First Time Founders with Ed Elson – Why Caroline Spiegel Built an Audio Erotica App

0:25This episode is brought to you by Jack Daniels. We all have that piece. The one that's so you, you've basically become known for it. And if you don't yet, fashionistas, you'll find it on eBay. That Miu Miu red leather bomber, the Cousteau Barcelona cowboy top, or that Patagonia fleece in the 2017 colorway. All these finds are all on eBay, along with millions of more main character pieces backed by authenticity guarantee. eBay is the place for pre-loved and vintage fashion. eBay, things people love. Scott, what's the most embarrassed you felt in your career? I think when I was kicked off of the board of the company I started at Red Envelope, that was pretty humiliating.

1:05I've also had businesses fail pretty quickly. That was pretty embarrassing. How did you deal with that feeling of embarrassment? I took a half a million dollars and ran a full-scale proxy fight to sweep out the entire board. Do you think that was the right move? Oh, 100 % no. No. I lost. Something like 90 % of the shareholders voted against me. So at that point, it was like, okay, you're not only got kicked off the board, but all the shareholders think it was the right thing to do. I eventually ended up going back and accomplishing that on the second board meeting. And then the company went chapter 11, four years later.

1:39Oh God, I start to sweat just thinking about it. the lesson there is that I then ended up getting contacted by some hedge funds who wanted to back me to be a tip of the spear and an activist at other companies because they thought that I was crazy, but I was the right kind of crazy. So even in failure, you don't recognize that may be in fact a door opening that you don't realize. What would your advice be to founders who feel embarrassed when things fail or when things don't quite go the way they wanted to? You're the might on a plum on a planet circling an unremarkable star that's one of 10 billion stars at the outskirts of a galaxy of one of 10 billion.

2:23You are insignificant. And then in 100 years, nobody you know will be alive nor care about your successes or your failures. No one's thinking about your successes or your failures as much as you. to let failure get in the way of taking risks or being open with your emotions and living your life vigorously and loving others with reckless abandon is to not recognize how insignificant you are.

2:55Welcome to First Time Founders. In 2019, a Stanford undergrad set out to answer an eternal question. What do women want? So she started an audio company, specifically an audio erotica company. Her app featured short form audio pieces with titles such as Yes Chef, Against the Window and I Forgot My Sleeping Bag. And investors were skeptical. Is this a tech enabled sex positive podcast company? Or is it just a porn site? Many wrote it off as the latter. Fast forward five years, and the company has more than$3 million in funding and 300 ,000 subscribers, a quarter of whom open the app every single day.

3:42Porn or not porn, there is no doubt this company is a success. This is my conversation with Caroline Spiegel, founder and CEO of Quinn. What's up, Caroline? Hi, Ed. How are you? I'm well. um it's 7 a.m there which is it's nice of you to do this so early well yesterday we had a fire alarm test every 15 minutes for the entire day yeah that's that's that's crazy but i was i mean i was shocked when you i was like oh can we do this in the morning like can we do it really early and you're like yes 7 a.m works for me brilliant are you would you say you're a morning person do you of like a crazy like morning routine tech founder thing going on or what well i heard a funny jeff bezos like video about it but puttering like morning puttering is like sacred to me like just kind of walking around getting my coffee catching up on stuff doing a little word game like amazing yeah i i agree with that i can never i can never get up in time to like actually start doing that though um i mean what do you do when you putter are you like reading the news or what are you doing Well, you have to have like a coffee thing that you're obsessed with.

4:54That's like step one. And then you have to have like some sort of just something to get your brain moving. Like you could read. Don't try to do anything like aggressive or like that wouldn't feel good in the morning. I don't understand people that are doing like, like going to the gym or ice baths or whatever. If you get crazy. Yeah. You're not, you're not down for the ice bath. No, no, no. So we met at Code Conference a couple years ago, and you were a speaker at the conference with Kara Swisher. And it was the first I'd heard of you, but you had this kind of crazy, awesome idea, and we talked a little bit about it, and you met our team.

5:38But the idea was for an audio erotica app called Quinn. Can you just tell us, what is Quinn? I started it actually in 2019, but when we met in 2021, we had just launched our app. So there were two years of kind of trying to figure it out, getting it wrong a lot, and happy to kind of dive into that more. But we had just launched our app, and since then we've grown 400 % year over year. A little bit about Quinn is it's a place to listen to erotic stories, and they're short, so it's not like an audiobook romance novel. They're designed to really turn the user on, and help the listener reach orgasm.

6:19And it's something kind of in between, right, like this sort of romance novel that takes hours and hours to consume and sort of graphic visual pornography that doesn't appeal to women and doesn't really suit the modern consumer. Is it for women? So it's made by women for the world, but a lot of our content is geared towards women and a lot of our users, the majority of our users are women. um that said we're really like expanding our uh our offerings for men and a lot of users report bringing it you know to their partner listening with their partner and and it really helping their their interpersonal relationships so it's definitely not only for women for someone who's listening to this right now they're probably thinking like why is why is there a porn app and why is there a porn app founder on this podcast, which is probably worth kind of explaining.

7:14Why did you do this? And why is Quinn, in your view, a good thing? Considering that I think most people would, a lot of people would say, you know, porn is bad. Porn is a bad thing. So what's good about Quinn? What is it doing for the world? So Quinn was started when I was a senior at Stanford and I had just recovered from an eating disorder. And one of the side effects, unexpected side effects, was something called female sexual dysfunction. And there are actually over 40 drugs on the market for male sexual dysfunction and zero for women. So I started looking into why that was and what offerings were out there for women.

7:59And it's kind of just this barren landscape where you either have romance novels that take hours and hours, like I mentioned, to consume or sort of this like off-putting, overwhelming, overly graphic video content on tube sites. And there was no in-between. And I think from like just like a very basic level, I didn't like the products that were out there and I wanted there to be a better product. I thought the products that were out there were ugly, not easy to use. The existing porn products. Yeah. And I mean, existing sexual wellness products, too. It's like porn, for example, it's like you're constantly bombarded by ads.

8:37I don't want to see like sperm vitamin gummies like when I'm, you know, trying to have a sexual experience. There's all these things that are just you wouldn't you wouldn't tolerate them if they were a part of any other product experience. If you weren't like listening to a meditation app and all of a sudden there were like these pop-up ads and the aesthetic was terrible and, you know, it was very like jarring and scary, you wouldn't want that product. So I just thought that there might be room for a product that was different. And I found Audio Erotica on Tumblr and Reddit. And there are already these massive user-generated communities creating and consuming Audio Erotica.

9:20so and then i listened to it and i was like holy shit this should be the mainstream way we consume erotic content um like this should be it this works really well it's immersive use your imagination but it's not like you're starting from scratch it's like it gives you a little it takes the leg work out of using your imagination but the reason why quinn is important is because sex is actually a really good, beautiful, happy thing in life. It's how we all got here. And we shouldn't live with such kind of deep shame about it. And Quinn gives you an opportunity to interact with aspirational erotic content and something you can share, something you're excited about, something that could really work in your life.

10:07Yeah, all these porn sites are known to be exploitative and extremely shady and dangerous and scammy and all of these things because of the nature of the content on there. But you're sort of rebranding that and making it cleaner and safer. And what I find especially interesting is that actually that is a better sexual experience for people who are consuming erotic content online. That's exactly right. Yeah. Like safety is sort of a prerequisite to arousal for women and I think also for a lot of men. And so when you like, it's kind of crazy that the only like erotic content, the only porn people are consuming are on these platforms that are like kind of feel scammy and dangerous, like you said.

11:01Do you think that women are turning to porn slash erotic content in greater numbers these days than in the past? Yes. Well, I love all this stuff you guys talk about, about young men. And I actually think like Quinn is an interesting topic as it like applies to young men who are having sex less or, you know, online more and stuff like that. And I actually find just anecdotally that there are a lot of women who, you know, they're making more money than they ever have, than in history women ever have. They're single later in life. They're, you know, super well educated. They have great jobs, etc.

11:42etc. And so Quinn is sort of this in the same way that all these sites and, you know, what cam girls strippers for years and years have been for men. Now it's time for there to be a sexual product for women. It's like the counterpart for women. So I think it's interesting as women get more and more financial freedom, where are these sexual products that cater to them? And it's like with workwear, right? Like Zara or these other brands that made workwear for women didn't exist because women weren't going to the office. And then eventually they did. So these industries kind of appear as we reach, you know, as we get further and further into equality among the sexes.

12:25Yeah. But, you know, a lot of people would view this as a bad thing. So, I mean, you mentioned like the stuff that we talk about, young, lonely, sexless men. I mean, And let's just, the numbers, which I have pulled up, ready to go, one in three American men aged 18 to 30 have had no sex in the past year. That number has tripled in the past decade. Um, here's one I just, when I was doing research for this episode, 46 % of men aged 18 to 30 watch porn on a weekly basis. Among women, it's 16%. And then one in 10 men say that they have a porn addiction. Um, and for women, that number is 3%. So, I mean, I think a lot of people would argue like, why create a counterpart for this thing that is resulting in, it would appear that porn and porn addiction is resulting in men not going out and meeting women and having sex and building relationships and establishing connections.

13:28And so why do the same thing for women? I think a big important part of it is it's not prescriptive. So when you're watching visual porn, you're seeing specific acts and specific types of bodies. And then you're going into the real world and you might have thoughts like, well, why doesn't my sex life look like that? And why am I not able to do that or whatever? And I mean, I hear this even with women where the watch visual porn and they'll just feel really shitty about their body, right? Like, I don't look like the women in these videos. Does that mean I'm not hot? Does that mean I'm not, you know, like a sexual being in the same way?

14:11And so with Quinn, it's just very imagination driven. You can literally imagine you and your crush, you and your partner, you and Draco Malfoy, whoever it is that you want to put into the scenario in your mind and have the two, you know, as you're listening to the audio, kind of imagine it with your own, in your own context that feels safe and comfortable. There are a lot of questions about scale. So like, I mean, let's just look at Pornhub, for example, biggest porn company in the world. It's owned by this company called MindGeek, which was recently acquired by this private equity firm, which is called Ethical Capital Partners.

14:49Yeah, do we know if that's real? No, we don't know what the acquisition price was. And there's basically no financial data on MindGeek or any of its assets. Right. But what we do know is that in 2018, MindGeek generated half a billion dollars in revenue with 50 % profit margin. The other side of the adult content coin is OnlyFans. And estimates say it did around two and a half billion dollars in revenue in 2021. on 30 million users 100 ,000 creators does the future of erotic content look more like Pornhub or more like OnlyFans or do you consider Quinn to be developing a new category what's so striking about Pornhub is how much traffic they receive and how hard it has been for them to monetize that traffic I actually hear like the number you're saying of half a billion dollars in revenue is that what you said i think yeah um as like kind of quite low for the amount of traffic that pornhub receives or that you know and what happens is they basically send the traffic around to different property like these different digital properties they own and some very small percentage of the users convert to buying like a premium chat site or a premium something and that's where that revenue comes from their ads like to buy an ad on pornhub is incredibly cheap So they're ads business because who wants to advertise on Pornhub, right?

16:19Touching on the stigma, the stigma point we talked about, you know, Walmart is not buying ad space on Pornhub. And so actually the things that like that, the advertisers on Pornhub are other MindGeek properties. So it's this whole kind of incestuous thing. It's very difficult for them to make money. OnlyFans, I think, is the most exciting, interesting, just incredible business that has entered the adult space in recent memory. I feel like Quinn is much closer to the OnlyFans model that we have all these creators. Quinn is a very good creator-driven platform. That's how we grow. Creators bring their audiences onto Quinn.

17:00But I don't feel that Quinn is taking market share from either company. I think we're creating our own market. And I think like, you know, on OnlyFans, nearly all of the paying customers on OnlyFans are men. And on Quinn, nearly all the paying customers are women. That's the main and most important difference. That's a good point. Yeah. Well, let's just think about like long-term prospects for the company. So it's a subscription model. What's the growth opportunity? I mean, when I was discussing with my team, we were thinking about like, you know, one thing you're addressing is female sexual dysfunction and also potentially loneliness.

17:41I mean, there's this potential side that you're improving relationships, improving sexual relationships. I'm sure that's where you would want to view it. Where's the growth? Or is audio just going to explode on its own? I do think that the medium and the genre of audio erotica, these short immersive audio stories designed to get the listener to orgasm i do think that's the future of the adult content space as we like know it so i think that's honestly where the growth is i see us as sort of the first company to bring adult content into the mainstream into the tech conversation into the consumer you know the true mainstream consumer space i mean i have a porn company on the prof G-Pod right now.

18:25It's pretty, it's pretty new. Yeah. Sorry, go ahead. No, no. And, and just sort of like, I mean, honestly, like when Apple first started, right, like computers were just for computer geeks. Like no one had a computer. It was like weird. They were like these black machines that no one understood. They were clunky and terrible and hard to use. No one knew how to talk about them. Yeah. They were for nerds. And like Steve jobs thought, oh, what if this was something beautiful that was like totally a part of everyone's lives? I see the value in this like category. And obviously I'm not saying that we're Apple or anything like that, but I think that's like a powerful like thing to think about.

19:08Like what are these categories that are shunned or just for so-and-so and just for this part of life, right? Like porn is just for under the cover, slam your laptop shut, taboo, no one's talking about it. And what if it was actually this beautiful, healthy, amazing part of life? That's the kind of thing we're betting on. We'll be right back.

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21:17we're back with first-time founders was it difficult to raise money i mean that was a pretty good pitch but i mean i can imagine yeah how do tech people respond to you when you ask them for their money you know i i have a lot of advantages in terms of raising money like i feel like i went to stanford i'm white like i don't know i was a cs major my brother is evan like there's a lot of like things that were working my favor so i'm i'm hesitant to be like it was impossible yeah it was so hard for me when like everyone it's hard for everyone but i would say like founders listening like just know that like know that it's like it's really truly hard for everyone and keep going because there's no one who like i remember like raising and being like is this like so much easier for everyone else and i'm the like i'm a fool and like i'm just the only one that's getting turned down but no every company that's ever been successful was turned down over and over and over again it's a really important thing to keep in mind yeah you mentioned your brother is evan that is evan spiegel's uh founder of snapchat um i feel like that's often like something that people mention in like press about you it's like caroline spiegel parentheses like sister evan spiegel like and it's a it's kind of one of the main things that like frames you um at least when people are talking about you in in media which i could imagine is pretty annoying but um i just what is it what has that experience been like well i mean it kind of just like humbles you a little bit in the sense that like the most interesting thing about me and probably still like the press views it this way is that i'm evan's sister like not not actually to me in my life but i'm just saying like that that's like that's the headline right rather than like the work that we're doing at quinn yeah and so it's a motivator which by the way i don't think is is true is way less true these days i want to say like i'm just thinking about like the really early no totally no no totally and it was but i think that's that's almost it's like motivating because it's like the more work we do the bigger quinn is the less that becomes the headline um and so it's like that's kind of the and i think it was frustrating especially in the beginning again don't feel sorry for me obviously but it was a little frustrating in the beginning because i was like oh my god all these people are watching and it's like i don't i don't know what i'm doing i'm 22 like quinn is not we haven't found product market fit this is embarrassing yeah would you say that that's kind of like one of the main barriers to to success in terms of being an entrepreneur is like just constant embarrassment like do you feel like embarrassment is kind of the main emotion that you're feeling yes actually i honestly do like it's very and like humbling and just like oh my god like and i see it you know i see all my friends or a lot of friends from Stanford who are the smartest people I know and they're consultants and bankers and whatever and I'm like I know what's holding them back it's that they don't want to be like super cringe and super embarrassed like just falling on their face in public it's humiliating like um but honestly no one's thinking about you as much as you think they are and the cringe passes you just get better at building a company and it goes away.

24:50You're also, by the way, the first female founder on this program, first time founders program. And just some stats, female founders received 2 % of VC investment in 2023. In 2022, that number was 2%. In 2021, that number was 2%. In 2020, the number was 2%. It has not risen above 2%. like ever why is that number so low i have several very controversial thoughts about this one one is that well one thing is when i was first raising people would say to me oh go to you know that female gp go to that female venture capitalist right and a lot of female vcs there are actually very few female vcs so if you think about it from the female vc perspective they're trying to minimize their reputational risk they're trying to be a great vc and in doing so like minimize their reputational risk so they're not going to take a chance most likely on a female founder especially female founder in like a taboo space or in say fertility or or you know sexual wellness or whatever they would rather be in like the hot deals with you know it's like a a bro-y SaaS company or something like that.

26:13Because again, they're trying to like make their career as a female VC. I tell now when I'm talking to female founders who are raising, I say go to the old white men who have made their career. They're good. Like they do not need, they're not proving anything and they're evaluating your idea for what it is rather than trying to preserve their reputation or rather than like make, even make their reputation. So that's just like a big thing to keep in mind is like what are the incentives of the person you're asking for money and most of the time they will be they want to be in the deals that are like in their view most safe which is kind of messed up considering that vc is like the only asset class where like taking big risk is like the most important thing that's a really good answer i mean the one thing i would say is like what's so risky about a female founder i mean you mentioned like they're getting into like sexual wellness category.

27:12I can understand how that's risky and different, but you know, why not, why not a female founder that's, I mean, are female founders starting bro-y SaaS companies? Well, I mean, when we look at like college majors, right? I mean, isn't this like a whole thing that like engineering majors have less women than, you know, English majors, for example. So is it a surprise that like women gravitate towards like consumer companies rather than these like hard tech or enterprise SaaS companies. Like, yeah, but it's all signal. It's just like, what is like a serious like company? Right. And so I guess like a tactical piece of advice to women would be to start more of these like serious bro-y companies.

27:54Where does Quinn lie on the serious to unserious company? What do you think, Ed? I know, but I guess the point being like, you know, you would think of Quinn, as an unserious thing at the beginning, but then, I don't know, you've grown, would you say, 400 % a year? Year over year for two years, yeah. Year over year for two years, and what is that, users or revenue? Revenue. I mean, there you go. How do other female founders do it? I think back to the early days of raising, and now it's a much different ballgame like we're talking about, like now that we have real revenue and real users, but those early days it's like that's when it's really really tough because you have this unserious idea and they ask you know what do you have backing up and you're like uh I'm 23 and nothing so I don't know um and so I guess you know at that point it's just about minimizing your burn really getting some traction and just you know taking what you can get you know doing what you can with what you can get, like going to people in your network, going to professors that liked you in college and asking them for interest.

29:14You know what I mean? It's like really just scrappy and trying to get 10K here, 20K here, you know, and putting something together where you can get something going. What was that moment when you were like, oh, fuck, I actually have something legit here? I think it was when we, so we released like our second celebrity voiced series in March of 2023, I think. And it like blew up and it was going, it just like went much better than I expected. Our revenue was higher than I ever expected it would be. And I think that was the moment where I was like, like my, I, on a different episode of this podcast, I think you said something about like the field of like delusion that you need to have.

29:58as a founder and it was like the first time that like reality was like kind of coming up to like the level of delusion that i had about quinn for many years do you feel like it has done anything in terms of like your identity as a founder because i can imagine that starting out this is something i experienced in conversations with other founders it's like they don't really believe in themselves necessarily. And they're pushing this idea to people and trying to convince other people, but also at the same time trying to convince themselves that like, they're legit and that this thing makes sense.

30:37And yes, I'm an entrepreneur and yes, I can, I can go in and convince people. But, you know, after a certain number of failures, you start to question whether you, your own personal belief in your identity as like a founder. And I guess I'm wondering like, if you feel you've achieved that. In an interesting way, like challenges or low lows served as a way for me to reaffirm to myself who I am. And I think sometimes success or like when things are going well, it can be frictionless in a problematic way. Like I'm thinking about all the times, like when we had literally no money, like for Quinn and like things were really bad and it was just not a good scene.

31:24Like that was when I really had to be like, who am I? Like, am I going to keep going or am I going to quit? And it's sort of empowering to make the decision to keep going. And I wonder sometimes like when things are going well, well, like, can you, is it maybe easier then to lose sight of that strength and that, like, grit? So, but, and I was talking to someone and they were like, when there's not a problem, that's when I start freaking out as a founder, because that's what it kind of feels like. It's like your job as a founder is to, like, deal with problems. And so when things start going well, you're like wait what like this doesn't feel this isn't in line with my identity um so there's a weird way in which like problems and low lows and setbacks help you form confidence in yourself and belief in yourself so where did your mind go to when like you had no money and everything was going terribly and then you had that urge to quit and then you decided to not quit like why not um it's such a good question i think i think it has to do with well two parts one is like really truly believing in quinn and the mission and i think a lot of people say this but it's true like if you don't have a good why for why your company should exist and it's easier to give up and then the second thing it was just i was like f all these people that are like saying i can't do this It's like the chip on your shoulder, right?

32:59And it's like, they think I'm going to quit. I'm not going to. I know the Beehive guy who was on this podcast said a similar thing. And I honestly have never met a successful founder who didn't have a chip on their shoulder. It's kind of something you need. You need to just have someone that you're proving wrong with the whole endeavor. Why do you think you have like a chip on your shoulder about stuff? I'm sure part of it is like Evan's sister of it all. and another part is everyone saying how I'm serious Quinn seemed at the beginning would you say that's the main thing that's motivating you right now it's like I'm going to turn this into like a massive I mean do you want to go public one day like what are you yes I do yeah now I'm saying this out loud it's really going to happen now yeah I just quit yeah

33:57I do. And I think Quinn is like a category definer. And you know, if it's not right now, it will be in the future and we're just going to keep at it. So as long as I'm here, Quinn will be here and we're going to keep grinding. Okay. I'm just going to do a rapid fire round of questions. So first question, what's the biggest personal challenge that you faced since this idea began? Okay. Here's a good one. This is like related to the resilience thing that we've been talking about. So like, you definitely have to like in those low lows, you have to find that fire inside of you and like keep going.

34:30Right. But I think another important thing is when you get those rejections, like having a semi porous wall between you and the rejection so that you let in some feedback. And I think a lot of founders have a tendency to be very defensive. And I certainly was like this, especially early on in my journey. But if you have this sort of thing of like, okay, I was rejected, like, F them. I still have my fire. I still have that, like, chip on my shoulder. But at the same time, like, they had a few valid points that I should incorporate those into my, you know, into the company. And it's really hard to do that, especially when you're, like, just, like, being, like, rejected all the time.