Special: Acquired x My First Million

Acquired teams up with the My First Million podcast for a “best of both worlds” crossover episode. First we go deep, “Acquired style”, on the wild story of MFM host Shaan Puri’s bought, sold, and then bought-again OG social networking site Bebo, and then we turn the tables and brainstorm startup ideas and investing themes “MFM style”. This episode was frankly a blast to do. We hope you have as much fun listening as we did recording! Sponsors: Vanta: https://bit.ly/acquiredvantaServiceNow: https://bit.ly/acquiredservicenow26Legora: https://bit.ly/acquiredlegoraStatsig: https://bit.ly/acquiredstatsig26 More Acquired! Get email updates https://www.acquired.fm/email with hints on next episode and follow-ups from recent episodesJoin the Slack http://acquired.fm/slackSubscribe to ACQ2 https://pod.link/acquiredlpMerch Store https://www.acquired.fm/store! © Copyright 2015-2026 ACQ, LLC Links: My First Million‘s website: https://thehustle.co/my-first-million-podcast/

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

• 0:00Speaker 00

  And this is for our podcast, correct? Or this is going on your podcast or both?

• 0:04Ben Gilbert?

  Good, good question. Like, we're open to whatever.

• 0:06Speaker 00

  Yeah. I think we should record it and see what fits. But like by default, I think it'll definitely work on our feed. If you guys feel good about it on your feed, I think great. Just dual purpose it.

• 0:14Ben Gilbert?

  Great.

• 0:14Speaker 00

  I love it. Okay, are we rolling then?

• 0:27Ben Gilbert?

  Welcome to this special Unnumbered crossover episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts. This episode is a crossover between Acquired and the My First Million podcast, a podcast from the hustle for business builders, schemers and dreamers. The show is hosted by Sean Peery and Sam Parr. And this crossover episode was just Sean and us. Sean works on special projects at Twitch and was most recently the CEO of Bebo, a once massive part of the consumer internet in the early 2000s. Sean was also the CEO of blab.im, which some of you may have used a few years ago. Our episode today has two parts.

• 1:11Ben Gilbert?

  First, we had Sean take us through what it was like to buy Bebo out of bankruptcy many years after its heyday and build something new with the assets, eventually selling it to Twitch. This is the first time on our show that we'll be talking about a company that was sold and not bought, which for those of you who have ever been through an exit, know that that is the far more common scenario. The second part of the show is more of the My First Million format, where David and I spitball startup ideas and talk tech trends with Sean. Also, we should say that while Acquired is normally a family-friendly show, at least for families who love analyzing business histories together, this episode has a bit of profanity. As always, if you love Acquired and want to hone your own craft of company building,

• 1:56Ben Gilbert?

  you should join the community of Acquired Limited Partners. You'll get access to the LP show where we dive deeper into the fundamentals of company building and investing, in addition to our monthly LP calls where we talk with all of you directly, and of course, our book club and Zoom calls with the authors. The most recent episode in the feed is the recording of our book club Zoom with Will Thorndike, author of The Outsiders. If you aren't already a limited partner, you can click the link in the show notes or go to acquired.fm/lp and all new listeners get a seven day free trial. Also, if you want to hang out with the acquired community and discuss all things tech news, strategy and ideas, you should join us in our Slack at acquired.fm/Slack.

• 2:37Ben Gilbert?

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

• 2:56David Rosenthal?

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

• 3:17Ben Gilbert?

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

• 3:39David Rosenthal?

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

• 3:57Ben Gilbert?

  And that's the real value. Trust has to be continuous now, which is why Vanta automates your security, your compliance, and the work to earn and prove trust. We're huge fans of Vanta over here, and literally hundreds of acquired listeners have become Vanta customers at their companies over the years. So you can get $1,000 off Vanta at vanta.com/acquired. That's V A N T A dot com slash acquired for $1,000 off, and just tell them that Ben and David sent you. And now, over to our crossover episode with Sean Peery of My First Million. Sean, are you open to telling us a little bit about the story of Bebo? Because I think listeners of Acquired probably don't know your background and might know an element or two of that

• 4:40Ben Gilbert?

  story, but I think getting a little bit of context around all that would be really fun.

• 4:44David Rosenthal?

  Have you been told it on your show?

• 4:45Speaker 00

  No, I haven't. And, you know, one of the reasons why was initially, I was pretty worried because, you know, when you get acquired, there's like these like pretty strict like what you could disclose and not disclose. So I've sort of over time figured out, okay, I can't say certain numbers. That's fine. No problem. But I could just generically tell the story of what our company was and how this all came about and the kind of twists and turns of the story. The hard part is I'm the host, so it's always awkward. Like, what am I going to interview myself? Like, so this is perfect. You guys can ask me questions.

• 5:11Ben Gilbert?

  This is great. That's why you have two interviewers on it.

• 5:13Speaker 00

  So one of the companies that I could talk about is Bebo, which is the company that most recently I ran. And Bebo actually has a really funny story, and I only came in kind of at halftime. So I'll tell the first half of the story, but the key disclaimer is I was not the CEO and founder during that first period, which was a way bigger exit. I wish I was the CEO and founder back then, but it was my partner, Michael, was the CEO and founder of that time. So for those who don't know-

• 5:37David Rosenthal?

  With his wife, Soty, right?

• 5:38Speaker 00

  What's that?

• 5:39David Rosenthal?

  With-

• 5:40Speaker 00

  Michael and Soty, husband and wife duo, who had built multiple companies together, actually, and Bebo was their sort of biggest hit. And so I'll tell kind of the quick version that we could dive in. So the quick version is, did you know there was this company back in the day when MySpace and Facebook were, you know, taking off? Facebook at the time was still in colleges. MySpace was actually the biggest network and was famous and celebrities, musicians were all using it. And so, Michael, when he tells me the story, because I've asked him a bunch of times, like, you know, Dad, can you tell me, like, what was it like back then? Like, tell me these internet war stories. And so he was telling me, he's like, initially, I was-

• 6:18Speaker 00

  Actually, let me finish the short version. I'll tell you the whole thing. So the short version is built a social network called Bebo, got really popular, but it became clear to him that Facebook was going to win this war and that like where he was now was like more like the top and was like, look, I should start looking at, is there an exit here for us? Because I'm not sure. What year is this? This might've been 2007, 2008. I think the deal closed in 2008. So probably let's say 2007, started thinking along these lines. Facebook had been out for three years, had expanded out of colleges, I think at this point, and was at high school level, I think. And so basically was like, look, we've built a cool product, but man, we're and was Bebo was big in certain markets, like Europe, New Zealand. You can. If you're in Ireland, like, you know, Bebo was like more trafficked than than Google at

• 7:03Speaker 00

  the time. And so decides to sell, sells the company for $850 million to AOL. Huge exit at the time, sold for more than MySpace did. And, and so amazing exit for Michael and Zoche, and they went on to do a whole bunch of great things, both philanthropically as well as. And they own 70% of the company. And they own 70% of the company at the exit because of, and I'll go into why they were able to own that. And if we want to go into that detail too. But so they sell it then, fast forward a few years, Facebook takes over the world, AOL basically writes off Bebo kind of like a year and a half later as like a tax write-off of like, it's worth nothing to us now. You know, we write it as essentially zero. Product kind of dwindles, obviously. And now

• 7:47Speaker 00

  it's five, six years later. Michael comes to me and at this time, I'm, I'm running his idea lab. So a startup studio that he had built, that he was basically funding, him and Zoche were funding themselves. Michael originally was the CEO. And then I joined to work with him. I came to San Francisco to work with him. And then a few months later, he put me in charge of the lab. He's like, I'll go to the board and I'm gonna, you know, me and Zoche, we're gonna do cool billionaire shit. Like you go run this thing. And I was like, hey, more power to you. That's what I would do too. I don't know if I would bet on me. I'm like a 25 year old kid, but like, you know, thank you. I'll try my best. And he comes to me at a certain point and he says, hey, you know, we actually have the opportunity to buy Bebo back. I heard, you know, he, Bebo had traded hands. So a private equity guy had bought

• 8:32Speaker 00

  it off of AOL. He had invested in that and he knew that had gone nowhere. That guy didn't even really do anything. And then he's like, he knew it was going to go into bankruptcy and it was going to get bought by somebody. And he's like, we have the opportunity to buy it back. Would you be interested? We're already building social kind of consumer products anyways. That's the point of the lab. Maybe we could use this brand name. Maybe we could use the email list. Maybe we could use the servers. I don't know. Whatever, whatever's there. Would this help us in any way, you know, get better distribution for one of our product ideas? So the, again, this is the, the longest short story I've ever told. We go buy it back.

• 9:06David Rosenthal?

  Welcome to acquire.

• 9:06Speaker 00

  Buy it back for a million dollars. And so we go to this crazy ass auction I can talk about, but buy the, buy the company back for one million. So sold for eight 50, bought for, bought it back for one. And then a couple of years later, we now sold it again, uh, you know, to, uh, to Twitch. We got acquired by Twitch and we're just owned by Amazon. And so, uh, I'm currently.

• 9:25Ben Gilbert?

  And when you're buying for one, does, does it come with like all of the data it's ever had? Like all the email addresses from every epoch of the company?

• 9:32Speaker 00

  It comes with whatever's still there. So some shit gets lost along the way. You can't recover that, but yes, in theory, it there yet. So we got like a 80 million person email list, which was one of the assets. Now, what we found when we got that email, 80 million email list was, hey, it looks like this email list might've been bought and sold before or something. Cause this is not, this does not have a great sort of sender, a send rating essentially. The other thing, the other key component was Bebo had started back when Hotmail and AOL were like the rage. And then Gmail came and everybody switched. And so what we had was essentially 80 million emails of which, you know, approximately 40 million were like, my teenage Hotmail address that I never check in will bounce or, or just go, go.

• 10:16David Rosenthal?

  Or AOL emails or whatever.

• 10:18Speaker 00

  And, um, so that turned out to be a lot less useful. Um, well, the funny thing, I don't know how much of this I could share, but the funny thing is one of the things in buying it was, we actually bought two assets. We bought the company and that brand and the, the domain and the email list and all that stuff for a million bucks. But in that same auction, we bought the sort of legal rights to sue the previous owner for, I don't know, 50,000. That actually they want to, they won the, the, the case, they won the suit for like multi, you know, multiple millions of dollars. And so that asset turned out to be really, really valuable and have a great ROI. And then the domain and the email list turned out to be a little less valuable than we originally had hoped.

• 10:58David Rosenthal?

  Wow. Did, um, did you guys use to our previous conversation, an SBA loan at all? And in financing the purchase?

• 11:05Speaker 00

  Michael and Zod, you were like, hey, straight cash. I don't think it would have qualified necessarily, right? It didn't have positive cash flow. It didn't have a lot of things that you would need. And it was kind of a hairy deal going through bankruptcy. So you needed to be an all cash buyer to buy it.

• 11:19Ben Gilbert?

  And so I cut you off a little bit. Take it so where is it eventually now? And how did it get there and why?

• 11:24Speaker 00

  Okay, let me try to pick that up. Where is it eventually now? So we got acquired now.

• 11:31Speaker 00

  And so the whole team that was working on it is now, you know, the majority of the team, 90, 95% of the team is at Twitch and got bought because we had built a whole bunch of things. So one of the things where we bought it, I'll kind of tell the story. It's kind of interesting entrepreneurial story. So when, when we were going to buy it, I got split opinions. I asked a few smart friends, hey, do you think we should buy this back? And 50% of people were like, don't touch it with a 10 foot pole. Like internet companies don't get revived. That's like, not really a thing. The brand is stale. It might be more baggage than it's worth. It's going to be constant confusion if you're launching a new thing under that old brand name. And you know, you don't need it. Why would you pay for this? Go, go put the million dollars into ads and you'll get the same amount of users. And then the other people were like, I don't know what's going to happen, but what a challenge.

• 12:16Speaker 00

  What fun if you did it? And you are also going to get a lot of kind of people who are curious to check out what it became, whether they're actually going to adopt it or not.

• 12:23David Rosenthal?

  It's a good story.

• 12:24Speaker 00

  It's the analogies like, you know, you go back home to your parents, you know, to your original, you know, to your, your parents' house when you're, after you're 30 years old and they say, hey, we renovated your old bedroom. You're like, oh, I want to go see what you do with my stuff. What, what does it look like now? That's essentially what we.

• 12:38Ben Gilbert?

  Dude, I downloaded the dig reader in 2016. Of course I did. I had to see what they did with dig.

• 12:43Speaker 00

  Exactly. Even if you come in thinking, I'm never going to fucking use dig. You want to see what are they trying to do with dig and laugh at it. So we were like, okay, at the very least we'll get that. Better than complete obscurity, I suppose. And so when we bought it, we did one smart thing, which was we, we had some predefined ground rules. We're not going to make, just bring it back as another social network. Like we had seen MySpace try that and we're like, no, that game is over. Facebook has won that game. Don't try to be like, hey, we're cool again 10 years later. Like that doesn't work.

• 13:12Speaker 00

  We also didn't have a new product and so, but we had to close the deal, given the timeline of the acquisition. We had to close the deal and we had to announce it and we had to turn off the existing product because it was going to cost a whole bunch of money every month to run.

• 13:22David Rosenthal?

  I saw this.

• 13:23Speaker 00

  And so, yeah, we were like, okay, we're going to do three things. First, we're going to turn it off. Second, we're going to preserve the SEO because it has amazing SEO. And so, we're like, how do we lower the cost by 100x while keeping the SEO, that everybody's profile page alive? Because you Google someone's name, their Bebo profile is like in the second or third. Static pages? Yeah. So we created these like static frozen pages that would, that would remain, you know, indexable. I don't know anything about it, but one of our engineers was like, nine engineers in the room were like, there's no way. And then our youngest engineer was like, well, why don't I just do this? And then all the other engineers were like begrudgingly like, well, yeah, if we just want to do that, we could do that. And I'm like, well, that accomplishes the goal. Of course, we want to do that simple thing that accomplishes

• 14:07Speaker 00

  our goal. So anyways, so shout out to Quinn for, for coming up with that. The last thing was, we came up with this video. We shot it in a weekend and it was basically like an announcement video of, hey, the original founders bought it back. We're going to bring it. We, and it was kind of tongue in cheek. So we were actually, it looked like a serious corporate stock video of like, hi, I'm Michael, you know, and I'm the original founder of Bebo. You know, we had this vision and over the years, you know, it grew. And, but then he, you know, like the video starts to make fun of the old Bebo. It's like, you know, we had great times and is basically pointing fun at like, you know, people used to like just, you know, go on each other's profile page and draw dicks like on the whiteboard feature. And so that was like, he's like, we have the largest repository of hand drawn

• 14:49Speaker 00

  dicks on the internet. And so this video kind of goes viral, which was our hope. So while the 80 million email list was dirty and pretty much unusable, we couldn't send from it. We got a million new people to sign up to see what's the new Bebo. And we were like, okay, that's cool. And they signed up thinking like, this is funny. I like this guy.

• 15:11David Rosenthal?

  This is like the, the Dolly Shave Club video.

• 15:12Speaker 00

  Exactly. That was our intent. Now, it wasn't as successful as that, but we, it was close. And so that was the, that was the, that was the goal there. And Then we were like, okay, well, we still don't know what product we're going to do. And I was still sort of of the mindset of we need to like test. We don't want to come back with this big bang and we don't know. You know, that's a one shot thing. So I was like, I started creating a little sub list, you know, groups of 10,000, 50,000 people. That was like, hey, do you want to? We're going to launch three new things. I want you to try them. You're going to be our focus group. You're going to tell us if this is any good or if this is dog shit. And whatever comes out of this will be the new Bebo, but you're sworn to ultimate secrecy and blah, blah, blah. And so we created these little lists and we launched different products to them. And we, you know, one was this messaging app with crazy avatars that look like Bitmoji.

• 15:56Speaker 00

  And then this other one was Blab, which you used. I was like this video chat platform. And then, and we were launching them under other names to test them first. The idea was if it ever works, we'll, we'll brand it as Bebo. We'll email the whole list. The last thing we did was we took the live streaming tech we had built and we built a esports platform where you would. We built essentially high school esports. So the way you can go play in a football league or a soccer league or a baseball league as a high school student. Play versus. Just like Play versus we're doing, they were our competitor. And so you could sign up to be in a Fortnite league. And we were like, dude, Fortnite is more popular than baseball. Like there should for sure be a way, a way to join a team for your school or as a high schooler and play with other high schoolers and compete and play in tournaments.

• 16:41Speaker 00

  And because we had built all this streaming tech, we were like, this is cool. Like not only are you playing, but your friends or your family can watch, uh, watch you play. And so that was really cool. And we were running the biggest high school esports league in the country at the time. And then, uh, you know, a couple of the platforms, you know, came knocking and we told them, hey, look, honestly, I, you know, I'm a realist. Like this is cool. The, the students love it and the platforms are happy because we're bringing on tens of thousands of new young teenage streamers for streaming for the first time, who would have never otherwise streamed because they don't want to be a streamer. They just want to play in tournaments and they're, they're like, now they're getting the joy, the thrill of streaming for the first time. And so we were like, all the value is accruing to them. We should go try to sell this to one of them.

• 17:23Speaker 00

  And so we went to YouTube and Facebook and Twitch and like all the others. And we basically said, hey, who wants to buy this thing? And ran a process, a pretty tight process over like 45 days and closed a deal and ended up selling the company.

• 17:37Ben Gilbert?

  And had you already closed down the, the other experiments at this point, or was Blab still like potentially a thing?

• 17:42Speaker 00

  We did them one at a time. So we had learned that lesson the hard way, running the startup studio in general, which is kind of like parallel entrepreneurship, splitting focus is very, very dangerous not to be done unless you are someone much more skilled than me. And so we were doing one experiment all in. And if it didn't work, we would then cycle and pivot to the next thing. But we, we had shut them down by then, which was hard, right? Blab had four million users and was growing and some people loved it and used it eight hours a day. And like, I got death threats and, you know, somebody, this is actually kind of funny. Somebody sent to the office a 200 page script for a play that was using me as the central character, my CTO is the second central character and our designer, head of community, the other people's, whose names they knew. And it was a, a script of

• 18:27Speaker 00

  us being, you know, it's kind of like the office. It was like us being dipshits, like making bad decisions because they were so angry. We were shutting this down.

• 18:34David Rosenthal?

  Oh my god.

• 18:34Speaker 00

  That they sent us like a full play of our, you know, total ineptitude. And I read the thing and I was like, wow, someone took this much time to do this. That's, that's awesome.

• 18:45David Rosenthal?

  So why'd you shut that one down? It was that like other messengers were just, you know, it was like a Facebook style situation?

• 18:51Ben Gilbert?

  And by the way, can I take a stab at explaining Blab?

• 18:53Speaker 00

  Please do.

• 18:54Ben Gilbert?

  From my recollection. So I guess the three modern comps would be, it's sort of like Zoom meets Twitch meets Clubhouse, where it's like video collaborative chat in real time that has a broadcast component.

• 19:08Speaker 00

  So, so the experience was like this. There's three of us on a Zoom call right now, right? Three little squares. And so we would be doing this, but where our chat is in the, you know, the side of Zoom, Zoom is just for private communication. Blab was public. It was like a talk show. So like, we could have live people watching this, listening to this, typing in questions. We could pull the question and put it on the screen and address it. Anybody could call in like an old radio show and like join the conversation. And so it was like this kind of live, you know, it was like if Google Hangouts had an audience or if Zoom had an audience, that was towards the premise. And so we, we organically had a bunch of cool people use it. Like I said, the UFC used it when they wanted to do a virtual fight announcement. We had Tony Robbins come on and do kind of, he would let people call in, tell them their problem and he would like, kind of help them workshop

• 19:51Speaker 00

  them live, just like he does at his big, you know, 7,000 person events. The Jonas Brothers did that with their fans. ESPN would use it every Friday for their basketball show. But the problem was there was two groups of people using it. There was all those cool things I just talked about that make it sound legit, but those people would use it once a week for like an hour. They're like, okay, I'm doing my live interactive fan thing. That's like hard to do. And like, I'm on the spot, but like, it's super deep connection with people. They love me if I do this. So I'll do it once a week for an hour. Fridays at three. That's when my live show happens. And so we were like, cool, Fridays at three are awesome. What happens every other hour of the day? Like, how are we ever going to fill this up with good content? So then

• 20:33David Rosenthal?

  you had the Facebook, same problem as Facebook.

• 20:34Speaker 00

  Same as Periscope, Facebook Live, Meerkat. And we were all at the same time. Our thing was like, they, they were like a monologue, like you hold up your phone and you just talk, which we thought was really hard to do. We were like, dude, dialogue is way easier for people to create content, which was true. But the hard part was for any given category, like, let's say, business talk, or sports, or whatever, you had to have 24/7 interesting content to build a habit for a viewer to just come and show up when they're bored. And if you just tried to get people to show up on demand, they were like, well, dude, I'm busy. Like, the whole world is not like, I don't show up on a schedule anymore. Like, I order things when I want it. And I get what I want when I want it. This is the Postmates era. Like, you know, I don't want to have to show up

• 21:16Speaker 00

  when the creator decides to go live and I'm in the middle of dinner. And so that was always a challenge. And then the other side, we had people that just, they just use this as like, like you said, Clubhouse, they just use it as a room to chill in. So they were just, people would meet each other, they would become friends. And then every day, some, some number of them would get online, and it would trigger notifications to the other friends. And then the party would just rage on all night. And you would just dip in and out as you were free, or, or, or you were busy, you would leave and you'd come back and different set of people would be hanging out. So it was this hangout platform. And the cool thing about that was, these guys were super sticky. So we wanted people on all, all the time. They were on all the time. They would fall asleep on the platform. But the problem with them was, the core value they were getting was they were making friends.

• 21:59Speaker 00

  So they didn't bring any friends to the platform. So that side was not growing. The celebrities grew, but were totally, you know, using it one hour a week. The people using it 40 hours a week, brought no friends. And then those two groups did not coexist at all. They didn't even understand why the hell they're on the platform. And so that was the problem that we were never able to solve and why we ended up pivoting.

• 22:20Ben Gilbert?

  Wow. Bring it at home. So Twitch buys it. What's the main reason? Like, what's the repurposed asset here? Is it mostly the team? Or is there technology or learnings?

• 22:30Speaker 00

  Yeah, all three. So anytime a company, I always differentiate. A company can either get bought or it's sold. We were sold, not bought. Bought is your Instagram, you're hot, you're the next big wave. Everybody recognizes it and people are banging down your door trying to buy you. We were sold in the sense of like, I approached a bunch of companies and I understood, I threw kind of conversations, was able to suss out, what are the things that are important to them? What are their big top three strategic priorities as a company? And then is my little company an answer to any of those problems?

• 23:00Ben Gilbert?

  It's a great framework.

• 23:01Speaker 00

  I was, you know, doing some yoga poses to try to make that fit, where I was like, oh, you really care about this?

• 23:07David Rosenthal?

  You're doing, instead of customer discovery, buyer discovery.

• 23:09Speaker 00

  Exactly. So, because I was like, I need to sell this company. It's not going to be the mega home run we think, but there is some value here. So I don't, I don't want to stay and work on a mediocre, medium sized business for five years, nor do I want to just shut this down and like walk away from millions of dollars of value. So I need to learn a skill I don't know, which is how to sell a company. And so I

• 23:30David Rosenthal?

  Which, by the way, is like long time venture capital. Like you are, you are falling into the 80% thick middle of entrepreneurs here, venture backed entrepreneurs.

• 23:38Speaker 00

  Exactly. So the first thing I did was, I asked six entrepreneurs who had done this before. I was like, hey, how the hell do I do this? And they gave me some tips and they became what I call my deal doulas, which is like, if you've ever had a baby, like, you know, a doula, somebody who helps you birth that baby. And like, these were the guys who helped me birth this deal. They helped, you know, go all the way from the, the tough part of labor, all the way to the happy part at the end. And so, so, so essentially, I found out what their top strategic priorities were. And what I, at first I was trying to be really smart about this. Then I realized, oh, here's how this market works. You have Twitch, which is the market leader, and they have strategic priorities about how to grow their business. Those are very specific to Twitch. I got to find those out. And I took some people to beers and I asked a bunch of questions and sussed out that, oh, there's

• 24:22Speaker 00

  this program that they've realized. And I'll give you kind of the rundown, which was, They were sort of in the category of Twitch has gotten really, really big in the same way that Netflix got really big. But then the content costs start to go up. People start demanding more money, right? Famous streamers want more money. Esports tournaments want money. Yeah, they want exclusive deals.

• 24:41David Rosenthal?

  Nintendo moves over to Mixer.

• 24:43Speaker 00

  Exactly, right. You got streamers getting paid tens of millions of dollars to switch platforms. So that drives up prices. So Netflix had a smart idea to create original content and like, hey, this is stuff we own. So I realized that Twitch really needed original content. And it needed content that it could, it could basically not, it could control its costs better and drive a ton of viewership. And internally, they had been practicing this, they had been doing this program totally manually. So they had no technology to do it. But we were lucky that they themselves had been thinking similarly, had been running a program very manually. And had come to the conclusion that, hey, this works. We need to scale this using tech. And then they looked inside the company. They're like, shit, where am I going to get a leader that I trust to do this really hard thing?

• 25:29Speaker 00

  We need engineers that know how to build this and we need this now, not like 18 months from now. And so that's, that's a great spot to get acquired in because you say, hey, I'm a leader. If you, if you meet me and you, if you believe in me as a, as a person, you think I could be one of the, you know, 10 leaders of your company. Then the only what you can't hire me, I'm an unhireable person. You've got to buy me to get, to get talent like that. Also, I come with 12 engineers that have been working on this for two years and we've already gone through the learning curve and figured out everything. You get the code and you get the learnings. And then, you know, in our case, we didn't have revenue or a big user base that would matter to them. But they're like, don't, don't worry. We already have revenue and users. We just need the rest. So I figured out for Twitch, that was the, the kind of solution. And for everybody else, it was, I realized that the core problem was we want to beat Twitch.

• 26:14Speaker 00

  So I was like, oh, this makes it really easy. I just need to pitch this as a way that you could potentially overtake Twitch. And I need to spin that story and then I need to tell you that Twitch wants to buy, buy this. So that will automatically get you interested. And I, and so that became the sort of game you play as an entrepreneur. To try to get multiple bidders involved. And part of it is persuasion, but you know, you can't just persuade. These are no dummies. These are CEOs of billion dollar companies. They know what the hell they're doing. So you, it's not about convincing of something that they don't want to do and making them do it. It's about. Finding out what they already want to do, positioning our, like, cutting away the fat of our story into just being the solution for that, and then connecting on a personal level and saying, would I, would you want me as one of the senior leaders of your company?

• 26:59Speaker 00

  Would you want me kind of on your extended exec team? And if so, great, let's do a deal.

• 27:03David Rosenthal?

  It's fascinating. It strikes me, we don't have time to go into it, but like, that process is the exact same process of raising money from venture. You want to have a hot round? You want to have VCs competing over your deal? You do exactly what you just said.

• 27:14Speaker 00

  Right, right, exactly.

• 27:16Ben Gilbert?

  Yeah, Sean, I think we'd love to have you on the LP show at some point for the, to be our deal doula, to help, uh, help listeners understand, like, what are the levers you can pull? What are the ways that you can, um, sort of message different things at different times and different parties? Putting that aside, thank you for, for sharing the Bebo story.

• 27:32Speaker 00

  Yeah, for sure. I, I kept every email I sent and things like that because I was like, I want to help the next entrepreneur who's going to be like me, needs this. This is seven years of effort that they just need to like cash in on, and they need a successful outcome. Uh, they deserve it, but like, they're going to be totally clueless. You don't take, get a ton of reps at doing this. And so how can I, I know when I Googled for it, I couldn't find jack shit. Everything was about the bot use case, which is like, should I sell my hot company when I have all these offers or should I stay independent? Like, yeah, there's a ton of content about that because VCs love to talk about that and they'll tell you to stay independent. Um, and then this is the other side that like is a little bit less sexy, usually results in failure, but if you could thread the needle, it'll be life-changing for you, your investors and your employees. Like, you know, there should be more content about this.

• 28:17Speaker 00

  And so I, I wouldn't make a course out of this probably because there's just not that many people who need to know this. Uh, it's like a very small, it's like a niche of a niche, but, um, I saved it in case people knock on my door and they're like, hey, can you help? I'm like, yeah, here, here's some templates that I used and here's what worked for me.

• 28:32David Rosenthal?

  Amazing. Awesome.

• 28:33Speaker 00

  And I got a podcast. And that's actually how the podcast started during the diligence period. I was, you know, the funny thing is when you're running your company, you just get so worn down. You're so tired over time, especially when it's not, you know, it's not a breeze when it's taken off or whatever. And then as soon as the sale process started, my creativity muscles just started firing again, started having all these ideas. And I was like, well, this is the worst time to have a startup idea is when I'm trying to sell my company. Uh, I need to like shut the lid on this and not get tempted to go start something. And, um, so I was like, oh, maybe I could start something that's safe, a podcast. And so I started the podcast just for kicks during that time to keep myself busy, uh, because otherwise I was going to damage my own deal.

• 29:13David Rosenthal?

  Little did you know what it would be.

• 29:16Ben Gilbert?

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

• 29:31David Rosenthal?

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

• 29:45Ben Gilbert?

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

• 29:54David Rosenthal?

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

• 30:12Ben Gilbert?

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

• 30:28David Rosenthal?

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

• 30:45Ben Gilbert?

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

• 30:54David Rosenthal?

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

• 31:05Ben Gilbert?

  All right, listeners. Now we shift to the second part of the show, which time for a secret, we actually recorded first to talk startup ideas, trends, and internet businesses with Sean. We'll talk about a side project idea I have been kicking around, what our smart friends are dabbling in on the weekends, and a bit more on SPACs. Let's dive in.

• 31:26Speaker 00

  Let's do a quick, quick intro. So I've never, I've actually never met you guys, but like I think most people for this podcast, I've heard you guys talking. And actually, just say like five words into your mic. Your mic setup is like godly. I don't know what, I don't know if it's your voice or your mic, but something is perfect. So just

• 31:41David Rosenthal?

  It's all Ben.

• 31:42Speaker 00

  Listen to that.

• 31:44David Rosenthal?

  If it, if it were like, if I were running the tech side of acquired, we would still be like talking into our, into our MacBooks.

• 31:50Ben Gilbert?

  Yeah, but fortunately, we have David's dulcet tones and buttery voice that can complete the, the equation.

• 31:56Speaker 00

  And Ben, you have the like, kind of soundproof panels in the background and stuff like that. I just like roll out of bed and push go and see if it works. All right. So we have David and Ben here with us. These guys host the acquired podcast, which is, we'll talk a little bit about that. So you do that. You're also venture capitalist, from what I understand, if I remember correctly, in the, from the podcast. And the podcast, so I used to listen to a bunch of it at the beginning, because I'll tell you a funny story. We have a guy in our, in our office at our startup named Jason. And Jason is great in all these different ways. He's super enthusiastic. He's a go getter. He'll make shit happen. He's very creative. But the one thing that Jason was always like, kind

• 32:38Speaker 00

  of punching bag of the office was, he would always say the wrong, like, he would always have his facts wrong. So he would be like, oh, you know, that's, you know, they got bought by this company. And we're like, no, it was this other company. Or they raised this number. And it's like, nope, that's not the right number. So he was always like getting fact checked. And then one day, Jason started coming in with just these knowledge bombs. And we were like, that's not right. Wait, that is right. And I was like, how did you know that backstory? Like, did you research this? Like, I didn't understand. And then I realized the secret. He was listening to y'all's podcast. And he was, you know, basically what you guys do is, you tell the story of great kind of acquisitions in tech history. And And you go through kind of like very methodically, you like research it well and you tell a very

• 33:22Speaker 00

  good linear story with no plot holes. And so Jason, all of a sudden had this superpower where he was telling these perfect renditions of what went down. And I was like, what the fuck is going on? And so that's why I was like, okay, what's this podcast that you listen to? So I listened to a few of them. I haven't listened recently. I know you guys been pumped out a ton of them.

• 33:41David Rosenthal?

  You get, well, you gotta hop back in because we're not just acquisitions anymore. We realize these stories, like we were limiting ourselves with just acquisitions.

• 33:47Speaker 00

  So what did you?

• 33:48David Rosenthal?

  We'll get into this with you, but like, you know, acquisitions are a limited part of the universe. So we just did Epic Games, we did SpaceX.

• 33:55Speaker 00

  So it's just like success story in addition to acquisition story type of thing.

• 33:59Ben Gilbert?

  Yeah, the, the goal is that we tell the story of like the, obviously the very deep story of any sort of great company, but then also try and understand the playbook of why it worked.

• 34:09Speaker 00

  Right. I love, I loved them. I've listened to a bunch where you had like a three parter and I'm like, oh man, this is so deep. I love it. Anyways, that's my, my genuine shout out for, for the acquired.

• 34:19David Rosenthal?

  Well, we, we gotta say too, your guys' show is awesome. We love it. And one of the reasons, A, you're just like good. You guys have great flow, chemistry, like you're awesome. But B, it's such a good counterpart to like what we do on acquired. Like we tell this like certain part of like the internet, like history and like as it exists. And it's like these big, huge flashy companies, but like, there's a million ways to skin the cat. And like, there's so many other good businesses out there and so many other people working, doing amazing things that are never going to be SpaceX. But like, that's cool. Like, you know, I've been like your golden hippo episode. I love that one.

• 34:54Speaker 00

  Yeah. On one hand, you have the story of SpaceX. And then the other hand, you have like, you know, this guy who's in Iowa, who's doing a drone light show company and just local, you know, rural Iowa and, uh, you know, making $2 million a year. And, you know, he quit his job as a construction worker before that, you know, that, that's the sort of other end of the spectrum of like cool success stories that are just different flavors.

• 35:15David Rosenthal?

  Yeah, it's so cool. You guys find these and you, you know, bring these folks on the show and this is awesome.

• 35:20Speaker 00

  Okay. So we can agree, our podcasts are great. We love it. Sorry. Go ahead, Ben.

• 35:24Ben Gilbert?

  I was gonna say, like, I also just like that it feels more like classic, I'll say classic American, but classic entrepreneurship.

• 35:32Speaker 00

  Right.

• 35:33Ben Gilbert?

  Like, we've lumped in entrepreneurship to become this thing that involves tons of money, a winner take all market, in all likelihood failing and flaming out, you know, fabulously. And by telling everyone they should go do that, you just set most people up for failure. Whereas, it's not, as long as you're really focused, you're really listening to your customers, you really iterate, you're really capital efficient, like, going and achieving a million dollar a year top line business, like, lots and lots and lots of people do that and can do that and should think they can do that. And so, I love that reminder in our lives.

• 36:09Speaker 00

  Yeah, I would say, like, Naval has this really, like, money line when he's talking, or I don't know who he stole it from, I think it was like Nassim Taleb or something, when he was like, you know, they're like, you know, what's your political stance? He's like, well, with my family, I'm a communist, with my friends, I'm a socialist, with my, you know, my city or my town, I'm a Democrat, and, you know, I'm a libertarian at the federal level, or whatever. And it's just a great, yeah, it's a, it's just a money quote. But I have sort of a similar thing in entrepreneurship, it's the, you know, the poor man's version of that, which is, you know, if I invest, I go for the billion dollar, the potential billion dollar companies. If I'm advising somebody to start something, I advise the types of things we brainstorm on the podcast all the time, which are these, you know, small niche businesses that could generate a ton of cash flow. And then when I do it myself, I just go solopreneurship, and I just create content that I think, you know,

• 36:54Speaker 00

  a lot of people could love, and I don't have to talk to, I don't have to, like, have employees or an office. That's my dream, right? And so, there's, there's these different flavors that each is good for a different purpose, and for a different person. So, anyways, that's my view on it. And so, you guys reached out the other day, and you were like, hey, it'd be fun to do kind of a crossover episode. I think that's a great idea. So, you came on, and I was like, okay, what are we gonna do? Are you guys gonna come on and tell great stories? And I'm just sitting here with my popcorn, because I'm down for that. But actually, you guys came with a bunch of ideas. And so, I wanted to jump in and riff through a bunch of these. And like, normally, the way me and Sam do it is just like you have here, we just have a sheet with like, a bunch of bullet points that, like, you don't even understand the full idea just from the bullet point. And we'll just say like, okay, what you got? And then one person will riff on one.

• 37:39Speaker 00

  And then when we're bored of it, we just say, all right, I got another one. And you just, you just keep going.

• 37:43David Rosenthal?

  This is gonna be so fun for us because it's like, we don't get to do this on acquired.

• 37:46Ben Gilbert?

  Yeah, I acquired.

• 37:47David Rosenthal?

  Yeah. This is awesome.

• 37:49Speaker 00

  This is like, you know, when like, uh, successful business person goes to Burning Man or Mardi Gras or something, it's like, oh, I get to let my hair down and just, you know, shoot the shit on half baked ideas that will totally not work, most likely. Yep, that's what this is. Cool. So when you guys get excited about ideas or, you know, some of the stuff you sent over, you know, what caught, what's, what's on your mind? What are you guys seeing as interesting? Let's, let's jump in with some of these different ideas you got.

• 38:13Ben Gilbert?

  Yeah, so I'll, uh, I'll start cause I, I have your, your Naval quote sort of inspired. I have a very bifurcated lens on the way that I look at ideas. And I don't think I realized it until recently that, um, so I should give a little bit of background. So, uh, I started a thing called Pioneer Square Labs five years ago. We're a startup studio where we spin out, um, companies, all of which go on to get venture backed. We've done that 24 times in the last five years, uh, and we're based in, in Seattle. So I'm really looking to make a dent in, uh, in the entrepreneurial ecosystem in the Northwest. So we're coming up with ideas all the time.

• 38:49David Rosenthal?

  And you guys are investors now, too.

• 38:51Ben Gilbert?

  Yeah. So then we also have the venture fund, PSL Ventures, where we invest in early stage companies in, in Northwest. And so, uh, and many that we have nothing to do with starting. And so, uh, I sort of sit on both sides of the house of coming up with ideas and also evaluating ideas that are not my own. And I, I have, um, a massive bias with my own ideas where I'm excited about it, no matter the market potential, if I can fully conceive of how to build it in my head and how it will deliver value to me as a customer. And like I, it's probably the engineering background, but like I, I put on my blinders real quick and just go heads down and I have to like fight every instinct. Like David will be like, hey, I think there's this really big way we can move the needle

• 39:35Ben Gilbert?

  for acquired and pitch me this big grand plan. And I'll be like, yeah, but I need to fix the way that headers look on our website. And like, I have a really good idea for how to do that. And sorry, I need two hours now. And so like, I, I have a massive bias towards things I can fully conceive of and, and will be satisfied with the value of.

• 39:57David Rosenthal?

  But I think this idea you have is a, is a really good one.

• 40:00Ben Gilbert?

  But the, I think, I think the way that I like, think about, or evaluate other ideas, is definitely, Sean, in that same way that you thought about, like, you know, is this, is this winner take all, is this gonna be a massive thing, is this a moonshot idea? And, and the scary part that always comes along with that is like, well, if this is a really good idea, and now just happens to be the perfect moment in time where someone can do this, are these people the people that are going to pull it off out of all the other people who are also thinking of this rare moment in time where there's a good idea that hasn't yet been done?

• 40:34Speaker 00

  Right.

• 40:34Ben Gilbert?

  And like, that, that's almost disheartening, right? Because then you scope down the universe super, super narrowly, and most of the time, what you're doing is, is saying, no, I'll wait for the next one.

• 40:45Speaker 00

  Right.

• 40:46Ben Gilbert?

  And that's a frustrating, and sometimes disheartening, job. But, I, I think that, finding that spot in the middle, where you can sort of believe in other people's ideas as much as you do your own that you get excited about, and apply the same amount of skeptical rigor that you do to things you're being pitched, to things you come up with, that's sort of where the magic lies in the middle.

• 41:06Speaker 00

  Yeah, I, I would agree. Also, when you said that thing about like, kind of the way you two are, are different, it reminded me of this, um, you know, all right, take a shot, I said framework, framework that, um, uh, that I heard one time, that has always stuck with me. I don't know if you guys have ever heard this, but, uh, Bill Gross, who's the founder of Idea Lab, he's kind of like, you know, internet OG, he gave this talk once, and he talked about, have you, have you heard this, about the four kind of personalities that, that come together to make a company?

• 41:36Ben Gilbert?

  No.

• 41:37Speaker 00

  So, basically, he says, every company needs these four personalities, and they come in a certain order, so he, it's called EPAI. So, uh, not a great acronym, but it works. And so, EPAI, so E is the entrepreneur, so he gives this analogy, you're sitting in a room... So say you're sitting in a classroom and one kid is going to look out the window and it's just, you know, there's just, there's just grass outside, but somebody's going to look at that grass and say, you know what, there should be a parking lot there. And, you know, we all come into work, we all come to school every day and parking is such a hassle. There should be a parking lot there. It could be six stories high. We should build a parking lot. And so entrepreneur comes up with a vision, see something before it exists, based on, you know, a pain point or a personal dream. Then they have P, which kind of sounds like you, Ben, which is the producer.

• 42:22Speaker 00

  So producer is somebody who gets along extremely well with, with the E. They're not usually the one necessarily to come up with the, the kind of visions every single time, but they're very good at downloading the vision. They hear the vision, they say, yep, got it, makes sense. And their brain immediately goes to, oh, by the way, six floors. No, no, no. What it should be is two different structures that each have this, you know, whatever. They start immediately, their brain starts building, uh, building that vision out and they're going to be able to take words and turn it into, you know, some form of action. So he draws these curves, like if, uh, if it's just the E alone, there's this initial value because they come up with a vision and then it's sort of peters out and goes nowhere because there's no production. But then if you have the E and the P, the P jumps in after the initial value is created and takes it to the next level.

• 43:04Speaker 00

  But then if you just have the two of them, um, your, your venture will be a mess because you need the A, which is actually an administrative type of person, a type of person who says, okay, great. We have a vision. We have a, a plan of production. We're actually going, we have six employees, but if no one's doing payroll, if no one's feeding anybody, if nobody's like writing things down about our plan, like we're screwed. We got to get organized here. And so you need A, A takes it to the next level. And then the last one is I, I is the student who's not even looking out the window. It's just looking at the other three people being like, you guys need to learn how to work together. And it's the integrator. Um, and so the I is this amazing person who can figure out, okay, how do we get this group of talented people to be cohesive, uh, over time? And how do we, you know, one person's thinking one thing, another person's thinking another

• 43:49Speaker 00

  thing. How do we get alignment? And so I've, and I've found this in my startups too. And I, the reason I bring it up is because Uh, it's really useful to know which one you're great at, which one your superpower is. So then you'll know who to partner with and when to partner with them. An I at the beginning does nothing for you, but an I is great. Kind of at the end of that cycle, um, you know, same sort of thing. So anyways, I just wanted to share that.

• 44:13David Rosenthal?

  Oh, that's awesome. When do you think you need the As and the Is?

• 44:15Speaker 00

  Uh, so from my experience, you don't need them unless you hit product market fit. So sometimes the E is totally off base. You didn't need a parking lot at all, or you know, you, you build the parking lot, but you didn't have a plan to, you know, get customers. Uh, so it's once you're, once your product has been pulled by the market. So once the demand is pulling, uh, more of the product faster than you can produce it, or asking for more features than you can keep up with, but they're actually using your, your thing. That's when you start to need A and then you need I as the team grows to a certain size, right? Because a two person team, you don't even need meetings. You're just constantly in sync. You're just sharing a brain. And then once, once you even get to six, six is like, oh shit. Uh, we all are doing different things. We all need to talk more.

• 44:57Speaker 00

  And then there's this rule, I forgot what it's called, but like every time the size of your team doubles, the communication required is like a square. So like, um, as you get, you know, from six to 12, you don't need double the communication. You need, you know, quadruple the communication or whatever. Uh, and I, I see that to be true.

• 45:14Ben Gilbert?

  In a perfect world or in a, a, uh, easy to model scenario where every person in the organization must communicate equally with everyone else in the organization. Uh, then the number of communicating lines is proportional to the square of the number of people.

• 45:30Speaker 00

  Cause it's a network, right? So every node needs multiple connections to all the other nodes, or at least to different hubs. And so it creates all these different lines that you need to, to work on. And that's where the A and the I help a lot because the A is like, hey, let's write things down. So other people can read this and the I is like, hey, here's like a common way to write things down. So we're all saying the same thing, have the same bar for, you know, what it takes to say yes to a project or whatever it is.

• 45:55David Rosenthal?

  Yep, that's awesome.

• 45:57Speaker 00

  Uh, okay. Framework hour over.

• 46:01Ben Gilbert?

  Cause. All right, everyone, uh, come back from business school. Let's, uh.

• 46:04Speaker 00

  Exactly. I get real academic about these things. In reality, you don't need to know any of this shit. You just gotta go and, you know, and when you look back on it, you'll say, oh yeah, that matches up to what I did. But it's not like you go forward saying, I gotta be a better P, you know? It doesn't, doesn't work that way. So, uh, anyways, you guys had a bunch of ideas. Let's, let's riff off the first one. What do you got?

• 46:25Ben Gilbert?

  So we thought about talking about some of the stuff that's more directly related to our show here, but people seem to come on your show and then throw out their latest, like brainstormed idea and shoot the shit about it. And so I figured that would be a fun thing for us to do here. And so I tried to apply my own criteria of what's a thing that occurs to me that I want in the world that the time is now and I can see sort of a path to how to accomplish it. And the gist of the idea is I want to book an Airbnb or a VRBO and all it tells me is whether it has internet or not. And that is completely useless in the world of I sit on Zoom for eight hours a day.

• 47:07Speaker 00

  Right.

• 47:08Ben Gilbert?

  And so I'm thinking this is like a totally bootstrappable, maybe even no-code thing where you just say, hey, to get access to, it's basically Waze for Wi-Fi, where whenever you're somewhere, you upload the geo-coordinates, maybe you put the address in, we'd have to figure out some security stuff around that, but you just take a screenshot of a speed test. And then we just have this big database of all these different places and anyone who stayed there and the screenshots they've uploaded. And yeah, that's the basic gist.

• 47:37Speaker 00

  It's basically solving the problem of I need great internet because everything is done through Zoom. And so when I'm out and about, I need a trusted source to know where my internet is going to be good versus okay versus whatever I have.

• 47:51David Rosenthal?

  Well, I think particularly when you're like traveling, working remote, like we did this, my wife and I went to Santa Barbara for a month, rented an Airbnb for a month, Ben, you're doing this later. It's like tons of people are doing this now. Sam's doing this, right?

• 48:04Speaker 00

  Yeah, Sam's nomadically bouncing around every two weeks or three weeks, I think.

• 48:10Ben Gilbert?

  Yeah, I mean, it's this classic cold start problem of like, what a useless website you've created, Ben. There's zero entries on here. So you got to figure out some way to sort of bootstrap that cold start problem.

• 48:20Speaker 00

  Right.

• 48:20Ben Gilbert?

  But I think the data entry is really easy and you can do cool stuff over time, like charting how it's gone up and down. And at the very least, you can probably create like five to 10 spots in every city where like super nerds who saw this on Product Hunt uploaded data for the first time. So it has like a pretty low bar for minimum efficient scale.

• 48:41Speaker 00

  Right. Would you literally build it on like based off of what Airbnb inventory is? So Airbnb tells you, does it have Wi-Fi or not, which is kind of useless. Right. It's like, yes, if it doesn't have Wi-Fi, just take it off the site. If it has Wi-Fi, okay, that doesn't tell me if that's gonna work for what I need.

• 48:58Ben Gilbert?

  It could be the psych glass coffee argument of like, oh, we've created this experience for you that is Wi-Fi free. So you can, but yes, that's not at all we're looking for.

• 49:05David Rosenthal?

  So it's funny. So Ben put this on our list last night where we were brainstorming these ideas. And I was like, holy shit. Did you, did you talk to this guy? We both know who's super awesome in Seattle. Cause I just talked to him yesterday afternoon. He was also thinking about this idea. And I was like, oh no, I didn't. And I think it just speaks to like, the timing and the need for this is so acute right now. I mean, of the four of us on our two shows, three of us have done this in the past, like couple of months are gonna do it now in COVID. Like this, this went from like, yeah, like it would be, you know, it's really nice when I get good, good Wi-Fi at my Airbnb to like, no, I need this.

• 49:48Speaker 00

  Right. Yeah. Wi-Fi is, you know, up there with food and water as far as I'm concerned. So we forget COVID. I always need great Wi-Fi. And if I don't, I'm like, you know, I have to like, take, take a time, time out for five minutes and be like, am I really this upset about the Wi-Fi? And I have to like rebound.

• 50:05David Rosenthal?

  Totally doable. You could stand this up on Webflow and, you know, do a little bit of other no code stuff in the background, maybe a little bit of code that you add over time. This could be, this could be a wedge into something more interesting though, right? Like, you know, on its own, great, you can build this. It's a little product. Maybe you charge for it. I think you probably better monetize this with affiliate for Airbnb listings and VRBA listings and the like. I wondered though, if you could actually use this to bootstrap inventory of places and have it then become its own network of like, oh, you want long-term, you know, Ben and my buddy was calling it workations. You know, you're, you're, you're doing this. Like here is where the best places for this are. Well, you start

• 50:49David Rosenthal?

  to onboard a little bit of that supply and maybe all of a sudden it becomes its own network. Just kind of like hip camp has kind of offloaded a lot of the, the, you know, true camping type experiences and glamping off of Airbnb. Maybe you can start to disaggregate it.

• 51:04Speaker 00

  Right. You know, the, the two ways I was thinking about this when you, because you just wrote a very simple thing like Wi-Fi site for Airbnb. I didn't know what that meant. I thought my brain actually went to a different thing. I didn't know you meant Wi-Fi website. I thought you meant Wi-Fi site. So like first, my first thought was around hip camp, which is like, is there just a cool outdoor area where I can be outdoors and sitting and comfortable, but have amazing Wi-Fi? And it's like, I don't actually want to go camping, but I do want to be like not in my room anymore. And so like, you know, could I be outdoors? Could I have great, could I be outdoors and have great Wi-Fi? Like that already is like, I love outdoors and I love great Wi-Fi and they rarely come together. And so if you could create these Wi-Fi sites that were awesome,

• 51:46Speaker 00

  that were just comfortable places to go sit, uh, maybe there's a little food trucks around there or whatever. Um, I think you could build kind of like this weird outdoor coworking thing. I'd love to see somebody like take a, take a shot of trying one of these. The other, the other angle I thought you guys might be going is like sort of that Boingo wireless or whatever that's called, which is like, you know, they went to, you know, airplanes or, um, you know, there's a version of this for coffee shops, which is like, hey, look, everybody who comes here wants Wi-Fi and a better Wi-Fi than you're providing, we will give free Wi-Fi in exchange for, you know, their email. And, um, you could potentially do that with Airbnb hosts. So you could basically say, hey, we will boost your Wi-Fi, um, through either those kind of mesh networks, mesh network

• 52:28Speaker 00

  routers, or just like provide Wi-Fi where you don't have Wi-Fi. And, um, in exchange, we, so basically run this little service, either you charge five bucks a night for the, for Wi-Fi, or you get that plus their data and then you use that as like kind of the way Boingo does. So that's actually what I thought you were, you were initially saying, but dude, I think I don't know if there's a there there.

• 52:48David Rosenthal?

  A valuable service itself, but if you did the like, if you were trying to build your own network of longer term rental properties, this would be a great growth hack. You'd say, come on my network. I'll pay for you to upgrade your Wi-Fi. Uh, and, uh, and then that's how you can onboard the supply.

• 53:08Speaker 00

  Right. Yeah, exactly. Yeah, that's an interesting point of like, how do you either onboard new supply? Like, okay, you've got a whatever, you've got a backyard and now that now backyards are cool. Or it's how do you give supply that was like unviable? How do you make it viable with some like investment that you could pay back in two, two night visits? You know, like, could you pay back? Could you pay that back in that short amount of time? I don't know, hard space, but there's, there might be something there. Let's jump to a different one. I'm gonna pick a random bullet.

• 53:38Ben Gilbert?

  Wait, can I go meta on this one for a second?

• 53:39Speaker 00

  Go for it.

• 53:40Ben Gilbert?

  I love, I guess this is moving to a different idea, but I love that we wrote down wifi site for Airbnbs and there's three different ideas that came out of that purely because there's insufficient information. So you like, apply creativity and fill in the gaps. And the, it reminds me of, I had, the very first time I did anything noteworthy on the internet was, I made this website called it's this for that.com as a joke at a startup weekend because every single pitch was, well, it's this for that in like 2009. And it was like the first time I got tech crunched. So we still maintain the websites, my buddy Eric and I, and it's like, it just comes up with random X for Y pitches. And as you just like click to refresh, it's like a startup meme generator. And I've like come up with some pretty decent ideas after

• 54:24Ben Gilbert?

  looking at very few words and then trying to extrapolate from there.

• 54:28Speaker 00

  Dude, I've been to this website. So I just went to it now. So I went to it. The first one is, so basically it's like Airbnb for stolen goods. The next one. The next one is, so basically it's Salesforce for coffee shops. Don't know what that means. Can't make it up. And so actually, we've played a similar game. There's a, there's a game, I don't know if you've ever heard of it called PowerPoint karaoke. Have you ever played this?

• 54:51Ben Gilbert?

  Yeah.

• 54:52Speaker 00

  I think there's different variations of how you do this, but there's a startup variation of it, which is, you know, somebody gets up, there's a PowerPoint deck behind them and they don't know what it is. They come in totally cold. And so they see the first slide and they just have to start talking as if this is their presentation. And then the next slide comes up and they have to connect it to whatever the hell they were saying, you know, about the previous slide and like create a cohesive story. It's a good muscle to exercise. It's like improv for business. And, you know, you could do this with startup pitches as well. You could literally just remix, you know, take one deck of cards, which is like successful internet companies and another deck of cards is just like niches. And you could just like pull two different cards and pitch it. And yeah, it's kind of surprising how some pretty viable ideas come out of it.

• 55:33Ben Gilbert?

  Someone should do that as a like startup comedy podcast.

• 55:37Speaker 00

  I think you guys are ready. You guys are ready to spin it off.

• 55:43Ben Gilbert?

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

• 55:56David Rosenthal?

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

• 56:13Ben Gilbert?

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

• 56:28David Rosenthal?

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

• 56:52Ben Gilbert?

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

• 57:11David Rosenthal?

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

• 57:41Ben Gilbert?

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

• 58:06David Rosenthal?

  All right, what we got up next?

• 58:08Speaker 00

  So you have one in here, SPAC index fund. Tell me what you're thinking.

• 58:15Ben Gilbert?

  So hear me out on this, and I don't know how long the opportunity exists to do this, but at least for the moment, there's this rush of everyone who has sufficient connection to capital, raising that capital into a SPAC and hoping in the next two years that they can leverage relationships with entrepreneurs to get a deal done and take someone public. And you've probably talked about SPACs on your show. We've talked about it in our LP program, so I don't want to go into too much detail about the mechanics. But I think if you were to bet on SPACs as a whole and say, you know, they all go public, they trade right around $10 a share because they're effectively worth exactly the amount

• 58:58Ben Gilbert?

  of cash that they have in the bank, which is a trust in the Cayman Islands or something that's like untouchable. And then at some point, they announce an acquisition and you either can redeem and get your money back, or you can roll it into the acquisition. And so in general, like I think we're going to see 20 plus of these sort of like Series C or later startups go public through this mechanism of SPACs in the next, I don't know, a couple of years. And there's two levels of appreciation here. There's the first one where, you know, you buy in at $10 a share and then there's a pop when they announce who they're going to buy. So you could play the pop game if you want to and then just cash out immediately after that.

• 59:41Ben Gilbert?

  Or you could play the longer term game and say, do you want to hold the basket of startups that went public in the 2020, 2021 vintage and hope that there's a zoom in there? And I think it'd be, to me, it feels like a reasonable upside, super mitigated downside type of way to index.

• 1:00:02Speaker 00

  Yes. I love this idea. When I saw it, this was the opposite where I had no. And there was no question marks about what this idea was. I was like, oh, good idea. Interesting. Also, I was curious, I don't know if you guys know, what are the mechanics of starting an index? Can I create an index? Do you need to be a certain person? Is there a certain bar? How does that work? Do you know?

• 1:00:21Ben Gilbert?

  Oh damn, someone should create an angel list for public equity indexes.

• 1:00:26Speaker 00

  Right.

• 1:00:26Ben Gilbert?

  Like where I maintain an index and get some carry.

• 1:00:29Speaker 00

  Yeah, because like, you know, a bunch of people trying to do this with like, you know, on Robinhood or public.com, this new website or whatever, where it's like this new app where, you know, I go invest in a basket of stocks. You can kind of follow me. It's a social network. But like, fuck the social network part. I think that's a little bit weak, honestly. I think that more interesting is, I listen to this podcast, I'm like, wow, Ben and David are so smart. You know what I want to do? I just want to own whatever stocks that they own. And I want to basically buy their index that they created and just roll with them in their portfolio, like, kind of like a money manager. But if you guys were basically curating an index over time, I think that that would be, it'd be interesting if you could create an angel list like platform where it was very trivial for somebody to create their own index and let others invest into it.

• 1:01:14Speaker 00

  I might have also just invented a mutual fund, I'm not sure.

• 1:01:16David Rosenthal?

  Feels like, so I don't know the answer to how you do this, although I should. But I used to work at Dow Jones, and which, I used to work at the Dow Jones, which is the Wall Street Journal's part of Dow Jones, part of News Corp. And while I was there, we sold the indexes business. So the Dow Jones index is now owned by one of the big Chicago companies.

• 1:01:40Ben Gilbert?

  Which is a garbage index and no one should pay any attention to it.

• 1:01:43David Rosenthal?

  But it was a billion dollar business within Dow Jones. So billion dollar top line, basically no expenses. Like, it was all just pure money. And what it was, it was just a marketing thing. It was like, you get to use the Dow name. Like, that's, it's like a licensing thing.

• 1:01:58Speaker 00

  Yeah.

• 1:02:00David Rosenthal?

  Yeah.

• 1:02:01Ben Gilbert?

  Oh, that is absurd.

• 1:02:02Speaker 00

  And who's, who's paying for that license? Who pays to, to be able to put the Dow Jones and is it like CNBC has to pay to put the Dow Jones index on the screen?

• 1:02:09David Rosenthal?

  I don't know exactly the answer. I think it's, I don't think like CNBC or like media properties have to pay for it. Cause I think that, that, that they're just, that's just public. But I think if you want to incorporate that index in your data of whatever like product you're using or whatever, then you gotta pay that licensing fee. Or if you want to use the brand.

• 1:02:29Speaker 00

  Yeah, it might also be the data stream.

• 1:02:30David Rosenthal?

  You know, Dow Jones was a powerful brand, like the Dow Jones XYZ, whatever mutual fun, blah, blah, blah.

• 1:02:39Speaker 00

  Right. That's interesting. You know, this reminds me, I had this meeting once where this guy came to our office and he was like, yeah, I'm the CEO of NASDAQ. I think it was NASDAQ, maybe New York Stock Exchange. And I was like, I was like, wait, NASDAQ has a CEO? I guess. Okay. That makes sense. Like, you know, so NASDAQ, like what, wait, what the fuck is NASDAQ? And he's like, well, because I just had always heard of NASDAQ through the kind of like, it's kind of like you hear Dow Jones. It's like, oh, this is just a sort of a, a name we give to track the market. And I didn't really fully, at the time, I had no idea that, first of all, there's multiple exchanges, they're highly competitive with each other, they hate each other, and they're constantly, you know, trying to fight for different IPOs. And then, but the part I did, I kind of knew that part, but the part I didn't know was that

• 1:03:20Speaker 00

  they license their technology. They're like, yeah, we power the stock exchange in Sweden and 40 other countries. And we make, you know, a billion dollars a year, or whatever the number is, just licensing our stock exchange technology to other countries for their stock exchange. And I was like, wow, this is a, this is a great business, actually, because it has this ultra powerful brand in the US. And then it just becomes like, you know, and they built this technology stack, there's very few competitors to it. And, um, and then it becomes kind of like the, um, you know, N of one company around what, what should I use to run our stock exchange? And there's going to be no switching, I bet. Like, I bet nobody wants to switch the sort of full stack they're using to run their stock exchange.

• 1:04:01Ben Gilbert?

  Oh, totally.

• 1:04:01Speaker 00

  Crazy, right? So you have extreme pricing power. And I was like, wow, this is an amazing business. I was like, could you compete with this? And that was right around the time that Eric Lee launched the long-term stock exchange.

• 1:04:11David Rosenthal?

  Great.

• 1:04:12Speaker 00

  Exactly. Which is like just an amazing idea. Seems like it's been a little bit slow to market as you would maybe expect, but.

• 1:04:19Ben Gilbert?

  Turns out, taking a stock exchange to market is not just putting up a website, measuring clicks.

• 1:04:23Speaker 00

  Yeah, exactly. There's no sort of, ironically, for the lean startup guy.

• 1:04:31Speaker 00

  Exactly. No, no quick MVP, you know, just landing page with, you know, smoke and mirrors where there's no, there's no product behind it. You can't do that. Eric Reese will be in jail telling people about the lean startup in there. But, but anyways, I think the whole idea of stock exchanges is just a very interesting thing. I think a SPAC index fund is interesting and I want to know how you create an index fund. I also kind of like the idea of Angel List, but for creating private equities instead of venture funds. Also, I just think like who out there, somebody out there is just doing like a SPAC newsletter right now and just taking advantage of all the SPAC keyword searches. And probably has built like a 50,000 person, pretty valuable email list.

• 1:05:09Ben Gilbert?

  There is, it's called SPAC. Is it SPAC for a port? Let me look this up real quick. spaceresearch.com. The founder is an acquired community member. And yeah, I think he's got, it's a, it's a paywalled business. There's either some sort of trial or some sort of freemium thing, but yeah, he's building a real business on it.

• 1:05:27Speaker 00

  Yeah, I think totally you could do kind of the Motley Fool or whatever. You know, basically it's, this is old solution, new problem, right? Okay. Nice newsletter, paid newsletter. That's old solution, new problem. Everyone wants to know about SPACs and there's not a definitive place to go find it, right? Like, I remember in the crypto boom, I ran into this guy who.

• 1:05:47Ben Gilbert?

  You're referring to this, this past tense crypto boom?

• 1:05:50Speaker 00

  Yeah, yeah. Crypto, the boom, the boom was a very specific time when, you know, money was flowing freely and my aunt in Virginia was like saying the word Ethereum in her Indian accent. And I was like, oh shit, what the hell is going on? But there's this guy, his name's Shaq, Shaq Khan and Shaquille Khan. And he, he was like, he's kind of this international man of mystery. He worked at Spotify and did a bunch of random things that like, nobody knows who he is, but he's just friends with all the CEOs and like, they hire him for like, He's the wolf from Full Fiction. Yeah, he's, he's exactly, exactly. He's the wolf. He's the one they call in. So during the initial Bitcoin run-up, when it was going from like $10 to $1,000, everybody was trying to figure out how do we create Bitcoin products? And he just created CoinDesk. He was helping create CoinDesk.

• 1:06:35Speaker 00

  He's just like, oh yeah, we should just create the news and information site and then we'll figure out from there what other opportunities we want to go to. But like, first things first, let's create Bloomberg or CNBC for Bitcoin. And I was like, oh man, such a simple idea that can be executed because you're nimble and you're, you know, very responsive to where the world is going. Totally.

• 1:06:55Ben Gilbert?

  Yeah.

• 1:06:57Ben Gilbert?

  Yeah, I mean, it's, it fits, it definitely fits into that. For anybody who hasn't read this thing, it's really, it's quite hard to discover because it's an archive of an old website, but it's

• 1:07:07Ben Gilbert?

  pmarchive.org and it's, it's Marc Andreessen's, it's like a play on his handle and it's his old blog before he started Andreessen Horowitz. And one of the amazing pieces of content on there, it's like a five-piece thing is his career advice, which of course starts with like, you can't plan your career. So I refuse to give you any advice, but if I were to, here's five articles on it. And one of the things is like, if your five smartest friends are getting together at two in the morning and going to Denny's because of something exciting that they're thinking about, or something that's new in the world, go with them every time.

• 1:07:41Ben Gilbert?

  And it's such a good like litmus test for if, yeah, if Pro Rata has written about SPACs every single morning for the last two weeks, then like, it's probably a good time to start a SPAC media business if you feel well positioned to do so.

• 1:07:54Speaker 00

  Right, right. Yeah, that's a great call. There's, there's the other one that's like, what nerds are doing on the weekends will all be doing, you know, five years from now, the Chris Dixon thing. And you know, wherever, wherever a nerd engineer is spending their free time on the weekends tinkering, that's, that's the area of innovation because they just can't help themselves. And what do you, what do you guys think would be that right now? I think I know if I just think about my smartest friends and what they're doing, I think I know one, one answer of what I would say, but it's, there, there are lulls where there's just no clear answer. And then there's like clear periods where something emerges. Do you guys have something in mind? Or do you remember a time when, when that was happening and you either were aware of it or you, you, you missed it?

• 1:08:35Ben Gilbert?

  So I have, uh, I'm going to give a little bit of a different answer than I think we're looking for here. My smartest friends who have means are working on climate problems right now.

• 1:08:45Speaker 00

  That's right.

• 1:08:47Ben Gilbert?

  And I think like, we can talk about GPT three, we can talk about crypto stuff, we can talk about, um, there, there are other sort of frontier technology things at the moment, but probably five times in the last couple of months, I've had really smart people that I've tried to recruit to start something with me to join a PSL company who are saying like, uh, actually after doing some reflecting, I'm going to go work on some climate stuff. And there's, there's no capital structure to support that. I mean, we have a whole, David, we did that deep dive on how, how, uh, energy, breakthrough energy stuff gets funded, which is completely broken. But, um,

• 1:09:25Speaker 00

  I've, I've, I've got a, I've got a company to talk about, but yeah, keep going.

• 1:09:31Ben Gilbert?

  Anyway, that, that's definitely the thing that occurs to me of like my smartest, most well intentioned and people with means.

• 1:09:37Speaker 00

  And yeah, throw out a couple of names that I've seen, these aren't even people I know, but I know Jesse Jacobs just launched a rolling fund for, for climate. I know that, uh, Josh Felsor left freestyle, I think to work on, you know, climate problems. I know that Yishon Wong, who's one of the smarter people, I like to read his, his writings on stuff. He's been talking about this, working on this for a couple of years now.

• 1:09:59Ben Gilbert?

  CEO of Reddit, right? At some point, either before or after Alan Powell.

• 1:10:02Speaker 00

  He was the CEO of Reddit. He was kind of like earlyish Facebook and then he became the CEO of Reddit for a while. And he's got this very simple website. I think it's just Yishon, Yishon Wong, which is hard to spell, but.

• 1:10:12Ben Gilbert?

  He should give, uh, give a shot at being CEO Twitter for a little bit, just to mix it up.

• 1:10:16Speaker 00

  Round it all out.

• 1:10:18David Rosenthal?

  So long Reddit, by the way.

• 1:10:19Speaker 00

  And so, yeah, he's, he's like buying a plot of land in Hawaii or something like that and doing some radical experiment.

• 1:10:25Ben Gilbert?

  Oh, awesome.

• 1:10:26Speaker 00

  There's also this guy who, the guy who created Control Labs, I think, which is, they got bought by Facebook. They're kind of like.

• 1:10:32Ben Gilbert?

  Did he leave Facebook?

• 1:10:34Speaker 00

  I think he left Facebook and I, I don't know if he's working on this, but I saw him talking about or tweeting about like, you know, we really could just go put solar panels into space and harness the sun's energy that way and then beam it to the earth or something crazy. Like, what would it take to like, you know, throw, you know, a giant set of solar panels into space? And then, yeah. And I was like, what the fuck is this guy talking about? Like this, you know, people with brain power, you know, 10 orders of magnitude more than mine. I'm like, oh, wow. I didn't even, I can't tell if you're joking or if you're serious. You're probably serious and it sounds like a joke to me. That's how big the knowledge gap is here.

• 1:11:07David Rosenthal?

  Yeah. What's super exciting to me on this is I have a friend who just started a company that like, there's, I mean, this is a double edged sword, but it's just reality. Like, the problems are finally starting to get real with climate. Like, I think one of the reasons why there's no good funding structure for it and clean tech failed and all this is just like, everybody knows that this like wave of awfulness is coming, but like, nobody feels it yet, you know? But, but the tip of the spear is fires in California. Like, those are real, real problems that we're all like, like, can't go outside. Like, it's just terrible. And like, people are losing their homes and properties. So I have

• 1:11:45David Rosenthal?

  a buddy who started a reinsurance business for, for fire risk in California. And he's like, yeah, the insurance industry is like so backward on this. These old stochastic models from like past history of like, there's a terrible fire in California once every 30 years. It's like, no, happens every year now. So like, okay, let's deal with this problem. And like, that's going to be a great company.

• 1:12:10Ben Gilbert?

  That, that's gonna be a great value capture mechanism. I don't know. I mean, how does that help us not burn down the planet?

• 1:12:18David Rosenthal?

  It's like, there's a, but there's a, there's a serious, but like, you can't get insurance for fire in a lot of places in California anymore. So like, this is a serious problem. Like.

• 1:12:26Ben Gilbert?

  Yeah. So it's a way to address the symptom of a problem.

• 1:12:29Speaker 00

  You know what you also can't get insurance for?

• 1:12:31Ben Gilbert?

  Less painful for lots of people, but it's still not addressing the problem.

• 1:12:34Speaker 00

  You're not solving the fire problem. You're, you're solving the, my house burned down problem and I'm shit out of luck.

• 1:12:39Ben Gilbert?

  Which is great and admirable to solve downstream problems, but yeah.

• 1:12:44Speaker 00

  Also, speaking of insurance, I tried to get insurance for an e-commerce business I own and um, dude, you can't get e-commerce insurance. I don't know what the hell's going on. You can't get business insurance for e-commerce. It was so painful. I thought I'm going to start typing the word biz and then Google's gonna be like, oh, you want business insurance? Cool. Here, here's 10 leads that will just call you incessantly. And instead it was the opposite. It was like business insurance, you know, for e-commerce business, uh, called 12 different companies, emailed a bunch of them. And they're just like, oh, do you, you know, is your product, um, oh, it's e-commerce. It's not physical retail. Oh, that's gonna be tough. And then they're like, you know, do you, is it manufactured in China? I was like, everything's manufactured in China. What are you talking about? And then they're like, oh yeah, it's gonna be really, really tough. Uh, it's like, it's like,

• 1:13:29Ben Gilbert?

  You're like, who's this for then?

• 1:13:31Speaker 00

  Right. I was like,

• 1:13:31David Rosenthal?

  Fraud? Like what's the, why is it gonna be tough?

• 1:13:34Speaker 00

  So they would just email me. They'd be like, we don't, unfortunately, we can't, uh, we can't find any underwriters that will underwrite for this business. And I was like, I haven't even told you anything specific or scary. I've just said e-commerce and made in China. And like, those are the, that's everything. That's most things, you know, as far as I'm concerned. And they were just like, yeah, we don't do much e-commerce. I was like, who does fucking e-commerce then? And so I don't know if I'm just a terrible Googler or uh,

• 1:14:00Ben Gilbert?

  How does Shopify not have a preferred partner for this?

• 1:14:03Speaker 00

  Yeah, I don't know. How does Shopify not just provide this as a service? It's like, you know,

• 1:14:07Ben Gilbert?

  Totally. It's a nice, high margin. This could float a bunch of their investments.

• 1:14:11David Rosenthal?

  The best business ever. We're, okay, I won't spoil, I won't do a spoiler. I'll do a teaser.

• 1:14:16Ben Gilbert?

  Okay. The mere fact that you said you won't do a spoiler alert means people are gonna know what we're talking about.

• 1:14:20David Rosenthal?

  Well, we're gonna do a, probably our season finale this year on acquired is going to be a well-known insurance business. Uh, but it's like, people, it's the best business in the world. You get free money.

• 1:14:31Speaker 00

  Right. Yeah.

• 1:14:32David Rosenthal?

  You literally just like, you get money that you can invest that you have to pay back at some point, but it's free money.

• 1:14:38Ben Gilbert?

  And to continue, David, because you've given away so much of the story now that like we may as well round it off. Like if you have a large insurance business that allows you to have a nice big float, you can invest that float in other things. And it's if you're a good capital allocator. Yeah, it's an amazing way to just go buy a bunch of other businesses, make more investments in non-insurance products. It actually seems like a no brainer for Shopify because they do want to build more and more and more technology and that's going to cost cash.

• 1:15:07Speaker 00

  Right. And if it's not Shopify, then somebody needs to go do like ClearBank for e-commerce insurance and do it extremely well. I know there's a, I finally got one provider, but the fact that it took me, the fact that I even had to try means somebody, you know, there's money on the table for someone, somewhere, you know, for this type of thing. Okay. So let's go back to, I think the thing you said is really, really interesting. It really resonated with me when you said the, you know, if your friends are going to Denny's at two in the morning, like just go with them. Like that's literally the best career move you can do. I totally agree. I fucked this up a ton. Like in college, like I would, I wasn't really even excelling in class, but I always just thought, okay, class is where I should go. That's where the

• 1:15:50Speaker 00

  value is going to be, right? That's what I'm supposed to be doing. And I ignored all these people. I actually literally laughed at a whole bunch of people who I knew were just like working on random shit. They weren't going to class. They weren't going to parties. They were just like building and like now I'm like begging them to invest in their companies here in Silicon Valley. Cause I'm like, oh dude, sorry. I like, you know, you know, made fun of you in the hallway. Like

• 1:16:12David Rosenthal?

  You went to Duke, right?

• 1:16:13Speaker 00

  I went to Duke. Yeah.

• 1:16:14David Rosenthal?

  Were you there with, with Stephen from Cameo?

• 1:16:18Speaker 00

  Yeah, he was a couple of years older than me. Yes. And he was actually, the funny thing is Duke is this school in Durham and Durham's not a, at the time at least wasn't a very cool city. So there was only one club that anybody could go to, one off-campus bar basically called Shooters.

• 1:16:33David Rosenthal?

  You're shooters? Oh, I've been to shooters several times.

• 1:16:36Speaker 00

  Did you go to Duke? Uh, my David, why have you been to? Yeah.

• 1:16:40David Rosenthal?

  I have performed a wedding at the Duke Gardens.

• 1:16:44Speaker 00

  Okay, gotcha.

• 1:16:45David Rosenthal?

  My sister and brother in law went to Duke, so we were gonna visit them a bunch of times and then got married there.

• 1:16:50Speaker 00

  Yeah, so of course they take you to shooters is the only fucking place to go. So Steven from Cameo.

• 1:16:55David Rosenthal?

  Shooters in Wayne Manor. My brother in law was in Wayne Manor.

• 1:16:58Speaker 00

  Right, right. So he used to just host parties at shooters. He was just a party promoter. So I literally knew this guy as like, you know, fuck boy number one as like just throwing parties at shooters. Just, he was always like texting people, you know, trying to hype up parties. He was good at it.

• 1:17:11David Rosenthal?

  Of course he was.

• 1:17:12Speaker 00

  And, um, and now he's like CEO of like a billion dollar company. But, you know, And it's the perfect company for him to be CEO of. Like that is, it, it pattern matches perfectly. Exactly. So, uh, yeah, he, he's a funny guy. Anyways, forgot where I was going with this, but I guess what I was gonna say is the follow your, follow your smart friends. So step one, have smart friends that actually do this kind of thing. And I think that's, if you just do that, you're 90% of the way there. And then the last 10% is like, listen to them and follow them and like, be, be interested in their things that seem just like random toys right now, uh, because they will probably become big deal, you know, one of those is gonna become a big deal soon. And so, um, I'll throw out three that I, I've seen as trends amongst my friends. I have basically tech friends and then I have like smart business friends.

• 1:17:57Speaker 00

  So of the top 1% of my friends, the tech friends are all about GPT-3 and they're all about, uh, DeFi, which is this sort of crypto infrastructure, uh, for, they're doing things that like, I don't think these guys own a stock, but they're like, oh yeah, I'm, you know, in this DeFi system where I'm staking and I'm yield farming and I'm like, you know, creating these really complex lending mechanisms. And I'm like, what the hell is going on? Like, when did you turn into a finance guy? And it's because all of a sudden engineers who like money are like, oh, I can use my engineering to make a lot of money.

• 1:18:31David Rosenthal?

  And the crypto boom probably fueled this because people were just like making millions of dollars. I'm like, oh.

• 1:18:37Speaker 00

  Well, they're all flush with cash. Uh, they're all flush with, with not cash. They're all flush with wealth that is in Ethereum or is in Bitcoin or random ass, you know, shitcoin. And, um, and so they don't want to take it out. They're not ready to like leave the crypto game, but they're like, well, I, you know, I was just trying to invest 10,000 into Ethereum and now I have 1.1 million. So, uh, okay, cool. This is a way I can stake my Ethereum or I can land Ethereum and I can get 12% a year, you know, doing this, you know, this is great. And I can kind of control the whole thing from my terminal in my computer. Like, that's awesome.

• 1:19:10Ben Gilbert?

  It's the same game that like multi-generational wealth have been playing within trusts in the US for, you know, a couple hundred years, but now like these crypto millionaires have the exact same problem of like, I'm sorry, I have to pay what taxes if I pull this out into cash? Well, how do I roll it into something that just kind of can spit off exactly as much cash as I need to live and I can leave it as an illiquid asset the rest of the time?

• 1:19:34Speaker 00

  Exactly, exactly. Like, you know, that is, that is what's happening. And so maybe, maybe more stuff needs to get built. That's the equivalent of a, of a trust or like the 1031 exchange of crypto. Like, uh, you know, I think that's where a lot of potential is like, this is why the ICO boom happened was so many people had made so much money off Bitcoin and Ethereum. And, you know, to them, they're still thinking about their 10 to $20,000 investment, but now it's 200, 500, 700, a million dollars, you know? Um, and so they were like, okay, cool. Maybe I could do that again. Like first con- false confidence that I could do that again. I can invest in this new small thing and it could also give me a million dollars.

• 1:20:11Ben Gilbert?

  It was skill, not luck.

• 1:20:11Speaker 00

  Right, exactly. It was skill, not luck. And then the other is I don't want to pull this out. And so you had just, it's like when the Fed pumps in a bunch of money and the stock market goes up. That's basically what happened for crypto and why there was so much slush money to put into random ICOs.

• 1:20:27Ben Gilbert?

  Huh. All right. New idea is opportunity zones for crypto millionaires.

• 1:20:31Speaker 00

  Yeah.

• 1:20:32Ben Gilbert?

  Do you know about the tax treatment on that? On the opportunity zones?

• 1:20:35Speaker 00

  I've been hunting for ways to avoid paying taxes over the past, you know, year and, uh, people keep telling me about opportunity zones and how I should be investing in them. And I only understand 20% of it so far.

• 1:20:47Ben Gilbert?

  I'll give you a very small amount that I know for sure and leave everything else unsaid. So I don't say anything wrong, but I know you can roll appreciated stock in, which I think is similar to a 1031 exchange without paying tax on it. So it's a new investment.

• 1:21:02Speaker 00

  Right. So let's combine the climate change and tax idea here into one with an idea I've been trying, I've been noodling on. I actually have said this on the podcast before, but I need to say it again because I'm still thinking about it, which is not true of 99% of the ideas I say.

• 1:21:18Speaker 00

  So one of the best, simple ways to reduce your tax burden is to, is to do a solar installation. Right? So there's a solar tax credit that the government gives. And, and so, you know, you have a house, you put solar panels on. Yes, you pay the upfront investment, but then you save on your utilities and you get the tax credit that you can use to, you know, eliminate a whole bunch of your earned income. So essentially you could do it for free as long as you have the money to put up upfront. And so I've been looking to basically do this. Now, I don't have, I don't want, I need something bigger than just my house, right? Your house might have like, I don't know, a $30,000 or $50,000 project. I don't know exactly what it is, but it's like, what do you do if you

• 1:22:00Speaker 00

  need to, can I get like a million dollars of tax credits for this? Like, can I do a million dollars worth of solar? I want to farm. Yeah. And so I, I was driving with my father-in-law and he was like, he was telling me about this. He goes, yeah, you know, like on every school, you see these solar panels on the parking, like garages or just like kind of outside of the school. And he's like, yeah, this is part of like Chevron energy, like Chevron installs all these. And, and I, and from what I gathered was they have both a kind of a service provider. They're a vendor, they get paid for that. But the bigger thing is that they'll be like, hey, school, you don't need to put up $2 million for the solar installation. We will do it Chevron, you know, out of our profits from oil and gas. So they get to say they're doing clean energy things. They get to reinvest profits into

• 1:22:44Speaker 00

  something that they're going to be able to get favorable tax treatment on. They get to help a school have solar, solar power. And then they become sort of a long-term, you know, landlord of the, of a lesser. Yes, of the solar panels and the school pays like kind of a small monthly fee, but they are there from day one, you know, saving money on their utility bill. So for them, it's like a net gain anyways, even if they pay for this, there's paying less for the utilities. So I was thinking, why isn't there a marketplace where I can, I don't have to buy a building and like do this whole solar plan, but I just said, dollars. Please invest that into the solar projects for me and give me my tax credits back. And give me my kind of monthly recurring income from this, this is going to go on some farm in, you know, Idaho.

• 1:23:28Ben Gilbert?

  Yeah.

• 1:23:29Speaker 00

  Yeah.

• 1:23:29Ben Gilbert?

  It's an asset manager. It solves the same problem of like, I don't want to do the dirty work of finding those investments and operationally putting the money in, but like, I will pay you something to do that on my behalf.

• 1:23:38Speaker 00

  One side you have the sort of supply of project or let's say supplies, capital, and then the demand is people who want solar and like, whether this is commercial buildings, schools, farms, factories, whatever, places that need, that could use solar, that don't want to put a quarter million dollar investment into their solar. They're like, they are going to buy another machine to like run their factory better or whatever. But they're happy to take a lower utility bill and they're happy to, and then on your side, you're happy to get, you know, monthly income plus tax credits. So seems like there's a business there.

• 1:24:07David Rosenthal?

  Solar is installed.

• 1:24:09Speaker 00

  Yeah, exactly. And we're helping the environment. So, so I like all of that. Now, somebody who's more knowledgeable than me probably in five seconds can tell me why this is not a viable thing. But for now, I'm going to say it out loud until somebody points that out or builds it.

• 1:24:22David Rosenthal?

  I love it. Well, this is part of, um, I don't know the exact history, but you know, SolarCity looked a lot more like this before it combined with Tesla. Which was weird, you know, all in and of itself, but, um, uh, but now I think Tesla's solar projects are much more about, um, the roofs and, uh, solar roofs and power walls, but.

• 1:24:46Speaker 00

  Right, for sure. Um, okay, climate, climate's one.

• 1:24:51Speaker 00

  The other one I said was buying businesses. So going more of the forget this venture capital game. I'm just going to buy all these profitable businesses or internet.

• 1:25:00David Rosenthal?

  Our mutual buddies, Tiny Capital.

• 1:25:02Speaker 00

  Yeah, Tiny Capital is kind of like probably the thought leader and has the longest running track record of doing this of like, kind of people who are public on Twitter about it. But then there's others like Constellation Software and, you know, there's a whole bunch of different, different folks that do this. But a lot of my smart friends are going down this path of, hey, I'm going to buy and then build rather than play the lottery and hope I find product market fit with a brand new invention.

• 1:25:26Ben Gilbert?

  Yeah, I also think so many people, it became so sexy to be an early stage, to use the finance term, an early stage manager or emerging manager, or as people would call it, maybe solo capitalists in the sort of startup parlance, or do a rolling fund or something like this. There's been so much of a rush to, I want to invest in my friends and relationships who are starting early stage companies that we're now into year five or so of the boom of that and people realizing how crazy hard it is to produce a market beating return. Or, you know, let's, let's say better than that, it's a top decile, top quartile return for your investors. That unless you're really, really differentiated, and I think most people are kidding themselves on how differentiated they are in the, in

• 1:26:10Ben Gilbert?

  the deals that they have access to, unless you're incredibly differentiated, you probably should go play a lower beta game where you can put in some sweat equity, like having to use your PM or dev talents to rehab a business that is available to you for a below market price. But like, I just think, much like the way we started this podcast, talking about classic entrepreneurship versus, you know, shoot your laser at the sun and hope, I don't know what I'm talking about there, but go big or go home. I was trying to make a metaphor that totally didn't work. Investment. It's, I think people are just realizing how crazy hard it is. And they're like, wait a minute, if what I'm trying to get is an X% annualized return, gosh, I know

• 1:26:52Ben Gilbert?

  way better ways of doing that, that don't involve this crazy power law.

• 1:26:56Speaker 00

  Yeah, I think that's true. If you wanted.

• 1:27:00Speaker 00

  If you wanted a, if I was saying, hey, I have to, over the next seven to 10 years, I have to end up with this amount of wealth or I die. Um, that's the path I would go, right? Cause I'm like, okay, it's really de-risking the market fit side and it's all about execution and growth. Um, and because the financing is so favorable, right? Like, most people don't realize this. Most people, a lot of people listening to this are working at a job and they make a great salary, right? They might be making $200,000 a year. And then they're paying kind of like, you know, income tax on that and now they're, you know, taking home 120 or whatever it is.

• 1:27:36David Rosenthal?

  Especially if they live in California.

• 1:27:37Speaker 00

  Yeah, exactly. And so, um, you know, what most people fail to realize is that for,

• 1:27:45Speaker 00

  either no money down or like, kind of like, you know, you could put down five to 10%, you can buy a million dollar business with an SBA loan. And by the way, if you buy it before September 27th, your first six months are going to get paid for you by the SBA. So you, first six months payback is taken care of. And, um, you know,

• 1:28:07David Rosenthal?

  Not to mention seller financing.

• 1:28:08Speaker 00

  Including, yeah, including the seller's going to carry 10% of it themselves. So that's how you get to the 15% down total. You put five, they put 10, and then the SBA loan covers the rest. And every month you're going to be making, you know, you're going to be making a profit on, you're going to, half the, half the profits are going to go towards paying back your loan. The other half are going to go to you. Within 12 months, you paid off that whole thing. And oh, by the way, if you improved operations doing one of three stupidly obvious things, uh, you know, you've now created an asset that is worth two, three times what you bought it for. And, um, that path-

• 1:28:39David Rosenthal?

  It's like buying a house, except the mortgage is like, you know, instead of you paying the mortgage, the mortgage is paying you.

• 1:28:44Speaker 00

  Yes, exactly. And, and unlike a house, it can appreciate at a rate that is uncommon. I have a friend who bought a business. I think for 300,000, you know, on one of these websites, he was the first guy I didn't know. I was like, you fucking buy off these random ass websites like, Love it. You know, You used one of these marketplaces. You go to Flipper and stuff like that. He's like, oh yeah, bought a bunch of stuff. I'm like, what? And it's because he didn't have connections. And so I was like, he's like, I didn't have funding and I didn't have connections. So I just go to these places where I don't need a reputation or connections and I can get funding from these like very simple pools of capital. But I have to buy profitable businesses. Otherwise, nobody will lend me the money. So I'm not taking big risks. And so he brought this company that was small but profitable.

• 1:29:26Speaker 00

  And that company is going to do, you know, 30 million this year in revenue. So he's going to literally take it from 300,000. So he 100xed it. He, yeah, he basically 100x this business. And I was like, dude, tell, take me back. When you were looking at this business, what was the, I was like, first, this is very uncommon. You don't usually get this type of, of lift. But I was like, did you know that there was this much room? He's like, yeah, I talked to the owner. And he was like, just always thinking about operations and how to like doing the shipping and the warehousing. He'd never ran a Facebook ad, you know, he never did any marketing and, and also, you know, his SEO was a little screwed up. And I realized that, you know, there's a lot of like latent potential there. And then also he didn't expand it any, any adjacent like, he didn't launch one new product in four years.

• 1:30:09Speaker 00

  And so, you know, just Facebook ads plus new product plus, you know, improving the content SEO game. And like just this insane lift, like he'll sell this company for over a hundred million dollars that he bought on one of these like Flipper type websites. It's insane.

• 1:30:22Ben Gilbert?

  Sean, I'm curious, like, do you think there is an opportunity to, if your skill set is like amazing growth marketer, to get really surgical about running ads against other people's products and trying to get data back from like, oh my God, I know something they don't.

• 1:30:39Speaker 00

  Right.

• 1:30:39Ben Gilbert?

  And

• 1:30:40Speaker 00

  Send them traffic.

• 1:30:40Ben Gilbert?

  Like it's hard because you don't own the pixel on their website, but maybe as a part of like, hey, I'm interested in doing the deal. Would you throw this pixel on so I can test some stuff and then I can tell you what I can afford to pay?

• 1:30:49Speaker 00

  Yeah, I think that's a great way to diligence things. But honestly, you don't even have to get that smart. So like, there's a lot of these that they're just not doing one channel. And if you know that that channel works, if you have experience in that channel, let's call it Facebook ads or Google AdWords or influencers or whatever, whatever's your, your, your growth thing. And you you know, the characteristics of the type of business that works there, right? So let's say it's Facebook. You know that the types of products that work are like scroll stopping products, like it has to be visually appealing. You have to understand the value through a visual in less than three seconds.

• 1:31:20Ben Gilbert?

  The slow mo of the theragun beating against a thigh, making the ripples like you know.

• 1:31:24Speaker 00

  Exactly like it does well, like a baby. It does well, like these things just do well on social networks. So you're like, okay, cool. I'm gonna do that. And maybe a little less like, I don't know, some other like some B to B thing that's not gonna resonate in the same way.

• 1:31:38Ben Gilbert?

  The spreadsheet will change your life.

• 1:31:40Speaker 00

  Exactly. The spreadsheet beating against your leg doesn't do the same.

• 1:31:44David Rosenthal?

  You guys get these ads of like two MIT grads, you know, are got together and X.

• 1:31:49Speaker 00

  Dude, all my ads are crazy because it's only for businesses that I'm looking at buying. And so I just like, I like try to get myself covered in their pixels. And then I'm like, yes, retarget me. I want to watch everything you're doing. And I want to see your ads and all this stuff. So Facebook thinks I'm like a 40 year old woman.

• 1:32:04Ben Gilbert?

  Bathing in D to C pixels.

• 1:32:05Speaker 00

  Yeah, exactly.

• 1:32:06Ben Gilbert?

  It's like a very strange.

• 1:32:07Speaker 00

  Exactly. So, so anyways, I think if you know, the channel really well, it's really not that risky to to know you'll know which type of products will work. And you just know how much have they invested into doing this channel? Okay, you can sort of think about the lift you're gonna get. You could say, hey, I'd love to love to run a trial. But what you risk is educating the operator of how good this is gonna work, right? And so I, you know, I think it's a little bit dangerous to do that. And you're better off, you know, betting on yourself in that in that way. There's other kind of funny ways you could do it. But I won't go into those that are slightly in the gray area. Well, listen, this was fun. Good dual episode. I appreciate you guys coming on. And I feel like we didn't even get to have these ideas on the list. So there's definitely more ammo if we want

• 1:32:52Speaker 00

  to do this again sometime. So appreciate you guys coming on my show. Thank you for having me on your show.

• 1:32:57David Rosenthal?

  We literally, we got to do both shows here. It's great. A little taste of both.

• 1:33:00Speaker 00

  Yeah, I like it. Cool. Well, thank you, everybody for listening. And that's it. That's a wrap.

• 1:33:06David Rosenthal?

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

• 1:33:12Ben Gilbert?

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

• 1:33:23David Rosenthal?

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

• 1:33:43Ben Gilbert?

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

• 1:33:56David Rosenthal?

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

• 1:34:07Ben Gilbert?

  That's it for today. If this is your first time listening to Acquired and you like what you hear, you should subscribe. And feel free to check out My First Million wherever fine podcast products are distributed. As always, if you love Acquired and want to hone your craft of company building, you should join the Acquired community of limited partners. You'll get access to the LP show where we dive deeper into the fundamentals of company building and investing, in addition to our monthly LP calls where we get to talk with all of you, and of course, our book club and calls with the authors, like recently Will Thorndike from The Outsiders. If you aren't an LP, you can click the link in the show notes or go to acquired.fm/lp. Everyone gets a seven-day free trial. So great to have so many of you in here. It's a blast. And with that, we will see you next time.