We dive into the fast-changing world of direct-to-consumer digital health, with perhaps the best person in the world: Levels founder Josh Clemente. (Shoutout to Ben Grynol and Michael Mizrahi from our LP community for introducing us!) Levels is on a mission to make consumers everywhere aware of their metabolic health by enabling anyone to track blood glucose levels with a continuous glucose monitor. Josh has had an incredible career, working as an early engineer at SpaceX and later at Hyperloop One before founding Levels out of a very real personal need. Join our conversation as we cover everything from Josh's time at SpaceX to why the market has changed for consumer digital health, and what the future holds for Levels. If you love Acquired and want more, join our LP Community for access to over 50 LP-only episodes, monthly Zoom calls, and live access for big events like emergency pods and book club discussions with authors. We can't wait to see you there. Join here at: https://acquired.fm/lp/ Sponsors: Thanks to Kevel for being our presenting sponsor for this special episode. Kevel provides API infrastructure to quickly build custom ad platforms for sponsored listings, internal promotions, native ads, and more — customers include Yelp, Rappi, OfferUp, Mozilla, Strava, and many other large apps and platforms. In true Acquired fashion, Kevel and CEO James Avery have put together a fun page showcasing the company's "history & facts", which you can find here: http://bit.ly/acquiredkevel ! Thank you as well to Masterworks and to Perkins Coie. You can learn more about them at: http://bit.ly/acquiredmasterworks (use code “Acquired” to skip the waitlist) http://bit.ly/acquiredperkins The Levels / Digital Health Playbook: (also available on our website at https://www.acquired.fm/episodes/special-why-now-for-digital-health-with-levels-founder-josh-clemente ) High risk, high return - having a mentality of "we have nothing to lose" can create the high risk tolerance necessary to achieving high returns. SpaceX had a "we have nothing to lose" mentality for all of its early days. Elon always reminded SpaceX employees that everyone had to personally have to succeed, or "2,000 people including you will lose their jobs." Internet-based prescription workflows have unlocked a key business model innovation for direct-to-consumer digital health. The unlocking of therapeutic devices and drugs for direct to consumer cases, as pioneered by Hims/Hers, Roman, etc, has created a new age for digital health. This paradigm has shift has allowed businesses to reach patients directly without spending years (and millions of dollars) negotiating agreements with payers to get a coveted "billing code" from insurance. Often the best startup opportunities come from personal experience. The story of how Josh came to found Levels illustrates the power of being patient zero of the problem you want to solve. Josh didn't start out looking for a company to start, but by self-experiments simply because he had a problem and was curious. In new categories, starting as a premium product and moving down market as costs come down is often the best strategy. Tesla's "master plan" illustrates this perfectly: start absurdly expensive & impractical (Roadster), then still expensive but more practical (Model S/X), then mass-market viability (Model 3/Y). Data, data, data. If you listened to our Meituan episode, you'll remember us discussing the power of Meituan's review data. Similarly, Levels moat lies in its data. Amazingly Levels already owns the world's largest collective dataset of non-diabetic glucose monitoring data, and the company is still in beta! As they amass more and more data, they'll be able to generate more personalized insights and health/lifestyle recommendations for customers. Links: Levels: https://www.levelshealth.com 

Acquired

Special: "Why Now" for Digital Health (with Levels founder Josh Clemente)

Last Acquired left the plucky Rec Room crew in our 2018 "Part I" episode, they were a seed stage startup making a VR game that users loved but grew slowly and barely monetized. Fast forward to today, and they're now a multi-platform social "place" with millions of active users, 500%+ YoY growth and hosting a robust creator economy that's rivaled only by their oft-compared metaverse cousin Roblox in dynamics and efficiency. And oh yeah, they're now a $1B+ company after a new $100m fundraise from existing investors Sequoia and Index, which they're announcing today. We figured it was high time to revisit Nick & crew for a Part II...   If you love Acquired and want more, join our LP Community for access to over 50 LP-only episodes, monthly Zoom calls, and live access for big events like emergency pods and book club discussions with authors. We can't wait to see you there. Join here at: https://acquired.fm/lp/   Sponsors:  Thanks to Tiny for being our presenting sponsor for all of Acquired Season 8. Tiny is building the "Berkshire Hathaway of the internet" — if you own a wonderful internet business that you want to sell, or know someone who does, you should get in touch with them. Unlike traditional buyers, they commit to quick, simple diligence, a 30-day or less process, and will leave your business to do its thing for the long term. You can learn more about Tiny here: http://bit.ly/acquiredtiny Thank you as well to Vouch and to Capchase. You can learn more about them at: https://bit.ly/acquired-vouch http://bit.ly/acquiredcapchase   The Rec Room Playbook: (also available on our website at https://www.acquired.fm/episodes/rec-room-part-ii-with-ceo-nick-fajt ) 1. It's ok not to have a grand plan from the beginning. As Nick says, company founding stories tend to get romanticized in retrospect. (Guilty as charged here at Acquired!) As a founder it can feel like there's so much pressure on you to "have it all figured out" from day one. But the reality of most great company beginnings is nothing so grand: often it's just founders who have an inkling about something interesting and the combination of courage + right life circumstances to jump into the unknown and learn as they go. Things change quickly in new or evolving markets, and if you're too wedded to a master plan you're likely to miss more opportunities than you seize. 2. Don't let early (or even just recent) success blind you if potential headwinds are on the horizon. Rec Room experienced "explosive" growth during the 2017 holiday season with the launch of Playstation VR. However this was a classic "wiggle of false hope" (in Paul Graham parlance), not real product-market fit. It would have been easy to ignore the very real warning signs (e.g., that VR adoption as a whole was slowing) and plow full steam ahead. Instead the team realized they probably needed to step back from the temporary momentum and diversify out of solely focusing on VR to find new avenues for growth. 3. Build your company into a robust organism. Startups constantly face existential risks: what if the market shifts? What if we make wrong strategic decisions? How can you architect your business as a system so that "you" (either you personally or the company management as a whole) doesn't need to always be right in order to succeed? For Rec Room this has meant investing deeply into UGC and letting creators lead growth. Any room or piece of content might be no more likely to breakout than another — but in aggregate across now millions of creators, Rec Room is almost guaranteed a constant stream of "hits". 4. UGC is a flywheel that's difficult to start, but creates incredible business dynamics once spinning. Like any flywheel, UGC requires a ton of effort to get moving in the beginning. (E.g., why should people bother to create? What tools do they need? How do you get the incentives right?) But once momentum takes over, it can become an incredible virtuous cycle where users' creativity inspires more users both to consume and create themselves, which compounds faster and faster over time. Furthermore, once a UGC flywheel is spinning, the underlying platform's unit economics get pretty fast: costs to produce content go down (or to zero), cost to acquire users go down (or to zero), and retention, engagement and monetization all spike up. In previous eras Facebook, YouTube, Instagram and Twitch rode to this dynamic to incredible success. Today Roblox, Rec Room, TikTok and others are following the same playbook. 5. When operating a "metaverse", the best business dynamics result from having everything on a single platform (vs. siloing users based on devices/geos/etc) Having all users able to interact on one platform not only maximizes liquidity across the creator-consumer marketplace, but affords the company more power across brand (e.g. Rec Room is the sole brand, not "Rec Room on xbox/steam/VR/etc") and central economic control.   Links: Our "Part I" episode with Nick on Rec Room's seed round: https://www.acquired.fm/episodes/season-2-episode-2raising-a-seed-round-with-against-gravity-ceo-nick-fajt Rec Room! https://recroom.com   Carve Outs: Invent and Wander: https://www.amazon.com/Invent-Wander-Collected-Writings-Introduction-ebook/dp/B08BCCT6MW/ Resonant Arc on YouTube: https://www.youtube.com/channel/UCFzWAEPDGiY34bGpwM_DWmA How The Economic Machine Works by Ray Dalio: https://www.youtube.com/watch?v=PHe0bXAIuk0 

Rec Room Part II (with CEO Nick Fajt)

We dive into the history behind Meituan, the juggernaut Chinese "super-app" which dominates China's services economy, offering consumers everything from food delivery, restaurant reviews, travel booking, bike-sharing, movie ticketing, and countless other entertainment and lifestyle services all at the touch of a button. Already China's 3rd largest tech company by market cap (behind just Tencent and Alibaba), Meituan did $15 billion in net revenue in FY2019 and continues to grow rapidly. What makes it so special, and how were they able to become the market leader in such a competitive space? This story is packed with lessons that apply equally beyond China tech to high-growth company building and investing everywhere. If you love Acquired and want more, join our LP Community for access to over 50 LP-only episodes, monthly Zoom calls, and live access for big events like emergency pods and book club discussions with authors. We can't wait to see you there. Join here at: https://acquired.fm/lp/ Sponsors: Thanks to Tiny for being our presenting sponsor for all of Acquired Season 8. Tiny is building the "Berkshire Hathaway of the internet" — if you own a wonderful internet business that you want to sell, or know someone who does, you should get in touch with them. Unlike traditional buyers, they commit to quick, simple diligence, a 30-day or less process, and will leave your business to do its thing for the long term. You can learn more about Tiny here: http://bit.ly/acquiredtiny Thank you as well to Vouch and to Capchase. You can learn more about them at: https://bit.ly/acquired-vouch http://bit.ly/acquiredcapchase The Meituan Playbook: (also available on our website at https://www.acquired.fm/episodes/meituan ) 1. Adding product offerings (post initial product-market fit) isn't losing focus. It's smart business. A huge part of Meituan's success and longterm defensibility versus its literally thousands of past competitors is its ability to cross-sell customers across many different product lines. Meituan can afford to spend much more on acquiring and retaining a new user who'll end up purchasing food delivery, groceries, hotels, travel and more through the platform vs. standalone competitors in each vertical. Most western companies woefully misunderstand this dynamic. (Amazon being a notable exception) Meituan enjoys an average of 26 transactions per user per year (vs e.g. Airbnb users which book an average of 0.5 transactions/year). With each additional offering, Meituan increases the number of revenue streams it can amortize its CAC over, while also offering superior experiences to customers. Key to making this strategy work is having the discipline to follow the same playbook as any startup: launch new initiatives quickly, test and improve based on real customer feedback, don't let perfect be the enemy of shipped, and kill what's not working and move on. Meituan and Amazon's new initiatives often lack polish — but they either quickly bring in $billions of revenue, or they die and the company goes on to the next one. Again with few exceptions, western tech companies completely misunderstand how to execute this playbook effectively. 2. When you spot a market that's both large and growing fast — ride that wave!! Chinese e-commerce was a 20% saturation industry in 2017 and still growing nicely. However real world services was only 5% online, and poised to grow even faster. Staying nimble to capitalize on this online to offline (or "O2O") trend allowed Meituan to accelerate while Alibaba was caught flat-footed. Today Meituan (along with its fellow Tencent portfolio company Pinduoduo) represents probably the biggest threat Alibaba has faced in its entire history. 3. Many still don't realize what a powerful moat (trusted) reviews provide in online platforms. Once it merged with Dianping, review data became Meituan's biggest competitive advantage vs other food delivery (and other product line) competitors. A deep database of reviews creates an incredible barrier to entry: any competitor can standup a set of listings, but without trusted reviews those listings are just "flat". This same dynamic helped Airbnb successfully defend against European clones early in its life. 4. Old news, but always worth repeating: the days of China simply cloning American tech companies are long gone. Today it's China, not the US, that's leading innovation on mobile and the internet more broadly across many categories. Ironically, Meituan's founder Wang Xing started his career as perhaps China's top Web 2.0 company cloner, and Meituan itself began as a Groupon knockoff. But to say the the tables have turned today is a massiveunderstatement, haha. 5. Meituan capitalized on the secular trend of China's growing middle class and mobile-first economy. Meituan's growth followed the growth of China's middle class. They were able to capitalize on the emergence of Tier 2 and 3 cities that provided newly addressable populations. Meituan was smart to pay attention to these non-Tier 1 cities from the very beginning. Founder Wang Xing realized that smaller cities where people were beginning to access the internet via mobile phones and internet cafes were a good fit for their initial group-discount platform. Links: Meituan's English language walkthrough video: https://www.youtube.com/watch?v=5wxgQVjDviQ The Tech Buzz China podcast: https://www.techbuzzchina.com GGV's Evolving for the Next Billion podcast: https://nextbn.ggvc.com/podcasts/ Bernard Leong's Analyse Asia: https://analyse.asia Carve Outs: Extraterrestrial: https://www.amazon.com/Extraterrestrial-First-Intelligent-Beyond-Earth-ebook/dp/B081TTY4NX/ John Luttig's newsletter: https://luttig.substack.com Episode Sources: Episode 258: Meituan Dianping with Liza Lin - Analyse Asia http://meituan.todayir.com/attachment/20180907112826231236667_en.pdf http://meituan.todayir.com/attachment/2020041708160280279238680_en.pdf http://www.yawenlei.com/uploads/4/4/3/4/44340649/asr_lei.pdf http://www.yourtechstory.com/2019/04/06/wang-xing-chinese-billionaire-businessman-founder-meituan/ https://about.meituan.com/en https://analyse.asia/2018/07/28/episode-258-meituan-dianping-with-liza-lin/ https://archive.org/details/aisuperpowerschi0000leek/page/22/mode/2up https://chinatechinvestor.simplecast.com/episodes/43-alibaba-has-a-meituan-problem-can-they-solve-it-with-11-billion-nTvmG0A5 https://cn.reuters.com/article/instant-article/idUKTRE7433HI20110504 https://daxueconsulting.com/o2o-food-delivery-market-in-china/ https://en.wikipedia.org/wiki/Ele.me https://en.wikipedia.org/wiki/Meituan https://en.wikipedia.org/wiki/Wang_Xing https://medium.com/@Loisinbeijing/online-food-delivery-market-in-china-and-why-ele-me-is-losing-the-food-delivery-wars-17ef912d8f53 https://money.cnn.com/2018/09/20/technology/meituan-dianping-ipo/index.html https://nextbn.ggvc.com/opinions/meituan-dianpings-path-towards-profitability/ https://nextbn.ggvc.com/podcast/s1-ep-5-tao-zhang-of-dianping-on-merging-with-meituan-groupon/ https://secure.fundsupermart.com/fsm/article/view/rcms202620/meituan-dianping-the-unicorn-that-might-one-day-become-china-s-next-ten-bagger https://secure.fundsupermart.com/fsm/article/view/rcms204700/meituan-dianping-the-undisputed-king-of-china-s-45-billion-dollar-online-food-delivery-industry https://seekingalpha.com/instablog/49925729-dongtalk/5288005-three-campaigns-of-meituan-dianping-in-2018 https://techcrunch.com/2015/01/19/meituan-700m/?_ga=2.56564267.1010056541.1614018328-150822071.1609868284 https://techcrunch.com/2015/06/30/baidu-offline-to-online-20-billion-cny/?_ga=2.59578797.1010056541.1614018328-150822071.1609868284 https://techcrunch.com/2015/10/08/meituan-and-dianping-chinas-top-group-deals-sites-merge-in-multi-billion-dollar-deal/ https://thehustle.co/01272021-bytedance-valuation/#:~:text=ByteDance is currently valued at,%24800B) https://venturebeat.com/2008/05/26/chinese-local-review-site-dianping-a-lot-more-than-a-yelp-for-china/ https://web.archive.org/web/20170615042020/http://www.fox14tv.com/story/35003690/meituan-dianping-becomes-the-first-worldwide-on-demand-delivery-platform-to-process-more-than-10-million-orders-and-deliveries-per-day https://www.caixinglobal.com/2017-02-22/video-of-brawling-deliverymen-sets-chinese-internet-abuzz-101057682.html https://www.forbes.com/global/2011/0509/companies-wang-xing-china-groupon-friendster-cloner.html?sh=517b2d5955a6 https://www.ft.com/content/05686da9-60f8-4a3a-a5c5-95155bd01ffe https://www.marketwatch.com/story/alibaba-raises-11-billion-in-hong-kong-secondary-listing-2019-11-20 https://www.statista.com/statistics/1155778/china-number-of-wechat-mini-program-daily-active-users/ https://www.techbuzzchina.com/episodes/ep-10-meituan-the-super-app-that-won-against-a-thousand-clones https://www.techbuzzchina.com/episodes/ep-25-the-o2o-local-services-war-alibaba-vs-meituan-part-1-eleme https://www.techbuzzchina.com/episodes/ep-26-the-o2o-local-services-war-alibaba-vs-meituan-part-2-koubei https://www.techinasia.com/5000-group-buy-sites-in-china-but-no-ones-making-money https://www.techinasia.com/china-online-food-ordering-startup-eleme-raises-80-million-dollars https://www.techinasia.com/chinas-successful-founders-afraid-copycat https://www.theworldofchinese.com/2017/08/wheel-life-china-the-fast-and-the-furious/ https://www.wsj.com/articles/BL-MBB-58175 https://www.wsj.com/articles/chinas-dianping-valued-at-4-billion-1427962959 https://www.wsj.com/articles/chinas-meituan-dianping-files-for-ipo-reveals-loss-of-nearly-3-billion-in-2017-1529895226 https://www.wsj.com/articles/chinas-meituan-dianping-raises-3-3-billion-in-biggest-startup-round-ever-1453211614?mod=article_inline https://www.wsj.com/articles/chinese-app-meituan-raises-4-2-billion-in-ipo-1536819691 https://www.wsj.com/articles/chinese-startups-meituan-com-and-dianping-near-multibillion-dollar-merger-1444188561 https://www.wsj.com/articles/investors-gain-billions-from-chinese-tech-ipo-1538041120 https://www.wsj.com/articles/investors-including-tencent-priceline-pump-4-billion-into-online-lifestyle-platform-1508413127 https://www.wsj.com/articles/offering-discounts-and-delivery-meituan-wants-to-become-chinas-next-internet-giant-1529578801 https://www.youtube.com/watch?v=5wxgQVjDviQ https://www.youtube.com/watch?v=ruyCPdUz1J0 https://youtu.be/IgDeiGpmXaQ https://youtu.be/z9NI-UAZDvw 

Meituan

For the entire 20th Century, you’d be hard pressed to find a better business than an American newspaper — Warren Buffett famously described them as “franchises” — and no American newspaper stood taller than the New York Times. Controlled by a single family bound by a legal oath “to maintain the editorial independence and integrity of The New York Times and to continue it as an independent newspaper, entirely fearless, free of ulterior influence and unselfishly devoted to the public welfare”, the Times served as the paper of record for generations of Americans and people around the world. But no good thing lasts forever, and the dawn of the 21st Century saw both the Times and this once-mighty industry devastated by the dual disruptive forces of the internet and the 2008 financial crisis. And yet by 2021, The Times, essentially alone of its former peers, has reemerged from the American newspaper wreckage and transformed itself into a thriving digital business with an order of magnitude more subscribers than its print heyday. Curious how it all happened? We dive into 170 years of history to find out! If you love Acquired and want more, join our LP Community for access to over 50 LP-only episodes, monthly Zoom calls, and live access for big events like emergency pods and book club discussions with authors. We can't wait to see you there. Join here at: https://acquired.fm/lp/   Sponsors: Thanks to Tiny for being our presenting sponsor for all of Acquired Season 8. Tiny is building the "Berkshire Hathaway of the internet" — if you own a wonderful internet business that you want to sell, or know someone who does, you should get in touch with them. Unlike traditional buyers, they commit to quick, simple diligence, a 30-day or less process, and will leave your business to do its thing for the long term. You can learn more about Tiny here: http://bit.ly/acquiredtiny Thank you as well to Vouch and to Capchase. You can learn more about them at: https://bit.ly/acquired-vouch http://bit.ly/acquiredcapchase   The New York Times Company Playbook:(also available on our website at https://www.acquired.fm/episodes/the-new-york-times-company ) 1. When you find yourself sitting in front of a big approaching demand wave... ride it!! The New York (Daily) Times was founded during the newspaper boom of the 1850s, and similarly Adolph Ochs took over the local Chattanooga paper at the start of that city’s mining boom. The NYT made huge investments in its reporting during the two World Wars as the public’s appetite for news exploded, while its rivals missed the ball worrying over preserving advertising space. Likewise NYT launched The Daily (which would become the biggest podcast in the world) immediately following Trump’s inauguration in early 2017. Arguably NYT’s biggest business mistake was missing the cable wave -- which Rupert Murdoch leveraged brilliantly to build Fox News into the most valuable news media franchise in the world. 2. Where there’s an entrepreneurial will, there’s an entrepreneurial way. Adolph Ochs bought the Chattanooga Times with $250 and sellers’ notes, and then acquired The New York Times out of bankruptcy with no personal money down and $100k of real estate debt. And turned them both into successes on a level no one (even himself at times) believed possible. 3. Recurring Acquired theme: the media business is still the second-best business of all time, behind technology. Media’s ability to generate dual revenue streams (advertising and subscription) from the same content product generates enormous leverage on investment, AND most of those costs are fixed vs. variable (especially in a digital environment). 4. This is why “content is king” has always been true in the media industry. NYT’s version of this strategy has always been to invest more in high-quality journalism than any of its peers. It was true in 1896 when Ochs took over, true during the World Wars and the Pentagon Papers, and perhaps has never been more true than today when NYT employs 1,700 journalists around the world and pays them an average of >2x the rest of the industry. 5. That said, distribution is critical as well. To build a world-class media organization you must be great at both content AND distribution. In the old media landscape, NYT built great distribution through its printing and delivery operations, as well as savvy investments like the Index which led to libraries and researchers across the country relying on the Times as the “paper of record”. However in today’s media landscape, the task of building great distribution falls on the newsroom and journalists themselves. The job is no longer finished once you hit publish -- reporters and editors must own the responsibility of getting their work in front of readers via social media and shareable story elements.   Links: The 2014 NYT Innovation Report: https://archive.org/details/pdfy-59s-4-I2qSvG6MnA/mode/2up Mine Safety Disclosures’ NYT presentation: https://minesafetydisclosures.com/blog/newyorktimes   Carve Outs: Ben: Titan by Ron Chernow: https://www.amazon.com/Titan-Life-John-Rockefeller-Sr-ebook/dp/B000XUDGHG Iteratively: https://iterative.ly David: Sabaa Tahir’s Ember in the Ashes series: https://www.amazon.com/Ember-Ashes-3-Book/dp/B074VDZB17   Episode Sources: http://www.internethistorypodcast.com/2015/10/martin-nisenholtz-on-bringing-the-new-york-times-online/ https://archive.nytimes.com/www.nytimes.com/books/99/09/19/daily/092299tifft-book-review.html?module=inline https://archive.nytimes.com/www.nytimes.com/learning/general/onthisday/bday/0312.html https://archive.org/details/pdfy-59s-4-I2qSvG6MnA/mode/2up https://archives.cjr.org/cover_story/sulzberger_at_the_barricades.php https://en.wikipedia.org/wiki/Adolph_Ochs https://en.wikipedia.org/wiki/Arthur_Hays_Sulzberger https://en.wikipedia.org/wiki/Battle_of_Fort_Sumter https://en.wikipedia.org/wiki/Daniel_Ellsberg https://en.wikipedia.org/wiki/Dotdash https://en.wikipedia.org/wiki/Edwin_D._Morgan https://en.wikipedia.org/wiki/George_Jones_(publisher) https://en.wikipedia.org/wiki/Henry_Jarvis_Raymond https://en.wikipedia.org/wiki/Iphigene_Ochs_Sulzberger https://en.wikipedia.org/wiki/List_of_assets_owned_by_The_New_York_Times_Company#Television_stations https://en.wikipedia.org/wiki/List_of_The_New_York_Times_employees https://en.wikipedia.org/wiki/Martin_Nisenholtz https://en.wikipedia.org/wiki/The_New_York_Times https://en.wikipedia.org/wiki/The_New_York_Times_Building https://en.wikipedia.org/wiki/The_New_York_Times_Company https://en.wikipedia.org/wiki/Yellow_journalism https://fintel.io/so/us/nyt https://media.foxcorporation.com/wp-content/uploads/prod/2019/09/18223214/Fox-Annual-Report-2019_Mid.pdf https://minesafetydisclosures.com/blog/newyorktimes https://nymag.com/intelligencer/2015/08/new-york-times-heirs.html https://nymag.com/news/features/40647/index4.html https://nymag.com/news/media/51015/ https://nytco-assets.nytimes.com/2021/02/Press-Release-12.27.2020-Final-for-posting.pdf https://stratechery.com/2020/an-interview-with-buzzfeed-ceo-jonah-peretti/?utm_source=Memberful&utm_campaign=f14650dd37-daily_update_2020_11_24&utm_medium=email&utm_term=0_d4c7fece27-f14650dd37-110888309 https://www.amazon.com/dp/B0058Z4NOQ/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1 https://www.amazon.com/gp/product/0316836311/ref=ppx_yo_dt_b_asin_title_o04_s00?ie=UTF8&psc=1 https://www.arcgis.com/apps/Cascade/index.html?appid=86354f1b322a4ec2a548e58ac3e83d49 https://www.bostonglobe.com/business/2012/05/11/new-york-times-sells-its-remaining-stake-boston-red-sox/ey4kwU4m6Xn2PYfcblrMcL/story.html https://www.enwoven.com/collections/view/1277/timeline https://www.fool.com/earnings/call-transcripts/2021/02/04/new-york-times-co-nyt-q4-2020-earnings-call-transc/ https://www.forbes.com/sites/jonathanberr/2020/09/30/failing-new-york-times-stock-is-on-a-tear/?sh=57459cfd6247 https://www.library.illinois.edu/hpnl/tutorials/antebellum-newspapers-city/ https://www.macrotrends.net/stocks/charts/NYT/new-york-times/revenuehttps://www.presscouncil.org.au/uploads/52321/ufiles/The_New_York_Times_Innovation_Report_-_March_2014.pdf https://www.npr.org/sections/codeswitch/2014/05/15/312850571/a-complicated-first-a-black-editor-takes-the-helm-at-the-gray-lady https://www.nytco.com/company/history/our-history/ https://www.nytco.com/person/a-g-sulzberger/ https://www.nytco.com/person/joseph-kahn/ https://www.nytco.com/person/kathleen-kingsbury/ https://www.nytco.com/person/meredith-kopit-levien/ https://www.nytimes.com/2004/04/25/weekinreview/the-public-editor-paper-of-record-no-way-no-reason-no-thanks.html https://www.nytimes.com/2009/01/20/business/media/20times.html https://www.nytimes.com/2012/10/02/opinion/nocera-how-punch-protected-the-times.html https://www.nytimes.com/2016/09/17/business/media/new-york-times-reinstates-managing-editor-role-appoints-joseph-kahn.html https://www.nytimes.com/2018/01/22/reader-center/ag-sulzberger-publisher-reader-questions.html https://www.nytimes.com/2018/09/20/insider/times-womens-section-female-reporters.html https://www.nytimes.com/2020/01/28/business/media/ben-smith-buzzfeed-new-york-times.html https://www.nytimes.com/2020/03/01/business/media/ben-smith-journalism-news-publishers-local.html https://www.nytimes.com/interactive/2018/opinion/editorialboard.htmlhttps://www.nytco.com/person/dean-baquet/ https://www.quora.com/Why-is-The-New-York-Times-called-the-gray-lady https://www.scribd.com/doc/224608514/The-Full-New-York-Times-Innovation-Report?campaign=SkimbitLtd&ad_group=1025X1162200X86792d9062cfc602c27b4a78b6a20b8f&keyword=660149026&source=hp_affiliate&medium=affiliate https://www.statista.com/statistics/315041/new-york-times-company-digital-subscribers/ https://www.wsj.com/articles/american-history-and-the-new-york-times-11602093219 https://www.wsj.com/articles/SB123660214438270341 https://www.youtube.com/watch?v=WVH0Yz0OMT0 

The New York Times Company

We cover Sequoia Capital a lot on this show. Not only across our now four(!) dedicated episodes, but across a stunning nearly 50% of recent season companies where Sequoia was a primary or only investor — the most of any venture firm by an enormous margin. Today in this very special episode, we dive into the principles that have led to the firm's 49 years of unparalleled success in venture, and the playbook behind how they identify markets and companies that create outcomes worthy of the firm's namesake tree. If you love Acquired and want more, join our LP Community for access to over 50 LP-only episodes, monthly Zoom calls, and live access for big events like emergency pods and book club discussions with authors. We can't wait to see you there. Join here at: https://acquired.fm/lp/ Sponsors: Thanks to MITIMCo for being our presenting sponsor for this special episode. They are truly some of the best and most well-known investors in the LP communit, and their investment performance supports MIT's cutting-edge research, and world-class education. If you or someone you know is starting a fund or recently launched, get in touch with them at: http://bit.ly/acquiredmitimco , and tell them that you heard about MITIMCo on Acquired. Thank you as well to Masterworks and to Perkins Coie. You can learn more about them at: http://bit.ly/acquiredmasterworks (use code “Acquired” to skip the waitlist) http://bit.ly/acquiredperkins The Sequoia Capital Playbook: (also available on our website at https://www.acquired.fm/episodes/special-sequoia-capitals-investment-playbook-with-alfred-lin ) 1. Bring a prepared mind. Founders (as they should) typically think more about solving a problem in the world, and less about the market context around what they're doing. Sequoia has always focused on the market — which allows them to bring a prepared mind to conversations with founders both pre and post investment. Great partnerships and great investments lie at the intersection of these two perspectives. Focusing on the market takes many forms at Sequoia. It includes building and maintaining market landscapes, constantly looking for white spaces, and convening quarterly "blue sky" sessions within the firm. 2. The two questions that matter are "Why now?" and "Who cares?". Early-stage is different from other forms of investing. As Don would say, it's predicated on investing in markets undergoing significant change: today's solutions are wrong for tomorrow. A good answer to "why now" upends the Warren Buffet quote about reputations of businesses with bad economics surviving intact. For example, DoorDash and Instacart had great “why now's” (ability to access a whole new class of labor through mobile devices), whereas Webvan (also a Sequoia investment) did not. Similarly, the key to evaluating market size in the context of early-stage venture is to focus on the opportunity size tomorrow, not today. "Who cares" is a great lens to predict and distill this: if this new solution were widely known and available who (how many people/customers, what segments, with what buying power) will care (how much will it improve their lives or businesses)? 3. The goal is not buying low and selling high. The goal is compounding capital. In a compounding environment, gains from the next few years will always dwarf all cumulative gains from years prior. The goal is to invest in companies that are able to become compounders, help them do so, and enjoy the returns as long as possible. Identifying compounding (and whether it will continue) is hard to get right. The question Sequoia asks is whether the future for a given market, company or investment looks brighter than today. When the answer is yes: ?? 4. Venture is a humbling business. You can make money even if you get the investment thesis wrong, lose money even if you get the investment thesis right, and you realize your losses many years before your gains. (Alfred has been at Sequoia for over 10 years and only just had his first two IPOs: Airbnb and DoorDash.) To succeed in venture over the long run you need all three of high IQ, high EQ, and hustle. (We would also add high patience to the list!) What you don't need are specific qualifications: Michael Moritz was a journalist, Roelof Botha was an actuary, Don and Doug were sales guys and Alfred was a COO. Greatness can come from anywhere. There will always be too much capital chasing too few good deals. It's true today, it was true when Alfred started 10 years ago, and it was true when Michael Moritz started 20 years before that. But the winning companies will always generate outsized returns by using that capital to their unfair advantage. Your job as a VC is very simple, but devilishly hard: invest in those companies. Links: Our two-part Sequoia history: Part I: https://www.acquired.fm/episodes/sequoia-capital-part-1 Part II: https://www.acquired.fm/episodes/sequoia-capital-part-ii-with-doug-leone Don Valentine's talk at Stanford GSB: https://www.youtube.com/watch?v=nKN-abRJMEw&t=2555s Our conversation about Sequoia's Black Swan Memo with Roelof Botha: https://www.acquired.fm/episodes/sequoias-black-swan-memo 

Special: Sequoia Capital's Investment Playbook (with Alfred Lin)

We had to do it. After 12 years and 3,000,000x appreciation, we kick off Season 8 with the best investment of all-time and our biggest episode ever: Bitcoin. From the first bitcoin transaction of 10k for two Papa John's pizzas (worth about $350m today!!) to $40k+ BTC and maybe the moon beyond, we cover the whole crazy, improbable journey of how a single 8-page PDF document changed the world of money — and perhaps the world itself — forever. If you love Acquired and want more, join our LP Community for access to over 50 LP-only episodes, monthly Zoom calls, and live access for big events like emergency pods and book club discussions with authors. We can't wait to see you there. Join here at: https://acquired.fm/lp/ Sponsors: Thanks to Tiny for being our presenting sponsor for all of Acquired Season 8. Tiny is building the "Berkshire Hathaway of the internet" — if you own a wonderful internet business that you want to sell, or know someone who does, you should get in touch with them. Unlike traditional buyers, they commit to quick, simple diligence, a 30-day or less process, and will leave your business to do its thing for the long term. You can learn more about Tiny here: http://bit.ly/acquiredtiny Thank you as well to Vouch and to Capchase. You can learn more about them at: http://bit.ly/acquiredvouch http://bit.ly/acquiredcapchase The Bitcoin Playbook: (also available on our website at https://www.acquired.fm/episodes/bitcoin ) 1. Technological paradigm shifts are ideal opportunities for attacking incumbents. The traditional finance system worked fantastically well for 500 years, but it wasn't built for the internet. The fact that sharing your bank account or credit card number is required in order to transact, but there's no really robust way to protect against fraud when doing so, provided the perfect seam for a new entrant. Bitcoin and its creators saw this shortcoming and created a new form of money that worked like email. 2. In the early days of a network-effect system, usage matters more than use-cases. Because the value of a network grows as a function of Metcalfe's Law (value = # of engaged participants squared), in the early days simply growing the number of engaged participants matters more than the specifics of what those participants are actually doing. As the network's value grows, it will become attractive to successively more groups of users and use cases. Bitcoin started as the domain of researchers and fringe libertarians, then illicit transactions (Silk Road), then speculation (the ICO boom) before finally reaching adoption by the mainstream investment community. Each wave built enough monetary value in the network to make it attractive to the next set of users. Similarly Facebook went from sharing photos of attractive undergrads to how billions communicate, and Airbnb went from ratty airbeds to ~10x larger than any hotel chain, all within a few short years. 3. Distributing network value out to its participants creates large incentives for adoption. Rewarding miners with bitcoin itself created a huge incentive for participants to join and stay in the Bitcoin network. Although this dynamic got a bad rap during the ICO bubble when it was overused and overpromised by grifters and scammers, it remains a powerful strategy and will likely be used more going forward. Perhaps most excitingly, this incentive unlocks massive new potential for open-source software development: people who work on open-source software (or provide other functions) can now receive direct value for their contributions, without being employed in any traditional sense. 4. Just HODL, baby. (aka let your winners run) You can get rich quickly by getting in early on a winning investment. But you can only get really rich by holding a compounding asset for an extended period of time. Sequoia learned this lesson painfully with its Apple investment in the 1970's: selling its entire position for just a ~$6m profit within a few years. Similarly, anyone who bought 1,000 bitcoin for $10 a piece in 2012 could have sold them for $1m four years later in 2016. But four years on from that, they're now worth $35 million. If you continue to believe Bitcoin has a bright longterm future (which, to be fair, you may not!), what could they be worth in 2024? 5. We're only just realizing the implications of digital scarcity. For its entire existence before Bitcoin, computing and the internet was all about turning scarcity into abundance. (via infinitely replicable + easily distributable software and other digital goods) For the first time in history, Bitcoin and its underlying blockchain have introduced the opposite: scarce, non-replicable digital assets. Native digital currency (Bitcoin) and smart contracts (Ethereum) are the first big outcomes of this advancement, but there may be many more seismic shifts to come. Links: Satoshi's Whitepaper: https://www.bitcoin.com/bitcoin.pdf Matt Huang's "Bitcoin for the Open-Minded Skeptic": https://www.paradigm.xyz/Bitcoin_For_The_Open_Minded_Skeptic.pdf Nellie Bowles's "Everyone Is Getting Hilariously Rich and You’re Not": https://www.nytimes.com/2018/01/13/style/bitcoin-millionaires.html Square’s $50m investment in BTC: https://images.ctfassets.net/2d5q1td6cyxq/5sXNrlEh2mEnTvvhgtYOm2/737bcfdc15e2a1c3cbd9b9451710ce54/Square_Inc._Bitcoin_Investment_Whitepaper.pdf Episode Sources: Full list of episode sources available here: https://docs.google.com/document/d/16QCDNm2qzG3Bn5h1j1KXisxL_JGT7egDx7czX9ThHLY/edit?usp=sharing  

Bitcoin

As regular listeners know, we typically cover some of the biggest companies who often receive the most media attention (see Airbnb and DoorDash). But today's episode is a little different. In our conversation with Courtland Allen of Indie Hackers, the largest community of startup founders, we dive into the stories of underdogs. What happens when there are millions of people doing small business entrepreneurship? How does anyone having access to the globally addressable market of 3 billion internet users open the door for the niche-est of products? We tell the story of Courtland’s own “Indie Hacker” journey, how he came to found Indie Hackers itself, and the lessons learned along the way.   If you want more more Acquired and the tools + resources to become the best founder, operator or investor you can be, join our LP Program for access to our LP Show, the LP community on Slack and Zoom, and our live Book Club discussions with top authors. Join here at: https://acquired.fm/lp/   Sponsors:  This episode is supported by Teamistry, a great new podcast from Atlassian that tells the stories of teams who work together in new and unexpected ways to achieve remarkable things. It's one of our best new podcast discoveries in 2020 and we think Acquired listeners are going to love it. Our thanks to Teamistry for their support, and you can listen here: https://link.chtbl.com/teamistry?sid=podcast.acquired Thank you as well to Kevel and to Capchase. You can learn more about them at: https://www.kevel.co https://www.capchase.com   Playbook Themes from this Episode: (also available on our website at https://www.acquired.fm/episodes/special-acquired-x-indie-hackers ) 1. As long as you don't quit your journey, you're still in the act of succeeding. Indie Hackers was Courtland's seventh company. Before it, Courtland had started six other companies, each with a few thousand dollars in revenue but never as big as he wanted it to be. Looking back, Courtland has realized that everyone has a certain number of companies they need to start before they succeed: for some, that number may be one, for others, 36. For him, that number was 7. So his advice? All you have to do is not quit before you get to that number. 2. The journey is as important as the destination. While Courtland was working on some of his earlier companies, he was miserable. A few of those working years felt like a complete blur. But sometime before he started Indie Hackers, he realized that in order to keep going until you succeed (see playbook #1), you must structure your life so that it's easy for you to not quit. In other words, you have to make the journey fun — almost like the emotional counterpart to Paul Graham’s famous “default alive” concept. With this reframe, Courtland began to enjoy the journey — enjoying the new people he met and the new things he learned. This mindset helped him level up as a person. Instead of worrying and asking "am I there yet?" he was able to enjoy the building journey. 3. Stories are always paramount. As we discuss so often on Acquired, stories can be an incredibly powerful force, and their value is one of the core theses/value propositions of Indie Hackers. One insight Courtland came to from Hacker News was that people didn't want to just read comments about people who didn't succeed. They wanted high quality, verified stories that were trustable in some way. Indie Hackers sends a survey out to users 6 months after they join the community. One of the questions the survey asks is, "would you have started your company if not for Indie Hackers?" 15-20% say they would not have started without some story or interaction on Indie Hackers! 4. Don't try to create budgets — sell to people that already have them. Courtland originally tried to monetize Indie Hackers via advertising, and shared advertisement opportunities with the Indie Hacker community. But he soon realized that these smaller businesses weren't exactly the best customers to sell to. Eventually, he transitioned to selling to enterprises, and was pleasantly surprised by how much easier it was to sell. The sales process simplified is: educate, then win. If you're selling to someone with a budget, you essentially bypass the education step. 5. Utilizing platforms, like everything in business, has tradeoffs. There are no hard or fast rules in business. Everything has tradeoffs. Platforms may help with distribution but make it harder to build a brand and also create risks and dependencies. For Courtland, it was important for Indie Hackers to have its own brand. Additionally, he already had a distribution strategy (Hacker News). Hence, it made sense for Indie Hackers to be its own site, as there were many risks but few benefits to using some other platform like Medium. 6. Trust and mission alignment are critical in acquisitions. Acquisition terms are about much more than just the purchase price. Sometimes, other considerations are more advantageous than cash (e.g. equity), and there are creative ways to align their incentives. For Courtland, it was crucial that he retain freedom over his time and control over the direction of Indie Hackers. Hence, it was — and still remains — key that Patrick and Courtland's relationship have a high degree of trust. 7. Acquisitions can enable established brands to take bigger risks. “Intra-preneurship” can be difficult because the initiative is constrained by internal processes and standards as well as external expectations. Hence, you can often take bigger risks through an acquisition. Google video versus YouTube is a great example of this. 8. There is an infinite number of "indie hacker" opportunities. There is no end to the number of niche problems that can be identified and served. Big businesses and platforms create massive opportunities to go for the long tail. New businesses can build on top of these platforms or build for these platforms, creating tools to help people use them. For example, there are thriving tools business ecosystems today for Stripe, Shopify, WordPress, and still many more use cases yet to be addressed.   Links: Indie Hackers: https://www.indiehackers.com 

Special: Acquired x Indie Hackers

Over 13 years after its founding, one of the defining startup companies of the past decade finally makes its public debut — and boy was it a big one. But for all the hype (and all the legitimately great things Airbnb has accomplished), this is a company that looks very different today than in the past. Even before COVID, Airbnb's once-exponential bookings growth had declined to linear levels while the company's costs continued to balloon at accelerating rates. What’s going on here? Are public investors smart to bet on a permanent shift in travel behavior coming out of the pandemic? Or is this a case of unrealistic expectations? As always, we dive in.   If you want more more Acquired and the tools + resources to become the best founder, operator or investor you can be, join our LP Program for access to our LP Show, the LP community on Slack and Zoom, and our live Book Club discussions with top authors. Join here at: https://acquired.fm/lp/   Sponsors: Thanks to Tiny for being our presenting sponsor for all of Acquired Season 7. Tiny is building the "Berkshire Hathaway of the internet" — if you own a wonderful internet business that you want to sell, or know someone who does, you should get in touch with them. Unlike traditional buyers, they commit to quick, simple diligence, a 30-day or less process, and will leave your business to do its thing for the long term. You can learn more about Tiny here: http://tinycapital.com Thank you as well to Bamboo Growth and to Perkins Coie. You can learn more about them at: https://growwithbamboo.com https://www.perkinscoie.com/   Playbook Themes from this Episode: (also available on our website at https://www.acquired.fm/episodes/airbnb ) 1. If you can create value for all sides in a market ("expand the efficient frontier"), you really can’t help but be successful. Born out of the 2008 financial crisis, Airbnb was able to fundamentally change the nature of the travel market and provide guests with more quality for less money, while also enabling hosts to earn meaningful extra income during a very difficult economic period. This led to incredible market adoption of the service, at times almost despite the company's own actions and activities. 2. When you create a market, you have an opportunity to set the terms. By virtue of creating a whole new class of supply that had never participated in the travel market before, Airbnb was able to enact much more platform-favorable payment terms versus the hotel industry. Unlike Booking.com and the OTAs, guests pay Airbnb at the time of booking, and Airbnb keeps that cash (including fees) until after check-in — which could occur weeks or even months later. This created an enormously beneficial cashflow dynamic for Airbnb that allowed them to grow while burning much less cash than otherwise would have been required. 3. When you don't fly low to the ground, you aren't forced to operate at the lowest level of detail. Unlike DoorDash which needed to create an enormously efficient operational machine just in order to survive, Airbnb's capital-light business model, low operational intensity and favorable cashflow dynamics meant they've never had to operate in a particularly cost-disciplined or product-focused manner. While the core business has been insulated from competition due to its global network effects, the company has missed or poorly executed on Amazon-like opportunities to expand into adjacent markets and services that could have continued to drive new growth. 4. Relying solely direct/organic traffic is both a gift and a curse. Undeniably, direct/organic customer acquisition is a wonderful goal for any business to strive for. Who wouldn't want to acquire customers without paying for them? However, if you don't also build the muscle for profitable and reliable growth through paid channels, you can be left vulnerable vulnerable when organic growth slows, as it inevitably will.   Carve Outs: David — San Francisco Ballet's Nutcracker: https://www.sfballet.org/productions/nutcracker-online/ Ben — Star Wars Lofi HipHop: https://open.spotify.com/playlist/5iu1sp3UBb1rjf8KNKETtJ?si=WxPdJcRpSnelHN9qh0xYSw     Sources:  http://www.critbuns.com/index.html http://www.paulgraham.com/airbnb.html https://avc.com/2011/03/airbnb/ https://diff.substack.com/p/understanding-airbnb https://en.wikipedia.org/wiki/Airbnb https://en.wikipedia.org/wiki/Brian_Chesky https://en.wikipedia.org/wiki/CouchSurfing https://en.wikipedia.org/wiki/Joe_Gebbia https://en.wikipedia.org/wiki/Timeline_of_Airbnb https://gadgets.ndtv.com/internet/features/airbnb-ipo-ceo-brian-chesky-nasdaq-december-debut-stock-market-2328441 https://growthhackers.com/growth-studies/airbnb https://hbr.org/2019/04/research-when-airbnb-listings-in-a-city-increase-so-do-rent-prices https://medium.com/traveltechmedia/airbnb-vs-booking-holdings-51e79b8cc489 https://news.airbnb.com/brian-cheskys-open-letter-to-the-airbnb-community-about-building-a-21st-century-company/ https://news.airbnb.com/designing-the-future-of-airbnb/ https://nextviewventures.com/blog/airbnb-s-1-part-1-so-how-profitable-is-this-thing-really/ https://thegeneralist.substack.com/p/airbnb-the-disaster-artist https://twitter.com/danprimack/status/1337101820007768064 https://www.amazon.com/Upstarts-Airbnb-Battle-Silicon-Valley/dp/0316388416/ https://www.bloomberg.com/news/articles/2020-12-09/airbnb-s-3-1-billion-ipo-hinges-on-hosts-who-make-rentals-feel-like-home https://www.cnbc.com/2019/12/10/airbnb-gitlab-considering-direct-listings-and-bankers-coming-around.html https://www.cnbc.com/2020/04/14/airbnb-raises-another-1-billion-in-debt.html https://www.cnbc.com/2020/12/09/airbnb-sells-shares-at-68-in-ipo-pricing-above-range.html https://www.epi.org/publication/the-economic-costs-and-benefits-of-airbnb-no-reason-for-local-policymakers-to-let-airbnb-bypass-tax-or-regulatory-obligations/ https://www.forbes.com/sites/davidjeans/2020/11/16/airbnb-cofounders-own-nearly-42-of-covid-dented-business-ipo-filing-shows/ https://www.linkedin.com/in/brianchesky/ https://www.npr.org/2017/10/19/543035808/airbnb-joe-gebbia https://www.nytimes.com/2019/09/20/technology/airbnb-employees-ipo-payouts.html https://www.nytimes.com/2020/07/17/technology/airbnb-coronavirus-layoffs-.html https://www.phocuswire.com/booking-holdings-expedia-group-marketing-spend-2019 https://www.sec.gov/Archives/edgar/data/1559720/000119312520294801/d81668ds1.htm https://www.sec.gov/Archives/edgar/data/1559720/000119312520306257/d81668ds1a.htm https://www.theinformation.com/articles/10-questions-airbnbs-ipo-investors-should-ask https://www.theinformation.com/articles/airbnbs-biggest-ipo-winners?utm_content=article-5102&utm_campaign=article_email&utm_source=sg&utm_medium=email https://www.theinformation.com/video/313?utm_campaign=Live_Video_QA_Call_P&utm_content=565410&utm_medium=email&utm_source=cio&utm_term=197334 https://www.wsj.com/articles/airbnb-expected-to-price-ipo-above-56-to-60-a-share-range-11607527468?mod=hp_lead_pos5 https://www.wsj.com/articles/airbnb-operating-chief-to-step-down-join-board-11574439482?mod=article_inline https://www.wsj.com/articles/airbnb-paying-more-than-10-interest-on-1-billion-financing-announced-monday-11586297484?mod=rsswn https://www.youtube.com/watch?v=efNyRmTLbjQ https://www.linkedin.com/in/blecharczyk/ https://www.linkedin.com/in/jgebbia/ https://news.airbnb.com/brian-cheskys-open-letter-to-the-airbnb-community-about-building-a-21st-century-company/  

Airbnb

Live from the scene of its blockbuster IPO, we recount the crazy, roller coaster journey of this "Palo Alto delivery company". From Sand Hill darling during their Series A and B fundraises to all but left-for-dead during the great unicorn massacre of 2015/16, DoorDash has clawed their way back from the brink and emerged as America's dominant meal delivery service, and its only unit-economic positive standalone logistics player. Is this the dawn of the next great Amazon-like story, or is the company simply benefiting from temporary tailwinds due to the pandemic? As always, we dive DEEP to find out. If you want more more Acquired and the tools + resources to become the best founder, operator or investor you can be, join our LP Program for access to our LP Show, the LP community on Slack and Zoom, and our live Book Club discussions with top authors. Join here at: https://acquired.fm/lp/   Sponsors:  Thanks to Tiny for being our presenting sponsor for all of Acquired Season 7. Tiny is building the "Berkshire Hathaway of the internet" — if you own a wonderful internet business that you want to sell, or know someone who does, you should get in touch with them. Unlike traditional buyers, they commit to quick, simple diligence, a 30-day or less process, and will leave your business to do its thing for the long term. You can learn more about Tiny here: http://tinycapital.com Thank you as well to Bamboo Growth and to Perkins Coie. You can learn more about them at: https://growwithbamboo.com https://www.perkinscoie.com/   Playbook Themes from this Episode: (also available on our website at https://www.acquired.fm/episodes/doordash ) 1. Sometimes winner-take-all markets DO tip. The end-state that Uber (and its global peers) spent the past decade chasing — that eventually it would outrun its competitors, tip entire markets in their favor, add multiple product lines and turn massively cashflow positive — has thus far proved elusive, leading many to believe that any such undertaking is a false dream. But, since 2018 China's Meituan appears to be doing just that, all while operating in an even more competitive environment than Uber. DoorDash may now be on a similar trajectory in the US. That said, it's almost impossible to predict in advance how much time and capital it will take to get there, let alone any one company's odds of success. DoorDash benefitted immensely from their competitors' relative difficulties accessing capital post-2016, and was willing to sacrifice enormous dilution to outlast them. If you're going to play the winner-take-all game, you need to be willing to go all-in when others blink. 2. If you're going to fly low to the ground, you also need to operate at the lowest level of detail. Flying low to the ground (i.e., sacrificing higher margins in order to share more value back to your customers and suppliers) is a great recipe for success in highly competitive markets like e-commerce and on-demand services. However when you do so, you need to be maniacal about squeezing every last drop of efficiency out of your platform: every 1% improvement in margins could mean a 20%, 30% or even 50% profitability increase and the difference between life (for you) and death (for your competitors). DoorDash clearly gets this and has embedded this ethos in everything they do at the company. 3. Focus on what you can control. DoorDash had the capital markets turn against them HARD early on in the company's life. It would have been easy to lose focus, sell or give up, as did many of their competitors. To Tony and the entire company's credit, they kept moving forward and made decisions each step of the way that kept the company alive — even when those decisions came at a high cost. As a result they outlasted nearly all competition and were in a position to IPO at one of the highest market caps of all-time, all as an only 7 year old company. 4. "Why now" matters. DoorDash had one of the best "why now" answers of all-time: mass-market smartphone adoption (not just high-end) made 3 things true that were never possible before: 1. average consumers could order online conveniently, 2. couriers could plug into the network via their own devices, and 3. restaurants (most of whom didn't have wifi or desk staff) could accept orders online. Before 2013 a business like this would simply have been impossible to build.   Carve Outs: David: Hades on the Nintendo Switch: https://www.nintendo.com/games/detail/hades-switch/ Ben: Watchmen on HBO: https://www.hbo.com/watchmen Succession on HBO: https://www.hbo.com/succession Palm Springs: https://www.imdb.com/title/tt9484998/   Sources: https://en.wikipedia.org/wiki/DoorDash https://startupclass.samaltman.com/courses/lec08/ https://techcrunch.com/2013/09/30/door-dash-raises-2-4m/ https://medium.com/@DoorDash/the-doordash-story-b370c2bb1e5f https://vator.tv/news/2019-01-04-when-doordash-was-young-the-early-years https://medium.com/@DoorDash/the-red-shirts-are-in-boston-838b0ddf63de https://medium.com/@DoorDash/doordash-raises-40m-led-by-kleiner-perkins-caufield-byers-9be34d3480c1 https://medium.com/@DoorDash/with-doordash-the-colonel-now-delivers-609fe6e8d263 https://www.tmz.com/2015/11/11/in-n-out-lawsuit/ https://www.chicagotribune.com/business/ct-biz-doordash-restaurant-food-delivery-lawsuit-20180109-story.html https://medium.com/@DoorDash/2015-the-year-in-doordash-delivery-b40bd22738b9 https://medium.com/@DoorDash/127-million-more-ways-to-move-doordash-forward-e22d86739a56 https://www.wsj.com/articles/food-delivery-startup-doordash-is-raising-more-than-110-million-1455639655 https://www.wsj.com/articles/BL-DGB-44622 https://fortune.com/2018/08/16/doordash-raises-250m-at-4b-valuation/ https://qz.com/1549084/doordash-overtook-uber-eats-in-us-online-food-delivery-second-measure-finds/ https://fortune.com/2019/03/11/doordash-tops-grubhub-on-demand-food/ https://www.inquirer.com/news/virus-doordash-grubhand-profits-competition-sales-20200427.html https://www.theverge.com/2020/6/10/21287128/grubhub-just-eat-takeaway-merger-uber-deal-antitrust https://themargins.substack.com/p/doordash-and-pizza-arbitrage https://www.meritechcapital.com/blog/doordash-ipo-s-1-breakdown https://www.firehose.vc/p/firehose-181-dashing-to-ipo- https://medium.com/@DoorDash/live-más-on-demand-doordash-taco-bell-is-here-e94956306f9e https://blog.doordash.com/fueling-the-last-mile-3ae0a6b45ea0 https://www.wsj.com/articles/airbnb-doordash-aim-for-higher-than-expected-valuations-ahead-of-debuts-11606689243 https://www.youtube.com/watch?v=g9KRJEAoqQ8 https://www.youtube.com/watch?v=VNfipjK3Gro https://www.sec.gov/Archives/edgar/data/1792789/000119312520292381/d752207ds1.htm https://thegeneralist.substack.com/p/doordash-the-value-of-speed https://www.linkedin.com/in/evanmoore/ https://www.linkedin.com/in/xutony/ https://www.linkedin.com/in/stanleytang/ https://www.linkedin.com/in/fangsterr/ https://medium.com/@DoorDash/doordash-raises-17-3-million-from-sequoia-capital-dc0d7aca1012 https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5ucHIub3JnLzUxMDMxMy9wb2RjYXN0LnhtbA/episode/MTc1NzVjMWQtYTFjNy00ZWJiLThmZTctYWE0MDc2NDFlYjg3 https://www.wsj.com/articles/doordash-poised-to-tap-torrid-ipo-market-11607442406 https://www.crunchbase.com/organization/postmates/company_financials https://blog.doordash.com/accelerating-our-unprecedented-growth-e5c9eb343ce8 https://nextbn.ggvc.com/opinions/meituan-dianpings-path-towards-profitability/ https://www.meritechcapital.com/blog/doordash-ipo-s-1-breakdown https://tanay.substack.com/p/doordash-and-profitable-food-delivery https://www.firehose.vc/p/firehose-181-dashing-to-ipo- https://themargins.substack.com/p/doordash-and-societal-arbitrage https://twitter.com/micapital2/status/1328491576109068289 https://twitter.com/Jer_Diamond/status/1329187739762184192 https://medium.com/@JeremyDiamond/feeding-the-rebels-6d748b8cfc58 https://thegeneralist.substack.com/p/doordash-the-value-of-speed https://www.ft.com/content/53e32708-59ea-11ea-a528-dd0f971febbc https://twitter.com/michaelxbloch/status/1335608288008941570 https://www.wsj.com/video/series/in-the-elevator-with/in-the-elevator-with-the-ceo-shaking-up-the-bra-industry/2BA23DB1-114C-489B-BA1A-A7346DE99136 https://www.vox.com/2019/1/9/18174556/doordash-tony-xu-christopher-payne-food-delivery-shopping-recode-decode-kara-swisher-podcast https://theflywheel.substack.com/p/doordash-flywheel-teardown https://www.wsj.com/articles/doordash-ipo-filing-shows-a-profitable-quarter-11605276373  

DoorDash

Acquired is live on the scene covering Salesforce's blockbuster $27.7B acquisition of Slack, with the help of the internet's #1 Slack bull (and top internet analyst in his own right), Packy McCormick of Not Boring. We dissect the deal itself, Slack's relatively short life as a public company, the impact of Microsoft and Teams, and most importantly what this means for enterprise SaaS startups broadly. And oh yeah — we have a ton of fun too. :) Note: you can find our full June 2019 episode on Slack's history and their DPO here: https://www.acquired.fm/episodes/the-slack-dpo If you want more more Acquired and the tools + resources to become the best founder, operator or investor you can be, join our LP Program for access to our LP Show, the LP community on Slack and Zoom, and our live Book Club discussions with top authors. Join here at: https://acquired.fm/lp/   Sponsors: Thanks to Tiny for being our presenting sponsor for all of Acquired Season 7. Tiny is building the "Berkshire Hathaway of the internet" — if you own a wonderful internet business that you want to sell, or know someone who does, you should get in touch with them. Unlike traditional buyers, they commit to quick, simple diligence, a 30-day or less process, and will leave your business to do its thing for the long term. You can learn more about Tiny here: http://tinycapital.com Thank you as well to Bamboo Growth and to Perkins Coie. You can learn more about them at: https://growwithbamboo.com https://www.perkinscoie.com/   Playbook Themes from this Episode: (also available on our website at https://www.acquired.fm/episodes/slack-salesforce-emergency-pod-with-packy-mccormick-of-not-boring ) 1. Distribution is still key when it comes to selling enterprise products at the highest levels. SaaS startups can (and do!) land deals with big companies all the time now through the bottoms-up motion of individual teams adopting the product and paying by credit card. And they also can (and do!) expand those deals into large, enterprise-wide contracts. But the massive power of Microsoft, Salesforce, and to a lesser-degree Oracle and Google's salesforces + bundling distribution abilities enables deals to happen at a scale that most independent companies find difficult to match. 2. Enterprise products are like icebergs — 90% of the work is below the surface. This is true both at the tactical level (integrations, permissions, security, etc) and the strategic: providing seamless connective tissue between work apps inside and across organizations is what makes Microsoft so powerful as an enterprise player — not necessarily because their products are better. This is why Slack Connect was such an important initiative for Slack, and why Microsoft trained the full firepower of its Teams marketing against it, while mostly ignoring Zoom even though Zoom is much more directly competitive on the product feature front. 3. Telling your story well always matters, no matter how big you get. Perhaps the biggest reason Slack "failed" as a public company was its inability to effectively communicate what it did that was special, why that was important, and why it was defensible enough to withstand the assault from Teams. Arguably, great answers existed to all of those questions — and the company kept posting impressive numbers to back them up — but Wall Street never bought the story Slack sold. 4. Enterprise collaboration is moving deeper into work apps themselves. Today's native SaaS tools like Figma, Coda, Notion and others are embedding collaboration and chat natively into apps themselves — which reduces the primacy of a centralized platform like Slack, Teams or Discord. While on the one hand this is a threat to dedicated collaboration platforms, it also presents a massive opportunity: if they (or someone else) can decouple the core "collaboration layer" service from their own dedicated apps and also embed it directly into those work apps via APIs, it exponentially increases the surface area of workplace productivity that they can address. 5. The "Outsiders playbook" of growing through acquisition once your original product approaches market saturation works just as well in tech as it did in other sectors like media and industrials. As Will Thorndike outlined in The Outsiders, many of the best CEO capital allocators of all-time utilized the grow-through-acquisition strategy very effectively. Salesforce (and other big tech companies like Facebook) are clearly adopting the same approach.   Links: Not Boring: https://notboring.substack.com Packy on Twitter: https://twitter.com/packyM Packy's bull thesis on Slack from November 2020: https://notboring.substack.com/p/slack-the-bulls-are-typing 

Slack + Salesforce Emergency Pod with Packy McCormick of Not Boring

Live from the 2020 ASCEND Space Conference, Acquired covers the full story behind the most "out there" technology story of the past few years: Virgin Galactic. How did this space tourism company grow out of the winning X Prize team, and catch the eyes and fancy of billionaires like Paul Allen, Sir Richard Branson, and, most recently, company chairman Chamath Palihapitiya who took it public via the first "modern" technology SPAC transaction in history? Tune in to find out!! If you want more more Acquired and the tools + resources to become the best founder, operator or investor you can be, join our LP Program for access to our LP Show, the LP community on Slack and Zoom, and our live Book Club discussions with top authors. Join here at: https://acquired.fm/lp/   Sponsors:  Thanks to Tiny for being our presenting sponsor for all of Acquired Season 7. Tiny is building the "Berkshire Hathaway of the internet" — if you own a wonderful internet business that you want to sell, or know someone who does, you should get in touch with them. Unlike traditional buyers, they commit to quick, simple diligence, a 30-day or less process, and will leave your business to do its thing for the long term. You can learn more about Tiny here: http://tinycapital.com Thank you as well to Bamboo Growth and to Perkins Coie. You can learn more about them at: https://growwithbamboo.com https://www.perkinscoie.com/   Playbook Themes from this Episode: (also available on our website at https://www.acquired.fm/episodes/virgin-galactic ) 1. Prizes can be a great way to generate leverage on innovation. If done right, the X Prize and other industry prizes like it (e.g., Netflix Prize, DARPA Challenge, etc) can bring an order of magnitude more talent to bear on a challenge than what the same dollars alone could hire. The challenge is to create a prize that inspires and draws in a large enough pool of contributors. The aerospace industry’s “cool” factor may be what allowed the X Prize to succeed and explain why prizes aren't employed as often in other sectors. 2. When trying new things, most people want to go second — but those willing to go first get the best returns.Being first into new markets carries high risk (including/especially reputational), but often also offers asymmetric upside. Investing in a new frontier when others think it’s crazy is a recipe for success — if you’re both contrarian and right. Chamath took a huge turn from the traditional VC playbook when he created his first SPAC in 2017, years before they went mainstream. He and his investors have generated over $1B in profits from that vehicle (which is now merged with Virgin Galactic), and have since used those proceeds to launch five more. 3. The best time to invest was yesterday, the next best time is today. Great investors don’t miss the chance to invest in big markets because they’ve passed on it before. Sir Richard Branson passed on investing in the X Prize twice before partnering with Burt Rutan's winning team to build Virgin Galactic. 4. Whenever a market's prices aren't being set by supply and demand, there's probably an opportunity to disrupt that market. The traditional IPO pricing process is managed by third parties (investment banks) that represent both sides of the transaction, and also have their own economic interests at play. It's the equivalent of a real estate agent representing both the buyer and seller. As a result, many technology IPOs have left hundreds of millions or billions of dollars on the table. SPACs and direct listings are now solving that problem. Any other market with this dynamic should represent fertile ground for entrepreneurs.   Links: Virgin Galactic's "One Small Step" reservation program: https://www.virgingalactic.com/smallstep/ The November 2020 launch delay: https://www.virgingalactic.com/articles/virgin-galactic-adjusts-test-flight-schedule-in-response-to-new-state-government-covid-19-restrictions/   Sources: Black Sky Documentary: https://www.youtube.com/watch?v=cikmdTVFPig How to Make a Spaceship: https://www.amazon.com/How-Make-Spaceship-Renegades-Spaceflight/dp/1101980494/ref=tmm_pap_swatch_0?_encoding=UTF8&qid=&sr= http://d18rn0p25nwr6d.cloudfront.net/CIK-0001706946/362d3eae-199a-4995-ab78-232a09ced07d.pdf http://www.agent4stars.com/virgin-galactic-passenger-list/ https://abcnews.go.com/Business/story?id=8191703 https://abcnews.go.com/Business/virgin-galactic-resume-selling-tickets-space-reports-skyrocketing/story?id=69229936 https://en.m.wikipedia.org/wiki/Virgin_Galactic https://en.wikipedia.org/wiki/Burt_Rutan https://en.wikipedia.org/wiki/Richard_Branson https://en.wikipedia.org/wiki/Scaled_Composites https://en.wikipedia.org/wiki/The_Spaceship_Company https://en.wikipedia.org/wiki/Virgin_Galactic https://investors.virgingalactic.com/news/news-details/2020/Virgin-Galactic-Adjusts-Test-Flight-Schedule-in-Response-to-New-State-Government-COVID-19-Restrictions/default.aspx https://investors.virgingalactic.com/news/news-details/2020/Virgin-Galactic-Announces-Third-Quarter-2020-Financial-Results/default.aspx https://open.spotify.com/episode/63gIP0UcvBUyhuf0qz1Rza https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5mZWVkYnVybmVyLmNvbS9wcm8tcmF0YQ/episode/OTc4MDliM2MtYTI1NS0xMWU5LWJhZjMtMmYxYWQyZTM2ZmM0 https://sifted.eu/articles/fund-fintech-secret-ian-osborne/ https://techcrunch.com/2020/09/16/cant-stop-wont-stop-social-capital-hedosophia-just-filed-for-its-fourth-spac-says-new-report/ https://www.ainonline.com/aviation-news/aerospace/2007-08-28/northrop-grumman-seals-scaled-composites-deal https://www.bloomberg.com/news/articles/2020-11-05/virgin-galactic-sees-new-ticket-sales-after-branson-s-space-trip https://www.businesswire.com/news/home/20121005005907/en/Virgin-Galactic-Acquires-Full-Ownership-Spaceship-Company#.VFvXsPnF98E https://www.forbes.com/sites/daviddawkins/2020/09/06/inside-virgin-orbit-richard-bransons-small-satellite-bid-to-match-musk-and-bezos-in-the-billionaire-space-race/?sh=1d880f577ab9 https://www.listennotes.com/podcasts/industry-focus/cg-virgin-galactic-prepares-wOHokI4mM06/ https://www.marketwatch.com/story/abu-dhabis-aabar-boosts-virgin-galactic-stake-2011-10-19 https://www.renaissancecapital.com/IPO-Center/News/65718/The-Space-SPAC-Everything-You-Need-to-Know-about-Virgin-Galactic https://www.renaissancecapital.com/IPO-Center/News/72123/Palihapitiya-and-Osbornes-fifth-SPAC-Social-Capital-Hedosophia-Holdings-V-p https://www.sec.gov/Archives/edgar/data/1706946/000114420417044783/v473766_s1.htm https://www.sec.gov/Archives/edgar/data/1706946/000119312519215509/d785777ds4.htm https://www.space.com/31993-stephen-hawking-virgin-galactic-spaceshiptwo-unity.html https://www.spacedaily.com/upi/2004/0831-091100-us-spacerace2-cashprize.html https://www.theguardian.com/business/2014/oct/09/virgin-galactic-space-tourism-richard-branson-george-whitesides https://www.theverge.com/2018/10/13/17967954/virgin-galactic-richard-branson-saudi-arabia-jamal-khashoggi https://www.usatoday.com/story/tech/talkingtech/2018/05/29/amazons-jeff-bezos-says-we-need-leave-earth-survive/651715002/?fbclid=IwAR0E2z5cBtry3Zy0sNRs9jRFKjE_b-T7N-kN0TQO7MDbWJO-baZKw4ZMZGU https://www.wsj.com/articles/richard-bransons-virgin-orbit-seeks-1-billion-valuation-in-fundraising-11602403201?cx_testId=3&cx_testVariant=cx_2&cx_artPos=1#cxrecs_s https://www.wsj.com/articles/richard-bransons-virgin-raises-480-million-with-spac-11601642288 

Virgin Galactic

Superstar past guest and Superhuman CEO Rahul Vorha joins us for a deep dive on how Superhuman applies concepts from game design to building productivity software. We're not talking points and badges — we mean hardcore, Unreal Engine-style technical innovations and Fortnite-level understanding of fun and mastery. It's a topic where Rahul has serious cred: before Superhuman and Rapportive, he worked as a game designer on RuneScape, the pioneering browser-based MMORPG. This is a topic every founder, engineer, product and even sales person should listen to. Tune in! You can listen to Part I of our Superhuman story with Rahul here: https://www.acquired.fm/episodes/superhuman If you want more more Acquired and the tools + resources to become the best founder, operator or investor you can be, join our LP Program for access to our LP Show, the LP community on Slack and Zoom, and our new live Book Club discussions with top authors. Join here at: https://acquired.fm/lp/ Sponsors: This episode is supported by Teamistry, a great new podcast from Atlassian that tells the stories of teams who work together in new and unexpected ways to achieve remarkable things. It's one of our best new podcast discoveries in 2020 and we think Acquired listeners are going to love it. Our thanks to Teamistry for their support, and you can listen here: https://link.chtbl.com/teamistry?sid=podcast.acquired Thank you as well to Lemon.io. You can learn more about Lemon at: https://lemon.io/acquired/ Playbook Themes from this Episode: Also available on our website at https://www.acquired.fm/episodes/special-superhuman-part-ii-designing-software-to-feel-like-a-game-with-rahul-vohra ) 1. Game Design not Gamification. Good games nurture intrinsic motivation in players, in part because they’re fun. “Gamification” instead uses external motivators like badges, levels, and points to goad users into interacting with the product. Game design combines goals and objectives, intentional emotional design, and the psychological phenomenon of flow. It forces the designer to consider, what is fun? To which Rahul’s answer is “pleasant surprise”. Great game design creates intrinsic motivation: “doing things because they are inherently interesting and satisfying.” Adding extrinsic motivation like points or rewards can actually erode the desire to do a task. Rahul’s Advice for product designers: “Pull back from user wants and user needs. Instead, design for fun.” 2. It's more important to consider how your product makes customers feel than what it functionally does for them. When designing any product, interaction, or experience, identifying the exact desired user emotions can be incredibly powerful. How do you do this? Find opportunities where the product naturally delights, surprises, or gives users a sense of accomplishment - and find light-touch ways to amplify it. Example: Inbox 0. Superhuman found that reaching Inbox 0 is one of the most emotionally resonant moments in someone’s interaction with their email. To amplify that moment, Superhuman uses beautiful imagery as a reward to trigger specific emotions when a user empties their inbox. 3. Democratizing powerful tools that were previously reserved for an elite class is a recipe success. Superhuman moved mountains to create that “10x better” experience before launching. Even when starved for resources, it can pay off in a big way for a startup to expend massive engineering effort to build a better foundation than the competition. The team at Superhuman faced a challenge: How can we deliver the same speed and power that developers have in code editors to ordinary people in their email inboxes? To solve it, they spent 2 years re-writing large parts of Chrome to make everything faster. Now the Superhuman browser app is faster than any standalone email app experience and provides sub-100 ms results. The result: users don’t have time to break flow state. 4. Storytelling is everything. Don Valentine used to say “Money flows as a function of the story.” Storytelling matters across all dimensions of a startup: pitching investors, recruiting talent, selling products, building a cult-like following. On the podcast, Rahul ties rich detail and visuals to his core points. When racing Lamborghinis: “you see the landscape rip by, you hear the scream of the engine, you taste burning rubber.” When pitching his co-founder on joining: “I could see as the gears turned in his mind as he’s munching this pizza, increasingly slowly until his mouth ground to a halt.” When describing engineers coding in flow state: “our fingers dance across a keyboard like we’re playing a piano.” 

Special: Superhuman Part II - Designing Software to Feel like a Game (with Rahul Vohra)

A week before the 2020 US Presidential election, former Twitter CEO Dick Costolo joins us to tell the story of a company that has impacted all of our lives (political and otherwise) like none other. While it's easy to forget now, a very viable alternate history exists where it's Twitter, not Facebook, who owns Instagram, and Vine, not TikTok, that's the global platform for mobile video. We dive into it all on this episode — and of course while we had Dick, we also had to discuss his controversial recent deleted tweet. If you want more more Acquired and the tools + resources to become the best founder, operator or investor you can be, join our LP Program for access to our LP Show, the LP community on Slack and Zoom, and our live Book Club discussions with top authors. Join here at: https://acquired.fm/lp/ New! We're codifying our own Playbook notes and takeaways from each episode, and posting them here in the show notes and on our website. You can read them below or at: https://www.acquired.fm/episodes/twitter-with-dick-costolo Sponsors: Thanks to Tiny for being our presenting sponsor for all of Acquired Season 7. Tiny is building the "Berkshire Hathaway of the internet" — if you own a wonderful internet business that you want to sell, or know someone who does, you should get in touch with them. Unlike traditional buyers, they commit to quick, simple diligence, a 30-day or less process, and will leave your business to do its thing for the long term. You can learn more about Tiny here: http://tinycapital.com Thank you as well to Bamboo Growth and to Perkins Coie. You can learn more about them at: https://growwithbamboo.com https://www.perkinscoie.com/ Playbook Themes from this Episode: Sometimes early advantages matter. A lot. In a network economy industry (like social media), it's almost impossible to chase down someone with an established lead. The only way you can hope to compete is by changing the game. And even that is a long shot. Once Facebook — and then Instagram within Facebook — had established a meaningful active user lead over Twitter, there was no "down the middle" play Twitter could run to catch up. Twitter recognized this and attempted all sorts of orthogonal strategies: video (Vine), live (Periscope), music (Twitter Music), syndication (Moments), exclusive content (the NFL deal). In each case either Facebook was able to copy and co-opt the innovation, or the attempt simply failed. Sometimes reach matters. A lot. If you're operating in a network economy, your service MUST deliver a first-class experience on every platform that matters. Vine launched on iOS and immediately went to #1 in the App Store. But they didn't get a good Android experience out fast enough, which fractured the social graph that users could share across. Instagram was able to respond aggressively with a first-class video experience across both iOS and Android before Vine could stop the bleeding — and the rest is history. Network Resiliency. Some network graphs are more inherently defensible than others. How easy it is to "rehydrate" your network somewhere else should drive how closely you guard it. Facebook, LinkedIn and WhatsApp all have relatively low defensible networks — if you were to exfiltrate their graphs, you could recreate their value quickly. This is why all of those companies / products significantly restrict connection exporting, and also why they were able to bootstrap quickly in the early days by importing users' address books. By contrast, the Twitter graph is about interest, not social connections. Even if you exfiltrated all its connections, it'd be very difficult to recreate Twitter (people have tried). This dynamic made it more difficult for Twitter to scale quickly, but also has made it more resilient over time. The core Twitter product is just as robust — if not more — today than it was in 2010... the same can't be said for the blue Facebook product, which has bled out to Instagram, WhatsApp, TikTok, Snap, iMessage, etc. Balancing forest fires and forestry management. As a leader of a rapidly growing organization, you face two types of challenges: "forest fires" (this crazy thing just happened and we need to respond), and "forestry management" (this set of crazy things will keep happening until we figure out a solution that scales). You need a different mental state to approach each, and balancing between the two is incredibly difficult when you're see-sawing back and forth every day. Links: Ashish Goel at Stanford: https://web.stanford.edu/~ashishg/twitter.html Dick and Adam's new firm, 01 Advisors: https://01a.com/ Carve Outs: Vote! https://www.vote.org 

Twitter (with Dick Costolo)

On this special episode of Acquired, we're joined by a master interviewer himself, Patrick O'Shaughnessy from Invest Like the Best. We turn the tables and cover the most fascinating story he's never told on ILTB... his own! What is O’Shaughnessy Asset Management, and how are they bringing "AWS-level" innovation to the sleepy wealth management industry? How did he go from Notre Dame philosophy major to quant researcher to (arguably) technology CEO and now also an early-stage venture investor... all while simultaneously building one of the world's top new business media empires? Acquired is here to explore it all. If you want more more Acquired and the tools + resources to become the best founder, operator or investor you can be, join our LP Program for access to our LP Show, the LP community on Slack and Zoom, and our new live Book Club discussions with top authors. Join here at: https://acquired.fm/lp/   Sponsor: This episode is supported by Teamistry, a great podcast from Atlassian that tells the stories of teams who work together in new and unexpected ways to achieve remarkable things. It's one of our best new podcast discoveries in 2020 and we honestly think Acquired listeners are going to love it. (business + history + space!) Click the link below to listen, and our thanks to Teamistry for their support. https://link.chtbl.com/teamistry?sid=podcast.acquired   Playbook Special! Patrick’s Favorite Themes from 5 Years of ILTB: Chetan Puttagunta (#1): Go slow to go fast — http://investorfieldguide.com/chetan/ Chetan Puttagunta (#2): Open source isn’t about saving on R&D, it’s about building differentiated distribution among developers — http://investorfieldguide.com/chetan-puttagunta-and-jeremiah-lowin-open-source-crash-course-invest-like-the-best-ep-188/ Bill Gurley: Healthy marketplace opportunities have increasing marginal value to demand from incremental supply penetration — http://investorfieldguide.com/gurley/ Matthew Ball: The key to unlocking the Metaverse isn’t about building Ready Player One, it’s about creating interoperable systems that will move value and information between experiences — http://investorfieldguide.com/matt-ball-the-future-of-media-movies-the-metaverse-and-more-invest-like-the-best-ep-185/ Charlie Songhurst: The best place to look for talent is in less-competitive markets — http://investorfieldguide.com/songhurst/ Katrina Lake: The past of e-commerce was about price, convenience and selection; the future is about personalization and curation — http://investorfieldguide.com/katrina-lake-the-next-wave-of-e-commerce-invest-like-the-best-ep-187/ Daniel Ek: Company scaling as “seeing around corners” — http://investorfieldguide.com/ek/ Kat Cole: Inversion as a tool to deal with difficult people — http://investorfieldguide.com/kat-cole-how-to-operate-lessons-in-brand-distribution-and-leadership-invest-like-the-best-ep-184/ Sarah Tavel: Hierarchy as a framework — http://investorfieldguide.com/tavel/ Josh Wolfe: The “directional arrow of progress” and the simple power of extrapolating trend lines — http://investorfieldguide.com/wolfe2/   Links: Invest Like the Best: http://investorfieldguide.com/podcast/ Founder's Field Guide: http://investorfieldguide.com/founders-field-guide/ OSAM and Canvas: https://www.osam.com 

Special: Invest Like the Best on Acquired

On the eve of the 2020 NBA Finals, we dive DEEP into the history and business model of the league behind the world's 2nd largest and fastest growing major sport. How did the NBA grow from merely an excuse to monetize hockey arena off-nights into a global powerhouse with more reach and influence and reach than any other American sport? Tune in!! If you want more more Acquired and the tools + resources to become the best founder, operator or investor you can be, join our LP Program for access to our LP Show, the LP community on Slack and Zoom, and our new live Book Club discussions with top authors. Join here at: https://acquired.fm/lp/   New! We're codifying our own Playbook notes and takeaways from each episode, and posting them here in the show notes and on our website. You can read them below or at: https://www.acquired.fm/episodes/the-nba   Sponsors:  Thanks to Tiny for being our presenting sponsor for all of Acquired Season 7. Tiny is building the "Berkshire Hathaway of the internet" — if you own a wonderful internet business that you want to sell, or know someone who does, you should get in touch with them. Unlike traditional buyers, they commit to quick, simple diligence, a 30-day or less process, and will leave your business to do its thing for the long term. You can learn more about Tiny here: http://tinycapital.com Thank you as well to Bamboo Growth and to Perkins Coie. You can learn more about them at: https://growwithbamboo.com https://www.perkinscoie.com/   Playbook Themes from this Episode: 1. Distribution. Great product-market fit is necessary but not sufficient for outsized success; you also need great distribution. Basketball had great product-market fit from the beginning — it was an indoor sport that could be played in any weather, didn't require lots of specialized equipment or setup, was relatively safe and provided a great player and spectator experience. However basketball's rapid dissemination was helped enormously by its origin within the missionary context of the YMCA organization, which quickly spread the new game to its branches around North America and the world (including and especially China) — all 50 years before the NBA's founding. 2. Hobbies. A corollary to Paul Graham's idea that great markets start as toys: finding the right business model to professionalize an amateur or "hobby" market with a large or rabid fan base can yield massive business opportunities. Basketball was hugely popular for decades before the NBA came along. College and independent professional teams (like the Harlem Globetrotters and New York Rens) proved people would pay to watch great talent; the NBA simply provided the right league structure and real estate to serve that demand at scale. Other examples: personal computers and Apple, electric cars and Tesla, video game streaming and Twitch, bitcoin and Coinbase, etc. 3. Influence = Power. The NBA's strategy to "make the players the stars" has succeeded tremendously, and stands in stark contrast to the other major American sports leagues. NBA players both individually and as a whole have an order of magnitude more social followers than other major American athletes and, relatedly, have also accumulated an order of magnitude more wealth: 7 current and former NBA players have ~half billion wealth or more, compared to only 1 from all other American team sports. Nike's Jordan deal + creation of the Air Jordan brand wrote the blueprint for the modern influencer endorsement (pre-Oprah!), and is perhaps the most successful non-acquisition deal of all-time. Social influence is a compounding network economy: because NBA players have more followers, they win over more fans (and especially young fans) and aspiring athletes than other sports leagues, which leads to new players and stars getting more influence, which repeats the cycle and widens the lead over other sports. 4. Internationalization. The world is a big place. Much more potential talent and customers exist outside any country's borders than inside. The wider you cast your net, the greater rewards you can reap. Starting with the Dream Team in 1992, the NBA embarked on a deliberate campaign to internationalize its image, both with players and fans. The result is this past season 1 billion people watched the NBA (the vast minority of whom were Americans), and 25% of NBA rosters (and probably 50%+ of its young stars) are international. No other major American sport is anywhere close. Regular Acquired mega-theme reminder: China is ALWAYS bigger and more important than you think it is. 600m people in China watch basketball and 300m people play basketball. That's an entire Unites States' worth of developing players, and two US's worth of fans. Whether the future value of those players and fans accrues to the NBA or the CBA (Chinese Basketball Association) will shape everything about the game going forward. 5. Cinematic Universes. The best media properties create and support whole ecosystems around the core product and across mediums. Non-game content like All-Star Weekend and the Slam Dunk Contest, as well as short-form and behind-the-scenes access like SportsCenter highlights, Inside the NBA, etc. provide the NBA with additional compelling (and monetizable) content, all while building the game's reach and deepening fan relationships. Unsurprisingly, this echoes the core of the Disney flywheel. Technology only amplifies this dynamic: social media, over-the-top distribution and direct fan relationships provide more opportunities for the best properties to increase their share of customers' attention. 6. Younger customers = More Future Cashflows. 57% of US 13-17 year-olds list the NBA as their favorite sports league, compared to 13% for the NFL and 4% for MLB. Assuming those numbers hold for this cohort (and younger), the impact on relative future cash flows (and valuations) for the respective sports is enormous. 7. Beachfront property. That said, valuations in any market aren't just driven by the discounted sum of future cashflows; scarcity also matters. Nowhere is this better exhibited than NBA team valuations. Average NBA team valuations have risen 600% in the past decade. Part of this is due to the League's incredible growth. But perhaps as much or more is simply because lots of people want to buy NBA franchises (see e.g., Ballmer) but there are only 30 properties, and ~0-2 are available for purchase at any given time.   Links: Our old LA Clippers episode: https://www.acquired.fm/episodes/episode-36-the-la-clippers The Last Dance: https://www.netflix.com/title/80203144 Allen Iverson Players' Tribune piece: https://www.theplayerstribune.com/en-us/articles/life-and-times-of-allen-iverson   Carve Outs: David: Phil Libin and Mmhmm on Joe Sweeny's Just Raised podcast: https://overcast.fm/+hJ7uJqHMA Ben: Meow Wolf + documentary https://meowwolf.com/explore/origin-story   Sources: Bill Simmons' Book of Basketball: https://www.amazon.com/Book-Basketball-NBA-According-Sports/dp/0345520106 http://investorfieldguide.com/hinkie/ https://bleacherreport.com/articles/1039092-nba-revenue-sharing-small-market-teams-to-benefit-from-new-sharing-structure https://bleacherreport.com/articles/1554991-ranking-each-decade-of-nba-basketball-from-the-1960s-to-today https://cbabreakdown.com/salary-cap-overview https://en.m.wikipedia.org/wiki/ABA–NBA_merger https://en.wikipedia.org/wiki/ABA–NBA_merger https://en.wikipedia.org/wiki/Basketball https://en.wikipedia.org/wiki/Bill_Russell https://en.wikipedia.org/wiki/Celtics–Lakers_rivalry https://en.wikipedia.org/wiki/David_Stern https://en.wikipedia.org/wiki/Eligibility_for_the_NBA_draft https://en.wikipedia.org/wiki/Harlem_Globetrotters https://en.wikipedia.org/wiki/Kareem_Abdul-Jabbar https://en.wikipedia.org/wiki/List_of_NBA_team_owners https://en.wikipedia.org/wiki/Michael_Jordan https://en.wikipedia.org/wiki/National_Basketball_Association https://en.wikipedia.org/wiki/National_Basketball_Players_Association https://en.wikipedia.org/wiki/NBA_2K https://en.wikipedia.org/wiki/NBA_Collective_Bargaining_Agreement https://en.wikipedia.org/wiki/NBA_dress_code https://en.wikipedia.org/wiki/NBA_salary_cap https://en.wikipedia.org/wiki/New_York_Renaissance https://en.wikipedia.org/wiki/Pacers–Pistons_brawl https://en.wikipedia.org/wiki/Wilt_Chamberlain https://en.wikipedia.org/wiki/Women's_National_Basketball_Association https://en.wikipedia.org/wiki/Yao_Ming https://fansided.com/2018/08/11/nba-reaches-30-million-instagram-followers/ https://globalsportmatters.com/business/2019/03/05/nba-realizing-the-power-of-new-markets-for-talent-and-revenue/ https://globalsportmatters.com/business/2019/03/07/tv-is-biggest-driver-in-global-sport-league-revenue/ https://news.cgtn.com/news/2019-07-29/Tencent-NBA-extend-partnership-for-five-more-years-in-1-5-bln-deal-IJ0UB34uxq/index.html https://opendorse.com/blog/the-top-100-athletes-on-social-media-2019/ https://sabr.org/research/article/mlbs-annual-salary-leaders-since-1874/ https://scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=1632&context=sportslaw https://techcrunch.com/2019/10/08/chinese-firms-tencent-vivo-and-cctv-suspend-ties-with-the-nba-over-hong-kong-tweet/ https://thehustle.co/dont-even-go-there/ https://web.archive.org/web/20110811000133/http://articles.latimes.com/2010/apr/27/sports/la-sp-crowe-20100427 https://www.biography.com/scholar/james-a-naismith https://www.celebritynetworth.com/articles/sports-news/the-25-richest-athletes-in-the-world-2020/ https://www.davemanuel.com/investor-dictionary/basketball-related-income/ https://www.forbes.com/sites/aliciajessop/2012/06/14/the-surge-of-the-nbas-international-viewership-and-popularity/#39a5149a79ef https://www.forbes.com/sites/kurtbadenhausen/2019/10/09/the-nbas-soaring-franchise-value-growth-at-stake-with-china-feud/#7c83a48c4257 https://www.forbes.com/sites/kurtbadenhausen/2020/02/11/nba-team-values-2020-lakers-and-warriors-join-knicks-in-rarefied-4-billion-club/#7fa5ff532032 https://www.forbes.com/sites/kurtbadenhausen/2020/05/03/michael-jordans-1-billion-nike-endorsement-is-the-biggest-bargain-in-sports/#456253056136 https://www.forbes.com/sites/kurtbadenhausen/2020/07/31/the-worlds-most-valuable-sports-teams-2020/#4c40b5d3c749 https://www.groovewallet.com/richest-athletes/ https://www.investopedia.com/articles/investing/070715/nbas-business-model.asp https://www.marketplace.org/2020/06/18/the-nba-hopes-to-recoup-revenue-in-the-bubble-at-disney-world/ https://www.nba.com/david-stern-looking-back-index https://www.rollingstone.com/culture/culture-sports/how-david-sterns-nba-dress-code-changed-mens-fashion-104719/ https://www.sbnation.com/2014/10/5/6916597/nba-new-tv-deal-espn-turner-24-billion https://www.si.com/longform/2018/nba-international-oral-history/index.html https://www.si.com/nba/2019/06/27/yao-ming-nba-rockets-chinese-basketball-association-adam-silver https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/nba-could-see-400m-revenue-decline-in-china-this-season-57153753 https://www.sportsbusinessdaily.com/Journal/Issues/2017/07/17/Research-and-Ratings/Social.aspx https://www.sportscasting.com/does-the-nba-own-the-wnba/ https://www.theatlantic.com/international/archive/2012/02/from-mao-zedong-to-jeremy-lin-why-basketball-is-chinas-biggest-sport/253427/ https://www.theplayerstribune.com/en-us/articles/life-and-times-of-allen-iverson https://www.usatoday.com/story/sports/nba/2019/10/09/nba-china-hong-kong-whats-at-stake/3912447002/ https://www.washingtonpost.com/archive/sports/1983/03/15/nba-red-ink-and-a-bleak-future/198bd65f-4062-4372-95e4-388b22c77666/ https://www.washingtonpost.com/news/made-by-history/wp/2017/12/26/how-the-nba-went-global/?noredirect=on https://www.washingtonpost.com/news/made-by-history/wp/2017/12/26/how-the-nba-went-global/?noredirect=on&utm_term=.fd1f9bd476e5 https://www.wsj.com/articles/yao-ming-the-7-foot-6-man-caught-between-the-nba-and-china-11570727998 https://www.yardbarker.com/nba/articles/nba_owners_from_oldest_to_youngest/s1__29844068#slide_30 

The NBA

Every company has a story. Acquired goes behind the scenes of the biggest tech IPOs and acquisitions of all time.

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Acquired

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