Show Notes

It’s always great to talk about startup success stories. But what about those startups that have great potential but are still struggling to get on track and find a path to success? There is still a lot to learn from startups like Knowable, an audio-first learning program that launched in 2020. While Knowable has big goals and strives to make a meaningful impact on the world, it is still in the process of making inroads.

Knowable CEO and co-founder Warren Shaeffer spoke with scaleup ally Roland Siebelink on this week’s episode of the Silicon Valley Momentum Podcast. As a veteran founder of multiple startups, Warren had a lot to say about his current company and advice he’d like to pass on to other founders:

• What he learned about an advertisement-supported business model from his previous startup.
• Why the best leaders are willing to be vulnerable and admit to their mistakes.
• What is the difference between selling vitamins and selling painkillers?
• Why feeding off one another’s energy has created a good partnership between Warren and his co-founder Alex.
• The importance of establishing relationships with other founders and using their experience to help on your journey.

Transcript

Roland Siebelink:Hello and welcome to the Silicon Valley Momentum Podcast. My name is Roland Siebelink and I'm a scaleup ally for tech founders. And am I honored today to have as our special guest Warren Shaeffer, who is the co-founder and CEO of knowable. Hello, Warren.

Warren Shaeffer:Hello, Roland. Thanks for having me.

Roland Siebelink: Absolutely. The honor is entirely mine. What does Knowable do and who do you make a difference for in the world? In what way?

Warren Shaeffer:Knowable launched less than a year ago. We're an audio-first learning platform. And we make it easy for people to learn actionable insights from experts at the top of their fields in an audio-first way. I started the company primarily to solve a personal problem, which was I wanted to keep learning, I wanted to hear from the greatest minds, but I didn't have time for long video courses. And audio allows someone to listen and learn as they move through the world. I like using Knowable and many of our members like using Knowable when they go for a walk, or a run, or doing dishes and don't have time to stare at a screen or read a physical book.

Roland Siebelink:Oh, that's amazing. And we have in this field, of course, a lot of alternatives, right? I'm guessing podcasts. I'm guessing audio books. What makes Knowable better suited for people to learn from than those alternatives that abound?

Warren Shaeffer:The key word that differentiates Knowable is actionability. We really focused on this idea of what can we convey in an audio course or an audio lesson that will help someone not just learn something new but actually go and take action in the world? Because in my opinion, one of the best ways to actually learn is to go do it and then to eventually teach it. Knowable lessons and audio curriculum is designed in such a way to instill as many insights per minute as possible while also being listenable like a podcast. In many ways, we combine the best of podcasts and the best of audio books and we add to it using e-learning best practices as well to create a more didactic and pedagogically-sound experience.

Roland Siebelink:Excellent. Well, I know that many of our listeners are leaders and therefore, they should also be readers, right? Can you give an example of how a product like Knowable would let them learn a lot more, maybe in the context of a business book, management learning, things like that?

Warren Shaeffer:Absolutely. We have a lot of courses focused for entrepreneurs and leaders. One of them is "Launch a Startup," and that's led by Alexis Ohanian, who is the co-founder of Reddit and is a partner at Initialized Capital. He brings in other founders and investors, and that's really an A to Z guide of how do you go from an idea on the whiteboard to a seat at the boardroom. Really, the difference from something like "How I Built This" versus a Knowable course on launching a startup is there's a lot of brass tacks, a lot of detail about how do I find a co-founder, how do I negotiate with a law firm, how do I validate my idea quickly, what shouldn't I do? Right. A little bit less gloss and a lot more actionability.

Roland Siebelink:You said it was started about a year ago, Warren. The best startups, I feel, are the ones where a founder is trying to scratch their own itch in a way, right? How did you turn that itch into this idea and into a company and how fast did that go?

Warren Shaeffer:My co-founder and I had actually worked together on two previous businesses. We wanted to do something together again. We did start with this idea of, "Okay, let's go to a company." And we really boiled the ocean of all these ideas. We had a hundred plus ideas that probably all seem pretty good on paper. Blockchain and face masks and the whole gamut. And then we realized that if we were going to do something again together, it was so important to really start with the mission and the vision first. Because that's what sustains you over the ups and downs of entrepreneurship, in my opinion. The education space and learning was the area where we thought we could have the biggest and most positive impact. I'm a first-generation American. I've seen firsthand how a great teacher can change the trajectory of somebody's life. I've been grateful to the people who've given me mentorship. And I think making that more accessible to more people - unlocking knowledge, unlocking insider knowledge, especially - is something that can be transformational for the world.

Roland Siebelink:The question that comes immediately to mind here is how do you display that value that you provide over podcasts and audiobooks? I guess that comes very closely to these questions about packaging and pricing, as you said. How do you convey that value to people and how do you get them to pony up for that subscription fee?

Warren Shaeffer:Honestly, we're still working on it. The people who we get to try it, they see the value. It is a challenge. Our biggest challenge right now is how do we get more top of the funnel awareness? Because generally, we have a really great conversion from somebody listening to a first lesson then becoming a member. But what we haven't figured out super well is, what's the best way to get a lot of people to listen? And so we're still in that experimental phase.

Roland Siebelink:This is not your first rodeo, Warren. To come back to you, how has that been a logic that you've seen in some of your previous businesses that you and your co-founder ran before?

Warren Shaeffer:Alex and I previously ran a company called Vidme, and the beauty of Vidme was that we baked virality into the DNA of the product. But what we started with was the world's simplest way to publish a video. We launched in 2014, and at the time, YouTube was effectively the only place where you could publish a video. Yet it required you to sign in, and at the time, Google was pushing Google plus. If you wanted to share your silly cat video with just a few friends, you had to go and publish it all on YouTube and all of our Google plus circle, and then there was all of this cognitive overhead versus just publishing it and sending it. I don't know if you remember, Roland. But you would try to text a video in 2014 and you would just see the progress bar stuck at about 20%.

Roland Siebelink:I do remember that. Yes. It taught me never to share videos ever again.

Warren Shaeffer:We dramatically simplified it. And video is inherently viral. When someone makes a video, they usually make it in order to share with someone else. Everyone who received a video that was posted on Vidme saw that it was hosted on Vidme and that helped us convert more video creators and so on. And we scaled that to over 25 million monthly users, and with no paid marketing. Knowable is a different product. We are charging upfront. We believe that part of our lesson learned from Vidme was that when you have an advertiser-supported model, your customer ends up becoming your advertiser rather than the end user. And we think that creates a lot of perverse incentives. And I think we're seeing many of those play out in social media today, unfortunately. And it was important to us to have a product where we felt like we were offering more value to the end user in exchange for money given to us rather than introducing a third party, which creates perverse incentives.

Roland Siebelink:Your go-to market, of course, is not only customers because when you think about this, as I hear it, this is really a two-sided platform where you also have to attract content producers. You must have thought a little bit with a chicken and an egg problem as well. How did you guys solve that?

Warren Shaeffer:That's right. We do think of it as a marketplace with passionate and enthusiastic teachers on one side and eager learners on the other side. We started with the supply side first..We raised funding pre-launch in order to build up the library. We initially sold courses on an a la carte basis to validate that people would actually pay for an audio course, audio lessons. Then we successfully validated that hypothesis and stayed focused on the supply side, I'd say post 12 months. And then once the library was big enough, we launched subscriptions two months ago. And in many ways, we feel like that's the actual launch of the company because that's the product that we want. Our vision as a world where daily actionable learning is as commonplace as taking a shower every day.

Roland Siebelink:I like that vision very much. What's the business model there? You said you were paying those content producers in order to get access to that content?

Warren Shaeffer:In many cases, we would pay a flat fee. In certain cases, we've done a rev-share model, so creators are incentivized. And that is part of our go-to-market strategy. Recruiters are actually out there promoting their own courses too. Actually, today we launched a course with the Upright Citizens Brigade. They're the premier teachers of improv comedy and improv theater, which is also a skill that's extremely valuable in the business world too. I think we're all improvising in many ways as we go through life. And they, because they have a revenue share component to our partnership, they're also out promoting the course to their existing audience.

Roland Siebelink:Awesome. That could indeed be a genius way to break through a bit of that go-to-market problem, right? It's really good that you guys are investigating, even improvising there, as we may say. That's awesome. How should we think about the traction that Knowable has seen so far? Only share numbers that you're comfortable sharing, of course. Do you look particularly at active users or just subscriptions sold and how far have you guys come so far?

Warren Shaeffer:We look at a lot of numbers. We look at sign-ups, and that's when somebody creates an account to go and listen to more than one free lesson. Obviously, we look at subscribers and average order value. We're north of 25,000 sign-ups where our conversion rate is about 10% from signup to membership so far. I think the numbers are still small but the growth that we're seeing is really exciting post-subscription launch over the past two months. But I'll be very candid, which is that our goal to end this year was 10,000 paid customers. And we're far short of that. And that means that we are having to make some decisions. It's part of the challenges of being a founder.

Roland Siebelink:It is absolutely. And thank you for being so open about that, Warren, because too many podcasts, whether this or many others, are only about the positive side. And I think that's not always fair. Then people think that they're doing something wrong when they are facing big headwinds as a founder. Whereas, my reality has always been that you face big headwinds 99% of the time. That's the real reality out there, right?

Warren Shaeffer:That's right. Actually, after listening to a Knowable course - I listened to Scott Kelly's Knowable course where he talks about leaders being open to admitting mistakes and the best leaders admit that they're not perfect and are vulnerable. And I actually think that vulnerability is the highest state of confidence and the fastest way to learn. I've actually started recently posting some live journals on Twitter, where I'll share both the highs and lows of being a founder. And I do that in the interest of sharing knowledge. And also, I find it very effective for me to distill my thoughts and get public feedback. The hashtag I started to use for that is: hashtag founder in public. Because I think it's very easy to build in public when things are going well. But I think it's actually a lot harder when, in fact, probably pretty terrifying when things are not going according to plan, which they rarely do in the startup world.

Roland Siebelink:In terms of the 10,000 paid customers you were going for and that you'll get to, have you got a very specific target group in mind or is this more of a: "let's just see where it sticks?"

Warren Shaeffer:That's a great question. And the reality is that we, in retrospect, scaled the library horizontally faster than we should have versus focusing on our core, early adopter user, which is a founder, a builder, someone who's taking a course because they're looking to earn more money as a shorthand heuristic. We invested in courses like "How to Sleep Better," which is an amazing course, right? A leading sleep doctor is from Oxford and Stanford. But the reality is that few people are willing to convert to a paid customer for that course. It's more of a vitamin than a painkiller. Our big learning and doing our retrospective this year, or at the end of this year, is that we actually should be doubling down on our core demo, which is people who are interested in business knowledge. So 2021 will be about us going deeper in that category since that's where we're seeing the most signal and we think will allow us to add even more value to our customer when we narrow in the focus of who our customer is beyond just general learners.

Roland Siebelink:You mentioned this concept of vitamin and painkiller, well-known here in Silicon Valley. But for those listeners that haven't heard about that yet, can you explain a little bit - maybe also with context of your previous businesses - how you think of a vitamin versus a painkiller as a product?

Warren Shaeffer:Sure. I'm sure there's somebody who's done an excellent, pithy summary of this. It's pretty straight forward in terms of a vitamin is something that you should take but few people do versus - basically, the fallacy in humans is that we're very bad at preventative care. We're very eager to pay for a care post-mistake. You get hungover, you take Tylenol, you pay for Tylenol. Very few people are thinking about taking the course that teaches them to not get too drunk to the point of being hungover. Long-winded way of saying, unfortunately, people don't always pay for what's good for them. To be clear, our goal is to provide both. And we think the subscription model lends itself really nicely to the combination of the two. But what we found is from a conversion perspective, people will pay for a painkiller more easily than they will a vitamin. And what we found from a retention perspective is that, "Okay, I might come in to take this great sales course or this great management course, but then I see this course on improv comedy and you know what, I start listening to that and it's extremely engaging and interesting and happens to also be useful to my career but not necessarily something that I would have paid for.”

Roland Siebelink:I did want to come back to your co-founder. You said, I think that you had already had two different companies with Alex before. I get a lot of questions, as you must imagine, from people like "How can I work better with my co-founder? What's a good co-founder dynamic? How do I know if I'm doing things wrong?" With all that experience, Warren, what are your comments on that? And will Alex like them?

Warren Shaeffer:Alex and I are both products of a previous co-founder divorce. Alex had a co-founder he parted ways with and I also had a co-founder who I parted ways with. That co-founder for me was my brother, so it was an especially difficult breakup. We met around the time that we were both going through that breakup process. And I think the reason that Alex and I have been able to work together so well over multiple companies is because we have very complementary skill sets. Alex is a developer and a designer and I'm focused on business and sales. We also have - I think both of us are pretty low ego. I think we care more about the outcome than being right. I feel really fortunate to have met Alex and I don't have a secret sauce for how to be a good co-founder. But I think really trying to focus on the scientific approach to how to come to a solution rather than the ego-driven approach is often a good recommendation.

Roland Siebelink:Can you illustrate it a little bit more around the time you met Alex for the first time. What made you feel that at some point in time you might want to start a company? Or how did that work? Were you sure from the outset or did this take quite a while to develop?

Warren Shaeffer:It took some time for both of us. But I think a really good indication was that - I had this tweet recently where I think - notice who and what gives you energy and spend more than there. And I noticed - and I think Alex felt the same way - we gave each other energy. We feed off of each other's energy. We feel like we're able to have a lot of high-value conversation in a short time. And I speak that same language and shared goals. I think also the general advice for co-founders is it's nice to find somebody who's basically the same age as you and the same life position. Because as you mature, you hopefully are moving through life at the same pace. Life circumstances can change the relationship externally.

Roland Siebelink:Can we move a little bit to the investment side? I'm looking primarily more toward general advice here. Many founders ask at what point in time should I seek investments for my business? And I think that with your trajectory from before, you probably had an opportunity to raise money earlier than other people would, right? What would be your general advice to founders? What's the optimal time? What are some key markers they need to achieve in order to seek investment, primarily for the first time?

Warren Shaeffer:The best time to raise money is when you don't need to raise money. The very best thing you can do to optimize your fundraising chances are to not need to fundraise. That means you have a product that is amazing, and it's working, and it's growing organically. You already have money in the bank or you're very lean and you don't need a lot of money to operate. That's the biggest thing that you can do to put yourself in a great fundraising position. Once you do decide to fundraise, there are definitely things that help the process. And I want to take a side note and say that I actually think that fundraising is a misnomer that favors investors. Founders, you're not fundraising. You are irrevocably selling a piece of your business, right?

Roland Siebelink:Let's change the term. That's what you're saying, right?

Warren Shaeffer:Absolutely. You are selling ownership in your business. You are not fundraising. Fundraising is what a PTA person does. Investors aren't giving you money and not expecting ownership in return. Going back to it, once you decide that you do want to fundraise and venture funding is right for your business. It certainly is not right for every business. It really is specialty financing. Investors have incentives that are different than most founders because they're investing over a portfolio rather than a founder who has an individual, very focused and concentrated bet on the company. But there are things that you can do. I think the very first thing that founders can do to increase the chances of a successful fundraise once they decide to pursue it - I should stop calling it a fundraiser - is to actually befriend founders who are ahead of them. Funded founders who are one or two steps ahead because those funded founders are the ones who will make the introductions that matter the most. Those funded founders are the ones who will help you navigate who is actually a decision maker at an investment firm and who is not. And those funded founders will guide you in terms of optimizing your process and story. I think there is a code of ethics among founders to be supportive of other people who are pursuing an entrepreneurial ambition, who are trying to solve problems at scale. I've certainly found that founders have been extremely generous with their time. And I try to pay it forward as well.

Roland Siebelink:When you do have a choice between different investors, what would you optimize for who to go with? Because it is ultimately, as you say, an irrevocable decision, right? A very important one. How do you make that choice?

Warren Shaeffer:Different investors are right for different companies and different founders. There isn't one right investor for everyone. I think understanding what you and what your company needs is first and foremost important. And from there, it goes back to actually talking with other funded founders because they're the ones we'll give you the honest, real feedback of what it's like to work with that particular partner. I shared recently on Twitter some tips, and the last tip is ask your venture capitalist for references and go and talk to the founders who are not listed as references but have been funded. Because every investor is going to be helpful when your company is going well. What you want to understand is how will they act when things aren't going well. Because every company at some point goes through challenges. That's when it really matters that you have an investor who will be supportive of you, and of your company, your vision, even in those downtimes.

Roland Siebelink:Absolutely. And I love those tips. Very good. We'll get to some of the materials that you mentioned and where people can find them. But still let's end this a little bit on a positive note as well. Knowing that you're facing some challenges right now, if you look a little bit further ahead, where would you like Knowable to be maybe three, five years down the road? Assuming you can turn the ship around and everything starts going really as good as it could go.

Warren Shaeffer:Just to be clear, I'm actually more optimistic about our long-term prospects than I've ever been. Our growth is great. It's just that we had to make some difficult decisions about our burn versus runway. Candidly, we let go of some very talented people. I certainly hope that that will be able to rehire them as our growth continues in 2021.

Roland Siebelink:Every founder will have to go through this at some point in time. It's not to be avoided in many companies. It's a very normal process, unfortunately.

Warren Shaeffer:I think it reinforces the advice of don't hire ahead of growth, only hire when you're bursting at the seams. Usually, you can go farther and faster with your people than you think you might need. It's an easy lesson to say and to hear but a hard one to internalize. When things are working, there's the impulse to hire more people. And I think that's an urge that founders are wise to resist.

Roland Siebelink:Isn't that the truth? Absolutely. Optimistic about the future, so let's hear it. Where do you want to be?

Warren Shaeffer:Knowable, our vision again, the long-term vision that we're working towards - the why of the company - is we want to make lifelong learning effectively as addictive as social media. And how we're doing that is we're empowering some of the world's greatest teachers and thinkers to share their knowledge and share their actionable and insider knowledge with Knowable members. And we are making the experience social. I believe that our curriculum will change, hopefully, at least a hundred million lives.

Roland Siebelink:Now you're talking. I was looking for that number. That's amazing. A hundred million lives changed. I also liked that you set goals as a non-monetary goal as more of an impact call. Have you done that with your previous businesses too?

Warren Shaeffer:No. This was really the most thoughtful we've been, I think. The previous business, we were really coming at it from that mindset of just testing and learning. And this one is more of a North star based enterprise.

Roland Siebelink:Very good. Thank you. That's really inspiring. I love it. What other tips would you have for founders that are a little bit behind you in their journey, that may be going through some difficulties of their own as well? What are some general points of advice you would give to any founder who's looking to emulate your journey.

Warren Shaeffer:At the risk of sounding repetitive, I think it's so valuable to have peers. That's people who are starting companies at the same stage as you, but also people who are ahead of you one or two steps. I recently came across a great quote, which is you can only really gain knowledge through experience, but that experience doesn't necessarily have to be yours. Learn from the experiences of others who've come before you and you will go farther than they have.

Roland Siebelink:Standing on the shoulders of giants is one of the quotes that seems to point to the same concept there as well, right? Absolutely. Very good. Awesome. You mentioned many resources and a lot of the stuff that you share, I believe, on Twitter. Where can people go to find all those resources? What should they go look up and how can they help Knowable succeed even more?

Warren Shaeffer:You can follow me on Twitter. My handle is @WWShaef, S H A E F. And I am sharing any lessons learned there. Obviously, I am a fan and recommend Knowable. You can find [email protected]. Many of the courses are free. We have some free courses. You can listen to a lot of courses for free to start. And my sincere hope is that you find something that can change your life for the better on Knowable. Right.

Roland Siebelink:Excellent. Go and change your lives. Go to knowable.fyi, sign up for the free courses, and then convert to a paid plan even faster. That's awesome. Thank you, Warren Schaffer, co-founder and CEO of Knowable, for joining this Silicon Valley Momentum Podcast. This was an amazing interview. And thank you for showing that not not everything is always roses and moonshine in the founder business. I think that's a very honest approach and I really appreciate you for it.

Warren Shaeffer:Thank you for having me, Roland. I really enjoyed the conversation.

Roland Siebelink:Absolutely. And for all the listeners, thank you again for listening and we'll have a new episode for you next week.

Roland Siebelink talks all things tech startup and bring you interviews with tech cofounders across the world.