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Dear Music Fans… (Season 3, Episode 4)

Business ain’t Yeezy.

November 10, 2017
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LISA CHOW: From Gimlet, this is StartUp. I’m Lisa Chow. And I want to tell you about a special project StartUp is working on. Coming up next month, we’re going to do something we’ve never done before. We’re making a five-part series that we’re going to drop in a single week. It will be in your feeds starting December 11th and running for five days straight. And it’s a story about a bunch strangers who go on a road trip—a very unusual road trip—and try to get their biggest ideas off the ground. We’re really excited about it. The whole team is working hard to get this series together, including Eric Mennel—he’s actually hosting the series. You might remember Eric, he’s been on the show a few times, and he’s also reported for us. So while we’re working behind the scenes to make the series happen, we’re going to replay a story of Eric’s. It’s one of our favorite episodes from a couple of seasons back. And this will be the last episode in your feed for a little while—but then we’ll be back. Okay, let’s get to the show today.


LISA: A couple of years back, a music streaming site called Grooveshark shut down. At the time, Grooveshark was nearly a decade old. It had tens of millions of users and was one of the largest music streaming services in the world. Its death was marked by a bunch of headlines and a couple of think pieces, but what they didn’t reveal was the novel that played out just beneath surface, as the company fell apart. We’re going to hear that story not from the founders but from a small group of early employees—people who bought into the vision behind Grooveshark, and helped grow it from an idea, to a business. At its peak, the company employed more than 150 people, earned millions in revenue, and drew the ire of an entire industry. And when you help build something like that, it changes you. Grooveshark was born in an unlikely place, far from Silicon Valley, in a small city in central Florida. Reporter Eric Mennel grew up in the same suburbs as the people who started Grooveshark. And a quick warning, there is some swearing in this episode. Here’s Eric.

ERIC MENNEL: Gainesville, Florida is a college town, home to the University of Florida Gators. It’s right in the middle of the state, about halfway between Orlando and the Florida-Georgia border. The best restaurant in town is Satchel’s Pizza, and the best table at Satchel’s is actually inside a gutted 1965 Ford Falcon van. One of the best things to do at dusk on a Friday is to go out to the bat house, which, as you might have inferred from its name, is a barn full of bats. Hundreds of thousands of them. And as the sun goes down, they swarm out into the night to the delight of young couples and alumni in town for the next day’s football game. This is where Jack DeYoung grew up. Jack’s tall with curly black hair and the kind of tan you’d expect on a boy from Florida. At 21 years old, he was working part time at a used bookstore in town.

JACK DEYOUNG: Not very much direction, and that’s a really kinda polite way of putting it. Yeah, I was fairly listless and kind of looking for something—something big to attach myself to.

ERIC: One day, in 2007, Jack met up with a high school friend. The friend had gotten a job with a brand new startup in town—a company called Grooveshark. It was a music download site that wanted to end piracy, to get past the legacy of illegal file sharing sites like Napster. That sounded great to Jack, so it wasn’t long before he landed an internship at Grooveshark. He spent his first two weeks sneaking into the office early so he’d look like the hardest worker on the team. Then, one night, at 4am, he got an email from Josh Greenberg, the company’s co-founder.

JACK: Saying that he wanted to bring me on I think as a customer service representative. I suspected he knew that I would be awake at that time because we kind of all were. I replied to the email immediately and said, “Would you mind talking with me about this in person?” And he said, “Sure, come on over.” And I drove over to his house which in Gainesville is the long commute of 5 minutes. And then we talked about it for about  two hours.

ERIC: So from like 4am to 6am you discussed your, your employment conditions.

JACK: Pretty much. And I just blindly agreed to all of them.

ERIC: Jack was so excited he called his mom. “I’m rich,” he told her. The job paid 24 thousand dollars a year.

ERIC: Grooveshark was the brainchild of a Freshman at the University of Florida—a guy named Sam Tarantino. Legend has it, Sam was driving by a used record store one day and thought, all I have are mp3s. Wouldn’t it be great if I could sell my old ones online? He imagined splitting the revenue three ways: one part for the seller, one part for Sam’s company, and one part for the musician. Sam was a business guy, a visionary, but he needed some help on the technology side. He found his better half in Josh Greenberg, another freshman. Josh was part of a tech entrepreneur club at the University, and he had cut his teeth making websites for people around town. In Sam Tarantino and Josh Greenberg you had a marriage of opposites. Sam was short, high energy. He’d quote Winston Churchill when he got excited. Josh was tall, mild-mannered, analytical. Sam grew up well-off; Josh came from a more modest home. And on March 31st, 2006, they and a third student named Andres Barreto started Escape Media. Their chief product was Grooveshark.

ERIC: They rented an office—a glorified closet, really. They bought three computers, and used the boxes those computers came in as desks. It wasn’t much, but by the end of the year, they’d raised about a million dollars in seed money, moved into a bigger office, and then they started hiring people. That’s when Jack DeYoung, the intern who would sneak in early, showed up.

JACK: The energy in that room and the way that everybody talked about what they were doing, it felt like something big was going to happen.

ERIC: Around the same time, Isaac Moredock joined the company. He was a stocky 19 year old, with shaggy brown hair and substantial glasses. He was going to the community college in town when he got an internship at Grooveshark. And within months, he’d landed a full-time job there, selling ads for the homepage. His qualifications, you ask?

ISAAC MOREDOCK: I guess I didn’t have any qualifications other than I was extremely passionate and willing to work all hours of the day, all hours of the night.

ERIC: How did you do it?

ISAAC: We would follow the sun around the planet. At some point, like, we were calling people in Australia—and just phone call after phone call you’re just like, oh, this guy’s probably just gonna hang up on me again, or be like, how’d the hell did you get my number?

ERIC: So if you were to make 500 phone calls in a week back then, how many of them would result in ad sales?

ISAAC: Well, I mean early? Like, zero. [laugh] I mean it was rough. It was really rough.

JOHN ASHENDEN: I was, I think, more inspired honestly, that these guys who were so young were like so confident in themselves and their ability to do more than open say, like, a taco shop.

ERIC: And this is John Ashenden. At 21, he was one of Grooveshark’s oldest employees. His blonde hair was both slick and earnest, and he was the kind of guy whose brow always seemed to be furrowed. He started at the company on the design team

JOHN: we’re gonna change the world. Be the next, like, Facebook, we’re gonna be the next YouTube. That was the energy, right? And I know, like, today that’s so cliché, and like, I’m sure everyone has that same aspiration, but at that time it felt so achievable and it didn’t in any way seem unrealistic to me.

ERIC: These three employees, Jack the eager intern, Isaac the sort of salesman, and John the designer, were among the first at a company that would grow to over 150. They were some of the earliest to buy into Sam and Josh’s vision. And they made a fateful decision to dedicate the better part of their youth to a hunch—that something big was about to happen in music, and Grooveshark would be at the center of it.

ERIC: But Grooveshark was still missing one thing: users. The company had a little bit of seed money left, they had dedicated employees, but people weren’t using their product. And as Jack DeYoung remembers it, they were under pressure from their investors: Get 50,000 users by a certain date, or risk losing support.

JACK: I can distinctly remember begging our mothers to sign up for the website at one point and, you know, posting on Facebook and just saying, like, please for the love of God, sign up for this.

ERIC: So they started marketing around town. And it got a little desperate.

JACK: There was a really, really ill-advised marketing thing to have fake parking tickets on cars in downtown Gainesville that actually advertised for Grooveshark. One, not only are we going to piss off everybody, but there was a misprint on the fake parking ticket. It was supposed to say 7.2 million songs, and it said 7.2 songs. So we’re offering 7.2 songs and this is what everybody in downtown Gainesville saw. It was a comedy of errors for a very long time.

ERIC: The team struggled like this for a year and a half. Trying to get users for a product that people didn’t seem to want, trying to get advertisers for a site no one seemed to visit. They were generating almost no revenue, and had mostly burned through that initial seed money. And then, one afternoon, the two founders, Sam and Josh, called everybody into the conference room. The news wasn’t good. Designer John Ashenden was in the room when Sam started talking.

JOHN: You know, he let everybody know, like, hey, we’re, like, cash dry in two weeks. And I can’t pay anybody in here. If you guys want to leave, I completely understand. And he didn’t even really offer any compensation alternative. There was no, like, I’m going to give you more stock for those of you who stay. It was generally just him appealing from his heart to everybody, like, I’ve hit the end right now. I’m doing everything I can, and I’m hoping you’ll stick with me. Every single person did. Except for, like, one guy.

ERIC: It was a testament to two things. The first: rent in Gainesville, Florida is really cheap. While $1000 might get you a tiny bedroom in San Francisco, it’ll get you a Townhouse in Gainesville. The second and more important thing that moment signaled, was buy-in. The people in that room believed they were on a mission—to make the music industry better for fans and artists. The whole endeavor spoke to them.

JOHN: And I think, yeah, that for me was truly the moment was all in. I was like, this company is great. Everybody here is like bought into the same vision. We’re all fighting the same fight.

ERIC: But the fact remained: if the public didn’t want the service, Grooveshark wasn’t going to survive. They needed to try something new. And the idea for that new thing was, as often happens, right in front their faces. A small feature already built into the product. On peer to peer sites like Grooveshark, all the content came from user’s libraries. So, you could type in the name of a song you wanted to download—say, Virtual Insanity, by Jamiroquai—and you could see every version of that song that had been uploaded by users. There might be 30 different versions. But within that, some files would be good quality, others really crummy, or even mislabeled. And you’d wind up downloading an entirely different song than you thought you were paying for. To avoid having users buy stuff they’d later resent, Grooveshark had a preview feature. You could click a button next to the file you wanted to download and play through it first. Designer John Ashenden.

JOHN: And what we found was that users were just streaming it and they weren’t downloading it. That was the behavior. I mean, it sounds so simple when you say it like that.

ERIC: It does seem simple. Now. But back in 2007, almost nobody was doing this with music.If you were listening to music, you were likely either toting around CD wallets, or, you were downloading mp3s. You would download a song to your computer, plug in your iPod, and sit there in Apple product purgatory watching your libraries sync up. One percent. Two percent. Three percent. It was a hassle, but it was our hassle. We simply didn’t know there could be something better.

ERIC: So the engineers got together and they started scheming. They wanted to design the simplest version of Grooveshark imaginable. Out with downloads, and 99 cent transactions. All they wanted was the cleanest version of that preview button. And what one engineer cooked up was a design more simple and elegant than even most of what you see on the internet today. At the middle of the page was a search bar. And that was it. You’d type in your song, and it would start playing.

JOHN:  And within, like, basically a couple weeks we had, like, a functioning prototype of what our product would look like if it was just streaming. And then, it kind of got up to Sam, and, you know, here’s Sam, who’s like kind of struggling to make payroll and he saw this thing and was like, this is it, this is, like, our thing. This is the thing that we’re going to dump everything into and launch it and pray for a miracle.

ERIC: They launched the new site in 2008. John Ashenden, their chief designer, sat back and waited for the response.

JOHN: And it was insane. Like, literally insane. I think within a matter of a month we had gone from, like, 10 thousand users to like, 50 thousand users and then, like, another month her were at, like, 100 thousand users. It just was compounding. It was crazy.

ISAAC: Instantly starting to grow 20 plus percent month over month.

ERIC: Isaac Moredock, the sales associate.

ISAAC: It wasn’t like uncle Bob signing up or whatever. It was, we have no idea who these people are and they’re logging in and they’re using it everyday.

JACK: It was sort of unbelievable.

ERIC: And that’s Jack Deyoung, the intern turned customer service rep. There were writeups in Mashable. The Atlantic.

JACK: I remember, one of the developers had rigged up something that would have balloons pop every time we hit a milestone.

ERIC: Like actual balloons?

JACK: No, not on actual…on a projector. Yeah, we didn’t have the money for that kind of helium.

ERIC: [laughs]

JOHN: You know, it was so exciting in the beginning, right? Like, every day we’d hit a new record. And then it was like, every…twice a day we hit a record. And then every hour. And then it literally got to the point where we were hitting, like, a new record, like, every 5 or 10 minutes.

JACK: The balloons just, sort of, wouldn’t stop popping

JOHN:  And we had to turn it off. It was so annoying.

JACK: You know, what had become, let’s get to 50 thousand users or lose our jobs, became, oh my, oh my…the genie’s out of the bottle.

JOHN: It was like, no doubt in anyone’s mind in the company that, like, this is what people want to do. They do not want to deal with mp3 files. They do not want to deal with hunt and peck for, like, individual songs and hoping the quality is good. And, also, as controversial as it might be, they don’t want to pay for individual songs either. They want something that’s cheap, easy, even free. And they want it immediately.

LISA: Coming up, what’s wrong with cheap easy and free. And what it would look like if Martin Scorsese directed your next management offsite. After these words from our sponsors.


LISA: Welcome back to StartUp, I’m Lisa Chow. When we left, the employees of Grooveshark had just designed a new version of their website. They were becoming a streaming service—something virtually nobody else was doing at the time. And, it was working. Eric Mennel picks up the story.

ERIC: Part of the original mission of Grooveshark had been to make things better for artists. Since Grooveshark couldn’t make money on downloads anymore, the new plan was to make money chiefly through ads on the site, and subscriptions for ad free streaming. From that revenue, they could, theoretically, give the artists a cut. Now, all this new user growth, since the switch to streaming, it meant Grooveshark could get real meetings, with big brands—brands like Pepsi, Bacardi, and Samsung. In the first full year after streaming, revenue had grown from roughly 10 thousand dollars to 100 thousand dollars. And before long, Grooveshark was earning over a million dollars a month. They were becoming a player in the industry, sponsoring festivals. They turned a tour bus into a studio for exclusive, live performances from big name bands.

MICHAEL FITZPATRICK: Hey everybody, we’re Fitz and the Tantrums and you’re watching Grooveshark sessions.

ERIC: Jack Deyoung, the once eager intern, was now running the music department. One year at SXSW, he and John Ashenden, the designer, they got hooked up with tickets to a secret Kanye West show. They even managed to get backstage.

JOHN: I think Jack was playing a game of basketball, like, pickup with Mos Def. And, yeah, I mean, it was a bunch of people back there. I think Rick Ross was back there. Aziz Ansari.”

ERIC: They actually decided to sneak even further backstage at that show. Jack remembers watching John stumble through the curtains, getting dangerously close to the actual stage where Kanye was performing.

JACK: The music is so loud that I’m screaming, just, top of my lungs, like, “John, John, you have to stop. You have to stop!” And John just keeps going.

JOHN: I’m sure he’s like, you know, “Doooon’t” Like slow motion, you know, like [laughs].

JACK: And John literally trips—

JOHN: I like trip over this guy who’s, like, bent over, like, tying his shoe. I turn around to Jack and he’s just got his, like, hands, like—he’s got this expression on his face like Macaulay Culkin, you know, in like Home Alone, like—

JACK: Hands to the cheeks, just, mouth agape.

JOHN: Just like, cannot believe what’s happening right now. And I’m like, what is going on? It kind of took me, what felt like an eternity, but it was probably two seconds and I looked down and I realize it was Kanye West.

JACK: And Kanye looks at John and goes “Y’all need to get the fuck out of here!”

JOHN: “Yo, get the fuck out of my way! Get the fuck out of here!” And we can just see that there’s some like backstage security guard, like, beelining it towards us.

JACK: And John literally jumps over a crouching Kanye and we run as fast as we can out of the building.

ERIC: Oh my gosh. That’s how you know you’ve arrived. Kanye yells at you.

JACK: I know, and I called my now wife at 4 in the morning, Austin time too. I’m like, “Kanye just yelled at us! It’s the greatest thing that ever happened!” She’s like, “I’m going to bed. Shut up.”

ERIC: Amidst the glamour the team had, literally, stumbled into, one question perpetually hung over their heads. A 2007 headline in Venturebeat summed it up pretty succinctly: “Grooveshark offers P2P music downloads — but is it legal?”

JOHN: I mean, that was always kind of, like, a constant question, a constant debate. You know, where do we sit in the legal spectrum from purely illegal all the way over to every “i” is dotted every “t” is crossed. You know, money constantly flowing back to rights holders. Like, where are we in the spectrum?

ERIC: Grooveshark had been operating in a murky area. They said they wanted to pay artists, but largely, those deals weren’t in place yet. So they were streaming songs they didn’t own and didn’t have licenses to. They did have some cover, though—a law called the Digital Millennium Copyright Act, or, DMCA. It says websites can’t be held liable for songs that users upload. The website just has to take the song down if the artist asks them to. But Grooveshark was not always very good at handling all those takedown requests. Some musicians said they had trouble getting their music off the site. And of course even if a song got taken down, some new user could just re-upload the song the next day. Grooveshark claimed it was acting in good faith, but artists and labels had their doubts. So, one of the four major labels, EMI—then responsible for about a quarter of the popular music out in the world. Sued them. For 15 million dollars.

JOHN: I think honestly, though it was kind of scary, it was also a bit exciting, too, right? Because it’s like we are worth even caring enough to sue.

ISAAC: It wasn’t like, this is the end. This was like a, we’re just going to tighten up together as a team and we’re gonna make it work.

ERIC: Here’s Isaac Moredock again, the sales associate from before. By this time he’d actually figured out the sales thing and worked his way up to Chief Revenue Officer.

ISAAC: We’ve gone through harder times. Remember when we weren’t getting paid for four months? And were about to go out of business? Now we have money and, you know, we’re able to, like, stand and fight against it.

ERIC: But the EMI lawsuit was just the beginning. It was around this time that Jack Deyoung had another backstage experience. One very different from the Kanye affair just months before. It was 2011 and he was behind the scenes at Lollapalooza, the big music festival in Chicago.

JACK: It’s probably about 4pm, you know, we’re sitting backstage and I’d run into an executive at an unnamed major record label and he kind of just took me aside and was like, “It’s coming. This certain person has declared legal jihad. And, you know, just be forewarned.”

ERIC: Seven months later, the hammer dropped. Universal Music Group, the largest record label in the world, sued. They were roughly 9 thousand times the size of Grooveshark, and wanted 17 billion dollars in damages. And Universal wasn’t just going after the company. They targeted seven individual employees as well.

JOHN: You know, it was something to the tune of, like, $1.5 billion. Just for me. That’s if the court were to award, you know, the maximum per song damage. I mean, that didn’t even seem real. To this day it doesn’t even seem real. It was so much money. It was, like not even like a real number. Okay, you know, like, yeah, you can take the money, but, like, you’re gonna get my couch and maybe my car and that’s about it.

ERIC: It wasn’t just the size of the suit that was daunting, it was the evidence Universal had on its side. The suit alleged that Grooveshark didn’t just flout take-down requests, but that, from the very start, its employees were uploading songs to the site themselves. Remember that law, the DMCA? It said Grooveshark was not liable if its users uploaded copyrighted songs, so long as the company wasn’t uploading them itself. But Grooveshark’s employees were also its users. And that really complicated things.

JOHN: You had instances where employees within the company, you know, not naming anyone in particular, they themselves had, you know, their own collection connected to the network as well. I mean, you had people not just doing this out of their apartment, like, some people had their computer just running at work, right? And, I mean, that starts to become really questionable.  Myself today, I look back and I’m like, yeah, of course, like, no way that should ever have happened. Like, that’s completely unacceptable. You kind of sat in this really tricky spot where you were kind of putting a mark on our head.

ERIC: Perhaps the most damning evidence Universal threw at Grooveshark were the management’s own words.  Universal had internal emails from Josh Greenberg and board chairman Sina Simantob—emails that suggested illegal behavior. Sina wrote one email to an advisor about Grooveshark’s growth.  He said: “The only thing that I want to add is this: we are achieving all this growth without paying a dime to any of the labels. Let’s keep this quiet for as long as we can.” The email actually reads let’s keep this “quite” Q – U – I – T – E, but everyone was pretty sure it was just a typo. And he meant to say keep it quiet. This email was plastered across the internet. And when Sina’s employees read it, they had concerns.

JOHN: He kind of sounded, like, really shady.

ERIC: John Ashenden again.

JOHN: I don’t think he was trying to be, like, a bad guy or anything, but it’s just kind of how he would say things every now and then. And, like, imagine if you’re Universal’s lawyers and you read that. That’s going to throw up, like, a red flag.

ERIC: I reached out to Sina for this story. He declined to be interviewed, citing legal restrictions that prevent him from talking about Grooveshark. Business started going sour. Advertisers dropped out. A deal with a major car company evaporated. This is Jennifer Hutton, VP of Advertising:

JENNIFER HUTTON: Someone would lose a campaign and say, you know, they told me it was because of legal stuff. The feedback they were getting was that these brands didn’t want to work with us because of our legal problems.

ERIC: And this is where things at Grooveshark took an ugly turn. All these legal issues, they started to trickle down, first into the business, and then into the very relationships that made Grooveshark so strong to begin with. That unity that was so present at the beginning of the company, started to splinter. What needed to happen to stop all the lawsuits was for Grooveshark to sign deals with the major labels. But managers at Grooveshark disagreed about how to get this done. Essentially, there were two camps. One camp thought they needed to play by the music industry’s rules. To hire insiders – old school producers and executives who’d worked at the major labels, who could help negotiate on Grooveshark’s behalf.

CHRIS BLACKBURN: The advisors with clout is what we’d always needed.

ERIC: Chris Blackburn was Director of Brand Partnerships at Grooveshark. He says the people at Grooveshark, while ambitious, didn’t have any status in music industry boardrooms. Its executives would walk into meetings in t-shirts, sandals, and jeans. One guy had a ponytail. They didn’t know the lingo; they didn’t have the connections. And that became a real problem.

CHRIS: In a game that you are a nobody in, and you’re viewed as less than nobody, you’re viewed as an enemy. So in terms of getting anything meaningful done, it was really about bringing in people who provide Grooveshark access to the bright future we all wanted to have.

ERIC: But the company’s top leadership, they seemed to reject this strategy. In those emails that Universal cited, Grooveshark Chairman Sina Simantob outlined what appeared to be his strategy for growing the company. In one email he writes: “We bet the company on the fact that it is easier to ask for forgiveness than it is to ask for permission.” In another email he writes, “In our case, we use the labels songs until we get 100 million uniques” that’s unique users, “by which time we can tell the labels who is listening to their music where, and then turn around and charge them for the very data we got from them.” Sina was one of Grooveshark’s earliest investors. He’d had success in real estate out West – and was a mentor to Sam Tarantino, the company’s founder. Sam put a lot of trust in him. But Sina doesn’t appear to have had much, if any experience in the music industry prior to working with Grooveshark. And so the camp that wanted to make nice with the labels, they found themselves in a really frustrating position: They saw what they viewed as a problem, but they couldn’t do anything about it. The only people who could do anything, were their bosses: Sam, Sina, and Josh. I reached out to Sam for this story, but he also declined, citing legal restrictions that prevent him from talking about the company. Some at the company hoped they would find an ally in Josh Greenberg, Grooveshark’s other co-founder. But, for Josh’s part, he was a tech guy, the product guy. Largely, it seems, he left the business decisions up to Sam. Josh trusted Sam. Sam trusted Sina. For Isaac Moredock, Chief Revenue Officer, the whole thing became so frustrating he lashed out at Josh Greenberg directly. He ran into Josh at a party one night and brought up the issue.

ISAAC: At one point at this party, I saw him and we kinda had, like, some small chit-chat and, uh, I slapped him. I was like, “Josh, what are you thinking—”

ERIC: What?

ISAAC: “—like, wake up man, like—”

ERIC: You hit him?

ISAAC: —just ‘cause like I thought nothing was getting through to his head and here’s somebody that I greatly respect, one of the most logical people that I knew and had worked with and was like a brother to me.  If anybody can help impact where this company’s gonna go right now, it’s you, man, like, why aren’t you seeing this?

ERIC: Hm.

ISAAC: And then we hugged it out and cried.

JOHN: There had been more and more kind of internal feuding.

ERIC: John Ashenden, former designer, now Creative Director.

JOHN: In fact, many of us who were on that kind of like leadership leg of the company had started having side conversations where we were like, you know, talking about how we weren’t happy with the direction, how we weren’t happy with Sam, Sina, what do we need to do to fix this? There was even like discussions of like almost like an overthrow, a coup if you will, of leadership.

ERIC: Wow.

JOHN: Yeah, it had gotten pretty nasty. And I know Sam and I know Josh, you know, they were not blind to it at all and knew that this was going on and they decided to call a emergency meeting.

ERIC: The meeting was going to be an off-site, scheduled for two days, in Gainesville. February 13th and 14th of 2012. I’ve heard people call this meeting a number of things: D-day. The Exodus. The most common though, was the St. Valentine’s Day Massacre. There were about 12 people in attendance. 8 or 9 top managers. And then, at the head of the table was Sina, the chairman, flanked to his left and right by Sam and Josh. Day one, was a long day.

JOHN: Hours—probably like, 10, 11 hours in this room. Everything being moderated by Sina.

ERIC: Mmhmm

JOHN: Where we just kind of, like, bitched. We complained. It was really shitty, honestly, this meeting. It was, like, us going around the room talking about how we felt and what we felt we were doing wrong and what we needed to do differently and where Sam had fallen short and where we needed new leadership or a change of direction. Everybody, you know, it’s, kind of, becoming very obvious where everybody stood and who was, like, aligned with our direction and who was very clearly not aligned with our direction.

ERIC: This went on for many, many hours. Just going around the table and complaining. Like trying to do group therapy without a licensed therapist in the room. And the whole time, Sam Tarantino, he wasn’t saying anything. He was sitting there. Listening. At the end, he finally spoke up.

ISAAC: The first thing that he said was that we were all ungrateful, like, you know? He’s like, instead of saying like, you know, you guys are passionate about this and appreciate, you know, the feedback and everybody’s, you know, hard work he, he just like, I can’t believe that you’re questioning our strategy and I just, you guys are just so all ungrateful.

JOHN: I think for most people in that room, they really took his response, myself included, in a really bad way and saw it as like, he’s missing the message here and seeing this as nothing more than a personal attack on him. And that, missing the message that these are all people who deeply, deeply care about the success of this company as much as he does and are angry.

ERIC: Everyone went home. Slept it off. The next day, they reconvened. Most people figured they had aired all their grievances and now, it was time to think about next steps. How do we fix these problems? They ordered pizza. Here’s Jack Deyoung.

JACK: We ordered Papa John’s and I remember because there were paper plates and I remember writing out little notes to Paul who was to my right and sliding them over to him.  And I actually kept that paper plate for quite a while after that.

ERIC: What were some of the notes that you wrote down?

JACK: One was, someone needs to know the definition of the word “literally—”

ERIC: [laughs] Mmhmm.

JACK: —was one of them. Um, another was “I feel like Hester Prynne.”

ERIC: Hm.

JACK: And the very last one was, “I’m pretty sure I’m about to resign.”

ERIC: Sina starts the meeting off, again, acting as moderator.

JOHN: He starts by essentially saying, like, we’ve heard everybody and we know where you stand and we’re going to make some decision here in this room, but it’s important that when everybody leaves this meeting  that everybody is in line with those decisions and we no longer have a moment like this where, you know, there is backdoor discussions and people planning coups and like kinda outlining the energy again, right?

ISAAC: And at one point he drew a triangle on the wall and was like, I just want everybody to know that I control every point of the company’s, uh, position so I’m the—I control, um, all of the preferred shareholders, they all vote with me. I’m chairman of the board. Uh, you know, Sam and Josh are the only other people on the board, they always vote with me. I’m one of the largest common shareholders. I just want everybody to know that, you know, ultimately I’m where the buck stops in the company. And we’re like, oh man, like, you know, he just went out and said it and he’s like, “Now Sam runs the company and, you know, he’s the, he’s the visionary and all, but, you know, I’m the one that writes the law.”

JOHN: It almost felt like…the way it was delivered, whether he intended it or not, came off as very authoritarian and almost just like a dictator. And it did not sit well with me at all. And it did not sit well with a lot of people either. Instead, he basically created like an ultimatum scenario where everyone was required basically to pick a side almost, like are you with us or are you out? And, um—

ERIC: It was a line in the sand.

JOHN: Yeah and I think…I was not prepared for that. I was not prepared for that.

ERIC: The people in that room, among them Jack, Isaac, and John, they had all started at this company basically as kids, when the idea of a management offsite was as foreign to them as a polar bear in a palm tree. Now, they were executives, with other people’s lives depending on their actions. In a lot of ways, circumstances had really changed for them. At the same time, there wasn’t that much distance between the fake parking tickets, and the billions of dollars in lawsuits hanging over their heads. They were still in their 20s, still living with their best friends. And they were figuring out on the fly how to respond to an ultimatum that could change the course of their lives. So they go around the room, person by person. First is the VP of Community Development, a guy named Graham Murphy.

JACK: And Graham, upon hearing this, he stood up and fist bumped me and said to the room, “Sorry guys I gotta go see about a girl,” which is a line from Good Will Hunting.

ERIC: [laughs] Oh, and that’s how he quit.

JACK: That’s how he quit and then he walked out and didn’t say a word, and texted me ten minutes later and said, “I realize that I’m your ride home. Give me a call.”

ERIC: Next, John Ashenden. He had started at the company as a designer and was now a Senior VP and Head of Product Design. He quit too.

JOHN: It felt like you were giving up. When you were 6 years in, like, kind of admitting that like this is just not going to work for either of us and we need to go.

ERIC: A couple people later,  the guy who couldn’t make a sale years before—but was now Chief Revenue officer—Isaac Moredock.

ISAAC: Well, I think we were all even like, fighting back tears because we’d all given our lives to this project. It was something that, you know, wasn’t just a job, it was, it was family. It was a very deep commitment we had all made for years of our life.

ERIC: Isaac quit. Then, the very last person.

JACK: And that’s when I think I wrote to Paul, “I think I’m going to resign.”

ERIC: A once eager intern, now Senior VP of the Music Department, Jack Deyoung.

JACK: It almost felt like, okay, there’s an out. And, it just seemed, if ever there’s going to be a time, it’s going to be right now.

ERIC: Half the leadership in the room quit that day. It was a far cry from five years before. When those same people had gathered in a conference room to hear Sam tell them they weren’t getting paid for a while. Then, they decided to stay. Now, they were leaving. The only constant: it was never about the money. The meeting ended. People were kind of floating around the parking lot. Nobody really knew what to do. Eventually, John Ashenden saw the door to the building open. It was Josh Greenberg, the Co-Founder.

JOHN: I’ll never forget Josh Greenberg came out 30 minutes or so later. And, um he gave me like a really big hug and told me it was really hard for him too. And that he was like super happy to have worked with me and proud of me. And…I don’t know, it was just so genuine, you know, like, despite the fact that I had essentially turned my back on him and his company, that he was happy for me.

ERIC: Yeah.

JOHN: And excited for what I was going to do next.

ERIC: It feels like this little spark of, like, humanity in this moment and period that was just cluttered with politics and bullshit.

JOHN: Definitely. Yeah, and I mean that’s who Josh was. He just had this, like, charismatic, positive, spirit that made you feel like, that everything was going to be fine.

JENNIFER: That was a really difficult time.

ERIC: Jennifer Hutton, Head of Accounts. While a lot of people quit that day, plenty, like Jennifer, stayed. And tried to make sense of it.

JENNIFER: It felt like the end of the company. It felt like, okay, if all these people are leaving, how can we possibly survive? What does this mean? What really happened? It was definitely a place of fear. Within the span of a couple months after that, almost my entire team had left. People I was working with everyday, people I considered my friends, people who I shared my frustrations with, my joys with.  If they didn’t leave on that day, they left within two months. And I was kind of left alone.

ERIC: At the same time, a Swedish music startup that had been making waves in Europe launched its US operations. With 200 million dollars in venture capital, and deals with all of the major record labels, Spotify was here.

JENNIFER: When Spotify launched in the U.S. we started to see our users drop. And revenue dropped too. And it kind of took away any sense of the little bubble that we had around us and this mentality of, okay we’re gonna succeed because we’re doing this really different thing and we’re the only ones doing it and we’re so popular. It kind of brought us back to reality a little bit.

ERIC: Spotify had taken the opposite approach of Grooveshark and, largely, it worked. They raised money early, used a lot of it to pay for licensing deals with the labels, and then launched, free of the legal maelstrom that overtook Gainesville. It’s not crazy to look at Spotify and think, huh, that could have been Grooveshark. It was three more years after the St. Valentine’s day Massacre before Grooveshark folded. And I don’t want it to seem like those three years were simply a black hole of difficulty and despair. Of course, their numbers were down and they were losing money. Sony and Warner joined the Universal suit, so, quite literally, the entire music industry was now gunning for them. A lot was going wrong. But there were other things happening too. The people who stayed, they became even closer. There was a dungeons and dragons game night a bunch of engineers had organized. Then there were two games nights. Then three. Much of the company still lived in the same apartment complexes and went out drinking together at the same bars every weekend. The Christmas parties were unlike anything else in town. I talked to a lot of employees from the company, and the best way I can think of to describe those last couple of years is like when you go away to camp for a week, and on Thursday night there’s a dance. And people are doing the limbo, and they’re eating too many cookies. And you’re thinking to yourself, “maybe we could all just stay here, out in the woods – form a little colony. Maybe we’ll never have to go back to real life.” And then, the lights dim, and it’s the final song.

NICK ANTONELLI: When we first heard it, there was that moment where we just had to, like, blink a couple times like, did that just happen?

ERIC: Nick Antonelli was an engineer at Grooveshark. He was there on April 30th, 2015, when Sam called for an all-staff meeting. He said the company would be closing down that afternoon, and that Grooveshark’s homepage would show a letter, admitting guilt of copyright infringement.

NICK: It was unreal in a way.

JENNIFER: They had officially addressed it earlier that day and we knew the letter was supposed to come out at a certain time, and there were a few developers working on taking down the site and putting the letter up, and so they were working at their desks, and the rest of the office had kind of gradually stopped what they were doing, and moved to join them. So, it was five or six, maybe, developers sitting at a little island of desks and the entire company was standing next to them in a big circle. And we started playing music from Grooveshark.

NICK: We basically had a playlist going on Grooveshark, and we just started dancing to it—

JENNIFER: You know, everybody was laughing and then, half of us were crying and then we were laughing again. We were just kind of having a good time playing music together.

NICK: I think we ended with Sister Hazel, which, I’m not sure of you know, they’re a band that came out of Gainesville.

ERIC: They’re a Gainesville band, yeah, I knew that.

NICK: Yeah.

ERIC: Yeah. All For You. The song [sings].

NICK: Yeah, I think that was the one. I actually have a video of us, part of us flipping the switch on the server—

-clip of singing-

NICK: And then, we all gathered around one of my teammates’ desks and he pressed the button and we shut off everything.

-clip of applause-

JENNIFER: And then we all stopped and read the letter together.

ERIC: And what was that like?

JENNIFER: God, that letter was such crap. That letter was rough to read.

ERIC: “Dear music fans,” the letter read, “Today we are shutting down Grooveshark. We started out nearly ten years ago with the goal of helping fans share and discover music. But despite best of intentions, we made very serious mistakes. We failed to secure licenses from rights holders for the vast amount of music on the service. That was wrong. We apologize. Without reservation.” The letter then says that Grooveshark is forfeiting all of it its intellectual property to the record companies. And urges people to sign up and pay for legal streaming services. The first one they mention is Spotify. And that was it. Overnight, the company was gone. People packed up their boxes, they threw out old files, and they wiped the servers clean. Then three months later, news broke.

NEWS ANCHOR 1: 28-year-old Josh Greenberg, the co-founder of Grooveshark, passed away last night.

NEWS ANCHOR 2: Gainesville police say Greenberg was found by his girlfriend around 9pm.

NEWS ANCHOR 3: Friends and colleagues tonight are mourning a person they say was an innovator, a mentor, and an even bigger advocate for our community.

ABBY MAYER: Josh dying so close to Grooveshark closing made so many people think that he had taken his own life or that, you know, Grooveshark closing and him dying were related.

ERIC: This is Abby Mayer, Josh’s girlfriend. She’d been out of town that weekend. She’d last talked to him late Saturday night. And, when she got back to the house that she and Josh shared on Sunday, she found him lying in bed, next to his laptop. At first she was talking to him—she thought he might have been sleeping. But she’s a nurse and says when she looked closer, she could tell. He was gone. He’d been dead for almost 16 hours according to the medical examiner. There were no signs of foul play or suicide. When the coroner’s report came back, it listed his cause of death as “undetermined” something that happens in about 2-5% of cases across the country. So, not unheard of, but very rare. Gainesville police put that information out right away. But it didn’t stop people from speculating. That Josh had cracked under the pressure of losing his company.

ABBY: The people that said that, like you, you just knew that they didn’t know him very well. Like, after it was over though, that constant stress and that constant roller coaster and the constant, like, up and down of Grooveshark and the lawsuits and everything, once that was over, you know, obviously losing Grooveshark was hugely upsetting, but also, that stress was gone and that was such a huge burden lifted off of him. It just felt like a lot of opportunity opened up and, you know, when Josh died, it was the opposite. My world collapsed. One thing that I’ve learned about this whole experience is that it’s certainly not linear. It doesn’t get easier every day and it doesn’t become more normal. It, you know, it ebbs and flows.

TODD: We’re here to celebrate Josh’s life. I’d like to welcome everybody here. We’re gonna have a set of speakers. We’re gonna have some videos. We’re gonna have pictures—

ERIC: Nearly 600 hundred people showed up to Josh’s funeral. The University of Florida let the reassembled Grooveshark employees use one of the auditoriums on campus. The mayor spoke. The Former president of the University. Business leaders and students Josh had mentored. Employees from all eras of Grooveshark were there, from the founding up until the final song. At the end of the service Sam got up to speak, and then sat down at piano, and he paid tribute to Josh the best way he knew how—through music. In startup culture, a failed business can be a sort of merit badge. It’s something founders carry around with them to their next project, part of their origin story about how they had to fail before they could succeed. For Josh Greenberg, Grooveshark arbitrarily became his life’s work. I doubt that’s what he intended. But if his legacy is wrapped up in the company at all, it’s not in the bottom line, or the company’s role in the music industry. It’s in the people whose lives it changed.

JENNIFER: You know, I grew up with with Grooveshark. I started out barely an adult. And I grew into this really responsible person. I’m not trying to, like, you know, brag or anything.

ERIC: Yeah, yeah, yeah.

JENNIFER: It’s just, I grew up.

JACK: Everything I always that I thought I could potentially possess that nobody ever realized was realized by about 80 of my best friends at a huge startup company. We grew up together. It was a surrogate for college, but we were teachers and professors. The curriculum might not have been as good as it could have been, but it was still pretty awesome.

ERIC: A lot the staff have scattered now. Some have started their own companies, others are  managers elsewhere. They’ve got real, adult jobs, all over the country. But they stay in touch with each other constantly—texting, emailing, they go to each other’s weddings. The Grooveshark family, it seems likely to endure, long after people forget the company that brought them together.


LISA: Eric Mennel is a senior producer here at Gimlet. Remember, we’re going away for a little bit. But we’ll be back in your feeds with a new series next month. Those episodes will start on December 11 and continue for five straight days. Today’s episode of StartUp was produced by Bruce Wallace. It was edited by Alex Blumberg, Peter Clowney, Kaitlin Roberts, Molly Messick, Luke Malone and me. Editing help from Lisa Pollak. Production assistance from Simone Polanen and Bryan Orr. Mark Phillips wrote and performed our theme song. Build Buildings wrote and performed our special ad music. Additional music from R.A.C., Jeffrey Brodsky, White Dove, Devin Dare and the band Hot Moms Dot Gov. Matthew Boll mixed the episode. To subscribe to the podcast, go to iTunes, or check out the gimlet media website: gimletmedia.com You can follow us on twitter @podcaststartup. Thanks for listening. We’ll see you soon.

 

The Race for a Driverless Future (Season 6, Episode 8)

When will we get robotaxis, anyway?

November 3, 2017
View show transcript

LISA CHOW: From Gimlet Media, I’m Lisa Chow and this is StartUp. We ended last week’s episode with Google hiring a bunch of people from the Grand Challenge races and starting its self-driving car project. It was 2009, and Google called this project a moonshot. In other words, it was wildly ambitious, with no immediate plans for profitability. Something that only a huge company with a lot of cash to burn would dare to pursue. And it’s not hard to see why Google was so excited about the prospect of a driverless future. It’s a pretty incredible thing to imagine. Take it from Jim Scheinman, a venture capitalist who could not be more enthusiastic about driverless cars.

JIM SCHEINMAN: I don’t even like calling them cars because I think they’re going to be something different. They’re going to be autonomous vehicles, they’re going to look different, they’re going to feel different. It’s going to be an amazing experience.

LISA: The kinds of things that Jim imagines can sound a bit crazy to the unconverted.

JIM: We’re all going to love pushing a button and having this robot pick us up and we sit back and take a nap before we get to work, or catch up on your Game of Thrones or Netflix shows. Have a drink. You know, whatever you want to do: get get your nails done, get your hair done on the way to the meeting. All that’s going to be possible.

LISA: Jim thinks that with autonomous vehicles, you’ll no longer want to own a car, because it will actually be cheaper to get around in a self driving taxi.

JIM: We’re going to look back and say, “What were we thinking?” Why would we spend 35-50 thousand dollars on a thing that sits around taking up space for 96% of the time? It’s crazy. And not only that, I only really needed one seat for like 90% of the time I was driving, you know. So if you’re going to go on a vacation somewhere and need to be driven and it’s three or four in your family, you’ll order that kind of vehicle. Most the time, though, you just want to commute, so you just need a one-seater. So the one-seater comes.

LISA: It really does sound like science fiction, what you’re describing.

JIM: Yeah. But it’s not.

LISA: Jim doesn’t only think driverless cars will change how we get around. He predicts all kinds of ripple effects. In this new world, parking garages go away because these vehicles will be constantly moving from one passenger to the next. But even bigger than that, with autonomous vehicles, you don’t have people drinking and driving or texting and driving. It saves lives. Being able to watch Game of Thrones in your roving one seater, that’s just the small stuff.

LISA: And when do you think this is going to happen?

JIM: I’m definitely much more aggressive than most people. I’d say, in a meaningful way, in certain areas of the United States, within five years.

LISA: Last week, we followed autonomous vehicles driving through the desert in a race called the Grand Challenge. But that race, it really kicked off a much bigger one: the race to actually get a driverless car out in the market and onto the streets. A lot of people are pushing to be the one to make Jim Scheinman’s vision of the future a reality. From the companies you’ve heard of—Google, Uber, GM, Tesla, Ford—to smaller upstarts looking for a way to get to the front of the pack. Today on the show, we look at how the spirit of the Grand Challenge is still going on 13 years later. And how the challenge has gotten even grander.


LISA: One of the first people to jump into the driverless space to compete with Google was this guy.

KYLE VOGT: Hi Lisa, I’m Kyle.

LISA: Hi.

LISA: Kyle Vogt built a vehicle for DARPA’s Grand Challenge as a freshman at MIT. And after that, he went on to co-found a company that wasn’t in the driverless space. A company called Twitch that sold to Amazon for $1 billion. By 2013, Kyle was in a pretty good spot. He wanted to start a new company, and he could afford to take a risk. Afford to come up with his own moonshot plan. But he wasn’t sure what to do yet. So he gave himself three criteria: his next project had to involve a challenging technical problem, it had to have a positive impact, and it had to be a good business—something that could really grow.

KYLE: I probably made a list of 50 different things, and actually self-driving cars wasn’t even on that list the first time. And then it, it really just sort of hit me one day as I was sort of reminiscing with some college friends about the past, that working on the DARPA Grand Challenge was probably the most fun I had had while at MIT. And then I started thinking more about that and then realizing that if you could be successful at building and deploying self-driving cars, it would actually check all those three boxes. Like a 10 out of 10 on the scale for every single box, in terms of technical challenge, impact. And you know being a successful business and having scale. Once that clicked in my head like the very next day I started working on Cruise.

LISA: Cruise, Kyle’s new company. He knew he was up against big competition. Google had been working on self-driving cars for five years at this point, pouring hundreds of millions of dollars into its project. So Kyle figured he’d have to find a totally different approach.

Kyle: I said I’m going to look at this a fresh lens through the way of a startup might approach the problem which is we’re gonna bite off the smallest piece of the overall problem that we can solve that really well. And then over time will lead our way into solving the larger problem.

LISA: Kyle decided Cruise would build something that would turn your regular car into a self-driving car, but just on highways. Cruise’s product was a rack that you’d bolt onto your car roof. It would hold cameras, radar, GPS and other sensors, and it would give your car autopilot capability on straight, simple roads.  But right as Cruise was getting off the ground, something big happened that changed the way people thought about transportation. Ridesharing was taking off. It was in cities all across the U.S. It was expanding internationally. And its explosive growth was changing the industry that Kyle had just entered. The success of companies like Uber and Lyft showed that eventually people might not need to own their own cars. They could just call one when they needed to go somewhere. Add driverless cars to the equation, and ridesharing looked even more like the future. Because not having a driver means not paying a driver, which could make these services cheaper and available to more people. Investors looked at this…and saw a trillion-dollar market for the taking. And that helped Cruise raise more than $12 million in its first big round of funding. But it wasn’t only investors who were seeing huge potential in a driverless future. Uber saw it too. It realized driverless car companies could become its competitors. And so in 2015, Uber jumped into the driverless game. Ex-CEO Travis Kalanick explained the decision at a conference that year.

TRAVIS KALANICK: This technology is coming. And so then, the question for us is does Uber want to be part of the future, or are we going resist the future. Like maybe the taxi industry before us. And really for us, we’re a tech company, and so our choice is to be part of that.

LISA: But not everyone was excited by the vision of a driverless ride-sharing future. It made car companies panic. Because if more people were sharing rides, fewer people would be buying cars. Some car companies decided to face this threat head-on—by joining the race. One of them was General Motors. In 2016, just two-and-a-half years after Kyle started Cruise, GM bought the company for over a billion dollars. Since then, Cruise has grown from 40 employees to over 350. And they’re no longer working on roof racks to make your car autonomous on highways. They’re part of the big race—the moonshot race—to be the first company to develop an autonomous car that can drive through all weather conditions, day and night, anywhere in the world. Here’s Kyle again.

KYLE: Whoever gets there first ,everyone that needs to compete with them is now dead in the water, unless they have a technology to be able to compete with. If one of the car companies comes out with a self driving technology first, the ride sharing companies would be in trouble or vice versa.

LISA: So now the question is: who will be first, and how will they pull it off?

NEWSCAST 1: Riders in Pittsburgh are getting a preview of what it’ll be like to be a passenger in a self-driving car. Uber has become a test program…

NEWSCAST 2: GM is already testing right now in San Francisco, Scottsdale, Arizona…

NEWSCAST 3: In more than a million miles of road tests, Google says only one minor crash has been caused by its self-driving cars.

LISA: A bunch of companies are testing their driverless cars—with safety drivers, just in case something goes wrong. And these cars are out collecting data about how people operate on the streets—data that will help these vehicles navigate the complicated world that we live in, where unpredictable things happen all the time.

KYLE: It’s like how do we deal with construction zones while there’s a thousand pedestrians and balloons and junk on the street from a parade. And you know mattresses falling off trucks and trees that aren’t trimmed properly, all at the same time. Those are the toughest, meatiest problems, and the ones that we spend almost all our time on.

LISA: Cruise, Uber, and Google—they each have advantages that could help them be the first to get a fully autonomous car on the road. Google has the most sophisticated and detailed mapping and navigation system in the world, a huge plus in the self-driving space. Uber has its app, which millions of people have already downloaded to their phones. It also has a huge amount of data about how consumers behave—where they want to go and when they want to get there. And Cruise has GM, a company that knows how to manufacture cars at scale. But what do you do if you don’t have these competitive advantages? You’d think that no founder in their right mind would dream of launching a scrappy startup in a space already dominated by giant companies. But that’s where you’d be wrong. Who dares to do it. That’s after the break.


LISA: Welcome back to StartUp. Remember Kevin Peterson from last week’s episode? The brilliant coder who spent six weeks in Nevada teaching Sandstorm how to get around?

KEVIN PETERSON: I really remember being in the desert for the first time, and that was it for me. I really fell in love with autonomous vehicles driving outside.

LISA: That was 13 years ago. Here’s what he’s doing now.

(SOUND OF ROBOT ROLLING DOWN STREET)

LISA: following a robot down a sidewalk in San Francisco. The robot is about the size of a washing machine. It’s white and boxy with four heavy duty wheels. The company that built this robot is called Marble, and Kevin is one of its cofounders. The robots deliver takeout and groceries. Right now Marble is in a pilot phase, operating in just a couple of neighborhoods in the city.

KEVIN: So at any given time it’s tracking everything that’s around it. From telephone poles, to people, to dogs, and it’s constantly making decisions about what the right action is based on what it’s seeing.

LISA: At one point during our trip, we’re crossing the street and a car makes a turn into the crosswalk and stops right in front of us to see if the robot will run into it. The driver leans out the window and asks Marble’s CEO, Matt Delaney, will it move around me?

MATT DELANEY: Eventually, yes. Right now, it’s just hoping, hoping that you’ll go.

LISA: The driver decides not to wait the robot out, says goodbye and keeps moving.

MATT: Cheers.

DRIVER: Later.

LISA: So does that happen a lot?

MATT: No, I think that’s the first time that’s ever happened. A more common thing is a lot people love to see if the robot stops if they jump in front of it, and of course it does, but it’s everybody’s favorite pastime.

LISA: Marble is doing something a bit like what Cruise did with its roof racks. It’s not going for the big goal of building a fully autonomous car. It’s biting off a smaller part of the problem first. Marble’s autonomous vehicles, of course, aren’t even transporting people. And they move as fast as you and I walk, about three miles per hour. At that speed, a lot of the harder technical problems of self driving cars just go away, because these robots don’t need to see very far in the distance, or react really quickly to things in their path. And a mistake at walking speed probably isn’t going to kill anyone. Kevin says the area where they’re learning the most is in engineering the robot’s soft skills.

KEVIN: How does a robot interact with people. How does it deliver to a person. How does it drive down the sidewalk politely, which I think is a really fundamental, interesting question. At some point robots are going to be out there operating in everyday lives across the board. They’re going to be in hospitals. They’re going to be in your apartment helping you out. They’re going to be doing deliveries. They’ll be everywhere. And in order to do that we have to be able to interact with everybody in a very general way. So our product is one of the first ones that gets to do that in a broad scale.

LISA: And delivery is a super fast-growing market, since everyone orders stuff online and wants their shoes, diapers, and food now. Kevin believes that by tackling what the industry calls the last mile problem, getting your package to your doorstep at relatively low cost, Marble will learn a lot.

KEVIN: It’s an area where things are about to change. Where the technology is viable, and where the business is really, really interesting.

LISA: Marble’s starting small but its ultimate goal is to automate the transportation of all goods, and that could at some point involve self-driving cars, trucks, planes, drones. Another startup in the space is called May Mobility. Their corner of the market is autonomous shuttle buses. So they are moving people, but they’re doing it in a really limited way. Their business is getting people around places like retirement communities, office parks, and college campuses. Places that are far less complex than busy cities. Last month, May Mobility ran its first pilot. For a week, its autonomous shuttles took employees from an office in downtown Detroit to a nearby parking garage. We sent producer Tyler Scott to check it out for us, and he told us about it.

TYLER SCOTT: It basically looks like a mini version of a minivan. It had three rows of seats in it. In the first row seats, it’s like a typical front row with your driver and passenger seat, except there’s no steering wheel. It’s just kind of like this t-bar thing, it’s more like a bike handle.

(SOUND OF TYLER GETTING IN VEHICLE)

TYLER: You get in and the guy who is in the driver’s seat, quote unquote, just presses a button and this electric vehicle takes off pretty quickly and pretty silently.

TYLER (in May Mobility vehicle): The whole top half of this thing is glass, it’s sweet design. And it is cool we’re kind of just rolling through downtown, it’s at night. So everything’s lit up.

LISA: The shuttle drove a one-kilometer loop. It ran only in the evening, from seven to ten, when there isn’t a lot of traffic. And it never went over 25 miles per hour. That’s how May Mobility, just like Marble, has found a way to wriggle into the market. Its cofounder and CEO, Ed Olson, hopes they can start selling their service next year.

ED OLSON: The central hypothesis for us is really that there are routes out there that we could do safely with the technology that we developed right now. And of course there are many routes which we cannot yet do safely at high levels of reliability but we’ll get there over time. The idea of May is but let’s go out and get those, the ones that we can do. And by tackling them, we’re going to learn a lot that we think will actually help us develop the technology faster.

LISA: Ed has this analogy that he uses to describe the difference between what his company is doing and what the big driverless car companies like Google and Uber are doing. And bear with me. It’s an analogy about ducks. The big companies are trying to train their ducks to do all kinds of tricks. Pirouettes, waltzes, flying in complex formations. Ed—he’s aiming for something different.

ED: The idea here is to be able to market dumb ducks. Ducks that only know a couple of tricks.

LISA: On the evening that our producer, Tyler, rode in Ed’s dumb duck…

TYLER: It definitely when I was in it like didn’t go much faster than 15 mile an hour. There wasn’t much going on and then all of a sudden we went through this corner and these two kids on skateboards hopped off the curb and skateboarded through the intersection in front of the shuttle.

TYLER (in vehicle):  Woah!

TYLER: The van, it might’ve slowed down a little bit, but it didn’t come to a stop.

TYLER (in vehicle): Close call there.

TYLER: A couple inches from like, hitting this kid on the shoulder.

LISA: And there was another problem during the pilot. On the first night, one of the shuttle vans approached a manhole cover with lots of steam coming up from it. The steam was thick enough that it confused the van.  Was this a solid object or something the van could drive though? The safety driver ended up taking control of the van so that they didn’t hold up traffic. These types of problems, they’re essentially the same problems that every driverless company is puzzling through. And they’re problems that human drivers are pretty good at dealing with. The driverless car industry spends a lot of time talking about how bad people are at driving. But Ed says, it’s actually the opposite.

ED: People drive 100 million miles between fatalities. In other words, you take the total number of miles driven in the United States and divide by the total number of people who are killed, and it’s 100 million miles per fatality. That’s a lot of miles. So when we look at building autonomous cars that are as good as human drivers they need to be amazingly reliable.

LISA: Safety drivers in autonomous vehicles intervene at wildly different rates, depending on the company and where that company is testing. Documents leaked from Uber earlier this year showed that its safety drivers in Pittsburgh and Arizona were intervening every 50-200 miles to prevent collisions. That doesn’t mean the cars would have killed someone had the drivers not stepped on the brakes or grabbed the wheel. But it does give you some idea of how often humans are having to correct the computer. And it’s a long way from the 100 million miles that Ed points to.

ED: I think a lot of the large automakers are painting very rosy pictures of where the technology is going to be and when it’s going to get there. So you hear a lot of automakers talking about 2020, 2021, basically saying we’re going have full autonomy before you know it. I think this is a good example of where the marketing is ahead of the engineering.

LISA: How long do you think that road is?

ED: It could be decades. Multiple decades. We need fundamental breakthroughs or eureka moments in sensors, the hardware itself, in the perception algorithms, and in the planning. And so we’re multiple breakthroughs short.

LISA: I asked Kyle, co-founder of Cruise, now owned by GM, when he thought autonomous vehicles would be on the road without safety drivers. He didn’t want to answer the question, But last year, during an interview at a TechCrunch conference, he did give some sense of when he thought things would start to really change on the roads.

DARRELL ETHERINGTON: Future of transportation, what does it look like, let’s say, I don’t know, 25, 30 years from now?

KYLE: 25 to 30 years, I hope at that point we’ve got to the point where we’re starting to pull the human drivers off the road.

DARRELL: Just starting to? It’s gonna take that long?

KYLE: Well, you know, it’s gonna take some time.

LISA: Three years after launching its self driving car project, Google’s cofounder, Sergey Brin, held a press conference at the company’s headquarters in Mountain View.

SERGEY BRIN: I think the self-driving car can really dramatically improve the quality of life for everyone here in California, in the country, and in the world.

LISA: At the end of his prepared remarks, there was a question from a reporter.

REPORTER DAN SIMON: When do you see the self-driving cars having a real practical application for everyday folks? How many years away?

SERGEY: That’s a great question. I don’t want to overpromise right now. We have some pretty ambitious targets for our team. You can see them stressing just looking at me answer this question. Anyway, you can count on one hand the number of years until ordinary people can experience this.

LISA: That press conference was five years ago. Matt Delaney, from Marble, the robot delivery startup, he says he has a running bet with people in the autonomous vehicle space about the timeline, and he’s noticed that the more thoroughly you understand the challenges, the farther away you believe we are from a driverless future. Building a fully autonomous vehicle is still a moonshot. The technical challenges are still enormous. What’s changed is the marketplace. There are more companies in the race today than five years ago. But the finish line is still far away.


LISA: StartUp is hosted by me, Lisa Chow. This episode was produced by Bruce Wallace, Luke Malone, Simone Polanen, Emanuele Berry, Amy Standen, and Max Gibson. Our senior producer is Molly Messick. We are edited by Annie-Rose Strasser. Mark Phillips wrote and performed our theme song. Build Buildings wrote and performed our special ad music. For full music credits, visit our website. David Herman and Ian Scott mixed the episode. Special thanks to Aarian Marshall, Martin Ford, Matt Johnson Roberson, Mike Isaac, and Mark Harris. To subscribe to StartUp, go to Apple Podcasts, or whichever app you like to use. Or check out the Gimlet Media website: GimletMedia.com. You can follow us on Twitter @podcaststartup. Thanks for listening. We’ll see you next week.

Correction: This story originally identified Kyle Vogt as the founder of Cruise Automation. He is actually the co-founder. The episode and transcript have been updated to reflect this.

We do our best to make sure these transcripts are accurate. If you would like to quote from an episode of StartUp, please check the transcript with the corresponding audio.

The Grand Challenge (Season 6, Episode 7)

When the driverless future began

October 27, 2017
View show transcript

2004 GRAND CHALLENGE RACE MC: All right, Ladies and gentlemen, boys and girls.

LISA CHOW: In 2004, there was a race from California to Nevada. People crowded around the starting line, to watch something that had never been done before.

MC: And off we go…

LISA: All sorts of vehicles—big trucks, small homemade cars, SUVs, and one motorcycle, were competing in a race covering 150 miles. DARPA, the Pentagon’s research agency, was offering $1 million to whoever finished first. And the thing that was so special about these vehicles is that every one of them was driving itself. There was no person at the wheel. No one steering them remotely. These vehicles were making decisions—when to turn, when to slow down—all by themselves.

MC: Making an adjustment, no problem, seeing the k-barrier, adjustment to the left, thank you.

LISA: The race was called the DARPA Grand Challenge, and it’s where some of the biggest names in today’s driverless car industry got their start. People with vehicles in the race went on lead projects at Google, Uber, GM, Ford, pioneering a movement that could radically transform our economy and the world.

NEWS ANNOUNCER 1: Major automakers are now busier than ever building vehicles that don’t need you.

NEWS ANNOUNCER 2: ready or not, they’re coming. automakers from Stuttgart to silicon valley are in a race to get driverless cars on the roads.

NEWS ANNOUNCER 3: we will almost surely experience a radical shift in how we move, where we live and what our cities look like.

LISA: Billions of dollars are pouring into driverless car research, and the Grand Challenge, this do-it-yourself meetup in the desert, that brought together robot-obsessed hobbyists and inventors, engineers, and high school students—it’s the thing that sparked it all. It was the seminal moment for the industry. But at the time, it was viewed as a total failure.  From Gimlet Media, I’m Lisa Chow, and this is StartUp. Over the course of the next two episodes, we’re going to tell the story of the Grand Challenge—the people who shaped it and were shaped by it, and we’ll find out how far we’ve come in the world of self driving cars.


LISA: One of the best known names from the 2004 Grand Challenge is William Whittaker who goes by Red. Red led one of the teams with vehicles in the race. He’s a professor at Carnegie Mellon. And if you talk to people who know Red, they’ll tell you he’s a legend on campus.  He’s a former marine who built robots to clean up the nuclear disaster at Three Mile Island. He races concrete canoes. He holds himself and everyone around him to incredibly high standards. He especially hates when people are late. When I met Red in person, I made sure to be on time.

RED WHITTAKER: Good to see you.

LISA: Good to see you.

LISA: Red is in his late 60s. He’s tall—about six-foot-three. He leads me into his office, and we discuss where to sit.

LISA: Wherever you’re comfortable.

RED: I don’t care about comfort, for god’s sakes, I’m comfortable standing on my head.

LISA: There’s an intensity about Red that doesn’t quite come through in his voice. He rarely looks away from you when he talks. At one point he balances his coffee on his knee without ever looking at it. A former student told me that Red challenges his students to take on big, risky, meaningful projects. And he’d do that by telling them about how people in the Arctic would hunt walrus. Red would say to his class—are you going to be a person who goes after the walrus to feed everyone, or are you going to catch a few fish to feed yourself? DARPA’s Grand Challenge became Red’s walrus. Many of Red’s colleagues at Carnegie Mellon believed the Grand Challenge was asking people to do the impossible. The race was going to be in the Mojave Desert, and no one had built a self driving car to navigate that kind of terrain at high speeds. Honestly, the idea sounded crazy. But the Grand Challenge immediately called to Red.

RED:I get that these things are not for everyone. But for gosh sakes you know at least a couple of times in life, let’s knock it out of the ballpark and do something for the world.

LISA: Red had a year. He needed to buy a vehicle, and a bunch of expensive computers and sensors. He pulled together enough money to get started. One of his backers was Google, which would later become the first company to seriously invest in self driving cars. Red also had to build a team. The fastest way of doing that was to create a class. He put up flyers all over the Carnegie Mellon campus. They said something like: robot race, million dollar prize, take this class. And dozens of people showed up. One of his key recruits was a 20-year-old from Brooklyn named Matt Johnson-Roberson.

MATT JOHNSON-ROBERSON: I was a junior when I joined. And very quickly it took over my entire academic life and then shortly thereafter my entire life altogether.

LISA: Matt was majoring in computer science at Carnegie Mellon. But so far, everything he’d been studying felt abstract. This felt different. Cars driving themselves, from one place to another, that was something he could talk to his parents about. It felt exciting. But then Matt saw the car they’d be using to build their Grand Challenge vehicle.

MATT: If you can imagine whatever you think in your mind of what a robot should look like you know shiny and new and sort of futuristic if you can imagine the exact opposite of that. They brought in this hummer from the 80s, that was like belching diesel fumes, was loud. It just looked old. And so I was immediately like, oh no this is going to be really really hard.

LISA: The car was a 1986 Humvee that Red bought from a farmer. Red told me the first time he saw it, he knew it was the one. Yes, it was old and beaten, but he says all that mattered was its four wheel drive, the fact that it was high off the ground and could navigate difficult terrain. Red tapped Matt to lead the computer hardware team. The computers would be the vehicle’s control system, and Matt’s job was to figure out not only how to hook them up to the car, so they would run the brakes, gas and steering wheel, but also how to keep them working, even when the car was in motion.

MATT: We were getting server grade hardware. You know, the stuff that should sit in a server room on a rack mount, and figuring out how to stick it on the back of a car, air condition it, and keep it running, particularly when this thing was bouncing around on these dirt tracks

LISA: And then, there were the car’s sensors—which would let it see the world around it. They’d be key to the vehicle’s success, but all the options they found had real problems. Cameras, for example, would give a lot of information about the environment, but the images are flat, making it hard for the vehicle to predict how far away the objects were. LIDAR, another sensing technology, would convey depth and distance, but it wouldn’t give the same rich representation of the world. Matt had been taking other classes but quickly realized he’d have to dedicate all his time to the Grand Challenge so that their car could be ready by race time. So he put everything else on hold, and pretty much stopped sleeping and socializing.

LISA: What did your friends think about what you were doing at this time?

MATT: At first they were kind of, “That’s weird, what are you doing?” And then at some point, they were definitely really worried about me. There is one time where I was walking back to the project area, and I was walking down this really steep flight of step.s I think I fell asleep on my feet, like I was like walking, and then like my brain was like, “Yep, we don’t need to be conscious anymore.” And like turned off, and I basically just like almost died falling down this very steep flight of stairs. And I came back and they were like, “What happened to you?”

LISA: All the scrapes and bruises and sleepless nights could be blamed, in part, on the scope of the Grand Challenge. And the fact that DARPA, the race’s organizer, wasn’t sharing much information about what the teams should expect.

MATT: It was so confusing. We were so uncertain about what it was actually going to look like in terms of a challenge. Nobody knew whether, you know, they were going to give us a very easy route or a really hard route. And, you know, it was even more exciting to some degree because of the unknowns

MATT: All that mystery was because DARPA was still working out some of the key details. Tony Tether was the head of DARPA at the time.

TONY TETHER: We really didn’t know what we were doing.

LISA; DARPA, best known for being the creative force behind the internet, has a budget in the billions. Its whole mission is to invest in breakthrough technologies for the military. Tony said he created the Grand Challenge because at the time Congress wanted more military vehicles to be unmanned to reduce the number of soldiers killed during basic missions.  But right from the start, pretty much nothing about the race went according to plan. Tony initially wanted the Grand Challenge to go from Disneyland to Las Vegas. But you couldn’t hold a race like this with regular cars and drivers around, so it meant closing down roads and highways. Plus, DARPA would have to pay back business owners, like casinos, for all the money they’d lose while the race was going on. To get an estimate, Jose Negron, the project manager for the Grand Challenge, videotaped intersections on the strip to see how many cars went by every minute and then reported back to Tony Tether.

JOSE NEGRON: That was the fun part is showing him the film, and I said, “Tony just to close down this intersection is going to cost you X amount. This intersection is going to cost you X amount. This intersection is going to cost you X amount.” He goes, “Well, you told me I had 15 intersections. How much more is it going to cost me?” I said, “Well, that’s my point.”

LISA: So Tony and Jose decided to move the race outside of big cities. Starting in Barstow, California, and going to Primm, Nevada. But this created other problems. Jose met with a power company that was worried that an autonomous vehicle would veer off course and knock out power lines near Hoover Dam, killing the electricity in Los Angeles. Native American tribes living in the Mojave Desert, they were concerned about unmanned vehicles careening through burial grounds. And Tony says there was another opponent to the race. The U.S. government itself, specifically the U.S. Fish and Wildlife Service.

TONY: They heard what we were doing, and then the next thing we know we have four of them showing up and saying hey what are you guys doing. You know, what you know about the turtles and we all kind of what turtles.

LISA: Tony says turtles but he means tortoises, specifically a protected species called the desert tortoise. To make sure these autonomous vehicles didn’t disturb them, or worse, kill them, Tony agreed that the morning of the race, they’d move all the tortoises off the route.

TONY: I’ll tell you a little thing about desert turtles. It’s dry out there right?

LISA: Uh huh.

TONY: So you say how on earth do they get water? Well they have an ability which is that they regenerate their water. Water goes into them, it turns to urine, they take that urine and actually create it back into water, pure water, internal.

LISA: Wow.

TONY: That’s how they live. And if you pick them up, what happens is that they get frightened, and they pee themselves. I mean they actually pee their urine.

LISA: Oh no.

TONY: And then if you put them down they die, because they’ve lost all the water they were using to recycle. So you could not just go and pick them up. You had to get people who knew how to pick the turtles up. Well I guess I hired all of the biologists in the southwestern part of the United States. Who were who were licensed to pick up turtles.

LISA: While Tony and Jose were dealing with reptiles, government officials, and utility executives, back at Carnegie Mellon, Red Whittaker’s team, which had assumed the name the Red team after its leader, was starting to see their 1986 Humvee look more like a robot. They’d named it Sandstorm and it had cyclops looking eyeball on top of it, to help it see the world around it. The team had settled on LIDAR for the car’s main sensor, the same technology that’s big in the self-driving car industry today. And inside Sandstorm sat a large electronics box on shocks, holding the servers, AC units, network switches, and power cables. That stuff, alone, weighed more than a thousand pounds. So the Red Team had built the vehicle. They had all the hardware in place. Now it was time to test the software. To refine the way Sandstorm was interpreting information and maneuvering itself through the world. And to do that they had to move out to the desert, to a setting like the one they’d be racing in. Six weeks before race day, a small group from the Red team moved to a testing facility in Nevada. Kevin Peterson was one of those people. He was from Princeton, New Jersey. A brilliant coder known for his competitive streak.

KEVIN PETERSON: I really remember being in the desert for the first time. And that was it for me. I really fell in love with autonomous vehicles driving outside. I think it’s, it’s kind of a unique thing. You write some software and you load it on the vehicle and the vehicle comes alive. You can, you can immediately see the effect of what you’re doing. I still love that. It’s still my passion.

LISA: It was in the desert that the magnitude of what they were trying to do, came into focus. There are so many things that humans do easily that are hard for computers. For example, if I see a puddle in the street, or a plastic bag blowing in the wind, I know that those things are pretty harmless to drive through. But for computers, puddles often look like holes in the street. Floating plastic bags look like flying rocks. It’s hard for computers to recognize what kind of object they’re looking at, and how exactly to deal with it. In 2004, one of the fundamental challenges for Sandstorm was figuring out: where’s the road. Kevin and the small crew rented RVs, so they could be closer to the testing facility, which was about an hour drive from the nearest town. Matt, the eager junior, had desperately wanted to be part of this group testing Sandstorm in Nevada. He’d already invested so much time in the project and who wouldn’t want to chase a robot car through the desert. So here he was, living his dream, until he saw where he’d be sleeping.

MATT: There were not enough beds in the RV for for even all the people. I was the youngest guy and so I guess I got the short straw. And so I remember I was sleeping on a table in one of the RVs.

LISA: Really?

MATT: Yeah, I think my legs were off it, maybe my head. It was, it was not comfortable. And the first week that we got there we had all this diesel fuel for the Humvee. And we were storing the diesel fuel in the RV and the diesel fuel spilled. So I was sleeping in this RV camper on a table with just diesel fumes like in my eyes and nose. I remember thinking, wow you know I really hope we win.

LISA: They parked the RVs near the two-story garage that housed Sandstorm, where Matt and Kevin would spend most of their days coding. This was early February. The nights were extremely cold. The crew would throw meat on a grill. They subsisted on a lot of bratwurst and peanut butter, which was rough for Matt, who was a vegetarian. And that wasn’t the worst of it. The RVs were equipped with showers and toilets, and at some point they needed to dispose of all the waste. Here’s Kevin, the software guy.

KEVIN: They drove into town and all of the water containers were full, and the toilets and the showers just exploded because we drove over rough roads. It was just like wastewater everywhere in these RVs. We had to clean up. It was disgusting. After that we decided that we weren’t going to use the bathrooms or the showers in the RV and what that meant was that we really didn’t shower for like two months. It was kind of barbaric, really.

LISA: The days followed the same rhythm. Kevin and Matt would code, then take Sandstorm out to test that code. They’d drive behind Sandstorm, watching it turn when the road curved but also watching it crash into fences, rip off wheels, hit large boulders, get stuck in mud. While Matt, Kevin and a handful of others were working hard in the desert, Red Whittaker was desperately trying to raise more money to keep the team alive. He was also leading a group of 30-some people working on Sandstorm’s planning, mapping, and perception capabilities back at Carnegie Mellon. But Red took occasional trips out to Nevada to check in on the guys testing Sandstorm.

LISA: Can you can you describe for me seeing them in the desert like what did they look like.

RED: Well I can certainly describe what they smelled like in the desert. There were a lot of hours under a lot of tough circumstances and they were on the grubby side.

LISA: The team did get one break from the desert. The company, Intel, which had donated computers, asked the Red team to present Sandstorm at a conference in San Francisco. Kevin, the software guy, was excited about staying in a hotel, taking a shower. But there was one big problem to work out in this formal unveiling of Sandstorm, because of how the CEO of Intel wanted it to happen.

KEVIN: He wanted sandstorm to drive onto the stage while he was talking about it. Sort of like set the stage. This is the future.

LISA: But that wasn’t going to be possible.

KEVIN: This was in an auditorium and there are crazy radio signals in these auditoriums. And of course at this point the robots didn’t, they weren’t perfect and they didn’t honestly work inside. We ended up putting a person in the car, and they lay down in the car and pushed the gas pedal and the brake with their hand and they couldn’t see anything.

LISA: This great triumph of autonomous vehicle technology was being driven by a guy slouched down on the floor.

KEVIN: Craig Barrett, who was the CEO, is up there on the stage in front of all these people and he goes, “And here’s sandstorm.” This music started blaring and the engine screamed and then the vehicle rolled out on stage and then the crowd went nuts.

LISA: The crowd was oblivious to the workaround. The CEO went unscathed. And for the Red Team, it brought home this idea that they were working on something important, something exciting.

KEVIN: It’s like one of these sports moments that you don’t, you don’t really get that in technology. You know there’s never like a moment where you like write some software and a thousand people cheer for you. I think we all felt like rock stars.

LISA: Just a few hours later, Kevin and the others were back to the desert, the RVs, the brought-wurst. The big day was just three weeks away, when they’d be competing against more than 20 teams. One of the things the Grand Challenge was testing was speed. This was a race after all. But driving autonomously at high speeds in a complicated environment presented all sorts of challenges. The faster a robot travels, the farther out it has to see. It has less time to make decisions and the decisions it makes have much greater consequences. And so the Red team started testing Sandstorm at higher and higher speeds, to make sure its software was working properly. Things were going well. Four days before the opening ceremony of the Grand Challenge, Matt, Kevin, and a guy named Chris, were out testing Sandstorm at a track they’d been using. Matt, the eager junior, was sitting in a car, watching.

MATT: So it’s a massive car barreling around the track, and we’re doing 20 miles an hour and then we’re doing 30 miles an hour.  And I remember I was sitting in the car with Kevin and we always had walkie talkies, and we were all talking to each other and I think Chris is probably in one of the chase vehicles or somewhere else on the track and he was telling us sort of, “OK, let’s go to the next highest speed.” So it’s going like 40 miles an hour. And I want to say we get to 50. Now I don’t know if you have ever seen an off-road car. I think it was 50 miles an hour. But like a car off road at that speed, it is like tearing around the track and it looks like a music video or like a highlight reel. It’s crazy. And me and Kevin are in the car, just incredibly impressed that this is happening and it’s amazing. And we’re super excited. And I think at that point we’d convinced ourselves that this is going to work. And then Chris is like, “Let’s go faster.” And I remember I looked at Kevin and I was like “I don’t, this seems crazy.” And he’s like, “All right, let’s try it.” It was faster than we had ever gone before. And we watched the car going around the track, and we watch it come around the turn and get to the end of its loop. And it jams the steering wheel all the way to the right. It was like slow motion because we watched this giant thing roll over. Like the worst accident you’ve ever seen on a highway, like this giant thing flips over and then spins. So all of the incredibly expensive and delicate electronics and sensors all sat on the roof. So this custom thing that we had built and spent like the whole year engineering immediately crushed, just completely destroyed. The computers are flying out. There’s oil leaking everywhere. The wheels are spinning. Me and Kevin just look at each other and are like, whoa.

KEVIN: We we ran over to the vehicle and started to look at it and tried to figure out you know is the thing salvageable. And it became more and more apparent that things were really really damaged. It’s one of those moments where you feel your heart drop.

SPENCER SPIKER: The look in everybody else’s face was defeat. They thought game over.

LISA: That’s Spencer Spiker, a mechanical engineer who was out in the desert with Matt and Kevin. He didn’t see the crash, but he remembers finding out about it.

SPENCER: I don’t know how many other folks play sports, but when I played football and you’re in the huddle, when you’re down you know 15-20 points you can look at your quarterback’s eyes and see if he’s defeated or not, and then you know there’s no winning. But you can tell if there’s like the fire there, you know you’ve still got a chance. But in that case you’d look at people and they were just, they were just done

LISA: Or were they. That’s after the break.

<<BREAK>>

LISA: Welcome back to StartUp. So Sandstorm had crashed. Many on the team thought there was no way they’d come back from it. They knew they had to tell Red, who’d dreamed up this whole idea of building an autonomous vehicle in the first place. And so they called to give him the news.

RED: I was here in Pittsburgh. I got enough communication to understand what had occurred.

LISA: What’s your initial reaction hearing this?

RED: It’s a gut-shot. Then, as a leader, it really matters to be clear immediately. What are we going to do. It’s not like you’re going to show your emotions. I had a sense that somehow Sandstorm’s greatness wouldn’t have the time to shine. It was a helluva machine with a lot of capability. And from the moment of the rollover, you know, my sense was, well we’re wounded

LISA: Red hopped on a plane to Nevada. When he got to the testing site, things did not look good.

RED: People were exhausted. People were beaten. There were people splayed out on their backs, completely dead asleep, dead to the world. And it just doesn’t work. Like, get up. It’s time to go.

LISA: Red had to convince these guys, who were sleep deprived and feeling totally defeated, to give it one more shot.

RED: What I gave was the clear, authentic, unambiguous declaration: Sandstorm’s going to run, it’s going to run in the front. It’s going to go the distance. And to get there we’ve got to do this by sun up and that by tomorrow night and that by this next sundown and that by the next night, and let’s haul.

MATT: in the same way that he convinced us that this whole thing was possible…

LISA: Here’s Matt, the junior.

MATT: …he convinced us that a week before the race, that we could rebuild and replicate all of the things that we had spent six months to a year building in a week, and that we could get it back to the point that we were ready to race. And I remember being like, yeah, that makes sense, ok, yeah, of course.

LISA: Red had convinced the team to take on the walrus. In the three days before the Grand Challenge’s opening ceremony, the team worked around the clock. They replaced the hood, rebuilt the engine, got a new sensor, and rebuilt the piece of hardware that was stabilizing the sensor—work that originally took months.

MATT: It was a real testament to the fact that the limits that you think you have to yourself I think aren’t really there. Because I thought I was at the exact physical limit of what I was capable of doing. And somehow I think that period we slept even less and worked even harder.

LISA: They finished just in time.  The night before the race, Red wrote in his log, “There is no more practice. Just impeccable execution. Saturday will be a lot of dirt, speed and brutality. We can win this. Spare nothing. Victory or demise.”  At 6:30 on the morning of March 13, 2004, all the teams gathered at the opening gate.

2004 GRAND CHALLENGE RACE MC: And we’re 30 seconds from history.

LISA: The vehicles had staggered start times, so they wouldn’t drive out in a pack and wind up running into each other. First up was the Red team’s vehicle, Sandstorm. The Humvee waited at the starting line, ready to go.

MC: Alright, ladies and gentlemen, boys and girls. OK, the bot has been ordered to run, the green flag waves, the strobe light is on, the command from the tower is to move. Ladies and gentlemen, Sandstorm.

Jose: Sandstorm takes off and it just took off like a bat. Boom.

LISA: That’s Jose Negron, project manager for the DARPA Grand Challenge. Matt, the junior, was with members of the Red Team.

MATT:  I remember seeing Sandstorm leave the opening gates and drive off, and very quickly it was like out of our sight. And I don’t think we had ever been in that position before because we had never been at a point where we were not following the vehicle, right. So we had always seen it. And so it was a really weird feeling, and so I remember that very vividly thinking like, oh yeah like it’s a self-driving car. It doesn’t need us.

TONY: Boy that day, the air was just electric.

LISA: Tony Tether, the head of DARPA, was watching Carnegie Mellon’s vehicle from the stands with a four-star general.

TONY: Carnegie’s vehicle takes off, comes down, makes a left-hand turn, takes off, and it’s riding down there, and it makes another turn. And he turns to me, and he says, “OK, there’s nobody in there?” I said, “Nope, there’s nobody inside that.” HE says, “There’s nobody like over here someplace remotely controlling?” I said, “No, General, it’s doing it all on its own.” And he said, “Wow.” And I thought to myself, “Holy cow.”

LISA: You’re impressing a four-star general.

TONY: Well, no, no I was impressing myself. I thought, holy cow. Look at this. When that thing took off, it really, really looked like there had to be somebody driving it, because it was driving itself just like a human was inside. I mean, it was spectacular.

JOSE: When you see an autonomous vehicle coming down toward you charging at 20-30 miles, your head starts thinking, is he going to slow down and turn? Oh my goodness, he’s slowing down and turning, he made it. does he turn again? Yes he does. Does he go across the cattle pins? Yes he did. When you see, that’s a realization that we’re here. We are here.

LISA: While Sandstorm was driving through the desert, other vehicles with names like Avidor, Ghostrider, and The NaviGator took off from the starting line, one by one.

MC: Seven of the vehicles are custom made, three are SUVs, three are six-wheel, and we have a smattering of them that are modified ATVs, and we have one motorcycle.

LISA: The motorcycle was the smallest vehicle in the race. The biggest vehicle of the race…

MC: And off we go with Terramax. Ladies and gentlemen.

LISA: …was called Terramax.

MC: 32,000 pounds, six wheel military vehicle.

TONY: It took off really good, very impressive.

LISA: That’s Tony Tether.

TONY: Big truck rumbling down, driving this thing by itself. And it got caught. It stopped. It came up against a tumbleweed that had gone into the path. It saw this tumbleweed and it thought, it’s an obstacle. What do I do now? So it starts backing up all by itself. Remember the thing is doing it all by itself. Well in the meantime, a tumbleweed had come behind it, and it had sensors in the back to see where it was backing up, so it sees this tumbleweed, and it says my god, another obstacle, and so it just ends up going back and forth, back and forth. 16 tons stymied by two tumbleweeds.

LISA: If vehicles got far enough out of sight, there was really no way to watch them. The only people who got to see what was happening were the people with DARPA, riding along in chase vehicles, or flying in helicopters overhead, surveying the route. Sandstorm drove one mile, then two, then three, things were looking good. It crossed a highway, got to a cattle gate, drove toward the desert, and then it got to one of the most challenging parts of the course—the switchbacks, incredibly windy roads up and down mountains.

MC: Okay, we just got word that Sandstorm is in the switchback section of the event, here at the DARPA Grand Challenge.

LISA: Matt, the junior, was hanging out by the opening gate area.

MATT:  I remember just not wanting to even hear any updates ‘cause I was so scared that something bad was going to happen.

DARPA CHASE VEHICLE: (PHONE RINGS) Hello.

LISA: This is tape from the DARPA vehicle that was following Sandstorm. They were relaying updates back to Tony Tether.

CHASE VEHICLE: it hit a huge boulder, and it uprooted it and it basically, it almost high centered itself on it, and then it had to back up and get back on course.

LISA: Sandstorm also ran into a few fence posts, but it was at mile seven where the trouble really started.

CHASE VEHICLE: Mic 22, victor 22, robot 22 is smoking. Roger.

LISA: Sandstorm was going up a hill when it drove off the road, and one of its massive wheels slipped into a patch of rocky dirt, and couldn’t get traction.

MATT: One of the things that we had programmed into it was sort of the same level of determination, perhaps, that we had. Which was to basically keep going in any scenario in which it got stuck.

LISA: One of the guys in the chase vehicle got out to take a look at Sandstorm.

CHASE VEHICLE: Mike, be careful cause it might back up.

MATT: It got stuck, and then it was spinning its wheels, essentially, when it went off the road. And it spun its wheels so much that it ripped the tires off the rims and was throwing molten rubber. I guess just onto the track.

CHASE VEHICLE: The left front tire was spinning, spun itself till it ran all the rubber off the tire, and now it’s spinning full bore with no rubber on the tire, there’s no more smoke. You want me to pause it?

PHONE IN CHASE VEHICLE: Victor 21 mic 21. We do want you to pause right now.

CHASE VEHICLE: Ok Tony says disable. Going to go to pause. Mic 22 victor 22 is going to pause, now disable. Alright, we just disabled him. Mic 22 victor 22 is disabled.

LISA: Sandstorm was done. It was stalled out on the side of a ridge, tire spun off, engine smoking. It had gone 7.4 miles, a long way from the one-hundred-and-fifty miles it would’ve had to travel to complete the race. Here’s Matt, again.

MATT: I remember losing it and it being really emotional because it just…it’s such a big physical manifestation of your work. It would be like having a fire at an artist’s studio and losing all of your work. Like you know that, yeah, I made that thing, and I could make another thing. But I could never make that exact thing again. And I certainly couldn’t replicate whatever the experience was of being part of building it.

LISA: Red Whittaker, he had a different reaction.

RED: When I first heard the news, I had a moment of disappointment, but mostly the idea that you know that’s it. That’s how far for today.

LISA: While members of the Red Team were working through their let down, there were news reporters waiting … who had no idea the race was even over. They were gathered at the finish line in Primm, Nevada, waiting for the first vehicle to come into view. Tony Tether took a helicopter to break the news.

TONY: I landed there into Primm. And the public affairs person, Jan Walker, came up to me and says, “What are you going to tell them?” And I said, “I don’t know.” I guess I got a minute or two to figure that out. So we went in just the two of us. And these cameras, and they say well, “OK, how’s it going?” And I said, “It’s over.” And they said, “What do you mean it’s over?” I said, “It’s over. The last car caught on fire. And got seven point something miles and that’s it. They’re all down.”

LISA: There was no winner that day, but the vehicle that had gone the farthest—it was Sandstorm. Tony said there was silence in the room. The disappointment was clear. So he had an idea.

TONY: I said, “Well, ok. I’ll tell you what though. We’re going to do this again. And we’re going to do it again in about 18 months. And then the prize is not going to be a million dollars. I’m making it $2 million.” Now I did not have the authority to make it that but I said it anyways.

LISA: Luckily, Tony did get what he wanted—another race, another prize, doubling the stakes.

TONY: I did not want it to end, even though I knew that the other guys at DARPA understood this as a Kitty Hawk event. If you go to Kitty Hawk and you see what the Wright Brothers did, it wasn’t very spectacular. Their airplane was catapulted. The first flight was 30 seconds. 30 seconds. But in that 30 seconds, The Wright Brothers proved what people really believed at that time couldn’t be done. And I always felt that, that Carnegie in that 7.6 miles or whatever the distance was, proved that it could be done. I mean, no other car in history had ever gone anywhere near that. Because people still did not really believe that you can put sensors and computers and into a vehicle and have it make all those decisions you know all by itself.

LISA: The Grand Challenge didn’t only make people believe in the potential of driverless cars, it also shaped the futures of a lot people, including people on the Red team. Matt graduated from Carnegie Mellon the following year and is now a professor at University of Michigan, where he co-directs the school’s center for autonomous vehicles. Kevin, our brilliant coder, he stuck around Carnegie Mellon to pursue his PhD, and is now cofounder of an autonomous vehicle company called Marble. Kevin and Red Whittaker kept at the DARPA races. The next year, the Red Team actually finished the race, but lost to a group from Stanford. The team finally won first place in 2007. They took home the $2 million prize in the third and final race that DARPA organized.

KEVIN: You really had a lot of the capability in 2003, but none of it was together in one place. We were really the first community to work on self-driving cars in a big way, and we were really the first people to crack the challenge. How do you test a vehicle, how do you write the first software, how do you do that safely, how do you develop that software safely. And in 2007 we had the vehicles working, and after that, there was this belief that self-driving cars could come together. Without those races, I really don’t think that we would have autonomous vehicles on the road today. I think it would be an entirely different world.

LISA: DARPA’s Grand Challenge inspired one company, in particular. Google. The tech giant hired engineers from the races to start its self driving car project. And for several years after the Grand Challenges, Google was only big company working on autonomous vehicles. They had no idea how it was going to make money. In fact, they called it a moonshot. But then something happened that turned that moonshot into a gold rush.

TRAVIS KALANICK: My name is Travis Kalanick, cofounder CEO of Uber.

LISA: How a race that started in the desert became a much larger race between tech giants and car companies, with billions of dollars in the balance. That’s next week on startup.


LISA: StartUp is hosted by me, Lisa Chow. This episode was produced by Bruce Wallace, Luke Malone, Simone Polanen, Emanuele Berry, Amy Standen, and Max Gibson. Our senior producer is Molly Messick. We are edited by Annie-Rose Strasser. And we want to take a moment to thank Emanuele Berry, who is leaving our show to join The Nod, another Gimlet podcast. Our loss is their gain. We’ll miss you, Emanuele. Even though you’re only sitting downstairs from us. Mark Phillips wrote and performed our theme song. Build Buildings wrote and performed our special ad music. For full music credits, visit our website. Andrew Dunn mixed the episode. Special thanks to Michele Gittleman and Vanessa Jameson. To subscribe to StartUp, go to Apple Podcasts, or whichever app you like to use. Or check out the Gimlet Media website: GimletMedia.com. You can follow us on Twitter @podcaststartup. And if you’re curious about what happened to those delicate desert tortoises, they survived the race. Tony Tether made sure all their needs were met.

TONY: In fact we found two turtles who were mating, they were actually on the track. So we didn’t know what the hell to do. We couldn’t go pick them up and move them. And when turtles mate, by the way, they take a long time, so we had to watch them. Because if a car made it as far to these turtles, we were going to have to stop the race, and we thought the cars wouldn’t get there for a couple of hours, and so they must surely be done by then.

LISA: Thanks for listening. We’ll see you next week.

We do our best to make sure these transcripts are accurate. If you would like to quote from an episode of StartUp, please check the transcript with the corresponding audio.

New Money (Season 6, Episode 6)

A company bets big on cryptocurrency

October 13, 2017
View show transcript

LISA CHOW: From Gimlet Media, I’m Lisa Chow and this is StartUp. What is it like building a social media company in a world dominated by Facebook? Facebook could copy your idea, distribute it to their billions of users, and in an instant, they’ve killed your business. So, what do you do if you’re trying to compete with one of the giants? One company has come up with a radical plan. Kik launched in 2010, and within a few years, it was worth a billion dollars. But its growth did not last, and things got tough for the company. So earlier this year, it decided to embrace a new trend—raising money and betting on a brand new currency through something called an I-C-O. An Initial Coin Offering. Producer Bruce Wallace has our story.


BRUCE WALLACE: If you’re not a teenager, or the parent of one, you may not have heard of Kik. It’s a chat app, kind of like WhatsApp. And when it first came out, kids loved it.

DAVID: Yeah it was awesome dude!

BRUCE: David was a sophomore in high school when Kik launched in 2010. Suddenly, all of his friends were talking about it.

DAVID: Everybody was like, ‘What’s your Kik, what’s your Kik?’ You know people ask for Kik’s before they gave you their phone number. It was great; it was really kicking.

BRUCE: Did you just say ‘kicking’?

DAVID: Yeah it was real kicking, yeah.

BRUCE: David was a big online gamer. He spent hours every day playing World of Warcraft, and he used Kik to send messages to people he was playing with: to tell them to hop online, and discuss strategy.These were the days when people got charged per text, but Kik worked on Wi-Fi instead. That was a big reason kids started using it.

DAVID: My mom would yell at my sister, ‘They charge you 30 cents a text.’ And my sister was like, ‘So what?’ She’s like, ‘But you send a thousand texts a month’. That was the genius behind Kik, you know, I can talk to my friends. I don’t have to get yelled at by my mom for using too much text messages. Kik’s awesome, you know?

BRUCE: A lot of other teenagers thought Kik was awesome, too. When the app launched, user growth was exponential across North America. Ted Livingston, who founded Kik, watched it all happen from the company’s headquarters in Waterloo, Canada.

TED LIVINGSTON: We went zero to a million users in 15 days. And then we went from a million to two million users in seven days. There’s eight of us in a room and the whole world was adopting Kik; it was pretty amazing.

BRUCE: Ted’s an unassuming guy, he’s affable, laid back. He grew up in the suburbs of Toronto. He hadn’t counted on this kind of success. But pretty soon, Kik said nearly half of all teens in the U.S. were on the app. They swarmed to it for groups chats, abundant emojis, and chatbots—that’s a bot that’s programmed to have simple conversations with users. Kik grew to 150 employees and opened offices in Toronto, Tel Aviv, and New York. In five years, they raised $120 million. Two years ago, when they raised their last round, the company was valued at a billion—elite territory that few startups reach. But then Kik started to sputter. The company saw a small but worrying dip in users. And damaging articles started to come out, about sexual predators using Kik to meet young people. But their biggest problem? Facebook. As chat exploded, the social media giant went all in on it, building out Messenger, and using its huge user base to become dominant in the space. When Facebook saw a feature doing well in another app, it would roll out something similar. People who follow the company call this strategy “copy-and-crush.” In 2014, the company bought WhatsApp, one of its biggest competitors, with hundreds of millions of users worldwide. By last year, things were looking pretty bad for Kik. Their user growth had slowed, and revenue was far below where it needed to be. Investors weren’t stepping up with more money. But none of their trouble was public knowledge, until Ted, with a frankness that makes him kind of unusual among CEOs, admitted it to a reporter.

TED: The reporter said, ‘Hey, we heard that there’s struggles in the space. Nobody’s commenting on it. What about you guys?’ And you know I was like, ‘Yeah we’re struggling.’ And I think the reporter said, ‘What, really!?’ It was sort of not the answer he was expecting.There was a lot of articles, it was big news that this unicorn company, Kik, is struggling with growth.

BRUCE: Ted says that, looking at some of the competitors out there, it’s no wonder Kik was losing ground.

TED: As a consumer. If I have a choice, you know, should I use Kik or should I use WhatsApp? WhatsApp, Facebook funds it probably to the tune of hundreds of millions of dollars per year. There’s not a single ad in it, and absolutely everything in it is completely free. How are we going to make money in a world where consumers have that as an alternative?

BRUCE: Before long, Kik wasn’t the only chat company struggling publicly. Even Snapchat—with its massive user base and tons of investment—ran into challenges.

TED: Here’s Snapchat. You know they’ve raised $2.5 billion. They have 2,000 employees and they’ve executed perfectly, this amazing company. And yet Facebook turns on Stories in Instagram and just overnight completely cuts off their growth. And so we said to ourselves, ‘If Snapchat can’t take on these big companies who can?’

BRUCE: Ted says it’s not just rival companies that lose out in a world where Facebook owns basically every type of social media. He thinks it’s something we should all be worried about.

TED: We’re going to get to a point I think where, if one company or just a few companies controlled that platform it could one day become dangerous to society. It would give one company or a handful of companies too much power to influence where society was going, should be going.

BRUCE: Ted’s a little vague about this broader threat he sees from Facebook. And at first, I wasn’t sure what he meant. But as the news has started to come out about how Russia-linked groups bought Facebook ads to try to sway the U.S. election, or when you realize that Facebook’s two billion users make it larger than every continent except Asia, that vague future Ted says he’s concerned about comes into focus. Plus, there’s the fact that Ted thinks chat is going to become a bigger part of our everyday lives. He thinks before long, people will use chat for most of their day-to-day interactions. You’ll use a chat app to send emails, buy concert tickets, split the check at a restaurant, book doctors appointments. This isn’t farfetched. In China, there is already an app that does all this. It’s called WeChat, and millions of people use it. Seeing Kik under threat, and believing that it was not only in the best interest of his company—but also of the world—that it stay alive, Ted started to think about what they could do. They’d already tried to grow revenue through advertising and brand partnerships, but none of it worked. And so last year he landed on a pretty radical idea—something called an ICO.

TED: We looked at all of the options, but one by one it became increasingly clear that not only was this the best option but it was also the only option.

BRUCE: ICO stands for initial coin offering. It’s a new way of crowdfunding that’s blown up this year. In the last nine months, over 100 projects have raised a total of about $2 billion this way. That’s on par with the amount of VC money raised by early stage companies in that same time. In an ICO, people put up money to help fund some kind of project, usually a tech project. It’s a bit like a Kickstarter. Except in an ICO, what the the people who are crowd-funding the project get back is a digital currency, called a cryptocurrency. Right, so what does that mean? You may have heard the term cryptocurrency. There are a lot of them today. And to explain how they work, we’re going to look at the biggest and most successful one to date—Bitcoin. It’s the first cryptocurrency, the model for all the others, including the one Ted’s company is launching. And to help us understand Bitcoin, we have this guy.

PETER VAN VALKENBURGH (singing): ‘Wonder of wonder miracle of miracles, I took a chance and it paid off.,’ or something like that.

BRUCE: Peter Van Valkenburgh. That song is from Fiddler on the Roof, from a role he once auditioned for. He’s an actor turned cryptocurrency expert.

PETER: I’m here to talk about fake money. And other things related to Bitcoin.

BRUCE: Is it really fake, level with me?

PETER: No. Well all money is fake; it’s a mass hysteria.

BRUCE: He’s kind of joking about mass hysteria. But what he’s saying is no currency—dollars or rubles or whatever—has any inherent value. Its value comes from people agreeing that it’s valuable.

PETER: I’d say a common question is, ‘Why does it have value; it has nothing behind it?’ Well nothing actually has value behind it. Even gold, or food for that matter, has value because people want it and there’s only so much of it.

BRUCE: Gold doesn’t have innate value. It would be worthless if no one wanted it. Same thing goes for dollars. And gold and dollars would also be worthless if there was an infinite supply of them. That’s why we care if people counterfeit money. So here are the first rules of creating any new currency. You need scarcity. And you need demand. The breakthrough Bitcoin’s creator made was devising a way of capping the total number of Bitcoins—here’ll only ever be 21 million of them—and tracking every single Bitcoin, so that it could never be counterfeited. So, scarcity: check. But, there wasn’t yet demand.

PETER: When Bitcoin first launched it was worthless. They were 21 million units of funny money that nobody wanted.

BRUCE: So, how do you create demand? In the case of Bitcoin, little by little. There were early adopters, people deep into internet technology and privacy. Legend has it that the first person who actually got a real thing with the currency was a guy in Florida. He paid someone 10,000 bitcoins to order him two pizzas. Pretty soon Bitcoin wasn’t only being used by anarchist types, People who loved that idea that an alternative currency could undermine big institutions like banks or, you know, the government. Bitcoin became the currency of choice for buying drugs on the dark web. Exchanges were created that made it easier for bitcoin to be changed into dollars or euros or yen. And speculators got into it. People started buying bitcoin, hanging onto it until it was worth more, and then selling it off. David, that Kik user we met before, is actually one of those people. He’d discovered Bitcoin when he was a teenager, and convinced his parents to let him use some of his college fund to buy some. Later, as more cryptocurrencies came onto the market, he invested in those, too. He’s 23 now, and trades cryptocurrency full-time. He actually asked us to only use his first name in this story, because he felt weird talking publicly about all the money he is making. And it’s kind of a crazy way to make money—spending your days following every dip and jump in a really volatile market. David told me about this one time a few months back, when he’d put some money into a cryptocurrency called Bitcoin Cash, which is kind of like Bitcoin’s younger sibling.

DAVID: I was like, ‘Wow, I could make some money off of this.’ So I bought 50 Bitcoin Cash at $300, and I got, I was sick in the hospital, and I went there. I had, like, pneumonia. It was real bad pneumonia. In Florida, right? Who would’ve guessed?

BRUCE: While he was in the hospital, the Bitcoin Cash price started to drop—from 300, to 280, to 270. He’d lost $1500, and was worried that the price was about to crater.

DAVID: I was like, ‘Oh crap, what am I doing here at the hospital getting sick, losing this money?’ And I was like, “Mom, you need to come bring my computer to me, or I can tell you how to get rid of this bitcoin cash. But I have a couple brothers and sisters still in high school, and she’s busy with them—you know, band practice. It was the worst feeling in the world. I really don’t know. I’m sure there are worse feelings in the world, but it’s like if I was strong enough, I would have got out of my hospital bed and went to a library or borrow a hospital computer, ‘Yo can I see that real quick?’

BRUCE: One night, right before he got out of the hospital, his mom finally brought him his computer. He was asleep, so she left it on his nightstand.

DAVID: When I woke up, you know, I got on to sell it, and it shot up like $770. I was like, “Oh my god, oh my god.” I just sold it. I was just like, “OMG.” Lemme see what the calculation for that was. Hold on. So that was $470 difference times 50. I made $23,500 on that. Yeah. The previous day I thought I had lost you know $2,000 on that transaction. But I was able to pay my car off the next day, so that’s a pretty good feeling.

BRUCE: Trading like this was another thing building demand for bitcoin. As that demand has grown, and as the value has grown with it, the currency’s gone more mainstream. You can pay for a hotel room on Expedia with it, or buy Xbox games from Microsoft. Overstock says that people spend about $50,000 in cryptocurrency on its site each week. And all this real-world use is driving up the value of Bitcoin. As of this recording, the value of one bitcoin is over $5,000. Which means that, if the person who bought those two pizzas back in 2010, had held onto their bitcoin instead? They’d have over $50 million. Which brings us back to Kik and its CEO Ted Livingston. Seeing the success of Bitcoin and other cryptocurrencies made Ted wonder: could there be a way in here to solve our problems? Could Kik raise money by creating its own cryptocurrency? And could that be the way to keep the company alive. So earlier this year, Ted announced the startup world’s equivalent of a hail mary pass. He was on stage at a tech conference in New York City, being interviewed by a venture capitalist.

VENTURE CAPITALIST: So what did you announce at eight a.m., and who are you?

TED: I’m from Kik. Kik is one of the largest chat apps in the world, and the thing we are announcing today is a new cryptocurrency called Kin.

BRUCE: Kik’s big plan. That’s after the break.

<<BREAK>>

BRUCE: So, by late last year, Ted Livingston was ready to forge a future for his company, Kik, through an ICO. The first step: creating a cryptocurrency. Kik decided to call it “Kin.” Yes, ‘kin’ like family. It would be a lot like Bitcoin, but the way of creating demand for it would be different. More deliberate. Ted decided they would make Kin useful in the app. People would be able to buy and sell things with it, creating a whole separate financial world. Ted was inspired by an experiment they’d done a couple of years earlier with something they called Kik points.

TED: Kik points was a digital currency that we created and built an economy around inside of Kik. So it started out, there was one way to earn Kik points, which was to watch ads, and there was one way to spend Kik points, which was to buy smileys.

BRUCE: Smileys were a kind of emoji that you could only get with Kik points.

TED: From there we built more and more ways to earn Kik points and more and more ways to spend Kik points. And we got millions of mainstream consumers earning and spending in this digital currency.

BRUCE: This idea probably isn’t totally unfamiliar to you. It also happens in video games, or social network games, like Farmville.  Anyway, with Kin, Ted thought he could take Kik points a step further. He could make it a cryptocurrency, which meant it would have value outside of Kik. It would trade on exchanges, and sell for real US dollars. Just like Bitcoin, there would be a limited supply of it. And so, it would rise in value over time, assuming there was demand. So how would they get Kin into the hands of Kik’s millions of users in the first place? Well, just like with Kik points, there would be ways to earn it. For example, the company could give users a few Kin in return for moderating a group chat, or posting a video that gets a lot of traffic.

TED: Today, as a consumer, you know, we’re providing value to all these huge services. You know, we’re posting photos and we’re liking stuff and we’re commenting. We’re creating all this value but we’re doing it all for free.

BRUCE: Ted says that under the new system, developers—like the ones who built the chatbots that helped make Kik a hit early on—they’ll also be getting paid in Kin. They’ll get some from Kik, and the hope is that users will start to pay developers too—giving them Kin in return for using a popular chatbot, or for special stickers or emojis.

TED: You create this amazing place for consumers to come together and to provide value to each other, whether that’s around sports or games or livestream, it doesn’t matter what it is. If you do that, you will get compensated. We think there could be a future with thousands—tens of thousands, hundreds of thousands of digital services that are all catering to a very specific audience around a very specific interest, and making a living from it.

BRUCE: So this is Kik’s plan. Jumpstart this chat universe where developers are making money building different ways for users to interact, and users are buying those new things and getting paid for their activity, too. It will be like a little economy, inside the app. And as all these new features get created, Kik gets more users. That use drives up the value of Kin, just like the value of Bitcoin rose as people found more ways to use it. Kik will capitalize on the rising value by holding onto a certain amount of Kin. 30% of it. This is what Kik envisions as the long term solution to their money problem. They reap the rewards as their stack of Kin climbs in value. So instead of making money in ad revenue, or subscriptions, or fees, Kik is betting on its currency. Ted first started talking about this grand theory of how to save Kik a year-and-a-half ago. And at the time, his investors thought it was pretty crazy.

TED: The investors, I tell them about this, and they’re like, ‘So we’re going to build an economy around a new cryptocurrency, and we’re not going to make any revenue. Is that what you’re saying?’ I’m like, ‘Yeah yeah yeah, that’s what we’re gonna do. ’

BRUCE: Not long after that, though, startups began to raise the first eye-popping amounts of money through ICOs. One raised $35 million in less than 30 seconds. A few months later, a project that was pretty early-stage and theoretical raised $230 million. Soon, Kik’s investors were on board.

TED: Today you know you see these companies raising hundreds of millions of dollars, and it’s just four or five guys in a room, you know, all of a sudden it doesn’t look so crazy.

ROD MCLEOD: Cool, can you hear us?

TANNER PHILIP: We can hear you.

BRUCE: In early September, preparation for Kik’s ICO reached a fever pitch. They had thousands of applications to review—collecting social security numbers, and double-checking scans of passports, making sure people were who they said they were. In the days leading up to the sale, teams in Waterloo, New York, and Tel Aviv were in touch constantly, working out kinks.

ROD: In terms of registrations, like numbers and under review, like how are you doing there?

TANNER: Yeah, so. Registration numbers. I haven’t checked the site in a minute but it’s quite close to 16,000 I guess. So, yeah, we’re feeling pretty healthy.

BRUCE: Ted, the CEO, was in the thick of things too. A few days later he told a crowd at a tech meetup about it.

TED: I jumped in, and I reviewed passports. I reviewed 200 passports, took me two hours. I got the training, did the passports. So cool. It’s like, here’s their passport, here’s their selfie, here’s all their information. And I’m like ‘OK…’ Like the customs guy. I’m like, ‘Welcome to Kinland.

BRUCE: The day of the sale, employees huddled in Waterloo in what they were calling the War Room. They live-chatted with buyers as questions poured in from people confused by the process, or trying to make sure their purchase had gone through. Tanner Philip was managing things.

TANNER: We kept having to call our service provider and up the amount of bandwidth that we had on the actual service, because they go by individual conversations. And we kept guessing as to what it would be, and then we’d have to call them and tell them to up the amount. So I think we started out the day with we thought we might hit 5,000 conversations, and then within about an hour we had to call them and then up to 20,000.

BRUCE: The ICO raised millions of dollars out of the gate. By the time the sale closed, two weeks later, Kik had raised $100 million. The company had thought it was out of options. Now, all of a sudden, they had the money they needed to stand a chance against Facebook. Not long after the ICO closed, I caught up with Ted to see how he was feeling.

TED: I think if you had asked me back in the winter when we decided to do this, you know, ‘Hey, if you were to make a new cryptocurrency, how much money do you think people would give you for that?’ And if I had said $100 million, I think everybody would have called me completely crazy. I mean, how could you ever expect that or foresee that. And so to be sitting here today, what if you actually gave us a $100 million for this new cryptocurrency is pretty surreal.

BRUCE: There’ve been a lot of ICOs this year, but Kik is the first big, established company to try to fund itself this way. Which means a lot of people have been watching to see how they do. And a lot of questions remain. Kin won’t succeed as a cryptocurrency unless Kik, the app, has lots of users trading lots of Kin. It’s not clear, yet, whether that will happen. David, that Kik-user-turned crypto-trader, says he’s skeptical. Because he doesn’t really use Kik anymore.

DAVID: It’s almost embarrassing sometimes to be like, “Oh, do you have a Kik still? It was just a fad that died out, honestly. Maybe it was the ease of use, but I really, I personally just stopped using it because everybody else either started texting me or using Facebook Messenger.

BRUCE: David doesn’t think people will start using the app again just because there’s now a cryptocurrency attached to it. And there’s a bigger reason to doubt Ted’s plan. Most people—even the real crypto believers—think the explosion in ICOs and the skyrocketing value of cryptocurrencies is a bubble, headed for a correction. What that means for all the projects like Kik that have gotten money through ICOs, is anybody’s guess. Here’s cryptocurrency expert Peter Van Valkenburgh again.

PETER: With the dot-com boom you had all kinds of embarrassing failures like the pets.com Super Bowl ad. Once the bottom fell out of the dot-com market, you had a lot of people thinking like, “Oh, this was just a flash in the pan. It’s going to go away. And then it took years to crawl back to a position where everyone was thinking like, “OK, no, never mind, the internet is a real innovation. It’s going to change everything.”

BRUCE: Peter predicts that cryptocurrencies, or tokens, as he calls them, will follow a similar path.

PETER: I think when the wind falls out of the sails of the token boom there’ll be a lot of embarrassing stories of like somebody raising an absurd amount of money and with no product behind it, and it will erode public confidence in the usefulness and true nature of the innovation of this space. And so that’s bad. The upside is, just like Google rose out of the ashes of the dot-com bubble, this bubble in tokens will burst some of the companies that might have been initially funded by the bubble will keep their heads down and emerge out of the ashes of that collapse and build the real products, the true innovations that will radically change the way we live our lives, do commerce. Interact with other people socially. Everything.

BRUCE: If Kik’s gamble pays off, they may be one of those companies that emerges out of the ashes. And they may end up sketching out a way for other companies like them to exist alongside players like Facebook, Amazon, and Google. They won’t be the next Facebook, but they won’t need to be. They’ll have created an economy inside their app. Written their own rules, to a different game.


LISA: Bruce Wallace is a producer of StartUp. Coming up on the next episode of StartUp, the multibillion-dollar driverless car industry got off the ground with a race called the Grand Challenge. And to build the vehicles, people made all kinds of sacrifices, big and small.

MATT JOHNSON-ROBERSON: There was not enough beds in the RV for even all the people. I was the youngest guy, so I guess I got the short straw, and so I remember I was sleeping on a table in one of the RVs.

LISA: Really?

MATT: Yeah, I think my legs were off it, maybe my head. It was not comfortable.

LISA: Find out how a team of sleep deprived, hungry, and grease-covered engineers helped launch the driverless car industry. Next time on StartUp.  And a reminder: our next season is going to focus on just one company. We’re looking for a company in the Bay Area, so if you know of one that’s doing interesting stuff, with an interesting founder at the center of it, please email us at startup@gimletmedia.com, subject line “Season 7.” StartUp is hosted by me, Lisa Chow. Our show is produced by Bruce Wallace, Luke Malone, Simone Polanen, Emanuele Berry, and Amy Standen. Our senior producer is Molly Messick. We are edited by Annie-Rose Strasser. Production assistance and fact checking by Max Gibson. Mark Phillips wrote and performed our theme song. Build Buildings wrote and performed our special ad music. For full music credits, visit our website. David Herman and Ian Scott mixed the episode. Special thanks to Jake Brukhman, Laura Shin, Colin Vine, Itamar Rogel, and Pat Walters. To subscribe to StartUp, go to Apple Podcasts, or whichever app you like to use. Or check out the Gimlet Media website: GimletMedia.com. You can follow us on Twitter @podcaststartup.

Thanks for listening. We’re off next week, so we’ll see you in two weeks.

We do our best to make sure these transcripts are accurate. If you would like to quote from an episode of StartUp, please check the transcript with the corresponding audio.

 

Just Hit Record (Season 6, Episode 5)

Can making a podcast about your life change the way you live it?

October 6, 2017
View show transcript

ALEX BLUMBERG: Hello, you’re listening to Startup. I’m Alex Blumberg, guest-hosting, as I sometimes do, for the regular host Lisa Chow. Lisa will be back in the hosting seat next week. But I’m here this week for a reason. Some of you might remember an episode we did last season. It was an episode where we asked listeners to send in questions to the show. Questions for me to answer. We had people asking us all sorts of things. Questions about how it felt to grow so fast, questions about all the TV projects that we have going on. It was a whole range of stuff. But there was one caller that we didn’t include in that episode. His question was just too big to fit in with the other ones.

SKYLER GRONHOLZ: Hello?

ALEX: Hi, this is Alex Blumberg calling from the StartUp podcast.

SKYLER: Wow, okay, first of all it’s amazing that I’m talking to you right now. I’m kind of freaking out about it. My name is Skyler Gronholz. And then you want me to tell you a little bit about why I wanted to talk to you…

ALEX: Yeah yeah, where am I talking to you from.

SKYLER: Okay, so I’m actually literally in the middle of a drive from Seattle to Bellingham. I’m moving up there to like try to officially start over my life. I got released from prison a year ago and since I’ve been out—so like a year ago I started listening to StartUp and loved the show. And probably by like episode four or five, I was driving to this really crappy job where I was like cleaning out rat poop and pee from like crawl spaces underneath houses. Yeah, it was really, really bad. And so I started listening to your show. And like on my way to work, I was like, “What if I started a show where I’m doing what you…you were doing for startup. But like for someone starting up their life coming out of prison?”

ALEX: I talked to Skyler that afternoon for almost an hour. And over the course of my career, I’ve talked to people who have been in prison. I’ve talked to people who have just gotten out of prison. I’ve heard plenty of stories on the radio about people getting out of prison and trying to start their lives over. But I’d never heard anyone talk about it like Skyler did. And in talking to him, there were a lot of surprising parallels between what he was going through and what anybody who’s ever tried to start something new for the first time goes through. There’s the self doubt, the fear of failure, the yearning for people to care about this thing that you’re doing. And so, today, we’re devoting the entire episode to Skyler’s story. To his attempt to restart his life. To what he did to upend that life in the first place. And to the strange, radical, and surprisingly familiar to listeners of this podcast strategy he came up with, to get everything back on track again. A warning, there is some swearing in this episode.


ALEX: Skyler told me that his path to prison started not long after high school. He’d had to drop out of college because he’d lost his scholarship. His grades weren’t where they needed to be. He was newly married, and working a job he hated.

SKYLER: I’m working construction for you know this just asshole dude. And like, I get my wisdom teeth pulled and so I start taking vicodin. The vicodin progresses into a full-blown addiction six months into my marriage. I’m going to rehab. At that rehab my roommate is a heroin dealer. So like I walk out of that rehab not with just a vicodin habit but like with a heroin habit. That’s within, I think, the first week of graduating rehab, I was getting introduced to that whole world. And like, so then there was like six years of, you know, of pretending like I had it all together. Like pretending that I wasn’t an addict so that my wife wouldn’t freak out and like all my friends and stuff—none of them were drug addicts. My wife was getting her master’s in psychology. And I’m like going into heroin dealers’ houses that are just disgusting like every single day and being this other person, being like just total total fraud. And, yeah, it just kept getting worse and worse. And so it eventually led me to stealing a projector and a few computers from the local college that we lived next to. So that I could not use the little bit of money that we had left in our account, so I could get high. And got caught.

ALEX: Oh man. And then it all came out, and your wife found out.

SKYLER: Oh yeah. She left. Yeah yeah yeah. I mean, it’s my own doing, like I…Yeah, it was really bad. It sucked.

ALEX: In prison, Skyler kept himself busy with work shifts and classes. Did the crossword every day. Got himself clean. And due to his good behavior, he ended up serving just three years out of his five year sentence. After his release, he moved back in with his parents. Got that rat poop cleaning job that he hated. And he was struggling to stay positive. He was feeling more and more like if things didn’t change, he’d slide back into addiction, end up back in prison. And that is when he had a thought I would not have predicted from somebody facing what he was facing. He thought,  “I’ll start a podcast about my own life. This is what’s gonna save me.”

SKYLER: And the second I thought about it, it was like I could breathe again. It gave everything like this new kind of context, and again definitely gave me a sense of purpose, which is what I just desperately needed. And so I was kicking around the idea and like didn’t know exactly how to do it. And I was actually talking to my probation officer, who’s like a screenwriter by—a screenwriter by trade. He was ike a ridiculously amazing probation officer.

ALEX: Wait your probation officer is a screenwriter by trade? What does that mean?

SKYLER: Yeah, like that’s his first love. Like he’s written for movies and stuff like that.

ALEX: That’s awesome.

SKYLER: Yeah, it was really trippy when I first met him.

ALEX: So your probation officer, who is a screenwriter, you’re telling him about this, that you wanted to start a podcast.

SKYLER: Yeah. And so he tells me the story of like, “Oh yeah, like my first screenplay, like I was sitting on it for years until one day, I just like grabbed some…grabbed some buddies and like hit record or whatever and just started making a movie, and all of a sudden like I was making my first movie.” So he’s like, “So, when you leave here today just pull out your phone and pull up a voice memo thing and just hit record and you will be making a podcast.” So I was like, okay I’m going to do it, and like…

ALEX:  Man that..he is a good probation officer.

SKYLER: Oh, he was the best. We would we would have like two- or three-hour long conversations, and I’m supposed to just be going in there to pee in a cup for him.

ALEX: Uh huh. Wow.

SKYLER: So like I get my in car and I hit record.

SKYLER (recording): Well, I’m just leaving my probation office…This is actually my first recording of this podcast…

ALEX: This is that very first recording that Skyler made. He’s recording it into his phone as he gets in his car and starts driving.

SKYLER: I’m not starting a small business. What I’m doing is I’m starting a life. I’m 31 years old. I am two and a half months out of a 60-month prison sentence for…nine felonies. Oh no, ten felonies.

ALEX: He talks for about 40 minutes. When he finally gets to where he’s going, he turns off the engine and keeps recording. He’s rambling a little, sounding sad. And then he starts talking directly to the people he imagines listening.

SKYLER: I’m learning how to live, and I want you guys to learn with me. Um, I need your support. I need to know that you’re there listening to this. I need to know that…you care about whether or not I choose to go right or choose to go left. I need to know that my life has purpose and value. Because right now it seems like my parents are the only ones to whom my life really matters. And that’s lonely.

ALEX: After this first recording, Skyler kept at it. He recorded conversations with his brother Shane, a meeting where he applied to get food stamps, talks with his mom and dad. And all sorts of just mundane stuff.

SKYLER (unlocking door): Gosh, I have got to get this key fixed. That was horrible.

ALEX: Like this recording, where Skyler gets back to his parents’ house late one night. He walks in, plays with the dog for a minute.

SKYLER: Hi, hi hi hi, hi hi hi. Come here.

ALEX: And then you hear the voice of his mom, Debbie, who it sounds like Skyler has just woken up.

DEBBIE GRONHOLZ: He’s been so funny tonight.

SKYLER: You guys are on the air.

DEBBIE: We’re on the air?

SKYLER: Yeah. The whole world is hearing you. In the future.

DEBBIE: Oh goody….

SKYLER: I have acquired just hours and hours of tape about like my life.

ALEX: This is Skyler and me, back on that first phone call in the studio again.

SKYLER: You know seeing people again that I hadn’t seen since before prison and like court dates that I had to go to. And I kind of feel like if I wasn’t recording, I might not have done them. It didn’t have any weight to me. Like I was kind of already expecting me…myself to fail, given that like it’s like 75 to 80 percent of everyone in prison will return to prison. I set out to like I was going to defy those odds. And then all the sudden, you know after the tenth hoop that I’m having a jump through, that just seemed so stupid. I was already questioning like if I had the fortitude to actually get through this thing. And so then once I started recording, like it gave me a sense of purpose to do that stuff.

ALEX: I get that. Because because I think…I’ve had that experience too where…where like sometimes…like I know there’s a conversation that I’ll have to have or there’s a thing I’ll have to do or there’s a thing I’m afraid to do or there’s a thing that feels like a pain in the ass to do. And if you’re not recording it then it’s just going to be something that happens. That doesn’t matter.

SKYLER: Yes. Yes.

ALEX: But if you’re recording it, then you’re like well maybe it’ll matter somehow. If I share it with somebody else.

SKYLER: Yes. That’s exactly how it felt.

ALEX: Okay. So, so, so, what’s your question.

SKYLER: Right okay. So if I can just be like brutally honest with you.

ALEX: Absolutely.

SKYLER: Like, okay, so I—I feel like if there was anyone that I could talk to about this idea, what I want to do, like you would be number one. But like I’m not even really sure what exactly the question is that I need to ask you. I wasn’t planning on saying that, but I don’t want to ask you this question. I was like why did I ask him that.

ALEX: Uh huh. Right.

SKYLER: Yeah, like so I’ve been, I’ve been so obsessing on like story formula and creating a great product and you know my standards are super, super high and even though Ira Glass talks about this gap thing and like I should be okay with that. I’m not okay with like putting out an episode that sounds like crap.

ALEX: What’s the gap thing?

SKYLER: You haven’t heard that?

ALEX: No.

SKYLER: Oh well maybe. Maybe so…

ALEX: That guy’s a hack man. No, I’m just joking. He taught me everything I know. I was just joking. Go ahead.

SKYLER: No, he, so he talks about when we first start, when you first starting creating anything, like your taste is like let’s say it’s set very high. But when you’re just starting out, like there’s this huge gap between your ability currently and, and—you need to be okay with that and you need to just start creating, regardless of the fact that like it’s not anywhere close to what you want to be putting out there.

ALEX: And I would add that like…

SKYLER: Please add!

ALEX: That’s like essential. Like the only way that you can get better is by, is by sucking and then learning exactly how you suck and then sort of trying to like okay well what if I do it different this time. You know? There’s no other way.

SKYLER: So how do you, how do you prevent the total despair that—I’ve been feeling like “Oh, I’m just being a complete fraud.” It’s almost like I’m fighting against this tension of like, I can’t afford to waste time. Like if I screw up, if I make the wrong step here, I’m going back to prison. Like my freedom and life is at stake here.

ALEX: Is that what it feels like?

SKYLER: Totally.

ALEX: It feels like the stakes are that high? Like it’s not just my podcast will suck but my podcast will suck…Get, get me from like my podcast sucks to I’m back in prison.

SKYLER: Okay, okay so. Anytime I feel sad. Like anytime I feel—even anytime I feel glad. Like any kind of emotion, like in recovery and stuff, like they talk like that it can all be a trigger.

ALEX: A trigger for what, a trigger for what?

SKYLER: Oh a trigger to go and do drugs again. And so if I let the sense of being a fraud start growing roots, or if I let shame start growing roots in any kind of way, that will possibly lead me to relapse, and if I relapse, all bets are off. I’m going to make some drastic mistake and go to prison. Like that—the line is no longer like a gigantic, you know, great wall of China. It’s a, it’s a little crack in the concrete. That’s that’s how I feel. Yeah.

ALEX: Yeah. So this thing that felt like it was saving you to get good at it..It also feels like it puts you at risk.

SKYLER: My gosh that that’s exactly it—that’s exactly it. So much so that like now, I just over the last few weeks…So I built this whole home studio thing and like just kept being like, “Okay, if I can just listen to enough of Alex Blumberg talking about how he does it, like I will be able to make a good product.”

ALEX: I wish it worked that way. I don’t think so. I don’t think you can get, get good at anything like that without, without exposing yourself to fear and feeling bad. I’ve never seen it happen. I’ve never seen it happen. But, but I also feel like I don’t think you can live a life without exposing yourself to fear and feeling bad. So, I don’t think it’s putting you at any more risk than you’re already in, you know?

SKYLER: Yeah.

ALEX: I’ve never been to prison. I’ve never used heroin. My circumstances couldn’t get more different than Skyler’s in many ways. But it was shocking, during this conversation, how familiar what Skyler was going through felt to me. We both started podcasts out of a feeling of not knowing what else to do. This vague sense that if we documented what we were doing, then maybe what we were doing actually mattered. That if we imagined success, imagined a big audience out there listening to what we were making, that one day success would actually come. And in fact, starting a podcast did bring me success. It helped me start a company. Could starting a podcast possibly help Skyler with his project, too? Restarting his own life? After the break, we find out. We send StartUp producer Molly Messick to Bellingham, Washington to catch up with Skyler. And to find out—can making a podcast about the story of your life, actually change the way you live it? That’s coming up after these words from our sponsor.


ALEX: Welcome back to StartUp. Molly Messick picks up Skyler’s story from here.

MOLLY MESSICK: A couple of months after Skyler and Alex talked, I flew out to Bellingham, Washington to meet Skyler. I found him outside his apartment building. But before we went in, we walked to a grocery store nearby so he could pick up dinner.

MOLLY: So is this sort of your normal routine? Is this a thing you do?

SKYLER: Yeah. Either walk or ride my bike.

MOLLY: When we get to the store, Skyler heads to a juice section along one wall and picks out a protein drink and a smoothie. Then he walks to the back wall of the store, steering clear of the center aisles, and gets some yogurt. Smoothies and yogurt are what he eats most of the time, he says. He’s had a fair amount of anxiety since prison, and he thinks it’s affecting his stomach. But that’s not the only reason he eats this way.

SKYLER: I’m really bad at decisions now. Which is…I mean maybe I’ve always been a little indecisive, but I think this is why I kind of do this is. That…

MOLLY: He gestures to the whole middle of the store—the produce and snacks and frozen foods.

SKYLER: …freaks me out.

MOLLY: Like the whole grocery store.

SKYLER: Oh yeah. It gets me totally panicky, almost.

MOLLY: Do you connect that with all the decisions that get made for you in prison?

SKYLER: I mean, it has to be. It has to be. The thing that I don’t like that I judge myself, almost, for, is I wasn’t in there that long. I haven’t sat down with anyone yet, I don’t think, that did 15 to 20 years. I can’t imagine. I don’t feel like I earned the right to have these kind of anxieties. I don’t know if that makes any sense.

GROCERY STORE CLERK: Do you want a bag?

SKYLER: Yeah, please.

MOLLY: When we get to the checkout, a couple of Skyler’s cards get declined before one finally works. It seems like he knows this checkout person, and like they’ve been through this before.

SKYLER: I think we did this last time.

CLERK: Yeah. Want to try again?

MOLLY: It was just a quick trip to a grocery store, but it summed up a lot about where Skyler is right now. He’s pretty anxious, and he doesn’t have much money. And he’s constantly thinking about how prison changed him. It’s not what he expected when he was still in prison and looking forward to getting out.

SKYLER: You know those little cars that you twist up? Like the ones that you pull back and like the wheels are winding and then you let go and then you just, boom. That tension was building exponentially almost like the closer I got to actually getting out. You know my parents came and saw me like every week and the closer the date came, like the more tension was being built of like, I finally get to be me. And then I get out and the car is released. And like it just boom right into a wall and like crashes and turns upside down and you know gets set on fire. That’s how it felt. Like all of that…that…that excitement and ambition just totally crashed.

MOLLY: Starting over was a lot more challenging than he thought it would be. At 31, he was back home with his parents, having a hard time finding work. His old friends from before prison weren’t around very much. And a couple of the friends he made during prison weren’t doing well.  They were back to using drugs, or back in jail. Skyler was lonely, and struggling with his urge to use again. It seemed like it was all going very badly. Which scared him, because that meant he was on a path toward failure. And in his mind failure meant relapse, and maybe prison. Skyler had started listening to podcasts pretty early—in 2006. He was a big fan of “Radiolab” and “This American Life.” And after getting out, he started listening again. With a kind of crazy intensity, by the way. At one point he subscribed to 126 shows. And one of the things he listened to was “StartUp.” When he heard it, he had a flash of inspiration.

SKYLER: It was something like, “Start recording my life as if I have 50,000 listeners every week. And start living my life as if I had 50,000 people that cared.”

MOLLY: We’ve listened to a lot of the recordings Skyler made in his first year out of prison. It’s more than 100 files. Skyler’s mom, Debbie, is on the tape pretty often. She’s an artist who used to paint illustrations for a stationary company and now teaches at the local high school. In one recording that Skyler sent, he and his mom are looking through a stack of Skyler’s old stuff from when he was a kid. They find an assignment from when he went through the DARE program in elementary school.

DEBBIE: Oh this DARE thing is…

SKYLER: Hilarious.

DEBBIE: Hilarious!

MOLLY: Debbie and her husband Marc have done a lot to support Skyler. They emptied their retirement account to pay for detox and rehab facilities. They hired a high-priced lawyer when Skyler faced prison time and when Skyler was in prison, they visited and called often. After he got out, they welcomed him back home, even though they worried a little about what it would be like to have him there. Debbie picks up the DARE assignment and reads from it.

DEBBIE (reading): “In my future I plan to be a good athlete, have a good job as a Disney artist, have a family and stay healthy. If I take drugs ,all of this could be taken away from me.” Oh! That’s a sad sentence. This is a very sad thing to read, Skyler… And then you have a scene, too. “Freeze, up against the wall. Spread ‘em.”

SKYLER: Oh my gosh, are you serious?

DEBBIE: Yeah.

MOLLY: I’ve asked Skyler about this tape. He says he sounds excited because he thought this recording could be good for his podcast. And he also says that in the moment he probably didn’t want to think too much about himself as a kid, drawing a cartoon that would turn out to predict so much about his life.

DEBBIE: “Officer, what’s going to happen to me?” That’s very sad, Skyler.

SKYLER: That’s wild.

DEBBIE: You’ll have to read that on your thing.

SKYLER: It’s like a prophesy of some kind.

DEBBIE: It’s very sad.

SKYLER: I’m sorry.

DEBBIE: I’m sorry, too.

SKYLER: At least I have you to help walk me through it.

DEBBIE: Always. You were a sweet little boy.

SKYLER: You’re a sweet mom. Still are.

DEBBIE: You still are sweet.

MOLLY: When Skyler was young, he was singled out for his talents. At nine, he won an art competition and met President Clinton. In junior high, he was elected student body president. In high school, he was a good athlete, sang in an a capella group that performed for the governor, and went on summer mission trips with his family’s church. But looking back Skyler thinks he always struggled. He had a hard time focusing, and he could be impulsive. He thinks that’s why he started shoplifting when he was still in high school. He mostly took small things, he says, but he did it pretty often, and went years without getting caught. In some of his most memorable recordings, Skyler is looking backward. He’s examining his past and trying to reconcile it with where he is now, or trying to take some lesson from it. Occasionally, in those moments, he’ll learn something completely new. For example, the whole time he was in prison, he told one version of his last arrest before he got sent away. He was the victim, and the police were super aggressive. But after he got out, he read the police report. And then he went to West Seattle, where the arrest took place, and recounted the story to himself, on tape.

SKYLER: Basically my arrest was really messy. I was high on methamphetamine. I was high on heroin. I was high on Xanax. I was a mess. An absolute mess. And I get pulled over by a cop.

MOLLY: In 2012, when this happened, it was a bad moment for Skyler to get pulled over. There was already a warrant out for his arrest. So he gave the police officer a fake name. It didn’t work. The officer, a woman, asked him to step out of the car.

SKYLER: And at that point I tried starting my car again, which began a chaotic rumble and tumble and struggle. I fall out from the car on top of her, at which point she chipped a tooth? I don’t know if I was like trying to strangle her? I cannot imagine how terrifying that would be. I know I’m not a violent person. I’ve never been one to start anything. I just remember feeling this desperation. It’s like, if I could just tell you that I’m not resisting and you could let me stand up and I can explain, I would have the opportunity to keep running. To run away, you know? So I was yelling out, “I’m not resisting! I’m not resisting!” While I was completely resisting.

MOLLY: If you search Skyler’s name, the top results are about this assault. The police officer’s tooth was knocked loose. And another officer who jumped in to help had torn muscles in his chest and shoulder.

SKYLER: I don’t like thinking that I’m a bad guy, I don’t. It’s so disturbing to think that it was me doing those things and not just a stranger. Because it feels like it was a stranger.

MOLLY: Skyler told me that, at the time he recorded this, seeing himself as the bad guy was a new thing for him.

SKYLER: I do remember feeling almost excited in a terrified sort of way, I guess. That, like, I was getting to the bottom of things, and how hopeful that was, in a way.

MOLLY: He says telling the story on tape helped him see himself more clearly. It was like he lifted a delusion he’d been living under. And that was painful, but it also felt like a good thing.

SKYLER: I think it’s because if I can understand why I’m here in this shitty existence—that’s too bleak, but like—why am I here and not where I thought I’d be at age 33? Why did I go to prison? Why did I ever start doing drugs? Why did I get divorced? Like why? How did that actually happen? Because I still don’t really get it. Especially when compared to the rest of my family and my friends. Like, how did this happen? Why would I ever compromise things? Like how…

MOLLY: Why is this my life.

SKYLER: Yeah, yeah. Anytime I can answer in any way those questions, it’s like another brick that I can put into the new foundation for this new life that I’m trying to live.

MOLLY: Skyler told me that honesty is a big part of that new life he wants. When I asked him to explain what he meant by that, he told me how he used to pay for drugs before his heroin addiction got found out. He stole computers from college campuses. He would walk in, pretending to be a student, and slide a laptop into his bag. He specialized in MacBooks, and resold them through Craigslist. The people he was closest to when his heroin addiction first got found out—his wife and his friends and his family—all thought he had a paid internship, working in architecture. He would get up in the morning and dress like he was going to an office, but actually he’d go steal computers, or go to his dealer, or download a movie and watch it at a coffee shop.

SKYLER: My parents would ask, “So how’s work, you know?” “Yeah, it’s good but, boy, is it a challenge. You know, geez. I didn’t realize architecture was going to be so mathematical,” or whatever.

MOLLY: He made up co-workers he would talk about.

SKYLER: Like oh okay so, “My new boss’s name is Ryan. And he’s the nice boss. And Jake, like he’s the assistant boss. And he’s more of an asshole and rides me all the time, but he’s not in all the time.”

MOLLY: There’s a question that Skyler says haunts him. Am I still doing the same things I’ve always done? Recording helped him believe he wasn’t slipping back into that groove of telling lies about what he was doing with his life. He was documenting things. Committing them to tape. Creating a record that wouldn’t lie. Recording helped him in more straightforward ways, too. It kept him company. Most of his friends had moved on while he was in prison. They had families, moved up in their jobs, moved away. He wanted connection, and wanted to make new friends. But when he tried, it backfired. For example, he told me this story about finding an ultimate frisbee pickup game one time, after he’d been out of prison for about six months. It used to be one of his favorite sports, and during the game, he hit it off with one of the other players.

SKYLER: We were just joking around the whole time and so yeah afterward he invites me to go get a drink with them down the street. And I was like, heck yeah like this night is like awesome.

MOLLY: Skyler texted his mom to let her know he was hanging out with some new people he’d met. He says the guys he was with seemed pretty successful. Like they all had pretty good white-collar type jobs.

SKYLER: And so then they’re like, “What do you do?” And I’m like working construction.

MOLLY: Skyler felt embarrassed about it, so he said something like, “It’s not my life’s work.” They asked a few questions, and he wound up telling them about his addiction and serving time. Pretty soon, two of the guys, including one who had given Skyler his number, moved to a different place in the bar. Skyler didn’t think much of it. He just kept talking to the guy who was still there. But the conversation was different.

SKYLER: The connection was all the sudden just gone. And then I kind of start being like, oh wait are they being, like did that happen because of like me telling my past. And then after like I don’t know half an hour or so of that, the guy that whose number I got, he comes up to me. He’s like, “Look man, I got I got a wife and kids ,and you think you could delete that number from your phone.” Yeah, it sucked.

MOLLY: Was that like the first time you’d really tried to make friends after prison?

SKYLER: I think so. Yeah, yeah. Yeah. I…it affected me. It…it. Like I think first of all I was kind of embarrassed with how excited I was. You know, and…

MOLLY: You mean like telling your mom about it.

SKYLER: Yeah, it’s, it’s kind of embarrassing. But way worse to then go home and like… yeah… I can’t believe I’m actually—I haven’t thought about it, but, I’m sorry I’m getting emotional. Yeah.

MOLLY: Did you tell your parents about it? Did you tell them what had happened?

SKYLER: No, not…not…not like, not for a while actually. Why are you asking me that? No, because I didn’t…like I…I think I just probably said it was great.

MOLLY: Skyler wanted real connection. But in the absence of that, he had his recorder and those 50,000 listeners he imagined to help him feel less alone. Sometimes he would perform for the microphone, like he was entertaining a friend. There’s one piece of tape that sticks out as an example—a time when Skyler was really hamming it up. He’s alone in his car. Driving.

SKYLER: Oh hi. Oh, what’s that? Oh I’m just in the middle of one of my crazy moments. Just going to another appointment and I’m hella late. I mean I just don’t even know if I can ever figure this shit out. Ugh. Oh oh, the appointment that I’m going to? Oh, it’s for a psychiatrist to maybe help me with being late. First time I’ve ever—ooh, no that’s not the right turn! First time ever seeing a psych doctor. Um, I think this means I’m moving closer and closer into insanity. At least that’s how I take it. I mean I don’t know how you would take it. If you can’t tell by my voice right now, I’ve lost it. The caboose has left the station. The train has left the station! The train has been derailed. The caboose isn’t even attached no mo’. You know what I’m saying? So uh, I’m parking and then I’m…I’m gonna run inside. Maybe I’ll even walk you to the door. Because that’s what a gentleman would do. He’d walk his guest to the door. Hey, and, and like it or not you’re one of my guests. And I’ve got to treat you with respect and with dignity. More so than I’m treating—hopefully—my new psych doctor. Because right now I’m treating him like a piece of shit.

MOLLY: There were other times when Skyler was performing in a slightly different way, like with his parents. Skyler says one of the most important things recording did was help him talk to them. In the past they’d struggled to listen to each other. But with a recorder rolling, their dynamic shifted. Tensions eased up, and they talked more openly. There’s a conversation between Skyler and his dad, Marc, that’s a good example of this. They’re at a place called Gators, where they’d go together for dinner sometimes. Before you hear the tape, there are a few things to know about Marc: he’s a Presbyterian pastor. And not long after Skyler got out of prison, he got a job at a charity that serves homeless people, working with men who are addicted. In other words, he’s spent a lot of time learning about addiction and trying to understand Skyler’s problems. But he also gets frustrated sometimes. He worries about how much money he and Debbie have spent trying to help Skyler over the years. That’s the jumping off point for this conversation—Marc’s sense of responsibility for Skyler, and the conflicting emotions that come with it. Skyler’s playing the part of the interviewer, asking his dad about it.

SKYLER: What does it feel like?

MARC GRONHOLZ: It feels like it’s a rock and a hard place. If I say, “Gee, I’m sorry, son, you got yourself into this situation, see you later.” Not “see you later,” but “figure this out on your own.” There’s that option. But that’s not the way I’m wired. At the same time, the flipside of that coin is it pisses me off.

SKYLER: Yeah, I hear you.

MARC: I think we just have to say those feelings are on the table, and we still love and care for each other, but it is what it is. So how does that make you feel?

SKYLER: I mean before prison, I don’t know if I ever really had much of a realistic view of life. I used to just take from you and mom. I abused the assumed roles of you being the dad and mom being the mom and me being the son. And I get myself into predicaments and you guys are supposed to take care of it. I don’t like that person. And you know I don’t see that as your guys’s role. Really at all. Now I rely on your guys’s help, but that assumed quality, I don’t think is there anymore.

MOLLY: What we’re hearing there may not sound like the most emotional connection in the world, but Skyler and his dad are both actually saying what they think and feel. And Skyler says that wouldn’t have happened if he weren’t recording.

SKYLER: For whatever reason, bringing the mic and setting it up at the table, it changed the dynamic in this way that made me look forward to sitting down with my dad or with my mom or with both. It was kind of like it was somewhat of a therapist in a way, holding us accountable, even though it was just a piece of machinery.

MOLLY: Before you started recording, what would a conversation like this have been like?

SKYLER: Well, yeah, my dad and my fighting is not…like it stays pretty cordial most of the time, but the emotion that would be there. I can’t speak for my dad, but I know for me, like, it would override my…my thinking. I would just become like this scared little child that was making his dad upset, or something. Scared child that then either acts out by totally shrivelling away and wanting to die or responds by saying hurtful things and being an asshole, kinda.

MOLLY: So recording did a lot for Skyler. But it didn’t fix everything, and it didn’t make Skyler’s challenges easy to overcome. In his tape, there are signs of trouble that Skyler often doesn’t explain or directly address. A conversation with his dad about needing legal representation. A recording of him calling the local court to try to deal with a warrant. Skyler had a few run-ins with the police during his first year out of prison. Not long after he got out, he got caught stealing a lamp and some other things from Target. A few months after that, he shoplifted two microphones that he thought would help him make his podcast. And then there’s an incident from last September, just over a year ago. According to the police report, Skyler was alone in his car, not far from where his parents live. Someone in the neighborhood saw something that concerned them, and they called the police. When the officers arrived they found Skyler with a pipe and a small amount of meth. I’ve talked to Skyler about the report. He told me he used meth a handful of times during his first year out. Maybe three, maybe seven. Definitely no more than ten. He says he doesn’t really understand that decision, and feels a lot of shame about it. And he seems both surprised and unsurprised when I tell him that it’s not something he talked about in his recordings, at least not directly. He explains that he didn’t think his mistakes had a place in the story he was trying to tell. Because his idea of what his story should be comes from church. He’s been going his whole life, and he’s heard a lot of conversion stories. Testimonies, they’re called. And those stories follow a simple and redemptive plot.

SKYLER: When you share testimony, you talk about how you were and who you were before you met Jesus, and then you talk about your conversion, and then you talk about your life afterward. And it’s this very neat way of thinking about your life. And I think I really want to think about my life in the same kind of way as like prison being the conversion moment. And since then, yeah, it’s been a struggle emotionally, but I haven’t done the same things. And that’s not true. And so I don’t know how to even go about like talking about that. It’s not something that I even like thinking about.

MOLLY: There’s a mantra that’s familiar to anyone who’s struggled with addiction. Relapse is part of recovery. Skyler believes it’s true. It certainly has been for him. But he still has a hard time accepting his mistakes. After he’d been recording for six or seven months, Skyler pulled together a pilot episode of his podcast.

SKYLER (on podcast): I mean I grew up in the suburbs…

MOLLY: This is a clip from it.

SKYLER: …playing baseball in my backyard and going to church on Sundays. But at 28, everything was different. I was in jail, waiting to be sentenced to prison.

MOLLY: The episode is short, about ten minutes long, and it doesn’t include any of the tape Skyler recorded. His parts are all scripted or acted out. Like in this part.

SKYLER: For my entire life prison was the antithesis to my world. And now I was stepping into a place I could never fully prepare for. I wanted to yell out. “Hey CO, I’m fixed. I’m ready to go home now. I’ve learned my lesson.”

MOLLY: I’ve written a lot of first drafts, and Skyler’s has some classic problems. The tone’s wrong. He’s not using any of his great tape. Skyler was disappointed with it, too. It made him think, “Who am I kidding? Who’s going to listen to this? I’m never going to get an audience.” But at some point he decided that maybe he was okay with that.

SKYLER: Once I finally realized like this is way harder than I thought, it started becoming more just for me than for this make-believe audience, which I’m glad it did. I’m glad that I didn’t give it up. I realized, oh, this thing has been comforting to me, and just having this phone up to my mouth in my car when I’m scared, you know, has been empowering. And I don’t really want it to stop.

MOLLY: Skyler wrapped up probation early this year, in March. Not long after that, he decided he wanted to move to Bellingham, a couple of hours from his parents’ house. He’d reconnected with an old friend who lives there, and visiting made him feel hopeful. Around sunset one night, when I was in Bellingham to see Skyler, he took me to a place called Boulevard Park. It’s one of his favorite spots in the city. It’s on a big bay, and you can see craggy mountains poking up on the far shore. A couple of his friends were going to be there, and he wanted me to meet them. When we got there, there were sail boats heading in for the night and a lot of people standing around watching the sky change. A new friend of Skyler’s showed up with her puppy. And then a guy named Andrew, who Skyler met not too long ago. Skyler was happy to see them both, and pretty hyper. He was taking sunset selfies, playing with the dog, striking up conversations with strangers. Andrew wanted to know what Skyler and I had been up to all day.

ANDREW: Did he play you any of his music?

MOLLY: No, we were talking about that! Should he?

ANDREW: Oh, heck yeah. Yeah, Skyler’s the best. No, he’s got a voice of an angel. I can’t believe you haven’t heard him play.

MOLLY: So a little while later, Andrew and Skyler and I all headed back to Skyler’s place.

SKYLER: Oh that’s uh, that’s, uh, “Death of Me.”

ANDREW: Play that one.

SKYLER: Play that one?

ANDREW: Play that one first, yeah.

SKYLER: (strumming) Watch this is going to be too high now. Okay. (starts singing) Working hard to numb the pain. She turned my heart and turned insane. My life is so unordinary. I dream of when the days are plain. I can’t believe the pain I caused my friends and family…

MOLLY: Lately, Skyler has been working on something. A simpler version of his podcast. Interviews with friends and family and people he’s met, mixed with music he’s writing himself. He’s got three episodes in the works, and he’s almost finished with them. He’s not sure how great they are. In fact he thinks they’re probably a little embarrassing. But he’s trying to follow Alex’s advice. If he wants to get better, he’s going to have to work at it.

ALEX: Molly Messick is senior producer of Startup. Coming up, a Canadian startup grows into a billion-dollar unicorn. Then hits a wall. Their plan to battle back leaves investors confused.

TED LIVINGSTON: I tell them about this, and they’re like, “So we’re going to build an economy around a new cryptocurrency and we’re not going to make any revenue. Is that what you’re saying?” I’m like, “Yeah, yeah, yeah, that’s what we’re gonna do.”

ALEX: How that crazy-sounding plan brought in $100 million. That’s next time on StartUp. Startup is produced by Bruce Wallace, Luke Malone, Simone Polanen, Emanuele Berry, and Amy Standen. Our senior producer is Molly Messick. We are edited by Annie-Rose Strasser. Production assistance and fact checking by Max Gibson. Mark Phillips wrote and performed our theme song. Build Buildings wrote and performed our special ad music. For full music credits, visit our website. Andrew Dunn and Ian Scott mixed the episode.  Special thanks to Debbie and Marc Gronholz, Shane Gronholz, Zach Siegel, and Pat Walters. When his episodes are ready, Skyler plans to start posting them at fellpodcast.com. That’s F-E-L-L podcast dot com. If you or someone you know is struggling with substance abuse, the Substance Abuse and Mental Health Services Administration has a number you can call. 1-800-662-HELP. That hotline gives referrals to local treatment facilities and support groups. And it is completely free and confidential. To subscribe to StartUp, go to Apple Podcasts, or whichever app you like to use. Or check out the Gimlet Media website: GimletMedia.com. You can follow us on Twitter @podcaststartup. Thanks for listening. Lisa Chow will be back next week. We’ll see you then!

Music: “The Death of Me” by Skyler Gronholz

We do our best to make sure these transcripts are accurate. If you would like to quote from an episode of StartUp, please check the transcript with the corresponding audio.

Hosted by

Lisa Chow

Lisa is co-host of StartUp. Previously, she was a senior editor at FiveThirtyEight and a reporter at NPR's Planet Money and WNYC. She has an MBA from Columbia .

Hosted by

Alex Blumberg

Alex is the host of StartUp, and CEO and cofounder of Gimlet. He 's an award-winning radio journalist and former producer for This American Life and the co-founder of Planet Money.

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