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Reverse Interview: Acquired Strategy w/ Nathan Baschez of Divinations (formerly Gimlet, Substack)

Limited Partner Episode

January 20, 2020
January 20, 2020

Ben and David agree to have the tables turned in a great interview by friend and longtime Acquired supporter Nathan Baschez, who was formerly the Head of Product at both Gimlet Media and Substack, and now writes the excellent Divinations newsletter on tech and business strategy.

This episode originally came about because one of Nathan’s first articles at Divinations kindly focused on Ben and Acquired, which you can read in full here: https://divinations.substack.com/p/ben-gilbert-on-how-acquired-launched

The core Divinations newsletter is free for everyone, but if you’d like special access to any of their paywalled content, Nathan shared this discount link for all Acquired LPs: https://divinations.substack.com/acquired . Check it out!

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
January 20, 2020

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
January 20, 2020

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
January 20, 2020

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
January 20, 2020

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
January 20, 2020

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
January 20, 2020

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
January 20, 2020

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
January 20, 2020

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
January 20, 2020

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: All right, LPs. Welcome to today’s show where David and I are on the other side of the microphones. We are joined by a friend of ours, Nathan Baschez.

Nathan: I’m a long time listener, first time caller. That’s what I am.

David: I think that’s the first time we’ve used that [...].

Ben: I think the Jetsetter episode. It was with the Jetsetter CEO what it was on.

David: It was with booking.com with you.

Ben: That’s right. Nathan is not only probably one of the most qualified to interview us, but also just a super fun personality. I’m so excited to have you here in the mix. I’ll introduce you, then I’ll turn over the host reins, and sit back and relax. If that sounds good.

Nathan: That’s great.

Ben: Nathan most recently has been writing a business strategy newsletter called Divinations. When he launched it a few weeks ago, he and I were talking. He said, “Hey, what do you think about one of the early posts being what is the business behind Acquired and the strategy of why you guys are doing, what you’re doing, and how you do it?” Nathan was kind enough to interview us in that format and publish it a few weeks ago. We thought it’d be cool to do a deeper dive and a follow-up as an LP episode. Nathan, of course, is a founder before that and a great product person, and now, also a great strategic thinker, writer.

Nathan, you play a lot in these tech content tie ups or amalgamations. How do you describe the businesses that you’re drawn to?

Nathan: I would definitely say the general theme is people trying to build things that utilized the Internet to make people smarter or to help people make themselves smarter. Gimlet Media is one place I worked and I’ve learned a lot from what they do. It was amazing to get to go in the office every day and work with such creative people, building such cool stuff. I started a company called Hardbound that had a new, visual, tappable format for reading on mobile. That was a lot of fun. We had stories like what is fire or explaining disruptive innovations, which is a precursor to Divinations.

Ben: The format was like Snapchat stories before Snapchat stories. It was the first vertical tappable storytelling novel experience.

Nathan: Yeah. It was right around when Snapchat stories was taking off and it’s a similar format, but imagine with illustrations and words that are very premeditated as opposed to just quick little captioney type things, where you’d really consume an actual piece of writing. Almost like a graphic novel in some ways, but yeah, in a Snapchat story-ish format.

Ben: That’s cool. That’s really cool. Listeners, before I turn over to Nathan, if you do want to sign up for Divinations, I know Nathan’s got a special discount code for listeners of the LP shows. Nathan, how do they get access if they’re interested?

Nathan: I do. You can sign up for free to read the free interviews at divinations.substack.com. But if you’re curious about the payload stuff, which is the more in-depth explainers of ideas in business—we explore trade-offs and run really deep posts and that kind of stuff—you can go to divinations.substack.com/acquired and there you get 50% off your first year. Just for you.

Ben: All right, let’s do it.

Nathan: Cool, okay. The thing that I’ve always been curious about is, when you’re doing research for one of these episodes, how many times do you change your opinion? Do you start off and you’re like, “Oh, I totally get it,” and then you fill it in more and more. Or are these radical paradigm shifts where like, “This is genius,” and then you’re like, “This is terrible,” and it’s all over the place.

David: Ben, you want to go first?

Ben: Yeah. It changes probably once or twice. Probably what’s more interesting is when does it change. That is usually when I’m getting into the financials. The best case scenario is the public company and I actually get to look at the income statement and I have a realization, like the Disney+ one where I’m like, “Oh my God, Parkson merge makes twice as much as the movies do.” Then, I have to rethink every other thing in the episode to look back and go, “Okay, that actually should frame the relative importance that I put any given event,” because my previous thinking was about the movies and the Parkson, the merch.

There are secondary revenue stream that served to get people more excited about watching the movies and the sequels. It turned out that when you looked at the numbers, that that was not at all the case. It was the other way around. Usually the closer I can get to the financials, the more likely that is to shape my thesis, so I try and do that as early as I possibly can.

David: My opinion changes. It depends on the episode, but frequently I would say, usually at least once if not two or three times. The first time it usually changes is just in the process of digging in and doing research. I can’t tell you the number of times Ben and I have decided to do an episode and we’re like, “Okay there might be a story here, we’re not totally sure. This seems like a boring company,” and then you get half an hour into the research and you’re like, “Oh my God! I’m just scratching the surface. There is so much here.”

Ben: The other thing that David will do is David texts me a lot. He’s like, “Hey, actually episode has to change. It’s not about this acquisition, it’s about these three acquisitions,” or, “It’s about the story of this company as a whole,” or, “Actually, the story of the company as a whole isn’t interesting. It’s about this transaction and the 10-year period afterward.” David, what occurs to you during the research a lot is how we need to frame what the interesting story is. 

David: Yeah. When we decide to do an episode, we think there might be something there. Sometimes we know what it is and sometimes the episode turns out as expected, but sometimes, it’s just a hunch and then during the research we figure out like, “Okay, here’s the interesting piece.”

We have a policy (Ben and I) that we will discuss before an episode while we’re preparing. “Hey, if there’s something, here’s some direction. Make sure you look in this direction,” but we don’t discuss specifics. We don’t discuss like, “Oh, this is what I think ahead of time because we wanted to be fresh.”

Nathan: You have like a firewall where you force yourselves to independently come to perhaps different conclusions.

Ben: Yeah. You can say facts to each other, but you shouldn’t lead the witness, is how we look at it. I don’t want to express my opinion to David because I don’t want to take color his.

David: Yeah. We did that in our first couple episodes. We realized we talked for hours and not record. And then when we’re recording, we’d already said everything. This wasn’t compelling. What I do, usually in the couple hours right before we record an episode, I’ll go through all my notes which are usually pages and pages long.

Nathan: Wait, are we talking 50 pages? 100 pages? 10 pages?

David: An average main show script… It’s not a script, not word-for-word, but notes, is usually 5-10 pages.

Nathan: Okay, that’s pretty solid.

David: Yeah. I go through all those bullet points that I’m taking real time as researching and then I break them out in the sections. I would usually call it chapters and I’ll put a title for each chapter, like here’s the introduction, here’s chapter one, chapter two, chapter three or act one, act two, act three. The process of doing that doesn’t usually change by an opinion, but gives me another layer of take on the company. And then actually on the third time in many episodes, when I’m changing my opinion is in the process of recording and discussing with Ben.

Nathan: Like live. Like, “As I say this actually, what occurs to me is…”

David: Exactly.

Ben: This happened to us during TikTok. All of my research and all the arguments I was prepared to make framed around Facebook and Instagram, and the right comp ended up being YouTube, based on the particular type of follower-following model and ratios. I was like, “Oh crap.” I had to on-the-fly, at the end, change a lot of the analysis to be more YouTube-centered. I think anybody’s listening at the episode does take that hard left when I feel like we collectively had the YouTube realization at the end.

Nathan: Have you ever had to scrap stuff you’ve recorded because you realize you changed your opinion so much that you almost want to start over?

Ben: Not for that reason, but we have scrapped stuff we recorded because it wasn’t good.

Nathan: How’d you know it wasn’t good? Because it’s got to be hard to just throw away something once you’ve…

Ben: Yeah, it’s super hard. If we think it might not be good, we send it to friends and we’re like, “Is this bad?” If they tell us it’s bad, then we scrap it.

David: In the process of doing the episode, by the time we come to the end, often times we feel like in the beginning. If we’ve changed our opinion on something, like this rabbit hole we went down, not that compelling or not relevant.

Ben: More often than not what happens is there’s just bad sections that we just need to wholesale cutout.

Nathan: Got you. Do you do the editing yourselves? Do you have someone who will tell you like, “This section is bad”? Or you have to listen to it and decide for yourself if you think a section is worth cutting?

Ben: It’s the latter. We started with just me editing. It’s enormously time-consuming. It’s fun, but it’s enormously time consuming. We have an outsourced editor that we work with now, that takes the first pass, then David and I both listen to it, we take notes on anything additional that we think needs to be there. Sometimes when we record a sentence or a word or something if we just got a fact wrong, but most of the time, it’s just cutting. And then, I’ll take the second pass of going through in Adobe Audition and it’s like cutting the parts that we need the cut. 

Nathan: It’s you literally re-recorded, you’ll say something “million” and you meant to say “billion,” and you just have to say the word in the same way so that when you spice it in, it doesn’t sound weird.

Ben: That’s correct. In fact, I had to re-record the episode number because we switched Convoy in LTSC.

David: That was such a pain because it was a live show.

Ben: Yeah. It was actually really hard because the music was playing in the background. It doesn’t sound perfect, I’m sure many people listened to it and realized something weird happened there.

Nathan: I feel like there’s room for some machine learning AI, like audio editing, make it sound like when you’re live or whatever. Blend it because someone who’s laughing a little bit in the background or something.

Ben: Descript does an interesting job of, I’m a nerd voice double demo. I can type out a sentence and press go and it’ll all be me speaking the sentence, but the problem is we’d have to pour our entire work flow over to do it in the Descript to take full advantage of that. And I haven’t got to that place yet. But I’m playing around with it. It’s really cool tech.

Nathan: Totally. This is a good transition about the time you spent editing, because one of the things we talked about in the interview, about reasons to launch a paid podcast even though this is not the primary goal, this is not to generate revenue, was so that you could use that revenue and reinvest it in this tradeoff, which is how you spend your time. You have a limited amount of time (obviously) to dedicate to this since it’s not a full-time thing (or even for a full time thing, you’d have a limited amount of time). I think one of the key uses was to invest in editing help or something else like that. Tell me the story of that, what impact it made in all that.

Ben: The underlying business strategy theme here is leverage on time. Also, only doing your core competency. How do we identify what the core competency of us at Acquire is and how do we outsource everything else, to get the most leverage possible on the time that we do spend to create the greatest product in the smallest amount of time.

We’re not interested in making a worse product in spending only a half hour or something or only the time that we spend recording the episode, but we are interested in figuring out what’s the low-hanging fruit where it’s really a poor use of our time. Editing, at least the first pass was one of those things, where removing uhms, or background noise, or making sure the audio’s leveled correctly. That was an easy one to say, “Awesome. That is a great thing to throw dollars at and the more we can do things like the LP program, the more we can throw dollars at that.”

Another one is travelling to guests.

David: This one is actually not that big.

Ben: David, this was one that you’ve been hardcore about. You want to talk about this?

David: It’s just so different. We’re recording this episode remote, it’s still great, but it’s so different being there face-to-face with somebody in the same room versus being on Zoom. Zoom is great. Remote work is totally the future and it’s amazing, but at least for the Acquired format, because we try and go so deep, if you’re not there in person with your guest, especially when the guest is the founder of the company, it’s hard for the interview to be as good.

This is where the travel actually comes in. A part of it’s about being in the same room, but part of it is we make it really clear that we are making an effort. We are coming to you, we are dedicating time, we will do everything for our guests. But because they deserve it, they’re giving us their time. It’s just an occasional, we’re taking this super seriously, as opposed to, “Hey, let’s pop on this video call at this particular moment in time.”

Ben: A lot of times with guests, too, we don’t know them. This is going smoothly, Nathan, because we’ve hung out, we’ve gotten drinks, we’d spent a tumultuous weekend in North Carolina.

Nathan: We’re not going to talk about the roof of New Orleans and Ace Hotel.

Ben: Yeah. But most of the time we’ve had a prep call with them maybe. Or maybe it’s just like they’re EA has coordinated in and we got a nice intro from somebody, but we don’t have a deep personal relationship. There’s a trust-building exercise that has to happen that, for anyone who has ever pitched for investment over video call for the time, you know it’s a lot harder to build that human relationship over video call. We view that as another no brainer way to spend dollars, is plane tickets and making sure to show up for our guests.

David: And when we thought about it more, the leverage on that is great. Deeper relationship with these guests, who are amazing people and have done amazing things with them on the show, outside of the show, and our day jobs. And then, usually they live in really interesting places with other interesting companies, founders, and things going on. We get great networking and business meetings. We get to meet our fans in the cities we go to. That’s perfect.

Ben: The place where we haven’t thrown dollars (which we could) and have had many a talented business school student email us and ask about this is research help. I like the idea, I’m more enamored with it than David is, but David’s quick to point out (and I think he’s right) that it’s part of our core competency, that’s not the thing to outsource, and that’s not the thing to take away from something that’s currently working, which to date, 100% of the research, prep, script and all that is us.

Nathan: But Ben, I’d love you to make the case for why you should have these talented MBA students help you. It could be awesome. I want to have this fight right now.

Ben: The reason I both want that and I think David is right is because he’s the one that does more research. I’m not the one that is feeling neither the pain nor the gratification and reward of laying out the narrative. The thing that I do much more of is trying to have a modern-day financial understanding in the company, frame options forward, and what the financial impact to those things will be.

I don’t think David or I necessarily knew that these were the roles we would take, but this is what we both gravitated over the course of doing the show. For me, I’m like, “Oh, wouldn’t be that big a deal and would save David some time, and would give me an advance copy of the way the story’s going to be told? Great.” That sounds great to me. For David it’s like, “Are you kidding me? That’s what makes the show good.” I think it makes a lot of sense that this is why I haven’t pushed on it at all.

David: For the record, I’m totally into it, especially if we’re having a discussion live, real time. I love this for the financial piece, especially.

Ben: Honestly, that’s probably where we should have an analyst.

David: Yeah, that would be great. I think for me, my perspective, I’m not at all against help on research. I do think it’s super important (for me) at least in my prep. I don’t think Acquired would work, or at least I wouldn’t be able to, however will I show up on episodes to show up that well, if I just rolled in 20 minutes before, read through the script, and was like, okay, what to do?

Nathan: Have you seen The Morning Show on Apple TV? The teleprompter comes on and they just go.

David: Yeah. It’s like this point center anchor. They write their own scripts.

Nathan: Totally. How long does it take you to do the research?

David: In general, somewhere between 5-10 hours per main episode for me. It depends a lot (for me at least) on how deep my existing knowledge of the company and the space is. Even when it is already deep, I still spend a lot of time making sure I codify that. Tesla, for instance, coming into that episode, which was the first of I would say the modern Acquired episodes of, “This is going to be a really long one. We’ll see if people like it.” And it turns out they loved it.

I didn’t know much at all about Tesla. I didn’t know that Elon didn’t found it, I didn’t know how the business worked, I didn’t know about this was before all the real big drama broke, but there had been lots of drama in the company. They’d almost gone bankrupt many times before that.

Nathan: Is this pretty funding secured?

David: It is pretty funding secured that we did the episode.

Ben: But not that far before. It was still a relevant episode. This is actually a huge growth thing for Acquired. It’s not planned, it’s not a tactic, but when it happens, it’s awesome. Mostly because we couldn’t plan for this, but a news event happens and then we become the content of record that people are sharing to come up to speed on that subject area. With the funding secured thing, there was so many tweets that were like, “You should go check out Acquired on the back story on Tesla.” And we are like, “Oh, my God. What a gift.”

David: Two quick things on that. One, to your first question, Nathan, if we changed our opinion on episodes, Tesla was one Ben and I debated for about a year, whether it was an interesting enough story to merit doing on Acquired episode. How crazy is that? Fast forward to today and you can hardly think of any more interesting story in tech. Period.

And then two, this may sound like but I don’t mean in that way to take credit, like we know the zeitgeist or whatever, but I think stories and companies tend to find their way to us. Our list of potential episode topics is well over a hundred companies long.

We don’t have a set process for deciding which episodes we cover, but the ones that start to feel interesting to us at the right moments in time. Not always, but oftentimes like Ben says, we’ll put out the episode and something really interesting will happen with the company.

I think this gets also to the difference of Acquired versus other tech media. We’re not journalists. We’re practitioners in the ecosystem. If something’s starting to feel interesting to us, then there’s probably something going on there.

Nathan: Have you tried to codify it at all? I imagine if you treated it like this is your full-time startup, there’s a huge temptation to be like, “Okay, what makes a perfect episode? Let’s create our framework of all of the different things and let’s turn this into a machine.” Maybe you haven’t done that, maybe you have. I’m just curious, how you think about prioritizing.

Ben: It’s interesting. I want to first give an anecdote and then we should answer your question. We were at the Acquired holiday party where we did a mystery and we went fencing. We were in the lift on the way from fencing to dinner. We were talking a lot about should we have KPIs?

We know what they would be, at least we know what the things we would measure are. It’s in any given season, how many new listeners did we add when you measure an episode by number of unique downloads within 30 days of releasing it. I track them in a spreadsheet.

We made the pretty explicit decision not to set goals that we want to hit because that would take some of the fun out of it. That would turn it into work and we would then be focused on what in our life do we have to sacrifice to hit this goal, or what in the show do we have to sacrifice to hit this goal. Maybe we do a splashier episode that has a shallower story on a topic that’s more likely to get clicks. We’re like, “Gosh, is that long-term sacrificing for the show to hit this short-term KPI that we thought was important?” 

We have enough KPIs and the other aspect of our life. Why don’t Acquire be a thing that we measure the growth so we can feel what the drivers of growth are, but we don’t set intentional goals that we want to hit and take some of the fun out of it.

David: The other thing I get on that point is we didn’t plan this when we started. Although I give all the credit in the world to Ben for us starting Acquired. Five years ago, we were working together in Madrona. Ben came to me and said, “Hey, I think podcasts are really interesting. What could we do together?”

The nature of the medium in podcasting is so personal. You all are listening to this right now. We are in your ears. Many of you are probably wearing headphones of some type and we are literally in your head, or if not, we’re in the airwaves around you. That’s not something that’s like a screen on a webpage that you can optimize. It’s a super personal thing.

Ben: And I should answer your question. That said, there are things to optimize. This happened with Whole Foods. I get a text from David, “Holy [...]. Amazon just bought Whole Foods.” I’m like, “Yeah, let’s cancel our meetings all morning. Let’s go get on this right now and then let’s try and release it tonight.” You bet we are part of that first new cycle, and you bet we’re actually second. The first is breaking the news, the second’s analysis, and then the third is commentary on the analysis. We are part of the second news cycle that second day. That was a huge traffic bump.

But it’s worth knowing that that spike will get a lot of listens who are outside of the ideal listener profile, so they churn more quickly. You need those to get that exposure outside of the bubble you’d normally get, but your attention is going to be way worse than it normally would be because they’re interested in this particular analysis, not, let me go on the Acquired journey and listen to a whole bunch of episodes either in the back catalogue or in the feature.

There’s these trade-offs that you make, where if we go two whole seasons without doing something current, there’s probably something wrong because we’re missing expansion opportunities, but if we’re just like riding the news cycle every day—we got close to this with the last season doing Uber IPO, Life IPO, in a row, in a row, in a row—there's a danger to that, too, because you’re not telling the cool, deep stories of P.A. Semi and Authentech and how that small acquisition or the couple of small acquisitions made the iPhone the powerhouse that it is today.

Nathan: I’m curious. Are there any other episodes that did surprisingly well? Maybe it was some small, deep cut thing that you want to do just because it’s fun and you’re like, “I don’t know if this would be the most popular, but I like it,” and it did super well. Or conversely, one that you’re like, “Oh, we got to do this, obviously,” and then it just…

Ben: Let me pull up in our stats.

Nathan: Also podcasting is a little different because with episodes, audience stability is much greater than, at least in terms of downloads (I mean a lot because there’s auto downloading apps and all that stuff) on the web or something. It’s much more clear when something was a hit or a dud if there’s an article.

Ben: It’s actually funny, yeah. I used to send a disclaimer to David whenever I’d send him an update on how episodes were doing because I definitely am an analytics junkie.

David: The moral of the story is Ben is a hero in so many ways, but also all the behind the scenes.

Ben: I ride along for the research, though. Thank you, David. When an episode is performing really well, at least in the first two days, it’s not because that particular episode was great. It’s because the listener base has grown since the previous episodes.

Nathan: The last episode was great.

Ben: Right. It’s definitely a lagging indicator. And then you see how is it doing day 3 through 15. That’s really after people listen to it, are they recommending it to their friends. And then sometimes you’ll even see a run between day 15 and day 30 where something catches a spike. It’s like, maybe the second person that got recommended to is very influential on Twitter and decided to make a big hullabaloo about it. It’s very different than analytics and other mediums because, as you said, the audience is sticky.

Nathan: I feel like there’s such a huge opportunity for some enterprising podcast host to build much better analytics around this. We had this crazy set up where we’d get stuff, export it to Amazon S3, then I would screw around with it and people would screw around with it in Excel, then Excel would crash because it was too much data. It’ just terrible trying to get a signal out of it. I feel like it’s actually not ultimately that harder problem. First of all, it’s immature and young as an industry, and second of all, it’s just different than web analytics. 

Ben: Yeah and it’s been relatively protected. The most important thing to note here is you can’t execute arbitrary JavaScript on somebody listening to a podcast, the way that you can to somebody loading a webpage. You just can’t fetch a bunch of data. It’s basically all server-side analytics. In some ways, if you’re a growth person, you’re like, “Damn, it’s in the dark ages.” But if you’re someone who’s a privacy zealot, you’re like, “This is so awesome. User behavior is really protected.” 

David: I think this it’s another side of the coin of just how podcasting as a medium is unique. I was thinking about this a minute ago, on your last question, that we’ve found that we’ve neve expected is just the value of the back catalogue. The Acquired flywheel keeps spinning faster because, now every new listener who comes in who subscribes, there are hundred episodes for them to listen to. Three years ago, they were 20 episodes for them to listen to.

Ben: Yeah. A thing that surprised me is that Acquired is apparently binge-able. I don’t know how. 

Nathan: I can tell you exactly as someone who’s been there.

Ben: But yeah, every time I get that feedback or we see it on Twitter, that’s definitely a thing that’s an unexpected behavior. Maybe it’s because recording them is so draining. We’ve tried to do two on one day and we just can’t. You can’t hold that much in. 

Nathan: What two episodes did you do?

David: It was in the early days.

Ben: It’s basically we can’t hold this much in mental RAM at once. I don’t remember the two episodes, so I can’t answer your question. What I can tell you is, the day before an episode and the day after an episode, I know significantly less than on the day we record. You get all the information as close as you possibly can to vocalizing it and then it goes away and atrophies afterwards. I don’t think we’d be able to three or four hours worth of content on two completely different subjects held in RAM at the same time. 

Nathan: Makes total sense to me, as someone who writes and podcast. It’s like trying to convey something in a good, complete, and accurate way, but in a way that’s also interesting and compelling and has a good story, framing and all. Balancing all those things in your head at once, it’s like weirdly emotionally exhausting. There’s not a lot of stakes. It’s not like some personal struggle or whatever, it’s just like you feel you’ve given birth or something.

Ben: 100%. Have you read Thinking, Fast and Slow?

Nathan: Yeah. I mean, kind of read it.

Ben: Yeah, everyone’s kind of read it. I previously kind of read it. 

Nathan: I read it. 

Ben: Yeah, I listen to the Blinkist. 

David: I took his course in college, Kahneman’s courses. 

Nathan: From Daniel Kahneman?

David: Yeah.

Nathan: Holy [...].

David: And then Thinking, Fast and Slow, I think came out the year I graduated or something like that.

Nathan: Oh my God,

Ben: That’s awesome.

David: Yeah. It was so cool.

Nathan: That’s amazing.

Ben: I bet.

Nathan: That’s it’s whole own episode. 

Ben: David had crazy professors. At GSP, was Eric Schmidt one of your professors?

David: Eric Schmidtwas one my professors, Andy Ratcliffe, founded Benchmark. I don’t even know if this is still the case now, but at least at the period when I was at GSP, all these CEOs and VCs, they’re right there. They would not just guest lecture, they would be professors. They would teach courses. I took courses where my professors who were there for the class twice a week were full time GPs. Like Andreessen Horowitz, Excel, Sequoia, Eric Schmidt was a full time professor of mine. It was crazy. 

Nathan: Good God, that sounds amazing. 

David: It was so great.

Ben: Let me get to what I was, why don’t you just leave us all on throwing out Thinking, Fast and Slow and then not explaining why. 

Nathan: Oh right, yeah. 

Ben: System one and system two. For anyone who hasn’t read the book, the quick primer is, system one thinking is things that you don’t have to do any mental work to do. If you see three plus four in a page, it’s all pattern recognition, so your brain immediately goes to seven. Let’s say, we’re walking next to each other and David tells me three plus four and I can just say seven without stopping walking. But if he says 34 x 17, my brain basically grinds to a halt. I have difficulty continuing to walk, my pupils dilate. If I’m doing the math actively, I probably can’t actually respond or even understand anything else that he’s saying afterwards, because I’m juggling these things in my head. That’s system two.

The way that I would describe doing an Acquired episode is an hour-and-a-half of not all system two thinking because you would die, but a lot of system two thinking. You are emotionally and mentally exhausted afterwards. I noticed I have less willpower in the day after really good episodes. It’s a draining activity.

Nathan: That study filter applicate on will power. It’s your limiting belief, Ben.

Ben: Really?

Nathan: Yeah, it’s true.

David: Ben, you have a fixed mindset.

Nathan: That also filter replicate though, unfortunately.

David: Not surprising.

Ben: Wait, you got to catch me up more on later on that failing to replicate.

Nathan: Yeah. Baumeister, he’s a professor, he wrote a book called Willpower. There’s the whole replication crisis that was peaking in psychology around 2016–2017. Mindset, the marshmallow experiment, all that kind of stuff just didn’t replicate. It’s kind of nuts. Psychology’s in a very interesting state as field right now.

Ben: Let me stop reading the book then because it must all be crap.

David: Nathan, you may know more than me, but I think most of Kahneman and Tversky work replicates.

Nathan: I think they did.

David: I think they’re the ones that arrived.

Nathan: Yeah. It’s cool. Anyway, to bring it back to your podcast and your process for creating episodes for the podcast (which is a draining one; when you complete one, it’s tiresome), what are some of the moments where you’ve published an episode and you thought, “Insane, that was worth it, all of the stuff”? Are there any peak moments of best, most proud experiences?

Ben: Yes and I can tell you the ones that I didn’t think were good, that got very positive response.

Nathan: Perfect. I was trying to bring it back to that.

Ben: One for me that definitely felt that way was Square. I definitely ended and just felt like we just really nailed the analysis. And there are other times where I don’t feel that way. Honestly, after TikTok, even though that episode did phenomenally well and gotten nice feedback, I was like, “Oh my God, we needed to hit that YouTube thing earlier. I felt like a mess because we didn’t get there earlier. Should we re-record it? There were parts we cut. Oh my God.” I got back from a redeye flight, I didn’t feel like I was all the way there. Sometimes they surprise you.

David: The Square one, yeah. It’s better to be lucky and good, but we did that episode, both of use, Ben and I, the narrative around that, they just recently gone public, the stock was in the dumps. It was like $8 a share. We did that episode and Ben and I both like these are really good company. The narrative is wrong around this company. There are a lot of luck involved here, but we were so right and that was so gratifying. The stocks are now trading in the high 60s. I think it might hit $100 a share within a year.

Nathan: Disclaimer, this is not trading advice. Consult your financial adviser.

David: This is all historical.

Nathan: But that is pretty amazing.

Ben: It’s interesting too, looking back, the show was much smaller than I think that we had sub 5000 listeners when we did that episode. I’m sure the show quality is much better, too. I want to go listen. I still have this nostalgic feeling in my head, like that one was so good. But based on audience size, how much the content has matured since then it was probably meh, but our take on the company was good.

Nathan: How much audience size influence for an episode, influence how you feel about how you did on the episode.

David: That’s a good question. In terms of the immediate feedback and gratification, a lot. It’s just so cool to see numbers spike, lots of people engaging on Twitter. Little known fact for Acquire LPs will appreciate this. We have there @AcquiredFM Twitter account. Ben is very active personally on Twitter.

A couple of years ago, I just decided I couldn’t make time for multiple Twitters in my life. I actually used the @AcquiredFM feed, is like my Twitter feed. I check multiple times a day. That’s always fun to see.

Once a little time goes by, things fade. I think it’s just the content that sticks out. For me, the Electronic Arts episode really sticks out. It’s a super fun one, great story, origins of Silicon Valley. It was not one of our most popular episodes, but Trip was such a great guest and so smart. I think back to that one a lot.

Ben: Yeah, and sometimes, things surprise us, too. We’ve decided that we need room to experiment, which is why a lot of the LP show was just experimenting grounds, which is why we’re doing a strange episode like this. Nathan, you don’t know this yet, but our previous episode that we’ll release soon is an analysis of the most recent Star Wars movie with Chetan from Benchmark. We’re really trying to experiment. We’re acknowledging we don’t know what will actually work.

Nathan: You’re talking about the empire’s flywheel or what?

Ben: No, it has almost no business [...]. We accidentally got there at the end.

David: Chetan is really like a Star Wars nerd. It’s awesome.

Nathan: It’s amazing.

Ben: Yeah. I felt among friends. Another one that surprised us was we decided to release the Superhuman episode as a main show episode instead of an LP episode. I think that one did the best out of the entire season. And that was a season that had Lift, I think was right up there with Uber, some big IPOs. It was a strange episode.

We didn’t really tell the whole story of Superhuman. We didn’t do grading, we didn’t do our standard format. It was still a private company. It’s a private, relatively small company. It’s a product that not only is hot and buzzy right now, but I think Rajol, not only is he a really compelling communicator, but he’s got these amazing frameworks.

I think there has been so many people that are just like, “Oh my God. I need to reference that.” People have written blog posts referencing the episode. That was another indicator for us, too. Maybe more frameworks that are really well communicated, with clear examples of when they worked and when they didn’t work, might be something interesting, too.

Nathan: Do you ever worry when you’re planning out an episode, whether it’s going to be too nerdy? Do you worry about the balance between going all the way as deep as you may want to go versus making it interesting to a wider set of people?

David: That’s interesting. I’m curious what listeners think about that. Please write us with a feedback or hit us up in the Slack if you have a view on this. I think in the early days we were worried about that. I remember getting feedback of like, “The show has a lot of potential. It gets great, I enjoy it, but you guys use a lot of technical terms. Can you make sure you take time to describe everything?” I do think, though, one of the reasons we’ve succeeded in so far as we have thus far is we embrace the [...]. I don’t think we’re going to shy away from that.

Ben: Yeah, I don’t think so either. We thought about it as that’s a bridge we would cross if we ever actually saturated our market. Right now, we have about 30,000 listeners. I suspect there’s at least 200,000 listeners we could get to before we’d have to worry about should we generalize the show a little bit more to make it more broadly applicable? The “how I built this” of the world, that’s a mass market comp for Acquired.

David: I think they’d get about a million-ish downloads?

Ben: We don’t know for sure, but close to a million. I think that’s a bridge we would cross if we ever felt like we are actually saturating. I don’t really know how we would know if we were saturating. At some point we would see growth plateau and we’d be like, “Why?” Then we’d hypothetically say, “Oh, we think it’s plateauing again,” then maybe we changed the content. It’s certainly the show we want to do, so we’ll just keep doing the show we want to do and then trust and hope that the audience is big enough.

Nathan: Totally. You’ve mentioned a lot of times that almost a transition point between early Acquired and modern Acquired or new Acquired. You even mentioned one episode [...] I forgot which one it was.

David: The Tesla episode?

Nathan: Yeah, Tesla was this turning point. Can you talk about BT (Before Tesla) and AT (After Tesla)? Eras of Acquired podcast?

David: What do you think of that gig?

Ben: I don’t segment in that much in my head. One thing I know for sure is in the first (at least) 10 episodes, history and facts basically just meant telling the deal size. Then David really grew into his own and was like, “Oh, I can really be a storyteller.” That was a big turning point.

I think there’s been several ep box along the way. The Tesla one you’re describing is where we realized that we are in the business of telling the stories of great companies and doing the analysis that comes with that to understand why it’s so interesting, why is this such an interesting story to tell, why is it so interestingly positioned for the future.

Beforehand, I think we indexed harder on the analytical. We were like, “Well, people are here because they want to know if it was a good deal or not.” I think Tesla was the first time we realized that, wow, there wasn’t even really a deal. People want to absorb stories.

David: I think Tesla was the first episode where the name of the episode is just Tesla, not the Tesla IPO, Tesla Acquired by so and so, even though they’re almost acquired by Google back in the day. We did it and we’re like, this is just the story of Tesla. Let’s just call it that.

Ben: Which is so interesting because that was about 18 months ago. That was 2½ years into Acquired, is when we found that out. Sometimes, it just takes a really long time to figure out what market you’re in or why your product is resonant. Especially in the content business. Fortunately, since it was a passion project, even though it wasn’t exponential growth, we just kept doing it for a while, but it’s taken a while for us to figure out why people like the show. Even though we asked them the whole time.

Nathan: Tell me more about that. I would guess maybe six episodes in or whatever, you’d at least be talking to friends or whatever. You’d have some feedback. But that was a year-and-a-half or whatever maybe before you feel like you made this discovery. It’s also a common thing I think for people building software or anything, it’s just really hard to interpret feedback until getting a lens that feels like it clicks, where you understand what you’re doing in a way that deeply resonates. A lot of people never get there. Did you learn any lessons about how to interpret feedback or is it just about doing a lot of cycles of iteration? What did you learn from that?

Ben: One thing we got really aggressive on was surveying. We created a really robust survey and we gave away our pods. We really promoted it on the show. It was the [...] that there were questions on what’s your least favorite part about the show, what’s your favorite part, what was your favorite episode this season, what was your least favorite episode. I really try to mine a lot of data out of that. We had five or six qualitative fields.

David: Also, who you are, where you live, what you do, what industry you’re working, what your job title is. We learned so much from that. A third of listeners are founders or have been founders of some type, and of the 70% or 60% who aren’t almost everybody, aspires to be one someday. I think if we thought about it, we’d come to thought, “Oh yeah, founders are probably our bet,” then we’re like, “Oh, wow no. founders and aspiring founders are our core audience.”

Ben: I wish I could tell you, there’s a really good methodology to analyze these survey results. Maybe David has something more sophisticated, but my belief on this has always been, if you really immerse yourself in the data and you really just live in it, and try and transform it a bunch of different times, then insights occur to you.

I probably spent eight hours over the course of several days putting on music, putting on my headphones, just reading survey responses. When something look particularly interesting to me, copying it and do another document, trying to categorize some of them. I’m like, “This is feedback related to storytelling. This is feedback related to…,” and try and decode it a little bit. Just by manipulating the responses enough times, and knowing, “Oh yeah, I remember seeing that feedback. That was tied to this person who also said this.”

We had 500 responses, but this is the same way I feel about our analytics data. I have eight tabs in the spreadsheet, they all are all tracking slightly different things, I understand how to draw the correlations that aren’t showing up on the page. They’re sort of just in your subconscious where you’re going through transforming the data.

I think that’s under cherished thing, especially in a world where everybody wants a framework that you can just run anything through and it’ll be successful every time. Just take the time and immerse yourself in the feedback, immerse yourself in the data, and stew in it.

David: There are so many things from this incredible journey (so far) that we’re hopefully still at the beginning at of doing Acquired. One thing that just so sticks with me is from the Kara Swisher episode. That was one that surprised us, didn’t perform stats as well as we thought it would. I haven’t listened to it in a while, so I don’t know the quality of the episode as a whole, but she said at some point on it like, “If you do the work, no one can touch you.” If you do the work. If you do. Do. The work. That leads to greatness. You got to do the work. But if you do it, it’ll work.

Nathan: It reminds me of this thing, Alex Blumberg, the founder of Gimlet Media, said, “There’s no real secret to making the stuff we make.” It’s not something you have to be crazy talented or whatever (although he is, of course, crazy talented), but he’s honestly, just the thing is, you just spend a little bit longer on it than is reasonable.

Most people would give up and then you just keep going for three more hours, making it better, doing more research, sticking with the servers. Whatever the thing is, just for most reasonable people would say, “Yeah. That’s about right,” you just keep going for a little while longer. Not an eternity longer, just like a bit longer. You just have this relative advantage of it’s just a little better, people like things, and it’s the best thing they’ve heard lately. It’s better than the other things. There’s no big secret to it. It’s pretty crazy here because the StartUp season one podcast is iconic. I think people will be listening to it in decades. He said that’s all there was to it.

David: It’s so spot on.

Ben: It’s funny. Amira, who’s the CEO of Glow, accredits Gimlet with captivating her into podcast initially. Obviously, Serial was podcasting this big moment, but I think the StartUp podcast was that for a lot of people, too.

Nathan: Before we go, I want to also ask, have there been any low lights? What are the moments that were the worst where you thought, “Why are we doing this”?

Ben: Yes. I don’t think I’ve shared this with David yet.

Nathan: It’s not just a scoop for the audience, it’s a scoop for David, too.

Ben: Yeah. Let me see what episode it was. There was a string of a few episodes early on where we saw this nice initial growth and we we’re like, “We have hundreds of people listening,” and then stayed for a while. We did a few episodes that I wasn’t personally that interested in. We were like, “Sure, we should do this because we should learn this stuff.” But I found myself, even while I was doing the episode, opening other things on my computer, zoning out a little bit. I was like, “Well, if I’m doing that, then our audience is definitely doing that.”

Nathan: Wait, you’re on the microphone and you have Twitter open or whatever?

Ben: For sure. I remember that. I’m like, “I wonder if this thing’s dead.” I’m trying to remember when it was. I think it was in this era of maybe Broadcom, Qualcomm, Blue Bottle Coffee, which you would think I’d be more engaged in. Atlassian, which I want to do again because there’s so much good stuff there. Booking.com, I was pretty excited about. Activision Blizzard. I definitely was having some, I don’t think I had found my role in the show yet, which is a weird thing to say. That’s how I recall that period going.

David: I don’t remember if I listened to them, but those were not great episodes either. I used to say this a lot, and I think it’s still true. It’s just fun. If you’re having fun doing it. We’re both nerds about tech, business in tech, and these companies. That just makes it fun, especially the first year plus. We maybe had hundreds of listeners, maybe. There was nothing going on that indicated that this was worth pursuing, but we just kept doing it because we like doing it.

Ben: Which is so interesting in this context, I think about this a lot with IPSL. We aggressively kill new startup ideas that aren’t instantly showing signs that there could be a there-there from customer interest. I think I said this before with Acquired, we would’ve killed it very quickly. Now granted, IPSL is not in the business of starting content business, but it doesn’t matter.

Nathan: Right. If you’re running a podcast network, you would have been like, “This is a dud.”

Ben: “Nope, this one’s not performing.”

Nathan: Yeah. You said there were hundreds of listeners, maybe. Was that even a year end? It was like, “Oh, we got 200 downloads.”

Ben: I think so. The oldest one that I have tracked here was Zappos against Gravity Nest which is two years ago. I’m sure I could dig up old SquareSpace data from older stuff.

David: Yeah. We [...] SquareSpace.

Nathan: Not known as a podcast host.

David: No.

Ben: No. actually, it’s a massive podcast host, but that’s a mistake for all the people doing that. 

Nathan: Fair. When did you decide to take off? You’re at 30,000 downloads per episode now, it sounds like.

Ben: We have 10,000 or so on Rover and that was season 2 episode 10. The very next episode was Tesla and that had 14,000. We’re like, “Oh, my God!” Basically, every episode would grow by 400 downloads, all season before that. We were like, “Cool! Linear growth, we found a formula to grow.” Then Tesla was like, “Oh, my God! We just got 40% bump in one episode.”

David: That’s so good. I’m glad the data backs my instinct that Tesla was the turning point.

Ben: I think we did Instagram part two last year. That one had around 14,000 or so.

David: These are all downloads in the first 30 days. 

Ben: Yeah and then the very next one was Lyft that had 21,000. Sometimes you get these insane spikes. Obviously, because both Tesla and (8 months later) Instagram were both 14,000, there’s a bunch of variance and there are ups and downs in the middle. But sometimes you just get these ones that bring you all these new listeners and get you totally re-energized about the show.

Nathan: And how does it work? Is it just people love it because it’s a great one, so they tweet about it at a higher rate than other episodes so you get more listeners? Or is it hits-driven? Or maybe not a lot of tweets happened, but one random person with a ton of followers like Ben Thompson tweets you or whatever? How did it work?

Ben: It’s some of both. It’s exactly what I was talking about earlier where there’s always the spike and there’s always the flight. There’s some staying power form the people that stuck around from the spike. You just have to know that when we get that Lyft episode and like, “Boom!” suddenly we’re up at 21,000, that doesn’t mean like, “Great! We’re going to be 21,000, that’s a new floor from here on out.” Although, that actually was true. That was awesome.

David: Yeah. I don’t know if you feel the same, Ben, but whenever we hit those spikes I feel like we’ve hit that peak on the mountain. We got to aim for the next peak now.

Ben: Totally. It was like this season that was WeWork and TikTok, where it’s like, “Yeah, why do anything less than that now?” You’re right, Nathan, we can’t really control it. We can control what episodes we do but we don’t control the new cycle, we don’t control who happens to hear it. We had someone hear about TikTok and tweet about it, we got a thousand new listeners from a tweet.

Nathan: Whose tweet?

David: It was Patrick O’Shaughnessy, right?

Ben: Yeah. Patrick’s show is incredible.

David: It’s so great.

Ben: David and I listen to Invest Like the Best and think, “Okay. Cool. This is what we can do to up our game when we’re interviewing people.” We have our shtick down for storytelling that’s different than his show and you listen to things, like what shows to try and sharpen your skills for that or get ideas for that.

Patrick is one of the best interviewers doing podcast right now. When he said, “Hey, this is a great show. I learned a lot from TikTok. I recommend you check it out.” It was (of course) crazy gratifying because you’re like, “I look up to the content that you produce in so many ways and this artful skill that you have,” but also because you have to believe the people who listen to his show are super smart and it’s awesome.

For however smart we assumed our audience was before, now we have all these reinforcements that we can continue to treat our audience with amazing and profound respect. We don’t need to lead them all the way to answers. We can let them run with whatever they can think of based on the material that we put out there. So, that’s cool on multiple levels.

Nathan: What makes Patrick O’Shaughnessy so good at interviewing?

Ben: Actually, I was thinking about this a lot when we were getting ready for the Kara interview. The number one thing to deliver a great interview is to not be intimidated by your guest. When you’re having amazing people on, that’s the natural thing is to be wildly different, treat them with respect, let them run the show. You have to just grab it and say, “Mmm, no. I’m going to run the show.” 

That has two pieces, one is just having conviction in your format and being like, “I’ve done this a bunch so I can do this again.” The other one is treating yourself with enough respect that you can go toe-to-toe with that person like, “Even though this person’s famous or even though this person started a billion-dollar company, I’m also smart and I’m going to have interesting ideas on this show. I have to find the right way to steer the direction of the content in the way that I want because I respect myself and my own ideas.” I think that’s hard when you’re sitting with some of these people across the table from you. So, that’s one big piece of it.

I think another one is letting yourself a proxy for your audience. If you’re interested, assume that your audience has a bunch of views. If you’re interested, then you should go there and if you’re bored with what they’re saying, you should cut them off and take it to another direction. We have attracted the audience that we’ve asked for and the audience we’ve asked for is we ourselves on air, so we’re a very good proxy for what the audience is actually going to think that is interesting.

Those are my tips on interviewing.

David: I think Patrick basically has the same core idea as what Ben said. My frame on it is he does a really great job of meeting guests on their level. That’s both putting himself on their level but also he interviews [...] broadly in finance and investing of various types, he puts himself and the audience at the same level as the guest, and I think he does that incredibly well.

Nathan: Nice. What is coming up on the horizon for Acquired? Any scoops here?

David: I’m surprised you didn’t ask, but the most asked question of us is when is Acquired Capital part two coming. That is coming very soon, we’re working on some special things for it. We’re excited to be bringing that this season.

Ben: We want to do more live shows but outside of our show at south by we don’t have scheduled yet. David and I did some planning and we can look at the content calendar to see what we can talk about.

David: We also are going to continue probably on the LP Show but maybe with some between LP Show and main show. Our no code theme exploration that started with Vlad and Webflow, that was so fun. I think that was one of, if not, our best LP episodes thus far.

Ben: If Airbnb goes public, then we can talk about that, but that’s up to them.

David: Vlad was so good. It was a combination of two things. His story and the story of Webflow is amazing. He tried to start the company the exact same company, same name, same product four times, and finally, on the fourth time, it's become the Webflow we know and love. The theme that is behind it, is just so powerful of this no-code movement.

I think when Acquired is at its best, it’s the intersection of those two things. It is Ben and my aspects of the show. It’s the story and the analysis, and when those are really compelling together and linked. Vlad and Webflow nailed that.

Ben: Can I tell you a bunch of stuff we’ve thought about but haven’t done because we don’t have time?

Nathan: Yeah.

Ben: We keep on thinking about writing a book but we haven’t. The idea isn’t that I want to write a book to be a New York Times Bestselling author. The idea is to write a book because we get to go on a book tour and we would basically get to do a bunch of live podcasts, probably at companies where tons of people listen to our show anyway.

We feel like we already have all the content for a book and it would just be about packaging it up in the right way. We’ve done an outline, we talked to publishers, we talked to book agents, but it just keeps falling by the wayside where it’s like, “Okay, we have day jobs, so already this is a side project.”

In that amount of time, would we rather allocate those hours towards producing the best episodes we can this season or should we go write a book? I think we just keep backburner-ing it in favor of the show, especially when the show’s working. If the show plateaued, it would be a different story, but if we know that we just keep on growing every episode, we’re like, “Yeah, more of that.”

Nathan: Totally. So, book, that’s one. Are there any other things that you might do, you might not do, you thought about doing?

David: It’ll always be inspired by the TikTok episode and some other things. We’ve been toying with videos and YouTube, well, which are actually two separate things. We’ve been toying with YouTube and with video. There are no plans currently do either one but the intersection between podcast and YouTube I find really fascinating right now. I think there is an opportunity for Acquired within that, but we haven’t figured out exactly what that is yet.

Nathan: You could do a video podcast. People could watch it in their iPod videos. This used to be a thing, Apple basically could have been YouTube with video podcast if you think about it.

Ben: Dude, I’m telling you I’ve spent 150-200 hours in my life watching DigNation so I believe in the power of video podcast.

Nathan: Amazing.

Ben: I think Leo Laporte coined the term “vodcast.”

David: Right. I remember that.

Nathan: It’s so close to vlog but it just missed.

David: This is what I’ve been really thinking about is, “Yup. Been all that,” but Joe Rogan, that show is one of the biggest media properties to be developed globally in the past 10 years.

Ben: Three million downloads on every single episode. You tell me a media company that has that kind of reach within a day of dropping a piece of content.

David: I think the key to it is YouTube. I don’t think he would’ve gotten that reach and distribution without YouTube.

Nathan: Totally.

Ben: I think that three million number I’m quoting is out of iTunes, so I don’t think that is inclusive of his YouTube downloads.

David: Yeah. It’s estimated he makes $50 million a year in just ad revenue on the show.

Ben: It’s wild and it’s so crazy because it’s very hard in a weird way. He’s amazing at what he does, but it’s one thing when it’s like Star Wars or whatever.

Ben: That’s the beauty of it though. He makes it seem effortless.

Nathan: Exactly.

Ben: He’s a unique person.

Nathan: Amazing.

David: That is a true statement.

Nathan: Cool. Well, any other parting thoughts that you two unique people want to leave with your audience.

Ben: One thing I forgot to say is, listeners we actually didn’t touch on most of the stuff that Nathan wrote about in the strategy newsletter, so we’ll link that in the show notes. It goes through how we think about the LP Show, how it fits into the puzzle of Acquired, how we think about monetization, where we decided to deploy those dollars, what our goals are with the show. There’s a lot of good stuff there that didn’t need to be repeated on the show, so I’m glad we didn’t. But if you’re interested in that, you should definitely check out on Divinations.

David: Really well done. You guys are very good at what you do.

Nathan: Thank you.

Ben: Let me talk about the format for that because I thought that was interesting. We spent an hour and a half on a call like this, you recorded it, and then you went back through later and turned a bunch of incoherent rambling into a really tight, well-edited piece. So, I’m curious. Just give us 60 seconds. What is that creative process look like for you?

Nathan: First of all, it wasn’t that incoherent. It’s interesting because the way that people talk is really different than what feels good to read. If you look at any transcript, it just feels really dumb. Even though if you’re to listen to it, it feels really smart. Essentially, it’s like converting it. It’s like dictation, almost. You’re dictating the post to me is the way that I think about it, but I can bring it out of you by asking a bunch of questions as opposed to you having to come up with it on your own.

The reason you do it is just because honestly, my really good friend Dan Shipper started doing Substack that has a similar style and he found out that style worked really well for him. He was like, “You should try it.” So I was like, “Okay, I’ll try it.”

I think it works pretty well. It’s pretty cool because I think writing is just really hard, it’s very painful. There’s a lot of people that have amazing insights and stories that I think would travel further if they were in written form on the Internet, especially when you pair that with email distribution.

There’s some work there, there’s some friction to the conversion, but if I take that on my newsletter can be that much better because it’s this thing that’s not just my ideas, it’s all the smart people like you can share your stories and experiences. I just want to get out of the way. I almost was like, “Well, I just can’t possibly do this on a regular basis if I have to be the source of all of the stuff.”

I’m sure you all feel the same way. The supply chain for you is there are fascinating companies out the world that you can do research on, so it’s like staring on the shoulders of giants. You can read all the interesting analysis that has been written, synthesize it, and paint a picture of it in a conversation in a way that is super compelling. You can apply this unique transformation to it, but it’s not like it’s coming from nowhere. I guess, same principle for the newsletter.

David: I think you hit on something really interesting there that I have thought for a while, but the truth is that’s probably what makes podcast so compelling is the Venn diagram overlap between people with compelling stories and thoughts to share and people who enjoy writing and are good writers is quite small. If you can get more people from the circle of having compelling thoughts and stories to share into getting that content out there, the spoken word is such an easier hurdle to clear.

Ben: Podcasting for me is like writing without all the self-loathing involved in the writing process.

Nathan: Oh my God, yeah. Seriously. I recently tweeted the amount of times I checked Twitter by activity, a little pictograph. I didn’t even put podcasting as the potential option because I don’t check it at all while I’m having a podcast conversation, but programming is not very much, designing maybe a little bit more, writing is off the scale in checking Twitter all the time because it’s so agonizing. I’m getting a little better at it but I’ve been tweeting about writing a lot because I started to do it more lately, obviously, and it’s hard. It’s so hard.

Ben: You got to find other writers to commiserate with, which actually I’m sure that’s probably why you’re doing this thing with Dan.

David: With Dan, yeah.

Ben: That’s cool.

Nathan: Yeah.

Ben: Awesome. Well, thank you so much, Nathan.

Nathan: Thank you. This has been so much fun. Maybe we’ll do it again in a year, or two years, or whatever. We can make a New Year’s tradition of it or whatever. I’m going to hold you to it. That’s why I suckered you into it now. I get to become a recurring guest.

Ben: What’s your Twitter handle for people who want to talk and write over, who want to find you?

Nathan: Twitter handle is @nbashaw, which is actually my old last name. I merged last names with my wife, so now it’s Baschez. She was Sanchez, I was Bashaw, now we’re Baschez. Anyway, I haven’t changed the actual handle yet because that feels complicated and hard, but if you search for Nathan Baschez, that also works too.

Ben: It’s @nbashaw. 

Nathan: Yeah, exactly.

Ben: You’re some guy named Shaw who plays basketball.

Nathan: I get a lot of NBA spam tweets sometimes because people are like, “Anybody with NBA in the first three letters of their handle probably is a basketball fan.”

Ben: Sometime we’ll go tit-for-tat. I get a lot of tweets Gilbert Arenas, Gilbert Arizona, and there’s some Italian Gilbert that I don’t know, but it’s fun.

Nathan: Awesome.

David: Gilbert Arenas, haven’t thought of that handle.

Ben: We get less of that than we used to.

Nathan: Cool. Well, thank you so much for having me. This has been a ton of fun.

David: Ton of fun. Thanks, Nathan.


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