2017-02-24

“I really believe in skating to where the puck is going to be, but at some point you have to stay in the same stadium. You can’t just wait forever for the puck to get there.” On this episode of Recode Decode, hosted by Kara Swisher, Kara sits down with Flipboard CEO Mike McCue to talk about his history before Silicon Valley (starting a video game company in high school in Upstate New York), his participation in Web 1.0 (remember Netscape?) and his career as a serial entrepreneur. Plus, Flipboard is making the case that it’s more important than ever to present news sources outside one’s filter bubble. You can read some of the highlights from the interview at that link, or listen to it in the audio player above. Below, we’ve posted a lightly edited complete transcript of their conversation. If you like this, be sure to subscribe to Recode Decode on iTunes, Google Play Music, TuneIn and Stitcher. Kara Swisher: Today in the red chair is Mike McCue, the CEO of Flipboard, and someone I’ve known for a very long time through many companies. I think I met him at Netscape, I believe. Mike McCue: That’s right. It’s a news aggregation company founded in 2009 but is now relaunching its namesake app. Mike previously worked at IBM, Netscape, and co-founded Tellme Networks, which was acquired by Microsoft in 2007. Mike, welcome to Recode Decode. Thank you for having me. This is great to be here. No problem. Let’s talk a little bit about what the news is actually around Flipboard. You guys announced today ... Explain to the people what Flipboard is. Flipboard was launched in 2010 to give people a magazine-like experience for getting great stories and products that are recommended by people who share a passion. It’s, in many ways, trying to modernize the notion of a magazine. I really believe in the idea that the first principles of a magazine where you pull together great stories that are thoughtfully collected by editors, you have reviews, you have a feature well, you’ve got opinion pieces. You have magazines that are focused around practically any passion you can think of: Mountain biking, rock climbing, politics, foreign policy. Horses. Whatever. This is something that I think is very much a need for people when they’re thinking about their work, their play, themselves, their world. It’s an idea that I think needs to be modernized for a mobile/social world. That’s what we’re trying to do with Flipboard, is help people find and discover great stories that inspire them, that inform them, and help them be better at what they do and what they love. That was when it was founded. This was a long time ago, before Facebook was really big and Twitter and other sites. The concept was that the internet was too big to understand, that people would create these reading things. In some ways, Flipboard grew from an observation that I had. Once I had left Microsoft, I was not thinking I was going to start another company. I was on a plane with my family getting a bunch of magazines to read on the plane, and I came across this one magazine. It was National Geographic and there was this amazing article in there. I remember really enjoying the article. I read it from front to back. It was just this beautiful experience. I remember that I had seen that article online, and I went to go look at it online, on the web, and I remember it just being a shadow of itself. It was spread across multiple pages, all the images were moved into a gallery, there were toolbars and popups and menus and so on. I thought, “It’s too bad that these amazingly beautiful, incredible stories are reduced to this on digital.” People had the idea of, you put stuff up on the web. You just port it, essentially. That was initially what happened. Exactly. I think a lot of the basic ideas of how articles could look were very limited because you had ’90s technology and low bandwidth connections and there was no such thing as a touchscreen. I thought back to my days at Netscape when I was helping to try to convince a lot of these publishers to get on the web to begin with. I thought, “It’s like we’re stuck in the ’90s here.” There’s an opportunity to create a new platform for stories to look great on a mobile digital device. When you were doing this, you got this idea that you just wanted to do it, you had just left Tellme Networks. Let’s go through your history a little bit because I think that’s interesting, before we get to what you guys were doing. Where did you start out? I remember having a long lunch with you. You explained this to me. I think I met you at Tellme. No. Netscape. Netscape? Yeah. I think, at Netscape, those days were very heady. We were thinking about content. You got there from where? Netscape acquired my company, my first startup, called Paper Software. We were doing virtual reality and created the first plugin for Netscape Navigator, and it was a VR ... What do you mean you were doing virtual? There wasn’t such a thing. There was. There was something called VRML, Virtual Reality Modeling Language. It was an open standard. It was about 20 years ahead of its time. Maybe 30. Maybe even 40 years ahead of its time, depending on how you think VR is going now. It was very cool. Marc Andreessen and I met and he saw it and he loved it. One thing led to another and ultimately they decided to buy us. What was their aim to buy that? Marc really believed in the idea of all sorts of different kinds of media being connected together on the web in virtual reality and 3-D graphics. Marc’s very prescient and saw a lot of where things were going to ultimately go with the web. He saw this as a real opportunity. Interestingly enough, my team, we continued to do the 3-D work at Netscape, but ultimately we actually ended up working more on things like the dynamic HTML rendering engine and creating a way for HTML pages to act and function more like apps and create the foundation that became Web 2.0. That was amazing. Then I worked a lot to try to get publishers to adopt that and create new ways to present content on Netscape. On Netscape. Because you were trying to get people on the web. We couldn’t get publishers and others on the web for people to look at with the Netscape browser. Really, you created the television and we’re trying to create the shows, or help people build the shows, essentially. Exactly. Figure out how to monetize it and everything was wide open. Was Paper Software your first company? It was my first real company that I ... I had a company when I was in high school called M Cubed Software. We made video games. I called it M Cubed because it was me and two other Mikes. What was the name of the best video game that you made? A game called Night Mission that actually did pretty well. It was a game where you had a helicopter and you rescued hostages in the desert. It was modeled after the Iranian hostage crisis. It was a really cool, fun thing to do. Interestingly enough, I sold it to another company and we worked on it together. We actually released the source code for the game and we wrote a book about how to write video games with the source code, and it did really well. That was in high school. I was getting revenue from ... What made you do that? I didn’t realize you had a high school company. So nerdy. It is very nerdy. I was really into robots when I was in grammar school. I built robots inspired by “Star Wars” and R2D2. That quickly got me into computers. The whole idea that you could actually have a computer ... Were your parents technical? No. My parents ran a small ad agency. It was just the two of them. This was where? In Upstate New York. Why did you get into robots? You just liked “Star Wars”? Yeah. I wanted to be an astronaut. I absolutely was serious about becoming an astronaut. Then my dad one day bought me a computer and it changed my life. I see. That’s the old story, right? Yeah. Which computer was it? The Texas Instruments 99/4a computer. 16k of RAM. Why did it change your life? It changed my life because there was no real opportunity in Upstate New York, and in that time, that era, economically or whatever, for what I was going to do with my life. I had no sense of what I wanted to do. When I found two things, the computer and the ability to actually create things on a computer in code and do storytelling on a computer, which is how I thought of video games ... Then also one day I ran across an interview with Steve Jobs where he talked about how the computer was like a bicycle for the mind and how it would empower the human race. The combination of those two things, I was completely, at that point, hooked. Right. Because? Why did that speak to you? I think it had to do with helping people of any background achieve the dreams and things that they wanted to do to be able to say and publish and communicate at much broader levels than were possible before. The possibilities just were so wide open and there were just so many places to innovate and to experiment and learn. It was incredibly fortunate that that was the dawn of this whole Information Age. I was right in the beginning of it. Where did you go to college? I only took a couple of courses in college. I didn’t actually go ... One of those. I’d gotten accepted to go to the Air Force Academy through a Congressional ... On your way to being an astronaut. On your way to Mars. Right. Exactly. I was going to be an astronaut, so I applied to the Air Force Academy. To do that you have to get a Congressional nomination, which I managed to get. I couldn’t believe I had been able to do that. My father, though ... I was the oldest of six. My father had cancer and had been sick for many years and, ultimately, he passed away just as I was graduating high school. I couldn’t do it. I couldn’t leave. Also my dad said that the rigid military world wouldn’t be the right thing for me. Of course, when he was alive I wanted to do the opposite of what he was saying, but once he was gone, I really thought about. I thought, “To be an astronaut I’m going to have to drop bombs on people? It doesn’t seem right. There’s got to be a different path to space.” Ultimately, I decided to just pursue the dream of building a company and doing that in the emerging tech world. Did you come out to Silicon Valley then immediately? Or no? I got to Silicon Valley when Netscape acquired us. I see. You were working in New York then? I was. In Woodstock, New York. You stayed there when you were doing your company. Yup, we did. I stayed there and built Paper Software over the course of about six years, and then it was acquired by Netscape and I was at Netscape for about three. What did you think when you got here? I was just blown away. I was amazed. I only read about these people ... Marc was on the cover of Time. Marc Andreessen and Bill Campbell and John Doerr and Jim Clark. Silicon Valley action figures. Yeah. I felt like that garage band that manages to open up for The Rolling Stones one day. I couldn’t believe it. You worked at Netscape. Of course ran that right into a wall. You were there for those key years where they were ... It was the hottest company at the time. It was the hottest company until the day I got there, then started its long decline. I learned so many lessons there and I made a lot of mistakes at Netscape that echo to this day in me. Such as? I think the No. 1 mistake that I made when I was there was that I over-rotated in the competition. I woke up every day thinking about Microsoft and why there were trying to kill us and how to avoid that instead of waking up every day and thinking about the people that were using our product. That was a visceral realization. They were a little scary. They were there and threatening you at all times, correct? Yeah. It was fascinating. I participated in the Department of Justice action and actually helped write the brief to break up Microsoft. Ironically, they bought a company of yours. That’s right. Did you think that they were the cause of Netscape’s downfall? No. They were the accelerant. I think that the cause ... By the way, I don’t think Netscape had a downfall, just to be clear. I think Netscape was a breakthrough company who did amazing things. That led to other things for other people. It was acquired for $4 billion that went to $8 billion in total value. That’s a success story in that regard, but it could’ve been bigger. It could’ve done more. I think the key thing is that the way we handled the competition from Microsoft put us more on the defensive and we thought more about them than actually what we were trying to do for the customers and the future of the web. Even though if you would’ve told us that back then we would’ve said that’s not the case, but looking back on it in hindsight, I think that was. If you compare Netscape to Intuit, let’s say — Intuit, if you remember, Microsoft was going to acquire Intuit. Then the Federal Trade Commission ruled against the acquisition. Then Microsoft basically went to go compete with Intuit. They came out with Microsoft Money to compete with Quicken. I remember a full-page ad in the Wall Street Journal and it said, “Today we’re giving away Money.” Microsoft just gave away Microsoft Money. Same playbook that they used against Netscape. Intuit, instead of over-rotating on that competition, just focused on making Quicken better systematically every day. What happened was they thrived. I think that was just a visceral lesson for me and a lot of other people. Right. It was an unusual time. It was very scary to have Microsoft come at you the way they did. Also I think one of the things too is that we were a web company that converted ourselves into a software company which, from a pure revenue point of view, we were public. That was the business model that made sense. It was the clear business model. Had it just been a couple of years later when the ad business model, of which Mike Homer was a huge advocate of and was pushing hard on ... You remember he tried to shift into being Yahoo after making Yahoo successful. Because Yahoo was on the bottom of the Netscape search page. They were hosted in our data center for a while. Exactly. Then Yahoo helped Google and then ... Marc and I actually were advocates of acquiring Yahoo, but internally people didn’t really get that. “Why would you do that? We’re a software company.” Right. Interesting. “How do these guys make money?” Good thing you didn’t buy it now. Maybe at the time. Who knows. It’s so funny when you think about all the acquisitions that could have been. Yahoo looked at Google and AOL looked at Google. It was interesting during that time period. You then left Netscape to start Tellme. When Netscape was acquired by AOL I moved on and I started Tellme. That’s a voice information service, I guess. Right. People use to call it a voice portal back when portals were a thing. I used to call it Dial Tone 2.0 back when dial tone was a thing. The idea is you say what you want and you get it to your phone. Right. Echo, essentially. Basically. The idea is the internet and you access it with your voice. Right. Why did you go into that? What was the thinking behind that? A guy who I hired at Netscape, he was also the youngest employee at Netscape. Guy named Angus Davis. Brilliant. Just incredibly Type A person. He came to me one day and was like, “We got to figure out how to build a voice browser for the web,” and I dismissed the idea initially. He kept at it. Then when I left Netscape he came at that idea again. He’s like, “We should do this,” and I thought about it. I was like, “This is actually a really interesting idea.” There was a new standard called VoiceXML. It reminded me of my VRML days, the Virtual Reality Modeling Language. This was Voice Markup Language. The idea of connecting an audio web and allowing people to navigate that from a mobile device, from a phone, with their voice seemed like a no-brainer. Talking more to Angus about it we really got excited about the idea, so we started to develop it and hired some phenomenal people. We actually got John Giannandrea, who runs Google Search today, became our founding CTO. I got to know him at Netscape. Then a guy named Hadi Partovi, who was my arch enemy at Microsoft, my nemesis who was building Internet Explorer, he became our head of engineering. The four of us set out to build this company. It was another hot company. Big funding? Big funding, yeah. We raised a lot of money: $250 million in about an 18-month period. Right. Then? Then the internet crashed. The dot-com market crashed. Voice portal was too early. Voice portal was way too early. Both with virtual reality and with voice portals, we were ... I really believe in skating to where the puck is going to be, but at some point you have to stay in the same stadium. You can’t just wait forever for the puck to get there. When we get back, we’ll talk about what happened to Tellme and then get into what’s going on with Flipboard today. It’s also been an up and down ride and you’ve been trying to figure out how to ... A lot of people and the whole content business has been shifting rather dramatically. We will talk about that when we get back. [ad] I am here with Mike McCue, a longtime Silicon Valley entrepreneur. He’s had a lot of hot companies and he’s running Flipboard now, but he’s had a long career in Silicon Valley in places like Netscape, Tellme, and apparently a virtual reality company when he was a teenager. Mike, we were talking about Tellme. You were early to the voice game, which is now hot, which is now really with Amazon and Google and everything else. Talk about just missing times, because you were saying you would rather be in the same stadium as the puck, essentially. Do you feel that that’s hard to do as an entrepreneur when you have a big idea that is way too early? Yeah. I think you can run the risk of either being too far out there or too near. I think it was Benjamin Franklin that said there’s nothing more powerful than an idea whose time has come. That’s one of those things about building a company; you have to figure out the right timing, and sometimes you might get right, sometimes you might not. There’s a certain amount of luck that comes along with that. I think that for me as entrepreneur, it’s very gratifying to work on products and technologies that ultimately help shape things, whether it’s our company or something else that someone else does later on down the road. It’s all part of the collective advancement of the technology realm. Obviously, if you’re building a company, you want to try to find the right zone. That’s important. Right. Raised a lot of money, hot investors, it’s a big company, but then you sold. What happened there from your perspective? We sold six years after the internet crashed, the dot-com crash, so what happened there is we were very successful early on in raising money and getting out there, but building a company is a lot of hard work, as you know, and it takes time to build out your business model, win customers, try different economic models out, get to profitability, and that’s what we did. For six years after the dot-com crash we just focused on first principles and kept building something that was valuable to our customers and our users and would be cashflow positive and eventually profitable. You did deals with telcos and ... We did. We did deals with major telcos, major enterprise companies. Our voice platform became the way that a lot of 800 number calls were being answered. We had... Which was not your initial business. It was conceived of in the initial business. Interestingly, what we did is we built a voice platform, and then on top of that we built a consumer experience. Our thing was that later we would go and add in enterprises like FedEx and American Airlines and so on, and banks, etc., into that consumer portal all on this platform and we’d connect it all together. When the dot-com crash hit, the consumer portal that we built which was monetized through advertising was one business, and then we had another business where we had gotten a couple of these companies on our platform. They were paying us to host their phone presence. We looked at those two things and we were like, “This whole ad thing is not going to work right now.” We had to make the painful decision to put that ... We didn’t completely kill it. We just put it on ice and slowed it down and we put all of our energy into building out the platform for these companies that, at that time, economically, actually really needed what we had so that they wouldn’t have to go buy a bunch of hardware and software themselves to run voice services. We created an outsourced, in-the-cloud service for voice telephony and speech recognition, and it was really successful. Over many years of just hard work, won deal after deal, had an amazing team that I did this with, and sure enough at the time ... One day I had a meeting with Steve Ballmer and he was incredibly excited about what we were doing and the future. Bill Gates was always a big fan of speech recognition and voice user interface. Steve asked if I’d be interested in becoming part of Microsoft and we talked more about it and concluded yeah. Why were you interested in becoming a part of Microsoft? Also, particularly for me, where I wouldn’t imagine they would ever give me a badge. The idea of Microsoft scale and the opportunity for us to integrate what we were building into everything that they were doing was very attractive. At that time, Tellme didn’t have a lot of options for distribution. This was before the iPhone. There was no such thing as an App Store. At that time, to get your apps out there, they had to be signed off by carriers. Right. We had a consumer experience that we had just come out with where it was a lot like Siri and it was really great, but we had 3,000 people using it. I knew it was the future, but there was no ... That’s not very many customers for a $50 million [investment]. That’s right. It was not our main business. I saw that was where things were going and I figured that, at Microsoft, we could actually make that happen. Now it’s become Cortana, which is great. At that time, when I looked at how we would progress at Tellme with that industry makeup, and we had been at the company now for eight years building, it just felt to me like it was the right thing to do. Also, when I looked at how many more 800 numbers would we get on our platform and how much longer is that business really going to last ... I was looking at that, too. All of those things factored in to say maybe this is a good idea. Do you feel good as an entrepreneur when you sell like that? Because that wasn’t particularly a win, but it was a win. You got out, but it wasn’t your first plan. The thing is that I don’t go into this thinking about one outcome or another. One of the things that, as an entrepreneur, always bugs me a little bit is when people ask me, “Mike, what’s your exit strategy?” That’s actually a VC term. That’s like if you’re an investor and then you get your money out. As an entrepreneur you cannot think that way in my view, because you’re in it for the cause. You don’t just exit your dream. You don’t exit something that you believe in. You figure out ways to continue to build it. It’s a very different way of thinking. For me, if you’d asked me when I started Tellme, “Is it going to be public? Is it going to be sold?” Honestly, I don’t know. I think you have to be open-minded to whatever the right thing to do is at the time given where you are, otherwise I think you cut off options. I think, in fact, companies are more valuable when they have options. You want to always preserve as many options as you possible can. Including a sale. Exactly. That’s just good, solid thinking as an entrepreneur. I’ll tell you, though, you can’t be thinking about that as your main thing. What you have to do is focus ... When I’m coaching other CEOs, I really try to get them to realize that it’s about building something that is inherently and durably valuable, a real business that can actually be profitable with people who really do love your product, and you’re not just gaming the numbers and gaming the valuation and gaming for some kind of a exit. If that’s the way you think about it ... There are some people who do that and they ... A lot. I think that’s just ... It’s shallow existence. That’s not what technology in Silicon Valley’s about. This is about ... It does sound a little, now, stereotype-y, but it’s about fusing technology with the world’s problems and figuring out ways to advance society through technology. You stayed at Microsoft for a New York minute, essentially, you were there for a little bit. Two and a half years. Way more than a New York minute. You stayed there, but then ... I was super committed. Wanted to leave because you were done with that. Mostly just retire. I was pretty much fried at that point. Why did you start Flipboard? I started Flipboard because this idea of creating a platform where great stories could thrive, help journalism move more into the digital world in a way that was healthier for the whole ecosystem, was very attractive and very powerful as an idea and as a mission. I think in life you have to have a purpose. It took about a week or two of just not doing anything before I realized this is boring. Retirement is boring. I think that when you have a purpose ... A friend of mine who had cancer, he knew he was dying, and he once told me, “Mike, you’re in your heroic phase of life right now. You really need to do something meaningful. Don’t just retire.” I really felt like ... This is one of those things that just grabs you. I didn’t set out to start a company. This idea, which in many ways was rooted in some of the things that were left undone at Netscape, really grabbed me. It was, really. Then there were a lot of them all of a sudden, a lot of these readers and different takes on the content business. Talk just briefly, and then next time talk about where it’s going now ... What was the purpose then? Because it was a very different internet. There were readers. Google had one. There were so many of them. There were tons of these in this area. What has changed in that time period? Because initially it was literally just make a magazine, but you’ve been changing the product quite a bit and trying to get it as the content needs are changing. What our guiding light is is the concept of a magazine. It still is. It still is and still will be. If you want to know where we’re going in the future, go pick up a great magazine and look at it and compare where we are now with what is in that magazine. That is our roadmap and will be for a long time. A legendary guy named Clay Felker who started New York Magazine once called magazines tribal organizing documents. That’s funny. Think about that. That’s pretty cool. You look at Wired. Wired isn’t just a collection of text stories, it’s a collection of text stories with a perspective. With an organization. You’re not making a magazine. You’re making a digital magazine, but you’re not actually being a publisher or a writer. No. We’re not creating the content. What we’re doing is we’re curating it. We’re curating content. Not just us. Our community is curating it and our publishing partners are curating it, algorithms are curating it. It’s this wonderful mixture of curation where you get basically what amounts to being a deeply personal magazine about something that you uniquely are massively passionate about so that you can find stories in there that can inspire you and inform you, help you do what you love better. You don’t consider yourself an editorial company or a media company. Or are you? Because so many people like to avoid ... I just think it’s a bit of a false choice. That’s Facebook’s new thing, “We’re not a media company.” Or Twitter, which you were on the board of, “We’re not a media company,” when, in fact, that’s precisely what they are. Right. I think that if you’re in the business of selling advertising and working with content, then you’re in the media industry. Does that mean you’re a media company? It depends on what you mean by that. Of course also, similarly, if you’re building apps that you download that are built over years and with a platform in the back end and all this advanced technology, then you’re a technology company, too. The reality is it’s a blend. You can’t not be in this era, right? You can’t not be. You can’t be just in media or just a technology company if you’re in this space. It’s a hybrid. It’s something new. When you are thinking of when you started versus now, what is the big difference between what’s happened in that time period? I think that’s what we called a reader. People thought of it as a reader, but interestingly enough, if you go back and look at the first product that we came out with, the first release, we called it a social magazine, and we were very specific about that terminology. Now, some people like to put it into the terms that they know and understand; it’s a reader. Certainly it acted in many ways like a reader, but if you look just a little under the covers, every single story that you saw on Flipboard was a tweet. It came from Twitter. That’s not a reader. A reader, you would take RSS feeds and you’d mash them together and that would be what you would see. This was a very different thing. When you go back and look deeper, what you really see is that Flipboard was a browser for the social web. When I think about when we were in the early days before Flipboard was named or we knew what it was going to be really, I gathered a group of my friends from the Netscape/Microsoft days together in my living room and we did a thought experiment. We asked ourselves, “What if the internet, the web, just got deleted by accident and we needed to create a totally new one from scratch?” Just like if you accidentally deleted an email ... This is fun on a Saturday night in Silicon Valley. [laughs] It’s a fun thing to do on a weekend. Add a few beers into the mix, it gets really fun. The fascinating thing about this is, what would you do? Would you still have a browser, would you still monetize the same way knowing all the things we’ve learned, in a mobile social world? One of the big insights we have then is this idea of the web where it was a document pointing to another document on a network, which was amazing. Just that simple concept created more than $1 trillion in value. Just that concept is now way more sophisticated because what you have, the web, is now not just a collection of documents, it’s people and documents. It’s people pointing to other people, people pointing to other sites and effectively endorsing other content or endorsing other people. When you look at that web, that’s a very different web than the web browser that we all use today was designed for. It’s a much more sophisticated, much more powerful web, I would argue, the power of which we’ve only just begun to tap into. This idea, the social web, needs a social browser. That was the beginning of thinking about Flipboard. Not just as a reader of just go find some more RSS feeds, but more as how do we navigate this network of people and content so that you can harness the value of that? How can you find all the mountain bikers who love to mountain bike in Santa Cruz and see the stories that they’re sharing? That’s a very different way to think about browsing the web. As you started to do this, a ton of companies, including Google and others, competed. I know Google talked to you about buying you and you didn’t do that. They’ve all fallen by the wayside. AOL had one. Everybody had one. Facebook. Facebook had one. What was Facebook’s? I forgot. Paper. Paper. Right. Ironically. Ironically. Google’s was what? Currents. The AOL’s was ... I can’t remember. It was called ... That one I forget. Nonetheless, lots of them. Why hasn’t this caught on? You guys ... Because people have thought about it more as a reader. We’ve thought about it more from a social perspective. Apple News: It’s a reader. There’s no social elements in Apple News. It’s not driven by anyone that you know or anyone that you respect. It’s just a bunch of algorithms giving you a bunch of articles. You can get that anywhere. What we’re trying to do is come back to the tribal organizing document. Think about the tribe. Depending on which one you pick. The idea of ... I love landscape photography with mirrorless cameras. It’s just one of my things I love to do, with Leica cameras. There are other people who love that very same thing. I don’t know who they are. I have a couple of them who are my friends, but there are people in the world who love that and they’re talking about that, sharing content about that. We want Flipboard to be able to help find that tribe of people, share content together so that you can be better landscape photographers and learn more about mirrorless cameras and Leica and so on. If you think of that, you think about that for democracy, for gun control, or for wellness and fitness, or parenting, whatever. These passions, these things that drive people where they’re truly passionate, not just mildly interested, if we can collect those people and those stories together like a magazine did, then I think we have something really special. That’s not how anyone else has thought about this. Right. Absolutely. What’s happened, though, is that people are now just relying on what’s vomited up on Facebook. I say that very clearly, vomited up, because that’s what it feels like. It doesn’t feel like there is organization or anything else. We’re going to talk about where that goes and what that means because I think it doesn’t mean good things. I have a feeling it doesn’t. [ad] We’re talking to Mike McCue who is CEO of Flipboard and a longtime entrepreneur in Silicon Valley. We had a conversation the other day. You’ve just done another iteration of Flipboard, and what’s the big difference? It’s not a pivot. It’s what? We’re introducing a very powerful new capability we call smart magazines. What that does is it allows you to ... For a given passion, like photography, you can pick the specific elements that you love about photography ... Even more drilling down. Very deep personalization. Like a Leica camera or you like ... Landscape photography. Really, it’s not all photography. Right. Tech is another great thing. Before 4.0, we would give everybody the same “tech” feed. All editorially driven, interestingly enough. If you’re in enterprise software or you’re in e-commerce or you’re in drones, you’re going to have a different perspective on tech. If you’re an entrepreneur versus a designer versus a product manager versus a marketer. You’re going to have a different perspective on tech. We want you to be able to personalize your own technology magazine and have it become the definitive resource for you as a participant in the tech industry. Interesting. You want to drill down, you want to make it more specific. I guess smarter ... More smart, more personalized. Also interestingly, it’s a mix of editorial and algorithms that has never been done before. You guys are picking and making choices. We’re picking stories and sources and so on. You are going against everything that’s happening because now that isn’t happening. I used the term “vomit” very particularly because that’s what it feels like. You used a term, I think, “slot machine for content,” which I love. That’s right. Explain that. Right now, that’s what it feels like, right? When you go to a newsfeed-type experience ... Like a Facebook feed, Twitter. You have no idea what you’re going to get. You’re going to get whatever your friends are sharing at that moment. That can be really great. It can also be not great. It’s totally random. That’s what I mean by “a slot machine for content.” It’s not about any one topic. It’s just whatever is going on at the moment, whatever your friends decide to share. Or it’s fueled by crazy news. That’s one of the big problems. Trump in Nordstrom today. Aghh! If you rely on getting your news from your friends, or if you rely on getting your news through just a bunch of algorithms, that’s a very challenging, semi-dangerous way to get your news. Tell me why it’s dangerous. Because I agree, but it’s what’s happening. Facebook is 50 percent of the news distribution? They’ve become a very powerful player in this. They have. Denials to the opposite. They really are a media distributor. They’re a force. It is how a lot of content gets distributed. You’re doing the exact opposite. We are. What we’re trying to do is create an experience where, first of all, you go there for the topic, not for the people. You go there because ... Or a passion. Or a passion. Right. You go there to go specifically to dive into politics or economics or gun control, immigration. First of all, that’s a massive difference. When you have a user experience and a platform that’s optimized for friends versus one that’s optimized for interests and topics and passions, everything is different. That’s one big thing. The second thing is that we really believe that stories are more than just a bunch of ones and zeros packaged together. The technology industry can sometimes over-rotate on the technology aspect and say, “This is a great story because most people are clicking on it.” There’s no algorithm for true or false, for fact or fiction. There’s no algorithm for insightful or important or meaningful. What a lot of the algorithms that are out there tend to focus on is engagement, and for a very specific economic reason. Sure. That’s there business: Engagement. It’s also the easiest thing to measure. Why is that dangerous? Because it’s what it is. It’s dangerous because you’re allowing computers to basically then propagate content that is extremist. Because extremist content is going to get the most clicks and extremist content’s going to create the most emotion and passion which is going to cause the most shares and the most engagement. It all feeds on itself. Then, if you are in the world of creating stories, over time, one of the things that I think is very challenging is that you have a combination of factors that are creating incentives for writing extremist content and link bait. You also have people that are playing into that in very strategic ways knowing that they’re writing propaganda and they’re utilizing these algorithms to spread that propaganda. Therefore, the 2016 election. There it was, right? That’s right. It may well be that those 60,000 votes that made a difference in the Electoral College were swayed by fake news. Which Facebook vehemently denies. What do you think? I think it absolutely had an impact on the electorate. Absolutely. Now, how do you quantify that, how do you prove that? It’s common sense. Just look at the tonality and the extremism. And the sharing. And the sharing. How many people still believe that Barack Obama was born outside the U.S.? Significant percentage of people. How many people don’t even know the difference between Obamacare and the Affordable Care Act? They think they’re different things. They don’t realize they’re the same thing. An educated electorate is in all of our best interests. A highly charged electorate that’s focused on extremist propaganda for the left or the right, you’re going to get what we get now. What do you do? Because they seem to be picking Facebook over you or anybody who’s doing something intelligent? I know they’re trying these various things and, as usual with Facebook, it’s the slow walk to the inevitable. You know what I mean? They’re realizing you need editors. They know it. It’s just it’s the slow walk they like to do. It takes them forever to get to the point. By the way, I think it’s not just Facebook. It’s anyone deeply rooted in the world of technology tends to rely on tech. So what do they do? They always say about false positives and it’s so difficult, and it seems like it may not be quite as complex as all that. Right. Again, the big challenge for Facebook is, if they want to be a news platform, you have to build something totally different. The idea of Facebook is very powerful, connecting people together and friends and family. That’s a mission, though, I think is very powerful and could do a lot of good in the world. To also try to be a platform for news and for informing people is a completely different business, architecture and user experience. To try to glom that on ... If Flipboard were to try to get friends to connect, just wouldn’t work. It’s just not the same kind of thing. I think that that’s one of the things that Silicon Valley companies sometimes can lose track of is who they are. This is one of the things I think ... Netscape, we were an internet company that converted ourselves to a software company. I think that this is why you see ... It’s not that they’re moving slowly for any nefarious reason. It’s more just like that’s what technology companies do. They rely on technology and they’ve built something with a certain center of gravity. To do anything that’s counter to that center of gravity is just going to take a lot of time. What can they do? I’m using them because they’re the biggest example of this. I think that they are onto some of the right things that they’re doing. It’s not a problem that can’t be solved, there’s some very straightforward things that can be done. I think that if I were to counsel them, I would say, “You really need to have those feeds be driven by editors and not algorithms.” That idea of a trending news feed ... We learned very early on in Flipboard ... I remember seeing a story driven by algorithms, when everything was powered by Twitter on Flipboard, about somebody microwaving a pet and I thought, “This is not the kind of news that people come to Flipboard to see.” The experience. Right. There’s things happening in Syria and in our government and so on that this is why people want to come to read Flipboard. I’ll tell you, too. One of the things that I think people sometimes think is that people only want to see link bait, they only want to go see these news feeds. That’s just not true. There are a lot of people, millennials included, who absolutely want to dive deep and learn about what’s happening in the world and they are thirsting for a place to do that where they can trust it. Absolutely. I think the problem is this stuff is so infectious, and I use that in the gross way, and hard to look away from. It’s combined with techniques that engineers back at Google or Facebook are doing to try to get me to look at it more. It’s almost like a big old cupcake. You have to eat it. It is. You have the engineers working to get you to see that content more and you have the people that are writing that content that are specialists at infusing passionate emotion in people. You got to look at it. It’s sitting there. It’s like a cupcake; I gotta eat it. Then you become addicted to it and ... It’s a really interesting problem. Sometimes I think of news feeds as the mystery meat of your information diet. It may be great initially, but then ... [laughs] That’s a great Slot machine, mystery meat. It’s not like when you finish reading your Facebook feed after a half hour you’re like, “That was a great use of time.” Yeah, you said that the other day. You feel sick. It’s like if you ate potato chips all day long. You have to have a balanced information diet. There’s nothing wrong with looking at Facebook. If that’s all you do then you’re just going to be a product of that. Same thing with Twitter. You were on the board of Twitter. You had to come off because there were obvious conflicts of interest with what Flipboard was doing and what they were doing. Did they have a news reader? Not really. Moments was kind of an effort. What happens to [Twitter]? Because they’ve truly become a cesspool of problems. They’re trying hard. Yesterday they tried to announce some anti-trolling stuff, but they’ve got Trump on there doing crazy stuff. They’ve never been more relevant, and then they’re challenged from a business point of view at the same time. One of the biggest problems is, the nature of the experience feels bad. It can feel bad. What do you imagine something like that ... What do they do? I think, first of all, Twitter is ... I just have a fondness for because they are one of the very few ... It’s actually, I think, the only platform where you can actually @ message the president of the United States. That’s amazing. Maybe he’ll even reply. Calling you a loser or something. If you think about it, how do you get a message to the president of the United States before Twitter? Or to the president of Iran? That’s amazing. Now, when you have a platform like that that’s that open, then obviously it can be abused. This is one of those very significant product challenges that you have to really work through and think about. I think Jack made some very good steps forward yesterday. That has to be a very continuous ongoing drumbeat of improvements to move Twitter out of the realm of the trolls and back into the realm of civilized conversation. Can it be done? It can be. Absolutely. At Twitter? At Twitter, for sure. I think it takes a lot of focus. Part of it is that you need to think about what your first principles are for your platform. If you let anyone say anything at any time without any sort of moderation, which you could call free speech, you could also call toxic. There has to be some mechanism. Just as you can’t yell “fire” in a crowded movie theater, the classic free speech test, there needs to be similar analogies in the world of social media when it’s all about technology. Why aren’t there? Because you believe in curation, Flipboard believes in curation. It’s very different, high-minded compared to everyone else, and every time I go to some of these companies they’re like, “People should be able to do what they want.” They’re very libertarian. I feel like the game is fixed. They’ve got their engineers making you do stuff, they create stuff that’s impossible to resist, they have a business model all around engagement. There’s a dark corner around porn in a lot of these companies and it drives a lot of engagement. Exactly. It’s fixed, and so it’s not fair and people can’t do what they want. You’re making them. It’s like the soda companies and the potato chip companies; they’re making something ... It’s the same thing as a cigarette company in a lot of ways. There is some responsibility. Why don’t they take responsibility? It drives me crazy, as you know. I’m not close enough to these guys to know whether they’re taking responsibility or not. I think a lot of it has to do with just a mentality that technology can solve the problem, technology alone. I think it’s just something that people are starting to realize: “Wait a minute, maybe this is why editors are a good thing. Maybe we have to apply some judgment.” When you start to do that, you start to then think about there are ways to create bionic editors, there are ways to scale curation, to scale human judgment. Bionic editors? What does that mean? For example, you can give an editor a task to say, “I want you to find these great stories,” and they could go look at every single story one by one, or they could use an algorithm to find the initial collection of stories. I thought you were going to give me an arm or something. More like an empowered ... Editors are using technology to do their job faster and better. You can design tools for them to do that, which is actually something we have at Flipboard is a whole set of tools and analytics that allows our curators to find hotspots and problems, as well as really great things that people should discover, and then they apply their own judgment on that. The idea of that is something they don’t want to do. They got rid of editors at Facebook and the right wing went crazy. That’s the problem. They’re so partisan now they can’t just take a stand and say, “We’re going to do what we want to do.” That’s a very good point, Kara. In this day and age in particular I think it’s very important for technology leaders and products to take a stand. Not against right or left, but against truth and fiction. That’s a problem when you’ve got a White House that talks about alternative facts. That’s right. You’re going to lose some readers or some users when you take that stand. You have to be willing to do that, otherwise you will just be driven by all these negative, toxic dynamics. If you take a stand and say, “We’re going to build a business based on, let’s say, fewer uses ... We’re willing to have some portion of our users not actually use the product,” then you actually make a better business, frankly, because you have ... I agree. I’ve been saying that. I’m like, “Facebook’s become toxic a little bit more and it shouldn’t be.” Look what’s happened to Twitter. They didn’t fix it early enough. If you were running it you’d bring in these bionic editors and things like that to try to improve that. Yeah. I think it is absolutely ... Again, Jack, I think, is making some good steps forward there. I absolutely think this is a solvable problem. By the way, the other thing too, Kara, I think is it’s really important for companies to cooperate on this stuff. There is actually a lot of cooperation already today on things like child pornography. They can do it on certain things. On spam. There is a lot of technology that be brought to bear on this problem. I know. I think if companies collaborate more here on techniques to deal with trolls and hate speech and so on ... You should get banned from Twitter, you should get banned from all sorts of things. If you go off the rails and threaten somebody, that should be something that you just can’t delete an account and go do some other social service or come back again. There should be a longer lasting impact to you. I also think anonymity has a lot to do with this. Anonymity can sometimes be a good thing for people who can’t speak truth to power without repercussions. On the other hand, it can be extremely damaging. It brings out the worst in people. I think that that’s ... There’s a place for anonymity, but you can’t treat everybody on the platform the same. If they’re anonymous, they should be able to have a certain amount of impact but not so much impact as someone who is a verified user who clearly is somebody who has a reputation. You may not agree with their points of view, but they’re not threatening people, either. Right. Interesting. We’re going to finish up. How much money did you raise for Flipboard? $210 [million]. That’s another big amount of money. What are you going to do? Where is it going? It’s all about building runway. You’ve had different executives in and out. You’re just going to continue with this mission. We’re just going to continue building what we’re building. I’m trying to recreate that idea of the magazine for a modern mobile social world, a place you can go to read about something you love, and all you see story after story is about that thing that you love. Every ad is about that thing that you love. Are you profitable? We were profitable in Q4. Q4 is always the best quarter of the year. We had our first profitable quarter ever. We’ll get there. We’ll get a full year of profitability I hope next year. Being sensible. That’s really hard. You can make more money being toxic. Very last question I ask everybody: what’s the one mistake you made as an entrepreneur if you could give a tip to an entrepreneur? It doesn’t have to be a mistake. What’s one thing ... I think for me the ... I mentioned this earlier. One of the biggest lessons I learned ... There’s a couple of lessons I learned. One is, don’t over-rotate on your competition. Two is, don’t think about the endgame while you’re in it. Play the game. Don’t constantly think about the endgame. Third I would say is treat your team with respect and treat your users with respect and good things will happen. I’ve seen too many entrepreneurs try to act like they think Steve Jobs was, which there were some things that he did. On the other hand, he was also a remarkably good leader in many ways. I think people can be ... If you’re respectful to both your users and to your team members and you build something that has real value, you can get a lot done here in the technology renaissance that we’re living in. You can do amazing things. If you try to take shortcuts, if you treat your people with a lack of respect, if you treat your users with a lack of respect, then you can also get into a lot of trouble. Although you can do that and be successful, too. There are people who can be successful. I think that’s one of the things ... You try to coach people like, “They just hit the lottery. They were lucky that they were successful.” I think that those are probably the biggest lessons. I guess one last one I would say is building a company is hard work. It’s going to be like raising a child. It is one of these things that has a lot of ups and downs, and so, if you’re going to do it, do it for something you love and do it for something big. Because it’s actually just as hard, in fact maybe in some ways it’s even harder to build a small company, a small idea than it is a big company with a big idea that’s going to change the world. It’s actually ... One of the things that I try to help people understand if they’re interested in becoming an entrepreneur is: Think big. Do some big things. That’s where the great team members want to go, that’s where the big investors want to invest it. Don’t think small, think smaller. Right. That is an excellent piece of advice. 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