Senate Dems to hold creator summit, ChatGPT launches ads and the rise of “vertical podcasts”

0:00Jasmine Enberg: Hi, everyone. This is Scalable, a weekly show about the business of the creator economy. I'm Kaya Yurieff. And I'm Jasmine Enberg. Every Thursday, we take you beyond the headlines to tell you what's happening, what it means, and why it matters. Where is the money going to come from? How does this affect the creator economy? Almost all of you have seen at least one headline about the upcoming launch of ads in ChatGPT, or as Gen Z likes to call it, Chat. And I love that they've given it a nickname like it's one of their friends. To start, the ads will show up at the bottom of chats when there is a, quote, relevant product or service in a conversation.

0:37This happens all the time, right? Like, just look at Netflix. It famously said it would never have ads and look at where we are now.

0:43Jasmine Enberg: Creators in general risk losing visibility. AI is not always the best about giving its sources.

0:53Jasmine Enberg: Hi, Jasmine. Hey, Kaya. We are on the road again this week. Yes, we have accidentally kicked off something of a road show for Scalable. We're going to be recording our second live podcast this Saturday at the Sundance Film Festival in Park City, Utah. We're going to be part of the Brand Storytelling event, which brings together brands, agencies and creators. You can probably guess the topic of our podcast, given that we're at a film festival. but it is the convergence of creators in Hollywood and how brands are navigating this new era of entertainment. We're also very excited to have special guests from Ocean Spray joining us.

1:32Jasmine Enberg: I think they're such an interesting brand because they accidentally had such early viral momentum on TikTok. So we're super excited to talk to them about how they built on that and how the 100-year-old brand is taking that moment and how it's shaped its creator and social strategy in the years since. So very excited for that conversation. We are also excited to announce that we are going to be judges in this year's Webby Awards. We are joining a stellar panel of judges that also includes celebrities like Paris Hilton, Walton Goggins, and industry experts and executives from YouTube's Kim Larson, who's the head of creators there, also the global CMO of Coca-Cola, as well as executives from companies like Meta, Waymo, TikTok, and OpenAI.

2:18The 30th annual Webby Awards will be held later this year. And it is very hard for me to believe that they've been around for 30 years. They're almost as old as we are, which is crazy.

2:30Jasmine Enberg: We did want to call out that the last chance to submit work for this year's awards is February 6th. And I think it's so interesting that they introduced a lot of new recognitions and honors this year, including best new podcast, best video podcast, as well as an entire new creator business category to recognize creators who are building real businesses in the space. So you can enter at entries.webbyawards.com. Even with the long weekend, there has been so much news as usual. But I do have to say that having the extra day this weekend was really great because most people in the US at least were off.

3:09So we got to catch up on some reading and some writing and also do all of the other little things and sometimes big things that come with running a business, especially when there's just two of us on a day to day basis. Exactly.

3:23Jasmine Enberg: These holidays are unfortunately not holidays for us, but maybe someday we can take the time off. And this is not a complaint. We wouldn't have it any other way. No, honestly, I was happy. I was like, okay, this is like a bonus day so we can get ahead, Especially with the travel schedule too, it throws off your week. Although I love working in planes. I feel like super powerful. I don't know how you do that. I'm like, the plane is the one time when nobody can bother me. I like either put on my headphones, listen to some music or a podcast, or I read a book or I sleep. I'm a very, very good plane sleeper.

3:55I'm a bad plane sleeper.

3:57Jasmine Enberg: And I have the opposite though, where I can like focus. Like I get so much done because like often people are not pinging you. But anyway, later in the show, we are going to talk to another founder, Hernan Lopez, who is the founder of Wondery, which, of course, is the podcast studio that was acquired by Amazon. And we're going to talk to him about all that, his founder journey, what it takes to start and run a business. Obviously, of course, we're going to dive into podcasting and get his take on whether every podcast has to be video or not. But first, let's talk about the news that has been dominating tech headlines all week.

4:31I'm sure almost all of you have seen at least one headline about the upcoming launch of ads in ChatGPT, or as Gen Z likes to call it, Chat. And I love that they've given it a nickname like it's one of their friends.

4:46Jasmine Enberg: We learned this from my younger sister, who is Gen Z. Chat, of course, has become a huge part of college students' lives, as well as many working adults. But as all platforms eventually do, they are bringing in ads. So last Friday, OpenAI announced that it will start testing ads in ChatGBT for users in the U.S. who are over 18. To start, the ads will show up at the bottom of chats when there is a, quote, relevant product or service in a conversation. So our first question, of course, is like, how often does this actually happen? And it's more than you might think. 57 % of Americans, so more than half, said that they used AI chatbots for product research, according to data from OmniSend.

5:29Jasmine Enberg: And I think what's really interesting is that 65 % of the respondents who said they used AI while shopping online preferred ChatGBT over other chatbots like Perplexity or Google's Gemini. So there are plenty of opportunities, it seems, for ChatGBT to show ads to users. Yeah, there sure are. And I feel like this is another one of those cases where what people say isn't necessarily aligned with how they behave. And we see this all the time in social media. And now we're starting to see it in AI as well. People say that they don't like or they distrust social media and now AI, but then they use it anyway.

6:05And there's tons of different reasons for this from, you know, convenience or from habit or from the fact that their friends and their favorite creators are there. So it's just really hard for them to stay away. But anyway, Our second question, of course, was how does this affect the creator economy? And on the surface, it probably seems like it doesn't. But I think it's really important to look at the launch of ads in the broader context of what else OpenAI is doing. It's recently launched Sora 2. It's added individual apps into ChatGPT. And it struck a partnership with Disney, just to name a couple of things.

6:44And I think most people in the creator economy today think of AI as a content creation tool or perhaps a search tool. And it is those things, right? But it is also increasingly becoming a new distribution channel. And I think with all of the things that OpenAI is doing, it's really looking to build out a new content ecosystem that isn't all that different from, say, meta and potentially even more powerful considering they control both content creation as well as distribution. Totally.

7:19Jasmine Enberg: And there's so many other signals that point in that direction. Sam Altman, the CEO of OpenAI, in a post on social media about the launch, shared his advertising principles, which were pretty expected. Ads are not going to influence AI-generated answers, and that conversations will also be kept private from advertisers. But he added, and I quote, an example of ads I like are on Instagram where I found stuff I like that otherwise I never would have. That's also not to mention that Fiji Simo, who was the head of the Facebook app, which is, of course, Instagram's sister company, is now leading OpenAI's ad initiative.

7:54Jasmine Enberg: She also was formerly the CEO of Instacart, but now she is the CEO of applications at OpenAI. And when she was hired, there was all the speculation of like, OK, ads are coming because that's her bread and butter. Yeah, and I know it's very early days, but it is so hard not to start to draw inferences from all of that. I mean, you have Sam Altman, the CEO of OpenAI, literally telling us that he's taking learnings from Instagram, which is a top creator platform as well, and also part of Meta, right, which is the second largest digital ad platform in the world. We should also note that Sam Altman has gone on the record saying that ads would be a last resort for the company.

8:31So much has been made of this, though, already in the news. So we're not going to go into detail on it. But the TLDR is that basically the company is falling into the same trap as so many other tech companies in that they need to make money, but they know that it's really hard to get users to pay. So instead, they turn to advertising.

8:49Jasmine Enberg: Lots of people pay for like the highest tier of chat. GBT. Really? Yes. So many, like so many. Yes. Like so many anecdotally business professionals that I know from like, okay, but is it for enterprise? No, it's not enterprise. They pay for it personally. But is it for work? Yes, it's for work, but I don't know that they're expensing it. That's so interesting. Cause I do think, you know, there's a lot of non-scientific by the way, this is just my experience. But I believe that I just think the average consumer, if they're going online, going to chat GPT to research, I don't know, a new lipstick to buy, they're probably not going to pay for it.

9:26But I do think there is, you know, a real use case that is worth the money for business professionals or for enterprises. But yeah, I mean, this happens all the time, right? Like just look at Netflix, it famously said it would never have ads and look at where we are now.

9:39Jasmine Enberg: Yes, I also think it's interesting to see this hybrid of like, it used to be like, okay, we're ad supported or we're subscription. And now everyone's both. And even when you look at Spotify, even when you pay for things like ChatGPT for the lower price tiers is also going to have ads. So they're kind of double dipping. And I think about this a lot with Spotify, where I'm a premium user, but like I still hear all the ads and podcasts. So it's like you can't escape things anymore like you used to. But anyway, back to ChatGPT. So I think another big question is like, where is the money going to come from?

10:14Jasmine Enberg: Traditional search budgets like Google and even Amazon will be most at risk. But this could also impact social and influencer budgets as well as advertisers start kind of shifting around their dollars. Google, of course, has some protections because of Gemini, but that doesn't have ads. And they recently confirmed that the app wouldn't be getting ads anytime soon. You know what that timeline means, TBD. We've heard that before. And now that ChatGBT has them, maybe that timeline shifts. Yeah. I mean, we see that all the time, right? I mean, when one app starts to roll out a new feature, whether it's ads or whether it's short videos, hello, TikTok, its competitors start to follow, right?

10:51And sometimes I think it's better to be first using that TikTok and short video example, because it somehow just like managed to take hold of, you know, culture and people. And it's been holding on even as reels and shorts have gained steam. But sometimes it is better to be second, right? And take learnings from the people who are the companies that came first. And I do think that this could be one of those cases. A good example of this, of course, is Stories, right? I mean, it was big on Snapchat. Instagram copied it, made it even bigger, and definitely into a better business. Speaking of which, another app that we are waiting to hear from is Meta AI, which also does not have ads at this point.

11:35They have punted launching ads until at least the end of this year. But again, the pressure could be on now. And I think this could complicate things even further for brands and advertisers, because are those social ads? Are they AI ads? Are they both a combination? What are they going to look like, right? Are they going to look like traditional search or display ads? Are they going to look like Instagram ads? One thing, because you brought up Sam Altman's quote, he says he likes Instagram ads. But did you see what the ads actually look like on chat GPT. They do not look like that at all. They look like display ads.

12:10They're incredibly boring, at least for now.

12:13Jasmine Enberg: And I think, too, in the meantime, right, like creators are already facing so much competition from the rise of AI chatbots. So like you might not think of the advertising thing as like having to do with creators. Everything is a creator economy story as we talk about. Ads and brand sponsorships account for almost half of the money that creators make. So it is a creator story, right? Yes. But there's a question of like, do they then do ad revenue sharing with creators, right? Like there's so many things like, we'll see what happens. But in general, if you step back, you know, this is a huge deal for creators because they are now having to compete with yet another kind of new technology format as more people are turning to chatbots for advice, recommendations, they're moving into creators turf.

12:56Jasmine Enberg: And of course, it's an opportunity, but it's also a potential threat where maybe they can show up in AI search results and that helps them with more traffic. The good news for now is that OpenAI has said that ads won't affect AI generated answers. So that means creator content is still going to show up even if there is an ad. But the issue is that creators in general risk losing visibility if they're pushed down or replaced by AI summaries, and they also might lose credit. So on one hand, it could be an opportunity because if AI is summarizing something and is citing the creator, that could then cause someone to then go to the creator's page or click through.

13:32Jasmine Enberg: But if summaries, as we know, AI is not always the best about giving its sources, they might lose credit. And all of this could translate to declines in viewership and engagement and people being less likely to then go into the original content from creators. We've seen publishers talk about this at length with especially with Google summaries where people are just not clicking through as much to the publisher pages if they can get the quick information right at the top of the search results. Yeah. And I want to piggyback off that final point about news publishers, because I think there could be a real ripple effect here, too.

14:06There was a report out from Reuters Institute for the Study of Journalism recently that showed that news publishers were going to start focusing more on platforms like YouTube and TikTok because of AI overviews, again, like the ones that you see on the top of Google search results. They've been really hurting traffic to their sites. That means that these platforms, meaning TikTok and YouTube, could get more crowded and make it even harder for creators to break through there, though. On the other hand, I think a piece of good news or a positive sign, is that we've seen news publishers start to take creators more seriously now.

14:42They've been striking deals with them for new shows like CNN Creators. We've seen The Washington Post start a new creator network. And then of course, there's Vox Media, which has expanded its podcasting

14:54Jasmine Enberg: network and bringing in hosts as special correspondents. As these publishers move on to creators turf, they're inevitably going to have to start working with creators, potentially opening up more opportunities there as well. And I think the other bit of good news is that people still like to confirm AI answers with real world content, especially when it comes to shopping. And I think I think of this so much, like, I don't know if this is a perfect example. But like, I think about Wikipedia, like when I was like, in, you know, or in school, where like, you could use Wikipedia as sort of a guide, but you couldn't trust it 100%.

15:31Jasmine Enberg: And now I think Wikipedia is like, kind of the Bible for people. I'm like, okay, this is true. But I sort of think it's similar where like, people use it as a guide, but they know they can't, like, just regurgitate exactly what they said. And I think it's good for certain things, right? Like, if you're like, okay, I need this vacuum cleaner, summarize the reviews instead of you going through all the Amazon customer reviews, right? But I think people still want to know from someone they trust, whether it's, you know, user generated content or creators, like, okay, what is the review of this vacuum cleaner, this hair tool, or whatever it is.

16:02Jasmine Enberg: And I think too, most importantly, like, as OpenAI continues to build out its offerings, like this could open new revenue streams for creators, whether it's ad revenue sharing or licensing or other things. I mean, I think we've seen AI companies, you know, be stingy in the beginning and see what they can get away with. But now they're increasingly starting to sign these deals and creators could certainly be an area where they start ramping up. Yeah, the Wikipedia point is so interesting because I feel the same way, right? And there's actually evidence now that kind of speaks to what you're saying, that it's become sort of a source of truth for people.

16:38So there's data from similar web that I found as I was doing research for this podcast that showed that the top platforms that people clicked through to from AI chatbots were social platforms like YouTube, Reddit, and Facebook, which means that user generated and creator content is still incredibly important. And Wikipedia, they are going to Wikipedia from say, chat GPT, which means they really are going there to confirm their answers. But I, I totally agree. I always double check everything I find on chat GPT. It feels like a good starting point. But I want to make sure especially when we're talking about, you know, important business topics that you are actually giving correct information.

17:19But I think big picture back to sort of the creator angle and all of this, creators are going to have to adapt again, right? I feel like this is the story over and over again in the creator economy. Good news is at least they have experience in it, like when TikTok launched and they

17:33Jasmine Enberg: all had to pivot to short video. With AI, I think, you know, building expertise and credibility is going to be critical, both so that creators show up in these AI summaries as well as other AI features and content, but also to be that trusted source when people are going to look for social proof. More tactically, I'd also say that they need to start thinking a little bit more about SEO or search engine optimization and how they can best frame their content for discoverability in, you know, AI chatbots. Speaking of which, Kai, I have to ask because I find this so fascinating. has the way that you search changed since you started using chat gpt i don't know if it's changed from like a pure seo perspective but like i still use google a lot like i have that muscle but i am reaching more for chat gpt as like my go-to source so it's starting to replace google even for simple stuff the one big area that i've totally shifted to is translations so i'm learning I'm learning Spanish, but like sometimes when I'm like in the line at the store and I have to like figure out how to say something, I don't go to Google Translate.

18:42Jasmine Enberg: I go to ChatGBT. Is it better? Do you think? It's really good. Yeah. I mean, I use it with Polish because I like because I speak Polish fluently. So I use it as like a proxy and it is good. Because Google Translate doesn't work in Finnish. That's why I'm asking. And I'm like, should I try ChatGBT? I mean, it works, but it's always a little off, you know? I know. But we speak these niche languages like Spanish is like, you know. So I also it's shifted kind of how I approach research, like even when I was still kind of working as a full time reporter in a newsroom, like I used to comb through Google to like find experts, like I already needed to find someone very specific in European tech policy, which I just like didn't know, like I didn't have a go to person for that.

19:22Jasmine Enberg: so instead of going to google i went through chat gbt and like it gave me some good recommendations but it's still not perfect like one this is like a really unfortunate example but like they gave me a list but one of the people had passed away oh no it was like i was like oh my god so that was not great um and obviously it like hallucinates and says things still that are not right so i am like reaching for chat gbt more in general sorry that was a very long answer No, it's so interesting. Yeah, I mean, I would say that I'm not a heavy chat GPT user. I definitely use it. I still use Google more, I think.

20:00I do use a lot of Google's AI overviews, though.

20:04Jasmine Enberg: Yes, me too. I found that I rarely actually scroll down past them anymore, which is not great. I do click through on the links that Google's Gemini gives me, though. So definitely still clicking through, But as long as, you know, they're at the very, very top. But it has changed the way that I search, meaning like the language of search. And I've noticed that I've been writing out full questions into the Google search bar. So you're like, ask Jeeves. Literally, I'm like, what is happening? But I'm like writing out what are the best tennis sneakers instead of just best tennis sneakers like I would have done before, right?

20:42So it's shifted from like keywords to like natural language questions. I'm talking to Google the way that I would talk to you, for example. And I mean, this is obviously so many business implications, especially for advertisers in terms of how they, you know, target ads. But it's also just wild how quickly we adapt, right? I mean, that happened to me. It feels like it happened overnight, basically.

21:08Jasmine Enberg: But it's been like a couple of years. Like everyone feels like everything is overnight. Like chat GPT obviously like went super viral and all of that. But like it's been how many? Three years? It launched what? November 2022. Yeah, it has. Just over three years. We're getting there. And my usage has gone up a lot. Like I feel like in the first year, I didn't really use chat GPT. And now, especially the last year, definitely more. Moving on from chat GPT. One of my favorite parts about doing this job is that I get to wear my journalism hat. For those of you who don't know, I went to J school at NYU, but ended up becoming an analyst.

21:45The jobs are similar in that as an analyst, I did get to do some reporting, but it was rarely ever breaking news and definitely not scoops. But now we do have a scoop to share with you today, or technically yesterday, since we published it in the newsletter. But Senate Democrats are planning their first ever summit for creators, independent journalists, and new media, according to an invitation that we saw. The full-day event is hosted by the Senate Democrats' Strategic Communications Committee, or the SCC, and it will take place on February 11th in the U.S. Capitol.

22:19Jasmine Enberg: And if you are not familiar with the SCC, it was established in 1974, and it has played different roles over its history, including acting as an advisory board for Democratic leadership and helping Senate Democrats with everything from research to policy to communications. It is currently chaired by New Jersey Senator Cory Booker, and Tina Smith is the vice chair, and she is a Minnesota senator. So this is not the first time that Democrats have opened their doors to creators. The Biden administration hosted the White House's first creator economy conference in August 2024. The event included about 100 creators and industry professionals, And it was the first of its kind hosted by the White House's Office of Digital Strategy.

23:01Jasmine Enberg: And the Biden White House, of course, also briefed creators on topics like the war in Ukraine, which was a big deal at the time and wasn't something that past administrations had done. Of course, the Obama administration, I remember Michelle Obama, invited minors to the White House. So, you know, there have been dabbling of this, but it felt like the Biden White House, you know, was the first to really like really hone in on the creator strategy. Yeah, totally. It felt like a huge moment. And so many people that we knew went there and you were actually there. I was there. So what was so funny about that event?

23:36Jasmine Enberg: So I was still a traditional journalist and they put press like in a different section, which was so interesting. And Taylor Lorenz was there when she was at the Washington Post. So it was interesting because they sort of like cordoned us off. But look, it was super exciting to be at the White House. It was in the Eisenhower building, which was right next door. They had speakers come in and out. it definitely was more industry professionals, I would say than creators, but it did. But there were newsletter writers there, which is why I found it so strange that they separated you from newsletter writers who are going to be covering it in the same way that a traditional news outlet would.

24:11Jasmine Enberg: But they really like put this line between kind of traditional media and then people that wrote Substack. So yeah, it was a little bit interesting. We were like on the balcony kind of looking in and there were certain sessions we weren't allowed to go to. So that was kind of like an interesting dynamic, to say the least. But it felt like this really big moment for the industry. You know, when the White House hosts a creator conference for the first time, like it's the same as like Goldman Sachs doing the big creator research report, the podcast election, like all these kind of moments you look back in time and they feel like, you know, big milestones for the industry.

24:45Jasmine Enberg: So it was exciting to be part of it, even though I had to look from above. At least you were there. Speaking of milestones, this new event actually comes after President Trump started inviting podcasters and independent media reporters to the White House briefing room, which was a huge moment that happened back in February immediately after he started his second term. And I think this shows just how far behind the Republicans Democrats really have been in creator and influencer strategies despite these big moments like the Biden creator conference. Trump, of course, was also widely credited for appearing on a slew of podcasts during the 2024 election.

25:26He did a three-hour interview with Joe Rogan, for example. He also did a live X Spaces, which I listened to, with Elon Musk, who, of course, was, you know, one of the most consequential people in getting Donald Trump reelected. Trump himself has also credited his win to those appearances, as well as his TikTok strategy. I don't think any of us can forget that one TikTok video that went viral of him working a shift in McDonald's.

25:55Jasmine Enberg: Speaking of TikTok and Trump, I about exactly a year ago, I was at the TikTok sponsored inauguration party for Trump, which I was reminded because someone that I met at the event texted me a picture being like, oh, my God, this was a year ago. And it was pretty incredible to see that turning point for tech companies because so many of them didn't want to be political. And you had YouTube there having a podcast event. Yes. It was one of the first out there, for example, saying it wasn't going to accept political advertising and it wasn't a political platform. Yes. So times have changed a lot, certainly.

26:32Jasmine Enberg: And Democrats have frequently acknowledged that their Party trails Republicans when it comes to influencer strategies. The deputy campaign manager for Kamala Harris's presidential campaign told some before after the 2024 election, quote, Democrats have historically had these really close relationships with institutional media, institutional culture, Hollywood and the traditional press. There's this entire cultural ecosystem that the Trump campaign did a really good job of cultivating over a long period of time. So that I think was that really sums it up, right? Like you've seen so many celebrities come out to back Democratic candidates.

27:06Jasmine Enberg: And it also speaks to like how our culture has shifted, right? Like A-list celebrities are not resonating, especially with young people in the same way. So now ahead of the midterm elections in November, Democrats have been trying different tactics. They're trying to learn from 2024. That includes developing content with left wing creators. This has sort of become like a cliche, but it's like, who's the Joe Rogan of the left? The New York Times had some reporting on this last spring about various efforts to do this, including, you know, pitching mega donors to, you know, put back different creator projects, including one from Biden White House alums, which we have talked about previously on this podcast.

27:42Yeah. I mean, you brought up Kamala Harris's campaign and sort of, you know, how celebrities may not hold the same sway among young people as they used to. One thing that that just reminded me of, though, is do you remember Kamala Harris's announcement and really how her team capitalized on Brat Summer at the time after Charlie XCX posted on Twitter, right, that Kamala is Brat. So they've definitely tried, right? And there was so much momentum. And it was such a great way for Kamala Harris to introduce herself to the public. I mean, there were so many things that were just working against her from like, but then it fell off.

28:17The social strategy fell off. Yeah, yeah, the limited amount of time, right. But also, they didn't really build on it. And the creator influencer efforts really weren't there in the same way as they were for Donald Trump. I mean, she sat down with Alex Cooper, but it still, you know, it didn't feel quite the same and to that same level as the Republicans were doing. But anyway, I mean, the urgency for Democrats to really get this right now is high. They know they have to figure it out. And Kaya, you mentioned that we talked about some of this on a previous podcast. You can check that out at the link in comments.

28:53Jasmine Enberg: All right, here is what else is going on in the creator economy. TikTok quietly launched a separate app called Pine Drama in the US and Brazil focused on micro dramas, which if you've listened to past episodes, you know that we think they're going to be really big this year. And we're starting to really see a lot of momentum. It really seems to be shaping up to be the year of micro dramas. And I think it makes so much sense for TikTok to do this because of how popular they are in China and on their sister app, Douyin. You know, often tech companies launch these spinoff apps to kind of learn and not money the water of their normal apps.

29:25Jasmine Enberg: Meta did this early on before launching Reels. They launched Lasso also in Brazil back in 2018. Oh, yeah. Yeah. So very interesting. Of course, TikTok is also experimenting with some microdrama features within its app. So definitely watch what they're doing with microdramas this year. Bitmine Immersion Technologies, a crypto company, has invested$200 million in Mr. Beast's holding company, Beast Industries. The chair of the company, Tom Lee, has called the move a moonshot. Now, if you're like me and are like, huh, when you hear this news, let me tell you what a crypto company could be doing in investing in Mr.

30:04Beast. He is, of course, the biggest YouTuber in the world. So clearly they're going off to reach an awareness here. His association with BitMind could definitely bring more eyeballs, especially among young people who might not yet have established banking habits or preconceived notions about crypto. It's also worth noting if you're wondering, you know, what's in it for Mr. Beast. In October, he filed a trademark for Mr. Beast Financial, which is described in the filing as offering online and banking services. Very interesting.

30:40Jasmine Enberg: Alex Earl has launched a new video series on YouTube, which is a twist on the Get Ready With Me format that, of course, catapulted her to success on TikTok. The new series called Get Real With Me, she's conducting longer, more in-depth interviews with guests, beginning with her friend and fellow TikToker, Jake Shane, who is so funny. Jasmine and I went to his live show at South By, and we were like, are we going to understand this? And we were crying laughing. He's so funny. Anyway, I digress. I think this is such an interesting one because she did a whole launch with this and had a press article.

31:18Jasmine Enberg: And the emphasis is really on YouTube. And of course, she is known for short-form content. She's, of course, diversified beyond TikTok. She's big on Instagram. But it really shows how creators are developing these recurring, recognizable formats and investing in long-form content. Long-form content, you tend to build stronger relationships with your audience. Of course, Alex Earle is super recognizable, but I think people see the limits of short form. And she's expanded with her podcast. This is another attempt at that. And I think just like watching, you know, your favorite talk show back in the day or franchise shows like Judge Judy or like Dr.

31:52Jasmine Enberg: Phil, right? There's something comforting about that same format, the same host, the same studio. And I think creators are looking to kind of recreate that for the modern entertainment age. So I cannot believe we're talking about taxes again, but here we go. It's a little different angle this time, at least. So many taxes. Should we have a taxes segment? Please, no. I don't want that. I don't think any of our listeners want that either. Anyway, although please tell me if I'm wrong. I could be wrong. James Fishback, a Republican candidate for the governor of Florida, is proposing a 50 percent, quote, sin tax on income earned by OnlyFans creators in the state.

32:31He believes that this would deter people from joining the adult content site and that they would use the revenue to raise teacher pay and improve school lunches. Now, it's worth noting that Florida is one of about eight states that doesn't have an income tax, but they do pay federal taxes. And most states have what is called a progressive tax, which means you pay higher taxes when you earn a higher income. But no state has an income tax that is anywhere near what Fishback is proposing. This proposal has obviously started to receive quite a bit of criticism and backlash, including from Florida-based Sophie Rain, who is one of OnlyFans' top paid creators.

33:12She pushed back on this proposal saying that many people rely on the platform to support their families. This is interesting because Rain was actually the creator that Fishback cited in his proposal to show just how much money could be made. He said that she would end up paying Florida$42 million in taxes.

33:32Jasmine Enberg: That is not a small sum. Also, the irony in all of this is not lost on us. This proposal unfairly targets mostly women who create content on the platform rather than the mostly men who pay for that content. A nonprofit is building the new Institute for Responsible Influence. Its first order of business is to create a certification program for U.S. creators. The institute was announced this week, and it will provide training and other resources to creators so that they follow rules from the FTC to properly disclose sponsorship deals. Creators who complete the training will be certified. And the idea is that, you know, creators who are certified are going to comply.

34:11Jasmine Enberg: And it's sort of this like almost stamp of approvals that brands and consumers can kind of look to. The Center for Industry Self-Regulation, which is part of the nonprofit organization BBB National Programs, is the group behind the effort. And the initiative has gotten a lot of support from ad agencies and other organizations, but it is up to creators to enroll and complete the certification. We, of course, discussed the FTC guidelines and how other countries like the UAE are approaching influencer regulation in last week's podcast. That's all the news we have for today. Now we are excited to welcome Hernan Lopez, the founder of Wondery, to our show.

34:45Hi, Hernan. Welcome to Scalable. Hi, thank you for having me. We are so excited to talk to you. You have had quite the career from almost 13 years at Fox International to then founding Wondery and now Owl & Co. Tell us a little bit more about you and what took you on this journey. I started my career in the creative side of an advertising sales team back in Argentina. And I always loved connecting the left side of my brain with the right side of my brain. How product, how creativity, how storytelling connects to business outcomes. And I moved to the U.S. in 97 to start for what was then a small division of Fox International Channels.

35:28I spent almost 18 years over there. By the time I left, we had grown to a large organization with thousands of employees around the world. I had this butt in me for about half the time that I wanted to be an entrepreneur. I wanted to start something. I was always drawn to entrepreneurial cultures. And podcasts in 2015, when I came up with the idea for Wondery, were a small industry. It was thought to be$100 million in total revenue. We didn't even know how much it was. And I kept getting the same consumer signal from very few friends who all of them very passionately use the same language. You have to listen to cereal.

36:11And the third or fourth time I heard people say this, I finally listened to it. I realized that we were at the dawn of a new wave of storytelling, similar to something that happened in television in the early, in the turn of the century. And I was lucky to have caught that bug early on and went on to start wondering, which led to an amazing journey over five years until it was acquired by Amazon. It was another amazing journey for them after I left. And two years ago, I started a consulting business called Allen Company. And we help companies in the media, tech, and entertainment space connect consumer trends with enterprise value.

36:56We talk about how time spent turns into enterprise value, something that informed Wondery and informed my work at Fox.

37:05Jasmine Enberg: We definitely want to get more into your career a little bit later in the interview. But we want to talk to you first about podcasting, which, of course, is very top of mind for us as new podcasters, as well as for the industry as a whole, because as you said, it's grown so much since you started Wondery 10 years ago. So was it listening to Serial that really, you know, triggered, you know, your decision to found Wondery? I mean, obviously, it was a much smaller market then. So what did you really see then? And was it listening to Serial that really sparked that idea? That was the consumer signal.

37:37And I know that's something that every entrepreneur or somebody who wants to start a business should pay attention to. We have even small pockets of consumers who are saying the same words about a new product that they come across. And with Serial, the level of passion was so unmistakable that I went and listened to it and realized why it was so different. But then I wonder why is it that there weren't 10 serials at the time that I listened to it for the first time, Gimlet had already started. So there was a great podcast called Startup about the creation of the company. And I went on to try to find out why nobody had tried to do that before.

38:28I realized the companies that should have made those kind of shows were the linear radio companies. and the linear rated companies were not set up for serialized storytelling. I also knew that in general, when there's a consumer trend that drives people to something new, typically monetization models will follow. So if you build the audience, the revenue will come. So speaking of monetization models, your firm, Alan Co., estimated the podcasting industry was worth$7.4 billion in 2024. First, do you have a more recent estimate, maybe for 2025? And how does that revenue actually break down? We are in the early stages of creating the 2025 Global Podcast Economy Report.

39:20The reason why I decided to do the report last year, and I realized that we were stuck on one study, which I actually helped put forward the IAB podcast revenue report that had measured only audio, only advertising revenue, and only the U.S. And I knew that video had become a much bigger part of total podcast revenue. I knew that consumer revenue had become significant for many companies and publishers. And I knew that global, by definition, was going to be bigger than the U.S. So I set out to measure all those different sources of revenue with the help of a team. Last year, I don't remember the exact numbers, but the majority of revenue was still advertising.

40:12We had more than two-thirds came from ads. But what had been undercounting before was the significant revenue that comes from YouTube. And of course, I'm counting all revenue that goes to podcasts, whether it goes to YouTube and through it to the publishers or whether it goes to the publishers themselves. But the consumer revenue, there are some apps, for example, Pocket FM, a company out of India. I had not heard of it until two years ago. They were making, as of last year already,$200 million in annual run rate. Just one company. A Patreon, I remember, was another significant contributor was making$500 million, if I believe, per year.

41:00And obviously, most of that revenue flows through to the publishers.

41:04Jasmine Enberg: As we've seen podcasting pivot to video, as you mentioned, what does that mean for the future of the medium as all of entertainment is sort of morphing, right? Will we still call them podcasts? What does this mean for the industry as YouTube shows start going on Netflix and other creators who aren't actually podcasters are uploading to Spotify? It feels like we're in this moment where everything is coming together. I do hope we continue to protect and preserve the name podcast and that we call them podcasts going forward. We should talk about whether video is needed for everybody. I don't believe that that's the case.

41:38But it's really expanding the potential audience. And the reason why video is so important is that YouTube made a concerted decision, however many years ago, to make a bet. people want to watch podcasts, not just listen to them. And as a result, other platforms, Spotify, most notably responded by supporting and leaning more heavily into video. And because video discovery algorithms were in general better resurfacing new content, or at least that's what is most widely understood, than audio only. The audio RSS feed is great for established brands. We obviously are wanting to build a business on RSS, but you tend to get the same audience every week.

42:29And there's something great that's habit forming. But the flip side of that is makes it very difficult for a new podcast to come in into your habit. So YouTube essentially sold for that. And as an extension, as a result, video has become part of the podcast language. Definitely want to hear your predictions about what's coming next. I have to ask, what did you make of the Golden Globes adding a podcasting category? And what did you make of the nominees and the winner, Amy Poehler, which I predicted, actually. Amy Poehler is great I love it you cannot you cannot have a show that is just more rewarding to watch and listen to than Amy Poehler and she's incredibly talented do I wish she had gone to somebody who had been doing podcasts for a longer time part of me yes just because I'm rooting for the people who have been in the industry but I 100 % think that Amy Poehler's show is amazing so I'm very happy that she got it.

43:30I think it was very smart on the Golden Globes to expand the character. They have not added categories in a long time. So earlier you said that podcasts should still be called podcasts, but Wondery actually was pretty early in having their podcast converted into TV shows. Can you tell us a little bit about that process and what you think makes for a good podcast TV show. I think, and I'm glad that we actually made these things very clear because, let's put an example, Dying for Sex, the podcast. It was narrated by Nikki Boyer. I love her. We just saw each other on Sunday, the same day that Michelle Williams won the Call of the Globes.

44:18The show, the podcast, has the actual audio of the real people that went through the story. And it can do some of what a television show does, but it's a narrative documentary, strictly speaking. Everything that is in the podcast is narrated as it happens with her editorialization. In television, for a number of reasons, because it's a scripted adaptation, it's a dramatization of the true events, the creators, the showrunners are able to expand beyond what actually happened and give themselves that and create licenses that make the show land in a different way. And they're both incredibly different media and they're both rewarding to watch or consume.

45:09The podcast to TV process that we had at Wondery always started with, we wanted to have stories that resonated with listeners emotionally, that they were character-driven stories. And because I came from television, I knew how buyers of television essentially prioritize some kinds of stories over the other. We chose the podcast that we're most likely to expand into television shows. And we got several of them made out of 30 that option.

45:47Jasmine Enberg: So you said that not all podcasts should be video. So say more about that. Why? What podcast should be audio only? And it feels like it's hard to not do video now in this environment. So tell us more about that. So I didn't think, for example, Up First, right, one of the nominees that the other day or Daily from the New York Times, I think those kind of shows are there's always a tradeoff between how much video you do and how much editing you can do. And there's always a trade-off in getting guests to be available at the time that you need it and for the time that you need them. You guys probably are familiar with the show Acquired.

46:31And they are very famously audio-only. They do amazing, very heavily edited four-hour episodes. And the kind of work that they do will be really difficult to do with video. Although sometimes they do video interviews. What I think is now table stakes is that every podcast needs to have a video strategy. And that video strategy is a minimum clips to be shown on Instagram and other short-form platforms. Because discovery is essential. And podcast clipping, it's becoming its own marketing vehicle. And it's actually spreading its own cottage industry. There are companies that make significant amount of revenue from Joe Ron clips, for example.

47:15Let's talk a little bit about predictions and what you expect from the industry. So what would you say is the single biggest structural shift in the podcasting business in the, say, next five years that people are still underestimating? I don't know if I would call it a structural shift necessarily, but it's a product innovation. I have predicted already that we're going to see vertical podcasts. I don't know if you guys are familiar with the show Subway Takes. That's on Instagram. That is, to me, a new format. And I call it a vertical podcast because the underlying trend, and I will publish some work about this over the next couple of weeks, is that vertical is the default mode on mobile.

48:06And the apps that lean on vertical are actually winning time spent. In the last year, Instagram, of all the big apps, gained more time spent than any other app. We resist turning our phone sideways. We don't do it unless we really have a reason that we are going to sit down to watch a movie or play a game. Other than that, the default mode is vertical. So when we started producing this episode, remember I asked, is this shot vertically or horizontally? I'm sure that you'll have vertical clips for promotion, but I predict that if I watch this show in five years from now, the default will be vertical.

48:50Jasmine Enberg: Microdramas have also been something that you have been paying attention to lately. So what were some of the early signals there? And do you think they're going to break into the mainstream in a big way this year? Yes and yes. So my very first area of interest was before I started Wondering, I was obsessed with this idea that because I worked in a movie and television company and we knew that movies had been made to fit into a television set. We thought that television shows and movies could be made to fit into a mobile phone. And in theory, they can, but that's not what they were designed for.

49:25So my first idea before Wondery was something very similar to Quibi. And luckily, I was talked out a bit by a colleague of mine, John Landgrave. And then when I told him about Wondery, he said, oh, no, that is actually a good idea. This thesis that mobile content needs to be designed for that screen has been with me for a long time. And if you think about short form, short form has been around for decades. In fact, short form movies precede feature films. That's why the word feature film exists. Short form television has existed as well. But there's never been a way of monetizing short form until YouTube.

50:05And YouTube has been great for pretty much everything except for scripted, serialized content. But there aren't any ways of monetizing at scale scripted serialized. So microdramas, which started in China at the end of 2020, have been essentially plugging a gap in consumer demand and supplier offering. And I think we are now at an inflection point that the whole industry was worth$3 billion outside of China, of which a little less than half was in the U.S. But I think you're hearing more and more about it because a lot of scripted talent who work in television as well are finding a way to express a new story and to monetize it through this medium.

50:57But I said in my reports, short dramas are a subset of this much bigger space called vertical video. Vertical video is a$100 billion industry already outside of China. So short dramas are$3 billion. And that's, I think, is going to increase in share. But those$3 billion are the ones that matter to the scripted entertainment producers. All right. Well, we'll have to talk to you five years from now and maybe we'll be in vertical. But we wanted to move on and talk to you a little bit more about your founder journey and hopefully get some advice from you as well as first-time founders in this space.

51:36So you have now founded OWL & Co. Tell us about that. I mean, what gap did you see in the market for this? There are consulting companies like BCG, McKinsey, that have lots of history and very big teams that come and solve solutions for large companies by definition. And they come in for three months and they'll charge you seven figures. And there are some smaller consulting firms that are more specialized and smaller, more affordable, and have more of a higher touch. But it's just a smaller version of what McKinsey and BCG do. What Allen Company seeks to do is to create relationships over a long period of time with companies in the media entertainment space.

52:26We're now working with different divisions of the top four global studios, four independent studios, always in the streaming or television content production. We work with startups. And our heirs of expertise all had to do with streamonomics, essentially the theory of what drives the economics of television, film, music, podcasts, creative content, and sports streaming. And today, everything is streaming. It's a completely different founder journey from Wondery because this one, we are a three-person team, obviously supported by a large network of experts that come from my experience at Fox and then at Wondery.

53:15But it's not meant to be a VC vehicle, right? the way that Wondery was.

53:20Jasmine Enberg: Looking back at your time at Wondery, was there a certain decision or most important decision that you made that materially changed kind of the company's trajectory? So many. And the first one that I can think of was launching Dirty John. And it wasn't really necessarily a decision, but rather landing that product. It came to us through the LA Times. LA Times wanted to create their version of the Daily. And so they called me for a meeting. There were no podcast companies like us in LA. So in summer, I got lucky. And I told them, don't launch the Daily. If you want to follow what the New York Times did, think about Modern Love as the model.

54:08It's a column that is based on a newspaper article that is easier, that it's ongoing, that you don't have to produce five days a week. So I asked them, what articles do you have that somehow are in the territory of modern love? And as just it happened, they had been reporting on Dirty John, the newspaper story, for about six months. we started together with Christopher Goffert, the writer, and we created this model of publishing simultaneously one day newspaper article and then the same day the podcast. And it really took off. There was a before and after Dirty John for Wondery. Is that your biggest win as a founder or would you point to something else?

54:56I think my biggest win was to create a brand. And this was very deliberate. From the beginning, we had a sense of what the Wondery brand meant. The model for me was Marvel. So you go and watch a Marvel movie and you immediately know that it's a Marvel movie or Pixar. And that's rare in movie studios. In podcasts, up until Gimlet existed, Gimlet also had a very distinct brand. We wanted people to hear a show, listen to the first, even before we had the Wondery Sonic logo. and feel that, okay, this feels like a Wondery show. We had a sonic identity. We had a specific kind of script. We had a narrative story arc with cliffhangers and characters and protagonists and antagonists.

55:46And all that contributed to the idea that people felt that Wondery shows were different from other shows. Obviously, it was easier to be distinct at the time because there weren't that many podcast companies available. But one of the things that flatters me the most is when people either recognize the Wondery sound or feel that they were inspired by the Wondery sound.

56:10Jasmine Enberg: And tell us a little bit about the decision to sell to Amazon. You know, obviously it's a huge company, but it's never an easy decision to exit. So talk to us a little bit about that thought process and why you decided to go with Amazon. It was 2020, a difficult year in a number of ways. of the pandemic was a difficult year for me personally. You guys can probably, if you're not familiar, you can listen to my or read my LinkedIn post. I was going through some challenges that luckily are behind me. And towards the end of the summer, I started to feel that some of the buyers in the industry, Spotify in particular, and Series XM, which had just bought Fitcher, and Spotify already bought Podcast, The Ringer, and Ghiblet, may not be as interested in buying yet another podcast company.

57:04So I started to, my advisors got inbound. They had a number of people reach out to them and say, would Hernán be interested in entertaining a conversation? And Amazon was not one of them, But once they got retained, we went through a process and the people at Amazon were very clear from the early conversations that they were serious about the company. And, you know, we had an amazing conversation and process over the next couple of months. And I want that ultimately concluded in a good place. Obviously, they have growing pains as any company acquired by another one always has. But they're, I think, five, six times bigger than they were as far as total revenue than they were when I was an independent company.

57:57So I think it was overall an outcome.

58:00Jasmine Enberg: And what was that process like emotionally, right? This is a company you founded so early on. Like, what is it like to let go and then, you know, watch, you know, watch the company, like you said, go through growing pains and changes and and all that stuff from the outside? It was made so much easier because my team went with the acquisition and I knew that obviously I was rooting for them from the outside. It's always difficult and a little emotional. And you have to catch yourself without saying, before I would do X or I would not do Y. Because from the outside, everything looks easier. One of the things that I practice at our own companies is I advise with a large degree of empathy because I was in that seat before.

58:47I know that decisions are difficult. I know that executives have conflicting objectives and intentions. So none of what all these large companies do is easy. And, you know, I was, I think, in many respects, able to just be proud that Wondery under Amazon was going to be much bigger than Wondery under the small team of 65 people, all of them but one state.

59:19Jasmine Enberg: We asked you kind of biggest win as a founder. So what's the biggest mistake you've made as a founder and what did you learn from it? I thought that it was going to be easy to raise money. And I went on to scale the company, went from zero to six employees, immediately thinking, okay, the money will come right away. And the money didn't come for two years. I really struggled the first couple of years to raise money. And for all good reasons that had to do with the market being small. The interesting thing is, if I had known how difficult it was going to be, the first year in particular, I may have not started wondering.

59:58So sometimes you have to go through those mistakes, you know, to get to success. So final question. What advice do you have to us either as first-time founders or as first-time podcasters? As first-time founders, I think you're already following this, which is you're both doing work that you love so much that you would do it for free. This is the framework that I can't remember who told me this for the first time because the founder journey is difficult and it's not for people who quit. So you have to love, generally love what you do every day. And as far as podcasters, podcasts are great for long-form conversations, but the world is moving towards shorter form.

1:00:58So mastering how to do 30-minute sweet spot is essential. We will keep that in mind as we keep experimenting. But thank you so much, Hernan. It was great to have you on the show. All right. Thank you so much for having me. I'm looking forward to seeing you both in person next time in L.A.

1:01:20Jasmine Enberg: Same. Thank you.