Today, I’m talking with Shishir Mehrotra, who is CEO of Superhuman — that’s the company formerly known as Grammarly, which is still its flagship product. 

Shishir also used to be the chief product officer at YouTube, and he’s on the board of directors at Spotify. He’s a fascinating guy, and we actually scheduled this interview a month or so ago, thinking we’d talk about AI and what it’s doing to software, platforms, and creativity pretty broadly.

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Then things really took a turn. Back in August of last year, Grammarly shipped a feature called Expert Review, which allowed you to get writing suggestions from AI-cloned “experts,” and reporters at The Verge and other outlets discovered that those experts included us. It included me.

No one had ever asked permission to use our names this way, and a lot of reporters were outraged by this — the talented investigative journalist Julia Angwin was so upset she filed a class action lawsuit about it. Superhuman responded to this by first offering up an email-based opt out and then killing the feature entirely. Shishir apologized, and you’ll hear him apologize again. 

Throughout all of this, I kept wondering if Shishir was still going to show up and record Decoder, because my questions about decision-making and AI and platforms suddenly seemed a lot harder than before. To his credit, he did, and he stuck it out. This conversation got tense at times, and it’s clear we disagree about how extractive AI feels for people. But I won’t stretch this out any longer.

Okay: Shishir Mehrotra, CEO of Superhuman. Here we go.

This interview has been lightly edited for length and clarity. 

Shishir Mehrotra, you’re the CEO of Superhuman. Welcome to Decoder.

Thanks for having me.

I’m happy you’re here. I’m a little surprised you’re here. I think you know what some of the questions are going to be, but I’m really happy you made it. I have a lot of questions about AI, how people feel about AI, and then a feature you launched in Grammarly, which is one of your products, that made people feel a lot of feelings about AI. So we’re going to get into it.

Let’s start at the start. Superhuman owns Grammarly and Coda. You own a bunch of companies. Just quickly describe the structure of Superhuman and all your products.

Superhuman is the AI native productivity suite. We bring AI to wherever people work. Late last year, we changed the name of our corporate entity from Grammarly to Superhuman. We did that because the scope of what we do has broadened quite a bit. And so in addition to Grammarly, which is everyone’s favorite writing assistant, we now have a document space called Coda, and a very popular email client called Mail.

We launched a new product called Superhuman Go. Go is the platform that brings you a network of proactive and personal AI assistance directly to wherever you work. So for people familiar with Grammarly, you can think about Go as taking that core idea and allowing anybody to write agents that work just like Grammarly does. Your sales agent, your support agent, so on, can all help work with you right where you work.

The core idea is that most AI tools require a big change in behavior. We bring AI where you work. Across our products, we see about a million different apps and agents every day. We seamlessly blend AI right into your experience, so you don’t have to think about AI.

That’s what we’ve been doing with Grammarly for years. And now we are opening that up so anyone can build on that with Superhuman Go.

You and I hung out a few weeks ago, and one of the things we talked about was the fact that Grammarly, for most people, is expressed as a keyboard. It shows up on your phone and your documents. You spend a lot of time figuring out how to make sure you work with things like Google Docs. 

All of those products are integrating AI in exactly the same way as you’re describing. I think you put AI right next to the insertion point, right next to your cursor. What’s the big differentiation for you?

First off, I think very few of them actually are doing that particularly well. A handful do. But as I mentioned, we see a million unique apps a day. The way to think about Grammarly is it’s your assistant that lives everywhere. You might be in a web app. It could be Gmail, it could be Google Docs, it could be Coda, it could be Notion. 

You could be in a desktop app. That could be Apple Notes, that could be Slack, that could be whatever app you’re using. It could be every mobile application. We have, for every one of those applications, figured out the right way to observe what you’re doing, annotate it in a way that is unobtrusive to you and to the application, and to make changes on your behalf. And doing that everywhere is the proposition.

As you jump from tool to tool, there are different types of AI in each one. Most of them actually don’t have that. Like I said, we see a million unique surfaces a day. And the ones that do don’t feel like one integrated experience. That’s why we have about 40 million daily active users and that’s what they use us for.

It feels like the promise there is by looking at all the places you work, your tool will be more intelligent than disparate tools you might encounter in all those places.

Yeah, becoming more intelligent is certainly part of it. For many people, it’s just that one familiar experience that really feels like a virtual human working right next to you.

So is it consistency of experience or is it better and more useful results?

It’s both. The fact that Grammarly is ever present is very important and [it produces] very high-quality grammar results. As we split the product into parts, we said, “We’re going to take the platform layer of Grammarly and we’re going to turn it into a platform.” That’s what we call Go. That’s about allowing other people to create agents and experiences that provide a high-quality experience that we can make ubiquitous for them.

All right. I wanted to understand what you think that the sell of the tools is. I think that’s very important for my next set of questions.

The other thing that I really want to ask is a question I ask everybody, but I think the stakes are a little bit higher here. It’s about decisions. How do you make decisions? What’s your framework?

We have a lot of different thoughts on how to make good decisions. I wrote a piece a long time ago called Eigenquestions, which is about framing not only the right solution, but how do you frame the right question? In terms of rituals we use, the most canonical one is something we do called Dory and Pulse, which is a way to solicit feedback and opinions so that you get rid of groupthink in the decision making process.

But those are probably the two that get mentioned the most if you were to ask teams here at Grammarly or previously at Coda or before that when I worked at YouTube or Google, or so on.

You can see where this is going. Let’s put this into practice. You launched a feature in Grammarly called Expert Review that generated suggestions on how to improve text. It synthesized advice from experts. It used my name among many other names: journalists Casey Newton and Julie Angwin, you can go down the line; bell hooks was in there, which is hilarious in its own way. 

You do not have our permission to use our names to do this. You had little check marks next to the name that indicated it was somehow official. People did not like this, I did not like this, and you removed the feature. Tell me about the decision to launch this feature with names you didn’t have permission for and the decision to unlaunch the feature.

I expected we’d talk a bit about this, so I have lots of different thoughts on it.

First off, I’d say I understand and respect how challenging a world it is for experts and idea generators these days. I’ve made a long career out of being a partner to folks like you, to folks like the ones you’ve mentioned. It deeply pained me to feel that we under-delivered for them. And I’d really like to apologize for that. That was not our intention.

On the specific feature you’re talking about, I’m sure we’ll talk more about it, but just to give the high-level view, my view of it is that the feature was not a good feature. It wasn’t good for experts, it wasn’t good for users. It was a fairly buried feature. It had very little usage. You mentioned it last week and talked about it. It took months for anybody to even sort of find it. All that doesn’t really matter. We can do much, much better. I believe we can and we will do better.

We decided to kill it pretty quickly. Notably, we decided to kill it while there was some feedback well before there was a lawsuit and so on. It was just not a good feature. It was misaligned to our strategy. It wasn’t the way we wanted to go after it. We have a much better view on how we think experts should participate in our platform, and I’m a lot more excited about that.

How many people work at Superhuman?

About 1,500.

So out of 1,500 people, how many people decided to launch this feature?

It was a small team. It was probably a product manager and a couple engineers.

Inside your decision-making process where you described a way of making sure you solicited the right feedback and then have groupthink, it never came up that using people’s names without permission would make them mad?

Maybe I should step back and talk about what inspired this team and what they were trying to do and what fell short. Let’s start with what they were trying to do. They were heavily influenced both by what we view users to want and what we want experts to want.

Let’s start with users. A lot of people talk about Grammarly as the last mile of AI. They say, “It feels like having your grammar teacher right next to you everywhere you work.” And so many of our users will say things like, “What would it feel like if instead of your grammar teacher, it was all the rest of the people in my life that could be with me as well? I want my head of sales to sit next to me and tell me I’m about to recommend the wrong product. I want my support person to sit next to me and say, ‘I’m about to email this person and you should know they had a big support issue last week and you should acknowledge that before you talk to them.'” 

That’s the core ethos of what we’re building. It is taking Grammarly and expanding it so that many of these other experiences come along with you. For some of those people, the people they want feedback from are the people they admire. It’s the experts in the world, it’s the people that they’re trying to look up to and trying to model. They try to do that today with LLMs. They go to ChatGPT and Claude and say, “What would Nilay think about my writing?” That was the inspiration for what the user was trying to do.

On the other side was what the experts were trying to do. As we formed our strategy here, turning Grammarly into a platform, the first people I called when thinking about this were a set of experts. I talked to some prominent YouTubers, I talked to a really prominent book author, and they all told me the same thing. It’s a really hard world for experts out there right now. It’s really hard to drive connection. If you’re a book author, your path to getting to your fans is you just keep publishing more and more books. And they all heard what we were doing and said, “Boy, it’d be really amazing to develop an ongoing connection with my fans. What happens when they put my book down? Can I still be with them and help them along the way?” It feels like the world shifted against them, AI Overviews stealing a bunch of their traffic and so on. This seems like a much better way to go after it.

That was the inspiration behind it. The team and the feature didn’t deliver. It didn’t deliver on either side of it, really. We ended up with an experience that was pretty suboptimal for the user and obviously suboptimal to the expert. The fundamental reason is something you said last week, that it’s really hard to distill what you would do as an editor based on the outcome of your published work. It’s really hard for AI to do that. We need your engagement for that to be a good feature.

So I think they launched something that wasn’t particularly good. Doing that and learning from it is part of the process, but that’s what they thought they were doing.

Sure. How much do you think you should pay me to use my name?

It’s really important to think about attribution and think about impersonation, and so on. As an expert, you have a trade you make on the internet. The idea is that when you put content out there, myself included, you hope people use it. You want to refer to other people’s content. You want people to link to you. You really, really hope they attribute you when they do. When somebody uses your content, should they attribute you? Of course. And to attribute you, you have to use your name.

There’s a different line which is, should people be able to impersonate you? And I think that is a very different standard. And we saw the lawsuit. Respectfully, we believe the claims are without merit. The idea that the feature is impersonation is quite a big stretch. Every mention was very clearly, “This is inspired not only by this person, but also inspired by a specific work from this specific person, with a clear attributed link to get back to them.” It’s far from that test [of impersonation].

If your work is used, should you be attributed? Yes, I think you should. That would be the nice contract. It doesn’t always happen. There are many products that will use your work and not attribute. We thought it was very important to attribute. I think that would be the view.

Let me flip around the other way–

Wait, let me ask you that question again. If you use my likeness, how much should you have to pay me?

We should not be able to impersonate you, period. We did not. If we use your work, if any LLM product or any product at all uses your work, they should attribute it to you and they should link back to you. That’s a human contract we have for how the internet is supposed to work. It’s a really important one. It should be the standard you’re looking for from LLMs too.

It’s a very different question you’re asking here, which I think is a more important one. I’m not really here to defend this feature. I don’t think it’s a good feature. I’m not trying to be close to this line. I think our main goal is to build a platform a lot like YouTube. You should choose to be on our platform. You should be able to choose and build an experience you trust. You should choose your business model. When you choose your business model, you should get paid for your contributions to it. That’s the model we’re working on. That’s really where I want to be.

I hear that you’re saying you’re not here to defend the feature. I just want to put you in the chronology for one second. The feature was launched. It is true. It took a while before we even discovered it, and wrote the story about it. It then blew up. Many other people wrote stories about it.

Your first response to the negative publicity was to offer people an email opt-out where if I didn’t want my name to be used, I could email Superhuman and say, “Please take me out.” Only after the lawsuit did you discontinue the feature. 

That’s not true, Nilay. We heard the first complaints from a handful of experts. They said, “I’d like to opt out of the feature,” and we addressed what they asked for. We then sat down and looked hard at the feature, and to be honest, I hadn’t spent any time on it. I came and looked at it and I said, “This is off-strategy for us.”

We announced we were taking it down well before there was a lawsuit. The reason we took it down is it’s all strategy, it’s not what we want to do. That’s not how we want to work with creators. We think we’re building a platform you should want to be on. We think we’re hopefully part of the solution for how you can take your work and make sure it’s present for people everywhere. It wasn’t our goal to be anywhere close to that line. But the feature wasn’t good, so we took it down.

You say it’s off-strategy for you. The feature obviously shipped. What made it on-strategy at the time it shipped?

At the time, the team believed they were doing that. They were looking at users and they were focused on a user need, which is, “I wish an expert could give me feedback at this moment. I wish my salesperson could give me feedback. I wish my support person could give me feedback. I wish my idol could give me feedback. I wish this expert could give me feedback.” In itself, I think that motivation that users have is a really good one, and I think one that I would encourage experts and creators to lean into. It’s a big opportunity.

Why would they lean into it if the value for that is $0?

No, it should be our job to make sure the value is not $0. We want you to–

How much do you think you should pay me?

To be clear, when you do the work to bring an agent, craft it, put it on our platform, then you should get paid for it. Just like how platforms like YouTube work.

Walk me through the economics. If you launch a platform that lets me say, “Okay, Nilay Patel can give you advice inside of Grammarly,” what are the economics of that platform? How much will I get paid to do that?

We’re building this business model now. Our store currently has a payment model for this that has a 70 / 30 revenue split that’s very similar to how a lot of other products do. If you want to go build an agent like that, you can do that today. There are a number of experts that already have. And that’s the core part of our strategy.

If you already had that system, why build another system that used my name for free?

We didn’t have the system at the time. And they are very different features. The team that built Expert Review, they were trying to address this need, they just missed.

How many times did you use my name?

Because it’s a legal case, I really can’t get into details of those types of things, but it was a very small number for basically everybody. The feature had very little usage.

Was there a set group of names? Was it just picking names out of the ether? Was it randomly hallucinating names?

It came right from the popular LLMs. So it’s exactly the same experience you would have if you came to Claude or Gemini or ChatGPT and said, “Can you take this piece of writing, recommend the people who would be most useful to give feedback on it, take their most interesting works and use that to try to give me feedback.” 

By the way, that’s a really hard feature to make good for users and it’s going to take work with people like you to actually deliver on that need.

Did you track how many times you were using people’s names?

We’ve certainly logged all the different interactions, yes.

So you do have a record of how many times my name showed up or Casey Newton’s name showed up, or anything like that?

It’s not tagged that way, but we’ll have to produce it obviously for a lawsuit.

Journalist Julia Angwin has filed a class-action lawsuit. There are a lot of ways that could go. You’ve said that claims are without merit. What did your lawyers say to convince you that the claims were without merit?

What did the lawyers say? It’s actually quite clear. It’s a layman’s test, it’s pretty obvious. It’s just not impersonation. When you look at the feature, there’s a disclosure next to every single link at the top and the bottom of the panel, very clearly stating these are inspired by these people. It clearly states we have no relationship with these people, that that’s the future. By the way, I’m not trying to defend it as a good feature. I don’t want to be on this line.

Maybe I could step back for a second and say, this is not the first time I’ve seen a situation like this. I used to run the team at Google — I used to run the YouTube team. When I got to YouTube, we had a big lawsuit from Viacom at the time, a very heavily watched lawsuit that we won. We won on summary judgment actually. We completely crossed the legal bar. But that’s not the standard we held ourselves to.

We looked at that and we said that the law doesn’t require us to do this, but we chose to do a lot more. We launched Content ID as a way to make sure that creators could find content that other people uploaded on their behalf. We launched an open creative program, which, as far as I know, is still the only platform with an open revenue share that’s out there.

I don’t think the legal standard is the right standard to be looking at. I’m not trying to get close to it. It’s fairly clear to me that we didn’t cross below it, but that doesn’t matter. We’re not trying to be close to that standard. We need creators to work. We need their business models to work for our platform to work, and it’s very similar to what happened at YouTube.

I have a lot of thoughts about YouTube. I’m going to ask you about YouTube. I have a lot of thoughts about the Viacom case. A lot of what happened with Google and YouTube is the foundation for the internet and policy on the internet as we know it today. That is changing because of AI. So I do want to ask you about that stuff because I think your history will shed a lot of light on how people feel about AI in particular today.

Sure.

I just want to stay on this one more turn. You’re saying “impersonation,” but that’s not the claim in the lawsuit. The claim in the lawsuit is the law in New York and California that bars companies from using names and identities of people for commercial purposes without their consent. And so, here you did have a commercial purpose here. You were selling the software and names were appearing as inspired by our names. 

I’m not in this lawsuit. I haven’t signed up for the class. The class hasn’t been certified. I promise I haven’t sued you yet. But the bar is very different from straightforward impersonation. It is the use of likeness for commercial purposes. And you’re saying it is without merit, and I haven’t seen you address that specifically anywhere.

I’ll have to leave the legal arguments for the lawsuit and for the court case. I think our view of it is that the set of work that was there was a fairly standard attribution that was well above the bar that any other product would do, what every LLM on the planet is doing and so on. And it didn’t come close to using name and likeness in any way that was beyond attributing the source.

You’ve already said this feature is bad, so I won’t hammer you on this too much, but I’m reading the edit that was generated with my name on it, which is just bad. I would literally never give this edit. It says I should “raise the stakes of a headline by adding emotional or stakes-based words that could underscore why this launch matters right now.” I’ve been an editor for over 15 years. I’ve literally never said anything like that.

You pinned the reason why. The idea that you can uncover your editing style from the end work, I just think it’s not possible. It’s very hard to come back from that end work and say, “What was the editing pass before that?” To do that well, you have to do it. You have to sit down and say, “Here’s how I would edit these things.” And I think you can provide that service and you can get paid for it. And hopefully we’re one of the platforms where you choose to do that.

So, you don’t have an annotated list of whose names are used in the feature, but you have logs of everybody who uses the feature, presuming those logs have the names in it, and you presume you’ll be able to provide that if you get to discovery.

I’m sure we’ll be asked. Yeah.

Do you think you’ll be able to provide that list?

I’m sure we’ll be asked. We’ll see.

Because it strikes me that one way you could get around this lawsuit is by just saying, “Actually, we never used Julia’s name until she went asking for it.” In the same way that OpenAI, when it responds to the New York Times lawsuit says, “This never happened until you prompted us specifically to do the things you said are illegal.” And here you have the same out. You could say, “Actually, until you asked us, we never generated your name.” Has that come up?

There are a lot of things in our defense that I won’t cover, but I think the core of this argument isn’t going to be that. The core of the argument is that what we did is normal attribution of content on the internet.

The reason I’m asking this very specifically is, “Hey, we never actually used your name,” puts you in a different spot than, “Hey, we have different feelings about the value of attribution.” The reason I’m asking this question as harshly as I’m asking it is that I don’t think the defense is whether or not people use the product or whether or not the names ever showed up. I think those are just clear cut, binary on or off. “Your name never showed up, you can’t sue us.” You’re saying the defense is, “Hey, that’s not how attribution should work.”

You used to be the chief product officer at YouTube, and YouTube is defined by creator attribution scandals. Every year, there’s another scandal about react videos. Every year there’s another scandal about the usage of copyright, about whether or not you can make an AI creator out of Marques Brownlee and just run a million videos of him and steal his views. It’s the essence of the YouTube creator ecosystem.

Do you know how YouTube reacted to this feature when we wrote the story? They invited me to an early preview of their AI likeness detection system, because they knew that would be good press for them. If you were still running YouTube, would you have ever allowed a feature like this to go out?

It’s interesting the way you just described it. First off, some of the ones you described, describing react videos as scandals is a very interesting way to describe it. Because I think–

Oh, they’re absolutely scandals.

I understood your definition. They’re also incredibly popular and have led to a whole genre of content being created. Likeness detection, Content ID, they were all fantastic tools for creators. My team built the Content ID tool with the same idea. 

If somebody does that to Marques Brownlee and they copy his videos and put them up, then you can use that tool and he can not only go claim them, but he can also go make money on them. That is a tool we built for YouTube, and I think it’s been incredibly popular. We took what looked like a scandal and went well beyond it. To be super clear, it’s not what the law requires.

No, I understand what some of the law requires, but the use of Content ID and the issuing of copyright strikes, which is something I’ve experienced, if you issue a copyright strike as a creator against another creator, that is a nuclear move, that comes with severe social and community consequences.

To be clear, if you use Content ID and you use it for monetization, you’re not issuing strikes.

Right. But I’m saying the YouTube economy writ large is defined and in many ways the products are built around issues of attribution and payment and monetization — where the views flow and where the money flows. 

Content ID is a brilliant innovation because it allows people to get some views and the right people to get paid. YouTube doesn’t exist without music. If the music is ever on YouTube, the publishers get paid because Content ID can identify the music and get them paid. I understand that. But that is a system that tracks attribution and delivers monetization. 

I’m just saying, I don’t see how YouTube could have ever said, “We’re going to let Marques Brownlee edit your video without paying Marques Brownlee.” It wouldn’t exist in that ecosystem. 

No, you just said it. What YouTube did is say, “When it happens, we are going to help you find it,” but you’re not preventing someone from doing it. It’s a very different standard.

But you’re making sure that the people get paid.

You’re making sure after. To be clear, the idea of copyright is very different from a name and likeness claim. If I built a video that said, “Hey, I really like Marques Brownlee, and here’s what I think he would say,” or “let me tell some jokes about Nilay,” it’s a very different standard. The standard for YouTube was about copyright, and that’s a set of regulations that are governed by totally different parts of the law. 

In that case, you have a claim, there’s a DMCA statute that allows you to go and enforce your copyright. That’s not actually what we’re talking about here. But the principle of what is similar is that in both cases there’s a law, and the law does not really meet the creative bar. I think the goal of the community, the goal of products like ours, working with people like you, is not to use the law as the test. The goal is to get well beyond that to align our interests, such that your success is our success, and that should be our goal.

Are we required to do it? No. I don’t think that’s a requirement. We choose to do it because it’s the best way to build the right products for our customers.

I used to be a copyright lawyer. I’ll happily admit that I was not the world’s best copyright lawyer. I understand that people don’t understand the difference between copyrights and trademarks and names and likeness. I’m saying that AI is collapsing those differences faster than ever before. There are European countries that are just openly suggesting you should expand copyright law to include likeness. 

I should be able to copyright my face, and then that means I can slide in under the existing legal regime instead of hoping that the United States Congress in 2026 can reach a resolution on expanded likeness protections. This is a thing that is being suggested because copyright law is more or less the dominant regulatory framework that exists on the internet.

I look at the big social platforms like YouTube, Instagram, and TikTok, and they have built all these systems to respond to copyright law — specifically copyright, things that can be protected by copyright law, that can be monetized in different ways by copyright law. Our likenesses are not one of them. Our names and faces are not one of them.

Yeah.

This seems like the place where the things you’re allowed to do and the things you should do are going to be ever more divergent. You are the one who’s experienced it the most loudly of late. And I’m curious if you’ve learned anything other than, “There’s what the law says I should do and there’s what I should do and we’re going to find the line down the middle.”

We’ll see if the laws find a ground on that. I do think it’s a catch-22 as a creator. The copyright law has been around for hundreds of years now in its various forms. It started like the way music composition was licensed, it started with Mozart and Bach. It has grown since then. Almost every country in the world has reached a very similar standard.

There’s a very thin line between taking publicly available work and being able to refer to it, and copying it. The idea that defining all references to work as being uses of names and likenesses, it would break the internet, it would break your business. You wouldn’t be able to refer to me. How’d you get on a show last week and talk about me?

Just to be clear — I don’t want to be all inside baseball about making a podcast, but we made you sign an appearance release to come on the show.

To come on the show. But you talked about me before I came on the show. Of course you should be–

We talked about you before you came on the show, but in order to be a real media company and not fly-by-night and then to use clips of your face talking, our lawyers need a release. And if you don’t sign it, they won’t let me use the show, because they need to be protected against you showing up tomorrow and saying, “I didn’t give you permission to use my face.”

No, I understand that. My point is broader than that. You talk about lots of people and that’s part of discourse. That’s part of how we work. Your articles will link to people, you attribute them. I think that’s really important. And if you drew a line that attributing something is like using their name and likeness, then it’s a very hard line to draw.

Again, this wasn’t an attribution. You just made something up and put my name on it. There’s no attribution here. This isn’t anything I ever said. It’s not something I would ever say. I’m not even sure how you would get to the idea that based on my work that I would ever say anything like this. There isn’t an attribution here. There’s no work that exists that would lead you to this outcome with my name attached to it.

I’ll repeat: The feature was, “Here’s a suggestion generated by a specific work from a specific person.” Everything is clearly indicated that it’s a suggestion generated from–

Wait, I’m sorry. You think in my role as editor-in-chief of The Verge and co-host of The Vergecast, I emphasize the importance of crafting compelling headlines that convey urgency?

I already told you it’s a bad feature. That’s not what you’re questioning.

You’re telling me there’s attribution and I’m just wondering what the attribution is.

Just read the rest of it. It says, “Based off of this work from you, we asked–”

No. It just says, “This suggestion is inspired by Nilay Patel’s The Vergecast.” I promise you on The Vergecast, I’ve hosted that show for a long time. I have never said, “What emotional or stakes-based words could underscore why this launch matters right now?” The Vergecast is not a show about editing headlines about smartwatches, first of all.

I understand, yeah.

So I don’t know how you got from A to B and then I don’t know why you think that’s an attribution.

If you were to go and read someone’s work, put it online—you do this on your show all the time—and say, “I read this person’s work and here’s now my conclusion from it,” you should decide whether that is a suggestion generated from attribution or not. I told you I think it’s a bad quality suggestion. I’m not trying to defend it. I don’t think that’s what we want to talk about there. But the question, when you publish work, can humans and AI use it to generate other suggestions, other impressions? They can, and you would like for them to attribute it.

But it’s not work that that person made. Hallucinating a thing that you thought I would make and then saying you’re attributing it to me, doesn’t provide me any benefit. It might actually detract from the benefits I could provide to other people. That’s the disconnect that’s in my brain. I’m not sure why this is an attribution.

If I’m like, “I talked to Shishir and I think here’s what he would say,” that’s very different than saying, “I read all of his work and I’ve asked whatever quick version of Claude or ChatGPT to just make something up and I’m going to put his name on it.” There’s something meaningfully different there. And it doesn’t seem like you’re willing to concede that.

No. I’m not. It’s fairly clear that generating a suggestion based on somebody else’s work… just use the simple task of a human doing it. If you generated a suggestion based on someone else’s work on your show and you said, “I read this person’s work and here’s my impression from that, this is what I think they meant,” you could build a whole show based on that. So you don’t always get it right. You don’t always say things about the people that you’re commenting on that are correct.

Right. But I’m not attributing that idea to them. That idea is clearly mine.

The feature is very clearly stated that this is a suggestion developed by this feature based off of this work.

Let me ask you a different question. I’m curious about this across the whole sweep, from YouTube to now. There’s an NBC News poll that just came out about how people feel about AI. And the answer is bad. People feel badly about AI. AI is polling behind ICE and only slightly above the Democratic Party. This is a tough spot to be in. It’s a -20 perception.

I think the reason for that is because it’s so extractive and the value isn’t there. I would compare this to YouTube, which a lot of people thought was pretty extractive. You fought a pitched copyright battle about YouTube, about whether South Park could be on YouTube without permission, and Viacom was going to sue you. That case was fascinating because the public was decidedly on YouTube’s side.

Oh, that’s an interesting memory of it.

I covered that case. I was in law school studying copyright during the case. The vast majority of people were like, “YouTube is really useful. We love it. And these big Hollywood companies suck.” When Napster was under fire, the public was not on the side of the record labels. They were not on the side of large companies. They were on the side of file sharing. Because the utility was so high regardless of the economic or social cost. I could keep going on and on with this. You can tell people all day long about the labor costs of Uber and they’re still going to use Uber. 

There’s a trial right now about whether social media platforms are damaging to teens’ health, whether they’re defectively designed products that hurt kids. That trial is ongoing as we speak. The jury is impaneled right now, and people are still going to use those platforms because they don’t care.

The environmental costs of big, stupid cars — you can tell people all day that trucks will ruin the environment, Americans will still buy trucks. That’s what we’re going to do. AI is only perceived as extractive. It’s less beloved than ICE. That’s crazy to me. Do you understand that the extractive nature of AI is causing a problem for the whole industry? Because you’re sitting in the middle of one of these controversies right now.

I think you’re drawing a pretty broad link for why people are afraid of AI.

I think great consumer products that provide a lot of value overcome their social costs.

Number one, AI has a lot of challenges ahead of it. There’s lots of opportunity. It does meet your other tests. It has created some of the most popular products in history. And there are many people who would have you pry any of those products from their cold, dead hands.

I think that the challenge with AI right now is that it’s challenging people’s sense of the future of their humanity, their ability to work. Those are really the challenges there. The line we’re talking about here, I don’t think that’s actually what you’re reading into that poll.

What would you read into the poll where AI polls below ICE?

People are scared for their jobs.

You think people are just scared for their jobs?

I think so. I think–

Do you understand that that’s extraction? You’ve taken the sum total of everyone’s work on the internet and now you’re going to use it to replace human beings and their jobs without any economic recompense.

That is certainly one way it could replace people’s jobs. I don’t think that’s the way that most people are worried about how it could replace their jobs. I think they’re wrong about it. I don’t actually think it’s going to replace as many jobs it’s going to create. One of the reasons why is that our model for thinking about AI is about bringing it to people and expanding their work. We like to call it the product that helps you become a superhuman. So I think they’re wrong about it. 

But if you’re asking me why it polls so low, it’s because the copywriter feels like, “Maybe I’m not going to need it anymore.” It’s the salesperson who says, or a support person who says, “I wonder if an agent’s going to be able to do my job.” I think the idea that it has something to do with name and likeness is a pretty big stretch.

You’re sitting in the middle of a controversy where a lot of people are mad at you for appropriating their work. If you’re a copywriter at an ad agency — I know a lot of copywriters at agencies — they’re saying, “You took all of my work.” Not you. “The AI companies have ingested all of my work for training and now they’re going to replace me and no one got paid.” Hollywood is basically like, “No one’s paying us for this.” The people who write on Tumblr are saying, “Now OpenAI is going to make a porny fanfic for people. That was our job. Why didn’t you pay us?”

You’re absolutely right. Creators are facing a very hard road right now. I don’t think it’s caused just by this feature or just by the latest advanced AI. They’re facing a hard future for a lot of different reasons. But the poll you’re referring to is of the broad population, and the broad population is not creators. The broad population has jobs that they are afraid may not be available to them. Whether they’re a truck driver, whether they’re a support person, that’s what they’re afraid of.

I’m not diminishing the fact that creators also have an issue with AI. I’m just pointing out that the broad impression of AI, the challenge we have with it, is that the entire industry has done a really bad job of helping people understand why a technology like this can help them and not prevent their job from being taken away. And most people just aren’t creators.

I’m not objecting to what you’re saying about creators. I’m just saying most people aren’t stressed about that because that’s not their job. That’s not what they’re individually afraid of.

No, I understand what you’re saying. I’m just pointing out that almost every major technological shift has been extractive in some way. Google copied all the books in the world without permission, and then we had a Google Books case, and Google had to win that case. And they did. They were able to do it. 

Google had to win the Viacom case with YouTube. Google had to win the Google Images case against Perfect 10, which was maybe the least sympathetic plaintiff of all time, because it was a porn company, and Google was doing Google Image thumbnails of softcore porn. It was obvious that Google was going to win that case, but they still had to win that case. 

All of this stuff got litigated at pretty intense levels in ways that are precedent still to this day, and it doesn’t feel like we’re spending the time to litigate, “Hey, you can just make a deepfake of my face and use it to sell headphones on Alibaba.” You can just start a company and say, “Well, it’s attribution, so I’m just going to use the names of famous people on my product to say these are the edits.” 

There’s a link there that seems very direct to me, maybe just as a creator, but also I would submit to everyone else who says there’s a pretty extractive cost here and the consumer benefits are not nearly as clear. 

In some ways I like the YouTube analogy. It’s a good analogy. When I talk to our team about why the legal standard shouldn’t be the minimal standard we try to hit. I will also tell you that what we’re doing here at Superhuman, I don’t expect to be very close to this line. There are other products that are very close to this line. Our core strategy is about building a platform that you can choose to participate in or not. I don’t think it’s going to be a fine line for us. I know in this case, we built a bad feature. It was not received well by either users or experts. I don’t like that. I killed it for that reason, but I don’t expect to be sitting here…

The YouTube analogy: you’re right. The Viacom case had to get litigated for YouTube to exist. And if it had gotten litigated the other way, YouTube wouldn’t exist. Actually, most of the internet wouldn’t exist. And so the idea that it got litigated that way, it was a win for everybody. It was a win for society. I do think it was a win for YouTube. I don’t expect that to be our case here. This is not a line I’m going to be close to.

There are a bunch of copyright cases against the AI companies. I feel like I should disclose that our company, Vox Media, has sued Google over ad tech. It has nothing to do with AI or copyright. I feel like I need to disclose it because I disclose it every time. Vox Media sued Cohere, one of the AI labs, over copyright infringement. The New York Times has sued OpenAI.

There are a million of these copyright cases floating around. There are more every day. One of them could go the other way, and this industry could faceplant. What do you think happens if one of the big AI labs loses a copyright case?

Are you asking me as someone watching the industry or are you asking me in my Superhuman role?

Both. 

My Superhuman role is straightforward. Whatever the models do is what we’ll use. And so if the models end up needing to restrict that behavior, then that is what it is. We sit on top of the models. I don’t think we’ll be the ones in the middle of those cases. If I look from an industry perspective, I think it’s a really hard case, in both directions. I have real empathy for both sides.

Copyright law is, like you said, what has allowed the internet to work, and not everybody is happy with how the law draws a line. You’re right that YouTube tested that line in a new way with the Viacom case and so on. What OpenAI, Claude, and Gemini are doing will test it in a new way. I hope they find a good line for it. I don’t think that’s where we’re going to be. We’re not going to be the ones in the middle of those lawsuits or those figuring out where that line is.

If the incremental cost of a token skyrockets, because suddenly the AI companies have to pay massive licensing fees to copyright owners downstream, what happens to your business?

I don’t think it really matters to us because it’ll all happen in the models underneath us. It doesn’t matter to us as our own entity. It matters to me as a citizen. I think it’s really important. But I would also remember that for us, the primary agents people are trying to build on Superhuman have nothing to do with this. The expert case is one case. 

What people are doing with our product is they’re going and taking their sales methodology and turning it into agents for their salespeople to be able to use. They’re taking their support tools. They’re taking their calendars and making sure that as you’re writing an email and saying, “I can meet tomorrow at 6PM, please make sure that I’m actually free then.” Like I said, this is not a common part of our business.

No, I’m not saying the expert review part. I’m saying you’re describing, “Take all of my sales literature, take my calendar,” that gets loaded in a context for a model that you call, right?

Yeah.

If the incremental cost of a token in that model goes up because the AI companies suddenly have to pay a bunch of copyright licensing fees, what happens to your business?

If I were those companies, the solution I would have isn’t to go distribute that cost across all users. I would charge users a subscription for using that information. That’s the business model they should have.

My personal view of what should happen is I should come to ChatGPT or Gemini or Claude and I should prove that I’m a New York Times subscriber, and then it should give me answers for The New York Times. And The New York Times is going to have to make a choice of, “Do I only want my content to be used for my subscribers or not?” But if I were those companies, that’s what I would promise.

All these cases are different. So I’m going to generalize here and you can attack me for generalizing and that’s fine. But broadly, they split into two lines. There’s one, the thing you’re describing, which is you spit out content that I’ve already made, like Suno can make a Beyonce song that’s copyright infringement on output. Other set of cases where I think much more important–

It’s on input.

It’s on input, it’s on training. And saying, “You ingested all my material without permission.” That’s also copyright infringement. If that goes the wrong way for the model companies, their cost structures change in retrospect. You can’t build the systems you’re describing because the model itself–

No, that’s what I was responding to. So output, a copyright law covers it. If you produce something that could be mistaken for the work of another person, then they can file a claim, they can get it taken down; if they choose to leave it up, you can choose to negotiate a revenue share agreement or whatever you might want to do with that. Output is cleared. Input is not cleared, like you said, and the cases haven’t been resolved in a particularly clear way.

The point I was making is if I were them, I wouldn’t take the cost of input and distribute it across all users. I would split the model. If it really went that way, I would say, “Fine, you don’t want your content there. I will build a version of the model that is just for New York Times subscribers and charge them.”

Your particular question was, “Will that cost get passed along to the other users of the LLMs?” That is what’s happening right now. They are paying for that content. It is being passed to us. Does it matter to us? Frankly speaking, the pace of innovation in that category is so high, the profits being generated there are so high, that no, it hasn’t mattered to the upstream users — or to us, to ChatGPT users, Gemini users, and so on. It hasn’t stopped their growth at all. Will it someday? Maybe. I don’t know.

But my point was more that in this world of output, copyright is fairly clear and the law covers it pretty well; input copyright is not that clear. It’s not clear for good reason. If you’re a human and you read a book and then you learn something and then you talk about that thing, what should happen? And that’s a legitimate question that hasn’t been well tested in the courts.

I don’t think the industry is going to take that cost and just pass it along to all users, but we’ll see. If it does, then it does and we’ll have to deal with it. Everybody will.

Most humans cannot infinitely scale to create trillions of dollars of enterprise value by reading one book. That’s the difference. To get that value at that scale, usually lots of people have to buy copies of the book and the economics spread out. The scale is the difference.

I understand that is a very fair argument, that this is not the same as a human reading the book. Obviously that’s the line being taken there. I would postulate that whatever way that case ends up, the correct answer for experts is it’s time for a new business model. And I think the idea is that you’re going to get into exactly the right spot and you’re going to get pennies for every query coming through Gemini. That’s certainly one path. 

When I went and talked to people about what we’re doing here at Superhuman, what they told me is, “Actually, I don’t really want to be fishing for pennies whenever my work gets used. I want to build connections with people. I didn’t build content to put it out there and get paid a fraction of every use. I want to go build a product that actually connects with people. I want to do this.” YouTube offers a great way to do that. What we’re doing is Superhuman should offer a great way to do that as well.

Let me ask you about that specifically. I wasn’t at South by Southwest. We have a little baby. I didn’t travel this year, but I watched Instagram. I experienced South by Southwest through the magic of Instagram and TikTok. 

You had a suite there at South by Southwest. I looked at some of the videos. The caption on one of the Instagram carousels… I’m just going to read you the caption. This is from the Superhuman suite at South by Southwest. There were a lot of talks there. The summary of the talks was, “AI can’t replace human creativity, empathy, or emotion. It won’t take all of our jobs, but it will reshape how we work. And in the AI era, taste and judgment are more valuable than ever.” Valuable on what metric? Is it dollars?

Valuable on every metric.

Specifically dollars. Dollars are what I pay my mortgage in. Is it dollars?

I’m sorry, I didn’t understand the question.

If my “taste and judgment are more valuable than ever,” but it’s also infinitely replicable and you think I need a new business model or every creator needs a new business model or–

Sorry, you made a big leap from that.

How do I make more dollars? If my “taste and judgment are more valuable than ever,” where do the extra dollars come from?

So just to be clear on the tagline for Superhuman, what we believe is that we can help all our users become superhuman by bringing them tools that allow them to expand their work. The main way we think about people is that Grammarly doesn’t do your work for you. Grammarly helps make you a better writer. And you still publish your essay, you still post your article. It’s our job to turn you into a superhuman. That’s our promise to our users. That’s what the banner’s about. Your question is a very good question.

The banner says “taste and judgment are more valuable than ever.” I’m just asking you to define the value and what value is going up and what value is going down.

If you’re using Grammarly and you’re a student or a salesperson, it is your taste and judgment that is actually what gets valued in the end. We’re here to help make sure you don’t make a mistake. We’re here to help make sure that you present yourself the best possible way. That’s what that banner is about.

We have 40 million users who use our product. The vast majority of them work in professional industries, they’re salespeople, they’re support people, that’s who that’s addressing. And we’re trying to tell them, “Don’t worry about losing your job when you use our products because we’re here to help you scale more. We’re here to help you be a better version of you.” That’s what that banner is about. That’s what our promise is about.

We have a proposition for you, Nilay, as well, which is that you can now become one of those assistants to all those people. Many of them have no idea that they could use your help, but you can build that relationship with them like Grammarly does. People personify Grammarly all the time: “My high school English teacher sitting next to me everywhere I work, that makes me better. It makes my trust and judgment shine through.”

I would like your agent for people for whom you matter. You should be able to build an agent that sits right next to them and you can actually feel like their editor. Now, you have to do some work to make that a good experience. You’re going to have to figure out how to document your editing style in a way that actually produces a good result, not like the one you quoted earlier. But if you can do that, you should be able to build that relationship. You should be able to construct it the way you want, you should control it, and you should be able to make money on it.

Wait, hold on. You understand that you’re saying I have to do that because all of the work I’ve produced in my career to date has been taken without compensation by AI companies.

I didn’t make that statement.

What? You’re saying I need to invent some new business model as an expert and upload an agent of myself to your tool and then advertise it to get a 70 / 30 revenue split from however many people use Grammarly, because my actual body of work has been reduced to zero value. That’s a pretty hard sell.

I’m not here to tell you how to answer every question about what’s changed in the creator economy. One way to look at it is that the path of being a creator has become harder. I assume this podcast is going to end up on YouTube and Spotify and so on. There are paths to becoming a creator that become easier. There were folks that, when YouTube came out, told us all the same things and they said, “We don’t understand. Our business model is screwed over there. Why should we work on YouTube?” 

The ones that looked at it that way and saw it as replacement ended up not moving forward to the future. Obviously you did. You run a show on all these platforms and you figured out a way to turn that into a business. You saw that opportunity and you expanded what you could do. 

If we look at AI from that perspective and say, “AI is here and it’s reducing the number of people who need to traffic to my current experiences,” that’s one way to look at it. There will be some creators that look at it that way. I would hope we look at it the other way and say, “Some of these platforms are going to give you a way to participate, are going to give you a way to take your expertise and put it in front of people in a way that actually helps them in a different way than you could connect in the past.”

That’s a bright future. I’m not really trying to say you have to or you don’t have to. It’s an expansion opportunity. I’m not really here to defend what some other company is doing with content. What’s happening there is happening there. I’m just saying creators feel that pressure. We recognize it. There’s an opportunity. I had one creator tell me that their traffic in just the last year from Google is down 50 percent. They said that with AI Overviews and so on, traffic is down 50 percent. They sell books.

My reaction to them was, “That really sucks. I understand why that really sucks.” I would also tell them, “If you’re a book author, waiting for people to search your name on Google has got to be the least good way to monetize your expertise. So now let’s talk about how we can take what you do well and get it in front of people in a way that creates value in a different way.”

Maybe we can do it in a way and get it in front of people in a way that creates value in a different way. And maybe we can do it in a way that isn’t tons of incremental work for you and brings you a new type of opportunity. I think platforms like ours are going to give that opportunity to people who choose to take it. Not everybody will.

Can I extend this to you as the CEO of a software company?

Sure.

This is the same argument I hear about the frontier models, and the AI companies and their relentless expansion into every category. And then what you might call the SaaSpocalypse. Why would I pay your margin on tokens that you’re buying from them when I can just buy their tokens directly and just talk to Claude? Why wouldn’t I just vibe code something that looks like Grammarly and run it instead of paying… what, you’re like $160 a year? This is the thing that’s coming for the software industry writ large. Do you feel that same pressure?

The SaaSpocalypse is not an easy word to say. It’s a little overstated. I’ll give you my view of it. There is a lot of software. The ability to build software is definitely getting much, much easier. I think the reasons why people choose to use software is often because it does a job particularly well and that there’s often a network effect associated with it. 

I’ll give you an example and I’ll just focus on customer relationship management (CRM). People look at the SaaSpocalypse, they go and try to judge Salesforce and say, “Why would anybody pay for Salesforce? I could just vibe code my own version of it.” Well, first they say, “Why would anybody have a CRM?” And then if they do need a CRM, why would they pay for Salesforce?

I’ll answer both questions. Why pay for a CRM? When you have groups of humans working together, you need software for them to work together. If I have one salesperson, I can keep all my sales in my head. If I have 10 salespeople, maybe I can do it with a spreadsheet. When I have 100, I need software to keep them together. That software today is called CRM software. When I have 1,000 agents selling on my behalf, I’m going to need a way for them to coordinate with each other. It might be different, but I do think it’s going to be important. Why is it going to be products like Salesforce? I don’t know if it will be Salesforce, but the power of network effects is going to become much higher.

You’re going to say, “These are products for which I’m going to pick the product that is plugged into the ecosystem in different ways.” Why would people rebuild Grammarly? I’m sure they’ll try. My hope is by that point, we are the platform for all the best agents that work right where you work and you [don’t] have to go replicate all of them. I’m sure there will be people that will, but I think most people won’t. That’s an important bet for how the software industry moves on. The need for software is only going to increase. The importance of network effects will only increase.

You don’t think that OpenAI, or Anthropic, or Google will say, “Well, Grammarly is pretty useful. We can build a tool that looks just like it in seconds and ship it and kill their product. They’re just buying our tokens anyway. We can just kill them pretty easily.”

The ability to build that tool has existed for a long time. So if that were true, our business wouldn’t be growing. We wouldn’t have 40 million people using it every day. The idea is getting easier and easier. Yeah, we can’t stand still. If we stand still and don’t continue to innovate, if we don’t build that network effect, if we don’t continue to add value for people, we’ll get caught. That’s always true. 

I just want to end on a big thing. Again, you used to run these platforms. You’re on the board at Spotify. I know you think about the economy here and how work gets produced and who gets paid as deeply as anyone. I look at the shape of the media landscape right now, the information landscape that you might call the internet. And I say, “Boy, everything is slowly turning into QVC.” Making this stuff is getting devalued every single day. Being the person who makes the stuff is getting harder and harder. It’s something you’ve repeated several times now over the past hour. 

At the end of it all, the creators all have to pivot to selling something. The Paul brothers have to sell you bottled water. Mr. Beast has to sell you energy bars. We’ve devalued the work so much that unlike any other industry in the world, the internet industries, the information ecosystem pivots from bits to atoms. That’s pretty rare in the history of business.

Most businesses pivot from atoms to bits. The margins of bits are historically much better than the margins of atoms except on YouTube, except every major artist has to be on tour forever because the money from selling music itself is so low. AI is bringing that at scale. You can feel the pressure. This whole conversation has been about that pressure.

Maybe the legal doctrines don’t line up exactly and maybe I’m making too many generalizations and I hear the criticisms that you’ve parried me with, but that’s what I feel. All of these platforms, at the end, are becoming about someone trying to sell you something else. AI is just accelerating that. I’m just wondering where you think the endpoint is.

It’s an interesting characterization. There are multiple business models out there. What you described as bits to atoms, I think is one way to look at it. I’m sure some creators feel like the ad revenue from YouTube is not enough. It’s because there’s an opportunity, right? Why would you not take an opportunity? I think “have to” is one way to describe it. “Get to” is a different way to describe it. The other thing I’d say is I don’t really think it’s quite accurate to say bits versus atoms. It’s much more advertising versus subscriptions versus purchases. And I don’t think the spread on that is really about the bit and atom piece. It’s about the connection piece.

There are a set of platforms that are built off eyeballs. What I built at YouTube was primarily built off eyeballs. Over all of history, the amount of advertising spend has always been some percentage of GDP. It’s covered between 2% and 4% of GDP forever. That gets divided up amongst all these eyeballs and that is one business model. Yes, the number of creators fighting for that has dramatically fragmented over the last couple decades on every platform. What can come from that is smaller. There’s also the ability to sell products. The ability to sell products is as old as time, and in the middle of that is the ability to build connections. Those products tend to do a lot of work with subscriptions. 

It’s interesting when we think about some of my favorite creators, many of them subscribe to the 1,000 fans theory: that if you can get 1,000 people to pay you 100 bucks a year, you all of a sudden have a $100,000 business. There’s a whole class of people who have decided, “I can either go somewhere I get a little bit of money every time somebody happens to blink and look at me. Or I can get them all the way down the funnel to buy my hamburger or my water bottle. Or in the middle, I can build a deep enough connection with a person that they’re willing to pay me a substantial amount of money on an ongoing basis and I don’t need a lot of them. If I can do that, then I can build a real business out of it.”

There are some fantastic creators who have done a really good job of that. Many of the ones I’m sure you know. What I’d like to do and what we’re trying to do with Superhuman and our agent platform is enable people to build that level of connection. A lot of them are doing newsletters. It’s very meaningful to say, “I got a newsletter. It’s 100 bucks a year. Here’s how you can do it. 1,000 people gets me to 100 grand. 10,000 people gets me to a million bucks a year.” That feels like a meaningful connection.

In our case, I’m saying AI is going to allow us to do more than show up in your inbox. It’s going to allow you to show up with a red pen and a blue pen right next to the person and say, “I can help you in the thing you’re doing, at least the part of it that we’re working on.” And I’m willing to gamble that, can you go get 1,000 people to say “that’s worth 100 bucks a year to me”? I think you’ll be able to.

Wait, I’m just going to ask you this as directly as I can. Do you think that feature will be good?

It’ll be as good as the work that the creator puts into it. Are all newsletters good? No, most newsletters suck. There’s no guarantee that the newsletter platform can make them good. Is every YouTube video good? No, mostly they’re quite terrible. But does it allow–

I don’t know what your tool looks like to build an agent inside your platform, but I haven’t seen an LLM that can replicate my writing, let alone my editing. And you’re dependent on the capabilities of models themselves. So I’m asking you kind of a general way, but you know how your tool is built, can you actually make a tool that can do that well?

I think so. I would say that we did a pretty good job with Grammarly, that we replicated a grammar teacher pretty well. Can we do that with a broader spectrum of things? I believe so. We have some good evidence of it already with some of the agents working on our platform. Can we build a good one for you or can you build a good one for you? I don’t know. I’d love to work with you on it.

What does that tool look like? What does “build a good tool that lets me edit” look like?

It’s what you said earlier, you have to write down that viewpoint of like, what is your editing like? 

No, I mean, literally describe the interface that your tool provides me to do that.

Oh, the big part of the interface is a prompt box in what we call triggers. You’re going to say, “Here’s my instruction.” Think of it like you’re going to publish your manual and here’s your trigger. Here’s a set of things that say, when you see this, do this. And here’s my manual, here’s how I think about things. And when you see this, do this. You gave the example of feedback on a headline. You didn’t like the feedback you gave on the headline. It’s reasonable. I wonder if you could write down what feedback you would give on a headline?

Let me suggest a different way to think about it. Pretend for a moment you were trying to train someone else. You’re saying, “Hey, I’m going to hire an employee and I’m going to scale myself and I’m going to teach them to be like me.” How would you teach them? You’d probably sit down with them and you’d write some things down. And then the second thing you’d do is you’d watch them do it and then you’d correct them.

The other piece we have to do is we have to say, you need to get feedback and you need to be able to come through and say, “That was a shitty suggestion. Don’t do that again.” And so that’s what that interface has to feel like. You give a set of instructions, you give a set of triggers, and then you get feedback. And you say, “This worked, this didn’t work.” You’re going to come back and you’re going to look at it and say, “Yeah, that clearly didn’t work.” Maybe it didn’t work for the user, they ignored your suggestions. Maybe it didn’t work for what you think was good work. You looked at the output and said that wasn’t particularly good work and you’re going to train it.

The idea of being able to train a custom agent for each person, for each product, is really interesting and compelling. I don’t think it’s going to be easy to do for everybody, but the people who do it well will be like the prominent YouTube creators of today. You’re going to make a very deep connection with a broad set of people in a way that you’re never going to capture with ad dollars or with selling water bottles.

Do you have an example of one of these that you think works well today?

I think Grammarly is the most obvious one. Most of the other really good ones—

Grammarly is like grammar, right? It’s rules-based and a very specific one. Grammar has rules, it has a logic. It’s squishy on the margin, but there’s good grammar and there’s bad grammar and you can pretty clearly detect the two.

It’s actually interesting. Grammarly is a stack of models. The base level model is actually spelling. Spelling is the very core definitional thing. Grammar has pretty good rules. Spelling has really clear rules. Grammar has pretty good rules. 

But actually the reason why people use Grammarly is we go well beyond that. So we do advice on tone, we do advice on style. We do, “Hey, this is making you sound harsh.” These are all things you get when you pay for Grammarly. That’s the type of suggestions they get from us and they seem to like them — 40 million people use it every day. There’s a wide set of partners that have jumped onto the platform and built agents as well. Many of them are closer to tools.

So one launched a couple of weeks ago from Gamma that helps you build a really good slide deck. They did a lot of work to take “what did you write?” to “how do I turn into a slide deck?” We’ve seen a lot of them being built inside of companies. The sales example I gave, which is a very common one, is, “Hey, if I’m a head of sales, I have a sales methodology. You should always ask these three questions. You should always pitch our product in these ways.” They write those down, they turn it into an agent and say, “Make sure this is in front of people while they’re working.” And I think some of them are doing great.

Those are enterprise uses and I actually understand the sales use case a lot. You need the salespeople to all say the same thing all the time. I understand they don’t do that all the time. We have salespeople.

Actually, can a creative one work?

I’m asking because I don’t think taste is rules-based. Our producers are in the background here just in a puddle, because part of their job every week is to try to write like me. They get a lot of feedback from me directly on that. I’m literally editing the documents so I can read the intros and outros and I’m changing the questions. And it’s really hard even when it’s just three people who have spent years working together to try to get to an output that works. And they’re really good.

Yeah. It’s totally fair. My guess is the types of experts that will first prevail here won’t be the ones you’re describing. Those that make something creative, sound unique, make it sound better, are probably not the ones that’ll work first. But I do think there’s a set of experts and creators that will work great. Maybe I’ll pick the ones that are right next to Grammarly.

There’s a set of teachers for whom this is going to work really well. They’re going to say, “Hey, in addition to making sure your grammar is good, it looks like you’re writing something about history. I can probably help you cover history more clearly.” It’s not quite as clear as grammar facts, but it’s pretty close. “This is what happened in this period. You should know these different elements of it.” Teachers will be a great example of that.

What are LLMs really good at? They’re really good at averaging what everybody says. So can they do something really unique like you do? No, probably not. Can they take some part of your suggestion and turn it into something useful enough that you can get 1,000 people to pay 100 bucks a month? I bet you can come up with something because the bar isn’t high. 

I know we’ve flipped the conversation around a little bit. If we’re talking about you and your business opportunity, you don’t really need to replicate yourself the way you would be in person. You just need to create enough benefit that 1,000 people pay you 100 bucks a year. That’s what you need to do. Is there some part of your methodology that you think is so good that people would do that? I bet there is.

I’m going to have to think about that quite a lot. Thank you so much for coming on, for answering the questions, for being game to answer the questions. I appreciate it.

Sure.

I have a lot of other questions. We’re going to have to have you back sometime soon to expand the full scope. What’s next for Grammarly? Tell the audience what they should look for.

We’re very busy building out Superhuman Go. We have a big set of launches coming in the next couple months, so keep an eye out for that.

All right. Shishir, thank you so much for being on Decoder.

All right. Thank you.

_{Questions or comments about this episode? Hit us up at decoder@theverge.com. We really do read every email!}

Today, I’m talking with Jim Lanzone, who is the CEO of Yahoo.

It’s basically impossible to sum up the Yahoo story, but the short version of it is that a long time ago Yahoo paid Google to run the search box on its website, and basically everything has gone sideways since. You’ll hear Jim refer to that deal as Yahoo’s original sin, actually. After a long series of mergers and spinouts and an extremely odd moment where it was part of Verizon, Yahoo is once again an independent, privately held company. And it has big properties in sports and finance, and, against all odds, email, where it’s growing with young people. Gen Z loves Yahoo Mail, people. You heard it here first.

All of that means Yahoo is profitable and growing, according to Jim, but I still had some big questions about where that growth is going. Yahoo is still the third-place search engine and it just launched a new AI-powered search called Scout, but are they really trying to take market share from Google? Is the big investment in traditional advertising a good bet when creators and influencers are taking up so much attention? And with so much of both sports and finance turning into straight-up gambling, does Jim have any red lines he won’t cross with two of the biggest apps on the internet?

Verge subscribers, don’t forget you get exclusive access to ad-free Decoder wherever you get your podcasts. Head here. Not a subscriber? You can sign up here.

There’s a lot in this one, including some wild Decoder org chart terminology and what amounts to two people with a long history on the internet trying to come up with ever deeper references to old memes. It’s a ride, and Jim was pretty much game. 

Jim was also a huge nerd about ad tech, and we used a lot of vocabulary talking about his decision to shut down part of Yahoo’s ad business and invest in the part that’s growing. Here’s a quick rundown — feel free to come back to this if it’s too wonky, I promise you’ll get it, it’s not that hard.

A supply-side platform, or SSP, is tech that an app, site, or platform can use to sell space to advertisers. You’ve got inventory — that’s supply — and advertisers use the SSP to buy that inventory. Yahoo had a big SSP, but Jim shut it down a couple years ago in favor of investing in the demand-side platform, or DSP, which works the other way around: An advertiser says it wants to reach a certain number of people, and then the platform does automated auctions across sites and apps to display the ads. This is the big money — it’s how Google makes so much money on the web, for example.

A big DSP doesn’t just deliver ads on the web or in apps, either. You’ll hear Jim talk about CTV, which stands for connected TVs. All those ads in streaming apps? Delivered by big DSPs, including Yahoo’s, which works with Netflix and Spotify.

Okay: Jim Lanzone, CEO of Yahoo. Here we go.

This interview has been lightly edited for length and clarity.

Jim Lanzone, you are the CEO of Yahoo. Welcome to Decoder.

Great to be here.

I’m excited to talk to you. My personal story is wrapped up in the thing that is now Yahoo that you operate. I once worked for AOL, which got smashed into Yahoo in a series of acquisitions. I know you are thinking a lot about what Yahoo is today and the future of the web and its relationship to the larger networks that we all operate on. So I think there’s a lot to unpack there.

I do want to start with my personal history with Yahoo, because I got my start in tech journalism at Engadget at $12 a post when it was owned by AOL. This was a very odd time in media that that was a thing you could do. And just last week, you announced that you are selling Engadget to a thing called Static Media. Take me inside that decision to sell Engadget. You just sold TechCrunch. What’s going on here?

Really it was the last non-Yahoo brand to be sold. Since we were spun out of Verizon in September of 2021, we’ve been in the process of rationalizing the portfolio and what makes sense going forward. I’m sure we’ll talk about it. 

But that goes all the way back to, “Why are we still here after all these years? What’s our right to exist? What’s our right to win?” And really the long story short of that goes back to the original mission of the company: being the trusted guide to the internet. In 1995, that meant helping you find websites. In 2026, it can mean all kinds of different things. But that’s where we’re strong. That’s where we’re still strong after all the things the company went through over the years. 

When we got here, there were still just a lot of things going on. We had a content delivery network business. The company had drifted very far into all kinds of media and away from its history as more of an aggregator and place to help you find where to go for that media. And again, we can talk about what we think about that. But between TechCrunch, Rivals, which we sold, Engadget, and a lot of other small properties, ultimately also AOL, we sold back in Q4, so on the one hand, it’s about focus. And on the other hand, when it comes to properties like TechCrunch and Engadget, if you think about what we do while we do media, it’s really to provide context for the products that we’re operating in those categories. We’re not the place to go for breaking news. And that’s why Engadget and TechCrunch found homes with, in both cases, families of brands that were either tech-focused or media-focused and really do that kind of journalism, which is really not what Yahoo does.

I want to dig into that for just one more turn. I think “we’re not the place for breaking news,” that has a different valence when you talk about that in the context of sports and finance.

Producing that news or enterprising that news, right? Versus being the aggregator for other people who are doing it.

That’s the other piece that I’m really curious about. Yahoo bought Artifact, which was a really great AI-powered news app that was started by the founders of Instagram. I’ve talked to Mike Krieger and Kevin Systrom about that over the years. One of the reasons they got out of that business and sold it to Yahoo was they were like, “There isn’t enough web to aggregate anymore. News on the web is a declining thing and actually all the action is on social. And as Artifact, we had no access to all of the other platforms on social.” 

Yahoo is an aggregator. I’ve heard you say that before. It’s what you’re saying now. The value here is bringing everything together and providing an audience. Are you running out of web to aggregate? Because this is, to me, the defining problem of our moment right now.

We’re particularly passionate about that. And I’m sure we’ll talk about our AI search engine that we launched, but that’s a big part of the thesis behind that as well. Our core value of that product is doing right by publishers in the open web. 

But I actually think that their biggest issue with Artifact was audience, which is the challenge a lot of people have. It’s really hard, especially in news, to build an audience of scale, whether in 2024 when we bought Artifact or today. And so it was a very small user base for a very awesome product. And that product was an aggregator. I think it actually did hit a lot of sources. We hit a lot more with Yahoo. It’s thousands of publishers.

Having direct deals with publishers to have their content aggregated with us has actually been part of the history of the company going back two-plus decades. We send them traffic, and in many cases, share revenue. That’s always been part of the history of Yahoo and what it did well. There are a lot of things that didn’t happen, that didn’t go well. But when we walked into the company, where it was still strong was where we were still doing that in categories that mattered. 

Artifact was our admission that what we inherited was probably not the best foot forward for being a great product in that space. We were all fans of Artifact; I was, personally. Usually, when you make an acquisition like that, you munge them into the Borg, to the mothership. We did the opposite. We actually just put the Yahoo logo on the Artifact app and started from there and just admitted it. 

One of the things that Yahoo does best is we are very large. We have a massive audience. And we can turn that fire hose on great products if we build them. That’s part of our thesis for how we would grow this business, which admittedly has been a big turnaround.

This is well before your time, but when we started The Verge in 2011, our first big syndication deal was with Yahoo and our first major traffic fire hose was the yahoo.com homepage. And I would sit around trying to figure out what stories would get placed there. I had all these conversations. Basically, the answer is, “you’re never going to know.” So then we did all this data analysis and we found out that the Yahoo algorithm loved stories about fish. I’m not kidding. It was literally fish.

I believe this.

And on Fridays, because I’m from Wisconsin, we would have Fish Fridays at The Verge and we would literally search for fish technology stories and collect all this Yahoo traffic. And this probably has more impact on my thinking about how to run a media property, even now in 2026. Like you shouldn’t do that.

It’s all about the fish.

Right. Yeah. The Verge is shockingly about fish under it all. It’s really just about fish. [laughs]

[laughs] Yeah. Yeah.

The thinking was, “If I play to this algorithm, eventually it will go away. This cannot be sustainable. And so we have to build something that’s sustainable on its own terms and collect all the algorithmic traffic along the way.” That’s still my worldview: We can chase SEO, but SEO is going away for people. We could chase whatever Instagram trend and switch from Stories to Reels, back to the carousel, whatever Adam Mosseri wants us to do, but that’s unsustainable. 

I’m asking this question about aggregators and selling the newsrooms to you because I’m wondering if Yahoo as an aggregator of audience can be sustainable for those newsrooms. Because what I’m seeing is that Google as a source of traffic is going away. Twitter or X doesn’t send links to anyone anymore, so as a source of traffic, that’s going away. The referral to the newsrooms is in decline. 

And when you just look at the state of the universe, the tech media is in decline. Media is in decline. Newspapers are getting shut down. In that position as an aggregator, do you think about that dynamic? “If we’re not sustainable, we will not actually have enough stuff to aggregate”?

Look, Yahoo has clearly gotten something out of being the aggregator over the years, so I’m not saying it’s completely selfless. But going all the way back to the beginning, Yahoo’s role was to help people find websites, right? And then apps, and then stories over the years. But we have taken that really seriously here, that it’s our job to help send traffic downstream, to help you build that brand. We’re in the same spot. I mean, we have SEO and we definitely are in the same position. And then thankfully, over 70% of our visits are direct. And we’ve built that side of the business. 

So I understand what you’re saying, and I do think it’s under threat. I think that the LLMs are one big reason that they’re under threat, with AI mode in Google being the biggest challenge. It’s probably pie in the sky, but I have some history in search and have seen this happen before with some things that my team built. 

I’m okay if the industry copies some of the things that we just did with Yahoo Scout, where we have very purposefully highlighted and linked very explicitly and bent over backwards to try to send more traffic downstream to the people who created the content that was digested by the LLMs to create the answers that they’ve been giving with chatbots. Ours looks a lot more like traditional search and it is more paragraph-driven. It’s not a chatbot that’s trying to act like it’s a person and be your friend. 

Besides the issue of ads, which we can also talk about. That Claude ad, that creepy interface with the chatbot, we don’t do that. But we do explicitly link a lot to publishers. We’re hoping that not just for us, but for other engines in the future, that becomes more of the user interface for these things. Those publishers deserve it, and we’re not going to have the content to consume to give great answers if publishers aren’t healthy.

I actually think Google would have wound up with a much more similar  interface if they’d been first out of the gate. Once ChatGPT beat them to market, however that happened, they had to play catch-up to avoid people bleeding out over to ChatGPT. I empathize with why they did it, but I’m hoping that’s not where the industry winds up.

You can see Google is walking a complicated line now with their publisher relationships, with how many links are in their results, how they integrate advertising. On the same token, you can see ChatGPT and OpenAI are walking a complicated line as well, right? They haven’t quite figured out their advertising experience.

But they wound up there, I think, not by accident. They were built by researchers. And so, of course, the first user interface had a bunch of citations. It looked like somebody at a university had written a research paper. We backed into that being the interface for what this should look like by accident. But that’s not how it has to look and operate in order to give great answers. I think we can do more to send traffic downstream, and we’ve tried to do that. It’s still early, so maybe that’ll wind up in more of the products. It certainly needs to, for advertising to work.

I think that’s my other question here. I know you’ve done a lot on the advertising side of the business. You’ve sold off some pieces, you’ve rethought some other pieces. I want to come to that. But let me just ask about that dynamic of sending traffic downstream. That’s not what any of your competitors are doing. They’re holding more and more traffic within their walled gardens. They’re creating more and more formats. They’re all converging on being scrolling video. You can just see it, right? Everything turns into a crab in the end with convergent evolution.

You haven’t quite done that. There’s bits and bobs of it on Yahoo properties, but you haven’t fully taken the approach of, “Okay, we’re going to wall this garden off. We’ll buy the content. We’ll put it here. It’s all one experience and then we can change it however we want.” You seem committed to sending traffic downstream. Where does that come from? Is that just a personally held belief? Is that idealistic? Or is there a business reason for that as well?

I think it can be all of the above in this case. We could be just being Pollyanna about it or think it’s a differentiator or whatever. But first of all, we think people want to go downstream to the publishers. Second, we think actually being able to check the sources or follow up and go get more information is an extremely high user need. It’s core to the user need in search, which is really where we are playing. 

We’re not a large language model. We’re not going to be the place you come to code. We’ve really launched Scout as an answer engine. Part of that is the traditional role of a search engine. We’re also launching integrated into our search engine experience. So it is more similar to that from the get-go. 

But it is also a core value of our products, for sure. We’ve had to do a lot of rethinking. The Yahoo homepage that we inherited in 2021 had drifted over the years towards being a more clickbait newsfeed and away from being a portal, and I have a lot of empathy for how that happened. We could dig all the way into the history of the company. I think it goes all the way back to the original sin of giving search to Google, which is what happened. It is a misnomer that it was beaten by Google. Yahoo didn’t even do search. They did an enterprise deal.

Right. Powered by Google.

It would almost be like if Google today, on every search results page, linked to ChatGPT with a logo for ChatGPT and paid ChatGPT for the privilege. That’s what Yahoo gave to Google in June 2000. From that point forward, it was a struggling company against the trends at Google and then Facebook. And then as a struggling public company, it was just hard to make the right choices. But during that time, it drifted from the portal experience, which I think a lot of people really valued — just probably not as many as valued Google. And so there was a lot of fog of war there.

By the time we picked it up, it was really this newsfeed. And we think people want more utility in our homepage. They can go downstream to News or to Sports or Finance, but in that place, so it is more of an aggregator. 

That is also one reason why you will see short-form video, because that actually has become a valid way to consume news and information. But we think that aggregation is something people really want from us. And to do that well, we’re not going to be the ones creating all the content ourselves. We have to partner with publishers and send them traffic.

They did not ask permission for the content that went into the original large language models. Even today, everybody still needs Google to get out there. You can ask people to stop crawling you, you can send a cease and desist, but it’s very hard to prevent it. But in that original version of each large language model, the content was just taken. And yeah, I think that was wrong.

The reason I’m pushing on this so hard is, one, I think it’s refreshing to hear an aggregator talk about supply in this way. It doesn’t happen very often. And all of your biggest competitors, one, they’ve all pivoted to video. In whatever way, they’ve pivoted to video. But if you look at the biggest aggregators, and they look like social platforms for the most part, they pay nothing for their content. 

Instagram pays nothing to Instagram influencers. It’s all brand deals up and down. X has whatever revenue sharing X is doing, but it’s so odd and it incentivizes such weird things that I don’t think it counts for publishers. YouTube rates are falling. If you ask people who make YouTube Shorts, they’re not making enough money on YouTube. The dynamics of Google, Google never paid for the content. The original sin of the publishing business was Jonah Peretti’s belief that he could go so viral with BuzzFeed that Facebook would be forced to pay him money in some sort of cable carriage deal situation that never came to pass. 

All of these publishers have hit the rocks in some way. They’ve all landed on, “the users will make us the stuff for free.” All these companies are differently positioned, they compete in different ways, but if you just look at it and squint, they’re all like, “We should pay nothing, because the users will make the videos for free. There’s an army of teenagers who will show up here no matter what we do.”

And you’re saying, “No, we should pay some money for content from some of these newsrooms because there’s some user demand.” How does that margin work out for you? Where is everybody making money here?

Well, in our case, there are rev shares. So we’re not writing a check to own the content. It really is our social contract. And remember, search also had a social contract, which is, “you let us crawl you, and then we’ll have a snippet, and then we’ll send you traffic.” And in search, that is what we’re trying to get back to and get the industry back to. 

For the rest of Yahoo, I’d say the difference is that, in every product you just named, publishers are creating bespoke content that is for that platform — a tweet, an Instagram post, a YouTube video — in the hopes that you’ll either aggregate audience there and/or they’ll start to build brand to bring it back to your own property.

In our case, you’re consuming some of that content with your brand there, as you know from the fish days, and then it leads you downstream. So it’s just a different model. And in our model, it is much more the content of the publisher, versus you creating a product for me, which is really what everyone’s doing everywhere else.

Let me just bring this back to Engadget and TechCrunch for one more turn. And then I want to talk about how you’ve structured Yahoo and, in particular, what you’re doing on the advertising side, because I’m very curious there. Do you think as you exit this space where you run newsrooms and editorial teams, that those cost structures are long for this world? It can’t just be Yahoo syndication deals that support all the newsrooms of the world, right? There has to be some set of other monetization, some set of other revenue, some diversification.

You were operating these businesses. You chose to be out of it. Is it just because you didn’t see the business opportunity for them? Or is it you just didn’t want to attack those problems?

The content you’re creating and the cost structure of that have to be congruent with the kind of advertising you’re pulling in. So if it’s all programmatic, you can’t staff premium or produce premium. Businesses along the way have gotten on the wrong side of their P&L because of that. They staff premium and monetize at a very low CPM. It’s wrong to say that we’re not in content, because it’s just the kind of content we’re creating. Our three pillars for product are superior aggregation, proprietary data sets, and what we call anchors for context. So that really is content for context.

We’re doing a lot of content in sports. We’re doing 60 hours a week now of original video. Same thing in finance. We’ve been building that muscle. We have the number-one NBA podcast with Kevin O’Connor. We have the number-one MMA podcast with Ariel Helwani. We do a lot of content. But it is not breaking news content. 

When I got here, we had a White House correspondent. We were competing with the Associated Press, and that is what we really wanted to get out of. If you think about TechCrunch, it said right there in the handle on Twitter. It was like, “Send us scoops.” And they were breaking news, sometimes about us, which is fair.

But I remember they were doing that in Tim Armstrong’s days as well. And that’s great. But it’s just not the kind of content we’re producing. Shams Charania in sports and Adrian Wojnarowski before him in the NBA, they started at Yahoo during that time period. And we just thought, look, that news is going to break and it’s going to be disseminated very quickly, and you won’t usually get credit for it on ESPN. They won’t always say on SportsCenter where that news was broken. And then of course, then they wind up stealing those guys and paying them $10 million a year. So it’s just like a game that we decided that’s not what people are really coming to us for. It’s really more to be the aggregator, and then we can provide great context. 

In sports and finance, it’s also a little bit different in that not only are we aggregating, but we have products that are extremely important, like Fantasy. We’re one of the top two platforms in the original and Fantasy and Sports. We have all these new Fantasy games that we’ve been launching. And of course, in finance, we are still the number one for tracking your portfolio and getting research and information about it. Whether it’s Brian Sozzi and his team on Finance, or it’s KOC and that stuff on Sports, we’re providing context to the actions that you’re going to be taking in those verticals.

Don’t worry. We’re going to come to the collision of sports and finance in one second here. 

This is a great spot for the Decoder questions. I actually want to ask you this. You’ve been CEO for a minute now. Yahoo has been through all kinds of twists and turns. At one point, it was squished into something with AOL at Verizon called Oath, which was deeply confusing. You became CEO after Apollo Global bought the company. It’s a private equity firm. Very few people are ever going to think to themselves, “I should be the CEO of Yahoo,” and then interview for that job. Walk me through that. What was the pitch? Did you make a deck? How did it work?

It was very different, actually. They bought it in May 2021. It closed in September 2021. And they talked to a lot of different people around the industry, people that you know, that I know, about doing diligence on Yahoo and whether they should buy it. I competed against Yahoo at basically every stop of my career. I knew every executive team. I went head-to-head with them over the years. I’d partner with them on certain things over the years. 

I always thought it was the granddaddy of all turnarounds, and I’ve been part of a few of them. I’ve just grown to love doing them. And in my case, I wanted to run towards the fire. I was very much of the mind that it was a great deal to do if you could get it for the right price, .

Once that deal closed, the conversation immediately turned to whether I would be interested in running it. And I definitely was. So there was no pitch deck other than my advice and input along the way to buying it. And then over that summer, before they closed, it wound up being a negotiation of me coming on to run it. I’d been at other companies where we’d thought to ourselves like, “Oh, I wish we could take our executive team over there and compete with them with those assets. Let’s see how that Olympic race goes.” We wanted to try that.

It was almost 30 years in the making. I was getting it at a very different time than if I’d gotten it in 2010 or 2005 or some other time. But the assets were still extremely strong. And yeah, I do also understand the part of your question, which is PE. And do people in my position normally want to go do that? 

I’ve been an entrepreneur. I’ve started two companies. I’ve worked for media moguls. I’ve done all kinds of things. And my view on that is just, you’ve always got to serve somebody; it’s your board, it’s the public markets, it’s a really hard boss, whoever it is. And I felt like Reed Rayman, who was the partner at Apollo who did the deal, was a really smart, really good guy, and that we would be really good partners, whether private equity is behind it or VC or anybody else.

Well then, actually, let me ask you about the PE piece of it, because you’re right that I’m very curious about that. Usually, a PE firm buys a declining asset to just ride it on the way down. Everything you’ve talked about so far is growth, right?

Have they provided sufficient capital to reinvest in the business, or are you just moving money around through cuts and reallocations?

I’d say two things. One is that they actually have been providing capital. In fact, I was in a meeting this morning where they were offering capital to do big things that we were talking about. 

Does the ominous music play when the private equity firm offers you money?

No. If you met Reed, you wouldn’t think about it like that.

Is it like the devil’s advocate?

No. We have a deal team that’s not like that at all. And I don’t know about other PE… I have not worked with other PE firms.

Sure.

No, they’ve really always wanted to swing bigger. If you go back to when I started, it was still the heart of Covid and the crypto boom and stonks, and there was one boom period, and then things dried up for a bit, and then the AI boom. We’ve gone through this. And so what we’ve looked at doing with that capital has been different. We’ve wound up buying smaller things along the way instead of bigger things, but they’ve been very up for the bigger things and trying to make this a much bigger outcome along the way.

We have tended to make our own fuel. So I promise you there’s not been one reduction here that hasn’t been strategically decided by my team, gone to Apollo, and said, “Hey, we’re going to do this.” We shut down two really big money-losing ad tech parts of the company, and that was all our team trying to do that. So we are, I’d say, profitable to very profitable, and we don’t need to make a dollar more than our budget to satisfy the PE gods. It’s agreed upon every year in our planning process what that’s going to be.

And certainly when we made the changes to the revenue engine, it was a little dicey there for a year. That was the “Indiana Jones replaced the gold” situation and they had to take a leap of faith with us on that. But we’ve not been through any PE-driven cost-reduction exercises or anything yet.

I’ve seen a quote from Apollo saying Yahoo is the fastest return on investment that they’ve ever had. I know you’re a private company. What is that return? Is it healthily profitable? Is it just a dollar more than they spent?

No, very profitable. And look, we don’t disclose revenue, but it’s in the billions. That number’s moved around as I’ve moved out a lot of bad revenue with those ad tech companies that are driving a lot of top line but not a lot of bottom line. AOL was a lot of revenue and profit and that went out. 

But it is in the billions of revenue. It is very profitable. It’s not profitable by a dollar. For a company that really paid the price for being a struggling public company for a long time, right into the teeth of some big competitors coming along to eat its lunch, it’s been good to be private along the way, whether we’re owned by PE or not, to be able to make a lot of these changes. It’s in a very healthy spot financially.

Let’s talk about those changes. I’m actually going to ask you the two Decoder questions in reverse order than I usually do. You’ve made a lot of decisions. It does not sound like you ever sat down and opened up Google Docs and said, “If I ran Yahoo…” and made a bullet list. But you’ve made a lot of decisions, including the decisions to exit some businesses. How do you make decisions? What’s your framework?

Having watched your podcast for a long time, I knew that question was coming, and I just didn’t want to come up with some bullshit answer. Because I’ve heard some, and they sound like they’re trying to write a chapter for Peter Drucker or something. I’m just not going to try and do that. 

I’m the wrong CEO for an enterprise software company. I’m the wrong CEO for a food company. But I’ve done consumer internet my entire career. I’ve started them, I’ve taken over big ones, I’ve seen everything you could see in this industry. And it’s very easy to make decisions. I think it’s harder to get the information for it. I think my team would tell you that I’m very quick to make decisions. I would rather they have done it themselves, and we can talk about the org structure and why that is. I’m the editor-in-chief myself for what happens here. 

The framework is definitely through the lens of our mission. I don’t have a set of Enron values on the wall, like integrity, that mean nothing. We have a view on that as well. So that’s not really how it happens. But it really is through the lens of why we’re here, what we’re trying to do, what our plan is for the year. 

My job at the end of the day is growth. You could dress that up any way you want. That is my job. I think that’s a job of any CEO, even if you’re a Series A company.

And so that lens for what we’re trying to do is pretty easy. We know who we are and what we need to be. And we know what the spine of the book is and the pages that are starting to come off of that as we go forward. The first two years I was here, it was the transformation period. It was not only getting us through Covid and all of that and extracted from Verizon, we actually had to stand this company back up. We’re not the same Yahoo. This is a new company — that, PS, [original Yahoo cofounder] Jerry Yang invested in, he was one of our investors — that we put the name Yahoo back on. 

All the transformation work that happened the first couple of years got you to the point where you could earn the right to start improving the products again. Because at the end of the day, we are a product company and these things had to not suck, let alone get to be good.

And now, we’re in, I’d say the third phase, which is starting to take shots on goal. And so the decisions are always going to be different as you go through those phases.

This is the other question. You have talked a lot about restructuring the company, getting rid of pieces you didn’t need anymore. How is Yahoo structured today and how did you land at the decisions that brought you to that structure?

It is a conglomerate or portfolio structure. I accidentally backed into the structure years ago at another company. This is actually the fourth conglomerate I’ve been a part of, starting with IAC, which bought Ask Jeeves back in the day.

You have a thick skin, my friend.

In that case, it was 60 companies that had been brought together by acquisition, most of which had nothing to do with each other. And they went through a period of trying to turn it into an operating company with a common backend with Jack Welch as the advisor,. That just didn’t work because Ticketmaster had nothing to do with Ask and search had nothing to do with LendingTree or the catalog business. There were just so many different parts of IAC that just weren’t similar.

But in my CBS days, all the brands were consumer internet companies. At first, because I was always a product leader or founder, I was the pig in slop. I was like, “Oh, great. These 25 brands all get to report to me, including Fantasy. I started playing Fantasy on SportsLine, and okay, I get to run that now.” 

And within like a year, it just became clear I was holding everything up. I couldn’t have 25 direct reports. I organized them into groups that were similar, with general managers in charge of each business. That structure worked great. We came to call that federal and state, that there were governors of every state that had their own economies, usually their own location, their own culture, and that was fine. And at the federal level, there’s no reason to have two IRSs or two FEMAs, across finance and legal and HR and some other things.

Can I just tell you, you’re killing me. Do you know what Tim Armstrong’s reorg at AOL was that basically inspired us to all leave and start The Verge?

No!

It was cities and towns. He put up a big sign over Engadget that said “Tech Town.” And I was like, “I’ve got to get out. I can’t be living in Tech Town, dude. I’ve got to bail.” But I understand the metaphor.

It’s funny too, because you say all that, and that is the structure we had here. I inherited this big matrix organization where nobody owned anything. There was one head of content across everything. There was one head of product across everything. And what you lose there is you don’t have experts who are focused, who you hire them to be the CEO of their own business and they want that. Every one of my general managers has an entrepreneurial background and usually a product background. And then they want to run. You’ve got to let them run and be a little inefficient at the edges by having their own engineering teams, their own design teams, their own content teams.

And then we will assign to them people in sales and marketing and PR who are experts at that area, but who roll up to a central person. And so that model worked amazingly well, because you can get real efficiencies at the center and expertise at the center. I don’t think efficiency is the name of the game here. It’s excellence and growth. So you hire great people to do those things, and then I’m the editor-in-chief at the center of all those. 

And we do have patriotism across all the brands. It’s a lot easier at Yahoo where we have one central brand. But that’s the structure.

What I’ll also say though is, structure is not everything. And at these big companies, you could be this big matrix Borg or you could be the GM model that we run. It always comes down to the people. I honestly think that where you see problems, it’s not just the structure, it’s not just the culture that you inherited, it really is the people and what they’re good at. If you don’t hire real domain experts who have high EQ and are really good teammates to each other, you’re going to wind up with a cesspool anyway, or people who don’t know which way to run.

Our people are just awesome. That was true at the last company, and that’s why we succeeded in doing the turnaround, and then got to the point where we could launch new products that were really groundbreaking. In that case, it was CBS All Access, which turned into Paramount Plus. Who would have thought Yahoo is going to launch an AI search engine? And we have some other bets that we’re making. People are what it really comes down to at the end of the day.

I know you have three divisions: News, Sports, and Finance. Tell me about how they operate together. Is it all three of those get to do whatever they want, and at the top, you’re saying, “Actually, we need an AI search engine that goes across these things.” Or do they have harmonized product roadmaps? How does that work?

Believe it or not, those are not the divisions. 

Those are also divisions. So we have GMs on each of those. Some roll up to Matt Sanchez, our COO. So he has the home business, the search business, email, which is, in many ways, our most important historical business, and our DSP, as well as monetization that goes across that, loads up to Matt. Ryan Spoon runs what we call the Yahoo Media Group. And that has Today, Sports, Finance. And then I’ve talked publicly that there’s a third leg of the stool, which is, we definitely probably have a right to go deeper into video in a nonfiction way across the verticals where we’re strong. News Today rolls into the home business just because they were so intertwined. But theoretically, it could be one or the other.

And then again, every one of those businesses has a GM who really has the business plan, the P&L, the resources to run their business. And then sidebar to that, we’ll have a CFO or the chief revenue officer with the sales team, et cetera. So that is how it’s structured. 

If you were to talk internally, there actually is incredible harmony across those businesses. Yeah, they brawl sometimes over traffic from the homepage or something to do with the content management system or the monetization. But for the most part, I actually think you’d get pretty unanimous feelings about how we operate together.

I think they would all sing from the same playbook. When people interview with us, they always comment about how everyone is speaking off the same playbook. We actually do have a pretty good working structure together.

Talk to me about the monetization piece. And I want to get into how you invested in your demand side platform for ads. If I’m looking at news and sports, I would say, “Well, we’re just going to do gambling now. That’s the money.” This is when I say finance and sports are colliding, right? The feeling that we’re all just gambling seems to be infecting everything over there. You have a deal with Polymarket and others. 

But then you have this big investment in just what feels like traditional display advertising, which is not an investment that other people are making at scale. Why are you still so invested there? Is that growing? Are you just holding serve? And then how do you think about, well, we should just do casino?

I don’t want to be long-winded with the answer. 

Go ahead. Take your time.

The entire company we inherited was monetized through this group that was a three-headed monster of native advertising, a supply-side platform, and a demand-side platform. You had to buy all three, and the Yahoo consumer businesses had to only get revenue from that group. If you think about the SSP, it was the Yahoo SSP, we couldn’t go out and play the field on an auction from Trade Desk and from Google and from others. So that was part of the decision there; we were leaving a lot of money on the table on our own consumer properties. 

The native ad business was just declining over time and something that was taking up a lot of resources. That included an extension of our Microsoft partnership on search advertising, which is another way we make money. We did all of these things. So we extended Microsoft. We shut down the native business. And we took 25% of Taboola and we outsourced it to them, because it was a lot of money. We shut down the SSP. There were people who wanted to buy it, but we would have had to give them preferential treatment and we wanted to be able to play the field on yield on all of our pages. 

But the DSP was underinvested in, but was the crown jewel. It was a place where we thought we had a right to win. The vast majority of the impressions through the DSP control center are not Yahoo. It’s less than 10%. And you can get anything through there. CTV, Netflix is in there, Spotify is in there. 

The differentiator for it is something that’s a differentiator for the whole company.When we inherited the company, it was like we discovered oil underneath it, which was this data gold mine of first-party data due to these direct relationships; 75% of our DAUs are logged in, so we really do know our users. And you cluster that information and you either target on Yahoo proper or you take it to go across when you buy through the DSP. We are incredible at conversion and outcomes.

That really is why I think Yahoo is still a very underappreciated asset and would be for anybody. We win nine out of 10 head-to-head tests against people on the DSP side. And again, I think on the Yahoo proper side, it’s even bigger. 

So yes, we are selling premium ads for March Madness and World Cup on Sports. Yes, we’re doing partnerships with Polymarket and others. BetMGM has historically been the gambling partner for the last seven years. It was a deal Verizon did that’s just coming up at the end of this month finally. Polymarket was just to fill in the blanks of the markets where we didn’t have that deal, so we’ll see what the partnerships look like going forward.

The vast majority of our revenue is on the back of our premium properties, either through highly targeted advertising, subscriptions, and then down funnel into search, which we should talk about separately.

I want to come to search. I just want to unpack the demand side piece of the puzzle, right? This is where advertisers log in to buy ads and then you can go address a bunch of stuff, whether that’s display advertising on Yahoo and then you’re saying you can even get to Netflix. I think you have a deal with Netflix to help them sell their inventory because they stood up that business so fast. I’m legitimately curious about the formats you see growing there, right? Is it display? Like everywhere else, banners and boxes are in decline, and all of the money is moving to influencer brand deals. I get consumer or tech companies on the show all the time.

The CEO of SharkNinja was on the show and he’s like, “I built my business with influencers. And we had this massive data set of sentiment analysis from the influencers we work with to figure out what blender we should make next.” And that is a crazy business that only exists because of influencer marketing. 

If you listen to the show, you think that’s the future. And here you are saying the gold underneath Yahoo, the oil underneath Yahoo, was this dataset that lets us target across to other platforms. But is it targeting on Yahoo that’s as valuable as being able to sell CTV or Netflix? Because that feels like the risk in this whole approach.

Look, it’s going to be different for every advertiser. I’ve worked in the streaming side of things and had an ad business in that, and you’re going to get premium CPMs for brand advertising. You’re not trying to drive people downstream for an outcome. 

DSP buyers are typically outcome-driven. Definitely Yahoo proper buyers are largely outcome-driven. We will get big brand takeovers. We just sold one yesterday for the World Cup. We’ve been building deeply into soccer, into motor sports, and some other verticals there. But for the most part, it is performance-based. We have to be top three places to go for really high-performing advertising. And it’s not always the same buyer.

So I’ll give an example just because I know he’d be okay with it. A person who used to work for me runs SurveyMonkey and they were buying through our DSP. He came to me and said, “Yahoo proper is by far the best-performing part of this. Can we just buy directly from you?” I introduced them over and they did a deal to buy direct through Yahoo. 

So it’s a different ad format for sure. And again, even native advertising can perform. It’s going to perform at a different percentage. But I think that the internet is just a much broader and more vast place than people appreciate. 

We are growing Yahoo after 30 years. It’s pretty incredible that with all it’s been through and what you might assume about it, 50% of Yahoo Mail users are Gen Z or millennial. Nobody would assume that. And it’s growing, and has had one of its best years ever. 

But the size and scale is just very rare. Of course, the surface area for that is mostly not going to be premium video advertising. It’s going to be display. And that has its place in the ecosystem. It’s not the hottest thing right now, but it converts and it has a place.

I’m asking these questions because it’s just refreshing to hear people say the basics still have something to say for them.

Yeah, they do. They do.

We’re going to send traffic to news publishers and we’re going to do display advertising.

No, we’ve got to get search there, dude. Search has to come along for the ride.

So let me ask you about search. You told my friend and colleague David Pierce that you’re very proudly number three in search. One of the more famous Decoder back and forths of all time is Satya Nadella at the launch of Bing with ChatGPT said, “I want to make Google dance. Every point of market share I can take from Google is billions of dollars for our bottom line.”

And then Sundar [Pichai, Google CEO], who has a very different personality, came on Decoder and was like, “Good luck.” Basically, in his very Sundar way, was like, he wanted to say that get a rise out of you, but like, “I’m not reacting to that at all.” And you can see how that played out. I don’t think Microsoft took points of share off Google. Maybe ChatGPT did, but they don’t have the monetization, right? They’re furiously hiring people from Meta to figure out how to monetize this new search behavior that they’ve created while Google is just going to roll it out across their products.

You’re number three. You’re sitting there. You’re watching this dance. You’re rolling out AI search. Can you take share off of Google and can you monetize it in a way that actually makes sense?

Well, it’s funny you mentioned  Bing. I remember the Bing launch being at the D conference. This is probably before I realized how Twitter was going to work, and I put some snotty tweet up when they announced Bing, that it was essentially a copy of Ask.com, of what we had already built. And Dan Frommer took it and turned it into an article and I was like, “No, no, no.”

Perfect.

I was like, “Delete.”

I didn’t mean for that to get out there. So I’ve been through the search wars. . I’m never going to be in a worse position than where the Ask Jeeves brand was in 2001 and 2002. And we did grow market share in search. The way that we did it is that we had a pretty big audience for the time with a completely underperforming product; the original product showed up 85% of the time and was only clicked 25% of the time because it was a hand-coded [natural language processor]. It didn’t really do it the way NLP works today.

Through a series of things — of improving search and launching what became OneBox on Google and doing all that — what we found is that if somebody was doing 1.5 searches a month on Ask, that if we launched these things, they would just do three searches a month on Ask to start with. That was doubling our search volume. And search advertising was linear in terms of what that would do for revenue. So that’s how we got profitable and grew that company from the brink to selling to IAC. 

Some of the same things are in effect here. Nobody chooses, you will not be surprised, Yahoo over Google or somewhere else to search. The way that we get our search volume is because we have 250 million US users and 700 million global users in the Yahoo network at any given time. There’s a search box there. And infrequently, they use it.

That search has been under threat of moving to LLMs, so we had to evolve that search engine, which we’ve been in partnership with Bing since 2009, and outsource that. And we had to do something to make sure that they kept doing those searches that they were already doing on Yahoo. So to do that, we had to have AI search. Our decision as we looked at the landscape was that we were actually the best people to build it, because we actually had the data to build upon to do it, and we could do it, and we could do it affordably.

But are we going to grow in search? I certainly hope so. And if we do, it’s going to be because people are doing an infrequent number of searches today. When they use it and they see Scout and it’s awesome and the results are really good compared to what they would get elsewhere, we hope that the next time they’re on Yahoo for Mail or Fantasy or checking their stocks, they’ll do another one. And that really is the beginning of the pathway. Wherever we wind up, I can’t get there without that start. There’s always going to be the question mark in the middle of Underpants Gnomes before profit.

That is old school.

Who knows where that goes? But that has to be the starting point and that’s why we did it.

That’s a good point. Let me ask you about that. You said earlier in this conversation that the original sin of Yahoo was giving search to Google, paying Google for the privilege of running the search box on yahoo.com. I am guessing you did not buy 10 million Nvidia GPUs to train your own model. Who is running your search right now?

We are working with Anthropic, with their lightweight model called Haiku. There are a number of these. Actually, ChatGPT used to have one called Nano that they aren’t really doing anymore. I’ve heard they might bring it back. But we’re not displaying results from Claude. 

It’s results from our own data that they are processing, essentially. We send them a payload that is both all this amazing data from our knowledge graph, soon to be our user side because we’re about to launch personalization, 30 years of search history, all of our vertical content knowledge. And then we also are grounding with Bing. That combines into one payload we send to Haiku. That’s the large language model that is applied in a small parameter way to Yahoo data that sends it back to our rendering engine in the way that you see that we think is really cool and useful and the way that we render results. 

It is definitely a much more affordable, kind of a MacGyver way of doing it. Eric Fang, who’s the mastermind of this project, who is head of our research group and the head of our search group, would phrase it as “Yahoo data plus Haiku equals very competitive AI answer engine.” 

And again, we’re not going to be doing all the things a large language model can do, but you are very shortly going to see us get into very personalized results. You’re going to see us get into very agentic actions that you can take.

With that launch, not only do we launch the Scout answer engine at scout.com, but we actually, on the day of launch, have embedded it within all of our other products.Of course, there’s news summaries. But there’s a button in Yahoo Finance that does analysis of a given stock on the fly. It is in Yahoo Mail to help summarize and process emails and extract really useful information. There is a whole roadmap that you’re going to see with a lot of different smaller announcements over the course of the year. It will become very proactive.

If you remember the days of push, it’s going to be very push-oriented where I think this category is going. People use this for productivity at the core of Yahoo, and this helps us also do that. At the same time, have a kick-ass AI answer engine.

So you’ve got Anthropic at the heart of it. I presume that that means you can take them out, right? If there was a better vendor or a better partner or better deal terms, you could replace that little LLM core and your products would still operate. One of the dynamics in AI generally, though, is that the big models are eating more and more of the capabilities that people are building on top of them. So you’re saying we’ve got a lot of capabilities. 

I’m surprised. I didn’t see that coming in the history of the consumer internet, that each 800-pound gorilla tries to do everything and eat all of its partners.

Don’t worry. One day, you’re going to open Claude and it’s just going to start serving you vertical social videos, and we’re going to be like, “how did we arrive here again?” 

We’re all trying to do it. Of course. But Google has started to compete more with all of its providers over the years too. This isn’t new.

How are you thinking about that dynamic? You’ve got this long history, you’ve got a core vendor in a position that looks a lot like the original sin, right? You’re paying a vendor to run the search, but maybe you can swap them out later, and then that vendor is just going to keep growing its capability set. And all the other vendors who are similarly positioned are going to keep trying to grow their capability set. How do you avoid the cliff? Because it feels like it rhymes with the past, as you’re pointing out.

Our biggest challenge from here forward right now, because I think we’re starting to cook with oil on the product side, is actually brand. We’ve come a long way. We’ve climbed the mountain a bit, and we’ve made a lot of progress, especially in the industry. I think people know what’s going on here. But if we hope to have a New Balance type comeback, or The Gap, or these places that have been down, but have made this comeback and become really solid brands again, which is my aspiration for the Yahoo brand, we have further to go before we’re really punching at the weight where I want to be.

The reason why we’re as good as we are is because, at our core, we do a really good job in these verticals where we play. If we can deliver these products that are much better than what we inherited to a user base this large, I think worst case, we are growing that audience at the core. 

I don’t think we are big enough. I think Anthropic and OpenAI have… We’re back to fish, but have much bigger fish to fry than Yahoo. We might be collateral damage in what they try and do. Absolutely. I’ve known since the start and others have said this, that you are tempting fate by opening up a way for consumers to access your product within a large language model. They certainly, over time, will try to take that on themselves. We’ve seen that every single time in this industry, going back to AOL, to be honest. That is a danger for everybody. 

The same way, I don’t think publishers would have been okay with people just taking their data and republishing the answers without getting traffic back, I think, on this topic, people should be very careful on how they partner with a large language model going forward. Because the big bad wolf will come to your door and say everything’s cool. It’s going to be tough. That being said, Anthropic has been an amazing partner. They were really impressed by the MacGyver move that Eric Feng and his team made and how we use Haiku.

In fact, they’re part of our press release for the launch of Scout. And we’re going to be doing something at South by Southwest together. That partnership is really good and I hope that it lasts for a long time.

The other big bad in all this is Google. We’ve brought them up several times. Google has a big DSP. They compete in all the areas you’re competing. They aggregate a bunch of news. Google Discover is the secret referrer to half of my competitors. They will never admit it, but it’s true. They’re in a lot of trouble, right? There’s a bunch of antitrust cases about their ad tech stack, about search in general. I don’t know how all that’s going to play out in the end, but they’re under a particular kind of pressure. Do you see that as an opportunity? Or do you see the way they run their ad tech stack as a particular kind of threat?

To think that we would be able to take advantage of Google at this point, I think we have further to go. They’re in a very strong position. I think that they really were surprised by the launch of ChatGPT, and that was a generationally important product. I think Google probably had it in their labs working somewhere.

Oh no, they did. If you mention this, a Google person jumps out of a bush and says, “We invented Transformers.” They’re over it now because they’ve managed to execute.

That’s right. And I don’t know if you remember Danny Sullivan, but in the original search wars—

Oh, I know him.

Danny was the figurehead of search and ran the biggest search conference, and all the SEOs who didn’t have their names on their business cards would be outside smoking and hanging out with Matt Cutts. That whole generation. Danny then ultimately went to work for Google and is like an evangelist for them. I’ve seen a presentation that he gave where he is singing the praises of the open web and how important it is. I am positive that they would have done more to take that on if they had been able to drive the conversation of the UI of this thing.

If you’ve looked at it, I mean, a very small percentage of Google users have actually used ChatGPT. I think Similarweb put that stat out on Twitter where I saw it. Much smaller than you would think. So there are opportunities. This is why they look so much like ChatGPT and why AI mode is embedded everywhere. Frankly, I will do something very similar once we’re through this beta period of distributing Scout through Yahoo. But I do think that it’s their game to lose. 

The one thing that is existential for them is making sure that, however this goes, search advertising crosses the chasm into this new hybrid answer engine world. I do not think that products that take nine steps of agentic whatever to monetize some outcome are going to be anywhere near as efficient as you clicking on links and them getting paid. Obviously, the world is headed towards outcomes over time anyway, but it has to find a way.

I think the UI that we launched lends itself to where that might head, in a way that would not cause Anthropic to do a Super Bowl ad about us. I think you can do it in a way that is very clearly paid and is helpful on commercial queries. 

I don’t know if you remember, but AltaVista tried to launch search advertising and were shut down by the industry and ads and articles and Wired saying, “How dare you?” before Overture made it okay, before Google AdWords came along and then really streamlined it. And I think that issue has been asked and answered already. Users are okay with it in commercial categories. It’s just about how you bring it over.

There’s a way to do it that’s keyword-driven, that is rendered in a way that is in this new format that users might prefer. That is where we’re headed and that’s the product I would like to launch and see if it gets there. But if Google doesn’t get that right, it will be difficult.

I’m very curious to see how these user interfaces evolve. I’m watching, every day, ChatGPT has a new riff. And you can tell they haven’t figured it out, because it’s hard to make it native. And that’s really what everybody wants, is for this to feel native. Even the 10 blue links have not been 10 blue links on Google for a long time. There’s a lot of embedded native experiences along the way.

20 years. It’s been 20 years.

So I’m curious to see how that evolves and I’m dying to see how you try to solve it, because it doesn’t seem like anybody knows yet. Search advertising is the most lucrative business in the history of the world. So it feels like that’s up for grabs.

I like our first draft. We’ve got a lot of great feedback on the UI of first draft of Scout. We have a lot of things that we want to add to it and improve about it. But I think we came out with a good first attempt and we’ll tweak it from here.

And just to be clear, your plan there is you’re going to grow the overall Yahoo user base. More Gen Z people are going to sign up for Yahoo Mail and you’re going to capture some of that search activity instead of trying to take direct share from Google search.

That’s step one. 

The dream would be that they then start to prefer us for search and bookmark us and decide to go to us instead of one of the other guys. And for the people already using it, their usage is increasing with more queries per day, per user. I know we’re onto something with that and I do hope that it gets there. 

But part of the thesis of the business plan for this was that we have a huge user base, just like Google does, but in a smaller version, the poor man’s version of being able to distribute the same way they’ve done with AI mode and put it on all the different surface areas. That is the homepage and News and Sports and Fantasy Sports and every single version of that.

We have new products coming. We launched three new Fantasy products last year, one of which was a huge traffic driver. And we had the biggest year of Fantasy ever. Every one of those is a surface area to which we can bring an audience that can trial Scout, and hopefully it goes from there.

I want to end by talking about finance and sports. New Fantasy products are great. The action in sports is, “boy, you should just bet on sports now.” You can see it with all these prediction markets. That is their big business. They have a lot of money to throw around. They’ve captured a bunch of lobbyists. Politics aside, the bipartisan nature of people feeling weird about sports gambling is unprecedented in my lifetime. 

Next to that is, we should just bet on anything. And then next to that, you actually mentioned it earlier. You came to Yahoo with crypto and then stonks and now there’s just gambling. All of that has always felt like gambling to me.

Crypto has always felt like one form of gambling. Stonks was like, “What if we just gamble by doing Reddit threads until GameStop goes to the moon?” And now we’re just at, “What if we just gamble on the outcome of the war?” There’s a pretty linear connection between all these ideas and how people feel about gambling. 

You run Finance, which is home of stonks. You run Sports, which could be the home of sports betting. Do you feel like you have an obligation to buffer against everyone’s worst instincts here?

Somewhat. To the extent everybody does, then yes. And by the way, we do that in all kinds of places. We really try extremely hard to be purple with news. Now, the algorithm may take you left or right over time. It’s partially our job to help reset that every now and then so you don’t get too far down the rabbit hole and you can see more neutral sources. I get complaints all the time from both the left and the right, so it probably means we’re doing that right. I do think that’s an important responsibility. We take that really seriously. We have a lot of conversations about that.

I don’t know if you know this, but Apollo historically owns Caesars and currently owns the Venetian and the Palazzo. And the sports book at Venetian Palazzo is the Yahoo Sportsbook. We don’t operate it. It’s a branding thing and there’s our content everywhere. We have had discussions since I got here about, “Should we do what Fanatics has done and get into the bloodbath of gambling and should we do it ourselves?” Because Apollo are experts at it, much more than we are. We decided no. Not only is that a huge cost sink, it’s already so far along, you’re battling it out to be eighth in the state of Iowa. We’ll stay away from that. We’ll be a distributor and we’ll be the top of the funnel for all of those.

That’s historically what we inherited about BetMGM. That’s where we’re going to play going forward. In some ways, those are ad deals. If you really think about it, we will incorporate odds and we’ll incorporate some of the more news-driven things around the betting odds about a certain topic iffhere’s a news item. But we don’t operate in either space.

Sure.

We just announced a deal with Coinbase as well where we are linking to them if you’re going to be buying stocks or crypto.

You have a long history here. I’m just asking, maybe just about vibes, right? Maybe the stock market has always been gambling. Some people would make that argument. But the idea historically is, you should turn on CNBC and look at the fundamentals of a company and invest in a company you think is going to grow for real. And we’ve just let that be gambling now. That’s what meme stocks have done to finance, in a very specific way.

Crypto maybe was just always gambling and we pretended it was going to be bigger than it was. And now crypto is part of finance and now it’s like even more gambling. 

Sports was not supposed to have any gambling at all. The reason the leagues kept gambling away, and then the money has infected sports and now everyone thinks there’s an NFL script and all the games are rigged. And you can see players are getting in trouble.

I wish that script would include the 49ers winning Super Bowl.

I wish it would include the Packers. I’ve got some real issues about the Packers in the second half of games, and I think we should talk to the script writers.

Although Pat Mahomes does get calls that nobody else does. And frankly, maybe the script.

See what I’m saying? So everyone thinks it’s rigged. And Taylor Swift won her first Super Bowl. That makes no sense to me.

Agreed. I agree.

But it’s the presence of the gambling that has led to the perception of corruption. And even though the leagues know it, even though the players are starting to get caught up in sting operations, the money is so convincing that that’s a problem. And now it’s going to happen to news, right? The prediction markets are coming for the news organizations, for the aggregators, are partnering with Reuters. Something else is going to happen where you have insider trading betting on news at scale right now.

You operate in these verticals, you’re talking about your responsibility, you’re talking about making the algorithm neutral. Here is the pressure. And not just the pressure, the money from your PE owner that runs casinos. There’s a real back and forth here, and I don’t know if anybody has really thought about the lines. I’m asking you, where’s the line? Because you could turn all of Yahoo into gambling tomorrow, based on the assets you have and the pressures that exist in the world.

Well, working backwards, it would have to be a really big check to turn Yahoo into that, which I don’t think is out there,. At this point, it really is information and a link. 

Sports odds are incredibly fundamental. I’ve been in a college betting pool with all my friends from UCLA for 20-plus years. It’s one of my favorite things I do every year. I finally won some this year. You have to have the odds and you have to have the information. If you’ve looked on these properties, Yahoo Sports, ESPN for years, with numberFire and all the different ways that you can analyze it, Fantasy obviously is a game. It’s not gambling, but it’s a game. But it is very much part of the spine of the book for what Yahoo Sports is about. So I do look at it as adjacent to that. 

I don’t want to give a political BS answer. I also don’t want to act like I’m the expert. I know one of your last episodes was on this topic and I listened to the whole thing and I think every argument you guys were making for why something is gambling is a valid argument. And then I also understand the two-way contract side of it. Even on the insider trading, there’s somebody on the other side betting the other way. Betting.

I don’t know where it’s going to wind up. If it winds up where this is illegal, then obviously we won’t have it. If it is legal, it’s incredibly popular. 

We always think about the next step somebody’s going to take to accomplish whatever goal they’re trying to achieve that day using our products. That actually is a cheesy thing that we talk about and try to build for and are always trying to do a better job at over time. I can’t think of a more fundamental next step downstream than going to FanDuel or going to Coinbase after what you’ve learned on Yahoo Sports or Finance. So I do have to have it as a core part of the product. I have to. Where that heads is going to be decided rungs up the ladder from me. But I do get your point for sure on it.

To me, the comparison is to sugar or, I don’t know, booze. Both legal, both incredibly popular, and both obviously bad for you in excess, right? We’ve built a lot of norms around excess for sugar and booze. We’re just good at it and people still fall off the edge all the time. 

There are no norms for prediction markets really, right? And the insistence that it’s not gambling actually keeps a lot of the other norms away. You’ve talked a lot about your values. And I’m saying it’s refreshing to hear you talk about brand and sending traffic to the web. This is a place where I think your values will be under pressure because the norms aren’t there. Is there a line for you?

The line would be something that we’d have to think about more if we were operating in either space. Which, again, we looked at including trading and decided we’re better as a partner sending traffic downstream. Maybe it’s similar to,  “do we take ads from beverage companies, from Bud Light?” 

It’s funny. Do you know why FDR won the 1932 election? It was in Andrew Ross Sorkin’s 1929 book. It wasn’t the Depression, it was Prohibition. I also don’t think we’re going that way. I think these things are, probably at some level, here to stay. And in that way, they’re a fundamental part of the next steps people are taking from our products. So I do think we’re a very relevant place for that. 

At the same time, we’re not the right company to operate them ourselves. You won’t see us going down that pathway, most likely. Maybe one of them will try and buy us and munge us into it. I could see that potentially happening. But otherwise, we’re back in the aggregation zone.

So that was my last question actually. You got there.

We made it. We made it.

Private equity usually wants an exit. That might look like Yahoo going public again. It might look like an acquisition. Do you have a preferred outcome in mind, or do you have a timeline?

Man, I’ve been getting this question. I know you guys have rules on this, how nothing is off the record in the UK. I was being interviewed by someone in Cannes and made just one wrong turn of phrase, and all of a sudden, there was an article that we were going public, and it made its way to CNBC. And it was not in any way where we were yet. 

It does tend to be a catnip topic about Yahoo that people are like, “Oh, when’s the IPO?” There’s a lot of people out ahead of us who are trillion-dollar IPOs that are probably first and others that people are wondering about.

I am building this thing so that we can be a healthy public company again, where you’re not struggling quarter to quarter, which is I think what got Yahoo into trouble in the past. AOL got into trouble in the past. We’re building towards that, for sure. We have longer to go to get to the point where we are truly ready to be public for five years after we go public, not just the day we go public.

That said, I think the history of PE is that they would probably much rather sell. That really is more their model, because the cash-out is more immediate. They don’t have to wait, sell down as the majority owner. That just creates its own set of problems. 

That said, we talk a lot about IPO in our board meetings, and the board is much more than just Apollo. There have been people trying to kick the tires on us for quite a while. Which also, by the way, winds up with all kinds of weird news. I get calls all the time because the other part of PE is, they kick every tire and they allow every tire to be kicked. They’re always getting phone calls about different parts of Yahoo.

But the truth is, Yahoo is way stronger together. The thesis originally was maybe you would break these things apart, and you could sell Finance, you could sell Sports, but you would really have to do it on the same day. It all would have to go at once, because it really is an ecosystem. The average Yahoo user uses two or more of our products. And they do, as we’ve talked about, send traffic to each other. Part of the data goldmine is that we have all of them together. In the context of all the other companies out there, we’re still incredibly undervalued for what we bring to the table.

In some ways, it’s part of why we’re as big as we are. In other ways, it’s still part of the challenge of where we need to go. That is really how we talk about it and look at it, and the decisions we’re making are for the future IPO. But if anybody is smart enough, I don’t know they’d let us get there.

Well, Jim, this has been great. I really enjoyed talking to you. It’s good to talk to another internet OG, both with weird shared histories with AOL. I’ve got to say, there’s more of that burbling beneath the surface of this episode than anyone can possibly know. But I really appreciate the time. Thank you so much for being on Decoder.

Awesome. I appreciate you having me. Thanks.

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