Advice Line with Steve Case of AOL

AOL co-founder and former CEO Steve Case joins Guy on the Advice Line, where they answer questions from three early-stage founders. Plus, Steve reflects on the challenges and opportunities facing today’s nascent tech companies. First we meet Silvia in San Francisco, who’s wondering how to engage more men with her homelife management app. Then Mindy in St. Louis, who’s considering new models for her online concierge for college students. And Jason in Las Vegas, who wants to convert a key demographic into customers for his music education products. Thank you to the founders of Coexist, mindyKNOWS, and Kidenza for being a part of our show. If you’d like to be featured on a future Advice Line episode, leave us a one-minute message that tells us about your business and a specific question you’d like answered. Send a voice memo to [email protected] mailto:[email protected] or call 1-800-433-1298. And be sure to listen to AOL’s founding story https://art19.com/shows/831bd173-0992-41b7-b1eb-112db904d947/episodes/f852b443-59da-444b-9b36-25ee8ff4984d/embed as told by Steve on the show in 2017. This episode was produced by Sam Paulson, with music composed by Ramtin Arablouei. It was edited by John Isabella. Our audio engineer was Cena Loffredo. You can follow HIBT on X https://x.com/HowIBuiltThis & Instagram https://www.instagram.com/howibuiltthis/ and sign up for Guy’s free newsletter at guyraz.com http://guyraz.com/. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 5:11Guy Raz?

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• 5:40Guy Raz?

  Hello and welcome to The Advice Line on How I Built This Lab. I'm Guy Raz. This is the place where we help try to solve your business challenges. Each week, I'm joined by a legendary founder, a former guest on the show, who will help me try to help you. And if you're building Something and you need advice, give us a call and you just might be the next guest on the show. Our number is 1-800-433-1298. Send us a one-minute message that tells us about your business and the issues or questions that you'd like help with. You can also send us a voice memo at [email protected]. And make sure to tell us how to reach you. And also, don't forget to sign up for my newsletter. It's full of insights

• 6:25Guy Raz?

  and ideas from the world's greatest entrepreneurs. You can sign up for free at guyraz.com. And we'll put all this info in the podcast description. All right, let's get to it. Joining me this week is Steve Case. He's the co-founder of one of the first major internet service providers, America Online, better known as AOL, of course. Steve, welcome back to the show.

• 6:48Speaker 01

  Great to see you again.

• 6:50Guy Raz?

  You too. You were on the show originally in the early days, 2017, an awesome episode. We're going to put a link to that episode in the podcast description. And just to remind listeners, Steve, you grew up in Hawaii and then you went to college on the East Coast and then went into marketing for a while and consulting. And you ended up working on a product that let you download Atari games through a telephone line, right?

• 7:16Speaker 01

  Yeah, back in 1983, so more than four decades ago. It was almost like an in-home arcade, like a Netflix streaming world now. You could download those video games, which didn't really work out, but it seemed like a good idea at the time.

• 7:32Guy Raz?

  It didn't work out, but then in 85, you helped found another company called Quantum Computer Services, which later, of course, became America Online and you became the CEO. And really, I mean, for so many people listening, and me, myself included, I mean, it was the first time people had access to the internet. We'd get these CDs in the mail and you would be online in no time. And in 92, it was the first internet company to go public. And eventually, there was a merger with Time Warner and AOL. You left after that and then started a new chapter in your life, which has been arguably, for you, as important and maybe more. You started an investment firm called Revolution. You're still the CEO today.

• 8:15Guy Raz?

  A lot of brands I know we've had on the show, you guys have actually invested in, right?

• 8:20Speaker 01

  Absolutely. No, it's been a great journey shifting from being an entrepreneur to being an investor and mentor and kind of champion cheerleader for the next generation of entrepreneurs. And we started this effort a decade ago when we launched Rise of the Rest, started doing bus tours around the country, then launched an investment fund, which made now 200 investments in 100 different cities in what we call Rise of the Rest cities, which we define as outside of the major tech ops, San Francisco, New York, and Boston. So I think we are making progress. I think people growing up in other parts of the country feel like they have to leave where they are and go someplace else. And so that does create a magnet for talent in places like Silicon Valley. It also unfortunately hollows out some of the rest of our communities and over time it has a negative impact on our country. So I think we have to reverse this.

• 9:05Speaker 01

  We have to make sure people are able to start and scale companies no matter where they choose to live and don't feel like they have to move to one of the coastal tech cities to really have a shot at building a company, a shot at the American dream.

• 9:17Guy Raz?

  Yeah, I mean, we've been hearing about these shifts for a while. And look, it'll be interesting to see what happens. I'm curious to get your take on what do you think it takes today to start a tech company? And how does that compare to when you first started?

• 9:34Speaker 01

  Well, it's obviously, as you say, very different. When we first started, only 3% of people were online and those 3% were online an average of one hour a week. So for us, it was about evangelizing the idea of being online, the idea of the internet. And it took us frankly, a decade before we finally broke through. And so I'm sympathetic, empathetic to the entrepreneurs who are fighting that battle. I think the good news now is that everybody's connected. The bad news is everybody's connected and everybody's able to launch businesses. So it becomes more challenging to win the battle for attention. In the early days was can you build it? Now it's really much more can you commercialize it? Can you break through? And for a growing number of companies, also can you navigate some of the policy challenges,

• 10:18Speaker 01

  some of the regulatory issues in areas like healthcare, food and agriculture, financial services? That's another aspect that is different now than it was back then.

• 10:27Guy Raz?

  On one hand, the barrier to entry is much lower. Like, you don't need as much money necessarily to start. But as you say, as a result of that, there's just so much more competition. It's just so much harder to get attention on what you're building.

• 10:42Speaker 01

  Yeah, exactly. In the early days, when we got started and AOL started, as you mentioned, in 1985, it was really, can you raise the money to get launched? And not that many people could. It was, there was only a handful of maybe less than a dozen venture capitalists back then. They're backing less than 100 companies. So just breaking through there, it's almost like getting signed by a record label or somebody. Yeah, that was the first step. And then you had to get in the market and actually be successful with your product or service or technology. Now, it's much easier, as you say, to get started. The barriers to entry are much lower, which is a great thing. And it does help democratize entrepreneurship, give more people the opportunity to start and build companies, which I think is really, really terrific. But in almost every category, there are multiple people doing the same thing, and you have to figure out how to differentiate and break through.

• 11:27Guy Raz?

  For sure. All right, why don't we take some calls, Steve? Bring in our first caller. Come onboard. Hello, please tell us your name, where you're calling from, and a little bit about your business.

• 11:38Speaker 02

  Hi, guys. Hi, Steve. Thanks for having me. I'm Sylvia Viera, calling in from San Francisco. I co-founded Coexist with my childhood friend Stella. And Coexist is an app for busy families to manage home life together. So you can easily coordinate everything from shared tasks to notes, calendars, recipes, meal plans, and even give each other kudos, all in one place.

• 12:00Guy Raz?

  Wow, okay. So this is an app that basically, it's like a whole, a family kind of sharing of chores and things and organizing. And is this, tell me how this idea came about, Sylvia?

• 12:12Speaker 02

  Sure. So I was working in operations at a growth-stage technology startup, running a lot of different projects. And as you can imagine, staying organized was a very key part to that job. Around that time, I moved in with my partner, and we quickly realized that managing a shared home was way more complex and honestly, also way more higher stakes than some of our work projects. But we didn't have the right tools like we did at work. And we did try using other tools out there, like Asana, Google Docs. Notes apps, but they felt, you know, so corporate or like one-off solutions and also just made home life feel like a business project. And so one day I was talking about this with my childhood friend Stella, who's a designer

• 12:56Speaker 02

  and really passionate about home life. And together we channeled this frustration and created what we like to think of as an app that's really simple to use and makes running a home feel more like a team effort.

• 13:09Guy Raz?

  Wow, that's cool. So the idea is that a lot of these other apps, these sort of collaboration apps are just too corporate. Here's one for sharing tasks and it's like, who's gonna feed the pets? Who's gonna make dinner? Like where you, it's like a calendar, like tell me what, how, how a family might use it?

• 13:27Speaker 02

  Sure, yeah. So you create an account, you invite your, you know, partner, whoever you live with to join you. And once you're in, there are kind of three main areas to explore. So those are the to-dos, where you can set up recurring or one-off tasks. So things like feed the cat or, you know, remember to change a filter that you always forget about or move the car. You can assign them to people or kind of alternate them. The second area is notes, where you can create and share notes or browse from a template library that we have. And then the third area is meals, where you can either add recipes manually or import them from a website URL and even generate a weekly plan with a categorized shopping list.

• 14:11Speaker 02

  And it's just a lot quicker than how people are doing it today manually.

• 14:16Guy Raz?

  Cool. And, and how, how are you guys doing so far? How, how many users do you have? And yeah, tell me a little bit about the business side.

• 14:22Speaker 02

  Sure. So we have several thousand users worldwide.

• 14:29Speaker 02

  We have kind of grown primarily through social media, in particular Facebook groups and Instagram influencers and in particular therapists. And we've also done some co-marketing partnerships with companies like BetterHelp and the Fair Play Policy Institute.

• 14:46Guy Raz?

  Amazing. Okay. And, and before I forget, Sylvia, what, what's your question for us?

• 14:51Speaker 02

  Yeah, so.

• 14:53Speaker 02

  So far, we've had a much easier time finding and marketing to majority female communities, especially ones that are oriented around motherhood or mental health. About eighty percent of our signups are women. But we know from our research that in our most active households, it's often the men who suggest using Coexist or some technology like Coexist and are big advocates of it. So my question is, what are some strategies that we could use to drive growth for Coexist, especially when it comes to reaching and engaging more men?

• 15:29Guy Raz?

  Interesting. Okay. I'm gonna bring in Steve Case because I think you know a thing or two about technology. And Steve, you're on the road a lot, and I think, I imagine, your wife Jean is on the road a lot. You guys have a foundation, a lot going on. You probably have a way to coordinate your calendars, I imagine, or people who can tell you where the other person is. But I don't know, what do you think? What do you make of this?

• 15:54Speaker 01

  I think it's a great idea. Actually, it's something we probably could use. We do coordinate our calendar, do a lot of texting and have assistants and others, but it's busy and hectic. And I think it gets more complicated when, in our case, you have kids and grandkids. That's one of my questions. Is this really for couples or a way for two people to share things? Or is it lends itself also to some group applications in sort of an extended family, maybe even for divorced parents in terms of coordinating? I'd be curious what some of the initial users are doing. What are they doing that maybe were different than what you were expecting going in? Because that might lead to the insight of which particular target group to go after in a more focused way.

• 16:33Speaker 02

  That's a great question. And we have been very intentional about making it inclusive to different family structures that are not that nuclear family structure. And we've seen siblings who live in different parts of the country, who maybe have an aging parent, and they want to coordinate that. We have gotten questions about divorced couples who want to co-parent. You know, the kind of the three key personas that we've seen emerge from our research of people who are currently using the app are One, kind of the self-described techies or the, the people who are optimizing things and really love finding efficient ways to do things. So the Post-its and the, you know, whiteboard in the kitchen is not going to do it for them.

• 17:17Speaker 02

  The second area is one that was surprising to us, but it's people who have had some sort of kind of diagnosis. So ADHD is a really common one, but also things ranging from short-term memory loss to diabetes, anything where you need to have a little bit more structure and um, kind of control in managing your appointments, diets and things like that. And the third one is sort of like the new parents who are feeling overwhelmed and uh, maybe a little frustrated about the division of labor at home. And maybe transitioning back to work and need to kind of reshuffle things.

• 17:51Speaker 01

  Hmm. I think it's the kind of thing where the general notion, the idea of an easier way to coordinate a family life which is busy and hectic kind of makes sense. But my guess is there's, you know, one or two or three more specific, almost killer app ideas that really will drive traction, drive initial adoption. And then over time, people will use it more broadly. So I just try to understand if people are, the couple thousand people you've got, what are the things that they're spending the most time on and obviously focusing more, more on that. And then the other broader point, which may be a little harder, but it's worth exploring is the extent you can figure out some way to unlock virality. So it kind of spreads on its own. That, you know, that's sort of the magic

• 18:36Speaker 01

  to it. So maybe, you know, you know, a bunch of guys are using it to coordinate, you know, something and then they realize they also can use it to coordinate their particular kind of family, you know, situation.

• 18:45Guy Raz?

  Yeah. Sort of leaping off what Steve was saying. I have a group of guys that I hang out with. We meet once a month and just, just kind of hang out. But it's, it requires organization. And there's one guy who really does all of it. And we do it through WhatsApp. It's just like, hey, let's meet up at this place, uh, who's in? And it, it seems to me like maybe there's a way where you could. Plug into some of these groups, either go back to the company where you worked and start there and offer, there's like a Substack kind of model here where you offer people two months free. Great. I think, how much does it cost to use?

• 19:18Speaker 02

  It's around $70 a year now.

• 19:20Guy Raz?

  Okay, so basically say, hey, we're going to give you two months free and give us feedback and tap into some of these groups of guys to see how they're using it and with the idea that they would then, you know, bring it into the house.

• 19:35Speaker 02

  I love that.

• 19:36Speaker 01

  And also building on that, there might be some, it sounds like some of the use cases are people trying to solve some problem they have, coordinating something that has to get done. And obviously, that could be a key driver. But the other side is, are there positive things that are more, not problems, but actually more opportunities? And is there a way to kind of have an offset, something like called date night that helps plan dates or sharing kind of ideas of which things to watch? Because obviously, all the different streaming services, it's hard to coordinate what you want to watch, let alone what you want to watch with other people. There are ways to tease people with a particular idea and then over time, expose them to the broader kind of capabilities. I don't know

• 20:21Speaker 01

  if it's going to be driven more by the problems they have to deal with in terms of coordination, sometimes even coordinating some of the drudgery of everyday life, that could be a driver. But if to the extent you also can look at ways to do things that might be viewed a little more positively, a little more optimistically, people are eager and happy to use it, not like, oh, I better go check that to figure out what my chore is today. That negative sentiment might not drive the adoption or drive the virality as much as something a little bit more positive.

• 20:48Speaker 02

  Yeah, I love that you said that because something we've really tried to do is to infuse the app with a really playful, kind of soothing design and to kind of layer in gamification and, you know, make the language more about like, so and so needs help with something or, you know, not like, you've been assigned this or you need to go and do this. It's all meant to be very positive, but I think definitely in the, even in our marketing and the features that we Float to the top, there could definitely be more positivity and excitement.

• 21:20Speaker 01

  Also could be a gift, you know, like for big events, Mother's Day, Father's Day, is that you basically annual subscriptions, half price, or you're gifted to a friend, or just some way to kind of double down on, you know, either particular segments or even particular days.

• 21:36Guy Raz?

  For sure.

• 21:36Speaker 02

  That makes sense.

• 21:37Guy Raz?

  For sure. The app is called Coexist. Sylvia Viera, thank you so much. Congrats and good luck.

• 21:42Speaker 02

  Thank you. Thanks so much for having me. It's been a real pleasure.

• 21:46Guy Raz?

  All right, we're going to take a quick break, but we'll be right back with another caller and another round of advice. Stay with us. I'm Guy Raz and you're listening to the Advice Line right here on How I Built This Lab.

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• 25:43Guy Raz?

  Welcome back to the Advice Line on How I Built This Lab. I'm Guy Raz and my guest today is AOL co-founder Steve Case. What do you say, Steve? Let's take another call.

• 25:52Speaker 01

  Great, let's do it.

• 25:54Guy Raz?

  Hello, welcome to the Advice Line. You're on with Steve Case. Please tell us your name, where you're calling from, and a little bit about your business.

• 26:01Speaker 03

  Hi, thanks for having me. My name is Mindy Horowitz and I'm calling from St. Louis, Missouri. And I'm the founder and CEO of Mindy Knows. We provide peace of mind and support for parents whose children attend college far from home. We provide advice, we make recommendations, and we deliver custom packages and other personalized concierge services for college families.

• 26:25Guy Raz?

  And this is a web-based business?

• 26:27Speaker 03

  Yes, it is.

• 26:29Guy Raz?

  So basically, you drop your kid off at school, but then you go back home, I don't know, 2,000 miles away, and then you're like, oh, man, like, my kid needs to find a doctor. Or my kid is, you know, looking for this, like, piece of equipment for sport. They can't find it. Stuff like that. You can just help out with whatever a parent might need?

• 26:52Speaker 03

  You nailed it. And we just try to take the stress away from the parents who I try to support from afar.

• 26:58Speaker 01

  Well, I can relate to this, having grown up in Hawaii and gone into college in Massachusetts. So I'm a target customer. And actually, I remember starting a couple of businesses in college that were kind of tied in with this. And I realized that you can't really sell to the students because they don't have much money and they prioritize beer. You have to sell to the parents who are missing their kid, love their kids, and maybe feel a little guilty about, you know, things. And most of the businesses that we formed were really focused on selling to the parents. I like that aspect of your business.

• 27:27Guy Raz?

  By the way, Steve, having gone from Hawaii to Massachusetts for college, that must have been depressing, that first winter.

• 27:35Speaker 01

  Oh, yeah. I kind of knew about snow in theory, but in practice, when it, you know, I remember going to college class, I think it was in October, and it was in shorts and flip flops. It was like 60s or so. I left the class less than two hours later. It dropped like 30 degrees and there was six inches of snow and I had to stumble back to my dorm. So, yeah, that was welcome. Welcome to the NFL. This is this thing called winter.

• 27:59Guy Raz?

  Yeah. You wouldn't need, you needed to find a local therapist. Mindy would have helped you at the time.

• 28:04Speaker 01

  Exactly. I needed, Mindy knows back then, or at least my parents did.

• 28:08Guy Raz?

  Mindy, how, how did you come up with this idea?

• 28:11Speaker 03

  I was a stay at home mom. I was able to stay home with my kids for a long time. And then when they were in their teens, I started to think about going back to work. And simultaneously, when I sent my first child off to college, I joined a Facebook parent group and I saw all the things that the out of town families needed for their students. And I realized that, that we had an opportunity to help. I'm a social worker by training and I just realized that it's very challenging to be far away from your kid and we could make it much easier and more stress free. So we launched in 2019. And this year where we expanded and we're now on 11 campuses.

• 28:52Guy Raz?

  Awesome. And, and tell me a little bit about your business model. How's it work?

• 28:55Speaker 03

  Our business is a membership based business. We have a monthly, a semester, an annual and a four year option. We like to feel like we're kind of like a family from afar. I, I think the students kind of think of me as, as a kind aunt. And when we form a relationship so that when, when things come up and they inevitably do come up, the parents have a sounding board and a support system in, in town in a place where they may not be lucky enough to have a local relative or friend.

• 29:27Guy Raz?

  Yeah.

• 29:28Speaker 01

  And how do you think about the pricing? I could see you wouldn't want to charge per event because that's kind of hard. You know, getting some kind of recurring revenue stream would make sense. At the same time, it's like the kind of thing you might, you know, need, you know, two or three times a year.

• 29:44Speaker 03

  Right.

• 29:44Speaker 01

  Is it better to have like a monthly fee or an annual fee? Or is it better to say you can get five or 10 of these kind of consults? You know, how did you think about it? Have you tried different things in different schools? Or they're one pricing structure across all of them?

• 30:00Speaker 03

  No, each of the schools is different because every school is very unique. And here in St. Louis at Wash U, we've tried a lot of it. I always wanted that ongoing relationship. I just didn't want to be a one-trick pony. But we did add the monthly option. I think the best thing is if you're paying X number of dollars to send your kid off to college, our annual fee seems relatively reasonable. And then you just have the support when, you know, when the things come up. But we also do do the monthly option. And what we find is that once people use us, then they continue on. And they just, I think they feel a connection and so continue working with us.

• 30:41Guy Raz?

  Mindy, before I forget, what's your question for us?

• 30:44Speaker 03

  Well, my question is about customer acquisition. Especially at our new locations, it's been a challenge. The schools themselves are not going to give us the list of their parents. If they did, we'd be, we'd be.

• 30:57Guy Raz?

  Set.

• 30:58Speaker 03

  We'd be set. So we do a lot of guerrilla marketing because, you know, it's a challenge to get to the parents. The kids are the ones that are here. So we have done, you know, Facebook ads and Instagram. We've had an influencer. We hired a PR firm. And we know from our experience here in St. Louis that the customers, they join us and then they stay for four years. We make an impact with them. But getting the new customers, especially in the new communities, is so challenging.

• 31:30Speaker 01

  Yeah, I wonder, I wonder if in terms of attracting customers, maybe in some cases, it's better to target the parents before the kids go to school because that's a time where they're, you know, a little bit of transition, then people might, even they don't have a particular need or a particular problem yet, it's almost like buying a little bit of an insurance policy, uh, just so, you know, they, they, they can rest assured that if a problem comes up, you know, they've got somebody on point who can, can help there. So I don't know if that, it could be working with high schools to something that they can make available to the parents before the kids even head to college. Is that, have you tried something like that?

• 32:04Speaker 03

  It's a great suggestion and we've talked about that. When we were only at Wash U, it didn't feel as, um, we weren't as memorable. The larger we get, the more schools we're at, then the more that, that technique I think makes sense or that, that, you know, I think that makes a lot of sense to go to the college advisors. Maybe they would help share with their parents, um, what we do. Yeah, I think it's a good suggestion.

• 32:28Guy Raz?

  One, one of the things that I, I keep thinking about is it's been a tough couple of years to be a college student all around, right? There's been a lot of turmoil on colleges and I think that a lot of parents, uh, are, you know, just concerned about, about their kids, their safety or their mental health. Uh, you know, the reality is a lot of young people are reporting, uh, mental health challenges in ways that we have not seen in previous generations. And so I wonder whether you start by connecting with community organizations around the country that, that have connections to the universities, you know, religious organizations

• 33:07Guy Raz?

  or centers where students congregate and gather and really trying to see if, if they would be receptive to hearing you out and what you can offer.

• 33:18Speaker 03

  If I could figure out what those organizations are, I would love to reach out to them and try and make that connection. Absolutely.

• 33:25Speaker 01

  And most schools now, they quickly tend to have Facebook groups and other groups where the students start gathering and getting to know each other and even the matching and some colleges and universities around roommates and so forth. It starts building some of that. If there's a way to interject there, I think it makes sense. One of the, now that you're thinking about it, one of the businesses I started when I was at college targeting parents was something we called the magic bus. And for parents who weren't going to be going with their kids to college, they're going to fly like I did from Hawaii. Basically, we said, we'll pick you up on a bus and all the other students who are flying in for the first time will be on that bus. So it'll be just, you know, freshmen. It'll be a fun bus with entertainment and refreshments. And so instead of having them arrive at the

• 34:08Speaker 01

  airport by themselves, lonely, scared, they instantly have a community. And parents resonated with that because they dealt with one of the concerns they had. And as a result, actually the college was willing to give us their mailing list of incoming freshmen. So something like that as a way to start, you know, creating a service that's of interest to the colleges as well as the parents. And then from that, maybe you can offer more personalized services that are available. You got to figure out some way to interject yourself as they're making the transition before they arrive on campus. That's probably the point where parents are most motivated to want a service like this.

• 34:47Speaker 03

  Absolutely. I think that's a great, great idea. Also, just to piggyback on that, we have, at least here in St. Louis, and I think at a lot of these schools, so many international students who literally are coming from across the world. Their parents don't come in with them. A magic bus would be a great option for those international students. We know there's a wonderful opportunity there to help kids who are so far from home.

• 35:11Guy Raz?

  Yeah, for sure, for sure. It's a really cool idea. And I have to imagine that there are physical mailing lists that are still available to buy. I mean, there are hundreds of thousands of young people who go off to college every year, and there must be ways to reach their parents. And I wonder whether those mailing lists are affordable. Is it something you've looked into? And is that something that you'd be open to doing?

• 35:37Speaker 03

  A mailing list would be our mothership. We would love to have a mailing list. I just haven't known where to go to find that. If it were available, I would be willing to invest heavily into it. Absolutely.

• 35:50Speaker 01

  It might even be, it ties in with a little bit, I was saying before, a little bit of a welcome wagon idea that, not so much the magic bus, but the, you know, not everybody who goes to college ends up staying, you know, some people, you know, for whatever reason, don't make the transition from starting to graduating and that's a concern to parents, also a concern to the, you know, high schools and the counselors and others. So, something that positions this as a, as a way to, you know, maximize the likelihood that not only you arrive and, and you're happy and, and, you know, get connected to other people and if you do have some particular problem, you know, there's somebody there to help, uh, but also will maximize the likelihood that you'll be successful there, uh, and, and be able to, you know, graduate. It's almost, almost like buying the insurance policy and with

• 36:35Speaker 01

  insurance, you know, the, the insurance companies know that most people are not going to have a problem, but a few will, uh, and they get everybody to sign up just in case. Is there a way to price this more affordably, uh, as, as, as more of an insurance policy, whether, and know that most people will not actually use it, uh, but, but it will be something that'll be provided, source of comfort to everybody.

• 36:56Speaker 03

  Oh, that's, that's very interesting. I actually never thought of that. Um, we've been, we've shied away from any kind of scare tactics. We don't, we don't want to put fear into anyone's head, but, um, but if we did try to position it as an insurance policy and maybe at a lower price point, it might be a, but then we would probably have to limit the, the scope of what we do. Um, you know, cause if we had more, more customers.

• 37:23Speaker 01

  Maybe, maybe, but my experience with AOL, we basically, when we went to unlimited use, yeah, there were some people using it all the time and we lost money on them and some people are using it infrequently and we, we made money on them. So it ends up being a, a law of the averages, but you also could put some, you know, kind of, you know, mechanism in place saying it basically unlimited service, unlimited coaching, but if it gets used too much, you can say, well, actually we're now going to limit it to, you know, two times a month or five times a month or something. So a few people don't end up driving up the cost for everybody.

• 37:54Speaker 03

  Yeah, for sure. Great suggestion. Thank you. I appreciate that.

• 37:58Guy Raz?

  Thank you. Mindy Horowitz. Mindy knows. Good luck. Thanks for calling in.

• 38:02Speaker 03

  Thank you so much.

• 38:02Speaker 01

  Good luck, Mindy.

• 38:03Speaker 03

  Thanks, guys.

• 38:05Guy Raz?

  All right, we're going to take another quick break, but we'll be right back with another caller. Stay with us. I'm Guy Raz and you're listening to the Advice Line right here on How I Built This Lab.

• 38:35Guy Raz?

  Welcome back to the Advice Line on How I Built This Lab. I'm Guy Raz and today I'm taking your calls with Steve Case. So Steve, let's, let's get right back into it and take another call. Hello, welcome to the Advice Line. You're on with Steve Case. Please tell us your name, where you're calling from, and a little bit about your business.

• 38:54Speaker 04

  Hi, Guy and Steve. It's really great to meet you. My name is Jason Levi. I'm calling from Las Vegas, Nevada, and I'm the co-founder of Kadenza. And we make early childhood music education products that make learning about musical instruments fun and engaging.

• 39:11Guy Raz?

  Awesome. And, and what ages are your products for?

• 39:16Speaker 04

  The, the youngest kids, like two to five, roughly.

• 39:19Guy Raz?

  And, and so when you say products, what, what, be more specific. What are you making?

• 39:23Speaker 04

  So our first offering is a series of board books that have QR codes throughout them. So the adult can scan to pull up sounds, videos, demonstrate musical concepts, and even like simple physics explanations, like showing vibrating guitar strings and things like that. And it supplements the page content and really brings instruments to life for these kids.

• 39:46Guy Raz?

  All right. Tell me a little bit about how you came up with this and what, what is the vision for what you want to build?

• 39:52Speaker 04

  Yeah, absolutely. I'm a professional trumpet player in Las Vegas.

• 39:56Guy Raz?

  Love it.

• 39:57Speaker 04

  Yeah. And I'm married to another musician, a violinist, and we have a wonderful four year old daughter together who loves music, like no surprise there, right? It's in her DNA. So we were listening to music one day and I was trying to teach her about what she was hearing, like. Oh, you hear that low groove that

• 40:18Speaker 04

  Okay, that's the bass guitar, you know. And then, oh, you hear those fast notes that

• 40:25Speaker 04

  Oh, that's the saxophone, right? And so like she's sort of understood, but not really. So would have to go sit at the computer or look at my phone and I'd have to Google image search for a reasonable picture of the instrument. And then try to find a kid friendly YouTube video to show someone playing it or how it works. And the whole thing felt really arduous even to me and I I know a lot about instruments. So that was the, oh, there's gotta be a better way moment. And I started thinking about ways to make learning about instruments easier and more accessible. And so that brings me to your second part, like the why, like, why did we want to do this? Um, and Guy and Steve, like, I hope you've had this experience in your life as well, like music is such an awesome emotional connection point

• 41:09Speaker 04

  from older generations to the newer. Um, you know, my daughter's four. So when I play her Earth, Wind & Fire, or Marvin Gaye, or Ella Fitzgerald, she doesn't know that it's, I'm air quoting here, old or uncool for kids to listen to. She just hears music for music's sake. So I'm really enjoying this time period of connecting with her via music that I love and feeding her curiosity about the instruments that make it. And that's the why, that's the whole point of why my co-founder Noel and I are building Cadenza is to nurture those musical connecting moments between generations.

• 41:46Guy Raz?

  And Jason, tell me a little bit about who you think your target, I mean, obviously it's two to five year olds, but who are the kinds of parents who are gonna buy, I mean, I know that that that exposing kids to music from an early age and and ideally getting them to learn how to play an instrument does fire up things in in a kid's brain that that can be extremely beneficial as they develop. Who are you targeting? What kinds of parents are you are you trying to get at?

• 42:12Speaker 04

  Obviously, I think like parents that are musically inclined or musicians themselves are a fairly easy sell, but you know, music loving people in general. So people that's um music is a part of their life and that's how they want to connect with their kid. So that kind of leads me to my question now, I I think, uh, if you don't mind. Please, yes, please. Yeah, okay, good. So um, so the the analytics from our online advertising show that people that engage with our ads are overwhelmingly women over fifty five. So really grandparents more than parents, right? Which is a surprise because I thought, well, I'm writing, we're writing kids books right now. And I assumed we're marketing to parents, but it's really grandparents that are clicking it up on our ads.

• 42:57Speaker 04

  Um, however, the conversion rate for that section is very low. So like, our question is, is there a better way to connect with and convert the grandparent aged audience? Whether that's online or offline?

• 43:10Speaker 01

  Well, here we go. I I I feel like I I I'm I'm your guy today because five years ago, we had no grandkids. And now we have five, all under five. And so I think I'm the target market. And I'm not surprised that, you know, grandparents are interested in part because they're probably trying to supplement some of the things that parents are doing that are kind of fun and creative. And music is obviously a a good one to do that. So I think, you know, trying to figure out ways to reach grandparents. It makes sense. I think maybe a press effort focused on magazine for grandparents or partnering with AARP, which by definition has a a group of of, you know, people over over fifty or podcasts. I think that would, it would make sense, but I'm not at all surprised that

• 43:53Speaker 01

  that grandparents aren't a a a key market. The question is, what's the most efficient way to reach them? Uh, and so they can, they can learn about this and buy it.

• 44:03Speaker 04

  Right, yeah, like they're they're being reached online, they're just not converting. So I'm not sure what the reason is why exactly.

• 44:10Speaker 01

  I think that the key is to keep it simple. I'd go back to exactly how when they're learning about this. You know, if they're reading an article or hearing about some kind of promotion you have, how do you simplify, you know, what it is and make it really easy to click and buy, kind of like Amazon one click buying, I think would be key to that. Just figure out other ways to make it really easy to buy, offering guaranteed return, things like that to kind of, you know, de-risk it. And the other thing is you mentioned people would have some predisposition around music, targeting those particular groups, I think would would make a lot of sense. Maybe bundling the book with a little kid's guitar, kid's ukulele, something like that might be another way to do it.

• 44:53Speaker 04

  Right, absolutely, yeah. To that point, when we started it, we weren't entirely sure. It was originally going to be like a magazine, something that came once a month. And then we were thinking maybe subscription boxes, but then we landed on board books first.

• 45:07Speaker 04

  Because just to have a bundle to sell. So right now we have two books available, there's piano and guitar. And we're working on one book for each instrument family after that. So there's going to be woodwinds, brass, strings, percussion and voice are forthcoming. And in phase two, as I like to call it, we would like to make games, cards, stickers, puzzles, et cetera, other things, to make it really more of a products business and not just selling books.

• 45:32Guy Raz?

  It seems to me that this, at least initially, to get to really gain some traction, you've got to have this in stores, in boutiques. And in like a food product, it seems to me that there's a huge opportunity here to demo this. Like you literally sit in a bookstore or a library and demo this thing. But I also feel like just having it D to C online is going to be a little bit more challenging just because, especially with the target audience you're going for. I mean, they go to stores, people over 65, they're going to go to a shop. So I would consider reaching out to some of these stores and seeing if they would just carry the books and display them.

• 46:15Speaker 04

  Yeah, no, that's a great point. We, we, we are in a toy store, at least, at least one toy store in Los Angeles. Uh, he ordered a dozen books a little while ago, and then we just heard from him again that was like, hey, I'm all out. Now I want, you know, a dozen.

• 46:28Guy Raz?

  Oh, great.

• 46:29Speaker 01

  Bingo, bingo.

• 46:30Guy Raz?

  Nice.

• 46:30Speaker 04

  That's working well. So we started offering the guitar book only in, uh, it came in like Q3 last year. So, um, we really only had one book now, only recently now we have the, we've received the piano book in stock. So now we have two kind of out of the seven. So, uh, we haven't put like all of our chips, all of our marketing chips in yet because I want the most bang for our buck.

• 46:55Speaker 01

  I think that's great. I'm glad to hear you have this broader product line, partly because obviously there's different instruments that people want to, you know, learn about, but also it, it gives you the ability to spend more on marketing because you're not just selling one book for 20 or $25. You're trying to build a, a broader, you know, maybe over time, figure out some way to subscriptionize it. I agree with Guy, the, you know, if you're in some of the stores, you know, targeting young kids, that's a, a, a great place to launch. And then over time, figuring out ways to offer more now products and services, and ideally instead of having it be a one-off purchase, turn it into much more of a ongoing recurring revenue, subscription kind of offering.

• 47:32Speaker 04

  Yes, that's absolutely the, the plan. Yes. Um, we didn't want to just try to sell books. We, we wanted to make a, a, a music education product company that, that helps people engage with music and, and create memories with their kids around music.

• 47:48Guy Raz?

  Jason Levi, the brand is called Cadenza Kids. Congrats. Good luck. We'll be following you.

• 47:53Speaker 04

  Thank you so much. This was useful and really fun. Thank you so much.

• 47:56Speaker 01

  Great, Jason. Thanks.

• 47:57Speaker 04

  Thank you.

• 47:59Guy Raz?

  Um, yeah. So, I mean, I think as kind of circling back to my first question, I mean, it is a, on the one hand, the barrier to entry is, is lower, right? You can, every, a lot of people can start web businesses, app businesses, but it's a lot harder to get attention. It's just a lot harder to get the eyeballs on what you're trying to, you know, sell.

• 48:22Speaker 01

  Yeah, no, it just forces you to be a little more unique, a little more differentiated. And the best way to create a big business is to create a very small, successful, passionate small business where you've got some real loyal fanatic customers who, you know, love your product, love your service, tell their friends, and from there you can launch into something bigger. But often entrepreneurs try to go too big, too fast, kind of, you know, spread their, their, uh, marketing dollars too, too broadly. And, and, and almost always it's better to sharpen your focus on a particular target market and a particular, uh, you know, kind of niche. But I should also say, guys, it's, it reminded me that I did one of your first shows. Before you launched the show, we weren't even sure whether it'd be successful. We, we, there was this concept called How I Built This.

• 49:03Guy Raz?

  Yeah, we, because I interviewed you before we launched.

• 49:06Speaker 01

  Yeah, at some point, we, I, I need to turn the tables here and do an interview with you on how I built, how I built this, because you, you had started with a little idea and turned it into not just a podcast, but really a broader franchise, a broader platform. And so it's a great entrepreneurial journey yourself.

• 49:21Guy Raz?

  You know what? You've just reminded, thank you for doing that. That was a big leap because we didn't know, you took a risk and, and I'll never forget that, Steve, ever, seriously. It means, it means a lot that you did that.

• 49:32Speaker 01

  I'm, I'm just proud of what you've built and how it's inspired another generation of entrepreneurs. You know, America is the leading country in the world because we've been the most innovative entrepreneurial nation over the last nearly 250 years. We have to keep doing that and we need to inspire the next generation. So thank you for doing your part.

• 49:48Guy Raz?

  Totally. Steve, already when you were in college, you were organizing the, the party bus and, and, and you're doing all these cool entrepreneurial things. You were like ahead of the curve here.

• 49:58Speaker 01

  Just trying to make a buck to, to pay for some beers.

• 50:01Guy Raz?

  But that's, that's the thing, right? That's when it starts. Um, and I wonder whether, if now you could go back to, to the Steve Case who was building what would become AOL at the time, you know, in the, in the mid eighties, when it was just a weird idea, like, what are you doing? What is this? You can do what? Like when people were asking those questions, if you go back to that person and, and just give him advice, what would you say to him?

• 50:26Speaker 01

  I would say that you should recognize that that big ideas take some time for people to understand and embrace. Usually people are pretty skeptical, cynical, so don't get discouraged by that. And, you know, revolutions usually happen in evolutionary ways. It takes a while for things to, you know, to build up. I mentioned the early days of AOL when only 3% of people were online. It really took a decade before it broke through. And there were many times where it didn't look like we were gonna, you know, make it. Even my parents at one point called and said, you know, have you maybe thought about Plan B? Like, this isn't working. And, you know, you have a young family and so forth, which

• 51:06Speaker 01

  I understood. But we stuck with it. And so I think that notion of passion, that notion of perseverance, having the right perspective, I think is important. Because sometimes businesses aren't really good ideas. And you should be honest about that and say, well, okay, we're getting the data back from customers, getting the data back from markets. Maybe this isn't meant to be. Maybe we should shut this down, or maybe we should pivot and do something else. But just as often, they are good ideas. They just require more patience, more perseverance. So sticking with it also is important. So I'd tell a younger self that if you really, you know, want to, you know, fight a big battle, you want to climb a big mountain, recognize it's going to be hard, it's going to be frustrating. You might fail, but you might succeed. And you likely will only succeed if you stick with it over

• 51:50Speaker 01

  a fairly long period of time. There are very few overnight successes.

• 51:53Guy Raz?

  For sure. Steve Case, thank you so much.

• 51:57Speaker 01

  Thank you, Guy. Great to be with you again.

• 51:59Guy Raz?

  That's AOL co-founder and CEO of Revolution, Steve Case. And by the way, if you haven't heard Steve's original How I Built This episode, you've got to go back and check it out. It's super fun. You can find a link to it in the podcast description. And here is one of my favorite moments from that interview. So when that deal unraveled, I'm assuming that was the biggest contract that the company had.

• 52:21Speaker 01

  Yeah, we were banking on that. We just raised a bunch of money, about $5 million, which for us was a lot of money. So when Apple basically said they wanted to pull the plug and pull the rug out from under us, that was a scary time.

• 52:35Guy Raz?

  Did you think the company was going to collapse?

• 52:37Speaker 01

  There was certainly a possibility of that.

• 52:40Guy Raz?

  Thanks so much for listening to the show this week. Please make sure to check out my newsletter. You can sign up for it for free at guyraz.com. Each week, it's packed with tons of insights from entrepreneurs and my own observations and experiences interviewing some of the greatest entrepreneurs ever. And if you're working on a business and you'd like to be on this show, send us a one-minute message that tells us about your business, the issues or questions you'd like help with, and hopefully, we can help you with them. And make sure to tell us how to reach you. You can send us a voice memo at [email protected] or call us at 1-800-433-1298 and leave a message there.

• 53:25Guy Raz?

  And we'll put all this in the podcast description as well. This episode was produced by Sam Paulson, with music composed by Ramtin Arablouei. It was edited by John Isabella, and our audio engineer was Sina LaFredo. Our production team at How I Built This also includes Alex Chung, Carla Estevez, Chris Messini, Devin Schwartz, Elaine Coats, J.C. Howard, Catherine Seifer, Kerry Thompson, and Neva Grant. I'm Guy Raz, and you've been listening to The Advice Line on How I Built This Lab.