Jesse Thorn has built a sizable audience with his Maximum Fun podcast business. His NPR talk show, “Bullseye With Jesse Thorn,” has drawn guests such as Jonathan Majors, Tom Hanks, and Kareem Abdul-Jabbar.
But for the past few years, he said, running the MacArthur Park-based business has brought him to a head. The father of three young children was struggling to balance his work and family life. He suffered from split migraines.
“You have to back off on this,” his wife, Theresa, told him at the dining room table in 2018. “I’m afraid you’re going to die.”
Then it got worse. The pandemic hit. The podcast industry took hold as big tech companies like Amazon and Spotify acquired startups in the advertising and audio technology space.
Amid personal and industry turmoil, Thorn faced a choice: maintain the status quo, which was untenable; or sell the company, which did not sit well with him.
“I had been trying to square the circle of how do I take this back without selling out to my colleagues or friends who make the shows,” said Thorn, 41.
Instead, he chose a third option: turning the company into an employee-owned operation.
On Monday Thorn, who has co-owned Maximum Fun with his wife since it joined in 2011, announced that their company would become a worker cooperative, a novel business model in the podcast industry, but one that has been proven. by many small businesses, including bakeries and pizzerias. Ownership will be shared equally by at least 16 people, including Thorn, the company said.
The process of turning Maximum Fun into a cooperative took about a year and a half, Thorn said.
Thorn said he would receive a lump sum up front and a percentage of the company’s revenue for a limited number of years. The company is taking a loan from a community development financial institution fund.
Employees opt to become owners of the cooperative by paying hundreds of dollars, which are placed in a trust and they get it back with interest when they leave the company. Worker-owners can also vote on the company’s board of directors. The new board oversees the management structure, which is expected to remain the same, Thorn said.
Thorn declined to disclose more specific details about the financial terms of the deal or how much money he would get from the purchase. The amount he is receiving is significantly less than what he would have gotten if he had sold it to another company, he said.
Several companies expressed interest in buying Maximum Fun, a large radio company, a medium-sized media company, and a television company, but Thorn declined to name them.
The sale would have presented its own problems. Thorn was concerned that employees in areas like accounting would be laid off under the new ownership.
Ultimately, Thorn began to think of alternatives, which led him to Project Equity, an Oakland-based nonprofit that helps companies become employee-owned.
“In the end, this is the way to do it that won’t screw everything up and allows the business to be owned and operated by people I trust who are doing it for the same reasons I am,” Thorn said.
Other businesses that also operate as worker-owned cooperatives include Atwater Village’s Proof Bakery. In recent years, companies like Great Lakes Brewing Co. and Taylor Guitars have transferred ownership to workers through what’s known as an employee stock ownership plan.
“The benefits of employee ownership are that you can have a lot more dedication from the employees of the company,” said Alec Levenson, senior research scientist at the Center for Effective Organizations at USC’s Marshall School of Business. “They really feel like it’s theirs.”
Thorn said he had never imagined how big his company would grow.
He started podcasting as a college student and turned to the format after he couldn’t find jobs in traditional media. Thorn later became the youngest national broadcaster on public radio when Public Radio International syndicated his show, “The Sound of Young America.” The show’s name changed to “Bullseye” in 2012, and it has been syndicated by NPR since 2013.
In “Bullseye With Jesse Thorn,” Thorn interviews creators and cultural icons, including actor Eugene Levy, rap group Little Brother, and music artist “Weird Al” Yankovic. The tone of the interviews is conversational and personal, like a millennial version of “Fresh Air” with Terry Gross.
In the early days of his company, Thorn said his only focus was helping pay the rent. Today, Maximum Fun generates millions of dollars in revenue each year, with 37 shows and 24 employees. Financial details were not disclosed.
About 70% of the company’s revenue comes from memberships, with the remainder coming from ads and live events, Thorn said.
The company is profitable, he said. But he never had any ambitions to dominate the podcast space or put exclusive shows behind a paywall. Podcasts associated with Maximum Fun are creator-owned and widely available on multiple platforms. “Bullseye” airs on public radio stations, including WNYC in New York and WBEZ in Chicago.
“We weren’t in it to gain market share and build and scale and lose money until we dominated our opponents,” Thorn said.
The podcast industry has been through a whirlwind cycle in recent years.
For example, Spotify in 2019 announced plans to grow its podcasting presence through acquisitions, dramatically changing the landscape of what was once a fragmented market with many independent podcast production companies. Over the years, Spotify bought podcasting studios Parcast and Ringer and signed deals with high-profile celebrities including Archewell, Prince Harry’s company and Meghan Markle.
But this year, Spotify has been under pressure to cut costs. In January, Spotify’s CEO announced the company was laying off 6% of its staff and executive Dawn Ostroff, one of the main architects of its podcast strategy, was leaving.
“There had been so much hot money in podcasts and something of a hiccup in the ad market, which led to all these layoffs,” Thorn said.
Now, there are ramifications for many companies that invested resources in the space.
“There was just no way that all of these people who knew nothing about audio production spending substantially all of this money could sustain their operations,” Thorn said. “They were all players, basically. Everyone was spending other people’s money hoping to get lucky.”
Despite the changes, Thorn said he believes the audience for podcasts continues to grow and that Maximum Fun is well positioned. Even in today’s market, there are small and medium-sized television production companies thriving, and his company continues to produce great content that has value, he said.
“Ultimately, we were making something that was meant to be really valuable to the people who were consuming it, and if we did that, there were lots of ways to make money,” Thorn said. “It has to be a certain number of people, but it doesn’t have to be an infinitely large number of people.”
