EP 23: Non-Crypto Talk with Zach Weinberg plus Interview with Acquired Podcast’s Ben Gilbert and David Rosenthal

Time Stamps: (1:18) Introducing Zach Weinberg (2:44) Web2 celebrity status (7:22) Frozen tech market (10:33) Investor perspective (14:06) Current market state (25:07) Advising founders (34:24) Bill Magnuson Story (38:13) Founder characteristics) (42:37) Zach vs Keith Rabois (49:13) Acquired FM intro (50:09) Acquired FM history (1:04:43) The state of podcasts (1:08:48) Logan’s backstory (1:23:52) Creating episodes (1:33:55) Three priorities of Acquired (1:46:28) Acquired’s best moments (1:49:10) Production process (1:54:36) Increasing blast radius (2:00:29 State of venture (2:08:14) The Tiger/SoftBank approach (2:17:37) Parting thoughts Links: Keith Rabois – Barrels and Ammunition clip - https://www.youtube.com/watch?v=75fyGOBy38c -Zach Weinberg vs Keith Rabois -https://medium.com/@KirbyAWallace/fact-checking-a-vcs-tweets-about-covid-19-clinical-trials-86cdef1b0ff4 -Acquired FM - https://www.acquired.fm/ Mixed and edited: Justin Hrabovsky Produced: Andrew Nadeau and Rashad Assir Executive Producer: Josh Machiz Music Griff Lawson 🎙 Listen to the show Apple Podcasts: https://podcasts.apple.com/us/podcast... Spotify: https://open.spotify.com/show/5WqBqDb... Google Podcasts: https://podcasts.google.com/feed/aHR0... Follow on Socials 📸 Instagram - https://instagram.com/cartoonavatars 🐦 Twitter - https://twitter.com/cartoonavatars 🎬 Clips on TikTok - https://www.tiktok.com/@cartoonavatars About the Show A Saturday morning podcast hosted by Logan Bartlett (Partner and Managing Director at Redpoint Ventures) covering the tech news with his friends and other people with industry expertise. Executive Producer: Rashad Assir Producer: Leah Clapper Mixing and editing: Justin Hrabovsky Check out Unsupervised Learning, Redpoint's AI Podcast: https://www.youtube.com/@UCUl-s_Vp-Kkk_XVyDylNwLA 🎥 Subscribe on YouTube: https://www.youtube.com/channel/UCugS0jD5IAdoqzjaNYzns7w?sub_confirmation=1 Follow on Socials 📸 Instagram - https://www.instagram.com/theloganbartlettshow 📱 X - https://twitter.com/loganbartshow 🎬 Clips on TikTok - https://www.tiktok.com/@theloganbartlettshow About the Show Logan Bartlett is a Software Investor at Redpoint Ventures - a Silicon Valley-based VC with $6B AUM and investments in Snowflake, DraftKings, Twilio, and Netflix. In each episode of The Logan Bartlett Show, we sit down with the people behind today’s most important startups and extract the tactics, lessons, and frameworks they’ve learned the hard way. Conversations span hiring to GTM, product, growth, fundraising and everything in between - collectively forming the ultimate playbook to make you a better CEO, investor or board member. Tap follow and enable notifications to stay ahead of the game.

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

• 0:00Logan Bartlett?

  What you're about to hear in episode 23 is a conversation that Zach and I had. We managed to stay away from crypto for a, for a full, whatever, 45 minutes to an hour, just kind of talking about the state of the market, investing. Zach actually rehashed his, his beef with, with Keith Rabois from early part of the pandemic. We talked through what it's like for him to be a, a web two celebrity and all the groupies that chase him around. And then on the second part of the episode, what you're going to hear is a conversation I had with Ben and David from Acquired. Folks that don't know, Acquired, I can't imagine there's too many of them that listen to this podcast, but it's a fascinating deep dive and into a bunch of different businesses,

• 0:43Logan Bartlett?

  kind of telling the definitive story of companies and how they came to be. And they're really interesting, thoughtful guys that I have a ton of respect for. And yeah, they've been really gracious with their time as I've kind of figured out what, what it is that I'm doing, we're doing here. And so it was an interesting conversation that we go into the history of acquired, we go into, you know, the, the state of podcasts in general. We talk about the state of venture capital as an industry and all that. So trust you'll, you'll enjoy both these conversations.

• 1:18Logan Bartlett?

  Welcome to the 23rd episode of Cartoon Avatars. I'm your host, Logan Bartlett, and I am joined today by recurring guest Zach Weinberg. Zach, how are we doing?

• 1:26Speaker 01

  I am good. I was curious what you were going to introduce me as, but I guess recurring guest is the, the right one.

• 1:32Logan Bartlett?

  Yeah, I don't know. Regular host, person that won't, uh, won't actually take any branding or anything. It's funny that here like All In almost fell apart over like branding and ownership and all that. And I'm like, hey, do you, do you want your face on anything or your name on anything? And you're like, no, no, I don't, that doesn't, that's not for me. I don't want that.

• 1:56Speaker 01

  It's a cartoon avatar that doesn't even want to be an avatar.

• 2:00Logan Bartlett?

  That's right. Yeah. They're playing, they're like, their egos are getting in the way of like their podcast. Meanwhile, I'm like begging you to, uh, to, to try to take any branding or ownership and you're like, nah, I don't think that's a good idea.

• 2:12Speaker 01

  I just don't understand, like, aren't they all supposed to have a ton of money? And like, you're fighting over some media brand that doesn't matter?

• 2:19Logan Bartlett?

  Doesn't everything end up being a dick measuring contest at some level at some point? I feel like, I don't know. It feels like it's all ego and, uh, just like ownership and effort. And it feels like it's just like a pride type thing at the end of the day.

• 2:33Speaker 01

  Yeah, I, well, maybe one day we'll hear what actually happened. But when I heard it was over money or ownership or something, it was kinda, I just might, that was surprising to me.

• 2:43Logan Bartlett?

  Yeah, like God bless him. So what, uh, so, so you've been, over the last couple of weeks, you've turned into, uh, something of a celebrity, I think. Like, are you, what's the, what's the state of play right now? Like, is your wife worried about Web 2 groupies coming up to you and like, you know, whatever, throwing themselves at you? What's it been like now?

• 3:04Speaker 01

  Yeah, I'm not allowed to go to any of the NFT events, uh, for fear of-

• 3:09Logan Bartlett?

  That's like a safety hazard risk. I would think there's like some equivalent, I don't know what the boomer version of NFT NYC is, but there's some, there's some like Web 2 version in which all the women would probably flock to you.

• 3:21Speaker 01

  Yeah, that's maybe like my, my dream as a 14-year-old is playing out in a weird way. Uh-

• 3:27Logan Bartlett?

  You got the nightclub, now you have, yeah, this is the other side of it.

• 3:31Speaker 01

  This was definitely never part of the dream, to be very clear. Uh, no, I, I, um, well, actually, the really funny part is, and I, I did this, uh, recode little thing for 10 minutes just to explain it.

• 3:42Logan Bartlett?

  Yeah, I listened to it.

• 3:43Speaker 01

  The stuff I do day to day, which takes up 97% whatever of my actual job, nobody has any idea about any of this because this is like not what they work on every day. Like healthcare and biotech, nobody gives a shit. So, and rightfully so, to be very clear, like they have more important things. So, I don't know, it's been fun. I enjoy it. I don't really like the- I don't love people knowing me, I guess, in a weird way, but I recognize that that's maybe part of what's required if you actually want to like have a public conversation about this stuff. So hazard of the job. Hence my continued refusal to be like a formal member of this podcast.

• 4:21Logan Bartlett?

  It's interesting. I had one of our LPs the other day. I was, and so I'm coming off a red eye. Again, this is my preamble in case I'm particularly slow versus just my normal horsepower that is, that is slow as is. But I was out in California yesterday with one of our LPs and they said that the crypto debates have become like regular listening for, for them as they're thinking through crypto managers. They're all like going through and, and listening to you debate different people and whether or not these use cases are actually commensurate with the fund size. So it is interesting. I mean, there's been enough jokes on the internet of you or me crashing crypto's prices, but it's interesting

• 5:03Logan Bartlett?

  to hear there actually is some flow through and some of these things that people are, people are listening to it. So I can't, I mean, you know, these are LPs that could be investing in you for other reasons, right? It's not necessarily a bad thing.

• 5:15Speaker 01

  Yeah. I mean, if maybe this is like revisionist history, but that part I think is really good for the world in a way where you have like legitimate questions about investing other people's money into things. And it's not that I care so much about any one LP per se, but you know, the people behind it, right? Like the actual dollars are coming from, in many cases, it's not just like large academic endowments, it's pension funds, it's retirement accounts, things like that. So I think it's good to ask questions. From my personal perspective, I would actually argue that given, you know, we work in biotech and I'm raising a fund in biotech and all of this, this probably doesn't help me in any way, shape or form. It might actually hurt because people think it's like I'm distracted,

• 5:59Speaker 01

  even though I think I mentioned like I do this for 60 to 90 minutes a day. It's not like a lot of time. It's fun, but it's not.

• 6:05Logan Bartlett?

  I am aware how much time, yeah. For anyone listening, I'm aware how much time Zach spends dedicated to this and it involves, I think 30 seconds before we hopped on, I said, hey, had you looked at the doc that we're going to talk about? And he said, no, can you send it to me? And so that's the, that's the extent of prep. I think you, you see the entirety of Zach's efforts in this right now. So, uh, yeah, I can validate that.

• 6:31Speaker 01

  Anyway.

• 6:32Logan Bartlett?

  Yeah, well, honestly, I've been trying to get away from like us talking about crypto as you know, trying to find the balance of like, I mean, it's obviously interesting and I think in some ways it's impactful, right, to what we were just talking about, but at the same time, we can't hijack the entirety of everything we talk about to just being crypto. That said, you can't really get away from the contagion that is like the crypto markets right now, right? Like I was going through the list of interesting stuff that's happened basically in the last week or two weeks or whatever, since we've actually done a real kind of normal topical episode and like, it's all crypto. That like, that's this, you know, it's like, oh, do we want to spend time talking about Zendex getting taken private for less than, you know, they could have

• 7:17Logan Bartlett?

  gotten whatever, six months ago? Like, I don't know, I think that's kind of boring, right? Or like-

• 7:22Speaker 01

  The tech markets kind of froze it. I mean, you would probably know this better than me, but like, a lot of stuff is just not happening because everybody's waiting, I assume. I mean, I'd be curious to hear what you see in the portfolio.

• 7:33Logan Bartlett?

  So I think basically what I'm seeing right now in the private markets, it's weird, right? So at the early stage, where I don't spend my time, but we do have a fund that does that. I think we've seen valuations kind of correct, I don't know, 20% or something, which I was actually a little surprised by that it flew, it flowed through to that part of the ecosystem as fast as it did. But I think at the end of the day, like the ultimate success of those investments, you're not going to be right or wrong based on whether you got in at 35 or 40 or 60. Like as an asset class, that matters for sure. But like, any individual investment, if you're swinging hard enough at the pitch, it's either going to work or it's not, right? It's going to be a couple billion dollar business and it's going to return the fund,

• 8:17Logan Bartlett?

  or there's probably some of those scenarios that it gets caught in the middle. But like, for the most part, I think if it turns into a snowflake or a stripe or Twilio or whatever, you're going to be fine. And so I think our early stage group is being pragmatic about things, but still like, you know, very much open for business. At the growth stage where I play kind of the series Bs and Cs, it's- A super funky market right now. Uh, we're actively chasing stuff around, but there's kind of like four-ish things that I was thinking about that have happened. Uh, and it's just led to a weird dynamic. One is that a lot of crossover phones, funds are just like sitting on the sidelines, right?

• 8:59Logan Bartlett?

  And so like some of these groups that have very big public, uh, exposure, they're saying, hey, from a risk adjusted return, it's actually better for us to focus just on publics or we're going to lick our wounds and do nothing at all right now. And so like those people, a lot of them are on the sidelines. Then there's other groups like Tiger or whoever that are saying, hey, instead of taking a $200 million, uh, round and doing it at $2 billion, we're going to break it into five separate $40 million checks and invest, you know, earlier, right? At series A or series B or whatever it is. And so that's kind of going on. And at the end of the day, if they were, they're not the most price sensitive, right? They don't really care about 200 or 250 or 300, right? For the most part, they have a much more broad-based underwriting framework that they're sort of.

• 9:44Speaker 01

  They're indexing, they're indexing.

• 9:46Logan Bartlett?

  Right? Yeah. Then the third thing is a lot of the tier one companies, uh, have raised more than enough capital last year, right? And so they're like, hey, why go out to market and go raise right now? It's super funky. And so why would I go raise? And then the, the last thing is like, a lot of founders are weighed down either by high last round posts from last year, or to some extent, some expectations of what, hey, you know, I talked to X firm in January and they told me I was worth a billion and they come out and talk to a bunch of VCs and a bunch of VCs say, actually you're worth 200. If you're a founder, especially at the growth stage, I might go out and raise just right now because you might get someone that will pay a price that, you know,

• 10:28Logan Bartlett?

  is, uh, not, uh, consistent with what other people in the market might pay.

• 10:33Speaker 01

  I see it from a different end because we, as an investor through like our little family office group, we do mostly early stage stuff.

• 10:40Logan Bartlett?

  Seedish mostly?

• 10:42Speaker 01

  Yeah, it's mostly seed. We'll do early A's. I kind of think of it as like typically sub $100 million valuations, generally speaking. You know, there's no exact.

• 10:51Logan Bartlett?

  One of my companies I was out to dinner with the other day and they said they, Acuity MD, I joined the board, led the, I guess it's effectively a Series A, really a Series B. But I was like, oh, you should, talk to Zach. You know, you guys are selling into med devices. There's probably some stuff you learned from Flatiron. Jacobs involved, obviously, he used to work with. And then they just hired Ross as well, went over there. And so another Flatiron guy. And the CEO said, he goes, yeah, I talked to Zach. He, it was in our seed and he said NinePost was way, way too high. And, and so it just didn't make sense for him and he walked away.

• 11:27Speaker 01

  I hate that example because there's a lot of cases where I have made the right call. And that is one where I knew like a few months after it. I was like, I think I fucked that one up.

• 11:38Logan Bartlett?

  Yeah.

• 11:38Speaker 01

  Because he just like, him in particular, he was really, really knowledgeable about the intricacies of like the med device sales product. Like he just knew the details really well.

• 11:48Logan Bartlett?

  Yeah.

• 11:49Speaker 01

  And I got caught up on valuation in a way that I probably shouldn't have. And that one has bothered me.

• 11:54Logan Bartlett?

  You guys have actually been pretty disciplined about like to your, yes, I'm using an example to rub in your face of like, hey, now it's at whatever. What would that be? It's at 30 times what that was right now or something like that. But

• 12:08Speaker 01

  God damn it.

• 12:09Logan Bartlett?

  You guys in particular, like as a basket, I mean, you've been pretty disciplined about like where you get involved and you stretched, like ramp you stretched, right? And like even got jammed a little bit on the amount. But like, I think that's probably served you well at this point.

• 12:22Speaker 01

  Yeah. I mean, we stretch every so often when the founders are remarkable or the market is massive ramp. I mean, we stretch a bit, but it was still some hundred. I would say, yeah, we've been relatively price disciplined for two reasons as investors. One is that, you know, we lived through the first crash, right? Like, I know people think I'm like 14, but we actually started our first company in 2007, right into the crash. And so I've been through one of these like repricing issues before and kind of understand. At least the basics of like, at some point, you need to make money.

• 12:54Logan Bartlett?

  Yeah.

• 12:54Speaker 01

  And we're seeing these valuations on companies where, you know, it's do is outrageous. So we tried our best to be reasonable. And then at one point, and I'll always give credit to Josh Koppelman for teaching me like 80% of everything I know, whether he knows that or not. But I remember.

• 13:08Logan Bartlett?

  Was first round investor in Flatiron?

• 13:10Speaker 01

  Yeah. First round was an investor in Flatiron. First one was our first check at Invite Media. You know, Josh wrote us, me and Nat a check when we were 20. And he's been a mentor and all this, and he's just like, he's the best. And I hope he listens to that and hear me say it out loud because I've told him that too, but he really is the best. And at some point, you know, I asked him like how they thought about valuation. And he said, look, I don't have a great answer for you, but at the end of the day, like if I buy into a business at 10 million posts and I buy into a business at $30 million posts and it's the same company, you know, that's the difference between 2X and 6X. It's just math.

• 13:44Logan Bartlett?

  Yeah.

• 13:44Speaker 01

  And I think that, for whatever reason, among the many conversations, that one really stuck with me of like, entry point price can matter if you're, you know, if you're indexing. And that's what we are, right? Like operator as a group, we, we don't make concentrated bats. We tend to do smaller checks in lots of companies.

• 14:00Logan Bartlett?

  How many investments a year will you guys make out of operator?

• 14:03Speaker 01

  Probably about 40 or 50.

• 14:04Logan Bartlett?

  Yeah.

• 14:05Speaker 01

  Or so.

• 14:07Logan Bartlett?

  That's what I told, by the way, that's what I told, an LP was asking about our, like where we are in the market right now. And I, I said, I think we want to be doing deals for sure. I think we can tell the difference between an A company and an A plus company. At least I hope we can. But I know we can tell the difference between 600 posts and 200 posts. Like I feel very confident in that. And if waiting a little bit longer, it just, the math has to eventually flow through, right? It just, it just, the public markets are, you know, if you're growing at over 30% right now, you're trading as a software business at like six and a half times, right? And like, you can't keep doing deals at 100 times ARR, right?

• 14:49Logan Bartlett?

  If six and a half times is the end state of where you're going to be trading at, right? It just like doesn't totally hold.

• 14:55Speaker 01

  One other nuance I learned as a individual investor, which is that like when you're investing your own money. Relative to investing out of a fund, you kind of have a different psyche because for me, and by the way, I, you know, we have a team that does this full time and I'm somewhat passive in it. I mean, obviously I meet the founders, but I don't do the day to day. And for me, it's like, if I'm going to write a check here, what I'm really boxing out from a capital standpoint is like treasuries or some, you know, other asset class that I'm pulling cash from to invest. And so we're, we just have a different mindset on like, we don't have to return the fund. That's not what we're aiming for. We don't need the like concentrate because it's not really a fund in the sense that it's just like our own money being deployed deal by deal.

• 15:40Speaker 01

  So just, it changes some of the dynamics, but.

• 15:42Logan Bartlett?

  I mean, that, that a hundred grand could go to like, uh, you know, a bet to get an Andreessen partner to come on the podcast and debate you, you know, there are like real trade offs in all of this stuff.

• 15:53Speaker 01

  Yeah. I mean, you know, a hundred K can be used for a lot of important things, clearly not important enough, but. Yeah. What I was gonna say is, so I end up seeing this from a different angle, which is like the founders called me. Right. Cause I get the call from the founders saying, what should I do? I actually had a call this morning with a founder to just like reason through this stuff. And the reality is like, if you have the ability to extend your runway right now and you don't have to raise, that's probably what you should do because like illiquidity in a market where actually fundraising is an auction. This is the difference between financing in a private company and financing in a public company, right? Which is like in a private company, when you do a round, it's really just an auction, right?

• 16:36Speaker 01

  It happens one time, you seek the highest bid. And if like half of your bidders are just sitting on the sidelines, you're going to run a less efficient auction than you would if they were participating. And when you're doing this in a world where like half the people are sitting on the sideline, you're going to end up probably at a lower price. You might as well just like wait until everybody's back in the game. And if you can extend your runway by cutting burn or shrinking head, whatever it is, the tactic that you're using, it's probably a good thing. And that's part of why I think tech is a little like not interesting right now because most people are just waiting it out. The other thing that happens is if you have like inefficiencies in your company. You can now actually fire people without it feeling like the company is going under.

• 17:20Speaker 01

  Like, no founder ever wants to do a headcount reduction or let people go in any material way in a boom, because it looks like everything's going to shit and then your employees start to leave. But here you've got air cover. Right? You can point to, well, look what's happening everywhere else. And if we do like a five to 20% headcount reduction in areas that we probably over hired, no one's going to look at you weird during this weird window. And so you have this unique opportunity as a founder, uh, where you can actually like right-size the business without collapsing your culture. And that's usually what founders care about.

• 17:54Logan Bartlett?

  No, and I, I think that, I mean, for the most part, I don't know what percentage it is, but for the most part, there is a bottom 10% at least of every company that's probably running a little less efficiently than it could otherwise, right? And to some extent, like, I've seen businesses that, uh, that have actually done layoffs and accelerated growth just because of the bloat in the org, right? It's like there's too many middle people that are slowing down communication right along the way. And so managing out the bottom 10% actually leads to both bottom line and top line improvement, right? But it is interesting. One of the things, I mean, in general, and this is the, kind of gets lost in like the whole ethos of focusing on valuation.

• 18:39Logan Bartlett?

  And I don't know, the hubris around that, both from a, you know, justing investor standpoint, wanting those markups and entrepreneurs wanting to be able to sell the vision, is ultimately like, uh, surviving is kind of the, the, uh, the precondition to succeed at all, right? And we're working on our, uh, mid-year letter to the LPs. And like, that seems so self-evident, but in the time of like abundant capital, you start to lose the plot a little bit on like what's going on. And we're talking about, like, at the end of the day, what are we talking about? We might be talking about- A point, two points, three points, four points, five points of incremental dilution,

• 19:22Logan Bartlett?

  right? Like within the margin of like what it would take. Oh, we would have been this, but now we're going to be this. Maybe you just raise a little less capital, fix the dilution. And like, it's actually not that big of a deal when sometimes the alternative to this is like not making it, right? And I think in this, this, the last couple of years, like the egos of everyone involved started to focus on like just the, the high level valuation number and the implications for all of that. And now it's just kind of like, I don't know, get the money in the bank, right? And I've been trying to tell all our companies to do that.

• 19:58Speaker 01

  Yeah, I mean, it's funny, the first thing, this is part of the benefit of being an angel investor and not being a board member, is you can have these more serious, honest conversations with the founder. Cause like, I don't, like, I don't own enough of any of these companies where it's going to affect me personally. So I can just tell them the truth.

• 20:16Logan Bartlett?

  Yeah. Knowing you, I get the feeling you're not going to tell the truth. Like, I think you're going to do that regardless, but I think you have the credibility of being able to tell the truth.

• 20:27Speaker 01

  Yeah. I mean, I will try my best to tell somebody when I think they are wrong. And I think that's come out. But like a lot of times what we end up talking about first, about any of these companies, when the founders call is just, do you have a good company? Like, do you, like objectively, is your company good? Cause you go through being a founder and you spend all of your time selling. You sell to investors, you sell to customers, you sell to employees, you sell to your management team, you sell to like the culture of the business. Like, you're always telling the story. You're always telling the positive version of the story because that's your job is to like not run out of money and to, you know, create a little bit of momentum. But you still have to think about the financing

• 21:09Speaker 01

  strategy objectively. And it's actually very hard to like switch gears from sales mode to like more rigorous finance mode, if you will. So actually a lot of what I spend time with the founders on, when I talk to them is just like, let's throw the salesmanship out for a second. Is this a good business? And if it's a really good business, you have a lot of optionality because once the markets get liquidity again, once people start, you know, to invest again, you'll be perfectly fine. And so all you're really doing is like bridging the gap. If things aren't going that well, or it's too early to tell, or if it's really not a good company yet, or you have like real serious downside risk, then you've got to start to think about padding the balance sheet sooner rather than later. Because the, you know, the further you, or sorry, the closer you get to cash out, the

• 21:54Speaker 01

  harder this is going to get. People know when you're backed against the wall. And so, most of the conversations start with like, where do you stand in that spectrum? And it's a really important conversation for founders to have that I think it's hard for them to have, because who do you have it with? Like, who do you talk to about this?

• 22:11Logan Bartlett?

  You know, what's interesting is like, when you're at the early stage, and I've seen this with executives that have had a bunch of success, and then they go decide they're going to start a company, right? And they've been the chief product officer of some high-profile thing, but like, they've never actually been an entrepreneur. And their, their default alternative is actually a very comfortable, well-paid existence, right? And then you go and be a founder, which in a lot of cases can suck. I mean, you know it way better than I do, but it's a very manic existence. And to some extent, one of the reasons I like investing in young people is their, their alternatives to, you know, their, their next best alternative or something, is like being

• 22:53Logan Bartlett?

  a rank-and-file executive at like, or rank-and-file person at a company. And so, they're, they just like, keep slogging ahead, because they don't, they're not going to go get a seven-figure payday and a 10-figure, uh, whatever, option package to go work at a FAANG stock or whatever. But to some extent, like, once you're down the path, this is going to be a very interesting thing, is like, past the point of just able to shut down the business, or sell it for parts, or whatever. I think, I'd be interested in your take on this. So like, let's say it's a Series A, Series B company, right? And it's probably a tier two or tier three business. And one of the things I think is going to be very interesting, and you've, you've been talking to LPs, and I, you know, we obviously, I talk a lot to our LPs.

• 23:34Logan Bartlett?

  And as the tide of publics has, has pulled back, right? The private market hasn't been marked to the same extent that the publics have pulled back, and so their, their exposure is different, right? So if they wanted to be 10% privates, now they're 15% privates or whatever. And maybe that'll correct at some point when, when marks come down or whatever. But at the end of the day, there's going to be a triaging. There's less dollars available. And so ultimately you're going to have to make a trade off of like X tier one fund that we've been in for 10 years. Right. And Y tier two funds that we took a flyer on. And ultimately the tier two funds are going to get cut out. Right. And so I think at some point, like those tier two funds, I think this is going to lead to a consolidation of power

• 24:19Logan Bartlett?

  to the people at the top, right, that exist. And then incrementally now the dollars are going to dry up for those tier two, three businesses that like otherwise ultimately could have gotten funded in a very meaningful way. Right. But like now those dollars are potentially not going to be available to them. And so I guess my question for you would be if, let's, let's say you're having that conversation with an entrepreneur and it's a good company, right? Like it's solid and you can see a path, you know, if they put their heads down, cut, burn or whatever. Maybe it ends up being, uh, you know, they get back to the last round post and can sell it for that price. Or maybe they can two X it or whatever.

• 25:01Logan Bartlett?

  As people are having that realization that they have a solid business, but it's not a, you know, Stripe or whatever. What are you telling, are you telling them just to get whatever cash you can hunker down and like fight to get to, you know, as far as you can take it? Are you telling them, hey, maybe entertain selling now? Like what's, what's that actual conversation look like between you and them?

• 25:23Speaker 01

  Part of it is just like, this is not something you did. Right. This is just like a reset. Uh, so.

• 25:31Logan Bartlett?

  Mommy and daddy, you know, the, the, it's not your fault, honey.

• 25:35Speaker 01

  Yeah, like, I'm sorry, you know, shit happens. And then I think the second part of the conversation is kind of like suck it up. You know, like you can cry to me. I'm happy to be, you know, someone who listens, but that's at the end of the day, you need to just suck it up and like, welcome to being an adult. And that means at some point, taking more dilution than you want, raising money at lower prices than you really thought, owning less of your own, whatever. There's some outcome that you didn't love, but like, so be it. Because actually, I think you kind of nailed it. The alternative, and I've had this conversation is like, do you want to do something else? Cause that's something else is going to be basically like a director of product at some giant company.

• 26:17Logan Bartlett?

  Yeah.

• 26:17Speaker 01

  Like, do you really want that job? You're gonna kill yourself. And so I think most people, once they understand the alternatives, eventually realize like, all right, let me just go make this work and they, they fight through it. Um, look, if you have an M and A offer that's legit and it, it allows you to take cash off the table and you're not super confident in the company, I would generally advise people to strongly consider it. The, the number of times where that is true, where there's a legitimate M and A offer that isn't like SPF buying your company at one, one hundredth of the last valuation, uh, is pretty rare. Like it doesn't happen more, uh, it happens significantly less frequently than people think. You just hear about it when

• 26:59Speaker 01

  it happens because it's very public. Most of the time, it's just like a tough unwind of a business if it goes under. Uh, there's, there's somebody right before the podcast tweeted the, like, the picture of, of SPF like lying on a beanbag, uh, in his socks or whatever he's doing, basically saying like, this is the last picture you see before they buy your company. Like, it's just, I, I was truly laughing out loud at that one. Uh, and that's what happens. You get people who are unbelievably smart, like him, uh, and kind of aggressive and sometimes you're gonna get taken advantage of.

• 27:35Logan Bartlett?

  Yeah.

• 27:36Speaker 01

  Anyway.

• 27:36Logan Bartlett?

  This is at a macro level, like every company, uh, almost every company, maybe not Stripe or something, but like, almost every company has gone through some, um, existential crisis. And a lot of times it was execution related, right? Uh, but like some point. Of serious doubt and I just pulled up, you know, the companies I track by market cap and just looking at, you know, some of these off the top of my head like Facebook obviously had the whole mobile thing that a bunch of people were doubting them and their stock prices way in the tank. Post IPO, right? And then you, I mean Netflix has gone through like six different versions of that Uber, obviously.

• 28:15Logan Bartlett?

  Snowflake at the series C, the round after. So we did the B at like 60 post and then altimeter came in and did the C and the round after that. But that was like a really, really hard round to get done and like, you know, running tight on cash and, you know, everyone thinks about that now as this huge up into the right story, but data dog series A was a really tough process, right? Like all these companies go through some level of it. And so I guess it's, I don't know if there's any consistency of grit that these entrepreneurs have. I wonder, the one thing that I've been thinking about is, how many of the entrepreneurs are in this for, like it's been sexy to be an entrepreneur. It's been sexy to be VC as well, right? For sure. But like,

• 28:58Logan Bartlett?

  how many, now that things are going to get hard, how many people are actually in it for the reasons that they're going to be able to slog ahead and just like willingly, galvanize the troops to get to where it's going. Cause I mean, Ben Horowitz always has that like wartime CEO versus peacetime CEO. And it's sort of like, everyone's going to war right now, like a hundred percent of people. And so I don't know the answer to that. I mean, it's, it's some of these things that the tide brings out a lot of stuff, right? To see what's exposed. And yeah, I wonder how even, even, you know, rank and file employees now that their options are maybe underwater or whatever, like,

• 29:36Logan Bartlett?

  were they actually in it because they loved the startup or were they in it because everything kept getting marked up, you know, three, five, 10x in a row and they thought they were going to be rich?

• 29:46Speaker 01

  Yeah, some people have it.

• 29:49Speaker 01

  And some don't.

• 29:50Logan Bartlett?

  Yeah.

• 29:51Speaker 01

  And, you know, you really don't know until your back's against a wall and you've got to fight through, I mean, you're doing like five things at once. That's the thing you have to remember as a founder is like, you know, we see one piece of it, but what's going on behind the scenes is they're dealing with attrition in the executive ranks, they're dealing with employees wondering if their job's going to exist, they're dealing with customers, you know, holding on contracts, and they're also dealing with the financing and the dilution and the psyche shift. They're doing all this at once. And that's why being a founder is so difficult because you're kind of managing across like multiple work streams at the same time. And when they all go wrong, they kind of all go wrong at the same point in time. And you're going to see a bunch of people who can't do it and just

• 30:35Speaker 01

  give up. And then you'll see the great ones and even the good ones will, will fight through. There's one always, and I, you know, nobody likes to talk about this stuff because I find they're like the hidden secrets of venture. But one of them, one of those hidden secrets is that if the company is successful over the long run, even if you fight, you know, you fight through the two, three years of crap, if you're capable of fighting through it, the board will give you another equity grant. Like that's the, that's the untalked about little trick that everybody knows, which is like, all right, take 30%, 40% dilution right now. But guess what's going to happen? Like when you fix it, the board is going to issue you another X% of your own business. Now it's going to be at a slightly higher

• 31:17Speaker 01

  strike and it will be worth exactly the same and you'll have to revest all of it and blah, blah, blah. But yes.

• 31:22Logan Bartlett?

  You'll kind of be made whole, you know? Yeah. No, that's right. And that's one of the things it's, it's an interesting thing. We're so beholden to founders, right? And their, their desire and willingness to go the distance. Like I'm not going to go parachute in and run any of these companies. And so keeping them incented to not say, fuck this, you know, we're recapping the entire business and I could just walk away and go raise a seed round at a higher price from someone else, right? It's actually in the interest of the investors to have executives that are motivated to keep going, right? And so, yeah, you're right. As these rounds happen,

• 32:04Logan Bartlett?

  and I actually, I mean, we've obviously, I think we're both buddies-ish with, with Aaron Levy, but like what he's been able to do from being like the cool.

• 32:15Logan Bartlett?

  Yeah, hot sexy enterprise software company to like just the slogging ahead, but you know, building a four or five billion dollar public company. It's I mean, it's actually a really inspiring story to me of like, when the sizzle wears off, what you go, someone that's just like plowed ahead and kept at it, right? And I'm sure he had grants along the way that got re-upped because he had ratchets and all this bullshit, right?

• 32:41Speaker 01

  Yeah, and this is where some of the incentives in startups are not always perfectly aligned, where you know, the most of the employee base never gets that re-up. The executive team does. And honestly, sometimes it's not even just the executive. Sometimes it's just the founder.

• 32:55Logan Bartlett?

  Yeah.

• 32:55Speaker 01

  And you know, I mean, I've seen some bad behavior previously to this of like firms coming in and offering late-stage, highly dilutive rounds, you know, more than the market would want with this like hidden handshake that we're going to give the founder like a re-up grant, basically.

• 33:12Logan Bartlett?

  Oh, yeah, totally. No, that I that happens, that actually happened to fair amount of like, hey, you know, we'll, we'll screw over your existing investors and dilute down the employees, but you're going to get an extra point on the post money or whatever, two points in. And it's kind of driving a wedge to incentivize the founder to go with you. I mean, it's a, it's a clever, if, if kind of dirty tactic, but yeah, people definitely do it.

• 33:37Speaker 01

  Super dirty. And I always see it have this like very conflicting outcome almost because like, you know, the reason usually I know about it is because the founder has called and said, hey, here's what's going on. And I'm like, well, as a founder, that's pretty cool. Like, I appreciate it. Let me give you my advice as a founder. As a investor in the seed round who is going to get destroyed by the dilution that's happening here, like, I don't really love this, but you know, that's my honest take and you will make the decision that feels right for you. But yeah, it's, it's a little subtle, like a lot of these crazy valuation rounds, or even the crazy recap and dilutive, honestly, on like both ends of the spectrum, there's all these like behind the scenes mechanics that happen that... Make the founder a little different than the rest of the company?

• 34:22Speaker 01

  If you will, like it's just a different dynamic.

• 34:24Logan Bartlett?

  You know, uh, it's a, I mean, he'll probably hate me, uh, saying this and hopefully he doesn't listen to this episode, but one of my best friends is Bill Magnuson, who's the CEO of Braze and I'm actually interviewing him tomorrow and I don't know when we're going to run it, but, uh, we've gotten to be, we're investors in, in Braze and now it's whatever, a four or five, three, four, five billion dollar public company, whatever it is. And he was a founder, but like through a bunch of machinations that maybe he and I will talk through, at the time of IPO, he had like 3% as founder CEO and, uh, and I was kind of like, dude, like this is on the low, like you're in the bottom 10% of founder CEO going public, right? And I was like, it just, it's a very reasonable ask to go to the board and ask for a little bit more.

• 35:09Logan Bartlett?

  And there was a bunch of examples of people doing that. And he, you know, 3% of whatever, three, four, five billion is still a lot of money, right? And he was like, uh, I just can't look our rank and file in the face and say, hey, I was able to do this and you guys didn't. And I was like, right, right. I get it, but you started this and like through a series of events, you got kind of hosed and he was like, I just can't do it. And it's not to judge people that do do it because I was actually advocating for him to do it. Uh, it, it's just like, he was, he was so, uh, such a purist about it, right? And so I have more than enough money. I will be fine. Uh, you know, we'll appreciate the stock price. I will be more rich and I just don't think it's fair, right?

• 35:54Logan Bartlett?

  And I just like have so much respect for that mindset. Not to say it's like the only way of doing it. If you take a grant, it doesn't mean it's the negative, but.

• 36:01Speaker 01

  Well, the best way, I would say like the, the corporate governance way to do this, if you want to be objective about it is what's the replacement cost?

• 36:11Logan Bartlett?

  Yes.

• 36:12Speaker 01

  Right? And that I think is a very legitimate exercise that aligns incentives across the board, which is.

• 36:17Logan Bartlett?

  And you're probably a public company CEO, you're probably giving three, four, five percent probably.

• 36:22Speaker 01

  Yeah. And I think that's the right way to do it. Like, once you're fully vested as the founder and you've got your cash comp at Bactus, like probably not at market, but like market-ish. Uh, and now you're going, all right, like what's my future incentive besides the equity that I own? Yeah, you go, you do an exercise of like, if I quit today. What would it cost the company to bring in somebody of equal or even potentially better caliber of operations? And yeah, that's usually three to 5%. And if it's an earlier stage company, it might be more. And I think that's like a reasonable anchor and starting point where a conversation doesn't have to be that exact number. But that's kind of how you want to

• 37:02Speaker 01

  do it for employees as well, which is like, I want to pay people slightly above the replacement cost, actually, because it costs me more to replace somebody in terms of like institutional knowledge and stuff like that. But that's the right way to think about compensation, in my opinion, which is if you quit, and I had to replace you, what's it going to cost me? And like, that's probably how much I should pay you plus a premium.

• 37:24Logan Bartlett?

  Yeah.

• 37:24Speaker 01

  So.

• 37:25Logan Bartlett?

  One of the things, I guess, a slightly different thread on this, just because we were talking about it earlier. But so you are, have been a founder. I think Dixon said former entrepreneur, but I think you're still would be considered, you're an entrepreneur to me still. So.

• 37:40Speaker 01

  Yeah, I always like being called a former entrepreneur by a former entrepreneur. You know what I mean? Like, is that an insult? Like, did you look in the mirror? But maybe it wasn't directed at me.

• 37:50Logan Bartlett?

  I personally think you're a, you're a professional talking head at this point. But that's how I would characterize you. But so you've, you've seen, and then you invest, I mean, you guys do, you're pretty thoughtful about product market, right? You're not necessarily doing product market fit post investing, but you guys really think through the product market of what these founders, you're not like, hey, this is just a badass team, right? Is there characteristics now, as you're thinking about companies that have, that are coming across your guys' plate, characteristics of founders in this existing market that you're hyper aware of, knowing that like, we're in sort of a more choppy time? And

• 38:33Logan Bartlett?

  so this characteristic is now a need to have, whereas in the, in the go-go sunshine pumping, you know, cotton candy and rainbows and bubble gum times in the last whatever couple of years, that it might not be necessary, but now you won't do a deal without this?

• 38:48Speaker 01

  So we've always focused on, look, it varies by.

• 38:55Speaker 01

  Industry, right? So I'm going to give like a generic version of what we look for. And then there are subtleties and nuances if you're doing like dev tools separate from enterprise. But my thing is like, great founders have two core characteristics that stand out to me. One is that they can stretch up and down, meaning they can same person can get on the phone and talk to you on the downside of like technical details. How does the product work? What are the use cases? Who are like, what are the user stories? Like true product management stuff, like which is in a sense, my background. I think that's part of why I've been able to do the crypto stuff is because I just understand product management. So I want to be able to talk to the founder about the specifics of the product and how it works and how it's built. And in particular, like where the advantage comes from.

• 39:39Logan Bartlett?

  And is this the single, like, is this a founding team or the singular like founder?

• 39:45Speaker 01

  I really think the founder and definitely among two people, should never be more than two to get to this can do that. And they can talk about the up, which is the market. They can talk about the sizing and the competition and pricing and the sales motion and the story and all this. And, you know, sometimes both founders can do it. And that's usually where you win is when like, there's two people who can independently to get this done. And you don't have to split it. We've always looked for that. We've always looked for like, can you stretch up and down in the same person? Because those people cut out middlemen from a feedback loop standpoint. Meaning they can go talk to a customer, think about the feedback and then translate it back to the product without having to go through like their head of technology or something like that.

• 40:28Speaker 01

  It's an unbelievable skill that a founder really needs to have. We've always looked for it. The add on, I would say here in this market is can you sell? Because can you tell like a clear coherent story? That's interesting to people who may not understand the details as well as you do. Because in the current market, you need to differentiate in the sales process. Because like inertia is there to kill you, right? Like, you're not going to necessarily die because of competition, but you might die as a company because your customers just kind of wait. They pause, right? Ah, we're not ready to buy. We're going to make it a 2023 decision. Now that that like ability to sell matters in most companies.

• 41:10Speaker 01

  It doesn't matter in all, like if you're doing true consumer stuff, it obviously doesn't matter. But for the majority of the stuff that I like to look at, which are more enterprisey in nature. That last piece, I think, is going to matter more. Can you get stuff over the line based on your just like brute force? Are you convincing, things like that? So we've always looked for this stuff, but I think that part ends up being more important these days.

• 41:34Logan Bartlett?

  Yeah, no, it's, it's interesting. I sort of think there's like two, some people can scale. I mean, the, the matrix of like consumer and enterprise, right? There's a handful of people that have ever done that particularly well, like Peter Fenton, obviously did, you know, has done an amazing job at doing that. And then the like pre-product market fit and then the post like, you know, kind of growthish investing type, like those tend to be a little bit different, but I'm just always fascinated by the people that are able to tell from a founder archetype, like I, I sort of need the feedback loop from customers validating and then I'll go assess a bunch of the other stuff, but like need the feedback loop because I've never been a founder.

• 42:19Logan Bartlett?

  I sort of view all that stuff as black magic, right? It's sort of like, oh yeah, you get, you know, you get a product and then the product's out there and then I can go talk to the customers and validate and like see your leadership skills and scaling and all that stuff. I just haven't seen the journey from like pre-product market fit, you know, idea stage past. And so it's always interesting. Your buddy Keith Herboy has like very interesting frameworks about, about like the types of characteristics and like hiring, having people that like really spike in singular dimensions, right? And not trying to get liberal arts type skills, but instead having someone that's like a one of one and doing one specific thing. That can stand out.

• 43:00Speaker 01

  The funny part about Keith, and I, yeah, we, we don't even really know each other, even though we got in that little tiff about healthcare.

• 43:06Logan Bartlett?

  By the way, so buried in your notoriety. I mean, that's gotta be the crypto thing. If, if there's been any real benefit to you, it's like, you know, I, I think that's, people have totally forgotten that you were the, you were the Keith Herboy guy.

• 43:20Speaker 01

  Yeah, well, we, you know, there, it's. There's a little bit of a, and then I'm about to, I'm gonna compliment him in a second, but like, there's a, there's a classic, I'm really good at this one thing, and so I think I'm really good at this other thing, and then you're kinda like out of your domain and discipline and healthcare.

• 43:37Logan Bartlett?

  Just for, just for context, by the way, Rashad just sent me a note being like, some people aren't gonna know this, but you, at the beginning of the pandemic, you and Keith got into a little bit of a Twitter spat. Actually, one of my original like viral tweets during the pandemic was, it said something, social distancing, and it was the picture of you two next to each other, and you guys got into, it like dominated the tech cycle for like, what, 36 hours on Twitter? I feel like in a time that we were all really bored, everyone was just like trapped at home, super bored, and it's like these two people are kind of like warring with each other.

• 44:10Speaker 01

  We got into this discussion in healthcare, which is very nuanced, and has to do with like, understanding of a specific type of statistics that you have to apply in, like, does a drug or any intervention, a medical device, a change in behavior, whatever, does the thing actually work? And how you measure whether it works? Cause we have a history in healthcare of saying something works, and then when you actually test it, it doesn't. And actually, more importantly is it's harmful.

• 44:35Logan Bartlett?

  Yeah.

• 44:36Speaker 01

  That's the thing you have to remember in healthcare, which is like, you can do things that make it worse, and a lot of like, engineering, software types, the worst thing that happens is your software doesn't work and it never gets worse, you might as well just try it. But in healthcare, actually, you can do things that are detrimental to somebody's health, as you have to be very careful about deciding whether something works. And there's this whole, there's a science of this, which has to do with like, randomizing data, basically, right? And I'm not gonna go into all the details, but there's this underlying idea that if the, if the data that you're using to measure whether something works is not randomized, then there can be inherent bias in the analysis. And actually, where him and I disagreed, and he was wrong, is that when you add more data, if the underlying

• 45:21Speaker 01

  data is biased in any way, it's not that you get to a better answer, you actually get to a worse answer, you get more biased data. In software, and we're doing like, normal data analysis stuff, you actually want more data because you're looking for a signal in it. But here, more data isn't helpful unless the underlying data is randomized. And we got in this giant little tiff about it.

• 45:39Logan Bartlett?

  And you know, you know some things about healthcare, right? Like, you have some credibility in that world, so.

• 45:44Speaker 01

  Look, this is one thing where like, I literally spent... Like years of my life because it was it was tied to what Flatiron does and doesn't do.

• 45:53Logan Bartlett?

  Which at some point we need to do like flat, you know, I don't even really understand Flatiron that well, but you know, needless to say, you know, a little bit about healthcare.

• 46:02Speaker 01

  Well, to tie it to tie back, like Flatiron's underlying biggest challenge is that our data is non-randomized. And it was funny because I was arguing the need for randomized data, even though the company that I built and started and sold was working on non-randomized data. I was essentially arguing against my own business, which I thought gave me some credibility here. And we got in this whole tiff and he was definitely wrong and he was like trying to show whatever that hydrochloroquine or something was effective and it's not and it probably is harmful. Anyway, the thing that I actually think is funny about Keith is that I've used some of his like operating frameworks in my own day to day. He's actually like a remarkable operator in the area that he knows.

• 46:41Speaker 01

  And I always loved the thing about him was that he was just like very good at saying, you're good at this, you're not good at this. Right? It was very, no bullshit about like, everyone can be good at everything, which is totally not true. And he had this little lecture he gave that I used to show, he doesn't know this, but I used to show it to our team at Flatiron, like the exact team of like barrels. He had this like analogy of basically barrels versus ammunition.

• 47:06Logan Bartlett?

  Where is this on YouTube or something?

• 47:08Speaker 01

  He gave some startup lecture at YC that I thought was really good, which was basically like a lot of startup hires are ammunition. You give them something to do and they do it exceptionally well. But if you give them like open-ended problems that they have to kind of organize other people around and coalesce around a strategy and drive it forward in blank space, most people are very bad at that. And if you find someone who can do that well, he would call them barrels because you can kind of like shoot through them. And it's a weird analogy, but it works. Those are the people you continuously give like bigger and bigger scopes of work. And I always thought that was like a really phenomenal way of thinking about like what makes a good startup hire and what doesn't. And then we got in this like stupid little Twitter beef and uh, I don't know.

• 47:51Logan Bartlett?

  I've tried, at some point we'll get, we'll make him, you know, I've, I've invited him on. He, I think he's been uh, reticent or busy or uninterested, but I uh, I think, yeah. We, you guys have invested in stuff together too, since then. So it's not like it's.

• 48:06Speaker 01

  Multiple things. And it's always so funny that the founder, the, the best part is usually where the seed investor and then founder's fund comes in later. Uh, and, and sometimes it's not the case, but sometimes it's, it's the other way around. And I'll always get a like, hey Zach, um, so yeah, uh, we're like, we're doing this round. Um, it's led by founder's fund and Keith's joining. So like, are you, I just wanted to let you know that. I'm like, I don't, I don't have some like long-term vendetta. I get this, gets this guy. I think he's a great operator. I think he doesn't know anything about healthcare. And like, I'm happy to have that debate and I'm sure there's a bunch of stuff that I'm really stupid about that he knows a ton. Like, I don't know, the details of fintech or something.

• 48:45Speaker 01

  Uh, but people I think assume, because we've gotten this like public argument that like we hate each other and like, I don't hate Keith or boy, he's perfectly fine.

• 48:54Logan Bartlett?

  Yeah. Yeah. Well, I'm in the middle. I like it. Like everything else. I'm just shaking hands, playing neutral, uh, try, you know, just facilitating drama, but trying my best to stay out of it. It's a, it's a role I've been able to play fairly well with uh, you, you and Keith as fire starters here.

• 49:10Speaker 01

  Happy to be the person that says something that gets themselves in trouble.

• 49:13Logan Bartlett?

  Ben, David, thanks for joining me. I am, uh, I am here today with the, the guys best known for Acquired FM, one of my, uh, one of my favorite podcasts. Thank you guys for, uh, for coming on.

• 49:25Speaker 02

  It's about time. I will say, I can't believe that you've done so many episodes and it hasn't been with us. I'm just offended.

• 49:30Logan Bartlett?

  You know, I, I was thinking, uh, as you guys have, have maybe seen, this has become a podcast for people, uh, going viral for like misspeaking, like our mutual friend, Pachy Maformic.

• 49:41Speaker 02

  I can't wait. Yeah.

• 49:42Logan Bartlett?

  Or, or like airing past grievances, uh, like Parker Conrad did. So I, uh, I'm excited for you guys. You either need to say something that like gets you, uh, viral on Twitter. Or you need to like really bury some past slight and go after someone. So those, that's like my expectation of all guests here.

• 50:00Speaker 02

  I'll, I'll sharpen my shiv. That sounds perfect.

• 50:02Speaker 03

  We're, we're lucky. We're, we're a history podcast. So like, you know, we, the, the story is already done when we do it.

• 50:08Logan Bartlett?

  Yeah, exactly.

• 50:08Speaker 03

  This is new for us.

• 50:09Logan Bartlett?

  I can't imagine too many people listen to this podcast and don't know, uh, don't know what acquired is, but maybe for the people that, uh, you know, want a brief primer on it. Can you guys just share a little bit about, uh, about what acquired is as a podcast?

• 50:22Speaker 02

  Yeah, absolutely. So acquired is a seven-year-old podcast that chronicles the stories and strategies of great companies, one company at a time. So one company, every episode, episodes are reasonably few and far between. Only every three-ish weeks. They're long. They're like three hours. So we go, our goal is to do an exhaustive, um, look and leave, you know, no stone unturned. The, the only stones that are unturned, you would need to like write a book to, to really capture. But to give like the definitive history of companies and analyze their position today. Uh, but done about 250 episodes. What am I missing, David?

• 51:01Speaker 03

  I mean, basically our goal is to be the hardcore history for, for business.

• 51:07Logan Bartlett?

  I, I'm a huge fan of what you guys have done, and I think one of the things that I've loved is, um, you've just synthesized a lot of things that I'm curious about or things that I don't even know are interesting into a very digestible format, uh, to go through and kind of get the definitive history of all this. So I guess, talk a little bit about like, how did you land on this? Was this an evolution? I know acquired by a name. It was originally about acquisitions, right? So like, what was the genesis of you guys doing this?

• 51:36Speaker 03

  Totally. And it turned out it was just a really good name for many reasons. Uh, biggest of which being that most podcast players sort shows alphabetically. So ACQ is a, is good SEO for podcasts.

• 51:50Logan Bartlett?

  Yeah, I'm going to be dollar sign cartoon avatars.

• 51:53Speaker 03

  Yeah, nice. There you go.

• 51:55Logan Bartlett?

  Yeah, just to try to get one above you. Yeah.

• 51:57Speaker 03

  Yeah, it, you know, it was not, um, we started in a different era. You know, we've gone through so many, um, iterations of acquired of the whole podcast ecosystem, of venture, of tech. We started in 2015. I was thinking about this. I was looking at the outline. When we started, Ben, remember, I didn't even listen to podcasts. I think in some of our early episodes, I'm like, I don't listen to other podcasts. I don't know what I'm doing here. We were just young and stupid.

• 52:26Speaker 02

  Yeah, it's 2015. I mean, the inception of it was over drinks in February of 2015. And our first episode actually didn't come out until October. So like any good project, it was like, we should totally do this. And then the idea dies four or five times over email threads until you get less busy.

• 52:42Logan Bartlett?

  So was that time spent, like actually, how much of that was prepping for what it would become and the strategy of it versus just inertia and laziness?

• 52:50Speaker 02

  Zero. Mostly procrastination.

• 52:53Speaker 03

  Zero.

• 52:54Speaker 02

  Here's the real story behind it. I felt like a massive imposter because I was working at Madrona Venture Group as not a VC. And I think the great career advice for anyone is only ever work at companies where your thing that you're doing is the core competency of what the business is known for. And David was like a real live investor. He was a principal, you know, just come out of Stanford, doing the GSB thing, had less investments. And I was doing this like labs project in the corner where I was the programmer for Madrona Labs, incubating sort of one company at a time. And

• 53:30Speaker 03

  Ben is being very self-deprecating here. Right before he joined Madrona, there was a front page Weekend Edition cover story in the Seattle Times about how Ben was the future of Microsoft. So

• 53:40Speaker 02

  It actually was not Weekend Edition. It was Monday Edition. And I know this because it came out the day that I resigned, which was not intentional, but an embarrassing, kind of terrifying thing to go into the office when my boss is holding up the front page of the local newspaper and I'm handing him up. Like I literally wrote a resignation letter because I didn't really know how you're supposed to quit. And so we traded pieces of paper.

• 54:02Logan Bartlett?

  Great. So why were you, what was the future of Microsoft, you being that? I mean, obviously, it didn't actually happen. But what was the article based on?

• 54:11Speaker 03

  Think of what could have been.

• 54:12Logan Bartlett?

  Yeah. Satya Nadella, you would not know that name if Ben hadn't left.

• 54:17Speaker 02

  I'm confident that is not true. We, I ran the Garage program, which was this like internal incubation factory inside of Microsoft. And I had just been a user experience PM on Office for iPad, which was this big counter strategy thing that Microsoft was working on that was actually part of the CEO shakeup. Because the sort of old company strategy was Windows first. The new company strategy was cloud and mobile. And, you know, when you want a cloud first strategy, you need to be a great experience on every mobile device. And so by building Office for iPad, which was like a three-year undertaking by a 200-plus person team to build a product we were like super proud of, managing to actually bring full fidelity documents

• 55:02Speaker 02

  to the, a very underpowered iPad at the time. I think the iPad 3. You know, it was like a gigantic lift that was completely opposite of the company's current strategy of do everything to promote Windows. So that was like a, that was a fascinating career moment to be caught in the crux of all that.

• 55:18Logan Bartlett?

  Yeah, famously a strategy that they had to unwind, right? I mean, that was kind of Satya's big day one initiative, right? Is sort of not being Windows first, but yeah.

• 55:28Speaker 02

  How much market cap has been created by not being Windows first?

• 55:32Logan Bartlett?

  I know, I know. You can define yourself in a lot of different ways. It's, so you were actually working on the future of Microsoft in a quite literal sense versus everyone else kind of that doing the Windows thing.

• 55:42Speaker 02

  I was answering the question of like, what should, what should the ribbon look like on the iPad? And like writing very long spec documents to make that happen.

• 55:50Logan Bartlett?

  So you guys overlapped in Madrona and?

• 55:53Speaker 02

  Oh, yeah. So, so I was like, how do, you know, David and I had like gotten drinks and coffee a couple of times. And I'm, I was like trying to, we weren't really friends yet. We were kind of acquaintances and I was looking to like, you know, I was looking to lock it down and?

• 56:05Logan Bartlett?

  How long on the job?

• 56:07Speaker 03

  This is so funny. I never had this perspective. I was like, oh, Ben's awesome. I want to hang out with Ben more.

• 56:13Speaker 02

  Nine months in or something like that. David had come back fairly recently from, from business school, but it was?

• 56:18Speaker 03

  I was at Madrona for a couple of years before business school. And then we were talking about Merit Tech before we started. Amazing folks. I worked at Merit Tech during business school and then came back to Madrona. So that was this era.

• 56:31Logan Bartlett?

  The Meritech guys are great. But yeah, so Ben, you're ready to DTR. You're ready to like, hey, David, this needs to be a thing between the two of us. And so you're, are you actually brainstorming like, what was the inspiration? Are you brainstorming how I get this person to make it official with me? Go on Facebook and define the relationship?

• 56:51Speaker 02

  It wasn't really that. I think it was like, I was actually a little blindsided when I was, I always keep this text document. I'm like very old school and use TextEdit as like the way that I take notes. And so I have a thing called ideas.rtf. And it's ideas for blog posts, when I used to do more of that. It's ideas for apps that I want to build. And I had like a little running list of ideas for like small media companies. Like, wouldn't it be cool if there was a podcast on this? And I was pitching David and there were two different ideas. And the one that sort of won was, I was like, do you think this is an interesting idea? Would you listen to this podcast if, you know, we're in the business of starting and investing in companies, most of them get acquired?

• 57:33Speaker 02

  It would be cool to understand like, when those go well, why do they go well? Because it seems like the rare case. And then we can use that to inform investing strategy. And in retrospect, that was kind of wrong. That's like how you build small companies. But I think that one, David, I was like shocked because immediately you were like, I will absolutely do that with you, like right on the spot, no, like.

• 57:57Speaker 03

  Well, it was more, you know, it wasn't about the idea. It was a bad idea for a podcast. We did it for like 10 episodes. But it was about, it was about, you know, the magic. Like it was the right time. It was the right time to start a podcast. It was, we were great friends. We had great chemistry. And it was like, yeah, let's see where this goes. And I think also, I think the thing that hooked me about the idea. And then now what it's evolved into was I had just been in business school and you do these cases in business school and like I hated them like they sucked. Business school case studies suck. If anything like to me acquired is the like that that was like the germ of what you know sparked it for me like how do you make this better? They're written,

• 58:42Speaker 03

  you know, so pedantically they treat you like you're two years old. I'm like, I'm smart. Don't treat me like a two-year-old. And so that was like, oh, this would be a cool way to explore what otherwise would be a business school case study in a much more real compelling way. We work in the industry. We can talk about what really happened. And yeah, here we are.

• 59:04Logan Bartlett?

  Had you guys been students of like business history before this?

• 59:09Speaker 02

  I was not a student of business history. I was definitely a student of tech history. Like, part of what made those early episodes work was that we sort of can remember where we were in the moment where these things happened. Like, I remember working at Cisco and reading about the 2008 financial collapse and wondering like, huh, how's this gonna be for my like, what am I gonna get an offer here or not? Or like, I remember watching the original Steve Jobs iPhone keynote like six times. And I feel like I didn't know jack about business models or defensibility. Like, acquired has been my MBA on that front. But a lot of, I think, what makes the show work and what made me passionate about doing

• 59:53Speaker 02

  it originally was like, exploring, when you think about the fact that we all use these mobile phones and we have the internet, it's kind of amazing that through the experiments of history, that is the sort of surviving thing that became successful. And I'm always fascinated by like, the pivotal moments of like, what made the information superhighway fail? Why didn't AOL win? You know, and?

• 1:00:21Speaker 02

  Remembering the moments when big news dropped and thinking about where I was and contextualizing it in the moment feels like a big piece of why the show has been relatable for people.

• 1:00:33Logan Bartlett?

  Yeah, it's interesting. You know, so my, my real first job, I was at Deutsche Bank for two years and then I went to go work at a boutique investment bank doing like sell side advisory for software companies. And it's funny, when you're, when you're doing advisory for software, you're not really entitled to your own opinion about like, unless you know, the history of databases, you're not entitled to an opinion about like the next gen database, right? To some extent. And so my little hack that I had was like, figure out the history of how software came to be and like all the, the businesses that were formed, all the controversies and all the personalities and all that stuff. And so I went back and studied all that stuff so that I could drop little anecdotes about

• 1:01:15Logan Bartlett?

  like the database wars, right? Of the eighties and you know, or like.

• 1:01:20Speaker 03

  I still haven't read the Oracle book.

• 1:01:22Logan Bartlett?

  Yeah, yeah, yeah. It was a great book. Well, the one, the one that I like, I don't know if that's what software, that's the one that I, yeah, yeah. It's a really cool book for people that haven't read it, but they go through and like the author got like total access to Larry Ellison, but Ellison said, based on what you write, I get to write footnotes that say, hey, this isn't what happened, right? And so I've never seen a book like this.

• 1:01:45Speaker 03

  Ben, we gotta do Oracle and do that book.

• 1:01:47Logan Bartlett?

  Yeah. The, the author will say like Larry did this and Larry will be in the footnotes being like, that's not how this happened, you know? So it's pretty funny. But yeah, so I read, I read books like, books like that are like, you know, the quick and dirty operating system story of, of Microsoft and Microsoft DOS and like the IBM project down in, where what, down in Florida.

• 1:02:08Speaker 03

  Oh, yeah, yeah, yeah. That's a crazy ass story.

• 1:02:11Logan Bartlett?

  Crazy story, right? And so, and so in Boca Raton, right? It was like a laptop grow group down in Boca. And so like, I knew all these little things and that's why I've loved your, your podcast is I guess I'm mine sort of the business strategy around tech and I can go.

• 1:02:28Speaker 02

  It feels like the people too. It feels like your background and your personal passion areas. It's like, how is?

• 1:02:36Speaker 03

  This set of people who all have all these agendas, how is that like the Holy Roman Empire? And I'm coming at more like, wow, how did this widget become so powerful in allowing someone to control the world? I'm focused on the widget.

• 1:02:50Logan Bartlett?

  Yeah, exactly. And it helps you understand. I do think, I mean, understanding history, you don't want to overly extrapolate those data points. And this is the first, I was coming out of college, probably not dissimilar to you all in the financial crisis. And, you know, I remember it. It didn't impact me at like an emotional level. I mean, it made it harder to like get jobs and stuff. But like, I didn't watch my life savings go to nothing. I watched my parents' life savings very impacted, right? By all that. But to some extent, knowing that and how all these businesses fared is super informative to now and knowing the history of the internet bubble. I also think there's something about like being able to throw that out because every crisis is kind of different. And so it's almost like you don't want to overly extrapolate

• 1:03:34Logan Bartlett?

  historical events forward, but like knowing they exist is just super helpful in framing. You know, the history of software is informed by all the anti-competitive stuff Microsoft did over the years, right?

• 1:03:47Speaker 03

  Totally. Well, it's not, you know, what's so history period, but especially in tech, like it's always different. It's always changing. It's always different this time. But what I think the value in going back and studying this stuff to me is if I were, I'm reading Sam Altman's, not Sam Altman, Sam Walton's autobiography now, Walmart. And I'm just reading, I'm getting all these ideas. And I'm like, holy crap, like he did this stuff, you know, 60, 70 years ago. It's kind of been forgotten to history. But like, what would that look like today? Like, what could I try in my, you know, XYZ founder? What could I talk to people about? Like, obviously, it's going to look different. But like, these people were so creative in the past. What can we learn from them?

• 1:04:27Logan Bartlett?

  Totally. Yeah, it's fascinating. So, so the state of podcasts, I mean, obviously for me to start one in 2022, it's very.

• 1:04:35Speaker 03

  Yeah, what are you insane?

• 1:04:36Logan Bartlett?

  It's much more.

• 1:04:37Speaker 03

  Yeah, okay, we got to talk about like, we got to talk about your story too. And like.

• 1:04:41Logan Bartlett?

  Yeah, I'm happy to do it. I'll give you my perspective, but I would love to hear, what was the state of podcast? Like, were there things you emulated and said, hey, like, this is similar to what we're gonna do?

• 1:04:53Speaker 03

  It was so different.

• 1:04:54Speaker 02

  Yes. So you wrote this in the outline, and I was trying to like, give it some real prep thought beforehand. I think there was this very significant chasm that we didn't realize was there. And I often wonder, do all founders kind of feel this way, where they just were interested in something and then didn't realize it would be a large market? But a thing that was well established that I spent thousands of hours of my life on was like Apple nerd podcasts. Like, I listened to every episode of Daring Fireball. I didn't listen to the previous version of Daring Fireball when it was Gruber and Dan Benjamin. I, you know, listened to every episode of Accidental Tech Podcast, and before that, Build and Analyze

• 1:05:37Speaker 02

  about Marco doing his iOS development. I mean, that was a well-trodden world. On the other hand, you had the highly-produced NPR podcasts about business stuff. You know, there's Planet Money predates us, and How I Built This predates us, but for a totally different audience. And I think stratechery was written for the audience that we would end up serving with Acquired with a totally different use case. And Ben is so brilliant. You know, he's the modern-day Michael Porter, and I think it one day will truly be recognized for that.

• 1:06:15Speaker 03

  Your episode with him and Packy was so good, by the way. Like, oh, it was so fun listening to that.

• 1:06:20Logan Bartlett?

  To some extent, you just get out of the way and let people, let people go, right? It's like, you're trying to pull stuff out of people, and then it's like, hey, I just need to, I'm gonna fade to the back of this. That's the way I feel now working with Zach Weinberg. But so, so, so you were looking at a bunch of those different, those different things, and clearly it resonated at a personal level with you as well.

• 1:06:41Speaker 02

  Yeah, and there's always been something, if I think back to ideas.rtf, like that all of the ideas that I ever have are tightly scoped. And I think it's because, I don't know if it's like my Ohio roots and now my Seattle roots, where I don't think like anything I'm gonna do is like particularly world conquering. So I don't at the start be like, I'm gonna start the next Walmart. It's more like, oh, I can clearly see the narrow scope of this idea and how it provides a lot of value to me and people like me. So let's just make that and then we can like draw a nice box around it. And it can be like this amazing shiny object. And like my first app that did very well was that, that I made this app called Seize the Day, very minimalist to do list manager that got a million downloads in the early days of the App Store.

• 1:07:25Speaker 02

  And like, I really like things that do one thing and do it well. And sort of that was the idea for Acquired. And I think it took us years to sort of realize, oh, the audience not only is willing to give us more leeway to do other stuff besides this tightly scoped reviewing and grading acquisitions. They actually want it. And I would not have, I probably wouldn't have started the show or certainly had the idea for it if it was tell these comprehensive company stories and analyze them. In part because in 2015, I was in no way qualified to analyze businesses.

• 1:08:03Logan Bartlett?

  It's interesting because you guys, like a lot of the podcasts that I think had early success, and we've talked about this a little bit in the past, but are, we're much more ephemeral in in nature. Right? It's like they're topical, they're related to what's going on. Their their shelf life is, is, you know, days, if not weeks, right? And you guys are doing such a comprehensive thing that persists. And you have to think through different considerations of that of, hey, I imagine if it hasn't already, like there, there will be business school classes that are done with the, you know, the centerpiece being your acquired episode, right?

• 1:08:45Speaker 02

  Yeah, Northwestern does that.

• 1:08:46Speaker 03

  It's wild. It's happening. Yeah.

• 1:08:48Logan Bartlett?

  Yeah, okay. It makes sense, right? And so it's just like, it's interesting to do something that's so different than everything else that was out there at the time. And ultimately, I was kind of pattern matching a little bit. David, you asked about what I was thinking through, and mine was...

• 1:09:06Speaker 03

  You did Twitter for... How long were you like really active on Twitter?

• 1:09:11Logan Bartlett?

  Yeah, so my Twitter, so I was at Battery 2014 to 2020.

• 1:09:17Speaker 02

  Can you say that? Are you supposed to say like another venture firm?

• 1:09:21Logan Bartlett?

  Yeah, no, I don't... I make all this stuff up, guy. As you've seen from my Twitter handle, there's not a lot of oversight around what's going on in my world. So I...

• 1:09:34Speaker 03

  So I didn't realize you were at Battery all the way through till 2020.

• 1:09:37Logan Bartlett?

  Yeah, so I left, I guess I joined at the beginning of 14 and left at the end of, I think my last paycheck was like, you know, whatever, January of 2020. So the very beginning. And so my story there was like, I felt like if you go listen, before I started doing podcasts, the only podcast I had done was Harry Stebbins. I did it in 2015 or 16 or something. And one of the things that was like germinating in my brain at the time, and it's still, I've gone back and listened to it in the last year or something, but it was this rise of celebrity investors, and not Ashton Kutcher-type celebrity, but people that were known as a personality.

• 1:10:20Logan Bartlett?

  I always thought there was like this flywheel between you did write by your founders, and did write by your LPs, and then those compounded on themselves, right? And it's like, hey, you do write by your founders and your LPs, and nothing else matters, right? And increasingly...

• 1:10:36Speaker 02

  Well, sure. If you're willing to wait 30 years, then yes.

• 1:10:38Logan Bartlett?

  Yeah, exactly. But increasingly, it felt like there was this little wrench that was Twitter, being poked into that spinning wheel, and saying like, hey, well, and Andreessen Horowitz deserves a lot of credit for this, where, hey, actually, there's this level of notoriety and celebrity and... Uh, you know, uh, resonance with entrepreneurs either because they're they're also founders or because they have a big platform or they're very well connected or they whatever, all these things. And it was like, hey, that's not just the flywheel anymore. There's a bunch of other considerations. And so I was noodling on that, but I wasn't really sure what lane I was gonna play in it, right? I was like a mid twenties, late twenties, something. And so I had a Twitter.

• 1:11:21Logan Bartlett?

  I probably had, I don't know, a thousand followers or something, right? And it was mostly like friends and CEOs that are executives that I like, like their tweets and occasionally replied to.

• 1:11:30Speaker 02

  Are you tweeting like, congratulations to my portfolio company on their most recent fundraiser?

• 1:11:34Logan Bartlett?

  So proud. Yeah, exactly. Totally benign. And I made some jokes, but like, we had a compliance compliance department. And like, I was always, I don't know how many times I actually got called into the principal's office, but I was like nervous to be called into the principal's office, right? And so I would toe the line at times, uh, but like, not, you know, not in a meaningful way. And then I joined Red Point. Uh, so ninth, December 19, I officially like signed to come on board. And then I started March 2, 2020, which is a fascinating time to start a job.

• 1:12:07Speaker 02

  Yeah, right.

• 1:12:08Logan Bartlett?

  And then we went all went into a pandemic and quarantine for a while. And I was kind of bored and staring at my phone all day, as a lot of us were. And it just like, you know, everyone was kind of bored and wanted to be entertained. And I was in that same boat. And finally, I, I, I, I was part of the principal's office, right? And so there was no like, getting called there to the same extent, like I have had my partners twice, uh, say something like, hey, you know, can you, can you not do that? Right? One time was a very prominent, um, investor who might have started Y commented or sent an email asking if I was, uh, if I was making

• 1:12:53Logan Bartlett?

  fun of him and, uh, I I I kind of I was in like spirit, but not in like intentionality, you know? I mean, I see how he thought that, but it also whatever. And so that was like, hey, by the way, I was only at four months on the job at that point. And I was like, oh, that's the stove. And I just touched it and like I, and so that was one. And then another one was when Marc Andreessen started tweeting in earnest, I made it. I made a comment like, or whatever, came back around and started doing memes. I was like, I can't believe the same guy that invented the web browser killed the meme.

• 1:13:29Logan Bartlett?

  And, uh, and it was like, do you really want to antagonize Marc Andreessen? And I was like, you know, I mean, kind of, but I see where you're coming from. I'm like, that might not be the best idea for my career. But otherwise they give me a lot of latitude to like, kind of joke around. Uh, and even then it's just kind of like, you know, guilt, like, do, is that really good for our firm? Right? Uh, that you're doing that. And there are, I mean, literally thousands of like controversial ish tweets that I've never gotten anything said about. And so that started to, uh, resonate and I tweeted in earnest, kind of unencumbered for a while. And then what happened?

• 1:14:08Speaker 03

  Were you thinking, I didn't realize this was all happening at the same time. You joined, right? Point of the pandemic, you started to tweet. Were you thinking like, hey, coming in like, you know, fresh start, repotted, like, I need a new strategy. Like, were you looking for something kind of new or did it all just kind of happen?

• 1:14:24Logan Bartlett?

  I always had the anxiety of like, what is my place in the venture community going to be? Because I am a liberal school, a liberal arts school, uh, uh, business major that did investment banking, doing technology investing. And it's like, and I'm a white, straight male.

• 1:14:42Speaker 02

  Wow. I've never heard that one before.

• 1:14:44Logan Bartlett?

  Yeah, exactly. Exactly. Like you, I walk into J. Crew and forget who I am when the mirrors are all around, right? And so I was kind of like, I was kind of like, how am I going to stand out and differentiate in all this? And so that was always an anxiety that I that I sort of had. I don't know how purposeful it was that like, hey, this is going to lead to something else, but you kind of, I was bored and you kind of get validation because things start feeding in the feedback loop. And, um, and so I just kept doing it and I, I would get more followers and I, it started to resonate. And, um, and then ultimately after like two years of doing that, like to some extent, the audience you make is the one you keep, right?

• 1:15:29Speaker 02

  A hundred percent.

• 1:15:30Logan Bartlett?

  And if, if they expect jokes when they come to you and you start deviating from it, it's, it's, uh, it's kind of like, I, I, I compare it to like in Wedding Crashers when it's like, no, make me a bicycle clown. It was like anytime I deviated from like a joke, everyone was like, that's not what I signed up for, right? I want the joke guy, right? And I get it because Twitter's algorithm kind of sucks. And so you're kind of force fed, you know, all of the stuff, if you follow me. And so I was kind of noodling what, uh, how I could branch out a little bit. I had seen your guys' success. I had seen the success of All In and it kind of felt like, hey, why not try?

• 1:16:11Logan Bartlett?

  The, the, the insights I had was like, if there was any, this was a little more strategic. The Twitter thing was accidental, but I, the, the strategicness of the podcast was, I thought that,

• 1:16:26Logan Bartlett?

  tech, the way tech, uh, is going to be covered is similar to the way Hollywood started to get covered in the 50s, 60s, 70s, politics in the 80s, 90s, sports in the 80s, 90s, 2000s, where people sort of follow the, the, um, the personalities and the palace intrigue and, uh, and it's some extent like, you know, how powerful these businesses have become. It's to some extent, uh, uh, you know, just a Twitter, to some extent crypto, to some extent Robin Hood meme stocks, to some extent, whatever. Like, uh, it's all of this stuff has kind of manifested itself. And so now you have Elon Musk covering SNL, right? Or on SNL.

• 1:17:05Speaker 03

  You're right. Yeah, these people have become mainstream celebrities in a way that five, 10 years ago was not the case.

• 1:17:12Logan Bartlett?

  And the insight that I sort of felt like is I still feel like an outsider, like by every definition, I'm an insider at this point. But I still sort of feel like I'm an accidental VC in that like I went to a liberal arts school in Virginia. I didn't know anyone in VC or technology. I grew up, my family's all from Tennessee and Alabama originally.

• 1:17:31Speaker 02

  You live in New York.

• 1:17:32Logan Bartlett?

  I live in New York. Yeah. And I've never lived in the Bay Area, which is crazy. And to have been in like tech ostensibly since 2012 and never once lived in the Bay Area. And so I still sort of feel like an outsider that I sort of fell into all this. And so my thought was, and then I'm about as young as you can be and be senior within the work, right? And so I felt like, hey, I still feel like an outsider. I'm, I'm, I'm young enough and relatable enough that I haven't, I'm not sitting in some like colossal mansion somewhere. Like I'm still, you know, I, I should be fine in my life, like no, but like I, you know, I don't own a house, right?

• 1:18:16Speaker 02

  Right. You're, you're not recording this podcast like with a full zoom room setup in your home and a telephoto lens eight feet away.

• 1:18:22Logan Bartlett?

  Exactly. I'm, I'm in like a one bedroom. I guess it's like kind of a one and a half bedroom apartment in, in New York, right? It's nice. It's great. But like, I don't own it. I rent it.

• 1:18:31Speaker 03

  You're not, you don't have something to lose.

• 1:18:33Logan Bartlett?

  Yeah. And so that was kind of, uh, those two things together sort of felt like there was an angle for, for me. And then the Twitter thing was beneficial because it gave me access to people that Parker Conrad came on and told the Zenefits story, right? And, uh, how did I get to Parker Conrad? He had followed me on Twitter for like two years or whatever. And like, I didn't know him, but he was positively inclined to me. And so that sort of gave me a little bit of a, a network and then.

• 1:19:05Speaker 02

  You know that study in Thinking Fast and Slow where they, um, they subject a group of people to a list. Of planted random names in fake news stories over the course of a couple of months. And then they give them a list of people, I think ostensibly that they would be voting for. And half the names have been planted in those news stories and half are brand new. And almost everyone rates the names that they recognize, not good, not bad, but just they recognize as more trustworthy. As someone that feels more competent to them, like recognition is real. In terms of like getting people to be positively inclined toward you, no matter how they heard your name.

• 1:19:45Logan Bartlett?

  Totally. And that was honestly, I mean, we were in this like two year mania of, I would love to talk about state adventure in a minute with you guys.

• 1:19:54Speaker 02

  Oh, it's over. It's done.

• 1:19:55Logan Bartlett?

  But we were in this period of like, I joke, I, I, I, I, one of the things I used to tell people is I started my job as a hedge fund analyst. And, and ended as a Hollywood agent and I was at VC the whole time and like.

• 1:20:09Speaker 02

  That's well put.

• 1:20:10Logan Bartlett?

  My job used to be like numbers and like analyzing and all of that. And then it became like, I, I, I actually went, one of the ramp guys, the co-founder of ramp, Kareem. I actually went with him and his wife after we had brunch together one day and I went with him and like, we walked through the house that they ultimately bought and I was like touring it and checking stuff out. And I'm like, I am a hundred percent a service provider at this point.

• 1:20:36Speaker 02

  You're Michael Ovitz.

• 1:20:37Logan Bartlett?

  Yeah, I'm Michael Ovitz. I actually, like, I'm going around and like, you know.

• 1:20:40Speaker 02

  That was so surreal when we got to do our episode with him like, it's like, I mean, it's such a window into this world. And to your point, like the Andreessen guys and Andreessen Horowitz, they realized it before anybody. They, they helped shape this world and like, it's become Hollywood.

• 1:20:55Logan Bartlett?

  A hundred percent, a hundred percent. So I, let's, I want to, I want to flip to, uh, let's talk state of venture in a minute. Cause I think that Andreessen stuff is all, is all fascinating. I would love to, I had like one very clear worldview of how this was playing out. And now it's been a little, uh, it's definitely changed. And so it's funny because I, we launched it in January or beginning of February. And like the market was pulling back at that exact time, right? And so. Everything that I was like super paranoid about like, you know, uh, hey, did returns really matter versus uh, just access and the ability to win deals predicated not on valuation, but on

• 1:21:35Logan Bartlett?

  uh, you know, service that you bring or, or gravitas or personnel, all that stuff, uh, as the podcast has risen, it's like they're actually just directly inversely correlated. Like as the podcast has had success, it's mattered less and less, I think. It's like, it's kind of a funny, uh, ironic thing. Now-

• 1:21:52Speaker 02

  All right. I got my mainframes all set up. Let's do this.

• 1:21:54Logan Bartlett?

  I know. Well, my, my, my, uh, my time has freed up, which is, which is, which is the other side of it. That's actually been nice of not a ton of companies are fundraising right now. And so in a weird way-

• 1:22:06Speaker 02

  Well, let's put it this way. Not a lot of companies are fundraising right now at the terms that you would be excited about writing a check right now.

• 1:22:12Logan Bartlett?

  That's right. And also not a lot of people, a lot of people are just sitting on their hands saying like, hey, why, why do we need to go out and, uh, and raise? And so it's, it's, it's an interesting, uh, thing, but those were kind of the insights that I, that I had. And then you get lucky with some stuff, right? Like I knew, I knew I could be kind of a neutral, uh, voice that could be likeable enough to like have people want to come on. I actually, I'm not interesting enough to like carry a show with like opinions and stuff. Like I, I just, I, I knew I could be Lex Friedman. I couldn't be like, uh, Joe Rogan, you know, like I knew that I could do one of those things and not the other. And it just so happened that like I sort of fell into,

• 1:22:56Logan Bartlett?

  uh, Zach Weinberg coming on board after we started with Nikita and Zach and Nikita had his company thing going on and, and Zach, uh, had some, uh, back to the compliance considerations that, uh, Battery had, General Catalyst has some of the similar ones and they were gracious and amazing to work with about all this stuff. But it was, uh, it was kind of a godsend that Zach came on board. Cause you talked about someone that like- Just, uh, Weinberg just doesn't care what people think and he's super bright and he is willing to say what he is on his mind and I've never, uh, that's all very, uh, traits that I don't have. I do care what people think, you know, all like I am not post cancellation

• 1:23:39Logan Bartlett?

  in the way that he had, he is. And so he's been a, a kind of godsend for that. I don't know where it's, where all this stuff's gonna go, but it's been, uh, it's been fun, accidental, probably similar to you guys, uh, in terms of just like you, you just keep at it.

• 1:23:52Speaker 03

  Well, I'm curious, you had, um, we, we had in the outline some stuff talking about kind of podcast business model and stuff. I think it'd be fun to riff on that if you, if you're up for it before we talk state of venture, cause I think it's all related, right? Like.

• 1:24:04Logan Bartlett?

  Well, so I would love to, like, let's go back real, real fast, just to, just to tell the story, cause I would love to hear the business side of it. So, so where were you guys, uh, so, so you, were you both still at Madrona when you launched?

• 1:24:15Speaker 02

  Yes. Uh, yeah, for the first maybe six months or so of the show.

• 1:24:20Speaker 03

  Oh yeah. And then, then you started PSL and I stayed at Madrona for, for another couple of years, I think. Yeah, probably two years.

• 1:24:28Speaker 02

  Yeah.

• 1:24:28Logan Bartlett?

  And so as that's going on, what was the cadence of episodes and like what, how did you validate that it was actually working? It sounds like it started as acquired, right? And you, David, you've got 10 episodes out of the way in the beginning and then you had to deviate the strategy. So maybe take through like, you started in October and you started slogging ahead and what happened?

• 1:24:50Speaker 02

  The, the tagline was acquisitions that actually went well and then we finished those. So we needed something else to do.

• 1:24:55Logan Bartlett?

  Yeah.

• 1:24:57Speaker 02

  No, we, so I, when you said over the outline, which, uh, by the way, good, good job as, as interviewer, being extremely prepared and having very thoughtful, uh, ahead of time questions. I was trying to do the normal acquired thing that we do, which is like try to, um, rather than making up what the story was in a way that is sort of the narrative fallacy that is a convenient story to tell, to try to like actually pull out some, um, like both remember specific moments, the way I felt in time, but then look up all the emails and stuff. And David, I had forgotten about this. Our original, um, we made no promises to each other about schedule. It was whenever we're starting to feel like

• 1:25:39Speaker 02

  we should do another episode, we should do another episode. And then once that created-

• 1:25:44Speaker 03

  And we didn't have sponsors, so there was no-

• 1:25:46Speaker 02

  Right.

• 1:25:46Speaker 03

  We had no commitments to anybody. Except ourselves to whom we made no commitments.

• 1:25:51Speaker 02

  Because neither of us thought it would go anywhere. We were like, this is a fun side project, but like, we're both very busy and very focused on, you know, building stuff. And this was not the thing we were building. And so then I think once we realized like, okay, it would be better if there weren't these random multi-month breaks between episodes. I think the next tightest way that we constrained it was whenever we finish an episode, we will always schedule the next one. So we always at least know there's another one coming. And, and you and I were both really, really resistant to, at least I was, and I felt like I, maybe I projected this on you, but I might've dragged you along with me. I never wanted to set goals for the show because I thought that would make it less fun.

• 1:26:30Speaker 02

  And I exclusively wanted to do this as a way to have fun. And I thought like, if it felt too much like a job, then I wouldn't want to do it. And so like, there was never a growth goal. There was never a schedule that we were keeping until we, it took two and a half years or something like that before we decided finally, okay, we'll do a sponsor.

• 1:26:53Logan Bartlett?

  How many episodes was that? Two and a half years?

• 1:26:56Speaker 02

  Fifty, sixty-ish, something like that.

• 1:26:59Logan Bartlett?

  Yeah. And, and you were talking about like, did you doubt in the early days, were there points in time that you thought like, hey, we, you know, this is taking up too much time or because you weren't beholden to either metrics or like a timeline of cadence that you were going after that like, hey, you know, but we're, it's, it's, it's fun. It's not work.

• 1:27:20Speaker 02

  Think the latter. You can check me on that, David, but I don't, I never felt, there was actually a few moments where like, I was bored with two or three episodes in a row. So my heart wasn't in it, but I never was like, let's stop doing it.

• 1:27:31Speaker 03

  Totally. I think if anything, it was, um, the opposite in a way, I think as. As time went on and the show got bigger, I mean, we've basically, it's interesting, right? Like we, we were kind of on a classic exponential growth curve in that like we've doubled our audience base every year that we've done the show. And for many, many, for seven years, for many years, you know, that going from 1,500 to 3,000 doesn't feel like much is going on, right? But then going from 100,000 to 250,000, like, well, it starts to get meaningful.

• 1:28:08Speaker 02

  Well, and let's, let's not make up numbers. We went from, last year, we went from 50,000 to 100,000 when you're measuring by number of people who listen to each episode in the first 90 days. The total audience at this point who listens in any given month is about 250,000. But like, if you literally measure by like, how many people listen to an average episode, that number has doubled every year for seven years. Kind of no matter what we've tried to do or not do, there is something about like, building a content brand where, like, we, we had, uh, we had a hell of a summer, the, the year that Uber, Lyft, uh, Slack, Pinterest, all went public at the same time. And that was like, right as we

• 1:28:51Speaker 02

  had really honed the skill as like, business storytellers who lived through all of those stories as participants and enthusiasts of all of those companies, where we were like, whoa, this just kind of landed in our lap right as we got good at this. Uh, so that year was better, but I think like on, on average, it's been a doubling every year.

• 1:29:09Speaker 03

  Yes. But it's, so from along the way, like, I can't remember exactly when I could think about it, but at some point, a few years ago in that journey, I was kind of like, there's something really interesting happening here. Like, there's a lot of potential in what we're doing. And it was, it was because we were doing it, like, we were the protagonist leading this, living this story. Um, most of the rest of the world didn't get it. Like, the rest of the venture industry didn't get it. Friends and family didn't get it.

• 1:29:38Speaker 02

  You mean, there's something interesting going on with like, business creators?

• 1:29:41Speaker 03

  Yeah.

• 1:29:42Speaker 02

  Yeah.

• 1:29:42Logan Bartlett?

  There's something nice in that, by the way, of like, you know, for me, the, the, the flip side of, of Having a bunch of Twitter followers when I started was it sort of launched loud and then there was a very uh it's almost like a D to C consumer subscription uh thing or consumer subscription product. Where like the episode one churn was like so significant because one like you can't be all things, you know, people liked my jokes. And so it's like, you can't be all things to what it was basically, it manifested itself as whatever people thought it would be from my Twitter and Nikita's Twitter is Zach's Twitters. And then it couldn't be that to all people. And so you see the like fall off in episode one and you're like, oh shit.

• 1:30:26Logan Bartlett?

  And my, my brother actually works in podcasts and he's uh, he is at the athletic and he had told me when like, they launch podcasts with people that have existing followings on different platforms. He was like, just be prepared. The first like four to six weeks, you're going to keep going down and it's going to feel like the world's ending, right? And I, I think without that insight, I would have just given up, right? And so to some extent, when, when people ask me about this now, I'm like, if you have a big platform, Ben Thompson said, I think he did 30 episodes with Gruber before they launched their thing together.

• 1:31:04Speaker 02

  That's the most extreme example ever.

• 1:31:05Logan Bartlett?

  That's, that's extreme. Nikita, Zach and I did like four and I think I would have done nine, you know, or something like uh, and.

• 1:31:13Speaker 02

  We did, we did one. It's a, it's been, it's never released and it's awful. It's a, anyway.

• 1:31:17Logan Bartlett?

  But the thing is, you guys launched with how many people listening, right? And so you got to get better.

• 1:31:22Speaker 03

  Yeah, dude, it was a different area. Yeah.

• 1:31:25Logan Bartlett?

  You got to get better over time. And so like every time someone discovered you, the, the quality of the product was like significantly better versus when, if you had launched with, uh, you know, your following today, like uh, and you weren't as good as you are now, then you know, a lot of people would be like, well, this isn't great.

• 1:31:43Speaker 03

  Yeah. Totally, totally.

• 1:31:46Logan Bartlett?

  Like, and so there was something that in retrospect, just slogging ahead, uh, I, I really had to know this was gonna happen versus it's kinda nice when I tell people, I'd like, just start throwing it out there. If you don't have a following, just start doing it, right? If you have a following, then like be very prepared, cause people come once.

• 1:32:05Speaker 02

  Good luck.

• 1:32:06Logan Bartlett?

  And then you really have to win them back, right? And then that was sort of what happened for me. So, yeah.

• 1:32:12Speaker 02

  Have you ever heard the Ira Glass thing about taste?

• 1:32:14Logan Bartlett?

  Um, yes.

• 1:32:16Speaker 02

  There's this four YouTube videos, they're each like 10 minutes, 10 minutes long. And I think it's like cut out of an old 90s documentary. It's an interview with him and one of them is where he's talking about how difficult it is to be a person with a high level of taste, but a low level of skill. Because when you're first starting out, you might have taste and you know what good looks like. And then you go and you make the things, you're passionate about making the thing because like you have good taste and you like making things in the world and you make it and it sucks. And you're like, wow, this is awful because I know what good is and this is so far from it. And most of being a creative person in honing a craft is starting with taste and just trying to shrink that gap between what you know it could be and what it actually is.

• 1:32:59Logan Bartlett?

  That's fascinating. Yeah, it's, it's, uh, it's one of those, it is interesting when I felt like I had figured out Twitter as a form factor. And a little bit, like at least to the extent I was doing it and like I, I know what would work and what wouldn't and like, uh, and then you go and you like the amount of surface area you're bringing yourself up to, uh, with Twitter is like literally 140 to 280 characters, right? And people could only critique you so much and can only, uh, know you so well. And then you move to like a different form factor and you have to learn all these different taste and quality things. And you know, like I knew we weren't good or as good as I wanted to be.

• 1:33:44Logan Bartlett?

  And every episode, I, I just kept being like, as long as it's better than the last episode, right? And that was kind of all we were, we were executing on. And so.

• 1:33:54Speaker 03

  That's what you do.

• 1:33:55Speaker 02

  To get super specific on what, so I, we mentioned like, we're having fun. Uh, and especially when we weren't monetizing it. And for the longest time, we didn't monetize it at any significant level. So call it the first five years before it was like a real business, even five and a half years. We had these three priorities and they were, we would get together every six months, David, and have like the little acquired summit, which was dinner. And we would review like, are these still our three priorities? And number one was learning. And it was always like in this order. Number two was our network, like get to know guests so that we have real relationship with those guests and use the podcast as a vehicle to expand that.

• 1:34:37Speaker 02

  So that's how we got to know Nolan Bushnell and Trip Hawkins, the founder of EA. And, you know, for people, we already had relationships with like Tom Alberg, who started Madrona and was the original angel investor in Amazon and was on the board until just a few years ago. It was an opportunity to like, get to know Tom better because we got to spend, you know, an hour dedicated just sitting, talking to him.

• 1:34:57Speaker 02

  And then third was, was reputation, like influence. It was the sort of listener facing side of things. And then we would always specifically assert a non-goal is monetization because we were very confident that doing this would provide enough goodness that like, that will happen at some point. And it, it never occurred to us that monetizing the show could make the show better. And I think like, I think we were pretty foolish in that for a long time, David, because we were so staunchly like anti-advertiser. It's because most podcast ads suck. And like by, when we first dipped our toe in and said, okay, SVB, will you take a chance on us and be our first sponsor?

• 1:35:41Speaker 02

  We were like, what if we do it differently where every single episode, we're actually interviewing one of the bankers who covers a sector at SVB to talk about like what's going on that's interesting in that sector and related to the episode very often. And our whole sort of format over the last few years has really followed that. Like with Vanta now interviewing them on like, what, Christina, what is the actual interesting insights for people who aren't in the compliance world to pull out of why your strategy is very compelling? And so I think like, we did not realize that there was material room for innovation on making sponsorship into content by being extremely selective about our sponsors and the format that we did with them. And on top of that, I don't think we realized how much better the show could get by reinvesting capital into it.

• 1:36:25Speaker 02

  I mean, if you think about how, how our editor turns stuff that we do into pure magic, it has made the show so much better.

• 1:36:36Speaker 03

  Well, to me, it's like, that's, that's only. Just a small part of it. Like, I feel, this is why I wanted to chat with you about what you're thinking and the whole business model and investing and podcasting and sponsorship. Like, I think we're just scratching the surface of how powerful this can be, even at Acquired. I think we're doing a lot of really innovative stuff, but like, I just see how powerful it is and I think it can be more. Like, Vanta, great example. Like, you know, they're our presenting sponsor for this past season. We invested in the company. We went to their all hands. We recorded the all hands. We released the all hands in our LP show in

• 1:37:15Speaker 03

  our second feed. Like, we can just, like, go so far into the depth of partnership with these companies and it's like, great. It's an amazing company. Vanta is an incredible company. They raised probably the best round of this year and they deserve it.

• 1:37:31Logan Bartlett?

  Yeah, Christina's, they're amazing. I mean, their execution's been just incredible to see. But, and when you say, by the way, when you say you invest in it, so Ben, you have Pioneer Square Labs, right?

• 1:37:44Speaker 02

  Yep.

• 1:37:45Logan Bartlett?

  David, what, so when you say invested, do you each, do you invest personally, David? And then you invest out of Pioneer Square Labs? Or how does that work?

• 1:37:52Speaker 02

  Good question. So for me, it's a little bit more complicated. I'm a GP at Pioneer Square Labs and our venture fund, PSL Ventures, which invests classic seed investing. So like, multimillion dollar lead checks, board seats, Pacific Northwest companies, like Call's old fashioned, but you know, it's the, it's the thing that we really like to do and it's the way that we feel we can like most work directly with founders. And we only write a few big checks a year and you know, it's classic venture. That doesn't fit at all with Vanta's raising a round that's, you know, it's a, what is it, Series B, but you know, billion and a half dollar valuation?

• 1:38:28Speaker 03

  Technically a B, but yeah.

• 1:38:30Speaker 02

  Yeah. And so that one was a personal check because I just, there's zero way to make that fit into, into the fund strategy. But for David, that is your fund strategy.

• 1:38:43Speaker 03

  Yeah. Well, that's what I was saying. And when I started to realize a few years ago, I was like, Wow, I know a secret that this is way more powerful than anybody in this whole industry realizes. So yeah, I have a fund on Angel List that I run with my friend Nat Manning. It's a $15 million fund and we invest out of that. And most, I mean, 100% of our LPs are listeners of the show. 100% of the founders that we invest in are listeners of the show. There is a high degree of overlap between people who have been on the show or protagonists that we've covered on the show. And, you know, that are in both of those categories. There's a high degree of overlap between people who we invest in and who are also LPs of the show.

• 1:39:26Speaker 03

  And that's what I just realized is like, I could sit at a venture firm being a GP in the traditional sense. Or I could see how deep the rabbit hole goes on like what's possible in this new Hollywood style world, like you said.

• 1:39:38Logan Bartlett?

  Yeah, it's fascinating. Well, so, so for me, you had asked about what, what we were thinking or I'm thinking about this. And I don't really know to what end we're, I'm doing this other than I'm enjoying it. It feels like there's an opportunity here, getting positive feedback around a lot of the stuff. And I both have the time in terms of like the market's slower and the, and the willingness from my partners to invest in this. And so like the budget, while, while our, your guys' quality is just like amazing and what you guys do from a video and audio standpoint.

• 1:40:23Logan Bartlett?

  The, the amount that we invest isn't a small amount in making this, you know, successful and making this work. By the way, your time being the biggest part of the budget. By far the biggest time of the budget, right? And, and then the other, the other thing is we've been resistant in taking on advertising. Just because I sort of took that inspiration from All In that they didn't really have it. And I don't know, it felt like we're not doing this for. Money explicit like explicit dollars that are coming from this. And so why if if if we're not

• 1:41:03Logan Bartlett?

  trading off any investments that we would or wouldn't make and and we don't need to do it, then why do it? But I don't know. Like, at some point, it could that could change. And I mean, we certainly could up the level of production to what you guys have from a video and audio standpoint. The other thing that we have, at least right now, is there, there is some level of like topicalness, like yours are definitive guides and mine are like, you know, could be outdated in hours, right? And so to some extent,

• 1:41:40Speaker 03

  Well, I feel like you're actually somewhere in the middle, right? Like, like Jake Allen Twist is like, could be outdated in hours, and that's explicitly what it is.

• 1:41:48Logan Bartlett?

  I've moved more to the middle. Originally, when we started, it was more on one end of it. And so I definitely more in the middle that like, some of these things will live on, certainly. And so in those ones, like, if you go look at the Parker Conrad interview, like, we had very real video crew in place that we hired to go do that. Same thing with Aaron Levy, went and hired a video crew to go do that.

• 1:42:13Speaker 02

  Probably should have done that with Brad Gersner, but instead, David and I spent two hours figuring out how to set up a bunch of tripods in their office.

• 1:42:19Logan Bartlett?

  Yeah, well, I can, I have a guy, if you're interested in, if you guys need to do these things on the road, we have a, we have a good team that can help on that. But yeah, it's interesting. And so I don't know, I agree with you. It's funny, when I launched, we got a bunch of pushback from random people being like, oh, we don't need another podcast. And I'm like, you know what? That's great. Don't like, you don't have to listen.

• 1:42:39Speaker 03

  Yeah, exactly.

• 1:42:41Logan Bartlett?

  Actually, we're not stealing a time slot from someone else, right? It's not like there's a limited shelf space on what can exist. And to some extent, I I'm excited as these tools, I don't think we're at the end state that like, the tools are totally seamless at all. Like, I think we're, I don't know, in the, in the second half, or maybe the beginning of the second half, or whatever, the beginning of the third quarter, whatever. The right sports analogy is in terms of like the tooling being as easy as it can be to get going. But it's definitely getting better. And so I'm glad that that all exists and people can enable, can experiment with different business models, like what you guys are doing, what Packy's doing, what Ben Thompson's doing.

• 1:43:23Speaker 03

  It's all different. I think that's what's so cool is all of these shows are all, all different.

• 1:43:28Logan Bartlett?

  And it's all for the most part free to the listener, right? And so it's like, it's like, of course, who cares? Like this content you get, you have infinite access to all these people's time and energy. And so I just think that's awesome that there's so many people out there trying. And I honestly wish that there were more doing different flavors of what you're doing, or different flavors of what I'm doing, or different flavors of what Packy's doing. Like, it just feels, it feels like we haven't even scratched the surface of the business model opportunities, the types of content.

• 1:44:03Speaker 03

  Well, that's one thing, you know, I was, wanted to bring up, and I was, I think that we've found that you might find it, I'd encourage you to, to experiment with sponsorship, quote unquote.

• 1:44:16Speaker 03

  We used to think about it just like you're thinking about it, which is on the cost side. Like, oh, does it look weird if like, I'm, you know, we, we can afford the cost to produce the show? Like, does it look weird if we're getting sponsors to cover the cost? It's not actually about the cost side. It's about what you can do. Like, we have so much of a deeper relationship with Vanta, with Modern Treasury, with PitchBook.

• 1:44:39Speaker 02

  PitchBook sponsored the show. We got much more familiar with the PitchBook product. We use the PitchBook product a lot more for pulling out stuff on the show. And then we got to work with PitchBook out of an unbelievably random thing that they had access to, where they offered us the ability to use the brand new basketball hockey arena in Seattle for a night for a live show. And like, you know, we have fans at PitchBook, but that wouldn't have happened like organically without us having the deep relationship with their marketing team.

• 1:45:09Speaker 03

  Yeah, it's a reason to go do that. Like, we are gonna do a whole bunch of episodes together. And we're gonna like, figure out how to make that awesome for you. And then you get to build these relationships.

• 1:45:18Logan Bartlett?

  Yeah. It's interesting. I feel like we're still experimenting on the, the model side of all this stuff. You know, like what the, what the end product ends up being. Uh, and so it's almost like I want to control the variables as we're sort of, you know.

• 1:45:33Speaker 03

  You're still early.

• 1:45:34Logan Bartlett?

  Sometimes Weinberg's on, sometimes he's not. Sometimes it's just me. I asked if you guys wanted to do this live because I actually like doing these things live, but that also limits my access to who can be on versus not.

• 1:45:47Speaker 02

  Wait till you need them to be in somewhere geographically, like an actual person in a seat. It's insane how much that, for our live show, I kept thinking, oh my gosh, it's a no brainer for this person. And like, 20 people that we wanted, David, couldn't make it and be in Seattle on that date, including big executives in Seattle who were like, yes, I want to do this.

• 1:46:08Logan Bartlett?

  It is, it is a crazy constraint, right? And so what is the trade off of a willingness to schedule in person? That said, I'm not totally convinced Parker Conrad tells me the story of Zenefits if I'm, if he knows there's a like camera staring in his face. So I don't know.

• 1:46:21Speaker 03

  Oh, in person is by far the best. Always the best.

• 1:46:24Logan Bartlett?

  But it's like at what expense of trading all this stuff off?

• 1:46:27Speaker 03

  Yep.

• 1:46:28Logan Bartlett?

  So maybe before we transition to the state of venture and what you guys are seeing, are there, are there interesting moments or anecdotes along the way? I know like the, we, you had mentioned that the Taylor Swift episode was like a big breakthrough, but were there some like, I mean, that obviously happened in the last, whatever, 12 months. And so along the way, were there just like surreal moments, either from a growth standpoint or a willingness for this person to come on standpoint that you guys were like, I can't believe we've gotten here?

• 1:46:55Speaker 02

  Logan, it's like totally counter to the advice of, um, like act like you, act like you've been here for us to reveal the times where we were like pinching ourselves. How is this actually happening? But it happens like all of the time. We try to be like, pretty chill about like, we're sitting here with Doug Leone at Sequoia's office for him to tell the definitive story of when he came into Sequoia through today. Meanwhile, we're both like, oh my God, oh my God, oh my God, oh my God. And like, that, uh,

• 1:47:23Speaker 02

  That happens several times a year. I mean, the arena show is definitely one of those. When we met up with Nolan Bushnell, David, I'd say that was a huge one for me.

• 1:47:31Speaker 03

  Yeah, that was so cool. Oh, man.

• 1:47:34Speaker 02

  I had my fifth birthday party at Chuck E. Cheese. For everyone who doesn't know, Nolan both started Atari and Chuck E. Cheese and is an absolute cowboy.

• 1:47:44Speaker 03

  And Atari birthed everything.

• 1:47:46Logan Bartlett?

  Totally.

• 1:47:46Speaker 03

  I mean, Steve Jobs worked for Nolan. Atari was Sequoia Capital's first investment in 1972. Like, it's crazy.

• 1:47:54Speaker 02

  Yeah, or like the emails we get from, I don't think I can name this name, but CEOs of very large companies that we have covered, who say, "This is by far the best telling of my company's story ever. How did you guys find this?" And we know we respond back like, "It's all public information. You just have to like, look and look and look and look and look." That's really cool.

• 1:48:16Speaker 03

  That's the craziest stuff these days is just like.

• 1:48:19Speaker 02

  Or like, "Oh, now it's..." And this also recently happened. It is now mandatory, if you join my company, to listen to the acquired episode on the company to become familiar with it. Like, that's crazy, because I'm like, "These are all publicly available resources that just haven't been pulled and assembled and ruthlessly whittled." Like, that's the other thing that like, goes into this, is David, you combing over the outline four, five, six times, and then in post, me listening to every single sentence, highlighting into script, working with our editor on like, "Can it be a clean cut if we still delete this one? Because I don't feel this sentence carried the gravitas." And if it's going to be three hours, it has to be like, the most interesting shit all the time for three hours.

• 1:49:01Logan Bartlett?

  Yeah, keeping it at that length, but also keeping people intrigued is a tough, tough exercise. But yeah, no, it's interesting. Maybe take through the process now of like, what it actually is for you guys to produce an episode, just because you referenced it.

• 1:49:16Speaker 02

  Do you want a case study, David?

• 1:49:17Speaker 03

  Yeah, well, it's live and in process. We're starting next season.

• 1:49:22Speaker 02

  Well, do you want to... Maybe because we don't know when this is going to come out, do you want a case study Nvidia?

• 1:49:27Speaker 03

  Sure. Yeah. Yeah, like Nvidia is a pretty good, modern example of an.

• 1:49:32Speaker 02

  acquired story. And interesting specifically because there's not a book. Sometimes it's it's not that it's like, oh, it's easy. We read the book and then we're done because there's another 50 sources that go into it. But like, that is always a situation where we know where to start. And right now, our next upcoming episode has an autobiography. So there's a place to start and we can spider off from there. And that can give us ideas of other places to look. But Nvidia is fascinating because there just isn't. There is not a definitive telling of that company anywhere. And so you do what every other person would do is you start on the Wikipedia page, and you start sort of using that to inform your list of here's a bunch of stuff that I should

• 1:50:14Speaker 02

  research based on like, oh, I forgot they got into that product line. Let me go look into the history of that product line and all of its competitors. But it lands you in weird places. Like, you find yourself watching obscure talks on YouTube with only a couple hundred views because it was by some mid-level executive at like, an industry-only conference. YouTube is the best. YouTube is like the greatest gift to humanity. And like, no one cared enough to watch it. But actually, there's a sort of like, first-party account of something that is mischaracterized in the media about that business that's important to know. Or like, we use Tigas all the time to go and like, find another sponsor of the show that turned out to build a really valuable product for us. But like, to get interviews with former

• 1:50:59Speaker 02

  employees of the of the company, that's a really interesting place. And so our two research processes look different. Mine look like this really random text edit document of like,

• 1:51:16Speaker 02

  I clean it up as we get closer to the show, but it's just like a whole bunch of sort of half thoughts of I think this is an interesting point to make about this company, but I don't know where I'm going to make them in the story. And then David is a really Cold version of like an actual timeline of events that we have sort of assembled and we don't share them with each other beforehand importantly, so we can have real live insights on the show and surprise each other where he can sort of pull out events that I didn't know happened in history and I can sort of make connections and bring up mental models that he otherwise wouldn't have thought of in the research.

• 1:51:53Logan Bartlett?

  It's fascinating. So how much time do you each put into like an average episode? How long does that take you to prep?

• 1:52:01Speaker 02

  I think it's about 100 person hours of prep work.

• 1:52:04Logan Bartlett?

  Each or total?

• 1:52:05Speaker 02

  Total.

• 1:52:06Logan Bartlett?

  Wow.

• 1:52:06Speaker 03

  Yeah, I usually spend two weeks on it.

• 1:52:08Speaker 02

  So maybe it's more than.

• 1:52:10Speaker 03

  The sort of organic division of labor that I think we arrived to over time is Ben owns the analysis that used to be in its like dedicated sections in the in the episodes, but now it's kind of peppered throughout the show as Ben you were saying. And I own the storytelling. So for me, yeah, it's, you know, I really write, you know, it's somewhere between an outline and a script, but it's much closer to a script these days. That's, you know, 15, 20, 30, 40 pages long on like, this is the story of this company.

• 1:52:43Logan Bartlett?

  And how long will you guys record for? Do you keep, is it end up being about half of what we hear is what's recorded?

• 1:52:50Speaker 02

  It's about three, three quarters.

• 1:52:52Logan Bartlett?

  Three quarters. Got it.

• 1:52:53Speaker 02

  Yeah.

• 1:52:53Logan Bartlett?

  Wow.

• 1:52:54Speaker 02

  We tend to turn four hours into three.

• 1:52:56Logan Bartlett?

  Yeah, that's, that's incredible. Yeah. I mean, you could tell just how much work goes into all this stuff, given the output of it. But yeah, no, you're really doing a public service.

• 1:53:07Speaker 02

  The most likely thing that we cut, by the way, is usually a false start. Like we really do, we put so much into the, you get yourself, you can get yourself mentally messed up in putting so much gravitas on like producing something so polished that like we've had several episodes where we get 20 minutes in and we're both looking at each other. We're like, let's take 10, go get a coffee and let's come back and just start this thing over because we like walked out on stage wrong and it's felt wrong ever since. And it's, that didn't used to happen when it was a lower key hobby. And now that we're like, We sure hope this becomes the definitive take on this company that the CEO recognizes

• 1:53:51Speaker 02

  and shares with the board of directors. Like, that is, it instills a lot more gravitas on us before going into it.

• 1:53:59Logan Bartlett?

  It was interesting. I've sort of stopped doing this now, but when I, in the early days of doing it with Nikita and Zach, we would generally start with a topic, hate our chemistry and flow, go to the next topic, go to the next topic, and then go back to the first topic. You know, we're like, all right, we're gonna eliminate that, we're gonna go back through it, right?

• 1:54:18Speaker 03

  Part of it's just about like warming up, too.

• 1:54:20Logan Bartlett?

  Yeah, it's kind of just a flow state of, I remember we tried everything. One time we all went and got beers and drank half a beer, as if that might help. I don't think it did. I think it actually hurt the quality of it, but we were like, we just gotta, we're too uptight right now. Thanks for, I mean, going through all that stuff. Any last thoughts? I mean, we've covered a bunch of ground here about the history of acquired, about you guys working together, about business models, about, you know, I guess, my own podcast. Any last thoughts or anything that you guys would want to share or that we didn't touch on?

• 1:54:54Speaker 02

  There's a thing I've been sort of noodling on recently, trying to decide if it's unique to content or if it applies to all founders or all creators of a thing in the world. And in particular, I think it is interesting to think in extremes. So think about whatever equation makes your thing work and make one variable infinity and what happens to the rest of it. And so, one easy one is what if there was infinite time? Like, what if acquired existed forever? What would sort of naturally happen? And I keep thinking about this, like, doubling, that it's doubled every year since inception. At some point, we will hit the top of the S-curve because we will saturate the market or we will need to change the content in order to appeal to a larger market, which neither of us have any incentive

• 1:55:39Speaker 02

  to do because I think that we have exactly the audience that we wanted. And if you produce regular and high-quality content in an opinionated way...

• 1:55:52Speaker 02

  At infinitum, you will accrue all of the people for whom there is content market fit with that thing. And you can accelerate that through various ways, but it might cost you because if you accelerate, you will also accidentally increase the blast radius of who you are acquiring. And so by going slow and only going from 1500 to 3000 from year one to year two, like we didn't have to try to appeal to people that wouldn't have found the show naturally. So we were able to keep the sort of like strike zone of who became a listener, super organic.

• 1:56:32Speaker 02

  And I think this is a lesson that can be taken for more people in venture because it, in general, what it means is you're taking a lower IRR for a more valuable company later. And it's like, you could think about it like you can increase your competitive advantage, or you can improve your pricing power in the out years, or you can just improve your customer love and keeping that high the entire time is important. But there's something to like, if you're willing to take longer, you can just, and you're willing to assume that the right people will find you, you can save yourself a lot of trouble and a lot of, like frankly,

• 1:57:15Speaker 02

  in the content business trolls, by not accidentally increasing the blast radius of who you want and therefore attracting the wrong people.

• 1:57:23Logan Bartlett?

  Yeah, it's super interesting. I mean, I think it is more broadly applicable. If you think about the companies that were either bootstrapped or lightly capitalized over the years, and I mean, it could be everything, it could be everything from Epic and Esri that like have never really taken money, or it could be companies like Atlassian or Veeva or-

• 1:57:44Speaker 03

  Oh, Veeva, such a great story.

• 1:57:46Logan Bartlett?

  There is something associated with like, when you're not forced, when you're focused on instead with the natural absorption rate of a market is, and you're not chasing everything, like all the infinite opportunities that- Could exist for what venture capitalists might encourage you to go do as the case may be. And instead are just gliding along the glide path of what is natural. I think oftentimes it leads to making these organic thoughtful decisions that are on a timeline conducive to what the market is receptive to,

• 1:58:28Logan Bartlett?

  rather than what a VC thinks that their appropriate IRR or opportunity should be. And it's one of these tropes in VC in general that discourages founders from taking VC. You know, it's like, oh, we don't want our money.

• 1:58:45Speaker 02

  Yeah.

• 1:58:46Logan Bartlett?

  Kind of a trope, but like, I do genuinely believe it in a lot of cases. I don't know what percentage of companies that have raised venture capital should have just taken out debt and had some different ambition of what they were going for. But it's some decent number. And I hope that the last couple of years of VC and capital being as abundant as it is, didn't lead to everyone or 90% of people raising VC, because there's really some special companies that had been built around constraints and dogmatic focus on like what they're pursuing. And so I think it's more broadly applicable than just this.

• 1:59:31Speaker 02

  Totally agree, and it's totally informed my perspective as a board member. Like when we invest in these companies, and I'm on a few boards right now from PSL Ventures, where there is very clear opportunity in front of us for reinvestment. And so we should be good capital allocators and go, go, go. And there are other ones for which that doesn't make sense. And we need to figure out what the natural absorption rate of the market is. And once we feel like, oh, my God, there is a very clear opportunity to not accidentally over, to use my former example, like make a huge blast radius when actually we want a very concentrated laser shot of the types of people we're acquiring and why and what we know about them as customers. You should have to be really careful of, Logan, to your point,

• 2:00:15Speaker 02

  the broad capital availability, not letting that guide.

• 2:00:21Speaker 03

  Your company to do inorganic things.

• 2:00:24Logan Bartlett?

  Yeah, no, that's, that's a, it's a really interesting point that I think has broad applicability. Well, so, so that's actually an interesting, I mean, we talked on capital allocation and all that. When I was going back and listening to, to a podcast you guys did earlier this year, we were, it was kind of on the state of venture capital and I, I think you two are both students of, of the venture capital history now, having produced a number of primers on how these firms came to, came to be. And I actually, I had done a lot of that myself, kind of going back through, I think it's, what is it? The Cal library or whatever that has.

• 2:01:03Speaker 03

  Yes.

• 2:01:03Logan Bartlett?

  John Allen, like, I remember going back and reading those transcripts whenever.

• 2:01:07Speaker 03

  Such a gem.

• 2:01:08Logan Bartlett?

  It's, it's really amazing. And so I, I think that, I think it would be interesting to kind of talk through how you view the, the industry as it's evolved to where it is today. And so your perspective on where we are right now, in, we're recording this, you know, summer of 2022. Where do you think the industry is from a maturation standpoint, from a product offering standpoint, from a, where we're headed from here standpoint, as people that have been sort of students of the, of the history of the industry?

• 2:01:46Speaker 03

  You know, just a big, small question, you know, not a lot of consequence to that.

• 2:01:54Speaker 03

  It's great. You know, one of the, well, I'm sure Ben also have a few thoughts, I have plenty. But I thought one of the best, summing up of the current state that I have heard recently was from Brad Gerson on our episode with him, where he was like, he, he put it very simply that I, I agree with this. He said, you know, the venture capital industry has industrialized over the past decade and a half, two decades, and the same thing happened in private equity in the previous generation. And the same thing happened in the public markets, you know, my God, we, we did our history on Berkshire Hathaway and like the Ben Graham days and like when Warren was starting, like, you know, it was a,

• 2:02:37Speaker 03

  public market investing was non-industrialized, let's just put it that way. And there were hundred dollar bills to be had sitting on the ground. And all that gets arbitrated away as competition comes in and like that's happening in venture. And I don't think that's necessarily a bad thing. I think it's probably a good thing. Like more capital for more companies, more founders. I also think to what we were, you were just talking about there. A, I think will end up being a feature of the venture capital industry that a lot of people think is a bug right now is the lack, the decoupling of capital and advice and governance.

• 2:03:16Speaker 03

  You know, bad things can happen in a lack of governance, but bad things can happen and have happened many times in history with governance from VCs. And nobody knows better than founders, like what the right things are to do. So you were just talking about, you know, investing capital, soaking capital into markets and, you know, I mean, I know in my history as a board member, when I used to be a board member, I used to give terrible advice, you know, not all the time, but sometimes and, you know, and I think founders now have the option to raise capital in ways that don't necessarily come bundled with that.

• 2:03:54Logan Bartlett?

  I think one of the things that I felt was clearly happening over the course of the last two years especially, and even, even, you know, a couple of years prior to that, I was noodling on it was, yeah, I think I, I forget who said this between the two of you, but kind of talking about getting stuck in the middle of there was kind of the shoe leather side of what Benchmark does and then the Walmart effect of like what Tiger does on the other side from a scale standpoint. And if you get caught in the middle, it's JC, you could be JC Penney and be neither, you know, so boutique and so specialized or so, so big and powerful.

• 2:04:37Logan Bartlett?

  And I really felt like that was definitely happening over the course of the last couple of years and it felt like that was part of the inspiration for doing this at all was I, it just felt like, you know, if you're not known for something, you're known for nothing. And the, the controversial analogy I'll use at times is like, it's better to be Donald Trump than it is to be Jeb Bush. And so It's better to deeply appeal very narrowly than broadly appeal, but thinly. And I think that's true of, you know, content like TikTok, right? I think that's the type of personalized.

• 2:05:12Speaker 02

  Anything that the internet happens to will have that characteristic.

• 2:05:16Logan Bartlett?

  Anything the internet happens to, right? Ultimately, you need to stand for something or you're thought of for nothing. And I was really excited when prices were somewhat fixed as determined by the entrepreneur. That was 100% happening where it was a Chinese menu of service offerings from VCs. And an entrepreneur said, hey, you know, at $400 million, this is the price. And some VCs disqualified themselves from the price, but then, you know, they got to say, hey, I want the boutique-ness of X firm or the scale of Y firm or the gravitas of Z firm or whatever it was, right?

• 2:05:55Logan Bartlett?

  And now as the markets pulled back, that was very much a product of, uh, of capital being infinitely accessible to venture managers and therefore also to, uh, to entrepreneurs, right? And as capitals pulled back, uh, and it's a bit more about the picking and the valuation that people are thinking through. I wonder, um, to what extent that continues to hold. When we draw the analogies of private equity, right? Institutional or industrializing, to use Brad Gersner's term, or Berkshire Hathaway.

• 2:06:35Logan Bartlett?

  Like Berkshire Hathaway theoretically has equal access to as, as most retail investors or whatever, right? Like, I'm sure it's different, but for the most part, they're operating on a level playing field from an information standpoint. Private equity for the most part has like the function of price. It's been a fairly scalable asset class. And for the most part, what you're willing to sell something for, uh, you know, you'll take a higher price from someone. If, if you're walking away from the asset, almost like selling your house, you're willing to take a higher price. And so while the asset. That comes with having big funds mattered. Like, at the end of the day, the brands of these firms in the private equity industry only matter so much.

• 2:07:19Logan Bartlett?

  And as an asset class, it has a fairly linear distribution, right? Uh, of how the different, you know, firms play out. Versus venture has always been this kind of bar or the staircase of venture returns. And there's so much that compounds to the top. And also, there's so many, uh, there's only so much scalability of the capital at all. And so I guess one of the things that I'm starting to wonder, and it's always been sort of been in the back of my mind, is like, how much does the Tiger or SoftBank approach to all of this? How much does that actually work, right?

• 2:08:03Logan Bartlett?

  In the world of declining prices. Uh, and so I don't know if you guys have thoughts on any of that, but it's been a wrench that I've sort of seen in the last couple of months, especially.

• 2:08:14Speaker 02

  It's interesting. I used to, six months ago, I definitely believed that venture capital was just becoming capital. And like, there would be, uh, there's this incredible post called "When Tailwinds Vanish" by John Luddig at Founder's Fund, he's got a Substack. And it talks about this notion of Sand Hill Sachs, that basically there's going to be a West Coast, you know, Goldman Sachs. And who's going to be that, is it Andreessen, is it Founder, who knows? But it's one of these really big platforms that sort of can, has the opportunity to become the like, financial institution for startup equity and things that used to be startups, of technology equities.

• 2:08:59Logan Bartlett?

  By the way, and not just to plug, uh, our friends at Founder's Fund, but then also Everett Randall wrote "Playing a Different Game," the Tiger one, right? Which I was like, you know, everyone, Harold and both of them, uh, wrote amazing pieces. But Ben, maybe talk about Luddig's thing.

• 2:09:14Speaker 02

  The pullback is interesting because I think that thesis, the industrialization of venture, venture capital becoming capital, it is true for high-performing, obvious companies. And that will continue to be the case. Four than, I don't know if, what percentile it's at, if it's 50, the 50% or below company, the bottom quartile of companies, maybe it's everyone but the top decile, the most obvious decile. I think this market correction will probably bring a return to shoe leather and for those, anyone at that sort of marginal company or lower, for which there is more risk and less,

• 2:09:55Speaker 02

  there's going to be less sort of a bidding process for that company. That company might only have one term sheet, it may have some adverse terms in it, they may not get to pick who the financer is or what the valuation is. And so that's where there's sort of opportunity for early-stage tech investors, or, you know, this is not a common asset class, but like distressed company who just need $5 million to sort of make, turn that corner and then they can look attractive type tech companies that are like mid-stage. I do think there will be an increasing opportunity for what we used to think of 10, 20 years ago as venture capital, well, not 20 years ago because that was the dot-com bubble,

• 2:10:39Speaker 02

  but 10 and 30 years ago, for the non-obvious companies. But we've already blown the doors wide open on massive amounts of late-stage private capital and very clearly paved roads to public equities for the obvious companies. And I don't think there's any return, there's no coming back from that, it's just about the marginal company.

• 2:11:01Logan Bartlett?

  Yeah, it's interesting. I'm seeing more and more, there's wider spreads in terms of what people are willing to pay, and there's no consistency, I would say, in terms of like the fundraise process. Entrepreneurs go out and one firm will tell you 200, one firm will tell you 700, and one firm will say, "We're not investing." And, you know, it's kind of like, what's weird right now is there's no consensus around what anything is going to be worth because the public markets has been turned upside down so much. And so access used to be the constraint, right? Because the only way to...

• 2:11:41Logan Bartlett?

  Get the opportunity to invest in these A-plus companies was to have the access to them, right? And increasingly, I'm kind of seeing price come back into the consideration because for a little while, like, the governor on price was like 409A and not wanting that to get too high for the employees. Or maybe investors cared about like, or some CEOs cared about like, hey, I want to be able to execute on this for my investor that's coming in, right? Or maybe they said, hey, I can get Sequoia at this price and SoftBank at that price and that trade-off is worth it to take Sequoia. Like, maybe it's that.

• 2:12:21Logan Bartlett?

  But for the most part, price was kind of a constant to whatever at a later stage of investing. And now, there's this dispersion in price that I think is democratizing access. And these businesses that raised at these crazy prices last year from A-plus firms could maybe raise at the same price this year, but it's not from that A-plus firm, right? And so, it's actually, interestingly, opening up. If someone's willing to pay a super-high price, there still is this opportunity for access that didn't exist last year, right? And I don't know exactly what happens to that, but it's interesting. And it's at a certain valuation level, and I think it's a weird moment in time right now that this is true.

• 2:13:04Logan Bartlett?

  And eventually, we'll all go back to agreeing what prices are worth. And then, when that happens, it'll probably turn back into the beauty contest that it was. But it's a weird moment right now in the market.

• 2:13:15Speaker 02

  It's temporarily really bad for founders because when you have really wide spreads, people all look at each other and go, then no one knows what it's worth if there's no consistency in the offers that are coming in. And so, therefore, I don't want to accidentally pay the wrong price because here I am, I'm in the investment business. What I should do is, you know, buy underpriced assets relative to what the market, you know, either should pay for them today based on their future cash flows, or I have some, you know, unique belief that this thing is more valuable today than other people are valuing it, whatever. But if it's this massive spread, you're like, well, I'm not going to pay massively above what the correct price is for this asset. And so, people stop. And like what we've talked about and referenced earlier on this show, when, you know, growth

• 2:13:58Speaker 02

  stage investors are saying, ew, I kind of need to see like what market clearing multiples are right now before I make investments. Like- Companies can't just like wait for six to 12 months for things to settle out. And so, I mean, unfortunately for a lot of founders, that creates

• 2:14:18Speaker 02

  like very attractive opportunities for investors with high conviction when no one else is willing to write a check to come in and at least write a check.

• 2:14:26Logan Bartlett?

  It's a super interesting point and I, it's not really in my interest to say this, but I have. And so I'll say it again here is like, I've kind of encouraged entrepreneurs to just wait till after Labor Day to fundraise and not because I think you could probably get a better price today than you could after Labor Day. I think, I think there's, there's probably the macro environment, it seems like it's deteriorating and you know, there still are some firms that are operating, maybe not at December 2021 prices, but maybe March 2021 or something, right? And so you could probably go get a decent, uh, better round done, but finding that requires turning over a lot of stones and you're going to get jerked around in a bunch of different

• 2:15:07Logan Bartlett?

  directions. And ultimately raising at that higher price might not be beneficial in the long term for what it means for your employees and what it means, you know, in the, in the, for, for an IPO or future ratchets or whatever it is. Like it might not be the best thing for you. And so I've kind of been like, if you don't have, if you have to go raise, go get money, right? If you don't have to, like hang out another two and a half months or whatever it is, right? And just get to the other side of, uh, at least VCs collectively agreeing on what stuff's worth because we're not there right now and it leads to this super funky dynamic.

• 2:15:42Speaker 03

  Yep. Yeah, I think you guys are right that price is the big question right now. I don't see, I mean, and maybe that will lead to, it will lead to some changing dynamics and changing players and new.

• 2:15:56Speaker 03

  Ways of doing venture that emerge because it's a complex adaptive system. But I don't think all the change that's happened in the last five to 10 years is going away.

• 2:16:07Speaker 02

  Totally agree.

• 2:16:07Speaker 03

  Like, we're not going back to, shoot, I joined the industry in 2010 and like, my God, it was so, we're not going back to those eras where like, you know, price is one thing, but like, just the, the way that VCs existed, the nature of how startups and founders and VCs interacted, like, I really don't think we're going back to that era.

• 2:16:29Logan Bartlett?

  The power dynamic has definitely shifted. The last year, it was, I mean, 10 years ago when you started, it was 100% on the VC side. And I just remember it was like, you know, people went and fundraised and it was six weeks until you actually would plan to get a term sheet or something. And now, and then it became six hours or unsolicited term sheets coming in your inbox. And now, I think we're going back away from that a little bit and like, people are going to have the ability to do diligence. But I agree. I mean, the power dynamic should have always been in this direction, right? And it was almost a bug rather than a feature that it was the way it was because capital was finite. But now, I agree. I mean,

• 2:17:13Speaker 03

  Well, and that's what I take the industrialization of venture to mean to me. It's like,

• 2:17:18Speaker 03

  price always goes up and down, right? But like, it's that you can now have a much better experience as a founder and a company and choose features of what you want, you know, and it would, yeah, I mean, oh my gosh, you used to plan for three to six months for a fundraiser if you were on a board of a company and like, that's just terrible for everybody.

• 2:17:37Logan Bartlett?

  Yeah. Well, any parting thoughts on the state of venture right now? It's obviously upside down. I imagine it doesn't impact your, Ben, like the early stage stuff you're doing. I assume it's business as usual as well, but.

• 2:17:51Speaker 02

  Prices are different, but velocity is still high. Like, I'm not afraid to write checks right now because I know as long as I don't do anything stupid, there is a Series A investor that will be willing to invest. At a higher price if things are going well for the company. You know, I don't know what that means if things have dropped 50% in price or 100, you know, that can't drop 100%, but I think things have probably dropped 33% to 50%. Like you used to see the very experienced second time founder being able to go and raise at a 30 or 40 million dollar valuation if they were doing a price round out of the chute. That seems to have gone away and we're sort of back to a return to the, you know,

• 2:18:36Speaker 02

  10 ish million dollar valuation first round days of 2017, 18, whenever that was.

• 2:18:45Speaker 02

  So it's been interesting watching prices change, but the cool thing about investing at Formation, which is really like, but what we do and then take a very active role and be on the board and all that is like, our jobs are still the same and the pace at which we're deploying capital is still pretty much the same.

• 2:19:02Logan Bartlett?

  You won't be wrong based on valuation, right?

• 2:19:05Speaker 02

  I'll just be wrong in all the, all the other ways that I've always.

• 2:19:07Logan Bartlett?

  Yeah, yeah, yeah, yeah. Your insight will be wrong, not the price you pay. For me, yeah, we, you know, there was an old adage that I think was very, ultimately led to sloppy thinking, but like you're never wrong on price. And it was like true, if, if, if you're investing for like these companies to be billion, 5 billion, 10 billion dollar companies, if you paid 10 posts or, you know, 20 posts or 30 posts or 50 posts, it shouldn't really matter. But then people started extrapolating the early stage mindset of that being true to growth stage. Cause all these companies were now worth like, you know, 10, 20 billion dollars. And now as that's corrected back down, you know, then price really does matter when multiples

• 2:19:52Logan Bartlett?

  compress, so.

• 2:19:53Speaker 02

  And the thing that we're seeing in early stage again is like, for a while I was not seeing the six cap note round, like that had totally gone away. This idea of like, I'm going to raise, you know, 300K to a million on a six cap note and we'll make some progress and then we'll go raise to a good old institutional venture round for the seed. And that just went away because there was so much seed capital wanting to play at Formation. And I'm actually now starting to see those rounds happening again.

• 2:20:20Logan Bartlett?

  Well, good. Well, uh, well, thank you both for doing this. Uh, this has been fun and sprawling and, uh, interesting to, uh, to be able to cut it up and talk about all this stuff. We'll, uh, we'll have to, as this format evolves and, uh, I figure out what I'm actually doing here, uh, we'll have to have you guys back on, but this has been fun.

• 2:20:39Speaker 03

  Oh, dude, you are off to such a good start. Uh, you're, uh, not, not only because you had the advantage of your Twitter following coming in, but like you're clearly putting the work into this and that's ultimately, you know, what makes a good show is putting the work in over time and you're doing great.

• 2:20:54Logan Bartlett?

  Thank you. I appreciate it.

• 2:20:56Speaker 03

  Thanks, Logan.

• 2:21:01Logan Bartlett?

  So that'll do it for episode 23 of Cartoon Avatars. Uh, thank you to Zach Weinberg, per usual, for coming on as well as, uh, Ben and David. Um, we have a, uh, really exciting episode next week that, uh, you're gonna hear. Um, we're, uh, we're, we're gonna go back to a little bit of the crypto hits as we kind of wind down that series. And so there's a few people that I'm really excited to, to have join, um, as we kind of bring that, bring that whole conversation to a close. So, uh, thanks everyone for joining and look forward to seeing everyone next week.