Photo: Airtime/Brew PR
Sean Parker and Shawn Fanning. haven’t slept in two days.They’ve been preparing for the launch of their new startup, Airtime, which lured celebrities and news outlets to MILK studios yesterday on the west side of Manhattan.
I was their last interview and found the pair exhausted. Fanning contemplated conducting our interview from the floor, curled up on the deer-skin rug that lined our plush leather seats.
The Internet legends were surprisingly easy to talk to; they rambled in a brilliant stream of consciousness. 20 minutes flew by effortlessly.
- Airtime is a peer-to-peer video chat startup that connects strangers who share Facebook interests. “The idea of smashing people together goes all the way back to Napster,” says Parker.
- Airtime is a working prototype. There’s a lot in the pipeline that will be methodically rolled out.
- Parker and Fanning want Airtime to be a calculated success, and they’re taking notes from Facebook. “You either stumble into success by sheer accident or you do it by good force with a lean startup model and by testing things,” says Fanning.
- Parker thinks Facebook’s best days are ahead of it and that it’s a mistake to judge the company based on its existing business units. “The company has just barely begun to scratch the surface in terms of where identity is relevant and how it can be monetized,” says Parker.
- Parker doesn’t think Facebook’s underwhelming IPO will have a negative effect on the startup scene. It will only make it less frothy, which is a good thing and will help create concentrations of talent.
Continue reading for a lightly edited interview with Sean Parker and Shawn Fanning…
Business Insider: You met each other online when you were teenagers. Did that spontaneous meeting inspire Airtime?
Sean Parker (SP): Yeah, it’s such a good case study for what’s possible. And we were very lucky in that we were part of an earlier phase of the Internet.
There literally was no web. There were no web browsers. Everything you know to be the Internet didn’t exist yet. You could connect to IRC chats—kind of like an AOL chat for elite hackers.
That world only existed for a minute. If you had a chance to experience that world, I think it affected the way you perceive the Internet. It ultimately led to Napster.
We went and built a software application that was for peer-to-peer music. And that was a totally weird thing to do, sort of in the middle of the web boom. It came from the fact that we were hackers to the core and understood that the Internet was a lot more than the HTTP protocol. That it was really about just connecting two people.
So I think this probably comes full circle to Airtime, because this idea of smashing people together goes all the way back to Napster.
Why didn’t you launch Airtime as a mobile product?
SP: I think in some ways it’s my contrarian bias towards life. You’re going to find value in a place where other people aren’t looking.
When you’re in a super competitive market where there’s limited screen real estate on a rectangle on a phone and a huge explosion of apps, then it becomes a very hard market to penetrate.
Shawn Fanning (SF): There’s also nothing particularly important about mobile devices as it relates to what we offer.
We can update our site on a regular basis and experiment as quickly as possible. The web provides a great foundation for that. There are no on-the-go use cases that are so overpowering that they justify Airtime starting with mobile.
SP: There are a lot of things you can do with our product with a full-screen interface, with YouTube integration, which is not directly portable to mobile. You need screen real estate if you’re going to do some of the more advanced sharing.
Airtime, like you said, “smashes people together.” Do people really want or need spontaneous meetings?
SP: You can get to know people much better if you don’t have the constraints of real life. Knowing each other in real life is sort of like a weird impediment with a social hierarchy and rules.
Of course, there’s no substitute for face to face interaction if you’re willing to put in the time and give someone the benefit of the doubt.
There are two main use cases for Airtime. The first is a friend-to-friend chat case. Airtime does that best because it’s web-based and there’s no friction. You just log-in with Facebook.
The second is the idea of sharing videos with a friend. Being able to watch reactions to a video I’m sharing in real time is pretty powerful.
Why do you feel video is the best way to introduce people to each other online?
SP: It’s a gigantic market. The only thing stopping everyone from video chatting is that there’s too much friction.
SF: It’s a hard area to work in because if you make mistakes, there are huge consequences that will devastate your service or your business. We’ve seen a lot of the evidence for that in the past, but we’ve also seen a lot of evidence of success if you’re able to achieve it.
It’s a medium that is very raw and we should start to explore it a little bit more. There are a few more
challenging problems and more meaningful problems; they have a chance to really have a huge effect on the quality and the substance of people’s interactions online.
We’ve had over a decade to make mistakes and learn lessons that have prepared us for this part of our lives.
Airtime undeniably looks and feels a lot like Chatroulette. At one point you were actually talking to the Chatroulette founder. What happened?
SP: We were talking to Andrey and looking at the product a lot. I think Andrey just had a very different vision, a very different direction he wanted to go in.
We’re more interested in fusing the social graph and all the data in the interest graph with real-time chat.
You say this is just the first version of Airtime and it’s still a work-in-progress. How are you planning to expand the product?SF: Where Airtime goes from here will be dictated by how people use the product.
We’re excited to go back and, after catching up on sleep, see how people use it and surprise us.
SP: We’ve actually mapped out apps and started building a lot of them.
You have to try to figure out how you are going to get leverage in the market, how you are going to buy users, what your growth strategy is, and then how you sequence all of the feature roll-outs.
We did a really good job of that at Facebook. We could’ve started building the feed and photo apps sooner, but we extracted all of the value even from the initial use cases, even though we’d kind of planned out where we were going.
SF: You’ve got to get people comfortable with using those technologies as well. When Feed was introduced on Facebook, it was interesting to see the backlash initially because people didn’t really understand the change. But it was clear that the design of the product showed a deep understanding of what people were actually doing with the service.
That kind of rollout and timing showed there was an overall plan with a deeper understanding about what was actually happening on Facebook and why.
MySpace is a funny example because having worked with them from the outside at a previous
company and watching the level of insecurity there, it was totally clear that it was successful by accident.
Myspace didn’t really know why it was successful so it was terrified to change anything. There was no overall planning strategy at all.
To watch that take place and see it fumbling, then watch Facebook eclipse it over time, it was really interesting.
You either stumble into success by sheer accident or you do it by good force with a lean startup model and by testing things. At the end of the day it’s always good to have a meta-view of the world and understand why things are the way they are, then let that dictate what you’re doing.
SP: I think the way to prove that you’re not an accident is to do it systematically over and over again for a long period of time.
Speaking of Facebook, What was it like to watch the Facebook IPO?
SP: It was a milestone in the company’s development. It had to happen at some point. The rate of return environment necessitated an offering.
The company has just barely begun to scratch the surface in terms of where identity is relevant and how it can be monetized. So if you look at reputation, accountability, trust, transactions, fraud prevention, optimising marketplaces, connecting buyers and sellers more efficiently, applications like Airtime, which have a deep integration with Facebook, there are so many markets that Facebook has barely begun to enter.
I think it’s a mistake to evaluate the strength of Facebook based on its existing business units.
Zynga is a great example of where, a category that Facebook didn’t care about, grew out of nowhere and now contributes over a billion dollars to Facebook’s top line. It’s pretty crazy.
I think Zynga contributes something like 12 per cent to Facebook’s total revenue.
SP: Maybe it’s not a billion dollars. It’s a lot.
You are both angel investors. What impact do you think Facebook’s IPO will have on the startup scene?
SP: I don’t think it’s going to have any impact on startups, not short-term. Venture capital wealth is so overfunded, there’s so much money chasing so few ideas that it’s not an issue. It won’t be an issue for a while.
We say venture capital firms have a barrier to exit. It’s kind of hard to shut one down. People will just keep putting money in them for decades.
SF: It may impact at some level the tail end of either new entrepreneurs or fringe projects, but that’s not necessarily a bad thing as far as the concentration of talent is concerned.
SP: If the scene got a little less frothy, if it cooled off a little bit, it’d be a good thing.
I don’t worry about how technology stocks in general are doing, because you’re getting startups that are taking such a long view anyway. It took Facebook eight years to IPO and that’s fast. Companies do this much more slowly.
So, the idea that this one momentary shock to the market would have a long-term impact—I think the only possible effect it can have would be good. This is the most competitive environment for engineers, for executives, for peers, for entrepreneurs, and you don’t get a concentration of talent.
They had a concentration of talent at PayPal. That’s where Reid Hoffman, Peter Thiel, Jeremy
Stoppelman and Max Levchin all came from. Facebook managed to achieve a concentration of talent. We’ve also done it at Airtime, but it was very hard.
SF: Sean brought in a lot of people from a couple of different companies—some from Facebook—but it felt like almost a currency that accrued with a lot of the relationships. We have 30 people working at Airtime right now.