Podcast Veteran Lex Friedman on the Podcast Industry's Evolution

Although the transcription is largely accurate, in some cases it may be incomplete or inaccurate due to inaudible passages or transcription software errors.

Jeff Umbro: Today on Podcast Perspectives, we are joined by Lex Friedman, one of the leading voices in the evolution of the podcast business.

Lex Friedman: Don't fall for the trap of only thinking you gotta be on the biggest shows. There are so many mid-size and niche shows that reach exactly the audience you're after. The reward can be much greater.

Jeff Umbro: Lex has helped shape the industry from nearly every angle. He served in executive roles at companies like Midroll, Art19 and Wondery, and today under the umbrella of Lex Friedman Consulting, he works with creators, advertisers, platforms, and brands. We'll talk about the state of the podcast sector, industry trends, his career path, and lessons from the history of podcasting. Welcome to the show, Lex. Thank you so much for joining us.

Lex Friedman: It is my pleasure. Thanks for having me.

Jeff Umbro: Of course. You've been on my list for a long time, so I'm, I'm really excited to chat.

Lex Friedman: I hope it was the guest to have on your podcast list and not a worst list.

Jeff Umbro: No, no, no guest to have on the podcast and I was really surprised.

Lex Friedman: Whew.

Jeff Umbro: When I found out that you were not the tech guy.

Lex Friedman: Yeah. You and everyone else I talk to.

Jeff Umbro: I bet you get a lot of emails about him.

Lex Friedman: We get messages for each other every day. He spells Friedman wrong and it's not really his name, and it was my name first, but other than that, I have no problem with it.

Jeff Umbro: Are you two friendly? Do you chat?

Lex Friedman: I would say we are nemeses.

Back in the heyday of Twitter, I would get tagged and tweets meant for him from people who didn't like his podcast. They'd be like, oh, Lex Friedman has an annoying voice. Or, Lex Friedman podcast is so boring. And anytime I got a negative one, I would quote it and say Fridman, 'cause he spells his last name Fridman, as in you mean Friedman.

And he didn't like that. I only ever quoted the bad ones and referenced him. So that terminated any chance we ever had of liking each other. So no, I would not say that we are friends.

Jeff Umbro: It's so funny 'cause you two are both titans in the podcast space. Very different titans, but titans.

Lex Friedman: Well, thank you.

Jeff Umbro: Let's explain to our listeners why that is the case. Can you walk us through your entry into podcasting? At what point did you first kind of touch the medium?

Lex Friedman: Almost nobody knows this, but in 2006 I had a podcast back when you still had a manually sync them to your podcast. A buddy of my name, Seth and I did a show together that we called Leth and Sex, which we thought was very funny. And nobody listened to that podcast. I think it had single digit listens ever.

But then a couple years go by, I worked at a series of startups. I had had some successes in the startup world, a couple acquisitions, and after three different acquisitions slash IPOs in a row, I was like, I'm gonna take a passion job. And so I took a job as a full-time writer for publication called Mac World, writing about Macs and iPhones and iPads.

And so when a buddy asked if I wanted to co-host a podcast. I was like, sure, I have free time for the first time in my life. I'm not working a 27 hour day startup job. I could do this. And we started a podcast that was on a network, I like to describe it. It was then nascent and is now long dead. It was called Mule Radio.

It was old enough that they called themselves radio, but we started this podcast and they gave us an ad to read a couple weeks in, and I literally was like, why? And they said, well, if you read this ad for, I think it was audible, we can get money and share some of it with you. And then the next week there was an ad for Squarespace and then there was another ad.

And then a couple weeks after we'd had ads every week in a row. There was no ad. I was like, guys, now that you've been paying me to do the show, doing the show and not getting paid for it is way less interesting. Do you mind if I try to sell ads? And I had absolutely no ad sales experience of any kind, but of course they didn't mind.

So I started selling ads for my show and. Found to my horror that I was pretty good at it. And then I started selling ads for a second show on that network. And then the network's like, why don't you sell ads for all of our shows? And then friends with podcasts said, why don't you sell ads for our show too?

And then friends of Friends said, sell ads for our too. So three months after I sold my first podcast ad I was representing 50 shows. After about a year of doing it, I had done literally like about a half a million dollars in podcast ad sales. I was making everything up as I went along. I decided I either have to stop making this be my thing 'cause I was doing it all night and all weekend, or make it my full-time thing.

And that's when I met up with the other co-founder of Midroll and that company became a real thing around 2012, 2012 or 2013.

Jeff Umbro: What was the podcast world like? It sounds like you were mostly involved in, I mean, you created your own show, but you were mostly involved in the sales side of it. What did that look like, because I assume it looked very different than it does today.

Lex Friedman: Initially it was all over email. You could beg for phone calls, which you would sometimes get, but there was a whole lot of explaining what a podcast was. Truly. You had to explain to people what it meant, that pod that what a, how to think about what a podcast was, what it meant to have ads on there In those early days, everything was a baked in ad too, so.

It was, it was a lot of teaching in the early days of why they should do this at all. And you had a lot of brands that were terrified of doing it and then some brands that really got into it. I remember the first time I decided I'm gonna pay for LinkedIn premium. 'cause LinkedIn was and is expensive when you wanna pay for a premium thing.

Right. And I had to decide, am I gonna invest in this business? And I did. And I wrote to six companies, one of which was 23 and me. And 23 and me wrote back like an hour later saying, yeah, we'd like to try. This is a hundred thousand dollars a good enough test budget. And I was like, well, I suppose we can make it work if we have to. We'll, uh.

Jeff Umbro: You're just then emailing everyone you know, like do you have more inventory?

Lex Friedman: But it was really just a, a ton of teaching people what podcasts were and then getting them comfortable. It's scary to, to lend your brand to somebody else's voice. Although when I started, I was really deep, deeply entrenched in the nerd podcast space like Apple Tech Nerd podcasts and adjacent shows, and so there were a whole lot of folks.

Who would never advertise today, like people who were early in the app store, which was also a big thing at that time, you know? And when you were one of 300 or 800 or a thousand apps in the app store, it made a ton of sense to advertise. 'cause you could really stand out from everybody else in the, in the app store and really make a decent amount of money.

So there was a lot of folks who got it because they came from the nerd podcast world. And then when you were talking to just like pure advertisers, they, they had to be taught what, what I was even talking about.

Jeff Umbro: To a very different extent. Would you say that that is kind of what the ad market is today? Some of these bigger brands are, are a little tenuous in terms of if they want to get into the space, whereas, you know, a lot of the DR brands love it.

Lex Friedman: Well, there was definitely an evolution of, initially it was what is a podcast? Then there was a time when everybody knew Serial, so you could at least have a conversation about whether Adnan Sed was guilty or not, and then you could get into what's your favorite podcast? What shows do you listen to? I would say today.

You'll never get into a conversation with a brand where you're like, what is a podcast? Or what is podcast advertising? There are some where they'll be nervous to your point about can they handle it? Can they, can they get comfortable with it? I remember back in the early days when Bill Simmons first left ESPN and launched The Ringer, he was an early partner of ours at Midroll before we were even Stitcher.

Procter & Gamble was really into it. They put head and shoulders on that show and Gillette on that show, but. They were also terrified. They were like, can we hear the ads ahead of time? And we were like, no. Bill records. The ads live to tape while he is recording the show and he won't let us hold the show up.

Eventually, there was one advertiser, a bank that required that they hear the ad before it go live. And so I would literally remember like being on a three-way phone call so we could listen in while Bill is recording and have the advertisers representative listening at the same time. 'cause he was like, we're not delaying this episode.

They have to hear it live and then it can go live. There are still brands today that are cautious or nervous or just scared off of the host red side, but now the programmatic is so prevalent. I think there are very few brands who are terrified There. There for a while there was that fear of the same thing that you get the fear of when you're working with YouTube.

Right. Is there a chance that your ad could run along? Unpleasant or bad content, but there's not nobody in podcast ad spend is spending on like UGC user created stuff like they're, they're buying shows that they know of. So I think, I think we've gotten mostly past the overall fear of the space.

Jeff Umbro: So 2012, you sell your first ad, 2013, give or take. You joined the founding team at Midroll and you were there for about six years. Can you walk us through your experience there? Correct me if I'm wrong, but you were one of the first four employees at Midroll, correct?

Lex Friedman: Yes, and I was officially brought in as a co-founder because I brought in my book of business, my advertising relationships and all my shows, and. That team was the founder, Jeff Ulrich, and then Adam Sachs, who went on to great things. And our CFO was Andrew Walker. And yeah, it was, I would say, incredibly stressful.

Like one of the reasons that I decided to do it as a co-founder versus doing this thing on my own was I didn't wanna wear this. I had never been in sales before and I didn't wanna wear the stress of like, I can't provide for my family unless I've sold ads. But then I became a co-founder at this company that started hiring more and more employees.

We can't pay the employees of this company unless I sell more ads. I gave myself way. I had zero gray hair when I started there. Maybe it was gonna happen anyway, but I don't know. But it was really scary, really stressful. I'm happy to say on the record, because I said before our, our founder, Jeff, would be the first to acknowledge, not you, Jeff, a different, Jeff, our founder.

Jeff was a challenging person and it was a, it was a very stressful time, but we were also doing things that like nobody was doing at the level we were doing. We had. All these giant shows. We had this growing podcast comedy network. We were bringing in partners like Mark Marin. We eventually did that deal with Bill Simmons.

Like if there was a big podcast, almost certainly. We sold it with very few exceptions. And so we were defining what the industry was, we were setting what the industry standard Ccpm should be or how these ads should be sold. And it was, I would say, really fun. Really terrifying. Eventually, as we started growing the sales team, it was a little bit less pressure on me since I had other people who could help sell ads too.

But those early days, it was so much like you would celebrate every ad sale. Like today, I work with a couple, couple companies in the ad sales space who are like, we don't wanna have ads sign iOS that are for less than a thousand dollars. That's not that interesting anymore. But if we could get a $500 buy, we were ready to put that on the books.

But it was, we were building the business in all facets. So we were teaching podcasters what to expect and advertisers and listeners what to expect. And we were also building in-house tools. When I joined the company, it was, they were managing what ad sales they had via one massive Google spreadsheet.

And I was like, no way. Because I came from a nerdy background, so my business, I had a web app that I had to used for managing all of my ad inventory. And I was like, we gotta do something like this. And so we hired people and I showed them, here's mine. Make something that does this before all these shows.

We had a tool that really lasted up until a year or so ago, I believe, when SiriusXM finally sunsetted it.

Jeff Umbro: What was it called?

Lex Friedman: I, I only ever refer to it as the Midroll app because that's, but it was, it was just for our use. But it was, I mean, it did everything right, like, so the, all the, when we would do listener surveys, which was a huge differentiator for us for a while, but it was the way that we could know who was listening or what the audiences looked like.

That data fed into the app. So then how was a salesperson? I could say, I wanna see podcasts where at least 75% of the audience is male and earn six figures. And it would say, okay, here's the 23 shows that match. That have inventory in the window you want, and here's what that inventory costs. So you could build a little proposal right there in that tool, send a link to that proposal to a buyer.

They could approve it via email, like it, it eventually got really, really fancy. The closest thing that I know that exists now is probably what Gumball does a. It drove the business for so long. But I would say those early days were, I never liked the term Wild West. It never felt like podcasting was the wild west to me 'cause we were very serious and buttoned up about the things we were doing. We took it all seriously. But we were definitely inventing things constantly like, 'cause we had, there was no prior art. We had to make stuff up all the time.

Jeff Umbro: Listeners of this show are gonna know Midroll and like what it eventually became, but. Everything you said is verifiable. guys were kind of setting the stage for what would come next, and beyond that, you know, there was a few acquisitions in there that we'll talk about, but guys also controlled the listener experience with the Stitch wrap. Midroll eventually acquired that right.

Lex Friedman: Yep. So we got acquired by EW Scripps, and then a year after that, almost exactly a year after that. Scripts bought Stitcher kind of as a gift for Midroll, and it was interesting. We didn't know what we were buying at the time. In one sense. I mean, we knew exactly what, we knew what the Stitcher app was. We wanted that ecosystem, but we didn't know were we buying it for the monetization side of all those ads that 'cause Stitcher used to put ads in between shows that the Stitcher app, were we buying it for the app?

I think we thought we were initially buying it for the first thing, like the ad engine, and then it turned out we were buying it for the app. And the app became a core focus for a while. Although that app no longer exists today as we're speaking, there was a lot of excitement about the brand. It felt like Stitcher was a bigger, better name than Midroll.

Midroll was always a terrible name. In fact, when I joined the company, it was called the Midroll three words. We paid an exorbitant amount of money to a branding agency over my objections, and that branding agency said it, instead of being the mid-roll, you should be mid-roll. And that was six figures. So.

Jeff Umbro: There's a whole episode of Startup from Gimlet that talks about the branding, agency fees and everything, and.

Lex Friedman: A hundred percent. And we sold startup back in the day. And one of the fun things about like when we were selling ads for startup, or when we were selling ads for other big shows was there were certain shows that didn't want people to know that they were not just selling their own ads. And startup was one of 'em.

And we would sell whatever price they told us it had to be, and it however customized they wanted to be. But they, they were like, we're not gonna put you in the startup story 'cause we don't want that to be part of the story. And we're like, all right, just keep paying us our commission checks and we'll keep doing it.

Jeff Umbro: What did Midroll sell to Scripts for the first time?

Lex Friedman: When we were acquired by Scripps, I believe it was 55 million, or it was 50 million plus a $5 million earnout. Obviously at the time, that was the first major acquisition in podcasting, so it was also the biggest 'cause it was the only. It was fascinating because when we were first thinking about starting to sell, we hired a banker.

A banker's job, in part, is to remain conservative, not get people's hopes too high, and his initial forecast you can probably sell for between like 12 and 17 million. And we got bids all over the map. We had some fascinating meetings. Some companies that did the vetting back then, you know, they have to sign documents and they were only gonna use this material.

To evaluate this company, we will not do any poaching or anti-competitive things. And then as soon as we said, Hey, by the way, we're going with scripts, another company in the podcasting space reached out to me and was like, Hey, we know what you made there and we know what you would get in this deal. Come work for us and we'll beat it.

And I was like, you can't do that. And I signed paperwork with scripts like, you can't have anything. Nah, our lawyers can get rid of anything. Nope. Can't do that. And so I don't like that company. I won't name and chain, but I don't like them. But we had a meeting with Michael Eisner.

Jeff Umbro: Wow.

Lex Friedman: Was hilarious because he ran a VC fund.

Jeff Umbro: Was that an interesting meeting though?

Lex Friedman: Fascinating. He kicks off the meeting being like, I know this is gonna sound stupid, but what is podcast? And we did it start at the beginning.

Jeff Umbro: This, by the way, for anyone who doesn't know is the former CEO of Disney.

Lex Friedman: Yeah. And his VC firm, Tornante, had Disney art everywhere. He was very proud, even though I think they broke up on unpleasant terms, he remains very loyal and a fan of Disney, at least the output of Disney. He took us to a lunch at Spago. Wolfgang Puck comes out at one point to say hi to Michael because Michael was the person who put Wolfgang Puck restaurants in Disney Parks, and you know, we're talking, it's a good lunch. And Michael at one point says, by the way, we're a VC firm, we're not a company. If we acquire you, the first thing we're gonna do is lay you all off so you can consider us your safe school. If nothing else works out, we'll pay the least for you and we'll gladly take it off the books.

And we're like, okay. So then eventually Michael calls for the check and the waiter's like, actually Wolfgang already took care of the check and I, you've known me a long time, Jeff. I was. I, I make jokes and it was one of those times where I made a joke and as soon as I started talking like, Nope, please don't do this food.

It was too late. The, the train had left the station and I turned to Michael after the waiter says, Wolfgang has taken care of lunch. I'm like, well, it appears to me you still owe us a lunch. And luckily he laughed. But it was one of those things where like, I should not make this joke right now because he was getting it comped by Wolf.

Jeff Umbro: That's a good joke though, and I feel like when you're with people who are just. Like kind of legendary in your mind. They appreciate it when you just are yourself.

Lex Friedman: But yeah, that was a fascinating experience and that was the, the last acquisition I did in the pre COVID era. So there it was, everything was in person. Like we were flying around and we met people in New York. We met with companies in la like there were probably seven companies in the running, and I do think scripts was.

Smart to do it. And then when they sold it years later to SiriusXM, I had already left by then. I don't know, I, the, I think the purchase price is public, although I don't have, I think it was maybe 300, 325. So a great return on investment for scripts, even though I think they spent double, like they spent another 50 plus in investment in Midroll and Stitcher before they sold it.

Still a, a healthy profit for them. And now if you look at Scripps of stock, it's like, it's less than what it sold for.

Jeff Umbro: Scripps definitely had kind of a, a rise and fall over the years. Okay. So Midroll sells to Scripps for 55 ish million dollars, and the number for Stitcher was four point a half million by the way. And you continued working there for a little bit, and eventually you decided to leave. When was that, where did you go and, and why did you make that decision?

Lex Friedman: Around early 2019. Well, really around late 2018, I realized it's just. Uh, I was done. I had been there for seven years. My whole career was working at startups. Those startups would get acquired and then I'd be at a big company and there's a question of how long was it gonna last at the big company. It took me a while to learn.

I don't like big companies, scripts. Like many acquirers said, Hey, we're gonna let you guys run the show. You know, podcasting, we're acquiring 'cause you have podcasting. You do what you wanna do. And that did stay true for at least several months. But of course they paid a whole bunch of money for it. So they wanna get involved and they did.

And I don't begrudge 'em getting involved. It got less and less fun. And I recognize that there is very good fortune in being able to enjoy your work or to have fun doing your work. And I don't take it for granted, but I do become extremely aware of it when it starts being totally miserable, which it was after a while.

So I was looking around for what other things I could do. And the reality is, and I've talked about this publicly before and there, there are no things hiding me from being able to say it, no gag orders. But when Scripps acquired Midroll, they gave five year non-competes to two of us. That is the longest non-compete I've ever heard of in this kind of a deal.

I think it's egregious, I think it's wrong, but it's also apparently legally justifiable If you're the beneficiary in an acquisition, especially in a newer field like podcasting, was considered that it, that a judge could support it, right? A judge could look and say, well, you made this much money in the deal, so it's, it's reasonable for them to have this five year non-compete and that non-compete basically said, I personally couldn't do.

I couldn't work at a company where I was doing direct sales of ads on podcasts. So when I was looking for what could I do in podcasting before that non-compete was up, I started talking with Art19. We were already customers of Art19 at the time at Midroll, and I love that team. And we started talking to them and it was like.

Art19 wants to do audience targeted ads. Those are not show specific. Those are broadly audience related. And my friend and colleague from Midroll, Corey Esa, was also looking to leave at the same time. And so we were both talking Art19 and eventually Art19 was like, Hey, we'll we want to do this, but we want in writing from Scripps that they don't consider competitive. So I had to go to Scripps before I had given notice and say, Hey, I would like to give notice and I would like to go to this company and I need you to say it's okay. The then CEO of Stitcher was like, why would you do this? We're gonna crush Art19.

But yeah, it's not competitive. And so we got the permission to go and did, but that was like, it was very lucky to find a company that I was excited about. That I was gonna be allowed to work at. 'cause I, there were, I'll say in this time period, Spotify had reached out. Literally I was just on a, a biz dev call with Spotify and they were like, Hey, by the way, would you ever leave Midroll income work for us?

I'm like, well, I can't. I, whether I would or not is irrelevant. I have this non, and once, this was another time, I was like, we can get it. Yeah. Anoscopy, we're not worried. And so I interviewed with the entire C-suite at Spotify and.

Jeff Umbro: The entire C-suite. Did you talk to Daniel Eck?

Lex Friedman: I did talk to Daniel, like he was, he, his was like a 10 minute conversation, but they wanted a spot check with him. The role at the time was Global Head of Podcasting, and they offered me more money than I think anybody will ever offer me, ever again for a job.

Jeff Umbro: What was the number you gotta say?

Lex Friedman: It was a three year contract where it would pay me 900 the first year, a million the second year, and 1.1 the third year.

Jeff Umbro: So 3 million over three years.

Lex Friedman: A massive quantity of Spotify stock as well.

Jeff Umbro: Which would've been a great buy in 2019.

Lex Friedman: Right? And this is, again, pre COVID. And so I'm talking with that team and I said to them, I currently officially work from home, but I come into New York City to our office four or five days a week, and it's a crappy commute.

I don't mind telling you I take a bus when I go into Manhattan, it could be 60 minutes, but when you're in commuting hours, it's 90 minutes minimum each way. Like it's a long day. I want from you Spotify in writing that I can work from home one day a week because I got small kids and they're grown up and I don't wanna miss out on it.

I wanna be, if there's like a school show, I wanna see it. And they said to me, you'd be too important if you need to leave early some days. If you need to leave at, you know, five instead of seven, you can do that. And I was like, I'm not interested in this job. Like real time in that conversation when they said that leave it early was five instead of seven, I was like, no.

And they could, they, from their perspective, it was a done deal. Nobody who was involved in that, who like would know who I am is still there, but they, they really hated me for so long. 'cause I said no, but I was, I was very great. I had no qualms about turning them down because work-life balance and mental health are really important to me.

Jeff Umbro: So when you left Midroll, there was a lot happening at that point. You know, Scripps had purchased Midroll. This was right around generally the time that Spotify bought Gimlet. That iHeart bot stuff works a couple years later. And it was right before Amazon bought Wondery, so there was clearly something in the water.

And, and if you look back in history now, that was like the first big wave of like VC money coming into the space and buying up all of these tech companies and everything. And we can say this now, like eventually R 19 was also acquired by Amazon, but. Was that part of your thinking when you moved over to Tar 19?

Like I know that you said that you love the tech and like you wanted to stay in the space and this was like an avenue in which you could do it with a team that you liked. But was that a small piece of the decision there for you personally and also for the broader industry? In that window of time there was this big feeling or vibe where it was like, we're all gonna get rich. You had already sold, you know, four companies at that.

Lex Friedman: You were already rich.

Jeff Umbro: Yeah. So like, like what I, what's the impetus there? Like are you trying to actually like grow the industry? Is this the next company that you could see getting like, taken off the table? Is there something else there?

Lex Friedman: I love that question. I'm thinking in real time as I answer it, and I think the reality is this. I love startups and I love finding things that I'm good at and I knew I was good at podcasting and it's, there are things you can get into that you can be good at. Because you can study them and you know, do the training.

And with podcasts there was less of that at the time, at least because it was still all happening in real time. And it felt very exciting to me to feel like I wasn't outta my mind to consider myself an expert in podcasting. 'cause I was there from the very beginning. And I love the idea of doing stuff that I'm good at.

Who doesn't like that? Right? So. I was going with a friend, which was very exciting. I was gonna a company of people who I already liked, which was very exciting and in a space that I felt really competent at, and like Art 19 had only been on the hosting, I don't mean only in a dismissive way, but had been exclusively on the hosting and dynamic ad insertion side.

And so there was all this green field of like, let's make original shows, let's sign third party shows, let's sell ads in different ways. Like they had done none of it. And I was like, I know how to do this. I just did this. We can do this again. Certainly the idea that it could be acquired was exciting.

Jeff Umbro: And at the time, that was like the best tech there was. You may argue that it still is, but there were very few competitors that could really stack up against it at the time.

Lex Friedman: It was really a two horse race at that point. It was megaphone and Art19, and I clearly wasn't gonna work at Spotify. It was all the things like, acquisition is always exciting for obvious reasons, but also there's, there's trade offs. Like I, I have never regretted being acquired, but I have, I, I have never successfully stayed for a very long time at an acquirer.

Jeff Umbro: You go to Art19, you help them to develop this next phase of their strategy. It is successful Art19 is acquired by Amazon. Feel free to talk about that acquisition, but what I'm really interested in is like what this looked like after the acquisition, and at this point, what was the threshold for you to say?

I'm looking for my next thing.

Lex Friedman: The untold story in the Art19 acquisition is Amazon and one other giant company wanted to acquire Art19 and neither knew about the other's interest. And one of these giant companies that was not Amazon, gave us something like 12 hours to review their letter of intent before we had to sign and return it on a weekend.

And we said yes to that other company and that other company said it was gonna do the deal, said it was gonna close, and then with like hours left on their window, said, you know what? We're not gonna do this. And paid a significant kill fee. That was not part of the deal 'cause they knew how much they kind of dragged it along.

And then when we went back to Amazon and said, you have a short window where you can potentially do this, 'cause these other folks let their thing expire. Amazon got it done. Amazon had said early on, I think even before the deal was done, we're gonna break Art19 back up again. It's gonna go back to being just the tech side, and we'll move the media and ad sales side over to Wondery.

So Lexi, you'll be moving over the Wondery side and that was fine. I, I was a fan of Wondery. It was hard on the inside, like I would say Amazon was surprised when I left. I was asked to do one thing at Amazon pretty much, which was get deals done and. I'm good at that. But it felt there were a couple problems.

One was I didn't love the numbers I was getting. They made it very easy to get deals done because sometimes they would give you these projections like, oh, we can make this much in ad sales on this show so you can offer, you know, this much money to that show. And I would kind of raise my hand and say, Hey, it used to be my job to do these projections.

These projections are crazy. There's no way we can make this much money. And they're like, that's not your job. Your job is to get the deal done. I'm like, not a problem. I can get this deal done.

Jeff Umbro: That's interesting though that they like turned around and said, you know, ignore that for the moment.

Lex Friedman: Well, there were other people on the org whose job it was to provide those rejections. So the, the message was really trust what you're being told. And Amazon has the, you know, its leadership principles, one of which is disagree and commit. So I disagreed and they said, do it anyway. And so I committed and do what they said.

I, I spent tons of Amazon's money, so I did the math at one point. I was saying like half a billion dollars in deals that I did in my time there, and I was only there a year and a half. When I gave notice, they were shocked because they figured, well, you know, if you stay every deal anniversary for X years, I had some not insignificant payout due me from Amazon for that acquisition. And I was like, but I don't like it here. And I, I wanna be clear, I don't think Amazon did wrong by me. I think Amazon made mistakes with its wonder acquisition, but I think that they did what Amazon clearly knows how to build successful businesses and scale them.

And part of that is very clearly specialized people like you do this thing and you do this thing. And I have always thought of myself as a creative person, have always chosen jobs where I can feel like I'm being creative even if I'm a chief revenue officer, but we're, you know, it's creative when you're pitching somebody. It's creative when you're figure out the right way to win a podcaster over or win an advertiser over or whatever it is. But when it was, do this deal with an agent and do this deal with an agent and do this deal with an agent. I love those agents. I love doing those deals, but I was just doing one thing over and over again. There was no room for creativity and I. Wanted to do more than they wanted me to. I also, there's ego involved for sure. Right? Like I was a C-level executive at two podcast companies and I started out reporting to the CEO of Wondery. And when I left I, well before I left, at one point I was reporting to a person who reported to a person who reported to a person who reported to the CEO of Wondery.

And they're like, this is not a demotion in any way. This is just what happens at Amazon. And I was like, it's kind of a demotion.

Jeff Umbro: It sounds like you're saying that they just wanted you to trust that this other person's projections were correct.

Lex Friedman: Yes.

Jeff Umbro: To like these deals, was this more of a strategy of getting more market share for Wondery by over offering, or was it just genuinely somebody got the numbers wrong?

Lex Friedman: I think the sales team who wasn't responsible and I, I don't think anybody did anything wrong intentionally here, but I think that if, I think we had the wrong people making those projections. 'cause when it's a sales person who has no budget affected by how much money we spend on a show, but who has the opportunity to make lots more money when they can sell a whole bunch of ads on a new giant?

Of course they should have big eyes, right? Yeah, this show is worth a bajillion dollars, spend a bajillion dollars. 'cause then I can sell a bunch of ads on it. And so I think they, they simply hadn't accurately thought about who should be providing those projections. It, it should have been somebody more senior.

And it was kind of like rank and file salespeople providing the projections who had a very clear bias. There were people who I really love there. Janine Wright was there overlapping with me. She, she is not there any longer either, but when they brought her in as kind of a COO, I stayed longer than I would have at Wondery because she was very good to me.

Jeff Umbro: I've spoken with her before. She's, she's great.

Lex Friedman: I think it was the least happy I, you know, you get acquired by Amazon, you assume, okay, now it's not gonna be startup hours anymore. Now I'm at a giant company and they want it even more. And it's a very west coast company and every, I've worked for so many west coast companies that live on the East coast and I had never had to do so many late night calls, not late night, but like nighttime calls. 

And again, I wanna be a dad. Like that's important to me and now I have to get in college. And so, I dunno, I was very, my only regret about leaving was that I didn't do it sooner.

Jeff Umbro: I love hearing that. And also, I don't know, there's like some sadness there.

Lex Friedman: It is really sad, honestly, because I, every place that I've been acquired, I've stayed at as long as I could because I care about the thing I wanted to succeed. But as it turned out, I wasn't really working on Art19 stuff anyway, so I, it was, it was a little bit easier in that case, I think, to rip the bandaid than it had been at some other gigs.

Jeff Umbro: So we have about 10 minutes left. I probably will have to have you back because I don't think we're gonna tackle everything I want to, but.

Lex Friedman: No filter. So it's exciting.

Jeff Umbro: It's the best. Well, so you now today have a consulting firm, Lex Friedman Consulting.

Lex Friedman: Brilliant name.

Jeff Umbro: Podglomerate is a client. So disclaimer there, I don't actually know this number, but over the last couple years you've probably had like 50 to 100 podcasting clients.

Is that accurate?

Lex Friedman: I don't think it's that big a number. I don't know the number offhand at any given time, I have 12 to 20 clients. Let's see. I think that I will tell you the exact number. All told I have had 55 in just shy of three years.

Jeff Umbro: And so you have a pretty good outlook and understanding of where the podcast market is. Those clients are smaller ones like conglomerate, but also I imagine like larger ones as well, right.

Lex Friedman: Part of my, you know, deal to leave Wondery, 'cause I had an Amazon non-compete as well, was that I would consult for Wondery for a while. So I consulted for Wondery for a year, although it's been now more, nearly two years since I've done that. But most of the time the giant companies aren't my clients because the, the biggest ones don't need me.

But I help a lot of clients who are doing deals or attempting to do deals with them. So I, I, I get to see a lot of different sides of the industry.

Jeff Umbro: What do you think of the industry? I know that's a very broad question, but I, I guess to give a little bit of background, like I've, I'm, we prepare this like predictions episode in October, November every year for this show on a whim. I went and just looked at like all of the different acquisitions, closures, layoffs, and everything that have happened this year alone.

We're only in September. Closures that have been announced that some have implemented, some have not. There's Chalk and Blade Wondery, pineapple Street Charitable, Shondaland Club, random Blog Talk Radio, wisecrack. Acquisitions. There's podcast movement, acquiring sounds profitable, Fox and two B acquiring Red Sea Ventures, pod X acquiring Lemon Media being acquired by Acast layoffs.

There's NPR and all of the associated avenues there. PBS, Pushkin, Spotify studios, the Ringer. That seems to me to be like, and I'm sure I'm missing a lot, but like that is a tumultuous. Nine months ignoring the closures and the layoffs, which are awful and tragic, and all the people who are gonna need to put up their own shingle or get a new job from there.

Those acquisitions are meaningful in the consolidation of the industry, which is only going to enhance the other issues that we're seeing. I wanna know your opinion of this. Where do we stand as an industry?

Lex Friedman: The industry makes me sad. That's, that's my full quote. And it doesn't have to, like, I still have optimism and hope, like I'm still in the podcast industry, but for the first time in my consulting life, I get more excited. Well, I hope this doesn't diminish my prospecting, but I get more excited when I sign clients who aren't in the podcasting space because podcasting as a space is really hard.

The giant companies, in many ways have broken podcasting, including ones that I was part of deals with. Right. I guess not Scripps as much, but like. The things that Spotify, SiriusXM, Amazon, iHeart are doing aren't good for what you and I might think of as podcasting. It reminds me a whole lot of two things I use as my go-to analogies.

One is the early blog space, right? The early blogosphere where first everybody had blog and then a whole lot of people had abandoned blogs, and then some really good stuff rose at the top. And then more often, whether it was good or not really famous people's blogs roast at the top, like Ariana Huffington had a head start because she was also Ariana Huffington.

With the early launch of the iOS app store, it's the same deal. If you were early in that app store, you won the lottery when there were 200 or 300 apps, and they all had fees on them, basically like people became app millionaires because that was it. But then as people saw that, now there are. I don't even know if it's hundreds of thousands or millions of apps in the app store.

You can have a great app and nobody can know about it. And obviously the same thing is true in podcasting. And what's, what's so hard about podcasting is there's still at some level competition to way overspend on stuff. Like just watching Smartless go from independent to Wonder to Sirius XM or watching other shows that kind of Hop D goes from one to another and.

There's no loyalty on the part of these creators like SiriusXM acquired Conan and Spotify acquired Bill Simmons and that's super smart to me in a lot of ways because now you don't have to lose that partner in X years if you structure your deal the right way. But these, these kind of rent relationships where they say, okay, we're gonna be your ad sales partner for X years.

And drive the price up. And then in a couple years they're like, all right, we're gonna keep looking to see who will be the highest bidder. I don't, I don't blame or fault the talent for doing that. If they can get that money, go get it. But clearly people have overspent time and time again, otherwise they'd renew.

And that's bad for the industry today. Nobody wants to pay for stuff. I have so many people on the student development side, I have clients who make shows and want people to pay them for those shows, and nobody wants to spend money on the shows. These layoffs that you're talking about across the industry very often affect the producers.

It becomes a mystery to me of who's gonna be making the stuff. A lot of people look at this American life, which is a show I love, and they look at how well produced it is, how great a show that is, and they're like, we wanna make something that sounds like that. But almost nobody can do that now outside of this American life because nobody can spend that kind of money on it.

So all of that in the industry makes me sad. Also, all the video stuff in the industry makes me sad because like comedians wanna be rock stars and rock stars wanna be comedians and people who work in podcasting somehow now wanna be TV people. And some of that is a whole lot of TV people came into podcasting, especially pandemic when they couldn't make stuff.

They're like, oh, we'll make a podcast instead. We already had to produce, now we just don't need the visual side. And they're like, oh, let's bring back video. Video and podcasts are two different things. Radio's introduction was a success. TV came and radio didn't go anywhere. Radio is still right here. The fact that they're like, oh, we can just pivot this all to video, and then that'll be then a podcasting.

Clearly that's not the case. It's just where the attention is, and so all those things make me sad. I'm not giving up on the podcasting industry. I think there's still plenty of opportunity, but the innovation and major successes that are outside of people like the Smartless guys or the Office Ladies women like it's not gonna come from these giants because they're not, they're focused on something else. They want it to be an IP factory and whatever else.

Jeff Umbro: They're taking what people have already figured out. They just wanna monetize what's already out there. Eric Benson, who is a podcast producer, just wrote this article that's been shared by like everyone in podcasting for Rolling Stone, essentially about the death of the narrative podcast. is something that I've heard a lot of people in the, in the industry talk about quite a bit, where it's just everyone who got into the industry to make these beautiful things and experiment with the medium and, and tell these stories that didn't necessarily fit elsewhere are now losing their jobs and their funding and their budgets and their ability to make these things. And the scary thing if, if we're to believe Eric's article, and I have no reason not to, is that a lot of the people who have been making some of the creme de la creme here. Are all now kind of burned out from the space and looking for jobs outside of the podcast industry. And that's not to say that they won't come back, but it's also not to say that they, that they will.

Lex Friedman: One of my proudest moments in my podcast career was I green-lit Missing Richard Simmons When my team at Midroll sit here was like, no, this, this makes no sense. And I take no credit for the show. Pineapple Street made that show. If Max and Jen hadn't brought it to me, I wouldn't have been a part of it, but I at least said, yeah, we'll fund it, we'll do it.

And it was a huge hit. And really what's gonna happen, I think, is that much smaller indie creators are gonna be the same way that they can make really great YouTube content. Some folks are gonna focus on making really great long form, long form's, hard narrative stuff, and podcasting is hard, but it's not, it's not dead, but it's not happening for those big companies anymore.

Jeff Umbro: I kind of think that because of this, we're just gonna see all kinds of new, the new iterations of Pineapple Street pop up from people that just have no other option other than just try and do it themselves. And they'll be really scrappy and they'll, they'll stand up whatever they're trying to do. And, and I hope it works, 'cause that's what made this industry so amazing in the first place. As somebody who has started a scrappy, bootstrapped podcast company, I know how hard that is.

Lex Friedman: The reality is that people who love podcasts still love podcasts. There's been a whole lot. Impact on the business side, but listeners are still the same way. We, we got to live through peak tv. Listeners are still enjoying a lot of the Perks of Peak podcast, where there are truly great shows to listen to.

So as a listener, I'm pretty excited. I think that when that's possible, when you can reach an effect and impact people and share exciting, meaningful, moving stories, there's a lot of opportunity. So I think it's harder than ever to launch a successful podcast and to reach people and to, to make shows, especially affordably and to find ways to monetize them.

But even though it's harder, I don't think it's, it's, I definitely don't think it's dead. I think it's still doable. I think it's gonna take longer and it's gonna be more scrappy, upstart stories. Meaning the people making the stories are gonna be the scrappy upstart. So I'm very optimistic for podcasting as a fan of the space.

I just wish we could fast forward a little bit past this current era that we're in. 'cause this is a tough spot.

Jeff Umbro: Yeah, it ebbs and flows. So thank you, Lex. This was awesome. Where, where should people find you if they want to chat.

Lex Friedman: lexfriedman.com/consulting is where people can find me. I appreciate it so much. It was great.

Jeff Umbro: We'll see you soon. We'll do a part 2.

Lex Friedman: Can't wait.

Jeff Umbro: Thanks so much for joining us on the show this week. If you'd like to find more from Lex, go to Lex Friedman, F-R-I-E-D-M-A-N on LinkedIn to hear his thoughts on the industry, or check out lex friedman.com/consulting.

For more podcast related news, info, and takes, you can follow me on LinkedIn at Jeff Umbro. Podcast Perspectives is a production of The Podglomerate.

If you're looking for help producing, marketing, or monetizing your podcast, you can find us at Podglomerate.com. Shoot us an email at listen@thepodglomerate.com, or follow us on all socials at @podglomeratepods. 

This episode was produced by Chris Boniello, and myself, Jeff Umbro. This episode was edited and mixed by José Roman. And thank you to our marketing team, Joni Deutsch, Madison Richards, and Morgan Swift. And a special thank you to Dan Christo. 

Thank you for listening and I'll catch you all in a few weeks.