My guest today is Dave Nemetz, the Founder of Bleacher Report, which was one of my favorite media companies as a kid. During his time there, Dave oversaw video, business development, and business operations. He helped grow the audience to more than 40 million monthly unique visitors before selling the company to Turner Broadcasting in 2012. Today, he is the Founder of Inverse and the Executive Vice President of Bustle Digital Group where he leads growth and business strategy for Inverse, Input, and Mic.
The conversation topics in this episode fall into three buckets: personal principles, business principles, and the state of the world. We spoke about what it’s like to lead your company through a merger, why you can think of media businesses like a supply & demand equation, and one of Dave’s favorite quotes from Hunter S. Thompson: “When the going gets weird, the weird turn pro.” My favorite part of the interview was hearing about a band called Phish, which Dave has seen in concert more than 200 times. That section kickstarted a whole conversation about the brand-building tradeoff between being welcoming to new fans and serving die-hard fans.
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2:31 – What inspired Dave to get started on the Bleacher Report and why he was drawn to it as a project.
6:24 – Why the desire for a different kind of sports coverage took so long to take off and why other companies didn’t get into it earlier.
9:06 – Why sites like Bleacher Report find their niche, even with an abundance of content being created all of the time.
12:46 – The implicit versus the explicit side of finding your niche and exploiting it in the market.
15:14 – What Dave has learned about building a brand and serving your customers from his favorite band, Phish.
20:12 – How businesses can both serve their die-hard fans and not neglect their newcomers.
27:05 – The arrival fallacy and why selling Bleacher Report to Turner wasn’t as exciting as it may have looked on the outside.
31:36 – Why Dave believes that a fervent drive and passion to achieve goals is a double-edged sword.
34:26 – What most people don’t know about managing a business during a buyout or a merger and why it was so difficult for Dave to handle.
42:54 – How the world of advertising in the early 2000s hadn’t seemed to change much from the era of “Mad Men”.
52:38 – Why the “the geeks won” and why Dave is super happy about it.
57:13 – How Dave has oriented his recruitment and retention strategy in his media brands.
1:05:43 – What the “career elevator” is and why Dave was determined to create it for himself.
1:10:29 – Some of Dave’s favorite quotes, and why one of his core philosophies is to “enjoy your sandwich”.
David Perell: You founded Bleacher Report, which was one of my favorite sites growing up. And as you were beginning to think about what the site was going to be about, what was the insight, what was the idea that got you excited about starting it?
Dave Nemetz: Oh man. Well, first off, I got to say you’re making me feel old saying that it was one of your favorite sites growing up, but that’s awesome. And that was exactly the point. When I started the site, it was kind of a project that started as a passion project amongst friends. I started with a few high school friends that evolved into a company and the media brand it is today. Our initial insight was that we were obsessed with sports fans. We were engaging with kind of all this new kind of way of covering and talking about sports on the internet. This was right after the emergence of blogging in 2005, 2006. And we just had this insight that we didn’t see any kind of mainstream media covering sports, talking about sports the way we did amongst ourselves with our friends. And we wanted to build this site, this brand, this community that would cater to the younger sports fan, the way they kind of consumed, dissected, joked about sports on the internet and kind of build it out across all the different teams that people cared about.
David Perell: Yeah. So I grew up big sports fan, grew up in the San Francisco Bay Area. And my whole engagement with sports was my dad used to come down every single morning and he’d give me the sports section. It was from the San Francisco Chronicle, the San Jose Mercury News and the New York Times. And I’d read three sports sections every morning. But now the way I engage with sports is so different. There’s, I’m engaging with players a lot more than I’m engaging with teams. I care less about the standings than I do any individual game, and I care a lot more about the highlights and the storylines and the cultural aspect of sports has really taken off. And if I look at the last 15 years of how sports has changed, that’s how I’d summarize what’s happened.
Dave Nemetz: Yeah. And I had a very similar experience. I grew up in the Bay Area as well. I read the Mercury News sports section pretty much every day from probably when I was around 12 years old until I was out of high school. And that was my experience. And then kind of watching Sports Center on ESPN during its classic days and you’d get the highlights from all over and that was kind of the first part where you started to see kind of this infusion of personality and storylines and humor and jokes into sports.
And then I think around the time we started Bleacher Report, it started to explode on the internet and we really kind of saw this opportunity to bring that fans point of view and to kind of give that big focus on the culture of sports, as opposed to just the headlines, the box scores, the quick highlights and turn it into this kind of round the clock thing. And it’s gone so much further today where it’s kind of your experience growing up as a sports fan is very different. You are much more connected to players and to kind of specific storylines and to this cultural aspect than you are necessarily to just kind of this very regional kind of local aspect.
David Perell: Why didn’t that happen sooner? So CNN started sometime in the early ’90s and that’s when the news had that around the clock flavor that you were just alluding to. Why didn’t this happen sooner? What happened with Bleacher Report? And Barstool starting when they did, why was the world only ready for this at that time? Because it seems like there must’ve been some kind of latent appetite for this for years, but maybe the technology wasn’t there yet, maybe the players weren’t there yet, maybe the world of media wasn’t there yet. Why did these companies start when they did?
Dave Nemetz: I think a lot of it had to do with the internet and with companies coming at it from a digital first perspective. And that’s one of the things that we saw early on at Bleacher when very early on, like I said before, it was a passion project. We didn’t even consider it a true company for a while. It was just something we were creating because we wanted to see it but then after being in it for a couple of years, we started to realize we were competing with ESPN, we were competing with Fox Sports and CBS Sports. And the advantage we had against a lot of them is all we cared about was digital. All we cared about was building an audience on the internet, whereas they all saw that as secondary to what they had in TV and these big broadcast operations.
And it was really about… I mean, there was a while where you went to the Fox Sports website and all it did was tell you what time the next game was on that they were going to broadcast. It was so focused on kind of pushing people to that big broadcast TV experience, which drives a ton of revenue for all these companies. And they’ve invested a ton of revenue in it, so you can understand that, but they were really kind of missing the boat on digital and the way that we were able to build such a big audience and kind of out of nowhere create something that could compete with them, all we were doing was thinking about feeding this conversation digitally and kind of encouraging that back and forth with an audience, which you can’t really do on TV. So that was what really kind of drove that. And you look at what Barstool has done today or what the athletic is doing, they’re kind of feeding that beast in a very different way.
David Perell: So you’ve told me that you think of media businesses almost like a supply and demand equation. And so what are you looking for? One of my fundamental sort of ideas is that there are certain moments in life where you really want to believe in efficient markets and certain moments in life where it’s actually really bad to believe in efficient markets. For example, one of the ways in which it’s really bad is you talk to new creators who want to start creating online and they’re like, “All the ideas that I’ve shared, they’ve already been shared before.” And so when I talked to my writing students, it’s the efficient market hypothesis, that idea. And they might not even be explicitly aware of it, but implicitly that’s how they feel. But then on the other side, what you’re sort of looking for is you’re operating with an assumption that the markets for media isn’t always entirely efficient. And so what you’re looking for is where there’s demand pulling on an idea, but there’s no supply to give people what they want. Talk about that.
Dave Nemetz: Yeah. I mean, I think that’s exactly the point. I mean, everyone hears these things about how there’s more new information created in a day now than there were in centuries before. And we’ve just got this flood of content from all sides and it’d be impossible to keep up, but I think the other thing that’s happened is we’ve all been able to through the internet, through this explosion of content and media, it allows people to seek out and find things that speak exactly to them. And so while the supply has increased dramatically, the demand has increased and kind of how broad that demand is, everyone has the opportunity to find the content creator that speaks directly to them.
And so I think when you think about creating a media business, whether it’s a big scale business or whether it’s a one person media business like the trend is today, that kind of thinking about it in that supply demand way where is there a demand for content that’s not being fulfilled, that you are uniquely positioned to fill that demand? And I think that’s the key and that was kind of the big aha moment at Bleacher Report early on, where we were looking at, like I said, competing with the ESPN and the Fox Sports of the world. And we realized that they just weren’t covering those cultural storylines, they weren’t covering teams at a deep level. And we were building this community of writers and this voice that was uniquely positioned to fulfill that demand.
And we started to look at it on a real granular level. One of the areas that we noticed early on just wasn’t getting the types of coverage at the level that there was real demand for was around the NFL draft and around kind of all the hype and the kind of analyzing the different prospects and looking at the teams needs and all that. There was a big kind of peak coverage around that right before the draft. And we realized early on, and this was both in the numbers and also kind of based on our own personal experience that that’s something that fans wanted year round.
They were thinking about constantly, how is my team going to improve? And so we started to turn that into a year round coverage beat, and a lot of the other sports site followed suit eventually. But that’s one point where we really had an advantage early on and we kind of followed that supply demand curve. And you can think about that if you’re starting a media business, if you’re starting a personal blog, a podcast or whatever, sure there’s a ton of stuff out there, but where do you see interest, where do you see people galvanizing around something that you’re uniquely positioned to fulfill it and there’s always going to be an opportunity to build an audience around them.
David Perell: How would you think about that on implicit on one side with explicit on the other, in terms of gauging supply and demand? So implicit is me and my buddies from college loves sports, but there’s aspect of sports that we’re not getting. We know we want this, so I’m going to go build it. That’s the implicit side, the explicit side is SEO. You’re looking at keyword volume and keyword competition and you’re looking for places where the number of people searching is way higher than the number of people actually writing about that thing and you’re going on that, how would you think about the trade-off between those two if you were advising a company?
Dave Nemetz: You always have to start with kind of that implicit idea and that vision around, hey, here’s something that you just have a strong, deep seated belief that there’s a need for in the world, because you as a consumer have looked for it and haven’t been able to find it because you have a specific insight around some topic or some category that you don’t think people are covering it in the way it should be or it’s not being talked about enough and it always has to kind of start from that inner vision. But I think about when you’re building a media company, when you’re building an audience, first of all, it just starts with putting things out there, kind of showing up and kind of putting your ideas out there consistently and kind of brick by brick, building an audience and creating a body of work.
And then over time, people are just going to find you and kind of the beauty of the internet is people have a way of just finding the things, whether it’s through SEO, through sharing, through word of mouth, finding the things that speak to them. But you start to see patterns in what’s working and what people are responding to. And you can start to look at every piece of content you put out there as a data point. And sometimes it’s hard to see the forest for the trees when you’ve got, there can be randomness and one thing hits and another thing doesn’t and you might feel like your best work isn’t getting the most hits or whatever.
And you can’t read too deeply into that, but you can start to understand, these are the things that really resonate with my audience. These are the story frames that people really seem to love and respond to. And like Search is a great gauge of that because Search is a market. People are looking for things. They don’t know where to find it. They go to Google and they type in whatever Buffalo Bills News, or when’s the next Star Wars movie coming out or whatever it is. And if you’re providing the right content for the right search, then you know you’re onto something. And if that starts to happen repeatedly, then that can start to kind of point the way for you.
David Perell: You have been to more than 200 Phish concerts. What has Phish taught you about building a brand and building a fan base that is engaged as any band I’ve ever seen?
Dave Nemetz: Yeah. So first of all after it full disclosure, I’ve been to almost 200 as it’s very important because in the Phish world, your stats, your show stats are something that Phish fans care deeply about. And I don’t want to misrepresent myself, but I think that’s kind of a big part of what makes the Phish fan base kind of so interesting and so rubbing. And what I really enjoy about it, I love the music. Obviously, I wouldn’t be following them around and going to so many shows if I didn’t, but I think there’s a really interesting lesson to learn and how they’ve created this community in the super engaged fan base that goes beyond the music and the long meandering jams and all the things you hear about Phish.
And it comes back to this concept about world-building, which is something that’s really prominent in like sci-fi and fantasy. And you think about Star Wars and kind of this intricate world that they’ve built. But it’s really a concept that can apply to a lot of different areas, music being one of them. I’ve seen it with… It’s something that’s rising a lot now with other types of media companies. And it essentially means you create this immersive world and experience around your brand. You’ve got where kind of the people who are following it feel like they’re kind of insiders where there’s things that only they know. There’s a secret language. There’s kind of specific customs that you kind of have to be on the inside to really get it.
And Phish got this very early on even back in the earliest days when they were kind of playing bars around Vermont, they were kind of weaving these little inside jokes and stories into their songs whether they might be 15 people at the show, but it’s, you had to be at that show to really get that reference. And then they’re going to kind of refer back to it maybe at the next show a week later. They’ve created a secret musical language where you had to know if they played a certain melody, everyone in the audience does something and there’s so much more beyond it. I mean, the format they have for their shows, they play a different concert every night.
So they play a different set list, different songs, some songs they play all the time, some, they might go 10 years without playing. And that has created this kind of interesting obsession with stats amongst Phish fans. It’s like baseball stats where people keep track of not just the shows that they’ve gone to, but how many times they’ve seen a certain song, when the last time they saw the song was if there was kind of an interesting, unique way it was played. And that becomes, it’s almost like a video game. It’s almost like you’re kind of collecting experience points and a certain unique song is like a badge of honor amongst the fans.
And I think there’s something that you can learn from that if you’re creating a media business or really kind of any consumer businesses, kind of find ways to really give those deeper experiences to your most loyal fans and to kind of give them something special that they can feel even more connected to you and to your brand, to connect with each other. That’s how you really build loyalty that people just want to go to bat for your brand, or really want to kind of feel like they’re on the inside, that they’re part of the world.
David Perell: Yeah. It’s a phenomenal answer. And just, there’s a lot here. So how would you think about the trade-off between, if I go to my first Phish concert, is the experience worse for me than it would be for a normal artist because I don’t understand those things or are they sort of layering them sort of deeper so that it’s still okay for the first time fan? Because that is something that it seems like there’d be a trade-off between what you’re giving your diehard fans and they almost like the fact that it’s bad for new people. That the new people don’t know the language, but what you’re doing is you’re creating this culture.
So as a media business, it seems like that would even map very well onto your business model. Like maybe an advertising based business model, at least most of them would be very good for first timers. SEO, somebody comes and you make money off of the page view, and then they leave. Whereas like athletic subscription might be very different or like a Ben Thompson. The way that Ben Thompson is self-referential. He talks about aggregation theory and all these ideas that I’m wondering how this maps onto business models, I guess.
Dave Nemetz: Yeah. I mean, to answer the first part of your question, I think you can go to a Phish concert, for example, not know any of the references, not know any of the songs and maybe see people you don’t know that you’re supposed to clap at a certain part or when they play stash and you see everyone, people around you doing it and you can kind of start to cue into it a little bit. I feel like for the newer fan, that’s one of the cooler things where you just see how intuit people are and it can vary.
I’ve taken people who are new to the band to shows where they play a bunch of very kind of deep bust out songs that the hardcore fans love, but are not very accessible to the new fan and they’re kind of like, “What the hell am I seeing?” But you can still kind of just vibe off the connection between the band and the audience and how deep that is. And if you’re in the right mindset and you’re kind of receptive to it, I feel that that’s how they create the new fans. And of course, like any brand or like any music, it’s not for everyone.
And I think about that the way when I think about how that applies to a media business. Certainly for a subscription kind of if you’re really speaking to a very narrow audience, people who’ve already sought you out, who are considering paying or willing to pay, I think there’s a similar dynamic at play. But even in an ad supportive world I look at some of the things that, for example, the guys at the Morning Brew are doing with their business. I know you’ve heard-
David Perell: Love those guys.
Dave Nemetz: Alex and Austin on the show and I’m a big fan of them as well. I look at what they’re doing. They’re very intentional about the voice of their brand, kind of the jokes that they use in their headlines, even down to like the iconography that the people who work there use on their Twitter handles. And they’re creating a world around their audience or around their brand, where you kind of might sign up, you might start to see their stuff and you kind of start to feel like this is a very intentional space of creating a voice of kind of how they’re approaching telling stories. And there’s a lot of winks and nods to their audience. And that’s kind of the same sense of how you build loyalty, where even though it’s a media brand speaking to millions of people, you kind of feel like it’s speaking directly to you. And like you’re on the inside.
And I think in a very different way Barstool has done that with their audience and to massive success. And to the outside, a lot of people look at Barstool and I did for a while and say like, what is this? It’s crass, it’s gets offensive. It’s a lot of stuff that if you’re looking at a certain way, it’s hard to wrap your head around and like, fair enough. But they have created this voice, created this world, these characters where you got everyone from Portnoy on down has like a personality where they’re playing a character almost like professional wrestling and people get into it. And they feel like they’re on the inside. And I think that’s the kind of definition that’s from the outside looking in, it’s hard to make heads or tails of it, but if you’re on the inside, you get it. And there’s something special when that happens.
David Perell: So I was listening to Green Day a couple months ago with a friend, and I have this theory about Green Day that you can tell if someone is a fan of Green Day versus just heard the popular songs by whether they know the song Jesus of Suburbia. And I’ll tell you why, because American Idiot came out in 2004, the track list was American Idiot, Jesus of Suburbia, Boulevard of Broken Dreams, then Holiday. And American Idiot, Boulevard of Broken Dreams and Holiday were three hit songs. And they were all radio songs, but on the album, Jesus of Suburbia was right there. So if you were a fan, everyone would know that song. But then there were a lot of people who pose your Green Day fans and whatever, they would know it, and the theory is always held true. And so I think that there’s these little signals that you get in any kind of brand, which I agree, make these brands really special. Real quick question for you, what is the craziest farthest story or place where you’ve gone to a Phish concert?
Dave Nemetz: So actually not too far from where I am now, I’m currently on the Coast of Maine near Belfast. And the farthest I’ve gone for a Phish concert was just over in Vermont, Northern Vermont Coventry was the farewell festival that Phish put on when the band broke up for the first time back in 2004. And so this was a huge deal. They put an announcement at the time. It was going to be their final shows ever. And kind of army of fans showed up a few miles from the Canada border to see them play. I drove up there with a friend, a few hours outside of it, his car broke down. We hitchhiked, found some benevolent fans who picked us up and we hitchhiked the rest of the way there.
And then as we were waiting along the highway in an all night traffic jam to get in, they came on and announced that because of massive rains that had been kind of saturated in the area for the few days beforehand, it was too muddy to get people onto the festival that they were going to have to basically start turning cars away and people weren’t going to be able to get in. So we already didn’t have a car. So we just got out, grabbed our stuff and we hiked in, along with thousands of other fans miles from the highway into the festival grounds and saw the show. I mean, the show itself was a blur but that whole experience of getting there, I mean, you talk about the dedication of fans, that’s about as dedicated as you can get. And fortunately, they weren’t really the farewell shows, they came back five years later and they’ve been going strong.
David Perell: So let’s talk about the arrival of Fallacy. So you sold Bleacher Report to Turner, and let’s talk about the time that you spent in Vegas after that, and then we’ll work back towards what it’s like to do a huge M&A deal like that.
Dave Nemetz: So that was, I guess, about a little over eight years ago, it was August, 2012. We sold the company to Turner, which is, it’s crazy. It’s been that long, but it was kind of the culmination of nearly seven years of working on Bleacher Report at the time, and basically since we got out of college and started working on this project. So, I mean, it was just a kind of a crazy time with a lot of honestly mixed emotions. You think about all of the highs of selling a company and kind of getting kind of to that point. And I think there’s a lot that happens when you get to something that you’ve anticipated for so long where it’s never exactly what you think it was or what you thought it would be.
So you asked about Vegas. A few weeks after selling the company, we took the entire company to Las Vegas, which was pretty nuts. We chartered a whole Southwest plane from San Francisco to Las Vegas, had any kind of the other offices meet us there. And it was pretty much kind of what you would expect of just a huge blowout. Let’s kind of let go and live the high life. There were people spending all night at the tables in the clubs and all that stuff. And I had a great time, but I wrote about this recently and I was so burned out after just what we had been through and the acquisition process that it was. I kind of felt like I was just going through the motions. I was like showing up to kind of celebrate with everyone but in my head I was totally mentally checked out at that point.
And there’s a lot of things that I think people don’t really talk about, about kind of what it’s like to go through that process of selling a company and just working so hard at something and then finally getting to that point. It can mess you up in a way a little bit in terms of your mindset and your mental health and the arrival of Fallacy is a concept that really tries to describe that, which is that you kind of when you’re working towards a goal, when you’re a very driven type person and all you think about is how you can kind of get to the next milestone and achieving things, that’s something that can consume you.
And often in a good way, you’re always focused on how you make that next kind of step forward. And within that, there’s a reward cycle where every achievement gives you a little hit and you’re kind of working towards it, then you work towards the next one. And then ultimately when you finally get to that big goal you’ve been working towards, all of a sudden, you have nothing kind of driving you forward. And I think there’s a little bit… Of course, overall the Bleacher Report experience was phenomenal and I’m very fortunate and privileged to have gone through it and achieve the exit and the success that we did.
But I think there can be a lot of problems with tying up your identity and your self-worth to a company, a project, kind of a goal that you’re shooting towards when you kind of you get there and you realize just because you achieved something, doesn’t solve all your problems, doesn’t mean you’re automatically a different person and that can lead to kind of some bittersweet feelings as well. So that’s kind of my experience. And it took me a while after Bleacher Report to really get into a good mental head space and work on my mental health to the point where I kind of had felt like I had other things driving me beyond what I’d really spent the last seven years working on.
David Perell: Do you ever wonder if the inability or unwillingness to question your motivations actually push people hard enough and give people the drive and the I’m not even going to think about it attitude that then leads to that burnout, but ultimately is might be what you actually need to build a company like Bleacher Report.
Dave Nemetz: Yeah. I mean, I think it’s a double-edged sword. There’s being a part of a company or project that’s just on a mission where you feel like you’re not going to let anything stop you. And I had a great group of co-founders and we had just a really tight knit early team that was kind of there the whole way. And there’s a certain bit of momentum and inevitability that you kind of you can push through the ups and downs and you’re kind of so caught up on it and it’s like riding a wave. No questions, that ultimately is a huge part of achieving success is kind of having that, but it can get consuming and it can kind of play some negative effects on you.
And kind of when I was doing Bleacher, I was in my 20s and I was kind of go fast, be over focused on it all the time. You’ll never turn it off. And I’ve kind of really learned to take a step back and learn to appreciate the need to have balance in your life and to take your mindset seriously. And that’s something as after Bleacher kind of went on and started Inverse, it built that and sold it last year, kind of having that balance, having kind of a really commitment to mindset in mindfulness kind of helped me through that experience through a lot of ups and downs there as well I think in a much more even keeled way than what I experienced at Bleacher Report.
So there’s been culturally, I think, more appreciation for mindfulness and work-life balance. Obviously, there’s still a huge hustle forward culture out there as well to each their own, but certainly, I see the benefit of you can still have that project and that kind of inner drive and that push to kind of continue to climb the mountain and achieve more and more. But ultimately, I think also kind of having that balance in that commitment to a mindset that helps you get through it is the right way to go.
David Perell: So you’re talking about two M&A deals that you’ve done, Bleacher and Inverse, having never done one myself, what would surprise me the most about doing an M&A deal outside of the mental health component, outside of the emotional component, just about the tactical business components of what you actually do, what would surprise me the most?
Dave Nemetz: Unfortunately, one of the surprise is just how grueling they are and how certainly I can’t speak for every deal and every process, but our experience at Bleacher, it was eight, nine month process from start to finish of selling the company. And that was, we were not trying to sell the company, that was with Turner coming to us and saying, “Hey, we want to buy you guys.” And from there that kicked off a whole process where we negotiate with him, we started negotiating with other people and there’s just a lot of kind of tricky balance that goes into something like that, because on the one hand, once you agree to engage in a process like that, you start to think about, okay, what do I need to do to get the deal done, all the diligence that goes into it, all the kind of the planning of how you get to the finish line of the deal.
But then at the same time, there’s always a possibility that the deal doesn’t happen or that you decide to cut it off for some reason, or they decide, and you’re still operating the business. And you’re still leading a team. You still need to think about the longterm and where you’re going to take the business if you don’t sell it. And so you’re kind of living in two different worlds and imagine doing that for eight or nine months. And there’s some interesting dynamics at play. You have to decide at what point to bring other people on the team under the tent and kind of let them know what’s happening because you do that too early and they get the same level of distractions that you do and all of a sudden your business progress can start to tank as everyone start to focus on the deal, but you do that too late and you risk kind of trust issues with the team or at certain points, you need to bring people in because they need to be involved in certain aspects of the diligence.
And again, every deal is different. Usually, the key management team is heavily involved in the process. But when we’re selling Bleacher Report, we had almost 250 employees at one point and it was still a few months before the deal closed, the news or the kind of the rumors of the negotiations leaked to the media, the Wall Street Journal wrote an article about it. And we had to kind of talk to the team and say, “Hey, there’s reports out there. We’re talking to Turner.” We talked to other people. We are always looking at kind of what the best opportunity long-term for the business is. But as of right now, we don’t have a deal, we’re focused on building the company and we’ll let you know if that changes, but just that specter in itself, it just puts the business in a very weird place. So it’s definitely a real balancing act to try to go through it because basically, you’re living two different lives the whole time that the process goes on.
David Perell: What are the dynamics of those leaks? When are they strategic? When are they accidents? How often? When I read an article about a potential acquisition like that, did someone plant that? One of the people in the negotiation, they put it there to maybe create havoc for the company that they’re acquiring, what’s going on when I read an article like that?
Dave Nemetz: Yeah. I mean, there’s always some story behind it. It’s everything from, I’ve talked to journalists who sat next to someone at a coffee shop or on an Amtrak train and overheard someone on the phone talking about an acquisition. And there are stories like that where it’s just completely random that something leaks, but very often it’s coming from someone on the inside. And I don’t know for sure when that happened. It could have been from outside. It could have been one of our bankers decided that the way he was going to get some other bidder to the table that he was trying to get to submit a counteroffer was by leaking to the media that we were close to closing our deal with Turner. It could have been from the outside.
It could have been a trial balloon just to see what the reaction was, see how it impacted their stock price or something like that. I mean, I don’t know if the Bleacher deal was that impactful on time or was stock price at the time, but it could have been from them. There’s always some or almost always some deeper story to it. And I think also journalists, especially journalists who are on that beat are good at cultivating sources and finding the people who will kind of slip them a little slivers of info that they can then chase down, so it can come from that way as well.
David Perell: Yeah. It’s one of the questions I always like to ask, when you see a big name in the media that hasn’t been in the media for a while, and this is different from leaks because they want to, you always got to ask why? Why now? And I think it’s always an important question because people, they come onto the stage and they disappear. And there’s always reasons for these things. People are very intentional about their media presence.
And I used to take it for granted, “There’s a bunch of Reed Hastings articles that are in the newspaper now. And then he was on TV. That was a Monday. His book came out on the Tuesday. Wait, but then why is he writing the Culture book?” And then you begin to get down these really interesting rabbit holes, where then you begin to discover and get into a question like, why would somebody like that spend three years on a book? How much of it was them actually spending time on the book versus their public relations team? And you could begin to discover a lot about the way that the world works by looking at the implicit actions that people are taking rather than listening to explicitly what’s being said.
Dave Nemetz: Yeah, no. I mean, no question. I access journalism for better, for worse, drives a lot of how the media works. And it’s interesting. I came into the media world as an outsider. There was a while early on at Bleacher Report, we never considered ourselves a media company. We were like a weird sports community type platform. And then eventually we kind of realized, no, we’re a media company. We’re creating content, we’re selling advertising, we’re building this brand. And there’s a lot that I kind of started to learn from that outsider perspective about how media works and kind of now seeing it more from the inside, it’s been interesting to see it from both perspectives.
David Perell: You talk about the ways that you began to see how media worked from the inside, the things that surprise you and Gary Vaynerchuk once gave this great speech, it’s unlike the other stuff that he makes, where he really goes into what he learned and the things that surprised him running an ad agency. And he said that one of the things that surprised him the most was like this step ladder of saying awards, they matter so much, being on the cranes list of best places to work, they matter so much. And then being like, you know what? Actually, people just pay to be on those things a lot of the times, they don’t matter at all.
But then saying, wait, they matter so much because all these other people think that they matter. And so even though people are paying to be on those things, that’s actually how you get clients in the advertising agency business. And going through that function of like surprise or thinking that something is a big deal, nothing is a big deal than thinking it’s big deal again. Did you have any of those moments, any of those realizations of just now being in the media business and be like, “Whoa, this world works very differently from how I thought.”
Dave Nemetz: Absolutely. And that’s a great example. I mean, when, like I said, we first kind of started to realize that we were a media business and that’s what we were doing, Bleacher Report, we started in San Francisco, we had some angel investors who were much more like technology investors. They weren’t necessarily media investors, but they believed in us early and made some bets on us. They were very, very dubious of the idea of us being a media business and of us selling advertising. They worked incredibly hard to try to convince us to get out of it, to do something different, not to gail on Bleacher Report all together, but some different business model other than advertising or another thing they really tried to push us on again, with that more like tech, Silicon Valley mindset is can we automate everything? Can we do it all self-serve the way Google does? And so that way we don’t have to hire expensive salespeople and all that type of stuff.
And first of all we kind of had to say, “Hey, Google employs a ton of salespeople, the self-serve stuff is just kind of a small part of their… Not a small part, but it’s just a part of their business.” And I think the other part, we just had to hold firm that, “No, the way for us to be a media company is we got to establish ourselves in New York where most of the advertising sold, we have to hire salespeople. We have to kind of go after the same brand advertisers who are advertising on ESPN or CBS or Fox.” And so we did and it was still surprising to me just how much of that business is driven off relationships and the in-person deal-making in the taking the clients out to a nice steak dinner or there’s something called Jeans Parties, have you heard of these?
David Perell: No.
Dave Nemetz: I don’t think they really happen anymore, but they did back in those days where literally a salesperson would take a whole group of kind of people who work at an ad agency to what’s called a Jeans Bar where they would all hang out and I’ve never went to one. So I don’t know if they’re drinking or what’s happening, but they all get fitted for custom jeans. And it’s like basically you’re buying everyone really nice jeans, but under the guise of we’re hanging out, we’re entertaining clients and we’re having a good time or there’s Jeans Bars, there’s taking clients out to a sports game and there’s all sorts of ways of basically you’re just quasi bribing people to do business with you but in under the guise of we’re going to show you a good time, we’re going to show you what good people we are. We’re going to build a relationship. And ultimately you’re going to be more predisposed to do business.
So that was just so surprising to me that this was still how the advertising world works. I mean, you start like, I’m a huge fan of Mad Men and it’s just a fascinating show on many levels, but a lot of what it depicts of the advertising industry back in the ’60s is still in place today or certainly still in place. About 10 years ago when we really started selling ads on Bleacher, a lot has changed since then. I think a lot of the ad agencies and big advertisers have really started to clamp down on that very egregious level of entertaining.
And there’re more controls around that. And I think the shift to programmatic advertising has in effect made the world in some ways more like that automated ad sales world that our investors envisioned 10 years ago, but there are still a lot of steak dinners or luxury suites at the concert or the next game or whatever happening in the advertising world. And that still kind of indirectly or directly influences a lot of the major buying decisions that are happening. Spending $500 on a steak dinner and then ending up with a several hundred thousand dollar ad campaign is definitely a trade-off that I think most publishers would make.
David Perell: Yeah. I remember this was one of my nights in New York where I was like, what is this world that I’m living in now? I got invited to a dinner with some private equity guys, and we went to Wolfgang Puck on 33rd and Park. So we sit down, there’s eight of us, there’s an NBA player at the table. There’s a professional comedian at the table. There’s some big names at this dinner. And I was really excited to be invited. So I said, “Sure, I’ll go.” And the hosts, I didn’t even look at the menu and they must have ordered at least a bottle and a half of wine for every single person at the table. And at a steakhouse, these bottles of wines aren’t cheap and the dinner was kind of a blur, but I remember just going through steak after steak, after steak, and we had all these different kinds of steaks.
And at the end of the meal, the guy said, “I will take care of it.” The host, they said, “I’ll take care of it, but can you chip in a little?” And I chipped in 250 bucks after they took care of the meal. And I was just like, this is not a group I want to be a part of. And I cannot believe that people in New York are doing this multiple times a week, but it’s the culture. And exactly what you said, it sounds so crazy at first. Like why would it ever make sense for them to drop a couple thousand dollars on a dinner?
And I now know that they’re pretty tight with this NBA player, the NBA player’s now pretty big deal. And if they get a million dollar deal out of that night, it’s pennies compared to what they’re making on the other place. And so it was just like the scale of the money that was exchanged. And I had season tickets to the golden state warriors grownup, and my dad got some of the cheapest seats in the house. I mean, I remember this was back when the worst were bad and we had third deck seats. And when you go from that of just like consumer spending to then the agency I worked for, we had court side seats at the nets and the whole calculus just changes. It shocked me, man.
Dave Nemetz: Yeah. Well, I mean, I’m sure those are some fun warriors games I’m sure you saw back at the whole market arena is that that place was amazing, but there’s a whole economy around this entertaining and this kind of clients or kind of interaction. And I mean, I got to think that a lot of these high-end restaurants, so much of their business is from people on expense accounts, entertaining clients, taking people out. It’d be interesting to see what happens kind of when all this shakes out, whether they can still sustain that kind of business. Because I think so much of this is going to shift. I mean, we’re talking about it where I’m at, BDG, that in-person client meetings are not going to happen for a while.
I mean, we’re talking until there’s a vaccine and then even after that, I think people are getting used to doing more business over the phone, online. It’s just a different mindset now. And kind of it’s cutting out a lot of those entertaining relationship building aspects and putting the focus more on just the business side. So it’ll be interesting to see whether that returns or how it changes or evolve. One of the very secondary effects of the world we’re living in right now, but just shows you how widespread kind of these changes can be.
David Perell: One of the things that you made very clear to me and I think it’s a spot on insight and was part of what went into you building Inverse was the mainstreaming of geek culture. That geeks are now taking over the world in a lot of ways. It used to be that it was weird, there maybe wasn’t a lot of money in it. And then when I was growing up, there were things like Yu-Gi-Oh and Pokemon, there was a lot of money in that, but it still wasn’t like today. Now you have an explosion of video games, you have nerds and people who ordinarily would be at the bottom of the social hierarchy. Now being at the top was Silicon Valley.
I mean, normally engineers, they weren’t the wealthiest ones, the wealthiest ones were the Mad Men people, the people who are really good at socializing and really good looking and often weren’t quite as smart. And now you have a world that really rewards intelligence and conscientiousness, and a lot of the nerds are sort of on top. And then you have CEOs like Elon Musk who tap into that, who love that geek culture, what’s going on behind that? What was the insight that you had before starting Inverse?
Dave Nemetz: Well, the geeks won basically. The geeks took over and I love it. Before I was a sports fan, I was a geek. I think I’ve always been a geek, I’m still today, but I grew up reading comic books and obscure sci-fi novels and just geeking out on the stuff. And I think I became kind of more of a big sports fan as I kind of got into middle school and high school like a lot of kids do, but part of it was to be less of a geek and to be more conventionally cool. But back when I was doing that, it was not very cool to be a geek. And then what we’ve seen, I think, over the last 15, 20 years is all of a sudden all these kind of fringe, cultural kind of ideas and franchises and things like that, all the kind of things like computer science and technology have all kind of emerged at the forefront.
And so when I started Inverse, which was a little over five years ago, that was kind of the central thesis is that geek culture has become mainstream. And that’s it’s not just kind of the entertainment side of the culture, but it’s the science, the technology kind of aspects of being a geek are also mainstream. And we decided we were going to cover that in a more mainstream way the same way that a Bleacher Report would cover sports. A great example you mentioned Elon, love him or hate him, some people are idolized. Everything he has to say, some people roll their eyes anytime he spouts off on Twitter about something, but he’s one of the biggest celebrities in the world now, and he’s got kind of a devoted following and he’s doing of course, really amazing things at Space X and Tesla, et cetera. But he’s just so central in the culture in a way that I think if you were to turn the clock back five years and say like, “Hey, Elon is going to be this massive figure that has millions upon millions of followers on Twitter and is going to be thriving the culture in such a way,” you would not expect it.
And when we started Inverse, he was one of the big people that we decided we were going to cover in a very deep way. And I see a lot of parallels between kind of his personality and kind of the reaction we would get around him and the engagement to kind of some of the biggest athletes that we would cover at Bleacher Report. And I think especially the big parallel is around Kobe, RIP, in kind of the heyday of Bleacher Report before the Turner deal, Kobe was kind of definitely, he’s still in his prime, he’s still an NBA and he was just the one athlete that whenever we wrote about him, whenever there was some big story around him, it just got the most engagement on both sides, a ton of people who love him, a ton of people who hate him, but everyone kind of respects him and is interested in what he’s doing. And I think Elon is in a similar place now, and that’s definitely kind of it’s a similar pattern anytime we cover him in Inverse.
There’s just always massive interests on both sides. A legion of followers, a lot of people who are not the biggest fans of him, but still care about what he’s doing. And that’s what’s fascinating to me that we’re in this place where this guy who in probably an earlier era would just be a fringe figure aerospace and tech entrepreneur, but now he’s one of the most followed people in the world. That’s fascinating.
David Perell: Yeah. As you’ve been building media companies, how have you thought about the funnel of getting people in versus retaining them? So with Bleacher, you ran a search engine optimization strategy for top of the funnel, and then you did some things like launching newsletters and then eventually building an app to retain people. Talk about that transition and what are some of the strategy conversations going on there?
Dave Nemetz: Yeah. So with Bleacher, it was very organic and we started out. Search was kind of pretty much our only option to find new audiences. Social didn’t exist the way it does now. At the time, Facebook was still kind of in its early days, Twitter, I think was literally launched around the same time we launched Bleacher Report. So that was all still very new. And Google was dominant. Search was the primary way people found their content online, unless they were typing in going to a homepage of a site they already knew. And we focused on creating content that could rank well in Search and kind yield looking at that supply demand equation that we talked about and kind of finding those opportunities to fill gaps and supply, which worked incredibly well.
And kind of we really studied it and I think did it better than almost anyone else at the time to build our audience. But a couple of years in, we started to notice this problem. We were growing pretty steadily and then all of a sudden that growth started to plateau. And as we dug into the audience, we kind of observed a classic problem of a lot of businesses, media or otherwise, which is, we had a great top of the funnel, but our retention was horrible. The product wasn’t sticky enough and we basically had the leaky bucket problem. We’re bringing people in, we had a great kind of fire host of people coming to read our stuff but they were reading one-off articles here and there and then they were going back to Google and searching for the next thing. And basically, we had to re-generate the audience all over again the next month. There’s very little retention.
So we were trying to figure out this problem. And at the time trying to come up with all sorts of different ideas. My co-founder Brian, he’s the founder and CEO of BDG where I’m at now, over the weekend with one of our engineers without really rated by anyone else, hacked together this newsletter module, like email signup module that you read in an article, it pops up and says, “Hey.” Everyone’s got them on their sites now. It’s, “Hey, you love what you’re reading? You’re reading about the San Francisco Giants, sign up here, we’ll send you more.” And like I said, he did it without even telling anyone. We started to see it and asked him, “What the hell is this?” We had a meeting the next Monday and said, “Brian, what happened here? Why did you put this together? We don’t even have a newsletter. How are we going to… We’re signing people up, what’s this all about?” He said, “Just wait, let’s see how it does.”
So we were ready to just take it down and we said, we need to discuss this, but he convinced us to hold out and to look at the numbers after a couple of days. The conversion was enough that we realized that he was onto something. And we were converting. I think, around 2% of people were signing up for these. And we said, “Wow.” If overtime, I mean, at the time we were already at millions of people coming and visiting the site every month, if we convert 2% and we figured out a way to kind of serve them with a good product, that could be the solution to our leaky bucket problem. So we left it up, we kept collecting emails. And at the time we were already collecting tens of thousands per month. And we quickly had to come up with a newsletter because we had already promised people.
So it’s a kind of good problem to have. Again, talk about supply demand, clearly there was demand for this. We just had to figure out what the product was and how to offer it. So we put together a pretty ambitious newsletter program where we were going to send out basically custom newsletters for every single team. And rather than just one kind of generic Bleacher Report newsletter, if you signed up on the San Francisco Giants article, you were going to get the Giant’s Newsletter. If you sign up on the Kansas City Chiefs, you’re going to get the Kansas City Chiefs.
David Perell: That’s what was great about Bleacher Report, man. I think that you just hit the nail on the head. It was that ESPN never gave me my team. And so I had the hometown stuff of I could watch the sports at the end of the 30 minute television segment, but when I was doing, I remember I would stay up all night. I would watch reruns at Sports Center. I mean, I’d watch the same thing two or three times.
Dave Nemetz: Same. Just to get your highlight of your team.
David Perell: Just to get my highlights, right?
Dave Nemetz: And you’d have to sit through how many segments of the Yankees or the Dallas Cowboys.
David Perell: Exactly.
Dave Nemetz: That was the reason we started it. Every fan wanted to be able to focus on their team or their teams in the same way that Sports Center were focused on the big market teams and the big name teams. And those newsletters, they were so incredibly sold. We were getting right off the bat. I mean, some of the newsletters we had like 70% open rates on. Because we were the only game in town. We were the only people who were providing a new, it was kind of almost like being the new sports page. Just like you would read your local sports every morning, we would provide that local news, that team focused news every day. And we also made, I think, a pretty smart decision, not just to focus it on Bleacher Report, we curated the newsletter. So if you signed up for the San Francisco Giant’s newsletter, you were not just getting Bleacher Report’s articles, we were linking ESPN. We were linking to the San Francisco Chronicle over time. As other forms of media emerged, we were linking to a player on Twitter and what he was sharing.
So this created this great curation experience where all you had to do was sign up and we were going to send you the very best things about what you cared about. And that was incredibly sticky. It didn’t solve our retention problem overnight, but that was kind of the law of compounding. We were converting a certain percentage of people each month and they were sticking. And over time that just became kind of a huge base of very loyal people. And then about a year or so after we launched the newsletters, even since it was the very early days of the App Store for the iPhone around like 2010 when it was starting to open up to more developers. And so we launched Bleacher Report app. It was called Team Stream at the time, now it’s just Bleacher Report app. And it was basically the same experience you get in the newsletters, but in an app, you choose your teams, you get that curated feed of everything that matters. And that just drove the retention to a new level.
And that was a real turning point where we went from I was kind of the main kind of lays on at the company to the media world and meeting with other companies and going out on some of our early ad sales meetings. So I used to go into most meetings expecting that no one had ever heard of us or knew very little about us. And I’d kind of have to go in and explain who we were and what we did and then all of a sudden kind of once the newsletters and the app started to take off, it completely changed. I’d go into meetings and people are like, “Bleacher Report. I’ve got the app. I get my alerts on Miami Hurricanes News because that’s where I went to school.” And that whole dynamic started to change where we went from complete unknown to the people in the sports world and the media world at large really knew us. And it was a real reflection point for the company.
David Perell: Two more questions. The first is you said that most people climb a career ladder and you’ve tried to create a career elevator. What do you mean by that?
Dave Nemetz: So similar to that idea around kind of taking control and changing your situation, a lot of people feel like they have to take a conventional path in life and certainly everyone’s circumstances are different and some people have to just do what they need to do to kind of survive and take that next step but the world is full of examples of people who kind of tried to go down the conventional path and hit a wall and really broke out when they took matters into their own hands. And when I started out right out of college, I went to USC film school.
And I originally wanted to be a filmmaker, producer inspired by Back to the Future and Science Fiction and all of that and took a fairly conventional path to try to get there, went to work in a talent agency right out of school was kind of thinking of, this is the way I get my foot in the door. I’ll go and work in this talent agency, learn the business, build a network and kind of climb the ladder that way. It was a fascinating world to kind of like be a fly on the wall end, but I kind of recognize at some point that not necessarily it wasn’t for me, but that path wasn’t the best way to get where I wanted to go. And really that light bulb turned on for me and this whole time I was working there and trying to kind of build relationships with studios and producers and kind of my peers at the agency, I was working on Bleacher Report as a side project. And it was kind of the secret thing I would go into the stairwell at the agency secretly do conference calls with my co-founders to work on things on my break.
And the agency was just starting to dip its toe into the digital world at the time and this was like very kind of early on in emergence of digital media and they were kind of trying to figure it out. And so I thought, well, I’m working on this website side project, the agency is trying to figure out digital, maybe I’ll raise my hand and this’ll be my way to climb the ladder. And so I started to try to get involved in this digital task force they were putting together and just go into a couple of those meetings and kind of seeing their approach to it I started to realize, hey, I get this stuff a lot more than a lot of the more senior people around the table do. And I can be here as a very junior person trying to climb the ladder and maybe use this as my ticket or I can get out of here and I can go focus on this project that I believe in.
And instead of climbing the ladder, I’m building an elevator and building something that can be my ticket up and my ticket to a career. And of course it could have completely failed, it could have not worked out at all and maybe I would have been back at the bottom of the ladder, but I think anyone who really has strong conviction in wanting to get somewhere in their life and their career kind of can find that equivalent way to take matters into their own hands, could be by going all in and starting a company or leaving the corporate world or whatever, it could be by launching their own blog or podcast or working on some stuff. I mean, just some way to kind of build your calling card rather than kind of wait for the path to open up in front of you. And I think that’s just a lesson that a lot of people can take and certainly it served me well.
David Perell: Yeah. I mean, that’s why I started Write of Passage. I’ve always believed that no matter what you want to do, writing online and building an audience is going to serve you well. And it is a path that works well for people who have a definite vision of what they want to do and indefinite one if they know they’re ambitious, but they don’t know where they want to direct their ambitions. But I want to end this with three quotes that illustrate your personal principles. The first is from Hunter S. Thompson, when the going gets weird, the weird turn pro. The second from Jon Fishman, get your ass handed to you every day. And the last one from Warren Zevon, enjoy every sandwich. Break down those three and talk about what they mean to you.
Dave Nemetz: So the Hunter S. Thompson quote, I love his writing and just talk about building a world he definitely did through his writing. That resonates with me around how we built Bleacher Report, how I look at launching any project is, you kind of have to take advantage of the weirdness in the world. And that’s where the opportunities are when there’s kind of a shift in things. And the people who build big businesses or who kind of take big swings are often kind of emerging from kind of idea or fringe part of the world that all of a sudden becomes a movement. And so that’s always resonated with me and it speaks to you got to have a vision, create a mission around it and find those people who believe in it and that can turn into something big.
The Fishman quote, by the way, John Fishman is the drummer from Phish. So that is a quote from lyrics from a song that he wrote not too long ago called Ass Handed that is perhaps one of the shortest songs and the Phish repertoire of they’re known for their 20 minute plus songs. This one’s maybe a minute long with the only lyrics being, you get your ass handed to you every day. And I think that to me is a hilarious song, but it just speaks to humility and not taking yourself too seriously. And it is something that I’ve been reminded again and again, whether it was in my early days trying to make it or after achieving success and being a dad, all these different things. Like there’s just some days where you get your ass handed to you and you just have to take it and move on and kind of be ready to laugh at yourself and keep going forward.
And I’m reminded that a little too much as I chase my two kids around and trying to keep up. And then the Zevon quote, enjoy every sandwich was the answer he gave. Warren Zevon was a critically acclaimed and prolific singer songwriter who’s kind of one of a real songwriter, songwriter. Bob Dylan admired him for his lyrics and things like that. And in the early 2000s, he was diagnosed with terminal cancer. He was fairly, fairly young, I think he was in his 50s. And he was a favorite guest of David Letterman on the Letterman show.
So he went on the show, it was one of his last public appearances a few months before he died to perform and kind of do kind of almost a farewell interview with Letterman and Letterman in his own way, was asking him about death and coming to terms with it and he said, “Hey, do you have any… You’ve lived an interesting life, a full life, but now you’re kind of faced with this, impending into it, have you gained any insight now that you can kind of look at your life at its point of near completion that you want to share with us and any kind of life advice.” And he said, “Enjoy every sandwich.” And I think it’s profound in a way. And it’s really about, I mean, you can have success, you can have great experiences, you can have great struggles, you can still find the joy and the satisfaction in the little things and in kind of the everyday pleasures or the everyday struggles. And that’s a big part of my philosophy is just finding meaning in the moment and kind of letting that be the thing that drives you forward.
David Perell: Beautiful. Well, thank you for an amazing conversation jam-packed with wisdom and as soulful as it was intellectual. So thank you very much.
Dave Nemetz: Thanks, David. This has been a lot of fun.
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