Acompli, Sunrise, and Wunderlist (with Kurt DelBene)

Ben and David have special guest Kurt DelBene on to discuss Microsoft's acquisition of Acompli, Sunrise, and Wunderlist. Kurt is the EVP of Corporate Strategy and Planning at Microsoft, and joins to discuss Microsoft’s cloud-first, mobile-first strategy, and the importance of being cross-platform in the modern era. They cover: How the app of Outlook Mobile on iPhone and Android came to be. How to decide whether to build vs. buy, and how it plays into the strategy for Office. How to preserve a culture and a team, and how Javier Soltero came to run all of Outlook at Microsoft. The origin of Outlook on the PC, originally led by Brian MacDonald as “Ren”. How to balance a business with competing priorities, and a decision-making framework for acquisitions in a large company. How to measure the success of an acquisition, and how sometimes, it’s not by measuring revenue at all. 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?

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• 1:20Ben Gilbert?

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• 1:48David Rosenthal?

  Four score and seven years ago.

• 1:49Speaker 02

  Our forefathers brought forth in this continent. How far can you go with that?

• 1:53David Rosenthal?

  I actually forgot.

• 1:54Speaker 02

  That's as far as you got? Or you didn't even get that far? What did you learn in civics in elementary school?

• 2:17Speaker 03

  Welcome to episode number eight of Acquired. I'm Ben Gilbert.

• 2:20David Rosenthal?

  I'm David Rosenthal.

• 2:22Speaker 03

  And we are your hosts. Today, we have a very special episode. We have a guest at Microsoft, Kurt Del Benny.

• 2:30David Rosenthal?

  Yeah, we are very lucky to have Kurt Del Benny with us today. He's been a great friend and mentor to both of us in different ways, and actually, both of us at Madrona, too. So Kurt started his career, actually, at the very famous and renowned Bell Labs, and spent five years there, and then went to Booth and got his MBA at Chicago, went to do a short stint at McKinsey after that, and then went to Microsoft and had an over 20-year career at Microsoft that culminated, when Ben was there, in Kurt being the President of Office, which he was until December 2013. And then

• 3:15David Rosenthal?

  afterwards, he went to healthcare.gov and did a stint there, helping launch Obamacare. And after that, ended up with us for a little while. We were really lucky to have him at Madrona as a venture partner. And then last spring, Kurt returned to Microsoft and is the EVP of Corporate Strategy and Planning. So, thank you, Kurt, for gracing us.

• 3:38Speaker 02

  Hey, it's good to be here and good to talk to you guys again. Just one little correction on healthcare.gov. I came in after the launch to help them repair it.

• 3:47Speaker 03

  You did. And for listeners, I had the privilege of waking up real early one morning and coming in to hear Kurt talk about that at Madrona. It is absolutely fascinating to hear how to mop up a gigantic software project like that, and getting all the right people on the bus, all the right consultants and contracting firms that are putting that whole thing together. It is, Kurt, that looked like an absolute ballet.

• 4:12Speaker 02

  Well, it was super rewarding and super challenging. So, maybe we can do a future podcast just on that. It's an interesting topic.

• 4:20David Rosenthal?

  You needed to get some good R&R, so you went to a venture firm for 10 months afterwards.

• 4:29David Rosenthal?

  So today with Kurt, we're going to talk about hopefully a very topical acquisition. And we're actually going to lump a few in here, but the main focus is going to be Accomplice, which is now the mobile Outlook on iOS and Android. So I'm going to run through quickly, we're going to do a company and then, and then we'll sprinkle in little bits of both Sunrise and Wunderlist, which are also office productivity apps that Microsoft all acquired in the past 18 months or so. And so I'm going to run through quickly, the acquisition history and facts.

• 5:08David Rosenthal?

  Accomplice founded April 2013 by Javier Soltero, JJ Zwong and Kevin Hendrickson. It's interesting Javier was CMU engineer and then an early employee at Netscape. Javier spent three and a half years at VMware before kind of coming back to his productivity roots and founding Accomplice, which I was a user from, from day one when it launched in, launched in beta and thought it was on my iPhone and thought it was just a great, really the first mobile app that combined mail and calendar all in one app.

• 5:50Speaker 03

  The, the magic that Outlook had been doing for so many years and no one, no one really did on iOS.

• 5:56David Rosenthal?

  What's, what's old is new again. They raised a $7.3 million Series A from Redpoint, led by Redpoint, where Javier had been in EIR after VMware and Harrison Metal and Felices. And then about 18 months later, Microsoft acquired the company in December 2014 for a reported $200 million. It was interesting, there's actually a, everybody knew this acquisition was going to happen because Microsoft wrote a blog post about it and it leaked about two weeks before the acquisition actually, actually went live. Yeah, not a shining moment. Not a shining moment, but, but it was successful.

• 6:38David Rosenthal?

  The acquisition happened there, about 25 employees, all based in San Francisco. They all joined Microsoft.

• 6:45Speaker 03

  David, that was only, I think like seven, eight months after launch, nine months maybe? I think it launched in April of that same year.

• 6:52David Rosenthal?

  It was, it was 18 months, less than 18 months after the founding of the company. And so it was very quick. And this was right after Dropbox had acquired Mailbox. So it was the era of email, mobile email acquisitions. Begun the iOS mail app wars have. Yes. Shortly thereafter, Microsoft then acquired the calendar app Sunrise in February 2015. And then in June of 2015, Microsoft acquired Wunderlist, the to-do list app, which I know has probably has a soft spot in Kurt's heart, knowing how much he loves lists.

• 7:36Speaker 02

  He loves Wunderlist.

• 7:37David Rosenthal?

  It is a great app. I joked when that happened, I think with Kurt, that Microsoft was trying to buy my entire iPhone home screen.

• 7:46Speaker 02

  Exactly. So what you'll have to tell us at the end, what you're using these days.

• 7:50David Rosenthal?

  I am still using all of these products. That's an endorsement right there. Yeah.

• 7:54Speaker 02

  There you go. I appreciate that.

• 7:55David Rosenthal?

  Yeah. So with that, you know, what's happened since then in at that same time, right after the Wunderlist acquisition, Javier was actually promoted within Microsoft to be the corporate VP running all of Outlook. So not, not just the Outlook mobile app, but Outlook on desktop as well.

• 8:20David Rosenthal?

  Shortly thereafter, after that, Sunrise Calendar was rolled into Outlook. Wunderlist has remained independent today, but has been announced that further integrations may be coming on that front. So maybe Kurt can enlighten us on that. But with that, Kurt would love to hear kind of how you thought about, about all of these products.

• 8:46Speaker 02

  Sure. So the first thing I should say is the acquisition happened during my time away from Microsoft, but I know the whole history of it. The corporate strategy team was, which I lead now, was intimately involved in the, in the acquisition. So, and I obviously know the space super well. I've spent a ton of time in office. So when I saw it happen, I said, okay, this one makes complete sense. This is an example, I mean, there are different reasons that Microsoft makes acquisitions, as I'm sure there are for all companies. There are places where we look at our position in a particular area and say, we need a technology, we need a particular product.

• 9:26Speaker 02

  There are other cases where we opportunistically look at a product or company that's doing well in a space and say, wow, we can see an adjacency to the business that we have, and so we want to acquire the company to kind of build out that adjacency. There are some more rare cases where we'll do it to get a particular set of talent. You know, we see a team that's super, super good, but I think that tends to be the exception. This one was the, was kind of, I would say, a strategic acquisition. If you think about the journey that Office has been on, the core competency has been on the desktop, you know, the Office suite, and by desktop, I mean both the Windows PC

• 10:11Speaker 02

  and, you know, kind of leading productivity on the Mac as well. And so, coming from that core, as other OSs became popular, particularly in the mobile space, the team, actually, it was a corporate strategy effort with the team, with the ASG team as well, said, okay, this is clearly a place where we've got to make an acquisition or build ourselves, but we need to have a great app for the core Office 365 scenarios, and those are email contacts, calendaring, and to-do. And so, we said, do we want to make, or do we want to buy, and is there somebody out there that we would love to have?

• 10:55Speaker 02

  And really just said, okay, what would, if we do want to acquire, what would that look like? What would it look like to make it internally? And are there candidates there that would be great for us to acquire? So, that's what kind of got us started on the path, and it kind of went from there.

• 11:12Speaker 03

  Cool. Thanks Kurt. I think it's one of the things that you read a lot about these days is Microsoft shifting from the Windows and Office company to a mobile-first, cloud-first company. And, you know, I think that from a high level, first of all, as a consumer and just, you know, from the public perception of Microsoft these days, everyone is loving that. I mean, the whole focus on build a really great cross-platform experience, have your same data with you everywhere, access to the same services, you know, the same core office services that you know and love. Huge value prop for consumers. As you guys transition to, you know, these free mobile apps

• 11:49Speaker 03

  that are on platforms that you don't own, how do you look at that as sort of the revenue future of Microsoft? And how does that replace the giants of yore with selling Windows and Office box software?

• 12:04Speaker 02

  The giants of yore, I love that.

• 12:07Speaker 02

  I think there's a couple of ways to look at it. The first thing is you have to recognize that Office 365, the cloud versions of Exchange, SharePoint, and Skype for Business are strong in rapidly growing revenue streams for Microsoft in, you know, by themselves. So in some sense, it's always been the case that when you buy Exchange, you get a client experience that goes with that, you know? Go all the way back to the Exchange clients in the mid 90s, there's always a client that came with it. And that model has stayed. And so, again, looking at a company in particular, they were really developing a very fast leadership position in terms of downloads,

• 12:50Speaker 02

  in terms of monthly active users, that was very appealing to us. And so, I think just that's a natural to something. When it comes to mobile, you've got to have a certain free experience. And then you can think about having a paid experience incremental to what the expectation in the market of what is free. So in the case of email, you know, the expectation is you're going to have a single client that'll work against your free mail, but will also work against your enterprise mail. You can think about features that you put behind a firewall, you know, a pay firewall. We do that by having certain tiers within Office 365. And then there's certain tiers within the client too, which is also available as a subscription.

• 13:34Speaker 02

  So we think about there's a certain free thing that free piece that you want to give to everybody. There's a certain set of features that can be made available as add-ons. Um, there are particular areas where that works well. So uh, features where to communicate to somebody else, you gotta have the paid one. That doesn't work very well because you want to have a common capability across the, across all the people using the service. But things like enterprise features like uh, um, retention policies and uh, anything around usage analysis, et cetera, those are all features where people will pay for, pay extra for them, but you don't have to build it into the core product. So we definitely see the ability to kind of tier things that way.

• 14:20Speaker 02

  The other thing you have to think about is uh, people have multiple devices. You, you, you know, they have a PC, they have an Android phone, they have a Windows phone, they have a Mac and an iPhone. And so you have to think about the client experience as being a single set of client experiences that go across all those different devices. And if you can package those together into a subscription, then you can sell the value proposition of the entire subscription regardless of what uh, device you happen to have. But then again, you still have to think about, we need to have a leader, leadership position in all of the devices that people find popular. And so we want to have Office be the best experience regardless of whether you're on an iOS device, whether you're on an Android device.

• 15:03Speaker 02

  You know, we'd love to, to have you think of Windows as your home, but we need to have a great experience regardless of the devices that you use.

• 15:11David Rosenthal?

  Well, I think um, you know, this is something that uh, Microsoft and, and you have really done a great job with. I mean, going back to the origin of Office 365, um, you know, Ben, when you were working at Microsoft, you were working on uh, Office for iPad, right?

• 15:27Speaker 03

  It was, I was, that was so much fun.

• 15:31Speaker 02

  Well, we find, we did get around to shipping that.

• 15:33David Rosenthal?

  Yeah. And um, you know, the importance of, you know, as a consumer, um, you know, it's not about my experience with my mail client or with Excel or with Word on a, on a particular device now. It's about how that works in concert across all of the areas where I'm doing my computing.

• 15:56David Rosenthal?

  A related area that I'm curious if you guys thought about with the Acompli acquisition and the strategy is something that Ben touched on, the unified inbox. And I remember in my first job in finance out of college, I had obviously Outlook. I was working in a bank and all of my work email was on Outlook on my computer and my workstation. And the iPhone had just launched and I loved it because it meant I could get my Gmail at work. And now, you know, the concept of having different inboxes, for me at least, is something I think for probably most of our listeners is something that we wouldn't even think about anymore.

• 16:40David Rosenthal?

  Was that, was that part of the strategy here too?

• 16:44Speaker 02

  Yeah, I think that Acompli does a great job of giving you a single unified inbox. Windows Phone also on its client also can get, you can link together a couple inboxes together. But if you go all the way back to when Outlook was first created, it was a total different look at what had historically been separate products for email versus calendaring. We had Schedule Plus. Those of you older in your blogosphere listeners will remember Schedule Plus. It became a verb, it was so popular.

• 17:22Speaker 03

  And in fact, still echoes around the hallways of Microsoft about sending S pluses around.

• 17:27Speaker 02

  Exactly. Every time I correct them, and I call it a meet, it's a meeting request because Schedule Plus is long since dead. But this notion that things come together and become unified, it really just follows how people expect to use the product. So when you start building a bunch of meeting request capability into Schedule Plus, all of a sudden it starts to look a lot like email. And so Outlook and under Brian McDonald, who is the, the kind of the father of Outlook way back when it was called Wren, as in Wren and Stimpie, he had this idea that you want to bring these different mail and calendaring and tasks all together into a single user experience, which clearly has been borne out.

• 18:11Speaker 02

  Early on, the versions of Outlook were not up to the task, really, I will say in retrospect. There was a period of time when Outlook was called Lookout because you wanted to stay away from it because it was pretty slow when it first happened, but it's become really the leader in this integrated set of products. And, and I think that's happening on mobile devices as well because those scenarios are so deeply integrated together. I think you find calendaring deeply integrated. That's why Sunrise got integrated into Comply. Task management actually is a little bit different. And so we think that there's, you know, if anything, the mobile, the paradigm in mobile is different applications for different use cases.

• 18:55Speaker 02

  And so it's not necessarily the case that what you do for the PC is what makes sense to do on a mobile device as well. And I can tell you there are any particular plans to take Wunderlist and deeply integrate it with a Comply where the scenarios crossover probably makes a lot of sense, but then, you know, the personality needs to be preserved of those different applications. And we think they're big applications in and of themselves.

• 19:18Ben Gilbert?

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• 19:33David Rosenthal?

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• 19:47Ben Gilbert?

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• 20:47Ben Gilbert?

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• 20:56David Rosenthal?

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• 21:08Speaker 03

  You know, we're talking about integration of software right now. Let's talk about integration of people. How, what were the different options you guys looked at for how you could integrate the teams in terms of location, in terms of hierarchy, in terms of focusing on retention? And what decisions did you guys make with primarily the employee team?

• 21:27Speaker 02

  It's a really, it's a great question. It is super, super important for us to retain both the particular talent, the fact that they're a team as well, but also the personality of the, of the organization itself. So it is not this, this get integrated into the collective and you are just part of Microsoft. We work really, really hard to keep the teams separate while we take the opportunity of being part of Microsoft to be an accelerant to the objectives of the, of the team. And so a lot of folks, these teams come on and they're just super

• 22:08Speaker 02

  excited about being able to leverage the breadth of Microsoft to do more great things.

• 22:15David Rosenthal?

  Unless I'm mistaken, all of these teams are still in their original locations.

• 22:22Speaker 02

  Well, that's the other thing.

• 22:22David Rosenthal?

  None of them are in Redmond, right?

• 22:23Speaker 02

  Right. It doesn't make much sense to have everybody come to Redmond. It's not necessary. We are already a broad company that has locations everywhere. And so there's not a need from that perspective. And you know, there's no purpose in them moving. They have cool locations. They have homes where their family are. And so in most cases, we actually don't relocate them. And that's definitely been the case here as well. The Wunderlist guys are in Germany and they love being there. And we're just as happy to have them there as well. I mean, the nature of software is it is a global business now. And so we can definitely accommodate that. The other thing that we've tried to really do is figure out,

• 23:07Speaker 02

  how do we take advantage of the skills that the team has and the vision that they have? That's why you see Javier become the leader of Outlook overall. And that's just a recognition that, hey, these guys did something really incredible. And we want to make sure that we take advantage of that as much as humanly possible. And so we definitely look for cases like that as well. I mean, the third thing I would say is the trickiest aspect of it from our perspective is we have places where we want to drive synergy between their product and other products at Microsoft.

• 23:48Speaker 02

  And that's a very, very tricky piece because these guys all come in with a set of plans that they have in place that they want to accomplish. And if you divert them too far from that mission, you can ruin what's special that you did the acquisition for in the first place. And so we try to be really, really careful. I'm not sure we always get the balance right. There are some times when we overindex on the integration and we find that we lose a little of the secret sauce because the product starts coming out more slowly and the innovation doesn't come through as well. And we're learning all the time too. And so I'm not sure we always get it right. I actually think on these acquisitions that we're talking about, we set the balance pretty well.

• 24:33Speaker 03

  Yeah, and I can speak to that. I just put out a tweet a couple of days ago, sort of asking about who's using Outlook for iPhone. And I got a response from someone I knew on the team over there. And, you know, that his response was something along the lines of, "Let me know how you like it. We move fast, and I want feedback."

• 24:51Speaker 02

  Yeah.

• 24:51Speaker 03

  And it seems like that team, and I'm not certain, but I think he was at Microsoft pre-acquisition. So it seems like some of that DNA sort of bleeds into the existing team and kind of lights a fire.

• 25:03Speaker 02

  Yeah, even simple things like if you use Outlook for iPhone, there's a way, actually for either platform, you can give user feedback on the product directly from within the product, from the context that you're in. And it'll bundle up everything that it knows about what you're trying to do and basically send it directly to us. And so that's a place where, you know, we'd love to take those learnings of how they got that 360 feedback loop and really, really intensely follow it and collect the data. So as your friend said, they can move super, super fast.

• 25:42Speaker 03

  Yeah. And from a leadership perspective, I mean, when you have people that have made their whole career and their life's work Outlook, and then you do an acquisition like this, and the leadership of the broader Outlook becomes someone from this new and outside team, you know, how do you make sure that lands organizationally?

• 26:00Speaker 02

  Well, it actually, it's not as hard as you might think. Probably the biggest challenge is if you've got particular people who were in line for that job, or a job in specific. It's, you know, I think it's a misconception that people at Microsoft are not, you know, are not open or embracing of new things that come in. I'm not actually even sure if it's a misconception. It's definitely not the case. And so when a new team like this comes in, and Incomple in particular, or any of these products, Sunrise, Wunderlist, it's like, the overall view is, "Oh, my gosh, this is a fantastic thing. Let's bring them in, let's embrace them as a team,

• 26:45Speaker 02

  let's learn from them, and we'll all do great things together." So it's not as hard as you might think.

• 26:53Speaker 03

  Yeah.

• 26:53Speaker 02

  Absent the particular positions where somebody from the entering team might get a get a position that somebody else might have thought they were in line for.

• 27:03David Rosenthal?

  When I mean, I remember when Javier was promoted to corporate VP and hearing, hearing about it in the press, but then also hearing friends at Microsoft talk about it. You know, so often, you know, you see, you know, we see looking at lots of acquisitions, the CEO or the management team of the target company will end up, you know, with some meaningless VP title at the acuity and they'll stay for 18 months until they vest and then they're gone and on to their next thing. And this is a major, major role at Microsoft and really was, you know, I don't know if promotion is the right word, given that he was CEO of a company, but, but a real recognition

• 27:45David Rosenthal?

  of a scope that, that, that really was, was much broader than, than just the accomplished mobile app.

• 27:55Speaker 02

  Absolutely. And it was, it truly was a recognition that he has skills that we want to leverage more broadly than just within the accomplished team per se. And it's working out really, really well.

• 28:09David Rosenthal?

  Actually, I was going to bring this up later, but Javier wrote in the blog post announcing the acquisition. He wrote, he wrote these, these sentences here that I'll read. He said, 18 months ago, we started building a team and a product around the idea that we can make mobile email better. Today, that journey continues as part of a larger organization with the technology, talent and market reach that will help us take the, the vision of a company to hundreds of millions of mobile users across the world. And I just thought when I read that, as we were researching this episode, you see some version of that in every acquisition that gets announced. You know, oh yeah, we, you know, we're going to get the scale and the resources that are really going to enable us to impact many more users.

• 28:53David Rosenthal?

  And usually it's pretty hollow, but, but here, you know, I kudos to you and to Microsoft for really giving, giving them that in truth, but, but it's really rare to see the team embrace this as much as, as Javier and the company team have.

• 29:10Speaker 02

  Yeah, no, I appreciate that. And it really was the intention, you know, that there is a bit of a scale difference too, though, because there are a billion users of Office across the planet. And so if you were somebody who wanted to see your vision. Get delivered. Just think about it, just in the context of business users that say, "Hey, I'm running Office and now Microsoft says we have a great Outlook client for iPhone and for Android." You're basically just sanctioning that product as being the product that they should use. Now, the great thing about Acomply is it had a huge user base and or quickly growing user base from a strong core.

• 29:54Speaker 02

  And so we were both able to take advantage of that in terms of getting a stronger footprint in mobile right there. But there, you know, Javier was right in terms of the leverage that came from just announcing it and starting to distribute it with Office, etc. We gave them a big boost and we took advantage of the boost that they gave us as well.

• 30:18David Rosenthal?

  I'm curious, as you were, when you made the acquisition, did Javier's background from Netscape and then from VMware especially, did that play into it? Did you, did you, Microsoft, see him as a potential leader when you, when you bought the company and was that a factor?

• 30:38Speaker 02

  Well, we definitely look at the talent, the specific talent as part of our due diligence process. I would not say that we, there are times when we actually do look for talent as the, as I discussed earlier, talent as the primary reason for doing an acquisition. The primary reason for this acquisition was they had a great product in a, in a space that we thought was super complimentary to us. And so, you know, that's the reason to do it there, but we definitely look at the talent and figure out how do we retain those key people along the way? The other thing that I would say is there's this whole question that often comes up,

• 31:18Speaker 02

  at least at Microsoft and I'm sure elsewhere, is there are times when you think you can buy the second best or the third best person or product or company, and there are times when you know you just need to buy the best. And this is a case, all three of those are the case where we wanted to buy the leader in the space. And in that sense, if that's your first and foremost goal and you believe you've got a great team, then the acquisition kind of writes itself. It's, it just makes a ton of sense and it, and it works out super well. And that's what kind of what happened in this case.

• 31:56Speaker 03

  I, I want to push on that a little bit. Why is it so important to have the absolute best clients? Wunderlist and Outlook, Outlook for iPhone and, and Sunrise, I guess that'll eventually just be an Outlook. When those are, are free products that can access both Microsoft services and other services. And the money is made on Office 365 subscriptions, which can also be accessed by a variety of clients.

• 32:21Speaker 02

  It's a good question. I, I think above all, we now live in a world where individual pull of applications is, in particular categories like email is incredibly important and in some ways more important than the push that can happen from Microsoft saying, this is our solution for email. And so that's a big piece of it. So when you, we, you see this.

• 32:47Speaker 03

  That's a big mindset shift.

• 32:48Speaker 02

  Yeah, it is. It is. It's not, you know, there are places where we think we can quote unquote, make the market by driving innovation, you know, defining innovation, delivering on it and making a category. I think SharePoint was probably an example of that. And there are other places where other people are establishing what that category looks like, particularly on form factors like mobile. And you just recognize it and say, you know, this is a place where we, we just want to get the best.

• 33:17Speaker 02

  The other thing is you always want to give yourself every advantage to do well. And in that case, if you're also having to overcome the fact that there's a leader in front of you that's got incredible end user pull. You know, it's, it's just not worth settling for that second best app.

• 33:35Speaker 03

  It's true. And if you're, if you're kind of following in the footsteps there, I mean, the client app is really the front door to the consumer experience. So I guess there's always that risk that, that, that client app could start prioritizing a different service. You don't own that customer relationship at that point unless you're, you're the leader with the, the client interface.

• 33:52Speaker 02

  Yeah, I think that's a different kind of acquisition, which isn't unheard of. There, there are some times when you can acquire an application and I don't think we ever do it. I can't think of a case where we have ever acquired anything purely for the sake of getting it out of the hands of a competitor or keeping it from being, being independent. It is a kind of nice byproduct in some cases where, you know, we think there's a good reason to have this application. And by the way, we'd rather the other guy didn't have it. But I don't think, I can't think of a single time when that has been a predominant reason. It's kind of a nice, a bonus, if you will.

• 34:29David Rosenthal?

  It's, it's really interesting that you say that. The, the last episode we did was on YouTube.

• 34:35Speaker 02

  Yep.

• 34:36David Rosenthal?

  And one of the really cool things about YouTube is there's all of this publicly available information about, about the company and about the acquisition because of the lawsuit, the Viacom and YouTube and then ultimately Google lawsuit. And it's interesting, Eric Schmidt testified that one of the key reasons both, both for the acquisition and for the price they paid for YouTube was the opposite of what you're saying was to keep it out of other people's hands.

• 35:03Speaker 02

  Really? Did he say whose hands they wanted to keep it out of?

• 35:08David Rosenthal?

  Uh, he, I don't believe he named specific competitors, but implied that they were other very large technology companies.

• 35:18Speaker 02

  I, I, I stand by, I can't think of an acquisition that we've done for that reason. You know, at the heart of it, the other thing I would say is, you know, Microsoft is a, we are a product and a technology driven company. And what we're trying to do within each of the product groups is what is the, you know, the, the dominant meme, if you will, about the discussions that we have. It's like, if you own the office business or you're part of the team, you're always thinking about your own product and how do you make it stronger? How do you make it better? You're not thinking about how you use it as a chess move, how you would make an acquisition to be a chess move to keep something out of somebody else's reach. I don't know, Ben, you were there. Can you imagine, have you, do you remember ever having such an acquisition?

• 36:05Speaker 03

  No, not while I was there. And I can't imagine too, like the, just thinking about the rest of the Office for iPad team. Like if we had bought one of the weird kind of like Office clones for iPad that we were looking at as sort of like the not doing so well, but decent competitive landscape and like tried to bring them into the team, that that would have been really messed up.

• 36:25Speaker 02

  Yep. You know, the other thing about it is it's, there's a certain amount of risk in an acquisition period. And so everything, you want everything going for you because there's always going to be things that, that help mess it up when you, when you bring it in. So, um, you know, having some ulterior motive, which is pulled out of somebody's hands versus being led by what you want to proactively and positively do with the product. It just doesn't seem like a very good calculus to me, but maybe that's what Eric really had in mind when he bought YouTube. I don't know. You know, it seemed to work out for him pretty well. So.

• 36:59David Rosenthal?

  Well, we graded that one not super highly.

• 37:02Speaker 02

  Is that right?

• 37:03Speaker 03

  Yeah, we, we gave it a C, or at least I did.

• 37:06Speaker 02

  Wow. You guys are tough graders.

• 37:08Speaker 03

  YouTube 10 years later is a break even business.

• 37:11David Rosenthal?

  They've lost a lot of money on that business.

• 37:13Speaker 02

  Well, I guess that is true. And huh, is it break even on an annual basis, including advertisements?

• 37:21Speaker 03

  Uh, as far as our research could determine, yes.

• 37:24Speaker 02

  Interesting. I don't follow that space super closely. So.

• 37:28David Rosenthal?

  A lot of, a lot of cogs in that business.

• 37:30Speaker 02

  I suppose that's true.

• 37:31David Rosenthal?

  Both on the technology and on the content and talent side.

• 37:38Ben 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.

• 37:52David 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?

• 38:08Ben 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.

• 38:23David 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. Legora'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.

• 38:47Ben Gilbert?

  And they recently launched Legora 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.

• 39:06David Rosenthal?

  And Legora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Legora numbers essentially speak for themselves. When they have a head-to-head pilot with their top competitor, they win 70% of the time. Legora 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.

• 39:36Ben 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 legora.com/acquired and just tell them that Ben and David sent you.

• 40:01David Rosenthal?

  Let's move on to, we're going to do two other categories that we like to do on the show or segments. First is Ben and I both, and Kurt, you're welcome to join in too. We assign a category to each acquisition we're looking at. And the categories we typically use are people, technology, product, and business line. And we give ourselves an out of an other. But Ben, you want to go ahead?

• 40:31Speaker 03

  Yeah, absolutely. This is a product acquisition. There's nice things that came along with it, but Oa, the Outlook Web Access App was just not good. And as someone that was at Microsoft and using it for quite a while, I was getting a lot of encrypted mail in IRM. And so I had that old Outlook Web Access installed on my phone just to read the encrypted mail. And then I'd get out of there as fast as I could. And I'm like rooting for the home team, right? I'm trying so hard. And it was, you know, it was a shame seeing all these other really great mail clients out there. And this is right when Mailbox and Acompli were popping up and, you know, useless for a lot of my mail. So.

• 41:12David Rosenthal?

  I remember even just as an Exchange user at Madrona, I mean, it was, it was really frustrating because all my friends who were working at startups, you know, were using Mailbox or the Gmail app. And they were great.

• 41:26Speaker 03

  And, and look, like it came not a moment too soon. I think that for me, Acompli, I was using it before the acquisition. I was using it after the acquisition. I thought it was super impressive, the turnaround time from, from going from being a acquisition where they were trying to work out exactly, you know, what it was going to turn into and what the timelines were going to look like and what the people were going to look like. You can kind of like, you always figure all that'll take like six months or so. Within two months, it shipped as Outlook for iPhone. And like all the news stories were kind of funny that, oh, they just slapped a new label on it. Maybe they did, but who cares? It was great.

• 41:59Speaker 02

  That's a really good point. At some, at some point, you don't want to mess with success. And there's a certain set of legal things you got to do to make it a Microsoft product. But that's, and that's probably what took the time. But, you know, keep giving people what they love.

• 42:13David Rosenthal?

  Yep. So I'll go next. And I'm curious, Ben and particularly Kurt may, may beat me up for this one, but.

• 42:22David Rosenthal?

  I'm going to go out of the box on this one. I'm going to call it an other.

• 42:26David Rosenthal?

  And I wrote down combo meal. Because I not only because it was multiple acquisitions. If you include Sunrise and Wunderlist. But I actually think there are elements of this that as there are in every acquisition, but here that that really hit on. Every every category. We've talked about a lot of them already. I would say the reason for this is it was really.

• 42:54David Rosenthal?

  A revitalization of a business line, not a creation of a new one, but a rethinking of.

• 43:01David Rosenthal?

  Of an entire business line in this case being Outlook as part of the broader office. Future on in a mobile first cloud first world and. You know, part of that is technology and part of that, a big part of that is people as we've talked about. And product as well. Yeah, I'm gonna go with combo meal.

• 43:21Speaker 02

  I think there's something to that. I mean, there is, there's clearly. I would say it's predominantly a product acquisition because that was we had in mind something very specific we wanted to acquire. But there's clearly synergies with the other parts of the office business and so in office products. So think about the fact when you download a piece of email, it has an attachment. You want to fire up Word to read that attachment. There's a way of of kind of linking those scenarios together that kind of goes towards your your combo meal theory. But it also said you you need to establish a footprint. On mobile devices and the first workload, if you will, that that people use.

• 44:05Speaker 02

  Or the first three, I would say, are the three that we we acquired in these three acquisitions. And so in that sense as well, it was in reenergizing the businesses also. So I guess I would, I think there's something to that. It's it's a maybe it's a combo meal. That has at its heart a a product deal. Maybe we call that a happy meal.

• 44:30Speaker 03

  That is interesting. You mean, you talk about the key scenarios on mobile there. It's like, you know, now Office is a full productivity suite and a mobile lightweight productivity suite. And those are dramatically different applications.

• 44:44David Rosenthal?

  I love the framing too, that you have Kurt of workloads and what's your mobile workload? And I think the Office mobile apps, Word and PowerPoint and Excel are great, but I almost never use them.

• 44:58David Rosenthal?

  My mobile workload is email, calendar, to do.

• 45:03Speaker 02

  Yep. No, I think that's right. The usage, we find that the applications are primarily used for great viewing, which the fidelity of viewing in our applications is better than others. And then light editing, which means, you know, there are scenarios like imagine if you're, you're reading a document in Word and there's a set of comments that, or edit revisions that you've got to take a look at and react to and edit with others that are working on the document. It's those kinds of scenarios for which you would use Word, Excel and PowerPoint. PowerPoint, you know, presenting, presentation mode really works really well, but you have to rethink the scenarios.

• 45:48Speaker 02

  It's not just that you imagine using, doing the same things on a mobile device that you do on your desktop. They're just different.

• 45:56David Rosenthal?

  Let's move on to, I want to make sure we have enough time for my favorite part of the show, which is our, our technology themes segment. And Kurt, so what we do here is each of us talks about, and again, please join in, would love to get your thoughts, you know, kind of what does this acquisition or these acquisitions highlight for you in terms of? The eternal truths about our business and technology. And Ben and I usually take a startup bent on this, but it'll be, I'm curious on your take, you know, having been at a big tech company for so long, having done a stint with us, you know, in the venture world, what, what themes are.

• 46:39David Rosenthal?

  So maybe, maybe Ben and I'll go first, give you a little time to think about it. But, you know, for me, I'll go because this will be quick. We've really already touched on it, but one big theme that all of these acquisitions highlight for me is, is I think Kurt, I think you said it, you know, innovation is distributed. It's global today. You know, Accomplice is in San Francisco, Sunrise was in New York City, Wunderlist is in Berlin. We haven't talked about it yet, but, and it's not in the same group, but Microsoft also recently acquired SwiftKey, another part of your strategy to take over my iPhone.

• 47:20David Rosenthal?

  But they're in London and, and again, don't know about SwiftKey, but the plan with, with all of the previous acquisitions is keep these teams where they are. And I think in a world of, you know, in the, a consequence of this mobile first, cloud first world is, you know, with GitHub, with Slack, with Dropbox, with AWS, and yes, with, you know, Office and Skype, you know, innovation can come from Redmond and Mountain View and San Francisco and Seattle, but also Berlin and also London and also New York. And what's, what's important isn't, isn't so much the, the location, it's about the quality of the products. And I think about when we talked with Ed Fries about Bungie and how important it was

• 48:05David Rosenthal?

  to keep the Bungie culture, but they had to move them down the street to Redmond. You know, today they would have stayed in Chicago.

• 48:12Speaker 03

  The one for me is translating a theme that we heard about over and over and over again five years ago, kind of one level up the stack. So it's been out of the news cycle recently, the phrase "bring your own device," because we all know that, yes, the BYOD world is here to stay and people choose their own hardware, bring their own hardware to works, and for a long time, and kind of still, it's a nightmare for IT folks. I think we've taken one step further on the stack, and it's really "bring your own client." And to the extent possible, except for certain very secure applications, the consumer expectation is that I choose the view in which my data is presented to me, and I view that data

• 48:56Speaker 03

  that is from a service that is mandated. So either you choose your own service as a consumer, and you choose Office 365, or Dropbox, or a variety of different mail services, or you work for a company, and that company has a set of services. You don't necessarily assume that that set of services comes with a mandated set of clients, and you sort of expect, "I choose my own software to consume those services." And I think, for me, the reason why I think that this was so important is, if there are three best-in-class applications that people are going to choose to consume their services, it's kind of great to own the unified experience and be able to provide all the best connections

• 49:40Speaker 03

  between the two, or the three possible.

• 49:42David Rosenthal?

  Yeah, this is really important. Certainly, the desktop operating system wars have been over for a long time, but the mobile operating system war is over too, and nobody won. The points of interest and dynamicism in computing and technology, the sort of technology meeting consumers and products these days, it's not iOS, or Android, or Windows, or Mac, or platforms, or even browser versus desktop versus mobile. It's really shifted to the app layer, and it may soon shift to the messaging layer.

• 50:27David Rosenthal?

  We'll see.

• 50:30Speaker 02

  No, I think there's something to what all of you said, and I think those are, those are all correct things. Um, for me, I don't, it's, it's hard for me in this one. The thing that, if there's a theme for me, it's that good products rise to the top, um, inevitably. And you look at one of these products like a company like Sunrise, um, like Wunderlist, and you just look at them and you say, wow, this is a great product. And you know, it's that excitement that we all have when we, when we download a new app and it just, it changes how you, it changes how you work, it changes how you work with others, et cetera. And each case of these, these were products like that. So

• 51:13Speaker 02

  as a theme, I think it is these products well crafted by creative artists that, you know, really think deeply about how the user uses them, have that passion. Um, they went out and they, you know, they get that opportunity to, to be in, you know, tens and hundreds of millions of, of users across the planet. So that, that's one theme. It just seems like that recurring, that excitement that you get when you see a product like this, that's really well done. And to have that, those teams succeed by part of the acquisition, I think is one key part of it. And then the second one for me is just that we are constantly learning of what the best

• 51:55Speaker 02

  way to, to execute these kinds of acquisitions is, and we constantly get better at it. And I think we as a company took another step at getting better at it with these acquisitions, recognizing how do we keep the people energized? Um, how do we, as, as you said, David, it's a global world and let's keep the teams where their families are and where they are. It's not about bringing them all to Redmond. Um, and so we continually get better about it as well. And consistent with that is, you know, we're a bunch of engineers and product people. And we just love to, you know, you get these talented teams, you bring them in. And again, part of this getting better is to having them

• 52:36Speaker 02

  become in leadership positions too in our company and help us all get better and deliver better products as well.

• 52:43Speaker 03

  Yeah, it's really interesting. I, there's an interesting question that comes to mind in, in just thinking about some previous Microsoft acquisitions. And then, um, you know, the, the world that exists today. Microsoft is a company that has Like a diverse portfolio of businesses across many different customer segments from enterprise to consumer and kind of all the way up the chain. Not all these businesses have aligned priorities. I mean, for Windows, it's to have all applications be best in class and first on Windows. And for, you know, Office, it's to have the best possible integrated experience across all platforms.

• 53:24Speaker 03

  How do you, when you do an acquisition like this, make sure that the leaders of all those organizations and that all the organizational priorities align around spending, you know, what comes to in total near half a billion dollars on a productivity suite that for iOS? When you're a Windows, you know, an executive over in Windows?

• 53:47Speaker 02

  Yep. Well, you come in with a set of premises that, or the fundamentals about what,

• 53:55Speaker 02

  fundamental assumptions under which you're making the acquisition. And in this case, for these apps, it was clear the cross-platform was a key part of the acquisition premise. And so in that sense, one, it has to be championed by the leader of that particular product group. So Chi Lu in this case, and there has to be strong support there. And it has to be championed by the CEO as well. And so Satya has to look at the acquisition and say, you know, I like this acquisition. And Terry Myerson, I understand this doesn't specifically help you. I think it indirectly helps you by making our services strong and making Windows and Outlook for Windows a great experience that also works on mobile devices.

• 54:40Speaker 02

  And this is relevant.

• 54:41Speaker 03

  Terry, for our listeners, is head of Windows, right?

• 54:44Speaker 02

  Yeah, Terry, Terry leads Windows. But there's always a balancing that happens and you go into it not thinking that there's, there may not be as strong a value proposition for some of the businesses as others. And any time you have a company that is as large as ours, and we're not the only one of this size, there's always going to be this balancing of priorities that comes out. The thing that you have to, that we are constantly pushing towards is don't let that balancing of priorities mean that you're mediocre in everything. And you really have to say that, for example, in cheese business, for this, for the, to, for office to be the leading productivity solution on the planet,

• 55:25Speaker 02

  we've got to have a great story around cross-platform. And so you really do, it's excellence for all. It's not about the balancing out at some mediocre level where nothing is great.

• 55:36Speaker 03

  God, that's a great point. That's a really good way to think about it. Thanks, Kurt.

• 55:42Speaker 02

  Sure. Should we, uh, should we wrap up?

• 55:46Speaker 03

  Yeah, yeah, yeah. Render our grades.

• 55:49Speaker 02

  Yeah.

• 55:49Speaker 03

  But before I do that, I have a, I have a question for, uh, for Kurt. So, you know, this, this acquisition is typically too, probably too early for the ones we usually do on this show. I mean, usually we like to see a little bit of proof in the pudding that you can like, look at some spreadsheets and see, hey, you know, they bought the company for this much and it turns out, you know, there, there's a lot of other ancillary value, but we can definitely attribute this value gain to the acquired property. And there was a multiplier on the value of the acquisition for the acquirer post-acquisition. Great, clean math, nice to justify. You know, we can look at Instagram being a multi-billion dollar business inside of Facebook right now and being acquired for a billion and go, great investment, guys.

• 56:32Speaker 03

  How, with this business, you know, it's, it's definitely too early to say for sure one way or another. I think we need to wait a few years. But, you know, how do you look at the success metrics of, you know, we dropped

• 56:47Speaker 03

  some number of hundreds of millions of dollars on this, this suite of applications? What are you looking for from a financial perspective on, on a return? And how do you, how could you possibly measure that?

• 56:59Speaker 02

  You can't. And, and we don't look for a financial measurement on everything that we do. In fact, we very explicitly have set of metrics that are around performance and others that are around, are we making progress in our category or, you know, so-called power metrics of, do we have strength among users in using our products? And this one, the metrics around these products are all in that latter category. It's all about how many people are using and loving the product. And you can't even draw the indirect, you know, mathematical connection to greater office sales and we don't even try. So we set goals that are for these products that are around how many monthly active users do we want to have?

• 57:43Speaker 02

  What's the level of engagement that we want to have with the products because we have confidence in the premise that if those are strong users, it will pull through um sales of office. Now, the place where we do do some measurements is around customer sentiment around about, you know, do you, what fraction of the office users are also using our mobile clients? You can also make a measurement of what the value is of a customer that is both a user of the core office applications and the users of the mobile applications as well, or do they use OneDrive, for instance? And we do find that the value of those customers are higher because they're more highly engaged users of office.

• 58:29Speaker 02

  And so that if you, if you want to come up with a mathematical equation, I suppose you could. We don't tend to look at it that way, but we do tend to do these, you know, conjoint analyses of, of uh, you know, if of the connections of the different products to today and what that implies about the, the strength of that person, that particular user as a customer.

• 58:51David Rosenthal?

  Fascinating. That is very cool. And you know, it's great to, you know, I think this is one of the reasons why we started this show is to talk about stuff like this, you know? It's so opaque what um, what acquirers are looking for and what happens to companies post-acquisition and um, it's just, yeah, it's, thank you for that and, and it's, it's um, great to, great to get that in insight into how, you know, we talk about categories of acquisition uh, and we're thinking more from the theoretical perspective, but um, but yeah, what, what really is the, you know, the measurement that you guys are using for different kinds of acquisitions?

• 59:30David Rosenthal?

  Yep, definitely differs by acquisition. Um, grades, Ben?

• 59:35Speaker 03

  Grades, so I'm gonna allow myself a plus or minus factor. That's the tolerance in which my grade can go up or down in notches over time since we're kind of early. And I'm gonna rate it a B plus right now with a two notch variation. So it could go, go to an A or B minus, but it's, it's, it's solidly an A or a B.

• 59:59David Rosenthal?

  Uh, I'm gonna go, um, you know, I've been thinking about this for the whole episode. Um, I'm gonna give this an A and I'm gonna say that because I'm thinking about this in contrast to, uh, we did an episode on Siri and Ben and I were both, we were both quite, uh, quite harsh in our judgment of, of that. Um, and I, and I, and one of the reasons is clearly, uh, virtual assistants and voice based computing is a, um, major, uh, paradigm that is important for technology companies going forward, you know, Amazon, but, but, um, Apple's really not done so great on that.

• 1:00:41David Rosenthal?

  And I think about in contrast, um, Office and, and Microsoft having been the leader in productivity. And when these acquisitions were made, really, you know, um, I think, I think Microsoft was under a lot of threat from a lot of different areas, from Google Docs to, um, startups like Evernote to the other mail and calendar clients and task lists out there, of which there were several. Um, and here we are several years later and I am a hundred percent an Apple guy. Um, and I love my cloud services and Dropbox and Slack, um, and

• 1:01:18Speaker 03

  David, you are looking at a Google Doc right now.

• 1:01:19David Rosenthal?

  And I'm looking at a Google Doc and yet, and yet, uh, you know, I've joked about it several times, but Microsoft basically owns my productivity on my iPhone. Um, I use Wunderlist every single day, all day. I use Outlook for iOS every single day, all day. Uh, and the calendaring features are, are the real differentiator for it. Uh, I use SwiftKey.

• 1:01:43Speaker 03

  My God, send availability in Outlook is like the best feature.

• 1:01:46David Rosenthal?

  Um, and, and I, I contrast that with, uh, with Siri and I just think it's been a huge, huge win. So a lot of work to do to keep it up, but good job, Kurt.

• 1:01:57Speaker 02

  All right. Well, I'll take those. I think I'll take those and go grab a beer to celebrate. But I hope you'll, I hope you ask me back and Ben, we can celebrate you changing your grade to an A.

• 1:02:09Speaker 03

  All right.

• 1:02:09Speaker 02

  All right. Thank you, Kurt. All right. It's been a pleasure. See you, guys.

• 1:02:33David Rosenthal?

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• 1:02:40Ben Gilbert?

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• 1:02:51David Rosenthal?

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• 1:03:11Ben Gilbert?

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• 1:03:23David Rosenthal?

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