March 13, 2019

Can a Zebra Survive in a Unicorn World? (#61, Hearken)

by The Pitch

Background show artwork for The Pitch

Jennifer Brandel of Hearken is pitching a new kind of business. She calls it a zebra: a company that’s driven by a mission — but still wants to make money. And Jennifer’s mission with Hearken is to help journalists do their jobs better. But can she and the investors get on the same page? 

Today’s investors are Jillian Manus, Charles Hudson, Phil Nadel, Michael Hyatt, and Sarah Downey.

Where to Listen


Can a Zebra Survive in a Unicorn World? (#61, Hearken)

Jen: so you know unicorn companies, obviously? The giant companies that billion dollar valuation.

Michael: Sure.

Jen: So we’re building a different kind of company that we call a zebra. 

Today, the Zebra startup. What happens when you blur the line between nonprofit and venture capital? Jennifer Brandel of Hearken wants to save the long-suffering news industry by helping newsrooms tell the stories that people actually want to hear. … 

And while that might be an honorable mission, here’s what the investors are trying to figure out: ..  Is her zebra business, a venture-backable one? 

From Gimlet, this is The Pitch. I’m Josh Muccio.

Today’s investors are:

Jillian Manus

Jillian is a partner at Structure Capital, where they’ve invested $98 million in high-profile startups like Uber.

Charles Hudson

Charles started Precursor Ventures, which has invested $20 million in over 100 startups to date.

Michael Hyatt

Michael built and sold two software companies for over $500 million dollars and now he invests for himself.

Phil Nadel

As a serial entrepreneur Phil built companies that sold for hundreds of millions of dollars. Now he manages one of the largest syndicates on AngelList.

Sarah Downey

Sarah used to run her own company. Now, she’s a partner at Accomplice and an angel investor making bets on early stage startups.

Alright, on with the pitch.

Phil: Hi.

Jillian: Oh my god.

Michael: Michael. Hey.

Charles: Hey. Charles. Nice to meet you, Jen.

Sarah: Hey. Sarah. How are you?

Phil: Hi Jen, I’m Phil.

Jillian: Hi. Jillian. Nice to meet you.

Jen: Well, my name’s Jennifer Brandel. I’m the CEO and founder of Hearken. And the seeds for my company were actually planted a long time ago when I was a little kid. So I was like ten, eleven years old, sitting in the back of my parents family station wagon. Summer, going to a softball game, my dad was driving. And the Love Hurts by Nazareth came on the radio. Do you guys remember that one? Exactly. Love Hurts came on the radio. And my dad, I remember he cranked up the volume and we were singing along, you know, summer breeze flowing through the car. And as we were driving and going past the suburban strip malls and everything, I saw Hertz rental car company. And I thought ‘love hurts’. Love Hertz. Like, they should use that as their theme song. That would be amazing. They could see cars just breaking down and people waiting in long lines, and then here comes Hertz to the rescue, right? It would become really sticky and a fun way to remember the brand. But there were two problems. One was that I was eleven years old and I knew nobody in advertising. And then two is something that I learned as an adult, which is that even if there’s a way to tell someone something, if there’s no process by which they can listen to you and actually take that feedback and respond, then it might as well go into a black hole.

Today, Jen isn’t coming up with catchy ways to promote car rental companies. Instead, she’s trying to help journalism rebuild the audience that newsrooms have been hemorrhaging since, well, the internet came round. 

What she’s built with Hearken is a suite of tools that allows news organizations to gather story ideas from their audience, put them up for a public vote, and cover the stories that people actually want.

Jen: And we’ve found that these stories that are coming from the public, that are coming from ideas outside of the newsroom, perform 11 to 15 times better than traditional stories, they generate email addresses which convert to paying members or subscribers at 2 to 5x, and they end up producing just original content that you would never find anywhere else. So my company Hearken is about three years old now. We’re in about 150 news rooms. And we’re just about approaching a million ARR. And are here to raise 3.5 million for our next stage of growth.

Phil: Can you walk us through the product a little bit more. I don’t really understand it yet.

Jen: Yeah, definitely. All right. So here we go to my laptop. I’ll show you how this works. So this is our technology, it works on mobile as well. It’s super simple. So the public can ask questions here, they can vote on each other’s ideas, they can see the resulting stories below.

When a newsroom is using Hearken, they can embed questions in a story, things like what’s the next thing we should cover here? And readers can suggest questions or upvote other people’s ideas.

Phil: So the newsrooms use this as a way to gauge reader interest in certain types of stories and then they’ll write the stories that seem to be resonating or popular?

Jen: Exactly. And it’s all based on curiosity. It attracts people who are humble enough to say, I don’t know something. Hey journalist, your job is to find out new information that doesn’t exist. This is a question that I have. Whether it’s about my community or a special topic or whatever that may be. And then the newsroom can curate the best questions, put them up for a vote, and let the audience ultimately help drive coverage. What we find is that a) the coverage is much more original and interesting than typical stuff. They’re not chasing their competitors or following whatever’s trending on Twitter. So they’re producing great information. But also it creates trust with the people that they’re serving. 

Sarah: Can you give me an example of a story that never would have happened without this?

Jen: Oh that’s a great question. Umm So in Nashville, there's a station that we work with, a public radio station called WPLN. And this woman Denise was just walking around her neighborhood and she came across a park that was called Fred Douglas Park. And she just wondered, who's Fred Douglas? You know, I knew who Frederick Douglass is, the famed abolitionist, but I don't know a Fred Douglas.


Jen: And so she went and she asked the newsroom and said who's Fred Douglas? And you know, the newsroom decided this is interesting. Let's put it up for a vote. They ended up putting it up for a vote. The public said, yeah, who is this Fred Douglas? Well, it turns out, after the newsroom started looking into this, that Fred Douglas was actually supposed to be named Frederick Douglas Park 80 years earlier, but it was a racist slight that happened in City Council.

Jillian: No way.

Jen: And they rededicated the park to Frederick Douglas, put in a correct sign, had a Frederick Douglass impersonator there, and dedicated it to the African American community, because this woman just wanted to know who is this guy. And you can imagine if Denise would have walked into City Council and said who's Fred Douglas? They would have said, scram, we've got better things to do. But because a news organization was involved, that citizen actually had power that they never would have had otherwise without that combination.

Sarah: That was an awesome example. 

The investors are sold on the power of Hearken to help create change in a community. Now they’re like... tell me about the business.

Jillian: Can you tell us about the unit economics?

Jen: Yeah. The unit economics. So we charge about $9,000 per license for a newsroom to use our technology and our methodology for the course of a year. But we have partners all the way up to the BBC who are paying far more than that.

Michael: What’s your churn rate with your client base? On the 150 per year?

Jen: So right now, it’s about 70% we retain. And what we’ve learned from the 30% that have been churning is actually the reason they stop working with us is because someone moves on from their job. There’s a lot of turnover in the news industry.


Michael: But that’s a very high churn rate for a SAAS company.

Jen: It is a high churn rate. Well, here’s the thing. We’re not a SAAS company. Yet. When I first started, I thought we were a SAAS company. I thought, oh, we’ll just build a tool. We’ll teach newsrooms how to use it. And then poof, they’re going to change their relationship with the public. What we’ve learned is that we need to do a ton of market education. And then the technology becomes super, super useful. But we’re helping newsrooms transition from looking at the public as a consumer to looking at them as a partner.

Michael: So you say you’re not a SAAS company. You’re a recurring revenue company but you’re not a SAAS as in you don’t have a cloud product that is a one to many relationship? Or what do you mean by that?

Jen: We do. So in terms of right now, we’re not like a turnkey self-service SAAS. 

We will be in a few years where we won’t have to spend so much time educating the folks that we’re bringing on board.

When Jen says “Turnkey-self service yada yada,” she’s talking about the idea that a customer can go to the Hearken website, sign up and then start using the product without any hand holding or instruction from a human. Jen’s saying that’s not the way it works right now, right now, there’s quite a bit of hand holding.

Michael: Let’s say you bring on a new newsroom in the United States or Canada today. How long does it take you to get them up and going?

Jen: Yeah, the average is six months from the first conversation to signing and having it in the bank. And this is, like, I’ve talked to many people who work in the news industry, this is about as fast it gets, unfortunately. Their budget cycles are pretty locked year to year.

Michael: But okay. Let’s work with your line of reasoning. But you still have a churn rate in your client base of 30% a year.

Jen: Yes. And that’s why, one of the reasons why we’re raising money right now, is to add two sides to the current door that our partners are walking through. So the first is to do more education up front so that the newsroom has more training. The second part is we’re working on connecting the dots between all of their data systems, so they can see exactly how people’s questions translate into dollars for their business. What we found is that people who ask questions via Hearken, we collect their email addresses 56% of the people who are giving their email address subscribe to a newsletter. That’s huge lead generation for the sales side, even if you’re a non-profit or a for profit.

Michael: And 30% of your clients are like, it doesn't matter to us?

Jen: In part because we haven't gotten deep enough into their organization yet for them to start seeing the business value. It takes about two years for them to go from...

Phil: But wait, so if you're going through a 6 month sales cycle, during that process, why aren't you educating them to the extent that you would be reducing churn when that one person leaves?

Jen: I mean we do emails, campaigns through the process of selling. A lot of times it's for them, we're hiring a new person, so we need to wait for them to get on board. A lot of times people say yes after the second meeting we have with them, it just takes six months to go through getting that person on board, that stakeholder, getting the billing department on board and having the signed contract. So it's not necessarily that they're saying no for that amount of time. It's between first conversation, contract signed.

Phil: But if you need all those people to sign off and buy in on it, then when one person leaves, why does the thing collapse?

Jen: The thing ends up collapsing because if it's not in the right person's hand in editorial that they pass it off within editorial, then we have to retrain someone to be the torch bearer for it.

It sounds like Hearken is having a tough time getting into newsrooms and staying there. And that clearly makes the investors nervous. 

After the break … Jenn tells Michael she’s just not that into him 

Michael: Like, I’m struggling with this kind of how does it become a big business?

Jen: Yeah. Definitely. And we are not looking for the kind of investor that you are.

Welcome back… founder Jennifer Brandel is making the case that Hearken is essential to the newsroom of the future, but investors still have a fundamental question: do journalists really need this? Here’s Sarah.

Sarah: Well, because ability to pay in newsrooms is dropping and advertising is not working. And this is... Budgets are tough. This is a tough group to sell to. And so if they're looking to just save money, think about Twitter, if I could filter by location and I can poll people can’t I for free gauge what’s happening in an area? And why couldn’t I just do that?

Jen: Part of what makes us less scalable right now is what makes us more defensible. Is because it’s not just a simple tool. It’s about the mindset shift. So we’ve had a lot of newsrooms say, oh, why don’t we just use Google Forms or Poll Daddy or Survey Monkey or what not? They start and then they stop because they haven’t actually done the methodology in a way that we can teach people to.

Charles: So your tool right now is a bundle of basically consulting best practices and software?

Jen: Yes.

Charles: Would the business work better if you just disaggregated that bundle and said, hey there’s a business model transformation piece that’s basically consulting that you have to do before we sell you the license, and then there’s the license.

Jen: Yes.

Charles: And what would that bundle look like? Because 9k feels dramatically underpriced for that bundle.

Jen: It is dramatically underpriced. And so we’ve been  clever in creating a subsidy program for foundations to put money in to help pay for our work for the moment while the news industry starts to see the value, to show them how.

Michael: Whoa, whoa. So your million ARR. How much of that is foundation money?

Jen: About 200,000. Subsidized. Yeah.

Michael: So you have 150 customers, some of it subsidized. So natural spend to you is, you’re almost like getting half.

Jen: Yeah. The subsidies range from 25 to 75% depending on the newsroom and how much that they’re able to pay.

Michael: I’m struggling listening to this because I have two problems. One is that I think the market is very, very, very tough for news right now. And it’s being like, literally, oh god, tsunami. The whole thing is going upside down. I mean, they’ve been ‘Ubered’ nine different ways to Sunday and they’re trying to figure it out. and I get it and so you have that problem. And number two, you have a big, big churn. And now number three is that a part of your revenues are actually coming from a foundation. Like, I’m struggling with this kind of how does it become a big business?

Jen: Yeah. Definitely. And we are not looking for the kind of investor that you are.

pretty sure Jen just told michael, she doesn't want HIS money

Jen: we’re looking for investors who are at the stage that we’re at right now, supporting a company that’s looking at both the value that we’re generating in the world in terms of what democracy requires at this moment and the business itself...

Michael: Okay, so this is interesting. So, you’re looking for someone to give you money and see it as more of a bit of an investment, bit of a be good to the planet?

Jen: Have you heard of, so you know unicorn companies, obviously? The giant companies that billion dollar valuation.

Michael: Sure.

Jen: So we’re building a different kind of company that we call a zebra. I don’t know if you’ve heard of zebras.

Charles: Yeah. I...

Jen: Okay. So I started zebras. It’s a company that’s both black and white. It’s for profit and for purpose. And it’s about generating shared prosperity and our value systems align. It doesn’t mean we can’t be a wildly profitable business. The other thing is, I agree with you, media is a very tough business right now. It’s kryptonite to add consulting to it. I totally understand this. And this is one of the reasons we are casting our net wide to try and find the right people to invest in the company at this stage. 

Sarah: And can you talk a little bit more about you? What did you do before this?

Jen: So I’m a curious person by nature. So my entire life I’ve spent just trying to figure out juicy questions and spending time answering them. So I’ve done everything from working in a vineyard in Tasmania to psychometric test development in Montreal to ghost writing for John Hughes to starting a craft company. This is my third company, or third idea that’s gone global, that’s gone to more than a dozen countries around the world. This is the first one I’m trying to make into an actual business, though. The other ones are more kind of ideas that have been incepted and then carried around the world.

Sarah: That's awesome.

Phil: You're a really interesting person.

Jen: Oh, thanks.

Phil: Yeah. And I applaud what you're doing. I think it's much needed. I really also appreciate your approach in pitching knowing that this opportunity is not right for every investor. And there are fortunately a lot of investors who do focus on the social good of their investments. Some make that a priority even above earning a good rate of return. I'm not one of them. Unfortunately I'm not the right fit for you as an investor. But I really hope that you make this work. 

Jen: Thank you. I mean, the only thing better than a yes is a firm no. So thank you.

Jillian: So question, why didn’t you make this, and just curious, why didn’t you just make this a nonprofit?

Jen: Yes. So when we first started we thought about should we become a non-profit. I spoke with a lot of friends who run non-profits who said, absolutely do not. It’s not going to solve your problems.

Jillian: No, it’s difficult.

Jen: So there’s a few things that I see here. One is that our problem I think is that the capital structures are set up to be either/or. Either you’re for maximized share holder profit, or maximized mission. And I think most founders, actually, are somewhere in between on the spectrum, but they’re pushed to one side or another just because the capital market was set up with that dichotomy.

Jillian: Yes. Absolutely.

Jen: And so what we’re finding is the founders who want to build companies that have these both/and kind of approach are not your typical founders who are looking just to maximize and make a giant business. So we are in this interesting spot and I kind of refuse at this moment to compromise and say...

Jillian: You don’t have to.

Jen: ... and say we have to be a nonprofit or a for profit, but trying to do both.

Jillian: No.

Jen: And the other thing is if we were to go to these foundations for journalism, we would be competing against the people that we’re trying to serve for those dollars.

Jillian: So I have to say, I had an ulterior motive for asking this question. I actually know that answer and you gave the right answer.

Jen: Oh great.

Jillian: OK. You have to have it make it a business to make it sustainable.

Michael: I'm not... I listened to this and I like you. I think you're going, I think your heart is in the right direction. But I just want to say that I don't think there's a mutual exclusivity between your zebra idea. I don't think that's necessarily right at all. There's a lot of great companies out there that have an amazing ethos that are very profitable that do well. For example, remember years ago, Zappos* shoes they grew an incredible culture.

Sarah: And Tom’s Shoes.

Michael: They built a great company and through that they had meaningful meaning and purpose. And they would still be a zebra. But for your business, I don’t think the reason why you’re not doing well well, if I drill into your numbers, is because you suddenly are a company with this magnificent purpose. I think fundamentally, you’re in a declining market, you have too much churn, you have too much weight lifting to get these sales done. I’m just saying, I don’t fundamentally think you’re structured properly to hit the purpose that you’re talking about. You’re right, I’m not the investor for you. But I really like you, and I like what you’re trying to do.

Jen: Yeah. And I didn’t mean to paint a picture that it’s either you’re in it to make someone else a ton of money, or you’re in it because you have a heart and you’re a conscious human. Those are not mutually exclusive.

Michael: Right. But I think fundamentally, I’m trying to zero in on how do you become a profitable great business to do what you want to do? And I’m just saying I’m not sure there’s enough want, need or desire for your product in a declining market, and your uphill selling and all the rest of it. A 30% churn is a very significant churn.

In case it isn’t clear, Michael is passing. Here’s Sarah.

Sarah: I love your self-awareness. I'm kind of, I'm having the same problem that a lot of the other investors are having where I have a lens for is this going to be a billion dollar company? And I have a lens for, is this going to be a nonprofit that I want to get involved with? 

Jen: Anything in between?

Sarah: I'm kind of like I don't know... Unicorns and zebras and then maybe the nonprofits are like the mini horses, and I know how to deal with all of them, but the zebra I don't really know. Because through the lens of is this a billion dollar company? I just don't see the speed, necessarily that you might be necessary to be a billion dollar business. And I think you don't have to be, and I love that you own that and know that. But because of all of those reasons, it's a pass for me.

Jen: Thanks for letting me know.

Sarah is out. Here’s Charles

Charles:  This one isn't quite right for me as an investment, but I've done probably more news investing than everyone here. And so I've actually run into pockets of people who I think on the spectrum of must make money, must be a nonprofit, they're open to things that are in the middle. And they're passionate about news and they're either independently wealthy or they believe that solving this problem is critical for other businesses that they're investors in. So I'd be happy to plumb my notes and see if I can find a few people who I think, given where you are, could be interested. Maybe not for the whole 3.5 but for making some contribution.

Jen: Fantastic. Great.

Jillian: This is really interesting, because one of the biggest deficits in this country is actually location based reporting. So what’s happening is we’re all getting these big swatches of news that have to do with national news. But we’re not really getting a better understanding. And then therefore connecting to what’s happening in our communities. And I think that’s actually taking chunks out of our democracy.

Jen: I a hundred percent agree. I think local news, I mean, it’s having a tremendous crisis right now. And so they’re taking coverage from larger national news and it’s degrading the quality of local pride, local understanding, local engagement.

Jillian: Absolutely. I come at it from a philanthropic lens. And I definitely support this area. But I do donate rather than invest. But it's actually, it's very much a passion of mine and that's why I invest in this area because it creates transparency, and where there's transparency it lifts every part of society. I am not going to invest in this simply because I just think that I'm already invested enough in this area through my foundation.

Jen: Yes.

Jillian: Umm, And all of us need to be investing in some way in this, in our democracy.

Jen: Excellent. Thank you. I really appreciate that.

Phil: A real pleasure meeting you.

Jillian: We should say the protection of democracy.

Sarah: What’s the valuation of democracy? Maybe someone...

Jen wasn’t able to capitalize on her time in the room the room. I step in to hear what the investors have to say …  

Jillian: I want to hand her millions of dollars. Because of what she’s doing.

Phil: Then do.

Michael: I don’t!

Jillian: No, no. But until she gets the pieces that she needs. Which you all pointed out. I don’t see the business piece specifically yet. I don’t see the pricing...

Michael: I’m not sure if she knows if it’s a business or it’s a passion. And I love her. I think it’s great. But I’m here to invest money and return on money.

Jillian: I mean, it starts there, I think. It needs to be a business.

Josh: And you don’t think this was a true business?

Jillian: I think it was missing a lot of the pieces. That’s the problem.

Phil: Well, as a business it’s a tough, it’s a tough business. They’ve got a lot of strikes against it.

Michael: But hold on. Look. If they had that kind of revenue, had a very small churn rate, had good pick up and all the rest of it, I’d be like, this is a good business. And it’s doing something social. This is great. All the better.

Phil: 100%. But they don’t have that. So they have a lot of strikes against it.

Michael: You can’t go live in the third floor of a house if the basement’s cracked, right?

Jillian: I’m sorry, who said that? I like that. I might use it.

Michael: Well, thank you Jillian. You can have that one.

Jillian: You’re welcome, Michael.

Josh: You have a million dollar ARR company, but because of the 30% churn, you...

Phil: You’re picking one thing. It’s not just that.

Jillian: It’s all of it.

Michael: Well, I knew we were kind of off when she said, well, I’m not sure you’re the right kind of investor. I’m like, hm... What does that mean? You need someone who doesn’t mind they lose their money, I guess?

Phil: I liked that she said that.

Sarah: I liked that she'd do that.

Josh: What do you think she meant when she said you’re not the right investor?

Michael: It means that you have to be able to... I translated everything you’re saying, call me cynical, but I think she was saying, you put someone money into my company, you’re probably not going to get anything for it, but you’re going do the world a little bit of good.

Charles: She didn’t...

Jillian: I don’t think that was...

Charles: She wasn’t clear... I’ve spent a bunch of time on the zebra stuff. The model is more that there ought to be a way for you to get a return on your money that doesn’t require a gigantic IPO. There are ways through the profitable operations of the business for me to return capital. It might be tapped at a 3x. But there’s a mechanism for you to get a return that doesn’t require an M&A or IPO.

Charles: I think in a world where you had unlimited capital to do any idea that was good, longer conversation about this one, but we all deal in a constrained environment where we can only do x numbers of companies per unit of time. And it wasn’t above the line of...  Was it absolutely potentially an okay business, above the line. For me at least.

For the investors on our show, this pitch checked all the boxes of a good philanthropy and not enough of the boxes of a good business.

But there are a lot of other investor fish in the sea. When we come back, Jen meets a fish, four thousand miles away. 


Welcome back. I called Jenn up four months later for an update. And to start, I wanted to know more about this whole zebra concept. Jenn told me about where the idea came from: It started when she met a founder named Mara Zepeta at a conference in San Francisco.

Jenn: Mara and I you know met at this conference and we ended up just getting together to get a smoothie at one of those guys got like ungodly price smoothie places in San Francisco like 14 dollars for you know six ounces of something. And we just started joking about startups being like the male anatomy you know designed for liquidity events and everything is you know it's about like putting all your money and hoping that you fertilize one company that then gives you a return and like yields and becomes something big. I mean it's like all of the you know seed funding and everyone's looking in your startup pitch deck for that quote unquote boner slide where you show the market size of your opportunity. I mean we call it the boner side because it's the one that's like up and to the right and it's the angle of you know it's the thing that gets everyone excited.

As Jenn and Mara talked more about it, they realized there was room for a different kind of startup ... the kind that doesn't need a boner slide to get investors excited. This is where zebra startups come in.

Jenn: And instead of a unicorn we you know jokingly were like We need a different animal so we came up with a zebra or a zebra. If you're outside of the US... And so we just started to create a chart essentially saying what were the differences between these kinds of companies. And the zebra as kind of a black and white animal you know for profit and for purpose and also an animal whose competitive advantage is actually in cooperation. You know the way zebras survive in the wild is by being with other zebras not by and...

Josh: By trampling anyone who tries to hunt them.  

Jenn: Exactly.

Josh: So what problem are zebra startups solving for?

Jenn: So you know you have your small businesses that are your mom and pop shops that are you know location based brick and mortar et cetera. Those are great. You know you can get bank loans and stuff if you have actual merchandise. If you're selling services and technology. It's really hard to find investors unless you're telling a story of extreme scale and extreme growth. But if you are starting if you're trying to build a company and services that are solving a particular problem for a community that isn't necessarily about scale first and foremost, it's really really hard to find investment. These people who are building these different kinds of companies aren't looking to exit on the other side with millions of dollars and go buy an island. They're looking to solve a problem for their community, and they're looking to make a living at doing it and not necessarily a quote unquote like lifestyle company. They might have really big and ambitious dreams but they're not in it to maximize shareholder value for a small group of investors and themselves. They're looking at it to fix a system and there's no funding for that.

Josh: You're saying that like the traditional venture capital structures are optimized for profit for their shareholders right. 

Jen: Yes. 

Josh: And there's a different type of company that still needs money to grow still needs investors but they're optimized more for their mission.

Jenn: Exactly.

Josh: Like what does that mean in the day to day. Like what are the implications of running a business that's different. 

Jenn: Well it means you have to focus on revenue first and foremost which means you can't just say oh we have this grand vision and once we reach 10,000 users or whatever then we can turn on the money machine or we're going to be ad supported or you know it's not about quantity it's really about quality. Can you create something quickly that people are willing to pay for and find value in. So it's really forcing founders to to have revenue be their chief driver rather than user numbers. 

Josh: Right. So like Facebook like very early on was like we’re are going to take on a bunch of cash to get as many users as we possibly can and we'll figure out how to monetize them later. And you’re saying the opposite of like yeah we need to figure out how to be profitable from day one with like customer one.

Jenn: Exactly. 

It sounds like Jenn is looking for an investor with different expectations for the company. Which helps make sense of a lot of what happened in her pitch, including this surprising moment.

Josh: You basically told an investor that you didn’t want his money.  Why did you do that?

Jenn: I think I was understanding that you know he's looking to go big and he's looking for the kinds of returns that a VC is looking for. And I knew that's not really what we were looking for. I mean I respect him he invests for the reasons he invests but it’s not for us so I guess I just wanted it cut to the chase and be like you know if we're on a speed dating date it's like nope. But that's fine. He should he should he should find people for whom he's a good fit and that's great.

Josh: There was a conversation after you left the room. Where they basically said we don't believe this is a good business. So it didn't matter to them whether it is a zebra business or a traditional startup unicorn. They just didn't like the business itself. 

Jenn: Yeah. Yeah. I, I understand like I think our business is atypical and it's hard to to pattern match for things that you might have bet on before and that have worked out well for you. So I am not surprised to hear them say that. And you know it's going to it's going to take time for a giant you know the institution of journalism to make that shift from being built for the machine age to being optimized for the information age. But we want to be there with them.

Even though it’s been hard for Jen to get that message across to investors it certainly isn’t for lack of effort. she says she spoke with precisely 54 investors, not that she’s counting...

Jenn: Of these 54 investors many of them just had their hands tied in different ways I ended up just seeing that even though we solve for so many of the things that investors are looking to solve for, we kind of are a little bit too out outside the box. And then lo and behold this Danish investor comes along who found us through reading a book in Danish that newsroom luminary had written about the future of media and Hearken was all over that book. I didn't know that because there is indeed. I had no idea we were in that book and was starting a fund he reached out to me he made me a pitch deck and basically was trying to woo me to be part of his fund. And I wrote him back and I said thanks but no thanks. 


Jenn was fed up with VC at this point, so she just didn't think this investor was worth pursuing. But he was persistent. They kept talking, and it turned out that this guy, Morten Andersen, really seemed to be on the same page with Jenn. So she flew over to Denmark to meet with him. Producer Heather Rogers asked her about it

Heather: So the first time you guys met in person. Can you talk about that? 

Jenn: Yes I would say the first time we met in person I went to Copenhagen. He drove me around in his minivan throughout Denmark and we got to vet each other as humans and get to know each other personality wise and do we want to go into business together.

Heather: So wait wait wait... You wrote around and he drove you around in his van. Yeah. What do you mean? So when you guys are driving around because I mean like people don't go on road trips with their investors. Yeah I think that rarely happens but it should.

Jen: I mean it was really about hey I'm a human I'm trying to help media survive. You're a human you're trying to help media survive. Let's figure out, is this a collaboration we want to have?

Josh: So this investor Morten, his like...his thesis is he wants to invest in media. Because it should exist. He doesn't necessarily want his money back.

Jen: Oh no he wants his money back like this isn't a philanthropy. He just knows that it's a longer time horizon because there's so much shifting going on right now and there's so many changes afoot and it's a complex multivariate problem that cannot be solved through technology alone or cannot be solved through you know AI and bots and big data alone it's going to be…. 

Josh: You mean you totally should go through some of those things in your pitch.  AI, blockchain and I'm sure that you made all the difference.

Jen: Do all the deal the buzz words. Yeah it's like our AI. We joke is actual intelligence. Everything with this 7 million years running technology of our brains and working with people to listen better and serve people better.

Josh: If only you could have spent an afternoon in a van with the investors.

Jenn: I know right. Kind of like really who could have really had that soul connection that was like let's do something bigger than make money. 

Morton ended up investing in 1.1 million in Hearken. And that's great! Jenn's zebra company wasn't a fit for the investors on our show, but it turns out, she just needed an investor of a slightly different stripe.

Our show is hosted by me, Josh Muccio, Produced by Heather Rogers, Kareem Maddox, and Molly Donahue. We are edited by Blythe Terrell.

Theme music by The Muse Maker. Original compositions from Breakmaster Cylinder, Bobby Lord, Billy Libby and The Muse Maker. We are mixed by Enoch Kim. 

Lisa Muccio planned the recording of this pitch.

A special thanks to Jordan Lofaro of McClatchy Publishing for introducing us to Hearken.

This is our disclaimer, no offer to invest is being made to or solicited from the listening audience on today’s show.

You can find more episodes on Apple Podcasts, Spotify or wherever you listen. We’ll be back with a new episode, next Wednesday.