T-Mobile / Sprint

If you thought the telecom business was boring, think again! Acquired brings you an episode packed with more drama than an entire season of Game of Thrones. Starting with a death in the family, we follow a tale of fortunes lost and rebuilt, bitter battles between rivals who once worked for each other, and at the center of it all, a lesson in the power of stable cashflow businesses. This is one call you don’t want to drop! 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 Links: Seattle Times’ infographic on Bellevue’s wireless company history https://www.seattletimes.com/business/technology/t-mobile-sprint-deal-would-extend-seattle-areas-long-wireless-reign/John Legere at CES 2013 https://www.youtube.com/watch?v=L9d-H0tfHtECarve Outs: Ben: Andrew Chen on the Intercom podcast https://blog.intercom.com/andrew-chen-on-growth/David: The 996 Podcast https://996.ggvc.com/category/podcast/ from Zara & Hans at GGV Capital

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

• 0:00David Rosenthal?

  The reinvention of John Ledger, of John Ledger.

• 0:04Ben Gilbert?

  Like John Legend.

• 0:18Ben Gilbert?

  Welcome to season two, episode eight of Acquired, the podcast about technology acquisitions and IPOs. I'm Ben Gilbert.

• 0:26David Rosenthal?

  I'm David Rosenthal.

• 0:27Ben Gilbert?

  And we are your hosts. Today, we'll be diving into the recently announced, or should I say, proposed but not regulator-approved Sprint T-Mobile merger.

• 0:40Ben Gilbert?

  David, you're laughing.

• 0:41David Rosenthal?

  I'm laughing. Who knows what's, uh, what's real these days?

• 0:46Ben Gilbert?

  This may be yet another episode where we cover an acquisition, much like the Broadcom Qualcomm merger, that did not actually happen. And so only time will tell, but now seems like a really fun time to dive into the topic, hear the crazy stories of both of these companies dating back over a century, and dig into the genesis of where most of the technology that we use today really, really came together here in the Northwest, and specifically in Bellevue, Washington.

• 1:15David Rosenthal?

  Well, we'll have to dive in.

• 1:18Ben Gilbert?

  David, don't give me your answer now. Wait till grading, but are we going from four carriers to three, or from two carriers to three?

• 1:27David Rosenthal?

  Well, we'll have to wait for that. But it's funny, in our last episode, in the PowerPoint episode, we were, you know, joking that there are like, in the 1980s, there were like 11 people who worked in technology, and who, who knew that there actually was a related industry that had even fewer people working in it. It turns out that telecom and the wireless industry in the 80s and 90s had like six people working in it. And as you alluded to, Ben, almost all of them were in Bellevue, Washington.

• 1:56Ben Gilbert?

  It's true. Well, listeners, if this is your first episode and you like it, or if this is your 50th episode and you've been with us for a long time, we would love a review on Apple Podcasts. Really appreciate any time you could give to doing that. It helps us promote the show to get great guests and to justify the increasing amount of research that David and I seem to be obsessing over episode by episode. If you are new to the show, you can check out our Slack at acquired.fm. Join the 1,300 of us that are talking about any tech news, really, but big mergers, acquisitions, IPOs, major landmark events that are happening between big corporate entities. All right, listeners, now is a great time to tell you about a longtime friend of the show, Vanta.

• 2:41Ben Gilbert?

  AI has scrambled the whole security picture. It used to be that you proved 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.

• 2:54David 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.

• 3:15Ben 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.

• 3:37David 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.

• 3:55Ben 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. All right, without any further ado, David, do you want to dive into the history and facts of these behemoth, concocted, merged, unmerged, and twisted companies?

• 4:36David Rosenthal?

  Well, how long do you have, Ben?

• 4:39Ben Gilbert?

  Yeah, listeners, we're only a couple of minutes in right now, but you know the final episode of length. We don't. I suspect it ends up being long.

• 4:47David Rosenthal?

  Well, let's see. Let's see how fast we can get through this. Well, like so many of our stories on this show, this one, the story of the modern wireless telecom industry and how it came to be, starts also in Silicon Valley on the Stanford campus. Unlike many of the other stories, though, it doesn't stay there for long. So let's go back to 1969 on the Stanford campus. And there's an undergrad there named Craig McCaw. And Craig is from a fairly wealthy family in Washington State. His father, Elroy McCaw, has been a successful entrepreneur

• 5:30David Rosenthal?

  in radio and television broadcasting kind of throughout the Northwest and had been early in local radio stations, local TV stations, and then just had started at this time to get into the very, very nascent cable television business, which was just emerging in the late 60s, early 70s, and then would obviously grow throughout the 80s, 90s, 2000s. But unfortunately, tragedy strikes very, very sadly. And Craig loses his father. Elroy dies suddenly of a stroke in 1969, while Craig is, he's the oldest of four brothers. And he's still an undergrad at Stanford, way too early to lose one's father for all the, all the children. But Elroy passes away, and it turns out that the company,

• 6:14David Rosenthal?

  even though the family was very successful, the company was very successful. They had a lot of debt on the company, as many of these types of broadcasting companies do. And it wasn't structured very well. And they had to, when Elroy passed away, they had to basically pay off all this debt. And so it triggered really disaster for the company and the family. They had to sell. Everything. They had to sell the family's house. The family had a yacht. They had to sell the yacht. They had to sell all the pieces of the business, except one tiny little bit of the cable assets, which again, this was like cable TV was like nonexistent in this time, but a very, very small cable company, division of the company in Centralia, Washington,

• 6:54David Rosenthal?

  that had somewhere between two and 4,000 subscribers. That was all that was left of basically all of the family's assets. And so Craig, he's the oldest of the brothers. He's, he's still an undergrad at Stanford. I think this is the next year, probably 1970. He's, he's a senior. While he's a senior during, while going to school, he takes over running the company to do something and kind of turn the family's fortunes around. And slowly, and he focuses on the cable business. And slowly he builds it into a kind of major cable empire over the next 10 to 15 years. And so by the early to mid 1980s, the company was then called McCaw Cable Vision. It was the 20th largest cable pay TV provider in all the United States.

• 7:40David Rosenthal?

  It was very successful and Craig's running it and he's still very young. And then something else happens in the early eighties. The advent of wireless cellular phone technology, analog cellphone technology is invented. And to make these calls work, this is the days like people envisioned this being used as car phones for like wealthy businessmen. To make the technology work though, you need to have wireless spectrum rights to operate the, the cell services over. And so the FCC, they try a bunch of things to allocate the spectrum throughout the country and get entrepreneurs to build cellphone businesses. They end up landing on holding a lottery. So they literally, they, they hold a lottery.

• 8:22David Rosenthal?

  You, you, you file an application to win the rights to a spectrum license in a given city or geography. And then they, they hold a lottery to see who wins it.

• 8:31Ben Gilbert?

  It's certainly fair, David.

• 8:33David Rosenthal?

  It's, it's fair in, in some sense.

• 8:37David Rosenthal?

  And Craig finds out about this, it's much discussed, and he sort of sees the parallels between the growing cable industry that he's been a part of over the last 10 years, and what the cellphone wireless industry could be, and sees this as kind of a land grab. So he applies for the lottery in a whole bunch of geographies throughout the country. He wins some of them, and others, there are lots of them, like plumbers that are applying, and accountants, like just random people are applying to win these spectrum licenses.

• 9:08Ben Gilbert?

  It reminds me of the dot com grab.

• 9:11David Rosenthal?

  Totally. It's like a dot com domain name grab, except there are far fewer spectrum licenses than there are dot com names out there. After the lotteries are held, Craig then goes out and he buys a lot of the licenses from the winners and ends up with basically a giant amount of real estate, of spectrum real estate throughout the country. He says, "Okay, well, I'm going to build a cellular telephone company alongside the cable company." He uses debt, once again, on the cable company to finance building out this wireless telephone network, ends up calling it McCaw Cellular. And he's kind of first to the game before AT&T, before, what was that, MCI, Sprint, all of the large wired telephone landline

• 9:55David Rosenthal?

  carriers get into the business. McCaw Cellular is the biggest cellphone business out there, or cellular network business.

• 10:03Ben Gilbert?

  And David, in looking into this, the company Lin Broadcasting comes up. Do you know how that fits in here?

• 10:08David Rosenthal?

  Lin Broadcasting, I know a little bit. So there still was, again, all these businesses are all related. There's TV broadcasting, so these are like your local ABC, NBC, CBS stations that are literally broadcasting from antennas in cities. Then there's cable TV, pay TV, so that's where you're getting the, you know, and these days it wasn't ESPN yet, or, you know, but pay TV channels, separate channels, and then cell business. So McCaw had gotten also back into the TV broadcasting business that his father was in. And so they acquired Lin Broadcasting, which was a major broadcaster, owned a whole bunch of local TV stations throughout the US.

• 10:49Ben Gilbert?

  Is a big purchase and it was, I think, heavily debt financed to make it happen. $3.4 billion purchase.

• 10:54David Rosenthal?

  And I believe that Lin operated, or maybe still operates, a bunch of the local TV stations in New York City. So they were one of the biggest local broadcasters in the country.

• 11:05Ben Gilbert?

  There's a great New York Times piece from 1990 called Craig McCaw's High Risk Phone Bet. Listeners, if you've never checked out this thing, the New York Times has this amazing tool called the Times Machine where they basically scan all of their old newspapers before they were digital and then present them as digital articles in the archives, the same way you'd be reading any other web-based New York Times article. And they actually show you, here's the place in the New York Times Business section where this occurred, and they highlighted it. It's super cool that this is on the internet. And there's a great line in this piece talking about the purchase of Lin Broadcasting, the gamble to go and build out cellular telephone network. And they say, essentially, Craig McCaw is

• 11:46Ben Gilbert?

  betting that the public will want cellular phones. Today, about 1.5% of the population uses car phones or portable phones. The hope is that figure will rise to 14% in just a decade.

• 11:58David Rosenthal?

  This was 1990?

• 12:00Ben Gilbert?

  1990.

• 12:00David Rosenthal?

  Oh, my gosh. 14%.

• 12:03Ben Gilbert?

  I would assume it had to be higher than 14% by 2000. I mean, we hadn't seen like-

• 12:08David Rosenthal?

  I had a cellphone in 2000.

• 12:10Ben Gilbert?

  Yeah, it was probably dramatically higher, but it is interesting how you wouldn't have forecasted that the majority of computing, or personal computing, would happen another decade later on that same form factor, on those same data networks. But, you know, that's a-

• 12:26David Rosenthal?

  People thought of it as car phones. I mean, I remember when I was growing up, my parents were lawyers and they had car phones in their car. Like, it was essentially a cellphone, but it was wired, hardwired into the car. That's what people thought it was. They didn't see cellphones, just like they didn't see smartphones that it would all become. Yeah, totally crazy. So I should have mentioned earlier, I don't think I did. As all this was happening, McCaw, in the beginning days, McCaw graduated from Stanford undergrad and then moved back up to Washington and ended up settling in Bellevue. And that's why Bellevue, Washington, just across Lake Washington from Seattle, is the, at least US, if not world, headquarters of the cellular phone and wireless industry,

• 13:07David Rosenthal?

  which we'll dive back into. So 1986 comes along and the cellular business is growing so much that McCaw ends up selling off the cable business entirely for $790 million in 1986. So 15, 17 years later, after, you know, completely, the family being completely destitute, they sell off the cable business for $790 million in 1986. That's pretty good. They focus solely on the cellular business, keep growing that over the next couple of years. And then four years after Ben, that article that you read in the New York Times in 1994, they end up selling the whole company, the cellular business, to AT&T,

• 13:50David Rosenthal?

  the old legacy telephone company, for $12.6 billion. Again, this is 1994. That's a lot of money. The company gets renamed AT&T Wireless. It becomes AT&T's wireless division that barely existed before then, which is just crazy. Ultimately, about 10 years later, in the early 2000s and 2004, AT&T Wireless merges with a company called Singular. Of course, you remember Singulars. I'm sure many, many listeners do here in the US. The company keeps the AT&T Wireless name and moves to Singular's headquarters, which are in Dallas, Texas. And so that's why AT&T is in Dallas instead of in Bellevue now. But the core of it all came from Bellevue.

• 14:31Ben Gilbert?

  1994 McCaw Cellular trivia fact. David, what else from the acquired episodes that we have done was related to McCaw Cellular and happened in 1994?

• 14:42David Rosenthal?

  Oh my gosh. That's a tough question. I should know this, of course, but I don't.

• 14:47Ben Gilbert?

  It was a gentleman who was angel investing.

• 14:50David Rosenthal?

  Oh, yes, of course, of course. How could we forget? So instrumental to everything about Acquired. Tom Alberg.

• 14:59Ben Gilbert?

  Tom Alberg. So Tom was an executive at McCaw Cellular and was was doing a lot with cellular data. And that was the reason he was introduced to Jeff Bezos when Tom started to do some angel investing. Because the internet sounded very similar to cellular data to whoever introduced them and decided Tom would be the right person to talk to.

• 15:22David Rosenthal?

  Oh, my gosh. I can't believe I missed that connection. Like, literally, Amazon comes out of this.

• 15:28Ben Gilbert?

  Yeah.

• 15:29David Rosenthal?

  I mean, Bezos would have been successful, I'm sure, regardless. But but certainly, Madrona, and thus Acquired, is a direct offshoot of all of this. Tom, of course, being, you know, one of the founders of Madrona a few years later. So back to Craig and McCaw. After this transaction, I mean, Craig is now one of the wealthiest people in the world, up there at this point in time with with Bill Gates, you know, also in the Seattle area. But he's not done. He's still quite young. He's not done, and he's not done with the telecom industry. The sale to AT&T was all in stock. So Craig is now one of the largest shareholders of AT&T. This, you know, huge, you know, 100-year-long, you know, company.

• 16:14David Rosenthal?

  But he doesn't join the board because he doesn't want to have any conflicts because he wants to get back into the business, into the telecom business and start competing with them right away, all over again. So he starts building a stake, an equity stake, in a company called Nextel. I suspect many listeners remember from the late 90s, early 2000s days, the Nextel Direct Connect, walkie-talkie on your cellphone.

• 16:36Ben Gilbert?

  Oh, yeah.

• 16:37David Rosenthal?

  Craig gets involved in Nextel, starts buying up shares. By 1995, just a year later, he is, controls the majority of the equity in the company, is the controlling shareholder. Nextel was not doing very well at this point in time. He completely turns them around, you know, they end Up introducing direct connect, they become, grow hugely, become much larger. They end up then, he sells Nextel in his second transaction to an old legacy telephone company in 2005, 10 years later, to Sprint. He sells Nextel for $35 billion. Sprint becomes Sprint Nextel, and that is the core of Sprint's wireless business. So thus, from one guy, from Craig McCaw, comes both AT&T and Sprint that we know and probably don't love today.

• 17:25Ben Gilbert?

  Yeah, but David, that transaction happens in 2005. I was going to do your transition for you. Something happens a year before 2005, in 2004, Craig McCaw does one more thing.

• 17:36David Rosenthal?

  He's still not done. Exactly. He's still not done. He does one more thing. He's like, he's the Steve Jobs of telecom, really. One more thing. In 2004, he starts a company called Clearwire. And Craig is starting to see, I don't know that he necessarily sees smartphones coming in the iPhone, but he does see that data over cellular telephone networks is going to be a big thing. Smartphones exist. There's Palm, there's Microsoft Windows Mobile, or whatever they called it back in the day. BlackBerry, all of those things. So he finds Clearwire. And Clearwire is essentially a wireless company, but instead of focusing on voice, it focuses on data.

• 18:15David Rosenthal?

  So they end up doing in, in November 2008, they do a huge deal with Sprint, who just a couple of years earlier, Craig had sold Nextel to, and Sprint buys half of the company. And Clearwire essentially becomes the data part of Sprint's network, what would become their LTE network. At the time, it was using a technology called WiMAX, which we're not even going to go down that rabbit hole, in the interest of time and our sanity.

• 18:44Ben Gilbert?

  Yeah, it is. It is worth noting for listeners, we're already in alphabet soup of sort of companies and companies that are acronyms and mergers and acquisitions and spinouts. We're covering like 10% of the sort of the depth of what happens here in these corporate histories. We're going to sort of touch lightly on AT&T's breakup by the Department of Justice and the baby bells and all that. But the amount of companies smashing and reassembling from different pieces over literally a century here, we just don't have time in the episode to do it all.

• 19:15David Rosenthal?

  It's like a particle accelerator. They're literally, these companies are smashing at high speeds into one another.

• 19:19Ben Gilbert?

  That's how I picture it, too.

• 19:23David Rosenthal?

  But one, I have two small, real fun notes before we wrap up on the McCaw portion of the episode here. One, Craig finally does sort of rest his pen after Clearwire, has not started any, any further telecom companies. But he does pretty well through all of this. He currently holds the record for the most expensive car ever purchased. In 2012, at an auction, he bought a 1962 Ferrari 250 GTO for over 38 million. Lest you think all of this is just boring telecom stuff, there is a lot of money to be made in these industries.

• 20:01Ben Gilbert?

  And we should, we should say too, in addition to $38 million, you know, historic sports cars, the McCaw family is also one of the most incredibly philanthropic

• 20:11David Rosenthal?

  Incredible.

• 20:12Ben Gilbert?

  families, you know, McCaw Hall in Seattle, tons and tons of charitable organizations. I think much like Bill Gates, their legacy as a family will actually, they'll be remembered more for their philanthropic efforts than for the incredible industrial, the value they created in industry.

• 20:28David Rosenthal?

  Basically, every arts organization in Seattle has the McCaw family to thank for, for their patronage and as well as so many other organizations in Seattle and throughout the country and the world. The other really fun note, listeners may know that I was involved at Madrona in, in starting a company called Rover.com. Rover is now a very successful marketplace in many ways, led to lots of great things for many people in the Seattle tech. And for me is a big part of starting Wave and our focus on marketplaces. Rover originally was not called Rover. It was originally called A Place For Rover.

• 21:03Ben Gilbert?

  A Place For Rover.

• 21:04David Rosenthal?

  It was, that is still, I believe, still the official name, incorporation name of the company. I know, I signed the incorporation documents back in the day when we first started it for A Place For Rover. We, we wanted to get-

• 21:15Ben Gilbert?

  Really good domain name.

• 21:16David Rosenthal?

  We wanted to get the rover.com domain name. And so we were like, this was super early days. We were searching around like, okay, like, wait, who has it? Like doing WHOIS lookups, all this stuff. It turned out that the rover.com domain name was owned by Clearwire. Because Clearwire had had a product that they, they introduced and then canceled called The Rover. And this was like a hockey puck sized device that was essentially a wifi hotspot. This was like one of the first wifi hotspots. And again, Clearwire was like a cellular data company and they were like introducing this idea of cellular data. So this product called The Rover and they somehow acquired the domain name rover.com. They were selling it. They had canceled the product. So this is 2011, summer of 2011 when we're starting Rover.

• 22:02David Rosenthal?

  Rover, the company, and they had canceled the product. So they were just sitting on this domain name. It turned out that one of our partners at the time at Madrona was Brian McAndrews, who was the CEO, had been the CEO of Aquanive, which was Microsoft's largest acquisition before Skype and then LinkedIn. And Brian was, was a partner with us at Madrona and he was on the board of Clearwire. And, and knew Craig McCaw really well and John Stanton, who's going to come into this story in a minute. And so we said to Brian, hey, like you're on the board. Can you like, you know, talk to the company? See if we can buy it from them.

• 22:33Ben Gilbert?

  Whoever in IT administers that domain, like see if you can get there.

• 22:37David Rosenthal?

  So you've got this like parked domain name that the company isn't using somewhere in the IT department. You've got a board member coming in. We ended up getting the deal done. We bought the, we bought the domain name. I believe we actually leased it first and then with an option to buy it. And then, and then we bought the rover.com domain name. And, and thus one of the world's great marketplaces was born.

• 22:59Ben Gilbert?

  Out of Macau Cellular comes Rover.

• 23:01David Rosenthal?

  So many things, so many things.

• 23:04Ben Gilbert?

  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.

• 23:18David 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.

• 23:32Ben 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.

• 23:42David 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.

• 23:59Ben 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.

• 24:15David 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.

• 24:32Ben 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?

• 24:41David 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.

• 24:52Ben Gilbert?

  So listeners, I'm going to guess where David is about to go. And there's going to just start to be a lot of companies involved here. And for folks that haven't heard a lot of these companies before, a really helpful thing to do, if you're interested, is go to the Seattle Times article called "T-Mobile Sprint Deal Would Extend Northwest Long Wireless Rain," by Rachel Lermon, great piece. And there's an amazing infographic by Mark Nolan. It basically has how all of these companies are related to each other, the spin outs, the people behind them, the years that they were, that each of the transactions occurred. If you are sort of sitting there on your phone and you want to tap into the show notes and check it out, could be sort of helpful in visualizing. It's certainly helpful as we sit here doing research to keep ourselves straight.

• 25:37David Rosenthal?

  Indeed, indeed. So to pick back up the story, and again, we apologize for all these companies. Hopefully, the graphic will help keep it, keep it straight. And we'll try and be, we'll try and be as straightforward as possible here. I would argue the second best spin out and thing to come out of the McCaw Cellular days, besides Rover, of course, being the first.

• 25:57Ben Gilbert?

  Amazon being third.

• 25:58David Rosenthal?

  Amazon being third, yeah, for sure.

• 26:02David Rosenthal?

  It turns out, when they were starting the cellular division of McCaw, there were two other people who were pretty instrumental in that besides Craig McCaw. One was a guy named John Stanton. And John was then a recent graduate from Harvard Business School. And he became the first employee on the cellular side of the company. And he eventually became the COO of McCaw Cellular. And the other, the other person that ended up being instrumental in what came next was Teresa Gillespie, Terry, she goes by Terry, Terry Gillespie. She was an SVP at McCaw and was the company's controller. She had been a public accountant before that. The two of them, they do two important things. One, they get married. That's, I don't know which they would say is more important of that.

• 26:46David Rosenthal?

  The other thing they do is they start T-Mobile.

• 26:51David Rosenthal?

  It wasn't, of course, called T-Mobile at the time.

• 26:53Ben Gilbert?

  But not directly.

• 26:53David Rosenthal?

  Not directly. But T-Mobile, the T-Mobile we know and love that we are talking about in this episode, John Legere, the uncarrier, it's John and Terry who started that.

• 27:03Ben Gilbert?

  T-Mobile USA.

• 27:04David Rosenthal?

  T-Mobile USA, yes, not Deutsche Telekom. But we'll get into all that. Okay, we're going back to the late 80s, early 90s. John and Terry, I don't know if they were married yet, but they're at Macau Cellular. Terry's on the finance side. John is the COO of the cellular business.

• 27:20Ben Gilbert?

  And John had joined in 1982, and the spinout we're about to talk about happened in 1994. So a good 12-year span of being there at Macau for John.

• 27:31David Rosenthal?

  Actually, 92 it started. There are too many companies to keep track of. But leading up to 1992 and a couple of years before, John started realizing, so the focus of Macau was urban areas. Again, cell phones were car phones at this point in time. Who used car phones? It was like business people, cities, urban environments. These were not like out in the countryside. So there were all these spectrum licenses that, you know, Macau owned some of them, but a lot of them were just ignored out in rural America. And John kind of had the vision that like, hey, this wireless thing, it might become like an even bigger industry someday, and maybe everybody will use this.

• 28:13David Rosenthal?

  And so he had started buying up these licenses, these spectrum licenses, in rural parts of the country, starting in rural Washington, I believe. He decided to leave Macau Cellular. Again, this is like an enormous company, like people thought he was crazy at the time, like he and Terry, career suicide to go from like the leading wireless company in the world to, you know, working in the boonies, essentially. They're acquiring these licenses, so they start a company, they call it Pacific Northwest Cellular. They're rolling up all these regional markets. They end up in 1992 acquiring another regional cellular company called General Cellular Corporation. They team up with Hellman and Friedman, the big private equity firm based in San Francisco, to co-purchase it.

• 28:58David Rosenthal?

  And then a couple of years later, then in 1994. Where they merge Pacific Northwest Cellular and General Cellular into a company, they call it Western Wireless. At this point in time, they're offering service to 19 western states under the brand Cellular One. I don't know if that rings any bells for anyone, Cellular One Telephone in rural areas. And at this point in time, they've started to get some spectrum assets in urban areas as well, in cities. And they call that part of the service, VoiceStream, VoiceStream Wireless. Couple of years later, 1996, they take the company public. Then a couple of years after that, 1999, VoiceStream, the urban, the city focused service has actually been growing a lot. They spin that off into a separate public company in 1999.

• 29:41David Rosenthal?

  Two years later, 2001, Deutsche Telekom comes in, the big German telephone company, wired and wireless operator. And they buy VoiceStream for $35 billion and rename it T-Mobile USA. And thus, that is how T-Mobile is born. And think about this, like this is, you know, again, just to recap, McCaw Cellular is, is sold in, what was it? 1990, 94 for 12.6 billion. So, you know, a lot of money. Not that much longer, 2001, so what's that, seven years later? The protege at McCaw, you know, John Stanton and his, and his, and his wife, Terry. They have created this crazy thing, this rural operator, turned it into VoiceStream.

• 30:25David Rosenthal?

  They sell that for $35 billion to Deutsche Telekom and it becomes T-Mobile. They actually retain Western Wireless, the Cellular One, the rural company. That ends, ends up getting acquired a couple of years later by Altel for $6 billion. Altel ends up getting split up and getting acquired by, mostly by Verizon, small parts of it by AT&T. And is a big part of the Verizon network now. So like, it's kind of crazy.

• 30:50Ben Gilbert?

  We now have complete coverage. We now have John Stanton's, starting Western Wireless, selling to Altel, which becomes parts of Verizon. We have McCaw Cellular itself, becoming what became AT&T Wireless.

• 31:04David Rosenthal?

  Nextel becoming Sprint.

• 31:06Ben Gilbert?

  Nextel becoming Sprint. And then lastly, VoiceStream becoming T-Mobile.

• 31:11David Rosenthal?

  Becoming T-Mobile.

• 31:11Ben Gilbert?

  So we have. One more event here, one more merger yet to cover that will be the real bulk of this episode, but that is how we've gotten to where we are today.

• 31:22David Rosenthal?

  Well, I don't know if it'll be the bulk. This is, I mean, all this backstory is, I hope listeners, you've enjoyed it. Like, it's so fun. And it's fun for us, being from Seattle and knowing a bunch of these people and all the people around it. So John and Terry, they do continue in the wireless industry. They started a company called Trilogy, which had owned many international wireless assets. And then these days, it's mostly they've turned it into a venture investing firm based in Seattle. They also own the Seattle Mariners today.

• 31:49Ben Gilbert?

  They do. They do.

• 31:50David Rosenthal?

  Incredible.

• 31:51Ben Gilbert?

  And they are supportive and amazing investors in PSL and some of our companies, too.

• 31:56David Rosenthal?

  Yep. So it all comes, all comes back home. Okay, let's fast forward a little bit. The industry basically operates at steady state. You know, from our point of view, there are like 57 mergers that, and acquisitions that happen that we're not even like, I can't even keep track of all of them. But basically, this is the state of play. You have AT&T and Verizon, which are the two largest carriers in the US. You have Sprint, which was Nextel, is the third largest. And then you have the new T-Mobile, formerly VoiceStream, owned by Deutsche Telekom, that is the fourth largest carrier in the US at this point.

• 32:33Ben Gilbert?

  And sort of of any of those, the one that's actually breaking the steady state and is sort of doing all sorts of amazing disruptive things to steal share pretty much exclusively from, oh, not yet, from Sprint, but we'll get to that.

• 32:45David Rosenthal?

  Well, they're stealing, they're stealing, you know, some share, they're doing some stuff, but, but actually, it's kind of sad. I mean, they're owned by this like, super conservative German and German telecom company, you know, the first decade, really, from the VoiceStream acquisition, through the first decade of T-Mobile USA is like, eh, it's like, okay.

• 33:06David Rosenthal?

  But we fast forward, March 2011. AT&T announces a deal that they're gonna buy T-Mobile USA. Deutsche Telekom's like, alright, you know, this hasn't worked out quite as we thought. We didn't become the dominant carrier in the US. Let's cut our losses. They're gonna sell T-Mobile to AT&T for 39 billion. So 4 billion more than they paid for it in 2001, but at least they're gonna get out of the game, cut their losses. And this is gonna reunite essentially the McCaw and Stanton and Gillespie branches of the Bellevue, Seattle telecom empires. It's all gonna be reunited under one company. It's gonna be by far the largest wireless carrier in the US.

• 33:48David Rosenthal?

  And that was its downfall because the US government and the antitrust regulators were like, nope.

• 33:54Ben Gilbert?

  They're like, wait, AT&T is gonna become the most dominant telephone provider to all of the US. We've heard this story before.

• 34:01David Rosenthal?

  We've heard this story before. We don't like it. Despite Bell Labs and everything great that came out of that, no. The government says no. It doesn't actually end up getting rejected by, they don't go so far as to actually block the deal, but the companies realize it's not gonna happen. They call off the merger.

• 34:18Ben Gilbert?

  They indicate that it would be a bad idea for you guys to stop doing the paperwork.

• 34:22David Rosenthal?

  Yeah, yeah. Good idea to stop doing the paperwork, yep. So December 2011, the T-Mobile and AT&T call off the merger. And T-Mobile is like in a serious bind now. So the deal fell through. They're distant fourth place behind Sprint and like way, way behind AT&T and Verizon. The company is like flatlined. It basically, things suck. Morale is terrible. So 2012, this was December 2011, they call off the merger. 2012, they do two things. First, they merge with MetroPCS, which was, I think, the fifth or sixth place carrier in the US. So that gives them a little bit more scale, a little bit more coverage. Because remember, coverage is super important. At this point, national coverage is really important. People use their smartphones, we're in the smartphone era, everywhere, all the time they travel.

• 35:07David Rosenthal?

  If you're, you only get data in your home city and not when you're traveling, that sucks.

• 35:12Ben Gilbert?

  And I think MetroPCS unlocked a new addressable market for them in terms of like market segment because it was the pay as you go, it was the sort of lower cost carrier. They could get their infrastructure and coverage and then also sort of a new, a new segment of people that were able to use the broader merged infrastructure also.

• 35:32David Rosenthal?

  Yep, totally. And we're not even going to get, I'm not going to go anywhere near cellular standards. We talked about that on the Qualcomm Broadcom episode. Listeners, if you care, you can go somewhere else. It's important technically, but, but we're not even going to go there. Okay. MetroPCS was a public company. As a result of the merger, the MetroPCS shareholders own 26% of the combined entity. So Deutsche Telekom now owns, what's that, 74% of the company and then 26% is publicly traded on the US stock markets. Okay, that's one. The other thing they do is they bring in a new CEO to turn around the company after, you know, this disastrous falling through of the merger. And they find a-

• 36:12Ben Gilbert?

  Really, really boring, non-polarizing, run-of-the-mill CEO.

• 36:16David Rosenthal?

  Yes. Yes, that was the plan. So they bring on a turnaround expert, a guy who has just sold a company called Global Crossing. We're not going to get into Global Crossing. It's like the most boring wired telecom conference bridge corporate telecom company you can imagine. The former, the CEO of it had taken over to turn around the company from bankruptcy, ended up selling it, leading it to an acquisition, a $3 billion acquisition the year before in 2011. So like, great, this guy turned them around. He saved it, you know, went from zero to $3 billion. Hopefully we can do the same. Let's bring him on, see what he can do here. This is a guy who, before Global Crossing, he had been an executive

• 36:57David Rosenthal?

  in the telecom industry at AT&T for almost 20 years. He'd also worked at Dell, so he had a little bit of, you know, you could argue device, you know, sensibility at that point in time. This was like relatively early days of smartphone time, you know, 2012, 2013, whatever. Great, let's bring him in. What's his name again? His name is John, John Ledger, you know, whatever, some dude, telecom guy.

• 37:20Ben Gilbert?

  He's got cool hair.

• 37:20David Rosenthal?

  He's got, he's got long hair. He didn't used to have long hair, but then after-

• 37:24Ben Gilbert?

  Yeah, I don't know if he had that at the time.

• 37:25David Rosenthal?

  No, he didn't. I mean, he was like a telecom CEO. He was like, sorry, he was like totally buttoned up. But then after they, he led to the exit of Global Crossing, you know, he sort of like didn't know what to do with his life. He talks about this and he's like, he bought a Ferrari, he grew his hair long, whatever. He comes back in, Deutsche Telekom, you know, again, big German corporate conservative company. They think they're getting like the turnaround CEO here. So John starts as CEO in the fall of 2012 of T-Mobile. And what is the first thing he did? He, he's from the telecom industry, but he doesn't know a lot about wireless. He's from the wired, corporate wired side of things. So he's like, well, I'm going to learn about what customers think about this company. I'm going to start listening into customer service calls, like literally people calling to complain about their, you know,

• 38:10David Rosenthal?

  cellphone carrier. So he spends the first couple of months doing this and he's just like aghast. He's like, oh my God. This is, I have never heard such vitriol and anger and angst and hatred being spewed from our customers at us about how much they hate us and they hate the industry and they hate carriers and they hate all this stuff. And he's just like, whoa. What have I got myself into? A couple of months go by, he's doing this. It's January 2013 at CES in Las Vegas and CES is, you know, in the US, there's Mobile World Congress in Barcelona internationally, but in the US CES is typically at this point in time, at least where cellphone, both, you know,

• 38:50David Rosenthal?

  Android manufacturers and cellphone carriers would launch all their new products and services and whatnot. And so John, this is going to be his first keynote address as CEO of, of T-Mobile at CES in Vegas 2013. So he goes, they're all scheduled, all the T-Mobile execs are there. It's got this whole thing. It's, you know, you know, it's a keynote. And it's the night before at the hotel suite and John's there and he's talking with the execs or the other senior execs. And he's like, what should I wear? What should I wear at this keynote? Now, now, to be fair, this is how the story is told today. Who knows what the reality is? But he's like, what should I wear? And one of the other execs is like- Well, I think you're, you know, if you want to look cool these days, you wear a T-shirt under your suit jacket. That's cool, right?

• 39:36David Rosenthal?

  And like, okay, so they start riffing on that. And the night goes on and apparently things get a little crazy. And John's like, oh yeah, I'll wear a T-shirt, but let's get a hot pink, you know, T-shirt to go with our corporate colors. And I'll, and let's see, let's go out and let's see if we can get a T-shirt made overnight to put the T-Mobile logo on this hot pink T-shirt. I'll wear that under my seat. Things keep going crazy. John shows up the next morning for this keynote. Not only is he wearing a T-shirt under his suit jacket, he's got a suit jacket on, he's got his sleeves rolled up. He's got a Yankees hat on and he's got a massive silver chain around his neck. And a bunch of like braid bracelets on his wrist and like, and so he shows up. That we'll link to video of this for the keynote in the show notes. This is amazing.

• 40:20David Rosenthal?

  So there are all these other T-Mobile like senior execs, you know, there in their like super button up suits. A bunch of them are European. They came from Germany, like all this stuff. And John's there and he looks like, I don't know, I don't even know what to like. Somebody trying to impersonate 50 Cent like.

• 40:40Ben Gilbert?

  Like, what's that? Like, how do you do fellow children?

• 40:43David Rosenthal?

  Exactly, exactly. It's amazing. So there's literally this moment, again, we'll link to it in the video. All the other execs are standing in a circle around him as he's giving his keynote. And I guess like, I don't know, like there are articles about this afterwards. Apparently he goes off script and makes all this up on the spot. Whether this was all planned, we don't know, but the story is.

• 41:04Ben Gilbert?

  Which at the time feels like heresy, but if you know about the guy now, you're like, well, of course he went off script.

• 41:09David Rosenthal?

  Yeah, totally. So he goes off script and he just starts like during this keynote, he just starts like talking about his experience of, you know, being on these customer service calls and listening to how much customers hate the industry. But instead of talking about how much they hate T-Mobile, he starts talking about how much they hate AT&T. And he's like, takes all these shots at AT&T, calls their network crap. He says, there's more truth in online profiles on online dating sites than AT&T has on their network maps. Like, it's just crazy. And like, remember, this is the telecom industry. People go nuts. People are like, we haven't seen anything this interesting in decades. And it gets all this press and people are like, wow, T-Mobile Mavericks, they're breaking the rules.

• 41:56David Rosenthal?

  And Ledger totally embraces it. He basically goes like full on performance art over the next couple of years. He gets on Twitter. He starts like, you know.

• 42:05Ben Gilbert?

  And Instagram, there's like, his Instagram's kind of amazing to follow. Aside from his like AT&T lambasting, there's like, you know, every Sunday, he's like, here's me grocery shopping and cooking with the fam. Like, it's like an intensely personal.

• 42:19David Rosenthal?

  Yep. He does a live show, a Facebook live show every Sunday. I think it's called Slow Cooking on Sundays, where he's like, cooking, and he's talking about whatever, and he's talking about T-Mobile. He does selfies all the time. He like curses all the time.

• 42:34Ben Gilbert?

  So there were lots of people, I'm sure, have been wondering, sort of, how do you pronounce the guy's name? Is it Legere or is it Ledger? He had a tweet a while ago that is, I know there's been some questions about it. It's pronounced, quote, Ledger, as in AT&T is about to jump off the ledge-er. His whole persona now is like, we know you hate AT&T and Verizon, and like, we are your other answer. And I'm just gonna be so obnoxious about that.

• 42:59David Rosenthal?

  They rebrand T-Mobile as the un-carrier, because they're unlike every, any other carry out there. Ledger, he's like, getting into fights on Twitter with Donald Trump. Like, it's amazing. He has, so he has 5.7 million Twitter followers now. Randall Stephenson, who's the CEO of AT&T, has 123 Twitter followers and has never tweeted. And you look at Randall Stephenson, and he's like the telecom exec you would expect. And now there's all this like controversy. Apparently, they like colluded with the Trump administration and Michael Cohen and all this stuff. It's just like ridiculous. And all this time Ledger's just like, F you guys, shouting from the rooftops.

• 43:34Ben Gilbert?

  The strategy around Ledger has become a corporate strategy where I'll get promoted tweets, not from T-Mobile about switching, but promoting John's personal account, and just tweets that he's made. I mean, it's really become kind of the Elon Musk, Steve Jobs, like cult of personality. I don't know how it is for employees, but that's at least the public perception of the company is that it is the CEO's persona.

• 43:57David Rosenthal?

  Yep, totally. Well, it's a complete, it's like, an architected strategy at this point. And Ledger actually talks about it in an interview. This is the quote from him. The strategy behind it, what they decided is the way to win when you're like, have no way to win, is you declare victory.

• 44:12Ben Gilbert?

  Kobayashi Maru.

• 44:13David Rosenthal?

  Yeah. I mean, it's basically like he does the Donald Trump playbook. Declare victory, even though you're obviously like, winning at nothing. You just declare victory and then you designate an enemy. Then you attack that enemy and the bigger the enemy, the better. And that's just what he did, like T-Mobile declared victory. And it totally works. So this was, this all begins in January 2013. The company has 19 straight quarters of adding over a million subscribers, net new subscribers. It quickly passes Sprint to become the third largest carrier. They're basically like, there's this giant like vacuum happening in the industry where like subscribers, mostly from Sprint, as you were saying, Ben, but also from AT&T and

• 44:55David Rosenthal?

  Verizon, are just like getting sucked into into T-Mobile over the last couple of years.

• 44:59Ben Gilbert?

  You know, it's been this like crazy PR thing with John as the CEO. It's also, they're putting their money where their mouth is and they're wildly innovating on their product offering relative to the leaders AT&T and Verizon in order to get it done. And there's lots of people that swear by T-Mobile. They're like, yeah, yeah, yeah, the service is worse. Like when I go out in the mountains or whatever, there's no way I'm making a phone call. But they have all this cool zero rating stuff where Netflix doesn't count against my, my plan. There's a bunch of plans that have unlimited data that were like way before the AT&T and Verizon ones. A lot of the ways that AT&T and Verizon plans have gotten better over the last few years are because T-Mobile has pushed the envelope and forced their hand.

• 45:39David Rosenthal?

  Honestly, all the credit in the world goes to the US government here. Because this is why they blocked AT&T buying T-Mobile, because they're like, this would have prevented competition. What does T-Mobile do? They start like competing incredibly fiercely and it's great for consumers. I mean, five years ago, like, it sucked. Like, of course people hated their cellphone plans. It was so, so crappy. And it's still not good, but it's like way better than it used to be. You're not locked into contracts as much anymore. You have unlimited data plans, like all this stuff.

• 46:09Ben Gilbert?

  And even though T-Mobile didn't like meaningfully steal share from Verizon and AT&T, they did end up making those customers' lives better by existing and forcing the hands.

• 46:21David Rosenthal?

  Yep, totally.

• 46:23Ben 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.

• 46:36David 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?

• 46:53Ben 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.

• 47:08David 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.

• 47:32Ben 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.

• 47:51David 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.

• 48:21Ben 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.

• 48:46David Rosenthal?

  Okay, one more piece and then we're going to wrap it up. Is that right around the same time that T-Mobile is transforming itself and Ledger's is joining. This is late 2012, early 2013. There emerges another figure in the industry here, one we've talked about in this season, and quite a force unto himself, and that is Masayoshi Son and SoftBank. So this is pre-Vision Fund. This is SoftBank itself and Masayoshi through the company. Remember, SoftBank is the largest mobile carrier in Japan and has investments all around the world in mobile carriers. They decide they want to enter the US market and they want to buy Sprint.

• 49:27David Rosenthal?

  And so they end up getting into a bidding war with Dish Network, the satellite television provider, because all this is converging, like, you know, it always has been. It's broadcasting and cable and telephone and wireless. It's all the same, or it's all the same business dynamics. They end up winning the bidding war with Dish Network. They buy 78% of Sprint in July 2013 for 21.6 billion.

• 49:50Ben Gilbert?

  And the best part about this bidding war with Dish is that SoftBank makes the offer to acquire Sprint. Dish Network then announced a higher offer to acquire Sprint Nextel at that point, which they then decide to retract so that they can focus on buying none other than Clearwire, which they also retract, and then Clearwire gets bought by Sprint as well.

• 50:14David Rosenthal?

  The drama is just too much. I can't handle all the drama. I thought telecom was going to be the most boring thing. There's so much drama, it's boring. I think it's boring because like, I just can't handle this drama. Like, it's too much. One quick aside, because we would be remiss to cover all this without covering this fun bit of history. Sprint, back before Nextel, when it acquired, you know, Craig McCaw's second act and became the wireless company, Sprint was a landline telephone operator. They were third behind, I believe, third behind AT&T, of course, and the Bell's being one, and then MCI, and then Sprint. Sprint... The landline company started as the Brown Telephone Company in 1899 in Abilene,

• 50:54David Rosenthal?

  Kansas, eventually became the Southern Pacific Communications Corporation. They didn't like that name. They decided they need a new name, so they run an internal naming contest.

• 51:04Ben Gilbert?

  And so they were the Southern Pacific Communication Company, and it was actually the Southern Pacific part of it comes from the fact that they were part of the Southern Pacific Rail. Like, when you think about like that, like, American history, like, the South Pacific Rail, you know, or formerly known as the Southern Pacific Transportation Company, they actually, there was a judicial decision that made it so that they could start providing long-distance telephone service because they had a right-of-way where their railroads were. So it only made sense that you need an ability to communicate along those lines for you and, you know, for your company to operate. And so they were actually using microwave communications that were lined up along the side of the railway in

• 51:48Ben Gilbert?

  order to communicate back and forth between their cities. And so they had this internal communication network that in the early 70s, they decided after this ExecuNet 2 decision, they could actually decide, hey, we'll lay fiber optic cables because we own that land, we have that right-of-way, or at least if we don't own the land, we have the right to sort of lease it and use it. And so then they were able to actually open up that internal network to other people, which really circumvented the AT&T's monopoly on public telephony and offered this other option as, you're a, it's a B2B company, like, hey, you, corporation, do you want to use this private line that we run between cities that we buried a wire next to our railroad? Like, thinking about that, infrastructure is completely nuts.

• 52:29David Rosenthal?

  It's totally nuts. Well, so, do you want to finish the story about the naming contest?

• 52:34Ben Gilbert?

  I would love to finish the story. This is like one of my favorite facts. And I've mentioned it to friends and some listeners of the show, like, I can't believe this is a thing. Sprint, while a cool word, is actually an acronym. And the contest that David was referring to, the naming contest for what would be better than Southern, you know, SPC or the Southern Pacific Communications Company, is Sprint, the Southern Pacific Railroad Internal Network Communications.

• 53:02David Rosenthal?

  Internal Network Telecommunications.

• 53:04Ben Gilbert?

  Telecommunications.

• 53:05David Rosenthal?

  Yes. Got to get the T in there.

• 53:09David Rosenthal?

  Unreal. Well, that's where Sprint comes from. Okay, back to SoftBank and Masayoshi Son. They win. Masayoshi likes to win, as we have seen on this show and in all of our daily lives.

• 53:27David Rosenthal?

  Masayoshi wins. Not only does he win acquiring a majority of Sprint, but as Ben alluded to, Dish focused instead on Clearwire. He beats Dish at Clearwire, too. Sprint ends up acquiring Clearwire as well. It already owned 50%. They own the rest of it. Dish walks away empty-handed. Okay, so all this happens in 2013. But then, over the next couple of years, Sprint is like a punching bag, like literally T-Mobile and John Ledger, even though they're focusing, you know, he's focusing his tweets on AT&T. They're just like literally delivering body blows to Sprint. And like Sprint, at that point in time, was bigger than T-Mobile. Now they are way smaller. T-Mobile is just taking basically all of their customers. Masayoshi, of course, is not oblivious to this.

• 54:10David Rosenthal?

  Late 2013, early 2014, news comes out that, and I think this was probably Masayoshi's plan all along, was use, get into Sprint, use that as a way to get into the US market, and then roll it up with T-Mobile. News comes out that Sprint and Masayoshi are working on a plan to acquire T-Mobile and merge the two companies.

• 54:28Ben Gilbert?

  And what year is this, David?

• 54:29David Rosenthal?

  This is not now. This is 2013, late 2013, early 2014. Once again, regulators, just like they did with AT&T and T-Mobile, the first time were like, "I don't know about that. You might not want to do that." So they abandoned the deal.

• 54:46Ben Gilbert?

  Which is interesting, because they were not the first player, not the second player. Like, they, you know, I think they were three and four then, maybe three and five.

• 54:54David Rosenthal?

  Three and four. Sprint was three, and T-Mobile was four at this point in time. But remember, Sprint, you know, sucked. They were not doing what T-Mobile is doing now, which we'll get into in discussion. They were kind of deal, they abandoned it. Sprint's like, "Okay, we gotta be cool, too. We gotta be, you know, an uncarrier. What can we do?" They're looking around. They're like, "We're gonna make an investment in a really hip, cool new company."

• 55:20Ben Gilbert?

  I was hoping you found this. This is gonna be my...

• 55:22David Rosenthal?

  Oh, yes. This is the best part of the whole episode. "We're gonna be so cool." January 2017, they buy a 33% minority stake in...

• 55:32Ben Gilbert?

  The hottest... The hottest streaming music company around.

• 55:38David Rosenthal?

  Oh.

• 55:38Ben Gilbert?

  That's right. You guessed it. As covered on Acquired, Tidal.

• 55:44David Rosenthal?

  Uh, Jay-Z. Um, yeah. That doesn't work out so well. Uh.

• 55:51Ben Gilbert?

  So wait, David, do they still, they still own 33% of Tidal, right?

• 55:55David Rosenthal?

  Does Tidal exist?

• 55:56Ben Gilbert?

  It does.

• 55:57David Rosenthal?

  Does it really?

• 55:58Ben Gilbert?

  Yep.

• 55:59David Rosenthal?

  I think they do. I don't know.

• 56:02Ben Gilbert?

  Cause like presumably if this goes through, then like T-Mobile owns some of Tidal. It's as.

• 56:08David Rosenthal?

  I would love to see Tidal with, you know, T-Mobile. Anyway.

• 56:15David Rosenthal?

  Clearly that doesn't work. So now that was January 2017. By mid 2017, SoftBank and Mas are just like literally, you know, fist palming, well, here face palming. Maybe fist, maybe literally bashing themselves in the head. Like this is not working. Sprint sucks. How are we gonna, you know, rationalize all this? They're like, okay, if we can't acquire T-Mobile, maybe we'll sell Sprint to you.

• 56:38Ben Gilbert?

  By the way, as an aside, yeah, you can, you can stream J-Lo featuring DJ Khalid and Cardi B right now on Tidal.

• 56:45David Rosenthal?

  Oh, that actually sounds pretty. I'd like to listen to that.

• 56:50David Rosenthal?

  Cardi B is awesome, by the way. Um, okay. So SoftBank, they're trying to sell, he's like, I'm gonna sell Sprint to Deutsche Telekom, to the parent company that who, you know, still owns 70 some odd percent of, of T-Mobile. He says, great, I'm gonna sell Sprint to Deutsche Telekom. They can't agree on price. Get the deal done. Finally now, a couple of weeks ago, April 29th, 2018, they take a new tack. Clearly, John Ledger, you know, the, the boring turnaround CEO, like, he's won. He's like the man. We just gotta have him do this. T-Mobile and Sprint are going to, they've announced that they're going to merge directly. So whereas before it was Sprint was gonna buy T-Mobile, then it was SoftBank was gonna sell Sprint to Deutsche Telekom.

• 57:36David Rosenthal?

  Again, leaving T-Mobile kinda, you know, they would get merged, but all, but like, nope, T-Mobile wins. Uh, T-Mobile is going to. Be the combined company. It's going to be based in Bellevue. John Ledger is going to remain the CEO. I mean, they are essentially taking over Sprint. Deutsche Telekom will have a 42% stake in the combined company. SoftBank will have a 27% stake. The rest will be publicly traded. Masa will be on the board.

• 57:59Ben Gilbert?

  I love that. It's like build as a merger when it's 9.75 Sprint shares for every one T-Mobile share.

• 58:05David Rosenthal?

  No. Well, I mean, there's shares because the share price. I mean, that that share counts don't matter, but like clearly T-Mobile is is taking over the company here. The enterprise value of the deal. So this includes debt in addition to the equity values Sprint at 59 billion and 146 billion for the combined company. So 87 billion for T-Mobile. Phew. And there we have it. As we alluded to in the beginning of the show and talked about throughout, who knows if this is actually going to happen. This is the third time that two of the four major US telecom wireless carriers have tried to merge. The government blocked it the first time with AT&T and T-Mobile and then we're going to the second time when Sprint was going to buy T-Mobile. Why is it going to be different this time?

• 58:50David Rosenthal?

  Is the question.

• 58:52Ben Gilbert?

  It was these exact companies and their exact market positions.

• 58:55David Rosenthal?

  But it was Sprint acquiring T-Mobile. Different administration.

• 58:58Ben Gilbert?

  Sure. It was different administration. I mean, T-Mobile is a majority foreign owned company. So you have a majority foreign owned company.

• 59:08David Rosenthal?

  Also is Sprint.

• 59:08Ben Gilbert?

  Buying.

• 59:09David Rosenthal?

  Owned by SoftBank.

• 59:10Ben Gilbert?

  Right. Buying another majority foreign owned company. So you could make an argument like, well, it's not really an overseas business buying an American business. So it's more like a foreign subsidiary buying another foreign subsidiary. So at least that's not going to set off the alarm bells that, you know, an American company being owned by someone overseas, that that sort of transaction would set off. The company is very confident that this thing is going to happen. And they've released lots and lots of materials. It's actually pretty hilarious. If you go and look at their T-Mobile's investor relations site, like the press release is completely over the top.

• 59:47David Rosenthal?

  It's hilarious.

• 59:47Ben Gilbert?

  For folks who've written a press release, like the type of language that you put in there, this is like John Ledger writing a press release. Like, here's all the great reasons why this is amazing for everyone, including people looking for jobs. We're going to create so many jobs. Also, also, our shareholders should be happy because there's economies of scale. And you're like, wait, wait, wait, wait, wait. Those things, how, wait, say again how this is going to create jobs while you're, you know, deduplicating a lot of your infrastructure. So like, it's, it's almost to the point where like, they're, they're selling so hard that this is good for everyone in America, no matter what position that you're in, uh, that they may even open themselves to like, the, the risk of people being like, wait, what? This makes no sense.

• 1:00:29David Rosenthal?

  Well, and the headline of the press release, the headline is T-Mobile and Sprint to combine, accelerating 5G innovation. Okay. And increasing competition. Wait, what? You're literally taking two competitors and you're merging them. And then you're saying that's going to increase competition? But actually, I mean, I think where I come out on this, why is, why would it be different this time? I actually think that is the kernel of it, which is that the last time it was Sprint, which sucked, buying T-Mobile. So it's like, okay, you're going to go from, you know, three sucky and one sort of, and now some interesting, consumer option to, uh, just three sucky ones. Now you're going from three sucky and one like, you know, oh, really interesting to,

• 1:01:12David Rosenthal?

  a bigger, really interesting one. So I think the thesis is like, now we can compete head on with AT&T and Verizon with our un-carrier strategy.

• 1:01:21Ben Gilbert?

  Yes.

• 1:01:22David Rosenthal?

  I don't know.

• 1:01:23Ben Gilbert?

  So I buy your logic. Here is the explanation from the T-Mobile press release. This isn't a case of going from four to three companies. There are now at least seven or eight big competitors in this converging market. And in 5G, we'll go from zero to one. Like, we are the only, we're going to be the only 5G company, uh, that's thin. And this like seven or eight big competitors thing is like, well, I mean, you guys are merging for a reason. Like, it doesn't feel like anyone else is really a competitor other than those two.

• 1:01:55David Rosenthal?

  Yeah.

• 1:01:55Ben Gilbert?

  Yeah.

• 1:01:56David Rosenthal?

  Well, they're increasing competition because before the merger, there were four companies. It's going down to three, but they're creating four new competitors out of thin air.

• 1:02:06Ben Gilbert?

  I was going through this. I was trying to figure out like, who are the other three or four?

• 1:02:10David Rosenthal?

  I think that they're arguing that it's like, to our point earlier in the show, that all of these businesses are related, that it's like Comcast and it's, you know, Dish Network and, well, DirecTV is part of AT&T now, so they can't claim that. But it's that there's going to be convergence between television companies and satellite companies and wireless carriers. I don't know. I mean, they're probably right.

• 1:02:35Ben Gilbert?

  Where I net out isn't a similar place to where you net out, that like this, there is so much cost associated with building and maintaining the infrastructure necessary to be a wireless,

• 1:02:48Ben Gilbert?

  quote unquote, telephone provider these days, that you need to be of a sufficient scale in order to do that. And neither T-Mobile or Sprint are. So I buy the argument that we're going from two to three, particularly with the 5G build out coming. I just think, in many ways, T-Mobile may have sold past the close.

• 1:03:06David Rosenthal?

  On the other hand, though, I mean, like, you need to sell hard, because obviously, the government blocked it. But it was a different administration blocked it before. But, all right.

• 1:03:17Ben Gilbert?

  It is actually, so I want to say a couple more quick things. So, so there is a website, you can go to allfor5g.com. They've actually stood up a public facing website of, that's basically a PR campaign to appeal to regulators. For folks who have been making pitch decks for startups, like, there's kind of an amazing allegory, if you go look at their, this investor.tmobile.com, creating a robust competition in the 5G era. It's a slide deck that violates all the rules of what you should do to pitch your startup company to VCs. But it's very like, in true John Ledger style, it's incredibly direct and very flamboyant about how great they are. So, like, the first slide of any substance, the title is "Highly Compelling Combination." You

• 1:04:02Ben Gilbert?

  get page after page after page of like, tons of bullet points, tons of, you actually kind of lose the narrative a little bit in how many advantages this is going to have for everyone in the world. There's a slide with, there's a slide that has two different, the left side says "Amazing Innovation," and it has the logos of Uber, Lyft, Instagram, Snapchat, Tinder, and Venmo. And on the right, it has a headline called "Global Leaders," and it has Amazon, Apple, Netflix, Microsoft, and Facebook. And

• 1:04:34David Rosenthal?

  What?

• 1:04:35Ben Gilbert?

  Like,

• 1:04:38Ben Gilbert?

  I'll just leave it at that. Like, it's a really fun slide deck to go and look at.

• 1:04:41David Rosenthal?

  And that Department of Justice is why you should approve this merger.

• 1:04:45Ben Gilbert?

  Yeah.

• 1:04:47David Rosenthal?

  Yeah. Wow.

• 1:04:48Ben Gilbert?

  All right. Anyway, that's our section on risk to why the deal may not get done.

• 1:04:52David Rosenthal?

  Yeah.

• 1:04:56David Rosenthal?

  I don't know if I'm glad or not glad that I'm not a Department of Justice lawyer. I actually don't know what the right answer is here.

• 1:05:01Ben Gilbert?

  I don't either. On the surface and after spending four or five hours looking into this, I'm for it. But like, I think it's going to be good for, if you take the lens of good for competition, good for

• 1:05:12David Rosenthal?

  Yeah, going from two to three.

• 1:05:13Ben Gilbert?

  People as customers, I'm in on that argument.

• 1:05:16David Rosenthal?

  Yep, yep. Yeah, I think I am too. Well, category?

• 1:05:25Ben Gilbert?

  Well, actually, I want to say one thing before moving out of, that's actually more of the acquisition history and facts. It's interesting to note that the wireless industry was growing massively from the time when SoftBank bought Sprint until today. And SoftBank bought Sprint, they bought 70% for, what was it, $21 billion?

• 1:05:47David Rosenthal?

  78%. Yep, 21.6 billion.

• 1:05:49Ben Gilbert?

  78%. And today, you know, the enterprise value, or I'm sorry, the market cap, or not today, but at the day that it was announced, was 26.5 billion. And I think SoftBank lost money.

• 1:06:02David Rosenthal?

  Yeah.

• 1:06:02Ben Gilbert?

  Despite the fact that it was a tremendously growing market.

• 1:06:06David Rosenthal?

  T-Mobile has been taking all of the growth. Like, for a number of years, T-Mobile was growing at more than 100% of the industry. Meaning that all of the growth of the industry was going to T-Mobile. I mean, some of it was going to other carriers. But they were taking so much share from the other carriers that as much as the whole industry grew, T-Mobile grew more. And most of that was at the cost of Sprint.

• 1:06:28Ben Gilbert?

  In acquisition category, I'm trying to remember how we categorize Zillow, Trulia, and Alaska Virgin because it's in that same category of consolidation. For folks who are new to the show, usually we say people, technology, business line, asset, or other. I guess it's a business line, but it's the same business line that they have. So it's really, you know, I think it's just consolidation to realize economies of scale.

• 1:06:51David Rosenthal?

  Yeah, 100%.

• 1:06:51Ben Gilbert?

  And the one thing that we haven't touched on yet is there actually is kind of a synergy here where, and oh, man, we need like a buzzer. Like, how many episodes have we made it since I last said synergy? I hope a lot. But there actually is something that makes a lot of sense here, and that's that the unfinalized 5G network spec, there's a lot of sort of things that may be 5G. So when people are talking about 5G, we don't yet quite know what it is. And it's not just adding one more G. Like, it's a very different thing. We neither are qualified to nor have the time to go into all the technical things here. But basically, people believe that the 5G network is going to require a lot more antennas. So it's going to be a very expensive build out. You're going to see in some sort of all over cities, that it's going

• 1:07:36Ben Gilbert?

  to require a much higher, I believe it's a much higher wavelength. Let me look this up real quick. A much higher frequency spectrum. So T-Mobile has lots of spectrum in the 600 megahertz range where they operate now. You're going to need a much higher frequency spectrum in order to deploy the 5G networks. Guess who has that from the Clearwire acquisition? It's Sprint. So Sprint actually has

• 1:08:04David Rosenthal?

  Craig McCaw strikes again.

• 1:08:06Ben Gilbert?

  That's right. The spectrum that is likely needed for what 5G will be, they have no money. Like, they're way, way, way in debt. So Sprint has no way to do the expensive build out necessary to compete on the spectrum that they actually have the rights to. And so T-Mobile, while still not in like an amazing cash position, is in a much better place than Sprint is to actually build out the network that that needs to happen to run the sort of next generation technology. So imagine VR over 5G and these super high bandwidth things. So there is something that makes lots of sense of, hey, you guys, Sprint, have this asset, but lots of debt. We're in a decent financial position and are a growth company. Bring that over here. We'll develop it, and then we can really compete.

• 1:08:52David Rosenthal?

  Maybe you can argue that in the not too distant future Comcast and the like our competitors in this world because like come 5G, are you still going to have a wired internet connection into your home? Probably not, right? It's just more commute. Like, why would you do this? Is it going to go the way of the landline, right? Like if all of the, you know, video content, television and faster internet is just why, why would you run a wire into your home and have a thing? It's just, you know, have your, have your wireless devices, right? Like who needs wifi? If you get.

• 1:09:25Ben Gilbert?

  It depends the speed, man. I love my, I love my gigabit connection.

• 1:09:28David Rosenthal?

  Oh, totally right. But what if you get that over wireless?

• 1:09:31Ben Gilbert?

  Yeah. And that's the thing. I don't, I don't know enough about 5G of what that will look like yet.

• 1:09:36David Rosenthal?

  Yeah, me neither. Or how far away it is.

• 1:09:39Ben Gilbert?

  Yeah.

• 1:09:40David Rosenthal?

  So, yeah, totally consolidation for the business line. I'm scared of what would have happened otherwise. There's just too much here.

• 1:09:49Ben Gilbert?

  There's one thing I want to throw out. Yeah. What would have happened otherwise had this merger not happen? And like 50% chance that it still doesn't.

• 1:09:56David Rosenthal?

  Yeah.

• 1:09:57Ben Gilbert?

  This is something I wanted to sort of ask you and pick your, your investor brain on. After the, after the, the deal was announced, both companies' share prices dropped dramatically. Like no, neither companies shareholders like this deal.

• 1:10:12Ben Gilbert?

  And so, you know, that it's interesting that they can announce a merger that's going to have a certain enterprise value that, that, that places a value on Sprint at, you know, that's based on their current market cap. Their market cap has dropped.

• 1:10:26David Rosenthal?

  Interesting.

• 1:10:27Ben Gilbert?

  As they are working the deal out. So sort of how does that work? What happens? What does it signal about the, the shareholders of those companies? Does it mean that they shouldn't do the deal or that they can't do the deal because there's not enough?

• 1:10:40Ben Gilbert?

  I don't know.

• 1:10:41David Rosenthal?

  I wonder if it's actually doesn't say much about the strategic value of the deal, but more about the regulatory risk. Like if you're a shareholder in those companies and it's a, it's a stock deal, a combination. And since both companies' share price drops, I wonder if the thesis that investors have is like, there's a huge regulatory risk here. So these companies are going down the paths with all this distraction, spending. All this money on this merger and then if it's going to get blocked, it's going to be a total waste and then like, and then what? And I think I remember reading, I could be wrong here, but I think I remember reading somewhere that there is not a large breakup fee associated with the deal because there was in the past and that was one of the reasons why the government was against the deal. Cause they were like, well, clearly you think there's a lot of risk here because you have this huge breakup fee.

• 1:11:27David Rosenthal?

  And I believe there's not this time. And so essentially the, the value of that breakup fee is what is supposed to guard against this from a shareholder perspective. And if there is no breakup fee, then like you're assuming a lot of risk to the deal, not getting done because of regulatory. I could be completely wrong on all this, but I think that might be what's going on.

• 1:11:44Ben Gilbert?

  I like that hypothesis and to put some numbers behind it, T-Mobile's share price went from $64 before it was announced down to 56. And Sprint's went from the high, high value of $6.50 down to $5.10. So, you know, what, what matters there is the market cap. So current market caps of both companies are $47 billion for T-Mobile and

• 1:12:11Ben Gilbert?

  $20 billion for, for Sprint, but.

• 1:12:14David Rosenthal?

  But that doesn't include the debt for either.

• 1:12:16Ben Gilbert?

  Right. Right. Which is, which is massive. Like we should, we should also say like, it's, it's worth touching on for these companies. I did a little math earlier. Sprint's total current liabilities and long-term debt is 42 billion and T-Mobile's is 24 billion.

• 1:12:30David Rosenthal?

  Oh, wow. So T-Mobile is much better capitalized with a, what did you say their market cap is like 40 something?

• 1:12:37Ben Gilbert?

  47.7.

• 1:12:38David Rosenthal?

  Okay. So 47 billion dollar market cap equity value versus 20 something billion in debt.

• 1:12:44Ben Gilbert?

  24.

• 1:12:45David Rosenthal?

  Where Sprint is probably what like one, less more debt than equity, right?

• 1:12:50Ben Gilbert?

  Yes.

• 1:12:50David Rosenthal?

  Yeah. Yeah. So there you have it.

• 1:12:55David Rosenthal?

  Well, do tech themes?

• 1:12:56Ben Gilbert?

  Yeah, let's do it. One of them is how much 5G is talked about in the reason for this combination. And it's something that's completely, it's not locked and it's not fully known what is going to be necessary. And it's, it's talked about for a business reason for this to happen long before it's going to be fully built out and available for customers. And like, we've just seen this before with, with 3G, with LTE, like it was, it was this like nebulous unclear thing until it wasn't. And there was like always a three or four year period where, where there was business hype around it and reasons why certain carriers were going to be in a better position than other carriers, sort of before it was actually a thing.

• 1:13:40Ben Gilbert?

  And it's, it's just, um, like I've been trying to tamp my expectations around what 5G is going to be so far, just because I feel like I've seen this movie before.

• 1:13:48David Rosenthal?

  On the other hand, though, like, yeah, I agree. Like there's so much hype, it's overblown, all this stuff, but like, think about our data networks now versus like 2008 or 2010 or 2012. Like, I don't really think about or care when I go off wifi on my phone and I can still do everything. That was not the case back then, at least in the US, that was not the case. My main tech theme is, I was trying to think about like, what is up with this industry and these businesses? And like, people don't pay a lot of attention to it. It's super boring. Hopefully you guys found the episode interesting. We had fun researching at least, but like, why does Masa care so much about this? And like, I mean, he's, as we talked about on the SoftBank episode, like, most of his

• 1:14:31David Rosenthal?

  whole career has been in these types of phone wireless businesses or, you know, hard asset utility like cash flow businesses. And then, you know, telling the stories here of, of the McCaw family and the Stanton Gillespies and like how successful they were as entrepreneurs and how much money they made. What's up with these businesses? And, and I think that were kind of brought back to me and made me think about is like, they are stable cash flow businesses. Like, these are Warren Buffett style businesses. Meaning that, yes, there is existential risk to them over like the multi-decade-long period where like broadcasting went to cable, went to wireless, like there is transition

• 1:15:15David Rosenthal?

  that happens. But during those periods, you have customers locked into paying you like a hundred to a hundred and fifty dollars a month. And it, you know, like customers, by customers, we mean like basically every person in America, or in the world, or whatever geography you're in. Like, that's a lot of money with very predictable, stable cash flows. And you can use that to just create enormous businesses. And so I think about, like, how can you apply that to the internet and internet business models? Actually, one of our investments that we're making right now at Wave is a form of a subscription-type business. It has marketplace aspects, but subscription businesses, I'm kind of coming around on like how powerful they can be. Like, this is what Netflix is. This is what,

• 1:15:56David Rosenthal?

  you know, Amazon Prime is. This is like, if you know, like, how much money your customers are going to give you, and there's low churn, you know, impermeability, you can architect really amazing businesses around them, and use it to do lots of things. So, subscription businesses, perhaps still yet underrated.

• 1:16:15Ben Gilbert?

  To generalize that to something we've talked about more on the show, and really specifically the SoftBank episode, stable and predictable cash flows. You can do amazing, amazing things when you have that in your business.

• 1:16:24David Rosenthal?

  Yep, yep. Well, that's, you know, you're preaching to the Warren Buffett choir there.

• 1:16:33David Rosenthal?

  All right, anything else on tech themes?

• 1:16:35Ben Gilbert?

  Not that we haven't already touched.

• 1:16:36David Rosenthal?

  Yeah, same.

• 1:16:37Ben Gilbert?

  Yeah.

• 1:16:38David Rosenthal?

  All right, greeting. What are we greeting? Are we greeting this deal if it goes through?

• 1:16:45Ben Gilbert?

  It's, we're greeting this deal if it goes through for shareholders of, what is it? Current shareholders of AT&T, oh god, current shareholders of T-Mobile.

• 1:16:57David Rosenthal?

  I think we have to do it for both, though, because it's a stock deal. It's a merger, like the, but it's Deutsche Telekom and SoftBank and public shareholders here are all have stake in the upside of risk here.

• 1:17:09Ben Gilbert?

  Is there more value when all the dust settles than existed before by combining? If it goes through?

• 1:17:16David Rosenthal?

  Yeah, I gotta say 100%, right? Like, if it goes through, now, look, is this going to create a trillion dollars in value? Like, you know, Next did, or, or, you know, Instagram maybe will, or something like that? Like, no. If this goes through and goes through the regulators, like, 100%, this is a great idea. And is going to enable these companies to compete with AT&T and Verizon in a way that they couldn't before.

• 1:17:39Ben Gilbert?

  That's where I come down. I can't, this may be the first one where it's like, just, it feels silly to actually kind of arbitrarily pick a pseudo, like a grade, because it would be a pseudo-high, but high variance grade. But, like, you know, I completely agree. I think this is the right move for, for all shareholders to do this. Number one, it has to clear regulation, and then it's an execution challenge from there to do it well.

• 1:18:01David Rosenthal?

  Well, it really is a merger. It's not like there's a winner and a loser. It's like, everybody's in the same boat all together here.

• 1:18:06Ben Gilbert?

  Right, right. We decided shares of this new thing are a better idea than each of us having shares in our own thing.

• 1:18:12David Rosenthal?

  Yeah, yeah. I don't know, what does that make it? Does that make it an A?

• 1:18:16Ben Gilbert?

  I mean, I don't know. I guess it, yeah. It breaks our scales, what it does.

• 1:18:21David Rosenthal?

  Breaks our scale. It's in the, it's in the multiverse. It's in a different, different physical dimension.

• 1:18:26Ben Gilbert?

  What I'd like to do at some point is chart all these, like, what the X-axis being episode and the Y-axis being A, B, C, D, F. And then, like, have error bars, like, for the variance that, that we wish to assign each of those, but...

• 1:18:41David Rosenthal?

  That would be cool.

• 1:18:44Ben Gilbert?

  I, I don't know, like, B+, A-, with high variance, hard to...

• 1:18:49David Rosenthal?

  Yeah, that'd actually be really cool. Any listeners, if you want to do a, create an acquired data visualization on that, that would be awesome. We'll put it on the site.

• 1:18:57Ben Gilbert?

  We absolutely would. Yeah, my question is, like, is this the right time to do this? Like, is, should, politically? Like, should they have waited for a different administration? I mean, the issue is, if you decide to wait two years and three years, or whatever, and roll the dice, is the market so sufficiently different? Like, the time kind of has to be now, and the question is...

• 1:19:18David Rosenthal?

  Well, I think this administration is probably going to be the most favorable to something like this.

• 1:19:22Ben Gilbert?

  You'd think.

• 1:19:23David Rosenthal?

  Certainly more so than a democratic administration than a Democrat administration.

• 1:19:28Ben Gilbert?

  Yeah, I don't know.

• 1:19:29David Rosenthal?

  We still live in a democracy despite outward appearances.

• 1:19:34Ben Gilbert?

  This is where we should cut to the next section.

• 1:19:36David Rosenthal?

  Yeah, let's just go to the next.

• 1:19:39David Rosenthal?

  Okay, that sounds good to me. Carvets?

• 1:19:41Ben Gilbert?

  Yeah, there was an awesome podcast episode with Andrew Chen of andrewchen.co, the amazing growth marketer who formerly was growth at Uber and now is a general partner at Andreessen Horowitz. As of about a month ago, he was on Intercom's podcast and Intercom has a great podcast on growth and Andrew is kind of the foremost thinker on this and was there at the early days of what is growth hacking and helping to define it and figure out that in a large organization, you can have a growth team that really sits between product and marketing, that is really thinking about what are intrinsic things we could do to the product that would make us acquire users better and cheaper and have sort of

• 1:20:22Ben Gilbert?

  that viral growth rather than going and spending on advertising. And he talks a lot about sort of strategies at Dropbox where that was done. The thing people always think about is that, you know, get free space by getting someone to sign up, but how so much more of it actually came from being able to share folders because that was an intrinsic tweak to the product that made it more inherently viral and cites a bunch of different other examples of similar things and what he looks for in B2B companies, being able to leverage sort of consumer style network effects, both within and outside of companies. The big overarching point that he's making is that growth marketing is really about frontier technology and being a person who learns how to harness a frontier technology before it all turns into crap. And eventually

• 1:21:07Ben Gilbert?

  all acquisition channels turn into crap and how fast can you figure out what the new frontier tech is and harness that to be able to create something that that spreads virally on that that fits a person's need in a really perfect way. And it's just a really good, it's not long, it's like a half hour or something, but really good framing. Anybody who's listening to this podcast surely doesn't care about long, long episodes anyway, but it's a really good, it's a really good framing of. What is growth marketing? What should I be looking for in trying to create the next product that grows like wildfire? And what technologies and platforms do I need to be paying attention to now because none of the old tricks will work anymore? And that's the way it's always been. It's just a matter of the cycle of one new trick shift to old.

• 1:21:50David Rosenthal?

  Yeah, that's actually a really good point. Like, it is like a law of nature, like all acquisition channels turn into crap at some decay rate. You know, we talked like Spotify, you know, growing on the back of the Facebook network, or, you know, whatever, what have you. Instagram growing on Twitter.

• 1:22:07Ben Gilbert?

  It's ultimately an exploit that's like novel at first, and then people get sick of whatever you're doing to them.

• 1:22:12David Rosenthal?

  Airbnb growing on Craigslist. You know, there's, I think about the scooter companies and the bike companies, like, growing on having your thing on the sidewalk.

• 1:22:22Ben Gilbert?

  Yes, he actually, he points that out. He's, somebody, they ask him, what's your favorite onboarding tactic recently? And he was like, non-software ones, like the onboarding tactic of one, seeing green bikes everywhere, and two, seeing people having fun on them every time I pass them. Like, that's the best onboarding ever.

• 1:22:37David Rosenthal?

  Yeah, it's great. But it's not going to work forever. At a certain point, there's going to be so much crap on the sidewalk that cities are going to legislate it out, or people are just not going to care anymore.

• 1:22:45Ben Gilbert?

  Sidewalks are going to look like my app screen, like my home screen.

• 1:22:48David Rosenthal?

  Yeah, remember home screen? Real estate was like a good tactic for a while. And then people are like, no more apps on my home screen. All right. My Car Out, also a podcast, a whole podcast series, not an episode, a podcast itself, the 996 Podcast. This is great. So it's done by Zara Zhang and Hans Tung at GGV Capital, which is a really, really great VC firm and investor, both in the US and China. They do cross-border US and China, and are in some of the largest Chinese internet companies early, and great companies here in the US. Anyway, this podcast, 996, and they also have a newsletter, is by far the best that I have ever seen take on, English language, take an explanation of what is going on in

• 1:23:33David Rosenthal?

  tech in China. And so like, if you care about tech today, like, you've got to care about China. Whether you operate in China or not, like, there's just so much innovation over there. Like, a certain point in the last, like, really in the last year, I feel like the pace and like, leadership of tech innovation shifted from Silicon Valley to China, or at least it's on par. This is a great podcast for understanding what's going on. They have great guests, and I can't recommend it enough.

• 1:24:00Ben Gilbert?

  I listened to the first episode this morning on your recommendation and excited to dig into more. The first episode's with, you know,

• 1:24:08David Rosenthal?

  Jerry Yang.

• 1:24:09Ben Gilbert?

  Jerry Yang. So like, to the extent where you're like, huh, how did that Alibaba deal go down? And what was the thinking there? And how did that, you know, logistically work to have that relationship in China and work with the government and work with it? It's a really cool story.

• 1:24:23David Rosenthal?

  Yeah, yeah. Really cool. And then they have, they have one of the co-founders of Xiaomi and they talk about all the bike sharing companies. Highly recommend. If you like our, our show, I think you will like theirs equally. Well, I think that's what we got.

• 1:24:39Ben Gilbert?

  I think that's it.

• 1:24:41David Rosenthal?

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

• 1:24:47Ben 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.

• 1:24:58David 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.

• 1:25:18Ben 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.

• 1:25:31David 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.

• 1:25:42Ben Gilbert?

  If this is your first time listening to an episode and you liked it, you should totally subscribe from your favorite podcast client. And we would love a review and that can happen wherever you choose. And that is all we have for you. Thanks to the telecom industry for providing a century of insane deals going down to give us the fodder for this research.

• 1:26:05David Rosenthal?

  Yeah. Without, thanks to the telecom industry for providing Amazon.

• 1:26:11David Rosenthal?

  And Rover and, uh, and Madrona and, uh, the acquired podcast, so.

• 1:26:16Ben Gilbert?

  There you go.

• 1:26:17David Rosenthal?

  There we go.

• 1:26:18Ben Gilbert?

  All right. Have a good one, everyone.

• 1:26:19David Rosenthal?

  Later.