Acquired - Tech Acquisitions & IPOs
Summary: Acquired goes behind the scenes of the best (and worst) acquisitions and IPOs of all time. We grade the deals, from the Instagram A+'s to the AOL Time Warner debacles. With the founders & CEOs as special guests.
Acquired brings it all back home—to the smart home that is—with Google’s 2014 acquisition of Nest for $3.2B. From Nest cofounder Tony Fadell’s first job at General Magic (alongside future Android founder Andy Rubin) to his days as “father of the iPod” under Steve Jobs at Apple, the Silicon Valley history runs deep with this one. But did that make the acquisition a good move for Google in the coming battle with Amazon’s “Lady A” for control over consumers’ homes? We dive in!
We launch mini-series on Acquired with a subject near & dear to our heroes’ hearts: startup fundraising! This has been one of our most-requested new topics, and we’re excited to kick things off with makers of the popular Rec Room social VR app, Against Gravity, which raised one of Seattle’s hottest venture rounds in recent history: a $4m seed led by Sequoia Capital in 2016. CEO Nick Fajt joins to tell the story from company inception to building and shipping the initial product, fundraising as a first-time CEO, what they’ve been able to accomplish with the capital and their vision for the future. We had a blast touching on many classic Acquired themes for the first time “in-action” with a young, growing company, and hope you all enjoy the discussion as much as we did. Let us know what you think in the Slack! Carve Outs: * Ben: Ready Player One * David: Seveneves * Nick: The Legend of Zelda: Breath of the Wild Sponsor: * Thanks to Perkins Coie, Counsel to Great Companies, for sponsoring this Acquired Season 2. You can get in touch with Gina Eiben, who you heard at the beginning of this podcast, here.
Former Zappos Chairman & COO (and current Partner at Sequoia Capital) Alfred Lin joins our heroes to kick off Season 2 with a classic: Amazon’s 2009 acquisition of the internet’s quirkiest online retailer for $1.2B in stock. How did three Harvard undergrads go from delivering pizza to their dorm to delivering happiness to the world — and become in the process one of the few companies ever to compete successfully head-to-head against Amazon in commerce? Tune in to find out! Note: Unfortunately the quality of David and Alfred’s audio tracks in this episode were significantly impacted by a processor issue on David’s computer, which we didn’t discover until after recording. We’ve worked hard to fix in post-production, but it’s still far from perfect. Still, the content from Alfred is so good, we felt we had to put this episode out there even though the audio quality isn’t up to par. We hope you’ll give it a listen regardless, and we’re working on getting a transcript made ASAP as well. -Ben & David Carve Outs: * Ben: Andrew Mason on Recode Decode * David: Justin O’Beirne on Google Maps’ Moat * Alfred: Walter Isaacson’s biographies of Albert Einstein and Benjamin Franklin Sponsor: * Thanks to Perkins Coie, Counsel to Great Companies, for sponsoring this podcast. You can get in touch with Jason Day, who you heard at the beginning of this podcast, here.
Join us on Tuesday, January 16th at 5:30 in San Francisco for the Acquired Listener Happy Hour! Find out more and RSVP here: http://bit.ly/acquiredhh
Acquired cozies up to the fire and looks back on the year in tech. How wildly off were we on last year’s predictions? What does the next year have in store? Most importantly, what price will Bitcoin be trading at in December 2018??? Pour yourself a glass of your favorite holiday beverage and kick back with us. SF Acquired Meetup! * Mark your calendars: we’ll be hosting an Acquired Meetup in SF the evening of January 18, 2018. More details coming soon—check Slack or Acquired.fm. Links * Josh Elman on shared experiences * Patrick McKenzie on distribution 2017 Carve Outs of the Year: * Books * His Dark Materials trilogy by Philip Pullman * Shoe Dog by Phil Knight * Wooden on Leadership by John Wooden and Steve Jamison * Articles * “The Great AI Awakening” New York Times Magazine * “Founder Friendly” AVC blog * Podcasts * “The Ezra Klein Show” featuring Yuval Noah Harari * “The Bill Simmons Show” featuring Jimmy Iovine * Music * Bruce Springsteen and The E Street Band live at the Hammersmith Odeon London in 1975 * A Moment Apart by Odesza * Movies * Creed * Blade Runner 2049 * The Last Jedi * Apps * YouTube * HQ Sponsor: * Thanks to Perkins Coie, Counsel to Great Companies, for sponsoring this podcast. You can get in touch with Jason Day, who you heard at the beginning of this podcast, here.
Acquired crosses the half-century mark with an instant classic: Apple’s 2014 purchase of Beats, its largest acquisition ever. If you knew Beats as just another headphone company, think again—the history on this one will keep your heads ringin’. SF Acquired Meetup! * Mark your calendars: we’ll be hosting an Acquired Meetup in SF the evening of January 18, 2018. More details to come soon. Carve Outs: * Ben: HQ * David: Wooden on Leadership Sponsor: * Thanks to Perkins Coie, Counsel to Great Companies, for sponsoring this podcast. You can get in touch with Nick Ferrer, who you heard at the beginning of this podcast, here.
Ben and David dive into the most talked-about tech IPO of 4Q 2017: Stitch Fix. After downsizing the offering and pricing below the range, does this signal a warning that public markets won’t value high-flying silicon valley “disruptors” as high as VCs hope? Or is this a textbook example of a great return for a disciplined management team and well-run company? Most importantly, what happens next? Tune in for our heroes’ take. Carve Outs: * Ben: The iPhone X * David: Coach Wooden and Me: Our 50-Year Friendship On and Off the Court Sponsor: * Thanks to Perkins Coie, Counsel to Great Companies, for sponsoring this podcast. You can get in touch with Jason Day, who you heard at the beginning of this podcast, here.
Ben & David cover the proposed largest tech M&A deal of all time, and in the process dive into the evolving dynamics of the industry that started everything in Silicon Valley—silicon. Just when VCs thought innovation was dead in semiconductors, a new wave of startups and large companies are redrawing the lines of competition in an industry dominated for a half-century by the “Wintel” duopoly of Intel and Microsoft. Topics Covered Include: * Innovation and disruption in the semiconductor industry over the past two years * Intel’s acquisition of Nervana * Graphcore and other ML-focused semiconductor startups * CDMA and the telephone network effect * Qualcomm’s early cell phone handsets * Vertical integration + commoditization in smartphone chipsets The Carve Out: * Ben: The de-watering of Niagara Falls * David: Big Daddy’s Antiques * Bonus: The Mystery Show Sponsor: * Thanks to Perkins Coie, Counsel to Great Companies, for sponsoring this podcast. You can get in touch with Nick Ferrer, who you heard at the beginning of this podcast, here.
Ben & David venture to the land down under (and reunite in-person!) to tell the story of the granddaddy of all bootstrapped tech success stories, collaboration software company Atlassian. How did two plucky college grads from Sydney, Australia go from just trying to escape working for the man to becoming two of the top 10 wealthiest people in the entire country, all without raising a dollar of venture capital? We dive in. Topics Covered Include: * How Atlassian founders Mike Cannon-Brookes and Scott Farquhar met in college at the University of New South Wales in Sydney, Australia, and their decision to bootstrap a startup as an alternative to finding a “real job” after graduation * Atlassian’s “no sales” model, and the resultant efficiency of their sales & marketing spend relative to other SAAS companies * Organic product growth and acquisitions over the years, starting with Jira and later adding Confluence, BitBucket, HipChat / Stride, Jira Service Desk and Trello * Rapid revenue growth and the decision to continue as a bootstrapped company, only raising secondary capital prior to going public * The IPO in November 2015 and subsequent stock performance (spoiler: it’s been good) The Carve Out: * Ben: Phil Knight’s memoir, Shoe Dog * David: Bruce Springsteen memoir, Born to Run Sponsor: * Thanks to Perkins Coie, Counsel to Great Companies, for sponsoring this podcast. You can get in touch with Jason Day, who you heard at the beginning of this podcast, here.
Today our heroes cover a deal that might have more impact on life in Silicon Valley than AI, wearables and AR/VR combined… Nestle’s acquisition of Blue Bottle Coffee. Will hipster entrepreneurs and the VCs who love/need them continue to line up around the block for their minimalist coffee experience of choice, now that it’s owned by the Nesquik Bunny? Is this the beginning of Blue Bottle pod machines filling the empty counter space left by Juicero’s demise in VC offices throughout South Park? We investigate. Topics Covered Include: * The rise of “Third Wave” coffee * Blue Bottle founder James Freeman’s “classical” (music) influences * Venture capital and the coffee business * Achieving liquidity when companies and founders’ don’t want to go public, and don’t want to sell their stakes * Nestle’s position in single-serve coffee market and potential brand impact of Blue Bottle The Carve Out: * Ben: There Never Was a Real Tulip Fever * David: iPhone SE Sponsor: * Thanks to Perkins Coie, Counsel to Great Companies, for sponsoring this podcast. You can get in touch with Jeff Beuche, who you heard at the beginning of this podcast, here.
Acquired is back and live on the scene! After months of speculation, Google announces today their acquisition (err, "Cooperation Agreement”) of a large portion of HTC’s hardware division. What does this mean for the future of mobile? Can Google transform itself into a vertically integrated device company and compete directly with Apple? Most importantly, when will we see more Beats Android handsets??? (We hope never) Topics Covered Include: * The origins of HTC as a Taiwanese OEM, dating back to the Compaq iPAQ and Palm Treo 650! * HTC’s long history with Google, starting as the manufacturer of the first Android phone, the HTC Dream / T-Mobile G1 * HTC’s ownership of Beats, for a hot minute * Google’s own winding history in hardware, with its Motorola acquisition in 2011 and divestiture in 2014 * Google & HTC’s joint work on the Pixel smartphones in 2016 * And much analysis and speculation on what this means for Google, Apple, Samsung, vertical vs horizontal business models and more! The Carve Out: * Ben: Odesza’s new album A Moment Apart * David: Bruce Springsteen on Fresh Air Sponsor: * Thanks to Perkins Coie, Counsel to Great Companies, for sponsoring this podcast. You can get in touch with Jeff Beuche, who you heard at the beginning of this podcast, here.
On this extra-long episode of Acquired, Brian McCullough from the Internet History Podcast returns to discuss perhaps the most (in)famous merger of all time: AOL - Time Warner. Who doesn’t remember the soothing sounds of 56k modems and the timeless phrase, “You’ve Got Mail”? Join us all as we unpack how one of the biggest ISP’s of the 90’s tried to take over the world… and failed. Topics Covered Include: * AOL’s status in the 90’s / early 00’s * Explaining just what it is that AOL did at the height of their popularity * How AOL pioneered a number of internet paradigms * AOL’s persistent money troubles and bailouts from other companies * Steve Case foreseeing the coming era of broadband, inspiring AOL to pursue working with a cable company * Ebay vs. Time Warner in a down-to-the-wire war for a merger with AOL * Why the money dried up for AOL after their merger with Time Warner * AOL and its value in the post-Time-Warner era * Speculating about what would have happened had AOL and others stayed independent businesses * And much discussion on how to grade this one… The Carve Out: * Ben: Give and Take by Adam Grant * David: Season of the Witch by David Talbot * Brian: A Mind at Play: How Claude Shannon Invented the Information Age by Rob Goodman Sponsor: * Thanks to Perkins Coie, Counsel to Great Companies, for sponsoring this podcast. You can get in touch with Jeff Beuche, who you heard at the beginning of this podcast, here.
Unicorns and ratchets and lawsuits, oh my! Our heroes dive into the history of Jack Dorsey’s famous “other” company, Square. Was the Square IPO a canary in the coal mine signaling doom & gloom for the so-called unicorn companies of the early 2010’s, or a mispriced and misunderstood diamond in the rough? Acquired weighs in. Topics Covered Include: ● Square’s deep origins in the early 90’s in St. Louis, MO with the initial meeting of its co-founders, Jack Dorsey & Jim McKelvey ● McKelvey’s side glass blowing business and the “inspiration” for Square that came much later in the late 2000’s ● The complicated involvement of Washington University (in St. Louis) professor Robert Morley, who had worked for years developing payment card reading technology ● The company’s early meeting with Scott Forstall at Apple, and its “significant” impact on the its name and design ● The real disruptive innovation of Square and its business model (hint: not just building a mobile card reader) ● Square’s massive payments deal with Starbucks in 2012 and its impact on the company ● The evolution of Square’s business from a simple card reader to cloud-based Point of Sale (PoS) system and entire suite of merchant tools & business management services ● The drama leading up to Square’s IPO (including at Jack Dorsey’s “other” company, Twitter), dynamics and narratives affecting its pricing, the effect of IPO “ratchets”, and the company’s performance over the ~2 years since The Carve Out: • David: Bob Iger on Nick Bilton’s Inside the Hive podcast • Ben: The World After Capital on GitBooks Sponsor: Thanks to Perkins Coie, Counsel to Great Companies, for sponsoring this podcast. You can get in touch with Buddy Arnheim, who you heard at the beginning of this podcast, here.
Acquired dives into the legendary acquisition of Ben Horowitz & Marc Andreessen’s “second act” software company Opsware, from a perspective never before heard—HP’s side of the story! Our heroes are joined by Michel Feaster, who led both the acquisition for HP and then the Opsware product as part of the integrated company afterward under Ben Horowitz. Today the tables have turned: Michel is the Co-Founder and CEO of Seattle-based startup Usermind, and Ben Horowitz sits on her board on behalf of A16Z. This episode is not one to miss! Topics covered include: * Opsware’s early history and origins as Loudcloud, the “second act” of internet wunderkind Marc Andreessen and Netscape product manager Ben Horowitz * Ben’s first person telling of the Loudcloud/Opsware history in The Hard Thing about Hard Things, as well as the great Wired "period piece” covering Loudcloud’s launch in August 2000 * The importance of timing, and Loudcloud’s too-early vision of—essentially—AWS before AWS (including eerie parallels between the metaphor Andreessen used to describe Loudcloud during the company’s first press briefing, and Jeff Bezos’s description of AWS at YC nearly a decade later) * Creation of the “Opsware” tool inside of Loudcloud to automate deploying and configuring servers within Loudcloud’s data centers * Loudcloud's meteoric rise, crash following the burst of the internet bubble, and hard pivot as a public company into Opsware—now an enterprise software company selling datacenter tools * Michel’s role in HP’s evaluation of the company as an acquisition target, and process leading to its $1.6B acquisition in July 2007 * Integration of the company into HP’s culture and sales channel * The creation of Ben & Marc’s “third act”, the VC firm Andreessen Horowitz, and what it’s like for Michel now having Ben as an investor on her board at Usermind The Carve Out: * Ben: StarStaX star trail photography software * David: Jimmy Iovine on the Bill Simmons Podcast
Acquired trains its lens on the “second or third best acquisition of all-time”, Priceline’s 2005 purchase of Booking.com. Our heroes are joined by friend-of-the-show and former Jetsetter & Room 77 CEO Drew Patterson to help understand how this little-known startup from The Netherlands grew into the largest travel company in the world, with nearly $8B in annual revenue. Was this deal even better than Instagram??? We debate, hotly. Topics covered include: * The biggest startup you’ve never heard of (in the US), Booking.com, and its parent company Priceline (yes, the William Shatner Priceline) * Booking’s founding in Amsterdam in late 1996: by recent college graduate Geert-Jan Bruinsma * Skift.com’s Definitive Oral History of Online Travel * The travel industry's GDS's (“Global Distribution Systems”) and the development of Sabre * How Bruinsma raised the initial money for Booking: by emailing anyone he know who had an email address * OTAs ("Online Travel Agencies”) and how they operate; the "merchant model" versus the “agency model" * The role of search in online travel * Bill Gurley on Conversion: The Most Important Internet Metric of All * Expedia’s early flirtation with Booking, and decision not to acquire the company * Priceline head of M&A Glenn Fogel’s vision for how powerful the agency model for OTAs could become in Europe * Priceline and Glenn's 2004 acquisition of Active Hotels in the UK, followed by the 2005 acquisition of Booking for $133M and the combination of the two businesses into Booking.com * Booking’s incredible growth in the decade since the acquisition, from less than 20M room-nights to over 500M, and $7.8B in revenue in 2016 The Carve Out: * Ben: Scott Forstall talking about the original iPhone at the Computer History Museum * David: The Big Sick * Drew: Bloomberg’s Money Stuff by Matt Levine Sponsor: * Thanks to Silicon Valley Bank for sponsoring this episode. If you'd like to learn more or start a banking relationship, you can get in touch with Shai Goldman here.