This SAAS Business Will Make Over 100 Million (Software as a Service) | My First million Podcast

Shaan Puri

And he was like, "Oh, this is Facebook." They... I was like, "Facebook?" He's like, "Yeah, they have an internal podcast that they do for their employees." Because Facebook has, I don't know, tens of thousands of employees. Maybe 50,000? I don't know.

Sam Parr

It's... I know I try to get past media, but I just love it so much. Okay, so Jeff Bezos, the Amazon guy, he owns The Washington Post. A few years ago, he said, "You know, I'm gonna buy it and I'll let the editorial do its thing and whatever else. I'm gonna stay out of it." But I kinda wanna take your guys' [referring to the editorial team's] technology to publish their articles. I kinda wanna take that and make it a huge business. A lot of people try this, and it rarely works. But what he did was—or he didn't do it, but he was somehow part of it—they created this thing called Arc Publishing. It does a couple of things. The first thing is companies like me pay money to use it. But it's really interesting that you and I have talked about this idea. What Arc Publishing is doing is going into companies like BP, the oil company that has 200,000 employees. They are saying, "Hey BP, you have 200,000 employees. We're going to help you publish newsletters and articles to your employees, which you already are doing, but we're gonna help you organize it and make sure it's read." They're saying that in the next year or two, they're gonna hit $100 million in revenue.

Shaan Puri

wow

Sam Parr

Which means, I bet the Washington Post probably does maybe $500,000,000 in total revenue, but $100,000,000 in this enterprise SaaS revenue would be worth more than the Washington Post itself. I wanted to get your opinion on: a) That's a cool idea that you and I have been noodling with for a while, and they're executing it in a really interesting way. b) The idea of branching out from your main thing to doing more, even if it's in a totally unrelated area. In some ways, it's totally a stupid idea. I mean, there’s an argument to be made that this is just a stupid idea and you should never do it. However, there's also an argument to be made that a lot of people do it successfully. So, what's your take on this?

Shaan Puri

So, first, this is my first time hearing about Arc. Just to clarify: 1. They give other brands or companies the tools that Washington Post uses? 2. They sort of productize their own toolkit? But is it always like the use case you talked about? Like BP, which has 50,000 employees, wants to publish internally? Or is it also for external publishing?

Sam Parr

I think that they're still trying to figure it out. I believe that they're building it for a variety of reasons. At first, it was just for publishers. Then, they closed this deal with BP, and I think to them, they're like, "Maybe that's the way, that's the path."

Shaan Puri

Right, no, I think there's something to that. Because, you know, when I started the podcast, I used to go to this podcast studio before you guys built a dope studio in your office. I was going to this kind of rent-a-studio-by-the-hour place. I was talking to the guy who ran it, and he mentioned that they had a sports radio station, a 24/7 sports radio station. Then they thought, "Well, we know how to build a studio; we built one for them. What if we turned a few conference rooms into broadcasting booths?" And we did! We offered it to podcasters. These hipsters in San Francisco love this stuff. And so, they didn't say that.

Sam Parr

and by the way in san francisco there there there are no studios

Shaan Puri

They’re basically the only ones I trust, and it sucked. So, I went there and I was like, "Hey, can I get 11 AM tomorrow?" He was like, "No, we're booked up from 11 to 3." I'm like, "Shit! Who else are the podcasters using this?" He was like, "Oh, this is Facebook." I was like, "Facebook?" He said, "Yeah, they have an internal podcast that they do for their employees." Because Facebook has, I don't know, tens of thousands of employees—maybe 50,000. They have managers who come in and record a podcast about managing at Facebook, and it gets distributed only internally. I was like, "I never heard of an internal-only podcast that a company was doing." But of course, it makes sense. People want to put out content for training and different things like that, whether it's in text or audio form. That was my first time hearing about these internal publishing systems that I had never really considered.

Sam Parr

And that is what Arc is trying to do. Like Facebook, which has, I don't know, 20,000 employees or some tens of thousands of people, they need to create a lot of this stuff. "Hey everyone, so here's how we're addressing this situation. Here's what we're going to say. Here are the words we're using, yada yada yada. Or we're quitting this product, here's why, yada yada yada. Here's how to use the internal software, yada yada yada." It's a great idea, I think. You and I had discussed a slight variation of this, but I want the listeners to tweet at me and tell me. I always hate the idea when people say, "Oh, I can't do this; it already exists." But I just want to know, does this exist? Who is solving this problem? I'm going to put, okay.

Shaan Puri

We’ve talked about a few variations of this, so let's go over them. This is all in the bubble of the theme of what I'll call... I mean, I want to say **internal publishing** because that sounds lame as shit, but basically, it's intra-company stuff. I'll think of a good name in a second. But basically, we talked about Q&A, or sorry, all-hands software. You know, big companies do all-hands meetings for their whole employee base. Also, individual divisions will do all-hands for their group. What you need there is video streaming. You need chat or Q&A functionality, but it needs to be private. It needs to be internal; it needs to be behind a wall that nobody else can get to. A lot of people already have video streaming services out there, but that's for mass audiences, you know? It's like YouTube, it's Twitch—things to go get a big audience. But this is for a select audience; it's a little bit different. So we talked about that one. We also discussed when we were going over Hemingway and how it makes you a better writer. We were saying, "What if you could do this for internal emails inside a company?" But also just a **Mailchimp** for your company. How does somebody get the word out within a company? How do they make nicely formatted, easy-to-read company announcements and bulletins that come with the kind of tools that Mailchimp has, like tracking opens and clicks and that sort of thing? So, that's internal Mailchimp, internal podcasting. What these guys are doing is basically internal... you know, **Washington Post**, which is like a whole bunch of different features and functionality. They have broadcasting, like live streaming; they have blogging; they have...

Sam Parr

are you reading the the website right now yeah

Shaan Puri

I'm going through their products. They have a huge set of things—basically everything you would need to make a Washington Post. I think that's just an interesting thing to think about. What if you took the best-in-class products that people use to publish and broadcast to large audiences, and you asked, "How do companies need this just for internal broadcasting and internal announcements?" I remember my brother-in-law, who owns gyms—he owns like 50 gyms—and he was like, "Yeah dude, I just need an easy way to mass text all my employees on a text list the kind of numbers for the day and any key announcements about what we're trying to do." He's like, "You'd be surprised, it's really hard to get this stuff set up and make this a part of the onboarding of my company so that everybody knows they should join."

Sam Parr

That's the SMB version, like the small business version, which is also a good idea.

Shaan Puri

And then the second thing you talked about is, you know, when do you take your eye off your core business? How do you expand into other lines of business? I think that's, you know, generically a hard thing, and it's a case-by-case situation. You have plenty of examples where it worked, and it becomes a huge business unit. Let's call AWS the best example of this, where Amazon takes its own sort of server and compute system and services system and makes it available to any company. Now, AWS brings in, you know, tens of billions of dollars a year. So that's like the best-case scenario. Then you have probably, you know, 100 or 1,000 other examples that you could come up with where somebody does this, and it doesn't take off. It becomes a distraction, etcetera, etcetera. And you guys have considered this too.

Sam Parr

so how

Shaan Puri

do you how do you guys think about this

Sam Parr

Yeah, so when we consider it, everyone says the same thing. They go, "Well, Amazon did it. Let's just make AWS for them." I'm like, well, you have to understand that Amazon did it like 10 years into the business when they were 10,000 employees. Throwing 250 people at that problem is... ain't no thing. At my company, it's like, yeah, okay, I could hire a person. I have no problem hiring a couple of people to do it, but you do need to get your main thing right first. That said, I struggle with it because I have ADD and I want to do this stuff, so it's hard. I don't know what... like Twitch. I bet Twitch is in the same boat. They're big enough that they can have these same projects. A lot of the infrastructure that they probably are built on, I bet they had to make a lot of it from scratch. So, I don't know.

Shaan Puri

So, Twitch is 10 years into the business, and you're right; they essentially invented the best-in-class live video streaming at scale. You can have 100,000 people all watching one channel with low latency, and it doesn't fall over while broadcasting around the world. Nobody else really had that problem, so nobody else built a solution. You could imagine that Twitch could say, "Hey, we could make this available to others," and they could spin it out as its own business unit. I think that might be a good decision, right? Because you're taking an asset you already have, one that you've refined, that's sort of battle-tested and brandable. Your sales pitch is, "Hey, we use this for the biggest live streaming network out there." But at the same time, it's a distraction. They wouldn't have done it in year one, two, or three. They could do it at year ten because at that point, your core is stable. It's not going anywhere; it's not going to die. I always make these analogies, and I don't know if my team really likes it, but I always talk about how a startup is like a baby. With a baby, they just need to eat, sleep, and poop. Nothing else matters. You don't need to teach a baby calculus right now; you don't need to do all this other stuff. But as it becomes a teenager or gets ready to go off to college, you don't have to watch it so intently. You don't have to worry about keeping the baby alive every single day. That's the main objective in the early stage. But as you get to the later stage, you don't have to worry about that, which lets you...

Sam Parr

invest why why don't they like that's a good analogy why don't they like it

Shaan Puri

I think it's because I'm always like, "Right now, we just gotta keep the baby alive." It's sort of a darker way of talking about it, but I did this with one of our companies in Idealab. We had one company that was already mature; it was already profitable, making $1,000,000. We had this other project that was totally unproven. So, anytime you had to decide where to spend an hour, it always seemed like a good idea to spend it on the thing that's making $1,000,000 in profit, never on the super speculative thing. But if we did that, we would have never invested in the new thing. So, I made a decision. I said, "Hey, we can't have the baby and the teenager in the same room because they have totally different needs. They need a different type of care." You know, one will always look feeble and weak compared to the other, but that one that's feeble and weak today has the most growth potential. So, we need to be investing in that too. Let's split these two companies up and spin them out.