Happy 10-year anniversary, Ben.
It's crazy. It's been 10 years.
I know. Here we are. Brought you down here to Silicon Valley to record our 10-year anniversary holiday special here. I wanted a special place.
Yeah. What are we doing? You keep like teeing up like, 'Oh, just come down. Oh, we'll just record it here.' And like clearly we're not at your house.
I was actually thinking we should try and find the Silicon Valley house. The Eric Bachman Aviato.
Aviato. Aviato. Now, the reason I brought you down here is I booked us a very special place to record. It's actually right over here.
It's a house.
Is this the Google house?
The where they had their first office in the garage.
This is Google's first office right here. They gave it to us for the day.
Like, we can do our holiday special in it.
Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Is it you? Is it you? Is it you? Sit me down. Say it straight. Another story on the way. Who got the truth? Welcome to the fall 2025 season finale of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert.
And we are your hosts. Well, listeners, today we're going to do something very different than our holiday specials of years past. We've received a bunch of requests over the years to do an Acquired episode on Acquired itself and to unpack why Acquired worked when 99% of podcasts do not. But it's always felt a little bit strange to me and we've always shied away from analyzing our own company.
Yep. But then this year we turned 10 years old and thought, well, maybe it's time for something at least a sort of pause and reflection, you know, to shout out the Coca-Cola episode.
On our journey to this point and why Acquired has worked.
And so we thought, well, if we're going to do something, we should bring someone in to do it with us. And we'd want someone who is great at dissecting the mechanics behind teams or companies. Someone who distills complexity into simplicity. Someone who himself knows how to tell a great story. And there was really only one choice.
Michael Lewis, author of Moneyball, Liar's Poker, The Blind Side, The Undoing Project, Going Infinite, on and on and on. And of course, host of his own podcast, Against the Rules. And Ben, you and I have looked up to Michael forever. So, this was really special.
Yes. And then, of course, there's the venue. We thought it'd be a fitting way to cap off the year of our three-part Google series to record in the literal garage where that nearly $4 trillion company got started.
Yes, indeed. Well, listeners, if you want to know every time an episode drops, vote on future episode topics, and get corrections on past episodes, check out our email list at acquired.fm/e. And that email list just got a whole lot better with our first overhaul in five years. So you'll now get episode summaries, our big takeaways, and exclusive photos from our research process. That's acquired.fm/e. Chat about this episode with us and the whole Acquired community in Slack. Acquired.fm/slack. And if you want more Acquired, check out our interview show, ACQ2. Our last episode was with Andrew Ross Sorkin, founder of the New York Times DealBook, host of CNBC's Squawk Box, and author of 1929. That's ACQ2 in any podcast player. And before we dive in, we want to briefly thank our presenting partner, JPMorgan Payments. Yes, just like how we say every company has a story, every company's story is powered by payments. And JPMorgan Payments is a part of so many of their journeys from seed to IPO and beyond.
So with that, this show is not investment advice. David and I may have investments in the companies we discuss and this show is for informational and entertainment purposes only.
With that, onto our conversation with Michael Lewis.
Well, Michael, thank you for joining us.
We have a little something since this is our 10-year anniversary that we're celebrating that we need to do before we start.
So, you went to Princeton. I went to Princeton.
My senior thesis would become impactful for Acquired. I was a French literature major. I wrote my thesis on the history of Dom Pérignon and the marketing history of...
Very serious college student.
A little different than yours.
They somehow I conned the French department into letting me do this and what probably 12, 13 years later we made our LVMH episode and it was a big moment for Acquired. Moët & Chandon has just released the 2015 vintage...
On Dom Pérignon. 2015 is the year we started.
So I thought you were going to say that the effect that the Princeton thesis had on Acquired. I didn't think it was as specific as that, but I feel like when I'm listening to your episodes, I'm listening to someone who's worked for up to a thesis, that it is thesis-like immersion in a subject. Well, I can tell you our episodes are much better than my actual thesis was, but that is exactly how it feels.
But that is the process we go through.
Yeah. And cramming for finals the night before. There's a lot of like academic feelings that happen as we get close to recording day.
So, it's your show and I don't want to take it over, but I wanted to start by saying that I didn't discover it until this year. I discovered in July. I was at Google camp, which is kind of a good way to discover Acquired. And...
We should talk about where we are now, too.
And we are sitting in the Google garage where...
Yes. I mean, I don't know exactly. I'm not sure exactly what happened in the Google garage. So, this was the... it's a nice idea.
Like, literally, Susan Wojcicki lived here. I think this was her house. She had just bought the house and was looking to sublet part of it, like just make some extra money on other people using the house. Posted a bulletin notice on the Stanford campus that there was space available here.
And so Larry and Sergey's first desks when they got kicked out of Stanford's offices were right there.
I actually think this actual desk is the one that they were using because Google pulled it out of storage for us.
So I'm at this camp with a lot of kind of well-known people and a prominent CEO says to me, 'You ought to listen. Have you listened to Acquired?' And I didn't know what he was talking about. And I went and listened. I can't remember what I listened to first. I think it might have been the Morris Chang episode, but I had about eight different reactions, all positive. And I thought this is kind of amazing what you all are doing. So then from July until now I've listened to maybe 10 of the episodes, which is a lot of hours of listening to this. The first thing that struck me, I could not believe you were getting away with a four-hour podcast. And I couldn't believe that even after four hours I was still kind of looking for even more. That you created the environment with the podcast that I try to create with the book. You grab the listener like I try to grab a reader and get them to the state of mind where they'll let you take them anywhere and teach them about stuff that they don't even know they want to learn about.
I think if we're going to... we're doing this as a 10th anniversary sort of celebration.
Yeah. I'm honored and I feel like I'm going to be a lot out of my depth here because I'm just a new listener and I haven't listened to all of it. I'm hardly the world's authority on your podcast and I didn't prepare at all except to listen to it, except I did one thing and that was I went back and listened to your very first.
It is shocking how different it is from where you started, from where you have... you probably haven't ended up, but where you are now. So, I'm going to start by this 10-year journey. I think I can see some things you've learned.
Oh, but I want to know what you think you've learned. Give me... Let's do the 10 lessons from the 10-year journey.
Do you have yours like crystallized because I don't want to taint you.
No, no, no. I do have... It's actually one big thing. And if you say it, I'll acknowledge that you sunk my battleship and I have nothing to add. But I'm curious what you think.
There's no way that first thing you did was ever going to become a hit.
Well, I'm curious if you think... I've always believed something that's always been there from the beginning is the magic between me and Ben.
That's interesting to me. You all meet at like a Passover seder.
And you have been colleagues at a VC firm.
I'll come back to that. I want to talk a little bit about you as investors, but we'll come back to that, boy, and how that's different from being a podcaster. But at what point do you decide that, oh, there's a kind of odd chemistry here?
Well, we really just wanted to spend more time together. It was one of these things where...
Yeah. Okay. This is married.
It's not a romantic relationship.
We like to say that we each have two spouses. We have our actual romantic spouses that we have families with and then we have each other. David and I shared a bank account before my wife and I shared a bank account.
So, are either of your spouses threatened by the relationship?
No. Just from a sheer time perspective. I mean, a little bit. My spouse loves it because she doesn't actually want to spend that much time with me. She likes... you know, I used to... all the stuff we do on Acquired, I used to just talk at her and she wasn't interested.
That is true. She loves it because I get to talk to, you know...
Although she gets the rough draft. Like my wife won't listen to episodes because she's like, 'I've already heard four versions of the episode.' And unfortunately I heard like four worse versions. And because I endure that and give you feedback, the listener actually gets the better version.
Right. So you meet and there's a chemistry.
Explain that chemistry. Like what is it that makes you excited to see each other?
David knew all the Apple rumors in real time just like I did. You had read all the latest Stratechery posts. We bonded over Ben Thompson originally.
And I think you can tell me if this is mutual, but I looked up to you because you were doing a thing that was mysterious to me, which was venture capital. I was a software engineer and I got hired to work at a venture firm to do some incubation work, but I didn't know anything about like the real job of venture capital. And here's David, someone who's just a few years older than me, like doing that thing, but kind of in my peer age group. And I could lean over and be like, 'What are they talking about?'
Well, I kind of felt like a fraud in a lot of ways. I repressed this deep down, but if I'm honest with myself, I think I felt like a fraud as a VC because I'd never... I went to Princeton. I was a French literature major. I worked on Wall Street. I worked briefly at the Wall Street Journal and then I became a venture capitalist. I had no qualification to...
Have you ever coded or you ever done anything?
I mean, I took some CS classes in college, but like I'd never built anything. And so I was like, Ben built all these things. Like you built this for that website. You built so many products. You had products that millions of people use. And I was like, I'm just masquerading here.
That Ben knew stuff that was exciting for you to know about.
Did you feel that David knew stuff?
Really? No, no, no. I only found out years into doing Acquired he was a French lit major.
But that's important, that French background... it ended up becoming kind of broad curiosity about things other than business and technology. I hear it in your program. I hear it in your podcast. So what I'm thinking of in my head is Kahneman and Tversky, that I wrote a book called The Undoing Project, and you could see... if you could see two people... and then it got me thinking about collaboration. And I've had exciting collaborations with people and the feeling I get is this person is bringing out a better version of me, which is why I asked if your spouses were threatened, because Kahneman and Tversky's spouses were threatened... is too strong a word, but they were very aware that the relationship that was the most important in their lives was not with their spouse but with each other.
I got the sense from The Undoing Project that Kahneman and Tversky's relationship was very intense.
I don't know that I would describe our relationship as...
It was not competitive on Danny. Kahneman always felt at risk of being dismissed, thought the lesser partner. There was a status difference between the two of them, right? Going into it. Everyone in the world thought Amos was the smartest person they'd ever met.
You two didn't ever have any of that.
But you said you felt like a fraud.
I think I felt lesser. Like there were a lot of things when we started doing Acquired where we were doing this like business analysis podcast, but I didn't know finance.
Funny. You've become more, you know, the keeper of the analysis on Acquired and I'm more the keeper of the story. It's different though than a difference in status. I don't feel that you or I have ever felt we had a difference in status and the number of like fights we've had or real tension we've had is like two, three ever in 10 years. I mean, it's weirdly...
Let's come back to those and let's get to the lessons. What have you learned?
We started thinking about what have we learned from the companies we've covered that we've then applied to Acquired.
Yep. All right. In particular, Acquired has clearly worked. Why? And does that why have something to do with the fact that we study the world's best companies? Like is there some osmosis that happens from the subject matter bleeding into the property itself?
Okay, let's go with that frame.
Yes. So the one I was going to start with is the NFL. The product is scarce. You know, 162 baseball games a year. It's called America's pastime. You pass a lot of time with it. But with the NFL, because the product is scarce and then they have very smartly cultivated that and engineered it to be more scarce, more of an event-driven sport. That's made all the difference. And like to me, as I look at what we do, it's insane for the podcasting industry. Like it's completely insane. We release... for the last three years we've released 12 episodes and next year we're going to do eight episodes for the whole year.
No. As a hobbyist podcaster, what I get told is you have to be on all the time.
And I can't do it and so I'm not going to do it.
Podcasting is like your second or third thing that you do, right? And you make more episodes, I think, per year than we do.
That's correct. But they're just, you know, except for the scripted ones which I do throw myself into, it really is... I do no preparation and it is a conversation. And I don't do very much of those. The scripted ones I do put time into, but it's a different sort of thing than what you're doing. It tends to be a very narrow little story that I'm telling. You didn't start out though.
We used to make 26 episodes a year, you know.
They were 40 minutes long to an hour 20. So, how do you go from that to realizing... and did you really learn it from the NFL or did you just do it and then...
We were starting to do it and then we covered the NFL and we like, aha, this is what we're doing.
Most of these things are actually, I think, confirmation bias. We get some inkling that like we should continue to go in this direction. Like my calling out Hermès, it's because I think quality and scarcity have become an important part of Acquired and in some ways we learned that from Hermès, but we covered Hermès last year.
Yeah. I think we found our way to that probably four-ish years ago, maybe five years ago, where we used to feel like we were bad at podcasting because we couldn't make very many and because we didn't have a whole production team and we didn't have professional ad sales people and we didn't have...
We weren't full-time for a long time.
Yeah. And at some point we kind of looked at each other and we're like, maybe if we just admit that we are heavily constrained and then try to just lean into that constraint in the way that Hermès leans into every single Birkin bag must be handmade by one artisan and we're going to build a business model around that. And it turns out to be a great business. We sort of thought every episode is going to be entirely handcrafted by us. All the research, all the recording. We work with this amazing audio engineer, Stephen, who does the literal waveform editing, but you know, we go in and in a transcript highlight a thousand cuts per episode. Like, it's this made-with-love product. And it turned out we could actually build a big platform and a good business out of something heavily constrained.
But that's not where you start.
So, let's just... for people who don't know, where you start is you're two guys who've met each other and got a crush on each other. You love being with each other and you get this idea that, oh, it would be really cool to do a podcast on corporate acquisitions that worked.
That worked. And bad idea... well, it is an idea. I would find you could easily have started the opposite, corporate acquisitions that didn't, and you'd have had much more material, which is what most press at the time was. It was let's talk about how crappy this acquisition... It's interesting to me that your first step right from the start is positive. It's like what worked, not what didn't work, it's what worked.
That's because we were VCs and I was trying to build companies. I mean, the goal was create things that have enough value to get bought and or go public. And when people buy things, it's because they're working. So let's try to reverse-engineer and understand why things worked.
Right. So that's a different starting spot from almost all journalism.
In fact, if most journalists started there, they'd be accused of hagiography. But because of where you're coming from and because you're thinking of this in very practical terms, like why did this work? You do get away with it. It's just that first episode you're almost like different people. But I'm going to hold back on what I think you learned because I want to see if you get to it. So we got two. What's the third episode that you have learned a lesson from?
I think Berkshire we learned so many things from. We did this three-part...
I have not listened to it and I am a big investor in Berkshire Hathaway.
Good for you. Well, since when?
I bought it right in the middle of the financial crisis because I thought... I mean, it's putting it a little strongly, but oddly I had written a takedown of Warren Buffett on the cover of The New Republic magazine called 'The Temptation of St. Warren.' You can probably dig it off of the Wayback.
The thesis was that he may have started out being who he says he is, but that he's become this very different thing in the marketplace. His money is not like other people's money. And you don't have a couple of things Warren Buffett has. And his money is valued differently. But secondly, he was willing to do deals that at the time bothered the hell out of me. And what had happened was like the Goldman deal was a Solomon Brothers deal that bothered the hell out of me. He kept a CEO in place who I thought should not have been.
Yeah. You lived through it.
No, I was through part of our Virtue series. It turned me briefly, only briefly actually, cynical about Warren Buffett and then I came out of it and fell in love with him all over again. But I had written this thing and pissed him off entirely. I mean, it clearly upset him and then I kind of started watching him for longer and I thought, you know, I just liked him. Just liked him. You couldn't help but like him. So I started to soften and when we got to the financial crisis I thought, well, his money is going to be so valuable here that what is needed is credit and I think it might, if he stays alive long enough, it might happen again soon.
So you invested in Berkshire before the legendary deals coming out of the financial crisis.
Yeah. And so I bought a chunk of the A shares and I've just sat on them. And let me tell you... can I tell you a Warren Buffett story? Yeah, I mean this is talking a little bit out of school, but I've never met him. I know he was really irritated with me and then I actually looked back at that. It's the only time I've ever looked back at a piece I wrote and I thought I overdid that and went right back to The New Republic and wrote another 5,000-word thing about Warren Buffett in which I basically apologized for the first piece. I bought these shares in 2008 when I was working on Going Infinite. I was working on the Sam Bankman-Fried book and I was talking to a publicist completely unrelated to Warren Buffett and she said, 'You know, I also represent Warren.' And she said, 'And I told Warren that I've been talking to you and he said he has a question for you.' And I said, 'What?' She says, 'Is he the Michael Lewis who bought shares back in the...' I swear to God. I swear to God. So this tells you more about Warren Buffett than me. And he said he bought it like what, the book value to, you know, that thing, that ratio, he bought it as cheap as it's ever been. And he says, 'But you made the best trade.' And then he says, 'So he's the Michael Lewis who sold some Berkshire Hathaway two years ago and four years ago.' And he was like, 'Why did he sell?' So he's tracking... I'm not a huge...
I can't imagine you tracking Vanguard.
No, no, no. And I said, well, actually I just gave them to charity is what I'd done. I'd given the money away. And when she said that, he'll be relieved to hear that kind of thing. It's like, so can you imagine that Warren Buffett is taking the time to watch who is coming in and out of the A shares and thinking about it? I mean, I just thought he has that... he and Munger had that whole thing about don't put your money in an index fund, put your money in a big bundle of stocks. Put it in a few stocks and watch those stocks like a hawk. It's like they watch that thing in a way that like I just... in history has anybody ever done anything like...
I mean all these people, they're maniacs. You don't build something like this if you're not...
That's exactly right. So anyway, sorry, I just digressed here, but you did your... what did you learn from your Berkshire, three episodes of Berkshire Hathaway?
Well, as it applies to Acquired, we got really obsessed with the circle of competence, that it's okay to have a giant too-hard pile. There's a bunch of things that like I'm not intelligently saying no to, the same all the time would be like too-hard pile.
Every phone call we'd have would say pile, the expression.
So Warren and Charlie had this thing. There was the...
The yes pile, the no pile, and then the too-hard.
I see. Okay. Right. And it's okay to just like... all the technology was a too-hard.
Yeah. It was just all... yeah. Like there might be something in here, but like I'm just... too hard.
It's basically admitting that like our opportunity cost is so high, like the things that we say yes to are so awesome that it's okay to say too hard to just a giant amount of things. And that was really freeing once we started just like... I mean truly on most...
So what's an example of something that you... I'm surprised you say this, what's too hard?
The reason that one of the reasons besides just wanting to meet you because you've been an inspiration to us forever that I wanted to meet you a few months ago was Hollywood. We've had lots of opportunities to work with Hollywood. It keeps... to this point they have thus always invariably ended up in the too-hard pile.
Are you talking about doing episodes about... creating TV shows, documentaries, adapting these stories into films?
They all sound good until we start digging in and then we're like... the time it would take us to think through all the implications of this... we should just make another episode.
The answer almost always is we should just make another episode. That's a really intelligent place to land because what they will do is woo you with their enthusiasm and then take you down a rabbit hole where you will spend years of your life and have nothing to show.
Well, this is one of the reasons I want to talk to... like Michael's a very smart guy. You've been very successful.
I've gone down the rabbit hole knowing that I didn't have a whole lot else better to do at the time. It's like between books. It's a palate cleanser.
You don't have a between-books period.
Yeah. I don't have that. I don't have the machine you have. You've got an assembly line going.
And it's a compounding asset. I mean, this is the craziest thing about podcasting and like a giant amount of why this has worked for us is we do a lot of work that looks a lot like the research and the writing of a book. But when we make our book and we release it to the world, people click subscribe. And so when we release the next one, those same people go listen. Like it's almost guaranteed. We're always growing our base. Podcasting, being an author, there's loose compounding elements to it, but there's not a literal...
Not when I got into the business of writing books, I thought there was going to... I thought about this a little bit and... So, you're right. It's...
But you've probably done it better than... You're one of the few people who probably does have a brand.
I thought I'm going to move around America to the various arenas of ambition. Wall Street, Silicon Valley, Washington, movie business, sports, the various things. And I'll naturally attract the audience that is interested in that arena. And then I'll drag them along to the others.
And it hasn't really happened that way even for you.
Not really. Not really. The books have a kind of market and it's a big market, big-ish market, but I see no evidence that I'm dragging people along with me. I feel like each book feels like another startup and that I've got to go out and make it happen almost as if I've not written one.
Now that's... Moneyball audience is not necessarily Fifth Risk.
Exactly. And that the audiences end up just being different. So it's just the way it is.
But that's not true. So every time if you were to take time off to go do something in Hollywood, you'd be abandoning this glorious network. The opportunity cost is so high of spending a month not making an Acquired episode because when we publish an episode of Acquired the base does come with us, not all of it, but like I, you know, we make Epic Systems about healthcare and all the people who listen to LVMH are now learning how a doctor's office works, right?
So podcasts are unique in that it does have that true subscriber base but unlike anything else where you click subscribe there's not an algorithmic platform that disintermediates. I mean, you think YouTube or Twitter or any of these, when someone clicks follow or subscribe, it's like signal in the algorithm, but it's not guaranteed. But like you subscribe in Apple Podcasts or Spotify and those people are actually subscribed and they're going to get the next episode, right?
And they learn to trust you.
They learn to trust you that if you're interested, they'll be interested. That what in fact what they're buying into is not the subject, but your interest in the subject.
Yes. And I am terrified of betraying that trust. Like anytime we make an episode, I think of it as a churn opportunity. If we put this in the feed, if we don't live up to the expectations that our listeners have, we will burn them and they will leave us forever.
In the 'why does Acquired work' framework, there's a strong element of terror of why it works. Like we are constantly terrified every time we make an episode.
Every minute is a churn opportunity.
Are we letting people down?
All right, listeners. Now is a great time to thank our presenting partner JPMorgan Payments. And we want to tell you about something pretty cool that we just did with them last week, which was a big live show in Las Vegas together.
Acquired residency in Las Vegas, baby.
No, no, no, no. But what we did do is we took the stage at the beautiful Venetian Theater at AWS re:Invent. We did four really just incredible interviews with the CEOs of Netflix, Perplexity, AWS, and JPMorgan Payments. And I will say, Ben, it was extra special in retrospect. We were talking with Greg Peters, the co-CEO of Netflix, and asking him how Netflix is reshaping Hollywood just a few hours before they announced the Warner Brothers acquisition. He has a pretty good poker face given that we were, you know, in Vegas and all that.
Yeah, that he does. Also very funny to interview Matt Garman from AWS at his own event. And I will say one of the most interesting conversations was with Max Neukirchner, the global co-head of JPMorgan Payments. We dug into this question that I've always wondered about. How did the leading global bank also come to own this technology business that does $18 billion a year in annual revenue on its own separate from the rest of JPMorgan?
Yeah, it's wild. If JPMorgan Payments were a standalone company, it would very likely be in the Fortune 500, but it's also part of JPMorgan.
Max also told us about JPM Coin, developed by Kinexys by JPMorgan, and how it's helped the bank and even Jamie evolve their thinking on how blockchain technology is transforming financial infrastructure.
Overall, it was a great week. We hung out at JPMorgan's booth on the show floor and got to see their developer portal being demoed live in action to customers, too.
Yep. So, if you want to learn more about these innovations in payments and how JPMorgan can help power your business, head on over to jpmorgan.com/acquired.
Are you more terrified than you were two years ago?
So, you're growing... the terror is growing.
At some point, it's not going to be a good thing.
I mean, it's good to be a little on edge,
but you don't want to get yourself in a situation where you feel like you do the same thing over and over again because eventually it will get old. We'll come back to this... we're going to get to the bull and the bear case at the end.
But back to the lesson that you gleaned from Munger and Buffett. It's okay to have a too-hard pile and you said the too-hard pile is like doing things in Hollywood. But when I asked the question, did you ever run across this? Have you run across this? Have you ever had a subject where you thought, ah, this is just too hard to do?
What would be an example of that?
We got pretty far down the line on doing an episode on the Fed.
Yeah. And walked away from it.
So you walked away from it.
Yeah. We might come back, but it's been quite...
There'll be a moment to come back to it.
Yeah. Yeah. Yeah. Yeah. I'm glad we didn't do it.
Although it's going to violate your rule about doing newsy things.
We always try and find things... timelessness is like a must. Everything we do must be timeless. The company we're covering...
Nothing's timeless. So what do you mean by that?
It must be that like if you listen to an episode that we make five years after we made it, it's 80% as relevant. It will still be an important institution in the world, right? But like a CNBC article is worth 2% of its original value within a month, right? And we want to be worth 80% of our original value five years from now on a piece of content.
So does that mean you're picking institutions that you think will survive?
But okay, so that's like baseline... you're so volatile. So much of your stuff is tech and finance where there's so much churn.
Well, yes. This didn't used to be true. You look at anything pre-2018, we had not yet discovered this principle.
But our real bangers are timeless and timely.
Doing Google this year was timeless and timely, right?
Having that, however you do it, you're getting to something that I try to get to when I'm picking subjects, but you're doing it in a slightly different way. What gets my socks start to go up and down about a subject is when I'm really interested in it and nobody else is, that there aren't people, it's not hot. And I found with... I think it's true of basically all my books, maybe a couple exceptions, but a lot of the books that if I'm at a dinner party and someone asks me what are you working on and after about 60 seconds I can see their eyes glaze, like why is he interested in that? You know, it's just not registering with them in any way. And I've learned just to not even talk about it because it kills my interest to watch it kill their interest. But I know why I'm interested and why it's important and I'm not relying on the world telling me it's important. That's a really good sign.
This is a difference between what you do and what we do because I feel like when I think through all your books, they're almost always a story of obscurity that once it becomes a Michael Lewis book, then it becomes a well-known phenomenon. Moneyball, like you are discovering these things that kind of nobody's talking about. Whereas when we do something like Trader Joe's, someone says, 'What are you working on?' And we're like, 'Trader Joe's.' They're like, 'I love Trader Joe's.'
So that is a difference. Your subjects are not obscure, right? They're the most famous corporations, right? People love it, but they don't really understand... a secret hiding in plain sight. Like people didn't understand Trader Joe's or people didn't understand Google. We thought when we...
There's three things that make a great Acquired episode. One, there's a compelling hero protagonist that takes a hero's journey where we're going from obscurity to ubiquity. How it starts is this thing that nobody cares about and then it becomes the most important thing in the world. Two is there's a secret hiding in plain sight. Like Costco, I think when the ordinary consumer sees Costco, they're like, 'Oh, I love Costco.' But when someone who's listened to an Acquired episode on Costco thinks about Costco, they see like all the gears turning of the machine. Like there has to be some way that we can expose something. And then our third criteria is it has to be important in the world. And I think that's something we picked up later. I mean, we used to do these like little $10 million acquisitions. And now when we're going to go spend two months of our life researching and making that like the Acquired episode, it has to be something worthy of the Acquired stage.
When did that happen? So I'm a little unclear. You again, getting back to this first episode you did and where you are now and the difference between them. What sort of compelled you or propelled you into the current form of Acquired? The decision to make it a business and the decision to actually live off of what you earned from your podcast. So it had to work commercially. So then you started to make these adjustments. Is that...
Yes and no. There's... you're on the right track. I like the Berkshire. I thought you were going to say partnership as a lesson from it. So we did a series on Sequoia Capital, the great venture firm.
I went full-time on Acquired in 2020.
Five years in, Ben didn't go full-time until January '24, right?
End of '23, beginning of '24 when I went.
You remained equal partners.
Oh, it wasn't a business when we started. It was just like... I mean, we didn't make money till our third year.
But those three years while you were full-time and you were part-time, it was an equal... equal.
Yes. David never once raised the issue, 'I'm depending on this for my livelihood and it's my only thing, so I should own more or get a greater share.' That never once came up.
That's great. It never crossed my mind.
There we go. That's an important point.
You're not... you... I guess I'm glossing over it because it wouldn't even... like it didn't even cross my mind now. Like it's just... it's always been the two of us, right? Equally. That's it. It would be profane for it to be anything else.
It would actually break it if we ever started trying to figure out like little carve-outs or pieces of the pie for 'well I did this therefore I should get...'
It's true collaboration. You don't recognize there's no boundary to where you start and you...
This is where I'm going with the story.
It's funny you bring up Sequoia because it's actually benchmarky in that way.
Well, it's the quote. It's Leon's quote.
So, end of '22, FTX happens. Interest rates go up, you know, all the podcast advertising market, you know, falls off a cliff. Our revenue dropped 40%. So we went from 'this wasn't a business, I went full-time, we made it a business, it worked amazingly well' from '20 to '22.
From '20 to '21 into '22, right?
And then our revenue dropped 40%.
And that was the moment when we changed everything. And uh...
So how many episodes are you making in 2021?
Oh, I see. Okay. And is it... but it's no longer just corporate acquisitions.
We started broadening with the Tesla episode in like 2019, maybe '18.
It was David's idea and he said, 'I have this thesis that the audience doesn't listen to us because they want to hear if a tech acquisition worked or not. They want to hear the story and strategy of the most important technology companies.'
There you go. So you kind of foul-hooked your audience.
Yes. They were listening.
When you go fishing and you catch the fish by the belly rather than the mouth. It's like the hook gets in some weird way. You didn't actually catch the fish in an honest way.
But yeah, we would get all these, you know, emails every time we'd meet people and they'd talk about the show and be like, 'I love the story. Like you guys are just gifted storytellers.' That's what we'd hear over and over and over again. And like eventually we're like, 'Well, we should believe that.'
So, can I... I'm going to, at that moment, I'm going to interject what I noticed because in that first episode you were so unsure of yourselves. You were so choked, both of you, and you have a background in theater. You were a kid. So you did not come across as people who had been on stage. It was kind of an effectless performance. It was flat. There's a flatness to it. You were afraid to, whether you knew it or not, exhibit a lot of emotion. You didn't realize that one of your secret sauces is emotion. It's the way you respond to each other when you're presenting material is helping the audience understand how they should feel about it. That you're giving them sometimes very dry facts like, I don't know, their revenues doubled every year for 100 years straight, and the audience may not know that that's an incredible thing, right? And the way you respond, even sophisticated listeners are helped, 'Oh, pay attention now, that's an important thing. I should get excited about that.'
We used to share our research such that we were doing research in the early days, I think we only had a single Google Doc that we were dumping everything into the same shared document. So by the time we would actually go to record the episode...
Yeah. There's no surprise.
You can't pretend to be surprised.
We can't, or you would be pretending to be surprised. Neither of us are good actors.
I don't... When did we... we did a little... This is really important. So you added an improvisational component.
There's another way of putting that. You added risk. You're taking risks when you don't know what's going to happen when you come on.
100% agree. Every episode now going into recording day feels like a high-wire act because we haven't fully scripted it out. I'm like, 'I think this is going to come together.' But like we had to add this thing called a production meeting about six months ago. One week before recording we are required to get together and agree on an episode structure but not share any details because we got so into this improvisation thing that some of our episodes would sort of end and you're like...
That had no flow to it. Like you guys had two different ideas.
You're not taking risk if it doesn't work sometimes, right? But it's the difference between...
I mean, do you know how your heart sinks when someone gets up at a podium with a script, with a speech, and they're going to read their speech? The audience is waiting for you to get through this thing because they know nothing's going to happen. Like whatever's on that page, that's what's going to happen.
Pre-announcing the score of the Super Bowl.
It's exactly right. And that if you get up and you just start talking, the audience also knows, 'Oh my god, this could be a disaster.' They don't know where it's going. Just having some of that has a huge effect on the way the audience responds to the performance. And so that is not in the beginning.
Do you remember when we started doing that?
Well, I think in the first 10 episodes, first five episodes, we got feedback saying you guys need to disagree more. But I don't think we quite realized that we should reveal surprises for each other until five years ago, four years ago.
But at some point we made it an unwritten rule of like we have separate documents we prepare separately.
We try to do like... that was five years ago you say. So we start with the corporate acquisitions in 2015 and you two knowing everything that you're going to say when you get on basically, and it's short and it's 40 minutes.
Yeah. So, and we're not confident. What you're hearing too is like I'm supposed to be doing financial analysis as someone who's never been taught how to read a financial statement, right? And so you're also hearing a little bit of like...
I'm trying... I can't get overenthusiastic because I'm afraid David's going to catch me and be like, 'You don't know what you're talking about.'
Okay. So plus there's an uncertainty about your own abilities. All right. So first thing that happens is you move off the corporate acquisitions.
We went from acquisitions to IPOs, right? Which was unbelievable timing in 2017, '18 when Uber, Pinterest, Slack, yeah, the eight IPOs in a row of tech companies that everyone had been following. And then it went really for two years and kind of culminated at the end of 2020 with DoorDash and Airbnb, which we recorded and released one day apart because we wanted to do that on IPO day.
Yeah. So, but once again, you're constraining yourself unnecessarily. Yeah. Exactly. That eventually you get to 'we're just going to do stories, big success stories basically.'
So it was acquisitions, IPOs, then it was broad histories and strategies of tech companies, and then broad histories and strategies of companies period, and people.
And people. With Taylor Swift, we frame them as companies in a funny way. You're still constraining yourself. You feel like you need this frame and you actually... you're not really living in a frame anymore.
Yeah, but constraints are good. Like format, forcing yourself.
Sure. But you should... but at some point you're going to wake up and say, you know, 'We should be doing more biography. We should be doing more people.' And if that person is not, you know, is not naturally a huge corporation, you may still... I have a feeling there's more... there's an evolution to come that you're not just saying you haven't reached like the end point of this. So at what point do you start to feel confident like 'we know what we're doing'?
Well, when the crash, you know, crash when the reset happened in 2022, 2023, so pretty recently, crypto bubble, tech stocks plummet, podcasting advertising budgets kind of dry up, end of 2022. Ben and I looked at each other and it was like... it wasn't even like really a conversation. We just knew what we had to do. We watched a lot of other people go for easy secure money now, try and keep the music playing, right? And we were just like, 'Party's over. We need to get to work. We need to focus on only what is enduring and like make great, great, great work and stop doing everything else.' Like up to that point we used to do these things called specials. We would just do, you know, not totally random but essentially random kind of interviews and undifferentiated topics. And we said, 'We need to start making stuff that only we can do, will only be great. We need to stop doing everything else.' And we did it on the commercial side too. We said, 'Let's go cut deals with our favorite partners, most of our sponsors,' and try to just figure out when we come out the other side of this that we have like the best companies to work with commercially as well as the most durable stories and brands associated with us because of the editorial side of the house.
The JP Morgans of the world. Did they join before you proved that this new way of doing...
No, we did a year. 2023 was the first year.
And what were those episodes?
That was LVMH. That was the NFL. That was Porsche. That was the beginning of what we really...
Yeah. And I think that's when we started to build the confidence of like, 'Oh, we can do something that...'
Isn't it interesting that you grabbed this kind of commercial attention only after you went really long?
Yes. And so then JP Morgan came in in January '24. So we had did the year of kind of building this out.
You're right. It was only after we had sort of leaned into Acquired as a brand about durability, about compounding over decades and, you know, centuries. And I don't think I appreciated that as a person in the early days of Acquired and it certainly wasn't what the show was about.
Yeah. Anyway, so I got us a little off track. Your lesson number three was Berkshire Hathaway and don't be afraid to have a two-horse pile. Which, pick another.
Okay. Then my frame for all this story was Sequoia. So this story is very different than Sequoia, but we interviewed Doug Leone, who was, you know, one of the, I guess, two stewards ago of Sequoia, and he told us that after the dot-com crash, for the Sequoia fund that was the dot-com bubble fund, every other venture firm out there after the bubble popped were taking mulligan funds. They went to their LPs and they said, you know, 'There's nothing we can do on this one. We're going to be more disciplined next time.' We said, 'Absolutely not. We will never lose money for our investors ever. We will do everything we can possibly do to make this fund in the black.' And he said the best... I think the best line anyone's ever said on Acquired. He said, 'We looked at each other and you could burn cigarettes on our arms and we wouldn't flinch.' And they spent the next like five years. They didn't raise another fund. They just like went to work with the portfolio and like...
They stopped taking fees for a while.
Stopped taking fees. Yeah. And got it back and it ended up being a, you know, a positive-returning fund.
This is how you get a reputation.
And that was that moment for us.
And easy to lose one too. And so I mean, they were really sensitive to reputation.
Yeah. Yeah. We had studied enough businesses by that point where we saw what led to durability and I think we already were awake to the idea that all that matters is the late years of compounding. Like in any given year you look at a Mag Seven company and their profits from the last year are greater than the first 20 years combined or whatever. And I think realizing that being around and being respected on the other side of this, you know, economic chasm is like the key to everything. Who cares about making money this year? It's about five, 10, 20 years from now and we have to like have the brand that people want to be a part of then, right?
But you don't know that you are a Mag Seven podcast. It's kind of ridiculous to compare when you make this decision. You don't know that there's going to be great riches 10 years out or five years out or three years out.
Yeah. But really like I think we were just... we both so believed it was like the 'burn cigarettes on our arm.' Like I think we just both so believed that that was the right thing to do.
Something had happened up before that and you had figured out how to do this. You'd figured out how to study a business in a way that was really interesting. The first episode's not that interesting. Yeah. There's just not that much I didn't know, hadn't thought of. Yeah, you know, whatever. And it's 30 minutes or whatever it is now in that first episode. I think there are more ads than there are... you, all you, YouTube speaking, but...
And now we pride ourselves on having the lowest in the entire industry.
So let's just... let's pause here before we get to number four. How do you study a business? Like what have you learned about how to study a business that's different from when you started out? Explain to the audience what you do to prepare, what you do to learn about a business.
Great. I read everything ever about them.
So, yep. You do what I do.
Yeah. Yeah. You go whatever's out there, right? Right. AI. That's just the AI part of it. Who's... who started with canonical... who's done great canonical work in the past and then what ideas do you have from reading the previous canonical work? And you know, you then say like, 'I wonder if I can find this old YouTube video.' And then those YouTube videos mention something else. And the spiderweb always starts with the pre-existing canonical.
And at what point do you pick up the phone and start calling people who maybe have information that isn't on the worldwide web?
Zero ever until about 2023. And now that is the most important way that we... probably about 50%, for me at least, about 50% of the way through the... like start to get your arms around, then start calling.
Right? You don't call uninformed. You call knowing as much as there is to know and then you start picking the brains of people who might know more and have not said.
There's like the obvious people to talk to, like, you know, for Google we talked to, you know, Sundar Pichai, like, you know, like obvious. Then there's like the less... slightly less obvious.
You just say that so casually. Who gets to pick up the phone? Part of the compounding effect and talk to the CEO of Google about Google? I mean, nobody.
We're in a scale economy.
We're in a compounding business, right? So the fact that you... when do you first realize that you can pick up the phone and call Tim, who you know that you have... you're on this first-name basis with all these people? When does that...
I think it was our Microsoft series when we talked to Steve.
Steve. Here we go. Steve.
Cast Acquired guest. Steve. I love name-dropping in your world is so different from the name-dropping in like Hollywood. None of your names mean anything in Hollywood, but they mean everything here.
And the arenas are so funny because like these people aren't... most of them aren't famous and they're a thousand to 10,000 times wealthier than these Hollywood stars. Different yardstick.
Well, what's funny with Microsoft? So we had some access because Ben used to work at Microsoft before...
Which got us zero access.
Well, no, no, but you knew some people. Like here's in my mind what sort of happened with this as I'm trying to think about how to answer Michael's question. Because we had started in Seattle and you still live in Seattle and you had worked at Microsoft when we started our Microsoft journey, we knew some people.
We like, 'Well, let's see if we can talk to Steve.' And so then we talked to Steve and we got his, you know, perspective on things and it completely changed...
Is that the first time you do that?
First time we reached that high.
Yeah. And you know what? This is where reputation matters. Steve didn't get back to us for a day and then we heard back and he said, 'I don't listen to podcasts. I haven't listened to your podcasts, but I talked to some people that I trust and they say you're great.'
'So let's hop on a call.' And we wouldn't have gotten the response back if...
And he gave us probably three hours, four hours in research for...
Yeah. And you learned a lot.
Yeah. This before we even interviewed him. That was later, but just in research.
I see. And we learned a lot. Did you all have a moment where you thought, 'Oh my god, let's keep doing that. That works.'
Yes. Well, yeah. So then we were like, 'That worked great.'
It kind of worked with Jensen too. So originally when we had the idea in 2021 to do Nvidia, we thought we were like an interview show. Then we thought the interviews would be better than our core storytelling episodes because we hadn't discovered that the Ben & David storytelling is our NF1 product. It is the thing that we uniquely can do that no one else can do. And we thought getting these big gets would be the key to success. Which is funny because usually they underperform our standard format. And so in 2021, we emailed Nvidia through the warmest connection we could find and said, 'Can we interview?'
'We're planning to cover the company. Can we interview Jensen?'
And they gave us a nice party line back. He's very busy. And then in 2022, we did our Nvidia part one. We did our standard research process and I think we did our part two. We did part two...
And then we got a note from Nvidia saying Jensen has listened and wants to know who your inside sources are because it's the most correct telling of Nvidia's story ever. And we were like, 'Oh, this was all just public information.' And if you're good at spidering the internet and just like digesting it and thinking about why he would have said something at this point in time to this audience in these various random university talks and stuff, you can kind of piece together the story. And so that...
It's still flying by radar a bit.
Oh yeah, we were totally flying by radar. Yeah. Yeah.
But that landed us... they were like... that started the relationship and eventually...
Then they're like, 'All right, Jensen wants to meet you.' And then...
'Do you want to do an interview and follow up on your episodes?'
But you did an interview episode with him, but it doesn't do as well as your own Nvidia episode.
That one may have been like at some particular peak of Nvidia buzziness. So it was probably our then-largest episode.
Well, here's what happens with interviews.
Yeah. And then they go and those listeners don't retain the way that...
Whereas if you look at our Costco episode, which is now two and a half years old, or LVMH, or LVMH, Rolex, like they just keep going. They just... I mean, I'm sure your books are like this. Like they just keep going.
Yeah. Every time I bring out a new book it has the same effect on the old books that a new podcast has on old podcasts. Yeah. It sells all the backlist. So yes.
All right. So I was asking you how you studied a business and you told me you read everything there is. And you must find when you go and read everything there is... you're very polite and you're very generous about citing your sources and all that, but you must find...
My wife is an academic. My wife has a PhD. She was trained as an academic and she was like, 'You guys got to cite your sources. Like what are you doing?'
Oh well yeah, but it's also... but are you ever surprised by the weakness of the source material?
In fact, literally today, we are no longer surprised, but we got an email from a company that we recently covered saying, 'You said a factually incorrect story in the episode and we know the book that you got it from because it was factually incorrect in that book. We told the author that it was factually incorrect and it went out anyway, right? And now you're repeating the incorrect story.' And you know, we have now an errata section where we publish our corrections.
And I bet you're mainly correcting other people's errors that you just repeated.
I mean, sometimes there are... sometimes we make a financial calculation error or something like that, but...
Right. So we read all source material and then we start to make phone calls in 2023 and now the phone calls have become extremely important and you're making...
Google is 40 probably across.
And do you find that when you're reaching out by phone to all these people that they always want to talk to you or no? Sometimes it makes...
But usually when you approach it with a spirit of...
'I'm just trying to understand its own background.'
Yes. We are going to tell a narrative here. Our biggest question to you is what is most misunderstood and what incorrect stories are out there where we can set the record straight.
And you get lots of great information after that. It's a very good way to go about it. It's... I do the same thing when I'm researching something. I don't know what the story is for the longest time and I'm holding everything very loosely. And almost all the relationships I have with people I'm interviewing is, 'Hey, this is all in background. I just want to try to understand this. Can I hop on a call with you?' And they're usually pretty open to it. And like, 'I just want to be educated,' kind of thing. And it's a great way to say like, 'What's the stupid thing people say?' Because everybody has an opinion.
But it's not a trick. Like this isn't 'here's one cool trick to get people to talk to you.' What I think you mean it earnestly and we mean it earnestly of 'I want to make something that's good.'
Everybody has different beliefs about the truth, but I want to make the story that most correctly approximates the average truth that exists from all these different truthy sources.
Yeah. I don't think of it quite that way. But I do think it's like I want to give something that's good and pure and true and is like the thing that will once it's said there's nothing else to say. It's like done.
Yeah. I got to imagine for your subjects...
And I think a big part of us too is like there's the truthy aspect which is very, very important, but there's also the like 'this is going to be great, like this is going to be really fun, this is going to be entertaining to read and people are going to consume it.' That's I think a huge motivation for our sources.
Have you... so when you're working on one of these episodes, are you aware of how much fun you're having learning? And have you ever shut something down just because, 'Oh, this isn't that much fun'? The Fed, maybe.
That's kind of why we killed the Fed. We've definitely killed other episodes.
If you can find fun in the Fed, man, you are doing... you can find fun.
We can generate all that enthusiasm for each other's insights about the Fed.
We killed Bell Labs because we couldn't find a through-line. There were so many different stories, so many different characters.
I know. We might come back to it.
Bell Labs. That's one that if I saw it, I said, 'Yes, I want to listen to that.'
It feels like a Michael Lewis book.
There. You could kind of do it as the history of the transistor, but then you miss all these other things like radar and...
Yeah, there's so much stuff that came out of...
No. No. But yeah, it's another one, right?
I guess Google still has this spirit where they're doing lots of stuff that maybe you can't identify instantly. Yeah. The payoff that's right around the corner. This kind of like 'let's just fiddle around, see what we find' stuff. I mean, corporate America, I think, just generally does less of that than it used to do a long time ago. But the big tech... No, I'm trying to think. That's an interesting...
So, I'm stealing this idea from our friend Hamilton Helmer, but he brought up this idea in conversation with us that there is a positive benefit to monopolies because they create the cash flows that fund these sorts of boondoggle basic research. And a lot of the most important technologies that move society forward...
Yes. And like boy does Google have that. I mean, you just... their last quarter was their first hundred-billion-dollar quarter ever.
And that's how they fund, you know, the next Gemini.
Right. Right. And Waymo and... yeah.
So actually you just bring up your friend Hamilton Helmer, who I had never heard of until I listened to your podcast and you do that thing of the Seven Powers. Let's just briefly, since we're here, how you study a business that has been a useful analytical framework for you, whatever these Seven Powers are, and I'll never remember any of them, but that's why we say every... network effects and all that. What is it about Hamilton? Like where did you find him and why are you making him so famous?
There's a lot of good frameworks out there for analyzing business strategy and this one just clicked. I just read it and I was like, that is actually the complete list.
Uh, he was... read that list. I read the list and it was all gobbledygook to me. The... there were these... I mean it didn't... the words did not mean things, but you have to know what they mean.
If I asked you in plain English, can you brainstorm all the ways in which an industry-leading company gets away with being more profitable than their competitor and gets to keep being more profitable? That's the list you would come up with. You might find...
Right. But so why did you decide you even needed that framework?
We... Oh, it goes hand in hand with the durability. If you're trying to study why is a business durable, the cause is the power.
We'd always been searching for a way to land the plane on the episodes. Like we tell this story and we finish the story, but that unsatisfying like, 'What's the takeaway?' Yeah. And so we had all various permutations of analysis at the end.
Buy or sell or hold, right?
Yeah. Yeah. You know, we did bull and bear and grading and blah blah blah. Once we shifted to like, 'Hey, we're studying these great companies, these durable businesses,' power felt like a really good part of that like 'so what,' right? Why?
For me, a critical, critical part of process, it goes back to writing a senior thesis at Princeton. Everything needs to pass through multiple cycles of source material through my brain, through my fingers onto a keyboard and recycle back through about three times. Yep. And so like I don't use AI note-taking. I do write physical notes in hard-copy books. Like if I'm not doing that, I feel like it's not going to work. Yeah.
So I have exactly the same issue and I discovered I wanted to be a writer writing my senior thesis. Had no ambition to do it before then and then all of a sudden I thought, 'Oh my god, I love this.' And what I loved was just that was the constant recycling of the thought. And so what I do, my process... I don't want to get too far away from your podcast, but I'm sitting with my notepad.
So this is a filter. Like if I'm talking to you, it takes effort to put it down on the page. I don't record anything that I've filtered. It's interesting enough to me that it belongs on the page. Then I go home and I write the notes up quickly. And that's another filter. If what's on the page interests me enough to put it in a Word document, then I've got... it's filtered again. Yeah. And I keep those notes while I'm working on a book and the file will be 500 pages long by it, maybe longer by the time, and it's just stuff. And then I start thinking about how do you frame the story? What is this story? But that's months usually down the road. Like and there are times when I get into something and I am months into it and I realize there's nothing here. With Sam Bankman-Fried, I was a year into it and I did not know what I was going to do with it until it blew up and then I thought, 'Oh my god, I had the story.'
When it had been sitting there for a year watching.
Do you think you would have not published the book if it hadn't...
Wow, you would have killed the book.
Well, I might have found a way to do it. I might have found a way to do it, but I hadn't found a way to do it. And it was always the same conversation with my editor. It was, 'I just don't know where this is going. I don't know what the end is. When I don't know what the end is, I don't know what the beginning is.' And it's that simple. And it wasn't that, 'Oh, I smelled fraud' or anything like that. It was just it didn't have shape to it. It was just... it was picaresque experience after picaresque experience. It was like Don Quixote, but the first chapter over and over and over and over. And so there was material there, which is why I kept coming back. It was fun. There were endless scenes. There were, you know, but it was just like, 'I don't know.'
Yeah. But scenes don't make a... scenes don't make a play.
They're necessary. They're necessary but insufficient.
So, but the bigger point... I hate to... we don't want to be talking about me. We be talking about you. But this process you are doing... I smell this from your work.
You're doing something that rhymes with what I do. You are gathering before you make judgments. You're open to learning things. You're trying to be the world's best student. You want people to want to teach you. And then if people want to teach you, they will teach you. And then you could take what you learn and you could present it in the best way you can present it.
I basically take a note in two scenarios. One is, 'Oh, I just figured out how that works and that is so cool.' Like when I learned how a mechanical... master of the... like this is such a cool thing, it was like we got excited. This is in some ways irrelevant to the business success of Rolex, but it will make my year to explain on air how a mechanical watch works and how an escapement is a thing and my excitement around the...
Greatest moments. Yeah, it is.
Or the Costco ballet or like... Yeah. Yeah. So there's the 'I just figured out how something worked' and then there's the 'I just made a connection.' And it's like I'll be on a run, I'll be listening to an audiobook, it'll be the third audiobook that I've listened to about a certain subject and I'll hear something and think, 'Oh, that's why.' And I'll stop and I'll write my little Apple note. 'This timestamp in this book, you know, just realized why.' I can't think of an example right now. This happened. And then later I go and I look it up in the Kindle book and I figure out like how I want to explain the connection that I just learned on air. But it has to come from the... I have to like remember and bottle up my excitement of learning it in that moment to share that enthusiasm with the listener.
Yeah. Yep. That's all very familiar to me.
All right, listeners. Now is a great time to tell you about a great friend of the show, Work OS. And since we recorded this episode in the garage where Google started, we thought this would be a fitting moment to talk about when a startup exits their proverbial garage phase and starts to become a real business. Garages were a little more popular back in the day with HP or Apple or in the '90s with Google and Amazon all founded in garages. Today though, it's more likely an SF apartment or a coffee shop or a hacker house. But you know the key question remains: what do you do after you find product-market fit and when you start scaling?
One big answer is moving up market and finding your first enterprise customers. And the best way to do that is Work OS. Work OS makes it easy to add all the things that enterprises require: single sign-on, SCIM permissions, audit logs, all with simple drop-in APIs. It lets you scale revenue bigger and faster earlier in the life of your company or if you already have some of this functionality, to just simplify your codebase.
As we've been saying all season, this is even more important in the AI era. AI products need deep access to sensitive data to be impactful. So these security features are just a price of admission for enterprises.
You really don't want to be late to this. We talked on our Google series about even with how successful they are today, by initially ignoring the enterprise, Google left the door open to competitors for a while. Google Docs and their original G Suite were so good. I mean, amazing productivity apps on the web, but they lacked enterprise features for years, leaving the door open for Microsoft to catch up and respond with Office 365.
Yeah, it's funny. We were talking with Work OS founder Michael Grinich about this and he was making an impassioned pitch to us that Google should have won the entire web-based productivity market given they were first and they had better technology. Get your enterprise story right early on. OpenAI, Anthropic, Cursor, Perplexity, Sierra, Replit, Vercel, hundreds of other AI startups too. They all rely on Work OS as their enterprise-ready OS solution and you should too. So if you're ready to get started with just a few lines of code for SAML, SCIM, OAuth, SSO, authorization, authentication, and everything else to please IT admins and...
Their checklists, check out Work OS. It's the modern software platform to make all this happen. That's monday.com, and just tell them that Ben and David sent you.
So give me a fourth example of a lesson learned from an episode.
Uh, this we learned, I feel like I learned from Ben Thompson, which is...
Tell the audience who Ben Thompson is.
Ben Thompson is the author of Stratechery...
Proprietor, founder of Stratechery. Uh...
We did an episode on him and with him a few years ago,
But his writing is sort of the thing that we bonded over when we met.
He's a great strategy technology writer.
The internet niches are way bigger than you think they are. So if you think you're writing about a niche topic, the internet being a global community of four-ish billion people means that any little niche, there might be six people in your geography that care about it in your local town, but there's millions of people online, right?
And the internet is your way to reach them. So no matter how niche you are, it's actually way, way bigger. And the corollary to that is in the media business, in podcasting, you can grow your audience and thus your revenue and thus your importance in the world. All outputs can scale completely independently of your inputs. David and I effectively do the same thing that we did not 10 years ago but two years ago to make an episode, but the audience has grown so much that like every output from the business is dramatically different even though all the inputs are the same. And so we really like took to heart the niche of smart people who care about how these businesses work and why the world is arranged in this way is large, and we don't have to scale our operation to reach them. We just have to keep making the highest quality stuff and giving people reason to share it.
What is your operation? I mean, we're in here with a large group of large men, and this is a bigger operation, but this isn't your normal operation. What is your operation?
Uh, I have a basement studio. You know, it's an office that we happen to have some lights and a camera in.
I built a studio in my backyard. So that's the YouTube. You mentioned that you send your stuff to an editor without naming the editor.
Steven is part of what we do.
Uh, he does. I'm not sure he'd want us to share on air.
So, Stephen. So, the mysterious Steven.
He's an independent contractor. We're his only client.
And he works only for you.
He's... and he's the best.
He's the best. So he's clearly good at his...
Stephen is as maniacal about creating the best audio product and video when we do it.
But we, yeah. No, we, no assistance. No, we do everything.
You don't sell. You don't have ad sales.
We love doing the businesses.
We love doing the business equally as much as we love making.
And I love the alignment. The business and the content are equally important, and they're like married.
Yeah. It's funny, you're preparing for this, like we're always tempted like to just talk about the business because we love the business as much as the show, but we never talk about the business.
So let's just stop here for a moment because I want to talk about this first before we move on from Stephen. So Stephen is in this rare position of basically being the only person who helps you create this thing.
We hired a wonderful production crew because we wanted to have a great video for today.
Right. So, how different is what you give, what comes out of Stephen from what you give him?
Eight, nine hours of raw audio with dozens of retakes, sometimes hundreds of retakes.
We produce each other as we go.
Yeah. David will say a paragraph and I'll be like, 'Wait, wait. I want to do that in an Acquired tone.'
Wow, that's amazing. Hundreds of retakes. That's incredible. Well, I would have guessed like if you just asked me, five hundreds.
You sound like a millennial.
I just want to be appropriately amazed.
The number of hundreds. You can't do hundreds of...
We cut literally all the time.
Literally. Totally. But the retakes though are a different thing. The retakes are...
We didn't say that clearly enough. We didn't land the point.
I made a point where I wasn't paying enough attention to what David was saying because I was like looking over at my notes, and then I make the same point, and he's like, 'Oh, I think you missed it. I just said that. Can you just say the last thing as an uh and then we'll move on.'
Or I explain something in twice the amount of time and David's like getting bored. And he's like, 'That was a real monologue. I think we got to keep the story moving.' And I'm like, 'I agree.' Uh, when I wrote it in my notes, I was really excited about it, but now that we're in the moment, I can feel that it's slowing down the energy. So, let me take two minutes. Let me retype some stuff and let me figure out if there's a condensed way to say that so that it can flow seamlessly in the energy of the story.
But that is all in the eight, nine hours.
So, and so he's cutting it in half.
And when it comes back to you from him.
So he turns eight, nine hours of that into an intelligible...
Into like five is probably appropriate to call it like release candidate one, to use like a software analogy, right.
And then we make 500 to 800 additional cuts to cut another hour off of it. And that stuff we're...
Are you doing it on the page? You doing it on the page.
Uh, we use a tool called Descript, uh, which we sort of use it. Not...
You're not listening to it. You're reading.
We are listening to it and we are watching. Yeah. Yeah. Watching.
And how long does that take?
Yeah. Because we usually do two cycles of that.
And then do you send it back to him after you've done that?
Yeah. And then we do it again.
I listen at 1x and you have to like feel where you get bored or feel where you're just like, I don't care. Like you have to get so sick of the material where you're just like cutting bone.
You're the hero on this. I can't bring myself to do it. I listen on two and a half x. Just, you are the hero for doing...
You don't actually listen to it at normal speed.
Ah, it's so like Ben really jumps on the grenade for this.
Almost always. You can cut the beginning of almost everything. There's always throat clearing. Yeah. Wind up. You don't need it. You just go right to it. And uh, and then once I start to feel it get taut, I just love it. I love it. I love... I like... the hardest thing is getting the stuff out in the first place. And then once it's out on the page, then you could start. Ah, each time it gets better. I find there's no despair associated with it. And there's stuff in the original draft that is a remnant of the point you thought you were going to make, and by the time you get to the end, you're like, that's actually not the important thing here. I no longer need that whole setup or that...
Or it's in there in all kinds of other ways.
Yeah. But it's important that you had the idea, but it's buried in the story some which way.
David will often highlight something and go at Ben, 'Okay, to cut, belaboring.'
So the minute you're there, you know it's got to be cut.
Yeah. Yeah. Mostly, right? Our default is always cut. Always cut. Yeah.
And so you get five hours down to whatever it is. Three and a half. Four.
Three and a half is the sweet spot.
And how do you know when you're done?
So deadlines. You're never really done. I would love one more edit.
We'd always... There's always more. Yeah. Yeah. Yeah.
We have both the gift and the curse of deadline and next episode coming. Whereas like you, you have an infinite timeline, right?
No, no, no. I mean, I owe a book on June the 1st that will come out September the 29th that I will start writing on January the 5th, and I will write it in five chunks, and each chunk will be delivered at the end of the month, and I won't be able to go back.
Okay. Wait, wait, wait, wait. What happens if you get to June and you're like, I'm not... I'm not... uh...
Okay. So it's a hard deadline. It's a drop dead.
Yeah. But I always find, once I establish that deadline, which is a reasonable deadline because I've spent a year doing the work, I have the material. By the way, it's very polite of you to ask me questions about myself. No, it's like... No, but that... it's somehow if you take your deadlines seriously, that's the key. You take the deadlines deadly seriously and you just refuse to violate them. Um, then you're serious when you establish them, and your mind just finishes when it needs to finish. And I'm always like a couple of days ahead of it.
Yeah. So, I would talk a little bit about the business side because this is something that I certainly don't know anything about in your lives, but you turn this into a very lucrative franchise, and you go out and unlike most podcasts, you're not subcontracting the sale of ads to some other company, and you're not just promiscuous in who you have as advertisers. So, you have two or three, four, whatever it is, major advertisers every season, and some stability there. When you go, walk me through, pretend Michael Lewis, Inc. is your target that you want me to be like the anchor tenant in your building, and you're coming in to tell me why I should do this. Give me a sense of it with that.
I'll let David give you the sales pitch. The philosophy of the whole thing comes from we want to create a durable business on our side and a great listener experience on the listener side. And I always feel as a listener so disrespected when there is this content of the podcast that is diamond quality and then they are running scratch McDonald's ads in the middle, usually not read by the host, usually with some jingle playing underneath.
It bothers the hell out of me too, and I haven't been able to do anything about it. I agree. It's the biggest complaint I get about my podcast. It's like, I got to listen to these ads.
The very first ad we ever sold, we said, 'What sponsor could we get that would make people perceive Acquired to be a higher quality brand?' So we could like have our cake and eat it too. We'll get...
I tried this. I had a thought about this on mine, and no one ever took me up on it. Just find the things I actually use, and it will be fun to talk about them. I want to tell the whole world about ExOfficio underpants, and I can't get ExOfficio to return my calls. I mean, that kind of thing. Foolish.
I just sleep with the... Wait, so literally you're telling me that Michael Lewis called...
I didn't. I just gave my podcast a list of things that I really love. Just love.
Oh, wait. You got to call them. That's the problem.
And well, that probably is the problem. My podcast company does not actually sell the ads. Another company sells the ads. And so it's just... I thought that the way to make it seamless is actually integral to my life will be the things that we're talking about.
So that is a structural blocker to creating the best experience, right?
And everything has a trade-off. The trade-off for us is we spend an enormous amount of time engaging with our sponsors. We write a custom read for every single sponsor, every single episode. We try to write it as if we're almost like talking about what we think is interesting about the business. We're doing this like mini two-minute analysis, and you know there's some horse trading there of we have to make these points. Okay. But like for the most part, and the best sponsor relationships are the ones where they say like, yeah, your listeners are going to respond the best to what you have to say.
Yeah. So if you're Michael Lewis, we want you to be a sponsor. I would say we're not coming to pitch you like... we're deciding a year in advance now, too, when we're now two years in advance, like what do we want our slate of partners to look like, right? So we start, Michael Lewis, Inc. we think is going to be super strategic for us in 2027, 2028. We start planning like, okay, how are we going to make this happen? How are we going to make sure that Michael Lewis, Inc. is as good as we think it could be?
How are we going to make sure that we're going to work really well together, that you're going to see massive ROI from us?
At any point, do you sit there worrying that you're compromising the shows because of the relationship you're about to have with an advertiser?
No. There's been companies that don't feel Switzerland enough that come to us that want to sponsor, and we just like the idea of not picking a venture capital firm to say we think this is the best venture capital firm. It's like too much of a picking team.
That's... I've never heard anybody say that. They don't feel Switzerland enough. Is this a cliche in the VC business?
No, I think that's a lovely line.
So you're looking for Switzerland.
And what do you mean by that?
Companies that we think are great where we don't have to take a side in like a big contentious current thing conversation, or the industry dynamics are...
We don't really deal with...
We don't. Okay, number one.
B2B companies with very high LTV products.
So not ExOfficio underwear.
Basically we want companies that are doing a significant number of multi-million dollar annual deals with customers because we want to feel like we can deliver a couple incremental of those for you directly to us. Yeah. And then like it's just a no-brainer.
Many of our sponsors have been ROI positive on signing one large customer who heard about them on Acquired. That is awesome.
And often it's not even just heard about Acquired. Events are a big part of this. Uh, so we do events with almost all of our sponsors. So there's the funnel of like heard about Acquired. That helps. But then like we're doing an event together with them. We're sitting next to their best prospect.
So, I'm thinking about hiring you. What kind of event will you do for me?
We're happy to join for a customer dinner. We're happy to speak at your big annual customer conference.
We're happy to go to a sporting event with you with your top clients. We're happy to...
And at that sporting event, will you do like some...
Fireside chat? Some fireside chat. Yeah.
Interview a legend from the sport.
How many hours of your time am I gonna get?
A couple days. Couple days.
We're there full, and while we're there with you, it's like, how can you maximize using us?
You promised to be my friend.
You'll be my friend, too, in the bargain.
We're great friends with a whole bunch of... Okay, so then it gets even better. So, um, let me tell you more.
Tell me more. I'm getting interested. I'm on the edge of my seat here.
The reason this whole thing works is the people who listen to Acquired are the most valuable audience in the world. And so if you want to market your B2B software or financial product or whatever to them, founders are executive decision makers, right?
But really, I mean, take a step back. I think the whole business side, and a lot of the content too, but the whole business side of Acquired starts with we were venture capitalists. We're not media people. So we have just always taken an approach, you're aspiring to be a great partner to them. You know, you're going to help recruit employees, you're going to help with whatever. And so we just like, great, that's how we approach our partners, right?
Why do you think, maybe you've just answered the question, why do you think no other podcast has approached their business in the way you approach your business?
I think we just came at it from like this...
You think coming from a kind of media space, and the media space was kind of bad business.
Okay, here's a take. The media business model of splitting the commercial activity from the editorial is a societal benefit that we all benefit from, from publications like the New York Times.
It is really good for journalism that that exists. The rest seems to have adopted it, and everyone doesn't need to.
If you're the host of Acquired, it's kind of great if you're going and learning about your sponsor's business and working with them and trying to build partnerships with them. It was almost like we had the luxury of getting to rethink what our operational model looks like.
So then the thing that brought it full circle a couple years ago is we added an investment fund. So not our public company sponsors, but almost all of our private company sponsors, we invested in them. So it came full circle.
You all, you created an investment fund. You two are the ones who are making the investments.
It's quite full circle. We're only a year in, but we've invested in five of our sponsors, and several of them are more valuable than when we invested.
Yeah. We asked ourselves, we're like, how do we do this? The focus is the show. If we're a venture capital firm with the podcast, it doesn't work. We need to do a podcast for the venture capital firm. The way we make this work is we just invest in our sponsors. We put all this work into finding the best partners for our sponsors in every category that we think are great. Why wouldn't we just invest in them? We don't do any incremental work.
Invest in all of your sponsors?
No, but a lot of the time like we'll just get a call that, hey, we're raising an up round. We want to talk about it in the next ad read. And we say, oh, that's cool. Can we invest a couple million dollars? And they're like, the round's like 300 million, so no one on the cap table's going to care, and we love that you're more aligned with us now, so we'll make room.
So you're only really accepting as sponsors companies that you would like to invest in.
That's essentially the frame we put on the whole thing.
It's not a perfect model.
JP Morgan is not an example.
Right. Right. We think it, we like having a couple public companies: JP Morgan, Shopify, ServiceNow.
And how deep is this market? How many Acquireds could be created on the back of this business model?
Oh, I think a lot. The question that I'm always wondering is why aren't there more Acquireds out there?
I'm asking that question now.
The format. Here's the ingredients.
