Issue 268,  published July 28, 2020

Headgum raises $2 million, primarily from USV

This is Headgum’s first investment raise ever, since its founding in 2015 by Jake Hurwitz and Amir Blumenfeld.

The news strikes me as a response to the times. Broadly speaking, Headgum can be viewed as having been a fairly conventional podcast network for much of its existence, structured as a collection of network-owned programming bolstered by a series of third-party shows that it does not own, but helps monetize and market.

It was only recently that Headgum began repositioning itself as an operation with discrete and differentiated lines of businesses. There is the core network component, but in November, the company launched a host read-focused podcast advertising marketplace solution called Gumball, and in January, it established “Headgum Studios,” which serves as a formal division for its owned-and-operated properties.

Gumball, of course, is perhaps the only truly venture capital-friendly component of the business, given its opportunity as a scalable advertising marketplace. As such, news of this investment shouldn’t be particularly surprising. Furthermore, Union Square Ventures, the storied VC firm that has invested in household names like Twitter and StackOverflow, has already expressed strong interest in podcasting, having invested in Meet Cute, the “short-form romantic audio company” founded by USV alum Naomi Shah.

There’s some discussion in USV’s official blog post on the investment about the firm’s interest in vertically-integrated media companies, which is worth noting. Here’s the pertinent part of the write-up:

This powerful three-part structure – owned content, distributed content network, ad marketplace – creates meaningful network effects. More unique content makes the platform more valuable to listeners, and user growth in turn boosts desirability for creators to join. This is true for most content networks. For Headgum, there is an added network effect between creators and brands. Better shows lead to cross-pollinated ad audiences which generate better ad opportunities within the network. We believe these effects, in tandem, are a formidable mechanism for building a trusted brand at scale.

One way we thought about Headgum’s unique model is as a vertically-integrated media company. Just as a vertically-integrated D2C brand owns IP, manufacturing, and distribution, Headgum unlocks creation, distribution, and monetization through its combined studio, network and marketplace. The benefits created by this full-stack approach for defensibility and scale got us excited about Headgum’s potential not only as a media company but as a venture-backable one.

Seems to me that it’s perhaps clearer to argue that the content side of businesses primarily functions as a top-of-the-funnel marketing opportunity for the Gumball marketplace, which can go onto participate in the current land-grab competition between various programmatically inclined hosting platforms like Art19 and Megaphone. 

I run this thing.