More often than not, the coolest, newest thing is born of people of some experience because we're really not doing super new things. We're doing things we have always done since we were in the caves telling stories by around the fire. We're just doing them differently and better. I guess a prediction for 2026. I feel, you know, there's going to be a big landscape of businesses changing. I think live events and being able to engage with brands in person. I just feel like that's, you know, that's just something that's going to continue growing and something at least that I feel is going to just keep getting better and better. And what's going to define the next 12 to 14 months is this bringing together of all the amazing things we're doing with AI and technology, but also all the amazing things that human beings can actually do on their own. And you see that live in person and things like the Olympics.
Welcome to the Lion Tree podcast. The podcast which elevates the people, the relationships, and the communities behind the headlines. I'm Lion Tree's Alex Michael. Welcome to the Lion Tree podcast. I'm very excited for our next guest. He's a man I've known and admired for many years. His name is Tim Armstrong. Tim was an early sales leader at Google in the early 2000s, opening up their New York office and championing much of their sales effort in those early days. He then went on to run AOL and then most recently before his latest endeavor, he ran Oath for Verizon and now he's got a new business. Well, it's not so new. He's been doing it for the last several years, but a company he founded called Flow Code. Flow code is a company built around a simple but powerful idea that most of the economy still happens in the real world. Yet for the last 20 years, we've built almost all our technology for what happens on screens. Flow code sits at that intersection connecting real world experiences directly to digital engagement and action using QR codes. We'll talk all about that technology and much much more with Tim. Tim, thank you for being here.
Alex, good to see you. I've been on the other side of Lion Tree for many years and so I'm like welcome to this side. Nice to be at your table.
We're very glad to have you. And of course, this is all off the record.
Yes, off the record podcast.
All off the record podcast. No one listen. Everyone leans in now as we talked about. But I want to start there. There's so much to talk about with the arc of your career from early Google days to AOL to Oath and etc. But we're living in the present, Tim. We're living with your current project which is Flow Code which I talked a little bit about in the intro. Tell the audience what Flow Code is briefly and why this was such an important next chapter for you.
Flow Code's very simple proposition which is 81% of the economy is in the real world and you know other than the seven people on the international space station most of the value that happens with humans happens on the surface of the earth and so Flow Code is the simple proposition behind it is connecting the real world economy to the digital economy and that's what we do and you know as Flow Code has gotten larger and we're working with more partners that simple proposition of having a consumer in the real world have a digital experience that feels like the internet, but it's in the offline world. It's frictionless. It's fast. You get to directly connect. Our mission statement is instantly connect fans to brands. And so, I think the ability for brands and fans to connect in the real world is like a sort of like a new surface area for the software that we do.
So, how tell us how that actually this isn't Pokémon Go. You're not putting AR into the world. You're doing this through codes.
Yes, we do it through codes.
What is that? Yeah. What is the code? Just give people who have no idea what this is about.
Sure. So our business started this is before the pandemic with a very simple premise of making that connection point the same way it happens in China and other countries where the majority of the consumer economies connect through QR codes in those countries. And we came back to the US, decided to launch Flow Code. And the premise was to take QR codes and have them be one designed well and brand centric, but two is really to start to build a software component and platform behind them that allowed you to do more sophisticated tracking, conversions, those type of things. And on the QR front, what I like to say is really the QR code's a touch point. You know, we have other technologies we do like NFC and other types of connection technologies, but really what our business proposition is around the code is really a touch point, which is if you're a brand and you have consumer channels that are in the real world, you know, you should enable those touch points with consumers.
So QR that's an old technology. It's been around, I don't know, since the beginning of the internet or like how long?
Yeah, it's actually it's a long story, but QR codes are essentially more dense versions of software than 1D barcodes. And they were built originally to really help tracking happen in a more deep way for products, services. And they were developed out of Japan and they have gotten a lot of traction over the years. Except for in the business world, except for when they tried to turn them into a consumer product about 20 years ago. And I like to say it was the worst new product introduction since New Coke. And in that sense, they basically put out QR codes, but you had to have an app to connect to it. So there was an immediate friction for the consumer, which there had to be an app behind it. And late in 2017, basically, they took away the need to have an app behind the QR code. So now QR codes can really connect to anything for the consumer. And that really fixed the product issue with QR codes, which is not every experience you're going to have in the world you want to connect through an app. So once they took away the necessity to have an app behind the QR code, it really changed a 20-year-old product to something that has become very relevant. And I think you can see it out in the real world, you know, and almost...
It's a lot in payments, right? Venmo, you use it a lot there. But give us the consumer walk through. Well, I guess both sides in terms of your deployment with Flow Code. How does you see a code on what I saw one actually I was at a hotel and there was for ordering and other items there were your codes, right?
But give us those examples and how it actually work.
Yeah. So I'll give you a couple just really simple examples. The simplest example is we work with Delta as an example. So at Delta, at the airports, if you go, there's Delta flow codes at most of the gates to get service, you know, to help you with your change your flight. We're on the planes on the back of seats. And the Delta flow codes essentially take the Delta ecosystem. And Delta has multiple prongs to their ecosystem from service to commerce partnerships to sponsorships to travel information. And we basically put a frictionless touch point on the front of their different, you know, data sources or consumer information that they want to get out to the real world. So in that case, Delta will use us in a multi-platform way across their business. And if you were in the airport in the last month, you would have seen flow codes at your gate on the seat you sat down with on a Delta flight and you would have seen it on the Milan Olympics. So they were using it for marketing conversions as well. So really the easiest way to think about it is the same way you're on a Delta website and they have a navigation or they have offers they're making flow code becomes that in the real world for Delta.
Essentially you're enabling a call to action with Flow Code but the action happens right there because in the old radio days you'd put you know at a vanity phone number if you were someone or on a website you'd be slash Armstrong for some offer. Here it's just the connectivity is through the code right there when you see it and experience it.
Yes. Unless you have attribution. Yes. Well, there's multiple steps there. The initial touch point is the connection point. The second piece is the experience. Where are you sending people and what are they getting? And then the third piece is what are the analytics and personalization that you're able to do behind the code. So our system that we built at Flow Code and we were the first ones to build it has the connection point technology. It has an experiences layer where you can plug into multiple experiences and then it has analytics and personalization on the back end where you can basically personalize the experience. So as the person connects to more of your codes over time, you can start to personalize things the same way that you and I both get a different, you know, Amazon page when we're shopping in the real world. You can start to have differentiated experiences with personalization behind it.
And so why what was the epiphany to do this now? Like what you've again you've had and again we will talk I keep teasing it but you've had these inflection points that you've participated in the last 25 years of technology.
Again not a new technology a new application.
What captured your imagination about this like why now?
I'll tell you what happened is at Google basically I was there from the beginning of Google to when it was...
I started in 2000. And my apartment in New York City was the first office outside of Mountain View on 86th and Columbus. And shout out to Howard Schultz. He allowed us to use the Starbucks next to my apartment for all of our meetings. So probably for the first...
Yeah. I told him I had said like, 'By the way, the manager at the Starbucks 86th and Columbus has been amazing.' And he was like, 'Oh, why are they amazing?' And I said, 'We're actually having all our Google meetings.' You know, we would tell them the days we were going to do it and they would let us use they had a table at the front of that store. So in my Google experience, I really learned the real fundamentals of the engineering I think behind the internet and also how important data was like we did a lot of things in ads that were no one had done before using data. So that I basically learned from my early days in content and then into Google how content and data mixed together. And then when I went to AOL, AOL was on the outside. It was like a company that people had stopped believing in. And you know, we went in with a very specific strategy and ended up turning it around. But in that travel at AOL and the travels at AOL, the internet started to change. The smartphone came out, social media took off. So you ended up with the, you know, the super large seven or 10 companies controlling all the traffic on the internet. And Flow Code came out of the fact that I was like, if you went forward 10, 15, 20 years, it's unlikely that every brand in the world and every fan in the world is going to want all their data to run through the big internet companies. So I was like, what would be ways that you would have other systems around that? And I was actually traveling in China for work and I was reading Walt Disney's biography on that trip. And in his biography, he had one line in it that said, 'Hey, I'm going to build the Disney parks because I don't want people to go to the movies anymore. I want to have them star in their own movie by going to one of the parks.' And you know, that stuck in my brain on the ride over to China. And when I was in China, I was actually going to look at facial recognition technology and other types of technology. And one day in the afternoon, I hadn't eaten all day. I was late for a meeting. And I ended up buying noodles on the street in Shanghai from somebody from a QR code that didn't go to an app. And while I was in the meeting looking at the facial recognition technology, I in the back of my mind, I was like, why wasn't there an app behind that QR code? So that night, I went back to the hotel and I went and read a lot of documentation about QR codes. And that night I was like basically if you can have that frictionless technology and have it branded in a way that consumers would care about and brands would care about that might be as good as facial recognition in terms of how people think about transacting. So came back to the US and started to build Flow Code kind of as a hobby. I wasn't like...
This is 2019 into 2020. And so I hired a few folks, hired an engineer and just started testing the technology and basically did that for a year. And as I tested it for a year, we started to learn a bunch of things. And then that learning kind of turned into customers seeing what we're doing and them asking about it. And then we ended up that year doing a major event with about 40 brands to just you know really test the idea and that's what started the journey. It was kind of a natural evolution of thinking about where the world was and then starting to test and getting to the point where that initial kernel from Walt Disney is like I think you can have really good experiences micro experiences out in the real world with technology. That side of the Walt Disney story and then the other side was actually being in China going to look at different types of technology but having the QR code come to the top of my radar screen and you know it was a little bit like Reese's it was like peanut butter and chocolate coming together and that's what built Flow Code from that day.
Amazing. And how many people now?
We have we don't release any of our numbers but we have roughly over a hundred I'll say.
And you've raised a bunch of money.
Okay. You won't say how much right?
We have great partners. Enough.
And just last thing on Flow Code how do you monetize these cards what's the business model?
Yeah the main business model is SaaS. So we essentially have a licensing model where people license Flow Code technology and they typically implement it across you know their business different business units so it ends up being very economical for people because we have like a very high quality not ultra-high cost product that is very scalable and works well so you know part of our goal is to really help businesses get this off the ground. As you can imagine, you spend a lot of time in different businesses. You know, really thinking about the real world in the way that we're thinking about it. If you go to companies, almost their entire staff is certified by Google, certified by, you know, Meta, certified by Amazon ads, and you know, very few people are certified in the real world. So that's one of the things that we it makes a business challenging but it also makes it rewarding because it's kind of like more open field area.
So you sit in a very interesting dimension because in some ways I think you're representing the anti-AI trade because we have to talk about AI of course we get paid by AI. I joke like an angel gets the t-shirt paid by AI. There's no paid without AI in it. But I just came up with that. I should go. But you're living the real world which is the anti-AI trade, right? That's why we see this live events thematic that's going bonkers because I can put my head in the sand and believe people go to events, sports, whatever. At the same time, you just said you're a SaaS business or SaaS model at least and you're dealing with technology that is not bonkers complex. It's QR codes at their heart. So how do you think about that juxtaposition?
Yeah. Well, we use a lot of AI in our product and I actually don't think they're opposed at all. As a matter of fact, I think that you know, this has been written about a lot, but I think the benefits to AI are going to start really they're stacking up online for sure and in people's digital businesses, but I think they're also starting to stack up in the real world. And I think that, you know, our business, our job is to connect fans and brands and AI is an incredible connection technology on accuracy, personalization, those type of things. So while people might see our business as anti-AI, we're pro-AI, really what we are is we're pro-IRL. And again the same thing I said in real life in real life is I don't again same way I'm about QR codes or NFC or any other connection technology our mission statement is instantly connect fans and brands and if AI is going to help us do that which it is we're going to invest in it and not only that but I think for consumers and for brands I think since the internet and probably the mobile phone it's one of it's amazing to see how fast the pickup has been on both sides with AI. So I think we don't think about ourselves as AI or not AI. We think about ourselves as sticking right with humans. As fast as humans are going to move in business and consumer, our products have to be, you know, probably one step ahead of that. And they are today. And so I'd expect Flow Code over time, you know, to be seen as close to matching the business cycle and the consumer cycle as possible. And I try not to have opinions about things. I try to have like what are humans and businesses doing and our products should be one step ahead of those.
Okay. Now you mentioned fans. Anytime I hear fans I think sports we do a ton in sports. How just quickly how are you using Flow Code there?
Maybe some let me just I should have hit on this earlier but the reason we call our consumers fans is because the true definition of a brand is whether or not you have a fan. And you can have one fan and you can be a brand and you can have...
Even if you're dish soap, you have fans.
Yeah. You have fans and really as a brand that's what separates you know they always say the margin is in the magic and you know I think the margin for people's businesses is in the fan how the fan thinks about you and so we try not to use the word consumer at all. We try to use the word fan and sports is one of our fastest growing and biggest verticals overall and a lot of it's because a lot of it's IRL as you know and another piece of it is that the fans you know fans of sports teams you know they love to connect and I think that that's a vertical we have a lot of verticals where there's a lot of fan fandom in general so I'd say sports right now today we're in pro sports college sports high school sports amateur sports and I think that sports kind of owns the weekends at this point and so I think if you think about the places our business is relevant it's where people are spending a lot of time in the offline the real world and so sports is obvious for us. It's also how we've built we have a saying at the company the product is the team and the team is the product we have a very kind of sports driven culture. So I would say that that word fan is at the center hub of what we do and how we think of even non-sports businesses.
So, let's go back to the AI relevance here and how you've been on the wave of so many of the digital transformations, right? And Flow Code is now part of it. How do you separate the hype versus the noise in your career as it pertains to these technology breakthroughs? Like I'm curious as your perspectives and then bring it to today like what do you think of the AI moment?
I started a newspaper in Boston in Cambridge Square when I was just out of college and I saw the first internet browser at MIT. The guys from University of Illinois were there for the day and a friend of mine called me and said you should come down and see this thing. So I was publishing a physical newspaper. I had sold my car to learn how to program a Quadra 650 which was an Apple computer. So I was writing my own publishing software to like publish the newspaper. And I saw the browser come up for the first time and in 5 seconds I was like how do you publish the content on that browser? How does the content get published? And I saw right away that it was 100 times faster than doing my newspaper. So I left that meeting went back I had a co-founder and I said to the co-founder, we're selling the newspaper and doing the internet.
And that quickly you just knew it?
No, this is 93, 94. So it was so obvious and this is the I'm going to answer your question on how do you choose good...
How do you choose technology?
You use the technology. And so because I was so deep in using the Quadra 650 and the software around publishing the newspaper when I saw the software that the browser was running on and then I went into how do you actually publish the content on the browser it was instantaneous because I knew one layer of software I was doing to publish a newspaper and when I saw the other technology. So my lesson in life and I've done this I do it every day at work is I use the technology so I understand it and once you understand the technology at depth it will change your perspective when you see other businesses. So I'm 100% sure AI is going to be a monstrosity success. I'm also 100% sure that there are a tremendous amount of pets.com out there. Okay, for sure 1,000%. And the way I try to do it is I try to get my personal compass aligned which is how does the technology actually work and do you know how it works and then when people come in with ideas you have to have a multi-layered cake because on the surface a lot of AI applications are magical but then you have to go into the application layers the data layer the ability for you to have a moat around your business and so I think that but you only can understand that if you're actually in the technology itself. So like at work we did a thing called Tuesday AI which is we took Tuesday and put AI at the end of it and we took our whole company and forced everyone in the company to start we had a session every Tuesday where every didn't matter what job you were in this is a year ago a year and a half ago basically had to build your job with AI and so when you fast forward today the things that we're doing at AI at Flow Code I don't have to put a dictate down we don't have to have an AI strategy session about it we have individual people at the company building things in their job, components in the product that are AI-driven. But it's only because I took that principle I learned the day I saw the internet browser and applied it to my personal life.
You have to play with it. You have to get deep in it. And only from there can you start seeking the truth of what you're hearing, seeing, and trying to...
You don't have to do that.
Well, but that's what you're saying that's your best.
I'll tell you a controversial story about this.
Good. Okay. You love controversy.
When I was at Google, one of the projects I started and worked on was Google TV where we were going to basically download TV was sort of what YouTube TV is today, but we were going to put ads in TV streams. And I spent a huge amount of time learning the technology behind the TV business, head-end technology, all the way down to the core studs. And I would go meet with the CEOs of some of the biggest TV networks in the world because we were pitching how are we going to put ads on TV using Google. We had intercepted a satellite feed. We sucked down a satellite feed. We were recording everyone's TV stations. So I was like sort of deep in all that stuff. So I would go to meetings with executives that you would know if I said their names.
And I would start describing what we were going to do and I would say pieces of technology in their stack that they had for TV and they would be like what's that? And after like a few meetings I realized that most of the people who were running those networks at the time did not actually know how the systems were actually working in detail. And so that was another lesson for me that like when I was in those meetings, I was like here we are coming from Google trying to be helpful to them and help get ads and increase their revenue. And part of the reason we weren't able to have like super coherent conversations was some of the people that needed to make those decisions didn't actually know the tech. And I remember being in those meetings thinking, man, that lesson I learned on the internet browser that don't ever forget doesn't matter how big you are in your job, how big your company is, you still have to know the basics of the technology and that I think connecting all those dots together is you especially in the age of AI, if you're making strategic decisions and you don't know how it works, you don't have Claude or Copilot on your machine or you're not using AI to sift through your data as a business. I think you should get the people in the room who are using it and I have many many many examples of that during my career and but it's always it's helped me out a tremendous amount.
I love that. No, it's a good lesson and it's one that I think people intuitively understand that you know it also gets me thinking of like working the register before you run the business. Like you need to know how to...
You have to know the business.
And so you've lived it. Curious, this is related to Flow Code. We had a guy named Scott Belsky on the program a couple shows ago and he was talking about in this AI world where there is so much generative content there is this there's going to be a demand for authenticity and it seems to me that the QR code is actually a great way to attack that whether it's a product, a show, etc. that people want to see behind the scenes and what makes that human even in the face of AI. I'd love your opinion of that.
I think that strategy of authenticity and I think that has been missed in multiple generations of content and the reality is that humans are very very very attuned to get information from the best source possible that they think is most authentic and the companies that take the risk to put authentication on their content I think are going to have a really substantial benefit and I was with the CEO of a really large international luxury goods company and I asked him I said what if there's one thing that you would change about your business what's the thing that you would change and he said I would take all of my marketing spend all of my media spend and I would put it against influencers.
And I said why why would you do that?
He said I think influencers are the most authentic form of marketing. And as things become less trusted, less real, that is the place where you're going to be able to get the authenticity and trust. And so I think that that's an interesting viewpoint from somebody who probably I'm going to guess 10 years ago, 5 years ago, was doing everything they possibly could to be in, you know, you name the fashion brand in general. But the person's mentality and I asked, 'Are you going to do it?' and he said, 'I don't think I could pull it off with my culture. I'm trying to bend everybody in that direction, but it's going to be tough to do.' But he's like, 'If you're asking me honestly what I would do, I would do that.'
So interesting. And we're also obviously seeing a lot of brands been going to real life events, whether it's runway shows or other things as well as out of home. It's been interesting to see that shift. But influencers, same idea. It's authentic, right? Which makes complete sense. Last question on the AI side. Have we forever changed search? You were at the beginning. And we've had this great run. Headlined by Google, but not exclusively, but pretty exclusively. Has the paradigm completely changed? Like, where do you see this going?
Yeah. I think you know, I've said this public, I should have branded it like got trademarked it, but when I first got asked about it, I said, you know, Google and search is a question engine and AI is the answer engine. And you know, I think there's a few things that are undefeated in world history. One is speed to answers is undefeated. And so if you give someone a choice of, you know, 15 or 15 million links as an answer to sift through of something you want versus, you know, you're going to get 80, 90, 100% the direct answer, you're going to choose the direct answer, you know, every time. And I think that's been proven out already. You can see the disruption with AI. I think the more interesting thing though, and this is another hot take is, and I've been saying this for the last couple years, is you know, advertising is going to get astronomically expensive. And so that...
Well, for a few reasons. One is just space is limited. So like when you get an AI answer, like if you talk to most major brands, their traffic is down 7 to 40% right now. So getting traffic and the space to get traffic is limited. So, people are going to pay more for it. The results are going to get better. So, they'll pay more for it. But the third thing is there's going to be less bad human decision-making. So, I think when you think about the amount of I'll call it bad human...
Decision breakage in the economy is pretty high. I think over time AI is going to bring that down. So that's another surface area that's going to get condensed down. So you're going to have a case where again there's probably going to be big gatekeepers, which there already are in AI. You're going to have less space. You're going to have better results and you're going to have fewer humans making fewer bad decisions. So that compact space is going to get exponentially more valuable. And then the real thing the second generation of AI is going to do, it's going to force companies, which goes back to the Flowcode thesis as part of it, is you're going to have to have direct relationships. It was already important in the age of the big internet platforms. If you fast forward AI for two, three, four, five years, if you don't have direct relationships, you as brand or business or a human too, but you need to have that customer.
Whether it manifests in subscription or just however it manifests, but you need to have it.
And by the way, there's a lot of latent relationships that people don't take advantage of right now if you're a brand. So most of the brands in the world basically have loyal membership-level customers that they don't treat as members right now. And I think that's an area where you're going to see over time that relationship has to shift. And I think the inside of companies, the way they think about their customers will have to change pretty dramatically.
AI should enable that, right? They'll let you know Tim is Tim and he...
Let's put it this way. If you don't get deep on your business and you don't understand how to make AI work and you're just outsourcing all your AI to a big platform constantly and they're becoming the gatekeepers, you're going to have the Hulk Hogan of AI gatekeepers in front of you if you don't get on top of this and get on top of it really.
So related to that, where do you think there's been this big downward pressure on SaaS companies and software? Do you believe in that as...
I think it's oversold and I'm not saying that because we have a SaaS model. It hasn't really affected our business, but I would say I think the SaaS business is oversold right now only because again going back to understanding the product underneath SaaS. The product underneath SaaS is SaaS helps you make your entire business network work when it's done properly and I think AI is going to be injected in all the SaaS companies already is and it's already doing amazing things but you're not going to get away from the fact of you have international operations, government issues to deal with, legal things, contracts you sign, like AI can help you figure out the contracts you're signing and what to do and how to make them better and more frictionless. AI is not always going to be able to understand the nuances between the government regulations, your contracts, what your competitors are doing. Over time, we'll eat more and more of that. But there's a big need still for SaaS in the economy in terms of how software actually operates in your environment.
Is that a matter of time though, Tim? Because I'll just push back like you talked about having a newspaper. Newspaper circulation I believe peaked in like the early 2010s, believe it or not, even though the writing was on the wall in 2000 as a disintermediate classifies in the revenue engine. Is this a timing question or are you saying there is a life to SaaS that is different than what people are sort of feeling that this is a matter of...
I think there'll be a different SaaS.
I think there'll be a different SaaS which is the SaaS will be basically a combination of the tooling it's doing for you real-time and the ability to run your business the way that you need to run your business. So, here's what's going to go away in SaaS. Big iron SaaS is going away where you're jamming customers for complexity integrations and those things. So, I think the larger SaaS companies that are running their business models on complexity charging, I think that's going away. I don't think software as a core fundamental value proposition to be on a platform and customized for your individual business needs is going away anytime soon or the AI companies will end up in larger SaaS models where they're doing more customization.
They marry it together. Yeah. Interesting. Last, I keep saying last question but I could go on and you've been around so many of these trends. Does AI from a query perspective end up looking like search when it's all said and done? You said there's less real estate. There doesn't have to be less real estate.
