Apathy is the killer for a media company, but also for any startup. You know, if people just don't care at all, I think that means you're not doing anything right. If people feel strongly for good or bad, you are making some sort of impact.
I'm Marco Dearlles and this is Undercovered. Today, we're at I Fiori, one of New York's most beloved Italian restaurants, to enjoy a delicious lunch while talking tech. Here's Alex Conrad. He left Forbes after 12 years to start his own media to tell stories about startups people may overlook. After meeting hundreds of founders and VCs, he knows what makes or breaks startup stories.
I need a flywheel of an audience getting value and feeling loyalty to my work. One way to try to build that community and have loyal readers is to ask them for 10 or 12 bucks a month. See if you know they're willing to pay a sandwich worth a month for the work. And if not, okay, so they value this work less than a sandwich. I need to be doing something better.
What are nonobvious red flags? If someone feels overly competitive in a destructive way, I think it's okay for a CEO to spend a lot of time on Twitter or LinkedIn or whatever if there's a goal for it. Yeah. But if they're on there just because they can't let go that people should be thinking about them at all times because of more of an ego thing, I think those founders will often flame out. This is not how they will build a generational business.
How do you think about AI impacting founder narratives? Are you seeing this problem?
I am so paranoid about this. One of the things that...
Alex, welcome to the pot.
Thanks for having me, Mark.
Thanks for joining me. One of the things I love about you is you don't like going through the motions. And so I want to start with a reflection. And if you were to think about a founder that you better understand today by now being a founder yourself, who comes to mind and what is the reflection you have on why?
I'm going to cheat and give you two answers. Eric Yuan at Zoom and Aaron Levie at Box. Why do those people come to mind? Because they're both super invested in their businesses right now after more than 10 years. And I've been doing Upstarts for a little over a year. And it is exciting, but it is also so hard and emotionally so draining to be a founder that I just have such new respect for Eric and Aaron and all the founders who are still running a company after more than a decade. And they're no longer like the buzzy new startup that everyone is giving flowers to, but they're, you know, Aaron is grinding on Twitter, posting about AI every day. Eric is trying to put all these new AI features in Zoom and get Zoom cool again. And I think it's just so hard to push that rock up the hill and for them to still be doing it. You know, I caught up with Eric recently and it just really blew me away.
Yeah. The long-term arc and ambition is just fascinating to watch for those guys. I guess when you think about your own long-term ambitions, give us the view for Upstarts. What do you want it to become?
Yeah. So, I started Upstarts because there wasn't a home for the kind of storytelling that I wanted to write and show in a podcast myself about the startup ecosystem. I felt like all the attention was focused on the same five names and companies and they deserve a lot of coverage. You know, OpenAI, Anthropic, SpaceX, these are very important companies. They deserve attention. But I just think it's less exciting to me and I'm not adding value to the world if I was reporter 10 covering those companies or the people. So for Upstarts the idea is that we can build a sustainable but also journalistic and serious publication that is bringing startup news to both the ecosystem and then a wider audience that cares about startups and that's across video, across short form, across writing, you know, wherever people want to get that news.
Yeah. And what does that mean for like how the business looks maybe number of reporters, number of newsletters, like what is the evolution?
Yeah. So I when I was at Forbes for over 10 years, we were not doing podcasts when I left. And so one of the first things was I want to jump right into video and audio and so we're doing that and I have one show right now, but I could imagine more shows in the future. I'd like to hire people and scale up the business. I do think of Upstarts as a startup although we are a small startup because I do have big ambition and I would love to hire people and grow the company, you know, support more journalists but in a very sustainable way. Yeah, this is never going to be one of those raise $50 million, hire 200 people companies.
Have you ever done a media investment?
I was asking you if you've done a media startup because my personal impression is that investing in media is a hard game to play. So, I'm curious your thoughts.
You know, in a prior life, I was a partner at the Chernin Group and I learned a lot from Peter, Mike, and Jesse about really content to commerce, how to build fandom, how to drive organic growth. And you're right, these businesses, they didn't raise 30, 50, or 100 million off the bat. You know, some of their best investments like Barstool Sports raised six and a half million on day one. No. And so, I do think it's a very different type of business model, but it's a very powerful one once you get the flywheel going. I will tell you it's a little tough mentally in this current AI environment to be trying to do a bootstrapped kind of sustainable growth business because so much of the energy and the thought leadership you see is you know this is the time to grow at all costs to build a generational business, you know, to avoid the permanent underclass and you know moving slow you're dead right like we've seen Harry Stebbings will say things like you know he's not going to invest in companies that only grow 30% or something and I'm like hey that doesn't sound that bad, you know, Upstarts has been profitable from day one. You know, surely there I'm doing something right there.
It's amazing. What are the metrics that matter from you at the highest level?
You know, I think the number one thing that I need is I need a flywheel of an audience getting value and feeling loyalty to my work. You know, I think if you build it, they will come. Like I need those people to be seeing the work we're doing and feeling loyal and excited by it. If I can't build a community, I think at the end of the day, I could be really good at sales, which it turns out I'm dreading sales and you know, maybe going into journalism in part because I never wanted to be a sales guy. I'm actually not bad at it. When you're a founder, you have to do sales. But if I only was good at sales and I wasn't connecting with my audience, it would all stop eventually. And so, I think for me, I'm obsessed about am I getting engagement? Am I getting feedback that I'm actually being useful? If not, how can I provide a product that people really want and value? And that is the challenge every day.
Yeah. What's good engagement look like for an emergent media product?
I think it's that you know people are writing you back in at a noticeable number saying this helped me think about something differently or I actually want to apply for a job at this company which I got with a recent story which made me really glad. And then it can be people pushing back and saying I think you missed the point here or I think you should have talked to this other company or I disagree with your thesis. But having an opinion, I think apathy is the killer for a media company, but also for any startup. You know, if people just don't care at all, I think that means you're not doing anything right. If people feel strongly for good or bad, you are making some sort of impact.
Since we're on, I guess, the topic of the business of Upstarts. Yeah. How did you think about the pay?
So I think you know Upstarts is about a couple revenue streams and at some point you have to get paid for journalism and I think you know we are in a moment where some people expect that they should get this product for free but we don't have a nonprofit or a system in place at least in the United States that supports journalism just on its own. So we got to get paid for our work. We got to get paid for our product. And I think, you know, one way to try to build that community and have loyal readers is to ask them for 10 or 12 bucks a month. See if you know they're willing to pay a sandwich worth a month for the work. And if not, like, okay, so they value this work less than a sandwich. I need to be doing something better. So, I think it's a good forcing function. But we also make revenue from sponsorships of our show, of events we do. So, I'm not all my eggs in one basket, but I do think I should be hopefully making a sandwiches worth of work for you every month.
Yeah. And how do you choose who you cover?
We're trying to cover startups from inception through IPO. And there is an interesting tension there where I want to write about startups that are not obvious, well-known. I love to kind of find those people who deserve more attention. This has been something I've cared about my whole career. And I think the challenge then is how do you get people to buy in to learn about that person? Like if I write about a five person startup that maybe has a pilot but no real customers yet, I don't think people will open that or they won't watch the podcast. And so I have to find the inflection point where I'm early but you still might pay attention if that makes sense.
And how do you define success for the current year? Do you have a subscriber goal?
Yeah, I'd say I am the kind of person who will never feel totally content. I'm always restless. I want to be growing faster than we are. But our podcast in the first two seasons got to 125,000 subscribers on YouTube. I'd love to see that grow, but I'd also love to see the engagement grow. You know what I actually care about more is I want my comments to go up. I want people to complain about the show because they are paying close attention. It's one thing to get views and subscribers, but I want to build a community there. And so, that's something I'm really watching. And then on the newsletter, I mean, would I love to add another 10,000 subscribers? Maybe your show can help me do that. But honestly, I think if we're building slower but getting loyal readers, you know, like let's say I get 10 comments on an article, if I could get that to even 15, I'll feel like I'm growing somewhat.
Yeah. I'm curious like when you think about the most important metric for a startup to have that early momentum, is it revenue? Is there another KPI that kind of gets you excited? Is it as obvious as I might think or Yeah.
Yeah. I think I look a lot at organic growth and really the source of that growth because it helps me understand is this a pain point that's really undersolved and customers are coming to you velocity and how much are they willing to pay without you actually have to market to that.
How do you know if a company is the sort of medicine or the vitamin? Because I think you know one challenge I had with Upstarts is sometimes I think people see the writing we're doing about startups as a nice to have but not a need to have and that is the challenge when you're like we are not writing about OpenAI or we are not writing about I mean we'll write about it occasionally but I'm not focused on OpenAI I'm not focused on public equities where you can move stock trades and I think a trader who wants to make you know immediate decisions with dollars will pay a lot of money for something that could affect their stock analysis. They might not pay for, you know, hey, this is a cool series A startup that you should have on your radar. So, kind of finding that medicine versus vitamin balance is a challenge I have. I'm curious if you've seen anything that kind of is a good indicator there.
Yeah, I think pricing and so one of our largest investments just took up pricing by 50%, they saw ACVs grow 96%.
No. And the return stayed stable. This is a problem that's becoming more and more relevant, frankly, higher cost. And so they're in the right market at the right time. I don't know if it works for every business, candidly. I don't know if you can just tape up pricing by 50% as an emergent media property.
Do you think it would be better to have like lose customers but have people very loyal and willing to pay more or lower pricing to get more people in the door? Broadly speaking,
I think better to lose customers. You want to find people that you solve the biggest pain point for and then bundle in more value into that?
Yeah. You know, it's so funny like I see all this startup advice. I learn it right and I one I've definitely internalized is people saying you know better to have a small passionate customer base than a lot of people who are sort of meh about your products but then when you're in the attention economy it can be very hard to let go of potential attention.
Yeah, I want to talk about that. I think you know one of the things around the business model that you've talked around is around IP ownership. Like how do you view that like as you hire you know reporters directly under you? Like how do they scale? Do they own their brands? Like what is the model that you think makes sense?
You know a real challenge of traditional media is that at some point they are creating a profit margin from their best talent. You've seen this wave of independent journalists strike out on their own like you know Eric Newcomer, Alex Heath, Alex Kantrowitz, Joanna Stern, all people that I subscribe and admire. And I think it's in part because they were at places like Bloomberg and the Wall Street Journal or in my case Forbes and they at some point felt like they'd maybe hit a ceiling and they were creating more value for the brand. They weren't getting it back from the brand themselves. And I think a lot of us wanted to sort of control our own destiny, control more of the upside, have a more direct relationship to our audience, and so we go independent. Of course, I'd be a hypocrite if I then turned around and started hiring people and saying in the long run, you're just creating a profit for me. There's a reason that Upstarts is called Upstarts and not, you know, Alex blog or whatever. You know, you might say Newcomer got lucky that he had a pun in his last name, but I don't think Konrad quite works the same way. Although my column in college was Pros and Cons with a K. So I did kind of have the cringy. It was a good college thing. I think we've moved past that. But Upstarts is supposed to be more than just me over time. I think people have a relationship with me right now. And so I am very intertwined with the brand, but over time I need to find ways to kind of launch people and support them in their upside while also kind of feeding back to Upstarts. And it's that symbiotic relationship that I think will be special.
When do you think you'll launch your first person?
That's a great question. You're not my investor, so I don't have to give a board deck to explain this, but I think I'm going to start a little modularly. We already have part-time help on business development, on producing my show, social media, and I think I'm going to start to sort of rent to own where I bring in more freelancers. I can pay people to do more sort of collaborations and then if it looks like, hey, you should be full-time under our flag, we can grow you. I'd love to in the next 3 to 6 months start to really actually scale.
Yeah. When you think about, I guess, covering the current AI boom, what similarities and differences do you see to the booms you've covered in the past, whether it was the SaaS boom or some other track?
Yeah. So, when I started my career, mobile was like the big thing. And I remember getting pitches like Justin Bieber invested in this mobile app, you know, Maze Runner or whatever is the exciting new game that everybody's playing. And I definitely like bought into that hype a bit, but I also saw how these mobile games could kind of come and go and you know, you were trying to catch a moment and maybe sell or you know, profit and then get out before you lost popularity. Do you remember there was like that...
Flappy Bird or something?
Not Angry Birds. There was a flying one that like one guy created. I think he was in Asia and it made millions of dollars and it was like a phenomenon and then he just shut it down and just disappeared.
Okay. Well, maybe we can put this in the show notes or something, but it was one of my great things where it was like the solo developer who cashed in big and then just like mic dropped and walked away versus the mobile game developers like an Angry Birds that scaled huge and then they had to kind of keep justifying that growth, you know, and obviously there have been successful gaming companies, but a lot of those companies ended up selling or not really sustaining that excitement.
Yeah, the comp I see today in AI is some of these application layer companies where it's possible that legal AI legal is just such a big market that it could sustain five decacorns or it could be that everyone is just in a race to be sort of the one big winner you know and if you look across the app layer I think it's both an exciting time to be building and a question of like are we building on stable foundations you know I also came up in this cloud wars between Amazon and Google and Microsoft and I think they're interesting comparisons between the initial hyperscaler kind of battles and pricing battles and what we're seeing from the big AI labs.
Do you feel any sort of deja vu there or...
Yeah, I think for the definitely for the cloud wars there's definitely an oligopoly structure that feels like it rhymes. I think there's a lot of differences.
You know there's more applications that have a more usage than ever. I think there are more B2B to C models that touch the consumer in a different way.
So would you say it's more like maybe broadly the rise of the internet where you know hundreds, thousands of internet companies you know benefited?
Yeah, we weren't there but I think we both like history. It does feel like that.
Yeah, just as an outsider but it's hard to know without us.
Hey I was one of the first users of Google as a like 8-year-old or whatever. So one of the first...
Well, I mean we were very early. I was at least the first of people I knew in New York City. You know, everyone was using Alta Vista and Ask Jeeves and stuff and they thought I was stupid. But yeah, I guess Yahoo. Yeah. I told my dad I was like, 'You got to get into Google if it ever goes public.' And...
Yeah. Good for him. My stock tip as a school kid.
Yeah. So, you grew up in New York City?
Yeah, I grew up in Manhattan. Now I live in Brooklyn.
I guess switching gears a bit, media has this tension around measuring consensus and reporting on that but also manufacturing it in some way. And I think you had a unique role given Midas list, Cloud 100 where you had to walk that line. Give me a sense for like how you walk that line, how you think about that problem.
Well, the most fun thing about doing these lists was always meeting people that were not yet obvious who were up-and-comers that then you could sort of develop a relationship with you know so covering venture capital and doing lists like that allowed me to meet a lot of our peers like a Sarah Guo or you know friends across the industry who now run firms. They're getting a lot of deserved accolades and you know I met them relatively early kind of like I guess you as an investor when you're meeting an early stage startup and you're like I knew you back when and that's the most fun of course getting to meet the already obvious companies is cool too and I've gotten to cover you know did a cover story on Stripe and Zoom and you know Salesforce and all these companies and that's fun but when I think back like the best part is like the Cloud 100 had a rising stars list of companies that have raised less than $20 million. And I met Melanie Perkins from Canva when they were like pretty tiny.
And Melanie is just like there as a rising star. And I'm like, 'Hey, great to meet you, the Australian.' And you know, fast forward a few years in 2019, I write like a big cover story on Canva that was the first deep dive into the company and they were already worth billions and like I don't think I would have been invited to Australia to do that if I hadn't met her through that list process. Yeah. So for me it was an information advantage to get stories to get relationships. Of course then we want to showcase positive players or people we think you know you should know. And so with the Midas list for example we would never play favorites. And so you couldn't opt out. And if you you know whatever your politics or whoever you were if you deserve to be on the list you would make the list. And so I could be a little bit of sort of a thankless job holder there where people would complain to me and it's like you know I'm not doing anything. I think that one's just the data and if they didn't provide the data, they weren't on the list.
We would use all publicly available data and then hundreds of investors, thousands over the years would submit data confidentially and with Forbes's data partner and that data of course would help. But there was definitely a misconception that if you did not submit you were like opting out you did not get to opt out. I actually think lists that allow you to opt out lose their credibility because then if someone's not on there, you don't know is it a bad list from construction or because they're too nice and they're just saying, 'Oh yeah, you know, big VC firm will let you skip out, you know.'
And in the years you built these lists, was there something you changed in your process over time as you kind of had a sense that someone was either trying to game it or there was a better way to do it?
Yes. You might be aware that some VCs have egos. Yeah. Have you seen that, Marco?
Okay. Well, let me tell you then that some VCs have sensitive egos about their big deals and the attribution. We actually see this today where even when it's not malicious. You see, you know, folks on social media saying, 'Oh, Cursor was just a huge acquisition. Who was the person who really sourced that deal at a firm?' You know, how many investors should take credit for that deal? Some firms like to say publicly, 'Oh, we're totally a team player and everyone was equally involved,' but they don't necessarily say that to their LPs behind the scenes.
They don't pay people that way.
They don't pay people and they might have key men or women who they get in trouble if those people leave. And so my job, which was quite thankless at times, was to try to get that real answer, not the sort of kumbaya public answer. And we weren't looking to cause drama, but we were looking to sort of credit the best person. So for the example with the Midas list, Forbes would allow up to two people to take some portion of credit, right?
But that could create interesting situations. For example, I'm curious your thoughts. Let's say an investor leads around in a generational business, but they leave their firm after two years. It takes another, you know, eight years to go public and another investor at the firm is on the board and really intrinsic to its success over that eight-year period. Should the credit mostly go to the guy who sourced the deal, who left at the beginning or should it go to the person who didn't make the deal but added a lot of value or should it be both?
So my answer would be a little bit different in that I think there are three meaningful inflection points in the relationship, not just two.
Sure. I was trying to be overly reductive, but yeah, give me your three.
Who brought it in? Why did the company choose to meet with you and prioritize a time? I think often that is a junior person, just given how firms are structured.
Who made the decision on the yes/no decision to invest?
Which is often a managing partner or senior person.
And then who drove value during the duration of the investment.
Right. That's actually a very similar framework to one I heard when I wrote a profile of Founders Fund a decade ago and I focused on a new Midas List member, Brian Singerman, who was like a growth investor there. He left more recently. Yeah. But really good investor. He basically was like, Alex, there's only three things you do in VC. You find the deal, you win the deal, you help the deal after. That's it.
And I think you're dead on there. But I guess my point was that sometimes different people do different of the three over time. So yeah.
