Yehong Zhu, founder and CEO of Zette, and Jake Seaton, founder and CEO of Column, about the challenges and successes of running tech startups that serve news organizations. They explore the impact of financial pressure in the industry and the importance of improving customer experience for publishers and readers. They discuss what journalism can learn from tech, the role of AI in journalism, and the importance of resilience and antifragility.
(02:34) – The appeal of journalism for these techies
(12:53) – The (overlooked) importance of user experience in journalism
(21:37) – How AI will impact journalism
(26:34) – Getting news orgs to be open to change
(37:10) – Agile project management
(45:41) – Rapid Fire Questions
Listen to the episode here:
- Yehong Zhu: web, LinkedIn, Twitter
- Jake Seaton: LinkedIn, Twitter
- Zette: web, LinkedIn, Twitter, Facebook
- Column: web, LinkedIn, Twitter
- Local News Matters: web, Twitter, Facebook, LinkedIn
- Colorado Press Association: web, Twitter, Facebook
- Tim Regan-Porter: bio, Twitter
Yehong Zhu is the founder and CEO of Zette, a venture-backed media tech startup that gives readers pay-per-article access to hundreds of publications, all while sharing revenue with newsrooms. Previously she was a journalist at Forbes, a product manager at Twitter on two consumer teams, and a Harvard philosophy graduate. She is based in San Francisco, CA.
Jake Seaton is the Founder & CEO of Column, a software platform for public notice. Jake is originally from Manhattan, Kansas where his family has owned an operated the local newspaper for the past five generations.
Sometimes you fall into a minefield and your efforts blow up in your face, right? Sometimes you just don't feel like continuing to walk that path. But that's why it's so important to not focus on the external reality, but rather on the internal reality of why are you doing this? It can't just be money, it can't just be success or external achievement, because none of that is up to you. And so by controlling your internal world and by making sure that your intentions are pure, that your doing your best, you're not faced, you're kind of unbreakable. In fact, I would say that it's important for entrepreneurs to develop anti fragility where anytime there's conflict, there's stress, things are being thrown at you left and right. Instead of it making you weaker, it makes you stronger, right? Every single no, every rejection will get you closer to eventually the end goal that you're targeting, as long as you don't let it faze you. And as long as you don't let it break you.
Regan-Porter: Welcome to the Local News Matters podcast, where we explore pathways to stronger journalism, better businesses, and healthier communities. I'm Tim Regan-Porter, CEO of the Colorado Press Association. In each episode, I sit down with guests from newsrooms and others in the local news ecosystem to highlight the innovative work of local newsrooms and those that support them, as well as the crucial questions they face.
This episode, I’m excited to welcome two leaders of tech companies serving newsrooms, Yehong Zhu of Zette and Jake Seaton of Column.
Yehong Zhu is the founder and CEO of Zette, a venture-backed media tech startup that gives readers pay-per-article access to hundreds of publications and shares revenue with newsrooms. Previously she was a journalist at Forbes, a product manager at Twitter on two consumer teams, and a Harvard philosophy graduate.
Jake Seaton is the Founder & CEO of Column, a software platform for public notices. Jake is originally from Manhattan, Kansas where his family has owned and operated the local newspaper for the past five generations.
In addition to discussing their companies and products, we discuss what drew them to focus on journalism as an industry in need of technology solutions, the challenges in serving news organizations, how AI might impact journalism, and what the journalism industry can learn from the way tech companies approach things.
You can support the work we’re doing on the Local News Matters podcast by doing something that will take you literally 5 seconds to do. In whatever podcast player you use, simply click ”Follow.” If you have a few more seconds, click five stars in Apple podcasts. It helps people discover the podcast and is all we ask in exchange for all of the work that goes into it.
And now I'm pleased to bring you Yehong Zhu and Jake Seaton.
The appeal of journalism for these techies
Pleased to welcome Jake Seaton and Yehong Zhu. Thank you for joining us.
Thanks for having us.
Yeah. Thanks so much, Tim.
So let's start with you, Yehong. Tell us a little bit about your company and a little bit of your background and then we'll move to Jake.
Amazing. So I'm Yehong. I am the founder and CEO of Zette. One way to think of us is like the Spotify or Netflix for news. So we partner with all of the top newspapers at the local, national and international level that you want to read behind a paywall. And then our technology allows you to unlock articles through a paid credit system so that you can read whatever you want, whenever you want. My background is that I am the daughter of a journalist and an engineer. So I've always been interested in the world of media technology and the intersection between the two. And I was actually a reporter at Forbes Magazine, product manager at Twitter, and a Harvard philosophy graduate before starting Zette.
Thanks, Tim. So my name is Jake Seaton. I'm the founder and CEO of Column. We are a public benefit software company now a certified B Corp that builds technology for public notice, which is a complicated regulated process that governments and law firms and citizens go through of publishing notices in newspapers of record around the US and actually all 54 commonwealth countries. My family has been in the newspaper business throughout the American Midwest for the past five generations and I'm a software engineer and an entrepreneur by training and have been in business for about four years now.
Great. So the idea for this podcast actually Kevin at Column suggested this, but it's actually something I had wanted to do. My background is in tech in the early days of the Internet, worked for IBM and a startup that Fran Tarkington, the hall of Fame quarterback, had started and then another startup helping people, helping companies get online. And one of the things I've always been fascinated with this industry, obviously I think it's very important what journalists do. And having come from a tech background, I have a different view of how we should operate and different things we can learn. And so I've wanted to talk with people working in tech about what we can learn from Silicon Valley and startup culture. So we want to get to that later. But let's talk specifically a little more about your solutions and what it's like to work with an industry that is going through disruption, that is not the easiest industry to serve. These are not companies that are awashing cash and looking to spend it willynilly and so I imagine that presents its own challenges. But both of you came to this with journalism in your blood and I find that really interesting. What was it that really inspired you to get in here and try to solve some problems in local news and journalism with technology?
I can start on this one. I grew up around the business and when I got to college chose to study computer science and technology to try to find a way to have a positive impact on the future of the family business and really fell. In love with public notice as a segment of the family business that I thought really could use some love. Where with public notice you've got government officials and paralegals and citizens that are drafting and submitting complicated legal jargon. Via fax and email and snail mail to their newspapers or record in their community that are then printing them out, clipping them out of the newspaper with scissors, stapling them to affidavits of publication that then get signed and notarized and stuffed into an envelope that then gets licked and stamped and sent out through the mail to be put in an accordion file in the basement of a county courthouse. And as a software engineer, that the sort of inefficiency of that system just really made my blood boil and I wanted to build something that would make it better and a delightful kind of state of the art user experience for those people that I knew had to go through that process together. And working in an industry where we know that newspapers need to hold on to every single dollar of revenue that is on the table for them these days, we need to find a way of monetizing that software that was aligned with helping newspapers retain as much of their revenue as possible. And so we tried to stay away from either charging a large software fee on a monthly basis as many other software companies do, or asking for a share of the revenue that we know that newspapers need to retain. And so that's how we arrived at the business model that we've brought to market, which is a processing fee where newspapers that send an invoice to their customers through our system, the system automatically tax on a small processing fee in the same way that if you buy an airplane ticket on Expedia, there might be a fee at checkout. That is what the way that expedia makes money and that enables newspapers to retain 100% of the revenue that they earn through publishing public notices through our platform while also incentivizing Column to really maximize the customer experience for those governments and law firms and citizens that have to place their notices so that the tool adds value for them. And they're happy to pay that fee to use it, as opposed to the way that things used to work. And that's enabled us to bring a modern software interface to market very quickly in the newspaper business without forcing them to choose between a large software as a service fee and this efficiency that we can bring to their business. And that's I think been a key part of our ability to gain traction and then scale as quickly as we have.
And before I move on, just to give people a little bit of context public notices, some people might think of them as arcane. There's a lot of legalese if you see them in a physical paper, they're usually a little hard to read, small prints, dents. But they're a very important part of not only local news, but of the news ecosystem and how information gets out to the public. And there's a lot of money involved. A couple of years ago, we had Column estimate based on the placements in the state, how much revenue was at stake here. And back then, it was, believe, seven to $8 million. And that was probably a low year because of the pandemic and that's impact on foreclosures and other things that require notice. It's very technical and involved. As you said, you have to produce affidavits. If they're not run correctly, proceedings in court can have to be restarted. It's serious business. It's a lot of work for the newspapers, it's a lot of work for the governments, but it's how people find out about things like storage sheds being repossessed and delinquencies and elections, particularly you get to smaller municipalities and special districts and things like that. So it's an important part. I just want to give people that context. Yehong tell us a little bit about Zette and why you thought journalism needed a technical solution to what you're trying to solve.
Yeah, absolutely. So to give some context, when I was growing up, my mom was always a journalist, she was always a writer, and she always impressed upon me the importance of stories. I believed that stories that we read in the paper, on the news, they actually became our worldview. They became the lens through which we saw the world, and that there was almost no higher art form. Right. And so I had this tremendous respect for the industry of media and for the hardworking journalists that bring us the local stories and national and the international stories that we read every day. So, of course, I wanted to go into the industry myself. I started as a writer for the Harvard Crimson, covering kind of on campus news stories. A lot of my stories would get syndicated in national outlets ranging from Business Insider to Slate to Huffington Post, et cetera. And I even worked for one of my dream magazines, Forbes, which I was super excited about. I was a young business reporter reporting on public company trends, consumer and retail stocks. While I was there, there are a few things that I noticed that I just couldn't quite get out of my head. One was that there were just so many ads on each page of Forbes at the time. It was completely programmatic, ad supported. There was no subscription yet, although there would be in the future. And basically, they separated all my articles into, like, three different pages with seven or eight ads per page, banner ads, video ads, ads that would flash in your face, and even my headlines would be changed to be a little bit more clickbaity. And I remember asking, Why are we doing this, it's going to make it so difficult to read the article. And my editor told me, oh, well, it's because we're not making quite enough money per ad, so we need to put a page full of ads so that we can make enough money to support the newsroom. And even then I remember thinking, oh, well, that's not going to be a great solution because I'm sure ad block is going to blow up and users aren't going to like this, and if they're not making enough money, it sounds like they're going to need a new business model soon. And what I already saw on the horizon this was back in 2016, was that paywalls were going to be that new solution, right, that the industry was going to flock towards. I mean, it made perfect sense. There was higher LTV per customer. There was a more engaged user base. They were making more money per reader. They could report on more objective news because they didn't have to constantly get new, more and more eyeballs, right? But it also put the consumer in a bind. So just to give you an example, because I was working in journalism, a lot of my friends were journalists too. They would publish articles on economists, the Financial Times in New York Times, and I would want to read them, especially when they posted them on Facebook or social media sites. And every time I clicked on those articles, I would hit a paywall. And when I went to see how much it cost to subscribe to these papers, I realized I couldn't afford it on a journalist salary, that I couldn't even afford to read what other journalists were writing, even though I worked in the industry. And so I thought, oh, wow, this has to change. Like, there's got to be a solution where I can read whatever I want while still paying the outlets in a fair way. Because of course, I knew how important it was for journalists to be supported and to have my paycheck my salary. But how would that happen? And then the obvious solution that came to me was, how did Netflix do it? How did Spotify do it? There's got to be a way, and it's got to be facilitated by technology. It's got to be a clean, easy to use, seamless, delightful solution. And it's got to have a way to bring revenue back to the publishers and put power back in the hands of journalists. And so that's really what inspired me to pursue this.
The (overlooked) importance of user experience in journalism
You're singing my language a little bit when you started talking about the user interface and user experience challenges that the ad driven newspapers were chasing. Last year, I read a book that collected Jeff Bezos annual letters and added some additional content. And reading through that and hearing him over and over again talking about doing what's right for the customer and that will, in the long term, benefit the business, even if it's costly in the short term. It just struck me how an industry that is here to serve the public makes it such a crappy experience chasing after what is really not a lot of money in the grand scheme of things. News already has a problem with because of the nature of what we're writing about. Sometimes it can be depressing and people need to take a break. And then you throw on top of that the crappy recommendations from I'm not going to name names, but from third parties and the pop up ads and just a layout that is not pleasing to the eye and that is to me just the exact opposite of what we should be doing in service to the reader. So yes to all of that and even on the Column side, Jake, I know you are not the first company to try to help newspapers put public notices online. But by and large those solutions did what we did when newspapers first started going online, which is to take something in print and put it online as if it were still a print product. And so you brought a sort of a modern interface to that. So I don't know if either of you want to comment on just sort of the user experience piece.
I would say our product is not putting public notices online, it's helping newspapers provide a modern customer experience to those governments and law firms that have to get notices published in their paper. And yeah, one is just taking uploaded files and displaying them on a website, which is actually something that we do for the Colorado Press Association for free. But our actual product and the way that we make money is by trying to make it as easy as possible for the governments, law firms, the citizens that have to go through this complicated process to get it done with the paper of record in their community. And that's when we got started. And over time have placed so many of these by hand to try to understand how newspapers do this right now. Like what that customer experience looks like and how we might be able to improve it. And just the empathy that we've developed for the government officials and paralegals that in some cases have to write email after email after email to newspaper support staff and then not hear back or not get. A proof or not get an invoice and wait weeks for, like, an affidavit to show up in the mail and then three months later for the bill to arrive, that they have to sign a check and put an envelope in it. The whole thing is so far behind. If you think about the user experience of Amazon, if you try to buy something on Amazon, it's one click. If you try to buy an ad in a newspaper, you're looking at a multi hour, if not multi week process. That could be a single click. And I think part of what has caused this industry to struggle to compete with tech platforms is that for so long it was so easy to make money that you had this monopoly on audience and local business trying to get in front of the subscribers to your paper. And I'd like to say, back in the day, my family, you just roll down the car window and people just threw money in the door. And now that there are so many different options for businesses trying to get their message out and there are so many different options for consumers trying to find information that we do. It's so difficult to pay money to these businesses and to buy their products that whether it's advertisements or a subscription, that I think, a very simple thing that we can do to improve our ability to compete and to keep up and to grow and to be good businesses is have modern technology that similarly reduces complicated inefficient workflows down to just a single click. And that's what we're really trying to do with one of the most complicated ones out there with Column and Yehong.
The solution you're providing, I feel like, has been you're getting at a problem the industry struggled with almost since the beginning of the web, at least of getting newspapers on the web. And not just news, but a lot of the content industry has thrown out many versions of micro payments. And the idea of a Netflix or Spotify for news has been almost like a Holy Grail or some might say a pipe dream for years. And so I'm curious, what made you think you could provide you could get into that space and have success where I think a lot of people have made some efforts and not succeeded and then tell us a little bit about how it actually works and how a newspaper would get involved.
Of course, fortunately, my job is to make pipe dreams come true. Bit of my specialty, let's say. But I want to go back to a point that Jake mentioned and that even you Tim, mentioned before about Amazon, which is a company that I actually worked at. I was an intern and a business analyst intern back in the summer of 2017. One of the ways that Amazon developed such a strong moat over becoming the king of ecommerce is that back in, like the 90s, they developed a button that was one click Buy. And this was revolutionary at the time because in order to purchase any kind of thing on the Internet, you had to fill out these long forms with credit cards and your address and probably go through like a ten step process just to buy a pair of shoes or a book. And when Amazon came out with one click Buy, just select something, press a button, and it shows up at your doorstep in a couple of days, if not the next day. They were able to make something like $300 billion in sales just from this button. And they patented the software so that no one else could use it for quite some time. That insight that I realized when working in Amazon made me understand, oh, in order to increase sales for any kind of business, but particularly for newspapers, it's a UI problem, it's a design problem. Right? At the end of the day, you need to make it so simple to spend money that it doesn't even feel like it's money anymore. And that's exactly why we had a core innovation in the concept of micropayments that's different from what normally people would assume. Micro payments are so class and audible. Just to give you an example, they have a credit based subscription model. So let's say, for the sake of argument, I'm paying $20. I get 20 class pass credits. I can then choose to allocate those credits to the classes that I want and not to the classes I don't want. And that's important because technically, each class requires a micro payment. But the reality is that these are recurring payments, right? As a consumer of class pass or audible or even Zette, I'm actually paying a monthly fee. But for each article I consume, it feels like nothing. It feels like it's just $0.33, something that's nominal pocket change. And by doing this model, we're able to actually capture more revenue per article for each individual publisher without offering everything you can eat for basically nothing and kind of almost cannibalizing their models. So we're able to allow publishers to keep their existing ad revenue, to keep their existing subscriptions, and then to introduce a third alternative way to also introduce new readers, casual readership and people who want to read articles, but the existing subscription fee might be too high. And we do that through software, through design. And of course, because I was a product manager at Twitter, I spent a long time thinking about how to make consumer products usable. And one of the core learnings I had from that time was that you need to make it so simple that your grandma could use it. Right? Steve Jobs had this beautiful quote that people don't want to learn how to use computers, they just want to use computers. And if we can make accessibility so easy that everybody can start accessing and reading the news, then we can build some beautiful things on top of that, like discovery. If you are already reading the news, well, what should you read next? Right? And we can have really strong discovery algorithms that can basically utilize your personal interest and recommend you the things that you want to read. Plus, with the network of publishers we have, we have the best premium outlets for you to read, unlike on Facebook or Twitter, where the incentive is to share free news instead of premium outlets because of a paywall. And that's just the beginning. With the advent of chat GPT and the advancements in AI, we can even make news interactive. So for example, if you asked your computer or asked software, hey, what's going on in the news today? Right, with the licenses that we have with publishers, eventually your computer can talk back to you or redo the news instead of you having to find it yourself. So there's a lot of really interesting things going on in the ecosystem and that's a little bit about where our future product roadmap is heading.
How AI will impact journalism
So you mentioned AI, and I know Column is looking at different AI use cases as well. Where do you see each of you to weigh in on not only how you see AI fitting into your solutions, but where do you see it going in terms of local news?
Well, let me tell you where I think it's not going to go first, which is writing content. Because I really think that the thing that will continue to differentiate news businesses from all of the different forms of content that are out there on the Internet is the fact that there are trained journalists for whom their craft is the creation of news stories in a format and in a tone, in a context that their readers are subscribing to. Purchase. And so I think we've talked a lot about over the years about can we start to employ AI and things like GPT-3 to start writing news articles. And I think that that is in fact the one thing that it will never end up doing in this industry, which is I think that the kind of main content advantage of these publications will continue to be curated content that is specific to an audience and not written by an algorithm. But I do think that when we're looking at Column, just for context, some of the AI work that we're doing involves taking all of the legal jargon that is uploaded to our platform in the form of notices of hearings and foreclosures and government meeting minutes and trying to use natural language processing and entity extraction to pull out the key information the dates, the addresses, the names that are in those notices to try to create structured data that can then be useful to the world. Whether you're a journalist pulling a real time stream of every foreclosure happening in the community that you're covering or the state government looking at a stream of all of the tax records or delinquent tax filings across all the counties that are within that roll up to the state finance or the state revenue office. We want to try to make the information contained in public notice more valuable to the world. We see there are opportunities to use machine learning and artificial intelligence in doing that. That and also the idea that we might be able to soon take your name, the type of notice you want, and a couple of other pieces of information and spit out the legal jargon that needs to run in the newspaper or needs to be available on a newspaper website pretty easily is definitely within reach within the next couple of years. And so we've looked a little bit at applications of AI within our products to help draft and figure out what exactly the notice needs to be. And that, I think, is something that might reduce the total legal bill for users of our platform. Any amount of back and forth that has to happen between newspapers and their customers is something that is opportunity for us to leverage that technology to add value.
Any thoughts you want to add to that?
Yeah, I just want to take a moment to tap into just how powerful recent advancements in AR are. I actually believe that AI could actually potentially make Google obsolete within the next five years. And one of the reasons for that is because it's so simple to use. You type a question in Chat GPT and you don't even have to search, really. By search, I mean look for which source to click on or search for the right source. You get one answer and it's simple and it's tailored to your interests. Right. And so on the basis of that, it's going to revolutionize all industries, and I think news is one of them. Right. Where News? There should be an interdependence between journalism and AI because of the need for AI to have training data. And what I mean by that is one of the reasons why AI cannot directly replace media is because it requires a closed set of information. It basically operates on data that's already known. But the nature of News is that things are unknown all the time and news has to break with people telling stories. Right. It needs to be up to date with exactly what's going on in the world. And right now there's not an easy way for AI models to just extract information from the air in order just to generate the breaking news of the day. So that has to come from people. Right. But what I do think is really interesting is the licensing component here, because let's say you're asking, hey, Chat GBT, what's going on today in the city of Miami or in the city of San Francisco? They're going to need to cite basically the articles that journalism, journalism will produce that day and basically attribute the correct answers to the sources that they're citing. Right. Because if they say, well, according to the Miami Herald, this is what's going on, and the weather is this and that, et cetera, they need to cite their sources. And so that licensing component is going to be key to unlocking a lot of potential in AI in News. And so, yeah, that's my take. And I think there's just so much deeper, so much innovation there and that's why I'm quite excited to see what will happen next.
Getting news orgs to be open to change Regan-Porter [00:26:34]:
Yeah, we could have a whole series of episodes just on AI alone. And what you're bringing up reminds me a little bit of a conversation earlier decade or two ago as the advertising model was really blossoming and you saw a lot of curators making a lot of money until Google changed their algorithm, just repackaging content. And one concern there was, if everybody's curating and no one's creating, what are they curating? And this is going to actually, I think, take that to a whole new level and we've got to figure out that licensing piece. I don't know if either of you listen to this Week in Stardust, but they've had quite a few conversations about intellectual property and chat GPT and other AI tools. But it's going to be crucial for that very reason that if it's just aggregating content, nobody's going to be producing content if it destroys everybody's business. And so we've got to figure out that model and that's going to make the whole conversation around social media and renumeration the Journalism Competition and Preservation Act. That's going to seem like a quaint issue compared to what's coming, I think, with AI. So it's going to be fascinating to see how that plays out, for sure. So both of you are offering solutions, not exclusively in terms of Column, but offering solutions to newsrooms. And I have a number of friends who are in that business and a couple of them on the podcast recently. That can be challenging because it's an industry that is in disruption. It's an industry with constant deadlines that's just sort of swimming uphill all the time. Swimming uphill. I think that's a mixed metaphor, but you get the idea and talk a little bit about the challenges of just getting into newsrooms and they're very different if you're talking about a national chain or a national publication, if you're talking about smaller local newsrooms. But in either case there are different challenges and innovation is not something this industry has been known for in a long time. And so how do you get the industry to pause and to open themselves to new ideas and new ways of doing things?
I think in our case, the financial pressure that continues to build on the industry is actually part of what is driving our growth because it means that every business leader in the industry has to constantly be looking for new ideas and new solutions and ways to be more efficient and grow revenue and improve their customer experience. And that as a reason to adopt Column is, I think, a big part of what gets people across the finish line of deciding to work with us, especially in states like Florida where you've got legislation coming into effect. That suddenly introduces alternatives to newspaper publication for public notices where there's now a need to have a reason that a notice is getting published in the paper. And our technology can play a big part in having a compelling pitch to governments, law firms, and citizens for continuing to publish their notices in the paper of record so that it gets in front of as many people as possible. And so I think we have an opportunity to lean into this moment where there's a spirit of collaboration, there's a spirit of we're all in this together because it's a time of disruption, of change. And I think that is something that benefits technology companies and we've just tried to focus on working with the folks that want to really take action. I think there certainly has been lots of inertia and lots of desire to either wait and see or to try to keep things the same. In the case of public notice, you've got staff both on the government side, on the newspaper side that have been faxing documents back and forth for 30 years and we're coming in and saying, hey, here's a tool that can do that. In a 10th of the time they're saying, you know what, I've got it. And I think that is certainly an objection that we have met with in trying to roll out this platform is that people have been doing this the same way for a very long time and there's a natural human instinct that is averse to change, especially when you've been doing it for a very long time. So we've just tried to make sure to be empathetic with people that are going to have their workflows change or going to have their processes change. And that's just part of the nature of being in this business right now. I think that as long as we can be empathetic partners to the papers and the publishers and the staff that we work with, that we can help them help them navigate that and help them get the business results out of implementing our platform in terms of efficiency and savings and revenue growth that we've seen. Some of the bigger chains that have rolled it out at scale really be able to recognize. But even as for companies like my families that are just ten papers rolling out a software tool that automates a good chunk of the back and forth, that was about ten full time employees for our ten newspapers, something that can have a pretty significant financial impact across a portfolio. So that's been our experience. But both encountering inertia but also encountering. The reason that people either say yes or come back around to us and say, you know what? It's actually time for us to pick this up is because of this moment that we're at in the industry where it's kind of all hands on deck and trying to figure out the path forward.
And Yehong, what about your perspective on that?
For sure. So I think that when I first got into this business, it was easy to think of publishers as somewhat of a monolith, right? That all publishers share certain characteristics and have certain incentives. But when you get deeper and deeper into these business development deals. What you quickly realize is that publishers are so diverse from one another. Just to give an example, TechCrunch is a smaller publication. They're very tech focused, right? They're kind of a specialty magazine. They have a lot of engineering and product resources that they focus on. Their back end. For example, they have an in house paywall and they have a relatively new paywall, right? So TechCrunch Pro or TechCrunch Plus is only a couple of years old. Now take The New York Times, right, as another example, huge organization, the market leader. They've been around since the 18 hundreds. They were the first to come out with a paywall in 2011 or 2012. And their current subscriber base is between ten to 12 million users. The way that you approach conversations with New York Times versus TechCrunch Pro is almost antypical to one another because they have different incentives, they have different concerns and they have different magnitudes of scale. And more broadly speaking, if you take a zoom back, a lot of corporate ownership actually governs a lot of newspapers today. When you think about parent companies, you think of News Corp. Hearst, Gannett, McClatchy, Conde Nast, and many Vox, for example, and many more. What that means is that if you're going through this giant kind of corporate structure, you're going to need multiple internal champions. You're going to need the right set of decision makers. You're going to need a lot of money, a lot of patience, a lot of time to kind of get through to the very end where they decide on betting on you or partnering with you as opposed to the hundreds and hundreds of pitches they get every single week, right? On the flip side, you have smaller family owned, maybe even local or independent titles. So, for example, Forbes Media, LLC. They just have their Forbes brand. It's very prominent brand, but they're not under a giant parent company with other brands alongside it. The negotiations will look different. They're going to look more personalized, more individualized, and closer to just having a couple of decision makers who are managing that one brand. And so our strategy going into the market and really consolidating the supply side is that we're both picking up big boulders and little rocks at the same time and we need both of them right in order to get the coverage that our users are looking for. And so ultimately it boils down to understanding your customer. In the case of any BD deal, our customer is the publisher. What do they want? What are they looking for? What scale versus scale are they operating at and how can we best serve them great?
And a lot of the companies you mentioned are huge and some of them, for some of our listeners, even the smallest that you mentioned will still be big. Does your product, your solution, scale down? So if it's a Salt Lake City Tribune or a Grand Junction Daily Sentinel that are independent or even a small family paper that's a weekly paper. Is there an opportunity to use your solution?
Yes, absolutely. So in fact, most of our publishers, we currently work with over 100 newspapers in magazine. Most of them are local. And so we've been able to partner with both local hyper local and regional publications through our partnerships with Boone Newspapers and McClatchy. And of course, we're always happy to talk one on one with local papers too. One of the reasons why I didn't directly cite kind of an independently owned local paper is because a lot of them don't actually have paywalls. If you look at, let's say, the average local paper, if they're below a certain size, they usually are ad supported or they have a slightly different business model. It's usually at the regional level or if they've established some sort of regional or global prominence, for example, the San Francisco Chronicle, which is local, but also a lot of people read it at that point in time, they usually paywall their content. And so always happy to talk to any publishers, even those who aren't paywalled. But we've just seen that's a little bit more rare to see that at the hyper local and local stages.
And is there an opportunity for we have a large member, the Colorado Sun, which is a statewide news organization and it doesn't have a paywall, but it's emphasizing membership. Is there an opportunity for even someone like that to get involved or do you really need a subscription strategy and paywall?
Absolutely. What we want to do one day in the near future is to get all newspapers and magazines involved. As long as they have high standards of editorial integrity and all those standards are met, we're actively finding and kind of brainstorming ways in which we can do that. Because right now, the credit based system, it makes sense for users to spend that $0.33 if they can't otherwise read the article for free. But for free news, we have to kind of think about other models that could exist. And either maybe a tipping function could be a function where you spend a credit and the ads come down so we actually pay to replace the ads for a better user experience. Or it could be something a combination of the two or something entirely different. And so we're actively brainstorming solutions because like you said, there's a lot of papers who want to work with us, but they don't have a paywall. And so they're struggling to monetize. They're trying to figure out solutions. We are one of the solution providers in the market and so we're brainstorming along with them. So if anyone ever wants to chat, my email is always open and I'm happy to talk.
Agile project management
Great. One of the things I want to dig into now I'm old enough to have been in tech when waterfall was the dominant paradigm for those who don't know what waterfall is. The early days at IBM when we were designing some of the big corporations first ecommerce sites, for example, it could take six months, 18 months to really design what they wanted and then you take another six to twelve months to implement it. And by the time that's done, everything's outdated. That was the recipe for failure and why so many software solutions did not meet the goals. And of course then Agile methodologies came around and really transformed the industry and Agile methodology have started to gain traction outside of tech. And so I'm curious, as two people who are running tech companies, and I think both of your companies are agile, whether whatever formal methodology you're using, you are definitely trying to be very responsive. What do you think newsrooms, and really any business, but newsrooms in particular, can learn from what's going on in the tech industry in terms of not only responsiveness to customers, but how to manage your internal teams and actually be agile.
I think the big thing that I've learned working on a couple of startups now is that having a cultural value where basically the entire startup is every single person's job and there is really no segmentation between different roles. Where the waterfall methodology that you described, where product is completely siloed from engineering, is completely from QAS, completely siloed from sales and things go from one to the next and they don't really talk to each other. At an early stage startup company, everybody has to be accountable for this overall success of the company. And you've seen that with companies even like Facebook that had this mantra that nothing at Facebook is somebody else's problem. And I think that that mentality and that culture is something that could really benefit a lot of news organizations right now, where, whether you're a newspaper, it's maybe a ten to 30 person operation where every single person should be accountable for the quality of the stories that are putting out to the number of subscribers that they're selling to, the number of ads that are being placed to large corporations where I think, over time, kind of divisional. Corporate structures, have moved some of the decision making power out of local hands or out of people that are actually close to the action, has resulted in some of the loss of touch with readers and has had really negative revenue implications for the company. And so that's like a thing that I wish I could pluck out of the startup and technology kind of world and methodology and apply to the journalism world and I think it would have a lot of impact.
Yeah, I think the whole point of having lean startup methodology and having Agile and having Sprints is to take more risks, right? The whole point of being a startup is that we're a speedboat, not the Titanic we can pivot when the market is indicating that, oh, there's a huge wave of innovation coming, we should probably get on that. Or we can pivot according to user feedback. For example, we get a lot of users saying, hey, when is mobile coming out? We're trying to read the news on mobile. I usually read the news on my phone. So we're saying, okay, yeah, we can build that next. That'll be in our next Sprint. And one of the things that I've noticed, just from speaking with many in the media industry, is that there's a huge hesitance to take risks. Right? There's a lot of fear in the industry, which obviously is understandable given all the shakeups that have happened. But I think that risk averse mentality is what led to a lot of the troubles in journalism in the first place. When dial back time to the 1950s, journalism was making money handover fist. They owned basically the distribution of information in terms of personal computing wasn't available. Smartphones were not a thing. If you wanted to get the news, you had to buy a newspaper and you had to buy one every single week, right? And so at the advent of the Internet, a lot of news executives chose to double down on print, as opposed to killing their cash cow and going all in on the Internet. But had they done that 1020 years earlier, the world would look very different than it does today for media. And so I would encourage risk taking. I mean, obviously I'm an entrepreneur, so it's in my blood to bet bold and bet big. But I think that in a situation like we are in now with media looking for the next solution, looking for the next wave of how to monetize it, how to capture the next generation without some big picture thinking, without some serious innovation, nothing's going to change.
Absolutely. I think there's so much to learn from what's gone on in tech. The Amazon examples that all three of us have talked about, but even down to the daily management. I have a friend who is a news director at WLRN in Miami, and he left and started doing business consulting and went from journalist to real business geek and became Scrum Certified Master, a certified Scrum Master. And so he and I were talking and kind of geeking out over that and showed me his spreadsheets where he's how he's managing Sprints. It can apply to journalism. And one of the founders of Scrum, in one of his books, his son works for NPR, and he talked about during the Arab Spring how they were disconnected from Washington and he had to quickly manage their response to the Arab Spring. And they basically applied Scrum methodology to that. And this is going to be maybe a little geeky point, but I'm curious on both of your organizations, what methodologies do you use? What tools do you use to manage development and product development?
I'm happy to go. So we use Asana for tickets. We also use Slack, obviously, for internal communications, for anything that's an internal kind of wiki facing. So, for example, polished roadmaps timelines notes from our weekly meetings that goes into Notion, and then for anything that's kind of messier or more internal documentation focused that goes into our Google Drive. So we use both. We do use Scrum, we use kind of lean and agile methodologies, and we have daily stand ups for our engineering team and our product teams. We also have weekly product reviews. We'll do retros as well. So after a given launch or a given sprint, we'll say, okay, what could we have done better? And so in that sense, we're always growing, we're always moving. You might have noticed that we don't use too many software products. We try to keep it lean, right? And we also try to keep it standardized across the team. So if we've committed to Asana, then we're committing to Asana, and we're not going to also use Trello for tickets, right? And so that's a little bit about our product management.
Philosophies how long are your Sprints?
Rapid Fire Questions
So now let's do some rapid fire questions, and your answers don't have to be short. You can elaborate as much as you would like or as little as you like compared to a year ago. And this is really more about trajectory. The first derivative, what's the trend? Are you more or less optimistic about local news?
So if you think about local news as a concept, not as a newspaper business of printing ink on dead trees and throwing it on people's doorsteps, but rather as the process of collecting and disseminating and structuring and telling stories about the information and events and decisions happening in communities around the world. Very optimistic on the latter and more so than certainly in the last few years that we're getting there in terms of making this transition. I think, yeah, I was at the Knight Media Forum down here in Miami where they've been investing and deploying capital into experimental projects and reinvented business models for half a decade now that finally are having a conference of like, here's everything that we have learned. And standing there and listening to those folks talk and about, here's what's worked, here's what's what hasn't, here's where our roadmap is headed. It's like, oh wow, this is like actually we're bridging the gap here. We're sort of completing this transition. So that made me super optimistic. The combination of that and then some of what we've started to see in states like Florida where legislation around public notice is starting to shift, and that's actually causing the industry to really need to innovate and really need to lean into technology like ours to provide a modern customer experience and solution has made me more optimistic than I have been for the last four years of running this company that this industry is going to be able to make transitions like the one down here.
I would say it depends. So I think that on a personal level, I think local news and being informed about what's going on in our communities is more important than ever, especially when you think about things like elections or mask mandates or things of that nature which have to happen on a local or even regional level. It's super important for users and readers to be informed. However, what I'm seeing on the business side, and Tim, you can correct me if you're seeing something different. I'm seeing a lot more consolidation from corporations, corporate owners and parent owners of local media companies. I'm seeing a lot of hedge fund activity where oftentimes hedge funds or big PE funds will come in, swoop in, and kind of almost take over internal management of different local media players. And I'm seeing a lot of local newspapers really struggle with a business model because as I mentioned before, it's relatively rare to see a successful paywall model for a lot of smaller local news outlets. And at the larger regional levels, you're almost a national player at that point, even if you are the San Francisco Chronicle or the Miami Herald. And so that's why my answer is a little bit mixed because as important as it is, I've also been seeing some serious issues on the business side. And so, yeah, I just think it depends on what the outcome will be.
Yeah, and I'll throw in I think the challenges are gigantic, but I am optimistic in terms of the trend line. I think some of that consolidation has slowed a little bit. And even with some of those large entities, what I'm seeing and I'm hopeful that this materializes and accelerates is a return to actually being local, having local entities, because one of the things some of these chains did was they tried to nationalize everything and I think they didn't get the results they were expecting. So I think that's a good trend. And I was also at the Night Media Forum. I didn't know you were there, Jake, but I came away from that incredibly optimistic because what I saw were other people being optimistic and some new business models emerging and some real investment in what's going on in local news. And a sense we have our convention coming up in September and I think we're going to theme it, build back better, because I think there is an opportunity, and this is what I got out of the Night Media Forum. There's an opportunity, I think we're hopefully at the trough of what's happened financially with local news and there's an opportunity to rebuild and rebuild and address some issues that have been needed to be addressed all along. More equitable newsrooms, more diverse newsrooms, more inclusion of the public into the news process, fixing some of the business problems, breaking down that wall that Jake referred to in terms of everything. So siloed, some optimistic that some of those trends will lead to healthier and more resilient newsrooms and more impact on the community. So that's my two cent, as both of you I know are very aware. Failure is this thing that Silicon Valley has tried to redefine for a long time and there's fell fast and break things to whatever that morphed into. But certainly a fear of failure can hold companies back and hold individuals back. And lots of good things can come from failure if you actually learn from them. So for each of you, do you have a favorite failure, something that put you on a new track or that was very something that you learned from, that was invaluable could be personal or company?
I think as a startup, you have to just try things and sometimes they work and sometimes they don't, and sometimes they make people mad and sometimes I don't I don't know. You know, we've we've launched all kinds of things, I think, in in this industry that have been maybe not quite right for newspapers or the industry like, and just not quite the right model or value propositions. I think in our early days, we got started trying to provide this system for papers and then also provide websites for state press associations that needed them for public policy reasons and wanted to provide a platform for their members to upload notices to for display at a statewide level. So the stake that we made at the early innings of our growth was focusing a little bit too much on that. And I think we kind of got pigeonholed as that company that builds websites for state associations when really our product is software that is used by publishing companies to improve their customer experience for law firms and governments and citizens that have to place complicated legal notices in their paper. And so I think the association world is very engaged on the public policy side of the business, in the legislature and sort of in the political world that exists in state capitals. And so if I had to do it all over again, I might have waited to get involved with the free product that we built for state associations to roll that out. I think it has been a key part of our early go to market, right? Because we did that. We got in touch with folks like yourself, Tim, that have helped us meet their members and the potential users of our product. That adds a ton of value. But as we're looking at our sort of brand and marketing journey, we're looking back and realizing that rolling out this free product before the one that we think has really added the most value for the clients have also driven the most revenue for us as a company. We might have reversed the order there a little bit. So that's one thing, I think that we just made an early mistake in sort of product messaging and positioning. And I don't think that I fully appreciated how that sort of follows you, right? Like it takes a long time for branding and messaging and product marketing to take effect. And so we still are coming into meetings with newspaper companies, them saying, oh, you're that vendor that works for the Colorado Press Association. And now I go, you're that vendor that can really help me, help my governments publish their notice in my paper. And I think that's been something that has haunted us a little bit.
Funny, Tim, that you should ask about failures, because I get the sense that the average person who is a friend or an investor or someone in the industry who looks at me or looks at Zette would just assume that we've always been successful from the beginning. But if you knew how many rejections, how many VCs have passed, how many people have told me that I was stupid for doing this, that it was never going to work, that media would never, ever reach venture scale outcomes, because where is the evidence? Where are the other IPO companies in the media space? Who are the women who have ever successfully led new tech innovations, much less tech innovations, in media? The things that I have been. Told Tim have been harrowing, right? From well, you're never going to raise money because you're a female, right? You're a woman tech CEO and you need a male co founder if you're ever going to hope to get anywhere in this industry. To how in the world do you think publishers will ever work with you? Like, you're a startup, no one's ever heard of you. They're publishers and they're going to be incentivized not to work with you. So good luck on your cute idea. Right? Like lots and lots of just comments that you don't even want to to the point where when we were raising our precede round, I got so many rejections that the only way I could continue moving forward was to set a goal for getting ten passes per day. Like I had a quoted a hit, right? It wasn't about getting to the yes, it was just about getting more no's. Because my reasoning was that if it was a numbers game, it was shots on goal. The more shots I took, even if most of them failed, the closer I would get to finding people who did believe in me, who did support me, and who did believe that media would one day rise again. Right. Because the average tech investor does not believe that this is a tech, I guess, investable industry for many reasons and so I can't even pinpoint a single failure, Tim. I feel like I fail every single day, but my whole purpose, my whole passion and motivation is to fail upwards, right? Fail better. The reason why we get into so many accelerators and so many awards is because we apply to every single one. So as long as we get a small percentage of the shots that we take on goal, eventually I think we will become a very successful company.
I do think the access to capital is a huge problem in this industry, right? Because just in terms of market dynamics, the consolidation, the revenue trajectory makes it so that if you are communicating with investors, potential sources of startup capital that you need in order to get started and to even test and iterate and potentially reinvent certain aspects of the industry, nobody wants to take that risk. And so that was something that we struggled with early on, I think I spent a lot of time talking to all of the sort of philanthropic capital that is out there that is branded and oriented toward reinventing business models, funding local news experiments and really didn't have any luck and was really surprised by that. And that despite us being a public benefit company, we are a business and do earn revenue and have been growing quite quickly and that we found was a pretty good fit for the investors that we eventually did find. But yeah, it took way longer and was way harder than I thought or expected. My advice usually to people try to get started, not just in this industry, but in a startup is how many people you think you're going to need to talk to to get started or to raise money or to hire people like Ten exit right. Because if not 100, because it is a way more daunting process. But I do think it is uniquely difficult in this industry where it's not intuitive that there are significant growth opportunities or like venture scale businesses to be built. And that means that there's less competition, but it also means that it's harder to raise money or to finance the experimentation that needs to happen in order for innovation to take root.
What's your favorite piece of advice you've been given?
That one I just said is one that I think I've given many times is like, basically, however much work or however many people that you think it's going to take to do what you're proposing, multiply it by ten. It took me probably 50, 60 no's. And introductory meetings with different seed investors raise our C round, about as many to raise our Series A. Like, I've had founders come to me after, oh, I've taken five meetings now with venture capitalists, and I got all no. So I guess we're just not going to be able to raise money. And it's like, no, keep going. So I guess that and also just for people that are interested in the career path of entrepreneurship but have started down a trajectory, working at a larger corporation or getting another degree or something, my advice is usually you have to get started. Like it's a certain point. You have to take a leap of faith in embarking on this career trajectory. It's ultimately a leap of faith in yourself and know it and have to know that this is what you want and be happy with the idea that you might not succeed. Because getting an entrepreneurship, starting your own company, is never a financially rational decision. There are always more lucrative things that you could be doing with your time. And the sort of expected value given on the probability of failure is not favorable compared to staying at your job, finishing your degree, getting a raise, getting a promotion. Right. So I tend to tell people that. And then also I also believe that the most important thing is the problem that you care about. I don't really care what sort of crazy product you've got in mind, what sort of business model have come up with for it. Initially, I think, what is the problem in the world that you want to try to solve and why do you care about that problem? And so I think you've heard from both me and Yang that we have very strong family and sort of childhood ties to this industry that motivated us to try to solve problems in the space. And that's something that keeps you going even when you are on that 49th no. And it turns out that you only need nine more to get that first. Yes. So those are my few pieces of advice, typically for people that are interested in entrepreneurship, interested in startups, interested in running your own company, that have asked what it takes to get started.
Yeah, that's funny, Jake, that someone talked to five investors. I think it took us 180 passes to close our 1st $1.7 million. And of course, it's not something I advertise all the time, but just the sheer number of people that I had to explain how money can be made in media and how, yes, there is growth in this market was just mind boggling. A little depressing, actually, if I'm being perfectly honest. But, yeah, ultimately you can find your believers. And if I were to give a piece of advice, I would say that the journey and the destination are the same thing. And this is not super intuitive because I think a lot of people go into startups or go into in any kind of industry thinking, well, the whole point is to bring about this external goal, right? Like, I have a goal of hitting this much money, of doing this for users, of making this much impact, whatever. The problem is that you're more likely than not, as Jake said, to not hit that goal, right, every day. It's not a linear path where you're putting 1ft in front of another. Sometimes you get driven backwards all the way to the end of the highway. Sometimes you fall into a minefield and your efforts blow up in your face, right? Sometimes you just don't feel like continuing to walk that path. But that's why it's so important to not focus on the external reality, but rather on the internal reality of why are you doing this? Right? Like, ultimately, what are you getting out of it? And it can't just be money. It can't just be success or external achievement, because none of that is up to you. If you think about it, all of those decisions tend to be made by someone else who has something that you don't, right? And so I can't decide for a VC to fund me, all I can do is give my best pitch, right? And so by controlling your internal world and by making sure that your intentions are pure, that you're doing your best, you're not faced, you're kind of unbreakable. In fact, I would say that it's important for entrepreneurs to develop antifragility where anytime there's conflict, there's stress, things are being thrown at you left and right. Instead of it making you weaker, it makes you stronger. Right. Every single no, every rejection will get you closer to eventually the end goal that you're targeting, as long as you don't let it phase you and as long as you don't let it break you. And so, ultimately, that's what I would say. Enjoy the journey, because the journey is a destination, and in doing so, it'll make you a lot stronger as an entrepreneur.
Regan-Porter: Thanks for listening to the Local News Matters podcast, and thanks to Yehong and Jake your time and the work that you do.
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