Behance (with Scott Belsky)

Ben and David are joined by Adobe’s Chief Product Officer, Behance founder, Benchmark partner, author, and product luminary, Scott Belsky, to tell the story of Adobe Systems’ 2012 acquisition of Behance. We dive into the role it played in of one of the greatest (and least well-known) pivots of all time: Adobe’s transition from packaged software to services, which over the past 6 years has generated an astounding $100B+ in market cap and nearly 10x growth in Adobe’s share price! 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: Scott’s great new book, The Messy Middle https://www.amazon.com/dp/B079WN554H/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1, out today!

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

• 0:11Ben Gilbert?

  Welcome to season three, episode six of Acquired, the show about technology acquisitions and IPOs. I'm Ben Gilbert.

• 0:18David Rosenthal?

  I'm David Rosenthal.

• 0:19Ben Gilbert?

  And we are your hosts. Today, we are covering Adobe Systems 2012 acquisition of Behance. Since acquiring Behance five years ago, Adobe's market cap has 5Xed to $130 billion. They've successfully moved all of their creative software from a box software model to a subscription service, and they have bought several companies to expand both their creative business and grow beyond it. And we're super excited that we have with us today Scott Belsky, the founder and CEO of Behance and Adobe's chief product officer. So, welcome, Scott.

• 0:50Speaker 02

  Thanks, guys.

• 0:51Ben Gilbert?

  Really appreciate you coming on.

• 0:53Speaker 02

  No, of course.

• 0:54Ben Gilbert?

  All right, so listeners, Scott is someone who has done many awesome things in the tech world. He's currently, obviously, chief product officer at Adobe, which acquired Behance. However, unlike what you might imagine, his path from founding Behance to the acquisition by Adobe was not a straight line, which we will get into, and especially to the position that he's in today. In addition to all of the above, he's a prolific angel investor. He has co-founded three companies, was a general partner at Benchmark, and is now a venture partner at Benchmark, and has written two books, the latest of which was "The Messy Middle," which is a very apt title for the journey that we are about to discuss.

• 1:28Speaker 02

  Indeed.

• 1:32Ben Gilbert?

  If you are new to the show, you can check out the Slack at acquired.fm. It's the place where David, myself, and 1,600 of our favorite listeners discuss episodes right after we release them, along with hot takes and the biggest tech news of the day, and really just get to know you, the listener, and the community better. 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.

• 2:07David 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.

• 2:28Ben 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.

• 2:50David 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.

• 3:08Ben 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. Well, Scott, we couldn't be more pumped to have you with us. This is a topic that's near and dear to my heart, and I think we'll get into this a lot in the episode, but I worked on Office for iPad at Microsoft right as we were sort

• 3:48Ben Gilbert?

  of taking a lead from Adobe and switching to a Office 365 sort of cloud-first subscription model, and it's really been amazing to watch the transformation that you guys have gone through from $700 box of Photoshop to where you are today with Creative Cloud.

• 4:03Speaker 02

  It's been an adventure and really interesting for me to learn and observe this as well. When we came into Adobe through the Behance acquisition, this was late 2012. The company was just going through that transition at that point. I think that there were a lot of folks internally that were still resistant to it. I think there was a lot of kind of a rude awakening as to what does this mean to actually start measuring monthly active users and have a relationship with customers as opposed to selling box software and not necessarily knowing who was using it and how many people were using it. It was quite a whirlwind of an education for me.

• 4:39Ben Gilbert?

  So hearing you talk now, you know an incredible amount about the sort of design and product world and you're really deep on all this stuff. Looking at your resume, it didn't exactly start with you as a product designer. Take us back to the earliest days in your career. How did you get into this crazy world?

• 4:55Speaker 02

  Yeah, it's funny. I mean, even when I talk to my designer friends who went to design school, they'll say that a lot of what they learned, they learned through apprenticeship on the job. And I think that the field of product and product experience is as much about psychology and empathy and marketing and understanding how people think and grounding yourself with customers as it is about design principles. It's a burgeoning field in itself. I mean, it's kind of, if you look at a computer interface 20 years ago, you'll just see how far we've actually come in terms of evolving customer experiences. But my background, I've always been kind of entrepreneurial. I've always been into design. You know, I was one of those kids who had Photoshop at 13.

• 5:36Speaker 02

  When I went to college, I was sort of deciding between some of the science of systems, which was a major at Cornell Economics, which is sort of a traditional business approach, and then, and then design. There was an actual major in human ecology college at Cornell called design and environmental analysis. And I actually couldn't make up my mind. So I started taking classes in all these different places. And I think I am technically a graduate of the general studies major, which is their way of saying, I didn't do as much of anything as I needed to, but I did too much. Then I left. I graduated in 2002 at a time where you cut your teeth on Wall Street if you were interested in business.

• 6:18Speaker 02

  And I guess I had a choice then of to go fully on the design path or to get a master's or something like that, or to go into business. And I I chose to go into business and have that experience at Goldman Sachs of all places. Two years in a traditional finance job, hated it, had another opportunity there to join a team focused on leadership development and really internal like management consulting, basically. And it was fascinating and I found myself, again, using Adobe Illustrator to make a leadership compass of how leaders should make decisions, using visual communication as a way to kind of organize information. And that was always a theme of interest for me. And then Behance was really inspired by me wanting to bring my interest in business and

• 7:03Speaker 02

  design and the creative community all together and a increasing degree of frustration that I had with the creative industries because I felt like all of my friends who were in the creative industry were disorganized, their careers were at the mercy of circumstance, they never got attribution for the work that they were doing. And a lot of them were always kind of being traded by headhunters, marked up as freelancers, you know, passing from agency to agency. And it just didn't make sense to me. These are the people that make our lives interesting. Like, why were their careers in this state? That was the inspiration for Behance.

• 7:36David Rosenthal?

  You left Goldman and you went to HBS. Did you go into HBS thinking like already with this idea and thinking like, I'm going to work on the core of this while I'm in school? Or did it come out later?

• 7:47Speaker 02

  Yes, I went in, in fact, I should have never gone to HBS if you think about the progression of my path because I was working on Behance as a side idea at Goldman. When I left, I had basically four months before starting business school and I was all in on Behance every day. I had already hired one full-time designer to work with me who became my co-founder and we were on it. And I think I went to business school out of fear. I went to business school because I was trying to hedge myself. It's an insurance policy. Exactly. Did you end up graduating? I did. I did end up graduating. I think the PR value of not graduating would have been far better.

• 8:24Ben Gilbert?

  We could have put it right on the back of the messy middle.

• 8:26Speaker 02

  Yeah, HBS dropout, damn it. All right. Anyways, but I, but I survived and actually, you know, made some great friends in business school and did learn quite a bit and did an independent study my second year there, which basically meant that I was in New York the whole time.

• 8:39David Rosenthal?

  Working on your company?

• 8:40Speaker 02

  Yeah, working with a woman named Teresa Amable, who's a professor at HBS focused on the creative industries. So I tried to make the most of it.

• 8:47Ben Gilbert?

  I bet there's a lot of our listeners out there that are considering, hey, maybe I'll dual track and try and go to business school while starting a company. Do you feel like that's advisable? Or do you feel like that's an insane thing to sign yourself up for?

• 9:00Speaker 02

  I don't know if I would say it's advisable. I feel like the benefits that I got were like 5149, you know, in terms of the benefit of cost of enduring that additional blow of responsibility as I was building my company. But at the same time, I mean, I did it because I wanted to have a bit of a hedge. And I also, in some ways, was slow baking the concept. I was working with Matthias, my designer at the time, and we were just kind of, we were making progress, even while I was going to classes. So I don't know. I mean, could we have accelerated the history of Behance had I not done that? Was it net positive or net negative? It's hard to tell. I just don't think I would advise people to do it because it wasn't, you know, an out of the park, obvious benefit.

• 9:45David Rosenthal?

  I'm super curious how being at HBS and taking this path played into the decision to bootstrap too. But first though, I have to ask, what was the deal with the Action Journals? Was that like the original beginning of Behance? Was that something you did to help bootstrap along the way?

• 10:01Speaker 02

  You guys go deep. I like this. This is great. Well, Behance, we started in 2006, 2005, depending upon what you call starting it. And in our first product,

• 10:14Speaker 02

  By the way, the mission has never changed to organize the creative world. But the first product was a paper product called the Action Pad and then the Action Journal and the Action Book that were designed to help creatives be more organized. And we figured, you know, what better way to start our brand than a physical manifestation of what we were about? By the way, it was also a bootstrapping mechanism. So we actually bootstrapped our company for the first five years with very little of the capital that I saved at Goldman to get this company off the ground. You know, the Action Pads and Journals were a big part of that as long as well as these conferences and the first book that I wrote. There were various ways we were trying to bootstrap the company, but it was always, it was, it was a somewhat medium agnostic, but mission centric approach to building the Behance brand.

• 10:59David Rosenthal?

  Both you were getting awareness and distribution, if you will, for Behance, but also its non-dilutive capital.

• 11:08Speaker 02

  That is true, and I think that is a big factor, you know, if we want to get into it, but I mean, I know we'll get there, but with the acquisition, a big part of the math was the fact that we had not really diluted ourselves much. We had raised one real round of third-party capital five, six years into the business, which really was very, very, you know, significant for us.

• 11:28Ben Gilbert?

  Well, it's interesting having a revenue stream that you don't think is going to be your ultimate product to help bootstrap the company. I think it's a pattern that most people don't explore because when they're setting out to start a startup, they often want to be venture-backed right away, and so they want to get right into the core business. But, you know, it reminds me of one other business that sold something to make money along the way, and that was Airbnb with the cereal boxes. Imagine if they were selling like Air Beds or something that was actually like very aligned with raising awareness for their product and their community itself.

• 11:58Speaker 02

  You know, I do interview Joe Gebbia, one of the co-founders for The Messy Middle for the new book, and talked to him about sort of those early days. I mean, they were, they went through some real fits and starts and they had multiple iterations and, you know, the first two didn't really hit it like the third one did. The cereal was like a, it was also like a cultural element of the team and how they operated and how they, you know, worked together. There was something significant, even though the cereal wasn't necessarily related to the end product, but it was all about like kind of this fun experience and community and that sort of thing.

• 12:35David Rosenthal?

  So you're bootstrapping, you're selling action journals, you're doing conferences, you wrote your first book, and then you also had 99%, right? Which was essentially consulting.

• 12:45Ben Gilbert?

  99U.

• 12:45David Rosenthal?

  Oh, 99U, sorry.

• 12:46Speaker 02

  Well, actually, you both are right. It was 99% until the whole Wall Street movement happened, where there was like the 1%, 99% thing. And then we had to change the name of the conference to the 99U conference, because 99% conference was suddenly attracting unwanted press.

• 13:05Ben Gilbert?

  Wow. Things you don't think will happen, like turns along the way in your company.

• 13:09Speaker 02

  I know, I know.

• 13:12David Rosenthal?

  So you had all those revenue streams that are, you know, helping you fund the company and bootstrap. But you have the core product, which is Behance. And crudely put, sort of, you know, LinkedIn for designers and creatives to showcase your portfolio online. How did that product evolve? Was that the core vision that you always started with?

• 13:33Speaker 02

  It was. We knew that we wanted to help organize the creative world at work. And of course, we had some bootstrapping projects that we've talked about that helped define our brand and pay the bills, frankly. But Behance, we always imagined it being a global network. It was interesting. We had one focus group in the history of Behance. And it was right in the beginning, when we were doing these paper products in the conference, we had a group of people in our office from different creative fields. And we gave people, you know, everyone a bottle of wine and some cheese. And we basically said, you know, what do you think of this idea of an online network for your creative work? And people said, oh, like, the last thing we need is another website for creative stuff. We have MySpace, we have DeviantArt. And we have Facebook. Like, why would we need this?

• 14:18Speaker 02

  And we were like, oh, okay. Well, what are your problems right now? And then people just opened up, oh, my goodness. Well, my portfolio is always out of date. I never get attribution for my work. My images show up in all these random places. Everywhere I have to showcase my work and build a network is unprofessional. It's always like a playground and different fun images. But I want to consider myself a business. Like, these are like the types of things we heard from our customers. And we realized, wow, this is one of those moments where our customers don't know what they need. What they do need is they need a better. Professional network to showcase their work. And so we made a few principles at that moment. For example, we never use the word creativity. In Behance, there's no word of

• 15:02Speaker 02

  inspiration or creativity, because the purpose of the platform is the opposite, is to help you organize the creativity you've already got. So there were certain things that came out of that experience that helps build the narrative and direction of our brand. But we also realized that, you know, we had to build something that people didn't necessarily know they needed.

• 15:20David Rosenthal?

  And of course, LinkedIn was already around at this point. Were you looking at that directly and seeing like, this product is clearly working, but is not working for this community? Or, or did it evolve kind of more organically side by side?

• 15:33Speaker 02

  Yeah. I mean, we, you know, LinkedIn was always a sort of resume type text site. It was never visual. And, and even when they started launching the visual tool for showing your, any sort of images, it was powered by Behance, actually. So we had a partnership with them.

• 15:48Ben Gilbert?

  Oh, no way.

• 15:49Speaker 02

  To make that turn. Yeah. So it's just not how creatives want to showcase their work. They don't want to, it doesn't matter where I worked, it matters what I did. And I want to have the content speak for itself, rather than you look at my profile image, you know? So there were some real differences that we felt dramatically differentiated Behance from other, other products that were out there like LinkedIn.

• 16:13David Rosenthal?

  I would imagine most of the people on Behance, they're creatives, they're freelancers. They don't have a traditional job or a resume in the same way that would lend itself to a site like LinkedIn, right? It's all about the work, not about, you know, your history.

• 16:28Speaker 02

  Yeah, it doesn't matter. I mean, what agency you worked at, that matters. What, what actual work you, you created and what's in your portfolio. So portfolio first was always a big principle of ours.

• 16:39Ben 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.

• 16:53David 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.

• 17:07Ben 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.

• 17:17David 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.

• 17:34Ben 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.

• 17:50David 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.

• 18:07Ben 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?

• 18:16David 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.

• 18:27Ben Gilbert?

  One way to look at Behance is LinkedIn attacks the meaty part of the market of showing off stuff you've done to get an interesting job. And it misses a lot of things along the way, including the creative work. Do you think there's other verticals that there's sort of can be a Behance for this field that that are still to be built?

• 18:46Speaker 02

  Well, I do think that there's a void of attribution, generally speaking, in the world. I don't think that the actual people who do work get sufficient credit. I think it's usually the companies or agencies that employ them. I mean, even look at a website. I mean, why isn't there a extension in every browser that shows you the actual development team that did the work to power the product that you're using so that they get attribution for their work and therefore get career opportunity based on the quality of their work? I think it's also fascinating that In some ways, every portfolio is a lie because if I have a portfolio of work, I have images that were retouched by a certain retoucher who, you know, and the images were shot by a photographer and the font that I was using was designed by a foundry

• 19:31Speaker 02

  that actually hired someone to do the actual work. I mean, there's this attribution graph that just doesn't exist across so many parts of our lives. I've always hoped that the internet would help bring some of that to the surface.

• 19:42David Rosenthal?

  Yeah, it's interesting. It's reminding me of a couple of episodes ago, we had Kara Swisher on to tell the story of Recode. And you know, kind of a big point she made in a theme there was that like, you know, in the print world of media, it's about the Wall Street Journal. It's about the New York Times. It's about the Washington Post. It's the brand of the publication. But, you know, once the internet happened, and she was a big part of making that happen for tech blogging specifically, the journalists became the stars, you know? And all of a sudden, you know Kara, you know Walt, you know? Well, I guess people always knew Walt in the personal journal, but you can all of a sudden, you know, have a relationship with the person who wrote the piece, not just the piece itself.

• 20:24Speaker 02

  Yeah, I think that that's, that's true. I mean, that's the un-mundling in some ways of talent, whether it's in journalism or anywhere else. And, you know, that's an opportunity. And, you know, that's what we sort of saw in the creative industry and continue to work on to this day. I mean, if you really want to figure out who did what, the best way to do it is to root that back to the actual creative tools that they use. Cause that's the source of truth for who's doing what.

• 20:46David Rosenthal?

  How did you start to find the business model for the core Behance product? It's, it's not super obvious from the get-go, right?

• 20:55Ben Gilbert?

  And, and attaching to that, how did you know it was working? And when was that aha moment when it sort of started working? And of course, I'm sure there were a bunch of little ones.

• 21:02Speaker 02

  For Behance, the greatest reward we received in the earlier days, before we had a real business moving along, was just seeing people from around the world showcase their work, being awed and humbled by the work as well as wondering like, how the heck did they find us? And realizing that the best way that Behance was growing was the quality of work and professional that was in the product and having that spread. Obviously, there were growth milestones that we always had that we were hoping to meet. And there were certain moments when we just did things to the product that just increased the growth by a step function. Those were always magic moments for us. In terms of the business, there were different mile markers of the business quote unquote working. The first was us successfully bootstrapping ourselves.

• 21:46Speaker 02

  When we had the paper products, it was a pretty robust business for a very small team. When the conference was selling out months in advance and we realized, oh, we can increase the ticket prices and we can actually float the business by selling tickets way in advance. That was another kind of big moment for us. And then with the website, we started getting tons and tons of page views. And this is back in like 2008, 2009, when there were, you know, a lot of advertising opportunities. And so we were running, actually running sponsored campaigns through the network as a way to bootstrap the company as well. And that was a real revenue stream. And that was exciting because it was like, wow, we can actually, you know, sign a six-figure deal with a brand because they all want to be associated with the creative world at

• 22:30Speaker 02

  work and have a business there. Although in the back of my mind, I always said, I want to get the heck out of that business. I didn't love advertising and nor did I like the process of sales and advertising per se. But I would say that things really started to work when we started to have a premium product for our members. So we launched a product called ProSite, which is now Adobe Portfolio. But that's like a monthly portfolio product that also empowers a portfolio in your own personal domain name, but keeps it in sync with the platform so that you can kind of have an incredibly customized personal portfolio that always has the same work as Behance so other people can actually find your work. So that was like the first real product and the job posting board was actually a pretty good business.

• 23:15Speaker 02

  So those are the things that we're like, okay, this is growing month to month. It's scalable. We get it. It's right in the center of what we're doing.

• 23:23Ben Gilbert?

  Five years in, you raised capital from Union Square Ventures. Anytime before that, in the first four years, that you were like, eh, maybe we should raise money? Or was it, you know, I'm curious if it was intentional to not go raise venture? Or if it was more like, we just don't have a business that we feel like is fundable yet?

• 23:38Speaker 02

  Yeah, well, listen, I mean, you can put your own money, get money from like, you know, an uncle or something like that. But when you go to third-party capital, you have to have a degree of ambition for scale and potential exit in the future. I swear, in the first five years, my co-founder, Matias, I never talked about an exit. I mean, honestly, it was like a lifestyle business. We were loving what we were doing. We love the autonomy. We sort of despise the whole venture capital ecosystem of companies just getting way ahead of their skis and spending resources they shouldn't be spending yet and that sort of thing. And we just kind of liked having control over our own destiny. And so we just always were very careful about what we were spending and who we were hiring.

• 24:20Speaker 02

  We were paying way below market wages, but we were distributing equity to our team. And so we had a very generous kind of equity approach because we wanted our team to be a team of owners. But five years in, what we found is that the network was growing at all, on all cylinders. It was hard to actually keep the network up because we needed to build and invest in the infrastructure. And the people that we wanted to hire to do the greatest work of our lives to make this scale properly, we couldn't afford. And so I actually started to feel like I was strangling my own team. And that was one of those, as a leader, signals to me, all right, like, I should start thinking about raising capital. And it was just a small number of conversations. Union Square Ventures, you know, Jeff Bezos is one of our angels, Chris Dixon was one

• 25:05Speaker 02

  of our angels, a few other folks that I respected that I thought could add value. And the whole thing happened pretty quickly and we raised money. I think it was like a 35, a 30, $35 million valuation. And this was our first kind of external round of funding because we had accomplished so much in the first five years. And usually, you know, usually in a seed round, you're raising at a $5 million valuation. And then you have a few subsequent rounds and that further dilutes the team. But we were fortunate enough to really skip a lot of that.

• 25:34David Rosenthal?

  Yeah, so many entrepreneurs think about valuations and that's what gets all the press. But like, what you really need to think about is dilution. Because like, whatever your valuation is along the way, doesn't really matter. What matters is, you know, when you have a quote unquote exit of whatever form, you know, how much do you and the team own of the company?

• 25:56Speaker 02

  So there's a section in the book at the end, which you probably haven't gotten to yet, but it's called the final mile. And in that, I basically tear apart why so many people screw up the final mile of their venture. And I actually talk about some conversations with entrepreneurs going through acquisitions and the fact that you can do everything right for five to seven years and then the final mile happens and you think you're ready for it because of all the success you've had so far with what you've done to get there. But in fact, it's a completely different playbook. You know, and we went through that. And when you're doing the apples to apples comparisons of, hey, do we get acquired now at X or do we wait three years with potentially two to three more rounds of funding and increase market risk and everything else and exit at Y? And what you end up finding is it might be the same.

• 26:39Speaker 02

  I mean, I know businesses that have been acquired for north of a billion dollars, whose founders, you know, received a fraction of businesses that I know that were acquired for $200 million. And it's, and yet the press celebrates a unicorn quote unquote exit, but at the end of the day, you know, that means nothing.

• 26:59David Rosenthal?

  Yep. Just like you say, you know, every time you're, you go out and you raise capital, like that's a minimum 20% hit to your cap table, often more. So, you know, you raise five rounds of funding. Well, you know, guess what? You sold, you know, not 100% of your business, but 20% to the fifth. Well, that math is wrong too, but a lot, a very, very large portion, well more than a majority.

• 27:22Speaker 02

  But listen, I mean, a lot of companies can't bootstrap and need to raise capital. And there's nothing wrong with raising capital. I think the question that you just have to ask yourself is, How do I play this for the long game? How do I not raise so much at such a high valuation out of the gate? That, I mean, I have a few companies in my portfolio that are coming back now saying, we need to raise more money. And they really stretched themselves the first time around in terms of their valuation because of the fact that they were Stanford this or PhDs that or whatever. And they could get away with it in a, you know, loose funding environment. And guess what? Now they're going to have to do a down round, which they're freaked out about because their employees are going to be like, wait, you're saying my equity is actually worth less than it was a year or two ago. And investors are going to be, they're going to smell blood and realize this isn't working.

• 28:07Speaker 02

  You know, and if had they just done like a sort of more level headed, easy round in the beginning, they would have been fine.

• 28:14Ben Gilbert?

  One thing before we move on on bootstrapping, so you said you were, you were very generous with employees on equity. How do you communicate when you're giving out equity in a business where you're, you're not thinking about the exit? What the upside potential is or how, how employees should think about that equity?

• 28:32Speaker 02

  Yeah, I mean, for me, it was pretty easy. It was, it was an LLC still, so because we weren't thinking about an exit and these were, these were compensatory units in an LLC. So theoretically, as we were profitable, every time we would distribute that profit to shareholders, it would go to everyone in the percentage of the company they owned.

• 28:49Ben Gilbert?

  Wow. So you, when you say you weren't thinking about an exit, you really weren't thinking about an exit.

• 28:54Speaker 02

  No, in the early stages, I wasn't, you know? I, I think it was part of what kept us together in some ways though, because we were all in it for what we were building. When people came into interview with us who were like, you know, there because, you know, they wanted to have like an exit, they wanted to have an IPO, they wanted this and that or whatever. They would have been interested in working with us.

• 29:15Ben Gilbert?

  Right, you would have been like, here's a LLC unit and they would have been like, what does that mean?

• 29:20Speaker 02

  Exactly. So back to like the messy middle, like in order to keep a team together long enough to figure it out, which is by the way, I think the competitive advantage of most startups is just to stick together long enough. To figure something out that they're completely nave about initially.

• 29:34Ben Gilbert?

  So true.

• 29:35Speaker 02

  And then apply like their modern sort of ways of working and skillsets and whatever else to solve an ancient problem. But that's, that's the trick is just to keep people together. And I think there's unique ways you can structure a team and compensate people and develop a culture in order to transcend, you know, the odds.

• 29:52Ben Gilbert?

  All right, so going back to, you know, May of 2012, you decide, hey, we're going to pour gas on, we're going to go raise 5 million, somewhere in there?

• 30:01Speaker 02

  We raised 5.5 million dollars.

• 30:03Ben Gilbert?

  5.5 million, 30 to 35 million dollar valuation, you really start pouring the gas on. You're not the only one thinking about this, you know, that we're starting to see a little bit the rise of Dribbble and there's, people are starting to pay attention that, hey, every single startup needs design from the very beginning, it's not just polish, it's really an integral part of every product. We start seeing all consumer products get beautiful and all, a lot of enterprise products get a consumer-like level of polish. How did you think about Behance in the market and really the competitive landscape?

• 30:34Speaker 02

  You know, there were a lot of them over the years, right? There was one called Crop, there was Coraflot, there was DeviantArt, there were so many different competitors over the years, you know, many of which dissipated, some of which sort of stayed small and niche. And we had some interesting lessons along the way, you know, I talk in the book about Dribbble a little bit and how it at first caused us to kind of question if we had it all wrong. I mean, Dribbble was encouraging designers to throw in these 400 by 400 pixel snapshots of their work and the result of that is that you can make anything look good. You can just find like a really nice drop shadow or a little nice little piece of your edge of your design and put it in and people will be like, oh my God, that's amazing. And yet we would look at these people's portfolios on Behance and many of them were like, wow,

• 31:18Speaker 02

  that's actually not good work. It has a nice drop shadow at the corner, but otherwise it's not. And we realized that, you know, the real, the real measure of a designer's portfolio is seeing the project in the context of the goal and the product, like everything around it, like how you bring it all together. That's like the, the masterful nature of a great designer is how to integrate everything and be seamless and simplify, yet it's harder to do that. And so here we had this conundrum where it was much easier to engage and contribute content on Dribbble and get feedback. And so that was like a better social dynamic, yet we also believe in the principles of Behance as a way to showcase your work and to get opportunity based on the quality of your work. And so we actually had some deviations.

• 32:03Speaker 02

  You know, we built a snapshot sharing tool in Behance. That we did out of, out of the competitive threat of dribble to some degree. And then we realized after launching it that this wasn't us and we ended up killing it. And that sounds easy, yet imagine like going through a year of building a whole new dimension of your product, launching it, realizing it's splintering the message of what your product's really about and then having to actually kill it. It's like, oh my goodness. What a, what a lesson.

• 32:30David Rosenthal?

  I think you, you talked about this a bit on, on the Tim Ferriss Show and it was super cool. Like, you know, one of the startup platitudes, right, is that like, you know, most startups die of indigestion versus starvation, right? And like, you should stay focused on your, you know, your customers, not your competition and don't worry about all that and you can, that can lead you to raise money and do stupid things. But like, that's so hard to do in practice. And I mean, so many companies I've been involved with, you know, the same thing. You have direct competitors, they do something and then you have to react to that.

• 32:59Speaker 02

  I mean, this is what I hate about best practices though, because look at Instagram copying a lot of the best practices of Snapchat. That was the best thing they ever did.

• 33:06David Rosenthal?

  Totally. How did you get conviction that, you know, you'd headed down this path as a competitive response that like, wait a minute, that really wasn't the right thing and then walk it back?

• 33:17Speaker 02

  Well, just stepping back for a moment, like the volatility of the middle of a, of a venture or startup, right? And actually, one of the things that really compelled me to write this book was the realization that we are not at our best when things are going really well, because we falsely attribute the things that we did to what worked. And we also start to have an ego, oh my God, we're winning. And then you start to stop paying attention, you stop being paranoid. You're also not your best when things are going the worst, obviously, because you're making decisions out of fear. And I would say that when we had the rise, I was, remember it was right after we raised our round of financing and I got a call from Albert, who was on my board at USV, who was like, what do you think of dribble? Like, everyone's starting to talk about dribble.

• 34:00Speaker 02

  And I was just like, oh my God, you know, we just raised our money and now, now this like increased focus on this, you know, site for UI designers and we just, I guess the lesson that I would learn here is that when you have principles for what you believe is best for your community and your product, the insights that you gain from competitors that are in line with your principles, potentially you should do yourself. I mean, that's how competition makes everyone better. But when you see competitors doing things that are not in line with your principles, but seem to be working. You have to really determine whether you should change your principles or stick with it. What we did, you know, in a bad way at certain times and a good way in other

• 34:42Speaker 02

  times is navigating that difference. And that was the tough lesson we learned with this sort of snapshot sharing tool on Behance that we ended up killing. Because our principle was that nothing would be better than a source of truth for the work that people created and like a truthful way of showing it. And you know what? And that was the right call. Because Behance, you know, dwarfs Dribbble in terms of its reach and size now, even though Dribbble actually still is a thriving ecosystem for a niche community of designers. And I think that there's actually a place for both. And most of our members are, you know, have a portfolio or a page on Dribbble. And that's great. And when people actually ask me where they should put their work, I'm like, put it freaking everywhere. You want it everywhere and they'll see where it performs best and then spend your energy there.

• 35:27Ben Gilbert?

  If you could go back and talk to yourself in the past at the moment where you're making that decision, hey, we're gonna fork off a piece of the team and start building this competitive product, would you do it again? Was that lesson important? Or would you save yourself the trouble?

• 35:40Speaker 02

  It's hard to ever regret lessons learned in the middle, right? Because I think they made me who I am. They gave me this point of view. Hey, I wouldn't have had that chapter right in the book. And I had that experience. So, but it has taught me about for an approach for dealing with competitive pressure, which is channeling it for us to spend more energy and time on the things that adhere or are in line with our principles for the product. And when teams ask me now, you know, do I quit it or do I stick with it? It's always a question back to them of whether the conviction they have in the end state of what they're building is greater or less as a result of what they learned so far in the product and in the process. If the conviction is greater, if you were like, oh my gosh, even

• 36:25Speaker 02

  more than ever, I know the world's going to be this way, stick with it regardless of who else is doing what and how hard it is and how hopeless you feel. Don't quit. However, if you're starting to compromise in that conviction a little bit, you're like, actually, you know, we've learned this and that, and this is actually not what we realized. And maybe the market isn't as big as we thought or whatever, then quit and do something different. I mean, life is short. You have a good team of people together, apply them towards an entirely different idea.

• 36:52David Rosenthal?

  My way of thinking about this is always like, if you think about the totality of your, whatever you want to call it, user growth, revenue, whatever is success in your product, and you think about that as like a curve over time, and just think about like, what area under the curve have you already achieved? Is the majority of the area under the curve in the future, or is it in the past? And this is a cool way to focus that more on the customers and the market for the product.

• 37:23Ben Gilbert?

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

• 37:36David Rosenthal?

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

• 37:53Ben Gilbert?

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

• 38:08David Rosenthal?

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

• 38:32Ben Gilbert?

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

• 38:51David Rosenthal?

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

• 39:21Ben Gilbert?

  Truly insane numbers, and that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at lagora.com/acquired and just tell them that Ben and David sent you. All right, so let's go back to the story. So in May of 2012, you raised this money. December, the news breaks that you guys have sold the company to Adobe. How did that conversation start and when did it start?

• 39:59Speaker 02

  Well, it was always a relationship. We're getting into a fun area here of how you kind of build ongoing relationships with potential acquirers in an appropriate way. We were never interested in selling our business in the first few conversations we had over a four-year period with Adobe. And some of these conversations yielded potential partnerships that would... in one case, we had a million-dollar deal on the table to power a network for Adobe. And then eventually, even with lawyers in the room, some executives at the time were like, wait a second, we can't do this. We can't have all of our customer data owned by a third party if we ever want to go into a subscription model.

• 40:38Speaker 02

  So it was an interesting four-year experience, getting to know the company and always sharing updates. I would share updates with various companies that we could have partnerships with, like Autodesk, Adobe, LinkedIn, where I would connect with folks and send them, hey FYI, here's the investor newsletter we sent out, just give you a sense of our progress, love to find more ways to work together. Things like that are important. And then when it came down to the fourth year and this relationship with Adobe in particular, the company had made the decision to go to subscription. The person who led digital media at the time, a guy named David Woodwanny, and now he's CEO of AppDynamics and led them through their acquisition, he kind of came to me and said,

• 41:23Speaker 02

  we are all in on this. And we actually believe that Behance wouldn't necessarily just be a marketing channel anymore or a cool kind of community for our customers. It would actually be at the center of Creative Cloud. This is how we're going to build an active user base of customers, is how we're going to know who's using what tool and how to make sure that we build an enduring business that has high engagement. And that was super interesting to me because then suddenly I felt like, wow. We could be at the core of a very exciting business. We could build our products into the actual tools people use to create. And I love the culture of Adobe. I liked the people that I was talking to there. Everyone seemed to be there because they liked making things for creative people, just like us, as opposed to being there because they have the flashy headlines.

• 42:09Speaker 02

  And so it just felt like I was starting to check off all the boxes. I felt like we had found a place where our team would be valued and placed at the center rather than treated as an appendage. I felt like it was a company that embraced new DNA and innovation as opposed to stifling it. I felt like the mission was very aligned to help creatives be successful. And then from a standpoint of economics, when we started talking about that, I went through that apples to apples comparison that I we talked about earlier, where, yes, we could have raised a series B and then a series C, and we could have maybe had a much larger exit, but then we would have had much greater dilution and greater market risk. And when I did all the math in terms of how many, you know, how much we'd have to increase the option pools and how many more people we'd have to hire and how much more dilution we would have. And like

• 42:54Speaker 02

  everything else, I realized that it was basically apples to apples, you know, didn't really, it kind of negated that part of the equation. So it was really about, you know, where we wanted to work.

• 43:04Ben Gilbert?

  That's so interesting to think about, just modeling out what every existing shareholders equity is, you know, diluted 20, 25% by another round of financing, plus another 10, 15% for an option pool. And you start looking at the hurdle you have to clear. I mean, that's, it gets serious. Per round you raise, you know, like you're saying, you gotta raise two rounds, double that.

• 43:24Speaker 02

  For the people involved, you realize that $150 million valuation or acquisition is maybe the same as a $600 million acquisition, or even more. What was helpful to me was to go through that exercise long enough to realize, all right, you know what, this is not about that at this point. This is not about the potential future return that's greater. I mean, this is really about what we want to do for our customers, what we want to do for our team, like how we want to work together and feel like we have a few more chapters ahead of us.

• 43:51Ben Gilbert?

  What was USV and your other venture investors, or people who had invested in the in the past round, what was their reaction to all this?

• 43:59Speaker 02

  They were very supportive because they, I mean, USP is just one of the greatest firms in terms of how founder-friendly they are and focused on doing what's best for us and for our team. In fact, they went even further. I wanted to make some changes on the cap chart of our company to incentivize some people who had recently joined us, who had not had any vested equity and who were about to maybe get another grant in six months or whatever. I wanted to synthetically kind of orientate the entire team to feel like they could get the outcome in three years that they would have gotten had we stayed a private company. That took some maneuvering of the cap chart and some generosity from our investors. And I went to Uniscore Ventures and said, listen, I'll take this out of my pocket. I want you to take some out of your pocket. And we took, I forget what it was,

• 44:44Speaker 02

  maybe it was like $10 million or something off the top of the entire transaction. And I was able to use that across our cap chart to make certain people whole and give certain people equity or cash in the deal that would vest over a period of time that they would have otherwise not received. And they were super flexible in that sense. And I remember, I mean, they got, what, you know, a 5X plus return or something like that in the 12-month period. So that's a pretty good IRR. I don't think that there was any complaint on that front. I think that obviously they had had higher hopes for us to stick with it and, you know, grow even further. But at the end of the day, I mean, they wanted to do what was best for us and they understood our logic.

• 45:24David Rosenthal?

  Let's talk about what Behance was able to do then, kind of within Adobe. And as you mentioned, being at the core of, I didn't realize that Adobe had already committed to go all in on subscription before they bought you guys. This decision completely transforms Adobe and the proof is in the pudding. Over the last five years, the stock price is up 5X. Talk a little bit about that.

• 45:48Speaker 02

  First of all, at the center of that is being able to ship updates and features and value to customers every month as opposed to once every 18 months. So it is an absolute no brainer in terms of both the customer value, what customers are actually getting in this modern world where it's more than just a desktop product. It's software that works across different devices that you can pick up where you left off. It kind of opens up a whole world of possibility, you know, for how we can build the creative products of the future across new mediums and that sort of stuff. And so especially now with the roadmap, I mean, goodness, like if we didn't have Creative Cloud to build on top of, I don't know what the future of creative would look like, but it would not be pretty.

• 46:30Speaker 02

  The software as a service business is also an easier business to understand from an investor perspective. It's, it's really about conversion and retention. You know, it's not about these like crazy sales cycles every 18 months that could go any which way. So it creates more regularity in, in the business, which obviously investors have valued. So it's one of those moments in the business that I, I can't take credit for the decision. It happened before I joined, but it was a, you know, a great decision by the leadership to build a better business for Adobe as well as for investors. But more importantly, just build a, a platform as a service for customers where they could just get updates all the time, every day, you know, wherever they are and be connected. And I think that that's the future.

• 47:15David Rosenthal?

  Before this transition, you know, I would imagine a huge, huge portion of Adobe's business was dependent on negotiations with large, you know, users of Adobe software, you know, call it WPP or whatever agency, or you know, I'm sure there are hundreds of big users, even companies themselves around the world that would come up for renegotiation every couple of years. And then it'd be like, okay, well, how much are you gonna, what's the price that, you know, you're going to charge per seat for the next four years of, you know, the right to use Photoshop? Switching that over to the subscription model, like, like you're saying, it's so much more predictable, but also lets you deliver a lot more value and reorient the company around that.

• 47:57Speaker 02

  The way I like to look at it is if you were starting a company today that was delivering any type of software experience to any group of people that wanted to collaborate, to work across devices, you of course would make it a service. I mean, no one would create desktop software anymore. Easy to say, hard to do for a big company that had had a traditional business model, right?

• 48:18David Rosenthal?

  Yeah, totally. I mean, this is like Adobe's a, at this point, what, probably close to a 30-plus-year-old company, right?

• 48:24Speaker 02

  Right. I love the idea. First of all, I'm very passionate about building for creative people. And I just think that, I mean, think about our world today. Labor is being increasingly commoditized and automated. You know, the pricing of labor is going down, the rise of the machines, artificial intelligence, everything else that's happening. Yet creativity is the most uniquely human trait there is. I believe that design should be taught as a form of literacy in school, just like you learn penmanship and how to write and read. And I think that it's one of the things, one of the few things that can just make everyone stand out at work, on social, you know, in any walk, part of their life. I mean, at the end of the day, it's going to be about creativity. And I always tell my teams, we've got not only an opportunity, obviously,

• 49:07Speaker 02

  but we have a responsibility. We've got to figure this stuff out and usher in this next generation of creative products. And I'm just grateful that Creative Cloud is a better business model because at the end of the day, we just have to get people to convert to tools and retain. It's very, very straightforward.

• 49:22Ben Gilbert?

  So better business model, and you've alluded a few times to sort of integrations and positioning Behance at the center. Can you talk about what that actually looks like from a product perspective, where it's evolved to today? And sort of how is the acquisition a one plus one equals three, where Adobe is able to do things they weren't able to do before, and Behance is able to be more than it could ever be?

• 49:40Speaker 02

  Yeah, I think it's on a number of fronts. I think it's a go-to-market level, it's a product level, and it's a people level. On the go-to-market side, obviously knowing, you know, having a reach of tons of people that are, that are on Behance showing their work, that have an Adobe ID that maybe, may have been like pirating Photoshop for the last 10 years of their life. But having a relationship with them, so they can start to see the features of the new Photoshop, and they can start to discover projects made with the new Photoshop. I mean, there's a, obviously a creative graph we built that Adobe can leverage in so many ways on a go-to-market level. On a product level, starting to think about, okay, you're in Lightroom. How do you publish all, an album of photos as a product on Behance with one click? And how do you show work in progress in Photoshop with one click?

• 50:23Speaker 02

  So there were a lot of product integrations that were really central. But on the people level, you know, and I'm somewhat biased on this front, but there are now people that were in our team in Behance that came in in December 2012 that are now scattered throughout the company. We had basically no attrition for the first three years. And then even four, five years in, A lot of our initial team is still here because we like working with each other, because we continue to make an impact. The company continues to do very well. And we still feel like we're in the early innings of some of the possibilities. So it's a good story in that sense. And everyone talks about unicorns as like companies that are billion dollar valuation, blah, blah, blah, blah. I actually think one of the real unicorns in the world is like an acquisition that

• 51:08Speaker 02

  actually works, where people stick together and they may continue to make an impact. Because, you know, usually it's not as, not as, not as nice of a story.

• 51:15David Rosenthal?

  It's funny. I mean, that's the reason we started this show.

• 51:18Ben Gilbert?

  I was gonna say, when we first set out to do the show, Scott, in our first few episodes, when nobody listened, the tagline for the show was a podcast about acquisitions that actually went well.

• 51:28Speaker 02

  And then you realize you didn't have enough stories.

• 51:33Ben Gilbert?

  I got one more. And this, this one, kind of before moving on to your journey since the acquisition, has the growth post-acquisition of the Behance product alone, not sort of considering all the advantages to Adobe, accelerated? And, and has the product hockey-sticked after the acquisition?

• 51:49Speaker 02

  Yeah, I mean, we were maybe a little over a million users of the platform at acquisition. Now we're over 15 million and growing rapidly. So, you know, I think that I attribute that both to our positioning within Adobe, as well as just the continued work of the Behance team, just building out a great product.

• 52:08David Rosenthal?

  There's such a, still, it's crazy, but still, I feel like in the tech and startup world, like the power of distribution is not fully understood, or, you know, underappreciated. As you were saying and describing, you know, Behance's role within the Creative Cloud, like, all of a sudden, if you've got a publish to, you know, to Behance button in Photoshop, like, that's the best form of distribution you could ever ask for, right?

• 52:33Speaker 02

  Yes, in theory. What I would say in practice is that it's hard to integrate in the right way into tools that have been working in a certain way for 25 years in some instances. So it, I agree with what you're saying, and actually, that is true. However, what I've also learned is that a lot of the things we thought were the obvious methods of distribution before the acquisition, you know, were not as powerful as some of the ones we discovered after.

• 52:59Ben Gilbert?

  Let's dive in a little bit here to your, your journey afterwards. So, angel investing. How did you start doing angel investing?

• 53:07Speaker 02

  On the angel investing front, it sort of happened by accident in the sense that I was in the, before the acquisition of Behance, and most of my stuff I did after. But before, I was introduced to Ben Silberman when he was coming through New York to raise money for what became Pinterest. And he was building a site that was also on a grid. And he was also trying to appeal to designers or design-minded folks. And we just started having a lot of product brainstorms together. And he asked me if I wanted to be a product advisor for the team. And I said, yes. And then he said, well, do you also want to participate in our seed round? And I thought, well, I don't have a lot of disposable income at this point to do so. But it would actually be fun to be a part of another journey and learn. And

• 53:50Speaker 02

  also, he was a, he was a West Coast entrepreneur. I was an East Coast entrepreneur. He had, I think, a lot of, a network and a lot of stuff I could learn from. So I did it. You know, and it was an incredible journey of being an advisor of his. And then, of course, when Pinterest started to really work, I started to meet a number of other entrepreneurs. Also, at around the same time, and this sounds a little crazy, but I was doing a big partnership, maybe this is like now 2010, 2011, 2012, I forget what actual year, but a big partnership between Behance and StumbleUpon, which you'll remember was a great discovery website for creative work online. And Behance was one of the number one sources of content for

• 54:31Speaker 02

  StumbleUpon. And so I remember one fateful day where Garrett Camp, who was the CEO of StumbleUpon, and also was tinkering with another idea, pulled out, I kid you not, an action book. This is going to go full circle, guys. He pulled out an action book, and he showed me a sketch in an action book of a little side project he was working on to get a car on demand on your phone. And, and he was like, Scott, you want to help me out with this? And I was like, sure. Did you invest when it was a sketch? I actually invested probably like six months after a sketch.

• 55:09Ben Gilbert?

  So of course, everyone, we're talking about Uber here.

• 55:12Speaker 02

  Yeah, so this was a fateful moment as well, early on. And of course, I should have just stopped my angel investing at that point and called it a day, right? But really, I mean, the opportunity to be involved as a product advisor and early investor in Pinterest and Uber really led to a lot of different things, obviously, and have had a great, a great experience being an investor. And, you know, one of the moments in my life, after three years at Adobe, it had been a 10-year journey of Behance and Adobe and everything else. And I was thinking like, what do I want to do next? Do I want to stay and, you know, and continue to build at Adobe and build products for creatives? Do I want to do something else, start another company? And everyone I knew was like, you have to be an investor. I mean, look, look at your track record. You love doing this.

• 55:54Ben Gilbert?

  Yeah. And we should say for, for listeners who don't know about Scott as an angel investor, it's, it's a ridiculous portfolio. I mean, you've angel invested. So in the very earliest stages of Pinterest, Uber, Warby Parker, Periscope, Carta, Ernest, Sweetgreen. I mean, the list goes on.

• 56:09Speaker 02

  You know, for me, it's about the products and it's about the people. And I would love to say that I am, um, you know, I, I can, I can scale this and make it into a firm or whatever. I just don't think I can nor should. What I did go through though, was this question of should I be a full-time VC? It was one of those moments in life where I learned that just because everyone says you should do something, doesn't mean it's the right thing for you. I left Adobe and I left my, you know, hung my spurs as a product maker and a team leader and builder.

• 56:35Ben Gilbert?

  And, and what year was this?

• 56:36Speaker 02

  So this is now 2016. I took the opportunity to jump in and become a general partner at Benchmark, which is one of the great VC firms I've always admired. And I, you know, have a tremendous amount of admiration for each of the partners. And I figured, okay, let's just jump in and learn from the best and, and do what everyone says I should be doing. And what I learned pretty quickly, maybe even three weeks in, was that I really missed building and jamming about product and spending time with teams, not based on the traction they were already getting, but because of the potential of their product and their team. And it was just in some ways a mismatch between what I loved doing and what the real job was. And so going through the process with my partnership of figuring out, okay,

• 57:21Speaker 02

  am I just, are these just like the blues of a new career transition? Should I just stick with it? Or should I really rethink this? You know, it was very difficult, but ultimately became a venture partner with the firm. So I could kind of focus on, on the teams that I wanted to focus on and, and still have a relationship with the team, but have a little bit more freedom to figure out what I wanted to do full time. That brought me back to Adobe.

• 57:46Ben Gilbert?

  What was it about the venture job? Cause ostensibly from the outside, and David and I'll laugh a little bit about this being a little bit more tied up in the mechanics. But what is it about the job of being a general partner at a venture capital firm that takes you away from spending time with the founders and obsessing over their products with them?

• 58:06Speaker 02

  When you think about it, as a venture capitalist, you are trying to see and network with as many different teams as possible. And at a top firm, you're trying to make sure that anyone that's really getting traction, any product that's really working, that you're ahead of it. Which basically means that any additional minute spent with a team that hasn't figured it out yet is in some ways a wasted minute. That's what I love doing.

• 58:29Ben Gilbert?

  So Benchmark being just a top, top unbelievable series A firm, you sort of had the best job at one of the best firms. To the extent you wanted to do venture, like you had it, you had it completely made. Do you think that going earlier, and if you had joined a, or started a fantastic seed firm where the job was really more about sort of working with maybe pre-traction or companies just as they found traction, that the, the job of being a full-time investor would have been one that you, you enjoyed more?

• 58:57Speaker 02

  You know, I don't know. I think, like, I knew it wasn't a fit. My partners knew. It's just, you know, it was being in that mode of just trying to make sure I find the transactions with traction and really trying to focus on the stuff that was really already working. Would that have been different at a seed fund? Potentially, what I kind of come back to now, though, is I think I have my best at both worlds right now because I can continue to work with benchmark in this capacity. But I have a full-time job, building teams and building products that I care about. And then my investing that I do, I get to do on my own. You know, all the seed investing that I do now, it's a one-to-one relationship between me and the founder and their product. And I can spend my energy and time where I want to go. I don't feel responsible for LP capital. So if I feel like there's nothing interesting for me to invest in for a period of time,

• 59:42Speaker 02

  I can just do that. I have no pressure. And to me, that's sort of a happy medium.

• 59:47David Rosenthal?

  What really struck me when you were talking about your angel investing and, you know, meeting Ben at Pinterest and Garrett and Uber is those conversations came out of like a business relationship. And then as you were talking about, you know, being a full-time investor is super different. Like, you know, when you're an angel investor, when you're meeting companies in a business context, like you're working together on problems. When you're a VC, you know, you're out there, as you say, you know, you're meeting companies. You are their problem, you know? You're showing up and trying to invest in them. It's a completely different approach.

• 1:00:22Speaker 02

  Yeah, it is. And but it feels natural to me. And you know, I advise everyone in their career is to find like the motions that feel natural to them and then do them. It doesn't matter whether they don't confine themselves to a, you know, standard job description or the way things are done. I'm proud of the portfolio I'm building on the seed side. I think it's one of the best, if I say so myself, and I do it my own way. And I like the fact that I have a day job where I get to work with designers and product makers. It keeps me on my toes. It, you know, it unleashes a part of me that I love exploring the most. And, you know, in this book was a way of just challenging myself to share a lot of the things that I have learned and also in the process, interview people and like get get advice myself.

• 1:01:05Speaker 02

  You know, I learned probably more in the process of writing The Messy Middle than I ever expected.

• 1:01:10Ben Gilbert?

  Well, David and I can certainly agree with you on, I mean, in doing this show, I think that we've absolutely learned the most from the people that we've gotten to have on and research with.

• 1:01:19David Rosenthal?

  Yeah, so let's jump to that. So you come back to Adobe as Chief Product Officer and start working on the book. How did both of those things happen?

• 1:01:28Speaker 02

  Well, the book was always an ongoing project, of course. And during my time before coming back to Adobe, I had more time to really focus on pulling it together. But coming back to Adobe was really this incredible homecoming. I was very excited about this next generation of creative products. I feel like Creative Cloud is at this transition where products can become services, where they can start to work in different ways. It can become more collaborative across different surfaces. I just think that that's the moment of the product right now. And to me, the opportunity to be involved with that inflection and to really help the teams get it right was really, really exciting to me. And I also just wanted to get back into my zone where I could be doing the different things that collectively

• 1:02:09Speaker 02

  round out my interests. So it was a relatively easy decision, actually, even though a lot of people were like, "You're doing what? You're going back where?" It made a lot of sense to me. A lot of my team is also still there. And I feel like some of my DNA is also in the company through the Behance acquisition. So it felt pretty natural. And I told them, "Hey, listen, I'm going to continue working in this capacity with Benchmark." And Benchmark was fine with it, and Adobe was fine with it. And also, I explained that I have this book project that I'm going to have to put some effort into to get wrapped up and out there. And I think that, to Adobe's credit, my leadership team has been very, very supportive.

• 1:02:47Ben Gilbert?

  I'm curious. I didn't ask this. Did you move out to the West Coast and then move back to New York? Were you in New York the whole time?

• 1:02:54Speaker 02

  Twice. I've moved back and forth twice over the last five years. So it's been a little bit volatile. But right now, I spend my time on both coasts. So we have a place in San Francisco and in New York, which is really cool to be able to say, "Hey, I can make the most of both of these interesting cities."

• 1:03:10David Rosenthal?

  For a company like Adobe, that makes a lot of sense, right? I mean, like, it's a software company at heart and it's been one of the iconic Silicon Valley companies going back to the 80s. And yet, your customers are creatives and the creative capital, at least of America, is New York. That makes a lot of sense.

• 1:03:28Speaker 02

  There's a bit of a renaissance in the company right now, where a lot of new ideas are coming in, people that are thinking services before desktop products. There's a lot of change and it's always fun to see what the next generation of a company can look like.

• 1:03:41Ben Gilbert?

  All right, so this is a really good transition. The next section that we're going to do is the acquisition category. So in this segment, we kind of assign a category to the acquisition: people, technology, product, business line, asset, consolidation, or other. Scott, you're welcome to sort of participate or not in this, but you talk a lot about this renaissance in the company. I'm curious, before labeling this, how much do you think of that as attributable to acquiring Behance?

• 1:04:08Speaker 02

  Oh, it's hard to say. I mean, I think that Behance is a small, little part of this whole picture. I think it's all about the people. There are some fantastic people that have been at Adobe for many years and there are a lot of new, great people that I believe Behance brought in. But it's a joint effort. No one gets the credit.

• 1:04:26Ben Gilbert?

  There's a few elements here. I mean, I think some part of this acquisition was definitely people and having you join the company and be a part of the senior leadership team now. To some extent, I think there's a business line where obviously Behance itself is a nice business. But I'm going to go with product because I think that this is really something that, as you alluded to earlier, Adobe was really able to plug into where the puck was going within the company and really be both distribution and a relationship with the company through the Behance product for everything else that Adobe does. And David, I'm curious on your take on that.

• 1:05:02David Rosenthal?

  You know, I mean, before the show, I was pretty dead set on product too. But I think, you know, something that's come out as we've discussed here and we're gonna have to do more episodes on Adobe and I don't know when the IPO was, it was probably a long, long time ago, that'd be fun to go back and look at.

• 1:05:16Speaker 02

  Our founders are still on the board, so it's amazing. Like, there's still real founder DNA involved with the company. It's just a remarkable story that Silicon Valley just doesn't talk about as much.

• 1:05:24David Rosenthal?

  Yeah, it's not as well known, and that's why I think we, I think we need to expose it more on this show. I think I'm gonna go with people though, because this transition from packaged software to subscription was so important. Obviously, there's the impact on Adobe's market cap and, you know, I mean, creating 80-plus billion dollars of market cap, like, that's a, that's an A+ in any regard, we, you know, previewing, grading here, and obviously not all that is, or even majority of that is attributable to Behance. That's such a huge DNA change and, you know, I mean, only look at like Microsoft to see how hard that is to go from the old world of licensed software to a new world of service-based

• 1:06:08David Rosenthal?

  software and subscription pricing. You know, it took changing the CEO of Microsoft for that to happen. Most of the Behance team is still at Adobe. You guys were acquired, you stayed there for four years, then you went to Benchmark, now you're back, you're back as Chief Product Officer. I think, again, from the outside, like, it's, it's, I can really appreciate how much of a DNA shift that is at Adobe and how important this has been. So I'm gonna go with people.

• 1:06:33Speaker 02

  As I think about the transformation of Adobe that I've seen happen, you know, I think about, first of all, our CEO, Shantu, has just had an incredible tenure and impact and led this whole thing. And then just think of the teams that were just like not willing to give up, even, even when it was, you know, not so clear that this transition would be smooth to, to the subscription and everything else. So it was fun, it's been fun to play a part. I think Behance's DNA has had impact in unexpected places, that's for sure. You know, hopefully, we're still in the early innings to some degree.

• 1:07:03Ben Gilbert?

  All right. What would have happened otherwise? So this is where we talk about if the company hadn't been bought at the time and by the acquirer had been bought for, what would have happened? Scott, I sort of have two questions for you. One is growing from 1 million users to 15 million users. Impossible to say for sure, but where, do you think you'd be sort of close to that as an independent? And that you would have sort of grown independently? And then two, where else could it have been a fit? Which is kind of funky to talk about now, now, given your job at Adobe. But what else would have made sense?

• 1:07:34Speaker 02

  Well, of course, I think that Behance would have been as big, if not greater. We have an incredible team and I think that the problem and the solution were on point. So that's my extraordinarily biased answer. But at the same time, I mean, I think that what Adobe has done for Behance and what the team has continued to do within the company is extraordinary. So, gosh, I don't, I can't answer that question. And I'm so happy with the way fate played out. And it's like, I think the customers have been served. I think the team has been served. And I think our, you know, I think Adobe's become, become better as a result. So very, very tricky one.

• 1:08:12Ben Gilbert?

  That's a great answer. I'm not going to push any harder.

• 1:08:15Speaker 02

  Thank you.

• 1:08:17Ben Gilbert?

  Tech themes. We've touched on a lot of them. I think one that we haven't given enough airtime to, and I'll just take a minute here to talk about it, is, you know, these marketplace businesses and sort of network businesses are so crazy powerful because every additional person that joins the network makes it so that much more valuable for everyone already on the network and everyone new that joins the network. Boy, does it require patience for a lot of these flywheel effects to kick in. Your story illustrates it so much more viscerally than a lot of others because it was five years before you sort of felt comfortable making any promises to any investors that there's a there there. You guys are selling paper journals, which led to Uber directly. I mean, like, how awesome is that? Directly.

• 1:09:02Ben Gilbert?

  When you're starting a business like this, you know, it's, it's a grind and it's, it's going to be a while before you can kind of fully realize the.

• 1:09:08Speaker 02

  It is a grind, which is a good segue in the messy middle. I mean, gosh, like, talk about, talk about the fact that ups and downs, fits and starts, and endless amounts of ambiguity, uncertainty, and self doubt along the way. You know, we had, through fibres of bootstrapping, tremendous volatility. The ultimate challenge was to sort of mine the volatility for its gems, and in some ways, develop like muscle and, and tolerance for the team that in some ways, we just became like outfitted for the journey from all of this. But it's ironic, because of course, we want to like, limit the volatility in a journey typically. Who wants to go through

• 1:09:50Speaker 02

  difficult periods? Yet, at the same time, without any of that adversity, you struggle even more.

• 1:09:57Ben Gilbert?

  All right, well, we'll round it out here with a grading, our final section of assigning a letter grade to the acquisition. And that basically is, you know, the A plus of the Apple acquiring Next, or maybe Facebook acquiring Instagram. We all have many, many stories about what an F would look like, including AOL Time Warner.

• 1:10:17Speaker 02

  The question is like, how do you really measure an acquisition? I mean, there's so many different.

• 1:10:20Ben Gilbert?

  We've struggled a bunch with it over the years and trying to really hone in. The way that we've sort of defined it is if you were a shareholder of the larger company, was that a good use of the capital relative to the other opportunity cost of it?

• 1:10:34Speaker 02

  Wow, you do this with me on the line as opposed to.

• 1:10:39Ben Gilbert?

  You, you can beg off. You could also, you're also welcome to grade. The way that I've sort of thought about these as we've evolved our grading is this belongs in the A camp. So it's sort of A minus, A plus. The A, A pluses are when a business sort of single handedly can be attributed to multiple tens of billions of dollars of value creation, which are like, you know, a few of those ever in history. So to me, this is an A minus because it certainly belongs in the category of As where it made a ton of sense for the company. It wasn't a tremendously expensive acquisition. And what the company got and being able to be on that path of reinventing itself, get that right DNA, do the right things with, with integration and keeping all those people

• 1:11:22Ben Gilbert?

  that were thinking about this the right way around, and continue to grow what is, what is an important sort of piece of the Adobe ecosystem, I'm coming in at an A minus.

• 1:11:31David Rosenthal?

  Ben, I don't think you've, you or we have formulated that rubric on the show yet, but I like that a lot of like, what does it take to get into an A range? And then, and then within the range. I'm completely with you, A minus here, but I just want to underscore again, like, I know I've talked about this a couple of times in the show, but like Adobe is such an underappreciated story in tech. Like, seriously, like, I was just looking at the stock charts, like, to make sure I'm right here. Like, since the Behance acquisition, there's been over a hundred billion dollars in market cap created here. Like, and again, of course, you know, lots of people, and a scout is the first to say, like, lots of people in the team are responsible for that. But like, that's pretty astounding.

• 1:12:12Speaker 02

  Very, very little cause and effect there.

• 1:12:16Speaker 02

  But I love, I love the way you look at the world.

• 1:12:20Speaker 02

  What I would say to anyone who's listening, who is going to go through an acquisition at some point in their lives, is to make sure that in that spotlight of seduction, in that final mile, where you feel like, oh my God, this like, these are all the decisions are going to affect the rest of my life. And you start to be, in some ways, you could, you could potentially be selfish or start to make decisions that are a little bit more short-term oriented. All I can say is that doing the right thing by the team, and also for the acquirer, nothing is more valuable than every reference check you'll ever get in the future from people that either worked for you, or worked with you, or acquired you, to say that you exceeded their expectations. And so I think that as a, as a leader of a startup going through an acquisition,

• 1:13:05Speaker 02

  put yourself in every employee's shoes. Think about what they would expect from this and try to exceed their expectations. You know, when you're coming into a company and you're given a new VP title, and you're given some, some additional stuff to do, and it's like, I could either mail it in, or I could really make an impact and continue to do some of the greatest work in my life. Life is short. Do great work, you know? Find a battle worth fighting. You will make an impact you're proud of, and everyone who works with you will want to work with you again in whatever capacity that might be. And, and your investors, you know, communicating with your investors, trying to do, do right by them, going to bat for them, not doing something that, you know, a lot of, a lot of entrepreneurs will go through an acquisition

• 1:13:44Speaker 02

  and try to take a lot of the capital towards their incentive plans and not really think about their investors at that point. Also a mistake. You know, you just want to have that feeling about an experience like this where you tried to really take care of everyone and you were fair and you'll stand behind it and you'll look at anyone in the eye that you come across for the rest of your life and feel like you did the right thing.

• 1:14:07Ben Gilbert?

  Well, Scott, that is why you are the revered product leader and business leader that so many very great people look up to. So, great, great place to end the show. Can you tell our listeners, The Messy Middle, where can they get it? Where can they follow you?

• 1:14:21Speaker 02

  Yeah, sure. No, I mean, I welcome people to follow along. I consider myself a curator of things that are interesting to me. And you can follow at @scottbelsky, whether it's @scottbelsky, B-E-L-S-K-Y, on Twitter or Instagram. And here's my shameless promo, The Messy Middle hits shelves October 2nd, so probably by the time you're listening to this, it will be in its first week. I really encourage you to get a copy. There's just a lot of stuff that I have learned and believed by or want to live by in this book. And I wrote it for you, listeners who are trying to start something and enduring volatility of a bold project of your own.

• 1:15:01Ben Gilbert?

  Well, thank you so much, Scott.

• 1:15:03Speaker 02

  Thank you, guys.

• 1:15:04David Rosenthal?

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

• 1:15:12Ben 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.

• 1:15:22David 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.

• 1:15:43Ben 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.

• 1:15:55David 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.

• 1:16:06Ben Gilbert?

  Listeners, if you like the show, feel free to review us on iTunes or share it with your friends. Have a great day, everyone. We'll see you next time.