Special: 2016 Review and 2017 Predictions

Ben & David wrap up 2016 with a review of the top tech themes we discussed on the show this year, and look forward to which themes we think will be relevant in the coming year. Can our hosts predict the future? Tune-in in 2018 to find out! Note: we apologize for the less-than-amazing audio quality on this one. We’re still working on tuning our remote recording setup! Sponsors: Vanta: https://bit.ly/acquiredvantaServiceNow: https://bit.ly/acquiredservicenow26Legora: https://bit.ly/acquiredlegoraStatsig: https://bit.ly/acquiredstatsig26 More Acquired! Get email updates https://www.acquired.fm/email with hints on next episode and follow-ups from recent episodesJoin the Slack http://acquired.fm/slackSubscribe to ACQ2 https://pod.link/acquiredlpMerch Store https://www.acquired.fm/store! © Copyright 2015-2026 ACQ, LLC Topics covered include: Our top tech themes of 2016, including the first annual Acquired "Theme of the Year”: Aggregation Theory https://stratechery.com/2015/aggregation-theory/ (surprise, surprise)Themes we think will be most relevant as we head into 2017Extended Carve Outs! The Carve Out(s): Books: Ben: On Writing Well https://www.amazon.com/Writing-Well-30th-Anniversary-Nonfiction-ebook/dp/B0090RVGW0/ref=mt_kindle?_encoding=UTF8&me=David: The Creative Habit https://www.amazon.com/Creative-Habit-Learn-Use-Life/dp/0743235274/ref=sr_1_1?ie=UTF8&qid=1483120593&sr=8-1&keywords=the+creative+habit and the Asimov Robot/Empire/Foundation series http://scifi.stackexchange.com/questions/2335/what-order-should-asimovs-foundation-series-be-read-inArticle: Ben: Wait But Why: Religion for the Nonreligious http://waitbutwhy.com/2014/10/religion-for-the-nonreligious.htmlDavid: The New York Times: The Perfect Weapon: How Russian Cyberpower Invaded the U. S. http://www.nytimes.com/2016/12/13/us/politics/russia-hack-election-dnc.html?_r=3Podcasts: Both: The Ezra Klein Show https://itunes.apple.com/us/podcast/the-ezra-klein-show/id1081584611?mt=2Music: Ben: Justin Bieber https://en.wikipedia.org/wiki/Justin_BieberDavid: Stevie Nicks https://en.wikipedia.org/wiki/Stevie_NicksTV/Movies: Ben: Westworld http://www.imdb.com/title/tt0475784/David: Rouge One http://www.imdb.com/title/tt3748528/Apps: Ben: ReachNow http://reachnow.comDavid: Amazon Music https://www.amazon.com/gp/feature.html?docId=1001316131

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Ben Gilbert?

  All right, listeners. Now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture. It used to be that you prove that you were secure once a year on audit or a static PDF, then everyone would nod and you're done. But in an AI-first world, that doesn't hold up anymore.

• 0:19David Rosenthal?

  Yep. Your risk surface changes every week now. A vendor turns on an AI feature, or someone writes in a new model without telling IT, and your posture is different than it was last week, let alone at your last audit. Vanta's own research found that around 70% of companies have this quote-unquote "shadow AI" running with no security review at all.

• 0:40Ben Gilbert?

  Right. And that's where Vanta comes in. They're the leading agentic trust platform, meaning they've built the thing that closes the gap. And the way that they close that gap is Vanta Agent. Think of it as a GRC engineer, that's Governance, Risk and Compliance, except that it's software and it doesn't sleep. It finds the issues, drafts the fixes, and cuts the time that you'd spend on vendor assessments in half.

• 1:02David Rosenthal?

  In half! Which is exactly why more than 16,000 companies today run on Vanta. Companies like Ramp, Cursor, and Snowflake all stay audit-ready and catch the risks that crop up between audits across every vendor, every AI tool, the whole environment.

• 1:20Ben Gilbert?

  And that's the real value. Trust has to be continuous now, which is why Vanta automates your security, your compliance, and the work to earn and prove trust. We're huge fans of Vanta over here, and literally hundreds of Acquired listeners have become Vanta customers at their companies over the years. So you can get $1,000 off Vanta at vanta.com/acquired. That's V-A-N-T-A dot com slash acquired for $1,000 off, and just tell them that Ben and David sent you.

• 1:48Speaker 02

  Ideas to fix Twitter. Jack Dorsey says Twitter is, quote, "thinking a lot about an edit tweet button."

• 1:54Ben Gilbert?

  Oh, God. Like, the things that are innovation in Twitter now.

• 2:00Speaker 02

  Yeah.

• 2:18Ben Gilbert?

  Welcome to episode 29 of Acquired, the podcast where we talk about technology acquisitions and IPOs. I'm Ben Gilbert.

• 2:26Speaker 02

  I'm David Rosenthal.

• 2:27Ben Gilbert?

  And we are your hosts. This is a very different episode for us than than usual. We decided to do a year in review and and probably more importantly than that, talk about what lies ahead in 2017. So David and I were thinking, you know, we've we've talked a lot about a lot of tech themes in a very sort of rambling and unstructured way over the course of the show. And we went back and actually pulled out what were the tech themes that we identified from from each episode. And and we've kind of basically have a little tally going of which ones were we thought were the most important and and we're going to kind of

• 3:08Ben Gilbert?

  talk about those and then get into the themes that we think are going to be pretty pretty dominant in 2017, or at least make some freewheeling predictions.

• 3:20Speaker 02

  Yeah, no, you get what you pay for here. So no guarantee will be right. But yeah, a couple of notes. So Ben and I are recording this on December 30th, right at the tail end of 2016. It will, barring some editing heroics, it will probably be up for you guys already into 2017. But but as we came to the end of the year, we thought, especially this being our first full year of doing Acquired, we wanted to look back and and run some run some data on our own content and see, see what the the biggest themes of our show have been. So Ben and I were chatting just before we started, we recorded 23 regular episodes.

• 4:04Speaker 02

  Well, I guess that includes specials, but 23 full episodes in 2016. This is our 24th. Um, and it was really fun to go through and and pull out the themes, a lot of, a lot of repeats.

• 4:17Ben Gilbert?

  Yeah.

• 4:18Speaker 02

  So with that, should we, should we announce the acquired 2016 theme of the year?

• 4:24Ben Gilbert?

  We should, and frequent listeners to the show, I'm, I'm, I'm sure can, can guess what this one's gonna be, or at least who the originator of this theory was.

• 4:31Speaker 02

  I'm shocked, shocked.

• 4:34Ben Gilbert?

  Yeah, so, uh, discussed in six different episodes is aggregation theory by Ben Thompson of Strategery. Um, this, uh, this of course talks about building superior user experiences as the winning strategy in an infinitely accessible, zero-cost distribution world, AKA the internet. And this was discussed on Accompli, Snapchat, Jet, Android, Skype, and Marvel. And so I think, uh, for us, it's such a, uh, it says a lot about the power of the theory that once you see it, you can't unsee it. And once you realize that, oh, this is a, this is a predominant factor in making these companies successful. Um, you know, uh, every company we analyze, we're like, oh, I, I see what they're doing here.

• 5:15Speaker 02

  Yep, um, a, uh, and obviously a big hat tip, as we always do on this show, to, to Ben Thompson and, um, all of his work, but I think it's, it's interesting how much we've talked about it and also reading Ben's work throughout the year. Um, he, he first published the post on aggregation theory last year in 2015. Um, but how much it keeps coming up in his work too, and, uh, and how he keeps refining, um, this concept, uh, and, and adding on to it, but the core of it, I think, you know, that insight that in this world where, um, where distribution costs are, are, the cost of distribution is zero

• 5:56Speaker 02

  and in, in digital marketplaces, your accessible market is the entire world. Um, that it is really the superior customer experiences that are going to beat everything else. Um, because you can have sort of perfect competition amongst the whole world. Um, and, uh, and so the best will rise to the top, uh, and it's, it's totally informed, um... You know, my work and I'm sure Ben yours too, you know, in the companies that we work with. When I'm meeting with startups, trying to decide which to invest in and which, you know, I think might be successful and won't be. It's been hugely influential, not just on this show, but in my everyday work too.

• 6:42Ben Gilbert?

  Yeah, absolutely. Moving on to things that were discussed four times throughout the year. And I think listeners, what we're going to do here for the structure of the show is move through these fairly quickly to kind of just establish a baseline of where we've come from and then really spend the bulk on 2017 themes. And also, we have sort of an extended carve out section to kind of talk about the best things that we've, you know, bought or read or listened to or paid attention to this year. So, that said, going back to the 2016 themes. The ever so dominant network effects. In Virgin America episode, PayPal, LinkedIn and Adobe.

• 7:22Ben Gilbert?

  And, you know, this one, like for me, was such a dominant theme that I gave this talk at a product conference called Industry.

• 7:32Speaker 02

  That's right.

• 7:33Ben Gilbert?

  Earlier this year. And I had like two ideas for talks going and I was working on both of them. And Dave and I were recording, I forget which episode it was, but it suddenly dawned on me that like, oh my God, this talk has to be about network effects. And I think it was actually pretty interesting because it was a conference for like product managers and people that have some amount of product management in their role. And it was really interesting to take sort of a venture lens to a product audience and talk about building, building network effects and virality and dependencies on the rest of your user base into the core product and rather than thinking about it as kind of an afterthought.

• 8:14Speaker 02

  Yeah. And Ben, is that, is your talk on YouTube?

• 8:18Ben Gilbert?

  It's not yet, it's not. They're going to start releasing the talks, I think, pretty soon here. But we'll definitely let the acquired audience know when they can check that out.

• 8:29Speaker 02

  Yeah, it's a, I got to, I got the privilege of seeing Ben's slides and hearing a, hearing a first draft of the talk. And it was, it was great. So we'll be sure to share that with you guys. And yeah, on this one, I think what's, one of the things I learned doing the show this year and thought about is how rare, like, true strong form network effects are and talking about it on these episodes. We spent a lot of time on LinkedIn and when we graded that episode, talking about how, you know, that is one of the very few really, really strong form network effects out there.

• 9:10Speaker 02

  And, and it's striking to me that all the companies we covered, you know, some have varying degrees of them, but only a few, you know, Facebook, Snapchat, LinkedIn have, have the strong form effect.

• 9:24Ben Gilbert?

  Yeah, it's really interesting thinking about the strength of the sort of like relationship between the nodes of the network and how that can be super variable. Like you can, you can have a product that has network effects that are, that are just not core to the product itself. And that ends up not, not scaling and becoming as, as powerful of a, of a sort of force of your business as the incredibly strong ones. So a couple of examples I'm thinking of are I use my fitness pal when I'm, I'm tracking what I eat. And there's sort of two components to it. There's, there's utility to actually provide me the ability to track, you know, how much of each macronutrient I'm eating, you know, how many calories have I eaten today?

• 10:10Ben Gilbert?

  What should I be getting more of? The actual catalog of food that has all the nutrition data associated with that. And then, you know, I can make friends on that and that's kind of important. I mean, it's interesting for sort of encouragement or accountability or anything like that. But an app like that is so much more utility than it is network. And then you have apps that are, are sort of a crossover. Like you look at Instagram at first and there is incredible utility to the fact that you could put filters on photos. And sure, you could share it out to the small network that was Instagram. But ultimately there was a powerful utility there regardless of network. Now that, that was an amazing product that. Actually did grow into incredibly powerful network effects.

• 10:55Speaker 02

  Yeah.

• 10:56Ben Gilbert?

  And then you get into things on the other side of the spectrum that have no utility and are pure network effects, like the telephone. I mean, if you have a communication network, the only purpose of it is to talk to other people on the networks or on the network. And when you think about how entrenched that technology became and how long the telephone has been the de facto means of communication, it's pretty clear that like the more core your network effect is to the product itself, the more power and I guess staying power that that technology has.

• 11:28Speaker 02

  Yeah, and it's interesting to the maybe a better distinction between it because as I was just going through the list again, I mean, network effects have played a large role in many of these companies we've talked about, but there's the the strong form, single platform network effects that Facebook has, that LinkedIn has, that Snapchat has, and then there's the two-sided network effect that marketplaces have, of which we spent a lot of a lot of time on this show between Amazon and Skype. Well, Skype is also a strong form, single platform network effect, but YouTube, you know, where you have supply and demand getting matched. And that's a that can also be a strong network effect, but it's so much harder to get going

• 12:12Speaker 02

  because you have to bring both of these sides together, whereas whereas the the single platform, strong form effect where it's literally been you being on Facebook makes Facebook more valuable to me, whereas you buying stuff from Amazon only indirectly makes Amazon more valuable to me.

• 12:27Ben Gilbert?

  Right. Oh, great.

• 12:29Speaker 02

  There's so so few companies that can achieve the scale in that single platform. And then, once you do, just the the defensibility is pretty much unbreakable.

• 12:42Ben Gilbert?

  Yeah, it's funny. I saw, I was reading a thing, it was reflections of Obama and his presidency. And he was talking about, actually, I think it was, I think this quote was from one of his aides, but talking about how important the telephone was to the Obama administration and how amazing it was that that's the way that he speaks to other world leaders and how that's pretty much unchanged over the last, I don't know, however many decades. But we have all this new technology and, you know, he was notoriously a BlackBerry addict. But, you know, the phone is ubiquitous. It's, you know, especially for landlines, pretty high quality, secure.

• 13:26Ben Gilbert?

  It's, you know, it's one of those-

• 13:28Speaker 02

  Well, and that's the, that's the classic case, right, of like, two world leaders, the value of the telephone is solely in the fact that other world leaders are available via the telephone.

• 13:39Ben Gilbert?

  Yeah. Yeah, exactly.

• 13:42Speaker 02

  Great. All right, let's move on. Our next theme that we also discussed four times this year was what I like to call "start small," but is focusing at the outset on solving a specific problem for a specific customer base, not trying to be everything to everyone as at the startup phase. And you could also think about this as targeting niche markets and then growing from there. We talked about this on the Virgin America episode with Alaska obviously targeting the Seattle market and Virgin targeting the California market. We talked about it on Snapchat with Snapchat, you know, really tailoring the product after

• 14:25Speaker 02

  some wandering in the woods for a while to high schoolers in Orange County and with Trulia and also with Amazon. You know, Amazon was just books until long after the IPO. And and and several of those companies, you know, Amazon, obviously, and potentially Snapchat too, have gone on to become huge companies that do lots of things and have many different products and target diverse user bases, but they all started with that core solving a very specific problem for a very specific audience.

• 15:02Ben Gilbert?

  Yeah, and relating this to network effects, like we just mentioned, what's not in this list but easily could be is Facebook. And you think about the issue of the cold start problem, like if they launched Facebook to the world, it would have been no fun because let's even say there's 10 people in every city on it. I mean, that's you're just not going to know anyone, maybe one person. And by launching university by university and focusing on just Harvard first, you take advantage of those those pre-existing networks to make sure that there's there's density among your customer base.

• 15:33Speaker 02

  Yeah, well, and you can provide, you can, you can, you know, do the Paul Graham things that don't scale to get those nodes on the on the small niche network and then grow from there. And actually, I think in our, well, let's, let's, let's jump to the third theme that we discussed four times this year. And I think the three of these kind of form a trinity that, you know, if you are working with startups, starting a startup or working in technology generally, you know, you could do far worse than to keep these three things in mind. And the third one is is growth culture. And what we mean by that is, is the discipline of growth within startups and technology. And it really started with PayPal, and that was the first episode where we discussed

• 16:16Speaker 02

  it of using real data from the marketplace and from usage of your product to iterate what you're doing and to iterate your product towards the signal of how people are using that data. So we talked about that on PayPal, Snapchat, Next, and the Amazon IPO. But I think the interplay of these three things, you know, one, you know, keeping in mind the power of network effects, but the problem with that is that it's, they're very hard to achieve because you need a lot of scale. And then companies that have achieved them have huge defensibility. So how do you? Attack that, you know, you start small with a very specific niche, you know, that's underserved. Uh, and by whatever solutions are in the marketplace today.

• 16:59Speaker 02

  Target them and then, and then you, you know, use the discipline of growth uh to um. To be honest with yourself about what's working, what are people using and um you take it one step at a time.

• 17:12Ben Gilbert?

  Boy, and I'll tell you, uh, in looking at, at growth culture and thinking about the way PayPal did it. When they released um, you know, a product that, that wasn't really resonating and then they found, you know, where are people using this product? And it turned out, oh, wow, like an incredible amount of uh transactions are actually happening over um.

• 17:30Speaker 02

  On eBay.

• 17:31Ben Gilbert?

  Because of eBay sales, yeah, or you look at like.

• 17:33Speaker 02

  I mean, the initial product was for Palm Pilots, right?

• 17:36Ben Gilbert?

  Right, right, right. And you look at like Twitch and they realize, you know, it's a general purpose thing, but wow, people are really using this thing around gaming. So let's focus on that. We've totally discovered that with uh with PSL and Madrona Labs companies where it's so important to like. Get in market with something and, and just be like. A player in that space to have something to talk to partners and customers to and, and ways to get actual data back. From the way that people are using your thing and, and it's just funny how companies either narrow or, or, you know, move to an adjacent market. And uh, and it's so important to get in the space, have a product in market, be able to learn. And then you'll find what the real opportunity is from there because it's always.

• 18:19Ben Gilbert?

  You know, there's varying degrees of how similar it is to your original idea um that ends up working, but um, you know, it's never exactly that. And you need customer data to know.

• 18:29Speaker 02

  It's a, you know, we didn't plan it this way, but uh, um, you know, as we've been talking about these themes, I almost see it as like this, this kind of trinity of. Of the, the themes that we talked about four times throughout the year. Being how you, you know, sort of the playbook of when you're actually. Building and running a startup, what you work on and then the meta theme is aggregation theory on top of that because the output of. If you do these three things is you'll create a superior customer experience. Uh, that really is the goal of, you know, starting small, focusing, solving a specific problem better than anyone else. For a specific customer uh and then growing from there and, and uh, and then network effects layering on top of that of making the product. Even better and providing defensibility.

• 19:13Speaker 02

  Add those together, you get aggregation theory.

• 19:16Ben Gilbert?

  You could do a lot worse than using these as your checklist when starting or pitching or refining an idea.

• 19:24Ben Gilbert?

  You know, as like, am I going to be able to create a successful company? Or at least convince other people that my company could be successful? This sure feels like a decent, decent place to start.

• 19:35Speaker 02

  Yeah, unfortunately, nobody has yet invented a magic button to translate theory into practice in the technology world. But that's what makes it fun.

• 19:48Ben Gilbert?

  Yep. All right, listeners. Now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team and deploying them is no longer the hard part.

• 20:03David Rosenthal?

  Yeah, the hard part is knowing what permissions they have, what employees are using them for, or what decisions AI is making. AI security for an enterprise at scale is not a small concern. Like, the risks are real.

• 20:17Ben Gilbert?

  Exactly, and the challenge with AI is governing it, securing it, measuring it, and making sure that it actually delivers value. That is why ServiceNow built the AI Control Tower.

• 20:27David Rosenthal?

  Yep, AI Control Tower gives enterprises a single place to see, manage, govern, and optimize AI across the entire business. And it works with any AI, not just theirs. Every device on your network, every permission across every system, every AI agent, visible and secure in one place.

• 20:45Ben Gilbert?

  And ServiceNow can do this because they've spent more than 20 years building the operational backbone of the enterprise. The workflows, governance, approvals, security controls, and institutional knowledge that power how work actually gets done across IT, HR, customer service, finance, and security.

• 21:01David Rosenthal?

  ServiceNow already runs more than 100 billion workflows annually and trillions of transactions for more than 85% of the Fortune 500. So when companies need a place to govern AI at enterprise scale, they're building on a platform at the center of how their business already operates.

• 21:17Ben Gilbert?

  And in a future that isn't going to be one AI, it's going to be thousands of AI agents working across every function of the company. But the question is, who's managing them all?

• 21:27David Rosenthal?

  So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely, at scale, go check out servicenow.com/acquired and tell them that Ben and David sent you.

• 21:38Ben Gilbert?

  All right, moving on to things we've discussed three times. The flywheel is a big one with Lucasfilm, Marvel, and the Amazon IPO episode. And I think, I look at a flywheel as a sort of a very specific type of network effect, where any increase in one piece of your business adds momentum and grows an additional part of your business. Amazon and Disney, of course, being classic examples of this. Disney with movies that feed into theme parks, that feed into TV shows, that feed into merchandise. And then Amazon with the ability to create a better experience through lower cost, building more customer trust, driving more traffic, and then their ability to continue and grow and scale from there.

• 22:23Speaker 02

  Yep, and it's, you know, Amazon is definitely a two-sided network effect. Or I guess now with AWS, all of the different businesses that Amazon has, multi-sided. But for them, the flywheel is about adding to one side of the network effect and then pushing the other side. You know, Disney and the companies they've acquired in their flywheel, I don't know how much it's about a network effect, but it's, it almost makes me think more of like economies of scale and sort of old world businesses.

• 23:05Speaker 02

  But I guess you could argue to the extent that, to the extent that people come, that consumers come to see content, that the more consumers they have coming to see Disney content, the more they can channel those consumers into other Disney content. And then, so you could, you could think about it as kind of a content consumer network effect.

• 23:32Ben Gilbert?

  Yeah.

• 23:33Speaker 02

  But it's not as, not as strong, I don't think.

• 23:34Ben Gilbert?

  Yeah, yeah, it's a good point. And it's funny, in thinking about the best way to define flywheels, or potentially if you're in an existing business, to see flywheel opportunities in the business, I think a good way to define it might be, what does your existing asset of, you know, business line, customer capabilities, all those things, allow you to do?

• 24:02Ben Gilbert?

  That is an unfair advantage that people

• 24:05Speaker 02

  Yeah.

• 24:05Ben Gilbert?

  starting from a cold start wouldn't be able to do. So there's sort of criteria one. And then criteria two is, does the existence of that new thing that you do feed back and grow your, your original business?

• 24:18Speaker 02

  Yeah, yeah.

• 24:19Ben Gilbert?

  Disney, you know, somebody trying to create a caricature, you know, like a toy business doesn't have Disney's IP, so they'd fall on their face. And so criteria one is like, boy, you can really bootstrap a merchandise business. And then criteria two is, of course, more people are going to go want to see, want to go see the movies and visit the parks if they have the toys.

• 24:39Speaker 02

  Yeah, and this makes me think about Airbnb and what they're doing now with launching experiences and blending both the lodging and experiences into trips, you know? Lots of people have tried to solve the kind of destination services in travel for a long time, but Airbnb has a complete unfair advantage in that they have travelers who are coming and using their site to book lodging and are, especially travelers who are oftentimes looking for experiences at the destinations they're going to. And so they can feed that into the experiences product.

• 25:18Speaker 02

  And then as that product matures and potentially someday people will be coming to Airbnb specifically for experiences, then they can funnel those people into booking lodging. So we could see, you could paint what they're trying to do now in a flywheel light.

• 25:35Ben Gilbert?

  Yeah, good point.

• 25:36Speaker 02

  All right, next one that we also discussed three times this year was as this idea that as a particular technology generation matures, so, and we saw this with, with the PC generation, with the mobile generation, and, and potentially with, with future technology generations to come, maybe we'll talk about this in 2017, 2017 themes. But the, the basis of competition moves up the stack throughout the generation and it kind of starts at the hardware level and then moves Up to the operating system level and then to the application layer level and then

• 26:16Speaker 02

  eventually like we're seeing now in in mobile and on the web into the service layer level which is cross cross application. So we talked about this in the Accompli episode and the Android episode where I think you can see it most clearly. And in the Push Pop Press episode which became Facebook Instant Articles.

• 26:34Ben Gilbert?

  Yeah, I really like this one and we talked about it was like not exactly the same but in in that episode about rightly in Google Docs.

• 26:44Speaker 02

  Yeah.

• 26:44Ben Gilbert?

  We were talking about you know as as productivity moved toward the cloud from from desktop software, you know, like

• 26:57Ben Gilbert?

  there's a low end disruption thing that happened where where Google decided that they were going to create, you know, not as good tools for the professional but you know, very good for people that wanted to do sort of lightweight editing in their browser. And then that began a total arms race of wow, there actually, there is a services and cloud based productivity market here. And you you don't necessarily discover those things without somebody building an inferior product further up the stack first.

• 27:25Speaker 02

  Yep, which is a great transition to our last our last three point theme or three times theme for 2016, which was business model based disruption, which we talked about on the rightly in Google Docs episode and on the ways episode and on the Android episode, but you know, anytime if you're an incumbent in an area and somebody pops up, they can offer the same product as you and make money by via a different business model, you should be very, very worried.

• 27:58Ben Gilbert?

  Yes.

• 27:58Speaker 02

  And this is classic Clayton Christiansen here.

• 28:01Ben Gilbert?

  It very much falls in the same sort of fear as the Jeff Bezos quote, your margin is my opportunity. And in this method, it's more like your business model is my opportunity because if you're able to leverage something like how rightly was able, I'm sorry, how ways was able to to crowdsource all the data. Suddenly it's like, hey, I've got this huge asset that costs you money for free and now I get to decide what to do with that.

• 28:27Speaker 02

  Yep, um, and we'll see this all, you know, Amazon is uh one of the best in the world at this and uh actually this is part of one of my carve-outs coming up, um, uh, not Amazon video, my carve-out is not Amazon video, but you see it happening there. I mean, um, Netflix is a great, great company and valued very highly right now, but um, Amazon video has improved so much throughout 2016 and it's free with Prime. Uh, and you have to pay eight bucks a month or whatever it is for Netflix now. It's, you know, it's a different business model.

• 29:04Ben Gilbert?

  It is, it is, it is. Alright, well, we've got some things that are discussed, you know, twice and, and once throughout the, the course of the year, but um, we're gonna put those in the show notes. So if you're, if you're curious about um, other tech themes that uh, um, were, were prevalent in 2016, at least through, through our lens, uh, those will be in the show notes. And uh, we're gonna move on to talk about um, some themes that we think are gonna be key in 2017. So uh, David, do you wanna, do you wanna start us off with one of your?

• 29:35Speaker 02

  Yeah, I will. Well, and um, uh, I'm laughing and uh, I'm sure a long time listeners of the show will be laughing as well. But my, the first one I wanted to talk about is um, I think aggregation theory is gonna continue to be critically important. And um, uh, one of if not the clearest lens through which to view uh, opportunities and challenges and disruption that's happening, um, not only in, in tech going into 2017, but I, but I think in, in the world broadly too, in society. I mean, uh, Ben Thompson has had um, some great posts,

• 30:15Speaker 02

  really great posts in the, the back half of the year here, um, talking about uh, how you can apply that lens, the aggregation theory lens to looking at uh, politics, uh, and you know, obviously the, the US election, presidential election in 2016, um, but uh, the media as well, um.

• 30:38Speaker 02

  And I, I, to me personally, I, I actually see it becoming more important in 2017. Um, and, and, and thinking about sort of beyond just the traditional IT sector of tech. Um, you know, consumer technology and enterprise software technology. Um, but what does it, what does it look like when aggregate, when the dynamics of aggregation theory and the, um, the both opportunities and, and, uh, implications of internet dynamics get trained on all industries. Um, you know, we're seeing it with driving right now, which, um, if I'm not getting my facts wrong, which is entirely possible that I could be.

• 31:23Speaker 02

  I, I believe driving jobs are either the number one or certainly top five. Yeah. Category of jobs in the U S and, um.

• 31:34Ben Gilbert?

  It's like two or three million, uh, uh, uh, jobs are directly related to the, uh, logistics industry. So it kind of trucking and coordinating.

• 31:43Speaker 02

  Yeah, trucking and, and then you add, you know, I don't know how many Uber drivers there are. If you add up Uber and Lyft and taxi drivers, that's another huge amount of people. Um, and all of a sudden you're going to have a superior, a superior customer experience through self-driving. Um, you know, technology that's going to come on board in the next few years. Um, I, I think everybody, uh, in some form or fashion is going to have to come to grips with the implications of what this means.

• 32:16Ben Gilbert?

  Yeah. Yeah, that's, uh, it's pretty interesting. I, I, um.

• 32:23Ben Gilbert?

  Well, this segues nicely into one of mine and I think, uh, I was going to talk about three things that I think will happen in 2017. Then three things that, um, I think will begin to happen, but are really, you know, 2018, 2019, uh, and 2020 themes. But this totally gets into, uh, one of mine, which is autonomous vehicles start to make people more serious about universal basic income. And, um, I was having this discussion with a friend recently where, um.

• 32:52Ben Gilbert?

  Let's start with this hypothetical world that is we can basically produce in a very sci-fi way our basic means of living for free. We create technology that is efficient enough that, you know, let's say that we can have farms that have all autonomous equipment that are powered by solar arrays of renewable free energy and can deliver all these ingredients to people basically free of charge. So we have clean water, clean food entirely for free and maybe it's even possible that transportation is there too. So then there's things like shelter, the other basic things that you need to live that aren't free. But

• 33:36Ben Gilbert?

  we're going to start trending toward this world where we could provide those things for everyone. But the thing that will happen much sooner than that is that we'll be able to provide these things with very little jobs. And so if you look at like the Industrial Revolution, the argument that everyone always makes is, well, you know, technology eliminates jobs, but it also creates new jobs. And I think in this era of autonomous vehicles, autonomous machines, and leveraging machine learning, the difference is that you don't create as many jobs as you eliminate. And that might be okay in the extreme long run

• 34:21Ben Gilbert?

  where we do have societal structure in place that, you know, we take care of everyone that doesn't have a job because like nobody needs to work. Like let's imagine a world where everybody gets to live without working. And then we need some ways to distribute that wealth out to people. But what we

• 34:42Speaker 02

  Yeah, we also need something for people to do when they're not working.

• 34:45Ben Gilbert?

  Yeah, boy, that's like, that's an

• 34:47Speaker 02

  That's what VR is for.

• 34:48Ben Gilbert?

  Right of figuring out what to do with your time in an era where we don't work. But I think there's an immediate pressing problem, which is companies will get extremely wealthy by having really fat profit margins on being able to achieve great value for you know, tons and tons of people through aggregation theory.

• 35:09Speaker 02

  Yep.

• 35:10Ben Gilbert?

  And

• 35:13Ben Gilbert?

  Those people will be completely served, but it will be, you know, the same price that we've been paying for things, except that lots of people don't have jobs. And there's going to be this kind of scary valley where we eliminate the jobs long before we have a sort of like support redistribution system.

• 35:29Speaker 02

  Yeah, there's, um, well, a couple of thoughts. I mean, I think one of the, I, I think what we're talking about is a, a consequence of aggregation theory where, you know, if you believe it, uh, that we are entering a world across all industries now where a superior customer experience becomes a winner take all business. You know, that means there is a winner and lots of losers. And, um, you know, as opposed to where you have equilibrium in other industries now, such as the auto industry where there are, you know, 10, 20, or the airline industry, 10, 20 firms, uh, that are all employing lots of people. Um, and maybe they're, you know, they are not as profitable as firms as a winner take all business.

• 36:15Speaker 02

  Um, but they are, uh, at least providing jobs. Um, uh, so, so this is definitely, you know, uh, as far, as far as I know, nobody has solved, uh, what this means, you know, how to deal with this on a societal level.

• 36:34Speaker 02

  But, but what you were saying after that reminds me of, um, there was a great, I believe this was in Wired. I'm going to find this article. I'll link it in the show notes. When, right before the election, Obama gave a few interviews, um, where he talked a lot about tech and sort of, you know, mused on what he saw as the biggest challenges, you know, for the world and for America going forward now. Um, and called on the tech industry to respond to them. And, and the first one was, was inequality. And, uh, this piece, they had, had six, you know, well-known figures from the tech industry sort of respond to each of these things, the challenges that Obama called out.

• 37:16Speaker 02

  And I believe, yes, it was Tim O'Reilly, um, the, who, founder of O'Reilly Media, um, answered the inequality topic and, and he said exactly what you were talking about, Ben, which is that. Silicon Valley often forgets that it takes consumer surplus and people with jobs who have disposable income to then spend money on Silicon Valley products and technology. So you're always kind of eating your own tail in the economy. And to the extent that we put more people out of jobs as an industry, then there's going to be far less consumption of our own products as an industry.

• 38:00Ben Gilbert?

  Yeah, it's kind of funny thinking about, it's not as much funny as sort of haunting.

• 38:08Speaker 02

  Yeah.

• 38:11Speaker 02

  It's ironic, but not in a happy way.

• 38:17Ben Gilbert?

  Yeah, so I guess like, you know, technology is this interesting sword that has to be responsibly wielded. Like, we've talked about this in the past, that the purpose of technology is to make things easier so that it requires less effort from people. So when you run that to its extreme, it's that you need less people to do the jobs that, you know, that create the value for people, for, you know, the consumers of those things.

• 38:49Speaker 02

  I mean, this is one of the themes that we talked about.

• 38:52Ben Gilbert?

  The Facebook idea.

• 38:53Speaker 02

  During the year, that technology is a lever. You know, it doesn't mean technology is like, not like it's Excalibur, right? It's not like it's a sword for good. Like, it magnifies what is going on, whether that's, you know, good or evil or indifferent. It just magnifies the consequences.

• 39:13Ben Gilbert?

  Yeah, so in having this ability to, you know, create incredible automation and incredible value without human input, I don't think we've necessarily figured out what a societal structure is in a world where technology is so powerful. And I think a lot of the things that we take for granted in a society that is a democratic republic and has a capitalist economy function pretty well.

• 39:46Ben Gilbert?

  In a world where aggregation theory and automation is not so powerful, but I think we could be forced to do some serious rethinking in the coming decade as these new harsh realities come to light and think about like, boy, if we just, pure capitalism may not actually work anymore. Or I think I'm venturing into dangerous territory there.

• 40:15Speaker 02

  We are. Well, we're gonna have to call my wife Jenny onto the show as a guest expert for this. As she's a PhD in humanities and thinks a lot about this. But I think channeling her, she would say, you know, we have been in a late capitalist world for a long time. I mean, at least since the end of World War II. And this is kind of the hallmark of late capitalism, which is that you have

• 40:44Speaker 02

  rapidly increasing wealth inequality. And then the theory is that it ends in a communist or socialist revolution.

• 40:58Speaker 02

  We'll see. Not predicting that that will necessarily happen. But that's the direction that, you know, if you look at like Europe, that political economies there have been moving towards over the last 20 years or so. But it's also a world where innovation isn't encouraged as much as it is in a purely capitalist society.

• 41:19Ben Gilbert?

  Yeah, maybe. I think then you start diving into what are human motives besides economic ones? Like, you know, if you look at like the reason, Daniel Pink has done a bunch of research on this, like what makes people happy in their jobs? It's not really money. It's autonomy, mastery, and purpose above, once you hit a certain dollar amount of sustaining yourself. And if you think about, you know, that on one hand, and you look at sort of like the things that motivate people in general, you know, money, power, love. There's a lot of like very core. Human things that we often like wrap up with how much money someone makes and people often

• 42:03Ben Gilbert?

  define themselves by by their job and their value in the world is so tied to that. And I think we might start seeing, and maybe not in 2017, and maybe not for a while, but once we get to a kind of a post scarcity society is a place where we start defining ourselves and doing things by different measurements.

• 42:24Speaker 02

  And actually, I'm glad you brought that up because I'm catching myself sort of falling into a trap that I think a lot of people and a lot of economists have for a long time. I've been reading a bunch of economists lately and realizing that, you know, classical and traditional macroeconomics is kind of like voodoo, right? Like, and not effective voodoo, like, it's really deeply flawed. And some of the, one of the assumptions that is really flawed in it is that every individual is A, a rational actor, B, has perfect information, and C, is motivated by money and wealth. And that's, all of those, three of those things

• 43:09Speaker 02

  have been proven to be just not true.

• 43:12Ben Gilbert?

  Are you reading Kahneman right now?

• 43:16Speaker 02

  I have not yet started reading The Undoing Project, but it's on my list. But no, I've been listening, I've been reading, I've been reading Tyler Cowen's blog, The Marginal Revolution, and a lot of the links and work that he links to and posts there. And he's sort of one of the poster children for the new breed of economists that reject a lot of these classical assumptions.

• 43:47Ben Gilbert?

  That's cool. I'll have to check that out.

• 43:49Speaker 02

  Yeah. Well, should we move on to, so, one that I wanted to bring up on a, sort of looking more on the bright side note of all of this, that we talked about on the Facebook IPO episode is, I'm hopeful that

• 44:06Speaker 02

  Twenty seventeen sees, at least starts to see the beginning of the end of this stay private longer theme and startups, private technology companies delaying their IPOs indefinitely. You know, it sure looks like we're gonna see a Snap Inc IPO in the first half, maybe even the first quarter of twenty seventeen. And I'm really, really excited and hopeful to see what that does for the market. You know, lots of questions to be answered both about the company and what valuation they end up getting, both at pricing and how the stock trades afterwards. But I hope that, you know, I'm encouraged by

• 44:52Speaker 02

  by their courage, I get to quote unquote, word of twenty seventeen, of twenty sixteen.

• 45:00Ben Gilbert?

  Thank you, Phil Schiller.

• 45:01Speaker 02

  In doing this. Yeah, thank you, Phil Schiller. So I hope we see more companies that are building long-term, sustainable businesses, get the courage to go public.

• 45:15Ben Gilbert?

  Yeah, and it's not clear to me if it's like, like courage, like they're taking some big risk necessarily that being private wouldn't make them risk, or that like they're doing it out of some sense of, like, it's probably like just overwhelmingly the right thing for them to do, so they're doing it. But regardless of motivation, it sure seems like it's better for everyone to have companies IPOing, you know, at or before the five-year mark. And after, you know, somewhere between like three and six years, rather than waiting eight to ten. Because it just, we talked about this on the Facebook episode, but like, it lets the American public get in on the growth and wealth that is created from late-stage American innovation.

• 46:00Speaker 02

  And I think it also, you know, I think this is something that, don't get me wrong, Wall Street has its own set of issues and the short-term focus on short-term earnings results can be a bad thing for companies of all types. But I think going public, it forces a level of accountability and being forced to see the real picture, reflection of your business, that I think in the long term will be good for companies. You know, we like, we talked about on the Facebook, you know, episode, it was, I really think, not being there at the time, but, but doing all the research and talking through the

• 46:41Speaker 02

  story, I think Facebook going public forced the company to recognize how big a problem they had in mobile and to, and to move at warp speed to fix it. Yeah, that's a great point.

• 46:55Ben Gilbert?

  All right, listeners. Now is a great time to talk about a new partner of ours here on Acquired, Logora, the agentic operating system that is redefining how the world's best legal teams work.

• 47:08David Rosenthal?

  Yep. It's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Logora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry?

• 47:25Ben Gilbert?

  So the founders did exactly what great founders do, operate with obsessive customer focus. They embedded inside a massive law firm for months. They sat with the lawyers just watching how the work really gets done.

• 47:40David Rosenthal?

  And that's how you get features that customers love, like Tabular Review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Logora's bet here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work. And this means that the pie can grow even as each individual task takes less time.

• 48:04Ben Gilbert?

  And they recently launched Logora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective, then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required.

• 48:23David Rosenthal?

  And Logora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Logora numbers essentially speak for themselves. When they have a head-to-head pilot with their top competitor, they win 70% of the time. Logora now has over 100,000 lawyers on the platform from 1,200 legal teams in 50 countries. And crazily, they went from 1 million to 100 million in ARR in about 18 months.

• 48:53Ben Gilbert?

  Truly insane numbers. And that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at logora.com/acquired and just tell them that Ben and David sent you. All right. I've got another couple that go together.

• 49:21Speaker 02

  Yeah.

• 49:22Ben Gilbert?

  So.

• 49:22Speaker 02

  Do it.

• 49:23Ben Gilbert?

  The first one is the commoditization of basic machine learning. I think, you know, there's, I am, let me just create a disclaimer that says, I am not a machine learning practitioner. We're a data scientist, nor do I have formal education on the topic. I am a curious person in tech. And so I've been doing as much reading as I possibly can and talking to some people that are, that are a lot smarter than I am in these things and trying to understand, what does the landscape look like? And what's become really apparent is that a lot of these things are 50 to 70-year-old technologies, or I guess, really like math papers that only now are coming

• 50:08Ben Gilbert?

  to fruition and actually being applied because, number one, we have the hardware to do so, not only with just cheap CPUs and GPUs, but with actual like Googles creating tensor processing units that are more effective at doing the sort of math quickly and efficiently that you need to do for, for machine learning.

• 50:26Speaker 02

  Plus you have access to elastically scalable clouds.

• 50:30Ben Gilbert?

  Exactly.

• 50:31Speaker 02

  You don't have to build tons of data centers. You can use S3.

• 50:35Ben Gilbert?

  Yep.

• 50:35Speaker 02

  To store all your data.

• 50:37Ben Gilbert?

  Yep. And yeah, so variety of factors contributing to this. There are tens or hundreds of defined machine learning methodologies. And I think something that that is pretty interesting is like, there's about, there's less than five that are actually used right now by a lot of people and have have actually had a lot of research on them, a lot of like time and practice. And you know, it's interesting that like relative to a decade ago, when there was still this green, you know, lots of green space of like, this is an emerging field, it's been researched for a while, but not commercialized. We don't know which things work best.

• 51:20Ben Gilbert?

  Now there's like a fairly understood scope and scale and understand of what they can be used for, for the the, you know, few basic types or a few most used types. And what we've seen is the platformization of those. So if you have a machine learning task to do at your company that are not like wildly different than something somebody else is doing, or don't require any sort of like new research or actual mathematicians to be, you know, hammering on a methodology that's that's not well understood yet. These are often available from from Google, from Amazon, from Microsoft as as cloud services

• 52:01Ben Gilbert?

  that that are built on TensorFlow or at Google or any of the other platforms at these other companies. And so what you see is like companies that might be like 30, 40 people don't really need to build out a data science and machine learning practice in the company. They just need to find a way to create really clean data and then feed it into these sort of like off the shelf systems that that the the big companies have created.

• 52:27Speaker 02

  Yep, and that makes me really excited as an investor because it's going to enable so many more companies in so many more industries to take advantage of these tools. And and I think it's going to, you know, I think this will be one of the enabling factors that further pushes aggregation theory out into the world, you know, beyond the traditional borders of the quote unquote tech industry that we that we talked about earlier.

• 52:55Ben Gilbert?

  Yeah, and that that brings up a the second point that I I have is, you know, the reason that these larger companies are incentivized to make these things available is that The value, once you hit a certain kind of scale and understanding and saturation of these things, the value isn't the algorithm themselves, the value is all about the data.

• 53:15Speaker 02

  Yes.

• 53:16Ben Gilbert?

  And so these companies with with large sets of data, Google, Facebook, Microsoft, Amazon, et cetera, can solve problems that startups just can't. And there's a total flywheel effect of, you know, once they, once they have like just incredible critical masses of data and have the, you know, the machine learning algorithms kind of and practices built in-house to really be competent at turning that data into, you know, new products and new services, they're just able to be the best at things that startups have no chance at. So there's a category of machine learning problems that, like you're saying, David, are very exciting as an investor to new startups because they can use these off-the-shelves shelf tools.

• 54:01Ben Gilbert?

  But there's a whole other category of things that, that, you know, the big tech companies with lots of data can do that no one else can.

• 54:07Speaker 02

  Yeah, I think, well, I'm going to agree with you with a caveat on this one and more to come, you know, on my front in 2017 on this idea, but, but my view, at least right now, on this question is, I think the key to the data is it's data about your customers and your domain and people who could be your customers and the interaction between those customers and what your product is. So, yes, I agree that if you have multiple companies doing the same thing, the company that has the most data and the most, the most robust and rich data is going to be able

• 54:51Speaker 02

  to create the most superior customer experience and win via hibernation theory, which we've talked about ad nauseam. But to the extent you're doing something slightly different, like, I don't think it pivots very well, you know, so that gives me some hope for opportunities for startups.

• 55:09Ben Gilbert?

  Yeah, maybe, like, I think there's this category of things. I see you. I think there's definitely a category of things around personalization, where all those points are like spot on, right? Anything that requires lots of information about you to bootstrap from. For example, like showing you the photos of your best memories of the last five years when you were in motion, you know, or some queries like that. But like, Google has the most photos of cats. So anything that relies on a very accurate cat recognizer, like, you're not going to beat Google at that. And so I think about like, these companies have the largest data sets of like, a lot of things.

• 55:53Ben Gilbert?

  And so I think you're right that like, outside of the domain of things that these companies capture, like, you know, you can imagine like flow meters on plumbing. Like, none of those big tech companies have the data on flow meters on plumbing. But anything that's like photo-related, or conversation-related, or, you know, data sets that people create in interactions with themselves in the world, is really like locked up there. And I think there's probably interesting opportunities to try and go find data sets elsewhere, and figure out what value can be created from those that those companies don't have.

• 56:31Speaker 02

  I think that's right. But I guess the perspective I come at it from is, if you think about all the activities in our economy, and in our lives, like, there is an infinite spectrum of products and services that can be built that are very different. And I guess the excitement I come at it from is that, you think about Google, you know, and the things you were saying, you know, understanding cats, and I do think machine vision is going to be perhaps the biggest category of machine learning, of value creation in the coming years. But like, you know, what about a company that I work with, that we're investors in

• 57:14Speaker 02

  in Majona, is a company called Booster Fuels, and they deliver gas to your car. And you wouldn't think that that would be... Driven by machine learning, but it actually turns out that, you know, the the route that trucks take to deliver gas is is hugely important and the more efficient you get at that. Uh, the better your business, your product will be and the better your business will be. Um, you know, Google can't do that. Uh, so I just think there's.

• 57:41Ben Gilbert?

  Or at least they don't have an unfair advantage in doing that.

• 57:44Speaker 02

  They don't have an unfair advantage in doing that. Yeah. Um, uh, and even Uber doesn't have an unfair advantage in doing that. Um, so I think there's a big C out there to fish in.

• 57:53Ben Gilbert?

  Cool. Yeah, I see you there.

• 57:55Speaker 02

  All right. Uh, last one that I had, uh, more, um, more fun one to, for me at least to end on is, uh, I think twenty seventeen. Is, uh, I I'm going back to the, um, niche, uh, uh, sort of a theme we didn't talk about in the preamble. Um, but is, you know, what did native experiences, quote unquote, look like in new mediums? Um, and I think twenty seventeen could be a really interesting year for VR. Um, and in the whole VR AR industry, and I think we'll get a lot more signal this year on whether. Um, VR and AR is going to be a mainstream industry anytime soon or a

• 58:41Speaker 02

  large niche industry or none of the above. And, uh, I I'm hopeful that by this time next year, we'll have a lot more information on that front. And to the extent that it either becomes mainstream or a large niche industry. Um, I'm really excited to see what native, quote unquote, experiences look like in, um, in the VR world.

• 59:03Ben Gilbert?

  Yeah, yeah, me too. Cause it's funny. It's like, you remember the first Steve Jobs demo of the iPhone when he pulls up the New York Times? And he, there's no such thing as a mobile optimized site yet. And he double taps to zoom in on all the articles and you're looking at like a desktop rendered version of the Times.

• 59:19Speaker 02

  Yup.

• 59:19Ben Gilbert?

  It's like, what's the equivalent there? Like, what's the, what are the native VR experiences that are, are, uh, right now, like, we're so excited to like, oh, my God, we're playing the, a similar video game, but in VR.

• 59:30Speaker 02

  Yeah, well, and and a lot of the games you're seeing in VR right now are those, you know, oh, man, this game that we've always known and loved would be so cool if we could do it in VR, like Minecraft or whatever, like, but what are the, and I think this is just where the creativity of entrepreneurs is going to come out. Um, it'll be things that you and I haven't imagined yet. Um, and, uh, uh, having done a lot of VR experiences myself, I would imagine a lot of our listeners either haven't done many or haven't done any yet. Um, it's very much a, a bleeding edge niche technology right now, but you can see so much potential in the immersiveness of the experience.

• 1:00:14Speaker 02

  You know, it's, it's like the anti-mobile in a lot of ways.

• 1:00:17Ben Gilbert?

  Yeah, yeah. Yeah. I mean, it's, uh, right now it's a largely tethered experience that's you can't, you don't, you certainly can't move around much outside of a very controlled environment.

• 1:00:27Speaker 02

  You know, the, the best VR experiences right now, um, we still have lots of problems with them, but where, you know, as opposed to on a mobile phone where you're getting 16,000 notifications every minute and jumping between contacts all the time, you know, you really do start to forget that you're in a simulation and just get totally immersed in what you're doing.

• 1:00:48Ben Gilbert?

  Yeah. Well, David, I would argue I'm frequently completely immersed in my phone and not paying attention to what's around me.

• 1:00:55Speaker 02

  It's all a question of what context are you thinking about?

• 1:00:58Ben Gilbert?

  Amen. Well, hey, I've got, I've got one more and it's more of a question.

• 1:01:02Speaker 02

  Yeah, do it.

• 1:01:02Ben Gilbert?

  I'm, I'm curious what you think, because it, for how political we could get on this show, we pretty, we stay pretty far away from it, even though we sort of discuss societal issues. And, um, I was trying to think through, you know, we've been in this era of rising abundance of both information and physical products, uh, over the last several decades. And I was trying to figure out, like, do, is it possible that we start moving to an era of scarcity of physical products? Where, um, in, in years past, you know, it's, it's, it's, uh, um,

• 1:01:35Ben Gilbert?

  It's been incredibly inexpensive to manufacture overseas. And you know, that's the reason why we can get an iPhone for $600 when it's this incredible magical device. And with the combination of a rising middle class in China, you know, additional countries where a lot of this very inexpensive manufacturing is getting done, becoming more of a developed nation. And then also, it's hard to predict what's going to happen, but all indications lead toward it. We may have a little bit more restrictions and tariffs on trade to encourage things to be built in America under the Trump administration. I'm curious, even if that doesn't come to fruition, do you think that that we start

• 1:02:19Ben Gilbert?

  to shift back toward an era where goods are more expensive and we have have less physical goods?

• 1:02:25Speaker 02

  Yeah, I don't know. I hadn't I hadn't quite thought about that. It's really hard to imagine that.

• 1:02:33Ben Gilbert?

  Yeah.

• 1:02:34Speaker 02

  Just from a consumer perspective, which does make me wonder if it happened, what would the political reaction be? I mean, let's let's say, can let's assume that if more barriers to trade get enacted, that a consequence of that is that the price of physical goods goes up significantly unless people are able to afford them. Like, how would people vote in reaction to that? I don't know. I don't know.

• 1:03:04Ben Gilbert?

  Yeah.

• 1:03:05Speaker 02

  If you can't buy your big screen anymore. Yeah, I don't know. It's at the same time, like, we also live in this moment where, you know, one of the books I read this year was one of the top selling books in 2016 was that The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering, all about removing physical things that there's there's too much. Many people have too many physical things in their life and you need to remove them. So if prices go up, will it solve that?

• 1:03:39Ben Gilbert?

  Yeah.

• 1:03:40Speaker 02

  I don't know.

• 1:03:41Ben Gilbert?

  And I can't I can't tell if there's a cultural, I'm trying to decide if I live too much in a bubble, but it sure seems like there's a trend toward owning less things just just to, you know, try and be more minimalist. And especially with the shift toward more people being in urban environments and having smaller spaces that we

• 1:04:00Ben Gilbert?

  We may just start to see this from a cultural desire perspective, too.

• 1:04:03Speaker 02

  Yeah, I mean, no question. I think one thing that seems very clear to me that you mentioned is urbanization, regardless of what happens with globalization and trade, I think urbanization is going to continue to be a very, very powerful force throughout the rest of this decade and likely into the next.

• 1:04:28Speaker 02

  You know, so many, for a whole variety of reasons, so many people in this country and around the world are are migrating to cities and the, you know, the migration to cities that I think is happening is gonna, gonna force a lot of this change, you know. The, the big mansions in the suburbs, you know, aren't what a lot of people aspire to anymore.

• 1:04:52Ben Gilbert?

  Mm hmm. It's a great point.

• 1:04:54Speaker 02

  Let alone, let alone the fancy cars that you drive to get back and forth.

• 1:04:59Ben Gilbert?

  Yeah, no kidding. With that, do you want to move on to carve outs?

• 1:05:03Speaker 02

  Yeah, so for carve outs for this episode, since it's the end of the year, we thought that we would each do a carve out across a whole bunch of, basically all the categories that we talked about throughout the year. So we have books, articles, podcasts, music, TV and movies and apps. Should we start with, should we start with books?

• 1:05:30Ben Gilbert?

  Yeah, let's do it. I've got one that I'm rereading now and I don't think I've done it as a carve out before. But it's one of these books that I probably should read every year and, you know, I'm just, just reading for the second time now, but it's called On Writing Well. It is a kind of a spiritual supplement to the E.B. White's The Elements, or Element, yeah, Elements of Style. And it's a really great, very enjoyable to read book that harps on the importance of writing in plain English, using one word when you can instead of two or three or 10, eliminating kind of colloquial phrases that are, you know, not adding anything to the piece

• 1:06:15Ben Gilbert?

  and, and really decluttering your writing and having clarity of thought. And one of the things I want to get better at in in two thousand and seventeen is is just being a better writer and writing with with more clarity and purpose and and be more pithy. And it's just a phenomenal, phenomenal guide to to doing exactly that.

• 1:06:34Speaker 02

  I've I've had that recommended to me several times over the years. I've never read it. And I I gotta get that and and read it. Very few things that we can invest in that'll do more for our our communication than than learning to be a better writer. Something I definitely definitely need to keep working on.

• 1:06:57David Rosenthal?

  Okay, for my book, for The Carve Out, I actually broke it into two. I did nonfiction and fiction. So for nonfiction, The Creative Habit by Twyla Tharp, which was a book that I actually got a long time ago and had been meaning to read. It started, never finished, and I finally picked it back up again and finished it this year. Really great. Twyla is a American choreographer and dancer. It just has, it's a really creative work itself, but a lot of great advice for how to think creatively and structure your life if you are someone from an entrepreneur to an executive to an actual artist

• 1:07:43David Rosenthal?

  who needs to think creatively in your work. And then my fiction for the year is actually a whole multiple series of books. But I finally read the entire Isaac Asimov canon. Not not all the books that he wrote, but the Robot series, the Empire series, and the Foundation series, which are all separate series. But later in his life, he wrote other books to fill in the gaps and tie them all together. Really fun and also a great, a great read as we head into this world, as we've been talking about on this episode of artificial intelligence and robotics potentially coming along with that. A lot of

• 1:08:23David Rosenthal?

  A lot of his work has been an inspiration to actual innovators and inventors throughout the years. So highly, highly recommend it. All of the series that he's written.

• 1:08:34Ben Gilbert?

  Awesome. And actually, that that kind of leads into my my article. Yeah, it's a religion for the non religious, which is a wait but why column?

• 1:08:43David Rosenthal?

  Yeah, so good.

• 1:08:45Ben Gilbert?

  Yeah, really, really great. Like, talks about, you know, level one thinking, which is more like instinctual, level two thinking, which is more empathetic, level three thinking, which is like, thinking about the whole universe as we know it, and being just floored by our place in it. And then level four thinking, which is, we didn't even know what we don't know. And it's kind of a an interesting like way to tie everything together from why am I acting so silly right now, all the way to what are the bounds of the known universe?

• 1:09:16David Rosenthal?

  Yeah, such a great blog, Wait But Why. My article is a piece in New York Times that came out a few weeks ago about the alleged activities by Russian hackers in hacking the DNC and the RNC, and then their use of that information to try and influence the outcome of the US elections. This is a really great, long reporting piece. And they sort of deliberately make the analogy in the beginning of the piece between Watergate and the hacking of the DNC, the physical hacking of the DNC headquarters for information during Watergate

• 1:09:58David Rosenthal?

  to to the digital hacking now. But what I thought it was super cool is they make the argument in the piece that if Russia did in fact do this, that this is actually moving beyond espionage into, you know, a trying to influence outcomes of elections in another country is a warlike act. And it made me think a lot, regardless of what you think about this particular situation, about disruption and evolving technology as regards to war, too, you know, if this is. This might be the way that, or at least one of the ways that war is conducted now, as opposed to, you know, tanks and planes and bombs.

• 1:10:43David Rosenthal?

  Super interesting to think about disruption of, at that level, too. And also relevant to what we were talking about earlier in this show.

• 1:10:51Ben Gilbert?

  Wow, yeah. Totally ties it together.

• 1:10:54David Rosenthal?

  Yep.

• 1:10:54Ben Gilbert?

  Speaking of being all over the place, my podcast recommendation is the episode of the Ezra Klein Show with Patrick Collison, the co-founder and CEO of Stripe. And fascinating on a lot of levels. It truly is all over the place in a lot of the, the best ways that you would hope. Super intellectual on, on technology, politics, philosophy, and highly recommend checking it out.

• 1:11:18David Rosenthal?

  That is so funny because the Ezra Klein Show was my podcast as well. Fortunately, I had two episodes to recommend. One was that, that show with Patrick Collison, which is a great, great episode. The other one, I think, is the one that Ezra did immediately following that episode, either immediately or two episodes later with Ta-Nehisi Coates. Completely different type of person and different world. Coates is an author and a journalist, but also very, very great episode and worth listening to.

• 1:11:51Ben Gilbert?

  I agree.

• 1:11:53David Rosenthal?

  Music?

• 1:11:54Ben Gilbert?

  Music. So we've been riding this really highbrow intellectual train, so I'm going to bring it back down and declare 2016 the year of Justin Bieber. His last, his album of mega hits technically came out in November of 2016, but boy, did they have staying power and stayed snappy and hot and released fresh singles all year. So I unapologetically go Justin Bieber.

• 1:12:17David Rosenthal?

  That's great. I'm also unapologetically going to go back to, I think I mentioned this an episode or two ago.

• 1:12:25David Rosenthal?

  Jenny and I went to Stevie Nicks concert this year and it was so good. I've been a huge Fleetwood Mac fan for a long, long time. And, uh, but in 2016, I have discovered Stevie Nicks' solo career too, even beyond, you know, Edge of Seventeen and the, the famous hits. She, uh, she really is an amazing artist, uh, and both her, her own solo albums and her collaborations, especially with Tom Petty and the Heartbreakers. Also Prince, uh, I didn't know until I went to her show that Prince played the guitar on her hit Stand Back.

• 1:13:01Ben Gilbert?

  No way.

• 1:13:02David Rosenthal?

  They had a, they had a, um, really close relationship. Um, so that's my, that's my music for, for 2016.

• 1:13:10Ben Gilbert?

  Awesome. Uh, so my TV or movie is, uh, Westworld, the HBO show. I mentioned it as my carve out a few episodes ago, but, um, that was the, the piece of entertainment of 2016 for me. It was so thought provoking, worth watching twice, worth listening to podcasts about, worth talking to your friends about and, and reading the subreddit and diving in. It is, uh, JJ Abrams and Jonathan Nolan at their absolute best. So.

• 1:13:36David Rosenthal?

  I'm gonna, I'm gonna bring it down, uh, even further here. I haven't, uh, haven't gotten into any of the heady grade television that's being produced these days. Uh, but my video content of the year was Rogue One. So good. If you haven't seen it yet, uh, I know it's gotten somewhat mixed reviews, but I thought it was just fantastic. Ben and I saw it together on opening tonight, uh, on, on opening night. It was a blast. I've seen it, uh, once more since then and, uh, I would totally go see it again.

• 1:14:06Ben Gilbert?

  The force is with me and I am with the force, David.

• 1:14:10Ben Gilbert?

  Moving on to app, uh, my app of the year is one I just started using, which is Reach Now, the car sharing program by BMW. It behaves very similar to Car2Go if you, if you've used that, but, um, you get a car that's, that's not a, a smart car. So you can, um, you know, take, take four or five passengers. Uh, it's enjoyable to drive. You can go on highways. Costs about the same amount and it's a really great, um, renting and, and drop off experience.

• 1:14:36David Rosenthal?

  Ah, interesting. I tried Reach Now when they first launched in Seattle earlier in the year, and I stopped using it because I remembered the prices being way more expensive than, um, than Cardigo. Have they, uh, have they gotten better?

• 1:14:49Ben Gilbert?

  I think they're the same. Right now, they're waiving signup fees, which is like 39 bucks. I think that they'll probably start at some point, but it's 40, uh, yeah, 40 cents a mile. And I think that's pretty comparable. I remember when I stopped using Cardigo like three or four years ago, it was, uh, 33 cents a mile, and I think has gone up since then, so.

• 1:15:06David Rosenthal?

  Hmm, interesting. Yeah, great in concept if for the same price as a smart car, you could drive a BMW.

• 1:15:12Ben Gilbert?

  Yeah, yeah.

• 1:15:13David Rosenthal?

  I'd take the BMW.

• 1:15:14Ben Gilbert?

  And I think, uh, uh, sorry, not a mile per minute. Um, and I think it's actually kind of part of their, um, their, their plan for eventually building a self-driving fleet. I think they're kind of data collecting vehicles.

• 1:15:25David Rosenthal?

  Getting the data for machine learning. Yep.

• 1:15:27Ben Gilbert?

  Yeah.

• 1:15:29David Rosenthal?

  My app, uh, also plays into a bunch of themes we've talked about on this show and throughout the year, and a company, uh, is Amazon Music. I, uh, discovered this in 2016, and, um, as perhaps evidenced by my music carve-out in Stevie Nicks, I'm not, uh, I'm, I don't spend a lot of time staying up on new music, and, uh, the Amazon Prime Music is free with Prime and is pretty great, uh, especially for free. Um, so talking about business model disruption, um, the Amazon, if you are not already a Spotify or, um, Pandora or other paid, uh, music server or Apple Music, uh, subscriber, and it's not

• 1:16:13David Rosenthal?

  something that's like so important to you to have a absolute full catalog, um, free with Amazon Prime, the music app is pretty great.

• 1:16:20Ben Gilbert?

  Yeah, I'd be curious, uh, listeners, if you are a music lover and have tried out Amazon, uh, Amazon MP3, I would love to, to get your review. Um, if you want to reach out to us, uh, in the Slack, uh, go to acquired.fm, you can, uh, you can see the, the Slack where all the conversations happening. And, uh, yeah, I would, I'd love to hear about it from, uh, from music lovers.

• 1:16:41David Rosenthal?

  Yeah, I also have a request too for anyone out there on going back to books. I love reading sci fi and but I'm super curious. I haven't read a lot of current science fiction and I would love to hear, read and learn about what people are imagining about the future today and especially women's science fiction authors, which I have read embarrassingly little. So if you have any good recommendations for current sci fi, especially by women authors, hit me up in the Slack.

• 1:17:12Ben Gilbert?

  Awesome.

• 1:17:14David Rosenthal?

  All right, listeners, now is a great time to talk about one of our favorite companies, Statsig.

• 1:17:20Ben Gilbert?

  Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI-powered experiences at scale.

• 1:17:31David Rosenthal?

  Yep. In the crazy speed of today's AI world, shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn what changes actually created value for customers and how fast you can use that signal to guide what you ship next.

• 1:17:51Ben Gilbert?

  This is where Statsig comes in. It brings experimentation, feature flags, and product analytics into one unified system so teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved.

• 1:18:04David Rosenthal?

  So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com/acquired to get started.

• 1:18:15Ben Gilbert?

  Well, listeners, we hope you had a great 2016 and ring in the 2017 with, you know, however you choose to ring it in. It's probably a week or so in right now, but we hope you have a great year. If you have been listening to the show for a long time, or even if you're brand new and enjoyed the episode, we would love a review on iTunes and to share it with your friends and colleagues or anyone that you think would be interested on Twitter or just email or word of mouth. So thank you so much for being a listener and have a great year.

• 1:18:46David Rosenthal?

  Happy 2017. We'll talk to you soon.

• 1:18:51Speaker 03

  Is it you, is it you, is it you? Who got the truth now? Huh?