465: The State of Podcasting with Ex-Spotify Executive and Parcast Founder Max Cutler

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2:42Hey Founder fam, welcome back to another episode of The Founder Podcast. Today we're speaking with Max Cutler, former head of talk creator content and partnerships at Spotify and also the founder of premier storytelling studio, Parcast. Cutler was recently named one of the most influential people in podcasting by Hollywood Reporter. And earlier this year, Cutler actually made headlines in the news because he had planned to depart from the company Spotify in May to launch a new venture. And in our conversation, we're going to discuss everything from the growth of the podcasting industry, really what it takes to create and monetize a massive podcast, and lessons he's learned from grassroots days at Parcast.

3:27And really, this is an absolute masterclass on how to build a massive podcast show. So please welcome to the founder podcast, Max Cutler. The first question I ask everyone that comes on is, how'd you get your job, aka how'd you find yourself doing the work you're doing today? Thanks for having me first. I'm really honored to be here. I think for me, it was desperation. It was 2015, the end of 2015. And I had another company before I launched what was Podcast Studios. And that was a company called Bizanza that was meant to aggregate a bunch of links on the internet. It did not work out for various reasons.

4:05I was driving back from all places in Las Vegas and I was listening to podcasts, something I love. I've always loved the audio content. I grew up in an audio household. My dad was in radio and I started to hear a bunch of ads and podcasts for the first time. And I knew that I'd have to get a real job, quote unquote, and work for somebody. I couldn't figure something out. And I just felt that my love for content, my love for audio seemed like a logical starting point for me. And when I heard ads, I thought there was a business. And so I literally got home. I spent three months learning everything I could about the podcast industry at that time, which was pretty early on.

4:45And I launched my first show six months later on Solve Murder's True Crime Stories. What happened next? Well, when we launched, we launched June 13th of 2016. And it was one of those rare moments, especially for a founder where there was some sort of like an instant gratification, instant feedback loop that we went to number three on the Apple charts at that time. We hosted on SoundCloud because being very cheap around financials and hosting costs. And we started seeing thousands and thousands of people listening in the first 24 hours, 48 hours. And I remember going out to lunch and thinking, wow, this is really easy.

5:25The first show within 72 hours, we're having success. that turned out not to be true it's very hard as as any successful founder knows but it was unbelievable to see the response we got so quickly and i just wanted to do more um and really from there one show became two shows became five shows and within three years we ended up selling the company to spotify and like a lot of people these days it's interesting you said that uh 2015 2016 was early days podcast that's probably around the time that I launched the founder podcast and I remember back then like podcasts were hot and they were even hot like four or five years before that and then they made a bit of a resurgence but now they are really hot like it seems like every person has a podcast or wants to launch a podcast I'm curious like do you think the landscape has changed much when it comes to creating a show that gets traction, you know, almost six, seven, eight years ago compared to now?

6:36Yeah. I mean, it has changed. I would say one thing, you make a good point. I think everything probably in business, but definitely in media is cyclical. Things come in, they go out, they come back. You may be even seeing that with podcasting right now. There's a lot of doom and gloom around the podcast industry in terms of the business models? Is it going to continue growing at the rate it's growing? And I think those are fair questions. Now, I think right now what you have is in 2016, when I launched Parcast, there was roughly 300 ,000 podcasts. There is now over five and a half, six million podcasts alone on Spotify, millions more on YouTube, millions more on Apple.

7:13So there's a lot more competition. I think the biggest change is that, and I equate it to almost blogging in 2008, 2009. I think everybody wants to have a podcast. They see value out of it. But the ones that are really cutting through all the clutter, that's rare right now. A lot of people want to be the next version of Caller Daddy, the next version of Emma Chamberlain, the next version of Ashley Flowers, the next Gary Vee, whatever that looks like. But those podcasts exist for a reason. They're already there. And so I think now a lot of creators have to be a little bit more deliberate around the formats they're doing and how they think about standing out and how they think about the marketing.

7:51And that's why I think the biggest probably evolution is, is we're doing this in video, right? This video was not a thing a couple of years ago. And my guess is you're doing this video for a couple of reasons. And one is marketing and clipping on all the other platforms you can do to really build more awareness, build more interesting stories and clips that hook your audience into hopefully this episode. And I think that has been the biggest change in podcasting definitely in the last 18 months is this push towards video and is that good or bad I don't know but what I do know is it does help build awareness for a brand and a podcast and a creator so what what do you think are the key things that you did in the early days of launching your first podcast I know you launched subsequent shows afterwards uh with uh on the podcast uh brand but uh network but what what were the key things that you did to get traction straight away?

8:46Like you said, you had thousands of listeners in the first 24 hours. I think for me, when most, I was very scared of creating an amazing podcast and nobody ever hearing about it. No one ever finding it, no one ever listening to it. And I think that a lot of, at that time, a lot of creatives, and still I think to this day, they focus only solely on the content and not the marketing plan. Podcast was very deliberate on spending dollar for dollar on the production and marketing. And that's pretty high for a podcast. And the reason for that was my paranoia. I'm going to create this amazing podcast and no one's going to know it exists.

9:23And so what we did was I didn't raise money. So I had to go where the audience was, which was in the podcasting space. Still to this day, true crime does very well in podcasting. There's a huge audience for true crime content. At that time, I felt that I I can position podcasts to be counter programming, as I would say, to what is already out there. And that instead of being personality led, we're going to be story led. We're going to be really focused on the facts and focused on the research. And what that allowed me to do is go out to other existing true crime podcasts, host and develop relationships with them that actually position this as if your audience loves your show and they love true crime, they're going to love podcasts and it's not competitive.

10:04Because what podcasts is doing is it's telling the story. It's doing the research. It's going a little bit deeper. And really, I had to fake it until I made it because I didn't have any money. And so I created this network effect with a bunch of true crime talent that were nice enough to promote Unsolved Murders at that time than other shows that came after that allowed me to have a base for what Parcast was. And Parcast always stayed focused. When Parcast was growing and when Parcast was at its best, it was because we did one format. We had one beat. Our audience knew exactly what to expect. if we were coming out every Monday with a show like Serial Killers, it would be out every Monday.

10:40And we became a part of somebody's day. And I think that was really important to me was being predictable and always showing up for your audience. And that allowed us to gain an audience pretty quickly because podcasting is not viral, right? It's rare that you launch an episode and the next day you're having huge success. It takes sometimes three or six months. And by doing that, when we continued to grow, we had a catalog of episodes and a catalog of content where people were just hooked. It's very hard. You said something interesting and I agree. It's very hard to grow a podcast. And you said you had a marketing budget.

11:16Could you share what that marketing budget was when you first launched? I mean, sure. So it was 9 ,500 bucks. 9 ,500 rolls there you go okay and what did you spend it on because it's hard to get people to listen to a podcast from my experience apart from the strategy that you shared go getting promotions on other shows is that what is that where you allocated that those dollars well we pioneered that in 2016 so at that moment in time a lot of people were not doing that now it's a very common strategy so I think that if I was to launch a podcast network or show now I'd have to be a little bit more creative.

11:54But that's what we really did in 2016. We really created this brand. And like I said, we faked a network before we even had it. And how did you know when it was time to launch the next show? I think as an entrepreneur, you have to go with your gut. I don't know if you ever know, but what I knew was this was really successful really quickly. And I felt there was something special happening. I saw every week the audience kept growing. And so we launched what was originally called Remarkable Lives, Tragic Deaths in September, I believe, or October. So roughly three or four months after that, which was a great learning for a lot of reasons.

12:30The other thing I would say going back, Nathan, what we did is we really focused on SEO. And so if you think of all the podcast shows, they were called Serial Killers, right? Because if you want to listen to a show on Serial Killers, what are you going to probably type in? Serial Killers. If you're going to listen and do a show on unsolved murders, you're probably going to go unsolved murders. And I think that's one of the hacks that we had is we were just very simple, which is actually very hard to maintain as you continue growing as being very simple and very focused. So for me, I didn't necessarily know that I was going to launch another show other than the fact that, wow, there's an audience here.

13:04It felt like the model I had was very scalable because I wasn't talent reliant. I was story first. And so when we launched Remarkable Lives, Tragic Deaths, that show did fine, but it wasn't as successful as Unsolved Murders. And there was a couple of reasons for that that I came to realize afterwards. One is the name, No One Searches Remarkable Lives, Tragic Deaths. So we quickly changed it to historical figures and we saw a huge increase. And then the other area of it was, it was a history show versus a crime show. And so for me, the audience that I was expecting was based off crime metrics versus history metrics, which is definitely a little bit different.

13:44from an underlining business perspective though you know crime cpms or cost per thousand that is done in advertising is a little bit less so there is give and take on that but it was a great learning historical figures went on to last for a few years be very successful and then really what changed the whole entire business was when we launched serial killers in february of 2017 hey founder fam i want to talk to you about something super exciting we're officially partnered with OmniSend, the email marketing and SMS platform built specifically for e-commerce founders. We've been recommending OmniSend to founder students for a while now because it just works.

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15:33I'm curious because you see all the data or you've been exposed to a lot of incredible data. So it completely depends on the genre and the show you're doing, right? So I think there's different metrics as I kind of mentioned around a true crime show versus a business show. And I think that also, this is probably the most important, I think success is really determined by the creator, right? So there's tons of success, what I would say successful shows that may be getting 10 to 30 ,000 downloads per episode because they're in a highly efficient format or genre like business that are able to sell things and get a CPM that may be$75 or$100 versus someone that may have 100 ,000 downloads per episode that's only able to capture a$13 or$14 CPM.

16:17And the other question to ask is, is podcasting your main business or is it a line item on your overall business. So it depends what the podcast is servicing. So with that being said, like if you're doing podcasting full time, and that is your main source of revenue, and you want to grow a hit show, I was at Parcast before I got to Spotify, you know, we had to be doing at least 125 ,000 downloads per episode by the two month mark was kind of the goal. And if we weren't doing that we probably invest those resources somewhere else uh i think a real hit like a home run is doing over you know a million downloads an episode now um and i think that you know if you look at the biggest shows they're doing that relatively quickly uh definitely half a million at a minimum yep and uh i'm curious how many shows did you have under the network before you're acquired by Spotify?

17:17That's a great question. Around 20, I think it was either 19 or 21. I'm forgetting. Got you. And what did the team look like? Was it one producer per show, one editor per show? What did the breakdown look like? Yeah, it's a great question. I think when you kind of pull back what made Podcast Special was we wanted to create this old studio mentality for production. I called it like the conveyor belt of scripts of Henry Ford at his conveyor belt. And the reality was what we did is if you looked at that time, there was a lot of other studios and production houses that would build teams around individual shows.

17:52So they would literally stand up three, four or five people, depending on the show, sometimes 10 people, right? And have them go and produce. And that's a very costly model, something that I couldn't do for a lot of reasons. As I mentioned, I didn't raise money, but I also don't think that's the smartest strategy. And so what we did was we really pulled together our resources and had multiple writers and producers working on multiple shows based off genres and verticals. And by doing that, we were able to get a better bang for our buck as well as allow people to continually feel like they are working on new content that's exciting to them versus the same show over and over again.

18:28And so when we sold to Spotify, we had around 30 employees, another 60 or so contractors that were producing over, call it 40 hours a week of content, which is pretty a lean team when you think about it. Yeah. So on average, it's around two people per show. Yeah. But I think that's not included. That's if you're looking at the overall business, there's a lot of operations and a lot of financial and business folks that are involved in production. Yeah. Got you. Yeah, no, that is. Okay. Interesting. And so how did the Spotify deal come about? Because it's been interesting how Spotify over time has started to acquire certain shows and content and it's really a big content player.

19:17I know that you've been somebody that's been behind really driving that movement with the Call Her Daddy deal, et cetera, et cetera. So yeah, I'd love to hear how your deal came about with Parcast and what made you decide to sell? In October of 2018, I got a call from somebody by the name of Courtney Holt, who was running podcasting at Spotify. And at that time, Spotify just started to distribute podcasts. So you had a bunch of... I didn't know what to expect. I went to that meeting. I thought they wanted a distribution deal. I did not expect to come out of that meeting with them wanting to acquire me.

19:58And when I left that meeting, it was very clear they're interested in acquiring podcasts. and Parkhouse wasn't for sale. I just started to take a salary. I just started to make money in 2018, a couple months before. I was excited. I was really happy that I was like finally after three years almost and many years before that of not having an income, I'm finally able to start enjoying this and it felt like I'd hit something special that was going to get not necessarily easier, but I felt like I could start enjoying the work. And they just came in at a very aggressive offer in December and January that as someone that saw the growth that had to probably consider taking and raising money or selling the multiple they offered me was probably the easiest decision of my life given where I was.

20:46And I really want to put fuel to the fire of podcasts. And I felt that having someone like Spotify that was going to clearly have big ambitions, invest a lot of money in my team and the resources would allow podcasts to scale efficiently and effectively. And that's what it was. And, you know, Parcast after the acquisition grew to be the largest studio at Spotify, grew to have many more team members and launch a lot more shows and work with some of the most amazing talent in the world. And that may or, you know, maybe that happens outside of Spotify. I don't know. But for me, the four years at Spotify and the first two really running Parcast was just the best experience for me as a founder, which is, as you know, very rare for a founder to say.

21:29interesting so for people listening uh that might be having conversations around potentially selling or or merging their business how how do you from your experience how do you know when when that's right for your business well for me it's got to not just be an okay or yeah it's got to be a fuck yeah um and i think that's really important right so i think that if you're in a position of strength then you build something why would you part with it you know i think is the first question you have to ask yourself and what is your motivations? What defines success for you? For me, the money was a fuck yeah, but really it was the impact I could have.

22:08And that's what sold me on it. I felt by going to a company like Spotify that had a huge reach, now there's over 500 million users on Spotify monthly, the ability to help program that, to help influence talent, to help build something special on a global scale was really appealing to me. The other thing for me that I considered strongly is I didn't view myself as like selling and being done. I was 28 at the time. I felt I had a lot more chapters left and this was the end of one chapter. And this was starting another chapter in my journey. And I think by having that mentality, you know, one of the reasons why I left Spotify a couple months ago is because that chapter is closed.

22:49I've learned a lot, but I'm launching another, you know, I'm going to be launching another company in the future. And I think that I knew that before I got to Spotify. I leaned into Spotify when I was there. I learned so much from so many amazing people and was able to grow a team of hundreds of people globally and got to lean into that. I got to work with the best talent in the world. And all those experiences allowed me, are going to allow me to be successful in my next venture, plain and simple. Now, for other founders, where are you in your life cycle? Are you in your 50s? Are you in your 60s?

23:18Are you younger? Are you older? Like, what is your goal? But I think you really have to think about your long-term goal because once you sell, it's done. And so you have to be comfortable with that decision. And so I'm curious, what did you miss about entrepreneurship and what are you looking forward to in your next venture? Well, a lot of things I missed about it. I think that for me, the speed, the ability to move quickly, it is your best moat when you launch a company and that became very clear to me while being at a big company is how the advantage of the advantage small companies have around speed and decision making and being able to move just really quickly and adapt to things that are working when you can see them i think when you're at a larger company naturally things have to move small move a little slower because a lot more decision makers and i think that was the hardest part for me was understanding that especially early on and respected.

24:16Hey guys, I hope you're enjoying this episode and learning a ton. As you know, in this series, we interview some of the greatest founders of our generation to find out how they did it. However, if you're thinking of starting your own business and you want to hear from some incredible stories from everyday people like you or I who are actually in the trenches, only been building their business for maybe one year or two years, like that are building right now and they're really in the early stages, but they're getting success, you should come and check out our new podcast, From Zero to Founder, hosted by our community manager, Molly Flynn.

24:53These are in the trenches stories from our very own successful students that have gone through some of our programs. People just like you who are deep within the process of building their very own successful business. These are the founders of tomorrow. You can find the From Zero to founder podcast on all platforms and remember it's founder without the e all right now let's jump in the show i guess when it comes to working with all of these top creators um i don't know if like uh how much you can share but how did the caller daddy deal come on your radar and and uh yeah that that was like a that one made headlines and it was pretty big move same with the joe rogan one but that was yeah that was the next big one like how how much can you share there yeah i think at a high level what i can say is i've been a fan of alex who's the host of call her daddy for when she was at barstool for a long time since that show first launched i felt that that show was doing something different in podcasting um i thought that she was just incredibly talented and when it was clear that there was going to be a falling out and there was a falling out at Barstool and Spotify had an opportunity to work with Alex, I was all in because as someone, as an executive, as I say, creative turned executive, the ability to work with the most talented creators in the world is just truly inspiring to me.

26:23And I thought Alex and what Spotify could do, and I truly believe this, what Spotify could do for Alex, what Alex could do for Spotify seemed like a partnership made in heaven. And I would say once we got that deal done. And, you know, it takes time to do deals of that size and that magnitude. But once a deal like that gets done, it's been clear to me over the last year and a half since I believe we did the deal that it's worked. It's worked for Alex and it's worked for Spotify. And I don't know if she goes anywhere else if that's the case. And I don't know if we lose her, what that means for Spotify.

26:55But I think a deal like that, you always have to start off like, what does the creator want? What is the creator looking for? What does success look like for them? And we have to Spotify in that case, look internally to make sure we are the right fit. Because what I truly believe is if that we can't deliver on the promises we're making in any deal in any partnership, it's not going to be good for anybody. And for Alex, I thought we could definitely deliver. And I think we've done that. And for other creators that we've had the pleasure are working with from you mentioned joe rogan to bernie brown to uh emma chamberlain now like i think there's a there's a reason why we work with certain creators and we're very deliberate with those critters we work with what's also interesting for me is looking at both sides of the table the side on the creator side and the side of essentially kind of like the network like barstool isn't known as a podcast network but they have a lot of podcasts right like they that that's a big strength of their content arm i'd say probably one of the biggest um is everyone talks about the 60 million dollar deal and we're not going to talk about the split or whatever but i'd assume that barstool would have owned a decent majority of that show and that was a great great outcome for the business but then i look at the spotify side and you talk you've got you know half a billion active monthly users you know acquiring shows of like superstar talent just drives a lot more user base a lot more usage so i think when you look at the number it probably was a no-brainer when you look at back now in the now numbers that you probably see is that probably like is that is that but then you look at the creator and the creator wants like i'm sure that she wanted to go more mainstream have access to more higher well-known celebrity type guests that perhaps barstool couldn't even break those doors and show that's what she was able to do as well so is that kind of how the value equation is that is that a good summary i think there's a couple things so i think from you know a platform's perspective it's not just user acquisition but it's consumption time and does doing a deal with a podcast host and spotify's case does that increase consumption of a user.

29:08So if you're currently on Spotify and you're just listening to music and you're listening three hours a month, four hours a month, and all of a sudden we do a podcast deal and that user now is listening six, seven, eight hours a month, that is very valuable to Spotify. So it's not just user acquisition. And I think that sometimes gets lost in the equation. Time spent is very important. And that's for any platform. In terms of Alex, it's hard for me to speculate why she wanted to come to Spotify. And I don't necessarily want to do that. But I do think for you made a point around the barstool, you know, what is public is obviously to Alex's credit, she was able to negotiate full ownership of her RSS feed and her podcast away from barstool when there was that breakup.

29:49And that's very out there and well known. And I think that speaks to Alex as the entrepreneur, Alex as not just a creator, but a very savvy businesswoman. And that allowed the deal to really come to fruition because I think it would have been hard for any company to kind of come in if there's multiple players around the ownership and it wasn't cleared and all those sort of things. Ah, okay. Yeah. Sorry. For some reason, I thought that Barstool still owned it, but no. Okay. There you go. No. Okay. Interesting. Awesome. So I'd love to switch gears and talk about kind of successful podcasts a bit more.