333 Stephanie Scapa: Competing With Giants

What is it like to take on giants like Apple, Spotify and Google? Disruptive innovation is not for the faint hearted or under-capitalized – so it does help to have the deep pockets of a corporate parent – especially when the CEO of that corporate parent is your Dad.

MELINDA

I’m Melinda Wittstock and today on Wings of Inspired Business we meet an inspiring entrepreneur who is on a mission to transform the digital economy to a new and more equitable model for artists, creators, and consumers.

Stephanie Scapa is the Co-Founder & CEO of WEYV, a platform that allows users to listen to music, read magazines and listen to podcasts all in a single app experience.

Competition is fierce in this space with established brands like Spotify, Apple Music, and Amazon duking it out to win the loyalty of consumers and content providers, and Stephanie has the advantage of also being a vice president of Altair, the software company founded by her Dad and also WEYV’s parent company. So Stephanie has the advantage of learning from a top entrepreneur firsthand  – plus she’s got the capital and support to play a long game.

Today we talk about this hot space, how WEYV is different from what else is on offer with a mission to pay content providers, and what it’s like to innovate as an “intrapreneur” within a larger corporation.

And before I share this conversation with Stephanie Scapa

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Now back to the inspiring Stephanie Scapa.

Stephanie says she’s on a mission to unite friends and families with shared access to ALL of the premium entertainment and quality content that bind them together by way of the new app WEYV – spelt w e y v.

WEYV is an ad-free, subscription-based app bringing music, magazines, kids e-books, and podcasts all into one experience. Users can listen to music while reading their favorite magazine, curate and share reading lists and playlists, and safely create kid-friendly profiles. WEYV has been built on a patented digital content licensing model where content providers are fairly compensated in proportion to the amount of time their content is accessed – a unique model for content providers to monetize their intellectual property.

Stephanie, a Vice President at WEYV’s parent company Altair, led both the development of the app, and also secured deals with major record labels and publishing companies like TIME Inc., Bonnier Corp., Universal Music Group, Warner Music Group and Sony Music Entertainment, in order to offer their content to WEYV users.

Stephanie is also a philanthropist having founded Tech Treehouse in 2016, a Metro Detroit-based non-profit providing after-school STEM activities to children.

So are you ready for Stephanie Scapa? I am. Let’s fly!

Melinda Wittstock:         Stephanie, welcome to Wings.

Stephanie Scapa:             Thank you so much for having me.

Melinda Wittstock:         I’m so excited to talk to you. I think WEYV is such an interesting idea. This platform that combines music and magazines and podcasts and everything in a single app. What made you interested in combining all that together? What was the a ha moment?

Stephanie Scapa:             So, really it all stems from the business model. So, the way that the model works, we think about it a little bit like a library where you’ve got your library card that allows you to check in and out content and based on the plan, the subscription plan you purchase and based on how many people are accessing and checking things out at the same time, you have sort of more flexibility and so that just lends itself really well to all different types of content.

Melinda Wittstock:         Yeah it’s interesting where all of us are consuming content like all of the time. It’s like this 24/7 thing. There’s so much of it out there and yet, from the end user perspective, it’s like still hard to find the right thing. There’s so much. Yet there’s a scarcity in there being so much. There’s a real opportunity to curate and was that really the value proposition here?

Stephanie Scapa:             So, it’s a big part of it. So, as an example on the music side, one of the things that we did is we understand that a user doesn’t necessarily want to choose every single item, independently searching and digging through, but at the same time, wants to give some guidance on what they want to listen to. So, we have what are called stations where you’re able to select an artist, an album, a song and then from there, you give us just a little bit more information than you would another app where you tell us what percent of that station do you want to be the artist you selected.

Stephanie Scapa:             So, if you pick Taylor Swift, do you want your station to be 100% Taylor Swift or do you want it to be 25% and then we’ll fill in the rest? You tell us just a little bit more, you tell us popularity percent wise and you tell us genres potentially, decades. You can decide how much you want to give us and then from there, we can better curate for you. So, we think about it as a laid back on demand experience which is absolutely a big part of our thinking and helping users find the content that they actually want in that moment.

Melinda Wittstock:         So, you’re competing though with big folks. Spotify, Pandora, Apple. Everything. So, that’s not for the faint hearted.

Stephanie Scapa:             No. It certainly is not.

Melinda Wittstock:         So, it’s awesome. Hats off to you. I love when … Sorry that was my dog barking. I’m just going to pick up there. I love when women take big moon shots and go for it. So, let’s lay it all on the table. What’s different? What’s different about what you’re doing and what all those folks are doing and why are you going to win?

Stephanie Scapa:             So, you’re totally dead on by the way that we are trying to climb a mountain with Goliaths that are already standing on the top, but for us, what really makes it different is the business model. So, when you look at all of those larger companies, so you look at Spotify who has been struggling since the beginning to become profitable and get out from the red and then you look at Apple who sort of doesn’t ever care if they make a profit on this side potentially because they’ve got the hardware where they’re making profit and that’s able to support quite a bit. For each of them, they’re not necessarily really having success. Though they’re having success gaining users and usage and so fort. It’s not necessarily the best sustainable model for the future.

Stephanie Scapa:             That’s sort of what stemmed the whole idea for us here is creating a more sustainable model for the future where content providers are compensated fairly for their work and their IP, but users have flexibility and access to the content that they’re interested in which isn’t the same for everybody. Some people are more interested in reading magazines and as a part of their family maybe their child is more interested in listening to music or they’ve got young kids who love the audio books that read to them and so forth. So, it gives a user more flexibility but it also allows for content to not all be priced the same. So, what I mean by that is if you’re thinking about a Amazon Prime as an example, the reason they can’t put their full music catalog to be available as the Prime subscription is because they can’t offset the cost.

Stephanie Scapa:             So, for them they make just a portion of the catalog available and then you can pay more in order to get access to each of their sub categories. Whether it’s music, videos, books so forth for some additional content if that’s a category you like. So, for us, what we’ve done is we priced the content independently so one magazine may be a different number of units is what we call it. So, when you’re thinking about your library card checking in and checking out, we count based on units. So, a group has say 20 units to listen to music, costs 10, and so you’re using the units to play the music but as soon as you’re doing playing the music, the units go back to your groups pool and can be used again by anybody you’ve given access to in your group. It’s up to 25 people across all the different types of content.

Stephanie Scapa:             So you’re not restricted from sharing with your spouse, sharing with family members, sharing with your uncle or your grandmother or even just a friend. You can share with as many people as you want. It’s no additional cost and what we’re doing is we’re actually just restricting the simultaneous usage and that allows us though the ability to have different content priced differently. Because I think if you really think about it, not every piece of content is equivalent. So, not every magazine you’re willing to pay the same amount for and I think that’s a big part of what’s missing when you’re looking at the other competitors in market.

Melinda Wittstock:         That’s so interesting. So, I see you with the sharing, creating potentially a big community around that. Is that part of the goal here is to make content community?

Stephanie Scapa:             It’s part of sort of how we view the world already. I think naturally most people do more sharing than the system has been set up for in general. So, you end up with a lot of scenarios like Netflix where there’s just account sharing that is not according to their user rules, but what you find is that most people do want more of that community aspect and do want to share and so we’re sort of going with nature rather than against it.

Melinda Wittstock:         Right. Because people want to talk about the music they’re listening to or what they’re reading or that sort of thing. It seems like there’s an opportunity there. I love the idea of being able to listen to music and read at the same time. My brain works that way. I like to do that anyway, so it’s all in an app and I imagine you have some sort of machine learning type algorithm in behind or matching algorithm. It’s like, “Oh if you like this, you’ll also like this.” But you’re giving the user as much control as they want.

Stephanie Scapa:             Exactly. Exactly. We do still have of course playlists that we’ve created and curated. So, if you want us to pick everything for you, we’re more than happy to, but absolutely. That’s the total idea.

Melinda Wittstock:         So this is interesting. So, this has launched from … WEYV has a parent company. The parent company is [Altair] and you are obviously the cofounder, CEO of WEYV, but you’re also the VP of corporate development at Altair. So, tell me a little bit about this. How a startup gets incubated within a bigger parent and how that came to be.

Stephanie Scapa:             Yeah. So, the business model that we use is the exact business model Altair uses for their business to business interactions on the software side. So, our business model is actually proven with the parent company and that was where the idea came from of this business model for consumer. So, the founder and CEO of Altair is actually my father. I was with him eight years ago. Time flies and he was telling me about how he wanted to take this business model and bring it to life on the consume content side of things. So, we discussed it and eventually I ended up joining Altair to do both roles. WEYV really is what drew me to Altair in the first place but Altair as an organization is really behind the idea of innovation projects and doing things that stretch boundaries so we can learn. This is sort of our first attempt I would say at anything in the digital consumer space.

Stephanie Scapa:             So, it’s been a lot of learning for us which has been super positive. I mean, plenty of mistakes and so forth of course as any startup has, but it’s been an adventure for sure.

Melinda Wittstock:         Well, I’m like a startup where it’s bootstrapped or built on credit cards, right? Where you’re scrapping to get some angel money or whatever. You have a corporate parent right? But how does that work in terms of budgets and all of that? Do you have to kind of fight for budget or investment within the company or what’s that process? I’m always curious about startups that are incubated within corporate parents and how the funding piece works.

Stephanie Scapa:             So, there is for sure sort of a budgeting aspect. I don’t know that it’s necessarily a battle like it is at many other large organizations. But for us it’s more of a discussion on what’s appropriate because we recognize the risks and we also recognize the reality of if you don’t spend enough, then there’s no opportunity for this to have success. So, it’s really more of a discussion on what’s appropriate and what will make sense. Now that Altair is a public company, thinking about the shareholder side of it and really being able to confidently communicate to shareholders on the appropriate spend that is taking place. So, I think it’s more in that direction. Though I’ve been part of larger companies where it’s much more of a battle to win your budget and you want to make sure you spend your whole budget in the year.

Melinda Wittstock:         Right. Yeah.

Stephanie Scapa:             Lose it the next year. That’s not the case.

Melinda Wittstock:         Okay because I’m thinking about that clash because startup culture and corporate culture and I know having run technology startups myself and selling in to Fortune 500s where there’s such a different culture and a different sensibility.

Stephanie Scapa:             Yeah.

Melinda Wittstock:         Right? So, that’s what made me kind of curious about what’s it like to incubate a startup within a company because do you have that scrappy startup culture or are you still kind of corporate?

Stephanie Scapa:             We do. We have a very scrappy startup culture. I think there’s two reasons for it. I think one Altair is still run by its founder who did it bootstrap.

Melinda Wittstock:         Right.

Stephanie Scapa:             So, there’s sort of a different perspective, though the company at this point is not really anything small, it’s really still got that history and the view of a small company. So, very often when we’re talking to smaller companies, one of the things we always say is we still as Altairians feel like we’re part of a smaller company because of the way everything is done. But then in addition, to help encourage more of the startup culture, we did start where our team was based. Our headquarters for Altair is in Troy, Michigan and the team was actually based in a warehouse basically that was five minutes from our headquarters when we first started and it was pretty much just us.

Stephanie Scapa:             It gave a different feel around things. So, it has been trying. It’s been sort of a balance of we recognize we need that scrappy aspect to us in order to win. I don’t think if you don’t have that scrappy startup feel, it’s very hard to come in and beat out some of the largest companies in the world. We have to bring something unique, bring something different but there are advantages too for us because I don’t have to spend my time going and talking to VCs in order to raise funds and giving in on things that I might not compromise on otherwise because of having outside investors and so forth. So, definitely a unique position.

Melinda Wittstock:         Yeah that’s really distracting. I know what it’s like to go to raise money from angels and VCs and it’s like taking a whole year off your company. You should be running your company but you’re kind of not because you’re doing that and then they all have an idea of where you should go. I’ve seen so many people get blown off course by being either over advised or advised in the wrong way and missing an opportunity with the money so it can be quite a difficult road. So, to be able to do that in an uncompromising way is really awesome. So, it does give you a big advantage. So, what was your background, Stephanie? Sorry. I’m just going to pick up there. So, Stephanie, what was your background? Have you don’t startups before or did you come really out of Altair?

Stephanie Scapa:             No. So, my background actually I have an engineering degree.

Melinda Wittstock:         Awesome. I love it. I love when women have engineering … that’s awesome.

Stephanie Scapa:             I started actually working full time at Cisco when I first began and I was coding. So, I had absolutely no startup experience. I had very little experience honestly when I joined Altair eight years ago, but I sort of learned I would say over time and it’s definitely so on one hand I have a skewed startup experience because I haven’t done everything that a normal startup has done, but on the other side of my role, I’m responsible right now for corporate development and all the software partnerships at Altair and when I first joined Altair, I was really much more engaged with all these little companies and even today in my role with the partnership side of things, I’m meeting tons and tons of startup companies in the technology space that we’re looking at partnering with, looking at acquiring and so I’m getting a little bit both sides view from a larger company perspective as well as a view from sort of a smaller company perspective. It’s a bit unusual to see both sides I think.

Melinda Wittstock:         You’re also a philanthropist which I love. You founded something called Tech Treehouse and tell me a little bit about that. It’s in Detroit and it’s really all about STEM for children which is awesome. So, this obviously correlates with your engineering background. Tell me a little bit about that.

Stephanie Scapa:             Yeah. Guiltily here, I moved to California and I haven’t really set it up here yet which I very much want to but the idea really stems from the fact that I have a friend who was a teacher in the charter schools in Detroit and he was telling me how most children that he was teaching, younger children we’re talking elementary school, second, third grade time frame right around then is when they tend to go in a bad direction let’s say and get in with the wrong crowds and that sort of thing. It often happens because after school there’s not enough oversight and it’s because single parents or going home to grandma or even just parents that work two jobs really a culture where there isn’t the ability to make sure your kids are doing their homework afterschool and you’re spending time with them doing fun little science experiments at home and all the things that every parent hopes that they can do but just not necessarily possible for everybody.

Stephanie Scapa:             On the other side, from the corporate perspective, I know that a lot of companies and employees are looking to get engaged in their community and give back. The challenge in my opinion and where things break down is the fact that most employees have their own families to go home to. So, if you ask somebody to drive down to Detroit after work to spend three hours with kids, that is a pretty big ask actually because they have their own things that they have to get done. So, the idea of Tech Treehouse is we bring the children onsite to a company’s location and usually it starts right after school. So, school gets out. By the time they get there it’s around 4:00 PM and they’re there for three hours basically.

Stephanie Scapa:             These employees run basically stations of different STEM activities. So, they’re able to interact with these kids and still go home at a pretty reasonable time. Usually it’s 6:30, 7:00 at night and the kids are perfectly happy to sit on a bus for 20 minutes or even 30, 40 minutes to go do something super fun. Plus the kids are getting exposure into companies that they may not otherwise thing about as career options. We did one at an insurance company as an example where I’ve never seen employees so excited by the way. It was one of the best events we’ve done and it honestly worked out fantastic. Plus the kids got exposure to something that is a bit unusual.

Melinda Wittstock:         That’s wonderful. It’s great that you’re doing that. I’d love to get your perspective on women in tech because so many girls at some point decide that they’re not good at math or it’s not cool or they don’t fit into what’s perceived as the bro culture. Then you take that all the way through what happened at Uber or wherever. So, what has to change to get women … It starts obviously with kids and what you’re doing with the Treehouse project, but what has to change in Silicon Valley and everywhere to really support women engineers, women in tech?

Stephanie Scapa:             I do think it has to come from a really young age. Because when I look at my graduating class in engineering, there absolutely wasn’t an equal amount of women as there were men. So, when you’re then going out and companies are looking to hire, of course there’s going to be a difference in the gender to some extent of that’s what’s coming out of the schools. By the way, that’s not the case in other countries so it’s not a excuse let’s say for everywhere but I do think that it can have an impact which means we have to get more women going to engineering school and pulling all the way through. I think it stems from being encouraged in that direction and being told that they are good at that and shown that math and science is cool.

Stephanie Scapa:             There are really some cool things that are part of it and what you can do and the excitement. So, it’s gotta start from a young age. For me, I was always encouraged by my parents which I think is a big part of it. So, us as parents need to make sure that we’re not accidentally saying, “Oh, well my child is not that good at math.” For me I always used to say that I wasn’t good at reading when I was young and my parents, no matter how many times I said it would always come back and say, “You are good at reading. It’s just practice.” I think that that’s really the biggest first step that we have to take. It’s not an easy one. The more programs and cool things that we can offer to kids, robotics and things like that, the better. Even for me, I probably would have done more robotics in university if I hadn’t been afraid that I would be the only one that didn’t know how to do anything.

Melinda Wittstock:         Interesting. So, it’s so funny we talk a lot on this podcast about things that hold women back in business or in tech or whatever. Part of it is the perfectionism gene. We think we have to be perfect at something or highly credential before we put our pants up if you know what I mean. Before we [inaudible 00:24:09].

Stephanie Scapa:             Yep.

Melinda Wittstock:         It holds us back. We’ve gotta stop that. We should be in AA for perfectionism really.

Stephanie Scapa:             I totally agree. Some of it is somebody just should have told me that nobody else knows what they’re doing when they join.

Melinda Wittstock:         Right. Well that’s it. So, it’s so interesting that women just make that self select thing whereas men tend not to.

Stephanie Scapa:             Yeah.

Melinda Wittstock:         Is it something to do also with just making it cool?

Stephanie Scapa:             I do think there is an aspect of that honestly. It’s really often times math and other classes can be physicians as really boring and not interesting, but every once in a while you get an unbelievable teacher that just is fantastic. I had one at University of Michigan. She was a material science professor actually and my engineering degree was not material science. I was industrial and operations. It was just an elective course that I chose to take as one of my additional engineering classes and she was just unbelievably amazing. It got me super excited about material science

Melinda Wittstock:         That’s awesome. I love it. So, one of the things that I wanted to talk to you about is the difference between male dominated and female dominated leadership teams. So, you’ve got this kind of corporate VP kind of … Sorry I’m just going to pick up there. You’ve got this lens from the corporate side as well as the startup side. How are women different in corporate and startup leadership roles? What are the amazing things about us that we should leverage more and where do we need to improve generally?

Stephanie Scapa:             So, I think in general, we tend to be great at more of the interpersonal side of things and a lot of the softer skills that often might get taken for granted. So, in a leadership role, usually I see that women are often more willing to help and to mentor and give guidance and so forth to others that are beneath them and it hurts us sometimes because it means that we’re not necessarily reaching above. We’re so busy helping below that sometimes it prohibits us from reaching up. So, I think women need to be aware that yes you absolutely should be helping people beneath you because it’s one of the best things in my opinion that women do naturally. Not that men don’t do it also, but I think it comes more natural for most women. But I really do think that we need to remind ourself also particularly on the corporate side here to think about the higher level of where we’re trying to go and how we ourselves can get there.

Stephanie Scapa:             So, that’s one of the big things I would say. On the startup side, I think we can often be really empathetic to the user and place ourselves in a user’s perspective thinking about what a user wants and how they’re feeling which can create great user experiences and great messaging to users and things like that but I think we tend to be more conservative. So, more nervous to take risks and to go all in on something which for a startup is a big part of whether or not you make it because naturally if you grow a small amount incrementally you most likely aren’t going to make it as a startup.

Melinda Wittstock:         Yeah you have to really swing for the fences, don’t you? You have to be prepared to think big. I think sometimes women do … I don’t know. We’re acculturated to be a little bit more conservative. I see this when women go out to raise money for instance. They’ll come up with projections that they think are realistic or conservative and the venture capitalist looks at it and says, “Well, that’s a good opportunity.” Because they automatically discount the numbers no matter what they are because for years, the guys could have overinflate. They do the hockey stick.

Melinda Wittstock:         So, women get dinged all the time. They think they’re being really smart and prudent because these are the actual numbers, but then the VCs discount them and yeah that kind of incremental thinking is a real problem and it holds us back.

Stephanie Scapa:             Totally.

Melinda Wittstock:         So, where do you see WEYV being in 5 years, 10 years? What’s big vision? When you sit there and you shut your eyes and you think, “Okay this company is going to be this amazing thing?” Is it going to stay within Altair or is the idea to spin it out or what’s it going to do? Where is its place with the Spotifys and the Apples and the Amazons?

Stephanie Scapa:             So, for us our vision is to be more on the digital currency side of things and so to be more of the gateway in how users are able to access content more easily and sustainably. So, whether we’re in Altair or outside, honestly I’m not really sure. I do think eventually this isn’t the core of what Altair does and so I can see spinning out or separating from Altair at some point in the future, but it’s not a requirement because there’s so much overlap on the business model concept that it’s not completely unconnected, let’s say. For us, though we want to be at that front, so as an example, when there’s content that becomes available whether it’s HBO or something like that, our goal is really to be just like you’ve got this button that says, “Sign in with Facebook,” or, “Sign in with Google,” you could have a button that’s, “Sign in with WEYV,” and then you’re able with your WEYV units to have access to that content for what you’ve already purchased. So, it gives users more flexibility. That’s really our goal is to be that gateway.

Melinda Wittstock:         So, it’s kind of like a digital content passport almost.

Stephanie Scapa:             Yeah exactly.

Melinda Wittstock:         Yeah that’s really super cool. Well, that’s awesome. Well, Stephanie, I just want to thank you for taking the time to put on your wings and fly with us today.

Stephanie Scapa:             Thank you so much for having me.

Melinda Wittstock:         That was great. Thank you and we finished at exactly 6:32.

Stephanie Scapa:             Yeah.

Melinda Wittstock:         So that wasn’t bad.