Mistakes are inevitable when building a company, especially in the industries we intersect — where founders are building novel technologies and tackling ambitious problems that not long ago were considered unsolvable. But after years of supporting companies through the early stages of growth, we’ve found that not all mistakes are created equal. Many mistakes are common and possible to avoid with the right insights and industry expertise, while some mistakes are wholly original. These are the mistakes we strive to understand and learn from. 

An original mistake is not only unique to a particular company or situation but, sometimes, wholly new to an industry. These mistakes may evolve with an industry, surprising even the most seasoned entrepreneurs.  

In this series, we’ve invited industry disruptors and entrepreneurs to share their original mistakes – the stories behind them, the lessons learned, and the wisdom gained. By sharing these experiences, we hope to provide insights for current and future founders, entrepreneurs, and technologists. 

This week’s guest is Rich Stern, the CEO of TuneIn. Rich is an entrepreneur and technologist whose operational background includes the likes of Amazon, PlayStation, and Audible. He’s built companies, products, and brands. We’d like to thank him for candidly sharing his experience doing this work!   

You clearly have a passion for storytelling and creative work. What made you turn to technology for your career? Would you say you're a technologist first and a creative second, or a creative first and a technologist second?

We could spend a whole hour on that first question. The first thing that I've learned in my career is that anybody who is a technologist is inherently creative. And most people who would describe themselves as creative have to embrace technology today. And so the line between those two things is getting blurry, especially with what's happening with AI right now and the tools being put in creative people's hands. Creatives almost can't do their jobs without having a deeper understanding of the technology landscape and what's afforded to them. 

In a traditional sense, I started with technology first. I would say that going all the way back to my early teens, technology and coding just felt fun to me. It wasn’t until later in my life that I realized I'm a fan of media and storytelling. I use what I know about technology to further those things. I’m endeavoring to blend both of them because I think that's the best possible outcome.

The entrepreneurs that I know who are most successful are storytellers and teachers. It just never ceases to surprise me how many brilliant people come out of technical programs who struggle to tell the story of their product or company. The quantitative skills are there, the scientific skills are there, and they can even tell stories with data — but it can be a challenge to sit down and share who you are and why you're personally passionate about this work. 

You’ve founded multiple companies. How do you compare founding your first company to your entrepreneurial pursuits today? What was it like then versus now?

Technology has two modes. One is a frothy stage, where people are betting on a business's promise but not necessarily its performance. Then, there is the drought stage, where people are betting on businesses' performance, and no one wants to hear about the BS of a promise. 

My first experience in starting a company was during the days of Web 1.0, we didn’t really have any revenue or a business, we had a concept of a community for independent artists online. And somebody with deep pockets came in and said, “I love that, let's go buy that.” But it wasn't really a business. And then, the bubble burst in 1999, and for my second company, we had to build a real business, and it took six years. We built a great business, but it had nowhere near the sky-high valuations companies were getting in 1998 or 1999. 

That's a really common experience for people who were entrepreneurs at that particular point in time. Even Amazon had to reset the business. Jeff is a brilliant guy and somebody who I really enjoyed working for, but he had a maturing process once the hype over an online e-commerce bookstore was no longer investible.

‍What’s the best piece of advice you received as you navigated hype, growth, and times of reset? 

The best piece of advice that I ever got was from a technologist who became a venture capitalist. He said to me, “You're not failing enough.” And I think for some of us, especially some of my colleagues who come out of STEM, Stanford, and Silicon Valley, where they’ve had to work hard to be the best at what they do, the idea of failing terrifies them. I think they feel like failing means something bad has happened. Failing means something is wrong. But to be a great entrepreneur, you have to fail a lot. 

Entrepreneurs need to fail 10 times more, and they need to fail in big ways, and they need to fail in small ways. They need to have the resilience to pick themselves back up and start again. Early on, I was fearful of failing, and I felt like if everything didn't go right immediately, it meant that there was something wrong with my thesis, there was something wrong with me as an entrepreneur, or I picked the wrong idea. What changed my mindset was understanding that a thesis is an organic thing that should change as new data and information are presented; it should evolve, and eventually, it evolves to an apex state where it's no longer a thesis, it's proven, and you're ready to go.

It took the advice of people I really trusted to let go of my ego and embrace failure as a way to get better.

Pivoting and evolving is such an important skill for entrepreneurs. But having a strong operational background helps too…

Having an operational background is something that you develop over time after you've seen both success and failure. But there are levels to it. Maybe your thesis is wrong. Or maybe you have the wrong customer. Or the wrong hire. The worst thing you can do is double down on a mistake. When something's not working, the worst thing you can do is just pray. You need to be able to take action, and you need to be definitive. 

And so when you start talking about operating businesses, a lot of it is simply systems thinking. 

There's a big difference between the entrepreneurs who can talk about WHAT they’re doing and WHY it's important and those who talk about HOW they’re doing it. The what and how are almost two different superpowers. There are visionary entrepreneurs who I could listen to for hours. But when you ask them what their first quarter looks like, they pause and say they need to hire a COO. On the other side, there are people who struggle to articulate what the next five years are going to look like, but they can tell you with almost metronomic precision what the next six months will look like. 

You need both to be a successful entrepreneur. Ultimately, they're both very achievable. I've been fortunate because in the early days of my career, I indulged a lot in the visionary view, which was really exciting and compelling for me.

But as my career progressed, I got to learn the operating side. And I feel really grateful that I've gotten a chance to learn from not necessarily startup operators but people who built incredible scaled businesses and have figured out ways to institutionalize what good operation looks like. Companies like Amazon or companies like Sony or Audible where you are building multi-billion dollar businesses and you're running teams of tens of thousands of people and systems thinking and ultimately understanding how to lead through people, that's the only way it works. That's the only way you scale those groups. 

You mentioned that the worst thing you can do is double down on a mistake. Do you have an experience that stands out? 

The most recurring one, and it still happens in my career to this day, is doubling down on people who aren't succeeding and aren't doing what they need to do for the organization. It's the toughest thing you have to do. I find it very hard to create distance from the people I work with. We're part of a team.

I struggle with those lines because building a startup is deeply personal. Everyone is on a mission, and you're spending a lot of time together, but you need to have a certain distance from it, especially as a CEO or senior leader. These are people, and I care about them. I want to have a great environment that I'm working in, but I also have capital allocation, and I've had to go out and fundraise, so now I have a fiduciary responsibility to my investors, and I need to know that I'm getting the value. It's a tough thing to balance. 

The other thing that comes to mind is especially important for the media space, which is dominated by very large companies that want to innovate and change something in the market. And you realize, especially in consumer products and consumer media, people don't change their habits for as good or slightly better. They change their habits for a big value step forward. 

And a lot of the companies that I've worked for, they've wanted those kinds of things to happen in certain markets. When I started Amazon Studios with the team there, Amazon wanted to revolutionize how movies were made and wanted to create an open door for its customers to Hollywood and completely transform that. At the time, Amazon had no experience working in Hollywood. Amazon needed to get good at making movies and television shows the way everybody else did before they could claim that they were going to innovate and revolutionize. And so we went from a very revolutionary view to an evolutionary view of “how are we going to make television and movies” and ultimately found better success.

When I was at Sony PlayStation, we made a gaming console, and people loved it. We imagined that VR was something we were going to innovate with, and we never quite got there, and we weren't able to get to that sea change in value. But especially working in a large company, you hear the siren call of billions of dollars and the huge amount of market share you're going to get. And so you sometimes go on these endeavors. But you have to remember, it doesn't need to be as good or slightly better — it needs to be revolutionary. It needs to be next level better. The companies that have transformed their industries have achieved this.

It would seem that whether you’re a large or small company, it’s easy to make mistakes. With this series being focused on original mistakes, do you have one that particularly stands out to you?  

A company is not “one” company. The company you are when you have one other employee and an alpha product in development is not the same company that lands its first alpha customer, it’s not the same company that lands its first hundred customers, it's not the same company at a million dollars in revenue and a hundred million dollars in revenue. And yet, we want to think about them as the same. We want to keep the team that’s been with us from day one.  

The person who was there when you had 10 people and a million dollars in revenue might not be the right fit when you have a hundred people and 50 million of revenue. And this is so hard because we talk a lot as founders and as entrepreneurs about first principles and culture, and those things should never change. Those should be the things that are true. Whether we've got one customer or a thousand customers, they're the distillation of what makes us successful as an organization.

But the organization itself, the products that we make, how we go about making them, and the markets that we do business in all evolve and change over time. And if we're going to grow as a business, we have to accept that the teams around us have to evolve and change.

TuneIn is my company. The company was founded for radio on the web, and then it became radio and mobile, and now our biggest opportunity is radio and connected vehicles. The team that was here when we were building for the web is not the team that was here for mobile and is not the team that's here in automotive today, but the legacy is here. Everyone contributed something along the way and along that journey. And I think it's important not to put yourself in a situation where you don't see that evolution and constantly reevaluate. And most importantly, it's not a failure if the business changes. That doesn't negate all the fantastic contributions people have made up until that point, but the business is a living, breathing thing that changes.

If you can appreciate the non-permanence of things and you've got the resilience to say, “okay, I had to do these things to get us from zero to $1 in revenue, and now I'm going to cultivate a whole different set of superpowers to go from $1 to a hundred to a thousand to a million,” you're going to love being an entrepreneur. I think that that's part of the fun of it.

Final question to build on this discussion. What advice do you have for folks grappling with growth and evolution? What advice would you give to your younger self? 

Don't chase shiny objects. When I joined TuneIn as CEO, social audio and Clubhouse were hot. Everybody was talking about it. One of my investors said we should pivot TuneIn to focus on social audio. I'd been CEO for about a month. And then, all of a sudden, Green Room launched, Facebook's getting into social audio, Twitter's getting into social audio. And then, three years later, everyone's out of that space.

I could have chased that shiny object, but we’ve been building a great business. Our business is profitable. It's grown year over year, and I think we have probably the best growth prospects of our entire company's history. But it could have all been disrupted by chasing shiny objects. And we've got a similar situation with Generative AI. Incorporating AI isn’t enough; you have to understand the business you’re getting into. What are you going to do with AI that's 10 times, a hundred times a thousand times greater than what can happen in the world without it today? And that's different from saying, I've figured out a way to use it.

It happens over and over in our business — people chase shiny objects, but the companies that emerge from these very frothy periods and the entrepreneurs that succeed are the ones that weren’t just chasing the trend. They’re using this particular technology or opportunity to build something of demonstrable value. 

The people that I admire most, and the companies that I admire most, know what businesses they're in and why those are great businesses, but they also know what businesses they're not in; they know where not to invest. Money does clarify a lot of things here… how you're going to make it, how you're going to return money to your investors, how a little bit of money is going to become a lot of money — these things really do differentiate a story from a great investment thesis.