Nov 1, 2021 · 1h 15m · how-i-built-this
Audible: Don Katz
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
This episode of 'How I Built This' chronicles how investigative journalist Don Katz founded Audible in the 1990s, pioneering downloadable digital audio and persevering through hardware bottlenecks, the dot-com crash, and near-bankruptcy to build a global audiobook powerhouse acquired by Amazon.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 30.7% of the talking time here. How this is scored →
Guy as informed peer 4.0 Guest teaching 1.9 Guest disagreement 0.6 Guy pushing back 1.1
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 1:03:43 Katz rejects the idea that hardware was a mistake
Katz firmly dismisses Raz's counterfactual premise that Audible should have avoided hardware, insisting category creation demanded taking foundational risks.
Hardest push from Guy ▶ 42:04 Raz challenges Katz on the failure of the 1997 playerRaz bluntly confronts Katz with the reality of his initial launch, asking directly whether the venture-backed device was simply a market bomb.
Biggest teaching moment ▶ 49:22 Katz explains ninety-era Silicon Valley survival against MicrosoftKatz educates Raz on the existential risk of claiming to build a platform in the nineties, which invited immediate destruction from Microsoft.
Guy holds their own ▶ 18:45 Raz contextualizes Ed Telling's public reputationRaz brings outside corporate journalism history into the conversation, challenging Katz on whether the reviled Sears CEO used the book for redemption.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| The Dot-Com Bubble Bursts and Stock Crashes | 4 | 1 | 0 | 0 | The opening segment features a short hook followed by Raz's polished narrative framing of Katz's trajectory from journalist to tech founder. Katz simply delivers the introductory reflection on the dot-com crash without tension. | |
| Father's Legacy, Entrepreneurial Roots, and Formative Loss | 4 | 3 | 1 | 1 | Raz probes into Katz's father's business, misidentifying it as a music store, which Katz gently corrects by explaining it was a guitar manufacturing company. Katz reflects openly on how the early loss of his father shaped his entrepreneurial risk tolerance. | |
| NYU English Studies, Ralph Ellison, and London | 3 | 1 | 0 | 1 | Raz guides Katz through his undergraduate studies under Ralph Ellison and his transition to the London School of Economics. The dynamic is conversational and collaborative with Raz validating Katz's uncertain career beginnings. | |
| Reporting for Rolling Stone and Foreign War Correspondence | 3 | 1 | 0 | 0 | Katz shares his accidental entry into Rolling Stone foreign reporting in Spain and Northern Ireland. Raz asks supportive questions about imposter syndrome and Katz's youth, letting Katz lead the narrative. | |
| Meeting Leslie and Documenting the Sears Corporate Saga | 5 | 2 | 1 | 2 | Raz displays strong historical context about Sears CEO Ed Telling, questioning whether Telling gave Katz access for personal redemption. Katz nuances Raz's theory by explaining Telling's sense of history and corporate battlefield culture. | |
| Conceiving Audible Words and Patenting Downloadable Audio | 4 | 2 | 0 | 1 | Katz details the technical and conceptual origin of Audible Words, from running with a Walkman to patenting downloadable audio via phone lines. Raz keeps the pace brisk by summarizing the conceptual shift from radio to internet audio. | |
| Mid-Episode Break: The Challenges of Building Audible | 4 | 2 | 1 | 2 | Raz presses Katz on whether the initial 1997 hardware device was essentially a commercial bomb given its poor audio quality and $200 price tag. Katz acknowledges the product's flaws while detailing the harsh manufacturing realities. | |
| The 1999 IPO, Grief, and Stock Collapse | 4 | 2 | 0 | 1 | Katz describes the 1999 IPO, the sudden death of CEO Andy Huffman, and the brutal collapse of their stock price to four cents. Raz provides empathetic prompts while maintaining narrative structure around the financial disaster. | |
| Mid-Episode Break: Charting a New Path Forward | 5 | 3 | 1 | 1 | Katz explains surviving the crash by abandoning hardware production to become an embedded platform, leading up to Steve Jobs's iPod integration. Raz connects the dots between the subscription pricing pivot and device giveaways. | |
| Audiobook Production, Project Hollywood, and Relocating to Newark | 4 | 2 | 1 | 2 | Raz challenges Katz on whether he regrets spending years making devices instead of focusing exclusively on audiobooks. Katz rejects the retrospective critique, arguing that category creation required pioneering hardware risk. | |
| The Amazon Acquisition and Reflections on Entrepreneurial Luck | 4 | 2 | 1 | 1 | Raz explores the 2008 Amazon buyout and asks the signature How I Built This question on luck versus skill. Katz offers a grounded 51-49 split, highlighting persistence and leadership decision-making. |
Statements from this episode (21)
Katz: High entrepreneurship often correlates with patterns of fatherlessness
“I, I've heard, and you probably have heard this too, that, ah, there's a lot of patterns of fatherlessness in highly entrepreneurial people.”
Katz: Anyone pursuing bold ideas experiences imposter syndrome
“The attack that actually, I think, attacks all people who go way out with crazy ideas whatever they are, which is that, oh my god, I'm a fraud, and they're about to find it out.”
Katz: Building Sears Tower shattered company's friendly image and sparked decline
“They made this genius conception of every customer thought Sears was the friendly guy down the street, the member of the Kiwanis Club, and that Sears was this localized reality. And once they built that tower and said that they're one of the most powerful comp…”
Katz: Funded Audible's original downloadable audio patent with $14k on credit card
“And we got a patent together on a downloadable system Of, for media that would be captured by a solid state device, and I remember it was 14,000 dollars that I put on my credit card.”
Katz: Single patents are worthless without an entire patent portfolio
“Now I know, of course, you know, without a portfolio patents are worthless, but, you know, at that point I didn't.”
Katz: Took an 85% pay cut at 43 to found Audible
“I was 43 years old, and I took an 85% year-over-year pay cut to start Audible.”
Katz: First Audible download occurred on October 31, 1997
“The first download when it finally happened was in, I remember October 31st of 97, it was Men Are From Mars and Women Are From Venus, the self-help book, and I remember it was to a customer in Cave Creek, Arizona, and that was, and it was done at that then pre…”
Katz: Audible's first player cost $208 to manufacture and sold for $215
“But it cost us 208 dollars to make that little device, and we tried to sell it for 215 dollars.”
Katz: When capital costs almost nothing, businesses should take it
“When capital costs almost nothing, you probably should take it.”
Katz: Robin Williams bought ~500k Audible shares before IPO
“Robin Williams had come in and bought, like, 500,000 shares of common stock before it went public.”
Katz: Audible raised ~$40M at IPO with 5,700 customers
“We walked away with almost forty million dollars. We had 5700 customers.”
Katz: Audible stock collapsed from ~$29 to four cents in 2000
“The stock price, you know, which was once 29 dollars or something, it went down to four cents at the end of 2000.”
Katz: In the 1990s, Microsoft targeted any startup building a platform
“If anyone said they were building a platform, Microsoft would make it their business to destroy your company.”
Katz: The book publishing industry inherently resists technological change
“Book publishing is a, is, is people who love books, meaning that they're willing to get paid less, or they have the wherewithal to not get paid a lot, and you know, and they go into a world, and usually, they stand for the status quo and they usually resist, y…”
Katz: Steve Jobs pledged $15M to market the original iPod
“Steve said he's going to spend fifteen million dollars marketing their audio player.”
Katz: Audible cut audiobook production costs by 90% using technology
“We also figured out how to make an audiobook for about a 10th of the cost. That the, just using technology, you know so we just started making a lot of audiobooks”
Katz: Audible became the largest employer of actors in New York
“We were becoming at that point the largest employer of actors in the New York area, which we've been for a while.”
Katz: Zero employees quit when Audible relocated to downtown Newark
“We moved in with a 120 people and nobody left.”
Amazon acquired Audible for $300 million after it reached $110M in revenue
“In 2007, your annual revenue at Audible was like one hundred and ten million dollars. And in January of 2008, Amazon announced that they would acquire Audible for three hundred million dollars in cash”
Katz: Amazon stock was trading around $50 during the Audible acquisition
“And also, you know, come on, let's face it, most people know that, you know, senior people at Amazon get paid in Amazon stock. And so we did the transaction, the stock was like 50 dollars a share.”
Katz: Entrepreneurial success is roughly 51% grit and 49% luck
“I think it's something on the order of 50.5 to 51% purposeful good calls and brave moments, and times when you just didn't give up, the rest of it is definitely luck, because otherwise, how could I have made so many stupid, boneheaded decisions along the way t…”