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Full transcript: Raftr co-founder Sue Decker and VC investor Michael Dearing on Recode Decode

The former Yahoo exec and the former eBay exec have teamed up on a new content platform.

On this episode of Recode Decode, hosted by Kara Swisher, former Yahoo CFO and President Sue Decker talked about her new company, Raftr, that is trying to create conversation spaces online that are not as prone to trolling as places like Reddit, Twitter or Facebook. Venture capitalist Michael Dearing, who invested in Raftr, joined the conversation.

You can read some of the highlights from the interview at that link, or listen to it in the audio player above. Below, we’ve posted a lightly edited complete transcript of their conversation.

If you like this, be sure to subscribe to Recode Decode on iTunes, Google Play Music, TuneIn and Stitcher.

Kara Swisher: Today in the red chair I’m delighted to welcome Sue Decker and Michael Dearing. Sue is the former CFO and president of Yahoo and co-founder of Raftr; she also spent nearly 10 years on the board of Intel and currently sits on several other boards, including Vox Media, which owns Recode, but I don’t care. And Michael is a former eBay executive and founder of Harrison Metal Capital, a venture capital firm that is invested in companies like AdMob, Birchbox and — Sue’s company — Raftr. And I have called him the one VC in Silicon Valley, you don’t know who he is, but he’s the most successful, so I’m excited to have him here, because he’s super smart about these issues.

Sue and Michael, welcome to Recode Decode.

Michael Dearing: Thanks for the invitation.

Sue Decker: Thanks, Kara.

Thank you.

So we’re talking content today. I want to talk about content and what you’re doing. So why don’t we first give a little background, what you’ve been doing since you left Yahoo, and what you’ve been investing in lately. And then we’ll talk about where Raftr is going and why.

The reason I want to talk about it is because content becomes, sort of, a very interesting topic with Facebook and others and how content is delivered and changed and everything, so it’s a great topic for discussion. But talk a little bit about what you’ve been doing since you left Yahoo, essentially, first.

SD: Sure. Well, for a few years I spent most of my time raising a lot of teenagers.

Which takes a lot of time.

SD: And continued to be on boards, but over time I started getting invited to be in advisory positions for smaller companies, which is not something I had a lot of experience with prior to that, and it was in that experience that I ended up meeting my co-founder and the CTO. Another, different sort of media opportunity in LA that we advised for, but ... one of the really great things about not being in a situation that’s 24/7, leading a large, complex company, is there is much more time to play with products and think about where the world is going. So I think it was a nice pause for me to have a little bit more time to engage in thinking about where the content world was going. My years on Wall Street were all about studying content companies and underlying stocks of newspapers, publishers, cable ...

People forget you were a financial analyst on Wall Street. I don’t, but I remember.

SD: So I’ve had a long history of loving the economics of content-related businesses, and it was fun to re-engage in that and come across this opportunity.

And obviously content was enormous at Yahoo, had been a big deal at Yahoo, it still remains a big deal at Yahoo, even though they’re in more distress than ever.

SD: It does, and I think that’s one of the things that is unfortunate about what happened, is that when you think about what makes any of the other companies in this broader space successful, it’s easy to identify that one thing — whether it’s search for Google or social for Facebook or transactions for Amazon — and yet all those companies do other things. But Yahoo sort of lost that sense of identity. And yet the thing it was the best at is the delivery of content — news, sports, finance — never really was able to go deeper in that and develop a social and mobile experience. That’s part of where my impetus to bring something to market that could do that came from.

All right.

Michael, you have been in commerce, you’ve been on a lot of commerce things.

MD: Yeah, that’s where I got started in Silicon Valley, at eBay. And of course when I started the investing business it was mostly consumer and commerce. Over time it’s migrated down to about a third of what I do. The other two-thirds being business software and services and developer tools.

So this is a shift, right? Or not? Because content isn’t been something that you’ve been much invested in.

MD: Well, you know, when I started in consumer investing I skewed heavy e-commerce because that’s what I know and what I came from. But what I started to see was a lot of similarities between the e-commerce models that were commanding a lot of people’s attention and entertainment products, games, ad-supported information businesses, and that took me in a whole different zone in the consumer world. It’s funny, I started out in e-commerce, but most of the money we’ve ever made as investors has come from content and ad-supported ...

Give me an example.

MD: Well, the ad-tech stuff that I’ve done, those businesses thrived — AdMob, MoPub, and then a company I’m working with now called Liftoff — they thrive when they make the content publisher successful. They’re the economic engine for those folks. And so that is the glue that binds the consumer experience, which is revolutionized in the last 10 years, like nobody could have anticipated. That binds the consumer experience and the economics of an ad-based model.

All right. So content, talk a little bit about where it is right now. How you look at? Because there’s obviously regular publishers who have their websites and mobile apps, like the New York Times and things like that, and then there’s Facebook, which has become a distributor, although I argue it’s a media company. Then you could argue that Pinterest, which I was just visiting, is a content company because it entertains and also sells stuff.

How do you look at the content business now? It used to be the Yahoo portal, you went there, you went to Yahoo News, you went to stuff. Obviously, it’s become mobile and social. So how do you look at it as you start to ... And then I want you guys to explain this company. Because it’s complicated, it’s complicated when it’s on paper. Explain where you think we are right now.

SD: Sure, well, we can tag-team on this. I think the clear evolution in the last five to seven years is that more and more people are receiving their news and information content from a social setting. So, I think, Pew Research and other studies say something like 70 or 80 percent of content is coming from there as opposed to people going to a publisher to receive it. There’s still a lot coming from an open search as well, but those are the two ...

Like a Google search?

SD: Yeah.

But not as much, for sure.

SD: But those are the two remote controls to get digital content now. And I think there’s some questions about whether or not that’s the optimal experience for consumption of content. It’s definitely a terrific experience for distribution of content, when you think about tweet and re-tweet, immediately getting out there in atomized pieces, breaking news. There’s really nothing better, but what I think may evolve over time is there will become more curated ways to receive content, because by virtue of the very success of distribution on social networks, the networks have become increasingly noisy and less curated. So I think that over time there will be ...

It’s like all of the library books thrown on the floor, right? I mean ...

MD: Well, not just thrown on the floor, but fired at you with a cannon, in your face all the time. I love what you said about the atomization, I think that’s totally right. That’s something we saw in creation, starting a long time ago. The idea that individuals, practically anybody, could create practically any kind of information content. But I think what’s changed is that the distribution pipes, the owners of the distribution pipes, whether that’s Facebook or Twitter and whomever, they actually see themselves as pipes.

They do. Well, no, they hide behind that when there’s trouble, and they’re like, “We’re a platform.” I think platform is the word they use.

MD: But I think what it’s become is ... I think I follow like 800 people on Twitter, that’s like 800 megaphones, that’s not 800 conversations. So what I miss about the interaction with people around ideas, and quite honestly why I follow so few people as I do, is I’d actually like to talk back, I’d like to have an engaging interaction. And I think that’s what’s been ...


MD: Sacrificed in the last couple of years.

Which used to be what newspapers were or what they ... although that was, sort of, a one-way.

MD: Or threaded discussion boards in the early days, right? Some of the most vibrant conversations I ever saw at eBay were in those threaded discussion boards, ditto on Yahoo. Today ...

They degenerated into ...

MD: They degenerated, that’s right. And so today the idea of feedback or comments is trolling.

Yeah, we took them off our site because we just couldn’t deal with them. There was one good one for every 10 horrible ones and it was exhausting, and cruel. It just wasn’t content, I don’t know what it was, it was just people screaming at each other, essentially.

So the only issue is, this is the way people have learned to behave, roll through their Twitter thing, or they go through Facebook and then they get little bits and pieces of things. It doesn’t have a cogent experience whatsoever. So explain what you’re doing at Raftr. Because there’s been a lot of attempts to do this. I’ve seen one after another. There’s Nuzzel, there’s Circa, there’s just a ton of these. I see them all the time and for some reason they do not catch on. So explain, as easily as you can, what Raftr is, because I get it. But it’s better to explain it person to person. We were on the phone the other day, once you explained it, I’m like, “Oh, I see.” But you can’t be doing that, you can’t be calling everybody like you’re calling me and explaining it. Or you could, I guess, a marketing opportunity.

SD: Well, now with your great distribution ...

Yeah, right, we’ll see.

SD: Yeah, the idea is ... Let’s go back to an analogy, that over time, I think, in any industry, use cases start to segment based on different ways people like to consume content. So, for example, in the world of our personal content that we post on Facebook or Instagram, that world has really segmented in the last year or two across the networks that are primarily focused on breadth and reach, and those that are focused on depth and engagement. And I think you have Instagram on the top, an amazing way to reach people, and the users will put their very best photo and then will try hard to get the best reach for that. On Facebook they’ll put the highlight reel from which they picked that best photo, and it probably goes out to fewer people but more people that you know. And Snapchat is sort of the behind-the-scenes reel that goes on every day and is sort of a messaging-based focus, and maybe you have a 100 people that get your Snap Stories, whereas you have 500 on Facebook, and 1,000 on Instagram.

So, I think that’s a very different use case that’s evolved naturally from the way the products were architected. Our theory is, the same is going to happen in the kind of content that we talk about day to day, whether it’s news, sports or entertainment. Today we have Twitter, which is incredible at the reach, one to many, celebrities hitting all the megaphones, and there’s no better for breaking news. But there is missing a place to have a more engaging, messaging kind of conversation with your people, and that’s the idea behind Raftr. Rafts are groups of people who are like-minded, you can graft your raft onto other rafts and have conversations that are more intimate, more like, by analogy, in Snapchat.

So it’s topically based?

SD: Yeah, that’s an architecture change that we made. Rather than follow people at the primary level, you’re following specific stories. We define a story as a sports team or a television show. So you can follow the “Game of Thrones,” you can follow the Golden State Warriors, or you can follow an ongoing news series, and that would be a sort of, like the election, something that could be delivered in serial form as opposed to a breaking news event which always is going to be better covered by a Twitter or a CNN.

Well, how is that different than what Twitter has been doing — not successfully — with Moments?

MD: Yeah, I think that they also acknowledge that the idea of following people wasn’t 100 percent ...

Well, they understand the hellscape that it’s become for most people, at this point.

MD: I think that’s part of it, I also think it’s too atomic. If I want to follow the presidential election, should I have to curate a list of 50 or 75 people who are really good at that? Actually, I’d just rather follow, in their case they called it Moments, you know for other people it’s hashtags, for us, it’s stories that gather the people around it.

The metaphor I’d use is, using Raftr is like going to a really great dinner party where there’s little rooms talking about different topics and you can move from room to room, but you know that if you go to the presidential or into the White House discussion room there’s going to be some people who take this seriously and who want to hear from others. It’s not a shouting fest, it’s not megaphones, it is a conversation. And I think the conversational tone to this product is what got me so excited about it.

But how do you prevent it from becoming Reddit, which is not conversational. Some of Reddit is conversational, but comments degenerate, how do you ...

MD: It can go that way, but just because people have the right to speak out however they want, doesn’t mean that the community of people in that room or that topic have to tolerate it. So I think, by the way, Reddit is making really good improvements here.

Yes, they are.

MD: Moderators getting more tools and more influence, the community saying look this is a room, this is a sub-Reddit. In our case, this will be a story for people who are serious, not for bomb throwers. The other thing we got is real name, real identity. Right? So it’s not a hide behind a handle and throw turds.

Like ningpan4 or something.

MD: So I think it can be ... Look, we can’t give up. This is what made our country and our industry great, is the ability to use technology to trade ideas in a quality manner. So this is part of that.

So tell me about that idea of giving up, because, I think, again, a lot of these efforts who have not worked out, whatever way they’re architected it doesn’t seem to attract users. They like the melee of Facebook or Twitter or something like that, I’m not sure if they like it or they’re just ... Someone I was talking with about this was talking about how Facebook and Twitter are just driving them crazy, you know what I mean, in terms of not being able to understand anything, but then being pummeled almost daily and nothing makes any sense. Although I didn’t see them think, “I want an answer to that.” You know, it’s an interesting question now, because you feel that you do get pummeled, like it doesn’t have any cogency or strength to it.

SD: Yeah, and I think just to build up on what Michael said, the two primary ways we’re trying to guard against that — even though it is the internet and we will experience some of that and we’ll have to figure out how to moderate it, but — the first is that our login process is by phone number, not by email, and that, right away, since most people have one phone, will prevent 30 pseudonym email accounts of trolls. So that may cause us to gain traction a little bit slower because we’re doing it by phone number, but it also ensures — or helps prevent — some of the problems that others have had.

The second thing is that we have curators that create a weekly episode and they curate the best content for the week, they hypertext link that in. We know it’s not fake news. And they also are the ones moderating, they put out the questions and try to create a dialogue around things that are interesting.

We’ve tried to put in a couple of safeguards in the product, and I think it’s kind of resonating. It’s the early days and we’ll see what happens and we have some big introductions coming up in the next couple of months, but when you think about the real world of content and conversations, they’re totally and inextricably linked. We love to talk about, it’s a social experience to share content together, whether it’s the news or a show you watched last night, at the water cooler at work. And usually things people do ...

There is no water cooler at work anymore.

MD: It’s a well stocked canteen of ...


MD: Yeah, exactly, lots of artisan, hand-crafted beverages.

SD: The proverbial one. But it is something people like to do, and most things that happen online are things people like to do in real life. And if you think about, as you guys talk about the threaded conversations, you either have the New York Times with a few comments or you have a social network with a barrage of unrelated content. And the idea of coming up with a way to have a conversation around content.

A more conversational system.

SD: I think is a big idea. I think it’s a fair point, that it hasn’t really been ... we haven’t landed on the right thing, but we’re hoping ...

When we come back, we’re going to talk about why that hasn’t happened. Because it’s fascinating that it hasn’t. The only thing that seems to have worked are newspapers or this screamfest, which is really interesting.

MD: I do think there’s been something that’s emerged out of the last maybe six or 12 months of politics in the U.S., and that is that people in private conversations, whether that’s a group SMS thread or around a Slack channel, linking an article and then having three, four, 10 people that care about that chime in on it.

Slack is a really good example.

MD: So if you add up all the private Slack channels that are talking about the White House or the big game or whatever it is, that’s a lot of people having high-quality conversations.

Well, that’s how the internet started.

MD: And it would be nice to bring that to everybody.

All right, when we get back, we’ll talk about the difficulty of doing that. We’re here with Michael Dearing and Sue Decker. Michael is a venture capitalist, Sue is a very well-known executive and they’re trying to make content sane again.


We’re here with Michael Dearing and Sue Decker. Sue is a well-known executive who ran Yahoo for many years, but that’s like a big group of people, different people who used to run Yahoo.

SD: It doesn’t make me unique.

It doesn’t make you unique. And Michael, who is a terrific venture capitalist, former executive at eBay. And we’re talking about content and where it’s going.

When we finished the last section we were talking about how difficult it’s been for companies to do that. So, first I want to talk about why you think that has failed, because these have not caught on. Literally there is two paradigms, regular publishing, which everyone is used to, and I’m talking about a newspaper style where they present stories to you and then you read them in their collected way, from New York Times to the Wall Street Journal to Recode. And then you have this sort of explosion on Facebook and Twitter and other places, and all these attempts not to do that have not worked out. Can you talk a little a bit about why that is or why you think that is?

MD: I’m not sure I would accept the premise that they haven’t worked out. I think it’s harder to measure the billions of smaller-scale conversations that are happening across multiple channels than it is to look at Facebook and say, “Holy smokes, most of the world is going to use this on a daily basis.”

Which they are.

MD:So, okay. I don’t happen to use Facebook, but I’m celebrating their awesomeness and the pet photography and the documenting your children’s height and the fabulous vacation that you just went on, but there is a whole other dimension to human communication. And I don’t think that for a channel to be valid it has to have billions of daily actives.

I see, okay.

MD: I think for it to be a successful business it needs to bring meaning to people’s life, and that’s what I think this product has a chance to do. Again, I’d go back and say, add up for me the number of private SMS threads, the number of Slack channels, the number of threaded discussions happening online around specific articles and specific chunks of news, and you might consider Reddit to be part of that or not, you might consider Slack to be part of that or not, but I think it’s a huge slice of daily activity. What we’re trying to do is bring some of those principles to a single application.

Sue, talk a little bit about what you had done at Yahoo and how this is different. Because Yahoo was essentially the same. It was a pretty top-down paradigm of news stories and then comments and involvement in them, correct?

SD: Yeah, I think that Yahoo was fantastic, early on, hiring and attracting writers that were willing to go try a new platform at a time that was a big leap for them, and they ended up creating a great franchise around finance, news and sports. That was curated in an effective way so the user could engage in those topics. Where I think that stopped is the world kept moving in terms of mobile and social, and Yahoo’s innovation didn’t, for whatever reasons.

I think we’re back to where Michael was, I think the use that we see out there is that people are creating iMessage streams with 10 people to talk about the Giants and the Cubs game. Then when my friend lives in Chicago she’s adding two or three people to that iMessage and we’re having fun, but those two or three people have been vetted by her, so I just found some people that I didn’t know before that have a similar interest. That’s what we’re trying to do at scale, it’s very hard to ... iMessage works great for three or four people, but it doesn’t work well to discover other people with similar ideas.

And this is a way to create that kind of messaging base. The whole world has moved to mobile and messaging, and I think that’s part of why Snapchat is so successful or Slack is successful. The world is moving toward more channels, and I think back to the idea of the evolution of everything, part of why I think this is a really good time, is because by virtue of the success of Twitter and Facebook they’ve become so crowded that sometimes new things emerge that would start to answer that problem. I think, early on, when you remember the early on Facebook conversations or even Twitter, it did feel more intimate, it did feel less megaphone-like, and it did feel like most of the content you received was what you were interested in as opposed to something that was forwarded by a friend of a friend.

Because they are so effective at distribution I think things do evolve and I think the time is right for this. I actually think that’s why Slack has emerged as a social network around your office or around topics, Nextdoor has emerged as a social network around your common interests in a neighborhood. They typically start more general and then more specific ones crop up that address a common interest, once the general ones get so broad that it’s hard to find what you’re looking for. So I think the fact that they haven’t emerged so far is partly because both Twitter and Facebook were serving the need pretty well, and they still do.

For the message boards and ...

So Michael, explain how it works, explain how this newest idea works.

MD: Okay. So the organizing principle is stories instead of people, and so I can choose from a menu of stories that might cover politics, sports, news, TV ...

You should probably start with sports to make it easy. It’s talkable, right?

MD: Yeah, well, not for me, unfortunately, because I was always picked last for everything I ever tried out for.

Not me either. I’m the only lesbian in America who hates sports, but go ahead.

MD: Reality TV shows, any topic that you think has persistence over time where the episodes and the content is going to evolve, the story is going to unfold and you want to watch it and talk about it with other people. It’s very, very similar to the ...

The old message boards, yeah.

MD: It’s very similar to old message boards, it’s very similar also to the feeling you get when you’ve had that SMS thread open with five or six friends while you’re watching “The Bachelor.”


MD: Sorry, I have to come clean and say that I am in fact one of those people.

SD: What do you think of Corinne?

MD: They’re all trouble, but that’s why it’s good. It makes you feel better about yourself to watch those shows.

All right. Do you watch the show about “The Bachelor” show?

MD: No, that’s too much.

Is it too much?

MD: There’s a limit.

No, but it’s a fictional one, you know, there’s a fictional show about “The Bachelor”-type show. It’s supposed to be awful, but anyway go ahead.

MD: It’s too much.

Yeah, okay. All right.

MD: So you follow a story. You meet through your own network or extended networks of friends the other people who want to follow that story and you develop a conversation that unfolds over the course of call it 10 weeks, 10 months. I mean, I’ve met some people in the White House channel that we’ve actually become a little bit friendly because we’ve been following each other — or, pardon me, following the story together — for the better part of the election.

So imagine that those groups of people persisted, these rafts as they’re called — by the way, the root of that is the otter metaphor, this incredibly social, lovable group of people, of creatures that build their homes together, they sleep together, not in that way. Sue, help me out here, I’m going down the wrong path.

Not that there’s anything wrong with that. There’s going to be a group for that.

MD: We hope. Yeah, so you have these conversations and they unfold over time and you develop a rapport and a set of standards in those story groups, in those rafts.

And so you join them, and they open and close, like “Game of Thrones” ends and then that’s enough of that discussion.

MD: “Game of Thrones” is out, it’s not on TV right now, but there’s still people talking about “Game of Thrones” and sharing ...

SD: It’s one of the most talked-about shows out there, globally.

So things that would work would be TV shows, sports teams, politics presumably, things that people talk about.

MD: That’s right, that’s right.

SD: We think that it’s anything they talk about that ... our definition is serialized. So you have entertainment that is already delivered in seasons and weekly episodes or series, sports kind of fits that metaphor too ...

Yeah, games.

SD: Because you have weekly, you have seasons, then you have games each week, and for news we are serializing that. So that, for example, in politics the White House story, the first season had 70 episodes and it was the battle for the White House. We just started the second season and it’s called "President Trump," we’ve just had two episodes. That’s going to keep going over time.

Episodes? And they’re run by individual people who are the moderators?

SD: Someone writes an episode every week, our people trying to link the best comment and pose a couple of questions at the end for people to talk about.

And that’s where it goes? And links and stories start to fall into that place?

SD: Yes.

I see, and then ... but is it scalable to have individual people? So you’re really believing in editorial, right?

MD: Absolutely. And the point is that the editorial, that the responsibility of the moderators and the subscribers, is mutually supportive. So if the moderator is giving me good episode write-ups, and giving me good links and jumping-off points of the conversation. I can have a role in that too, by posting, “Hey! I found this link, let’s talk about this.” And I can steer the conversation in that way.

In that way. Does that scale with a lot of people? You have to hire a lot of editorial staffers, correct?

SD: I would put it this way, and I think it’s a really core and important question. And this is our hypothesis, we’ll see if this is right, but in traditional social media you have millions of people talking about millions of other people, hundreds of millions. The stories we all follow together, the kinds that we are offering, there are maybe a few thousand in the world. These are stories that millions of people are following, we have 50 of them on our site just to start and 30 million people follow those stories if you look at it on Twitter or Facebook, and mostly they’re fan pages of Bravo or more solicitation and stuff.

So when you have that kind of one to many, how many sports teams are there? There is 132 of the four big professional sports, add FIFA that’s another 200, add all the women sports, maybe you have 500 or 600 stories. And the same is true of entertainment, there’s 500 scripted and reality TV shows. And for the way we define news, similarly. So you could cover that with a team of a 100 editors, and you could cover it really well. And you would keep the conversations more curated and safe, which is what we think the market need is, because of the evolution of what’s happened in these other platforms. Many of them have evolved in really great ways, but all the negative things of the internet have come around. We think that this is an opportunity to curate better.

And how do you then get people to use them since they’re, sort of, on the crack cocaine of Facebook and Twitter and stuff like that. Besides talking to me.

MD: I think it’s not an or, it’s an and. I think one of the things that’s driving frustration with Twitter, with Facebook, etc., is the inability to have that conversation, so if we can find that product sweet spot where they are going to reallocate some of their time, right now, which is being spent feeling frustrated, allocate that frustration time over to Raftr, I think they’re going to have a much, much better experience with a portion of their time.

SD: The other thing I would just add to that. Although we do a lot internal, we hire curators who create our episodes, there are some great bloggers out there that have tens of thousands of followers.

Right, you’ve added some bloggers.

SD: So Dave Pell is on our site and Lauren Zalaznick, and they ...

Former NBC executive.

SD: NBC executive, she heads up a women’s blog that a lot of people read. So that’s a story, I’m interested in what she curates. She puts out a weekly blog and then it curates the best links, much like our ...

She does. Jason Hirschhorn does it, others, there’s lots of people that have a following like that.

SD: So if you pick a few of those kinds of stories to have on Raftr, most of those people don’t have a social or mobile experience. They don’t have a way for their fans to talk to each other about the issues.

They can do it through Twitter or Facebook.

SD: That’s it, right. It’s hard for you to have a channel where all of your tens of thousands of people get to talk about what you just published. And so they’re tweeting about it. We do have a way, we think ...

So you bring in popular people who co-write and stuff like that?

SD: Yeah, so some of our curators or people that we’ve hired and developed, as time goes on, as the company gets more successful we’ll be able to hire people with more following, who will be writing and they can advertise it in their social channels.

Okay. When we get back, we are going to talk about the problematic relationship Silicon Valley has had with content and where things are going in Silicon Valley. We’re here with Michael Dearing and Sue Decker talking about their new company Raftr.


We’re here with Sue Decker and Michael Dearing. Sue has got to go in a minute for something. But I want to get your thoughts on why Silicon Valley has had such a problematic relationship with content. Because it really has been an odd thing, they want to aggregate the responsibility to the content, yet they distribute the content, and they impact the content and have killed many media companies. So what is the problem, not taking responsibility?

SD: You know, I don’t know that it was planned that way. I think that when some of these major social networks emerged they probably didn’t expect to be in a position of such power as a distribution for content. So I think as time has gone on and it’s become more clear that where the pipes end and where the content begins is a blurrier line now, because they’re actually doing things on their distribution networks to deliver ... that actually put them squarely in the content business. I think you’ll see more and more sympathetic leadership toward trying to understand the rights of content owners and trying to take leadership over the content world.

What’s the problem of taking leadership, though? Because they don’t want the responsibility, because it comes with screaming and it comes with opinions and it comes with making decisions.

SD: I think it does but it also- I’m not sure that a lot of these companies started with that expertise or even that feeling, that that would be their identity so they have to hire people, they have to think about the issues, and there are a lot of complex issues related to that. I don’t know if pessimist is the right word, but I think things will evolve and I think you will see the worlds of technology and content become much more embracing.

It’s been a problematic relationship, all the way from the beginnings of Yahoo. And at one point you guys were going to buy YouTube — remember the fights over that? It just seems like it’s never been resolved easily.

SD: Yeah, but look how far the world has come in terms of the experience now and things like that, a lot of these content experiences, YouTube for example. Look at what’s happened in Apple Music and what seemed like two separate worlds, somehow it’s gotten figured out and, of course, when there’s one economic pie and an industry goes through an evolution, how that pie gets split changes somewhat and there’s going to be some that feel like they got less and others that get more. And I think that’s sort of a natural evolution of an industry, but I think the worlds do come together and they have to come together and figure out ways to embrace each other.

All right, Sue has to go, but I’m going to bother Michael about where things are going in Silicon Valley because I know he’s going to say some horrible things about that landscape. No? Yes?

MD: Sure.

Okay, good. Thank you, Sue.

MD: I’ll uncork the horrible.

SD: I think I’m not going to leave now because I want to hear that.

Thank you, Sue.

SD: Thank you, Kara.

All right, Michael, let’s talk real talk here.

All right, here we go.

So here you are investing in content and stuff like that. What do you think the problems between content and Silicon Valley are, because they seem to be growing, even though Sue was saying there’s an element of it’s not, just this whole fake news thing, this idea of who’s responsible, the decimation of these regular media companies that actually provide real content.

Yeah, I think the root of the problem is the somewhat libertarian love for free speech among the tech community, combined with the premise that people are basically good. If you look back, even all the way back to the days of eBay and Yahoo when they were sort of owning the web, the premise was these products are built for people who basically don’t intend harm. And so, products that assume that about people, they did not come with tremendous amounts of safety infrastructure. eBay of course decided to build trust and safety infrastructure over time. I think many of the high-flying companies of today are struggling with the same challenge, but it’s that tension between the love for right to free speech, the premise that people are basically good that gets us into some amount of trouble.

Now me personally, I lean toward the libertarian end of the spectrum and so I don’t expect Facebook to police this stuff.

Well, who does then?

I think actually the market can.

How? It hasn’t worked. The thing is they suck all the money out of the system and then they say nobody is responsible.

That may well be true in that company’s case, but there is nothing technically preventing them from offering people tools to filter and down-vote and eliminate fake news from the feed.


So I think you have a handful of choices in these tech companies. You don’t command and control the users in the way that Procter & Gamble did in the early part, in the last industrial revolution, the big companies had command and control over the markets. These markets are messy, they are full of crazy people who like to do their own thing and they don’t want to hear about rules from a particular company that they patronize. But the companies have three tools in their tool kit: They have a pen, a price tag and a flashlight.

They can write a rule, and command and control using the pen to write legislation about what’s okay and what’s not on their site. They can set a price tag, for if you want to exhibit these types of behaviors here is the price you have to pay in dollars, or you can shine a flashlight on it and say, “Hey, we’re not here to judge but we want you to know where these people are coming from, what country of origin did this news item originate in, who are the credentials of the people who supplied it.” That flashlight is the most powerful tool these companies have.

Why not just throw them off?

I wish they would deploy the flashlight and let people decide on their own. I’d rather have the fake news providers fail in the open market of debate and discussion ...

But people make choices every single day. What I’m interested in is the Facebook, Twitter, Snapchat thing. Snapchat is providing a relatively good environment and Facebook’s environment is becoming more and more trashy.

That’s because Facebook is addicted to user growth and advertising revenue growth. And I don’t judge them for that, but that’s the fact.

Yeah, so they have to do engagement, engagement, engagement no matter what.

That’s right. And ad dollars, ad dollars, ad dollars.

So here you are trying to change that content experience, that it’s quality content. I’ve been hearing this a lot from people, that we’ve got to create a quality content experience because now it’s just a screamscape, essentially.

The good news, Kara, is we don’t have to create the quality conversation, we have to give it an outlet. And right now there’s not very many places for them to have that discussion. Some of the smaller sub-Reddits around very specific, narrow topics, home-frickin-runs in terms of the quality of the conversation. But that product and that experience is for, whatever reason, not the dominant experience on that platform. So I think that Raftr, and Slack channels among like-minded people, who like to debate and discuss, and all the SMS group chats I’ve got going between my friends and their friends, that’s the model we should be trying to scale.

And to finish up, how do you think this is going to be delivered? Because a lot of it is typing, like typing words. Where does it go? Is it voice, is it video? Are you in a VR space with people?

I think you have to look to what’s happened in chat, in SMS, in messaging. You’ve got overlays, filters, you’ve got audio, video, static images, captioning, all that stuff. Those are the native behaviors of people using these mobile devices to share ideas with their friends and in some cases strangers. Those are emerging grassroots, bottoms-up, and I think that’s a good sign, that we should expect a lot more of those.

Do you imagine a virtual reality conversation with Raftr or Slack or whatever?

I’m not qualified to guess.

You don’t have enough money for that.

I’m not qualified to guess, but I would say that the conversation ... Look, we don’t have to do anything to the human operating system to make them crave quality conversations with their peers.

That’s a very good point.

We don’t have to do anything, it’s been there for years. We have to find ways to unlock it in software and to amplify it with software. And that challenge is very solvable.

Two last questions. One, do you think Silicon Valley cares about content?

To the extent that it sells advertising, yes.

[laughs] So they’re not committed, they’re ...

Now when you say Silicon Valley, I ...

There’s no Henry Luce here, you know what I mean.

I assume you mean the large companies with the huge audiences. Individual human beings in Silicon Valley care about getting information just as much as humans all over the earth do.

There’s not many Jeff Bezoses buying the Washington Posts, kind of thing.

I love that he did that and I’m a subscriber for all the reasons that you’d imagine to support that business model financially, but we don’t need to rely solely upon the media brands and platforms of the last 100 years to solve this problem. We can do both. It’s not or, it’s and.

And very last question, how do you look at the investing landscape right now? Here you are, you put a couple of million dollars into this company.

Way too much money, way too much money available. The Earth has been industrialized for what? 250 years? The pile of wealth that we’ve compounded since that industrialization started is staggering. And those people sitting on those big piles of money — and by people I should say universities, endowments, pension funds, all of the institutional limited partners — they’re looking at returns from the public debt and equity markets that are just not acceptable. So if they’re going to make their numbers work they’ve got to pour money into private. And so if we’ve got an overabundance of supply of capital, we’ve got a healthy flow of new ideas. What we’re really starving for in Silicon Valley is great general management. Great ability to take the spark of an idea and turn it into a really functioning business.

That’s a really good point.

And so that’s what drew me to Sue. I’ve known Sue a long, long time, since back in the eBay and Yahoo days. And what I love about companies like hers is, she and her colleagues are real executives, with real general management jobs.

Right. There are a lot of idiots, Michael.

I don’t think I’m an idiot so much ...

Oh I do.

As just ... Maybe a little ...

I’m teasing you, not really. I’m not teasing you anymore.

You’re making me sweat again.

All right, we’ve been here with Michael Dearing and Sue Decker talking about where content is going in Silicon Valley. They’ve got a new company called Raftr which is trying to make sense of the hellscape that content has become on the internet and I appreciate it. Thank you, Michael.

Thanks for having us.

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