Lead by Change New York One

In this episode Jeff visits New York and meets with Jon Stein CEO and Founder of Betterment, Amy O’Leary Editorial Director of Upworthy, and Raul Gutierrez of Tinybop.

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Jeff Martin: I’m Jeff Martin. This is Lead by Change New York One.
In this episode, we talked with Jon, CEO and Founder of Betterment. We speak with Raul, CEO and Founder of Tinybop, and Amy, the Editorial Director of Upworthy.
Interview with Jon Stein, CEO and Founder of Betterment

Jeff Martin: I’m on my way to Gramercy in Manhattan to go meet with Jon Stein, CEO and Founder of Betterment. We’re going to take a look at his offices and head over to Bo’s and have a conversation about being in TechCrunch Disrupt and also the milestones of running Betterment.
How is it going?

Jon Stein: Nice to see you!

Jeff Martin: Can you show me around a little bit?

Jon Stein: Yeah, sure. Let’s take a tour.

Jeff Martin: I’d like to start with kind of go on the way back. Where did you grow up?

Jon Stein: I grew up in Dallas, Texas. I grew up there all 18 years. My parents were both city planners there in Dallas, and I think I inherited from them many good things including a love of maps because they always had like a great wall maps spreads out on the coffee table.
Jeff Martin: You were there for 18 years, so pretty much your whole kind of upbringing.

Jon Stein: My whole childhood, yeah, I was there. Yeah.

Jeff Martin: Were you involved in technology early on?

Jon Stein: Not at all, you know. I don’t think I even knew what technology was and it was all going on, right?

Jeff Martin: Yeah, yeah.

Jon Stein: But it wasn’t like a big deal in my life. When I graduated from college in 2001, I had some friends who had been in the tech sector, but they were all losing their jobs.
Jeff Martin: Within that time like growing up, what was your early conception of like money and money management?

Jon Stein: You know growing up I had an interest in stocks I think in part because every year around Christmas, my grandparents would say, “Oh, you know, we should get John some Disney stock or something like that.”
I would say, “What about that like, you know?” And I would never get it, right?

Jeff Martin: Yeah, yeah.

Jon Stein: That would be like a nice thing to get and actually I remember looking at like the papers. I’m tracking the value of stocks, and I thought, “My goodness! This is a complex thing like who actually reads all this? Who looks at all of this?”

Jeff Martin: Yeah. And you understood the fact that it was like stocks were being traded and that there were companies in there, something –

Jon Stein: At some level.

Jeff Martin: That was interesting to you?

Jon Stein: Yeah but it wasn’t really until I got to college, and I took economics that I got a real sort of framework for understanding how markets work and how economies work, and the macro level of finance came from that.

Jeff Martin: Where did you go to school?

Jon Stein: I went to Harvard for undergrad, and in my freshman year there, I took two classes that really shaped my worldview. One was intro to economics with Marty Feldstein. He was one of Reagan’s economic advisors, very efficient, markets driven, and believed in rational decisions, and if we would just all make better decisions, the world would be a better place. Then, I took human behavioral biology from Irven DeVore, who was this like liberal from southern Louisiana who grew up drinking Pearl Beer and got struck by lightning in Africa and just like traveled the world doing interesting stuff and talked about how despite our best intentions and what we would see as like the right decision, we often trip ourselves up and get in our own way, and making good decisions is hard.
I always thought that those two worldviews were really interesting. They hit me at a formative time. I think I’ve spent a lot of my life and career trying to reconcile those two things. On the one hand, we should just make better decisions and we’ll be better off if we do, and on the other hand that’s really hard to do.
Jeff Martin: If you look back in college for you, what was the most impactful thing that you learned that helped Betterment today?

Jon Stein: I think what I learned most in college was the value of good decisions versus the difficulty of making that. We deepen that and have a good understanding of financial theory. When I got out of college, I don’t know that it helped me out all that much because I started investing my graduation money myself. I made some of the same mistakes that I read about in the economics classes like I bought Enron on the way down, which is like that kind of like a classically bad, bad decision. I made some good investments, too, and I netted out kind of like in neutral, but I realized I was spending a lot of time on it on. There were probably more productive things that I could be doing with that time, furthering my own career for instance or just spending that time with friends. It would be better than spending all that time kind of fruitlessly.

Jeff Martin: It takes a lot of time?

Jon Stein: It takes a lot of time.

Jeff Martin: Where did the concept of Betterment come about?

Jon Stein: It grew in part from that experience, right?

Jeff Martin: Yeah.

Jon Stein: From my own investing experience and having opened multiple different brokerage accounts and finding that none of them really steered me toward the right answer. They all steered me toward the right answer for them. It wasn’t the right answer for me, and at the same time, I was working for banks as a consultant, my first significant job out of school. I was learning all kinds of stuff. I was having a great time. I was living in New York and traveling around and working on product development and risk management, investment portfolio, policy. I earned my CFA just learning all this great stuff.

Jeff Martin: Yeah. Financial innovation.

Jon Stein: Financial stuff like but I found that most of our products that we were developing didn’t really take into account what the customers wanted. We would go on a six-month product development cycle and we’d never talk to the customers, and now that seems crazy. We would never do that.

Jeff Martin: Yeah, never.

Jon Stein: And I realized there’s got to be a way to build products that put customers first, that aligned with the customers’ interests. You can still make money but you’ve got to think about what the customer wants from this thing. I don’t feel like that’s the place that most financial services are these days, right? We’re trying to build up a financial service that you can love, one that makes you happy, one that is really aligned with you.

Jeff Martin: Understand the why of the people, right?

Jon Stein: Right.

Jeff Martin: Understand what they want and why they want it.

Jon Stein: Exactly, yeah.

Jeff Martin: How old was Betterment before you did TechCrunch Disrupt?

Jon Stein: When we launched at TechCrunch Disrupt in May of 2010, we’ve already been working on the service for 2-1/2 years before that, 2-1/2 years of regulatory approvals, 2-1/2 years of tech bill. There was a significant investment. We were bootstrapping that whole time, you know.

Jeff Martin: Wow!

Jon Stein: We were really just on fumes, and it was a great way to launch. We’ve seen other companies like Mint.com launch at TechCrunch, and it’s worked for them, and this is a good forum for us, and it was. It was a great way to get out in front of a lot of people.

Jeff Martin: Yeah. What about New York do you like, like as far as the tech scene and technology here versus maybe doing it somewhere else?

Jon Stein: New York is an amazing place to live. I mean I’m biased because I’ve lived here for 13 years now and –

Jeff Martin: Well, you’re not from here so?

Jon Stein: Yeah, right.

Jeff Martin: Right?

Jon Stein: But it’s a place where young people want to come from all over the country, so we have our team is people from the West Coast. There’s people from the Midwest. There’s people from the South. Maybe only about 10 percent of the team is native New Yorkers.

Jeff Martin: Really?

Jon Stein: People come from all over-

Jeff Martin: Interesting.

Jon Stein: To come to New York, and it’s because it’s one of the greatest places to live in the world. It’s like such an exciting city. There’s so many different people, in the industry, there’s events and interesting places to live and go out and go to parks. It’s just like I’m so excited. I have a daughter now. I’m so excited that she gets to grow up here because there’s no place in the world where there’s more going on.

Jeff Martin: Looking at milestones and kind of looking into the future, what kind of milestones do you have for yourself now and where do you the organization going?

Jon Stein: Ultimately, we want to make tens of millions of Americans happier, right?

Jeff Martin: Uh-huh.

Jon Stein: Like we want to build technology that makes them happy, and we’re doing that through the lens of financial services and efficiency, and how we get them to better outcomes. I think the major milestone for us is when do we have 10 million customers on the platform. That’s going to be a big day. That’s still probably a few years out. We’re over 100,000 customers now and we’re growing very quickly, but we’ll get there.

Jeff Martin: As you scale when the company moves forward, what challenges do you see on the horizon?

Jon Stein: I think the toughest challenges for us are execution, right? We have market-leading position, we have a great team, we have the best technology, we have like real differentiation between us and everybody else in that robo-advisor space like we’re head and shoulders above. If we execute well, we’re going to do amazing things like we’re going to naturally come to occupy a large share of the market. We’re going to help millions of people. If we get distracted and we start to try to do too many different things, we will stumble, and I think that’s the thing that scares me the most.

Jeff Martin: Focusing on the right things?

Jon Stein: Focusing on the right things.

Jeff Martin: Yeah. It’s hard to know sometimes what are the right things.

Jon Stein: Sometimes you don’t know until you don’t know.

Jeff Martin: Yes. I’d like to know straight from you like why should people invest this way versus the old traditional ways of investing?

Jon Stein: I mean it’s kind of a no-brainer, right? Like it’s just obviously better than anything else you could do with your money, so the way that we used to invest makes no sense like the idea that you should go and pick stocks or funds and then tax manage them and rebalance them like why would you do that. It’s like yes, those are the right things to do, but to do those things yourself is like maintaining your own car. Maybe it’s a fun hobby. Maybe it’s something you want to do on the weekends, but it should not be something that most of us have to do, and we’re moving very quickly towards a world where people don’t have to do that anymore. It’s like if you could perform surgery on yourself, would you want to do that? Maybe like you’d probably do that.

Jeff Martin: Probably not.

Jon Stein: But you probably shouldn’t be doing that and that’s what we’re doing with our old-fashioned investing system like this idea of self-direct investing, it was kind of forced on people over the last 40 years. It’s not just the right thing like we’re in the early days of thinking about how do we plan for long-term retirement and how do we plan for – when we’re only working for a portion of our lives, we need to set up a system to take care of people for the reminder of their lives that they’re not working. We’re still just figuring that out because this is only a situation that’s existed for a few decades, right?

Jeff Martin: Absolutely.

Jon Stein: And it’s a brand-new thing to us as a species. It’s not something that we’ve like adapted to and we’re building the way that that should happen over the next 100 years.
Jeff Martin: What was some of the best advice that you received that’s really helped you and helped Betterment?

Jon Stein: When I think about like advice and when I think about things that are often in my mind, I often think of something that my grandfather and then my mother have said to me again and again, which is like, “To those whom much is given, much is expected,” right? I feel like when you’re in a good spot, you got to do really good things sort of pay that forward and I feel like – I think about that a lot. I think that has something to do with like how I think about happiness that as long as you’re pursuing something that you feel is good and valuable to the world, you’re not pursuing your own happiness but you sort of tend to find it along the way. It’s worked for me so far, so that’s great.

Jeff Martin: Well, thanks for your time. I appreciate it.

Jon Stein: Thank you very much for having me.

Jeff Martin: I don’t know how you would not find talent in New York. There’s so many people here. I thought it really fascinating talking to Jon when he is talking about how so many of these people are from the East Coast, the West Coast, and Midwest, and there’s only a small group of them that are like New Yorkers themselves. Most of them are transplants. I thought that was really fascinating.
Interview with Amy O’Leary, Editorial Director of Upworthy

Jeff Martin: I’m on my way to meet with Amy O’Leary of Upworthy. We’re meeting at the Grind Coworking Space on the West Side.
I’m really excited to talk to Amy. She’s really doing something unique where she’s blended technology and storytelling. Early in Amy’s career, she was working with a software company, early days of mobile technology, studying at Salt Institute, working with Ira Glass, New York Times, and now she’s bringing it altogether to tell stories at Upworthy that combine tech and storytelling.

Thank you for meeting with me today. There’s been a lot of questions I’ve have for a long time, and I’ve gone to you for a lot of questions throughout the years because I think you’re the master of story. I want to talk to you today because our audience are a lot of tech leaders, tech professionals, tech executives, and also CEOs of tech firms. And so, I want to sit down with you and learn a little bit more about storytelling.

Going back where we actually first met, I think it was about 15 years ago.

Amy O’Leary: Uh-huh.

Jeff Martin: A little startup called Gearworks where you were doing kind of mobile technology, how did you see your role at the time?

Amy O’Leary: I mean like any startup, we all had a million jobs, we wore a million hats, but I think you’re right. I think in the different roles I had at that startup over its 4-year trajectory that I was at the company, my job was really I was the one communicator at the company, in a company full of product people and engineers. And so my job was to go around and really listen to everyone and ask them questions about what they were building, ask them questions about their interactions with our customers. Ask our CEO and CTO questions about their interactions with investors. Then my job was really to synthesize all of that into easy to tell, easy to understand stories that will communicate what this company was doing, which was a crazy thing. We were building mobile technology at the turn of the millennium, which almost no one was doing. You really had to put some craft and effort in how you talk about the stories in such a newly emerging market.

Jeff Martin: So you transitioned out of tech-

Amy O’Leary: Yes.

Jeff Martin: From Gearworks, you went to Salt Institute. You said documentary. Is that right, radio documentary?

Amy O’Leary: Yeah. My ambition had always been to be in journalism in some form and what I love working at a startup, I kind of knew that my real skill set was probably closer to storytelling than journalism. I made the decision to go, do graduate program because my real dream was to work at This American Life, and so I did a program that taught me how to do interviews and how to find stories and how to be responsible about them, which is what you were in a documentary program. That’s really served me than through the rest of my career.

Jeff Martin: Yeah. If I remember actually back at that time when you were trying to get interned at This American Life, I believe you told me that you listened to their stories, and you figured out the formula –

Amy O’Leary: Sure.

Jeff Martin: And used that to apply to the role, which you ended up working there as an intern. Is that correct?

Amy O’Leary: Yeah. I’m a big believer that a lot of things that people think are talent are really skills that you can build and storytelling is no different, so if you look at someone like, “Man! They’re telling an amazing story! How can I ever learn to do that?” I’m a big believer that you can analyze stories, break them down, and then what was really wonderful about This American Life is they’re very good at taking lots of different stories and placing them into a simple but highly effective structure that makes almost anything you say utterly compelling.

Jeff Martin: From This American Life, you went to New York Times.

Amy O’Leary: So I was hired at the New York Times actually in 2007 as their first ever audio producer. Now that was this little window in time where everybody thought the future of journalism was going to be this really awkward thing called an audio slide show. But I was really good I got in the door there because I actually had seven different jobs in 7 years.

Jeff Martin: Wow.

Amy O’Leary: I was everything from a traditional reporter to a news editor. I worked a lot on digital change because it was clear to me with my background in having worked at a tech startup, being one of the few journalists at the New York Times who knew how to talk to engineers. Now there were some pretty significant things that we were falling behind on. I cared very deeply, I still do, about the institution of New York Times. I think it’s really important for society. I wanted to do what I could to help the paper make its transition towards a fully digital era.
Jeff Martin: From the New York Times, you now have moved on to Upworthy.

Amy O’Leary: Uh-huh.

Jeff Martin: And it seems like such a great place for you to be – you’re such a great person for Upworthy, melding the technology that you understand the technology world, the storytelling world, and bringing that altogether. What makes Upworthy different than the other digital online media companies?

Amy O’Leary: Yeah, Upworthy is really unusual. When I first talking to them, I wasn’t actually planning to leave the New York Times. I was expecting to have a long and thriving career there, but something really got me about Upworthy, which is that – and you would know this just by looking at our website. Upworthy is the most data-driven storytelling company you can possibly find. Under the hood, we collect more data about how our stories work, if they’re effective, if they work on changing people’s minds, attitudes, and perceptions. And so it’s kind of –

Jeff Martin: How do you collect that data?

Amy O’Leary: Well, we do a couple of things. I mean we certainly watch every possible signal indicator from our online readership. I have a weekly meeting as kind of the lead editor at Upworthy where we look at up to eight different data factors for every single story we published that week and we analyzed what happened with it. But we also have a social psychologist Ph.D. on staff and we run surveys, so we might tell a certain story and then ask people what their attitudes were about something before and after they saw the story so we can actually see if the story has changed people’s minds or opinions because we’re really interested in not just telling great stories but being effective with it. I think that if you look at most traditional journalism organizations, they would tell true and accurate stories, which is an important and noble mission. Upworthy is interested in something bigger. We have a mission, which is to tell stories for a better world. We ask ourselves with every story, if a million people saw this would the world be a better place? We don’t publish as many stories as most other places, but the stories we do publish are finely crafted from story selection to creation to editing to be as powerful, impactful, and to reach as many people as possible. I don’t know anywhere else where storytelling and data are merged in a single pursuit.

Jeff Martin: From the perspective of tech leaders, CEOs [unintelligible 0:21:25] of emerging tech companies-

Amy O’Leary: Uh-huh.

Jeff Martin: These people need to tell stories, right?

Amy O’Leary: Yeah.

Jeff Martin: They may be telling different stories but they all need to tell stories. What is the one thing that most of those people get wrong when telling a story?

Amy O’Leary: I think it’s a great question because I get really impatient with bad storytelling. I see it from technology and business all the time, and the main problem is that I think most leaders, they know what their marketing materials say, they know what their company’s messaging is, they kind of stick to that script. Unfortunately most marketing is meant to be completely positive, completely what I would say anodyne, stripped of any –

Jeff Martin: Vanilla.

Amy O’Leary: Yeah, vanilla like who’s interested in that like we all have seen enough stories and enough marketing messages to know like boring, turn it off, that’s not authentic. To break through, what you need to do is you need to find a real story of a real person, so whether if you’re recruiting a star you want to bring into your team, you need to tell them about somebody else at your company. “We have this guy named Gerry, and he came in one day,” and tell them the story of Gerry and how he thrived at your company. If you are talking to customers or consumers, you need to tell them the story of another customer, another consumer, and you got to add those little details that actually have nothing to do with your product.
A good example is if I’m talking about a little kid. I’m talking about this little kid named Billy. I could talk about Billy just as the kid is going to use this new app, or I could tell you that Billy has got alligator tennis shoes. He calls his dogs stuffy head, and he hates green peas. Now you care a little bit more about Billy because you can imagine he’s a fully rounded character. Including details and including people not just including marketing messages is a big part of how you break through to use the human brain’s natural information structure, which is hardwired for stories to kind of use that system to get your message across. You tell the story and the moral is your marketing message rather than making your whole bit the marketing message.

Jeff Martin: How does an executive find a story like –

Amy O’Leary: Well-

Jeff Martin: Like you know they’re doing their job.

Amy O’Leary: Yeah, sure.

Jeff Martin: They’re making sure the servers are running and that the Salesforce.com implementation is going well.

Amy O’Leary: Right.

Jeff Martin: You know where do they go to find their stories?

Amy O’Leary: I mean there’s two ways. One, great stories should be running across any executive’s desk. If you want to know how things are going, you know from your salespeople in the field, they should be telling you how things are going. Part of that is just having radar and alertness to the stories that exist within your company already, and know which ones to grab and hang on to for a presentation or for an interview.
But the other really is listening. I would encourage you know if a busy executive doesn’t have time to do that listening, which they seem generally don’t, it’s a great thing to send somebody out to do, to go on listening toward, to take notes, to record interviews with people inside and outside your company and to sift those back. I mean I’ve done consulting for companies where I’ve gone and interviewed employees and customers, and then edited those stories down to be like beautifully told versions of what’s happening within their company. There are a lot of ways to do it but it really does start with listening. They’re not going to land on your desk neatly wrapped up in a bow. You got to go out and look for them.
Jeff Martin: Excellent. So the art of storytelling, the pattern is, what is it again?

Amy O’Leary: You want to have a sequence of events, and then an idea about what that means or moral of the story. Really the big secret here is if you can take any story and make it vastly more interesting by putting a little bit of thought behind how you’re presenting it to your audience and what that moral is.

Jeff Martin: So today, what is the moral of the story?

Amy O’Leary: I think today’s moral is the storytelling is one of the most hugely powerful tools we have to communicate with each other. We can change people’s minds. We can explain who we are. We can connect with people, and we’re much more effective when we do that through a traditional story than when we do it through just saying, “Hi! My name is Amy, and I’m the editorial director at Upworthy.”

Jeff Martin: Excellent. Thank you so much for sharing your time. I really appreciate it.

Amy O’Leary: My pleasure, Jeff. Always great to speak with you.

Jeff Martin: You know everybody knows kids’ stories have a moral, right? But I don’t know where that got lost once we became adults. I mean we forgot that there should be a moral to every story, and I thought that was kind of interesting and simple.
Interview with Raul Gutierrez, CEO and Founder of Tinybop

Jeff Martin: Today we’ll meet with Raul Gutierrez, CEO and Founder of Tinybop. Tinybop is a company that makes iPad games for kids. We’re going to by their offices, check them out, and swing over to Red Lantern Bicycles, talk a little bit more, and then hopefully go for a ride.

Jeff Martin: How are you?

Raul Gutierrez: Welcome to Tinybop!

Jeff Martin: This is the place, huh?

Raul Gutierrez: Yeah.

Jeff Martin: This is excellent.

Raul Gutierrez: This is the spot, and we wanted to just have an open space so that everybody can all work together around
here. Then we need to have a conference room also so that we could work on projects.

Jeff Martin: This is cool.

Raul Gutierrez: This is where like we need to crunch on a project or figure something out. Post-it notes are like our –

Jeff Martin: Agile.

Raul Gutierrez: Yeah, exactly.

Jeff Martin: This is great. You have a lot of Macs.

Raul Gutierrez: Yes, so we have a lot of Macs. We make iOS apps, but actually even if we’re doing Android, we’d still do it on Mac. We’re at our core creative studio, so that’s our tool. I’ve collected children’s books my whole life, so –

Jeff Martin: Have you really?
Raul Gutierrez: Yeah.

Jeff Martin: Since you were a child, right?

Raul Gutierrez: Since I was a child. I was the guy in college who had like children’s books in my college room, which didn’t always go really well. I wanted to always have reference, and then also serve as a point of inspiration.

Jeff Martin: You bring kids into the office?

Raul Gutierrez: All the time, yeah. So we test all our apps with kids in the office and we try to go to schools, and I’m the
guy at the birthday party like trying to get the kids play the apps.

Jeff Martin: We’re hailing a cab.

Raul Gutierrez: Only outside of New York is that considered anything.

Jeff Martin: Exactly. So why did you choose this area of Brooklyn?

Raul Gutierrez: We were in DUMBO, which is the this area right where the acronym means Down Under Manhattan Bridge, and DUMBO is like one of the hot tech areas here. There are over 80 startups in that one tiny little area.
Jeff Martin: Really?

Raul Gutierrez: But the prices have also been going way, way up, and so we wanted to be close to there. We also wanted to be close where everybody lived. We have 20 people. We mapped where everybody lived on a map, and we said, “Okay, what’s kind of the center of it,” and ended up being here.

Jeff Martin: So let’s start from the beginning.

Raul Gutierrez: Sure.

Jeff Martin: Where did you grow up?

Raul Gutierrez: I was born in Mexico, and I grew up mainly in Lufkin, Texas. Lufkin is this tiny town in east Texas. I always described it as an island surrounded by trees instead of water.

Jeff Martin: Interesting.

Raul Gutierrez: When I grew up there, it was way pre-Internet. There was one channel on television. They had Farm and Ranch News with Horace McQueen. There wasn’t a lot of outlet to the outside world.

Jeff Martin: I have five kids, and I have experienced kids and their relationships with toys are very different.

Raul Gutierrez: Uh-huh.

Jeff Martin: The oldest, my stepson, likes some human toys, meaning that’s what my wife always says, meaning that he likes
the interaction with people instead of a toy.

Raul Gutierrez: Right.

Jeff Martin: My 10-year-old loves like collecting things like even as my old G.I. Joe guys, right?

Raul Gutierrez: Right.

Jeff Martin: He likes to collect them and put them in up and really can play by himself with those toys. It seems that since kids are very different in how they played. What types of toys did you play with and –

Raul Gutierrez: I have – compared to today’s children, it’s like very sparse in terms of the number of toys I had. My parents were really good about giving me tools, so I had like my dad’s Pentax camera was by the time I was 7, I was sort of obsessed with it. I was taking a lot of pictures with the camera. I made Super 8 movies, and that I was not supposed to play with but my parents would go out of town. Back in the era when your parents would go on vacation, they’d leave you at home with let’s say with our grandmother or something.

Jeff Martin: Yeah.

Raul Gutierrez: And so we would sneak the camera, and I don’t even remember how we bought film, but we would make these little movies. We made this elaborate our version of Star Wars or I was really into stop motion, so I did these very, very elaborate stop-motion movies, and more so than any toy that you played with like those were I was really like I love these tools that you can make things with.

Jeff Martin: Yeah. What work did you do before you started Tinybop?

Raul Gutierrez: I have done many things. My career is not sort of a standard career. I’ve always worked. I’ve worked since I was a kid. I’ve always had businesses. I used to write software. I used to cut grass. I used to make museum displays like when I was in high school for our local museum. After college, I was supposed to go to China, but because of Tiananmen Square, I couldn’t go, and I landed in a law firm job that I hated, and I had some stuff happen in my life that I lost like my mom and my brother. I spent like 2 years traveling around the world, and after I came out of that, I ended up in Hollywood and it wasn’t any plan. It was just that I had a couple of friends who were there, and just out of luck on my second day there, I got a job with Scott Rudin, who is a very well known producer. Like right away, I was like working at Paramount and going through the Paramount gates every day, which was pretty awesome.

Jeff Martin: What kind of roles did you play within Hollywood?

Raul Gutierrez: I started as the lowliest, lowliest assistant, and this was an office that had like a hierarchy of assistants. There were seven when I started, and the lowliest assistant had to do just like these very humble jobs, but little by little, I worked my way up, not necessarily through good work but often through attrition. It was a job in which all do got fired, and eventually I was sort of like his right-hand guy, traveling around. We were working on five movies at any given time and then also Broadway plays, and so I was on the set from beginning to end.
I think the first movie I worked on was Clueless and the last movie I worked on was The Truman Show. I was there for a little bit of a span and even though it was in a long period of time in my life, I learned a lot because each movie is like a little startup. You start with an idea. You hatch and develop it. You hire a bunch of people. You have to make the thing. You have to sell the thing.

Jeff Martin: And you do that over and over again?

Raul Gutierrez: And you do it over and over again.
I’ve worked for other people for a long time, and I knew that I wanted to be in mobile also because I’ve been around the block from the beginning of computers basically or the home computers, and it seemed to me the world was going this way and it was just a tidal wave that was happening. And so I wasn’t really – I gave myself a year. I put myself in a coworking space, and I just had a list of ideas that I was going through. None of them actually had anything to do with kids, a lot of things.
It was in the middle of that year that one of my kids came to me. He was about to have a birthday party, and I think it was kindergarten birthday party. He asked me if he could trade his birthday party for an iPhone, and if you know anything about kindergarteners like the birthday party is pretty much like the centerpiece of that year and not only –

Jeff Martin: That’s the most important thing for a kid is having that birthday party, right?

Raul Gutierrez: Yeah, and so not only was he willing to sell out all his friends, but it was his favorite toy, and that moment like really made me stop and it made me not so much as a business thing. I was just wanted to understand as a parent because I, as a parent had sort of troubled relationship with screen time. I didn’t like I felt like it was sort of keeping kids away from parents and from that sort of interaction.

Jeff Martin: The woods.

Raul Gutierrez: Keep them away from the woods. They’re not building things. I felt like they were just consuming, so I wanted to understand it. I went through and I really started tracking everything he was doing and I downloaded like the top 100 like kids and educational apps, and I played with them. At the end of that, I think I realized that the form, it’s just a tool. It’s a tool like those tools that I used to have. It’s like no different really than the camera or Super 8; in fact, it’s both of those things. But it was also all these other things.
There were very few people in the kids’ world creating kids content that I thought were deserving of my kids’ attention. There were a lot of things that were really disposable and that were just essentially trying to stimulate them into some sort of game loop that involved them buying more coins, and it looks like a monkey pressing. I want to do the opposite of that. Kids nowadays don’t have the woods like even if they live in the woods, they probably don’t go out the woods like in the way that we used to.
I wanted to create like a set of apps that will allow them to sort of explore the world and like maybe understand a little bit more about the world and to bring up questions in kids, to drive them closer to their parents. And so, out of that, the first series that we developed called The Explorer’s Library came up, and these are big subjects that every kid everywhere needs to know about – the human body, plants, the Earth, where the weather coming out, the spaces on there. What’s great is that we start each of these apps by asking what does the kid know about the subject, how has it been taught in the past, and you find out that kids actually don’t know that much like most 6-year-olds don’t know that there’s a tube that connects our mouth and the other end, you know.

Jeff Martin: Yeah.

Raul Gutierrez: Like kids, it’s some sort of weird magic; they don’t understand that. When you reveal that, they suddenly understand something about themselves that’s really important. The feedback we get from parents constantly is, “Oh, my kids are like actually asking all these great questions.” And so, it’s not something that drives kids away from parents. It actually drives them towards them.

Jeff Martin: Your first app was, which one?

Raul Gutierrez: Our first app was Human Body, and it sort of set the template for this Explorer’s Library series. Well the original sort of inspiration were these old dictionaries or encyclopedias that have the transparencies of the body, and we thought like wouldn’t it be cool if we do that and then bring it to life. All of our apps are what we call Explorable Explanations, so they’re not really game in the traditional sense. It’s simulation.

Jeff Martin: What was one of the big first milestones for the company?

Raul Gutierrez: Well, I mean getting the first app out was a pretty colossal task. At the beginning, we were only four people, and I think our goal for the first month was 10,000 downloads, and we had 8,000 downloads in the first day, so that was sort of one milestone; then eventually it got to 1 million downloads and now we’re sort of many millions of downloads. But we didn’t know if it was going to work at the beginning. The App Store is this amazing distribution platform, and you can hit a button and reach everywhere in the world, and we’re heavily localized. We’re in 50, 60 languages. When we hit that button the first time, we didn’t know like if it was going to connect. I think we got back the numbers on the first day and we had said that there were three downloads. I was like we were sunk. I got to do the rounds.
Jeff Martin: That sounds like a rough day.
Raul Gutierrez: Yeah. It’s like we made like $6, and then I noticed that those three downloads were like in the last seconds like they’ve just gotten under the wire of the last seconds of the day. And so, the actual number for that first day was like 8,000 downloads. It’s pretty good.
Jeff Martin: It’s awesome.
Raul Gutierrez: And then we’ve done other things like we did this thing called Free App of the Week with Apple where we gave the app away for free. What can we expect from this? I said, “Well, maybe if you did well, you’ll get like 100,000; really well, you get 300,000 downloads during the week.” On the first day, we had 800,000 downloads.

Jeff Martin: Wow!

Raul Gutierrez: Over the week, we had like 4 point whatever million.

Jeff Martin: What’s been like the largest challenge as a company like Tinybop like what is the thing that you struggled with maybe for the longest period of time that you think you might have solved now?
Raul Gutierrez: Discovery is always a challenge like having people find you and sort of understand what you are.

Jeff Martin: Discovery within the App Store?

Raul Gutierrez: Discovery within the App Store is a huge challenge because you’re up there with a million other apps. A lot of those other apps are like big company marketing something or there are things built by a single guy, gotten his app up, and so there’s like very little differentiation in terms of quality.

Jeff Martin: They’re all in the same platform?

Raul Gutierrez: They’re all in the same platform, and there’s very little sort of weight. There are already things that are sort of we’ve risen above in that you get like editor’s choice and our like Robot app got iPad App of the Year for last year. There are things like that that kind of differentiates you a little bit. But ultimately for us, it’s really been about this sort of slow building of brand, having a parent trust you because they bought one of your apps and their kid was asking good questions, or kids building something with the other app. That means that each time that we put out an app, people buy into the system more, and so it wasn’t sort of one particular lightning bolt. It’s just in this like long hard slug that it means that every time we put out something new, they have a higher and higher amplitude opening.

Jeff Martin: I have one final question.

Raul Gutierrez: Uh-huh.
Jeff Martin: And the question is looking back, has there some advice that someone gave you that helped guide you through your journey and maybe still helps you today?

Raul Gutierrez: Yeah, I mean for me one of the things that was really powerful in my life was hanging out with my grandfather. My grandfather was a shoemaker, a loan shark, in Mexico. I used to travel around with him, and he used to collect all the things he needed to make shoes, leather, and there were like dyes and you know different parts of things. He at the same time was doing his loan shark business in which he was sort of maybe collecting somebody’s ring as collateral and so on, and he would bring me along and I was like little.
Sometimes when he was doing loan sharking, there would be these emotional scenes and he was always incredibly kind to people. He was not the type of loan shark that was going to break you his leg. It was just like well he was going to have your wedding ring like if you didn’t pay him back, and he was always kind to them, and I think even when people were not necessarily being sort of nice to him back. He always told me that if you’re kind to everybody and if you try to do that, then people always think well of you and that it will make your business easier. I don’t know if that’s like sort of an overriding principle, but I try to do that. I try to do that in my company.

Jeff Martin: That’s great. Well, thanks for being kind and being on our show.
It’s fun spending a day with Raul at Brooklyn and learning more about Tinybop. When we talked about advice, it was very similar to Jon. Raul said that it was about kindness and Jon said it was about giving back. Amy taught us that every great story has a moral, and I believe in this story, it’s really about kindness and giving back; at the end of the day, that’s the most important thing.

Brian Gluck: Is New York ruthless or is New York kind? New York is kind. Yeah, New York is kind, but you have to sort of got to crack that exterior shell. Really on the surface, it’s very cold and lonely. Lonely, it’s a really lonely town. But once you break beyond that sort of surface, once you get connected and plugged in, it’s a wonderful city. It’s warm. It’s great. I love this town.

Jeff Martin: Hey, this is Jeff Martin again! If you go to LeadbyChange.com, you can see this show and other shows. If you subscribe, you can get early access to new shows and also exclusive content. Thanks for watching!

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