Lightspeed’s Jeremy Liew is on the hunt for always-on media startups

Perhaps best known for a career-making seed investment in Snapchat, Lightspeed partner Jeremy Liew is a leading investor across media and entertainment, making bets on startups like Cheddar, Giphy, HQ, SpecialGuest, Mic, Beme, Playdom, Duta and Flixster.

I spoke to him earlier this week about how he assesses the market for media startups, which led into a discussion about “always-on” forms of entertainment that add stimulation to a person’s environment, instead of commanding their full focus.

Here’s the transcript of our conversation, edited for length and clarity:

Eric Peckham: Do you have a consistent framework for evaluating potential investments?

Jeremy Liew: Our perspective is that consumer technology is now more about the consumer side than the technology side. It’s really more about pop culture than new innovations in technology. 

When we are assessing a consumer investment we ask ourselves, “does this have the potential to become part of pop culture?” One way to think about it is whether people who don’t use the product will still become familiar with what it is. Like how you can understand a reference to “Game of Thrones” even if you don’t watch it. 

Another key question is, whether there is a scalable, repeatable way for the product to reach its audience. That can be advertising, it can be word of mouth, it could be through social channels.

We also asked ourselves, “is this product going to build a new habit?” and we assess whether the entrepreneur has a unique insight into both why this is happening and why it’s happening now.

Your colleague Alex Taussig told me you have an overarching “future of TV” thesis that’s guided a number of your investments. Tell me about that thesis and how it filters opportunities in the media & entertainment space for you.

I think you can split what used to be called TV into two core use cases: “TV as entertainment” and “TV as company.”

“TV as entertainment” is most of what Netflix, Amazon, Apple, HBO, and similar companies have been focused on. It is high-production quality entertainment you have to pay attention to. Think shows like “Game of Thrones,” “Succession,” “Orange is the New Black.”

Then there’s another classic category of TV — “TV as company,” which is stuff that’s on while you’re doing something else. You’ve got the morning show on while you’re getting the kids ready for school or you’re getting ready to go to work. That’s how you get the five hours of TV viewing per day that Americans average.

TV as entertainment has to be so good that you choose to watch it over doing anything else; TV as company you just have to not choose to turn it off.

The vast amount of attention to the move to video — with subscription video on-demand (SVOD) and so forth — has been on TV as entertainment. There are hit shows that will attract people to Netflix, or to HBO Go, to Disney+. But what causes them to stay as a subscriber after they binge-watched all the way through the stuff that brought them in the first place?

That tends to be the TV as company content. If you actually look at hours watched in television, no one is tuning in to catch the latest episode of “Shark Week” — it is just what’s on. Think about the TV Guide grid: every genre, every channel will likely have a mobile native equivalent.

Some of these already exist. ESPN — it’s a channel where men watch the best competitors in the world play the sports they used to play when they were in high school and then they talk about it with their friends. Twitch is a place where men, mostly, watch the best competitors in the world play the games they used to play when they were younger and talk about it with their friends.

In this case, usually those friends are in the live chat rather than in the same room with you. If you think of the saying, “history doesn’t repeat itself but it rhymes,” you can hear the rhyme between ESPN and Twitch, right?

What rhymes with game shows — HQ Trivia. And you can go through every genre and say, “okay, so what’s going to rhyme with like, ‘televangelist,’ then?” So we went to this company called Seven Spark, which is trying to answer that question.

If it’s mobile native, then it can be interactive and it may be in vertical video, and the consumption habits change because you’re not sitting down in front of a TV.

Doesn’t video on mobile shift back to the “TV as entertainment” category though if it’s the only thing you can do on your phone at once and it is interactive? It’s more of a lean-in experience rather than a TV on the wall playing in the background.

I don’t think we have all the answers on this. This could be where audio interfaces tie in more, like listening to Alexa daily briefings in the background. But Cheddar for instance, which rhymes with CNBC, they want to be on all the time in the background. They pursued a strategy much heavier on OTT (over-the-top streaming) bundling strategy, which ended up with them being on phones but mainly on TVs.

Remember the old Pointcast company from the late 90s, it was basically like a screensaver…if you have always-on broadband, what could a screensaver become? Should it be drone footage flying over San Francisco like it is on AppleTV, or should it be like live “TV?” Screens don’t have to be off while you’re doing a conference call or doing things around the house.

Where do startups have an advantage here versus incumbents who own a lot of content IP? It seems like incumbents domain streaming TV but would struggle trying to figure out new interactive formats.

I think the only advantage a startup has over an incumbent is it can move faster. Who is winning in TV as entertainment? It’s incumbents, because you have to have a massive wallet to afford the top showrunners and talent to make your tentpole content. The one startup that’s doing that, Quibi, has a massive wallet.

Startups can be successful if they understand the native interactivity first and better because it is a new medium, and they can be successful if they understand a new distribution channel before the incumbents do. Cheddar understood a shift in distribution, whereas a company like HQ is figuring out new modalities of interactive content.

I’ll say that the window of opportunity in distribution change tends to close more quickly because the incumbents can do it quickly once they recognize how. CNN can get its channel on OTT services quickly now that it wants to.

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In terms of new formats then, how do you think about smart speakers and the voice space? There’s enormous market penetration of smart speakers but not big media companies yet built off it. We have podcasting taking off, though it’s not really interactive. Do you see a big opportunity?

I think that there are two classes of podcasts: podcasts you have to pay attention to and podcasts where you can dip in and out like Pod Save America and Joe Rogan. The second group are the equivalent of TV as company. You can tune in and you can leave the room, come back 15 minutes later and like, you don’t need to rewind what you missed. If you try to follow Serial or one of these true crime shows, it requires your full attention. That’s more like TV as entertainment.

We might see more long form content that simply allows it to be always-on the way that a radio is on. With Alexa you have to constantly turn it back on, request a new skill or song when the last one ends. In radio and TV, that’s not the case — when something finishes, the next thing starts. Amazon has chosen to make notifications relatively difficult. One of the primary mechanisms for engagement on any platform (whether it’s Facebook or the iPhone or whatever) is notifications, which proactively pull people back to content and avoid the decision paralysis of browsing content options.