Acquired - Ben Gilbert and David Rosenthal

Latest Episodes:

BAMTech, Disney and "the Biggest Media Company You've Never Heard Of” May 10, 2017

Show notes

Ben and David continue Acquired’s “tech and sports” mini-series with Disney’s 2016 acquisition of a minority stake (with the right to purchase a majority stake at a later date) in BAMTech, the internet streaming company originally founded as part of Major League Baseball in the early 2000’s. However the importance of this story goes deeper than just sports, with major ramifications for nearly every major technology company from Amazon to YouTube. Even if you’re not not sure if baseball’s played on a diamond or a gridiron, tune in as we swing for the fences in predicting the future of TV!

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Topics covered include:

What is BAMTech, and why is it, according to The Verge, "the future of television”?
BAMTech’s origins as part of Major League Baseball's Advanced Media division ("MLBAM)”)
MLBAM’s founding CEO Bob Bowman’s decidedly “non-tech” background, and growth into one of the most important tech leaders of the past 15 years
Initial technology struggles and learnings from early streaming efforts (including a botched audio package of Ichiro Suzuki’s games with the Mariners for fans in Japan)
Landing on a streaming model that works with the launch of MLB.tv in 2002/2003—three years before YouTube is founded!
Improvement of the MLB.tv service and MLBAM’s streaming expertise over the next ten years through the rise of mobile, and simultaneous growth of MLBAM’s revenues to over $1B annually
MLBAM’s initial deals to expand its streaming services beyond baseball, starting with ESPN in 2010, then WWE, the PGA, HBO and the NHL
The importance of media rights, and MLBAM’s transition from a simple tech/infrastructure provider to a full-fledged media company
The decision to initiate a spin-off process for BAMTech from MLB in August 2015, and Disney’s $1B investment into the newly created spin-out company in August 2016
Disney’s subsequent announcement that they’ll be working with BAMTech to create a direct-to-consumer ESPN streaming service
BAMTech’s $300M deal with Riot Games in December 2016 for the media rights to League of Legends eSports content
Bob Bowman’s announcement in February 2017 that he’ll be stepping back to from a day to day role, and hiring of former Amazon VP of Video Michael Paull as BAMTech’s new CEO

Followups & Hot Takes:

Facebook’s struggles with Instant Articles
Microsoft killing Wunderlist (David is VERY sad)
Instagram continues its torrid growth, passes 700M MAU
Amazon’s new Look
The Cloudera IPO
Confirmation the ride sharing wars are far from over: Didi raises $5.5B in the largest private funding round ever

The Carve Out:

Ben: NYT’s 4th Down Bot
David: Wait But Why on Elon Musk’s “Wizard Hat"

The LA Clippers Apr 23, 2017

Show notes

In honor of start of NBA playoffs, Ben & David venture off the beaten path to explore one of Steve Ballmer’s most famous acquisitions, his 2014 purchase of the Los Angeles Clippers NBA franchise. Was this landmark purchase a steal or a turnover for the former Microsoft CEO? We speculate wildly!

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Topics covered include:

The Clippers’ founding in 1970 as the NBA expansion team the Buffalo Braves
Early ownership changes and the move west to San Diego in 1981
Acquisition in 1981 by LA lawyer and real estate developer Donald Sterling for $12.5M
Sterling's relocation of the Clippers to LA in 1984 against NBA rules
Struggles over the next 25 years as the "worst franchise in professional sports” according to ESPN
Turnaround beginning in early 2010s led by Blake Griffin, DeAndre Jordan, and Chris Paul
The bombshell in April 2014, reported by TMZ, of a taped conversation between Sterling and his mistress where Sterling makes hugely offensive and racist comments, directed in particular toward former Lakers point guard Magic Johnson
Fallout from the comments, resulting in a lifetime ban from NBA for Sterling, and a forced sale of the team to former Microsoft CEO, Steve Ballmer for $2B
Impact of the landmark sale price on NBA and other sports franchise valuations
Clippers performance post-sale, and prospects for the future
The opportunity for technology and business model innovation in the NBA, and professional sports in general

Followups:

Instagram Stories passes 200 million users per day (including correction on the definition of DAU)
The Last Jedi trailer!
Clarifying Starbucks’ same store sales performance post-IPO

The Carve Out:

Ben: Bill Gurley on This Week in Startups
David: Pop, Race & the '60s podcast and Just Around Midnight by Jack Hamilton

Oculus Apr 11, 2017

Show notes

Ben & David transcend the barriers of “real” reality, and dive into Facebook and Mark Zuckerberg’s geek-eutpoia vision of the future of gaming, social, and maybe even the entire internet: strapping goofy-looking goggles to your face. Is VR for real this time or are we living through another Virtual Boy moment? Tune in to find out!

Sponsors:

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Topics covered include:

Oculus’s origins in 2010 as a twinkle in the eye of the then-17 year old VR wunderkind, Palmer Luckey, who started by prototyping VR headsets in his parents’ garage in Southern California
Palmer’s time interning at USC's Institute for Creative Technologies, and chronicling of his own VR efforts in the Meant to be Seen 3D internet forums
Legendary game developer John Carmack’s own interest in virtual reality, his intersection with Palmer on the MTBS3D forums, and how he acquired and popularized one of Palmer's first early prototypes of the Oculus Rift (which was literally held together with duct tape!) by demonstrating it onstage at E3 2012
How former Scaleform cofounders Brendan Iribe and Michael Antonov teamed up with Palmer after E3 to create the company Oculus VR
The newly-formed Oculus’s wildly successful August 2012 Kickstarter campaign, including video endorsements from both Carmack and Valve founder Gabe Newell
Oculus’s subsequent venture capital fundraisings, and catching the attention of Facebook and Mark Zuckerberg
Facebook’s acquisition of the company in March 2014 for $2.3B
The Zenimax lawsuit filed against Oculus and Facebook following the acquisition
Valve (home of the most incredible company handbook of all-time) and Gabe Newell’s subsequent pivot from supporting Oculus to launching their own competing VR efforts with the Vive
Team changes at Oculus post-acquisition

Followups:

SNAP: still a public company

Hot Takes:

Intel’s $15B acquisition of Mobileye (with reference to Ben Thompson’s analysis of the deal and Smiling Curves)

The Carve Out:

Ben: Kara Swisher interviews the Pod Save America team at SXSW
David: Adam Gopnik asks Are Liberals on the Wrong Side of History?

The Starbucks IPO with Dan Levitan Apr 03, 2017

Show notes

Ben & David "pour over" the 1992 IPO of the legendary Seattle coffee company with the help of Dan Levitan, who served as lead investment banker on the IPO and who would later co-found the venture capital firm Maveron with Starbucks’ CEO Howard Schultz.

Sponsors:

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Topics covered include:

The original Starbucks’ founding as a coffee bean roaster, started by three disciples of the legendary coffee roaster Alfred Peet
Howard Schultz’s introduction to Starbucks, his joining the team as director of marketing, and inspiration behind his “third place” coffee shop vision
Howard’s departure from the original Starbucks, founding of Il Giornale, and subsequent of acquisition the Seattle Starbucks stores
Starbucks’ incredible growth following the acquisition and expansion beyond Seattle
The state of raising private capital in the 1980’s/90’s, and the decision to go public (link to the S-1)
Howard’s ambitious goals for the roadshow and investor participation, and subsequent stock performance after the IPO
The narrative and evolution of Starbucks as a technology company, or a consumer company that leverages technology very effectively

The Carve Out:

Ben: Dan Primack’s new daily newsletter, Pro Rata
David: The Wizard and the Bruiser podcast
Dan: The Man in the Glass

Overture (with the Internet History Podcast!) Mar 13, 2017

Show notes

Episode 33: Overture (with the Internet History Podcast!) Ben & David dive deep into the early days of internet search, with the help of the best in the internet history business: Brian McCullough from the Internet History Podcast! We are huge fans of IHP at Acquired, so this was a real treat to collaborate with Brian and the great work he does over there. In this episode we cover the story of how a small incubator in Southern California spawned perhaps the greatest tech business model of all-time, Yahoo!’s fumbling of that golden opportunity, and Google’s recovery of that fumble to cross into the end zone of tech history behind the biggest moat ever constructed on the internet.

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Topics covered include:

Overture’s origins as part of the Idealab incubator run by famed early internet entrepreneur Bill Gross
Invention of the paid search business model… initially by returning ADS ONLY in response to search queries
The eventual marrying of Overture’s paid search (ads) with organic search results via syndication on other properties like Yahoo!
Revenue from Overture’s ad partnership saving Yahoo!’s business after the internet bubble burst
Yahoo!’s eventual acquisition of Overture for $1.4B in 2003
But… the really interesting story here: Overture’s 'inspiration' of Google’s business model and the creation of "the greatest advertising machine in the history of the world"
The original (pre-Overture) Google business model: selling a box!
Google’s differentiation vs Overture: focusing on the long tail, ad quality scores, and an advertiser-friendly auction structure
Google’s first major search syndication victory over Overture: AOL
Yahoo!’s failed attempt to buy Google for $3B in 2002, leading it to settle for acquiring Overture instead the following year
“Project Panama” at Yahoo!, and its impact on the tech and internet history
Overture's (and later Yahoo!’s) lawsuit against Google for stealing the paid search business model— "the O.G. version of Snapchat and Instagram”
Paul Graham’s take on "What Happened to Yahoo?”
Perhaps the most important technology to come out of this whole episode: Hadoop
The power of incentive alignment in marketplaces— and creating the widest and deepest moats on the internet

The Carve Out:

Ben: The famous University of Washington's “Love Lab” Dr. John Gottman: “The Secret to Love is Just Kindness”
David: Berlin
Brian: The Dark Valley: A Panorama of the 1930s

The Snap Inc. IPO Mar 04, 2017

Show notes

Snap! Acquired is live on the scene reporting from the "Super Bowl" of 2017 tech events: Snap Inc's hugely anticipated (and just plain huge) IPO. What does the future hold for this plucky “camera company”? Will Snap's IPO endure as tech's most important picture-frame since the 2012 debut of Facebook, or is it destined to fade as just another snapshot? We debate!

Sponsors:

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Topics covered include:

Reference to our previous Acquired episode on Snap covering Facebook’s failed attempt to acquire the company in 2013, which goes deep on Snap’s origins and early history
Snap’s busy years since: launching Discover, Lenses, Geofilters, new Chat, Memories, an ads API, acquiring Bitmoji, and, of course, debuting Spectacles
The incredible document that is Snap's S-1 filing (read starting from the “BUSINESS” section on p.93)
Snap Inc’s “unique” voting structure
Evan Spiegel’s “CEO Award” bonus for successfully completing an IPO: an extra 3.0% of the company worth more than $600M
Snap’s IPO pricing, first day of trading “pop”, and momentum carried into day two
Introducing a new show section (for IPOs): Narratives!
- Snap is a “camera company"
- Snap's opportunity is winning television ad dollars
- Snap is a cult of the “product genius”
- Snap has a growth problem… and its name is Instagram (Stories)
- Snap has a cost problem: the (first?) gross margin negative IPO
- Wall Street to Evan: “we trust you… for now"
Chris Sacca’s biggest email fail of 2012
…And of course all the classics from the Acquired canon: waves, moats, flywheels, network effects, starting small and more!

The Carve Out:

Ben: The Bill Simmons Podcast with Ben Thompson
David: The Art of War, also Evan Spiegel’s Carve Out for 2013 :)

The Uber - Didi Chuxing Merger with Brad Stone, author of The Upstarts & The Everything Store Feb 28, 2017

Show notes

Topics covered include:

The global surge in 2012 of entrepreneurs starting ridesharing companies, nowhere moreso than China
Didi CEO Cheng Wei and investor Wang Gang’s backgrounds at Alibaba, first entrepreneurial effort in Momo, and Momo’s pivot to Didi Dache
The culling of the ridesharing herd in China down to Didi Dache and Kuaidi Dache through brutal competition and involvement of the “big three” Chinese internet companies
Rise of the Chinese messaging apps and associated mobile payments, and their impact on ridesharing
The 2015 merger between Didi and Kuaidi, brokered in part by Russian VC Yuri Milner
Uber’s decision to enter the Chinese market, and early success with investment and support from Baidu
The first meeting between Uber CEO Travis Kalanick and Cheng Wei in 2015—which does not go well
Subsequent “scorched earth” competition between Didi and Uber throughout 2015-16
Negotiating an armistice: Uber’s agreement to sell its Chinese operations to Didi in late 2016
End of the war, or just the beginning? January 2017: Didi invests $100M in Brazilian Uber competitor 99
Sustainable growth, and building moats versus scorching earth

Sponsors:

Vanta: https://bit.ly/acquiredvanta
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Followups:

Stay tuned for real-time coverage of the Snap IPO coming here on Acquired!

The Carve Out:

Ben: Taming the Mammoth on Wait But Why
David: Conversations with Tyler Podcast by Tyler Cowen, co-author of the Marginal Revolution blog
Brad: Yuval Noah Harari (author of Sapiens)’s new book, Homo Deus: A Brief History of Tomorrow

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P.A. Semi + AuthenTec Jan 24, 2017

Show notes

Topics covered include:

P.A. Semi’s original moniker ("Palo Alto Semiconductor”) and its celebrity founder (in the semiconductor world) Dan Dobberpuhl
History of the back and forth tradeoffs between Intel’s powerful x86 chips and low power alternatives like ARM processors
Dobberpuhl’s technology breakthroughs throughout his career that enabled true low-power + high-performance chips
The initial target markets for P.A. Semi’s chips (surprise: NOT mobile phones)
P.A. Semi’s first foray into a potential deal with Apple, dashed by Cupertino’s surprise switch to Intel processors in 2005
The rise of mobile finally creating the huge market need for low-power / high-performance, Apple’s acquisition of P.A., and launch of the first Apple-designed chip, the “A4”, with the original iPad in 2010
Geekbench: the single-core performance of Apple’s latest generation of smartphone processors (A10 Fusion) has basically caught up with Intel’s laptop CPUs
AuthenTec’s beginnings in the late 90’s as a spinoff from the defense contractor Harris Corporation (named by Wired Magazine as the #2 threat to internet privacy in the US), based in Melbourne, Florida
Early versions of the technology that became TouchID, the sensors for which were many times larger than today’s iPhones themselves!
AuthenTec “not very Apple-like” website on Archive.org (and screenshot)
AuthenTec’s deal that almost was to put their technology and sensors into Samsung’s flagship phones
Apple’s acquisition of AuthenTec for $356 million in July 2012, and the rapid introduction of TouchID in the iPhone 5S one year later in September 2013

Sponsors:

Vanta: https://bit.ly/acquiredvanta
ServiceNow: https://bit.ly/acquiredservicenow26
Legora: https://bit.ly/acquiredlegora
Statsig: https://bit.ly/acquiredstatsig26

Followups:

Merging of Alaska & Virgin America loyalty programs (woo!)
Walmart announces major reorg following the Jet acquisition
Snap Inc. IPO drama is mounting! (we can’t wait to cover this one)

The Carve Out:

Ben: Rands in Repose: The Situation
David: Daily Rituals: How Artists Work

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Special: 2016 Review and 2017 Predictions Jan 11, 2017

Show notes

Ben & David wrap up 2016 with a review of the top tech themes we discussed on the show this year, and look forward to which themes we think will be relevant in the coming year. Can our hosts predict the future? Tune-in in 2018 to find out! Note: we apologize for the less-than-amazing audio quality on this one. We’re still working on tuning our remote recording setup!

Sponsors:

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ServiceNow: https://bit.ly/acquiredservicenow26
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More Acquired!

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Topics covered include:

Our top tech themes of 2016, including the first annual Acquired "Theme of the Year”: Aggregation Theory (surprise, surprise)
Themes we think will be most relevant as we head into 2017
Extended Carve Outs!

The Carve Out(s):

Books:
- Ben: On Writing Well
- David: The Creative Habit and the Asimov Robot/Empire/Foundation series
Article:
- Ben: Wait But Why: Religion for the Nonreligious
- David: The New York Times: The Perfect Weapon: How Russian Cyberpower Invaded the U.S.
Podcasts:
- Both: The Ezra Klein Show
Music:
- Ben: Justin Bieber
- David: Stevie Nicks
TV/Movies:
- Ben: Westworld
- David: Rouge One
Apps:
- Ben: ReachNow
- David: Amazon Music

The Amazon IPO with original Amazon Board Member Tom Alberg Dec 31, 2016

Show notes

Ben & David welcome very special guest Tom Alberg, board member and first lead investor in Amazon.com, to cover the IPO of "earth’s most customer-centric company". From longterm thinking to flywheels to riding big waves, this episode is chock full of lessons and stories from the journey of building one of tech’s most iconic franchises. We hope you enjoy listening as much as we did recording it!

Sponsors:

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Statsig: https://bit.ly/acquiredstatsig26

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Topics covered include:

Tom’s “prolific” bio from the Amazon S-1
Jeff Bezos’s journey from a Vice President at the New York hedge fund D. E. Shaw to founding Amazon in a Bellevue, WA garage in the summer of 1994
Jeff’s longterm thinking as evident in the early days of Amazon, and his approach that "failure is ok, but not trying things is not ok”
Raising the seed money for Amazon before product launch, how Tom met Jeff and decided to invest despite the “high” valuation
Tom's (and Jeff’s) focus on the power of targeting large and growing markets
Amazon’s actual overnight success after launching the website: according to Tom at the time, "By the second or third week… It was clear there was a trend here.”
How Amazon’s venture round, led by John Doerr of Kleiner Perkins, came together in the spring of 1996
Amazon’s torrid growth through 1996, Jeff’s mantra of “get big fast” to win the land grab of online book selling, and the board’s decision to prepare for a public offering in the spring of 1997
How Frank Quattrone and Bill Gurley, then of Deutsche Bank, won the lead position for the Amazon IPO, beating out more storied firms such as Goldman Sachs and Morgan Stanley
Development of the flywheel concept within Amazon, as an outgrowth of maniacal focus on creating superior customer experience
Amazon's public offering on May 15, 1997 at $18 per share (effectively $1.50 relative to today’s stock price after splits), raising $54M at a market capitalization of $438M — and subsequently trading down during the first few months following the IPO
Amazon and Jeff’s management of investor perceptions of the company, and ability to sell the longterm vision over short term profits — “you get the investors you ask for”
The creation of the first annual letter to Amazon shareholders included in the company’s 1997 annual report (and republished every year since), and then-CFO Joy Covey’s role and contributions to it
Raising convertible debt just before the peak of the dotcom bubble and subsequent ability to survive the burst, and the impact of the downturn on Amazon culture

The Carve Out:

Ben: the band The Album Leaf
David: Cormac McCarthy (author of All the Pretty Horses, No Country for Old Men, etc)’s contribution to W. Brian Arthur’s landmark paper about the economics of the internet, “Increasing Returns and the New World of Business”
Tom: Michael Lewis’s latest book The Undoing Project, chronicling the Nobel Prize winning partnership between Daniel Kahneman & Amos Tversky in developing the field of behavioral economics