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Podcasts + startups + Spotify = Crazy newsletter!

February 8 · Issue #28 · View online
Design Sprint Newsletter
Hey there!
This week Spotify bet big on podcasts, buying startups Gimlet Media and Anchor. Podcasts are undeniably compelling, they’ve grown in popularity, and Spotify sees this as a way to obtain more listeners, keep more listeners, and make more money.
This news fascinated me, made me happy and sad at the same time, and I thought… well, I haven’t sent out a newsletter in a while and I’m nerdily into this topic so let’s combine the two.
This newsletter is not like my others, it’s REALLY long and more of a single narrative. I won’t do this often or maybe ever again, but what the heck… here we go down the rabbit hole…

1. Backstory, part 1:
Back in 2014, when Gimlet was a young startup, I went with some colleagues from GV and ran a design sprint with co-founders Alex Blumberg and Matt Lieber at their funky office in Brooklyn. It was soooo fun. And weird, because Alex recorded the whole thing for an episode of their podcast Startup.
I wrote this post about the Gimlet design sprint (originally intended to be a chapter in Sprint but didn’t quite fit). Spending time with these two got me really excited about podcasts and about what they were doing, so I followed closely from there. And it’s interesting to me that what Gimlet was trying to figure out in 2014 is part of what Spotify has to figure out now.

2. Backstory, part 2:
Speaking of the Startup podcast, if you’re into building products and you haven’t heard season 1 (2014-15), you should definitely go back and give it a listen because it’s a super behind-the-scenes account of starting a company. Actually I think most people would probably enjoy it because it’s just a really good story, very well told.

3. Podcasts are valuable, part 1:
In our design sprint back in 2014, Gimlet was trying to figure out how to push the limitations of podcast platforms like iTunes, and how to make money beyond advertising. Fast forward to today, and it’s still a struggle in the US, but podcasts in China have figured it out. This excellent post by Connie Chan (general partner at Andreesen Horowitz) explains how Chinese podcasts made $3-5 billion in 2017, compared to $314 million in the US.
Instead of relying on ads, podcasters in China can sell subscriptions or individual episodes, as well as receive tips from listeners. That’s so cool! Will Spotify combine the idea of Netflix-like premium content with some kind of micropayments? What do I know!

4. Podcasts are valuable, part 2:
Why else might Spotify buy these startups? Well, as much as podcasts are taking off, buying podcast ads is a total hassle, as you can see from this post. (Side note: I am a sucker for in-depth process stories, and this one even includes email screenshots!)
Spotify’s other acquisition, Anchor, is a platform for creating podcasts—which also makes it a platform for advertising. What if Spotify made podcast advertising as easy as buying ads on Instagram or Google? Maybe that’s their plan… but again, what do I know?

5. Wait… this news kinda sucks.
Reset. It’s easy to get into the story and the possibilities. When I heard this news I was excited for the future of podcasting… but also kinda bummed out.
I’ve been following Anchor and Gimlet and had (naively!) hoped they’d grow on their own and become big, independent entities. I know, I’ve worked in venture capital so I should’ve known better. But I forgot about this basic fact: when startups take investments, they throw fuel on their growth, but they also bind their future. Investors make money at the exit, when the startup is acquired or goes public. So, of course, the investors push for an exit. (Read this post by Basecamp’s DHH for an opinionated view of how this works.)
Reading between the lines of this interview with Gimlet’s founders, it’s clear that pressure from investors was a big part of their decision. Don’t cry for anybody here—the founders made a lot of money. And sure, one way or another, Gimlet will probably keep making great podcasts, and Anchor plus Spotify might have a better chance of improving the podcasting platform than Anchor alone.
Probably. Maybe. But in my opinion, it sure would’ve been cool if these companies could’ve stayed independent. Less bureaucracy. More competition. Most startup acquisitions don’t go well… I hope Gimlet and Anchor are exceptions.

6. Not sick of podcasts yet? Listen to mine!
Oh yeah, I have a podcast, called Product Breakfast Club! In the most recent episode, we interviewed Kevin Rose, founder of Digg and investor (ahem) in startups like Twitter, Facebook, Medium, and Square. You can listen everywhere podcasts exist, including iTunes and of course Spotify.

  • Charlotte - March 18-19 Two day workshop, with me teaching the first day/morning of the second, and a second instructor (Jeff Grant, ex-IDEO) teaching the rest.
  • Reykjavík - April 4 This will be my first time to Iceland, and the workshop is at Reykjavík University, where they once ran 92 sprints in one week!
  • Stockholm - May 2 at the From Business to Buttons conference.

Whew, that’s it, thanks for reading! Or at least skimming! If you liked this newsletter, consider forwarding it to a friend. You can promise them it will never be like this, ever, ever again. 😅

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