On this episode of Recode Media with Peter Kafka, Alex Blumberg and Matt Lieber, the founders of podcasting network Gimlet, talk about creating audio and video that has a genuine connection to its audience — even if that means making branded content.

You can read some highlights from the interview here or listen to Recode Media on Apple Podcasts, Spotify, Pocket Casts, Overcast or wherever you listen to podcasts.

Below, you’ll also find a lightly edited transcript of the full episode.

Peter Kafka: This is Recode Media with Peter Kafka. That is me, I am part of the Vox Media podcast network. Normally I tell you I’m in the Vox Media Headquarters in New York City. Not today. I’m at Gimlet Media HQ, hard by exotic Gowanus Canal Superfund luxury condos, here with the Gimlet Media folks.

Alex Blumberg: Canada geese on the water.

Alex Blumberg, that’s you?

AB: Yes.

Matt Lieber, that’s you?

Matt Lieber: Hey.

Hey guys. Thanks for making room for me today, for this podcast.

AB: Thanks for coming.

ML: Yeah.

This is the part of the podcast where you guys tell the listeners what Gimlet Media is.

AB: Cool. Oh, right now?

Just go for it.

AB: Oh, we start?

Yeah, yeah, we’re in.

AB: Wow, exotic, so ...

This is the part where you get to present your version of the company, then I get to probe you a little bit.

AB: Gotcha, gotcha. Okay. Yeah, so Gimlet Media is an audio-first digital media company. We are striving to be the vanguard of digital media and audio.

So I would call you a podcasting company, right?

AB: Sure.

You want to be a digital company. I think in the past I’ve called you a digital, or podcast network?

AB: Yeah. That’ll work too.

But you guys make podcasts, sell podcasts, distribute podcasts?

ML: Yeah, we had this idea four years ago which is that there was a new medium being born, and when new mediums get born, new media companies get built. At the time it was ... the new medium was on-demand audio, and it came in the form of podcasts. Alex was making podcasts at Planet Money that were very successful. He was seeing a lot of growth there. I was listening to a ton of podcasts, and I had grown up as a radio producer. We got excited by the idea of building the HBO of audio, so invested heavily in really high-quality content. We make shows like Reply All and StartUp and Homecoming, which is fiction, and Crime Town, and grow big audiences, attract brand advertising, and build franchises.

And the origin story was this came out of StartUp, the podcast that Alex made at ...

AB: Yeah, well, Matt and I both come from backgrounds in radio, public radio specifically. I came into it and sort of got on a producer track with This American Life. Matt came in through various, like MTV and WNYC, and then swerved into business and got a business degree, and then worked at BCG. Then we sort of came together because we saw this great opportunity in digital media. We were both seeing it from our unique vantage points. I was working at This American Life for many years, which was sort of the original public radio storytelling narrative, nonfiction narrative show.

It’s what ... everything sounds like This American Life today, because This American Life was so groundbreaking.

AB: This American Life really launched this thing, and then from This American Life, me and Adam Davidson, who is a reporter at NPR, we launched a show called Planet Money.

Right.

AB: It was at Planet Money where ... I was sort of dubious about the idea of Planet Money at the beginning. Adam had to convince me because I was like, “Ah, This American Life especially, the special sauce can’t be translated into something else.” Then we launched Planet Money, and sure enough, there was a whole audience for well-crafted, narrative, audio stories about ...

You guys famously did something about the financial crisis?

AB: Yeah, we did a show called The Giant Pool of Money, which was sort of explaining the financial crisis. That sort of launched us. So we saw this, and the audiences were showing up, and we’d do live shows and people were screaming. It felt like I was a rock star for a second. So it just felt very much like, “Okay, this is something. We’re at the beginning of something special here.” That gave me the idea to launch a company that would raise money and then launch more shows like Planet Money.

Then you did this meta thing where you made a podcast about you starting a podcast?

AB: Yes, and so our first ... So Matt and I joined forces. We raised some money, and then our first podcast was called StartUp. It was the story of launching. It was a podcast about the launching of a podcast company.

So just talk about scope broadly. You’re four years into it, you’ve raised money, which I’ve written about. How many employees do you have?

ML: We now have just over 110 employees and we’re based here in Brooklyn. You’re sitting in one of our six studios. We’re moving later this summer to new studios we’re building in downtown Brooklyn on Flatbush Avenue.

Because that’s what you do when you raise money?

ML: Yeah, that’s one of the things that you do, is you build new studios.

Put it into real estate.

ML: Well, actually, we’re running out of space here. There are three parts to the business: We have Gimlet Originals, which is the shows that I mentioned, shows that we create, own and operate, invest heavily in.

We have Gimlet Creative, which is ... services brands who are trying to figure out how they should sound in audio. So they make all the advertising that appears on our shows, and then we also make original podcasts for brands like MasterCard and Gatorade and Blue Apron and more.

Then the third part of the business is Gimlet Pictures, which takes the intellectual property from our shows and develops it for television and film.

I want to talk about all that. I want to talk about the state of podcasting, but I think ... One of the things that’s really interesting to me that I think doesn’t get talked about that much is the stage of a company that you’re in right now. So everyone ...

People sort of get the idea of what a startup is. You go around and shake the can, and the bolt, or the idea comes out of the blue, and they get what happens when you become very successful or fail. You guys are at this interesting point where you’re four years into it, you’ve raised money a couple different times., you have 100 employees. Describe how that is different than literally the two of you starting off. Everything’s different, obviously, but day to day, when you have a little bit of infrastructure under you and some money behind you, how does that change sort of how you go about your job?

AB: Matt and I both talk about how when you launch and run a company that is growing, your job changes every three to six months, basically. For me, one of the biggest differences is how we interact with the company. It used to be we could just get in a meeting and sort of, “Here’s what we’re doing now, guys.”

You could get in one room?

AB: Yeah, you could get in one room, and now there’s enough people that there are different parts of the company that are working on different things, and you don’t know ...

Do you know everyone who works there?

AB: I know ...

ML: We’re just getting ... I do know everyone who works here, I think, but we’re getting to the point now, at 110, that’s where things break. Now we can’t ... Past this point we will not be able to know everyone, at least not well.

AB: Yeah, I know everyone now, but there’s people showing up who I’m like, “Wait, who are you?”

So you literally have to spend time thinking how to communicate with them. Are we going to use Slack, are we going to use email?

AB: If this is email, we have to build in infrastructure just to communicate to the company.

That sounds like a small thing but it’s a big deal, because you need to know that employee 111 actually understands what you want to do, and that, by the way, employee five knows why you guys decided to change x into y.

ML: Or they may or may not know why we’ve decided to make the changes we have. If we’ve done a good job, we’ve helped them understand it, but they also may disagree because they may have joined for one reason at five, and then at 100 it feels like, “Wait, I don’t ... This isn’t why I joined here.”

So the thing about startups is ... Going back to the first show that we did, which was called StartUp, and it was about what it’s really like to start a business. It became a smash hit very quickly. Alex hosted it, and told the story in a really raw way about what it’s like to start.

The myth of being an entrepreneur is like ... If you ask any entrepreneur how’s it going, they will tell you, “Oh, we’re crushing it, Peter. We just made a great hire, we just closed our most recent round of funding. We got MasterCard as a customer. Everything’s going great.”

The truth is, the way it feels is 180 degrees the opposite. It feels like everything is about to break. There’s so much change that it’s very jarring and uncomfortable, and the reason the StartUp podcast has been so successful is because it pulls back the curtain on what it’s really like. It’s still like that.

So getting to 100 employees, raising a bunch of money doesn’t make that “you’re not crushing it, you’re being crushed” feeling go away?

AB: Oh my God, no, no. It just changes it, and it makes it more ... I think the thing that it also does is it forces me and Matt to be more connected and more aligned on the direction of the company, because there’s so many people now that like ... Unless we’re pretty clear about it, things can sort of ... People can be doing things, and maybe it’s good and maybe it’s bad, but it’s not necessarily all working in unison. So we have to be together. We’ve been seeing an executive coach, which is a fancy way of saying a marriage counselor.

Yeah, Matt told me. You want to tell everyone? It’s a famous executive coach.

AB: It’s a famous executive coach, Jerry Colonna, known as the CEO whisperer. We met him, actually, through the podcast. I think we featured him on an early episode of StartUp.

Basically a psychologist for startups.

AB: He’s not licensed, so he’s not like a ... Yeah, but he employs a lot of ...

Therapist.

AB: He’s a therapist.

ML: But his background was, he was a venture capitalist and then did private equity, so he understands business and he understands that context too.

There’s a great Wired feature about him, if you want to Google it.

AB: Yeah, yeah, and the story he tells is that he was a very successful ... I think he worked in private equity in a bank, and then he found himself crouched under his desk having a panic attack and realized, “I’m in the wrong business.”

So he’s helping you do ... What sort of stuff is he advising ... He’s not advising you, right? He’s giving you sort of like, what?

ML: There’s different flavors of ... Executive coaching has become a thing, and did not used to really be a thing, and nowadays ... There’s different flavors of coaches, and some coaches are about, “Let me tell you what to do, and let me hold you accountable if you don’t do it. Here’s how you should grow this team, or you should fire that person.”

Then there are kinds of coaches that are sort of on the more, yeah, I guess, marriage counseling or spiritual end, which is, if you’re going to be a successful leader, you first have to be successful in understanding yourself, and what motivates you, and be in touch with what’s going on in your gut. That is more the kind that Jerry is. It’s like, “Let’s conduct a form of self-inquiry that helps us get closer to why we’re all here.”

Is it working?

AB: I absolutely think it’s working. I buy it pretty completely. I don’t think you can only focus on that, obviously. You need to sort of think about strategy and examine the market. But I do think a thing that brings down lots and lots of leaders is their own blind spots about their own triggers, or their own things where they’re acting not out of rational interest, but because they’re acting out of emotion that they don’t understand. I think that’s very real. I think you see it and it cascades through organizations. If you haven’t fully come to grips with what your baggage is, it just spreads throughout your organization. I one hundred percent believe that, and I think that Jerry has been very instrumental in helping Matt and I figure out what those blind spots are and making sure they don’t affect our organization.

It’s funny, because when you write about, or talk to, or ... Any sort of business journals, the standard model is to talk about the person running the company, and then occasionally there’s a reaction. Well, this sort of great man theory of telling a story is kind of bullshit, because there’s 100 people there and they all have individual roles. But it really does sort of flow from you guys, and if you guys have it together, people figure that out, and if you don’t, that rolls downhill as well. Super obvious, but until you’re in it, you don’t get it.

AB: You don’t get it, and the problem is that no, obviously we can’t do this by ourselves. The entire success of the company is because of all the people who work here, who are putting their heart and souls into it, and their incredible talent. The problems is that, as a leader and especially as you get bigger, you can just do a lot of damage, right? I think in some ways the maxim is, “Do no harm.” Just unleash people to do their work, and if you haven’t figured that out amongst your ... in yourself, you can actually sort of cascade.

Is there some kind of screw-up, some kind of damage you guys think you’ve done, at this size, that you literally could not have done earlier because you didn’t have the resources to do it? You can make bigger mistakes, I’m assuming now, right?

AB: They affect more people. Yeah, your mistakes affect more people. I don’t think we’ve made any. We’ve definitely made mistakes. We’ve definitely made mistakes.

ML: I think, at the risk of doing what I said entrepreneurs do earlier, things are going very well at the company. So yeah, we’ve made mistakes, but I think the thing both of us are most proud of about Gimlet is the culture, and the fact that people come here to do their best work every day. They are really motivated by doing excellent work, and working collaboratively to do it. They walk in the door and they feel a sense of mutual support and being on the same team. The reason we do any of this, the reason we started this company is not just because we saw, “Oh, this is a fast-growing market and this is going to be great for advertising.”

Which, by the way, is a perfectly fine reason to start a company.

ML: Totally fine reason to start a company.

Most people want to create an origin story, but these origin stories where, “I went to business school and I was looking for a good opportunity and I created this company.” That’s a good story.

ML: Yeah, but we ...

But it’s not your story.

ML: No, our story is that we actually love the medium of audio. I spent a decade as a producer, and I grew up listening to NPR in the backseat of my parents’ car, and I felt this ...

You know when you go to a bar and you’re having a conversation with your friends and you’re really connecting with them? I do not have that that much at bars, but I have that when I listen to podcasts. I feel like ... I listen to your podcast every week, Peter, and even though you’re very grouchy and skeptical, I’m like, “Peter is like ... I’m kind of friends with him. I can connect with him.”

So that’s what we had, and that power of empathy that happens and intimacy through audio is something that we just get excited about as producers and consumers. We can also build a business around it and it informs how we work. So empathy is a big ... We use the word so much that I think it’s lost meaning for some people in the building, but it’s big about how we work with each other, like, “Can you understand what’s going on at the other end of the table? Can you put on the other person’s hat and think how they’re approaching this?”

Are you guys thinking practically about dealing with expectations that employees who come in at this size probably think of Gimlet differently than the employees who first started with you? You have investors who now have very specific expectations of you. You can’t just say, we were x size and now we’ve doubled. You have different goals. Have you thought practically about, sort of, how to grapple with that?

AB: I think the people who come to work at Gimlet feel really psyched to come to work at Gimlet, because I think of the work that we’re doing, I feel like, as long as ... What Matt was saying about audio, it really is ... It’s something that we really believe in deeply. When you listen to my voice, people who haven’t seen me before, they’re constructing an image of me, right?

I’m nodding.

AB: You get it all the time. When you meet people who listen to your podcast, right, they say, “Oh, you don’t look at all like I thought you’d look.” Right?

They say, “I like you in audio form,” which they will say to my face, which, God bless them.

AB: But see, that’s the power of audio, because they have created some image and it’s them. So they’re listening to your words, but they’re creating an image of you in their minds, and so your words become almost literally a part of them. That’s the power of it, right? You connect that way, and when you combine that with the other stuff that we bring, which is really just engaging storytelling, great attention to detail, attention to quality. We’re making work that people are excited to be a part of, and so I think when they come here, that’s what they’re buying into.

And that was the same when you started, so you don’t have to overthink that part.

AB: Yeah, and the danger is you can get away from it. I think as long as we are continuing that value ... Not to say that everything we do has to be sort of this elaborately produced, super expensive to make masterpiece, but as long as we are keeping that front and center that we’re leading the way. We’re not being derivative. We’re trying to be the beacon, the vanguard of what’s happening here.

ML: I think that that’s part of why people come to work here.

I don’t seem grouchy right? This is very touchy subject.

AB: I’m waiting for the point in the interview where you are like, okay, let me attack why you guys are actually sucking. We did that to ourselves.

Do you want to get to that part now? Let’s take a break first and then we’ll get to the next phase of the interview. We’ll be right back.

[ad]

Back here still with Gimlet Media with Matt and Alex.

ML: I’m in awe of your live to commercial break skills. You’re really good. Yeah.

AB: We’re not going to get a host read today?

Except for the socks, I’ve stopped doing the host read during the interview because I find that embarrassing.

AB: You find it embarrassing to talk about your Mack Weldon socks.

No. Mack Weldon, I will talk about them, I’m wearing them right now, I pay for them with my own money at mackweldon.com, 20 percent off with order code Recode. No problem with that. It’s the stopping and starting and there’s some reads I’m less enthusiastic about.

ML: Yeah.

Let’s talk about the business of podcasting.

ML: Yeah

So you guys have three main revenue streams, right? You make shows, sell ads on those shows, you make basically sponsored shows for individual companies, and then you are taking your ideas that you’ve made as shows and bringing them to various people in Hollywood.

ML: Yep.

What part of the business is growing fastest for you?

ML: Gimlet Pictures is growing fastest off the smallest space.

Yep.

ML: But most of our business is advertising, so people who hear our shows and then they will hear a mid-roll break or hear a pre-roll ad where we tell a story in the advertisement about the brand. That is most of our business today.

The version of the ad that I’m going to hear in a show like Reply All?

ML: Yep.

And then you also do just sponsored shows, where the show is underwritten by a sponsor you created ...

ML: We made a show for Gatorade about featuring the world’s best athletes called Secret to Victory where you can here Peyton Manning and Serena Williams talk about how you become really successful.

We make a show for Blue Apron about the anthropology of food. Our brand and content just got nominated for a James Beard Award. So Gimlet creates sponsored shows and then creates all the ads, the native ads, that you hear in our shows.

So the Gatorade style, fully sponsored show versus the ad in a show that you created organically, what’s the split between those two, revenue-wise for you guys?

ML: The majority of our revenue is advertising. It’s media ads that you hear embedded in the shows.

Right.

ML: The second-largest part of the business is sponsored shows that we make for brands, like the Gatorade show or the Blue Apron show, and then Gimlet Pictures which really only has started in the last year, which is licensing IP and then producing television and film, today is the smallest part of the business, but the fastest growing.

How do you think, if we make a pie chart, in a couple years how does that revenue look?

ML: Ahhh ...

Ideally, things change.

ML: If I were to say, is it one third, one third, one third? Is it 50, 25, 25? I actually don’t know. But I would say we’re seeing, actually, a lot of growth across all three. It’s a high-growth market and podcast today, so just give to you the numbers, podcast today as an industry is not huge. It was a quarter-billion dollars last year. It will probably be $400 million or $500 million this year.

Facebook did about $50 billion last year.

ML: Yep. And radio did $18 billion last year. So the bet we are making is not this is a huge industry today.

Right.

ML: The bet we are making is the dollars that are running on radio right now are going to move over to on-demand.

It’s funny, some people will actually say, “Isn’t podcasting pretty small?” And you go, “Yeah.”

ML: It’s big in terms of the amount of people who are listening and the amount of time they spend listening and it’s an incredibly effective medium for mobile advertising. But what happens in media is first consumers change their behavior and then advertising dollars follow.

So right now that quarter-billion dollars was up 85 percent year over year. It’s the fastest-growing media industry in the world next to eSports and VR. So our bet is that that growth is going to continue. And the same with the sponsored podcast brands, they’re finding increasingly that the people who are listening to podcasts are really hard to reach. Our word for them, if we look at our audience, the unreachables. Median age of 31 years old, they’re watching a lot of television but they watch on Netflix or Amazon where they don’t see ads and then they are on the internet all day, but 65 percent of them use ad blockers. So they are very hard to reach. And we’re reaching with our ads and our ads are very effective because they’re native, they’re midstream and we put a lot of work and care at Gimlet Creative to making them good.

Then on to Gimlet Pictures, it’s growing because TV markets are very hot and the whole network television system is sort of being refactored and it created an opportunity for us to come in.

I want to come back to the TV stuff. On the conventional ads versus the sponsored show I get, you have a hit show like Reply All or StartUp, you put an ad in there, pretty straightforward, we can talk about some of the intricacies of that. The idea where Gatorade comes to you and says make me a hit podcast, that seems pretty fraught, there’s versions of this in other mediums where the sponsor says, “I would like to have a show like that except I’m going to own it and it will deliver my message, make that for me.” And someone always says, “Sure, I’ll make that for you,” because they’ll take the money. But making a thing that people actually want to listen to that happens to be sponsored by Gatorade ... or didn’t you guys do one for one of the dating services?

ML: We made a show for Tinder called DTR, which is now in its second season.

So I can see saying, “Look, we have an awesome show and it’s popular. Do you want to underwrite it?” That part makes sense. The part where someone comes to you and says, “Make me a show from scratch that I will give you money for and then make it popular,” that always seems super fraught to me.

ML: Yeah. No one is going to listen to a 20-minute advertisement for Gatorade or Tinder or anyone else.

Right.

ML: So our starting assumption is put the listener first, let’s actually make a show that we feel fills a need in the market.

And they sit in the room and go, “Yes, yes, yes,” but then eventually don’t they go, “Well actually, we need to explain the electrolytes,” right?

ML: Yeah.

Or whatever ...

ML: You can listen to Secret to Victory, there’s no discussion of electrolytes.

Right.

ML: You can actually listen to the whole thing and not totally know that it’s Gatorade.

First of all, how do you talk them out of, because inevitably someone says, “I’m footing the bill, lets have some brand leadership.”

ML: “Make the logo bigger.”

Yeah.

ML: Well, I think that is the art of helping brands find their voice in audio and there is an art to client service and doing great creative work and doing break through advertising and that’s what we’ve gotten really good at in audio. So, yeah, it’s not easy.

And then the other part to this, maybe more so, is someone’s got to listen to it. So you guys have made this awesome show, it is very hard to get someone to listen to your show. You can push it through your network but eventually I’m going to go, “I like Matt and Alex, I like StartUp, but I don’t want to listen to the Gatorade show to help them out.”

ML: That’s the argument. That is what we tell clients. First of all, podcasts are an intent-driven medium. Podcasts are not like Facebook, where someone goes and just sees what’s in the feed and if the feed serves you branded content or if it serves your cousin’s photos or if it serves you news, you’ll take a look at it. Podcast people have to actually seek them out.

Right.

ML: Or a friend has to tell them, “Hey, this is a really interesting show.” That’s like the final argument for why you have to make the programming good and it can’t feel like an ad because no one is going to seek it out and then no one will hear it and then it will be ineffective.

So brand x says, “I got it, I’m not going to push the electrolytes, you guys make an awesome show, great, we’re all on board, we love it.” You put it out, it is not working, because you make stuff and maybe it just does not catch. What happens now? You have made the stuff, everyone has agreed it is good, but it is not generating enough audience for the advertisement ... How do you solve that?

ML: There’s not really a great solution. You can’t buy audience.

Do you give them their money back? If it’s video, at least in the old days, a couple years ago, we’re just going to shove it into Facebook or YouTube, we’re going to buy the viewers ...

ML: I can think of one or two times that that’s happened. And what we will do is, first of all we can drive some distribution because we can promote these shows across our network. The ads you hear will point toward a show. But if a show doesn’t get traction, this is quite rare for us because the thing that we put a lot of focus on is making it good so people listen and then tell their friends and there’s an organic audience. If it doesn’t, then we’ll promote it more on the network or we’ll say, “Hey, this isn’t working, we need to adjust the content or we can give you advertising across the network.

That’s your version of make good.

AB: It’s a conversation you have with the brand. We tell them, we will set expectations. “Here’s what you are buying and if you want to get a shot at a bigger audience, here’s where you can put some more marketing dollars.” We’ll advise them about that, but like, it’s pretty holistic. We’ll tell them, “Here’s what you can expect, and here’s how we think it gives you a better shot, you focus on the story, you focus on making it good.” But it’s just a negotiation, right? It’s another client. There’s the audience and there’s the brand and we have to make sure that both are satisfied. But brands renew. We’ll put out a branded podcast and a lot of time they are thrilled and they’ll come back for a second and third season.

There’s a stage in companies’ evolution and mediums’ evolution where advertisers want to play with it. It’s a hot new thing, they read about it in the Wall Street Journal or Ad Age, “I want to go get me some of that, it’s going to look cool.” And then at some point, two to three times into it, they say, “All right, I need to actually see results.”

Podcasts, without getting too nerdy here, podcasting measurement’s young, I guess you would say. There’s a lot of discussion about how precise it should or shouldn’t be, how are you bringing folks back four or five times as sponsors? How are you explaining they are actually getting their money’s worth beyond the novelty buy?

ML: So our advertisers do renew at high rates. Most of our business today is brand advertising. Part of the idea when we started was, if you listened to podcasting in 2014, you heard a lot of ads for direct response product, right? So you heard...

Mack Weldon socks.

ML: Yep. Mack Weldon, Stamps.com, heard some Squarespace, Casper. And our idea was if we can build big franchises and then create an ad product that feels exciting, feels native, feels “I can tell a bigger story about the brand,” we can attract brand dollars.

The reason the direct advertising comes to you is they can measure it pretty effectively, right?

ML: Yep.

They can, they used the offer code and by the way we know exactly how much that is worth to us when you buy a mattress from us and that’s both very effective and then you often find people like yourself saying, “We want to move into brand advertising.” Why do you want to move into brand advertising and away from mattress or sock sales?

ML: Because that is where bigger budgets are and that is where we can do more interesting, creative work. Ultimately we think this is a great medium for brand advertising. The emotional affinity we talked about that we have with the shows we listen to extends to brands, too. How do those brands decide whether to renew or not? Well, they look at how many impressions did we get. We do research, so we look. Before you heard the campaign, what was your awareness of this brand? How much were you considering purchasing a Ford vehicle before you heard the campaign that ran on StartUp and how much after?

And when we look at the lift on something like that, 27 percent lift in purchase consideration, 50 percent lift in unaided recall. When you put it in front of brand clients, actually, they are blown away and they’re kind of scratching their heads because, “How can this be?” And the reason is the connection that happens through audio is special and direct and it’s not cluttered up with a ton of other stuff you are seeing on a feed or five other boxes you’re seeing on your laptop screen. Do you know the story of the early days of CBS?

No.

ML: So, CBS, which you know is a giant media company, it started as a radio company. And William Paley, who is now one of the most august media names of the last 100 years, if you go Midtown, you can go to the Paley Center of Media, they were not a media family. They were a cigar family. They owned a cigar company called Congress Cigars. And in the 1920s, young William Paley was tasked with growing the cigar business. At the time, I think cigarettes were becoming more popular and cigar sales were declining, and one of the things they tried in addition to newspaper advertising and magazine advertising was advertising on the radio.

AB: This new technology, the radio.

ML: This new technology. The cigar was called La Palina, which is “the Paley,” and Paley created a La Palina radio hour and found that it reversed declining sales, more results from radio than they had got from print and then became infatuated with the medium of radio, decided actually cigars aren’t cool. What’s cool is radio, so like, “Hey Dad, will you buy me a radio station?” And that was the original Columbia Broadcasting System.

And now we have Les Moonves suing Shari Redstone.

AB: He went on to discover Bing Crosby and it was off to the races.

ML: But the growth of radio was like, audio is a great medium for advertising, and the same is true today with podcasting, and brands are increasingly discovering that.

When banner ads started a couple decades ago, the initial click-through rate was like 80 percent because no one had ever seen an ad on their screen like that, and now the click rate is basically zero. Do you think about what’s going to happen once you get through this first phase of people who are really, really, really intensely into their podcast and willing to serve and support an advertiser because they like the podcast and they get it? And as things scale up where it becomes more standard and people get more used to the idea that, maybe I can click through this ad, I’m not that engaged in it. Whether you are going to hit that inflection point or whether that’s going to be an obstacle for you?

ML: I think the essential dynamics are the same. I think the process that I described to you of sort of like, when you listen to somebody that you connect with them, I don’t think that changes. So I think that’s at the heart of what makes podcasting effective and that’s at the heart of what makes podcasting advertising effective. I think when you listen, you can hear emotional honesty.

Yes. You can tell when I like the socks and when I’m just reading a script.

ML: Yeah. And that’s why a good conversation where people are actually being authentically themselves and having their authentic emotions, why that plays and why nobody turns that off when that’s happening. And that’s why when people come on and they B.S. you on how we’re killing it, that’s bad audio. The same dynamic works and this is what we tell our brands all the time, emotional honesty is what works and if we can get that into the ad, it will work.

How do you guys feel about programmatic audio advertising? This is what dominates traditional media advertising. This is what dominates traditional media. Some people think this is what’s going to move podcasting from a small business to a really big business. People say there’s no way it’s going to work because once you start hearing someone else’s random ad inserted there, you’re just gonna skip past it.

AB: Yeah, I think programmatic audio is coming. What we’re really conscious about is not eroding the listener experience. If you turn on the radio right now, you’re going to get ad lids, 15, 20 minutes per hour. They’re going to sound interruptive and annoying.

They’re yelling at you.

AB: They’re yelling at you. We know programmatic audio is coming. I think it fits in with the fact that there’s a bunch of really large audio platforms that are standing around the edge of the pool of podcasting. Some are dipping their toes, some are ready to jump in, some are already in. Those are scaled advertising platforms. The ad solutions on those are not necessarily going ... they’re not going to be all host-read advertisements.

Just because of scale. There’s no way because you simply can’t stop it.

AB: I think the market’s going to bifurcate and some percentage of it is going to be programmatic and that’s going to be that scale and efficiency. Then some percentage of it is at 25, 30 percent, I don’t know, 40, I don’t know, is going to be premium native advertising. That’s mostly where we’re going to play. That’s about telling the bigger story and making an impact on the culture.

That’s a good place to take a break and listen to an ad probably read by me, I assume.

AB: Perfect.

Heartfelt, innovative, support our sponsors so you can listening to this shit for free. We’ll be right back.

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I’m back here, still at Gimlet Media with Alex and Matt. We’ve been talking about advertising. I want to talk about TV and movies and streaming media. You guys had a show on ABC. Was it called “StartUp”?

AB: It was called “Alex Inc.”

It was called “Alex Inc.” Loosely modeled on you.

AB: Loosely modeled. Yes.

Starring Zach Braff.

AB: Yes indeed.

It is middle of May. ABC just announced that that show is not coming back.

AB: Right.

You had a shot at TV, didn’t work. What’d you learn?

AB: That was our very first TV deal time. They approached us. I don’t even remember when it was. It was very early in the company. It was in like the first year or two. It was back when we were just literally like, we were completely underwater and just trying to keep moving. It was one of those things where they came to us and we were like, yeah, yeah, yeah. Do it.

Great. Sounds great.

AB: It just needs to be great. Sounds good. We’ll sign the option and then go off and do it. Thinking that it would never ever happen, right? Because I had been ... at this moment in my life I had had the experience of people get option shows all the time and nothing ever came of it.

An option is someone writes you a check for something that’s real money, but not a lot of money.

AB: No.

Not “keep a company alive” money.

AB: Yes. Yes.

The idea is, “Maybe we’ll turn this into something and if we do, we’ll give you more money.”

AB: Yeah. Exactly. We were like, okay, great. If it becomes “Seinfeld” we’ll make a bunch of money. If not, no harm done. They went, but then we kept hearing ... it was a good producer. This guy John Davis who’s been in the business and then we kept hearing, “We attached Zach Braff to it.” Then they liked the pilot. There was all these steps along the way where it was like, “Oh, this is actually happening.” But by the time it was happening, this was of all the TV and film projects that we’re launching, we had by far the least amount of input into this.

What kind of input do you have into this?

ML: Very little. This was like we licensed the IP, sold option and said, you guys go with God. We’re gonna focus on building the podcast company. The show got made. It was really the story of Alex and his family, I’m played by Michael Imperioli. It went for a season. I saw what Zach said the other day, which is, “I feel really proud of the show. It didn’t resonate with audiences. It got canceled and that’s the reality of network television.”

It was your first trip into TV and Hollywood and you knew that. Right? You knew most shows get canceled.

ML: Yeah. Yeah.

That’s your first show. At any point do you go, “Oh, I like it but I wish we would’ve done this or I wish they would’ve gone this way”? Cast someone else?

ML: No. That wasn’t the approach we took. We said, at the time we were like, the one key to our success as a company is going to be single-minded focus and we’re gonna focus completely on building the podcast company. Now, one thing, so we really wanted to be involved in creatively developing the show. What we did learn was that there’s a much bigger opportunity in television and film.

Since then, we’re currently shooting I would say the first show that we are quite creatively involved in, “Homecoming,” which stars Julia Roberts, it’s wrapping up principal photography now. It’ll be on Amazon this fall. Eli Horowitz, who created the podcast here at Gimlet, he’s a Gimlet producer, is one of the executive producers and is showrunning it.

It’s not gonna get canceled, right? Because they bought two seasons of it.

ML: They bought two seasons up front. We have a film in development based on our pilot episode and Richard Linklater and Robert Downey Jr. are attached. Then “Sandra,” our newest fiction series, which as a podcast starred Ethan Hawke and Kristin Wiig, we’re developing now for television.

What’s the difference between these, other than that you’re making different shows. Isn’t it still you have an idea, someone says I like your idea, I’m going to pay you some amount of money for it. Then they know how to make TV and movies, you don’t. It seems like it’s still the same model.

ML: Different model. In the first instance, we were just licensing the IP. Now we’re really taking on more production-oriented responsibilities. We’re attaching writers. We’re attaching talent. We’re packaging it and selling it to the network. It’s not just, “We have an idea.”

I think one of the things we’ve realized is that when you come to Hollywood and you say, “We have an idea. We also have a proven audience and six episodes that are each a half an hour long with story arcs and characters and worlds that audiences, we know they like because hundreds of thousands of people are listening to the podcast.” That becomes a much more ...

That’s an explicit part of your pitch. “We have an audience, we will bring this audience to this thing that you’re going to pay us to make.”

ML: We’ll bring the audience and we’ve proven the IP. And now what we have is a network of relationships and an ability to package together a project with the kind of talent that will break through.

We’re all trying this, right? Every media company that wants to disrupt TV and take TV’s money eventually goes, “Maybe we should get into this business where all the money is as well.” The nice thing for all of us proudly in media is that Amazon and Apple and Netflix are all spending money right now. The network’s like 500-plus different shows this year. Plus, shows. Again, there’s a million people knocking on their door. There always have been. They all say we have this audience, we have this idea. Right? All day long they see pitches. Other than saying, “We’re really good at it, we have an audience,” what else are you doing to get people over the line?

AB: We’re really good at it. Having audiences goes a long way. I think it goes back to focusing on these core principles of quality, moving the bar, and being pretty relentless in the choices that we make. We have a very ... when we choose a project to green light in fiction, we’re thinking entirely about what is the experience going to be like as a podcast. We’re proceeding entirely from audio and we’re thinking, is it going to be engaging? Is it going to be new? Is it going to feel special? We’re already seeing hundreds of scripts before we even green light the ones that we make. That’s a big value add. You can go and the scripts are good.

ML: And we can take more creative risk. The whole key in Hollywood is, how do you take the most amount of creative risk and the least amount of business risk? What we’re able to do in podcasting is take the most creative risk because it’s not as expensive to produce and distribute a show as a podcast. We can prove out ideas that would not be accepted through the gatekeepers of Hollywood and prove them out in audio and validate them. I would also say ...

We spent the beginning of this podcast talking about your background in audio, how you really know what you’re doing, about the connection you have with the audience because you’re literally in their head. Obviously we’re talking about a whole different thing where you don’t have that background and the connection of the audience is different. Obviously you have to bring in help.

ML: Our approach is still very much a partnership approach. We’re not a television studio today. With “Homecoming,” we went out and we brought in Sam Esmail and he is directing the show and working with Eli as a showrunner.

It’s the “Mr. Robot” guy.

ML: Sam Esmail who did “Mr. Robot” and with Anonymous Content. I would also say there’s a difference between being a web publisher that’s really good at getting, hooking in people’s attention on social platforms or creating a great experience on a screen through articles or images, or even videos that may be short form, like four minutes long, than saying how do we take that and make it into television. Doing what we’re doing, which is already formatted pretty similar, our episodes are, like I said, 20, 30, 40 minutes long. They have characters. We obsess about how are we going to create stakes that will pull people in? How are we going to pace these stories in a way that people are going to stick with us?

You’re saying you have a leg up on the Voxs and BuzzFeeds of the world. Even though my employer and BuzzFeed has been making video product for awhile and you guys haven’t, you’re saying you actually can make a better version because you know how to tell a story better.

ML: You asked what gives you guys permission because everyone’s trying to do this. We’re a lot smaller and a lot younger. I think one of the reasons that we’re able to do this is because of the kind of storytelling we do.

AB: We’re thinking already. I’ve been working on this new episode for Reply All. For our nonfiction podcasts and for our fiction podcasts, we think in terms of narrative arc. We think in terms of story structure. That’s just sort of built into our DNA as a company. I would never want to go up against BuzzFeed in making viral content. That is the thing that they have perfected and are excellent at. I would not bet against them pivoting into other things as well. It’s just that we happen to be ... we think about structure similarly. I think that just helps when we’re making decisions about what kind of brand of podcast to ... I’m sorry. What kind of fictional podcast to green light, we’re making the same kinds of calculations that probably people in TV and film are making as well. It helps. We’re thinking about the same things.

What’s your favorite non-Gimlet podcast today? First thought, best thought. Don’t pause. What’s in your iPhone right now?

AB: I’ve been listening to this wackadoodle podcast that I noticed in the charts called Tropical Moon. Have you heard it?

ML: I don’t know. What is this?

AB: It’s so weird. I sort of love it. It’s bizarre. It’s this guy and he ... it’s a fiction podcast. It’s just him. He tells stories. It’s sort of in that Welcome to Night Vale lane but there’s more of an arc to each episode, it’s about this fictional world called Tropical Moon. Everybody there is ... it’s very beautiful and everybody there is pretty happy. They go on these weird little whimsical adventures. It’s sort of like Douglas Adams, the “Hitchhiker’s Guide to the Galaxy” kind of thing. It’s like they’re pretty comic. Not as funny, but just weird and sweet and bizarre. I like it because it’s like this guy has somehow just imagined this world and he’s created this podcast around it. It’s bizarre. I’ve listened to a couple of them now and they go down very easy.

Tropical Moon.

AB: Tropical Moon. Yeah.

Matt, you got one for us?

ML: Uh, god. There’s so many.

Pick the first one.

ML: I’m actually listening to the new TED podcast, WorkLife with Adam Grant, because it has management lessons, which is something I’m obsessed with.

AB: Is it good? Have you learned anything that you’ve been applying?

ML: Yes.

Is it good? No, I just keep listening. I hate it.

ML: I sent the podcast episode about feedback around to the whole executive team and why it’s important. Obviously you didn’t listen.

It’s well-intentioned. Tropical Moon, TED podcast, Reply All. Go help out Amazon and watch that show when it airs. When’s that going to air?

AB: Coming this fall. I think October, November.

All right, we’ll see if we can give Jeff Bezos some help. Thanks to you guys.

AB: Thanks a lot. Thanks for having us.

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