Ah, social media. We all love to hate it and yet we can’t stay away from this toxic playground.
But on today’s show, Ben Trenda thinks he can crack this cantankerous social media conundrum wide open with his startup Goodtalk. Ben says he’s figured out how to stop the trolls and create meaningful one-on-one conversations for all to enjoy.
Investors, well they like Ben’s vision of making social media better for everyone. But if you strip away the bad you might lose the things people really like about social, and it’ll never get off the ground.
From Gimlet this is The Pitch. I’m Josh Muccio. Today’s investors are:
I’m Soraya Darabi
Soraya is a founding partner at Trailmix ventures, and she invested in a little startup you may have heard of, called Gimlet.
I’m Charles Hudson
Charles started Precursor Ventures, where he’s invested $45 million in over 100 startups to date.
I’m Sarah Downey
Sarah’s a partner at Accomplice and they’ve invested $600 million in over 200 startups so far, one example, a company called Draftkings.
I’m Michael Hyatt
Michael built and sold two software companies for over $500 million dollars and now he invests for himself.
I’m Phil Nadel
Phil’s companies that sold for hundreds of millions of dollars and now he manages Forefront Venture Partners, one of the largest syndicates on AngelList.
The Pitch for Goodtalk, is coming up. In just a moment.
Alright let’s do this.
Ben: Hi everyone!
Ben: I’m Ben.
Phil: Hi Ben!
Ben: What’s happening? All right, so a couple months ago something really cool happened. I was watching the Super Bowl at a friend’s apartment here in New York on a big screen TV. And at the same time in my hand on my phone I was a fly on the wall in a text conversation between a bunch of current NFL quarterbacks. And these people have played on that field against these same players. And it was really cool. I mean, it was a real-time commentary about the game that was better in a lot of cases than what was on TV. Now to be super clear, I wasn’t in the conversation. Right. I was a fly on the wall in that conversation. How did that happen? They were using our platform, Goodtalk.
Ben thinks that a lot of people want to have this same experience. They want to follow a conversation between experts and celebrities free of the firestorm of random comments that come with notoriety on social media.
Ben: When they operate on social media, the masses pile in. Two or three tweets and then just chaos ensues. I mean, you can Google #KaraJack and see an example from just a couple months ago of a one on one conversation between Jack Dorsey and Kara Swisher where they attempted to have a one on one conversation. And if you know Twitter, it didn’t, it didn’t work well.
Charles: About 30 seconds.
Ben: About 30 seconds. And it’s not just the trolls. It’s not just the bots. It’s well-meaning people that have an opinion. The users on those platforms believe that it is their god-given right to jump into your conversation. And we’re saying that, No, sometimes it’s more valuable when only certain voices are amplified. Since we launched our beta five months ago, we’ve had over 500 high-profile people like that broadcasting to over 20 million followers. Pretty good traction.
Michael: And how much money are you asking for today?
Ben: 2.5 million to take it to the next level.
Michael: And what valuation?
Ben: Uh, well we’ll see what the market gives us on that.
Michael: So why don’t you walk us through how the product works?
Ben: So here’s how it works.
Michael: You’re pulling up your cell phone right now.
Ben: I initiate a conversation. Let’s say all of us here want to start a conversation. You’re going to get a text message from our system. Regular SMS. As soon as you reply to that text, the conversation goes live.
Michael Hyatt: I have to have your app, right?
Ben: You do not have to our app.
Michael: Oh you don’t.
Ben: One person does. Whoever initiates it has to have the app.
Michael: So let’s take your quarterback example. If I’m, there’s like five quarterbacks in there, that would be a really great conversation to watch, right? But what’s the incentive for the quarterback to get on that conversation? Do they get paid for being part of that conversation?
Ben: No. So people do this for a variety of reasons. In this environment it’s like being on stage with somebody that you perceive to be a peer. So that’s the main driving force.
Okay, so we know how Goodtalk works for the influencer, those quarterbacks. But how does it work for the masses?
Michael: Like, I’m, I’m the fly on the wall. Where am I viewing that conversation?
Ben: So it could be in our app, yes. It can be converted to an Instagram story. It can load in a Twitter browser.
Michael: How do I know what I want to jump into? What do, how does it all work?
Ben: You can. I can show you what that looks like.
Ben steps forward to show the investors how people find a conversation that they want to subscribe to. They’re looking at a tweet with a link in it, and if you follow that link you can go to the Goodtalk app or you can actually subscribe to follow a conversation via SMS.
Ben: The next time they go live, you’re going to get a push notification. So if you get a notification of something that you already follow, one of the users that’s in a chat.
Michael: Like a venture capitalist chat? And then you have another one.
Ben: Yeah, so let’s say you signed up, let’s say you texted “VC” to 22415 to follow Brad Feld. The next time Brad Feld goes live, you’re going to get a text, and you’re going to open that at a rate of 51%.
Michael: How many active users do you have right now? And how fast is that growing?
Ben: Oh, it's growing lightning fast. We just launched the beta in January. It's in the tens of thousands and we will get more detail if you want that.
Michael: How do you monetize?
Ben: Yeah. So you, you can look first at the big social media platforms. There’s a $67 billion market there. We think that there’s a way that you can combine that with a micropayments business model so that you can have a micropayments economy where I might do basic use cases, like tipping. You want to customize your profile? Or you want to do a special reaction that’s not one of the existing options? Pay a couple credits. So to be super clear, we’re not monetizing yet. For us right now it’s about creating scale. And so start first with this, with this premise. And if you don’t believe this, you shouldn’t get involved. This is a big problem that’s worth solving. And the company that solves it is going to be worth a lot of money.
Phil: So I understand your philosophy, building audience, building a mass audience before you start to monetize. I get that. But you gotta eventually bring in the revenue. So I want to see how that looks.
Ben: That's right. Here's where we think it gets super interesting. Right. So you start a chat and it’s related to your business or project you’re working on that you care about, and you want more people to see it than you’ve been able to generate on your own. You pay some credits to Goodtalk, we cross-promote it now to all these other people.
Michael: Yep. That makes sense.
Ben: Right. And then some of the value of that trickles down, basically airdrops, into the accounts of everyone who viewed it and everyone who created those viewers. And you’ve got people that now, who have just been passive viewers on the platform, now they have credits in their account. Well, what am I going to do with these credits? I don’t have enough to cash them out. I’m going to spend them now. I’m going to customize my reaction. I’m going to do these other things. As that grows, then that should drive continued usage.
Sarah: You’re talking about airdrops, like the micro payments thing, there's a lot of crypto sensibility to this. I think that's a really interesting thing of letting that value trickle down to the users. Too many of these platforms have been too closed for so long. So I think your head is in the right place with that.
Ben: Thank you.
Michael: Tell us a little bit more about you. Did you have previous exits?
Ben: Yeah. Three times in my career, I’ve been part of building products that generated $100 million of revenue. Early in my career that was a company called Overture. So we invented Google’s business model, basically.
Soraya: Right. Old user.
Ben: Yeah. And so then I ran a team at Yahoo, after that acquisition. Helped build another startup that we sold to AOL Time Warner. Ran global partnerships at AOL under Time Warner, until I realized I'm a builder and there wasn't a lot of building happening in those days. So I went back and then built the programmatic business at Rubicon Project. We IPO-ed that one a couple of years ago. And then two startups since then.
Michael: Sorry, is this your first time being a founder?
Ben: No. Cofounder on the last two.
Michael: And you sold the last two?
Ben: The last two were strategic acquisitions, yeah.
Next, Ben tells the investors about his team. He’s got people from Cheddar, Evernote, Adobe. Even a producer from Project Runway. It’s a star-studded cast of early employees. And it’s kind of perfect. But almost too perfect.
Michael: Let me ask you this. I’m listening to you, I’m like, Wow. I could be listening to a multi-billion dollar pitch right now. But aren’t you just a feature that these massive platforms can just turn on tomorrow? Like, this is a WhatsApp feature.
Ben: It’s a great question. And you can think about it like, you know, this is antithetical to those platforms. You even hear these CEOs when they talk about it, like when Jack Dorsey talks about the power of Twitter, it’s that every user can participate in every conversation. And so um you can’t solve a problem that you don’t understand, and if they understood the problem they would have solved it by now.
Michael: But why do you think WhatsApp can’t do this? As just a, I mean, it just sounds like I could have a conversation with you and people could sub, kind of subscribe to listen to our conversation.
Ben: In the same way that you could share photos on Facebook before Instagram launched. Right, I mean people want to do certain things in different environments. We’re the platform for this.
Huh, Ben doesn't seem too worried about the competition from some of the biggest tech companies in the world.
And on top of that, the social media market is so locked down. that new apps bite the dust every day. Remember Friendfeed? Or YikYak? What’s to keep Goodtalk from heading down that same path?
Ben tries to answer this make or break question right after we make a break of our own.
Ben has pitched a pretty outlandish idea to our investors -- a brand new social media app, where only a select few get to comment. But the investors think it’s a longshot to try and build a social media startup these days.
Soraya: Your story right now is reminiscent of early stories that I heard in the 2007/2008 era. But that era is very different from the era that we're living in today. We're oversaturated with mobile app opportunities. The average app is used for less than six minutes a day. So talk to me about attention. Talk to me about awareness. How are you going to get the right users on to this app? It is inherently viral, I'll give you that. But the competition is fierce.
Ben: So two points. The first part of the answer is SMS. Alright, so 5 billion on the planet already use SMS and on average we use it twice as much as we use all social media combined. We're an SMS first product, although 90% of the users do eventually download the app. But we just believe we have to show them the value before you get them to download an app. Two is, when we started this, we looked at literally hundreds of companies. Like to your point, hundreds of companies have tried to break into consumer media and have failed. We said, let's just go right after the high end of the market. If you could create product market fit with these high profile users, you’ve got something, if you can’t, you’re just another company trying to get people to download an app. So we're the first company since Instagram or Snap to create product market fit with that segment of users.
Sarah: How many of them are really famous? Like can we come up with a scale to be like, football guys, I don't sports but.
Ben: Totally. So without offending anyone, the way that we define, so we call them tier one users. And we define that as two things. One, you're noteworthy offline. You're not just internet famous. And you have at least 50,000 social media followers. So it's not a perfect calculation, but it gives us something to optimize against.
Sarah: This is a kind of a tangent, but I’m scrolling through, I’m looking at your phone and looking at some of these conversations. And I just get the sense that these people know there’s an audience and they’re being kind of buttoned up and not saying what they really think. So with your example of the football players talking about the game in real time, it seemed, it’s a great example because it’s raw and authentic. But is there this kind of like self-censorship that’s happening?
Ben: I mean, definitely. Like if you were to go on Jimmy Fallon and get interviewed, you wouldn’t say everything that you think. But in this environment, because it’s text, and because some of these conversations go on for months, eventually you let your guard down a little bit.
Charles: I think the hypothesis that consumers are open to new experiences in a way that they weren't maybe three years ago, I think people if you ask them are you happy with the triumvirate of Facebook, WhatsApp, Instagram and whatever else people have said, I think all of my needs are met, I think there's opportunities. This one isn't quite right for me. It just feels like you're kind of in between a bunch of big icebergs and I think there's room there. I'm just not sure how much room there is. And I think every time I've gotten excited about a platform that's fundamentally about conversations, whether it was Whale, AMA on Reddit, Quora, it breaks somehow. The conversations become so longtail and esoteric that they can't build an audience. Or the monetization piece ends up being harder than it feels like it ought to be. And I think this one isn't quite right for me yet, so I'm going to pass.
Ben: Thank you.
Soraya: You know, I'm keen to what you're building. It scares me how much of this is predicated upon media dollars. At the end of the day, I'm not sure I fully buy into the idea that these micropayments will work. It's a pass for me. But I'm rooting for you. I think you’re gonna have great success, just not for me.
Ben: Thanks, I get that.
Phil: I never invest in pre-revenue companies but I’m super tempted to do so this time. I always say to people that I would have passed on Twitter and Facebook had they come to me pre-revenue too. You know I’m just not smart enough to know that those are going to be big hits without seeing some early indication that someone’s willing to pay money for something.
Ben: Yeah. So I 1000% get that. This is not for everyone.
Phil: Yeah. Yeah. And you know, I.
Ben: I think, but in the second I have that traction you’re talking about, we’re a billion dollars. At least.
Phil: I know. That’s the problem. I’d love to get in on the next round when you’re monetizing, but it’s probably going to be too late at that point, honestly. Um.
Ben: Yeah, but, you know it’s cool. Thank you. I appreciate the feedback. And your positive sentiment.
Phil: No I really, I really think it’s very cool. Yeah.
Michael: So I’m going to pass. But I guess I’m not that concerned about your revenue, which is a weird thing for me to say. Maybe I’ve never said that on the show. I think I’m probably sitting in either a tremendous hit or a zero here. And I think you know that too. But I would say there’s a huge difference between now and ten years ago. The cost to scale this kind of company I think has gone up an order of magnitude than what it used to. Uh. Right now I’m going to pass and I’m probably going to regret it.
Ben: No, it makes sense. And I agree. It’s a swing for the fences, for sure.
Sarah: So I’m sitting here struggling. And because there’s so much of this is on the right side of trends. Everybody’s kind of getting away from the inauthenticity of social media. I really like all of that. And I also don’t care that it’s pre-revenue. I mean, I think you get the users, you can always figure out the money later. It’s just that, like, I keep coming back to this piece about if I want to watch a conversation, it’s because I want it to be completely unfiltered and raw. And I just think that that’s at odds, that quality is at odds with what you’re creating, because it still fundamentally has this huge audience piece. And you need the huge audience to ultimately monetize. So because of that tension, and because consumer, like a lot of people have said, is just a huge swing or a zero, I feel like it has to be a pass for me. But I’m just so intrigued by you. And I think, I really want to help in any way that I can -- introductions, product testing, like I will sign up today.
Ben: Cool thanks. Appreciate that. All right.
Michael: Thanks for coming in.
Ben: It was nice to sort of meet you all.
Soraya: Yeah. Great to meet you. We’ll be reading about you.
Phil: Appreciate it.
Ben: Thank you.
Ben leaves the room no richer than he came in. And the investors all agree that it's going to be really hard for Ben to build a better social network.
Sarah: I was really struggling.
Phil: Yeah, me too.
Sarah: There’s so much that I liked about that.
Michael: Well you can see the size of this thing, right. But I would tell you that to get one of these companies off the ground now is a very expensive proposition. It’s almost like something has to happen that would not only happen, like, I don’t know, like the Kardashians all start using it by fluke tomorrow.
Phil: You’re absolutely right. I mean, that’s it. That’s all you need.
Soraya: Well, that's all you need for a short period of time. That's all you would have needed in 2008. And I see this being something that has immediate short-term popularity, but people forget about. Because I have Medium, I have Twitter, I'm oversaturated.
Michael: Barrier to entry is so much higher now.
Sarah: Yeah, like back with Twitter, they did their South by Southwest launch and that’s when everybody started using it. And you would need a lot more than that.
Charles: We invest in a lot of consumer, but I’d say most of the things we do, they take a much stronger position, a much more I would say adversarial position against existing products. They don’t feel complementary. If you’re just like, we’re like Twitter but better, then people are just going to use Twitter.
Sarah: And this was so reliant on things like Twitter and Instagram. It seems like there is no user acquisition without existing platforms, so you’re trying to cut through the noise but you need the noise.
Soraya: I could see the instant virality in this. But I couldn't picture myself as an active daily user. And that's what I need to get over the hump to invest.
Sarah: Me too.
Phil: Really? You couldn't see? I mean, if there were a conversation going on that you were truly interested in?
Michael: Every single day?
Michael: I mean, I would tune in for that maybe if I was watching the Superbowl with those quarterbacks thing, but I wouldn't be an active daily user to her point.
Sarah: There's also like Twitter and Instagram let you do this to a degree, and they've gotten better. Where if you're following two people, or if there's two high profile people, it will raise up those comments and let you see them. So I can see when Nicki Minaj likes Ariana Grande's stuff and comments on it you know.
Michael: But you don't see this copied easily by one of the big boys?
Sarah: I do.
Soraya: I definitely do.
Michael: Maybe we should put The Pitch on that, we should all chat about...
Phil: We’re on it right now.
Michael: When they’re actually playing it, playing The Pitch, and then we could tell people what we think.
Sarah: Oh that would be cool. I would totally do that.
Phil: That’s interesting. That would be cool.
Soraya: Yeah, let's do it.
Phil: Josh, did you hear that?
Michael: There you go.
Super cool idea guys! I bet listeners would love it except, coming up after the break, Ben throws a giant wrench in their plan.
Welcome back. It’s been about six months since Ben pitched our investors. And since then Goodtalk has taken a pretty radical turn. Ben talked to producer Heather Rogers about it.
Heather: What's been happening with Goodtalk since you were on the show?
Ben: We have decided to take a very different direction, um, and we're actually shutting down Goodtalk as a consumer destination.
Heather: Wait, so you’re closing Goodtalk? Like how does that feel?
Ben: You know, I’ve been through this a few times and I’ve pivoted two companies before. So you have to be flexible. As an entrepreneur you have to be…
Heather: But how does that make you feel?
Ben: Um. Well, that was, that was sort of like, that was the wind up to saying it sucks. You know?
Ben: Um. It does. But at the same time, it felt very clear and calm. Not that it feels good, but that it feels correct. Almost like, I probably should have made this decision a little bit sooner.
Yep, if you go to the Goodtalk site right now, it’s not going to load. We’ve never had this happen before -- where a founder gives their pitch and before we can even get the episode out, the founder shuts it down.
Why the heck is Ben closing up shop? Well when he dug into the user data, what he found is people were coming onto the Goodtalk app, joining conversations. But then they weren’t coming back.
So he decided to do a little test, well several tests actually, and what he would do is he would actually turn on commenting for everyone for some of the conversations on Goodtalk. Just like Twitter.
Ben: We found that we could get users to come back. We were able to achieve really high levels of engagement when we gave them the opportunity to participate in the conversation.
Ben: Which was, like, totally antithetical to what we wanted to accomplish. And it led me to the conclusion that the thing that makes Twitter successful is the very thing that makes it awful.
So Ben was faced with this dilemma. He was still pitching investors, trying to convince them to give him money to build this better social platform. And at the same time, he started to realize that in order to make a profitable company he’d have to build a product that he doesn’t believe in.
Ben: We were going to have to become a lot more like Twitter to be able to achieve the greatest possible return on investment for those investors. And that was just going to be a level of friction and misalignment that I thought would create the environment for us to compromise our values every step of the way.
Heather: So you were seeing like this thing could totally take off and you basically walked away from that?
Ben: So, I, yeah, I mean, I don't want to overstate that. Because like we could get really small numbers of people in these experiments to come back and use it like 30 times a day. I mean, like really good levels of engagement. That set us up to be able to raise a lot of money, but I want to be super clear. It wasn't like we were, we're like, we're not, we're not heroes. We're not walking away from like a billion dollars in our, in our pockets tomorrow. Right. There was still going to be a lot of work there. Um, and I think we could have achieved it, but, you know, it would have been still a lot of work in a, in a lot of time and, uh, compromising what we care about and, you know, ending up with something that's just yet another social media platform, which I don’t, which I really just don't think is what the world needs right now.
So here’s where Ben’s at, he’s trying to liquidate the technology to pay off some of his early investors. I think he raised something like $200K. So he wants to pay those people off.
I don’t know what he’s going to do after this but what’s interesting to me is that he can walk just away and start another business because that's the VC game. As they say, if your first, or second, or third moonshot doesn’t fly, no harm done. It’s on to the next.
The Pitch is hosted by me, Josh Muccio. Produced by Heather Rogers and Kareem Maddox. We are edited by Sara Sarasohn.
Theme music by The Muse Maker. Original compositions from Breakmaster Cylinder, Peter Leonard, Billy Libby, The Muse Maker. We are mixed by Enoch Kim.
Lisa Muccio planned the recording of this pitch.
And here’s a quick disclaimer, no offer to invest is being made to or solicited from the listening audience on today’s show.
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Thank you so much for listening. We’ll be back next week. With a brand new episode. See you then.