Lucasfilm

Riding closely on the tails of Star Wars: The Force Awakens, Ben and David cover Disney's 2012 acquisition of Lucasfilm. In the episode, they mention Walt Disney's original flywheel diagram, seen below. 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 prove 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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• 2:04Speaker 02

  Welcome to episode six of Acquired, the podcast where we talk about technology acquisitions that actually went well. I'm Ben Gilbert.

• 2:12David Rosenthal?

  I'm David Rosenthal.

• 2:14Speaker 02

  And we are your hosts. Just a quick administrative thing, if you like the show, we would love for you to rate us on iTunes. I've been doing a lot of research on podcasts recently and kind of how the iTunes search algorithm works. And if you like it and you think other people would like it too, we'd love, love, love for you to leave a review.

• 2:33David Rosenthal?

  And likewise, as always, if you have feedback, hit us up on Twitter at acquired.fm, or leave a comment on the website.

• 2:42Speaker 02

  Yes. So, this week, we are, I'd say we're timely, we're probably a month late. We were talking about the Disney acquisition of Lucasfilm and all of Lucasfilm's franchises.

• 2:56David Rosenthal?

  Ben, I am your father.

• 3:00Speaker 02

  Wait, that wasn't in the script.

• 3:02David Rosenthal?

  Cut.

• 3:06Speaker 02

  All right. David, over to you first for acquisition history and facts.

• 3:10David Rosenthal?

  Oh, man. Lucasfilm, Star Wars. What more can you say? So, George Lucas, obviously, founded Lucasfilm, 1971, in San Rafael, California, which has personal significance for me and my family. That's where my wife is from, where my in-laws live. And-

• 3:32Speaker 02

  David, where did you watch Star Wars?

• 3:34David Rosenthal?

  And I was gonna say, episode seven, we went, we went over the holiday break to the theater in Corder Madera that George Lucas himself helped renovate.

• 3:48David Rosenthal?

  For the, I believe for the prequels when they came out. It's a one screen theater in Marin and it was amazing. There's a great Vanity Fair article about this theater. And, and the work that Lucas has done on it. Super fun. So 19, early seventies, Lucas, Lucas found Lucasfilm. And the first project that the company does is American Graffiti, which comes out in 1973. And then the next, the next film that the company produces, 1977 is A New Hope.

• 4:26Speaker 02

  Well, it was Star Wars.

• 4:27David Rosenthal?

  Called Star Wars at the time. We know it as A New Hope.

• 4:30Speaker 02

  On this podcast, it's just called Star Wars, David.

• 4:32David Rosenthal?

  Ah, alright Ben. And, and then since then, over the years, I've been pretty incredible what this company has, has produced both itself and what's come out of it. I mean, we've already, this is our second episode about a Lucasfilm company.

• 4:51Speaker 02

  A Disney acquisition?

• 4:53David Rosenthal?

  Yeah, Disney acquisition of a Lucasfilm company.

• 4:56Speaker 02

  I was gonna try and catch you there and, well, David, I think you mean, because Pixar was also acquired by Disney, but was also spun out of Lucasfilm.

• 5:05David Rosenthal?

  Yeah, well, essentially, I mean, you could argue started at Lucasfilm. The, the company and the product itself, I believe, was started at Lucasfilm.

• 5:13Speaker 02

  Yeah, so I guess, you know, I guess they just took two shots at acquiring Lucasfilm.

• 5:18David Rosenthal?

  Yeah, exactly. Do you know what else came out of Lucasfilm?

• 5:24Speaker 02

  Hmm.

• 5:24David Rosenthal?

  That is, that is no longer part of the company.

• 5:27Speaker 02

  Industrial Light and Magic?

• 5:29David Rosenthal?

  Yes, that's part of the company. This came out of Industrial Light and Magic specifically.

• 5:33Speaker 02

  Hmm, I have no idea.

• 5:36David Rosenthal?

  Photoshop.

• 5:37Speaker 02

  Adobe?

• 5:39David Rosenthal?

  Not Adobe, Photoshop.

• 5:41Speaker 02

  Did Adobe acquire Photoshop?

• 5:44David Rosenthal?

  Adobe acquired Photoshop, yeah.

• 5:47Speaker 02

  Well, there's another episode coming.

• 5:49David Rosenthal?

  Yeah, too, I believe John, I believe John Knowles was an employee of ILM. And one summer, I believe it was part of a movie project. I didn't, didn't read the full history online. Needed this piece of software, so he wrote it and then sold it to Adobe.

• 6:10Speaker 02

  Crazy.

• 6:10David Rosenthal?

  Yeah, pretty incredible company.

• 6:12Speaker 02

  I think we know what's coming next for Disney.

• 6:17David Rosenthal?

  Among, so those great organizations aside, other things that Lucasfilm contains, Star Wars, Indiana Jones, ILM, obviously, Skywalker Sound, which is film and TV sound production, quite large video game publishing and development arm, which now, post-acquisition, has been mostly outsourced to EA by Disney, animation arm, licensing, and then the other company to come out of Lucasfilm was THX, the sound, consumer sound company.

• 6:55Speaker 02

  Named for George Lucas's first film in film school, THX 1138.

• 6:58David Rosenthal?

  Did not know that. So, acquisition. In 2011, this is a great story, Star Tours, which I've done many, many times, most recently just a few weeks ago in December, was being revamped at Disney World in Florida, and George Lucas flies out to come, go to the premiere of the new version, the new revamped Star Tours ride, and while he's there, he's talking with Bob Iger, the CEO of Disney, and mentions to him that he's thinking about retiring and maybe selling Lucasfilm.

• 7:39David Rosenthal?

  And that was, that was summer, I believe, of 2011, and then about a year later, a little over a year later, October 2012, Disney announces the acquisition, $4.1 billion.

• 7:51Speaker 02

  Ooh, pretty penny. And Lucas gives quotes in interviews saying he never dreamed of selling it to anyone else.

• 7:57David Rosenthal?

  Would've been pretty hard for him to sell it to anybody else.

• 8:01Speaker 02

  Yeah, yeah, yeah. It's interesting, because I think the, we'll get a little bit into Bob Iger, but, I mean, there's fascinating history there. There's a 20-year-old relationship where Bob Iger was working at ABC, and actually greenlit the television show Young Indiana Jones for George Lucas, which did not go so well, but he kind of stuck with him through at least the first season, and there's always goodwill between Lucas and the trust that he and Iger had that eventually kind of led them here.

• 8:34David Rosenthal?

  Yeah. Interestingly, though, and I didn't realize this till we started researching this episode... Disney obviously spends 1.4.1 billion dollars to acquire Lucasfilm.

• 8:47David Rosenthal?

  And acquires a lot within that, all the properties we just mentioned, ILM and Skywalker Sound and whatnot that hadn't been spun out. But the distribution rights to the original Star Wars movies were held by Fox and still are.

• 9:06Speaker 02

  Oh, wow.

• 9:07David Rosenthal?

  So Disney was really making a big bet on the future with this acquisition.

• 9:10Speaker 02

  Yeah, because it's easy to justify buying that existing cash cow. You know, there's pretty much no chance that those movies are.

• 9:19David Rosenthal?

  Raise your hand if in anticipation of The Force Awakens, you

• 9:23Speaker 02

  Purchased.

• 9:23David Rosenthal?

  Digital purchased the Star Wars collection.

• 9:27Speaker 02

  It was the.

• 9:28David Rosenthal?

  My hands in the air.

• 9:29Speaker 02

  Both of us. Well, I went to watch it on iTunes and the only way that I could do it was like some massive three-pack collector's edition, really expensive digital download. I mean, they.

• 9:39David Rosenthal?

  I sprung for the six-pack on Amazon.

• 9:41Speaker 02

  Oh, nice. So that when I bought that through Apple on the Apple TV, is that through Fox? That money's going to Fox watching, we watched four, five and six again. Actually, this isn't fully true. I watched the despecialized editions, but also I'm not going to get into that. That's a problem. But yeah, that's crazy. So Fox was actually capitalizing.

• 10:02David Rosenthal?

  Yeah, so Fox. I got to imagine Fox made a significant amount of money in the lead up to The Force Awakens.

• 10:11Speaker 02

  That doesn't include, do you know if that includes merch from those original characters? Like if you're selling, if they're selling a episode for Han Solo toy.

• 10:21David Rosenthal?

  Yeah, that's a good question. I think this is on the Wikipedia article about the acquisition, but.

• 10:27Speaker 02

  David's giving me homework.

• 10:28David Rosenthal?

  Yeah, giving us all homework. I believe I read in there that, that at least for episode four, I think there's a special deal for episode four, that Fox might be even getting those ancillary rights as well.

• 10:43Ben 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.

• 10:57David 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.

• 11:11Ben 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.

• 11:21David 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.

• 11:38Ben 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.

• 11:55David 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.

• 12:11Ben 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?

• 12:20David 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.

• 12:31Ben Gilbert?

  Well, you want to keep going with the...

• 12:33David Rosenthal?

  Let's keep going. So Ben, what's your category?

• 12:38Speaker 02

  Hmm. So...

• 12:43David Rosenthal?

  As a reminder, we've got people, technology, product, business line, and the all-powerful other.

• 12:54Speaker 02

  This to me is a product acquisition in the near term, but it's a lot more in the kind of far-reaching future. I mean, the way that Disney learned from Pixar and was able to produce in Disney Creative Studios, not in Pixar, Frozen and put that at the center of the company and have that insane, it's like 1.4 billion or something, 1.3, somewhere in there, insane cash cow in Frozen. Disney learned from that acquisition without messing with Pixar too much. And that is a Bob Iger thing. I mean, I think that when Bob Iger took over from Michael Eisner as CEO, he's largely returning to the company's roots.

• 13:36Speaker 02

  And there's this incredible diagram that shows Disney's business model and their, the ecosystem thinking and how everything goes in everything else.

• 13:44David Rosenthal?

  We should link to this online and on Twitter.

• 13:46Speaker 02

  We will, we'll put it in the show notes.

• 13:47David Rosenthal?

  Awesome.

• 13:48Speaker 02

  Yeah, and on Twitter. It's amazing. Like, anybody who's ever been pitched a company and wondered, ooh, what's the lock-in? What are the network effects? You know, how does this company build a mode around itself? Disney has this unbelievable ecosystem where everything flows into each other. And the center of the whole thing, as illustrated in this diagram, is phenomenal content in feature-length films. And that's something that's escaped them for a long time. I mean, if you look at Disney's revenues right now, one half are from cable subsidiaries, from affiliate money that they get when you know...

• 14:20David Rosenthal?

  Which probably 90% is ESPN.

• 14:22Speaker 02

  Yeah, 50%. Like, a little over 50%. Yeah. But ESPN is a quarter of Disney's revenue. And if you look every year, it's cord-cutting, money's going away. Like, that future was not sustainable and it was drifting far from Disney's original roots. So putting incredible content in feature-length films back at the center of the business model is a total change of direction for Disney and something that Bob Iger really kind of came in and shook everything up and did. And he gave a lot of autonomy to all the individual groups. So, you know, the way that Pixar was left alone, the way that Lucasfilm was left to do its thing... The incredible long-term thing, if they can pull it off, is sort of reverse acquiring the things that made that incredible content and letting them produce incredible content

• 15:04Speaker 02

  in-house. Because right now, they bought the Star Wars product, but they have not sustainably proven, and of course, this takes a lot of time, that they can now take the muscle of what that made that content incredible and make that something that is something they can produce on their own in the future.

• 15:24David Rosenthal?

  Yeah, you're raising a couple interesting themes that I've been noodling on about this. So one, I would, my category, so you said product today and business line in the future?

• 15:38Speaker 02

  Yeah, I guess, you know, I think it sticks with product, but I think it's that that sort of reverse infection thing, like the Apple to next, like can the productiness, the productness that makes Disney and that makes Pixar and Lucasfilm what they are, and I guess you could throw Marvel in there, too.

• 15:59David Rosenthal?

  We might have to do a, complete the trilogy here at some point and do Marvel.

• 16:04Speaker 02

  Yeah.

• 16:05David Rosenthal?

  Interestingly, just almost about the same price that Disney paid for Marvel as they did for Lucasfilm.

• 16:10Speaker 02

  Yeah, we're gonna have to do an episode on that. So at the end of the day, I think it's product, that they get this product, but the ultimate thing that will prove that this spree of acquisitions and this business strategy was successful is can Disney reacquire that muscle to build their own incredible content of all types henceforth?

• 16:28David Rosenthal?

  Yep. And, you know, I think, I basically think the same thing. My, my frame on it that I was gonna say is, is this is a product acquisition, but what the product is, is the product is the juice that flows through the Disney flywheel. And this diagram that Ben was talking about, Walt Disney illustrated it by hand. It's actually, it's beautiful. There's mickeys and minis and ticker bells.

• 16:54Speaker 02

  Turns out the man was a good illustrator.

• 16:55David Rosenthal?

  Yeah, all throughout it, but it's this amazing document of business strategy and...

• 17:05David Rosenthal?

  And what it is is a flywheel. I've been thinking a lot about flywheels over the past few months, inspired by the Everything Store, reading the Everything Store and thinking about Amazon and the Amazon flywheel. And the definition basically being, you know, how do you create this dynamic in a business where you've got different pieces of the business? And if you push on one piece of the business, it accelerates the whole system. So like in Amazon, it's, you know, lower prices lead to more consumers, which lead to more suppliers in the marketplace, which, and leads to more leverage over those suppliers, which enables you to charge lower prices, which gets you more consumers, which gets

• 17:46David Rosenthal?

  you more suppliers and more leverage and on and on and on and on. For Disney, you know, the actual diagram is quite complicated, but the nodes in their business are films and tent pole, to use the media industry term, going way back to my days as a media investment banker here. Content and franchises at the center, and then the parks and the rides and television and music and merchandising and publications, you know, comic books and everything flowing through that system. And so to me, Star Wars is like, just a great, juice is probably the wrong word, but like a great car to put on that track.

• 18:29Speaker 02

  Yeah, I like that way of thinking about it, too. All right, next section. Techno themes?

• 18:37David Rosenthal?

  What would have happened otherwise?

• 18:38Speaker 02

  Oh, yeah.

• 18:39David Rosenthal?

  Which we almost skipped, but I think could be interesting here.

• 18:41Speaker 02

  Yes, I'm not sure David and I totally agree. What would have happened otherwise? So Lucas sat on this for, I don't know how long.

• 18:51David Rosenthal?

  Forty years.

• 18:53Speaker 02

  Yeah, but from not, he started saying in 97, no plans to make the sequel trilogy. You know, I've made the original.

• 19:01David Rosenthal?

  Sat on Star Wars.

• 19:02Speaker 02

  Yeah, yeah. I mean, we haven't seen anything since, since 1997. And he's been adamantly saying, I will never produce more Star Wars, blah, blah, blah, blah, blah. And he's also been saying-

• 19:10David Rosenthal?

  I'm glad he didn't.

• 19:13Speaker 02

  Howard the Duck. And not only that saying that he wouldn't, but saying that he wouldn't license it to anyone else either. And you know, I think that maybe that's just like, that'll wear out over time and this thing has too much value not to go back and re-milk and they would have sold it to somebody else. But I think the circumstances were unique, that this is exactly the sort of thing that Disney was acquiring as part of its new strategy going forward, that there was a relationship and trust there from Lucasfilm, not only with the relationship with Iger, but also, you know, that, you know, they watched, Lucas watched Jobs take Pixar from him, be extremely product focused about it and very hands-on

• 19:55Speaker 02

  and very intentional to keep that thing separate, and then watch the fact that Disney was able to shelter it. And when Disney was able to keep that thing separate and nurture what made it special. And, you know, I don't, I get the sense that Lucas doesn't have that trust lightly, that this wouldn't have been sold to someone that he didn't feel would, you know, keep it in that sort of form.

• 20:16David Rosenthal?

  So this was inevitable?

• 20:20Speaker 02

  Well, I don't think it wouldn't have been Disney or no one, but I, it's hard to imagine this falling into place with a company other than Disney.

• 20:31David Rosenthal?

  Could you imagine Fox owning Star Wars?

• 20:36Speaker 02

  Well, I mean, what if, I mean, this is, that's just as crazy as five years ago saying, can you imagine Disney owning Star Wars?

• 20:42David Rosenthal?

  Yeah, but, but I mean, like, there was, Disney and Lucasfilm have always had a tight relationship. I mean, there's the Star Tours ride, there's the Indiana Jones rides, you know?

• 20:52Speaker 02

  Well, is it possible that Lucasfilm would just not have produced more films? That George Lucas would have retired? It would have made boatloads of money off the merch forever?

• 21:02David Rosenthal?

  Off ILM.

• 21:03Speaker 02

  Yeah. And like, it's just not a company that produced films anymore. It was a defunct...

• 21:09David Rosenthal?

  Yeah, it's interesting, right? And that kind of gets to, if you think about acquisitions as a form of investing, which they should be, it's just one that most companies tend to be pretty bad at. You know, at the core of investing is about identifying, it's about identifying mispriced assets. And so if you, if you're Disney, Bob Iger, and Disney's famed technology and strategy group and M&A group, and you're looking at Lucasfilm, and the worth of Lucasfilm sitting there as an independent entity was X, call it 4.1

• 21:51David Rosenthal?

  billion, but was that mispriced relative to the opportunity that Lucasfilm had? I think, you know, if The Force Awakens is any indication, and, and, you know, I think that the not so secret secret in, that I am just like beyond excited about is, you know, we're not going to have to wait too long to see Star Wars land, and, and all the spinoff movies that they've already announced and everything coming down the pipe.

• 22:20Speaker 02

  I don't know. I mean, this is the part where I'm gonna say, there's a spoiler alert. Sorry, here's a couple of seconds if you'd like to turn the podcast off. If Disney didn't acquire Lucasfilm, and no one did, and it laid dormant, then we would have Han Solo forever, and Han Solo wouldn't be dead.

• 22:37David Rosenthal?

  [laughing]

• 22:40Speaker 02

  So sad.

• 22:41David Rosenthal?

  Well, you know, the, I saw in doing research for this, I think the second Star Wars spinoff movie that Disney's gonna make is a Han Solo chronicle.

• 22:53Speaker 02

  Yeah, the first being Rogue One, and the second being the first of the chronicles following Han Solo.

• 22:58David Rosenthal?

  Man.

• 22:59Speaker 02

  So that's, this is kind of amazing. I mean, we, we've got five films queued up before 2020. I mean, let's, let's review the finances so far from The Force Awakens. So, already, it's made 1.78 billion on-

• 23:15David Rosenthal?

  That's incredible.

• 23:16Speaker 02

  Yeah, recording this on January 14th. That's including domestic and international, not including any merchandise.

• 23:21David Rosenthal?

  Less than one month.

• 23:24David Rosenthal?

  Just box office receipts.

• 23:26Speaker 02

  On a $200 million budget. Now, if you look at the prequels as a whole, remember-

• 23:32David Rosenthal?

  That's amazing.

• 23:33Speaker 02

  Well, yeah, it's the most incredible film, you know, as a business ever created on every metric, literally every metric. So, you know, 4.1 billion, that's, that's the number-

• 23:44David Rosenthal?

  Not to mention, as, as I alluded to earlier, Jenny and my wife and I went to Disney World over New Year's, which was amazing. And the number of lightsaber, Kylo Ren lightsabers with, with crossguards and-

• 23:59Speaker 02

  Having a crossbow, it's, or crossguard is so stupid. You're just gonna cut yourself. It doesn't bode well when they're hot lasers.

• 24:05David Rosenthal?

  Well, it, it comes, uh, it's useful in the, one of the battle scenes.

• 24:10Speaker 02

  Uh, I think it does more harm. It's like, we, we could have a whole different podcast about this.

• 24:18David Rosenthal?

  That could be our next podcast.

• 24:19Speaker 02

  All right.

• 24:20David Rosenthal?

  Vote in the comments if you want to hear it.

• 24:23Speaker 02

  So we're trying to get to 4.1 billion, right? We're already 1.78 of the way there, minus the 200 they spent on it. I mean, it, it's not quite like that, but if you want to pencil it out, if, if you compare that to all of the, the, the prequels, the first one, the, which it's, it's hard even speaking of these when really they don't exist, but the, the, um, uh, first prequel made a billion dollars, the second eight 48 million, the second six 49 billion. So total, the prequel trilogy made 2.5 billion on, on, um, theater tickets. And like, we could see that alone from The Force Awakens.

• 25:00David Rosenthal?

  Easily, I think.

• 25:01Speaker 02

  Before we get any distribution outside of theaters. And so, we're already looking at that. Um, The Economist quotes that, uh, they, they imagine that, um, five billion in Star Wars licensed products will be sold in 2016. And I don't, you know, judging by your experience at Disney World and, and, um, the, the Star Wars toasters and, uh, like everything we're seeing everywhere. You know, Disney has the most incredible licensing team in the world.

• 25:26David Rosenthal?

  Yeah.

• 25:26Speaker 02

  And, uh, they're taking full advantage of Star Wars. It is, it is, um, they, they got an Instagram bargain on their hands.

• 25:36David Rosenthal?

  Yeah, well. Maybe not quite in CRM.

• 25:40Ben 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.

• 25:53David 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?

• 26:10Ben 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.

• 26:25David 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.

• 26:49Ben 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.

• 27:08David 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.

• 27:38Ben 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.

• 28:03David Rosenthal?

  Let's move on to tech themes because I think this is a good segue. You know, as I was thinking about this, you know, what technology theme does this illustrate for you? I was sitting here and I was thinking, you know, this is our sixth episode. We should have saved this for episode seven. That would have been appropriate, but not as timely.

• 28:23Speaker 02

  Yeah.

• 28:25David Rosenthal?

  And, and the companies we've done so far for a show that's ostensibly about technology acquisitions. We've done Pixar, Instagram, Twitch, Bungie, Siri, and now Lucasfilm. You could argue that that's, that's five media companies and one technology company.

• 28:45David Rosenthal?

  And Siri being the technology company and everything else being, yes, a technology company, but also a media company. And what's interesting for me, you know, this highlights a couple of things which we've mentioned before on this, on this show. But one, you know,

• 29:03David Rosenthal?

  as a, I don't know if I need to pay any royalties on this phrase to Andreessen Horowitz. They probably trademarked it, but like software is eating the world. Two, I actually like this phrasing of it better. This is from an old version of the Sequoia website that they've since changed. But they used to have a section on there called something like what we believe or like what we've learned over 40 years of venture capital or something like that. And, and one of the phrases was technology is the best amplifier of a business.

• 29:38Speaker 02

  Very rings true of Paul Graham's recent technology as a lever.

• 29:41David Rosenthal?

  Yeah, exactly, exactly. And if you think about technology as a lever for, it always has been for Lucasfilm.

• 29:51Speaker 02

  Oh my gosh, ILM, like they were doing things that were absolutely unheard of. Yeah, yeah.

• 29:58David Rosenthal?

  So both within, within Lucasfilm itself, but then also, you know, now as part of Disney, I mean, There's the whole Disney flywheel, but like, I think one of the coolest parts about Episode 7 or coolest, you know, sort of things that, business things that happened around it is Disney didn't do a big marketing blowout budget for it. Like, who in the world didn't know that The Force Awakens was coming out this past December?

• 30:27Speaker 02

  What do you mean they didn't? They didn't do a big marketing budget? Like, there was more media for The Force Awakens than I've ever seen for a movie before.

• 30:34David Rosenthal?

  Yes, and it was free from technology, from social media.

• 30:39Speaker 02

  Ah.

• 30:40David Rosenthal?

  So there's, there's-

• 30:43Speaker 02

  They had a tremendous amount of earned media there, but they-

• 30:45David Rosenthal?

  A tremendous amount of earned media. And of course, they had a, they had a marketing budget for, for the film, and I believe it was about a hundred million dollars. But it was on the low end for big tent pole movie releases. And actually, there are a few interviews with Bob Iger about this, or stories, just one in the Wall Street Journal, and I think one in Fortune, where he really pushed the company to be thoughtful about this and say, "Hey, do we need to spend a huge amount of like, traditional marketing on, on The Force Awakens?"

• 31:15Speaker 02

  Yeah, it's really interesting. I mean, I saw, there's definitely some, some paid media where, or leveraging of internal assets, where, I mean, at SportsCenter the day before the movie came out, there was a 15-minute segment in the middle of SportsCenter on the, the athletic training behind Star Wars. It was a gigantic star, it was incredible. And I'm like, I, that's a-

• 31:33David Rosenthal?

  I need to watch that.

• 31:33Speaker 02

  Very nice Disney-owned property. But I mean, the, the amount of like, memes that started from it of like, people taking pictures of weird Star Wars products and then posting them on Instagram and Twitter. And like, there was that hashtag, it was like, "Only Disney" or something like that. And I mean, Reddit was just, they, they, they, they knew where people were and they took full advantage of their ability to spread content virally.

• 31:53David Rosenthal?

  Yep.

• 31:56David Rosenthal?

  Second theme for me, whichever I just talked about is just illustrating the power of the flywheel, probably more so here than than technology being an amplifier because at the core, Lucasfilm, probably less so than Pixar and Twitch is a technology business. I mean, it is, but the power of the flywheel, both within Lucasfilm and within Disney is incredible here.

• 32:24Speaker 02

  Yeah, it's interesting. I was thinking, you know, a lot of times we talk about themes, we talk about the technology themes and other ones, the acquisition themes. This almost feels like a Facebook-style acquisition where Disney is acquiring a portfolio of, you know, third-party brands that they really are learning from, but not roping in in the wrong way. They're leveraging the Disney assets and the things that Disney does best, merchandising and a lot of this media distribution, but they're not, well, actually, here's the best litmus test of all. There was no Disney

• 33:04David Rosenthal?

  Logo.

• 33:06Speaker 02

  Logo at the beginning of Star Wars. I mean, we didn't have 20th Century Fox, we didn't get the fanfare and like, God, did my heart sink, but I'll take it as a compromise for we didn't get the castle. And it was, of course, I couldn't stop thinking about this during the movie of how good Disney is at just like letting this thing be what it is, contributing its own assets where they make sense and learning from it in a very slow, hands-off way. And the trend there is, I mean, Facebook is the shining example so far of companies that know how to do really good kind of siloed acquisitions where you don't mess it up too much. And like, look at Instagram from the day it was acquired

• 33:47Speaker 02

  to today. You know, you look at WhatsApp from the day it was acquired to today. That is the theme of the modern acquisition that goes well.

• 33:54David Rosenthal?

  And I think it's a major theme of the show. You know, look at all the episodes we've done, you know, they've all, the successful deals have all been this style of acquisition. Pixar, Instagram, Twitch.

• 34:09David Rosenthal?

  Bungy to an extent, as we heard Ed talk about, you know, they had their own office. They knocked down the walls. You know, they kept their culture and then the acquisition we did that hasn't gone so well is the one that didn't take this approach in Siri.

• 34:28Speaker 02

  Yeah, and I think to distill it down to a more catchy thing than that long version I articulated before. I think it's amplify quickly, integrate slowly.

• 34:41David Rosenthal?

  Yeah, because there's no question that Disney is integrating Pixar, Lucasfilm, Marvel.

• 34:48Speaker 02

  Look at the riots. Yeah, absolutely. Absolutely. I just never want to see a world where Luke Skywalker faces off against Iron Man, right? Like, we better not see combining of universes.

• 34:59David Rosenthal?

  I think we'll have to go back and revise this episode if that happens.

• 35:03Speaker 02

  From the CDN.

• 35:03David Rosenthal?

  Yeah.

• 35:06David Rosenthal?

  I never got Batman versus Superman.

• 35:12David Rosenthal?

  All right. On that note, any other themes you want to add, Ben?

• 35:17Speaker 02

  Um, I don't think so.

• 35:18David Rosenthal?

  Great.

• 35:21David Rosenthal?

  What's your grade?

• 35:25Speaker 02

  I'm going to give it an A and not an A plus, even though financially, I think spectacular. But I think the thing that

• 35:36Speaker 02

  we will see in the future is is Disney able to produce content like this without gigantic acquisitions from now on? Because there's only so many pieces of gigantic content houses that they can pick up. There was some stat, I was looking at the top 25 movies from last year and like 21 or 22 of them were rebooted. Yeah, I guess Star Wars isn't reboot, but unoriginal storylines, unoriginal assets. And you compare that with like 1985 and it was like three of the top 25 were sequels. And, you know, we're seeing the same thing happening in entertainment today that's happening elsewhere. And it's you.

• 36:21Speaker 02

  You in movies, you know, they're gonna spend one to $200 million producing what's gonna be for sure a big hit. And all the experimentation has moved to television. So that's the whole kind of like startup scrappy. We're gonna try one little thing, small investment. If it works, we'll double down. Like, what does that look like for feature film content in the future? And when Disney runs out of Star Wars movies to make and runs out of Star Wars like franchises to buy.

• 36:50David Rosenthal?

  Mm hmm.

• 36:52Speaker 02

  How do they continue? And what does that flywheel look like after 2025?

• 36:56David Rosenthal?

  Yep, I I was gonna go down the same path. I'm gonna give it an A minus for but for for this reason. Thinking about Lucasfilm versus Pixar.

• 37:07David Rosenthal?

  Lucasfilm is a depreciating asset. It was a mispriced one that Disney correctly identified and they're gonna be able to get a ton of juice out of it by feeding it through their flywheel. And that'll go on and on and on for a long time. But fundamentally, there's not a. It is just content. There's not a moat there, you know. Maybe there is an ILM in their technology to the extent that that's differentiated. But the moat is Disney. And what's interesting is Pixar, I think, was different. You know, their their moat was people, which is slightly arguably more ephemeral, more

• 37:51David Rosenthal?

  ephemeral than an organizational or a process or a technology moat. But Pixar for Disney, I think, has been an appreciating asset. Because the process that it brought the ability to continually generate new, relevant, successful content.

• 38:13David Rosenthal?

  Maybe they can apply that to Lucasfilm. But I don't think Lucasfilm itself is gonna be that gift that keeps on giving.

• 38:23Speaker 02

  What are you talking about? Indiana Jones is gonna be like.

• 38:26David Rosenthal?

  Yeah, but that's just one way. Just one more existing content franchise.

• 38:32Speaker 02

  Yeah, like will Lucasfilm, the division of Disney, come up with an entirely new franchise? And will they go spend $100 million to make that movie that is the new Lucasfilm franchise? Unlikely. The question is, will they be able to do it successfully within Walt Disney Studios?

• 38:49David Rosenthal?

  Yep. And here's the question, right? I mean, financially, probably Lucasfilm in the medium term is going to be a better acquisition than Pixar.

• 39:01David Rosenthal?

  And, but in the long, long term, in terms of like extending Disney's competitive advantage and and motor around their, around, motor around their flywheel, to mix two metaphors.

• 39:16David Rosenthal?

  I feel like, I feel like Pixar is going to add longevity and Lucasfilm is like a, it's like a, like a turbo boost.

• 39:25Speaker 02

  Yeah.

• 39:29Speaker 02

  Yeah, I like that.

• 39:33Speaker 02

  Well, that's all I got.

• 39:35David Rosenthal?

  Me too. On that note, happy 2016, everybody.

• 39:38Speaker 02

  May the force be with you.

• 39:59David Rosenthal?

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• 40:05Ben Gilbert?

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• 40:16David Rosenthal?

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• 40:36Ben Gilbert?

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• 40:49David Rosenthal?

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