A Conversation with Noah Shanok, Founder of Stitcher
Noah talks about his journey building Stitcher, what acquisitions actually look like, dealing with burnout, and figuring out what's next after building a startup.
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A Conversation with Noah Shanok, Founder of Stitcher
Noah Shanok is the founder of Stitcher, one of the world’s most popular podcast apps which was bought for $325M by SiriusXM earlier this year. I met Noah back in 2018 when we became colleagues. He jokingly refers to our team as founder rehab – “somewhere founders go when they have had some success but not successful enough to not need to work.”
When I found out that one of my new teammates was the founder of Stitcher, I was a little intimidated – I had been using Stitcher to listen to a podcast the morning that I learned Noah was on my team. I was also a bit confused as to why the founder of such a successful app was on the team I was joining.
It turns out what may look like success from afar can actually be a lot messier. Noah built and ran Stitcher for seven years before selling it in 2014 – nearly six years before the recent $325M acquisition. He built something successful that lived on and provided value to millions of people, but when he sold the company, it wasn’t financially successful. In our conversation, Noah tells what the end of the road looked like:
“One narrative is that I failed. I called all my investors, including friends and family, and told them that I am returning them no money. I spent seven years doing this, and I did not succeed. At this point now podcasts are a thing and Stitcher's done pretty well. But at the time it wasn't clear whether Deezer (the acquirer) was going to shelve it in six months or continue to grow it.”
This candor is what made me want to talk to Noah in the first place. I originally learned more about Noah’s journey when I was listening to a workshop he ran on founder mental health. I related to some of the struggles Noah had as a founder, except the stakes for Noah were significantly higher. Noah ran his company for 7 years, raised over $30M, and had dozens of employees. But having tens of millions of dollars in funding doesn’t make the path easier. As Noah puts it:
I was really good at raising money and selling the vision. We ended up with a lot of investors that were used to seeing really big returns. We struggled the whole way. We were so close to running out of money so many times.
Despite his journey with Stitcher being such a tough challenge, Noah still wants to start another company down the line. It made me want to learn more about where Noah sources this resilience.
In a previous post, I defined resilience – a key ingredient of building an entrepreneurial career – as “the ability to start new ideas, work hard on ideas, and kill ideas – without burning out.” To put it another way, it’s the ability to move on and still try again, over and over.
Before my conversation with Noah, “the ability to move on and still try again” was something I was insecure about. I wondered how long it would take me to fully recover from my last founding experience before getting in the ring again, or if I’d ever fully recover.
Noah helped me understand that recovery doesn’t all happen at once. The scar tissue we get from our past experiences is forever part of us, and we can never know for sure if we’re fully recovered anyway, so we might as well just get back in the ring.
I think dealing with burnout just takes a while. You get through different pieces of it at different times. It's been five years and I haven't started another company yet. My guess is I will, and my guess is when I do there'll be a set of things that get unearthed that I still haven't dealt with. My experience was not like: “Okay, I'm over this, everything's good now I'm ready to move on.” I think that it's an ongoing process. That was part of me for a pretty long time. We're also resilient folks, entrepreneurs. We're used to getting knocked down. Our job is basically to get knocked down and get up every day.
In this conversation, I learned about entrepreneurial resilience, but also a lot more. Noah’s story is a close look at parts of the entrepreneurial journey you don’t usually hear much about – from how Stitcher was inspired by his side project of starting a podcast with a comedian, to how Noah picked up the pieces and figured out what he wanted to do with his life after selling Stitcher.
Interview with Noah Shanok
Mike: What was your career arc leading up to the founding of Stitcher?
Noah: I started my career on Wall Street, with one of those investment banking two-year programs. I'd always been really entrepreneurial, but I felt like I wasn't quite ready to start a business. I asked some folks what would be a good thing to do for a couple of years, and their advice was to start on Wall Street. I was supposed to go into mergers and acquisitions, but I ended up on a trading floor for a rotation. I became a bond trader, which was actually a really cool first job experience. After two and a half years, it felt pretty soulless, so I resigned. I rode my motorcycle cross country trying to find my inner Noah, and ended up in San Francisco.
I got a job in business development working for a ticketing company that was subsequently acquired by Ticketmaster. I was then introduced to the founders of StubHub when they were still at Stanford Business School trying to get that company off the ground. I knew enough about tickets, combined with my experience as a trader, to realize there really needed to be this secondary market for event tickets. I thought it was the best idea. I wanted to work at a really early stage startup. It was a pretty ideal experience for me, and it ended up being really successful so I spent a couple of years there running business development.
From what I could see with fundraising, it was a pretty difficult market environment, so I figured if I could get into Harvard, Stanford or Wharton business school, it would be a great next step for me that would help me with starting a venture. I could work on business plans, figure out what I was going to do, and I would look smart on paper. Miraculously, I got into Wharton. I spent most of my time working on business plans, trying to figure out what business I was going to start. When I graduated, I still hadn't found the right thing.
So I went to a consulting firm, BCG, for a couple of years, which was a challenging experience. After that I needed to do something therapeutic, so I started a podcast in the very early days of podcasts. My podcast was like “America's funniest home videos” for audio podcast. I hired a comedian and I was doing it in my apartment, just for fun. I thought I could probably make enough money through advertising revenue to sustain myself. Between that experience and being an early adopter of Pandora, I saw what a two-way internet connection could do for a listening experience. That was the “aha” moment that led me to start Stitcher in 2007.
Mike: And at a high level, what was the Stitcher experience and what’s your career been like after Stitcher?
We raised I think $30 million over three or four rounds of financing. We got pretty damn far, but we were just about 10 years early. We “sold” the company – I say “sell” in air quotes because it was an asset sale of the company, and the employees went to work for Deezer, which was the acquirer. I was exhausted and slept for a year, and then became an Entrepreneur-in-Residence at a venture firm, thinking that I would start another company. I ended up on the Startups team at AWS.
Mike: Can you walk us through the Stitcher journey it in more detail?
Noah: It was really hard like all startups are. We founded the company before the iPhone. We had this idea that mobile was going to be a thing, and people were going to use mobile devices with an internet connection. If they were going to do that, then why would anybody want to listen to the radio anymore? You could listen to a two-way interactive internet connection, verse one-way broadcast connection. There were podcasts, but they were really hard to discover and find. The first thing that we actually created was a plugin for iTunes that would sit on your desktop and make organizing your podcasts easier. We launched that and literally had no users.
It was so bad that we had to pay people to try it just so we could even figure out what was so bad about it, which helped us learn and improve. Fast-forward when the iPhone came out, and we started building apps for the iPhone. We already had some of the audio infrastructure in place. We raised a Series A in 2008. The growth was rocky and too slow, because podcasts just weren't mainstream yet. Still, we raised a Series B led by Benchmark, and we announced that we were going to be directly in the car with Ford and GM. Throughout this whole experience, up until when we sold the company in 2014, it was a struggle to get users.
We did pretty well with early adopters, but we weren’t able to cross that chasm between early adopters and the mainstream. I was really good at raising money and selling the vision, so we ended up with a lot of investors who were used to seeing really big returns. We struggled the whole way. We were so close to running out of money so many times, that throughout the journey there were various points when we were considering our alternatives to sell the company. Eventually in 2014, I had no energy left. We'd given away too much ownership of the company, we weren't growing quickly, and our costs were significant. We were in a pretty tough spot.
We also had debt on the balance sheet from doing a venture debt round. We were in a situation where Deezer wanted to buy the company, but I don’t think they even fully paid off the debt. In 2014, we went through an asset sale process, which basically means the employees got jobs at Deezer. The assets of Stitcher were sold to Deezer, and then all of the liabilities went away because it was assignment for the benefit of creditors acquisition and asset sale.
Mike: When navigating acquisitions and outcomes that may not be deemed a success financially, managing your investors and their expectations is always a challenge. What was the relationship like between you and the investors throughout this process? Did it become fraught in that way, or were you able to maintain those relationships?
Noah: It was pretty challenging towards the end. In 2012, they wanted to replace me. I remember a board member from Benchmark called me and said, "Hey, we're going to try to find another CEO. We want you to help the process along, be part of the transition." I think I was upset about it for about a minute, and then I was like, “What the fuck took you people so long?” We tried to find a replacement for me and we didn't find anybody that was up to all of our standards. The relationship was strained. Nobody likes to lose. We had an interesting board dynamic where we had one investor who hadn't had a big win yet, and then we had a founding partner from Benchmark. Then we had a seasoned investor from NEA but he was a young partner. It was a challenging board dynamic and it wasn't great towards the end, but we're all on speaking terms I guess. At the point that we were in acquisition talks, I think the investors had given up, and they just wanted it off the balance sheet and wanted to move on.
Mike: Investors are one thing, but there are other folks – like employees – who are investing their time and careers into your company. How did you communicate or manage expectations about the acquisition with employees?
Noah: People have various views about transparency. The Silicon Valley ethos is that you should have radical transparency, and be transparent about everything. I actually think that's bullshit. I think that if you are running out of cash but realistically think you’ll figured it out, then it's not the employee's job to worry about it. It's their job to do their job, and the CEOs job to worry about runway. I had a set of people who worked for me for a long time who wanted to know about that side of the business, and a set of people who did not want to know about that side of the business.
With the people who wanted to know, I would tell them everything. With the people who didn't want to know, they just trusted that I was going to get it done. In the final couple of weeks, we had to furlough the employees because we didn't have enough cash to get everything signed and get the deal done. I basically told the employees, "We think we have a deal on the table. I'm trying to get everybody jobs. Just hang tight, be patient, and we’re going to try to work it out.” I ended up getting everybody jobs at the acquiring company, but it was hard.
Mike: Having raised the venture capital that you did, you must have had a grand vision for what success looked like for Stitcher. How did you personally grapple with the fact that Stitcher wasn’t the success you’d hoped for?
Noah: I think I had been grappling with it for some time. I think like most of us entrepreneurs — I’m an optimist. That's why we're crazy enough to do this. We always think we're going to try to work our way out of it somehow. Maybe the vision and the scope will change somewhat, but something really good is going to happen. By the time we were down to just having one or two possible acquirers, and knowing that the situation was pretty dire and we didn't really have any negotiating leverage, my mindset changed. I changed course from being an optimist to just thinking about trying to land my employees jobs. I wanted Stitcher to live on in the world. I believed deeply in the mission of Stitcher and just wanted to see it live on in some way, shape or form, and fortunately it did.
Mike: Once the acquisition was done, how did you feel?
Noah: I was really exhausted. I was physically and emotionally exhausted. Since year four of the Stitcher journey, I had a little bit of financial flexibility. I had said to myself that whatever happens, whether we fail or are wildly successful, I was going to take a year off. At the time we sold the company, I was mostly just relieved. I slept a lot – that may have also been depression – but I really know I was just exhausted and relieved. I had been at it for so much longer than I had intended without rounding the corner to true product-market fit. I think I just felt relief, and then started to pick up the pieces.
Mike: What pieces needed to get picked back up once the journey was over?
Noah: I think the biggest challenge was reconciling two different narratives. One narrative is that I failed. I called all my investors, including friends and family, and told them that I am returning them no money. I spent seven years doing this, and I did not succeed. At this point now podcasts are a thing and Stitcher's done pretty well. But at the time it wasn't clear whether Deezer (the acquirer) was going to shelve it in six months or continue to grow it.
The challenge was reconciling the narrative of “I failed and I've wasted seven years of my life,” with “Holy shit I got really far and millions of people use this and are still using it and love it and I built something cool.” It took me some time, but I recognized that only one of those narratives was actually useful. I just dropped the failure narrative. I basically just said to myself: “Do I wish that I had worked at a consulting firm or an investment bank this whole time? No. Is there anything else I would have rather done? No.” Nobody ever regrets having tried to start a business. I felt like I swung really hard, and basically left everything on the field. I couldn't have left anything more of myself on the field to get this thing off the ground. It’s about embracing the pride of what did get accomplished and what was important, not the failure part.
Regardless of the outcome, there's a lot to be proud of. I think focusing on that is the important part.
Mike: So you were exhausted, how did you recover?
Noah: Having done it for seven years, I had to do a lot of things along the way that fortified me. While my identity was somewhat wrapped up in Stitcher still, as all founders are, at that point I recognized that I wasn't Stitcher. But I do think that that's a challenge for folks and was still a challenge for me. I think dealing with burnout just takes a while. You get through different pieces of it at different times. It's been five years and I haven't started another company yet. My guess is I will, and my guess is when I do there'll be a set of things that get unearthed that I still haven't dealt with.
My experience was not like: “Okay, I'm over this, everything's good now I'm ready to move on.” I think that it's an ongoing process. That was part of me for a pretty long time. We're also resilient folks, entrepreneurs. We're used to getting knocked down. Our job is basically to get knocked down and get up every day, so it's good training for that.
Mike: What was the single hardest thing for you after Stitcher?
Noah: I think just figuring out what to do was challenging. I assumed I was going to start another company. Then I was hanging out as an EIR at a venture firm. Then after some period of time I didn't want to force starting another company, so I got back to the basics of asking myself, “What do I like to do?”, “What do I enjoy?”, “What gives me energy?”, “What is less energizing?” I wanted to be intentional about that in whatever my next career move was. For example, I've managed a lot of people. I think at Stitcher at our height we were 50 people. While I did get a lot of emotional benefit from managing people, I found that it was not net-energy producing. When I was evaluating jobs to take, most of them were managing a business line having many direct reports. One of the things that was attractive to me about team at AWS was being an individual contributor. Knowing that I loved helping founders and that I didn’t want to manage a big organization made me to gravitate to the Startup team at AWS.
Mike: What advice would you give founders who are trying to figure out what to do next after their startup?
Noah: Founders have spent a few years doing whatever the hell it takes to make their company work, not listening to their own self about what they like and what they don't like, because you have to do freaking everything whether you like it or not. It’s important to come back to yourself and listen to what you like and what you don't like while you're building your startup. Being honest with yourself about what those things are that you enjoy, and what those things are that you don't enjoy. When you're seeking your next job or whatever you're going to do next, maybe you want to start a company but you don't want to go out and raise a bunch of money. Maybe you don't care about a big swing, you just care about being honest with yourself. I think that part is probably the hardest and the most important. Partially because your opportunities are not going to perfectly align with whatever the set of things are that you want to do. But knowing yourself well enough, and not giving in to ego is a really important next step. Because the last thing you want to do is get the shit kicked out of you even more.
Mike: Are there any ways that you've seen people successfully process that and be really honest with themselves?
Noah: There are a lot of frameworks and books that I used this past go-around. For example, there’s a book I read called Designing for Your Life. If you do a little research, you can figure out what is the one that works for you. There are exercises that can help you clarify things for yourself, and I think doing something like that is useful. I also think it’s valuable to see a therapist or a career coach.
I think one thing that is really important though, is to just make sure that you're prioritizing yourself, and surrounding yourself with positive people and positive things, so that you've built an environment for yourself that is most conducive to finding what's next. But having your life back and feeling like you're in control is an amazing benefit once you've gotten over the stages of grief part. I actually started writing. Since Stitcher, I've been doing a much better job of writing annual goals, and I would do that at New Years. Just spending much more time focusing on what my goals are for the year. Whereas when I was running Stitcher, I felt like most of that was out of my control. It's very liberating to feel like you're back and you're the owner of your own life.
Mike: Any final words of wisdom?
Noah: This has been a deep, non-humorous conversation. But just being able to laugh at stuff is really important in general. It helps keep perspective. In the grand scheme of things, your startup doesn't really matter that much. We're all going to be fine. I think maintaining that perspective, and being able to laugh at whatever it is that happens is really, really important. My dad used to say that if you're in a situation, once you can't laugh at it, then you're screwed. So make sure you can laugh about things.
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