Failing to close Jimmy Fallon & using a buggy app to capture once in lifetime moment
My chat with Michael Mignano, Partner at Lightspeed & Cofounder of Anchor
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You likely know Spotify has gone all in on audio beyond music. They made a series of acquisitions to conquer the podcasting world. One of them was Anchor. If you follow the podcasting world, you likely know Anchor lets you create and distribute podcasts. What you might not know is Anchor started as a social audio network. Think Twitter, but for audio. I was one of the earliest adopters of that version of Anchor in early 2016. I got to know one of Anchor’s earliest investors, Matt Hartman, from Betaworks, a prominent venture studio, by having a back-and-forth on Anchor about consumer apps. Matt ended up hiring me as an intern in the summer of 2016 while I was in college. That’s how I broke into tech in NYC!
Today’s chat is with Michael, the co-founder and ex-CEO of Anchor, who recently joined Lightspeed Ventures as a Partner after a 3-year stint as Head of Podcasts, Live & Video at Spotify. Michael is a great essayist and has been interviewed by Statechery’s Ben Thompson and Cartoon Avatar’s Logan Barlett, covering his journey of the past decade and perspective on innovation paradox in audio standards and recommendation-based media. We won’t be covering those topics.
In this chat, Michael and I talked about :
How he tried to get Jimmy Fallon to angel invest
What would have happened if Spotify hadn’t bought Anchor
Product idea he wishes he had pursued harder
Why is social audio so hard
Advising first-time founders
The transition from angel investor to VC
Triaging pitches in his inbox
Change in perception of VCs now that he is one
Next generation of social networks
What deserves more energy and dollars
What’s missing in the startup blogosphere
Sar: What’s the most memorable story from your Anchor days that hasn’t been shared publicly?
Michael: Shortly after raising Anchor’s seed round in early 2016, we thought it’d be a smart idea to attempt to get a celebrity comedian to angel invest in the company. We thought Anchor would be a great platform for comedians, so what better way to garner validation and distribution than through one of the world’s most famous comedians? We decided that Jimmy Fallon, who had recently taken over the hosting gig at the Tonight Show, was our best bet.
We didn’t know Jimmy personally, but a few of our investors did, and they all got to work on trying to connect us with him. This proved to be difficult. Jimmy was a very busy person, and his people were understandably not compelled by the idea of allowing two random, local nobodies to pitch him on some weird social audio app. We tried every angle possible, and in hindsight, I’m confident I personally invested dozens of hours trying to get in touch with him. Then, one day, we caught our lucky break several months later. A friend had let us know that later that evening, he’d be stopping by the Atlantic Records offices, where I had previously worked years earlier. My former co-workers agreed to let me camp out there and take my chance at bumping into Jimmy to pitch him on Anchor.
Hours went by with no sign of Jimmy. But slowly, a trickle of interesting people started to flow into the Atlantic office, right near where I was camped out. First came Questlove, the famed Roots drummer I had met previously. He and I exchanged hellos as Quest moved to a recording studio to work on something. After an hour or two, I heard a knock at the door. Since no one was around to answer it, I took it upon myself to let the knocker in. To my surprise, the guest was hip-hop legend Busta Rhymes, who said hello, shook my hand, and swiftly moved to the studio.
At this point, I had been sitting around for hours and was very hungry. I ordered takeout, and after 45 minutes or so, I went down to the building’s lobby to pick it up from the delivery person. As I was collecting my meal, I bumped into someone headed up to the Atlantic Records studio: Lin-Manuel Miranda, the creator of Hamilton (at the peak of Hamilton’s popularity). Recognizing that we were both going to the same place, Lin said hello, exchanging a few words as the elevator took us up to Atlantic. Lin went into the studio, and I hung out in the lobby to have my dinner.
The clock was nearing 11 pm when I finally noticed a small group of people surrounding a very obvious VIP shuffling into the office. And there was my white whale: Jimmy Fallon. He quickly made his way into the studio, where Quest, Busta, and Lin were already working. I waited patiently for their work to end so I could find a way to approach and pitch Jimmy.
Finally, they emerged, and one of my friends who knew why I was there did me the favor of introducing me to Jimmy. Despite Jimmy’s insane level of celebrity at the time, he was extremely friendly, humble, and willing to hear me out. I dove into the pitch, reciting the same bit I had done hundreds of times before, and Jimmy was immediately drawn in. He even asked to try the app. I handed my phone over and watched as Jimmy went through the Anchor onboarding flow and started to record some audio. My mind was blown. After trying to create this exact moment for months, it was finally happening. But then, seemingly out of nowhere, the pitch came to a grinding halt.
Something else was happening in the other corner of the room we were all hanging out in. Busta Rhymes, easily one of the most famous rappers of the 90s and early 2000s, and Lin-Manuel Miranda, easily one of the most famous people on the entire planet at the moment of this story, were jamming on a grand piano. Lin was enthusiastically playing the piano, and Busta was freestyle rapping. It was mesmerizing and unlike anything any of us had ever seen. Understandably, Jimmy instantly lost interest in my silly Anchor pitch, indifferently handed my iPhone back to me as if it were a piece of trash to be disposed of (I took no offense and would have done the same), and turned 100% of his attention to Busta and Lin. It went on for 5 minutes, everyone busting out their smartphones to capture this extremely unique moment. Even worse, I made the stupid mistake of trying to capture the event’s audio on Anchor, only to have our still-nascent app crash and lose the recording moments later. When it was finally over, the room erupted into applause, each of us awestruck by what we had just witnessed. Jimmy was whisked away by his people. The moment, and my pitch to invest in Anchor, were over.
Needless to say, we never got Jimmy to invest. Anchor turned out great anyway. After this early fundraising moment, I learned a few valuable lessons: as an early-stage startup founder, no individual investor will ever make or break your company. And more importantly, you should never over-invest your time in any person or initiative, especially when it comes to fundraising. Diversifying your time and energy is critical, especially when your team is small. Even though the Jimmy Fallon pitch turned into an incredibly memorable story, it wasn’t even close to being worth the dozens of hours I invested in trying to reach him, and those hours would have been far more valuable if I had invested them in getting back to working on product and go-to-market strategy. Also, don’t rely on your buggy app to capture a unique, once-in-a-lifetime moment. Instead, use your iPhone camera.
Sar: What would it have been like if Spotify CEO hadn’t reached out to you and if you hadn’t managed to sell Anchor for 2-3 more years? It’s a counterfactual but fun exercise, I think!
Michael: We had a Series B term sheet from a top firm on the table, and we were considering signing that instead of selling to Spotify. However, we had a few hesitations with that approach, the main one being platform risk. Since the consumption of Anchor podcasts was taking place on other platforms (e.g., Apple, Spotify), there was always a risk that a major platform would cut us off and our distribution would be disrupted. However, if we had chosen to remain independent, and our disruption hadn’t been cut off, Anchor would have likely experienced a lot of the same macro winds we did inside of Spotify. We likely wouldn’t have been able to truly achieve our mission, which we felt we did inside of Spotify. Without being able to partner deeply with a platform with a critical mass of consumption on the listener side, it would have been impossible for us to innovate on the actual podcasting format and truly democratize the medium.
Sar: Are there any product ideas you wish you had pursued harder during Anchor’s social audio and pre-podcasting days?
Michael: A few years back, Anchor received some criticism because we had a line in our terms of service that indicated that Anchor users had the ability to remix and repurpose other Anchor users’ content once they uploaded to the platform. While we understood our users’ concern with this line, it was never intended to be related to podcasting. Instead, it was a relic of our earlier social-audio aspirations that we hadn’t proactively removed at the time. We wanted to create a platform where creators could easily clip segments from other creators’ audio and mix them into their own. Additionally, clipped audio would exist in a “soundbank” from which any other creator could pull and incorporate into their content. This was a big idea that I was always very excited to pursue. It felt like if we could pull it off successfully, it would inspire new dimensions of creativity and democratization of audio, especially if we could get the soundback to a critical mass of scale. Unfortunately, it became one of the features we inevitably had to deprioritize to focus on more high-impact projects that immediately moved the needle. Fast forward to now: it’s been fun to watch how a flavor of this style of “soundbank” functionality has become more commonplace on platforms like TikTok, where users often lip sync over not only songs but lines from their favorite TV shows, etc.
Sar: Why has no one been able to crack social audio?
Michael: Social media platforms succeed when there’s a high density of people (demand), content (supply), and efficient distribution (connecting the supply and the demand), all happening at the same time. I think each type of content exists across a 2x2 of cost (how easy or hard it is to produce) and value (how engaging it is).
For example: in terms of cost, some content types are really cheap to produce, such as text or photos. Others are really expensive/challenging to produce, such as video. Text is probably the least engaging format, while video is the most engaging. Audio, unfortunately, falls somewhere in the middle on both spectrums. It’s not that easy to create, so creating a critical mass of social audio content is challenging. And it’s not nearly as engaging and rewarding to consume as video, which means users will often, over time, revert to their favorite video platforms. Because of this cost and benefit mismatch, it’s hard to get the flywheel of engagement going on social audio platforms over a sustained period of time.
Sar: I think what you said re cost-benefit applies more to short-form audio (which has been the default format for the social audio platform attempts) and less to long-form audio (aka podcasting), which has been a broadcasting format and far more successful than short-form audio in general. What do you think?
Michael: I think it has to do with expectations of value for the amount of time you’re willing to invest in the content. When consuming short-form content, I naturally have less time (and therefore less patience) for a low value per minute of content I consume. I want as much value as possible with short form because I have less time to consume. With long-form content, I am naturally more willing to tolerate less value per minute of content. As a side effect of this different expectation, I’m willing to come in and out of the content; my attention can drift to and from what I’m consuming based on whatever else you’re doing (driving, cooking, etc.). That’s how I see it, at least – but who knows!
Sar: Alright, let’s switch gears. When you meet first-time founders asking you for advice, do you have moments where you think, “Oh man, I wish I had a smart answer to that! The honest answer would come off as a platitude or sound boring!”?
Michael: For better or worse, I am a very direct and honest person. I am often the first to admit when I don’t have the answer to something. The good news is, as a founder who has been through nearly every stage of the company-building journey (except IPO), I have typically gone through the most common founder scenarios, which get brought up when I am asked for advice. While I often don’t have the exact right answer to every question or challenge a founder faces, I try to at least offer some visibility into what I did in the same situation (while being clear to disclaim whether or not my approach worked or failed). I also try to share stories or perspectives I’ve heard from other founders, too.
Sar: You are still new to being a full-time VC. What’s been a big adjustment from being an angel investor?
Michael: I’m learning quickly that VC is much different than angel investing in terms of the required return profile of companies we aim to invest in. As an angel, nearly any positive return multiple can be a good thing. While you definitely want to try to hit grand slams, even just getting a single digital return multiple can move the needle for an angel. However, in venture, you really have to aim for massive return multiples. After four years of angel investing, this is a new lens for me, so I’m working on calibrating how I assess opportunities.
Sar: When you pull up your inbox, what gets quickly archived? What makes you want to lean in?
Michael: As a founder, I greatly appreciated it when investors would respond to my emails, even if I sent a cold email. And so, I’m trying my best to respond to the vast majority of emails I receive. That said, it’s sometimes obvious when I’m on the receiving end of a spam email blast sent to every investor at every fund on the planet. Those typically get archived quickly. The rest of the cold emails get categorized into a folder for me to come back to either at the end of that day or the beginning of the next. I find it really hard to ignore any email that makes it obvious the founder actually meant to send it to me and believes there’s a connection between what they’re building and my personal strengths/interests/experiences. I’m surprised to see how often this happens; I wouldn’t have expected it before I started as a VC.
Sar: A common critique of investors by founders is that they say they are open to cold inbound but don’t respond to their emails. I know it’s easy to miss despite the best effort to respond to emails. Has anything about your perception of investors (as a founder) changed now that you are an investor?
Michael: I’ve learned that VC is a far busier job than I pictured when I was a founder. I pictured a person sitting at their computer, staring off into the distance and contemplating the future. I’m exaggerating, but it was something along those lines. I’ve learned that your weeks are typically jam-packed because you’re spending so much time meeting with companies to explore whether or not it makes sense to partner with them. On top of that, you have internal meetings with your partners to align on deals, fund dynamics, etc. Plus, for any companies you’re already invested in, you’re likely meeting with those companies and doing what you can to help them succeed. So email often does become a thing that’s easy to overlook if you don’t dedicate actual time to reading and responding. It’s not something you can fit in while you’re on the go, in between meetings.
Sar: What’s catching your interest lately that does not have a digital trail yet?
Michael: I’m thinking a lot about social media and the opportunity for a new challenger platform to emerge. Now that all of the world’s biggest social networks are pivoting to recommendations, there may be a window of opportunity for a new social media platform to capture our attention at scale. However, I believe that for a new social media platform to succeed, they probably need to find a unique lever to drive the density of engagement. Social graphs can only go so far in 2022, especially when address books effectively commoditize them. I’m spending a lot of time contemplating what those unique levers might be. For example, BeReal has been able to drive engagement density through time as a lever (via push notifications). It puts us all on the same schedule to get us to engage at the same time. In addition to time, there may be other levers to be explored, such as new forms of media, events/calendars, commerce, etc.
Sar: What do you think we are not paying enough attention to and that you believe deserves more energy and dollars?
Michael: I’d like to see people talking, writing, investing, and building consumer products that treat security as a first-class feature. Given the growing lack of trust in institutions (including in big tech companies), we see more and more signals that consumers who previously couldn’t care less about the security of their data care a lot more. For example, when Roe v. Wade was recently overturned, we saw privacy-focused women’s health apps shoot to the top of the App Store charts. This should tell us something. But this is just one example, and we’re seeing this trend in more categories. Signal becoming a mainstream messaging app is another. I expect this trend to continue, and I’m excited to see smart tech thinkers building and in this space.
Sar: Many conflate security with privacy. I’m not convinced consumers care about privacy the way privacy absolutists and big tech critics claim to do. Signal reportedly has less than 50 million active users. That’s a tiny fraction of what mainstream messaging apps that supposedly invade privacy do! Part of this disconnect is that we do not have a shared definition of privacy. I reject the notion that ad targeting is unequivocally bad! Some surveys show public trust in a few tech giants might be falling, but the tech industry remains the most trusted and is trusted more than media and government! The revealed preferences tell a different story than what we see on Twitter!
Michael: I think you’re right about conflating security and privacy, and I’m probably guilty of that. That said, I strongly believe the tide is turning on consumer preferences regarding both. Part of this may be because consumers actually care and understand the implications of security and privacy more than they used to. Part of it may be because the world’s biggest companies are telling them they should. For example, while watching game 4 of the World Series the other night, I saw a WhatsApp commercial that led with end-to-end encryption of your personal data as the core value proposition. I found this to be both baffling and extremely telling. Regardless of the reasons, I believe the traction is real. Signal, per your point, may only have 50 million active users, but Telegram stands at #2 in the US Social Media App Store charts as of this writing. And as for other use cases, a quick scan of the top app charts across a number of categories in the App Store shows VPN apps ranked very highly. Over time, I expect we’ll see consumers demanding more clarity around the privacy and security of their data across all categories of apps.
Sar: My last question is, what do you not like about the startup blogosphere? What topics do you think the startup blogosphere lacks high-quality writing on?
Michael: I see a lot of recycling of content in the startup blogosphere. We all get so consumed by the same technology, trend, platform, or strategy, and everyone just ends up writing the same piece in slight variations from one another. I’d like to see a lot more of people treating writing like software. In early-stage startups, the companies which most often succeed are the ones that ship quickly. I’d like to see tech writers become less precious and more willing to ship their unpolished ideas faster. People are really afraid of the digital trail of their writing and how they’ll be perceived if they get stuff wrong (even in hindsight), but I think we should be more accepting of ourselves and others’ opinions. I've tried pushing myself in this direction (and I’m working on shipping my writing even faster). I’ve found that when I take too much time and gather a lot of feedback, I find many reasons *not* to ship. And when I’m not shipping, I’m not learning.
I want more pragmatism in the startup blogosphere. I want to read more nuanced takes on the most popular – or even controversial – topics. For example, it is possible that web3 is not the most transformational technology ever invented and also not a heap of garbage! Generative AI can be one of the coolest examples of emerging tech in recent memory, while remaining unproven in terms of the massive, long-term value. I’m a fan of writing that starts from a place of optimism, then layers in measured and logical analysis to get to a reasonable point of view. I don’t like the assumption that something is awful as a foundation. No one knows how the Elon era of Twitter will actually play out! So let’s all please stop writing as if we do and let the chips fall where they may.
Sar: I agree. That’s a good place to end our chat. Hopefully, we will do this again when you are slightly more jaded about the venture business :)
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