Siri

In the last episode of 2015, Ben and David discuss Apple's acquisition of Siri. Notable topics include: The founding of Siri by Dag Kittlau, Adam Cheyer, and Chris Brigham. Scott Forstall on the Apple side, and the end of his time at the company. The other Apple acquisitions around Siri, including Topsy, Novauris Technologies, OttoCat. Cue, Spotsetter, VocalIQ, and Perceptio. The team Apple built around Siri post-acquisition, including Alex Acero from Microsoft Research. Speculation on the future of voice and its role in everyday computing. 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

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

• 0:00Ben Gilbert?

  All right, listeners. Now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture. It used to be that you 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.

• 0:19David Rosenthal?

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• 1:20Ben Gilbert?

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• 1:48David Rosenthal?

  Hey Siri, were you a good acquisition by Apple?

• 1:52Speaker 02

  Interesting question.

• 2:10Ben Gilbert?

  Welcome to episode five of Acquired. This episode is about Siri and Apple's acquisition.

• 2:18David Rosenthal?

  Are we starting?

• 2:19Speaker 03

  Yeah.

• 2:23David Rosenthal?

  We're starting.

• 2:24Speaker 03

  So, uh, welcome back to all of our listeners. As usual, you can give us any feedback or anything at Acquired FM on Twitter.

• 2:32Speaker 03

  It's been a fun last few episodes. I think this is our last one before, um, before the new year.

• 2:37David Rosenthal?

  Yeah. Happy holidays, everybody.

• 2:38Speaker 03

  Yeah, yeah.

• 2:40David Rosenthal?

  In the meantime, though, we've got a special one for you here. We're doing, "Hey Siri."

• 2:48Speaker 03

  We are, we are, we are. David, do you want to start us off with the acquisition history and facts?

• 2:54David Rosenthal?

  As always, so Siri, uh, super interesting history. A spin out from SRI International, uh, which itself is a fascinating organization. Um, many people are probably familiar with, based in Menlo Park. Uh, it itself was actually started in 1946, uh, by the trustees of Stanford. Um, and was originally called the Stanford Research Institute. And the purpose of it was to commercialize, well, to research and, um, then spin out and potentially spin out and commercialize, uh, basic technology.

• 3:37David Rosenthal?

  Um, and has been funded by the government, uh, Stanford itself and many other sources over the years. Done a lot of great work. Uh, and in the sort of mid 2000s, started working on this project called Kalo, which was funded by DARPA and that SRI was a major participant of. And the goal of that was to develop, uh, an artificial intelligence-based personal assistant, uh, for the government and the military. And, uh, SRI, uh, thought that the potential was there to spin this out and commercialize it, uh, and put it on smartphones. So.

• 4:17David Rosenthal?

  In 2008, they spun out what would become Siri. And there's a really cool story about how they decided to name it. Actually, on Cora, Adam Cheyer, one of the co-founders and the VP of Engineering at Siri, talks about how they came up with the name. And obviously, it echoes SRI that the company spun out of. But Dag Kitlis, who was the CEO of Siri, had apparently once considered it as the name for his daughter when his daughter was born.

• 4:57Speaker 03

  Just think of that every time you say, "Hey Siri."

• 4:59David Rosenthal?

  Every time you say, "Hey Siri." And in Norse, Dag is Norwegian-American. In Norse, it means "beautiful woman who leads you to victory." And then apparently, in Swahili, it means "secret," which, this is my favorite part, is, as Adam writes on Cora, "A tip of the hat to their pre-named days of the project when they began as stealth-company.com," which still exists. If you go to stealth-company.com, there is this really old-school-looking website saying, "Stealth, get in early. We are forming Silicon Valley's next great company.

• 5:43David Rosenthal?

  We aim to fundamentally redesign the face of consumer internet." And then in News and Events, they have "Office Location Finalized on February 1st and January 18th. Money Raised From Top VCs," in parentheses, "lots."

• 5:58Speaker 03

  That's the key to success. That's my understanding, was the biggies.

• 6:03David Rosenthal?

  Hey, you got an office? You got funding? You're going to revolutionize consumer internet.

• 6:08Speaker 03

  All right. So fast forward. So it's spun out. It's its own independent company. It becomes a consumer offering. There's an app you can download in the store where if you look at some screenshots of it, I was just Googling around earlier today. I remember having it on my phone, but I don't remember how bad that UI used to be.

• 6:25David Rosenthal?

  Oh, so bad.

• 6:26Speaker 03

  But it was early days. So it's hard to know at this point, looking back if like that was sort of table stakes. Or if they were actually just like, yeah, way, way, way form before function, or sorry, function before form.

• 6:37David Rosenthal?

  I mean, this was back in the days of iOS three, I believe, and the iPhone three G and the iPhone three GS. Super old school. And what was interesting, I remember using Siri too, before Apple acquired it. And my favorite feature actually was the ability to type into it. You didn't have to use your voice. And I'm so bummed that Apple ditched that over the years.

• 7:03Speaker 03

  Yeah. And well, yeah, I mean, it manifests in so many other parts of the US, but the the main thing that they basically did was they took out a massive license with Nuance and used Nuance for all the speech recognition.

• 7:15David Rosenthal?

  Nuance itself being an SRI spin out from the past.

• 7:19Speaker 03

  I did not know that. But still an independent company that, that over the years has licensed their speech recognition technology to all kind of all the major players. And they kind of combined that with partnering with a bunch of the, the independent functions that Siri was going to serve. So looking up restaurants.

• 7:39David Rosenthal?

  Open table, making reservations.

• 7:42Speaker 03

  Weather, kind of all the APIs that you would expect. Yeah. Yeah. And they, they kind of went from there. So it became an app where it was theoretically easier to use your voice to look up all those specific functions. And quite honestly, probably a lot of if then statements, a lot of regular expressions, like kind of just parsing whatever you were saying.

• 8:03David Rosenthal?

  Bailing wire and duct tape behind the scenes. What's interesting though, is like, I remember this being super cool as an app, getting a lot of press, downloading it, using it occasionally. But it was actually way harder to do anything on it versus just opening up the OpenTable app yourself.

• 8:22Speaker 03

  Yeah, and it's and then thinking about that, too. I mean, that was before there was proper dictation on the iPhone. So I remember, you know, walking around and opening the Nuance app, the Dragon Dictation app, to talk into my phone and then copying and pasting out of that into other things where I wanted to use it. So at the time, you know, now we're looking back at like, well, I don't really use Siri that much. I use dictation a lot more than I use Siri. And that all kind of has been bundled together in Apple as a sort of one big thing.

• 8:50David Rosenthal?

  Yep. So the company spins out. They raised two rounds of venture capital from Morgan Thaler and Menlo Ventures, 24 million in total. The company, the app's in the App Store for just about a year, maybe less, I believe. And then in April 2010, and it was only on iOS, they'd announced that they were working on Android versions and BlackBerry versions at the time. Remember BlackBerry, Ben?

• 9:17Speaker 03

  It's been a long time. It's been so far away.

• 9:20David Rosenthal?

  And and then in April of 2010, Apple announces that they're acquiring the company for, they've never disclosed the price, but rumors are around $200 million. And then fast forward another year and a half after that to the launch of the iPhone 4S in October 2011. And Siri relaunches as a baked in feature exclusive to the iPhone 4S.

• 9:48Speaker 03

  And as as one of the most intense betas of all time. I mean, I think for a year or maybe it was a was it a full release or two full releases? Siri was technically beta. And, you know, any, any ridiculous things that happened to Siri, ah, it's the Gmail thing.

• 10:02David Rosenthal?

  Perpetual beta. And and interestingly, in a very Apple like move, when the iPhone 4S came out, they removed the Siri app from the App Store. So if you wanted to use Siri, you had to have an Apple iPhone 4S.

• 10:17Speaker 03

  And you know what? There's a variety of reasons they did that, I'm sure. One of which I bet people get confused. I mean, I bet you hear Siri comes out, you see it advertised, and where do you go to check out the thing that you're seeing everybody talk about on the new Apple phone? You're going to the App Store. And that could be enormously confusing.

• 10:35David Rosenthal?

  Not to mention, I think it helped sell a lot of iPhones that Christmas.

• 10:39Speaker 03

  Yeah, yeah, I want to get into that.

• 10:42David Rosenthal?

  So that's the history.

• 10:44Ben 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.

• 10:58David 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.

• 11:12Ben 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.

• 11:22David 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.

• 11:40Ben 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.

• 11:56David Rosenthal?

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• 12:12Ben 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?

• 12:22David 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.

• 12:33Speaker 03

  So Apple acquired Siri for $200 million ish.

• 12:37David Rosenthal?

  Ish.

• 12:37Speaker 03

  Heard a variety of figures, but I think we'll kind of lock on that, on what we look at, the acquisition price this episode. And that was sort of a pet project of Scott Forstall. If you guys remember, he was sort of the second Steve Jobs of the company. And people talk about Johnny and the design aesthetic and kind of that focus on making beautiful things. But Scott was kind of the product person that was like second only to Steve.

• 13:09David Rosenthal?

  And I remember, I think I'm remembering right, but in the time when Jobs' health was declining, a lot of people were talking about Forstall as potentially being the next CEO of Apple.

• 13:21Speaker 03

  Yeah, yeah, it's true. And I think a lot of people now know Scott as the guy that kind of took on Apple Maps. Just like Siri was going to be his baby, that Apple Maps was kind of his.

• 13:32David Rosenthal?

  Not to mention the guy infamous for skeuomorphic design in iOS.

• 13:37Speaker 03

  I think that's an after the fact assignment and really easy way to say that was his little fiefdom, but.

• 13:44David Rosenthal?

  History is written by the victors, Ben.

• 13:46Speaker 03

  It's true. Scott's actually, I think he produced the Tony Award winning Broadway musical this year. Talk about quite a different departure. No, it was last year. This is worth looking up actually, because it was totally crazy when I heard about it. Let's see. So Scott Forstall was a producer of Fun Home, a Broadway musical that follows the story of a lesbian cartoonist looking back on her childhood with a secretly gay father. And so interesting to see after he leaves Apple, total media silence, not doing anything else. Then we find out this is what he's been up to. And the really funny part, I remember, I think it was totally coincidence, but it was during the WWDC keynote that.

• 14:31Speaker 03

  He tweeted that he would, I think it was like his first tweet or his first tweet in a very long time. So excited to have produced the Tony Award winning musical this year, thanks to all the amazing people that worked on it, or something like that. And I remember thinking, this is unbelievable, like, right in the middle of the keynote. Wow. Anyway, so the acquisition was kind of done by Scott Forstall. And that kicked off a long chain of things happening in Apple acquisitions. Siri, you know, as it sort of turns out, looking back, there's a lot of really intense research that has gone on since then in architecting these kind of voice and, you know, I guess for

• 15:10Speaker 03

  lack of a better word, AI systems. And, you know, we see a lot of them, I'm not sure if Siri is or not, but I know that Google's is and Cortana is architected as a neural network. And Siri, at the time of acquisition, the company that was Siri was definitely not that. And I think it's important to start, kind of at this point going forward, thinking about Siri as two things. No longer as the product that Apple acquired, but as both an organization at Apple that is responsible for dictation, for voice search, for a variety of those things, and the product that is shipped on iOS devices that we now today know as Siri. And that product is a ton of things all in one. I mean, I think that

• 15:53Speaker 03

  the impetus for Apple to actually create this group, and to focus on shipping this product in every version of iOS going forward, that would not have happened without this acquisition. But the theoretical success that Siri has today as a product is attributed to so much more than that. Apple got extremely serious about hiring great people. They hired a senior director, he's now the senior director of Siri, Alex Acero, who is ex-Microsoft Research. They made a ton of acquisitions, including but not limited to Topsi, Novarius Technologies, AutoCAD Q, Spotsetter, Vocal IQ pretty recently, and Perceptio. And these

• 16:38Speaker 03

  things, particularly Topsi, are really kind of the academic rigor around the search and the methodologies that Siri uses today. I mean, I think Topsi, Topsi was another $200 million acquisition. That one ish, yeah. I think actually that one might be reported.

• 16:56David Rosenthal?

  Probably.

• 16:57Speaker 03

  Yeah, but but Topsy is effectively the the backbone of how the search works within Siri and how the the kind of deeply technical part of it works. And I think a lot of really good people came came with Topsy. Whereas you look at the actual Siri acquisition, all three of those founders are gone. They've started, I think, Viv, I think is how it's pronounced, but effectively newer, better next generation.

• 17:25David Rosenthal?

  New AI company.

• 17:26Speaker 03

  Yeah. And, you know, they had a lot of people attrit from from that acquisition.

• 17:31David Rosenthal?

  Yeah.

• 17:31Speaker 03

  Topsy, a lot of those people stayed with the company. And from from talking to some friends that are kind of in the know, really, really top people. And, you know, Dave and I were talking earlier, thought about kind of doing this episode, this is a dual episode on on Topsy and the Siri company, because that's that's sort of how important Topsy is to the product that Siri is today.

• 17:52David Rosenthal?

  Yeah, I think a couple really interesting notes. And as Ben mentioned, fascinating that this acquisition has led to the creation of this whole organization within Apple that, you know, AI, search, and those types of that type of platform technology was so not in Apple's DNA prior to the Siri acquisition.

• 18:15Speaker 03

  Yeah, I truly believe that we wouldn't have this product shipped if not for, wow, we just unloaded a bunch of cash acquiring this thing. We got to be serious about it.

• 18:23David Rosenthal?

  Yep. And what's doubly interesting about that is that the actual people at Siri that Apple acquired, like, they're gone. It was acquiring this company and bringing this product and this feature into iOS that was the first foundation of a platform that Apple started building and and all the great people that they've acquired and hired since then. And you can argue, I think, probably very justifiable justifiably so that Google is still ahead of Apple in a lot of these areas, AI, search, voice search, speech recognition. But certainly, Apple is not nearly as far behind as they would have been had they continued

• 19:08David Rosenthal?

  along the path they were before this acquisition.

• 19:11Speaker 03

  No. And I think that in kind of thinking about

• 19:16Speaker 03

  Any acquisition, you can use the framework of build or buy. What's, you know, if you're thinking about it before you make the acquisition, you're a leader at that company and you've decided that, you know, this is something we need to pursue and it's going to cost us $200 million to buy or we could build. And I don't think that that is the case here. I don't think that Apple.

• 19:37David Rosenthal?

  Could they even have built like, would they have been able to hire the really top people that they would have needed to in machine learning, AI, speech recognition to make this happen?

• 19:49Speaker 03

  Yeah, I don't, it's interesting. It would have been a tall order and still was. I mean, I think that even after they did the Siri acquisition, they, they had a long, long road ahead of them to turn it into the product it is today. And the, the question is sort of begs to me is, you know, it would have a different name and it would, it would have started off in a different place, but what if they didn't acquire Siri at all and they just made all these other acquisitions and these other key hires? Cause they've hired a lot of the really great people away from Nuance. They've actually architected the whole kind of speech recognition pipeline that they were licensing from Nuance internally. They've, they've rewritten and thrown away all the code that they've acquired from Siri.

• 20:29Speaker 03

  So there's no Siri people, there's no Siri technology, there's merely a Siri brand and basically what that original product did there. But a lot of the success of what Siri, the product in iOS is today is not attributed to what they actually acquired.

• 20:45David Rosenthal?

  Yeah. And it's interesting, a little bit of an aside, but on Nuance, most of the major mobile companies, mobile platform companies, Microsoft, Google, Apple, I believe most or all of them have moved away from Nuance at this point.

• 21:02Speaker 03

  Yeah, I think that's true. Got to be some really upset account reps at Nuance.

• 21:09David Rosenthal?

  Yeah. So I love the discussion we've been having.

• 21:16David Rosenthal?

  In a way, you know, we're sitting here at the end of 2015 talking about this. It's been almost six years since this acquisition happened. We haven't really talked about Siri, the product slash feature yet. And I think, you know, I would argue, as would a lot of people, it really hasn't lived up to its promise so far.

• 21:37Speaker 03

  Nope.

• 21:38David Rosenthal?

  I don't know about you, Ben, but I use Siri for one thing, setting alarms.

• 21:43Speaker 03

  It's a, it's a, God, I would love to see the histogram of this at Apple. Cause I think, I just don't think Siri has gotten that far. Well, they have two problems. One, I don't think they've gotten that far from actually being able to, you know, do things that are like, quote unquote, learning, right? Like, I know I have these very specific functions, much like the original Siri, where I go, "Hey Siri, look up the best breakfast restaurant around me," or something like that. And the sort of second problem around that is if they have fixed that, or they do in the future, kind of roll out something that's much more technically sophisticated, that's truly like a deep systems approach to search and understanding and, you know,

• 22:26Speaker 03

  all these deeply technical things, how am I supposed to know about it? Cause I think that like, there are some of us that, you know, will watch the WWDC keynote and that's super cool. But it's a really sort of dangerous thing with these voice-based interfaces that don't have a layout of all the possible functions in front of your face that you can use. If it falls on its face a couple of times for you, you basically assume it can't do things in the future and you never try again.

• 22:52David Rosenthal?

  Yep, and you definitely fall into that uncanny valley and then you just reject it. And that's why I said, it's super interesting, we're sitting here at the end of 2015 talking about this, because I think it's non-controversial to say Siri as a product has been a failure. All these like, even just basic, basic stuff, like, you know, "My wife's name is Jenny, J E N N I E." That's her given name. Every time I talk to Siri about my wife, it says J E N N Y. And she has a different last name than me, she didn't change her name. Siri doesn't like figure that out, it's so annoying, super basic stuff. But we're sitting here right now, you know, Amazon came out with the Echo and Alexa this year. They're investing heavily in that.

• 23:35David Rosenthal?

  Definitely, Amazon believes that voice and voice interfaces are going to be a huge part of technology going forward, as does Google, as does Apple. In a lot of ways, I think this, the, the full story on this acquisition hasn't been written yet, because there's going to be so much more to come.

• 23:54Speaker 03

  Yeah, and then there needs to be. I mean, the interesting thing, you know, we say this show is about technology acquisitions that actually went well. And if you look at kind of the app, we can do this, this episode of this show because Apple needed to do this. I mean, it's, it's effectively table stakes to have a personal assistant baked into your mobile operating system. Like, they, it would be embarrassing.

• 24:21David Rosenthal?

  It's funny, as you're saying that, I, as you're saying that, I, I had my, my left hand twisted back and I accidentally activated Siri on my Apple Watch.

• 24:31Speaker 03

  Oh, do you have Hey Siri on?

• 24:33David Rosenthal?

  No, it was holding the, the digital crown.

• 24:36Speaker 03

  That's your fault.

• 24:37David Rosenthal?

  But, but it's so fundamental, like, this needs to be a part of, especially as you move into watches and televisions and connected speakers and being able to say, "Hey Siri," to your phone, a critical part of any platform.

• 24:54Speaker 03

  Yeah. Yeah, it is. It's interesting. In trying to think of examples of things that Siri can't do, it, the thought exercise of it is actually difficult because your mind is trapped in the things that you can do. Like, I'm pulling up my phone, thinking of, like, you know, "Hey Siri, am I going to have time to go for a run tomorrow before work, based on when my first meeting is and the fact that I want to walk to work, not knowing what the weather will be right now?"

• 25:23Speaker 02

  Hi, Ben Lachaim.

• 25:27Speaker 03

  And that's a mispronunciation of Lachaim, because it's Hanukkah.

• 25:33Speaker 03

  Like, right. There's a long way to go.

• 25:36David Rosenthal?

  Long way to go.

• 25:38Ben 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.

• 25:51David 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?

• 26:08Ben 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.

• 26:23David 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.

• 26:47Ben 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.

• 27:06David 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.

• 27:36Ben 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.

• 28:01Speaker 03

  All right, so let's move into the next segment of the show where we categorize this acquisition.

• 28:06Speaker 03

  I'm not looking at it right now, but I think we've got-

• 28:07David Rosenthal?

  We've got people, technology, product, business line, and other. For me, you know, our audience is craving disagreement here, but I just don't think- Well, Ben, what's your category?

• 28:22Speaker 03

  So, I think if you like, didn't do your research, it's technology. And you think you're acquiring this super academic-

• 28:33Speaker 03

  And I guess it is partly technology, and we've just come a long way since Siri was started. But, I mean, what it ultimately became for Apple is a product. Because they sure as hell don't have the people, and they don't have the technology that it was originally built on. And the world has moved in a direction, and Apple is, to their credit, really kept up with this, and put some serious muscle behind this, and hired some of the top people in the field to build out the direction of the technology that's actually moving in. So, I'm calling it a product acquisition.

• 29:07David Rosenthal?

  Boom, I'm disagreeing.

• 29:09Speaker 03

  All right.

• 29:10David Rosenthal?

  Maybe I didn't do my research. I think it's a technology acquisition. I mean, as we were just saying, like Siri as a product sucks.

• 29:19Speaker 03

  Yeah, I didn't say they acquired a good one.

• 29:23Speaker 03

  I mean-

• 29:24David Rosenthal?

  Fair point, fair point.

• 29:27David Rosenthal?

  Yeah, I mean, I think, look, we've already talked about all of this, but I think, for me, it's a technology acquisition because I don't view Siri as a product. Like, A, it sucks, but I don't think it is even really, especially going forward, will be a product or a feature. I think it's just gonna be so fundamentally baked into the platform.

• 29:55David Rosenthal?

  Voice and voice interface and the predictive assistant parts of it, that I think that is just gonna be a fundamental technology piece. Is a fundamental technology piece, and will be more so over time. And yes, that's not exactly what they acquired, but that was the kernel of it that they've built over time.

• 30:17Speaker 03

  Yeah, I mean, I have no doubt that voice will be more central to the way that human beings compute in the future and interact with machines.

• 30:29Speaker 03

  I don't think screens are going to go away. I think we'll become much less reliant on them and much more conversational with with machines. But the question is, is Apple doing this and building what they're doing today? Actually moving in the right direction so they're going to be the ones to create that future? Or is it going to be someone that fundamentally kind of takes a new approach to? What is a computer? How do you interact with it? Can you do it all over voice and not be? Hammered with a legacy of let's try and tie this? Future of computing into the way that people interact with this screen?

• 31:07David Rosenthal?

  Yep, that's a great point.

• 31:10Speaker 03

  I guess that's me cheating and preemptively launching into technology trends. The next part of our show is?

• 31:19Speaker 03

  What trends does this illustrate for you in technology right now? That's absolutely one. I mean, every time I have someone talk to me about a thing that they're working on that's more about a natural interface or screenless computing or? Thinking about the movie Her, I've had probably three conversations in the last few months with with different entrepreneurs working on this, people at Microsoft.

• 31:37David Rosenthal?

  There are so many AI companies right now. Doing everything from just like? We are an AI research company platform? That is building to be acquired by Facebook or Google or Apple? I think? I love that theme and is so true in technology like? You can't bring old world thinking into the future. It's like, it's like the Henry Ford analogy of a faster horse.

• 32:05Speaker 03

  Yeah. And you know, we'll eat these words if in 10 years, Apple's the leader in this category and everyone's interacting with their their voice device, but?

• 32:16Speaker 03

  I don't know. It's hard for me to see Siri today evolving into what? I think is clearly the future of computing.

• 32:24David Rosenthal?

  Yeah, but I also, I also, I don't think screens are going away. I think visual interaction with computers is not going to stop and is only going to continue to rise with computing. But you don't always want to do that. Sometimes you want a voice-based interaction, like in the kitchen, which is the primary use case for the Echo.

• 32:48Speaker 03

  It reminds me of a similar trend. So, thinking about the fact that you've got this massive spike in tablet sales since they came out, for so many people, you know, the tablet is not as successful as the phone, but for so many people, the tablet is the computer that they actually needed. And ever since personal computers came out, people have been buying them, people have been using them for a variety of purposes, but it was really the device that we could build at the time that was over-applied to a variety of use cases that were outside of the, the specific thing that they were actually good at. And, perfect story, at my grandma's house, over Thanksgiving, helping her move some

• 33:31Speaker 03

  stuff around, she needs to unplug her computer because someone's going to be doing, they're going to be putting new carpet in, in that room, and they're moving into the other room. And I'm like, oh, well, I'll plug it back in, and we'll set it up in this other room for now. And she goes, "Oh, you don't need to, I haven't been on it in a month." And I was like, "What?" Because she, I mean, she, she really does a lot on her computer, it's not like she's...

• 33:51David Rosenthal?

  On her iPad.

• 33:52Speaker 03

  Or, well, well, she's very proficient with her computer. She's been fully reliant on her iPad and her iPhone. And I didn't realize this, I mean, I've been emailing with her, and I actually don't think she does her, her spreadsheets on the iPad, but I think...

• 34:08David Rosenthal?

  But she could.

• 34:08Speaker 03

  She could, she totally could. And it's, it's just me kind of explaining the new, new input mechanism to her. But for so many people... The point I'm getting at is that the computer was doing a lot of jobs and it had a very specific job. And then when the tablet came out, it revealed that the tablet is actually a better thing to do a lot of those jobs around consumption, around lightweight email, things like that than the computer was. So then people are actually using tablets, a better thing for that purpose, for its intended purpose. I think screens right now are oversaturated, the same way that PCs were oversaturated. We've got screens doing a lot of jobs screens don't need to be doing. And sure, screens will be doing things where there's a heavy

• 34:45David Rosenthal?

  Like when you're driving?

• 34:46Speaker 03

  Yeah, great point. Heavy display of information, things where you need to reference multiple things in parallel and not just have a single track. Things where you have modal interfaces, where you need to understand context with new context on top. But there sure is a lot that does not need to be on a screen that we use screens for.

• 35:03David Rosenthal?

  Yep. Another theme that I'd throw in that I think this illustrates is that consumer generally and specifically building great consumer products is really hard. I mean, I feel like Siri is a classic example that a lot of companies and products have a trap they fall into, which is, I've got this awesome technology, we can do these amazing things, look at these really cool shiny demos. And then you get it out in the real world with like edge cases and delivering actual value on a consistent basis, solving people's real problems, doing that without friction.

• 35:46David Rosenthal?

  And it's really, really hard to live up to those promises in the demo. And when you think about most consumer products, many or most consumer products that end up being really successful, they're really simple and it's very clear what their value is. Like Airbnb, you know, which I've been on an Airbnb kick lately.

• 36:10Speaker 03

  Deservedly so.

• 36:11David Rosenthal?

  My wife and I just signed up to be hosts in the last six months and it pays half our mortgage. And that's amazing. And that's like, as a host, that's what Airbnb does for me. And we get to meet these really cool people who are coming through. And we're traveling for the holidays to a whole bunch of places to see family. And we're staying in, I believe, three different Airbnbs this month.

• 36:33Speaker 03

  So what you're getting at is you, you very much understand the intended purpose of that product.

• 36:37David Rosenthal?

  Absolutely. It's so simple, it's so elegant, and it perfectly solves my problem.

• 36:44David Rosenthal?

  I don't even know what it's supposed to do. It looks cool. I watched the keynotes and I'm like, "That's awesome." And then I never use it.

• 36:51Speaker 03

  Yeah, I mean, to take it to another, I'm sitting there trying to, I'm on, so I have the new Apple TV and I was looking for some videos on YouTube, laying there on the couch the other night and it's, it is the worst to type into, just like one row of characters swiping around, trying to tap individual, it's like being on PS2 again and I was using the keyword. Anyway, so I'm like, "Oh, wait, Siri, this is supposed to be like a really conversational UI. I'll use Siri." And I'm like, "Hey Siri, look for the Aziz Ansari stand-up on YouTube." Or at first I said the Aziz Ansari stand-up and it brought up like movies with Aziz Ansari and they were like, you know, theatrical releases and I was like, "Oh, I should probably specify." And I'm like, "Look up the Aziz Ansari stand-up on YouTube."

• 37:36Speaker 03

  Exact same search results. And I was like, "Oh my God, it's not even plugged into YouTube." And like every time I have this brilliant idea where I'm like, "I should use Siri for that." It doesn't really work.

• 37:50David Rosenthal?

  Yeah.

• 37:50Speaker 03

  And I think we're weirdos, like we're tech people. I am the kind of person that walks down the street and it's raining, so I'm not typing on my phone and, and what do I do? I like hold down Siri and I'm like, "Siri, text back, blah, blah, blah, blah, blah, blah, blah."

• 38:03David Rosenthal?

  Yeah, because you're not worried about the social stigma of like talking to nobody walking down the street.

• 38:08Speaker 03

  Total weirdo. And I, you know, I'm fine with that, but I fully recognize that like other people aren't doing that. And I had, I have to imagine if you can see the numbers at Apple of the people that are actually like using Siri on an hourly or daily basis, it's, it's probably very disappointing.

• 38:25David Rosenthal?

  I'm curious, as you're listening to this, if you disagree with us, you should totally let us know that you use Siri and what you use it for.

• 38:34Speaker 03

  God, I'd like to know.

• 38:35David Rosenthal?

  I would love to know.

• 38:37Speaker 03

  @Gilbert, @DJRosentee, @AcquiredFM, find us. Yeah.

• 38:42David Rosenthal?

  The other thing I want to, I want to add on that before, before we move on, you know, this is also, you know, building consumer companies, consumer products is super hard. This is one of the reasons why as VCs, we really focus when we're looking at consumer companies on cohort and retention data, because just like straight up acquisition data, user acquisition data isn't enough. Like the question is, are people coming back, you know, month after month after month, day after day after day, are they continuing to see value from your products? And it's really hard.

• 39:13Speaker 03

  Yeah, I wonder, so in February 2015, one of the founders of Siri was remarking in an interview to TechCrunch that more than 200 million people use it monthly and more than 100 million people use it every day. So it's 1 in 5 people with access to Siri actually are a daily active user, which is a little shocking. Like, I wonder how wide the purview of that is. And I also wonder, I mean, every single person out there is gonna laugh, but like, you're sitting in a meeting, you hold the button, it goes into Siri mode, you're super embarrassed. I can't tell you how many times a day I accidentally open Siri.

• 39:55Speaker 03

  I mean, I'm just glad they turned off the little doo-doo, so that I don't look like a total idiot in meetings.

• 40:00David Rosenthal?

  That must have been the number one use case for Siri, was the accidental embarrassing meeting doo-doo.

• 40:06Speaker 03

  Yep.

• 40:07David Rosenthal?

  All right. Should we wrap this one up, Ben?

• 40:10Speaker 03

  Yeah, so I think it's time to give it a grade. You know, I think that if they didn't do this, Apple might not have moved in this direction and might have tried to follow after Google and Microsoft did it. I don't think it's really in their DNA to start this without going on an acquisition spree, to start acquiring a lot of talent, hiring people from other companies. These days, it's sort of table stakes to have it, but Apple definitely does not sell a single, like, one single more iPhone because it has Siri versus it doesn't.

• 40:42David Rosenthal?

  I bet they sold a lot more iPhone 4S's because it had Siri.

• 40:45Speaker 03

  Sure, once.

• 40:46David Rosenthal?

  Yeah, once.

• 40:46Speaker 03

  I don't think anything they're doing to Siri now sells a single additional iPhone.

• 40:50David Rosenthal?

  I agree.

• 40:51Speaker 03

  Or like, when they, you know, add Siri to another market. I think that there's an interesting thing, like, maybe we'll see in China, maybe we'll see it pick up a little bit, since in China, it's so much more difficult to type and it's so much easier to...

• 41:04David Rosenthal?

  Enter characters.

• 41:05Speaker 03

  Yeah, it's gotta be much nicer over there. And if actually you have any experience as a Chinese person, or someone who has used the iPhone in China, would love to get your feedback on that, too.

• 41:18David Rosenthal?

  Yeah.

• 41:19Speaker 03

  But, you know, I think to this point, it's hard to point to ROI, other than it was something they sort of needed to do long-term. And I don't know that actually acquiring the company Siri... Was the best way to do it. I'm going to give this one a C.

• 41:36David Rosenthal?

  Yep. So I think this acquisition was just like so classically Apple, or at least Apple of the last few years, spend south of $500 million to acquire a technology company that you then use to build into part of your platform and your whole product platform. I'm thinking about, you know, authentic and the fingerprint.

• 42:01Speaker 03

  Great acquisition.

• 42:02David Rosenthal?

  Great acquisition. We should do that in a future episode. The company, oh, I'm blanking on the name that they bought that was the semiconductor company.

• 42:10Speaker 03

  PA Semi.

• 42:11David Rosenthal?

  Yeah, PA Semi.

• 42:12Speaker 03

  And God, has that paid dividends. They're, I mean, they're, are they the highest yield? I think they're the highest yield producing ARM chip manufacturer in the world now.

• 42:25David Rosenthal?

  Not to mention, like now Apple designs their own chips.

• 42:28Speaker 03

  Yeah. And the fact that they can do their own system on a chip and the fact that they tie it directly into their operating system, they're able to do things like Touch ID where they have that secure enclave that sits separately than the processor. And I mean, we'll do PSMI too at some point.

• 42:41David Rosenthal?

  So much good stuff. Yeah. But and when you stack rank those, like unfortunately Siri falls pretty far down the list. So I think I'd give it a, I'm going to give it a B because I think it is, I'm giving it a B because future importance of voice and AI is going to be huge for Apple. And if they hadn't done this, if they hadn't started when they did, there's just like Google and Facebook and maybe even Microsoft would be so far beyond them at this point. They could never catch up, no matter how much they would spend.

• 43:20Speaker 03

  Sounds like Maps.

• 43:21David Rosenthal?

  Yeah. Although I just saw a stat the other day that like Maps is getting better and getting more usage.

• 43:27Speaker 03

  Well, yeah, it's getting more usage. It ships with the OS.

• 43:30David Rosenthal?

  Well, right. I haven't tried it in a while.

• 43:34Speaker 03

  I didn't have a bad experience. I keep hearing it's getting better though, so.

• 43:39David Rosenthal?

  But we still don't use it. So same with Siri. All right. B for me.

• 43:44Speaker 03

  B for you, C for me. I think that's, that's all we got.

• 43:50David Rosenthal?

  That's all we got. Happy holidays, everybody. We will see you in 2016.

• 43:54Speaker 03

  Siri, do you have anything to say to the listeners?

• 43:58Speaker 02

  I'm sorry, Ben. I'm afraid I can't answer that.

• 44:20David Rosenthal?

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

• 44:26Ben Gilbert?

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• 44:37David Rosenthal?

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• 44:57Ben Gilbert?

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• 45:10David 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.