Kate Barrett (00:06):
This is Founder Forward, the podcast from NEA, where we explore the company building journey with candid commentary from founders and investors, some legendary, some just getting started, all moving forward. I'm Kate Barrett. On this episode of Founder Forward, I spoke to Pamela Valdes, CEO and co-founder of Beek, the leading audio subscription platform for Spanish content and creators. We discussed Pamela's path to founding a company, how she got the attention of Silicon Valley, and the impact she believes Beek can have on an underserved market.
Pamela Valdes Esteva (00:47):
I'm Pamela Valdes, CEO, and co-founder of Beek.
Kate Barrett (00:51):
On every episode of Founder Forward, we like to fast-forward to get some insights from our founder and investor who walked this road together before. Today, we'll hear from David Rogier, CEO and founder of MasterClass, an online education platform that allows anyone to learn from the world's best instructors and NEA general partner, Rick Yang.
David Rogier (01:11):
I'm David Rogier. I'm the CEO and founder of MasterClass.
Rick Yang (01:15):
I'm Rick Yang. I'm a general partner at NEA and I head up our consumer investing practice and led the MasterClass series B and have been on the board ever since.
Kate Barrett (01:28):
They talked about David's lifelong attraction to entrepreneurship, stepping outside of his comfort zone to pursue a passion, and his experience taking MasterClass from a big idea to a big business. Whether you're already on the path as a startup founder or wondering how to transform your own passion into a product or service people love, join us to learn how these founders are leaning into their strengths and testing their limits to create something incredibly powerful. Let's dive in. I want to start just talking about what is Beek and tell me a little bit about what you're building.
Pamela Valdes Esteva (02:08):
Beek is the number one most downloaded audiobook app for Spanish speakers, but we're actually way more than an audiobook platform. We started with audiobooks, but we have turned into a platform where creators monetize audio content and listeners find the best content from their favorite creators in the audio format.
Kate Barrett (02:29):
Super interesting evolution. We'll talk about that, but let's focus on the beginning of the company for a minute. You had the idea for Beek when you were still in college, is that right? Were you always drawn to entrepreneurship?
Pamela Valdes Esteva (02:41):
Yeah. It's kind of a weird story. I would say that I always had an itch to do something big. I wasn't sure if that was going to be a company, but I had this itch of doing something really big because that was the story that I was told from my parents. When I was in elementary school, I was very bullied and my parents always told me that being bullied and being different was a good thing because people who change the world are the ones who don't just adapt to the way things are. They don't fit in, they stand out.
Kate Barrett (03:16):
Yeah, it's fascinating. I think a lot of entrepreneurs have that idea where they know they want to build something big. You hit on yours pretty early. I think for David, it was a longer journey to figure out exactly what he wanted to build.
Rick Yang (03:33):
Why don't you talk a little bit about just the founding of MasterClass and then we can pick up right where I met you back in 2014 probably?
David Rogier (03:43):
Okay. I was working for Michael Dearing, who runs a venture capital firm in the Bay. Honestly, I was working with entrepreneurs all day and I missed it and I was spending more and more of my time spending time with the entrepreneurs and less and less time on pitches and deciding what to invest in. I think I went to Michael and I was like, "Hey, I want to go start something." And that was a scary, hard thing to say and do because I had a great job and I wasn't sure how he was going to respond. Michael basically said, "Great. Well, what are you going to start?" And I was like, "I have no idea." He was surprised. "Are you sure this is what you want to do?" I was like, "Yeah, I'm pretty sure." I think he said, "Hey, you can think about it if you want a little bit," so I was like, all right. So I thought about it for a day or two and I came back. I was like, "No, no. I do."
Rick Yang (04:38):
You hear a lot about people starting companies with a very specific idea or mission in mind. You don't hear as often about people saying like, hey, I want to start a company and I have no idea what that might be. What were you thinking at the time?
David Rogier (04:53):
I was terrified. I think I had known for a long time. Even when I was a kid, I remember when I was in third grade, I would take a walk and picture if I started my own startup, what the office was going to look like and stuff that has nothing to do with the success of the company, but starting to do that. I think I knew I always wanted to do it, but I think I was probably scared to be honest. So much of our society I think trains us to seek praise. Usually, I think how you get praise in our society is you do what somebody else thinks is right or what somebody else thinks is a good idea or what somebody else wants. We're talking about grades in school, what your boss wants, what your parents might want or something like this.
Starting a company is terrifying for a whole host of reasons, but one of it, at your core when you start a company, you're doing a thing that most people think is a dumb idea. Because if other people thought it was a good idea, they would already do it and I was scared.
Rick Yang (06:01):
And how long did you live in that zone of trying to figure out what you actually wanted to build?
David Rogier (06:06):
Honestly, it took me about a year and that was probably one of the darkest times of my life. Now you might say, hey, how's that dark time? You have funding. You can do whatever you want. But I think we need constraints sometimes to feel inspired. It was a completely unstructured day and honestly, it was self-imposed pressure. I didn't want to mess this up. I got advice from somebody and she said, "Choose an idea that even if it fails, you are going to be proud of it." That was amazing advice. I was trying to look at ideas from the top down, from the bottoms up, from my own need, from my own expertise, all that, and all of a sudden that was a constraint. That was a constraint to choose something that I actually really care about.
So for me, then I knew it was going to be health or education. I posted ads on Craigslist up and down the coast in California offering to pay people a couple of bucks just to hear about their education because I wanted to get ideas of people not from me. Then I also started thinking about if something failed, what would I be proud of? There's something about making it possible for anybody to learn from the best. If I could do that, I'd be proud of it, something other people couldn't take away and I got to figure out all the rest. It took another six, eight months to get the biggest names in the world to say yes to this. Lots of people told me this idea was never going to work, it's going to fail, it's impossible. But then we got our first yes, and then we got our second yes, and then we got our third yes.
Kate Barrett (07:37):
It's really interesting. David was able to move forward by framing the challenge a certain way and to do something that he would be proud of. Pamela, was there something in the earliest stages of your journey, a purpose or a guiding principle that really helped you stay on track?
Pamela Valdes Esteva (07:53):
I feel like it was a way to deal with pain. The pain of not fitting in was like, I'm going to do something big, I'm going to do something big. Later on when I was trying to figure out what that big thing was going to be, I found that starting a company was the most efficient way to do something big. I realized that the stories you grow up with are very important in defining your future. For me, it became very clear that if Latin America, because I am Mexican, I am from Latin America, if people don't grow up with better stories, we're always going to be a Third World country. Latin America's always going to be a Third World region. When I wanted to solve that problem, getting better stories in the minds of Latinos, you can do it through a nonprofit and try to get people to read more or you can build a business model that actually, in a very capitalist mindset, actually solves the root cause of the problem in a more sustainable way.
So that's how my journey started. I want to solve this problem and I just figured that building a company was the best way to solve that problem.
Kate Barrett (09:00):
And how is that going so far? Is what you're building having the impact you've desired on your target market?
Pamela Valdes Esteva (09:07):
100%. The way I came up with the solution was what we need is the best possible product for Latinos to listen to relevant information, and the way to do it is to build the best revenue model for the creators that Latinos are interested in. The problem is the product, a physical book doesn't work for Latinos because Latinos are very busy. They are the longest working hours in the world and they spend most time in traffic than any other region in the world, most hours spent commuting than any other region. So if you want to solve that, you need to build a company that creates a product that is better for Latinos than a physical book, and that's audio. But the way you get the supply of audio is to creating the best business model so that Latino creators and Latino authors can make a living from creating that content.
Because today, no one makes a living from writing books in Latin America, very few people can. But if you create a revenue model where you're incentivizing creators to launch content and it's efficient for listeners, that's how you sustainably solve the problem long term. If you are just doing campaigns with good intentions to help people get good information, that doesn't sustain long term.
Kate Barrett (10:26):
Striking that balance between the long term mission and all of the things you have to do to get there is really hard, but it's also really powerful if you get it right. In fact, Rick was telling David that that's one of the things that really compelled NEA to invest in MasterClass.
Rick Yang (10:46):
I would say that drive and that passion and that mission behind why you wanted to start this company and why you wanted this company to succeed actually was one of those things that got over the hump of not having that prior experience in the space. I'd love to actually just take a step back and get your take on if you're talking to somebody who's got a great job, a great career path, but they still have that entrepreneurial itch like you had, they don't have an idea, they don't know what they necessarily want to do other than, hey, I feel like I really want to start a company, what advice would you give them?
David Rogier (11:25):
What drives me, and you've got to find what drives you, is—I don't want to be in my deathbed, hopefully in a long time, and wish I had done things I had not done. You got to figure out what are those things that you are going to regret and you got to find a way to do it. Now there are smart ways to do it too. If you have a family and kids that are depending on you, find a way to do it outside of work or find a way if you can become an EIR at a VC fund. So find a way that isn't going to risk the health of your family. Number two is I think one thing I learned was you can test a lot of your ideas for really cheap. For example, the Craigslist thing I mentioned. I put an ad on Craigslist wanting to talk to people about their education.
Once I then had an idea, I mocked stuff up, so one page. It wasn't a webpage that actually work. It was like a JPEG and I put it in front of those same people. So I called them back up, said, "Can I show you something?" and you show them, "Look, here's an idea for a website. You have classes from these amazing people and have a price on it. Tell me what your thoughts are." Usually, everybody will be like, "Great idea. So amazing." So what I learned, you have to ask is would you pay for it today? Can I have your money, can I have a pre-order? Most of them at that point, folks will be like, no, I think it's missing a couple of things I'd want. But if you start getting people to say yes, then you know, oh, my God, I actually have an idea.
I think figuring out what are the cheap ways to test and to try your stuff so that when you have to make that jump, you know it's the best jump you can. I think something else I learned in that process was investors love that, if you can show them and do it, because I think it shows up, hey, this is somebody who's not going to spend a lot of cash or is going to be really smart about it. Or I don't know, Rick. I showed you and talked to you about some of that stuff because we didn't have a lot of stats at the time. Did that help or is that just in my mind that that helped investors?
Rick Yang (13:17):
It helped. I would say the process and the hustle around gathering that data and how analytical you and the early, early team were around being very data-led in what to build, what was working, what wasn't working, it showed a bit of early product-market fit, but I think what was more important about that was the process of getting to figuring out how you could get to product-market fit. It wasn't one of these things where it was like we're just going to throw a bunch of stuff at the wall and see what works. It was a very methodical way of saying, we need to figure out with two tenets, one is the customer, what does the customer want? What is the value we're bringing to the customer that will bring them enough perceived value that they're going to part with their hard-earned money? And two is like, what does the data tell us and how do we gather data along every single step of the way? That was actually a really important part of our investment decision early on.
Kate Barrett (14:19):
I think that's a challenge every entrepreneur faces. You figure out what you want to do and then you have to figure out how to do it. Pamela, once you knew what you wanted to build, what steps did you take to make it happen?
Pamela Valdes Esteva (14:31):
There are three things that really matter. One is product-market fit. It's like you make something people want. The other one is product-channel fit, which is you do it in a way that you can leverage a channel to grow your users at the pace that you need to grow to be a venture-backed company and to achieve your mission. Then the third one is revenue model fit. I needed to get the three right very early. What we did was we realized that the initial product that we built wouldn't translate into revenue. So we completely pivoted and we were like, okay, this community where you can actually buy audiobook à la carte doesn't really work. We need to shift the entire business model. So we went back to a drawing board and we asked users who weren't buying why they weren't buying. We realized that they were pretty educated by Netflix that if you want digital, it's a subscription.
So we pivoted into a subscription model and that's how we got the revenue model fit. So we were actually like, oh, we made something people want, now we have a revenue model, but then we were missing the channel fit. How do we adapt this into a channel that allows us to grow? Something that I learned from these mentors from Silicon Valley is that all products are built in the backs of another channel. For us, we realized that our channel could be creators, and that's how we built it. We created this program where creators would monetize audio content on our platform. We didn't have to spend millions of dollars on paid marketing to acquire the listeners. It was the creators. So we created a better model that is a marketplace that you basically become the super app of all those verticals put all into one in a way more efficient way because you have network effects between the creators and the listeners.
Kate Barrett (16:25):
I'm guessing that all of those advisors you had and people helping you build along the way is part of the reason you were able to be as nimble as you were as the company evolved and respond to what you were seeing in the market. I think for David, it's been a very similar theme in his journey, that leaning into people who have been there and done that along the way.
Rick Yang (16:50):
I think the beauty of meeting somebody like you that early on at the series A pre-launch and given what we do at NEA, I also knew because that's the hardest part of my job when I know I want to work with somebody, I love when they come back and prove me wrong. We met during the series A. You basically said, "These are three instructors that I haven't signed yet that I haven't shot classes for, but I'm going to do it." Then we caught up periodically throughout that time period. Then at the series B, you had come back. You had signed those instructors. You had shot those classes. You had launched and out of the gates, things were really humming. When you look back at that time period between the series A and the series B and thinking about product launch, were you expecting that amount of success out of the gates? Just walk me through that piece.
David Rogier (17:45):
We ended up launching with three classes live and then two classes on wait list. The three classes live were Dustin Hoffman, Serena Williams and James Patterson with Usher and Annie Leibovitz on wait list, because we wanted a mix that would also show we're not in one category. We thought that was a really interesting mix of folks, so we said, okay. We get a big PR firm to help. I had built up in my head that the day we launch was going to be a huge day, like 10X average day, what would be afterwards. We launched at 2:00 AM in the morning. Our first customer was my mom. Thanks, mom. I didn't even know she was doing that, so that was so sweet of her. The team's all there late at night and we launched and I think sales, I'm trying to remember, but order magnitude of $10,000. I'm like, if it's $10,000 and I expected this day to be 10X, because you're getting press, buzz, that means tomorrow's going to be like $1,000.
In some businesses, that could be amazing, great, but we have expensive production costs. We've got to do more than that to actually sell things. If you're thinking about 10,000 bucks, we're talking about roughly a hundred people had signed up that day. Roughly order of magnitude we're talking about. A hundred people with all that press, with all the ads we're doing, with these names, these instructors all tweeted about us and posted on Facebook, you're like, I am in trouble. I went home that night and I actually cried. I actually cried. I'm not a crier. I called my mom, dad and I was like, I am screwed. I got some of the biggest names on planet. I got more in the pipeline. I've committed to them. I promised them this is going to be a big thing and I just not only screwed with the team, with investors, with these people who I don't want to have a bad reputation with either.
I don't come from this world, but that feels like the wrong people that think that you are not good at this. I remember my parents' advice was... I asked them, "What do I come tomorrow back in the office? Well, how do I do this?" and they're like, "You fake it until you make it." You got to have strength until you figure out what you're going to do. So I went in, trying to have a positive attitude. I remember I saw a grin on our head of paid marketing. Reed is his name. I was like, "Tell me what's going on." He's nodding his head with a big smile. I'm like, "Why are you smiling?" He's like, "This is going to be a big business." And I'm like, "Sorry, what?" He's like, "Have you seen the CACs I'm able to get? I can scale this thing huge." All of a sudden, you go from dire darkness to wait, what? I think that's how I summarize the first stage.
Everybody talks about the ups and downs, but you don't know when the downs are going to be. You don't know when the ups are going to be, but it can change like that. Then what happened was the next day was a little bit above the first day and then the next day was just around there and it kept increasing. You're like, oh, if the sales curve is going up, this might actually work.
Kate Barrett (21:05):
My heart starts pounding just hearing that story. There are so many ups and downs that you face in the company building journey. How do you deal with those on a day-to-day basis?
Pamela Valdes Esteva (21:16):
Yeah. I think same as every other founder, you get really highs and then you get really lows and it's become easier as my support network has grown. It's very different being a founder in Latin America than in Silicon Valley where it's even access to talent is just easier there. Now that I have more friends that are founders that have started companies, that have gone through the same things that I'm going, it's become easier because I have people to talk to and get advice from. But I would say the complicated thing is your company is growing exponentially. If you're doing your job, you're growing 2X every four to six months. That means the challenge is 2X bigger every four to six months. If that's the case, your emotional intelligence and your skills as a founder need to be scaling at that same speed.
What happens is there's always a delta. Imagine a graph where it's the big challenge, how hard things are exponentially, and then my emotional intelligence and my skills, and it's also exponential. There's a delta between those two lines that is always constant. With the skills and emotional intelligence that I have now, the challenges I had last year, I would master it. But I don't have those challenges. I have the challenges of this year. So this year, I'm still at the delta. There's a difference between what I know and what I need to know. So that's the challenge. If you ever slow down and stop developing your emotional intelligence and your skills, you can get behind really fast. So that's what's really overwhelming, but I've solve it in an efficient way, which is with being surrounded with the people who have done it and I've been very good at that.
I have people from Netflix and Pinterest and Audible, the best companies that went through these exact challenges. They're my investors or my advisors. Casey, for example, he's on our board. So now whenever I have a challenge, I know someone from my network has gone through it and can tell me how to figure it out.
Rick Yang (23:43):
Thinking about advice for other founders that are earlier on that journey that are maybe at that series A or series B phase, any advice in the fundraising process and deciding on which investors to work with?
David Rogier (23:55):
This is advice that I wish I had had and some of it I had and some of it I had to learn the hard way. Number one is find somebody who's a couple stages ahead of you and ask him for advice. There's art to this. There's skill to the race and it changes all the time. So getting somebody who's maybe a year to two years ahead of you in whatever phase you're at is really going to help because things change in the market and things like that. I think it is easier to get a divorce than it is to get somebody off your board. So you have to choose this person and this fund that you're going to work with for five years, for 10 years, for 15 years, whatever it is. So for me, I had to think about what do I care about, and I care about somebody that I'm going to want to work with and somebody who I know we're going to have some amazing days.
I know we're going to have some hard days, but that through all that, I'm going to want to work with. The biggest way I find that out, I asked you for a bunch of your entrepreneurs, I asked them for these entrepreneurs. For me, the trick was figuring out the entrepreneurs or the companies of yours that failed. Because to me, always if a company does well, okay, so the investor's great. You're like, "Yeah, okay. If everything's going well, I'd be good too." You wonder what happens when a company doesn't do well. What was amazing to me, Rick, is I talked to entrepreneurs at companies for years and a few that hadn't done well, and they were like, "I would take Rick's money again any day. I would work with him any day, and he was fantastic."
They get emotional. It was a tough process for them. It's tough to remember them, but they're like, "Rick, through all that, was there with me" and I was like, that's the type of guy I want. So it's almost the references from the folks that hadn't gone as well meant more to me than the ones that had, if that makes any sense.
Rick Yang (25:39):
No, absolutely. From the investor standpoint, what I always believe and know is there's also this bond between founders even if they don't know each other, that because they are on that same journey, they'll always be looking out for each other and be 100% transparent with each other. That's what I think about a lot as an investor and when I'm working with people. I think that's great advice.
Kate Barrett (26:09):
Pamela, what drives or excites you as you think about the future of Beek?
Pamela Valdes Esteva (26:13):
For me, it's all about the mission. I know in the future, we will see in Latin America things that didn't happen in the past like winning the Olympics or winning the World Cup or going to space. Those are stories that don't happen in Latin America because we don't have an American dream like you do in the US. Beek is building the Latin American dream for Latinos through stories in their local language. I just know it's going to be like something that will generate a change in our region.
Kate Barrett (26:46):
Pamela, thank you so much for joining us today. It's just been thrilling to have you and a real inspiration to hear the story of Beek so far.
Pamela Valdes Esteva (26:54):
Thank you so much for having me. I'm really excited to be here and I hope this inspires other founders to build great things with purpose.
Rick Yang (27:04):
It's been awesome partnering with you so far.
David Rogier (27:06):
Same. Same, same, same.
Rick Yang (27:08):
There's still a lot more to go.
David Rogier (27:09):
Thank you. Thank you.
Kate Barrett (27:16):
It's always inspiring to hear a founder share their journey. It's inspiring and instructive to hear a founder explain how they overcame obstacles and evolved with their businesses to serve a community or a cause that's deeply important to them. The candor and conviction with which these founders discuss company building offers any founder both guiding principles and specific advice that they can take away and apply in their own journey. I'd like to thank Pamela, David, and Rick for sharing their incredible stories with us. It's an honor to hear about their journeys and learn from their experience. I hope you learned a lot too.
Founder Forward is a production from NEA, made in partnership with FRQNCY Media. From NEA, I'm your host and executive producer, Kate Barrett, with support from Ashley Mitchell, Erica Sunkin, and Shanna Hendriks. From FRQNCY Media, Michelle Khouri is our executive producer, Enna Garkusha is our supervising producer, Jordan Rizzieri is our producer, and Catherine Devine and Emily Krumberger are our associate producers. Our mixer and sound designer is Claire Bidigare-Curtis with dialogue editing by Sidney Evans. For more on NEA, visit nea.com. You can subscribe to Founder Forward on Apple Podcasts, Spotify, and wherever you get your favorite podcasts.