How Kit Gray Built a $50M Podcast Empire—and Took It Public | Ep 217 with Kit Gray co-founder of PodcastOne

0:00Hey, everyone. Welcome back to Founder Story. Today, we have Kit Gray, the president, co-founder of Podcast One, which I've been following for many years. But Podcast One is a leading podcast network. Even NASDAQ under PODC, which is amazing. I cannot wait, Kit, to talk all the things through. How is it to take a company public? But I know that Podcast One has worked with the likes of A &E, Adam Carolla, Lady Gang, Justin Harbinger, and 200 shows, which is incredible. So, Kit, what was the spark for you that made you say, I want to be an entrepreneur and why this industry? Yeah. Hey, nice to meet you.

0:43And thanks for having me today. Yeah. You know, really, I became a fan of really the audio medium back when I was a kid living in Boston and going to sporting events with my dad, you know, dragging me around the tennis matches or soccer matches or baseball games that I was playing in that, you know, we'd listen to sports talk radio to kind of like break up the, the awkward silence. And, uh, during commercial breaks, we would actually talk about it and have something fun to talk about. And, um, you know, so audio has always had a special place in my heart and, um, you know, that, uh, that kind of grew as Howard Stern came into my life and listening to him and then watching him on his TV show and then realizing how he built brands listened to both his show and his radio network.

1:36He really was a thought leader in that space. We talk about 360 video podcasts now. Well, Howard did it years and years and years ago, and he really did an amazing job. And when you look at endorsement radio or endorsement anything, I knew that was an extremely powerful thing early in my career. I wound up going to school not for anything in the radio or audio space, but I was an analyst. I went to business school, got my MBA in finance, and worked in a national security firm in Orlando, funny enough, with missiles and defense contracts and everything that I'm not about. But I did learn a lot from that experience and went to Chicago, worked in a bar with some friends after grad school, and then decided to take a job in New York City working for Cats Media Group, which was part of iHeart, Clear Channel.

2:41And what we did was we represented radio stations across the country and then started to pitch why certain radio stations should be on a media spend out of advertising agencies in New York. And from there, I really learned the business where the funnel of money from clients to ad agencies to planners to buyers, how it all kind of went out. And that was kind of how I learned the business. but I was actually opening an office for them in Los Angeles in 2004, 2005. And I started to listen to podcasts, which back in the day, you had to actually like download a file on your computer, hook up your iPod or whatever device you had for MP3s at the time.

3:30And then, you know, you download and drag it over. And then maybe add like a tape player in your car where the wire's out and all that kind of stuff. and you could listen to on-demand content. And the reason I loved that so much was I lived in Los Angeles. I hate the Lakers. I hate Dodgers. I'm a Boston guy at heart. And so basically I had to listen to Boston radio stations on demand that were doing this, and that's what we did. So I would drive and sit on the 405 in traffic, going to meetings and listening to my podcast. And I started to think about the medium that I was in and if there was scale that I could start to bring those to advertising.

4:13So what I did on my own was there's a guy named Adam Carolla from The Man Show. He wrote for Jimmy Kimmel. He was on Love Line, which was with Dr. Drew, which was National Centricated Radio Show at night, but also on MTV, being um which is funny dan marug was talking about mtv and spring breaks and stuff like that where i live but um yeah so we just started to talk about uh adam did a podcast after he um he actually took over for howard stern on the west coast for syndication uh it didn't last too long unfortunately it was a really good show um so he decided doing a podcast and i was listening to that and i reached out to him we started meeting making some ad deals right where pro flowers and LegalZoom and Stamps.com and Citrix.

5:03We would do reads and we had great return on investment based on these tracking codes. And I started to build a business. So I started my own company there, started representing Marc Maron, Bill Burr, the Nerdist, CBS News, and creating a network of shows to offer advertisers. And, you know, 2012 or something like that. And it was really exciting. The medium changed tremendously with the iPhone and being able to download shows and then figuring out what a download is and what's an impression and, you know, targetability and connecting to programmatic desks. And we've created, you know, I sold my company two times now.

5:52And, you know, I still run it, Podcast One, because I love it. And it's a great sell. And I love my team. And I love the shows that we work for and work with. And, you know, it's been amazing. We now do about$51 million in revenue. We're publicly traded, which we'll talk a little bit more about, hopefully. And then, you know, we've got about 200 shows and mostly they are really created so they can work for advertisers. Right. But we do IP where we have shows that we've sold to, you know, different networks to become TV programs or movies or books. we do merch we do live shows we you know really do everything kind of soup to nuts to help podcasters monetize their content we market them we do talent booking we do sales collections all that fun stuff to really make sure talented people like the people that you mentioned earlier the jordan harbingers the the lady gangs the caitlin bristows the a andes that they can give us more content or create more content that we can tie to advertisers and models house so that's our business uh you know we've been on the nasdaq now under podc uh for about uh two years and that's a whole different animal um but uh you know i would say not as much fun talking to analysts and uh and and finance guys sorry guys uh but uh you know i really enjoy talking to or the talent and in creating relationships with them.

7:32And certainly a very lucky guy in the sense that I get to deal with some of the funniest, smartest people in the world. So it's been fun. So I'm curious about what you say is very important when it comes to timing. Some of the most successful people that we have spoken to have told me that timing was everything for them, whether it was timing of the idea or timing of how long they stuck get out. These all were very important to the success of the company. How do you feel that timing was since you were so not only were you so early on, but you've also been doing it for so long? Yeah, you know, timing is a lot to it, right?

8:12And hard work and perseverance and believing. I got lucky in the sense that, you know, this medium really took off as audio was kind of going this way and still is um this really you know put new life into the audio experience and um the people that really got behind it really understand how impactful audio is and you know you look at like radio stations and the fact that you'd have i don't know six a fn towers and four a.m towers in the market or whatever it is right each one is different but it's so limited in what programming you could offer uh not only you know viewers or listeners but also advertisers right and in this case uh the internet is you know unlimited right so you can you know do podcasts on you know gardening and get an audience and monetize it and make a life as you want um i got lucky too in the sense that covid happened and that was horrible obviously a lot of sleepless nights, stressful times.

9:19But it actually helped the medium quite a bit because people were stuck in their homes, a lot of solitude, had a lot of time to, you know, watch or consume content. Once that ran out, people started to get into podcasts. And, you know, a lot of these type of conversations like we are having right now, where you're across the country from me, this became acceptable forms of content for people to consume. They didn't care. This is normal now. And that timing-wise kind of helped us and helped the medium. And three years ago, YouTube got into the podcasting space. And now they're the number one consumption platform for podcasting.

10:07And video is exploding. So we got lucky there too. Right. So, you know, we we we feel, you know, even no matter what your political views are, and I definitely don't want to get into that. Certain people in the last election took advantage of the podcasting space and what it offers. And, you know, I think Elon Musk on Rogan said it perfectly. When you have an hour or two hour interview, you can't hide. And when people get to know the person they're listening to, the hosts, it's it's tremendous. And I think podcasting, or I know, and I know President Trump would say it greatly helps his opportunity to be the president again.

10:52And, you know, that's pretty cool stuff for, you know, a medium that isn't that old and really living, you know, that's timing. Yeah, no, I was just going to bring up these two stats. One was YouTube being the number one consumption place for podcasts. but then also a lot of these traditional cable shows, they are creating their own podcast now because they see, you know, the traditional side of TV, the linear side has been dropping. How did you then navigate the landscape of this being, you know, audio focused from, from iPod to iPhone, to phones to moving into social media now, and then everyone getting into it.

11:38Like you said, it's one, I think everyone in 2020 launched a podcast. Funny enough, that's when we launched this show right here. It was the early stages of COVID. How are you navigating that? And not just the specifics, but as a founder, as a president, how do you navigate the changing landscape? As we know, business can change every five minutes. And if you're not keeping up, your company can be in trouble. Yeah, you know, to me, and I've had this debate with a lot of companies, salespeople, clients, agencies, you name it. But to me, the smartest companies out there and the ones that are going to win the advertising world and become, you know, the Squarespace's, the Ntuckets of the world that started in podcasting and now are in Super Bowl commercials and, you know, publicly traded and worth billions of dollars.

12:33these are companies that understood buying communities. And when I say we're a podcasting company, it's yes, we are. And that's our focus of doing live reads and endorsements and all the stuff I've already talked about. But really when you're a brand and you're buying into a community, that's where I see the most impact. And there's a lot of brands that work with a lot of big ad agencies and big companies that I'll leave them out of this. But, you know, when you just start putting money into it and, you know, selling mass impressions, even at a small discounted rate, you're not getting what really is going to move the needle, in my opinion.

13:16And, you know, my opinion is if you can look at, you know, 20 podcasts that have solid numbers in audio, video, social media, and you put them all together and say to a brand, hey, I can do this, this and this. And you can actually do what I tell you you're going to do, whether it's put the state farm pillow in the right spot or the mug in the right spot, you know, get the social media when they need it with the backdrops. If you can do that, that's the those are the companies that are going to really win and see great success. So that's what we do. That's why we're different. We go into these big brands and bring 10, 15, 20 like-minded podcasts and bring video, audio, social, mass scale.

14:03And then we come through and they keep coming back because they're seeing great results. There's always a battle on, you know, how much money is going to go to these big agencies and they're going to throw it out on radio and TV and overnights to get low CPMs. And I'm like, well, that's not us. You know, we value our inventory. We value our community. We value the endorsements. You know, I have a lot of clients that, you know, say no to certain brands for whatever reason. And, you know, that's okay. Right? Like we will find other ones that will fit better and we do the work that way. So, yeah, it's fun, man.

14:42I mean, who knows what the next thing is going to be in this space. But I'm excited about it and it keeps growing and, you know, clients are happy. And when you're a sales guy like me, that's a dream come true. Okay, Kit, I need you to sell me this pen. Now, I remember like that was like the funniest sales question. I've witnessed so many interviews where they said that it was like, it was like the, how did this become even a thing? But I am curious, what's the first thing that you sold in your life? What was the first thing that you sold? Well, I mean, first thing, like, geez, it goes back to being like 12, 13 years old and like figuring out girls for the first time.

15:24Right. And selling yourself. Right. Like who you are and like that kind of stuff. Right. So there's that. But like, you know, for podcasting, it was awesome. And it's a cool story, I think, at least. when I went to Adam Carolla and said, Pro Flowers, Cherries, Berries, you know, is on the hook. This is like 2012 and they want to do, you know, a campaign with you. And I told them it's going to be like a thousand bucks to do a read. And, you know, leading up to Valentine's Day, the media buyer is like, you're crazy. That's more money than K-Rock Morning Drive in LA. And I'm like, well, what about like doing like a CPA, which is cost per thousand thing and they're like all right we'll pay you 12 bucks for every person that uses adam's code i'm like okay let me see if i can sell adam on doing it talk to adam and i said hey this is what i'm thinking we do it you lean in heavy on this let's see what happens i know that if i can get proof of concept here they've got more advertisers i can go to more advertisers that'll do things like this um and we'll start rolling right and So I got him to do it.

16:36And Adam is a tremendous sales guy himself. So he's got this great audience that he could talk to them about supporting the show. And if you're going to send anyone Valentine's Day flowers, by the way, it's Mother's Day coming up, so don't forget. So I think when we ended the campaign, it was two weeks, the buyer called me back after Valentine's Day and said, I've got some great news. I said, all right, well, let's see. What is it? And he goes, we owe you$43 ,000. And I'm like, holy, man, we're on it. So I knew then, you know, that this is a business, right? So he started getting more clients involved.

17:20We did, you know, calls where Adam would get on with talent, with brands and kind of talk about that too. And so, you know, I think everything's sales, man. I mean, if you're a sales guy or a sales guy, you're selling all all the time right so yeah that's what it is so i'm wondering i think most i think most people would say i want to work with a celebrity or i want to work with somebody but i'm i'm too afraid to message them i'm too afraid to contact somebody who i would think is more important more special than i am more known that is very gutsy of you back then to do that and i I like how you added value to him versus trying to extract value from him.

18:03You added value to him. So if somebody is like, hey, kid, I'm going to message, you know, so and so because this could change my life. Like what happened with you? How do you think or what would you say to them as to how do I go about messaging this person? Because this this is huge. I am I know so many people that would never have done that. But you took the chance. Yeah. You know, we go back to timing. right adam had just lost his job at cbs um you know being syndicated he was starting the podcast um you know he had like a fan like email list so i'm like i'll just send it in you know and uh he got back within a day and and i went in and met with him and his team uh over in glendale and you know we started doing it and and um you know and nobody knew what a download was or any of that kind of stuff we just we figured it out and um and it worked and um you know what i would say look you know there's a million ways to reach out to talent now through instagram and you know all these all these things that i'm you know too old for now but uh but i would say never have any regrets in life right like if you want to do something go make it happen you know and um And my wife of 12 years now, we weren't married at the time when I started the company, but she supported me along the way and, you know, gave me great beliefs in what I was doing.

19:36And, you know, that was really cool of her and having a supportive group around. Like, so when this happened and it was stressful, right? Like, after I started building the business, people would start, you know, reaching out to Adam and I'll do it too. and now you're sitting on me in a battling turf and it got a little crazy. The good news is I met some investors that I could start to take on some money and hire some people and get contracts going and protect my business that I had founded. So back to your original thing though, if you have an idea and you believe in it, go for it, man. You only live once, right?

20:19Like this is this is it. And, you know, I'm one of the few lucky people living my dream. I love it. I've had a bunch of dreams, but this is one of them. And and and I really I still wake up every day and love it. I'm so lucky. You always look really relaxed. You look like you're having a good time. You don't look stressed. So I always did, though, being the president of a publicly traded company. and how was the process of taking the company public? So that's not the first time I've heard this about not being stressed, which is so crazy because if you knew me in my head, there's a lot going on up here and there's a lot of anxiety and sleepless nights.

21:03I've got 40 employees and they have families. There's a lot there, but I try to live it differently. I'm wearing flip-flops and wearing shorts right now, So I don't think I'm your typical CEO of a publicly traded company. I go into New York and I was at a conference up there and I was speaking at it. And one of the guys came up after doing it because that was the most fun presentation. I'm like, yeah, because I don't do like slides or any of that kind of stuff. I just kind of talk. And it's when you realize you need to hire, it's usually already too late. I've been there wasting weeks waiting for decent candidates.

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23:00And he goes, yeah, I feel like you're like wearing flip flops. And I'm like, if I could wear flip flops here, I would. You know, like that's that's just kind of my personality. Lived in California and, you know, just have that. Running a public traded company is interesting. You know, we, the company that bought us Live One, which is LVO on the NASDAQ, spun us out their offering into a new offering. And, you know, that was interesting. We worked with Gunner, and then we also worked with the Roth Bank and understanding, you know, the process of going public, how that works, what is entailed in it.

23:44You know, the reason why we did it is to make it an all-inclusive space, right, for talent producers to really win in it, right? Like, so even when these big deals come down on Spotify or Amazon, you know, these The talent's not getting the piece of it. It's a contract and it is what it is. For us, when we go out to sign talent or work with new talent, we like to offer them stock so they feel the potential upside of the company. So we all are kind of swimming in the same direction together and it's unique. So we use stock a lot of times to help us in some of these deals and, you know, hopefully keep people like Adam and Brendan Schaub and all these guys I've worked with for years and years to stay with us because they're, you know, invested in the company.

24:39So that's pretty cool, you know, and we're continuing to grow. We have a lot of M &A conversations going on right now with a lot of different podcasting companies and non-podcasting companies where we feel we're profitable, which is great. And we feel like we have all the systems in place where we don't need any more back end stuff or really more sales people, maybe some more producers. But if we take on more scale, that'll help. And if a company comes into us and we can take some of their things like finance and HR and payroll and all that stuff off their plates and help them monetize and market their shows that one plus one will equal three or four.

25:24right and everybody alone so it's been interesting i i mentioned it earlier you know i got a chance to talk to people like whitney cummings who i'm going to talk to later today and just brilliant you know funny amazing people that are so talented and had so much success in their career and they're so fun to talk to and then you know then i got a call with an analyst right which is you know fun but different you know so it's uh it's no offense to those analysts i love them too So, you know, I'm an analyst and I think I'm funded. No, I'm not really an analyst, but an unofficial analyst. So, you know, this is this has been great.

26:02I could I I'm really fascinated and I'm excited by the fact that talent can now take over and really win versus before they had to work through management and they had to work through. There's so many layers, like you said, in the end, they don't even really make much of the money. It was very little, if any, at all. There's too many people involved, but now they can create their own show. They can have their own asset. They can build a company. I was just reading about how Diary of a CEO was offered$100 million to do a deal with whatever company it was, like a Spotify or whatever. And he turned it down and said they can create a company around what they're doing and make more money than$100 million and how they wouldn't even receive a lot of the$100 million in the end.

26:53And I was like, wow, this is very interesting that it seems like the talent now has almost more of the upside or has more of the control than before where it really was like these record labels or these Hollywood studios. Like they really had the control and the talent had to bend to them. But this this has been amazing. If you want to get in touch with you, they want to find out more information. How can they do so? Yeah, happy to take any emails at kit, K-I-T, at podcastone, that's O-N-E dot com. I try to respond to almost everybody, but we're on, you know, every social media platform, and you can go to podcastone.com, check out our shows, listen to those super talented people that have some amazing stories to tell, and you'll find something you like and, you know, really enjoy it.

27:45But I've enjoyed my conversation with you guys and really appreciate your time today. Same. I know we might have met each other in Orlando many years ago. Who knows? But Orlando is going to be in Orlando. Into your future bucket. Thanks for joining us today on Founder's Story. Thank you. Appreciate it. Take care, guys.