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Holiday Special 2022

LP Show Episode

December 18, 2022
December 18, 2022

Cozy up to the fire and join Acquired as we do our annual strategic review of the show and our business “in public”. We recap our perspectives on Acquired’s big moments from the past year, a bit of commentary on the current state of the tech ecosystem, and what lies ahead for us in 2023. Plus as always at the holidays, we do an extended carve out session on our favorite things from the past year. Huge thank you to all of you for making 2022 an amazing year here in Acquired-land, and here’s to even bigger and better things to come in 2023!

If you want more Acquired, you can follow our public LP Show feed here in the podcast player of your choice (including Spotify!).

Sponsors:

  • Thanks to Vanta for being our presenting sponsor for this special episode. Vanta is the leader in automated security compliance – making SOC 2, HIPAA, GDPR, and more a breeze for startups and organizations of all sizes. You might say they’re like the “AWS of security and compliance”! Everyone in the Acquired community can get 10% off using this link.
  • Thank you as well to Tiny and to Brex. If you sign up for Brex using this link, Brex and we will send you a free Acquired t-shirt! :)
  • Note: New and existing Brex customers are eligible for this promotion. Promotion runs through December 31, 2022, at 11:59pm PT. To receive an Acquired t-shirt, you must create a free Brex account via brex.com/acquired. Brex terms and conditions apply. If you’re an existing customer, send your t-shirt request to hello@acquired.com from your work email. T-shirts will be mailed within 30 days to the address on the Brex account.

Carveouts!:

Sponsors:

We finally did it. After five years and over 100 episodes, we decided to formalize the answer to Acquired’s most frequently asked question: “what are the best acquisitions of all time?” Here it is: The Acquired Top Ten. You can listen to the full episode (above, which includes honorable mentions), or read our quick blog post below.

Note: we ranked the list by our estimate of absolute dollar return to the acquirer. We could have used ROI multiple or annualized return, but we decided the ultimate yardstick of success should be the absolute dollar amount added to the parent company’s enterprise value. Afterall, you can’t eat IRR! For more on our methodology, please see the notes at the end of this post. And for all our trademark Acquired editorial and discussion tune in to the full episode above!

10. Marvel

Purchase Price: $4.2 billion, 2009

Estimated Current Contribution to Market Cap: $20.5 billion

Absolute Dollar Return: $16.3 billion

Back in 2009, Marvel Studios was recently formed, most of its movie rights were leased out, and the prevailing wisdom was that Marvel was just some old comic book IP company that only nerds cared about. Since then, Marvel Cinematic Universe films have grossed $22.5b in total box office receipts (including the single biggest movie of all-time), for an average of $2.2b annually. Disney earns about two dollars in parks and merchandise revenue for every one dollar earned from films (discussed on our Disney, Plus episode). Therefore we estimate Marvel generates about $6.75b in annual revenue for Disney, or nearly 10% of all the company’s revenue. Not bad for a set of nerdy comic book franchises…

Marvel
Season 1, Episode 26
LP Show
1/5/2016
December 18, 2022

9. Google Maps (Where2, Keyhole, ZipDash)

Total Purchase Price: $70 million (estimated), 2004

Estimated Current Contribution to Market Cap: $16.9 billion

Absolute Dollar Return: $16.8 billion

Morgan Stanley estimated that Google Maps generated $2.95b in revenue in 2019. Although that’s small compared to Google’s overall revenue of $160b+, it still accounts for over $16b in market cap by our calculations. Ironically the majority of Maps’ usage (and presumably revenue) comes from mobile, which grew out of by far the smallest of the 3 acquisitions, ZipDash. Tiny yet mighty!

Google Maps
Season 5, Episode 3
LP Show
8/28/2019
December 18, 2022

8. ESPN

Total Purchase Price: $188 million (by ABC), 1984

Estimated Current Contribution to Market Cap: $31.2 billion

Absolute Dollar Return: $31.0 billion

ABC’s 1984 acquisition of ESPN is heavyweight champion and still undisputed G.O.A.T. of media acquisitions.With an estimated $10.3B in 2018 revenue, ESPN’s value has compounded annually within ABC/Disney at >15% for an astounding THIRTY-FIVE YEARS. Single-handedly responsible for one of the greatest business model innovations in history with the advent of cable carriage fees, ESPN proves Albert Einstein’s famous statement that “Compound interest is the eighth wonder of the world.”

ESPN
Season 4, Episode 1
LP Show
1/28/2019
December 18, 2022

7. PayPal

Total Purchase Price: $1.5 billion, 2002

Value Realized at Spinoff: $47.1 billion

Absolute Dollar Return: $45.6 billion

Who would have thought facilitating payments for Beanie Baby trades could be so lucrative? The only acquisition on our list whose value we can precisely measure, eBay spun off PayPal into a stand-alone public company in July 2015. Its value at the time? A cool 31x what eBay paid in 2002.

PayPal
Season 1, Episode 11
LP Show
5/8/2016
December 18, 2022

6. Booking.com

Total Purchase Price: $135 million, 2005

Estimated Current Contribution to Market Cap: $49.9 billion

Absolute Dollar Return: $49.8 billion

Remember the Priceline Negotiator? Boy did he get himself a screaming deal on this one. This purchase might have ranked even higher if Booking Holdings’ stock (Priceline even renamed the whole company after this acquisition!) weren’t down ~20% due to COVID-19 fears when we did the analysis. We also took a conservative approach, using only the (massive) $10.8b in annual revenue from the company’s “Agency Revenues” segment as Booking.com’s contribution — there is likely more revenue in other segments that’s also attributable to Booking.com, though we can’t be sure how much.

Booking.com (with Jetsetter & Room 77 CEO Drew Patterson)
Season 1, Episode 41
LP Show
6/25/2017
December 18, 2022

5. NeXT

Total Purchase Price: $429 million, 1997

Estimated Current Contribution to Market Cap: $63.0 billion

Absolute Dollar Return: $62.6 billion

How do you put a value on Steve Jobs? Turns out we didn’t have to! NeXTSTEP, NeXT’s operating system, underpins all of Apple’s modern operating systems today: MacOS, iOS, WatchOS, and beyond. Literally every dollar of Apple’s $260b in annual revenue comes from NeXT roots, and from Steve wiping the product slate clean upon his return. With the acquisition being necessary but not sufficient to create Apple’s $1.4 trillion market cap today, we conservatively attributed 5% of Apple to this purchase.

NeXT
Season 1, Episode 23
LP Show
10/23/2016
December 18, 2022

4. Android

Total Purchase Price: $50 million, 2005

Estimated Current Contribution to Market Cap: $72 billion

Absolute Dollar Return: $72 billion

Speaking of operating system acquisitions, NeXT was great, but on a pure value basis Android beats it. We took Google Play Store revenues (where Google’s 30% cut is worth about $7.7b) and added the dollar amount we estimate Google saves in Traffic Acquisition Costs by owning default search on Android ($4.8b), to reach an estimated annual revenue contribution to Google of $12.5b from the diminutive robot OS. Android also takes the award for largest ROI multiple: >1400x. Yep, you can’t eat IRR, but that’s a figure VCs only dream of.

Android
Season 1, Episode 20
LP Show
9/16/2016
December 18, 2022

3. YouTube

Total Purchase Price: $1.65 billion, 2006

Estimated Current Contribution to Market Cap: $86.2 billion

Absolute Dollar Return: $84.5 billion

We admit it, we screwed up on our first episode covering YouTube: there’s no way this deal was a “C”.  With Google recently reporting YouTube revenues for the first time ($15b — almost 10% of Google’s revenue!), it’s clear this acquisition was a juggernaut. It’s past-time for an Acquired revisit.

That said, while YouTube as the world’s second-highest-traffic search engine (second-only to their parent company!) grosses $15b, much of that revenue (over 50%?) gets paid out to creators, and YouTube’s hosting and bandwidth costs are significant. But we’ll leave the debate over the division’s profitability to the podcast.

YouTube
Season 1, Episode 7
LP Show
2/3/2016
December 18, 2022

2. DoubleClick

Total Purchase Price: $3.1 billion, 2007

Estimated Current Contribution to Market Cap: $126.4 billion

Absolute Dollar Return: $123.3 billion

A dark horse rides into second place! The only acquisition on this list not-yet covered on Acquired (to be remedied very soon), this deal was far, far more important than most people realize. Effectively extending Google’s advertising reach from just its own properties to the entire internet, DoubleClick and its associated products generated over $20b in revenue within Google last year. Given what we now know about the nature of competition in internet advertising services, it’s unlikely governments and antitrust authorities would allow another deal like this again, much like #1 on our list...

1. Instagram

Purchase Price: $1 billion, 2012

Estimated Current Contribution to Market Cap: $153 billion

Absolute Dollar Return: $152 billion

Source: SportsNation

When it comes to G.O.A.T. status, if ESPN is M&A’s Lebron, Insta is its MJ. No offense to ESPN/Lebron, but we’ll probably never see another acquisition that’s so unquestionably dominant across every dimension of the M&A game as Facebook’s 2012 purchase of Instagram. Reported by Bloomberg to be doing $20B of revenue annually now within Facebook (up from ~$0 just eight years ago), Instagram takes the Acquired crown by a mile. And unlike YouTube, Facebook keeps nearly all of that $20b for itself! At risk of stretching the MJ analogy too far, given the circumstances at the time of the deal — Facebook’s “missing” of mobile and existential questions surrounding its ill-fated IPO — buying Instagram was Facebook’s equivalent of Jordan’s Game 6. Whether this deal was ultimately good or bad for the world at-large is another question, but there’s no doubt Instagram goes down in history as the greatest acquisition of all-time.

Instagram
Season 1, Episode 2
LP Show
10/31/2015
December 18, 2022

The Acquired Top Ten data, in full.

Methodology and Notes:

  • In order to count for our list, acquisitions must be at least a majority stake in the target company (otherwise it’s just an investment). Naspers’ investment in Tencent and Softbank/Yahoo’s investment in Alibaba are disqualified for this reason.
  • We considered all historical acquisitions — not just technology companies — but may have overlooked some in areas that we know less well. If you have any examples you think we missed ping us on Slack or email at: acquiredfm@gmail.com
  • We used revenue multiples to estimate the current value of the acquired company, multiplying its current estimated revenue by the market cap-to-revenue multiple of the parent company’s stock. We recognize this analysis is flawed (cashflow/profit multiples are better, at least for mature companies), but given the opacity of most companies’ business unit reporting, this was the only way to apply a consistent and straightforward approach to each deal.
  • All underlying assumptions are based on public financial disclosures unless stated otherwise. If we made an assumption not disclosed by the parent company, we linked to the source of the reported assumption.
  • This ranking represents a point in time in history, March 2, 2020. It is obviously subject to change going forward from both future and past acquisition performance, as well as fluctuating stock prices.
  • We have five honorable mentions that didn’t make our Top Ten list. Tune into the full episode to hear them!

Sponsor:

  • Thanks to Silicon Valley Bank for being our banner sponsor for Acquired Season 6. You can learn more about SVB here: https://www.svb.com/next
  • Thank you as well to Wilson Sonsini - You can learn more about WSGR at: https://www.wsgr.com/

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Transcript: (disclaimer: may contain unintentionally confusing, inaccurate and/or amusing transcription errors)

Ben: Welcome to the special episode of Acquired. The special podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert and I'm the co-founder and managing director of Seattle-based Pioneer Square Labs and our venture fund, PSL Ventures.

David: I'm David Rosenthal and I'm an angel investor based in San Francisco. Today, Ben, you are hosting me at your lovely home here in Seattle.

Ben: Welcome to the studio.

David: It's great to be here.

David: And we are your hosts.

Ben: Ho-ho-ho.

David: Ho-ho-ho, happy holidays.

Ben: Happy holidays.

David: I don't know about you, but I'm ready to put a bow in 2022. We have much to talk about.

Ben: Yup. Listeners, normally I have like a script, like a thing that I'm looking at in front of me to know what to say now, but I don't really do this one other than to say join the Slack. There are great people there, including probably you if you're listening to this episode.

We don't think this is an entry point for a lot of people into Acquired. We think this is probably, if you're a fan, you're going to listen to this, but I don't think this is going to be anyone's first show, so we're going to try and go a little deeper and nerdier than normal.

David: We've got a little agenda. We're going to recap 2022 for the show, for tech, and for us. Talk a little bit about what's ahead in 2023. We've got some extra, extra fun carve outs.

Ben: Indeed. We would be remiss if we did not thank our good friends at Vanta. Before we dive in over to our conversation with founder and CEO, Christina Cacioppo.

David: One of the things we've talked about over the season, Christina, is how security and compliance has really evolved in these few years that Vanta has been really pushing the market forward. It's no longer just about check the box playing defense as a company and especially as a startup. It's actually about playing offense. Given all that in the central role that Vanta is now playing in this space, how do you see security and compliance evolving?

Christina: Really excited about the future, so I think a handful of things we're seeing is this concept of security and compliance and basically proving the security you have to your buyers has just become table stakes to B2B companies. When raising the seed round for Vanta in 2018, walked around and totaled the VCs that were going to SOC 2 all their startups, and many of them very reasonably looked at me perplexed and said, but my startups don't get SOC 2, so what are you talking about?

Now we serve a majority of the current YC batch. The people in YC right now—and again, YC is all about just getting revenue—these reports just help you unlock that and they do that by opening up new markets, whether it's international or enterprise, or healthcare regulated industries. Anything particularly in the 2022 funding environment, so much is about revenue growth from secure, trusted sources.

I think we're going to see more companies move up market faster than we might have otherwise. These big companies know that they're only as secure as their vendors are. If your vendor gets breached, it looks like you did. It doesn't matter if it's them. I think we're going to see more and more scrutiny here over time and that's going to filter down into higher expectations for startups. Having stable customers that aren't going to go out of business on you or nobody are going to expand over time.

One of the things these security and compliance certifications and reporting helps you do as a founder is sell to those big companies and prove your credibility. You might not have the tenure of a more established competitor, but you have their practices. You are taking good care of the customer data that you've been entrusted with and are ultimately going to be a good and trusted business partner for the long run.

Ben: Our thanks to Vanta. If you want to become a customer along with 4000 other companies, you can click the link in the show notes or go to vanta.com/acquired. With that, this is not investment advice. This is probably the episode of the year where we will come closest to things that might be interpreted as investment advice as we talk about things that we have liked and didn't like, predict the future and all that, so do your own research.

All right, David, what are we starting with?

David: All right. I think we got to recap 2022. Despite the craziness of the year of 2022 in the broader world tech markets economy, this is a pretty great year for the show. I have down here, my signature Acquired episodes and favorite memories from the year.

We started the year with Taylor Swift. Isn't that crazy that that was like this year?

Ben: January.

David: That feels like three years ago. We knew that at the end of the year she was going to drop Midnight. It seemed appropriate that in the year where she was going to put on the concert and announce the tickets for the concert series with the most demanded human history that we should of course kick the ear off with a Taylor episode. Predicting the future as usual here on Acquired.

David: I think 2023, we might need to line her up for a follow-up. We should do an Acquired session with Taylor.

Ben: Naturally.

David: Taylor, we'll come to you. We'll come to your studio.

Ben: Or maybe the long pond.

David: Yeah, long pond. Great.

Ben: I was reflecting on this. It's pretty crazy that I think the announcement was that they had 900 stadiums worth of demand showing up to ticketmaster.com and there are 50 shows.

I think it's something like 35 stadiums, but a lot of them have 2 nights. There are two nights in Seattle here. I'm sure not all 900 stadiums worth can be counted as actual demand. I have to imagine when there's a YouTube concert or something, there are a hundred stadiums worth of demand for 50 shows or something like that. Clearly not necessarily all purchase intent or not all purchase intent at the available prices, but still, there was just no way to service the amount of demand.

I actually don't know how you solve this problem. Do you make all tickets $10,000 so that you actually find the correct price equilibrium for the demand?

David: Kind of like we were talking about on our most recent episode with Ben Thompson and Stratechery and he's like, the obvious thing that I should do is raise prices to maximize revenue, but then that's pretty quickly going to lead to limiting my reach and impact. I think Taylor cares a lot about her reach and impact.

Ben: She could probably make the most money on this tour by having $10,000 tickets exclusively and still fill all 50 stadiums. I don't know the price, maybe $2000 tickets, she could do it. But if you're playing for a 50 year career, then you have to nurture the fan base over time and recognize that the—

David: That would truly be a farewell tour because that would create so much negative reaction.

Ben: Which of course would create even more demand if you knew it was her farewell tour.

David: This is making me think though, reflecting back on that episode 11 months ago. I don't remember exactly everything we said, but I don't remember talking as much about the obvious point that this raises for me, which is that Taylor is a rockstar on the Internet.

She's probably the first really, really big internet rockstar. The thing about the Internet is the markets are bigger than you can ever imagine. The demand is larger than you can ever imagine. Even in niche products like for Stratechery or Acquired, these niches are bigger than you could ever imagine. Now think about a mainstream pop star.

Ben: The Internet enables two things. It enables the niches to exist so there are way more artists that can make a living today, I think, than if you think back to like the 60s or something where the labels would pick the 10 bands of the year and that's it. Why is it that Taylor Swift is bigger than the Beatles?

Would the Beatles have had this much demand too when the only promotion that existed was from the labels, like the labels pick the winners and then those are the winners world?

David: There are multiple things going on here. One is the disintermediation or at least the reduction of power of the middle men of the labels and everything else in the middle of the value chain. So much more of the value is now accruing directly to Taylor.

Ben: But that's not an argument for why there's so much more demand to—

David: I think there also is a lot more demand for Taylor than there was for The Beatles.

Ben: Just because the Internet has several ways to reach a customer means that the most popular artist in the world is going to have just way more distribution, period, than the labels.

David: Way more distribution, way more touch points. There's also so much less friction. As hard as it was and all in the news about how hard it was to get tickets to these Taylor concerts, everybody knew when they were going on sale, that it was happening through social media and the mainstream media amplifying that, and it was hard to secure a ticket but very easy to log onto Ticketmaster, or maybe not that easy compared to I don't even know how you would've gotten a ticket to a Beatles show back in the day.

Ben: I assume you have to go to the stadium box office and line up on the day that they're going on sale and you would only know when they're going on sale because of radio ads and print ads.

David: Maybe you read about it in the newspaper.

Ben: This is a thing I was thinking about when I was caught up in the Friday night, was it Friday night? Whenever it was that people were like Twitter's going down. It's going to basically turn off tomorrow. I mentally knew this is a system that would degrade slowly and fade into irrelevance. It's going to turn off tomorrow, but putting myself in the head space of Twitter doesn't exist soon.

I was like how would I know if stuff is taking off? How will I know what the general consensus is around something? How will I know that the tenor has shifted and this thing is not interesting anymore and that thing is interesting? Would I start reading the New York Times many times a day and going deep into many of the sections?I'm certainly not going to log onto Facebook.

David: You can't really even get that same experience or understanding from any centralized publication.

Ben: Correct, and it's the centralization that makes it less valuable. You'd never be able to say nobody's talking about that. Because The New York Times is not a place where you go to find out if people are talking about something. It's a place where you get news, so you'd literally have to, in person, go to events and have a bunch of conversations to know what people are talking about.

Okay, Twitter doesn't exist tomorrow. Where do you go to find out what people in the world are talking about right now? I think it's TikTok.

David: Yeah, but I think it would be a much less efficient experience because it's all video.

Ben: The number of new tidbits of information you can consume per minute on Twitter is high and reasonably low in TikTok. It's 10–20 versus 2–3.

David: I don't know how we got from Taylor Swift to TikTok.

Ben: It's a holiday interview special. The format list except for the pretty robust format that you fleshed out here.

David: You know me, I can't not prepare for an episode, even a holiday special. Okay, next on my list is Sony Corporation.

Ben: Which I didn't think would be that interesting when we started doing it.

David: It was your idea to do it, right?

Ben: I know it was, but I found myself being God, is this actually an interesting company? I had wanted to read Made in Japan because I'd heard it was amazing. As I looked back at trademark Acquired episodes—TSMC, The New York Times—I just didn't think it would be one of those and it very clearly, especially in the numbers, did become one of those. It has it all. I mean, it has a genius founder. It has probably the most adversity that we've ever talked about in any founding story in all Acquired.

David: It's really hard to think of a greater adversity that a company and founders have overcome than Japan in 1945.

Ben: It also has so many chapters. The craziest thing to me is if you look at the business, as of the time we did the episode, they had five separate business units, all of which did a double digit percentage of their revenue, so it's super diverse, and all of which did a double digit percentage of their operating income. You have five businesses that are all reasonably the same size in top and bottom line in one house.

David: Then we got well over two hours into the episode before we mentioned PlayStation. The PlayStation story in and of itself, we could do an episode on.

Ben: The fact that we got from rice cookers and World War II to that crazy coda about Spiderman is nuts.

David: In the back of my mind, I've been percolating, it could be fun to do a whole episode just on Xbox. We need to do a Microsoft series at some point. We've talked a lot about and around Microsoft on the show, but we've never covered Microsoft and Apple. We've not done Microsoft.

Ben: We have not done the Google IPO.

David: Apple, Google, Oracle.

Ben: If we just wanted to cheat and spike the numbers as much as possible, we just take the whole next season and just do fang, basically.

David: I think we should do one of those companies a year, not even a season, I think one a year.

Ben: It's going to take three episodes to do each one.

David: We were able to fit Amazon into two episodes, but Amazon is only a 27-year-old company.

Ben: We didn't talk about a bunch of stuff, that was the way we skipped it. We didn't really talk about Alexa at all.

David: Sorry, everybody, if we just lit up here. Although I think there's enough voice personalization in those devices that if a piece of media says the A word, I don't think it lights up anymore.

Ben: Well it might be because I have the Sonos ones and the firmware in the Sonos ones is different from the ones that Amazon actually makes. Mine will just light up when people say things that are not that word and are just like in a movie. When dialogue sounds too much like that word.

David: Interesting. Here's my proposal. I think we should do one of these big tech companies a year for two reasons. One, for Microsoft, for Apple, I think those are going to be three-plus episodes to do it right, even at Acquired-length episodes, so it's a huge lift. Also, I think we should spread it out because like you said, the cheat code would be if we just do them all back to back, but we have a diversity of interest here on Acquired. We want to go for many years.

Ben: I even have a lot of fear around doing a three-part Microsoft series where people are going to be like I'm just out for the next three months. Next year, what we've decided is—this is a little bit approximate; we're going to average it—we're going to do a season episode and a special. Either a season being like Apple part one, or a special being an interview with someone, or an Acquired session or something that doesn't fit the normal format. That literally means that it's like, oh, you're doing a three part Microsoft thing. Well, I'm out for Q1 on Acquired.

David: I actually think about this. I've experienced this on one of my carve outs for extended carve outs later. One of my favorite video game podcasts, Resonant Arc—they're a video game story book club—they choose a game and then they'll do 10–20 episodes playing through the game, dissecting the story, all from a literary perspective. It's really cool. I love it. If they choose a game that I don't have a large affinity for, then it's anywhere from one to two months that I'm not listening to that show.

Ben: Three months is certainly long enough for someone to permanently change behavior. I don't think it's good for us if someone decides to take a three month break from Acquired because there's not a 100% chance they come back.

David: We got to think about the right way to do this.

Ben: Maybe I'm too focused on the downside and maybe it will turn out that while we may alienate some people, it's the largest thing in Acquired history because I was shocked that—we will keep going here on big episodes—the Amazon episode was by far the biggest in Acquired history. When David pitched me on this idea, I was like I don't know. Brad Stone has written some excellent books on this. There's been documentaries. Jeff Bezos is the most studied CEO in the world, I think, until this recent Elon madness. What can we bring to the world in the Amazon?

David: Which by the way, I think that has become this year something's crystallized for me about Acquired and the show and what we do. I think that should always be our lens. What can we add by doing it, because there are lots of voices out there saying lots of things. Spoiler alert, this is part of why we haven't covered Twitter.

Ben: There's nothing new to add.

David: What can we add?

Ben: All the best tech journalists in the world are covering it every single day. I mean, you have Matt Levine, you have Dan Primack, every single day they're reporting the newest thing with not just reporting, but true analysis behind it. You have then Ben Thompson the following day, writing a reaction piece that's like here's my even more thoughtful take on what happened.

David: You have Casey Newton, who has a whole platform dedicated to this.

Ben: A bunch of access and a bunch of insiders sending him stuff, breaking it real time on Twitter. It was one of these things where we're like there's no daylight here for us to talk about it.

We actually felt the same way about FTX, which you could argue that we did have a part to play in FTX because Sam was on the show last year, but there was so much good coverage and good reporting going on, we're not reporters, and we don't do stuff in real time, blah-blah-blah, that it felt like the right way to have Acquired add to the conversation is go do a hundred hours of research on Enron and try to indirectly draw as many parallels as we can.

We don't want to hit people over the head with this is just like an FTX where they had this. It's more of how can we bring up ideas for people that they can draw their own parallels?

David: It's been interesting to watch this past week. Who knows if it was coincidental or not, but I think at least two major news outlets have run pieces in the past week with a title like how FTX compares to Enron.

Ben: It was obvious. It's obvious to draw that parallel.

David: They were probably in the works anyway.

Ben: Is it worth sharing more on that now?

David: This is a holiday special. We can break the format.

Ben: Every time people write us in and they're like, oh, you got to do a take on this. It's like I almost never have a take in real time.

David: That's not what we do.

Ben: I suppose the traditional Acquired format of a company buying another company, we are some of the most well-positioned people in the world to have a take on why that acquisition happened. What will make it go well? What could kill it?

Ben: Just like you killed grading this season, which by the way, I love that. I was so surprised when you threw it.

Ben: It has its place sometimes real time.

David: Things seem to evolve. Next year's going to be our eighth year into the show. I thought Ben Thompson just said it perfectly on our most recent episode with him, where he was like when I was young, I used to think when I got old that I would still be cool and I would never be one of those old people.

Now that I'm older, I think two things. One, being old is pretty great, and two, I look at my peers who are still trying to be young and it just looks sad. You got to change and you got to evolve. The show has changed and evolved to a point where I think we are a different show than the show that used to do breaking emergency pods.

Ben: Whole foods got bought today, cancel everything today so we can do some quick research. There are times where it still makes sense for us to do those, like John Foley bringing in a new CEO.

David: The Barry McCarthy connection. That is a take that has not aged well.

Ben: I think you're right that it's okay that we're something different now than what the show was.

David: I'm curious what everybody listening thinks.

Ben: Yeah. Last point on this FTX Saga, which again, we're watching it play out in real time. I don't know that that's where Acquired shines because we try to make evergreen pieces that stand the test of time, and every week it's so different than it was the previous week.

These are excuses. We probably just should directly say we totally had Sam on. We'd wanted to tell the extraordinary story of FTX, which was extraordinary, now in a different way than we thought.

David: You could not argue that it is an extraordinary story.

Ben: I do want to say, I'm sorry if the exposure that FTX got from Acquired and every other publication in the world, but from Acquired—

David: We caused our platform to Sam and to FTX. I do feel bad about that. I don't think there's any way we could have known at the time and I don't want to stop having interesting people and companies on the show, up and coming companies. It sucks and a lot of people lost a lot of money.

Ben: Sorry if you were on the fence on FTX and you were like, I don't know if this thing's legit or not, and then Acquired legitimized that for you. Next?

David: If you have not listened to the Sony episode—I'm sure most of you have—it's so good. Oh my gosh. Talk about the opposite of a fraud.

Ben: We made this thing, it's amazing. You should listen. The Sony story.

David: Whether you like our telling of it or not, it is a vastly underappreciated company and an underappreciated journey overcoming adversity.

Ben: Yup.

David: Dude, we did NVIDIA this year. We did a lot this year.

Ben: I'm trying to think which of our Silicon episodes I feel the strongest about in terms of enlightening me about the way the world works. I think it's first TSMC, but I think that the most interesting thing about the NVIDIA story is Jensen bet the company three separate times and truly bet the company like if this initiative fails, it will go to zero, and it worked three separate times.

The first time is when they shipped the card in whatever it was, nine months instead of two years, and they designed the whole thing in emulation, never tested it and shipped it to customers, and it worked. I mean, it worked enough. Maybe I'm forgetting the story in its entirety, but I think there was a bet the company made around programmable shaders, and then a third one around the like seven year investment before the market was there in AI and Cuda and building their own developer ecosystem.

David: Obviously OpenAI existed. I'm trying to remember if DALI was out at the time when we did the NVIDIA episodes.

Ben: Interestingly enough, I think DALI-1 was, but it got no acclaim. The one that lit the world on fire was DALI-2.

David: It was DALI-2. But now as we record this, ChatGPT came out last week. We are thinking about the AI renaissance and how important AI is and just in a general sense, when we did those episodes.

Ben: NVIDIA stock had that crazy run long before we did the episode, two years before we did the episode at the beginning of COVID. It's interesting that I don't think that was around gaming. I think that was around AI, the thing that was selling that story.

In a way, the craziest and video bowls that were buying at the top and selling the story as much as humanly possible, when did it peak? Late 2021 maybe. They were right. I don't think they knew that the next year would make AI's developments as obvious as it has.

Everybody who believed that AI was going to be this complete step change in the way that we use computers, and decided that buying NVIDIA at a very high price was the way to endorse that belief. That ended up happening very quickly soon after.

David: The moment when it really hit me was when we were recording the LP episode that we did with Jaleh at Mutiny.

Ben: We have a GPT-3–based feature in our product.

David: I was like okay, you are dynamically rewriting copy on your customer's websites using GPT-3. Okay, that blows my mind. I can now see the business use cases for this.

Ben: You say you can see them, but we're in this very interesting moment where we've all seen three pre amazing proof of concepts in the last six months. We saw DALI-2, GPT-3, and now ChatGPT, which to me is actually the most interesting, because the most meaningful change is that it changed the modality that you interact with the AI model, but it's either the same or I think it’s GPT-3½ or something. It's a very similar model, but we're interacting with it in a new way and it's stateful rather than being stateless, as in it can preserve state and you can ask it more questions about.

I think there's a little bit of a crypto moment here, where it's the first time someone explains to you a decentralized world computer. You're like, whoa, that unlocks a whole world of possibilities. You say what are they? Someone says, let me think about that.

I feel very similar to ChatGPT right now. I'm looking at it, I'm like, whoa, this unlocks a whole world of possibilities. Someone says, what is it? I'm like, I feel better than I did about the decentralized world computer, but I still can't articulate to you when the app store launched, like this will be an $80 billion on demand car service market.

David: I think this is just naturally how markets play out, though. We look back now and we're like when the app store launched, it was obvious, but was it at the time? I think we probably would've felt very similarly back in that moment of apps on your phone, cool.

Ben: When I first saw the iPhone, I thought this device changes everything because I was like I wanted one so bad. I had a coworker at Cisco.

David: I watched the keynotes so many times between the keynote, and when it was six months before it came out, I was so hyped for it.

Ben: I just remember seeing the device at my coworkers desk at Cisco and thinking I need one of these things. This is so much of the money that I have would be used to buy one. I think I bought the 3G the next year or six months or something.

David: I got one day one, I didn't camp out overnight, but I waited in line for hours. I got day one release, I got the original one. I just graduated from college. It was the summer I graduated. I graduated, but I hadn't started work yet, but I had my signing bonus. I was like this is where I am spending my money.

Ben: I waited in line just to wait in line.

David: You waited in line, you didn't buy one?

Ben: I didn't have enough money. I was 17–18.

David: That's right because you had to pay full price. There was no carrier subsidization for the original iPhone.

Ben: Correct. It was fun. I brought my little point and shoot camera. I took pictures of all the people getting their first iPhones and playing with them and setting up.

David: Did your dad go with you?

Ben: No, I went with my friend George. I remember feeling that this device is amazing. I remember really wanting to make apps for it, so I made this to-do list app.

David: You couldn't make apps until the next year.

Ben: I missed that whole first year of, you can't make apps. I don't think I was thinking about it then. The app that I made was a to-do list. It's not like I was like, oh my God, this is going to be a way that you can hail cars or order groceries, or it was let me do the smallest possible thing on this.

I think that's actually just how I think about products. I'm not a Travis Kalanick–like person. I think I always think in terms of what products I can fully conceptualize and see in my head, understand all the hard stuff involved in it, draw a nice neat box around it, and just work towards shipping that thing that I can fully imagine.

It's almost like I want to be able to do everything myself, which is why I think Acquired has come out the way that it has, rather than us doing a bunch of hard stuff. I very much shy away from you'd have to send a bunch of people into grocery stores and figure out all their inventory to like, load it. I just wouldn't do that. But the idea of okay, there's this really nice, neat package called an Acquired episode, and it contains these components that David and I can make it ourselves.

David: What do you think the ‘what would've happened otherwise’ would be if we did the hard stuff? One thing we've been very explicit about and a trade-off for the show and Acquired as an entity and a business is we don't want to have a lot of employees. We don't want to have a team.

Ben: There'd be more shows. I think we would've tried to turn it into a network. We would've taken people up on the book offers. There could be a Netflix show.

David: I'm trying to think, is there anything we could have done or still do that would just be like a fundamentally different thing? Everything you're describing would be building [...]. That would be great. We probably would make more money, but that's not what we want to do. Is there anything that would be like an Uber versus a to-do app?

Ben: It depends what on the believability spectrum you're willing to call part of Acquired. We could have launched a new podcast app for Acquired.

David: We thought about it with Glow.

Ben: We did. Glow was originally going to be a new app with payments built-in.

David: That would have been a boondoggle.

Ben: Yeah. I'll validate your point. When the App Store first came out, you could stare at it and go, this is going to change everything. But it was only a select few people who actually saw the particular massive use case with the new thing. That's how I feel about ChatGPT right now. This thing is scary powerful, and I don't actually know what to do with it.

David: Most people I think are also in the same mode that you and I are of like, oh, I can see how this could rewrite copy dynamically on a website, but that's the to-do list version of what AI can do.

Ben: Yup.

David: Man, this is fun. We're only halfway through the year, too. Okay, we did NVIDIA. That was so fun and I learned so much. And now it's just so much more important. Obviously, T. Swift, the same dynamic.

Ben: Yup.

David: Then we did Amazon. I include Walmart and Amazon. I'm so glad we did Walmart first. That's why I have in my head, I was like, did we do two episodes on Amazon or three? We really did three. Episode one was Walmart.

Ben: In order to understand the role of retail in America today, you first need to understand that everything we think of as a retailer or most things we think of as retailer, are actually discounters.

I totally didn't get that before doing the Walmart episode. I was like, well, there are stores, like Walmart, Target, and there are department stores, which are more expensive and opinionated, and then the brands that have their own stores.

I didn't conceptualize that the most common place that you buy things are actually discounters. Walmart was really the company that single-handedly created the wave of the modern store, period, which then Amazon could take digital.

David: I was so blown away learning about Walmart, how much of a tech company they were. I think we said on the episode, and I still think that they were the first applied technology company in America.

Ben: I think this is silly. I think you've said this a few times now. I don't agree with it. Technology, at its purest definition, is anything that enhances the productivity of a human. The wheel is technology, because with the same number of calories burned, you're able to go farther. Or a navigational instrument, which means you're able to get somewhere in a shorter amount of time. Maybe you could scope it to apply digital technology.

David: What makes me want to say that is they were a company who did business in an established sector. They transformed the way they worked and ultimately, the whole sector by applying technology to it.

Ben: So did Standard Oil, by applying technology to the old way that you used to extract oil from the ground.

David: Fair enough. You could say the car companies…

Ben: Or the lighting, the way people light their homes.

David: I guess the distinction I'm trying to draw, which may not be a valid one, is I think in all those cases, the business was the technology. Here, it was a separate existing part of the economy that they were in that business and they use technology to transform the way they do it. Maybe it's a meaningless distinction.

Ben: It's interesting.

David: I just feel like today, Walmart would have been like a hot venture-backed startup.

Ben: It's interesting. The question with applying technology to an existing market is always, what are you using the technology for? I always think about this with tech-enabled businesses. Okay, what are you using technology for, and how does it make your financial statements of your business at maturity look better?

Are you using it to consolidate back office operations to make your company more operationally efficient, and thus lower your cost structure, and thus with the same amount of revenue, you just run at better margins? Or you're using it because you're able to get a better distribution?

The Internet enables you to generate way more revenue because you're able to reach way more customers on the same set of costs. I was thinking about it as like, what are you actually using technology for in your business, and does that make it a meaningfully better business than non tech-enabled incumbents? I think there’s a lot of stuff in the world today that is a tech enabled thing, that is not all that tech-enabled when you look at the financials.

David: Yup, but Walmart is a perfect example of a tech-enabled business that is the right way to do it.

Ben: And why? What previously large number did collapse in their financials to a small number because of technology?

David: Certainly, the coordination of the distribution and the way Walmart built their supply chain was vastly different than all of the, they’re too for traditional retailers, and way more efficient and made their financials work in a way that just wouldn't work for other retailers.

Ben: Legitimately enabled them to have lower prices to get more customers.

David: Yup.

Ben: That's a strong argument. Agree to disagree that they were the first that brought technology. But yeah, that's a good point.

David: Benchmark.

Ben: Benchmark?

David: Benchmark was super cool.

Ben: Like a pinch-me moment for you and I both.

David: I think we should lean into that format as much as possible going forward of we tell a story, and then we have the protagonist on.

Ben: Yes. I think Acquired has been a bunch of iterations to find our way to that format. That does feel like the platonic ideal of a way Acquired talks about a topic. I do think it’s probably you and I spending three hours diving deep from everything we can find, telling the story in the way that we see it.

David: I used to think, oh, what can make us different and better is we're going to spend more time preparing than any other interviewer. We're going to take this super seriously. We only do one of these interviews a month.

Ben: Which is a tactic, not a strategy.

David: Exactly. And yeah, we probably do more preparation for our interviews than 80%–90% of other interviewers out there, but there are other really great interviewers like Ben Thompson.

Ben: Yup. Patrick O'Shaughnessy.

David: Exactly. But what we did with Benchmark, that's something that only we can uniquely do.

Ben: It's interesting. Only is aggressive, but it's something that our format and the set of trade-offs that we make in our business makes it easier for us to do that than for someone else. I always think strategy is about trade-offs. What's the original Michael Porter journal entry called? Competitive strategy. It's great.

For anyone who hasn't read it, it was in the Harvard Business Review. I think when it first came out, it's something like 20 pages. It's very cogent, it's very straightforward, and he talks a lot about how there's operational efficiency and there's strategy.

An operational efficiency is we're just going to be better, we're going to be more efficient, we're going to do it for cheaper costs, you and I are going to do more research than anybody else. But there's a real strategy, which is trade-offs. It's the Southwest model.

David: The former is not a strategy.

Ben: There's the Southwest model of, we're going to have a different model for where we keep planes than every other airline. We're not going to use the hub and spoke model. Everywhere that we fly to in a constrained set of places that we fly to is going to be a pseudo hub for us. We're going to keep our planes diversified. We're only going to have one model of airplanes, so that way, they're easier to service. And there's a whole bunch of trade-offs involved with that, but that's our strategy. Even though it comes with a lot of downsides, we're going to lean into the upsides.

I think the lean into the upsides thing for us is, if you're doing a super high velocity show, Benchmark's probably not going to feel like you're giving them a unique spotlight, in a way, to do something like that. If you do things that may or may not enable deep trust from listeners, then there are people that are not going to want to come on the show because they don't know how they're going to come across.

If you always lean into this, we have very few guests, we think there are people that you really should hear from—which by the way, this is why the SBF thing burns me up so much just because we tried to be ridiculously selective—then it enables you to create content with people that otherwise are not going to go do the circuit. Not to mention, when we do three hours of content about the thing before it enables us to come in with that prepared mind.

David: That's what I was going to say, too. There's an element. In the case on the Benchmark episodes, it actually was all pre-planned in advance that we were going to do the episode, just us, and then we were going to do the dinner with them. That was planned before we even released the first episode.

We've experienced in the past with the show, there are times where we will engage with a company, a CEO, or a firm, before having done any Acquired content on them, and they don't engage fully right. Then we do an episode just us, and then it completely changes the tenor of the conversation.

Ben: Yeah, it's like being willing to do the work to prove that you're as serious about caring about this topic as you say you are. And by us having the format of you and I just doing these deep dives on companies, that is a differentiated strategy than an interview show.

David: Yup.

Ben: Okay. Enron, we talked about it. It's super recent. I have nothing to add other than I think it's fun to add little corrections and additions as we go through here.

David: Yeah, we've got a few of these.

Ben: On the Enron one, I neglected to point out that there is a company today called Enron Oil and Gas, that's an $80 billion company, publicly traded as EOG.

David: We got a listener who emailed us about this.

Ben: Yup. That's the upstream production business. The oil and gas industry over the last 30 years has fragmented into upstream and downstream.

David: And midstream. Midstream has pipelines.

Ben: That makes sense. I think EOG is their upstream business that spun off, but it is a publicly-traded company that still bears the Enron name.

David: Yeah, I should look this up. Did they change the name officially to EOG or is the actual name, Enron Oil and Gas?

Ben: I don't know. That's a good question. It is actually called EOG Resources. The name of the company is EOG.

David: That makes sense, like the Accenture Arthur Andersen.

Ben: Yeah. Although, after many rebrands and iterations, some subset of Arthur Andersen was preserved as a tax organization that is now called Andersen Tax again.

David: Oh, interesting. Because I guess tax is separate from audit, right?

Ben: Right. They had tax audit and consulting. Consulting became Accenture. I assume audit is what went away entirely. I think they spun off tax in its own new name that is now Andersen Tax.

David: Interesting.

Ben: Which is crazy to me that there was enough brand equity in Andersen left to go back to Andersen.

David: You would have thought that...

Ben: There's got to be a story there.

David: It could be an LP episode.

Ben: It could be an LP episode.

David: We talked a minute ago about trade-offs when we're talking about Benchmark, two-parter. What in your mind are the biggest trade-offs that we make here on Acquired?

Ben: I think we make a ton of trade-offs. I think we are maybe to a fault, a purist organization. That's the first one, two people.

David: You're looking at the whole organization.

Ben: Okay, not a lot of content. A common wisdom is to release content every week. We don't do that. That has downsides, such as it's hard to become a top show in the charts. If you're not constantly producing new content, it works against the algorithms. But it has upsides of, now we can go do really, really deep research.

A second one being really long episodes, that's a massive trade-off. Lots of people don't want to listen to you when you do that, but the people who do really like it.

Another one being, people often ask, do another show, bring another host. You could leverage the podcast feed to promote other episodes of your new spin-off show with your new host, where you have some of the economics of that. There's a lack of purity to me that that's not Acquired, then. I don't know why we would do that.

David: It doesn't fit in the box.

Ben: It's one of those things where it's like, sure, you could make more money doing that, but it goes in the too hard pile. I think you and I have a really big, too hard pile. In some ways, that's strategy. If you actually believe in the set of trade-offs that you have, then you have to be willing to have a really big, too hard pile when there are a lot of people telling you there's a low hanging fruit to be done. But often, that low hanging fruit is counter to your strategic trade-offs.

David: It's interesting. I feel like you've always been this way, I think, in your life.

Ben: I'm cranky.

David: You're not cranky, though. You're wonderful.

Ben: But I'm cranky about things like this.

David: You're persnickety. You're not cranky.

Ben: I'm persnickety.

David: You're persnickety. Yes, for sure.

Ben: Jerry Seinfeld said it really well on the Tim Ferriss show, which is one of the best podcast interviews in history. That's my first carve out, by the way. Tim asked him, how does he come up with all the bits? How does he observe things?

His comment is, there are so many things that annoy me. I sit there and all I can see in the world is all the things are a little bit wrong, and that just really bothered me, and then I write them down. Then I polish, polish, polish, polish, polish. I'm not Jerry Seinfeld, and it's not to that extent.

David: Very different application, but a similar shirt.

Ben: We shift an Acquired episode, all I can see are the 16 ways that we could have made it better. I'm proud that it's out there, but really, all I can see are the flaws.

David: I think my hunch is right that you've always been this way.

Ben: Yes.

David: I've become much more this way over time. I used to not be this way at all. I used to be like, I believe you can do everything, trade-offs. The old Jim Mora, the Colts coach of the playoffs, like playoffs, trade-offs. As I become older, though, I completely have shifted and embraced trade-offs.

Ben: Yeah, you don't even answer emails. It's honestly crazy.

David: It's like a joke now, yeah.

Ben: It's not a joke when I'm trying to get a hold of you.

David: I feel so bad. The only person I feel bad about it is you. Really, you bear a huge brunt to that. Thank you.

Ben: You're also pretty good about like, I said I was going to be done working today at six, so I'm just not really doing anything after six. Even if the text looks important, that's fine.

David: That's called parenthood.

Ben: That's true. Yeah, parenthood has probably forced you to lean into some of that more.

David: Yes. I was leaning this way anyway for sure, but it was like a massive tidal wave. I felt like I was at a waterpark and a wave machine came along. I was heading this direction anyway, floating along, and then just like, woosh.

Ben: The issue is that now that you're doing it pretty aggressively as you and I amplify each other, because I have this thing where I'm like, oh, this is the thing that David would say, like, not worth it. There's probably a good time to talk about this. We did a lot of live stuff this year.

David: Yes, let's talk about this. Some of which were super cool. There were some amazing opportunities we got in 2022.

Ben: But for lots of reasons, they're way harder than doing my normal thing. Are they worth it? Are they that much incrementally better for how much harder they are for us? Probably not in almost all cases. There are cases where it is, but in almost all cases, no.

I think this is one of the things where you inspire me to be more persnickety. You ask the question, and then I went to a place of like, oh, well, that's easy. We should not do anything live because the juice is almost never worth the squeeze, which is probably too far.

There's probably some middle ground, where if Pitchbook offers us the ability to do another Arena Show, like, oh my God, we should do an Arena Show, but the litany of things that make this way harder, and frankly way less listenable after the fact, it's actually a worse product most of the time.

David: Let's recount the cool live stuff we did this year. We did the Arena Show. I can't say that without laughing.

Ben: Pinch me moment, at least number two of the year.

David: Yeah, wow. We did the Arena Show. We then also did a big live show in another country for the first time, in Portugal with Solana at Breakpoint. That was a whole another crazy set of experiences and amazing.

Ben: Yup. We did the LP Show live at the TCV event.

David: Yup. The Benchmark dinner, although it wasn't a live or public event, the amount of production effort that—

Ben: Totally. I was down in San Francisco for three days. We set up three cameras, we bought a bunch of new microphones, we tested all the microphones, and a big production lift.

David: Big, big production lift.

Ben: Guests. Things that make production harder, guests. Total wildcard. They might cancel on you. They might reschedule, blah-blah-blah.

David: They might not use the equipment we send them.

Ben: Yes. In-person, changes it way harder. You and I are sitting here now, it took an extra hour to set this up to this beautiful roaring fire next to us.

David: Yes. We haven't even mentioned, yeah.

Ben: These three cameras, although now that I'm looking at it, there are only two cameras on, because here's the trade-off we make. We don't have an engineer. We don't have a sound person or a video person who works with us. If you've been watching this on video for I don't know how long, I'm going to guess, that thing shut off half an hour ago, we lost the third camera. So talk about trade-offs.

David: I knew I should have brought my camera.

Ben: Especially in shooting stuff live in person, there's a whole new web of things that could go wrong that just don't happen when it's you and I on Zoom. Now at a live audience, that massively compounds it. First of all, the sound quality is going to be way worse. That bothers me as a persnickety person.

The audience gets antsy in their seats, because no one can sit still for four hours. No one wants to attend a four-hour. When you're at a sporting event, halftime quarters, you go get concessions, you whatever, so it makes the product different and I think worse for the 150,000+ people who are going to listen after the fact. It's an interesting compromise, where for all those people, it's a worse product. But for the people in the room, that's what we're optimizing for at the moment.

David: I don't even know that we optimized for that. It's so funny. The Arena Show, let's just take a step back. It was so cool.

Ben: Amazing.

David: It was so cool. Everybody who came, the fact that so many people came in flew in from all over the world.

Ben: Yup. We did Brooks Run with people in the morning. We did a dinner with some friends at the show, previous guests, and sponsors the night before at Canlis, who we've had on the show on that Adapting episode.

David: It was so special. Looking back, I went to talk about it, because you actually live again yourself this year, but the farther we get from it, the more in my mind and in my emotions, the space the Arena Show occupies is just like Jenny and my wedding. All the ups, all the amazingness, special feelings of it. My most vivid memories, looking back on both events, are just a huge amount of stress and being like, are people having fun right now? Is this going well?

Ben: I mostly remember the upside of both of them, of my wedding.

David: I remember the upside too. But every time I think about it, I can't not think about us being onstage in the middle of the show. When we got to act two and it was on, we didn't have brakes planned and people needed to go to the bathroom and get food.

Ben: And Pitchbook was paying for all the free food, booze, and everything up. Of course, people were going to go. After the first act ends, it's like, okay, well, now's a good time to go take it then to the open bar.

David: Of course, and I was just like, oh, we should have planned that better.

Ben: How did we not plan for that? Anyway, all that to say, some of the live shows we've done are the most special experiences of the year. They have hidden value for Acquired in a bunch of ways, like getting to actually talk with real people, like getting to hang out with the 1000 people that came to the Arena Show. Life-changingly cool to get to meet so many folks.

David: I'll always, always remember that night, especially the after party afterwards.

Ben: Yes, walking into Queen Anne Beer Hall was very cool and just hanging out for hours. Also, at least 10, if not 20 times as much work for a product that I continue to believe was worse for people who listened to it than our average Acquired episode.

Again, it's a set of trade-offs that we just have to be intentional about making next year rather than being like, oh, that would be a fun conference to speak at. Oh, my God, I forgot about Capital Camp.

David: Oh, Capital Camp, yeah.

Ben: That was so cool.

David: That was cool. That was a relatively low trade-off because Patrick, Brent, Clayton, and the team there took care of everything.

Ben: Absolutely. It was different, too, because we created a talk for it. It was less issues, because there was no guest. There was no guest risk, but it was the first time. I'm such a likened VC. Oh, some technology risk, is there a guest risk?

The only thing that we had done that was similar was the Acquired Top 10, The Best Acquisitions of All Time episode that we did. We had a little bit of confidence that you and I could produce a talk about a thing that wasn't the entire history and strategy of a company, but that was a totally new format for us.

David: I'm curious what you think. I'm so glad we did Capital Camp and in other words, that was a fun switch up. I think it was an inferior format to the normal show. I was thinking we put together a deck for it. You did most of it.

Ben: It was a set of pictures.

David: A set of pictures, but I hadn't made a deck in years.

Ben: That was cool, though. The nice thing about doing that is then we have a product we can take on the road too. I think we can share this publicly. You gave that talk again at an internal Fundrise event.

David: Yes, which was super cool. I would love to do more of that. I got to meet everybody at Fundrise, our biggest partner for the year. The whole team, all 300 people at the company, were there at the off-site. It was very cool.

Ben: All this to say, it leads me to believe that much like all the other trade-offs we make, we just need to figure out, how do we 80/20 it? What are the things that we care the most about, and how do we not do the long tail of stuff?

I think it means pick one episode per year to do a massive live show and throw the Acquired Super Bowl/wedding. Maybe once a year is even too often, because God, it's a lift. But then feel free to do a bunch of in-person stuff with our partners, with our sponsors, with people that we like, work with on the show anyway and want to just continue to build deeper relationships with, but those aren't necessarily episodes.

David: Yup. That has been a huge highlight for me for the year. I think we have found a way. I don't know that anybody would have thought it was possible as a podcast, as a media business, to really build deep relationships with our sponsors and our partners. I think almost every single one of them, we did something like the Fundrise all hands or a conference. Most of them now, a very large percentage of our sponsors, we've invested in.

Ben: Yeah. What, five of them?

David: I think five, yeah. We talked about Vanta in a big way. Modern Treasury, Vouch, Mystery, Standard Metrics, we've invested in.

Ben: What was Standard Metrics called when they sponsored?

David: Quaestor. That was their original name.

Ben: Back in the day.

David: Yeah. For our listeners and our audience, we've always thought, I think it's been one of our core tenets from the beginning of we treat our audience as equals to more impressive than us. When we started the show, especially now, and even the folks who are listening to us or the folks who we want to invest in, we want to do business with, we want to do...

Ben: That's what eats me alive when I get something wrong in an episode. It's a black mark to me, and I can't do anything but see it as the people who I know listen to the show, who are listening to that, and thinking, oh, he didn't quite get that right, because that's how I envisioned our audience.

David: Not that we didn't always think this way, but it's really come to be realized now. We think of our sponsors the same way as our partners. These are amazing companies. How can we build a deeper relationship with them as possible?

Ben: Totally agree. The sponsorship model is another way that we make a pretty significant trade-off. We only do six-month-season–long sponsorships. We are ridiculously choosy about the people that we do that with, because it's a six-month–long thing to an audience of 250,000 people that happens to be probably the most valuable audience in the world in terms of CEOs, founders, engineers, capital allocators.

David: Certainly the set. It would be hubris of us to claim that we singularly at Acquired have the muscle, but our niche of media. The listeners to our niche of media (I think) unquestionably are the most valuable audience in the world.

Ben: It's a big ticket item whenever a sponsor decides that they want to work with us for the duration, for the reach, and for the magnitude of who you're reaching when you reach them. It's like a big freaking commitment.

There's a trade-off there in our business model, which is we're not going to work with that many people when we do. But when we do, we want to go as deep as possible. That means that we can't do things like engage with agencies, or engage with dynamic ad insertion networks, or a lot of other things that would make our lives easier.

It probably also means that we can't outsource sales. You and I are the ones talking to the CEOs of the companies who sponsor, which, again, lots of trade-offs. They're very busy people, they're often hard to get a hold of, but they're the people that we get to build really real relationships with.

David: This is one of my favorite trade-offs. Kind of like I've been saying, these are the types of people who we would want anyway to build deep relationships with, so why wouldn't we lean into that as much as possible?

On the completely opposite end of the spectrum, though, something that I think highlights the trade-off, and that I've really come to appreciate this year, in the very beginning of Acquired we did YouTube, and we've been saying for years and years, we got to redo YouTube.

Ben: At this point, it's almost a MacGuffin, where it's like Seattle's NBA team. Maybe we should never redo it, so we can always talk about the fact that—

David: Of course, Seattle is going to get an NBA team. Of course, Acquired is going to redo YouTube. But I was so negative on YouTube in the episode. The intervening years, I feel like it's just been a journey for me of really coming to appreciate what an incredible product and business YouTube is.

This year, my big YouTube appreciation has been, they enable for many, many creators, people to make their livelihoods with the exact opposite trade-off of what we do. You can just focus on content, and if you have an audience and can build an audience, can make a good to great living on YouTube and never engage with business, never engage with ad sales.

Ben: This is how I felt as an app developer. I was like, wow, there's a money fountain. I write software, I upload it to the store, and money comes out the other side.

David: Which, obviously, that's not the decision we would make. But for the long tail Massmart and other niches of media that don't have as valuable an audience as us, that is an amazing thing. Most creators don't want to be business people. We want to be business people. We want to be entrepreneurs.

Ben: By the way, I think it makes the content better that we are, because then you get first party insights rather than if we were journalists shooting from the sidelines. Some of the stuff I've already talked about on this episode today is the strategic conversation that came out of a board meeting that I was in earlier. And so, us engaging in business makes the show what it is too.

David: It's funny. That reminds me of another trade-off. One of the things is really, this is driven by being a parent, but yeah, I don't do boards anymore. I just can't. Never say never. But man, thinking back on times in my life when I was on five, six, seven boards as you are now.

Ben: I'm on three. That makes it work. It's like you pick very few companies and you go very deep. It's a very Acquired way of doing it.

David: Three is a manageable number. But even so, to do it right, you really got to engage.

Ben: Yup. All right, what's next on the agenda?

David: Relatedly, show growth. It was so fun talking to Ben Thompson about this and his growth trajectory and curve. We pretty amazingly doubled our audience again this year.

Ben: Which has basically been true every year since we started seven years ago. This is always one of these things where if a startup is only doubling year over year in the first two or three years, it's like, okay, well, it's not going to be a breakout company. But if you can actually keep doubling for seven, eight, nine years, the numbers get pretty big. It feels very different transitioning from 2020 to today, looking over a two-year span.

David: Even from last year to today. We hit over a quarter of a million subscribers.

Ben: Which was 62,000 just 24 months ago. That's the place where our years of compounding are starting to show up for us.

David: The thing that's been crazy to me is there still have been some step change, like the Amazon episode. That was a step change for us.

Ben: For sure, yeah. I think the previous highest episode to Amazon had gotten just over 100,000 downloads, and that one got 170,000.

David: In the first 90 days, the first time you look at it.

Ben: When we say a quarter million, that is the unique number of people who listen. It's basically our monthly active listener count across all platforms who engage with at least one episode.

David: Because not all of you listen to every episode. The cool thing about podcasts and for us, and that it is an open ecosystem that's not controlled by algorithms, it does mean growth takes longer, and it's harder, and you have to do the step change functions. But then people become subscribers, and they stick around. Amazon was a huge step change moment for us in terms of growth. Many of those new people subscribed. Thus, the subsequent episodes, Benchmark, Enron.

Ben: The two Benchmark episodes were both way higher than the 100,000 that we were at before Amazon. And then Enron now is starting to look pretty similar to Amazon, the early or only five or six days in, but it is unbelievable how sticky.

David: I don't think it's a reflection. The Benchmark episode was such a cool experience, but it's more niche. It's a venture capital firm versus Amazon. Everybody cares about Amazon.

Ben: Exactly. There's also this chronological thing where every three or four episodes is our biggest episode ever. Not necessarily because the content is more interesting, but because when you find a podcast you like, you stick around.

There is this cumulative effect when we drop a new episode. If we had dropped this in 2016, it would have gotten a couple of thousand listens. But because it's dropped on top of the entire base of people who are subscribed to Acquired, it's really meaningful.

I thought Ben brought up this really interesting point, where he asserted, podcasts are great because they're really sticky, but they're terrible to grow. He basically said, I don't know how you would grow a podcast if you didn't also have a writing platform that was easily affordable, because podcasts are really hard to share. That explains the reason why no matter how hard we try, we've really never been able to more than double in any year, because podcasts are an inherently uninsurable mechanism.

Unless there's something that happens, like you get feed dropped for free in an NPR podcast that brings you 100,000 new listeners right away, or we had NVIDIA part two, I think, got a large promotion in Spotify, that brought us a bunch of new listeners that were subscribed in Spotify.

David: Spotify has been a great partner to us this year.

Ben: Yeah, they have.

David: We really only started more directly working with them in January with the Taylor Swift episode.

Ben: Which is why, what was our stat? Ninety-eight percent of the people who listen on Spotify today were not listeners last year.

David: We should be clear about what I mean by directly working with Spotify. We're not owned by Spotify. There's no economic relationship or ad sales. Like we've been saying, we do all of that in-house. That's our business model.

Ben: They assign you a creator manager. There are people that we know that we can contact in the company.

David: We have relationships at Spotify in a way that we don't have with any of the other platforms. I think, technically, we have a manager at Apple. I don't know who that person is.

Ben: No, we found someone's email address, but they're not assigned there.

David: Yeah. Spotify has done a great job of, at least from my perspective, engaging with us as creators, and I think striking a good balance between podcasting is an open ecosystem with all the benefits and trade-offs that we've just been talking about, but you can also do it better than Apple. Apple has been such a terrible steward of this industry.

Ben: You've brought this up before. Terrible in one respect, but they're the reason why we have a direct connection with our listeners. Them advocating the creation of a platform in an intermediary is the reason why we have this really sticky relationship with listeners.

David: It's such a good point. Their internal strategy failure at Apple, and execution, too. I just feel like if you're an Apple shareholder, you should be really angry at management about how they have mismanaged, like fumbled the ball on podcasting.

Ben: But delighted in many other ways.

David: For us, yeah, I agree. Especially, the type of business we have at Acquired is really enabled by the lack of algorithmic stranglehold on this medium.

Ben: It does beg this interesting question that Ben threw out, which is, how do you grow a podcast when you don't have a secondary shareable component? I think we have tried to do this with the Acquired website. Each episode has a page, that page has a bunch of show notes, that page has a transcript. There's never a reason to consume it on that page. You can sign up via email on that page. You can join the Slack from that page.

David: The Slack now has over 14,000 members.

Ben: Our preferred way to share an episode is the page because we feel that that URL is a nice way to package it up for someone and say, listen to this. Unfortunately, our episodes are four hours long, so it doesn't come with a deep link. It would be really nice if as you scroll down the page, and as you move through the transcript, or as you watch the video or as you consume the audio, that was always updating the URL so that at any given point, you copy the URL.

David: Kind of like Overcast has the share timestamp. You can do it on YouTube, too.

Ben: Those are inherently flawed because you don't know if someone likes to use that platform. When I share that Overcast link with people, I'm like, are they going to be like, what is this podcast player that I don't use? Why are you sharing it to me in this weird way?

There are a bunch of reasons that contribute to podcasts being inherently unshareable. Our episodes being really long to make them, especially hard to share moments insights. There's been a zillion clip apps over the years.

David: I do think, actually, we have not grown in the same way that a viral product grows, but we've had really nice growth as a podcast. I think, actually, growth happens because we infiltrate a network, particularly a company network, and then we get shared within the company, like in a company Slack, Teams, or just friend networks within a company.

Ben: Yup. It's interesting. I'm not particularly interested in additional growth.

David: Especially at this point. It's great. It would be nice. I think Ben was making the same point in the episode we did with him. For all of us, additional growth is great, but not by trading off any of the things that we really care about that drive our business.

Ben: Or changing the audience mix. I was wildly relieved this year from the—how many people took the survey—1500 people or so that answered the survey, which thank you, if you did.

David: Yeah, thank you.

Ben: The audience mix stayed pretty much the same from 2–2½ years ago, the last time we ran a survey, which was awesome. I was like, wow, we managed to get 200,000 more of basically the same type of person. It was heartening talking to Ben, because it sounded like he thought that he had bumped up against the market that he was starting to saturate and then accelerated through it again.

It feels like Ben, I think he probably has close to a million people that consume stratechery.com for free in a given year. If he doesn't feel like he's bumping up against the TAM, and we have a reasonably overlapping audience, that feels like a pretty good proxy for us to say, well, we could probably at least 4X from here. I don't really have a strong desire to do so. I think it would make our lives generally worse if we did.

David: I think it would be neutral. In some way, it would be better. In some ways, it would be worse.

Ben: If we were a video podcast, it would make it worse, because we're right at the limit right now. We have all the benefits of when we drop an episode, it really matters to the people that we care about it mattering to, and we don't get recognized on the street.

David: The episode with Ben was about Stratechery, obviously. We didn't really talk about this, but I kept thinking about him wanting to explore more, and we should do here. Our business model is very different from Ben's. Growth, again, nice to have for us. It comes with some set of trade-offs. There are some downsides to it, some upsides. I don't know.

You could argue. Maybe you think it's slightly negative to growth. Maybe I think it's slightly positive. It's in the neutral zone. But because of our business model and everything we were talking about, the deepening of the engagement with the right people and the right sponsors, that's what drives our excitement about the business and the business itself in a way that for Ben, it's different, because he actually does need to grow his business to keep growing the number of consumers, because some percentage of them will convert to paying.

Ben: You're saying for his revenue to grow, he must grow the number of subscribers, which means if subscribers are always a fixed fraction of the set of people who are reading anything on Stratechery, he must grow the top line. Whereas what you're saying for us is, the revenue is not necessarily directly connected to audience size.

David: It's connected, but it's not directly connected. As we evolve the business model more, I mean, this is a good place to talk about Vanta.

Ben: That's a good point.

David: They're one of our couple biggest sponsors and partners on the show this year. We and through Kindergarten and [...], invested almost $10 million in the company this year.

Ben: Mostly Kindergarten, very small for me.

David: Yes, very small, Ben. Most of that capital came from the Acquired audience community. The LP capital that backed that SPV came in very large part from the Acquired audience.

Growing the audience, of course, increases the number of super high quality people. We care about growing the high quality people in the audience. The bigger that size is great, but it's not directly tied to the business. That was a transformational moment for us. Obviously, Vanta is an amazing company, but that's a whole new business.

Ben: It was at least an insight. You can test the hypothesis of like, because you and I have invested small amounts personally in our sponsors before, because we get insight into their business from getting to work directly with CEOs on those.

David: And we see what the audience resonates with with the products.

Ben: Right. That's a really interesting thing we should invest a little bit. But your insight of, okay, this is a growth round, this is a company that's doing really well, I can see how well they're doing both from getting to like, look at the investment pitch, but also...

David: The reaction of our community to the sponsorship.

Ben: Right. Could I invest a meaningful amount of capital in this?

David: How can we put together a meaningful amount of capital?

Ben: And do I, as a host of Acquired, have relationships with the owners of capital, the stewards of capital who want to invest in this opportunity? There's a really interesting way for you to prove that hypothesis a little bit.

David: Yeah, there is no strategic plan for Kindergarten Ventures, period.

Ben: You all may be shocked that there's no strategic plan.

David: It's not like we did an off-site. We didn't do an end of year special for Kindergarten like we're doing now for Acquired and discuss our strategy and say, you know, I think we should find an opportunity to do a $10 million SPV this year. But no, it came naturally from everything we're talking about here on Acquired.

Ben: Yup. Just to put a finer point on the business being not entirely connected to the audience size, there were years where the audience would 2X, but revenue would 10X just because it was a wildly under monetized asset.

David: There were several years where revenue was zero. This was not a business.

Ben: That's true. Who's to say that we necessarily have the business model optimized? Do I think that there should be more sponsorships and episodes? No. In fact, I think we should probably be a little bit tighter on them, and shorter on them, and find more ways to make the sponsorship segments even more differentiated, where we're not just giving the high-level pitch on the company, but doing more Vouch Insurance 101–type stuff, where we can find a key insight with the company and story-tell that together.

I think leaning into the strategic differentiation that we have, and I know that sounds like jargon, but we're (I think) the only ones who work this closely with our sponsors. What does that enable us to do that no other podcast could do? I think that's the lens that I want to keep taking to it. To your point, the business is probably still unoptimized. It will probably grow directionally with the audience, but can grow in other ways, too.

David: Would this be the perfect point?

Ben: To do what?

David: To talk about our friends at Brex?

Ben: Yes. Let's talk about our friends at Brex.

David: What we were planning to do for this sponsor segment for them is actually perfect for this episode. We didn't plan it this way. They wanted to talk about how they've innovated twice. They have these two successful, now separate products, and there really are two products within Brex. This is so perfect. When we started Acquired, I think most people listening don't know this, we had two ideas for the show.

Ben: Acquisitions that actually went well. It's theoretically what this is.

David: Which we did, and it has now morphed into this. The other idea that we had for a podcast to do together...

Ben: Companies that had two massive innovations.

David: Two successful innovations.

Ben: By the way, I think that's why I'm so drawn to the NVIDIA story, because that is what they bet the company's big innovations, or Apple with the Mac, the iPod, and the iPhone, or Microsoft with Windows and Office. I think this is a great place to talk about Brex's two big innovations.

David: Totally, which they started with corporate card for startups. They were the first corporate card for startups that was like...

Ben: Modern, incredible UI, really flexible, customizable product that felt good Super mobile friendly.

David: And that you could just get actual good underwriting and available credit and credit card products as a startup, whereas most traditional banks would be like, you're a startup, you don't have revenue. But these companies were good credit risk. They raised a lot of money from big VCs. Massive innovation and the first time.

The second time that they've innovated recently is for a whole different set of customers, which are large enterprises, because a huge number of those startups that started with Brex have now grown up and matured into large enterprises. What they've gotten into now is not just credit cards, but spend management.

Brex works seamlessly for spend management across 100+ countries and currencies. But the even bigger product innovation is they built in compliance and controls to the start of the spend management process, not to the end.

Rather than approving expenses after they're registered on the card, and you got to track down the receipts, and do all the nightmare that you and I remember from working at larger companies and Acquired, it's all set of guidelines are set upfront by policy teams, by finance, by compliance, and then anything that is by Brex's algorithms within compliance gets automatically approved.

You don't need the receipts. You don't need to approve every single thing that goes through. It's just automatically done, and it's only the outliers that get flagged. That is a huge, huge productivity savings for growth enterprises. Go to brex.com/acquired to sign up.

This is perfect for the end of the year, the holiday season. We put our heads together a couple of weeks ago with the Brex team. We want to do something for the community and people who sign up with Acquired. If you sign up for Brex via that link or if you have already in the past, signed up for Brex because you heard about them on Acquired, just email us and let us know.

Ben: hello@acquire.fm.

David: You can get a free Acquired t-shirt from the merch store. We now have several different t-shirts to choose from.

Ben: Our thanks to Brex for a great, great season.

David: Indeed. There are a few terms and conditions that apply. Those are in the show notes and on the website. Thank you, Brex.

Ben: All right, David, what's next on the year in review agenda?

David: Next we got talking about next year, 2023, looking ahead. Okay, first question for us. What episodes, topics, guests, are we thinking about? What's on the docket?

Ben: Hang on, let me bust out my list.

David: One that feels like an obvious one we should do at some point next year is OpenAI.

Ben: Absolutely.

David: We talked about doing it at various points this year, and especially fitting in with the whole NVIDIA series. Now, it feels like we got to do it.

Ben: We almost did it 12 months ago. I remember last year over the holidays, doing some prep work for it. That (I think) would have been disastrous because we would have done it way under sold.

David: It would have been way too early. If we do end up doing it and do it relatively early next year, it's ironic that the next Elon company that we'll cover after our old SpaceX episode is OpenAI. We didn't do anything on Twitter. We haven't done any revisiting on Tesla.

Ben: I freaked out, this is an Elon company. It is crazy. God, he's got his fingers on everything.

David: Twitter is just, oh, my gosh, there's so much drama. I don't like having this drama on Acquired.

Ben: That is true. I think part of the reason why we haven't done a Twitter episode since we interviewed Dick Costolo in early 2021, maybe.

David: Yeah, way before all this.

Ben: Is like, the story feels less like a business story and more like a TMZ story, which isn't our cup of tea.

David: Yes. I don't ever want to feel like TMZ.

Ben: I won't say that I'm not interested in reading all the TMZ drama about it. It's totally fascinating. If you can run a company with 80% less people than you were running it before and nothing goes terribly wrong, that's super interesting for the world to know.

Now, of course, it does look like all sorts of things are going wrong. But to the extent that they can turn it around and the business can be generating as much revenue as it was before on a massively lower cost basis, I'm very curious to know what the second order effects of that are.

David: That is interesting, actually in business. We don't actually know that yet. Everything that is being discussed is just drama.

Ben: Okay, so OpenAI is a good candidate. I was perusing the world's richest people list the other day.

David: For Acquired ideas or that's what you do in your free time?

Ben: You know. Lots of the names are very familiar to us and Acquired listeners. The one that is not is Bernard Arnault, who is one of the world's top five wealthiest people and not in tech, not in finance, but in luxury brands. I think it'd be pretty interesting to go down the path of really deeply unpacking brand power and brand power over generations, and the concept of a house of brands, and what brands mean to people, and why you can know that it's the exact same leather that you're buying elsewhere, but because it has this mark on it, you pay 500 times more for it. I would love to figure out what the right starting place is for luxury and do that on Acquired.

David: Yeah. The point and reason to do it is what you said, on the brand. How did these amazing, durable brands get built?

Ben: Yup. I continue to want to do epic health care. I think they're a huge force in the American economy. I don't know if that episode will be a hero's journey or a villain.

David: Is it an Enron or an NVIDIA? Without having done any research, I suspect more of an Enron. They're probably not a fraud, but just a...

Ben: Open question whether it's good for the world.

David: Yes.

Ben: Some value certainly captures a lot of it. Does it capture? Well, then it creates an open question.

David: One thing I definitely want to do more of and figure out how it's going to evolve in sessions, we did the session with Jason Calacanis. That was really fun and felt like a really cool way to do something orthogonal to the core Acquired approach, but still really fun.

Maybe sessions or a format like sessions ends up being what we do with protagonists of stories after we've done an episode, just us on them. Maybe we keep doing it with interesting people, maybe both. But that felt like a really cool, different type of interview than just a standard podcast interview.

Ben: I feel like if sessions evolve into talking to people who do fascinating work about things that aren't necessarily their work, that's a pretty interesting use of the format. That's something that I want to explore because that statement can take two directions. I think either would make for an interesting session's reason for existence.

One is talking to the CEO of a Fortune 500 company about things that aren't their company. They probably think about a lot of really interesting stuff and have a bunch of really interesting ideas, and they probably can't say a lot of the most interesting thoughts they have about their company, because they're publicly traded, and there are all sorts of SEC stuff involved. But there are other conversations we have with them.

David: But they're people, and they have feelings and emotions.

Ben: And those aren't the reasons people typically are trying to get them to come on podcasts.

David: That's one thing actually that my wife, Jenny, pointed out to me after listening to the session we did with Jason. She was like, it was interesting. It was good. You guys could have gone way harder on diving into the emotional side of Jason's lived experience and his feelings, especially when he mentioned Tony Hsieh's passing, how that really impacted him, and led to him deciding to make some changes in how he approached life and his work for the next few years. She was like, that was an opportunity that you just let fall on the floor. You could have gone way deeper into that.

Ben: I think that's a great point. The other thing that I was implying in that statement is we could have people on almost as a prop. We're not interviewing them, but they're instead a piece of whatever discussion you and I wanted to have anyway.

What if we had Eric Vishria just hanging out next to you on the couch, and we weren't talking about Benchmark, but Eric was just chiming in on a lot of this stuff and sharing his ideas? He's not the subject of the interview. He's a piece of the show. He's the heart of the conversation. He's a foil to bounce ideas off of.

David: I would, for sure, do that with Eric. That would be an amazing and a great privilege. You know who would be truly the most interesting person to have as playing that role? It would be Peter Fenton.

Ben: Oh, yeah. You're right. Sorry, I used Eric as an example.

David: The things that Peter says. Oh, my gosh. The whole Benchmark crew is amazing. That dinner was amazing. There were a few things that Peter said that when we were talking about the principal program and Blake, a camera froze me or you asked, why do you guys have a principal, like a junior investment person when clearly, your whole ethos is you don't do that. Peter's response? It was like, because forced consistency is the hobgoblin of little minds, which is a famous quote from I can't remember where it's from now.

Ben: It's just like it leapt out of it.

David: That was the immediate response that leapt out of him, and it's like, wow, I never thought that that would show up on a podcast.

Ben: Yeah, that was great. Peter is one of a kind.

David: He is one of a kind.

Ben: Other episodes that I want to do, I want to do Intuit. I think that's a far more interesting and successful business than people realize. In the vein of consumer brands, we got to do Nike at some point.

David: Oh, yeah.

Ben: I want to continue going back in time from Walmart and do Sears.

David: Nike is one that I really want to do. I know we said we don't live. I actually don't think this should be a live show. I want to go on-site. I want to go to Oregon, go to Eugene.

Ben: Get a workout in?

David: I may just be curious to see. I've never been, but the facilities there. Because it's such an athletic, physical thing, I want to go see what it's like.

Ben: That's a good point. That feels like something that we need to experience more physically. I don't know. You could make that argument for a lot of them, like TSMC. The episode would have been much better if you and I got to witness chips being fabbed and feel what it was like to be in a bunny suit.

David: The little bit I know ended mostly from The Last Dance, but one of the key, key moments in Nike's history is the signing of the deal with Michael Jordan. What did it feel like when Michael came out to the campus?

Ben: There's feeling the history there. It used to be a big thing.

All right. Before we get to our extended carve outs, in reviewing 2022 you and I both had big 2022s, so that's probably worth telling about a little bit.

David: We didn't intend it this way. This is becoming much like the Benchmark dinner where we recorded everything. I was like, before dinner, because we want to eat dinner before we went up.

Ben: We got a lot of good comments like, why are they just sitting there with cheese on their plates? Aren't they going to eat? Are they going to eat real food? And we did afterwards.

David: Yeah, but that would not make for good video content, audio or video content. After we finish recording here, we're going to go out to celebrate the holiday dinner for Acquired, for the two of us, but I feel like this is the pre-record. This is the recording version at which we would definitely talk about our personal lives.

Ben: I had probably the biggest life event that you want to have. I got married. It was wonderful.

David: I was here. It was great.

Ben: You were here. It was really cool because in some ways, I thought it wasn't going to feel different afterwards. I think a lot of people in our generation date for a long time, live together, and feel like life partners. But there's something totally different about being married, having the ring on every day as a reminder, and the sense of longevity associated with it is really cool and a really totally different psychological place than I thought.

David: And you go through this process and project together of the wedding. From the moment you get engaged until the wedding, you're like a caterpillar going into a cocoon. It's like a transformational period, and I say like I was here. You did the wedding at your house right after moving.

Ben: I don't want to play the 2022 venue game, like two times more people got married this year. Is this like, you're not getting a venue? And if you are, you're getting a terrible date, you're paying a lot of money for it, and you're not going to get any of the things that you want out of it.

David: That was probably half of CPI inflation right there.

Ben: David was one of my groomsmen. You and I have some great pictures together. Thank you for coming up and being a part of it.

David: You did an amazing job given that you too planned it all yourself. You were the venue. It was at your house.

Ben: We're literally sitting where the DJ was DJing onto the dance floor out there.

David: It's so fun going to weddings after having been married, because you're like, oh God, I just get to enjoy all of the fruits of the couple's labor.

Ben: Yeah. Really, people say it's the happiest day of your life. No doubt, the happiest day of my life. I think the energy, love, and just overwhelming force that you feel from your closest friends and family when you're walking down the aisle and you feel all that energy on you is crazy. It's an indescribable moment, really.

David: It was super cool. That was (I think) the best personal life event, most for you this year reflecting on 2022.

Ben: Let's see. We took a vacation to Italy. I've never been to Italy before. That was an absolutely spectacular time. Rome, Cinque Terre, Florence, Capri. God, the island of Capri is incredible.

David: I've never been.

Ben: It's beautiful.

David: Have you been to Greece?

Ben: I have not.

David: Okay. I was curious how it compares to Greece.

Ben: I think it's similar to some of the Grecian islands. This one has some cool history associated with it because at one point the Roman emperor was fleeing. I don't know if it was paranoia or is legitimate, but just thought that everyone in Rome was coming and trying to kill him. So he fled to Capri and ruled from the island where he could see in every direction to fortify. It was remote work before. Yeah, that would be a comeback for me.

David: He was a pre-digital nomad.

Ben: Yes.

David: That's the cool thing about Italy and every European country compared to here, but I feel like especially Italy, the sense of history. Especially for us, two history buffs, you walk around Rome, Florence, especially with Florence in its own right is still ancient history compared to America, but Rome, you're talking about the ancient Roman times.

Ben: Actually walking around the forum is wild, because you're literally looking at pillars that are 3000 years old, at least 2000 years old. We're thinking about where to go on a honeymoon, probably early to mid next year. I want to go back to Italy. It's a magical place.

David: This is the problem as you get older and you have cool travel experiences. You're like, I want to go back to those places, but you also want to experience new places.

Ben: The rest of the world. I will die without seeing most of the world no matter how much I travel. Should I try and put a dent in that as much as possible or should I say, there's just one spot in Hawaii that I really like, so every single year, I'm going back there?

David: Clearly, the answer is both. Maybe you had some other plan for carve outs, but I feel like I'm decently up on the latest tech and gadgets and stuff, but you made some interesting decisions about your personal technology.

Ben: Oh, we're going to review my Apple year-in review?

David: Yeah. Can we do an Apple year-in review for Ben?

Ben: Yeah, let's do it. I got the iPad Mini for Acquired. We’re both rocking the Mini because it's very, very good onstage as we did more live stuff. It's just game-changing for that.

David: This is the perfect device for live events and any way you're not sitting in front of a computer monitor.

Ben: Yeah, easy to hold it in one hand. I really want the big iPad Pro, but I have basically no use for it. This is actually the device that suits my use case. I think a little over a year ago, I got the MacBook Pro 16 inch, which is right here. This is our fire, which is the finest computer I've ever owned. It's a tank, it's heavy.

David: The display is amazing.

Ben: Yes, the display is unbelievable. Everything about this thing is nuts. I do envy the M2 MacBook Air. I think it's sexy. It's so thin, it's so light. A lot of the capability of this one, but when I'm traveling, and because what we do is so everything intensive, it's bandwidth-intensive, it's storage-intensive, the SD slot, you just need a desktop computer with you all the time.

We're transferring hundreds of gigabytes back and forth. After we record for all the multiple camera videos. I want the good webcam that comes on this computer in case we have to do a remote episode. I want the screen space, because I'm also a venture capitalist and I'm doing spreadsheety things. I have a hard time with a travel computer. If they made an 18-inch computer and they made it three pounds heavier, I might buy that one, too.

David: When you're doing purely personal travel, do you not bring this and just bring the iPad?

Ben: No, absolutely not.

David: So you still bring this?

Ben: Purely personal travel, what are you talking about? There's not a single day where I'm on personal vacation where I'm not also doing something.

David: Yeah, that's true. Even for yours truly, that's true.

Ben: We're small business owners. There are things every single day, where there's no one else that can do it. Either it doesn't happen or we have to do it. That's on top of me being a professional venture capitalist, where there are real obligations that come with, and that you don't necessarily need the heaviest computer you can find for, but you need to be pretty responsive on a lot of things. Sometimes if you're giving a document, you need a real computer.

David: If we need to make edits to an episode or something, you can't do that on an iPad.

Ben: I can do that on a smaller computer, and maybe this is totally overkill. When you got here today, I had left to go to a board meeting, then a launch, and then meet someone for coffee for a nonprofit that I'm working with. None of those things required a computer, but I brought my backpack with my computer in it to all three, even though I knew I would never take it out, because if something came up, I would need to be able to get away for five minutes, do something on my computer, put it back in my bag, and then go back to whatever I was doing.

David: I love it.

Ben: You just never know. I'm probably overly paranoid about that, but the one time you get burned, it changes your behavior forever.

David: Okay, opposite of this, and where I thought you were going to start.

Ben: I really like to take pictures. I'm a very big nerd about understanding all the physics and as much of the black box that Apple will let you understand of the computational photography engine, but I also have, I think it's tendinosis. Something's up with my wrists. They fatigue super easily, and I basically get a tennis elbow. It's probably from having my computer with me all the time and constantly getting a hunch over a computer.

David: It's having a beast on there.

Ben: I have the iPhone 13 Mini. It's the correctly sized phone. It's the correct weight for a phone. It's the correct reachability for a phone, which I know Apple used to name a feature which was a stupid feature. I was like, gosh, there's no iPhone 14 Mini. I would pay literally anything. I don't know if that is exactly right, but 4X or 5X the current iPhone prices.

David: You have a high willingness to pay.

Ben: For an iPhone 14 Pro Mini. Apple, if there's a test one at a lab somewhere, please send it to me. Again, no price sensitivity around it. But I was like, I should try the new phone and just play with the cameras and stuff.

I got it. As you would suspect, it was too big, it was too heavy. I waited 13 days until the 14-day return deadline. I returned it, went back to my 13 Mini. I'm thinking about buying another 13 Mini because at some point the battery's going to die on this one, and if they’re never going to make another Mini again…

David: You want to have one in cold storage.

Ben: It's just like my Nikes upstairs that I've got stacked in the closet.

David: It is the perfect-sized phone. I have a 12 Mini right now. I didn't upgrade to 13. I probably should have.

Ben: Dude, you totally should upgrade right now before they run out.

David: I realized I finally need to upgrade the 12 Mini. The biggest driving factor for me as a new parent was the camera, so I actually went. I haven't gotten it yet, because it's on the back door, but I went to the 14 Pro, which I have never had any of the pro iPhones. I care about technology a lot, but I was just never compelled by… I didn't use to not care that much about photography. I was just never that compelled by the pro versions, and I really cared about size. But now with the little one...

Ben: If I was a parent, I think I would buy the 14 Pro also.

David: It's a double whammy. What I cared most about size was for portability when out and about.

Ben: Which, that part of your life has gone away.

David: That part of my life, particularly exercising now. My exercise is primarily walking a stroller, which has a lot of carrying capacity. I didn't care that much about photo quality. I took very few photos before.

Now, some of the best advice, I love talking to people who have older kids. You just realize, time just slips away when you have a kid. Almost universally, I wish I'd taken more photos. I especially wish I'd taken more videos throughout. The pro, I have on order, but I'm conflicted about it. I'm really gonna miss the form factor.

Ben: You are. You're really going to miss it. Yeah, it's like not going to fit your pocket.

David: It's going to be a transition.

Ben: Also, the camera mount on this one is so large that the phone actually rocks when you're leaving it on a table and typing. It's fascinating to see the set of trade-offs Apple has been okay with in the name of getting the very best photos that they can out of this thing.

David: Which, as a parent now, I'm like, I see the business reason for doing that.

Ben: Right.

David: Okay, keep going on the lineup, because you got another important large device.

Ben: Yeah, I bought the Apple Watch. It's really heavy as opposed to the Apple Watch 14, the Apple Watch Ultra, which I'm sure next year, there's going to be the Apple Watch Ultra 2 or the Apple Watch 2 Ultra. I'm curious how they'll name it. Apple Watch Ultra 2nd generation, I imagine, that's what they'll do.

Anyway, this thing is actually super light relative to how large it is. You've made the joke about lifting your arm. I don't feel it anymore. I think that happens with all watches over time, you get used to the weight.

One of the big things that sold me on it is, because I thought the reason I was going to hate it was the weight, I put it on and I think it's the titanium, remarkably light for how large it is, it's big. For sure, it's big.

David: It's beautiful, though.

Ben: The screen is super clear. You can look at pictures on it. It's really bright. It's 2000 nits, so it has a flashlight button, because it functions as a fairly effective flashlight. The battery lasts almost three days, which is totally game-changing. I think I've tracked every single night of sleep for four or five years now. That's a use case I really care about. I haven't done anything extreme in it yet. I've climbed Mount St. Helens.

David: I got this great photo behind me.

Ben: Yeah, that's Iceland that I did with my dad. He used to do this big backpacking trip every summer. I have not adventured in this thing yet, mostly because I've just been doing less adventuring over the last year or two. I totally expect to use it for the stated purposes, but it's been awesome for me even not for the ultra type purposes that it's advertised for.

David: The photo viewing, I would imagine, I would never think I want to view photos on my wrist, but actually, I think they can be of good use.

Ben: There are a good number of times where I'm like, okay, cool. I saw it clearly enough now, where I don't need to also pull it up on my phone.

David: Yup, when you're getting photos in a text chat.

Ben: Yes, exactly. The other interesting thing is the screen is just large enough where it feels like a small phone and less like a big watch. I think it's the edge to edge display, the fact that they have the raised bezel around it. It has an onscreen keyboard that you can use the finger swiping on. I literally can just swipe on the keyboard to respond to text messages.

I can't decide if that's really nerdy, Casio mid 80s, and that's not actually useful, but I've probably done it 30 or 40 times since I've gotten it just to respond to text messages real quick, and that's been pretty nice.

David: One thing I wish they had added, to me, would be maybe not a killer feature but a really, really nice thing to have would be some biometric authentication in the watch. Maybe with the Ultra, I wouldn't have to take it off to charge it as much. But when I put my watch back on after charging it, I had to enter my PIN code every time, which is a first world problem, but I don't understand why they can't put a touch ID sensor. I know they're trying to save as much space as possible there.

Ben: That's good. You're right. There's no biometric on it. But I think a feature that it does have is if you put it on, and then you take out your phone before you need to type in the passcode on your watch, and you face ID on your phone, your watch is auto unlocked.

David: Yes, that is true, but I found that to be janky.

Ben: I found that to be janky, too.

David: I can't reliably trust that it's going to work.

Ben: Yes, totally agree. I'm like, why do I still need to type in a passcode? I swear I shouldn't need a passcode right now.

David: One of the things I found, maybe I need a different watch band to solve the problem, but toddlers really like to grab shiny things with screens, especially ones that are on your wrist while you're changing diapers. The amount of times a day that I enter my passcode on my watch is a lot larger than it used to be, shall we say?

Ben: All right, let's go with your Apple. We'll go in reverse order for you. Give me your Apple lineup, and then let's get into your year-in review.

David: Okay. I'm still rocking the 2020 original OG M1 MacBook Air, which there are so many more performant machines out there like this now, but I still have tons of [...].

Ben: Right. I'm not sure you've noticed the performance.

David: Yeah, and the leap forward that that M1 chip was was just incredible. I mean, performance, battery life, price point.

Ben: Yeah, it's crazy.

David: I don't know what these 2020 original M1 MacBook Airs are going for on eBay, Craigslist, or whatnot right now. Whatever they're going for, I bet $500-ish, maybe less, the amount of performance and longevity that you can get for that dollar amount is crazy.

Ben: Yeah, it's crazy. You're right. If it's only $500, it's way better than, let's say you have a 2018 or 2019 Intel machine. It's so worth it to trade up to even an old M1 because they're just not that different after three years.

David: Totally. I can't imagine anything that a normal human would need to do on a computer that the M1 MacBook can't handle.

Ben: Yup, okay. Still keeping that.

David: There's that. We talked about my phone. I'm currently rocking the 12 Mini. Very mixed emotions about transitioning to the 14 Pro. I'm rocking the original SE Apple Watch.

Ben: I forgot they made a Watch SE.

David: They have two now. There's a new SE 2. I don't know exactly what the SE 2 has, the feature set. I'm very tempted by the Ultra for all the reasons we discussed.

Ben: I highly recommended it.

David: My decision for going with the SE originally was it didn't have the always on screen. I actively did not want the always-on screen. How do you find it? Do you find it distracts you at all?

Ben: I like it now, especially with the Wayfinder Watchface that comes on the Ultra. When it's off, you still see the watch hands, but everything else, it's a black background. Then when you turn it, the white face comes on, so I like it.

David: Nice.

Ben: I did not like the always-on display on the phone when I had the 14 Pro. It was loud. It felt like my phone is really on.

David: Yeah. But on the watch, yeah, it's subtle. It's not noticeable.

Ben: I will say too, I was in a coffee meeting today, where I did need to call an Uber, so that I could get back here so that we could record. It was quite nice being able to have the watch at a super...

David: Because there's a social thing about checking your watch.

Ben: But having it, like being able to see the time. When I was looking at it at 170 degree angle, I used to definitely be the person that's jerking my wrist or tapping it to try to see the time.

David: That is one, yeah. I'll put my hands under the table and then tap it surreptitiously. Then on the iPad side, the iPad Mini, the one really only negative experience besides just the amount of work that we and PitchBook put into the Arena Show was my old iPad got stolen after the Arena Show.

Ben: Criminal.

David: Literally, criminal. I could still see it on the map on the Find My Devices over somewhere up North Gate or somewhere like north of Seattle.

Ben: It's one of these things, where just because I know where that is, it does not mean I should go there and get it.

David: Yeah. No, definitely not. Oh, man. I really liked the Mini. It's not nearly as good for watching and consuming content. I have an old iPad that we keep in the kitchen for when I'm doing the dishes and stuff.

Ben: And that, you have ProMotion on, right? The Minis don't have a ProMotion display, the 120 Hertz.

David: Yeah. No, I've got an old, old iPad that I don't think has ProMotion.

Ben: I feel like you used to have one with a ProMotion display.

David: You know what, maybe it does. I think it's the first iPad Pro that they made in 2017.

Ben: Yeah, that one did.

David: Okay. You're right. It does have ProMotion.

Ben: Because that I actually missed when I was downgrading from the new iPhone down to the 13 Mini, because the non pro iPhones have never had ProMotions.

David: Right, it goes up to 120 hertz refresh rate on the screen.

Ben: Yeah, butter.

David: The Mini is great, though, for events. It's also really good. I have a Kindle Oasis that I use for reading fiction at home. But when I travel, I no longer bring the Kindle Oasis. I use this as a Kindle. It's great for that.

Ben: For outdoor stuff, you can't beat the Kindle.

David: Yeah.

Ben: I also find that night reading in bed, the iPad, even in the lightest setting, is too bright.

David: That's true. When going to the beach, I'll still bring the Kindle. I wouldn't feel good bringing this to a beach.

Ben: That's a good point, because they're not waterproof. Unlike iPhones, iPads are not waterproof.

The device that's still in my lineup that blows my mind is in 2012, as a college graduation gift, my uncle got me the $70 Kindle. That is still a Kindle that I use and take on vacation. It's such a good product.

David: They're industrial strength.

Ben: Yeah, and super light. I looked at it in the Oasis, but it's actually heavier than my 2012 model.

David: The nice thing about the Oasis is it's got the page turn buttons, which I like.

Ben: And the Paperwhite is really nice. I'm envious of the Paperwhite, for sure. My Kindle is actually worthless in bed, because you need to light it.

David: Right. Jenny and I got the Oasis for that very reason. Jenny's a night owl and I'm a morning person, and Jenny's a huge reader. She has a PhD in literature. I'm a huge reader, too, but she puts me to shame. She would stay up reading, and I put the light on. Then she was just like, I'm buying you this, turn the light off.

Ben: It's for you and for me.

David: It's for you, but mostly for me.

Ben: All right, your 2022 personal year.

David: 2022 personal year. This was the year of adjusting to life as a parent. Our daughter was born towards the end of 2021. Most of the year was preparing. The first couple of months are like [...]. Of course, we're thinking back now on the FTX interview when we had Sam on...

Ben: Was that your first interview back?

David: I was still in the fog of war. I know we released the interview beginning of December.

Ben: We switched it with the Michael Ovitz episode. I think we interviewed Michael first.

David: That's right. But all of that, she was no more than two months old, probably less. It's such a fog. Yeah, those first few months. But then this year, Jenny went back to work, and she works in-person. She works at San Francisco Ballet.

It's an in-person fiscal art form. They put in physical performances. She needs to be in the office every day, weekends, and nights. Yeah, this year was just about figuring out life with a lot of changes. But we met early in college, so we were like babies.

Ben: You were together for 17 years before having a kid, 16 years?

David: Sixteen years before having a kid, which were wonderful 16 years. I'm glad we had all that time together, pre baby. But we hadn't had to really renegotiate our relationship in a long time. It was like, oh, wow, flexing old muscles again.

Ben: Yeah, I bet.

David: The last time was when we got married, and we didn't expect. It's funny hearing you talk about things are different when you get married. They really are.

Ben: All your life systems have to change. Your notion of self is only about one person. But after you're married, your notion of self includes another person whose emotions you can't actually feel. When you're looking out for yourself, you have to account for things that you currently don't know, which I think is this very interesting phenomenon.

David: And that is so true, but getting rare. But then having a kid, there are so many huge things, but one is you now have this other being. When you get married, yes, you have to account for the other person and you're in it together. You're no longer just you.

Ben: Right, you're checking on decisions.

David: The other person is like a responsible adult, hopefully. Can keep themselves alive. If we're going late recording an Acquired episode, she'll be fine. When you have a kid, 24/7, somebody needs to have a pretty foreground in their mental processes. I need the algorithm of how I'm behaving needs to be at the forefront, to keep this kid alive and happy. And they're incapable of doing so on their own.

You love this person so incredibly much in just really unfathomable ways. It's like, how do you then integrate that back with your life? It's been a lot of figuring that out for us. Now it's such a good age. Not that it's still difficult. She's a little over a year old now, 14 months. It's so fun.

It's always been fun. I think a lot of parents, and especially a lot of dads, don't love their kids immediately. That's a very normal thing. Moms too have this, but the kid pops out and you're like, woah, but there's no instant love. I have the instant love. Instant. Very, very powerful.

I still feel that, but also as they become more of a person, like she's walking now, she's talking a little bit, but she's so clearly has a personality every day. Like, oh, wow, you are even more of a person than you were yesterday, and it's so fun. It's also a lot easier. The early days are so physically demanding on everybody, especially moms, but any caregiver.

Ben: It's one of these things that you can describe it, but having not experienced it, I don't actually know what it's like. It's like, oh, cool words, David.

David: Exactly. Highly recommended, but in due time.

Ben: Yeah. Other stuff for you this year, personally?

David: It's crazy looking back on it. So much changes when you're a parent, but we were both intentional about this. Also, I think it just naturally happened because it is an important part of our lives.

We didn't actually travel any less. We didn't travel in the early, early months, but we did eight or nine trips with the baby in 2022, including going to Portugal. We made that a family trip when we went for Breakpoint, which actually was great. Really hard, very different.

Ben: It seemed very hard, I got to say, from the outside.

David: It was hard, but I'm really glad we did it. The other big thing for us this year, we'd spent a lot of time over the last couple of years thinking about where we wanted to live in general and then the anticipation of having a baby.

After having the baby. Jenny and I went around the axle so many times about California. We're pretty sure we're going to stay in California. Probably the Bay Area, Jenny's family's there. We genuinely really love it there, but do we move to the suburbs? Where do we move? Do we stay in the city? We were in the city before, and we ultimately decided to stay in the city. To stay in the same neighborhood, we moved houses.

The plan for now is we're just going to stay for the perpetuity in the city in which some people I think are like, that's crazy. Why would you live in San Francisco? Especially post pandemic, why would you raise kids in San Francisco? It's actually great. For us, it's been amazing. We can walk, we don't have to drive. We don't have to get in the car. There's so much great stuff. She really enjoys it. She's a city kid.

After Breakpoint, we went out in the countryside in Portugal for a couple days. The baby was so bored. She was like, get me back to Lisbon. It's actually been really great for us staying in the city. We'll see as she gets older, but that's the plan.

Ben: That's great.

David: This is the perfect spot to think of our next sponsor of the episode, our very good friends over at Tiny.

Ben: Our final sponsor of the season, of the year.

David: I know, crazy. Tiny, as you all know by now, is the Berkshire Hathaway of the Internet, and has built and acquired the world's premier collection of truly wonderful internet businesses.

Ben: Yeah, truly. When people refer to them as the Berkshire Hathaway of the Internet, it makes sense from two angles. Berkshire doesn't really invest in tech businesses. Obviously, a quarter of Berkshire's or something is Apple. Then recently, it invested in TSMC, which was fascinating. But also, the wonderful internet businesses that Tiny is buying, these companies that are doing about $5 million in—

David: Annual recurring revenue, 30%-40% operating margins.

Ben: Or the ability to quickly get there if you could move your business around and get to that level. That's extremely interesting to Tiny and extremely not interesting to Berkshire Hathaway. Berkshire is at a scale where that is no longer something that can move the needle for them, but it could have for Warren in 1980. I always just thought that was an apt analogy.

Rather than saying everything that we normally say about Tiny on this episode, I think we should just leave you with this thing. If you are a founder, or you're a venture investor, or you're friends with a founder of venture investor who's just working with a company that is no longer a fit for venture capital, but has raised venture capital, but that's just not the right way to run the business going forward, just call Tiny. When I say call, I mean email, because it's 2022 going on 2023.

I think there are just so many businesses out there like Acquired that should be run by the founders, that can grow modestly every year, that can be nice, profitable businesses, that take advantage of the Internet, either for distribution or as we were discussing earlier, for making a more efficient back of house to have better profitability than non tech-enabled counterparts.

They're the types of businesses that may or may not make sense for venture capital, which needs super fast growing businesses, gigantic markets, the potential exit and IPO. Especially with the IPO markets and really a lot of M&A markets being effectively closed right now, Tiny is a great option.

David: Yup. Email hi@tiny.com. Tell them Ben and David sent you. They are truly great folks. They're a pleasure to do business with. We can't thank them and Vouch for them enough.

Ben: Yup. Thanks, Tiny. Carve outs?

David: Carve outs, let's do it.

Ben: All right. Should we start with books?

David: Let's do it.

Ben: All right. I can't remember if I recommended this one, because I read it over the holidays last year. I think it might have been my first carve out of 2022, Project Hail Mary.

David: Oh, yeah. I think I read it on your recommendation.

Ben: That's right.

David: And vouch, very good.

Ben: I think it's the best fiction I've ever read, definitely the best sci-fi I've ever read. I think it's the best fiction I've ever read. The premise arrives at you in real time as you read it, so I don't want to give away the premise, unless otherwise stated this is a spoiler-free carve out.

The coolest thing about Project Hail Mary is how it is basically all in our universe. There's no big leap. In Star Trek, you have to take this leap of like, well, there's warp drive. You don't really understand how it works, and that's fine. Now that we accept this black box, now we can go do other stuff. There's not an accepted black box in Project Hail Mary. There are just all the known rules of physics that we know about.

David: It's hard sci-fi, I think is the term.

Ben: Is that what they call it?

David: Yeah, where everything is laws of physics explorations for everything.

Ben: Right. That was super cool. Another book that I finished about two months ago that I thought was exceptional, and every single person who listens to Acquired should read it. I think it expands even broader than this audience, but this audience in particular would eat it up, called The Psychology of Money by Morgan Housel.

David: We got to talk to Morgan recently. That was really fun.

Ben: When we hopped on that call with him, I was two-thirds through the book. It was really fun getting to talk about some of the concepts with him while I was in real time digesting them. He's unbelievably pithy and a real class act.

David: I need to read that book. Yes, I agree. Total class act. I suspect it's a really good one to read now post-2020 and 2021 bubble when everything was crazy.

Ben: It would have been great to read it during 2020 also.

David: Yes.

Ben: I think I've made it a carve out before Morgan's essay, How All This Happened. Every chapter of Psychology of Money is one of his essays. If you read How All This Happened, which is this amazing path of World War II through today through the American economy—a lot of politics, why different things happened, and how everything led to the next thing—The Psychology of Money is awesome because it incorporates all of that factual history with just really good perspectives and some citations of research on what actually makes people happy and what investment strategies work when your goal is happiness.

David: I certainly don't account for enough of that in my own financial planning.

Ben: Yeah. Morgan makes a very strong argument in the book to basically put as much into S&P 500 index funds when you're as young as you possibly can and just never sell anything. It's like the most boring style of investing possible that will probably beat whatever you do.

David: Yup. I got to pick that up and read it. That'll be good over the holidays book. Anything else you got in books?

Ben: I do, actually. I'm halfway through it. I was tempted to not talk about it, because I want to use it for our future carve out. It's already so good. This is another one. Listeners of the show will especially eat this up. The Power Law by Sebastian Mallaby.

David: Is it worth reading, even if you're already steeped in the industry?

Ben: Yes. You and I have done research on 250 companies and all these venture funds, and talked to the people that started a lot of these venture funds, and Sebastian knows more. He just goes deeper. He just talks about these investments that we think we've talked about the best investments of all time, there are more.

He cites them all numerically. He cites returns on early venture capital funds. He takes you all the way through product venture capital. There's George Daurio and then Arthur Rock. He talks about how all those partnerships lead to the next ones and how certain structures were bad, and then the invention of the private limited partnership, fixed all these problems. You're going to love it.

David: Okay. I might find that under the tree.

Ben: That's all I got for books.

David: Oh, that's all you got? All right. My books, I've got two Acquired books that I can't believe we did both of these episodes this year. We completely whiffed on this very obvious pun and fun moment.

Ben: You know I don't like whiffs.

David: I know. I'm embarrassed by this. Mostly for me, this is like an ultimate David Rosenthal dad joke moment. My top two Acquired books, and they genuinely are also my top two Acquired books for the year, Made in Japan and Made in America.

Ben: I made that joke.

David: Did you?

Ben: I totally made that joke.

David: Oh, I can't believe I forgot that.

Ben: I swear I did.

David: Did you? We'll have to go back through the transcripts.

Ben: Or at least observed that in some capacity. Maybe it was a tweet.

David: Maybe I just have dead brain.

Ben: Isn't that crazy that they're both named that?

David: And they're both so good. I highly recommend. Non Acquired books that I read this year, I think I did this as a carve out, The Godfather series, the books, Mario Puzo's books. They are so good, as good or better than the movies. The movies are, in my opinion, some of the best of all time.

The other one is Masters of Doom. I don't know if I talked about that on the show. We've thought about doing an id episode, and then Lex did that huge interview with Carmack. It felt less urgent for us to do it, but a really well-written book.

Then the author of Masters of Doom, David Kushner, just did a follow-up piece (I think) in Vanity Fair of a follow-up interview. Did I send this to you? With Stevie Case, who's the CRO at Vanta. Stevie is a prominent figure in the book. She was the first or one of the first professional female gamers. Did she work at id? She may have worked briefly at id, but then she joined Romero at his next company after Romero and Carmack broke up. Anyway, crazy story. Then she went on. She came out to Silicon Valley, ended up working at Twilio, and now is the CRO at Vanta.

Ben: Oh, you did tell me about this. I'm not sure I read the article, but I remember hearing it.

David: It's so good, both the book and the follow-up article. Great. Stevie's story is amazing. That's my article carve out, too, which is our next category.

Ben: Mine was How All This Happened.

David: Yeah, perfect.

Ben: Podcasts?

David: Podcasts. I already mentioned Resonant Arc, my favorite video game podcast. I got All In. Resonant Arc and All In are my go-to must-listen every episode. Two shout outs, though, that I discovered this year and have become friends, David Senra and the Founders Podcast. Of course. wonderful show.

We've become close with David. When you hear David on the show, he is exactly that same way in real life, too. It's so great. He's come out to California. We've hung out a bunch. I love him.

The other one, I have been a huge MKBHD fan on YouTube, as I know you have been, too. The Waveform podcast that they do is great. I've started regularly listening, I really like it.

Our buddy, David Imel, who's on the MKBHD team, is regularly a co-host there. They rotate through the team on the Waveform podcast. It's in the same vein as The Verge podcast. It's all about the products of tech, but it's really well done.

Ben: I have become an increasingly large fan of The Verge. I don't know how I slept on it. In my head, it was like, oh, another one of these Engadget, Gizmodo type things, but that was wrong. It is my—this is embarrassing to say—new favorite publication. Nilay is so smart. I'll basically go listen to Nilay talk wherever he is. That is a way to, for sure, get me to go listen to an episode of whatever the podcast is. Over Covid, I think I'll listen to Nilay in any situation.

With The Verge redesign, I don't think I realized how unbelievably thoughtful the team there is and how strategic they are. They're one of the few publications that thinks about the fact that they're a business, too, and thinks about the way to marry their business with their editorial, and how they can uniquely show up in the world based on what they do differently than other people.

I think the new Verge redesign is genius. I don't know if it'll work or not, but I love the attempt. They're also one of the few news sites in the world that actually gets a ton of direct traffic. That's a huge thing that plays to their advantage that then they can do interesting things with. There are people that come to them to solve a problem in their life or to fill a need.

David: It's so true. Even me. You're way deeper in the product side as a fan of the product side of tech than I am, but anytime there's a new Apple device or there are a couple places I will go directly, I will go to MKBHD and all the various properties that he had they have now, and I'll go to The Verge. I might consume some other stuff that comes to me on social media, but I'll directly go to those two properties. My impression of Nilay is that he is world class on the product side of tech, but he also gets the business side.

Ben: Oh yeah, for sure.

David: Which is super rare.

Ben: It's super rare. His legal background, he gets all the interesting IP copyright stuff that's going on in technology. I just feel like there's that Scott Adams aphorism, you don't want to be top 1% of anything, you want to be top 25% at the right 3 things, and figure out how to marry them together. I feel like that's Nilay.

I'll also say, I think The Verge has been the thing that's surprisingly the most helpful for me for Acquired research this year. I did a ton of Qualcomm research on The Verge, because they've done so much reporting on Qualcomm over the years. So a big Verge fan. I know that we don't have publication or the category.

David: They've got podcasts.

Ben: Yeah, they do. Back to podcasts, I already said the episode of Tim Ferriss with Jerry Seinfeld from a couple of years ago. It's so good. The episode of Huberman Lab, what alcohol does to your body? Dude, it's scary, scary stuff.

Moderation is also bad. There's no, well, I only had one drink this week, and that's devastating to your body versus zero. This is certainly not medical advice, but go listen to that podcast. It's just unbelievable, the research studies that he's citing, where it's just so much more bad for you in every way than I ever thought. I thought it was bad for you.

David: Yeah, you were already starting to drink less, right?

Ben: Yeah. We both opened tonight with cocktails, but you got to live.

David: This is a celebratory event.

Ben: That's right. My last podcast recommendation is SmartLess. Any episode, it's so fun. It's just so fun to go live in their world for an episode.

David: Even that one for a while, right?

Ben: Last six months or so.

David: Yeah. I feel like you've been big on that. All right, music.

Ben: Music. I don't think I discovered any new music this year. I listened to a lot of Taylor Swift Midnights. I did a ton of prep for our wedding, curating a bunch of different playlists for different segments of the day.

David: That's right. You put together all the playlists yourself too, right?

Ben: Yeah. The DJ did all the work that a great DJ does, but I sent him very highly manicured playlists that took several months to put together with a lot of opinion in it. Here's the dance, here's the cocktail hour, here's dinner. I was looking at my Spotify year-in review, and I was like, oh, these are my favorite songs from over the course of my life and my wife's life, and that's where most of my music listening went this year.

I'll also say, most of my audio time, even when I'm in the gym now, is podcasts or Audible books, mostly in service of Acquired research. I just listened to way less music than I used to.

David: I feel like you do a large part of your Acquired book research via audiobooks, right?

Ben: Almost exclusively. It was painful for me to read the whole Qualcomm book, but the only way to get it is with that book.

David: Right, it's the only way available. Whereas I've gone the total opposite direction. I pretty much only do physical paper copies for Acquired research.

Ben: I admire your attention span.

David: I'm interested to try. I do have an Apple pencil for our iPad Minis. I wish I could write with the Apple Pencil directly on the book.

Ben: I find that to be a useless device. I bought that, and I thought it'd be so cool, and I never use it.

David: I agree. I don't know if it's a DRM thing or a font size thing that changes the page, but really, I just want to be able to write with the Apple Pencil directly on an ebook the same way I do on a physical book. For whatever reason, the tech gods just do not let me do that.

I have new music. Shockingly, you would not think that me, knowing me and as a new parent, would discover new music this year, but the baby loves Olivia Rodrigo. Less so now, but when she was between ages two months and six months, they'll go through moments.

Olivia Rodrigo, almost without fail, turn on driver's license. She would just be wrapped in attention and immediately calmed down. I guess we have a teenager. I listened to a lot of Olivia Rodrigo this year, and she's very talented. Very impressive.

Ben: All right. I got to add it to my Spotify.

David: TV and movies.

Ben: Andor was my carve out very recently.

David: You got to carry everything here, because I did none of this. I rewatched Black Panther recently. It was just as good, but that's all I got.

Ben: Andor, I saw the new Top Gun. That was unbelievably fun. Put that on a big 4K TV with some surround sound and just enjoy.

David: Jenny and I watched that on a laptop.

Ben: Oh, brutal.

David: Yeah, we got to go. I think they're rereleasing it in theaters for the holidays.

Ben: Oh, really?

David: Yeah.

Ben: We can go upstairs after this and watch this on a 75-inch. It's a very good experience.

David: Nice.

Ben: I watched Everything Everywhere All at Once the movie, and that movie gives you all the feels. That is a great, great movie. Great one to watch together if you're looking for something to watch with your partner. Weird movie, kind of a sci-fi, rom-com. It's like a family dynamics movie, sad parts, happy parts, and visually stunning, and great acting. I don't even really want to talk about what it's about, because it's one of these that I just don't want to spoil. But basically, everyone will like this movie.

David: Good holiday movie?

Ben: Great holiday movie. I haven't watched season one yet, because I felt like I just wanted to catch up as soon as possible, because everyone was talking about it. I'm now up to date on White Lotus season two. That is a wild show.

The premise is you get 8–10 rich people that show up at this beautiful hotel, the White Lotus in Sicily. They're in three or four different groups, so the plot follows different groups. The thing that runs through everyone is everyone is extremely set in life, very wealthy, and deeply unhappy, and then crazy, problematic stuff ensues from there.

It's visually stunning. The acting is great. You're simultaneously very mad at all these characters for doing stuff that they shouldn't be doing, but the characters are so well-established that you understand based on their flaws as humans, why they're falling into these traps.

David: Are they real people? Is it reality or is it fictional fiction?

Ben: No, fiction. Yeah, just very well-written fiction. The first one was in Hawaii. I think it's almost a completely different cast, but same general premise in Italy.

David: Each season is a different set of people?

Ben: I think that's what they're doing. Lastly, I watch a lot of TV this year. The Vow on Netflix is great, like trash TV you live on in the background. It is two seasons long, and it is a documentary about a cult. Unbelievably, the cult leader is so wrapped up, maybe not unbelievably for a cult leader, in self glorification that 15–20 years ago, he started recruiting filmmakers to join the cult, so they would shoot all this footage.

There's all this very, very high production value footage over the entire life of the cult all the way through the trial, which was only a few years ago. It's the NXIVM cult. Dude went to prison for life. A bunch of other people went to prison, because they did terrible cult stuff. The whole thing is just perfectly documented the entire time, because I think it was part of the arrest that all this stuff became public footage. Maybe Netflix bought it, I don't know. Either way, very, very good background TV.

David: Great.

Ben: Apps?

David: The only new app that I started using this year that had any meaningful impact was our baby monitor app. Just like everything's ossified. What about you? Do you have anything there?

Ben: I have a few apps since moving houses that are tied to IoT-type things. The only one that's not that I really liked that I started using this year is Flighty, which is Ryan Jones'. He's an indie developer. He previously did Weather Line, which is my favorite weather app.

Flighty is like the modern TripIt. The best way to explain it is unbelievably good UI to tell you real time information about your flight. It's tied into every available API with every available airline. You get information from Flighty before the airline notifies you of it, and often before it even displays on gates when you're in the airport. I'll get pushed before.

David: I'm going to get this for flying back in a couple days.

Ben: Dude, when you get a 30-second heads up on a change before the mass of people are behind you, it's valuable.

David: That's huge. That is an edge. That's alpha.

Ben: That's alpha right there.

David: That's alpha. Although now, we just gave it to everybody.

Ben: I think he was even featured in the Apple Keynote. We're not giving anybody any distribution here that they didn't otherwise already earn. Ryan's just an amazing indie developer. It's been really fun to—I haven't met him or anything—watch the success of his apps over the years. This is just a fantastic experience.

David: It'd be fun to do maybe an LP show or two. We should have some indie developers on. Those are interesting business stories.

Ben: Totally. All right, products. I have one that actually comes with an app.

David: Great.

Ben: Mine is the Roborock S7 Max.

David: Roborock S7 Max. Is this a robo vacuum?

Ben: Yes. It's the competitor to Roomba. I think it's a Xiaomi company. You know how Xiaomi owns large stakes and a whole bunch of companies that they manufacture for, I think it's that. I had a Roomba. I actually returned it to get the Roborock instead.

The S7 Max is the worst product name of all time, but it's the souped up, self-emptying, and also has a lightweight mop built-in. It's the first time I've actually had a robot, where you actually can say, this thing is robust enough that it's just going to make my life easier without failing, getting stuck, or needing some intervention. It just does its job.

David: What's preventing me from ever seriously considering robot vacuums is stairs. You just need one for each floor?

Ben: Exactly, or you can move it. I went for two Roborocks.

David: Given the Xiaomi involvement or potential, but I would imagine you could probably get two for less than the cost.

Ben: No, they're very expensive.

David: Oh, they're very expensive? Oh, wow.

Ben: I was expecting that, too. They're premium priced.

David: Oh, interesting.

Ben: But great, fantastic product.

David: I guess that is the solution. You just do one for each floor.

Ben: Yup.

David: Interesting.

Ben: Or get used to carrying it. It's fine. You're going to walk upstairs to go to bed, so you may as well just carry this thing under your arm, set it down, and then start it in the morning or something.

David: That's great. I never thought about that.

Ben: I just saved you $1000 right there. All right. That's all I got.

David: Let's see. I'm intentionally going to limit a parenting product into just one. I could really do a whole another show about this.

Ben: Somewhat, you should curate.

David: I should do a list.

Ben: Maybe listeners want this.

David: Yeah, maybe. Not all, but a subset do. My just one, this is a super pro tip that I never would have thought of, but diaper bags are big. Brilliant idea. I wish I could take credit for this, but I can't. Put the key essentials of a diaper bag, which are diapers, wipes, changing pad, in a pouch.

You can get a nice pouch or whatever printed. I don't even know where ours is from. Then you could just move that pouch into whatever bag. You can either carry the pouch yourself, put it in your backpack, or put it on whatever. Rather than having a dedicated diaper bag, keep the core essentials of the diaper bag in a pouch that you can then put in other things.

Ben: God, this show is getting worse and worse. Listeners, if you're still listening, I'm sorry. We'll be back next year with better content.

David: Oh, boy.

Ben: By the way, at some point, if I'm ever apparent, I'm totally going to be like that.

David: I'll make a list for you.

Ben: Good.

David: On the Universal Product appeal, a couple of quick ones. I actually went back to the Apple keyboard. I had a mechanical keyboard which I really liked, but I went back to the Apple one with Touch ID built in. It's so convenient.

Ben: It is really nice. I have the Microsoft ergonomic Sculpt, too. I love it, but I think I typed my password two dozen times a day more than I would if I just had my iPad.

David: I seriously doubt they'll do this. Actually, they could sell for $100 and make a ton of margin.

Ben: A little standalone.

David: A standalone Touch ID dongle.

Ben: I'd pay for that, for sure.

David: Yeah, totally. Bunch of El Gato gear, including the sound panels. Their sound panels are so good, so easy to put up.

Ben: By the way, we have four Elgato lights in this room right now, an Elgato stream deck. David and I use the Elgato preamps, the Wave XLR, and then also the camera. The wide camera that somehow turned off again is mounted on the Elgato boom arm, where my mic is normally on my desk.

David: Yup. They make such good stuff. The sound panels in particular are really, really good. Really, they have frames around them and then sticky stuff to mount. Literally, I've put up probably 12 of them in total. It took less than an hour.

Ben: We also use the Cam Link 4K the way that we pipe our cameras into our computer as webcams.

David: Yup. Huge Elgato fans.

Ben: Nice.

David: All right, and then you added to the agenda a final new carve out section of places.

Ben: Places? Capri.

David: That you already discussed.

Ben: Yes. Any for you?

David: No. We didn't really go anywhere new, despite all our travels. We've been to Portugal and Lisbon before we went back to Santa Barbara. We try to go there every year, at least once a year. That's the beach for us. Santa Barbara is just amazing, lovely, lovely. It's one of the loveliest places on earth and very accessible from California.

Ben: We got to find more. We did the EA episode down there. We got to find more Acquired-related reasons to go.

David: Yeah, that's right. Trip lives down there. He's got it figured out.

Ben: That's right. With that listeners, I think we will see you in 2023. Our huge thank you to Vanta, to our good friends at Brex, and to our friends at Tiny.

As mentioned on Brex, sign up, brex.com/acquired, and you can get a free Acquired t-shirt. If you have a company that you want to sell to Tiny or you think they should buy that as someone else's company, email them at hi@tiny.com. Vanta, you know Vanta by now. Go get your SOC 2 or other compliance certificates from them, vanta.com/acquired.

We would love to see you in Slack. We'll be hanging out there over the holidays. If you want to listen to the LP Show, we actually just recorded two other great LP shows that will be coming out soon. You can join and get those two weeks early at acquired.fm/lp, or you can search Acquired LP Show in any podcast player and get access to them two weeks after LPs get them. Anything else, David?

David: One very, very important last thing, a big thank you to all of you. We talked about it a lot in this episode. We truly have the best audience in the world, the best community in the world, Ben and I just pinch ourselves literally on a weekly, if not daily basis that we get to do this, that I get to do this as a living. It's all thanks to you all. We just get so much joy out of putting this show together. Clearly, we can talk for hours just about the year and all the fun we had.

Ben: Whether or not that's interesting, to other people, it remains to be seen. Every business should know their source of power and their source of differentiation, and ours is all of you. Thank you so much for being on the journey with us. It's been an amazing seven years, and here's to seven more.

David: Indeed. Happy holidays.

Ben: Happy holidays.

Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.

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