VC Funding vs. Bootstrapping for Subscription Apps — Martín Siniawski, Podcast App

David Barnard:

Welcome to the Sub Club Podcast, a show dedicated to the best practices for building and growing app businesses. We sit down with the entrepreneurs, investors, and builders behind the most successful apps in the world to learn from their successes and failures. Sub Club is brought to you by RevenueCat, thousands of the world's best apps. Trust RevenueCat to power in-app purchases, manage customers, and grow revenue across iOS, Android, and the web. You can learn more at revenuecat.com. Let's get into the show. Hello, I'm your host, David Barnard, and with me today RevenueCat, CEO, Jacob Eiting. Our guest today is Martin Siniawski, co-founder and CEO of Podcast App. After bootstrapping Streema into one of the largest radio streaming services in the world, Martin founded Podcast App to help enhance the joy and personal growth provided by podcasts. On this podcast, we talk with Martin about spinning off a new product from secondary product market fit, the journey of getting into YC and the give and take of raising venture capital.

Hey, Martin, thanks so much for joining us on the podcast today.

Martin Siniawski:

Really excited to be here. Thanks for having me on.

David Barnard:

And Jacob, always nice to have you on an episode.

Jacob Eiting:

I'm here. For the folks in the video pod, this is the first time in the enhanced studio with the neon backdrop and all that stuff. You'll have to check out the YouTube.

David Barnard:

Yeah, check it out on YouTube. Jacob has a really nice neon RevenueCat logo in the background there.

Jacob Eiting:

It's a trick. It's not actually neon, do you know that? They don't do neon anymore?

David Barnard:

Seriously?

Jacob Eiting:

Well, LEDs, we're living in the world...it's the era of solid state, so everything's just...

David Barnard:

It looks like neon. It looks fantastic.

Jacob Eiting:

Exactly. It looks like neon, much more affordable. Anyway, we're here to talk about subscriptions, not neon signs. Fake neon signs.

David Barnard:

All right, so Martin, I want to talk about your app, Podcast App, but before we get there, you started your career in apps with an app called Streema and combined between Streema and Podcast App, you're now a hundred million downloads, which just blew my mind when you told me that. So tell me about bootstrapping Streema first and what the app is and what led you to build it, and then we'll get into the Podcast App and everything else today.

Martin Siniawski:

Sounds great. Yeah, it still blows my mind too, to think of a hundred million downloads, numbers in the thousands or hundreds of thousands, it's already quite impressive when you come to think of-

Jacob Eiting:

A hundred million is beyond human ability-

Martin Siniawski:

Yeah, it's pretty crazy.

Jacob Eiting:

... to grasp, yeah.

Martin Siniawski:

Yeah, so the story with Streema, so it's a AM and FM radio streaming service, so if you want to listen to a radio station from any country in the world, any city in the world, you can do it through our service. And before it was an app, it was actually a website. The website is still pretty big, and we started that in 2007, and so it was a long, arduous experience. I thought I was going to get a Lamborghini after a couple of years. It ended up being four years of complete no revenue, no payments, no users, no nothing. And then slowly, very slowly things started to happen and we only launched the app, which is called Simple Radio, which is the one that has lots of installs as we're talking, many years after that, probably like 2013. So we came late into the game of mobile, but it's been a company that's been around 15, 16 years. It's profitable. I haven't been personally involved running it in the past six years since I started building Podcast App, but it was where I learned and made most of my mistakes and...

Jacob Eiting:

It's always good to have a starter company.

Martin Siniawski:

Yes, totally.

Jacob Eiting:

Ideally it's even better if it's not yours. That's always what I did.

Martin Siniawski:

That's always a good tactic

David Barnard:

And it's kind of a recurring theme of folks who we've had on who bootstrapped is that there's this kind of idealism of I'll start my side project and it's going to instantly become this hit. But yeah, it sounds like you wandered in the desert for years before it actually made a meaningful revenue.

Martin Siniawski:

We did wander in the desert for years and we had some false starts. It almost looked like it's going to happen and it didn't quite. I'm kind dating myself, but at this point we were using the Facebook platform and they were like-

Jacob Eiting:

Yeah, like '07, '08. Yeah, that was when-

Martin Siniawski:

Yeah, totally.

Jacob Eiting:

... it was just coming out.

Martin Siniawski:

So we first started a social network for radio listeners, 2007, Facebook for everything. So we started doing that. Nothing going to happen. Then they announced the apps and their platform and we started hearing these wild west stories of [inaudible 00:04:30].

Jacob Eiting:

Oh, it was wild west. You could do-

Martin Siniawski:

It was wild west.

Jacob Eiting:

... literally anything, yeah.

Martin Siniawski:

Yes, exactly. It was really wild west, not super proud of the things that happened in there.

Jacob Eiting:

Just to give people concretes, you could crawl the Facebook API, you could just jump from person to person. Cambridge Analytica is nothing compared to what you could do in 2007.

Martin Siniawski:

For us, it was like there were notification APIs you could use to send notifications. It's amazing. You come to think of it, it's kind of crazy. You could actually send notifications on behalf of Facebook for your app. These weren't push notifications because they weren't in the phone, but they were still in that desktop app, right?

Jacob Eiting:

Yeah, there was a small window before... when Farmville and all those people exploited it until Facebook shut it down. It was only like a-

Martin Siniawski:

Totally.

Jacob Eiting:

... year and a half.

Martin Siniawski:

Exactly.

Jacob Eiting:

Or two years, yeah.

Martin Siniawski:

So I think we caught four months of that, and we did have some days in which we had 130,000 daily actives new users, so these crazy viral loops, but they had quotas and they would close the quotas and they would reset back after 20 days or 30 days. We had to wait for the next big boost of users. The problem was they ended up shutting it down and also the users were coming from countries that were monetizing rate, so it wasn't like US users or some of those really well monetizing countries. So I think that at the peak we made a $100 at revenue, not the most encouraging. So that was one of the false starting in which we thought we were seeing the light and we didn't quite see it, but slowly and surely we started figuring it out. That was the first experience, and as I was saying, it's been profitable for the past five, six years and operated by an amazing team independently and it's been really good.

David Barnard:

I did want to transition to the Podcast App. So you built Streema, it's doing really well, you finally get the momentum going. What made you decide to jump from that to build the Podcast App?

Martin Siniawski:

Masochism. No, it was more positive than that.

Jacob Eiting:

I laugh because otherwise I'd cry.

Martin Siniawski:

This whole thing is really a mind game. You really need to... I think, laugh at it and also it's this whole journey of understanding oneself better and why we do the things we do. At the time, and it's still our motivation, so we had this amazing 10 year run with Streema. After 10 years as co-founders and folks on the team, you start becoming a different person, wanting different things, maybe thinking about what's your next stage, what's your next phase and how you want to do it. And we all had different ideas for me and also for whom ended up being my co-founder in Podcast App, who was our CTO at Streema, his name is Juan, a college mate of mine. We kind of had this desire of building a built to last company.

We had read this book actually by Jim Collins, Build to Last, and they talk about long-lasting enduring companies and companies with a purpose and with strong core values, and that idea resonated with us. I think we were doing a little bit of soul-searching with Streema and many of other things happened. We personally got into podcasts because they were the future of radio, from live to on demand, analog to digital, that sort of thing. And we were enamored by podcasts, just this idea of learning from the world's greatest minds, being able to obtain knowledge while you're doing something else that maybe it's not particularly fun or meaningful like washing the dishes or just driving somewhere. We started toying with the idea of putting all these things together and also felt like there was going to be a big migration from radio and other mediums onto podcasts, and that was 2016, and there had already been a few, let's say boom and busts around podcasts, but...

Jacob Eiting:

I'm trying to remember when was Serial? What year was that?

Martin Siniawski:

Serial, I'm guessing like 2014.

Jacob Eiting:

Okay, that been one of those false start. Because podcast thing has been around... I remember downloading podcasts in 2006 but it was like-

David Barnard:

Before, yeah.

Jacob Eiting:

... super nerdy. You had to do it in [inaudible 00:07:59] or an RSS feed, and there were very few people. That was the technology. It just felt like we were in the flats for a very long time, but then this period you're talking about, there were just convergence of big money came in like Serial, New York Times. Those started to come into it. I guess also it was just like a consumer behavior thing. Normies, for lack of a better word, had to understand downloading digital... and it had to change from being RSS feeds of MP3s to being like a click button, get audio content model. But that would've been right around that time.

Martin Siniawski:

Yeah, I think there were many different pillars that were being built or assembled from content to user interface. Even more penetration, maybe now the devices like Android, cultural moments like Serial, which ties back into content, but there was, for example, Stitcher. Stitcher Was a big one, big app that they actually raised 30 million, I think it was around 2012, 2013. They had already raised a significant amount of money and funny enough, I ended up meeting the founder of Stitcher. We ended up becoming friends and he was the first advisor to Podcast App, kind of randomly made an event here in San Francisco. But yeah, I think it was these conversions of things, opportunity and trends that we were identifying, a personal passion and a desire of thinking, hey, can we build another company, make it larger, bigger, maybe more purposeful and having more of an impact in the world and hoping something that can be our last company.

And maybe the last thing I want to say is I was living in Argentina at the time. That's where I'm from originally, and I also kind of had this desire, I don't know of playing in the big leagues and doing it from Silicon Valley and doing that sort of experience. We had also felt some pain with Streema, even though we built it to a pretty large company and it's the second-largest platform for that AMFM radio world. The first company was built from here and we were doing it from Argentina, bootstrapping it for the US.

Jacob Eiting:

I was going to ask, I didn't know if you guys use Latin America as a wedge or if it was fully based US oriented.

Martin Siniawski:

So definitely Brazil is a big country for the product, but US is the main one in terms of revenue and the most important metrics.

David Barnard:

So when you founded Podcast App, did you initially bootstrapped it or did you go straight to raising a little bit of funding?

Martin Siniawski:

We tried to raise and we failed quite a bit. Turns out that moving to a different country and here to this ecosystem and maybe having one of your accolades that you bootstrap something, even if the scale is pretty interesting, it's not that meaningful or important. It's not one of the classic, I think pattern matching that people use.

Jacob Eiting:

It's almost an anti-signal to them, right? They're like, oh, great, you built a cash flowing business that's not dependent on capital. They didn't have an exit. Not what I'm shopping for.

Martin Siniawski:

Yeah, exactly. You're looking for money to do this again. So that was tricky. We did try to raise money at the beginning. We did a few different things. We applied to YC. That was part of the dream. YC, that'd be awesome. We were reading all the program essays for the past 10 years, so we applied at the end of 2016. Rude awakening, we got to the interview stage, but we got obliterated in the interview stage with some really...

Jacob Eiting:

Where did they hit you guys? What weren't you prepared for?

Martin Siniawski:

I'm sitting down in my chair and they start... another podcast player, we have iTunes, we have Apple. It works great. Why do I care about this? What is this? [inaudible 00:11:13] really bad copying it big time?

Jacob Eiting:

Did you not know that that's what the style of the interview is going to be?

Martin Siniawski:

I think I knew to some extent, but I just hadn't fully internalized it, I think penetrated my defenses more than it should have had. Had starting us on the wrong foot. I think we were still fresh in many respects.

David Barnard:

Had you built anything at that point? Was the app live on the store-

Martin Siniawski:

Yeah.

David Barnard:

... when you first applied?

Martin Siniawski:

So over 2016, we built a first prototype within Streema. We were already exploring podcasts within Streema. We were wondering are we going to do it within Streema? Is it going to be a separate company? And we ended up spinning it off. Funny enough, we started with Android, so it was only like an Android... I'm saying, funny enough, because in the US most monetization, at least what we've seen happens through iOS. So we started with Android, we had early revenue, we had some decent level of traction, and we had the Streema background. And we go to the interview stage close enough, I think it's 500 folks or companies getting invited to that. So pretty close. But yeah, we just got obliterated there and we just hadn't had that much exposure pitching investors, not something that we were used to because we were more in our own bubble and ecosystem, building our own bootstrap thing for 10 years and limited exposure, I guess, to investors.

So we raised some money from Streema co-founders, we put in some money ourselves. We started doing that. We didn't have a lot of runway, but also we didn't have a lot of costs. It was stressful. My wife and I had moved here, cost of living expenses coming from Argentina, like 5x, 10x, I don't know what happens. All of a sudden time is ticking, I think we had a mixture of skill and luck, honestly, in the sense that somewhat fast we were able to get traction. Many of the things we were doing that we learned from the Streema days can't translate it well when it comes to user acquisition and distribution and monetization. So very fast we were able to start generating and building an audience and growing. Eventually we got into YC, it was another year.

Jacob Eiting:

How'd the second interview go? Did you come in-

Martin Siniawski:

Much better?

Jacob Eiting:

... ready?

Martin Siniawski:

Much better.

Jacob Eiting:

Started yelling at them right when you come in.

Martin Siniawski:

I felt like... I'm a big Rocky Balboa fan and I just felt like it was the rematch.

Jacob Eiting:

Oh, yeah.

Martin Siniawski:

I felt it was the rematch.

Jacob Eiting:

Classic arc, right?

Martin Siniawski:

Yes. I felt like it was the rematch. We were pumped. We were in a different mindset. We tend to be very chill people, very thoughtful, and we hear people out. Here, we were [inaudible 00:13:21] more for a fight.

Jacob Eiting:

Yeah. It's interesting, the interview is... I don't know what their exact philosophy of it, but it's 50% constitution and intelligence tests. They want to just see how fast you are on your feet and maybe only half of it's probing the idea and your preparation. If they can defeat your idea in 30 seconds or 10 minutes, then you're not ready. You need to be ahead. And you made some point there about building Streema on your own, in sort of your own bubble. And when folks are considering this bootstrap nod, whatever, I do think that outside capital or outside pressure can be really helpful for a company. I find it really helpful for me when I'm not sure what to do next or not sure how fast to go or how slow to go, whatever. Having a little bit of that constraint or interactions with those investor types or whatever, I found can be really clarifying. It forces a little bit of discipline, it forced you to go back and clarify your thinking and really be able to defend your idea. Did you have the same interviewer both times? They probably don't remember anyway.

Martin Siniawski:

No, different interviewers, but the second one was tough. It was Michael Seibel was leading the charge.

Jacob Eiting:

I'm sure they're all tough. I've never heard anybody say I breezed through it, not to do too much YC inside baseball but yeah, it's an intense experience. I've never been in a more loaded atmosphere than sitting outside the interview rooms. I've never seen so many nervous overachieving kids in my life outside of the YC interview rooms.

Martin Siniawski:

And you get all sorts of dynamics and vibes. The first time I remember some folks started interviewing me or reeling me on my interest-

Jacob Eiting:

Oh, that was me, I was the guy.

Martin Siniawski:

You were doing that?

Jacob Eiting:

Yeah, [inaudible 00:14:52] out in the hallway because I was so nervous. It's so silly now but I brought... my mother-in-law or something had given me some peppermint smelling oils that were supposed to be calming. You're just supposed to put a little bit on your body and then you smell it and then it's supposed... but no, I just brought the whole bottle with me and the whole time I was just like...

Martin Siniawski:

You are drinking it.

Jacob Eiting:

I was just huffing it like a crazy person.

David Barnard:

One thing you talked about in the first interview was them pressing you on. Well, Apple has a podcast app. Google has a podcast app. Spotify, I don't know if they were big in podcasts at the time you applied, but this is a huge deal for apps. How big can your app really be? There may be a huge tam, but it's also super competitive. Going into that second interview, did you prep for that question or how did that go and how do you think about it even to this day, how big can the Podcast App be?

Martin Siniawski:

That's a really good question. So there's this idea of bootstrap versus venture backed, and I think this idea of deciding how to do it or what to go goes beyond the market size. I think it's also a matter of what you're signing up for and what kind of entrepreneurial adventure you want to go through.

Jacob Eiting:

We're coming right off... coming off this bootstrap, so let's have that conversation. So did you guys know... because I think that was the thing I didn't know, honestly even when we did YC, it clarified to me during YC, what you're signing up for. You go from building cashflow business first to building an equities business first. You're engaging in business with some people who essentially invest in equities for a living. Just like any other customer, they're going to spend some money and expect some kind of return. Did you know that? For me, I think I was stuck in the lights a little bit. I was like, this is what you do. This is what all these founders I look up to do. Where were you at in that mental game?

Martin Siniawski:

I think it was mixed feelings. I definitely was thinking a lot about it because we were very jaded or skewed I guess by a 10 year bootstrapping experience. And so we were constantly thinking, should we have done it differently? Is this a better path? So I definitely was thinking a lot about it, and to this day, I still think a lot about it because we've raised some money. We raised like a million and a half, so we didn't raise a lot of money, and that option is still on the table for us. It's not that we said, hey, we're never going to raise money again, but I do wonder, will that be the best path? So at the time, yes, we were thinking about it. I think one of the main worries for us was, is this something that's going to compromise our desire to build something for the future that can last? Is it going to limit our options too much? Is it going to compromise our lifestyle? You hear all these horror stories. I love working hard and I do think that work is my hobby to some extent.

Jacob Eiting:

[inaudible 00:17:15].

Martin Siniawski:

It's kind of sad.

Jacob Eiting:

No, no, it makes sense to me.

Martin Siniawski:

Or happy, but I do feel like there's some kind of craftsmanship around being an entrepreneur and building things, but at the same time, I want to have my family. I want to do certain things that are important to me. And so I guess I was afraid and after hearing all these stories of folks getting burned out things, that sounded terrible. But here's what I would say, for sure the more you bring outside folks, involving other people in the business, I think there's higher stakes, there's more responsibility, there's more accountability. I think to what you were saying earlier, Jacob, you need to know if you're in the mood for that and if that's what you want to sign up for or if you want to do something that's more your terms, your freedom, optionality always. Again, I don't want to get too into the psychology, but I do think there's the issue of commitment. How comfortable do we all feel in commitment versus freedom? I think there's lots of parallels there.

Jacob Eiting:

I've never really had a bootstrapped business. I think everybody grass is greener, they're always thinking that the other one is, oh, that'll solve all my problems. The reality, it's somewhere messy middle. I think the easiest thought process I'll give to most folks is that with raising venture, it unequivocally accelerates your business. You can make the hire today, you would've had to wait a year. You can build the thing today that you would've had to wait, and that can make the whole thing go a lot faster. Assuming you can find product market fit and you're actually building into a market that cares, the venture capital can be really, really awesome. And you don't have to build a wholly unhealthy business too. You can just be... like Revenue Cat, we operate maybe a year ahead of what we can afford at any given time or so, plus or minus, depending on the quarter.

Yeah, we burn venture, but also the business is sound in a lot of ways. I think the thing that I always think about is that once you bring that money in, you're limiting your options. The number of all mutually agreed upon successes for the company is limited. It doesn't mean you're screwed. It doesn't mean you can't do certain things. There are stories of venture backed companies that have returned to a free cashflow and bootstrapping model. There are stories of companies that have... I don't know, I think Kyle's been pretty public about this, but Gumroad is a good example. He raised a bunch from... I think it was Sequoia and never really got the right product market fit, and he just kind of went to them and was like, hey, I'm just not going to keep building this like you guys want, and they just cashed out. They were like, yeah, okay, that's fine.

They wrote it off and then he's gone and built it his own way. So there are options, but those can be rare. My advice would be... it's a bit reductive, but I think it's true. It's like when you take money from people, just figure out how you're going to pay them back 5, 10, 20x. That's what they're going to want. That's their success criteria is a 5, 10, 20x payday. And if you're not comfortable thinking about that math, then probably don't take the money. And I saw this and it was helpful for me. I was very timid about it initially. I was like, oh, I don't know. It's sort of scary. And I think seeing early stage investors are very good at kind of being like, nah, pushing a little bit. Yeah, you just take [inaudible 00:20:04].

Martin Siniawski:

Take it, take it.

Jacob Eiting:

It's not a big deal. But as you get further along, it gets a little bit, they're like, I do want to return at some point, especially if you start to look like a winner. And that goes back to that accountability. It can be good. I think for me it's been good. It's not just the advice that I get from those folks. It's the betting and them saying, folks I know have other winners, and being like, I think you have the makings of a winner in our portfolio, so I want you to keep pushing. I find that helpful. But I also, for Revenue Cat, I couldn't be like 180, actually, we're going to be a bootstrap company now. That's not viable anymore, which is fine. It's okay in life to close doors sometimes. I think the advice that I would hope anybody in this situation, that's the thing you need to think about is like, okay, what doors am I closing and am I okay closing those doors? I don't think there's a right answer. We've covered this on the podcast before, but it's rare to talk to somebody who's played both sides.

Martin Siniawski:

I think that's a great summary, man. I also do wonder... again, this might be an example of classic greener on the other side, but I do wonder if there's A B2C versus B2B difference also.

Jacob Eiting:

Oh, absolutely. A hundred percent.

Martin Siniawski:

I do get the feeling... of course B2B companies, they pivot, they struggle with product market fit, all of these classic surprises I think that all companies have. But I do feel like B2C, I don't know. That's all my experience. That's all I've done. And it's like, I don't know, you're trying to read the culture a little bit. What's going to happen in the world broadly. We all do that as entrepreneurs, but I do think that there's something here that it's less predictable, more artistic maybe.

Jacob Eiting:

Yeah, it's a hits business. If you look at other hits businesses like the movies, they run a portfolio, they have lots and lots of movies and they lose a lot of money on a lot of movies. And then they have a couple that make a ton. And I think what that does is it creates this really dangerous and difficult early phase where you haven't had your first hit yet. And with B2B, if you can make one customer happy, truly happy, you have a foothold. And then you can make that too, and you can make that for, and that's how we met. I met you during YC when I was looking for those first couple of customers to make happy. I emailed you because you were in my [inaudible 00:22:03] like can I just come put my stupid SDK in your app please? And you were gracious enough to be like, sure. And we hung out at a Blue Bottle for a few hours.

Martin Siniawski:

You send some pool requests for us, not including the SDK, but I think you also [inaudible 00:22:16] couple of bucks, like three bucks.

Jacob Eiting:

You know sometimes your car fix saver put some candy on the dash or a little bit of appreciation gift. That was my little appreciation gift. I fixed some UI things I saw while I was in there.

Martin Siniawski:

And it was really cool, man, by the way, because subscription wasn't big for us at the time. Right now it's most of our revenue and the company 3x or 4x because we properly took the time to focus on subscription. And at the time it was mostly ads and subscription was something that we had, but just for the handful of people that wanted to remove the ads. And so we gave them subscription that was pretty hidden and it was already working. And I think you added the SDK, so we would do it through you, but it ended up planting the seeds for what would be truly the future of our business model and our revenue.

Jacob Eiting:

I won't take any credit at all for that. I will take credit for fixing the little launch UI bug though, like the image being midsized that definitely, I take credit for. But that era, going back to the B2B, B2C, as a B2B founder, you can show up to a coffee shop and implement and learn and iterate and there's just much easier toeholds. And then the flywheels are present much sooner in a B2B business also because of retention, our retention tends to be over a hundred percent. It's just an easier game. And so going into that question, I wouldn't say it's definitely an easier game, but in some ways more predictable game.

And so going back to the raising question, I've definitely changed my tack here a lot. And I think for consumer founders, I think it's even a bigger gamble. With B2B, it's been pretty well shown how venture capital can be turned into enterprise equity value and then eventually a public company. For B2C, that certainly exists. There's Duolingo of the world, there's lots of B2C and they're massively valuable compared to even your average B2B company in a lot of ways, but there's an order of magnitude or several orders of magnitude, fewer of them than there are.

Martin Siniawski:

And even Duolingo, I feel like it's so much more clearly at an educational tool to learn a very concrete skill, which is amazing and I think it's an amazing company, but I'm just... compare that to maybe a Clubhouse, they raised, I think, I don't know, was it a billion...

Jacob Eiting:

On a billion, yeah. They raised more money than they needed.

Martin Siniawski:

4 billion.

Jacob Eiting:

And killed company essentially, right?

Martin Siniawski:

Yeah.

Jacob Eiting:

It put them in a really weird place.

Martin Siniawski:

At the time, they were really booming. The metrics were insane. We were following it because we are in the audio space and we were like, whoa. And it looked like it could be the next big thing. And then maybe, I don't know, lockdowns ease, COVID change, different things and I don't know the exact metrics, but from public analytics you can see that they have come way down. And as you're saying, raising so much money limits your optionality. Where do you go from there when you've raised so much money, you need to do a 10x, 15x, 20x out of that, it's really tough. Even for a company that was already with huge amount of traction and things can change rapidly.

That's kind of how I see a little bit difference between B2C and B2B. Thinking back the entire conversation we've been having this last piece, think through the implications of either path. There's no right or wrong paths. It's more about thinking through the implications of doing it either way and maybe try to see which one's the best for you. And I don't think raising money necessarily means that it's not such a binary decision, I guess. The raising money piece, because I think it's the more you race and the further...

Jacob Eiting:

Yeah, exactly. The floor comes up. Every incremental dollar, the floor of possibilities gets cut off and there's some categories of exits that kind of get smaller with time.

David Barnard:

So circling all the way back, I am really curious in that second interview, because again, I think so many consumer apps... like we've talked through now, all the reasons you would or wouldn't raise money and opportunity and everything else like that, but for those who are thinking they might want to raise money, you do have to when talking to somebody who's going to invest, convince them at some level that there's enough opportunity to be venture scale, that they will be able to get a 5, 10, 20x return on that investment. So going into that second interview, and then especially knowing the first interview, part of why that went south was like Apple has a Podcast App, Google has a Podcast App. How did that second interview go as far as convincing them that you were potentially a venture scale outcome?

Martin Siniawski:

I think the interview specifically, they weren't necessarily about size of market. The first interview I'm going to write off just because I do feel like we kind of froze and kind of broke down under pressure. The second one, so the other person was Gustav, he used to be the head of growth at Airbnb.

Jacob Eiting:

He was our group partner as well.

Martin Siniawski:

Yeah. We worked with him and with Michael and I think they were both believers around streaming and around audio itself. And by the way, when we didn't get in for the first batch of YC, three months after that TechCrunch article announcing all the startups, there was another podcast company with a very similar pitch to ours. I think that what that means is that they were believers in podcasts to the point that they were already backing a company. Talking about market for a moment, some ways of thinking about it, at least in the case of podcasts. One way was looking at radio, the broadcast radio world, hobby of an industry in ad revenue that is, and that was 10, 13 billion, something like that. And what was the time spent listening on talk radio, which is comparable to podcast. I think that was 25%. So with that, you could already see, hey, there's multiple billions a year that are spent on ad revenue for talk radio.

Jacob Eiting:

Just locked up in a legacy platform.

Martin Siniawski:

Yeah, exactly. Without targeting, without any type of intelligence. And the content also is not personalized, the audio content that folks are listening to. So podcasts could be much more compelling. So that was already one way of thinking about it. But I think what YC was more interested at the time, and I can see that was the subscription angle, and there was a lot of talk at the time of building the Netflix of podcasts. So in that case it was more like a bottoms up approach kind of saying, okay, how many subscribers would we need for this to be a hundred million dollars a year type of business? And the math added up just in the sense that it was maybe millions of subscribers.

David Barnard:

Yeah, it's not huge.

Martin Siniawski:

Yeah, it's not huge when you see Spotify or Netflix, the scale they're at. I think now there's been more attempts at that from Luminary, it's a company that started with that page. They raised a hundred million out of the gate, they had 50 premium shows and they never [inaudible 00:28:01] were able to do that or scale it. And Spotify itself as in so far, they've been the big winners in the world podcast, but they invested more than a billion dollars into doing that.

Jacob Eiting:

There was only one moment in history when you could invest a billion dollars in acquiring podcast content and they did it when they could.

Martin Siniawski:

Yeah. Well for them it was content, but it was also platform, like hosting services, ad targeting services, and then the content and deals and networks. I guess there's different approaches how to do that estimation of the market. Right now we're doing something actually in the world of sleep and we recently had to do that too.

Jacob Eiting:

Same exercise, you mean?

Martin Siniawski:

Yeah, same exercise of like... yeah, I think the more and more you grow as an entrepreneur or maybe you get older, the more you realize that hey, the size of the market matters. It's really hard to build something that wins anywhere. Might as well maybe do it in a large market where there's lots of money flowing and so we did that recently for sleep.

David Barnard:

Yeah, let's talk about that. So yeah, you've run the Podcast App and then I'll cut the story short. You initially were more focused on ads and then really double down in subscriptions and have been very successful growing it as a subscription business.

Jacob Eiting:

Also, I just want to point out the all time greatest name of a company ever, which is to name it the SEO perfect name. It's like A1 podcast app that you put in the phone book, the Podcast App.

Martin Siniawski:

By way, I would love to give you a really inspirational, we did this shopping session, this retreat off the grid for five days and we came up with that, but it was actually in the Streema. Within Streema, we had to launch the prototype I think for Android and we had to put a name on Google Play and I don't know, someone on our team came up with said-

Jacob Eiting:

The Podcast App, it's so good. It's so good.

Martin Siniawski:

Something straightforward it's probably going to help with SEO or something.

Jacob Eiting:

If you'd gone to the stupid retreat, you would've come up with some name that it wasn't even in the words and nobody's going to remember. The Podcast App is so good. It does create sometimes have you downloaded the Podcast App? It's like, well, which podcast app? But then you get a really nice moment where you're like the Podcast App, right? It's like the titular. Anyway.

Martin Siniawski:

Yeah.

David Barnard:

So the Podcast App is doing really well, but recently you did decide to become a multi-product company. Talk us through that exercise in both thinking through becoming a multi-product company and then with the sleep product, that kind of market discovery.

Martin Siniawski:

So Podcast App, we got it to 130,000 paid subscribers. So that's a number we're pretty proud of. But yeah, talking about multi-product company, I think my first rule of multi-product companies is try not to become a multi-product company.

David Barnard:

The masochism?

Martin Siniawski:

Yes. No, because there is this issue of focus. I think for us it came from a place of, hey, we've been at this for six years now with the Podcast App. We got it to meaningful scale, but what's the next path forward for us? And we have a team of 20 folks, highly capable people. How do we use our time in the best possible way? And continuing with this idea of building large businesses, but also in a way that has positive impact, still continues to be a through line for us since those days at Streema starting into the Podcast App. So we came up on this opportunity on sleep. It wasn't like a systematic approach for some folks can be very regimented in exploring opportunities and really opening up the aperture and lens. There's a backstory of lots of experiments that we did within podcast app that didn't necessarily pan out in terms of where can we meaningfully differentiate beyond the essence of podcasts.

And we tried experiments around education from creating our own content to creating thematic playlists with editors and curators to creating a social podcasting learning club, kind of like a book club or WhatsApp. We did all sort of crazy things in this past few years with the goal of exploring what's the next big leap in growth. While doing all of this, we came up across the use case of sleep, podcasts for sleep. We were seeing lots of people using our app at night for sleep. And it turns out podcasts can have a hypnotic effect, hopefully not ours because ours is very engaging, but other podcasts can have a bit of a hypnotic effect. And so people forget about their concerns, what happened during the day and they're able to fall asleep similar to maybe reading a book but without light in your face. For some people it works better.

We started looking into sleep. We also went through our own personal journeys with sleep, being stressed as entrepreneurs. I also had my first daughter two years ago and so different experiences with sleep and we learned a lot. We did all sort of weird experiments from cooling down my mattress to looking like a dork at night with the blue light blocking glasses or wearing the aura ring for many years. So similar thing to podcasts, we saw some adjacent type of opportunity. We have personal experience and again, we started looking into a space and it does look like there's a huge amount of people with sleep problems.

It's only getting worse and the money that's being spent is really big. It's huge. In the US it looks like 30 billion a year, multiple categories of course, from the sleep medication to the mattresses, we started doing interviews with people who had improved their sleep. And it turns out that usually people, they buy lots of products in many different sub categories of the market because they're trying to... for them it's about improving their sleep and getting it solved. They don't care. They don't think, oh, I'm only going to buy a mattress. I'm a mattress purchaser. I'm only going to stick here.

Jacob Eiting:

Big mattress person, it's kind of my thing.

Martin Siniawski:

Yes, big mattress person, exactly. Because there's some controversy sometimes in terms of like, okay, what's really the market that you can... not building a mattress, you are building a mobile app. Are you going to take dollars away from mattresses? Are you going to capture any of that value or not? And I think there is an opportunity of doing that because just help people sleep better, maybe have less of a need for buying other products, or maybe you can be the person who directs them to buy the right product for them that's going to help them and maybe capture some of the value there.

That's kind of how we came to this new opportunity in sleep that we're pursuing. Started with audio. We started as we learned more, getting into using AI and specifically LLMs to give people a personalized sleep coaching experience because a lot of that has to do with changing your habits and changing your routines and changing your thinking around sleep and it's not easy to do. Some people go to doctors but they're expensive or hard to find, or other folks they just do it themselves by listening to podcasts and watching videos and being on TikTok and learning there and then trying an error. So yeah, we're trying to create something that solves it better and faster for people.

David Barnard:

It sounds like with the Podcast App you were looking for that second level product market fit, like we were talking about with competing with Google and Spotify and Apple and everyone else. How much money is there in Podcast App and what are the opportunities? So it's really cool that through trying to find that second level of product market fit with the Podcast App that you actually came upon the sleep opportunity and then also just even looking at how much more willingness there is to pay and all of those kinds of opportunities. But now you're a two product company, how has it gone and the sleep app has already launched. How did you get those early users for the sleep app? I wish we had another three hours to talk through all the distribution and the things that you did with both Streema and the Podcast App and now the third app. You've kind of run the gamut, but yeah, give us a speed run of what it was like bootstrapping inside an already successful company, this new app, this secondary product.

Martin Siniawski:

I do think we'll share this vision that distribution is extremely important.

Jacob Eiting:

You've always been really good at acquiring users. I think you've been one of the founders I think has always been just very comfortable doing that.

Martin Siniawski:

Yeah, I think the most important piece is to have folks realize first and foremost that it's a skillset that you need to build, that you need to continuously hone in because channels change, tactics change, we're seeing that right now. The things that were working for us, maybe for a certain type of business works and maybe doesn't translate as well for a different one. Maybe the maturity of the channel is different from what it was was earlier on in which there's more low hanging fruit. Back to a Facebook example at the time that we were sharing at the beginning, wild west.

But I think the most important piece is first realizing this is important and then just spending a lot of time and energy to try to learn it and ways of learning it, I think this podcast is a great one actually. I've learned a lot from listening to you guys interview other practitioners who are really deep into [inaudible 00:35:57] or ASO, I think this is the most important piece, the mindset I'm taking the time, I'm making it a priority because I think it's easy to get obsessed over product and product is important of course, but in this day and age, product alone won't do it and many times a worse product wins over a better product just because they have better distribution, and this whole idea about the Teams versus Slack example and the growth charts are amazing.

Back to your question David, on how do we get this thing going inside of like... so this sleep product is live, it's called Rest. And if you want to check it out, it's getrest.app, APP and it's live and it has a mixture of this audio content I was telling you, it's the largest audio catalog for falling asleep and going back to sleep really, really fast. And we're building these AIPs which we're really excited about and it's in early access right now. And so how do we get the initial users for that? It's a mixture of cross promotion. Cross promotion helps with our existing app because we already have an audience and the use case translates. So we were able to target folks at night for example.

Jacob Eiting:

That's something you don't have the first time around. We did that at Elevate coming from Mind Snacks, we sent out a blast to our Minds Snacks list like hey, if you're interested. And when you're in that zero to one, those little boosts are big deal.

Martin Siniawski:

Totally. For Streema, which we had absolutely nothing going for us. No money, no nothing. And SEO ended up being the thing for us. Long tail SEO was huge. So it just takes time, just takes time. You need to be able to survive as that thing kicks in and starts working. And I also do wonder how it's going to be now in this world of generative AI and search will change, SEO will change or not, I don't know, but I think it's a really interesting discussion. But yeah, so cross promotion is something we do. We also have money, so we have money from the business so we're able to buy users, get that going and not to an insane amount but to a good enough amount for us to be able to understand if the products working, get some metrics.

Jacob Eiting:

You learn. Do you consider your CAC LTV to be a product market fit indicator? I guess. If you wanted to be a viable business it probably needs a... but do you use that? Because you can just purely use retention metrics, but do you also look at revenue and scalability metrics?

Martin Siniawski:

I don't know if I look at it, the CAC LTV, we look at it quite closely just because we would love to be able to scale paid acquisition even further, and that's being a constraining factor because we're not there yet. Maybe it's product market fit and it's the right term. I just see this needs to work for this to be viable. Do we have a viable business here or not?

Jacob Eiting:

I don't think it's totally unindicative of product market fit because businesses with product market fit tend to be good businesses. That's the market part. And so I think it's interesting to look at early... though, I do see some founders over rotate on it too soon where they'll be trying to balance that equation right at the beginning. You've been in this long enough, you know you don't need to necessarily have a dollar 10 for every dollar spent. What matters is learning, what matters is iterations.

Martin Siniawski:

And in my experience, the CAC LTV thing, it's surprisingly hard. It's not easy. And my conclusion at least so far, I guess consumer world with this type of products, you need a big organic piece to make everything work.

Jacob Eiting:

The core product has to be good enough.

Martin Siniawski:

If it's a CEO-

Jacob Eiting:

To spread on...

Martin Siniawski:

Or virality or whatever it is, there needs to be a really core organic piece to make the system work, at least that's how it's been in all of our cases.

David Barnard:

I think it's a great place to wrap up. It was so fun having you on the podcast and we should had another three hours to go.

Jacob Eiting:

I'm telling you, David-

David Barnard:

Maybe we should just do the Joe Rogan thing-

Jacob Eiting:

I keep pitching the Rogan style, four hours, just talk.

Martin Siniawski:

You have the logo at the back there.

Jacob Eiting:

Yeah, I've already got it [inaudible 00:39:21]. I'm telling you, somehow they keep it going. I don't understand how these long podcasts do it, but we have a lot in our brains. We could talk for hours.

David Barnard:

We do. We could. Anything you wanted to share as we wrap up Martin, are you hiring? Anything you wanted to share about your apps and business as we wrap up?

Martin Siniawski:

Just check out our products and send us feedback. And so it's podcast.app and getrest.app. Really curious to see what you think and we keep on working on both of them, making improvements and trying to really finesse them. So yeah, we'd love to hear from the audience and get feedback. And also, I'm also curious to learn about new growth playbooks. So if you have a growth secret.

Jacob Eiting:

Send it [inaudible 00:40:01] Martin.

Martin Siniawski:

And want to trade notes and we can trade my growth secrets for [inaudible 00:40:06] growth secrets. I'm always interested in learning. I really consider myself a student of this discipline and I think this audience is quite a special one.

David Barnard:

Awesome. Thank you so much. It was great talking to you today.

Martin Siniawski:

Thank you for having me on.

David Barnard:

Thanks so much for listening. If you have a minute, please leave a review in your favorite podcast player. You can also stop by chat.subclub.com to join our private community.