EVERY SPOKEN WORD
145 min read · 28,962 words- 0:00 – 2:01
Holiday special kickoff: deeper/nerdier agenda for a year-end recap
- BGBen Gilbert
How do I open again? Welcome.
- DRDavid Rosenthal
Wait, what is this show? What are we doing? [laughing]
- BGBen Gilbert
Welcome to How I Built This.
- DRDavid Rosenthal
Welcome. [laughing] No.
- BGBen Gilbert
[laughing]
- DRDavid Rosenthal
No, nothing against How I Built This, but that's not us.
- BGBen Gilbert
All right, let's start. [laughing]
- DRDavid Rosenthal
Okay. [laughing]
- SPSpeaker
Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Is it you? Is it you? Is it you? Sit me down, say it straight. Another story on the way. Who got the truth?
- BGBen Gilbert
Welcome to this special episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert, and I am the co-founder and managing director of Seattle-based Pioneer Square Labs, and our venture fund, PSL Ventures.
- DRDavid Rosenthal
And I'm David Rosenthal, and I am an angel investor based in San Francisco. But today, Ben, you are hosting me at your lovely home here in Seattle.
- BGBen Gilbert
Welcome to the studio.
- DRDavid Rosenthal
[laughing] It's great to be here.
- BGBen Gilbert
And we are your hosts. Ho, ho, ho.
- DRDavid Rosenthal
Ho, ho, ho, happy holidays.
- BGBen Gilbert
Happy holidays. [hip hop music]
- DRDavid Rosenthal
Man, I, uh, I don't know about you, but, uh, I'm ready to put a bow on 2022. [laughing] Well, we have much to talk about.
- BGBen Gilbert
Yep. Well, listeners, normally I have, like, a script, like, a thing that I'm looking at in front of me to know what to say now, but I don't really on this one, other than to say join the Slack. There are great people there-
- DRDavid Rosenthal
Yes
- BGBen Gilbert
... including probably you, if you're listening to this episode. We don't think this is an entry point for a lot of people into Acquired. We think this is probably if you're a fan, you're gonna listen to this, but I don't think this is gonna be anyone's sort of first show, so we're gonna try and go a little, uh, a little deeper and nerdier than normal.
- DRDavid Rosenthal
We've got a little agenda. We're gonna recap 2022 for the show, for tech, for us, talk a little bit about what's ahead in 2023. We've got some extra, extra fun carve-outs.
- BGBen Gilbert
Indeed. Well, we would be remiss if we did not thank our good friends at Vanta. So before we dive in, over to our conversation with founder and CEO Christina Cacioppo.
- 2:01 – 4:43
Sponsor conversation: Vanta and how compliance becomes revenue-enabling
- DRDavid Rosenthal
One of the things we've talked about over the season, Christina, is how security and compliance has really evolved in these few years that Vanta has been, uh, really pushing the market forward, and it's no longer just about, like, check the box, playing defense as a company, and especially as a startup. It's actually about playing offense. Given all that and the kind of central role that Vanta is now playing in this space, how do you see security and compliance evolving?
- SPSpeaker
Really excited about the future, so I think a handful of things we're seeing. This concept of, you know, security and compliance and basically proving the security you have to your buyers has just become table stakes to B2B companies. When raising the seed round for Vanta in 2018, walked around and totaled the VCs that were gonna SOC 2 all their startups, and many of them very reasonably looked at me perplexed and said: "But my startups don't get SOC 2, so what are you talking about?" But now we serve a majority of the current YC batch, so people in YC right now, and again, like, YC is all about just getting revenue, but these reports just help you unlock that, and they do that by, like, opening up new markets, whether it's international or enterprise or healthcare or regulated industries. And I think particularly in the 2022 funding environment, so much is about revenue growth from secure, trusted sources, and so I think we're gonna see more companies move upmarket faster than we might have otherwise, and these big companies know that, you know, they're only as secure as their vendors are. If your vendor gets breached, looks like you did. It doesn't matter it was them, and so there's just... I think we're gonna see more and more scrutiny here over time, and that's gonna filter down into higher expectations for startups. So having stable customers that aren't gonna go out of business on you and hopefully are gonna expand over time, and one of the things these security and compliance certifications and reporting helps you do as a founder is sell to those big companies and prove your credibility. And, you know, you might not have the tenure of a kind of more established competitor, but you have their practices. You are taking good care of the customer data that you've been entrusted with and are ultimately gonna be a good and trusted business partner for the long run.
- BGBen Gilbert
Our thanks to Vanta. If you want to become a customer, along with 4,000 other companies, you can click the link in the show notes or go to vanta.com/acquired. With that, this is not investment advice. This is probably the episode of the year where we will come closest to things that might be interpreted as investment advice as we talk about things that we have liked and didn't like and predict the future and all that, so do your own research. All right, David, what are we starting with?
- 4:43 – 11:36
2022 highlight: Taylor Swift, Ticketmaster demand, and internet-scale markets
- DRDavid Rosenthal
All right, I think we gotta recap 2022. [chuckles] Despite the craziness of the year of 2022 in the, um, broader world, tech, markets, economy, this was a pretty great year for the show. I have down here my signature Acquired episodes-
- BGBen Gilbert
Mm
- DRDavid Rosenthal
... and favorite memories from the year. We started the year with Taylor Swift.
- BGBen Gilbert
Yes.
- DRDavid Rosenthal
Isn't that crazy that that was, like-
- BGBen Gilbert
This year
- DRDavid Rosenthal
... January? That feels like three years ago.
- BGBen Gilbert
Well, we knew that at the end of the year she was gonna drop Midnight. It seemed appropriate that in the year where she was gonna put on the concert and announce the tickets for the concert series with the most demand in human history, that we should, of course, kick the year off with a Taylor episode, predicting the future as usual here on Acquired.
- DRDavid Rosenthal
I think 2023, we might need to line her up for a follow-up. We should do an Acquired session-
- BGBen Gilbert
With Taylor
- DRDavid Rosenthal
... with Taylor.
- BGBen Gilbert
Naturally.
- DRDavid Rosenthal
Taylor, we'll come to you. We'll come to your studio.
- BGBen Gilbert
Or maybe the Long Pond.
- DRDavid Rosenthal
Yeah, Long Pond. Great.
- BGBen Gilbert
I was reflecting on this. It's pretty crazy that I think the announcement was that they had 900 stadiums' worth of demand-
- DRDavid Rosenthal
Whew
- BGBen Gilbert
... showing up to ticketmaster.com, and there's 50 shows. I think it's something like 35 stadiums, but a lot of them have two nights. Like, there's two nights in Seattle here, and I'm sure not all 900 stadiums' worth can be counted as, like, actual demand. Like, I have to imagine when-... you know, there's a U2 concert or something, there are 100 stadiums worth of demand for 50 shows or something like that. So clearly not necessarily all purchase intent, or not all purchase intent at the available prices, but still, there was just no way to service the amount of demand. Like, I actually don't know how you solve this problem. Do you make all tickets $10,000 so that you actually find the correct price equilibrium for the demand?
- DRDavid Rosenthal
You know, kinda like we were talking about on our most recent episode with Ben Thompson and Stratechery, and he's like, "The obvious thing that I should do is raise prices to maximize revenue, but then that's pretty quickly gonna lead to limiting my reach and impact."
- BGBen Gilbert
Right.
- DRDavid Rosenthal
I think Taylor cares a lot about her reach and impact.
- BGBen Gilbert
And she could probably make the most money on this tour by having $10,000 tickets exclusively and still fill all 50 stadiums. I don't know what the price... Maybe $2,000 tickets she could do it. But if you're playing for a 50-year career, then you sort of have to, like, nurture the fan base over time and recognize that the-
- DRDavid Rosenthal
Right
- BGBen Gilbert
- it's about the out years.
- DRDavid Rosenthal
If she did that, that would be like a... That would truly be a farewell tour [chuckles]
- BGBen Gilbert
Yes.
- DRDavid Rosenthal
Because that would create so much-
- BGBen Gilbert
Ride off into the sunset
- DRDavid Rosenthal
... so much, uh, negative reaction.
- BGBen Gilbert
Which, of course, would create even more demand if you knew it was her farewell tour. [laughing]
- 11:36 – 22:07
Sony’s underappreciated journey and why “conglomerate diversity” worked
- DRDavid Rosenthal
Even a holiday special. Okay, next one on my list, Sony. Sony Corporation.
- BGBen Gilbert
Which I didn't think would be that interesting when we started doing it.
- DRDavid Rosenthal
It was your idea to do it, right?
- BGBen Gilbert
I know. It was, but I found myself being like, "God, is this actually an interesting company?" I had wanted to read Made in Japan, 'cause I'd heard it was amazing. But as I looked back at, like, trademark Acquired episodes, TSMC, The New York Times, like, I just didn't think it would be one of those, and it very clearly, especially in the numbers, did become one of those. It has it all. I mean, it has the genius founder, it has the-... probably the most adversity that we've ever talked about in any founding story in all of Acquired?
- DRDavid Rosenthal
It's really hard to think offhand of a greater adversity that a company and founders have overcome than Japan in 1945. [chuckles]
- BGBen Gilbert
It also has so many chapters. I mean, the craziest thing to me is if you look at the business as of the time we did the episode, they had five separate business units, all of which did a double-digit percentage of their revenue, so it's super diverse, and all of which did a double-digit percentage of their operating income. So, like, you have five businesses that are all reasonably the same size in top and bottom line in one house.
- DRDavid Rosenthal
Well, and that we got well over two hours into the episode before we mentioned PlayStation. And then, like, the PlayStation story in and of itself, we could do an episode on.
- BGBen Gilbert
I mean, the fact that we got from, like, rice cookers and World War II to, like, that crazy coda about Spider-Man is nuts.
- DRDavid Rosenthal
In the back of my mind, I've been percolating, it could be fun to do a whole episode just on Xbox. A, we need to do a Microsoft series-
- BGBen Gilbert
Yep
- DRDavid Rosenthal
... at some point. We've talked a lot about and around Microsoft on the show, but we've never covered Microsoft.
- BGBen Gilbert
And Apple.
- DRDavid Rosenthal
And Apple. We've not done Microsoft, we've not done-
- BGBen Gilbert
Or Google. We have not done the Google IPO.
- DRDavid Rosenthal
Apple, Google, Oracle.
- BGBen Gilbert
If we just wanted to cheat and, like, spike the numbers as much as possible, we just, like, take the whole next season and just do, you know, Fang, basically.
- DRDavid Rosenthal
I think we should do one of those companies a year. Not even a season, I think one a year.
- BGBen Gilbert
It's gonna take three episodes to do each one.
- DRDavid Rosenthal
We were able to fit Amazon into two episodes, but Amazon is only a, what? 27-year-old company.
- BGBen Gilbert
And we didn't talk about a bunch of stuff.
- DRDavid Rosenthal
Right.
- BGBen Gilbert
That was the way we skipped it. We didn't really talk about Alexa at all.
- DRDavid Rosenthal
Right. Sorry, everybody, if we just lit up here. Although, I think there's enough voice personalization in those devices that if a piece of media says the A word, I don't think it lights up anymore.
- BGBen Gilbert
Well, it might be 'cause I have the Sonos ones, and the firmware on the ph- Sonos ones is different than the ones that Amazon actually makes, but mine will just, like, light up when people say things that are not that word and are just, like, in a movie, like, when dialogue sounds too much like that name.
- DRDavid Rosenthal
Like that word?
- BGBen Gilbert
Yeah.
- DRDavid Rosenthal
Interesting. Here's my proposal: I think we should do one of these big tech companies a year for two reasons. One, you know, for Microsoft, for Apple, I think those are gonna be three-plus episodes to do it right.
- BGBen Gilbert
Yeah.
- DRDavid Rosenthal
Even at Acquired length episodes, so it's a huge lift, but also I think we should spread it out. Like, 'cause like you said, you know, the cheat code would be if we just do them all back-to-back.
- BGBen Gilbert
Right.
- 22:07 – 31:05
NVIDIA and the AI inflection: three bet-the-company moments to CUDA/ChatGPT
- DRDavid Rosenthal
Okay, Sony. Dude, we did NVIDIA this year. [chuckles] We did a lot this year.
- BGBen Gilbert
Yeah. I'm trying to think which of our Silicon episodes I feel the strongest about in terms of, like, enlightening me about the way the world works. I think it's first TSMC-
- DRDavid Rosenthal
Yeah
- BGBen Gilbert
... but NVIDIA is... The thing that's the most interesting about the NVIDIA story, I think, is Jensen bet the company three separate times, and truly bet the company. Like, if this initiative fails, it will go to zero, and it worked three separate times. The first time is when they shipped the card in, whatever it was, nine months instead of two years, and they designed the whole thing in emulation, never tested it, and shipped it to customers, and it worked. I mean, it worked enough... And maybe I'm forgetting the story in its entirety, but I think there was a bet-the-company moment around programmable shaders-
- DRDavid Rosenthal
Right
- BGBen Gilbert
... and then a third one-
- DRDavid Rosenthal
Right
- BGBen Gilbert
... around the, like, seven-year investment before the market was there in AI and CUDA and building their own developer ecosystem.
- DRDavid Rosenthal
Obviously, OpenAI existed. I'm trying to remember if DALL-E was out at the time when we did the NVIDIA episode. Certainly, GP- GPT-3 was.
- BGBen Gilbert
Well, interestingly enough, I think DALL-E 1 was, but it got no acclaim.
- DRDavid Rosenthal
Right.
- BGBen Gilbert
The one that lit the world on fire was DALL-E 2.
- DRDavid Rosenthal
Was DALL-E 2, yep. But now, as we record this, ChatGPT came out last week. Like, we were thinking about the, you know, AI renaissance and how important AI is, like, just in a general sense when we did those episodes.
- BGBen Gilbert
NVIDIA's stock had that crazy run long before we did the episode, like two years before we did the episode-
- DRDavid Rosenthal
Yep
- BGBen Gilbert
... at the beginning of COVID, and so it's interesting that I don't think that was around gaming. I think that was around AI, the thing that was sort of selling that story, and so it, in a way, the, like, craziest NVIDIA bulls that were, uh, sort of buying at the top and selling the story as much as humanly possible... When, when did it peak? I don't know, late 2021 maybe. They were kind of right. I don't think they knew that the next year would-... make AI's developments as obvious-
- DRDavid Rosenthal
Mm-hmm
- BGBen Gilbert
-as it has, but everybody who believed that AI was gonna be this complete step change in the way that we use computers, and decided that buying NVIDIA at a very high price was the way to endorse that belief, like, that ended up happening very quickly soon after.
- DRDavid Rosenthal
Yep. The moment when it really hit me was when we were recording the LP episode that we did with Jale at Mutiny, and at some point, just kind of-
- BGBen Gilbert
Just cavalierly, it was like, "Oh, yeah, we have a GPT-3-based feature in our product."
- DRDavid Rosenthal
Right, and I was like, "Whoa, okay, you are dynamically rewriting copy on your customers' websites using GPT-3. Okay, that kind of blows my mind."
- BGBen Gilbert
Yeah.
- DRDavid Rosenthal
Like, I can now see the business use cases for this.
- BGBen Gilbert
You say you can see them, but we're in this very interesting moment where we've all seen three pretty amazing proof of concepts in the last six months. We saw DALL-E 2, GPT-3, and now ChatGPT, which to me is actually the most interesting, because the most meaningful change is that it changed the modality that you interact with the AI model, but it's either the same or a s- I think it's, like, GPT-3 and a half or something. It's a very similar model, but we're interacting with it in a new way, and it's stateful, rather than being stateless, as in it sort of can preserve state, and you can ask it more questions about... And so I think there's a little bit of a, like, a crypto moment here, where it's the first time someone explains to you a decentralized world computer. You're like, "Whoa, that unlocks a whole world of possibilities," and you say, "What are they?" And someone says, "Let me think about that."
- DRDavid Rosenthal
Yeah. Yeah.
- BGBen Gilbert
I feel very similar with ChatGPT right now. I'm looking at it, I'm like: Whoa, this unlocks a whole world of possibilities. And someone says, "What is it?" And I'm like, "I feel better than I did about the decentralized world computer, but I still can't articulate to you," like, when the App Store launched, like, "Oh, this will be an, an $80 billion on-demand car service market." Like, that's not-
- DRDavid Rosenthal
Well, I think this is just naturally how markets play out, though, right? Like, we look back now, and we're like, "Oh, when the App Store launched, it was obvious," but was it at the time? I think we probably would've felt very similarly back in that moment of, like-
- BGBen Gilbert
Right
- DRDavid Rosenthal
... "Oh, apps on your phone. Cool."
- BGBen Gilbert
When I first saw the iPhone, I thought, "This device changes everything," 'cause I was like... I wanted one so bad.
- 31:05 – 35:45
Walmart → Amazon: discount retail, tech-enabled operations, and what “tech company” means
- DRDavid Rosenthal
Then we did Amazon, and, and I include Walmart in Amazon. I'm so glad we did Walmart-
- BGBen Gilbert
Walmart first
- DRDavid Rosenthal
... first. That's why, I have in my head, I was like, "Did we do two Am- episodes on Amazon or three?" We really did three.
- BGBen Gilbert
Yeah.
- DRDavid Rosenthal
Episode one was Walmart.
- BGBen Gilbert
Yep. In order to understand the role of retail in America today, you sort of first need to understand that everything we think of as a retailer, or most things we think of as retailer, are actually discounters.
- DRDavid Rosenthal
Yes.
- BGBen Gilbert
And I totally didn't get that before doing the Walmart episode. I was like, "Well, there's, like, stores, like Walmart and Target, and there's department stores, which are, like, more expensive and opinionated, and then the brands that have sort of their own stores." But, like, I didn't con- conceptualize that the most common place that you buy things are actually discounters. And Walmart was really the company that single-handedly created the wave of the modern store, period-
- DRDavid Rosenthal
Yep
- BGBen Gilbert
... which then Amazon could take digital.
- DRDavid Rosenthal
Yes. Yes. Well, and I was so blown away learning about, with Walmart, how much of a tech company they were.
- BGBen Gilbert
Yeah.
- DRDavid Rosenthal
Like, I think we said on the episode, and I, I still think, that they were the first applied technology company in America.
- BGBen Gilbert
I think this is, uh, silly. I think you've said this a few times now. I don't, I don't agree with it.
- DRDavid Rosenthal
Okay.
- BGBen Gilbert
Like, uh, okay, so technology at its purest definition is anything that enhances the productivity of a human. So, like, the wheel is technology, because with the same number of calories burned, you're able to go farther.
- DRDavid Rosenthal
Fair.
- BGBen Gilbert
Or a navigational instrument, which means you're able to get somewhere in a shorter amount of time. So, I mean, maybe you could scope it to, like, applied-
- DRDavid Rosenthal
Well, I guess what I-
- BGBen Gilbert
... digital technology, or like-
- DRDavid Rosenthal
What makes me s- wanna say that is they were a company who did business in an established sector.
- BGBen Gilbert
Yep.
- DRDavid Rosenthal
And they transformed the way they worked, and ultimately the whole sector, by applying technology to it.
- BGBen Gilbert
So did Standard Oil, by applying technology to the old way that you used to extract oil from the ground.
- DRDavid Rosenthal
Fair enough. I mean, I guess, like, you could say the car companies-
- BGBen Gilbert
Or the lighting, the way people light their homes.
- DRDavid Rosenthal
But those... I guess the distinction I'm trying to draw, which may not be a valid one, is I think in all those cases, the business was the technology.
- BGBen Gilbert
Mm.
- DRDavid Rosenthal
Here, it was a separate existing part of the economy, that they were in that business, and they used technology to transform the way they do it. Maybe it's a meaningless distinction.
- BGBen Gilbert
Mm. It's interesting.
- 35:45 – 41:45
Benchmark + Enron + FTX: what Acquired can add, and when not to cover live drama
- DRDavid Rosenthal
Benchmark?
- BGBen Gilbert
Benchmark.
- DRDavid Rosenthal
Benchmark was super cool.
- BGBen Gilbert
I mean, that, like, a pinch me moment for you and I both.
- DRDavid Rosenthal
I think we should lean into that format as much as possible going forward, of we tell a story, and then we have the protagonist on.
- BGBen Gilbert
Yeah. I think Acquired has been a bunch of iterations to find our way to that format. That does feel like the platonic ideal of an Acquired... A way Acquired talks about a topic, I do think, is probably you and I spending three hours diving deep from everything we can find, telling the story in the way that we sort of see it.
- DRDavid Rosenthal
I used to think, "Oh, what, what can make us different and better is we're gonna spend more time preparing-... than any other interviewer. We're gonna take this super seriously. We only do one of these interviews a month. This is like-
- BGBen Gilbert
Which is a tactic, not a strategy.
- DRDavid Rosenthal
Exactly. And, like, yeah, we probably do more preparation for our interviews than eighty, ninety percent of other interviewers out there, but there are other really good interviewers-
- BGBen Gilbert
Very good, yep
- DRDavid Rosenthal
... like Ben Thompson.
- BGBen Gilbert
Yep.
- DRDavid Rosenthal
But what-
- BGBen Gilbert
Patrick O'Shaughnessy.
- DRDavid Rosenthal
Patrick O'Shaughnessy.
- BGBen Gilbert
Yeah.
- DRDavid Rosenthal
Exactly. But what we did with Benchmark, that's something that only we can uniquely do.
- BGBen Gilbert
It's interesting. I- only as aggressive, but it's something that our format and the set of trade-offs that we make in our business makes it easier for us to do that than for someone else. I always think about strategy as about trade-offs. Like, what's the original, um, Michael Porter journal entry? It's called Competitive Strategy, and it's great. It's like, for anyone who hasn't read it, it was in the Harvard Business Review, I think, when it first came out, something like twenty pages. It's very cogent, it's very straightforward, and he talks a lot about how there's operational efficiency and there's strategy. And operational efficiency is, we're just gonna be better. We're gonna be more efficient. We're gonna do it for cheaper costs. You and I are gonna do more research than anybody else. But there's real strategy, which is trade-offs.
- DRDavid Rosenthal
Right.
- BGBen Gilbert
It's the Southwest model.
- DRDavid Rosenthal
The, the former is not a strategy.
- BGBen Gilbert
Right. There's sort of the Southwest model of, like, we are going to have a different model for where we keep planes than every other airline. We're not gonna use the hub and spoke model. We're gonna... Everywhere that we fly to, and a constrained set of places that we fly to, is going to be a pseudo hub for us, and we're gonna keep our planes sort of diversified, and we're only gonna have one model of airplane, so that way they're easier to service, and there's a whole bunch of trade-offs involved with that, but that's our strategy. Even though it's- comes with a lot of downsides, we're gonna lean into the upsides. And I think, like, the lean into the upsides thing for us is, if you're doing a super high-velocity show, Benchmark's probably not gonna feel like you're giving them a unique spotlight, in a way, to do something like that. If you do things that may or may not enable deep trust from listeners, then there's people that are not gonna wanna come on the show 'cause they don't know how they're gonna come across. But if you always sort of lean into this, "We have very few guests, we think they're people that you really should hear from"... Which, by the way, this is why the SBF thing burns me up so much, is 'cause, like, we try to be ridiculously selective. Then it enables you to create content with people that otherwise are not going to go do the circuit.
- DRDavid Rosenthal
Yep.
- BGBen Gilbert
Not to mention, when we do three hours of content about the thing before, it enables us to come in with that prepared mind.
- DRDavid Rosenthal
That's what I was gonna say, too. There's an element, in the case of the Benchmark episodes, it actually was all pre-planned in advance that we were gonna do the episode just us, and then we were gonna do the dinner with them. That was planned before we even released the first episode. But I do think we've experienced, in the past with the show, there are times where we will engage with a company or a CEO or a firm before having done any Acquired content on them, and they're like... They don't engage fully.
- BGBen Gilbert
Right.
- DRDavid Rosenthal
And then we do an episode just us, and then it completely changes-
- BGBen Gilbert
Yep
- DRDavid Rosenthal
... the tenor of the conversation.
- BGBen Gilbert
Yeah, it's like being willing to do the work to prove that you're as serious about caring about this topic as you say you are, and by us having the format of you and I just doing these deep dives on companies, that is a differentiated strategy than an interview show.
- 41:45 – 53:29
Strategy as trade-offs: two-person purity, long episodes, and why live shows are costly
- DRDavid Rosenthal
We talked a minute ago about trade-offs, when we were talking about the Benchmark-
- BGBen Gilbert
Yep
- DRDavid Rosenthal
... two-parter. What, in your mind, are the biggest trade-offs that we make here on Acquired?
- BGBen Gilbert
I think we make a ton of trade-offs. I think we are an, maybe to a fault, purist organization. That, and that's the first one. We're two people.
- DRDavid Rosenthal
Organization. [chuckles] You're looking at the whole organization here.
- BGBen Gilbert
But, like, okay, not a lot of content.
- DRDavid Rosenthal
Yeah.
- BGBen Gilbert
Right? A common wisdom is to release content every week. We don't do that. That has downsides, such as it's hard to become a top show in the charts if you're not constantly producing new content. It works against the algorithms. But it has upsides of, now we can go do really, really deep research. A second one being really long episodes. That's a massive trade-off. Like, lots of people don't wanna listen to you when you do that, but the people who do, really like it.... another one being, people often ask, like, "Do another show, bring on other hosts. You could leverage the podcast feed to promote other episodes of your new spin-off show with your new host, where you have some of the economics of that." There's, like, a lack of purity to me that that's not Acquired, then. That's- I don't know why we would do that. [chuckles]
- DRDavid Rosenthal
It doesn't fit in the box.
- BGBen Gilbert
It's one of those things where it's like, sure, you could make more money doing that, but it goes in the too-hard pile. I think you and I have a really big too-hard pile.
- DRDavid Rosenthal
Yeah.
- BGBen Gilbert
In some ways, that's strategy. It's like if you actually believe in the set of trade-offs that you have, then you have to be willing to have a really big too-hard pile when there's a lot of people telling you there's low-hanging fruit to be done. But often, that low-hanging fruit is counter to your strategic trade-offs.
- DRDavid Rosenthal
It's interesting. I feel like you've always been this way, I think, in your life.
- BGBen Gilbert
I'm cranky.
- DRDavid Rosenthal
[laughing] Oh, you're so-- you're not cranky, though. You're wonderful.
- BGBen Gilbert
But I'm cranky about things like this. Like, I-
- DRDavid Rosenthal
You're persnickety, you're not cranky.
- BGBen Gilbert
I'm persnickety.
- DRDavid Rosenthal
You're persnickety.
- BGBen Gilbert
Yes.
- DRDavid Rosenthal
Yes, for sure.
- BGBen Gilbert
Jerry Seinfeld said it really well on The Tim Ferriss Show, which is one of the best podcast interviews in history. That's my first carve out of the night.
- DRDavid Rosenthal
Ooh!
- BGBen Gilbert
Tim asked him, like, how does he come up with all the bits? Like, how does he observe things? And his comment is, "There's so many things that annoy me."
- DRDavid Rosenthal
Mm.
- BGBen Gilbert
"I sit there, and all I can see in the world is all the things that are, like, a little bit wrong, and that just really bother me, and then I write them down. And then I polish, polish, polish, polish, polish." And I'm not Jerry Seinfeld, and I don't... It's not to that extent, but, like-
- DRDavid Rosenthal
Very different, uh, application-
- BGBen Gilbert
Right
- DRDavid Rosenthal
... of this, but a similar trait.
- BGBen Gilbert
Like, we ship an Acquired episode, all I can see are the 16 ways that we could have made it better. I'm proud that it's out there, but, like, really, all I can see are the flaws.
- 53:29 – 59:27
Partners, sponsors, and a different media business model (including investing alongside the community)
- DRDavid Rosenthal
Yep. That has been a huge highlight for me for the year, is I think we have found a way I don't know that anybody would've thought was, like, possible as a podcast, as a media business, to, like, really build deep relationships with our sponsors and our partners. I think almost every single one of them, we did something like the Fundrise All Hands or, you know, a conference, and most of them now... A, a very large percentage of our sponsors, we've invested in.
- BGBen Gilbert
Yeah. What, five of them?
- DRDavid Rosenthal
I think five, yeah. Vanta, and we should talk about Vanta in a, in a big way. Modern Treasury, Vouch, Mystery, Standard Metrics, we've invested in.
- BGBen Gilbert
And what was Standard Metrics called when they sponsored?
- DRDavid Rosenthal
Quaister.
- BGBen Gilbert
Quaister, that's right.
- DRDavid Rosenthal
That was their original name. Yeah.
- BGBen Gilbert
Back in the day.
- DRDavid Rosenthal
Just like we, for our listeners and our audience, you know, we've kinda always thought... I think it's been one of our core tenets from the beginning, of like, we treat our audience as, like, equals to, like, more impressive than us. Like, when we started the show, especially. Now, and even the folks who are listening to us are the folks who we want to invest in, we wanna do business with, we wanna do-
- BGBen Gilbert
Well, that's what eats me alive when I get something wrong in an episode, and it's a black mark to me, and I can't do anything but see it. It's like, you know, I'm thinking of the people who I know listen to the show, who are listening to that and thinking, "Uh, he didn't quite get that right," 'cause that's how I envision our audience.
- DRDavid Rosenthal
Not that we didn't always think this way, but it's really come to-... we realize now, we think of our sponsors the same way as our, you know, our partners, as like these are amazing companies. Like, how can we build as deep a relationship with them as possible?
- BGBen Gilbert
Yep, totally agree. I mean, the sponsorship model is another way that we make a pretty significant trade-off. So we only do six-month, season-long sponsorships, and we are ridiculously choosy about the people that we do that with. And because it's a six-month-long thing to an audience of 250,000 people that happen to be probably the most valuable audience in the world in terms of CEOs, founders, engineers, capital allocators-
- DRDavid Rosenthal
Certainly the set. I mean-
- BGBen Gilbert
The set.
- DRDavid Rosenthal
It would be, um, hubris of us to claim that we singularly at Acquired have the most-
- BGBen Gilbert
No, but-
- DRDavid Rosenthal
... but of the, you know, our niche of media-
- BGBen Gilbert
Right
- DRDavid Rosenthal
... the listeners to our niche of media, I, I think unquestionably are the most valuable-
- BGBen Gilbert
Right
- DRDavid Rosenthal
... audience in the world.
- BGBen Gilbert
So it's a big-ticket item whenever a sponsor decides that they wanna work with us, for the duration, for the reach, and for the magnitude of who you're reaching when you reach them. And so it's like a big freaking commitment.
- DRDavid Rosenthal
Yep.
- BGBen Gilbert
And there's a trade-off there in our business model, which is we're not gonna work with that many people when we do, but when we do, we wanna go as deep as possible. And so that means that we can't do things like engage with agencies or engage with dynamic ad insertion networks, or a lot of other things that would make our lives easier.
- DRDavid Rosenthal
Yep.
- BGBen Gilbert
It probably also means that we can't outsource sales. Like, you and I are the ones talking to the CEOs of the companies who sponsor, which again, lots of trade-offs. They're very busy people, they're often hard to get ahold of, but they're people that we get to build a really real relationship with.
- DRDavid Rosenthal
Yep. This is one of my favorite trade-offs we've made, kinda like I've been saying, is like, these are the types of people who we would want anyway-
- BGBen Gilbert
Right
- DRDavid Rosenthal
... to build deep relationships with.
- BGBen Gilbert
Right.
- 59:27 – 1:13:47
Show growth mechanics: compounding, step-change episodes, Spotify partnership, and why sharing is hard
- DRDavid Rosenthal
Relatedly, show growth.
- BGBen Gilbert
Show growth.
- DRDavid Rosenthal
It was so fun talking to Ben Thompson about this and his growth trajectory and curve. We pretty amazingly doubled our audience again this year.
- BGBen Gilbert
Which has basically been true every year since we started seven years ago, which this is always one of these things where if a startup is only doubling year over year in the first two or three years, it's like, okay, well, it's not gonna be a breakout company. But if you can actually keep doubling for seven, eight, nine years, the numbers get pretty big.
- DRDavid Rosenthal
Yeah.
- BGBen Gilbert
And so it feels very different transitioning from 2020 to today-
- DRDavid Rosenthal
Yeah
- BGBen Gilbert
... sort of looking over a two-year span, where-
- DRDavid Rosenthal
Even from last year to today. So we, we hit over a quarter million subscribers, um-
- BGBen Gilbert
Which was 62,000 just 24 months ago.
- DRDavid Rosenthal
I know.
- BGBen Gilbert
So that's the crazy... Like, that's the place where this sort of, like, out years of compounding is starting to show up for us.
- DRDavid Rosenthal
And the thing that's been crazy to me is there still have been some kind of step change. Like, the Amazon episode-
- BGBen Gilbert
Yeah
- DRDavid Rosenthal
... was, that was a step change for us.
- BGBen Gilbert
For sure. Yeah, I think the previous highest episode to Amazon had gotten just over 100,000 downloads, and that one got 170,000.
- DRDavid Rosenthal
Yeah.
- BGBen Gilbert
And-
- DRDavid Rosenthal
In the first 90 days-
- BGBen Gilbert
In the first 90 days
- DRDavid Rosenthal
... that's how we look at it.
- BGBen Gilbert
And when we say a quarter million, that is the unique-... number of people who listen to, it's basically our monthly active listener count-
- DRDavid Rosenthal
Yep
- BGBen Gilbert
- across all platforms, who engage with at least one episode.
- DRDavid Rosenthal
'Cause not all of you listen to every episode, [chuckles] sadly. The cool thing about podcasts, and for us, and you know, that it is an open ecosystem that's not controlled by algorithms, it does mean growth takes longer, and it's harder, and you have to do these step change functions, but then people become subscribers, and they stick around. Amazon was a huge step change moment for us in terms of growth, and many of those new people subscribed.
- BGBen Gilbert
Right.
- DRDavid Rosenthal
And so thus, the subsequent episodes, Benchmark, Enron [chuckles] -
- BGBen Gilbert
Like, the two Benchmark episodes were both way higher than the 100,000 that we were at before Amazon, and then Enron now is charting to look pretty similar to Amazon. They're early, we're only five or six days in, but, like, it is-
- DRDavid Rosenthal
Which shouldn't be-
- BGBen Gilbert
- unbelievable how sticky.
- 1:13:47 – 1:17:12
Sponsor spotlight: Brex’s two innovations (startup card → enterprise spend + controls)
- DRDavid Rosenthal
Would this be the perfect point?
- BGBen Gilbert
To do what?
- DRDavid Rosenthal
To talk about our friends at Brex?
- BGBen Gilbert
Yes. Let's talk about our friends at Brex.
- DRDavid Rosenthal
What we were planning to do for this sponsor segment for them is actually perfect for this episode.
- BGBen Gilbert
[chuckles]
- DRDavid Rosenthal
We didn't plan it this way, but they wanted to talk about how they've innovated twice, and they have these two successful, now separate, products, and they really are two products within Brex. This is so perfect. When we started Acquired, I think most people listening don't know this-
- BGBen Gilbert
It's true
- DRDavid Rosenthal
... we had two ideas for the show. [chuckles]
- BGBen Gilbert
Right.
- DRDavid Rosenthal
One was-
- BGBen Gilbert
Acquisitions that actually went well.
- DRDavid Rosenthal
Yes, which more-
- BGBen Gilbert
Is theoretically what this is.
- DRDavid Rosenthal
Which we did, and it has now morphed into this.
- BGBen Gilbert
Yep.
- DRDavid Rosenthal
The other idea that we had for a podcast to do together-
- BGBen Gilbert
Companies that had two massive innovations.
- DRDavid Rosenthal
Two successful innovations.
- BGBen Gilbert
Which, by the way, I think that's why I'm so drawn to the NVIDIA story, is because that is what they sort of like these bet the company big innovations, or like Apple with the Mac and the iPod and the iPhone, or Microsoft with Windows and Office, and I think this is a great place to talk about Brex's two big innovations.
- DRDavid Rosenthal
Totally. Which, you know, they started with corporate card for startups. They were the first corporate card for startups. That was like-
- BGBen Gilbert
Modern, incredible UI, really flexible, customizable product that felt super mobile-friendly.
- DRDavid Rosenthal
Well, and that you could just get actual, like, good underwriting and, like, available credit and credit card products as a startup-
- BGBen Gilbert
Yep
- DRDavid Rosenthal
... whereas most traditional [chuckles] banks would be like, "You're a startup. You don't have revenue." But, like, these companies were good credit risk. They had raised a lot of money from big VCs. Anyway, massive innovation and the first time. The second time that they've innovated recently is for a whole different set of customers, which are large enterprises, 'cause a huge number of those startups that started with Brex have now grown up and matured into large enterprises. So what they've gotten into now is not just credit cards, but spend management. Brex works seamlessly for spend management across 100-plus countries and currencies, but the even bigger product innovation is they've built in compliance and controls to the start of the spend management process, not to the end. So rather than, like, approving expenses after they're registered on the card, and you've gotta track down the receipts and do all the nightmare that you and I remember from working at larger companies than Acquired-
- BGBen Gilbert
Yep
- DRDavid Rosenthal
... it's all set of guidelines are, are set upfront by policy teams, by finance, by compliance, and then anything that is, by Brex's algorithms, within compliance gets automatically approved. You don't need the receipts. You don't need to [chuckles] like, approve every single thing that goes through. It's just automatically done, and it's only the outliers that get flagged. So that is a huge, huge productivity savings for growth enterprises. Go to brex.com/acquired to sign up, and this is perfect for the end of the year, the holiday season. We put our heads together a couple weeks ago with the Brex team and said, "We, we wanna do something for the community and people who sign up with Acquired." You can... If you sign up for Brex via that link, or if you have already in the past signed up for Brex because you heard about them on Acquired, just email us, let us know.
- BGBen Gilbert
hello@acquired.fm.
- DRDavid Rosenthal
You can get a free Acquired t-shirt from the merch store, and we now have several different T-shirts to choose from.
- BGBen Gilbert
Our thanks to Brex for a great, great season.
- 1:17:12 – 1:25:58
Looking to 2023: OpenAI, luxury/brands, Epic, Sessions evolution, and on-site storytelling
- DRDavid Rosenthal
Next, we gotta talk about next year, 2023.
- BGBen Gilbert
Yes.
- DRDavid Rosenthal
Looking ahead. Okay, first question for us: What episodes, topics, guests are we thinking about?
- BGBen Gilbert
Oh!
- DRDavid Rosenthal
What should we, um... What's on the docket?
- BGBen Gilbert
Hang on, let me bust out my list.
- DRDavid Rosenthal
One that feels like an obvious one we should do at some point next year is OpenAI.
- BGBen Gilbert
Yeah, absolutely.
- DRDavid Rosenthal
We talked about doing it at various points this year, and especially, like, fitting in with the whole NVIDIA series, but, um-
- BGBen Gilbert
It's funny-
- DRDavid Rosenthal
... now it feels like we gotta do it.
- BGBen Gilbert
We almost did it 12 months ago. Like, I remember last year over the holidays doing some prep work for it, and that, I think, would've been kind of disastrous, 'cause we would've done it, and I think way undersold. Like, we wouldn't have been-
- DRDavid Rosenthal
Would've been way too early.
- BGBen Gilbert
Yeah.
- DRDavid Rosenthal
If we do end up doing it, and do it, you know, relatively early next year, it's sort of ironic that the next Elon company that we'll cover after our old [laugh] SpaceX episode is [chuckles] OpenAI. We didn't, didn't do anything on Twitter.
- BGBen Gilbert
I kind of forgot-
- DRDavid Rosenthal
We haven't done any revisiting of Tesla
- BGBen Gilbert
... this is an Elon company. It is crazy. God, he's got his fingers in everything.
- DRDavid Rosenthal
The Twitter is just... Oh, my gosh, there's just so much drama. There's so much drama. I don't, I don't like having just drama on Acquired.
- BGBen Gilbert
That is true, and I think part of the reason why we haven't done a Twitter episode since we interviewed Dick Costolo in early 2021, maybe-
- DRDavid Rosenthal
Yeah, way before all this
- BGBen Gilbert
... is, like, the story feels less like a business story and more like a TMZ story, which-
- DRDavid Rosenthal
Yes
- BGBen Gilbert
... isn't our cup of tea.
- DRDavid Rosenthal
Yes. I don't ever wanna feel like TMZ. [chuckles]
- BGBen Gilbert
I won't say that, like, I'm not interested in reading all the TMZ drama about it. It's totally fascinating, and, you know, if you can run a company on 80% less people than you were running it before, and nothing goes terribly wrong, that's super interesting for the world to know. Now, of course, it does look like all sorts of things are going wrong, but to the extent that they can turn it around, and the business can be generating as much revenue as it was before on a massively lower cost basis-... I'm very curious to know what the second-order effects of that are.
- DRDavid Rosenthal
Yeah.
- BGBen Gilbert
But the story that we know so far-
- DRDavid Rosenthal
That is an interesting, actually-
- BGBen Gilbert
Is TNC
- 1:25:58 – 2:22:18
Personal 2022 recaps + tech gear corner + closing carve-outs and thanks
- BGBen Gilbert
... has to be a, a big thing. All right, so before we get to our extended carve-outs, in sort of reviewing 2022, you and I both had big 2022s.
- DRDavid Rosenthal
Yeah.
- BGBen Gilbert
So that's probably worth [chuckles] uh, worth-
- DRDavid Rosenthal
Yeah
- BGBen Gilbert
... chatting about a little bit.
- DRDavid Rosenthal
We did- I love... This is, uh... We didn't intend it this way. This is becoming much like the Benchmark dinner that we recorded everything, obviously, before dinner, 'cause we didn't wanna eat dinner before we went out. This is-
- BGBen Gilbert
We got a lot of good comments of, like, "Why are they just sitting there with cheese and on their plates? Like, aren't they gonna eat? Aren't they gonna eat real food?" And like, we did afterwards.
- DRDavid Rosenthal
Yeah, yeah. But, like, that would not make for good [chuckles] video content.
- BGBen Gilbert
Clink, clink, clink, clink, clink.
- DRDavid Rosenthal
Yeah, uh, audio or video content.
- BGBen Gilbert
Video or audio content. [chuckles]
- DRDavid Rosenthal
We are going to, after we finish recording here, we're gonna go out to, uh-
- BGBen Gilbert
Celebrate 2022
- DRDavid Rosenthal
... celebrate a holiday dinner for Acquired, for the two of us. But I feel like this is, like, the pre-record. This is the recording version, so at which we would definitely talk about our personal lives. Well, you had by far-
- BGBen Gilbert
I had probably the biggest-
- DRDavid Rosenthal
... the biggest event
- BGBen Gilbert
... life event that you could have.
- DRDavid Rosenthal
Yeah, you had a-
- BGBen Gilbert
Yes. I got married. It was wonderful.
- DRDavid Rosenthal
I was here. It was great.
- BGBen Gilbert
You were here. It was really cool, 'cause in some ways I thought it wasn't going to feel different afterwards. I think a lot of people in our generation sort of, like, date for a long time, and live together, and feel like life partners, but there's something totally different about being married.
- DRDavid Rosenthal
Totally.
- BGBen Gilbert
You know, having the ring on every day as a reminder, and the sense of, like, longevity associated with it is really cool and a really totally different psychological place than I thought.
- DRDavid Rosenthal
Well, and you go through this process and project together-
- BGBen Gilbert
Yes
- DRDavid Rosenthal
... of the wedding. [chuckles] Like, from the moment you get engaged until the wedding, is this like, uh, you know, you're like a butterfly going into... like, a caterpillar going into a cocoon. It's like a transformational period.
- BGBen Gilbert
Yes.
- DRDavid Rosenthal
Um, and I say, like, I was here. You did the [chuckles] wedding at your house af- right after moving. Like, oh, my gosh.
- BGBen Gilbert
I didn't wanna play the 2022 venue game.
- DRDavid Rosenthal
Yeah. [chuckles]
Episode duration: 2:22:18
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