lets you know that.

Eric Hornung 37:13
You mentioned these pillars, and I want to go back to pricing for a second. What are the pillars? We talked about hosting mentioned analytics? What are the different service pillars? And then how do you price each of those.

Jonathan Gill 37:25
So it depends on kind of the complexity of implementation and the amount of traffic and the number of series, we call them series equivalent of a show or a channel. So all of that factors into it. So imagine that it’s volume based on some of that. And then so we have basically all in one hosting Player Analytics. And then as you get essentially, for us larger and more complicated scenarios is where the pricing changes. So for us, it’s monthly platform, the, and then, if you’re super large, it’s going to be more expensive than if you’re just starting out. And so general SAS and then there’s a component of volume or complexity for certain features. So people that don’t need API access, they don’t need to pay for having, you know, basically close to 100% uptime on API’s, because they’re not going to care about they’re not calling it all day long to push and pull from systems. And then things like our player, people may use other players, they may not care about hours, or they may want that. So you can basically pick the items and build your own package. But in general, it’s a monthly fee.

Eric Hornung 38:35
How many customers do you guys have right now? Where you don’t you don’t sell? Okay? Do you have an average price like that a customer pays per month is is like $500, or just like $5?

Jonathan Gill 38:47
It ranges. So for us, the average price can be around $49 on on the low end, and then we have customers paying thousands, but that’s for very professional org large business, its mission critical to them. And so everybody gets the same uptime with us. It’s basically never go down. never delete your data. But it’s just the question of don’t pay for things that you don’t need to use yet. And so we see people move, that’s what we want is also a start on what we call our hobby plan. And then you get more and more popular more and more features. Oh, I have someone that’s like in my post production process. Now they need to look at this, and then drop in the final version, the audio or somebody that I’ve got advertisers now that needs they need to see the data alongside me. And then they need to be sure that it’s not me sending an Excel report and adding a zero to the end. If they’ve never advertised with me, they may question the number. So then our position is where the intermediary that we’re not the publisher, and we’re not the advertiser where the thing that counts. And then that’s basically how we how we prices, it’s based volume in scale.

Jay Clouse 40:00
Are there any customers have backtracks that we would recognize that are publicly using your player that people could find any way that you could talk about?

Jonathan Gill 40:07
Yep, so Y Combinator is a public customer McKinsey and Company is one Britain Co. Sanford used it for data and walking through the public private.

Yeah, so we’re all over those. A lot of those websites like on the Y Combinator site, you’ll see our logo all over the place.

Jay Clouse 40:26
I remember when I was doing research before you came in here this morning, I saw the UI of your player and I thought, Man, I’ve seen this and it was on a major show. And I thought it was gimlet and I look back and they have their own player. Now it seems, couldn’t remember I was like I’ve seen this UI because I remember seeing this and thinking this looks great. I would be interested in like using this player.

Jonathan Gill 40:45
And we’ve got a new version coming. We’ve put a lot of time and effort into the player to help our customers and some of those little touches, oh works in Twitter that you can share segment.

Jay Clouse 40:55
And you have transcription now to the one on your website has like real time transcript that you can tweet from the UI is transcription part of the basic plan, I think it looked like it was like the startup or small business plan.

Jonathan Gill 41:07
So it’s not on the basic plans. The transcription is useful for lots of things SEO. So we take another thing that we do is just stance wise, we’re always trying to align ourselves with our brands and our customers and their audience versus we think in the long run that’s better for us versus some players. And some things they’ll fire these what’s called retargeting pixels. So you visit a website, and then they’ll fire this pixel. And then you go to a web, another website, and then you see an ad for that website. So some platforms for players and hosting, even if you’re a customer, and you’re paying them, they’ll fire their own pixel. And now all of a sudden you’re seeing, or your audience is seeing ads for their platform. Or they create a page that ranks alongside you in search engine results for your own content. So you search for episode. And then you’ll find a public page. That’s not your website. But it’s that hosting platform. And in large part, they made a page about your website so that they could get right. And usually they rank above the content producer. So we’re basically hopefully like the wind behind your sales or something of we power the actual people with talent, and then it’s behind the scenes and that we don’t actually have publicly ranked pages on the SEO side, for any of our customers, it is sometimes a little bit hard to find them. But it’s not really about us. So we like that. And then in the player experience, it’s what’s the best for the audience that wants the best for the brands. And then having the textual equipping the audio sometimes is best. And then in our player, you can share that to social media directly quoted. And then if you want, you can take the transcripts and put it live on your page, but in a way that search engines will index on your website. And that never gets like attributed. So that’s why we do that a lot of time deep in the transcript side of things because we do transcripts. And I’ve like been refining this process for months. A lot of transcripts services are AI driven, and it’s good, but you have to definitely do some cleanup afterwards. And then you have like the total white glove, rev calm dollar per minute, we’re going to make sure this is like good. Where do you guys fall on that spectrum? For the transcript, we are even more accurate than roof really depends on where you fall on terms of what you on our customer basis, a lot of our customers go for the higher end option of basically almost absolute accuracy, but multiple people. So it’s AI plus humans, and then so some of the nuance and some of our content is very technical or has very specific things. Like we automatically we do a lot on the API side, just because we’re nerds, like will identify all Twitter, hashtag all handles all links, and then you get the marketing attribution of all the clicks. And then so someone just says, like, I’m at upside have found that automatically is a clickable link, you know, have to go like change. And then when people say get or get if you know the actual topic of if it’s a technical thing and gets a source code repository for, for people a source control for people out there in podcast land. And so it’s hard to tell if you don’t know what the content is what that is. And so there’s even some editorial rules in place. So certain customers, they use Oxford comma, certain ones really have a everybody should use Oxford, comma. I’m on board with that. I’ve heard that there’s a very strong divide.

Eric Hornung 44:32
lawyers don’t use Oxford commas, and it drives me crazy. It just doesn’t make sense. But it’s like that’s their brand standard. As a lawyer, I guess, I don’t know, it’s not a p standard,

Jonathan Gill 44:43
if you will, are widely divided on that. But so we see you either want a quick transcript or you want an accurate transcript. And they’re currently mutually exclusive.

Jay Clouse 44:55
How big is your team? You mentioned that you have a plus humans? Is that like your team? Or is that outsource? How big is the Backtracks?

Jonathan Gill 45:01
That part is that part is outsourced? And then on the core team? There’s only four people

Jay Clouse 45:06
Wow.

Eric Hornung 45:07
what are your biggest costs? Four people? It’s like…

Jonathan Gill 45:10
that’s what the biggest cost.

Eric Hornung 45:11
is that that’s the biggest cost?

Jonathan Gill 45:13
Yeah.

Eric Hornung 45:14
are you guys going to fundraise this thing, or? It sounds like you guys are profitable.

Jonathan Gill 45:18
we are doing well, we have a very large sporting brand, say you have made an amazing business. Because they basically have close to 100 people on there. And just more people than play on the team support the content production of the team. And we were first worried that they would hear the number of people and the kind of taken aback and that’s one thing about our product is it’s basically use the product demo and near like your customer, but people are the strength of the product really speaks louder than than us. And we always structured the company, we want to be more of an Instagram style lean team. But we’re not consumer style scale like them. So it’s the four of us really multiply out in the way that we built. The platform is like you couldn’t rely on it, even if you have 100 people’s livelihood on the other side. And then we got back from them was, and I can’t name the name of this one. But basically, that you built an amazing company, amazing product. And it just works. And we’re super impressed.

Jay Clouse 46:25
I’m just thinking about like, your UI is beautiful, the design of the websites beautiful, you got to be doing stuff like this and selling somebody’s gonna be building it like what’s the breakdown these four people,

Jonathan Gill 46:34
one person focuses specifically on outreach and on the kind of business development and sales. And then I split my time I still write code as people make fun of me for because they see what time I write code and check.

Jay Clouse 46:48
This commitment was at 3am.

Jonathan Gill 46:52
That Yes, somebody recently didn’t believe there, oh, you still are writing code at that time. In then our CTO, Kevin focuses basically mostly on the code side, and I split my time a little bit more than everyone else

Eric Hornung 47:07
on your biz dev side, for those…I’m guessing that that person is going after these bigger accounts?

Jonathan Gill 47:14
Not quite yet. So what’s been great for us is we get a lot of inbound. And then even though we’re not public in a large way, our customers tell other potential customers and we actually don’t internally say customers were always on a partnership orientation of. So even some of the people we talked to is we’re going to help get your strategy right well ahead of when we will ever work together. And we never want to be a vendor. It’s always up into the right for everybody we work with. And then so we always say we want someone to basically say the equivalent of this sentence, I got a promotion because of backtracks, or we met goal X, Y and Z because of backtracks. And basically, as long as we continue to deliver on that our partners tell other partners and then it’s inbound. We also have outbound is we’re trying to scale up to these larger organizations that are, you know, the multinational media companies.

Eric Hornung 48:06
What’s the sales funnel look like on that outbound?

Jonathan Gill 48:09
In terms of like depth? How far ahead or?

Eric Hornung 48:11
Yeah, likehow how long until you convert someone?

Jonathan Gill 48:15
it depends on the person depends on the size deal. But if it’s a moderate sized deal, that’s a small 30 minutes. So we demo, it’s really as many demos as you can get. It’s like demo, do a demo to demo do on the larger and when it’s like a strategy shift, or they’re building a podcast studio, they’re changing. They’re doing something new and big. That can take months, so three to four months. And then we’ve had people that are our looking at this, but they don’t talk to them that actively but like it will be a 10 month cycle.

Eric Hornung 48:51
And then how does the hobbyist kind of community fit into that sales cycle? Are they before that small to medium deal? Do they even need to demo or they just kind of find and signing up,

Jonathan Gill 49:00
they can find it and sign up. So there’s a free trial on the hobbyist plan that’s not quite the same bells and whistles as other things, but 14 day free trial. And then they can import a copy of your existing content. So you see what you’re used to, but it’s not live and then you just make one change, and then your traffic starts flowing through your actual traffic. And then you can undo that. And then so people can basically point click Sign up. And if they have an existing podcast, they’ll see all their existing content there, they don’t have to repeat any data, we can actually real time synchronized. So if you’re releasing episodes, while you’re trying to sell

Jay Clouse 49:40
your new episodes of hearing vectrix, it seems very intentional to me. You know, I did, I did research on the company. And I was trying to find, you know, screenshots or videos at the dashboard or the demo itself. But it’s very much like contacts us or a demo, which has to be very intentional. So talk to me about that decision and why it works that way.

Jonathan Gill 49:56
I think just because of where the industry is, and where we sit, we like to of the conversation with the customers. And then because of the size of some of them, they may build you eyes that are completely different than the ones the way we are presented data. And so talking through their needs, are there plans and what they want to do, we always like, even if they’re not going to become a customer. That conversation, that value is more how we align like what are you actually trying to accomplish? And sometimes we actually say we don’t think your content justifies this or where you’re at justifies what we charge and pricing or, and I think actually being a partner where we may not be the right fit for you or, first of all, like it’s a hard conversation to tell someone that could be a partner, like your content is not that good. You should work on that first. And then I think we’re rare and that we will say that. Have you listened to any upside episodes? I have not yet.

Jay Clouse 50:57
We’re about to ask for some validation real quick.

Jonathan Gill 50:59
Yeah, yeah. But I think that’s one of the things that like I’m very honest about I would be very poor as a content creator on very hard work to produce content that’s good and engaging, and I needs a certain skill set. And I think the listeners understand it. And I think there’s a little bit of a gold rush in the content production, which helps us on our side. But I think if people put more thought and planning and research, like you guys have done into planning their episodes out, it’s better for the audience better for them better for their future prospects. And while our data can tell you, you’re not doing a good job, it can’t help you fix bad content.

Jay Clouse 51:38
So what what do you look at? Is it the audio quality is the structure of the show is the length? How do you know at like a demo level glance, you guys aren’t where you need to be for us to make sense.

Jonathan Gill 51:49
So depending on the demo, before we do it, we do a lot of prep. So we would go and listen to the content, go check out their website, go do research on what we know of their strategy. And then we have the talk of what they’re able to share with us. Sometimes they can’t share really what their strategy is. But basically, we can come to that meeting saying, this is what we’re able to see is this really how the world is for you. And then some what’s great is, while I was a little bit focused on the negative there, most of its positive people are doing a good job. And it’s just how do you grow that audience are I don’t have the data I need or I need or they they know that they need certain things that we have. And then it’s just validating that. Okay, does this thing actually work? Does it do what you say? How does the player actually work? It looks nice. And then we just show them basically a guided specific to their problem set, not just a it’s not ever set demo, which I think, you know, some people have a set demo or webinar, you just watch that. And the way we approach it is in the world that the current state of podcasting, a lot of times there’s not a set answer for. So that’s why we like to do that demos and that way. And that’s why there’s not a bunch of public screenshots, because there’s various ways to look at what we do. And then one representation that static is you saw that plan at version of the product, you didn’t see the one that this big customer uses, or, yeah,.

Jay Clouse 53:16
How many demos you guys do in a week?

Jonathan Gill 53:19
A lot. Yeah, so at least five a day. And then during this particular point in time, it’s busy because there’s festival going on, there’s like more in person, demos and meetings, and I don’t five maybe low. But if you imagine that that’s more people than work at backtracks. Yeah, it’s it’s good, good pacing for us. But we want that to grow as well. And then maybe some of our approach will have to change over time or will grow as a team. And then just kind of our approach has been a blend between bootstrapping, and we likely will not be in that mode very, very much longer just to grow faster.

Eric Hornung 54:00
What’s on your business’s dashboard? Like what are the KPIs that you guys care about? Because you’re you’re giving data to other people and saying, here’s what you guys should be caring about. But what about when you look at your business? What are the most important things you’re thinking?

Jonathan Gill 54:12
The most important things for us, because if we’re in a great position of its demo deal is how many actual qualified leads and demos can we get or not like email blast prospects style is very curated. And, and that’s why we have such high conversion rate is, by the time that we reach out or you reach out to us, it’s a good chance that you need what we have solution wise. So for us the number of qualified leads, but I think we take a little bit of a more focused, some people take a breath, and then they narrow down a funnel. If you’re even in our funnel, there’s a good chance that you’ll convert. And we have to do that because of the team size and that we do personalized demos. And some of that doesn’t quite scale with the team this small, but you can go a little bit wider and breasts, that’s one of the metrics, the actual organic traffic to our site is one. And what we like to see which is not what other people like to see is that there’s no refer of the traffic that somebody sent you to backtracks directly. And then that just fits our model of, okay, somebody told you we exist. And then it’s probably somebody that’s a customer. So from that side, those two numbers actually drive everything for us. And then so that’s what I’m constantly looking at. Yeah, if we increase either one of those, we increase the output of that formula.

Eric Hornung 55:34
We spent probably the least amount of time in an interview on your background that we’ve done on the upside thus far, I think. But one thing that you mentioned was you grew a team from your employee three to 54. What about that growth? Did you like or not like to the point that you are, it feels like repressing team growth here?

Jonathan Gill 55:56
Yeah, there was obviously some downside to that. And we went the other way. And then my co founder, Kevin also worked with me at mosey, which is now Kibo. It is a little bit of reaction to that. And then before that, when I was at AMD, aim, the at that time was 16,000 people. So I had seen big kind of smaller, and then this is a curated experience. And then the way that backtracks is structured in that way from the get go. We knew we wanted a small, very efficient team. And we wanted everybody to pass what we call the Sunday test of mosey, we had some very hard time sleeping in the office late at night, very hard. And then the next day it would be Do you want to see these people after not going home? Sometimes, you know, 36 hours, we had showers and the off like it was different. We didn’t want to recreate some of the problems and culture there. But basically, everybody that would work at backtracks, hopefully from here into the future is, no matter what happens is the day before, would you ever be mad or irritated this see the first in the next day? And the answer should always be now. So the people that work at backtracks now, it’s I could be working with them hanging out with them all day long, for years on end, which is what we what the company that will be. And so the way we thought about it was so what was bad about our prior working experiences? And I say that it’s like, actually, when we reflect on it, what we didn’t like, maybe in the moment, we didn’t think about it that way. But what would we change if we could control our own destiny, which largely people start companies in the small fire large part to do that. So it’s like we had the chance to decide big team super fast growth, not profitable, profitable, how we paste that out, and it’s intentionally building a larger platform to do the difficult things, we think that the industry may need a little bit ahead of when it needs it. And then we’ll be there with some product and viewpoints of the time it gets there. And then in terms of, kind of, we look at the team structure, it’s just like an internal thing, but now not internal, we’re like, We want everybody to be a designator like one of that person is worth, like at another company, they’re like, taken down 10 things of like, that’s worth 1010 people that one person or that one person is just so outsize and the value that they add, it’s not even ours, it’s not even. It’s just the impact. And sometimes it’s this particular set of people working together and work with my co founder now, almost eight years, and we’re very different in age like he is over 30 years older than me, that’s also different was we wanted a very diverse team, doesn’t matter what age you are, doesn’t matter. Like your actual what school you went to, it’s what can you do, and who are you as a person and the believe in this super weird vision that we have. That’s now not so weird, but it’s been very intentional, and we think will grow a little bit better after the next year. But we want to keep that in mind of, we’re never going to be a 6000 person company that’s just not in the DNA.

Jay Clouse 59:08
You’ve alluded to more rapid growth the next year in terms of headcount, which probably means some level of investment, you guys are in a good position of leverage, it sounds like so what’s important to you in looking for investment and investors like what type of profile of a person would you be looking for?

Jonathan Gill 59:23
So the same way that we approach thinking very intentionally about the team building, I think investors are extension of the team. And so the same way, that what you would call a customers, we think of partners, we’re not trying to maximize our revenue out of a relationship, it’s, we want to maximize the overall impact. So that’s how we think about the investors is who on the I’m not a sports guy, but we have got a growing roster of sports customers. So like who’s on the who’s on the bench with us? Who’s on the team with us? And then it’s just when I look at it investor is, do you believe in our vision and the actual approaches that we take, not, oh, this business looks good. This is a really attractive from a financial standpoint. But there’s a lot of things that we do that are maybe not so standard for, we’re going to be more intentional about our growth, we’re actually going to make money on unit economics, at certain people are growth at all costs. And we’re not a growth at all costs were growth where it makes sense. And it’s not growth, that cost is growth, that profit for us. And so for a certain style investor that has a certain timeline, a certain amount of capital to deploy, we’re growing in that timeline, or in that growth rate. But that style approach of us will call it like a blitz scale style, we may be able to do that at a later stage, but for just the way that we’re doing it now. And the way that we structure it, it’s more everything that we sell is not a loss leader in a certain way. But so we think of our investment partners is true partners. What do you know about media? What do you know about technology? What do you know about in some ways, advertising? And then do you agree with our view of the world, or if you disagree, why is having you on the team with the disagreement worth having. So we actually think there’s a great and that’s one of the great parts about podcasting is all the different viewpoints, the debates, the disagreements, if you want to call them that there’s value in different perspectives. So even if somebody actually disagrees, but agrees with some of what we’re doing, that’s a value to us to is this, if you have that overlap, that you’re checking, like, basically, our desire to maybe grow at a certain pace. But if you push us to grow, maybe at a different pace, maybe that’s exactly what we need. Or you think that we should push more on this product line, and you have actual reasoning behind it. Those that goes into our product discussions and how we demo, we value a lot of input even from our partners, even in that demo process. That’s another reason why we demo is we learned a lot from when we demo somebody and it’s not prescriptive, it’s you tell us and then we learned a lot and then we tell you, and then it’s not, Oh, I know this, it’s we’re all learning together. And so firm investors, a lot of times they’re that approach that we’re looking for is someone that will work with us and not be our boss, and all the way all the ways that you know someone that provides capital candy. So we do you think a lot about that, as you’re very quickly catching on to when it’s very top of mind to us, every dollar or every is not created equally.

Jay Clouse 1:02:32
It seems like your model and your positioning, you guys are trending more towards the more professional established podcaster for sure. So what is it about the future of podcasting where you see that you want to go down that path as opposed to have a more ubiquitous, even entry level player to say, like hobbyists, you can come in and just use this off the shelf.

Jonathan Gill 1:02:54
So this is also a reaction to maybe the industries we were in before. So a lot of of the people in the hosting sub segment of podcast technology for the most part, isolate it to that is they operate more what we would call gym memberships of, they don’t actually care if you showed up to the gym, they don’t care if you get used to the equipment, they care that you pay them. And so our structure is consciously against that of we want to always be able to add value, we want you to tell us what equipment you want in the gym, we want you to show up to the gym. If you’re not, you shouldn’t be paying us, you should do something else with your money. So right now the people that tell you what they want in the gym and that go to the gym, and that get the most value are in that professional segment. And then over time, we think we can take all those learnings and apply it to people just starting out, but the way we do it is very, I think that’s why we focus there. And then we learn more to benefit everybody else down the line.

Jay Clouse 1:03:51
I would love to look into the crystal ball a little bit from your perspective and say, okay, Spotify just bought Gimlet, they also bought Anchor, do you see the future of podcasting being niche individual creators almost like a YouTube? Or do you see it going more towards that Netflix style? Where it’s big budgets, high production quality? And we’re watching those big back shows?

Jonathan Gill 1:04:14
It’s not the maybe not the answer you’re looking for. But I see both. So in podcasting, and in enterprise software, there’s I think the saying of initials or riches or

Jay Clouse 1:04:32
the riches are in the niches, bitches.

Eric Hornung 1:04:33
you through at the end.

Jay Clouse 1:04:33
Yeah, it’s like comma, the riches are in the niches.

Jonathan Gill 1:04:34
There you go.

Sorry, so much as

Well, so that saying I actually think is a little bit true for I don’t think podcasting will lose its way. But I think you’ll start to see more big budget productions. But there’s some fear with that have. So if your podcast is doing well, and ecosystem like Spotify, are they going to produce content just like yours? And so almost like the end, Amazon basic style? Yep, you’ve sold this much you’ve done so well, we’re going to predict for giving us this roadmap. Yep. So part of the value that we see of us sitting kind of outside of that is how do you control your destiny in a world that it’s not that will that happen? Absolutely will happen. So if people will look at what’s doing well, and they will produce shows that look like your shows, if you’re doing well, how do you make sure to maintain your identity, your control of your audience, your distribution mechanisms. And some of that is why we capture the data across all the platforms in those ways and have the partnerships and then give it to the producers. And I say give it it’s really their data. And then so it should continue to be that way. But what I do see is more growth around we’ll call it mass market podcast. So I think people in the industry or hopefully a lot of the listeners, they’ve seen more office water cooler talk their parents, their family, asking them about what podcasts to listen to or what they’re listening to. And we’re in a little of a bubble where people are always talking to us about podcast, but I think even that is it’s anecdotal, but there’s more people that live outside of podcasting that are learning about it that are getting more excited about it that will listen to a podcast over watching a TV show. They listened to it with more intent, more frequency, where I think there’s a blend of the style show you can do with higher production values is a different style show then with but the question then we’ll be having more This American Life The good thing, is it a bad thing? It may be subjective, or…

Eric Hornung 1:06:38
do you think we’ll ever have another Serial? Like the I like the incremental step up from pre cereal and podcasting to cereal and podcasting had to have brought on like millions of people to podcasting. Do you think that’ll ever happen again?

Jonathan Gill 1:06:51
I think it will happen again. It will not be cocoa puffs. I think it will. And so podcasting has a lot of people will have forgotten some of the earlier pre cereal jumps, Ricky Gervais set a very, very large podcast and help get some of podcasting. If you want to call it the fly will kick started into cereal. You see these stages of where podcasting was popular. Just think of audio. And so Twitter basically came out of a podcasting platform that was very early called audio audio didn’t work out, but Twitter absolutely has people have heard of it. And it’s it’s a tiny little thing now. So that was a little bit early to the game. And podcasting keeps persisting with these tiny, tiny tweaks, these iterations. And in a way it’s like product market fit on the startup side. And then you see, just like in a startup, it’s not an exact rocket ship, you see this big jump, you see a plateau, then you see another job. And then you’re starting to see things like the true crime shows take, which may be an extension of the cereals, and then astounded not do quite as well, but you’ll…

Jay Clouse 1:07:53
It had a horrible ending.

Jonathan Gill 1:07:57
Spoiler alert, spoiler alert, but I actually had this conversation yesterday. This is the same outcome of that. But uh, yep. But I think he’s accurate. And then I think it will continue to have narratives man, I think back to just a history of radio and great things like the shadow. We currently the equivalent of the shadow for podcasting, which was shadow was a serial long form radio show that Orson Welles was also in and then I don’t think we’ve gotten there yet. And podcasting, where you’re seeing what the equivalent of you’re seeing celebrities hosts their own shows that are more like talk shows. And when you get to the narrative, podcast with big stars across the entire cast, where I think that’s basically the next step is where everybody in this cast for narrative podcast is, like, original radio, like original radio. And so I think when that happens, if it’s the right story, the right cast the same thing, like all other forms of media, I think that’ll be the next jump. And we haven’t seen that in podcasting yet. Maybe someday, it’ll grab that idea and do it.

Jay Clouse 1:09:06
Okay, so we haven’t talked to a ton of companies from Texas. I would love to hear your perspective, being a Texas based startup, what does Texas mean for your company?

Jonathan Gill 1:09:14
So Texas means a lot of things to our company. So people like you’re a media measurement ad company in Texas, that doesn’t make any sense. We get that a lot. And then say, why would you be in Austin and not in LA, New York, San Francisco. And then so there’s, as I hope people are getting from the podcast, there’s a lot of intention behind the decisions there. And so one of our team members is not here they are Nomad. And so currently in Chiang Mai, and then we’ve gotten people that have stopped by if you want to call it like a stock or a tour that are literally the people that created the frameworks that we write code. And so some of the vision of the company some of what’s there is we’re able to attracts, like I said, some very good people, barber than we should be able to some of us around the excitement, the way we write code, which is a little bit of like, no one quite gets to see the sausage, but it’s it’s attractive, so certain style person, and then Texas specifically has no state income tax has a lower cost of living. So someone can live a little bit differently here, then they can in the Bay Area, and then the pace of Texas and Austin, specifically, city wise has a lot of benefits. So it’s known as a music town. It’s known as a tech town. And while we’re in podcasting, there’s even festivals related to podcasting in Austin. And then in South by Southwest, no one’s having a panel, they’re having a live podcast, even the panels are really recorded live podcast, that’s great for the industry. It’s great for the direction. So Austin’s very focused, which is where backtracks is based technologically, in startups, there’s a lot of infrastructure here, there’s people that are coming here and large companies are coming. I think the second large Apple campus is going to be in Austin, Whole Foods is based here. And while people don’t think of them as a technology company, a lot of the logistics portion is which of course makes sense with the Amazon acquisition. Google’s building a tower here, Google has a little bit over presidents, Amazon has a presence here. So in terms of the tech side, it’s we have a lot of talent here that is largely in while those are somewhat sexy businesses and certain degrees, a work and things like logistics, they work in businesses that make money but if you want to change or something where we’re here as well. And so in terms of how we’re focused is the Bay Area, I think it’s getting a little crazy on on pricing and for what we’re doing. And the way we want to grow the company, even shifts like the cost of living, if you multiply that out time as a team, that’s if you sizes larger than us, we actually do want to be for the large part, the option of being fully distributed. And then we are based in Texas for the opportunities and there’s a little bit of rebel and being in Texas, I happen to also be born here. But I think that carries through and what we’re doing and in startups and then in Austin specifically. So you’re this health conscious town that is actually all about drinking. And the conflict of all that living together in the same town and the same people. It actually breeds really good ideas. And then for us, and this the industry that we’re in, both on the tech side, which can be very like singularly focused and very sometimes lack of diversity and thought a lack of diversity and background, Austin to us adds a little bit more of that of like I mentioned, I know nothing about sports. But I talked to people that know tons about sports all the time, people that are different ages and the different political views. And we all work together. And then I think in other places that’s a little bit harder to come by and actually march in the same direction. And there’s something about Texas, that is like someone’s said this yesterday, it may not be the right thing for a podcast, but they’re like Texas is crazy. All the democrats have guns. And then I thought about it is like that doesn’t sound crazy to Texan. It’s just the conflict, the dichotomy that that exists. And being here adds a lot of value, where what I see though, is that on the investment side, and the companies, they tend to not have this like a large vision because the funding environment doesn’t support it. So when you’re doing something like a backtracks or something that’s more of a, we’ll call it a bay area style or a New York style startup. That’s a little bit harder in Austin to get funding for versus if you were an enterprise style company that you’re doing seven figure eight figure deals all the time. And so for Austin, I think some of it be great if backtracks had a good outcome for this style company, because then there’ll be more support in the ecosystem. So I think in Texas, there’s lots of pros. It’s a lot lot of capital that is not specifically targeted towards startups and tech, but just in terms of the natural resources of, of the state and a large part, Texas is more economy wise, like a country than estate, it’s very large. So being an estate on an upswing, that is good. And then how we look at it is will be based in Austin. It’s part of the DNA, but we want the best people from everywhere. And that’s kind of our viewpoint.

Jay Clouse 1:14:22
Jonathan, if people want to learn more about you or backtracks after the show, or should they go

Jonathan Gill 1:14:26
They should go to backtracks.fm? or on Twitter, we’re @backtracksteam. Yeah. Happy podcasting.

David Sherry 1:14:34
Hey, what’s up everyone? This is David from the new money podcast where we discuss investing opportunities for everyday people. If you’re interested in startups and tech, each episode of the new money show explores a different financial product or opportunity that anyone can invest in. These are websites and apps like betterment and wealth front and acorns. The types of companies you’ve heard even advertise on podcasts like these, we break down the pros, cons and trends that we see emerging in this new world of FinTech in bite size shows the you can listen to every week. So just search new money in your podcast player and you can tune in. Thanks

Eric Hornung 1:15:05
lot of podcasts talk on the podcast today. Jay, how many times can I say podcasts in one sentence? That’s the real question. I’m counting. Well, we had Jonathan on who talked podcast analytics. We just heard from David from new money, a podcast that’s coming to our network. This is the upside podcast. So let’s bring in one more podcast. Who is it Jay?

Jay Clouse 1:15:30
We’re going to talk with Meb Faber of the med Faber show a popular finance podcast that you actually turned me on to Eric.

Eric Hornung 1:15:37
I did. I have been listening to the Meb Faber show since episode one.

Jay Clouse 1:15:41
Meb is a co founder and chief investment officer at Cambria Investment Management. He’s the manager of Cambria’s ETFs in separate accounts. He’s also the host of the Meb Faber Show podcast and has authored numerous white papers and leather bound books, as his website says he’s a frequent speaker and writer on investment strategies and has been featured in Barron’s The New York Times and The New Yorker. Matt’s got a highly listened to, and very popular show. So I thought I’d be we thought it would be a good idea to talk with him about his insights into his audience and what he looks for in terms of data.

Meb, Welcome to the show.

Meb Faber 1:16:16
Thanks for having me, guys.

Eric Hornung 1:16:17
It’s great to have you here. Usually, we like to start with a little bit of background on the guests. But I think specifically for this insight segment, it’d be great to talk about your background, getting into podcasting, which was a few years ago.

Meb Faber 1:16:30
Well, like a lot of people is windy road, you know. My main business is asset management. So we’re kind of a quant finance focused investment business. And so that’s my day job. But we’re a little different as far as asset managers go, and that we built the company through a lot of content. And so if you rewind or take a time machine back in years, you know, that started out with writing pretty nerdy academic papers. And then that kind of transitioned into two books. But at the same time, this would have been mid 2000s, writing investment blogs. And then of course, that transition a little bit into white papers. And then in the more recent years, things like the podcast and you know, picking fights on Twitter, but but you know, all of those really represent nothing more than a than a soapbox, when giving speeches and all that sort of stuff. That’s been kind of the evolution, we still do all of those things. But the podcast has been really a wonderful medium for us.

Eric Hornung 1:17:30
So you started your content creation with a paper on tactical asset allocation, if I’m remembering correctly, that’s a pretty esoteric title. podcasting has gotten pretty big. How do you know how your audience has grown and who it is? I feel like you have a pretty big podcast.

Meb Faber 1:17:49
It’s it’s all my it’s all my nerds. I can say that lovingly because I was an engineer once upon a time. But yeah, I mean, look, if you rewind all the way back to that first paper in the journal wealth management, the first title was actually a simple approach to market timing, but but no one would read that. And so we changed it to a quantitative approach to tactical asset allocation, which is a mouthful, but then oddly enough, everyone loved it. You know, it helped it was published before the financial crisis, and it would have worked well during that period. But you know, all of that is a very limited audience, academic quant professionals, whereas a lot of the other mediums each one has its own unique audience, it being quiet finance, you know, 90% is male, probably, the podcast has a totally different audience than the other mediums and we actually get that feedback all the time. Made, it helps that I speak with a very slow Midwest Southern mashup draws, people can can listen to my podcast at like two or three x speed. So an hour they can get get through and like 20 minutes, but you know, we we’ve hit upon something that’s in my world, you also got to realize, because aren’t necessarily doing the podcast to try to monetize it for podcast sake, you know, it’s to maybe spread research and ideas and everything else. So it lends itself to really a wonderful, medium. And even if it’s super niche, you can be talking about, I don’t know, just stout beers, somewhere, they get produced in the in the southwest, there’ll be an audience for that. And that’s the beauty of the internet. But But I’m kind of droning on here. But content, you know, it’s been around forever, people used to do radio. And that was a huge, huge audience, for a lot of people in massive, massive businesses have been built upon that. And then whether it’s direct mail or magazines, whatnot, but but podcasting has been particularly wonderful for us. Can you talk about what you guys do in terms of analytics for your podcast, right now, either the tools you use, or what type of insight you’re looking to gain and do gain from it. You know, despite being a quant, I’m almost embarrassed to say we do almost no analytics parts. Part of that is because, and you’re hitting on a sore topic for me part of that is because there’s just not that much developed an analytic space. You know, if you look at iTunes, or Lipson, besides getting show downloads, and what countries, you know, are downloading, there’s not that much. You’ve also hit upon my source of all sore points, which is, you know, you’ve had this massive boom, in this awesome space of podcasts. And there’s so much amazing content. And the of the dozens of podcast players, not a single one allows you to rate episodes. And the problem with that is there’s a lot of great shows, obviously y’all my show amazing, but not every episode is great. You know, I can say that with honesty. And then there’s plenty of shows that are decent are average, but some of the episodes are world class. And the problem with podcast discovery now is every app out there with the analytics wants to introduce you to more shows, well, I don’t need more show, you know, I need to know of the shows which ones are fantastic. And so the big challenge there is that there’s just a massive fire hose of information. And so the analytics on my side as a host, it’s really frustrating because you don’t necessarily get that feedback other than people emailing you and saying, hey, great show, or Hey, that was really stupid. But that happens every show. So we no matter what we usually have in someone and someone loves it every single show. And so it’s hard, and it’s unforced, someone will eventually get it right. And we used to think about doing this as a business. But I think it’s more of a feature rather than a company. And so if Apple or radio public or breaker, any of these apps or analytic platforms wanted to do it, I would love them forever. The same way that Rotten Tomatoes are IMDb does it for movies, because there’s a good chance if a movie has 95% rating that it’s good chance that it’s good. And there’s a good chance that if it has a 10% rating, it’s probably an Adam Sandler movie, but it’s probably not a good movie. And so that’s all I want. I want the ability, nothing upsets me more than sitting through an hour long podcast is I have fo mo that it’s going to get amazing the last 10 minutes when usually never does. So listeners, big business opportunity for you please figure it out.

Jay Clouse 1:22:14
Yeah, I would say anecdotally, Eric, and I, you know, we describe our podcast listeners and similar terms that you did, you know, they’re My nerves are my croissant, my quad nerds. But analytically, we don’t really know, we just know anecdotally what the type of person is who’s emailing or tweeting at us? And so for you, Has anything changed in your general toolset or podcasting experience over the last couple years? And what is that?

Meb Faber 1:22:39
You know, I think there’s a lot of opportunity in the space that people haven’t really thought of yet. And so I talked to so many people and being one of the kind of the, I don’t want to say, early entrance into podcasting, but maybe the kind of second wave, but certainly before the main sort of Cambrian explosion of podcast is that there’s so many other things ideas out there that could develop such as I would love to see more people do long form or even short form content, you know, even books published them as cereals. And you’re starting to see that, you know, we experiment with some just kind of short, instructional sort of audio book style episodes. You know, the main, the main format is one on one interviews. But, you know, China, for example, totally different podcast scene where it’s multiples of the size of the US. And it’s actually a subscription model, and so that the revenue is like five times the US podcast revenue, whereas the US is, say, sponsored by ads. I mean, there’s so many different business ideas. I mean, if I was a financial plan, or you could just do case studies once a week or once a day. The best idea I have outside of asset management I don’t want to do it’s too much work, but would love to see someone do so much like I instructional Rosetta Stone of investing where, you know, hey, you want to focus on investing on one or real estate investing, or angel investing, or how to invest in mobile home parks, do kind of like a coursework, or study for the CFA, you know, it’d be nice to have just a CFA tutorial where each episode covers a chapter or whatever. And so you could do it while walking your dog or working out or sleeping, whatever may be lots of ideas, and I think you’ll see the development there. You know, we’re, we’re trying to pair it a little bit with some video coming up, which is, which is I think a little bit lost in the podcast for the visual element MySpace, which, which is talking about, you know, investing and charts and everything surrounding that. So despite the massive amount of podcasts coming along, I think it’s early innings to use a baseball analogy of what’s going to get developed. And I’m other than the fire hose of podcasts that I want to listen to not enough hours in the day, but I’m up to to at least two x feed on almost all my podcast. So my wife thinks I’m insane psychopath every time she gets in the car, because it just starts auto playing towns like Alvin and the Chipmunks. But anyway, so we’re hugely bullish on space.

Eric Hornung 1:24:59
you have advertisers on your podcast, but you also said that you don’t really have great data on your podcast, how did those conversations go when your onboarding and advertiser to say, this is kind of who you’re going to get? How does that all work?

Meb Faber 1:25:13
We can extrapolate my audience very easy from other mediums like Twitter, the blog, etc. I mean, if you’re talking about high level, quantitative finance, like you have a pretty good idea of what what your audience is that having been said, you know, we take a little bit different model to the advertisers. And you know, again, my main goal is not we manage a billion dollar asset managers and the main goal of the podcast is not monetization, it’s just to use the platform as a soapbox and or megaphone. And so many of the sponsors we do have the kind of falls under this Tim Ferriss sort of concept of its products or services or things we’d like or love already. So for example, we reached out I’m a big skier grew up in Colorado, reached out to the mountain collected pass and said, Hey, guys, will give you a free sponsorship. You give us a couple of free ski passes, how’s that work? It’ll be a huge discount to what we normally charge Have at it and and I love it because I get to go ski ski if you’re a few days, and they get a great platform, you know, is it there? Perfect audience I don’t know. I think you’ll get a lot more in depth analytics in the coming years. But certainly it’s it’s a kind of a shotgun approach at this point. But that’s an idea for a lot of podcast hosts to is you can reach out to some of the services and providers that you already paid for or maybe the products you love already that you’re spending money on and work it out. So we we don’t have a huge amount of analytics insight. I wish I wish we did.

Eric Hornung 1:26:41
I only know about Japanese skiing because of your podcast.

Meb Faber 1:26:45
Well, you know, I’m kind of sad that that’s the case because the words getting out why we went skiing and and Hokkaido again this year and the change in the crowds and development going on. I think one of the resorts we went to was there’s a Ritz and a Park Hyatt going up with all bunch of Ozzy’s I love you guys. But my God, everyone’s found out at this point, but it’s a special place. And the great takeaway is that little finance history for the listeners that during the Japanese boom in the 1980s, they just built hundreds of ski resorts. And so there’s tons and tons of these little mom and pops all over the island. I think there’s still something like 300, which is kind of insane to think about. So once you get outside the main one or two, there’s still a lot of hidden gems.

Eric Hornung 1:27:32
Well, not we are running up on time, but I wanted to say thank you for coming on listeners. Without megs podcast upside probably wouldn’t have been a thing. He interviewed someone back in October of 2017, who kind of kick started Jay and eyes conversations about this podcast. So that thank you for coming on. Thank you for giving us some insight about the podcasting space and data analytics.

Meb Faber 1:27:54
Yeah, guys, when I’m when I’m local in June, we’ll have to catch up and do one live.

Jay Clouse 1:27:58
for sure. And if let’s there’s of the show, one learn more about you. Where should they go? what’s what’s your Twitter? What’s the name of your podcasts?

Meb Faber 1:28:05
Yeah, there’s not too many Mebs out there. So if you search that you’ll end up and probably the right place, but blog is Meb Faber. Same for Twitter and the podcast. And then my my day job is Cambria investments, which is the asset management company.

Jay Clouse 1:28:21
All right Eric, in depth interview here diving into a lot of things related to podcasting. But let’s talk about backtracks as an opportunity. Or would you rather start talking about Jonathan’s founder? I think

Eric Hornung 1:28:31
we start with backtracks as opportunity. Because I think we spent such limited time on Jonathan as a founder in this interview, very unique for us not to spend the full 15 to 20 minutes going into a backstory, I got excited, we both got excited. And we got excited because listeners, if you have not created a podcast, or played around a podcast or listen to people who talk about the podcast space, one of the biggest frustrations is data analytics. Jay and I are sitting here today don’t know who you are listening to us. And that is very unlike most other mediums.

Jay Clouse 1:29:11
Yeah. And you know, to get around that things that we’ve talked about our Okay, well, let’s Sunday listener survey, or talk about a listener survey here on the podcast and see who will fill it out. Now you’ve got response bias, you’re going to have a sharp drop off a number of listeners, people actually fill out the survey. It’s not a great solution. And in a world where I can get analytics on just about anything else that we do any other digital property very, very specific in depth analytics is very frustrating that the core of our product has so little to tell us.

Eric Hornung 1:29:45
It’s frustrating, but it’s also an opportunity.

Jay Clouse 1:29:48
Right, right.

And that’s what Jonathan found when he was getting these calls while backpacking in remote areas, asking him to analyze the audio of people’s podcasts. And this is the one part of Jonathan’s background we did get a look into that I think is worth mentioning here. He somehow found his way into the music industry, create a label published all kinds of albums worked with Amex PEX, play it loud. Now he’s in the podcasting space, focusing on a different area of audio. I really liked the perspective he brought up of the benefits of the slow maturity of podcasting as a medium, saying, basically, that the music industry made some bad decisions early on with how they structured monetization, which has really kind of hurt the industry, in a lot of ways made things like Spotify possible, but brought an industry that was killing it in the 90s, from a CD perspective, to its knees, and a streaming music perspective. And now in the podcasting space, it’s very decentralized, and empowering a lot of creators to kind of hold and manage their own destiny, with their packing slip, as he called it their RSS feed,

Eric Hornung 1:30:55
I want to talk a little bit about how big of a pain point this really is. Because for us, whose core product is a podcast, it’s a big pain point. We like feel this. For some other brands, it might not be as big of a pain point. We heard about that with men. He’s like, this sucks. It’s annoying, it bothers me a lot. But this isn’t my main product. This is something that I had a lot of listeners, and I know that we can kind of back into roughly who they are, we think they’re a little bit different than that. But people to follow me on Twitter and this, quote, finance circle, I can get advertisers to cover some costs and do things that I want to do. So it’s more like a lifestyle, business kind of aspect of because of the informality of it, I can have cool things be on my show that benefit me personally, while also having the content benefit my core product, which is my Asset Management shop. I think right now, a lot of podcasts that are actually I don’t hear your take on this. Do you think right now, there are more podcast supporting brands or more podcasts that are trying to be the brand?

Jay Clouse 1:32:00
Well, an add on to the point you’re making is just how many podcasters are there in general? You know, it’s still rapidly growing, but still fairly small. So you have like, how many people would it be possible to care? And then how many people would actually care? to your question about brands versus individuals building a brand? I don’t know, I’d go off intuition here. But with 660,000 shows, I would bet that the majority of them which are dead, that shows already were individuals, but I don’t have any data here.

Eric Hornung 1:32:32
That was just it was just a gut question. What about like the biggest shows, I feel like most shows that I listened to are supporting a brand. They aren’t a brand itself.

Jay Clouse 1:32:41
I would disagree. I think it’s going to change here soon. Because I think the world of podcasting is becoming more what audience can you bring to this new medium? versus how can you create a new medium and build an audience? I think historically, it’s been much more about independent creators and building a brand from scratch. You have Mark Marion, WTF popping up and then you had Pete Holmes, his podcast, those started to get wrapped under some networks like three list. But originally, they were kind of created content, Joe Rogan, I would say is unique creator, or some other popular shows here. Song explode or anything under the radio topia network was an independent creator and then brought into a network, the gimlet shows, some of them were baked in house, some of them were independent, then brought in house like reply all cereal, the NPR shows those were supporting a brand. And I think that’s what really started kind of the tipping point here because you started to see what was possible in this medium, when you had a staff focused on highly produced narrative type content.

Eric Hornung 1:33:48
And I guess maybe that’s just because I listened to so many business podcasts, and everything you just kind of went through. I don’t subscribe to any of those shows.

Jay Clouse 1:33:56
Well think about sports too, because huge, huge groups here our sports, entertainment, you’re starting to see like armchair expert DAX shepherds show that was independent, but Conan’s show less independent like it’s supporting the brand of Conan, as what I’m saying with a lot of these entertainment based shows people with an audience, people with a name, I think are coming more from the standpoint of we’ve already built an audience. Let’s leverage this platform now.

Eric Hornung 1:34:23
Quick little question for you. What do you think the most represented categories on iTunes are?

Jay Clouse 1:34:31
I think that religion is super high. I think that sports is probably behind that. And then maybe entertainment.

Eric Hornung 1:34:39
comedy, business news and politics and religion in that order. Two thirds of the top podcasts come from just four categories, society and culture, news and politics, comedy, and sports.

Jay Clouse 1:34:54
That’s interesting, because I wonder if that says more about the podcast host the people who are drawn to podcasting as a medium or about listeners.

Eric Hornung 1:35:03
When we look at marketplaces, don’t you look at supply before demand, or at least you do Jay so its supply could kind of drive demand, right?

Jay Clouse 1:35:12
was that numbers of shows or numbers of listeners?

Eric Hornung 1:35:16
Number of Apple top 200 shows. So that is where listeners want to spend their time. I believe that if you actually track all of the 660,000 podcasts across Apple, that religion is actually one of the highest numbers of podcasts. But there are only for religious shows that make the top 200.

Jay Clouse 1:35:40
Yeah, I have some data in front of me. But it’s from 2015, where it shows top 20 categories on iTunes, with most podcasts, in Christianity, dwarfs just about everything else, aside from music. It goes Christianity with 39,000 shows music with 34,000, then comedy with 14,000, TV and film with 13,000. And then things start to taper off pretty drastically business news was at 2300, at the time of this, this chart. That was four years ago, so…

Eric Hornung 1:36:09
Assuming those ratios held up, though, pretty much the only while we’re going down the rabbit hole here, and we should pop back out. But pretty much the only category that has correlation between supply and demand is comedy because there are 16% of the top 200 Apple shows are comedy and they have a huge number of shows. Whereas there are very few number of society and culture shows but they make up 45 sorry, 22 and a half percent of the apple top 200 shows.

Jay Clouse 1:36:41
Let’s pop out of this of this rabbit hole here. One Piece of insight will pull back out is that current numbers that we have 660,000 podcasts available to listen to. That would be the total market that Jonathan and his team at backtracks could be attacking right now as it stands in growth course, but 660,000 shows. So let’s try to back into some some numbers as far as how big this opportunity is.

Eric Hornung 1:37:07
So we don’t have a good solid way to say, okay, who is going to pay and care about data analytics on their podcasts? We don’t have a good solid way to do something, I find there are two ways you can do it. You can either split in half, which is the ED Thorpe model, which is I don’t know the answer. So the answer must be 5050. Or you can use the credo principle, which is 20% are going to give you 80%. I think for this, we should use the Pareto principle and say, okay, of the 660,000 shows, well, first, we probably should cut out half of them for being dead shows that don’t have anything on it. But assuming that there’s 660,000 shows 20% of those are going to care enough about their podcast to get data analytics. That gets us to 130,000 shows, let’s call it 150,000 shows for simplicity sake. And we know that the minimum monthly price for backtracks is $50 a month, multiply that times 12. And you’re looking at $90 million a year in terms of total potential revenues. There’s a lot of adjustments there that we’re missing Jay I mean, there’s dead shows, as I mentioned, there’s shows that are going to get in the thousands of dollars instead of that minimum 4995. There’s a lot of adjustments. But I think that this gives us a ballpark of if this were to become the number one data analytics platform. What does this look like today?

Jay Clouse 1:38:38
Yeah, and you know, typically, we wouldn’t look at a 90 million or $100 million market and say like, this is huge. This is a no brainer. There are a couple of incumbent competitors in the space one being pod track one being pod sites that also sitting the RSS feed, but aren’t giving us nearly the specificity of data that Jonathan is talking about, and or would I limit myself to one analytics provider, especially given that pod track is free. So I would actually remove that concern there. But still not a huge market, Eric, and yes, it will grow. But I think this opportunity sort of depends on the investors fund size, and what types of investments they have to make to mathematically work out to be a returnable investment.

Eric Hornung 1:39:27
So there are 2 million artists on Spotify. There are 660,000 podcasts on Apple iTunes. Last year, there were 525,000 podcasts on Apple iTunes, I’m not saying all of those are going to stick around. And all of those are going to continue to be hosted and some will peel off and some will never exist. But I think that there is a lot of room to run. on the supply side of podcasts, I think we’re just kind of starting the kind of spike up.

Jay Clouse 1:39:58
I also think that there’s probably some opportunity here with advertisers or brokers themselves utilizing and paying for this data. But that wasn’t really brought up in the interview. So I’m not going to speculate on it. The interesting thing about podcasting and monetization as it relates to advertising, I think we’re going to see with more and better data, more shows will have the opportunity to advertise because you can be much more specific in your audience and how much that audience is worth to an advertiser. Right now, I think there’s actually some security for small shows, it shows that are bringing on advertisement in the fact that they don’t have great data. I think it plays a little bit of a smoke screen right now that some shows are going to be resistant to let go. Because I think for shows that are performing well. In are receiving advertisement, a lot of them may be getting a benefit of the doubt in terms of their listenership that good data would remove.

Eric Hornung 1:40:54
We also kind of talked about this the other day informally, with this benefit of bad data as it relates to Instagram, and how some of the biggest people on Instagram, you know, say they have 500,000 followers. Well have those followers are just bots, giving them thumbs up in their comments. But when they go out to advertisers, they can say we have 500,000 followers, Instagram, pared back all of those bots, kind of like what happened at Twitter, although there’s still some Twitter bounce around. If a lot of those got kind of chopped off and you had more real numbers, the numbers would look smaller. And I think podcasting feels smaller, because the listens and downloads are mostly real.

Jay Clouse 1:41:35
So what does this all mean for us as potential investors here we’re looking at backtracks as an opportunity to invest some some high level takeaways for me. Jonathan’s background as a founder, makes a lot of sense to me how he got to where he is now, why he started this company, and why he’s able to do things with audio analytics that other people wouldn’t be able to do. I like that this is an exceptionally tight knit and lean team. I love the Instagram small team, impactful product model. It sounds like Jonathan’s very intentional about the culture of the team and how he’s building it. A shadow for me is his reluctance to build it faster. I think that it almost felt like we were too far on the spectrum of being careful to the point of possibly foregoing some growth. I mean, if he’s doing five demos per day, with a team of four people total, you have a hard capacity limit in terms of number of demos a day, you can do number of demos per week, number of new contracts to could be signing per week. I just think he could be capturing more faster. The market itself seems fairly small, but growing. So you know, what’s, where’s your head at? What do you think about this opportunity?

Eric Hornung 1:42:42
I don’t mind that the markets small because I think that podcasts are going to boom, and I think you’re going to get a lot more branded content. When there’s branded content, that means that there is more money behind it, I would assume that the thousand dollar accounts per month are all branded, for example, the sports seems that he talked about. So I think when you get more and more people kind of coming on. Like the ear Wolf’s of the world, we talked about the Conan Conan show, but also small and medium sized businesses that are going to pile into podcasting over the next five years. to kind of see it as a way, just like blogging kind of took off for a while. Hey, what if we try this and some will stick and some won’t. But they’re going to all want great analytics, I see that as a huge benefit. I see the growth of this industry is a huge benefit for backtracks, I understand that it’s very small right now. But if we’re looking just at last year’s growth, that’s somewhere between 25 and 30%. growth year on year. I mean, if you see that for a few more years in a row, you’re going to get to some real numbers really fast, especially if the people coming on have money that they’re willing to spend. And they’re not these independent creators that are trying to do it on a shoestring budget, like we did when we started. So I like the growth of the space. I’m very bullish on podcasting in general, I’m always wary that Spotify. and to a lesser extent, apple, I’m really not as worried about Apple. But Spotify and the other potential competitors that are bigger can roll something out like this. What I like is a competitive advantage is that this works in between platforms, and kind of feels like a third party. So you don’t feel like you ever being cheated on your data by seeing Spotify as numbers as elevated above apples numbers or something like that, right? There is no bias in the numbers. It’s just across all of the platforms. I think that there is a huge opportunity here because of the fragmentation of podcasts. And I think that will consolidate. I’ve talked a lot about the market here because I think that is my biggest takeaway is that this space is underdeveloped, but critical in the professionalization of podcasting.

Jay Clouse 1:44:59
Yeah, I’m trying to avoid putting in any of my own bias because I love the product. I really like the team. I like the business itself. I think it’s all going to come down to fund dynamics and whether or not this makes sense for any an individual investor to put money into. I think this will be a highly successful highly profitable business. Yeah, I think that’s I think that’s awesome. As far as investment, it just depends on the investor. I can tell you that 618 months from now, I’m looking for really just growth and new accounts, how quickly they’re pulling on new growth and the retention of those accounts. Jonathan mentioned that his personal KPIs are numbers of demos numbers of leads, amount of organic traffic licensee they don’t have a refer like to see this direct traffic. I think that’s all kind of leading indicators of revenue and number of contracts old. So I’m looking at ad revenue. Here I am.

Eric Hornung 1:45:56
We’re always looking at revenue, Jay.

Jay Clouse 1:45:57
Hot take!

Eric Hornung 1:45:58
We’re always looking at revenue, think it’s 6-18 months. I want to see the backtracks name, getting more play. For example, I didn’t know about backtracks until we got introduced them. And I would consider myself at least moderately educated in the podcast space. I read almost everything on podcasting that comes out on medium. I’m learning about the market constantly. Whenever a VC puts out like a note on podcasting, or how they think about investing in podcasting, I’m, I’m reading it most likely. And it’s odd to me that I haven’t heard more buzz about backtracks. And maybe that’s just what a exponential curve looks like early on. But in 6-18 months, I’d like to see that name getting tossed around Twitter a little bit, I’d like to see this idea of data analytics, whenever it’s discussed, bringing up the backtracks name, because that’s gonna, I think that’s my version of it Jonathan’s KPI of direct referrals to his website. My version of that is, who’s talking about it on social and who’s talking about it in the articles they’re writing. So I want to see more of that, because I think that’ll translate very quickly into what you want to see in 6-18 months.

Jay Clouse 1:47:16
Alright, guys would love to hear your thoughts here. Let us know what you think about backtrack. So what do you think about this opportunity? What do you think about the future of podcasting, you can tweet at us at upside FM or email us Hello at upside down. And we’ll talk to you next week. That’s all for this week. Thanks for listening. We’d love to hear your thoughts on today’s guest. So shoot us an email at hello@upside.fm. or find us on Twitter at upside FM. We’ll be back here next week at the same time talking to another founder and our quest to find upside outside of Silicon Valley. If you or someone you know would make a good guest for our show, please email us or find us on Twitter and let us know. And if you love our show, please leave us a review on iTunes. That goes a long way in helping us spread the word and continue to help bring high quality guests to the show. Eric and I decided there are a couple things we wanted to share with you at the end of the podcast. And so here we go. Eric Hornung and Jay Clouse are the founding partners of the upside podcast. At the time of this recording, we do not own equity or other financial interest in the companies which appear on this show. All opinions expressed by podcast participants are solely their own opinion and do not reflect the opinions of death and Phelps LLC and its affiliates on your collective LLC and its affiliates, or any entity which employs This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. We have not considered your specific financial situation, nor provided any investment advice on the show. Thanks for listening, and we’ll talk to you next week.

Eric Hornung 1:48:56
A lot of people benchmark themselves against these average is that are published online. I want to do like a little round of fact or fiction based on your understanding what exists. Average trailing 30 day downloads across all podcasts is 141. False? Is it higher, lower?

Jonathan Gill 1:49:13
Higher.

Eric Hornung 1:49:13
How much higher?

Jonathan Gill 1:49:15
Depends on the subset of the customers, I would say 60% higher than that.

Eric Hornung 1:49:20
Okay. Top 10% downloads, trailing 30 days is about somewhere between 3030 600, true or false?

Jonathan Gill 1:49:28
for an individual podcast?

Eric Hornung 1:49:30
for an individual podcast.

Jonathan Gill 1:49:32
Depends on the size if you have more than 50,000 downloads in a given month here in the top 1% of all podcasters still to this day. That’s false.

Eric Hornung 1:49:42
Okay. And the average percentage a person makes it through a podcast is 40%.

Jonathan Gill 1:49:48
That’s true.

Eric Hornung 1:49:49
Okay.

Jay Clouse 1:49:50
And that’s for a 43 minute episode.

Eric Hornung 1:49:52
40…48 minutes and 13 seconds, I think.

Jonathan Gill 1:49:55
Okay, good. That one was surprisingly like, on the mark.

Jay Clouse 1:50:00
Any other surprising facts that you found?

Jonathan Gill 1:50:02
Yeah, there’s a few surprising facts. People listen on websites more often than is publicized by essentially the people that don’t have the incentive to say that. So

Jay Clouse 1:50:11
that’s our second biggest channel.

Jonathan Gill 1:50:12
Yeah, when you get a number, and it’s from a podcast app, I think people need to remember the question where the research comes from it’s so if you have a podcast and you don’t have a website, you should maybe have a website because it’s a bigger channel than people realize, at first, at surprising and that a lot of traffic can be driven through newsletters. We have customers that most of their traffic flow is not from social not from searching, not from directly the pod catchers, but they send an email and people check out the podcast there. Those are surprising. And then how diverse a podcast audience can be in terms of geographic location. So I think people when they see that they truly realize it’s a global phenomenon. And even if you think you’re just starting out, you’ll see someone in Sri Lanka listening to your podcast and the data

Interview begins: 07:29
Insight begins: 1:15:07
Debrief begins: 1:28:18

Jonathan Gill is the founder and CEO of Backtracks.

Backtracks is an analytics and hosting platform that helps podcasters know & grow their podcast audience. They are an audio-oriented, highly technical team that have worked on 30+ albums, voted in the Grammy Awards, worked on NASA space station software, hold multiple patents, built massive e-commerce and payments systems (for the likes of Dell, American Express, Visa, etc.)

Backtracks was founded in 2016 and based in Austin, Texas.

Learn more about Backtracks: https://backtracks.fm/

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Meb Faber is a co-founder and the Chief Investment Officer of Cambria Investment Management. Meb is the manager of Cambria’s ETFs and separate accounts. He is also the host of The Meb Faber Show podcast and has authored numerous white papers and leather-bound books. He is a frequent speaker and writer on investment strategies and has been featured in Barron’s, The New York Times, and The New Yorker. Meb graduated from the University of Virginia with a double major in Engineering Science and Biology.

Follow Meb on Twitter: https://twitter.com/MebFaber
Visit Meb’s website: https://mebfaber.com/

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This episode is sponsored by Taft, Stettinius & Hollister, a full-service law firm known for assisting entrepreneurs across the Heartland.

Learn more about or get in touch with Taft: https://www.taftlaw.com/
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