Writely (Google Docs)

Ben and David continue the cloud productivity saga with Google Docs. They examine the suite of acquisitions made by Google with a focus on Writely in 2006. They tackle: The nuts and bolts of the Upstartle (company behind Writely) acquisition, founded by Sam Schillace, Steve Newman and Claudia Carpenter. SaaS offerings in cloud productivity today. Was this a good idea for Google? Google's future bets. A new section: The Carve Out! 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.

• 0:26Speaker 00

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

• 0:35David Rosenthal?

  I'm David Rosenthal.

• 0:36Speaker 00

  And we are your hosts. This week, we're going to be covering an older acquisition, but following a theme from our last episode in productivity software. We're going to be covering the, what became the eventual suite known as Google Drive, Google Docs, Google Sheets, and is it Google Presentations? Google Slides?

• 0:56David Rosenthal?

  So I think it started as Presentations.

• 0:58Speaker 00

  Yeah, and then it was Presentation, Spreadsheets, and Docs.

• 1:02David Rosenthal?

  The product of many names.

• 1:03Speaker 00

  Yes. And we'll go through, there were, there were a whole ton of companies that actually contributed to this. David will go through the acquisition history and facts, but largely focused around Rightly, which eventually became Google Docs. Yes. A reminder that if you enjoy the show, leave us a review on iTunes. We would love any feedback.

• 1:23David Rosenthal?

  Or you can hit us up on Twitter, @AcquiredFM.

• 1:26Speaker 00

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

• 1:45David Rosenthal?

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• 2:06Speaker 00

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• 2:28David Rosenthal?

  In half?

• 2:29David Rosenthal?

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

• 2:46Ben Gilbert?

  And that's the real value. Trust has to be continuous now, which is why Vanta automates your security, your compliance and the work to earn and prove trust. We're huge fans of Vanta over here and literally hundreds of acquired listeners have become Vanta customers at their companies over the years. So you can get $1,000 off Vanta at vanta.com/acquired. That's V A N T A dot com slash acquired for $1,000 off and just tell them that Ben and David sent you. Now let's dive into the show. David, you want to do acquisition history and facts?

• 3:17David Rosenthal?

  As always, Ben. So, dear listeners, let's transport back in time to the mid 2000s. Web 2.0 era is in full swing. Ajax, the browser technology that enabled, that enabled live dynamic updating of websites had just come out and a group of, a group of technologists from Intuit had decided to start a little crew to dabble in what they could do with Ajax. And so they founded a company that they called Upstartle. I love that name.

• 3:58Ben Gilbert?

  So Bubble.

• 3:59David Rosenthal?

  So, so web 2.0. And they ran through a couple of projects and landed on a product that they called Rightly. And it was collaborative document editing in the cloud. I don't know if they called it that at the time.

• 4:18Ben Gilbert?

  Yeah, which now seems so table stakes.

• 4:20David Rosenthal?

  Absolutely. Founded by Sam Schalass, Claudia Carpenter, and Steve Newman. And they worked on it for a couple of years. It was in beta. They had a few thousand users. And then in March 2006, Google announces that they had acquired the company for an undisclosed amount rumored in the $10 million range. What's interesting, they'd only hired one person over those two years. So it was the three founders and one other former Intuit employee, Jennifer Mazan. And they all joined Google and became PMs in Google Docs. And what's interesting is that this was actually the second acquisition that Google

• 5:05David Rosenthal?

  had made in their online office productivity suite. The first was another company, a smaller company in New York called TwoWeb. TwoWeb Technologies that they'd actually acquired in 2005 that was working on Excel to Web.

• 5:21Speaker 00

  Well, that was something that they brought into Google Labs, right? And I think Google Labs created the first Google Spreadsheets before Google Docs even launched.

• 5:29David Rosenthal?

  Yes. And this was all happening right around the same time. So Google Spreadsheet launched in Labs in June 2006. Rightly was acquired in March 2006. And then shortly thereafter, in the beginning of 2007, Google Docs, based on Rightly, was released publicly.

• 5:48Speaker 00

  Yeah, I think it was Docs and Spreadsheets were actually merged right around that time. And you could go to docs.google.com and I remember the header actually said, "Google Docs and Spreadsheets," one big, long thing. And it looked like they just kind of like took the Spreadsheets view and just interjected some of your Docs in there and you could sort by date. But that was pretty much all the integration they had.

• 6:09David Rosenthal?

  Yep. And then shortly after that launched, two more companies that Google acquired in 2007, Tonic Systems and Zenter, which was an early Y Combinator company, both of which were working on presentation software for the browser.

• 6:25Speaker 00

  That's right. Tonic largely the backend and Zenter largely the frontend.

• 6:29David Rosenthal?

  And it's pretty amazing how quickly Google turned these acquisitions around. September 2007, Presentations was launched, and finally, there is now a full suite of Microsoft Office-esque productivity software in the cloud.

• 6:45Speaker 00

  That's right, but don't ask Eric Schmidt that. When they announced Google Docs and Spreadsheets, he definitely told a gigantic audience full of people that they were not indeed competing with Microsoft, and it was not a competitor to Office.

• 6:57David Rosenthal?

  I wonder if our last episode's guest, Kurt Delbenny, was listening at the time.

• 7:02Speaker 00

  Yeah.

• 7:03David Rosenthal?

  And then, some might say, you know, the rest is history. However, interesting side note of history, 2007, the same year these final acquisitions happened, and the full suite was released by Google. June of 2007, Dropbox is founded.

• 7:22Speaker 00

  Yeah, that's interesting. I mean, you look at the bet that Google's making here, I mean, this happens so fast. This all happens within a year and a half span, and all of a sudden, they have a full kind of suite here, and they definitely went through and made very strategic acquisitions here, but built a lot of it in-house. I think what they acquired was super bare bones in each of these applications, all pretty inexpensive. I mean, these are all rumored approximate $10 million acquisitions. You know, last episode, we were talking with Kurt Delbenny, and we were looking at what Microsoft paid for Accompli and Wonderlist and Sunrise. That, you know, totals somewhere around half a billion dollars. And when Google was getting into dabble in this game, which is the, you know, really

• 8:07Speaker 00

  inventing the market for cloud productivity, super cheap, because that wasn't, you know, people weren't flocking there yet. People didn't realize that, oh, I need collaboration tools in real time, where I can look at the other person's cursor in my document. It was largely a toy at that point.

• 8:24David Rosenthal?

  Yep, and I think these are all really interesting examples of the buy versus build that we were talking about with Kurt a little bit last week. And what's interesting, and one of the reasons I brought up Dropbox being founded around then, you know, all these companies, these five or so companies that Google acquired that became the backbone of Google Docs.

• 8:46David Rosenthal?

  There were all these rumors, I don't know if you remember Ben, around the time for years about the mythical G drive.

• 8:52Speaker 00

  Yeah, that's right.

• 8:53David Rosenthal?

  The G drive, it was coming, it was coming.

• 8:56Speaker 00

  And it was, it was the Dropbox killer.

• 8:57David Rosenthal?

  It was the Dropbox killer and it didn't launch until 2012. And, um, you know, and, and one can imagine, you know, we mentioned Xenter was, was an early Y Combinator company, as was Dropbox. You know, how might history have been different have Google had decided that they would accelerate their drive efforts by acquiring Dropbox or Box at the same time?

• 9:18Speaker 00

  Yeah, it'd be interesting.

• 9:20David Rosenthal?

  Hmm. Very interesting. All right, with that, should we move on to acquisition category?

• 9:24Speaker 00

  Yeah, let's do it. Cause I think there's, there's a lot of, this episode, I'm most interested in the fast forwarding to today and looking at, you know, how does this impact Google's business as a whole? So I think, um, yeah, let's, happy to just blow right through acquisition history and facts now onto acquisition category. To me, um, technology, I think all these acquisitions, you know, primarily, um, rightly were these kind of experimental Ajax apps and everybody was seeing what they could do with Ajax at the time. Google Maps, I remember was a very flashy demo example of that. And, you know, I think there were a few different people later on Etherpad, but a few different companies playing around with collaborative editing.

• 10:07Speaker 00

  And I think content editable was the, the new hottest thing in browser technology that they took advantage of. And, you know, this is, this is just acquiring, um, sort of that, the, the people that were doing that right. And so I think, you know, technology and a, a people acquisition, knowing that it was a lot of, of technology to, to build in-house to really turn it into a, a product that was marketable.

• 10:32David Rosenthal?

  Yep. Um, it's interesting, you know, I, I was going to go with business line for this category, but this is such, uh, you know, we, when we started doing this, talked about doing this episode, we said it was going to be on rightly, but as we were doing research, we realized, you know, there are these really five or so companies.

• 10:49Speaker 00

  And none of them too, too, too much further along than any of the other ones.

• 10:53David Rosenthal?

  Exactly. Um, and, and I think this really. You know, to me, crystallized this being a classic, you know, Google decided they wanted to get into the business of productivity apps. And they wanted to take a typically Google bent on it and put them in the browser instead of being installed software on your PC. And they decided to get into this business and made the judgment that buying was going to be a faster, a faster way to get there than building in-house.

• 11:21Speaker 00

  Yeah, it sure does feel like a case study in the buy versus build. I mean, I think that dropping, let's say, $50 million shortcutted their time to market dramatically and put all that right brain power in-house right away.

• 11:34David Rosenthal?

  Yep. And what's interesting is it's also, you know, I think blending a little bit kind of the tech themes here, but and I don't know what Google thought at the time in terms of their strategy, but as the battleground for productivity software has really evolved from, you know, at that time, it was Word and Excel and PowerPoint installed on your computer to now it's this whole suite of, you know, not just those applications, but also your email, also your, your cloud services as a, as an organization. I mean, what do your, not only the third-party software you're running, which is your email, which is your word processing, which is your spreadsheets,

• 12:19David Rosenthal?

  but also your internal company apps that you're running on, whether that's AWS or Google Cloud Engine or Microsoft Azure. As that's really evolved in the last few years, it's, it's, it's almost been this mix within Google that they bought the traditional productivity software, but the email piece with Gmail and the cloud piece, which we can argue, you know, about how much success they've had there relative to Amazon, they built in-house.

• 12:52David Rosenthal?

  Interesting.

• 12:54Ben 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.

• 13:08David 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.

• 13:21Ben 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.

• 13:31David 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.

• 13:49Ben 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.

• 14:05David 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.

• 14:22Ben 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?

• 14:31David 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.

• 14:42Speaker 00

  So there's the question now of, you know, before we get into what would have happened otherwise, David, do you think that Google should have gotten into productivity at all? Like let's zoom out, look at Google as a business. It's an advertising business primarily driven by AdWords and you search and people click and Google gets a cut. And you know, that has always been their cash cow and for the foreseeable future, looks to be the largest source of their revenue. Working backwards from that, you either have to believe that that is at some point not going to become their largest stream of revenue, or that that's going to rely on some data or some asset provided by, could be customers, by the productivity applications.

• 15:28Speaker 00

  Does it make sense for them to be in the productivity game at all?

• 15:32David Rosenthal?

  Yeah, it's a good question. My sense is that Google for a long time has been looking for that what's next.

• 15:44Speaker 00

  Yeah, I mean, in fact, their revenues now are reported, since they're Alphabet now, we should be saying Alphabet, Alphabet's revenues now are reported as Google and OtherBets. Like they're so fascinated with this what's the next, you know, widget that they've restructured their entire company, their reporting scheme and their leadership structure around it.

• 16:05David Rosenthal?

  It's, it's interesting and you know, Microsoft had this challenge too for a long time. I mean, they were the Windows company, the operating system company for a long time.

• 16:16Speaker 00

  Yeah.

• 16:16David Rosenthal?

  And I think perhaps longer than a lot of people would have expected, that has continued to be an incredible cash cow for them. But now we're in the throes, as we talked with Kurt last week about, you know, what is Microsoft today? It's, you know, a mobile first, cloud first company. It's not an operating system and office company. And for Google, you know, they're the search company. They've been the search company now for nearly 20 years. And when did-

• 16:44Speaker 00

  Wow, I feel old.

• 16:45David Rosenthal?

  Yeah. Not quite 20 years, but 18 years. Google is going to college, you know? Google is graduating from high school this year and they're going to college.

• 16:54Speaker 00

  If we had a coin name for naming episodes, that's what we'd name this one.

• 16:59David Rosenthal?

  And, and I think this is a big part of the question of, of what does Google want to be when it grows up? And, and actually, I think a relevant other acquisition, flashing forward to today, Google recently acquired a company called Bebop, which was founded by Diane Green, who was the founder of VMware, and Diane was on Google's board. And Bebop was nominal, they hadn't released their product, it was still in stealth, but nominally making productivity software for the enterprise. Now, I don't think it was Word and Excel type productivity software,

• 17:39David Rosenthal?

  but it was software to helping, about helping enterprises build their applications. And Diane is now taking over the entire cloud business for Google, which includes all of Google Apps and Google for Work.

• 17:55Speaker 00

  Yeah, it's interesting. Well, two, two directions I want to go with this. The, the first one is, okay, maybe they, clearly they've been obsessed with big bets the whole time. I mean, Google itself, the, the core project back rub, the whole academic research project into organizing the world's information and releasing the, the best search engine and the one that's the most sustainable on an ongoing basis.

• 18:21Speaker 00

  You know, that was an enormous bet. And I think that now they're thinking totally crazy with these moonshot ideas. When they started with Google Docs in 90, or I'm sorry, in 2006, like, they weren't doing self-driving cars and they weren't doing balloons that deliver internet and they weren't doing a lot of these, these, these huge projects. So.

• 18:42Speaker 00

  Maybe this felt like a possible big bet to them for the future of their company. Looking at Microsoft and seeing that productivity of that era was such a cash cow. And is just now sort of dwarfed by how big they're thinking with all their their current big bets. And this was sort of like an early on possible big, big bet that we're seeing that's sort of legacy. Like, I'm not sure Google would go into this space starting today.

• 19:07David Rosenthal?

  Yep, yep, I agree. But it's interesting to go back to that time and I wonder if Google. I've been sitting here today in 2016. Microsoft, as much as they've had a resurgence in the last couple of years. They're not as relevant in terms of the, the, you know, most important strategic players into, you know, landscape and technology, but going back to the mid 2000s with Google looking at Microsoft. And I wonder if they saw the Windows Office, you know, two legs of the, you know, the stool, the non-balancing stool and thought, gosh, those two core businesses in an operating system and productivity.

• 19:51David Rosenthal?

  And they thought about themselves and said, you know, if we want to be like Microsoft, our analogy for operating systems is search. You know, we're the operating system of the web. What is the productivity on the web? And, and when you think about when they started Google Docs, that was what it was and still is to a large extent to this day.

• 20:12Speaker 00

  Yeah, it makes total sense in that context. And I think that, you know, if we're looking at this like three to five years ago, rather than looking at it today, I'd be sitting here preaching or I guess singing the praises of Google as this is one of the most classic examples ever of low end disruption. I mean, you have the, the big thing that the enterprise people are buying with these companies that need every single last feature of Office, even though any given person only uses 5% of it. And most of them use the same 5%, but you need all those features because that's how you, you get the big enterprise contract.

• 20:49David Rosenthal?

  As you know, well, did you stuff all 100% of those features into Office for iPad?

• 20:53Speaker 00

  No, it's fun. We get to rethink, rethink the, the, the lightweight productivity, we called it. Which is super fun, but the, um,

• 21:06Speaker 00

  You know, in low end disruption, you get this new person that comes along, Google in this case, with Google Docs. Everything's a total toy. It doesn't have any of the features that the enterprise need. They're giving it away for free. But like, at the end of the day, there's so many people that look at that realtime collaboration available on the web, cloud storage as like, wait, this is way more important to me than all those old things that colloquially everyone believed were necessary. And I think the difference of where we're sitting today from a few years ago is, I don't think it fulfilled its low end disruption promise of unseating the incumbent. I mean, I was all braced and ready for Office to become less relevant,

• 21:51Speaker 00

  and Google Docs to be the future, and them to slowly add on the rich feature set that people would call the new incumbent.

• 21:59David Rosenthal?

  Yeah. And so let me ask you, I'm curious. You guys started Pioneer Square Labs in 2015.

• 22:06Speaker 00

  Uh huh.

• 22:07David Rosenthal?

  Do you have on either your computers or via Office 365, Word, Excel, and PowerPoint?

• 22:14Speaker 00

  We do because of BizBark. BizBark is the Microsoft program that makes a lot of their software available for free to startups.

• 22:23David Rosenthal?

  Startups, interesting. If you didn't have that, would you pay for those? Would you use just Google Docs?

• 22:30Speaker 00

  At least a couple of us would, just because any of our legal documents are going to be changed in Word, and that needs to be, have perfect rendering. There are definitely still industries that require high fidelity, perfect rendering of documents.

• 22:48David Rosenthal?

  Yep.

• 22:49Speaker 00

  But you know, like, anything that I open that, when I'm writing like a quick feature spec, or like a one pager on an idea, or a welcome document that we're going to send out to new users of our application, or anything like that, it's all Google Docs. So I mean, really, I'd say like anything that I start from scratch these days is Google Docs.

• 23:09David Rosenthal?

  Google Docs.

• 23:11Speaker 00

  The other direction that I wanted to go with that is when we were talking with Kurt last week, and something that's become completely obvious with with Amazon's earnings breaking out AWS, that, you know, Azure is very much the future for Microsoft. AWS is already as profitable as an independent business as their entire e-commerce business is in a much shorter time period.

• 23:36David Rosenthal?

  For Amazon.

• 23:37Speaker 00

  For Amazon, sorry.

• 23:38David Rosenthal?

  Microsoft wishes it were part of Microsoft.

• 23:39Speaker 00

  Well, yeah, so Microsoft with Azure, Amazon with AWS. Lot of interesting news in the last couple of weeks with Google and Google Cloud Platform. I think there was some news that Apple was moving there. It's actually been a tremendous amount of news in the last couple of weeks. Apple developing their own internal cloud or their own cloud hardware. Apple developing their own hardware to put in their own data centers and run their own cloud infrastructure.

• 24:05David Rosenthal?

  Yep.

• 24:06Speaker 00

  Dropbox doing the same thing.

• 24:08David Rosenthal?

  Yep.

• 24:08Speaker 00

  But I guess the where I'm going with this is in these cloud services, you kind of have these three layers, infrastructure as a service, platform as a service, and then software as a service. Each of these three players, Microsoft, Amazon, and Google, have all the layers of the stack. They started in different places. Amazon kind of with infrastructure, Microsoft with all the way up with with software, and Google with originally Google App Engine with platform as a service.

• 24:37David Rosenthal?

  Yep.

• 24:38Speaker 00

  Do you think that as all of these businesses are betting on that being the cash cow of the future, do all of them need all of the layers? Or would Google be fine without productivity software and the software as a service?

• 24:50David Rosenthal?

  It's interesting. This gets a little bit into, maybe I'll just jump into it, you know, my sort of tech theme. As we've been describing, you know, all of Google's strategic decisions around this business probably made perfect sense to them when they made them in the mid 2000s and even up until a few years ago, but. The landscape has changed and the battleground has changed for what productivity is. And that's why I brought up, why you brought this up now and why I was mentioning earlier, the sort of cloud and the infrastructure layer. And I think Ben, the answer to your question is no. And I think one need look no farther than AWS to see that. I mean, AWS started as infrastructure. That's what they do.

• 25:34David Rosenthal?

  And of course they've moved up the stack and added other things, but that's, they aren't offering email. I think there is some Amazon email, but like nobody uses it.

• 25:43Speaker 00

  Not as serious, yeah.

• 25:44David Rosenthal?

  And, and yet they're still, at least in, you know, inning number, maybe we're in inning number two of the cloud now, they're, they're pretty far and away, you know, the leader. And it would be, it's interesting to think about like, what could Google have done rather than copying the Microsoft strategy in the mid 2000s of, okay, we've got the quote unquote operating system. Now we're going to do productivity. What if they had instead fought Amazon more directly at that point on the infrastructure layer or gone with another, another aspect entirely?

• 26:23Speaker 00

  Well, yeah, it's interesting. I think with Google, Google App Engine, you were locking yourself into like Google's proprietary data storage and you had to use Python. It was like there, when you were looking at the cloud services and inning number one or the top half, the, the choices, it like wasn't apples to apples at all. Cause you're like, well, I'm going to either build for Google App Engine or I'm not, I don't really get choices around that. Or Amazon, it looks like gives me just one level of abstraction above running my own server, which I think is what I want.

• 26:52David Rosenthal?

  Yeah.

• 26:52Speaker 00

  And like, it was interesting how those two companies made enormously different bets there and Amazon won out.

• 26:58David Rosenthal?

  And you look at the, the diversity of, of companies and enterprises and workloads that have, that have adopted Amazon over the past few years. And you know, you mentioned Dropbox moving off of Amazon, but for the longest time, you know, Dropbox, you know, Amazon kind of won the first round of this fight across productivity because everybody used AWS, you know? Dropbox paid the Amazon tax. There's a great Strategery article, which, you know, as our listeners know, we are both big fans of Ben Thompson, but his article last week on the Amazon tax is just fantastic.

• 27:34Speaker 00

  Yeah, yeah. And I, before we move off this point, I want to revisit when I, when I say that the low end disruption machine sort of failed. Obviously, people use Google Docs all over the place. We even talked about how it's my, my go to for the longest time.

• 27:50David Rosenthal?

  But it hasn't become a great business for Google.

• 27:51Speaker 00

  No, that, that's the thing. Like, the, there's been stagnation in Google, the adoption of Google Apps in the enterprise in a way that if they were really displacing the incumbent, disrupting the incumbent, the world would have moved to whatever their new set of features and new sort of market they were creating. The world would have needed those things. And that's not necessarily true from a monetization perspective.

• 28:24David Rosenthal?

  Yep. And instead, actually, I mean, to bring back to our last episode, what you've seen happen is this resurgence of Microsoft, of the original winner in this space, you know, with granted some expensive acquisitions that they've made, you know, as we discussed last week, half a billion or so in total. But Office 365 and now, you know, Outlook and Outlook Mobile through a company are winning huge share.

• 28:53Speaker 00

  Yep. Yep. There's a, I gotta find this real quick. There was an interesting point made. Here we go. About a year and a half ago, Google Apps had doubled the market share of Microsoft's cloud offering, according to a research report by Bitglass. The 16% versus 8% that a whole bunch of people still using on-premise productivity and email software. More recently, about six months ago, Office 365 had jumped ahead of Google Apps, 25% versus 23%. And it's a thing where Microsoft got their act together in Office 365 and building the, the cloud productivity tools. And like, to be honest, I, so I worked on

• 29:38Speaker 00

  what was then Office Web or.

• 29:42Speaker 00

  Word web app before they were called Office Online. It's actually my internship at Microsoft. And like, it was a joke compared to Google Docs. I mean, I was writing specs and looking at Google Docs for like, well, how did they do it as a reference and then figuring out, can we do it better?

• 29:57David Rosenthal?

  Side note.

• 29:58Speaker 00

  Nope.

• 29:59David Rosenthal?

  Not, yeah, not a place, not a good place to be as a product team.

• 30:02Speaker 00

  No, no, we were totally like trying to fast follow, but built on much older infrastructure. And it was, it was kind of a nightmare. And what's happened is, is really like that native clients on all platforms at Microsoft have become excellent through building and buying. And the, the, the cloud applications have, have, you know, held their own. And you can do real time collaboration now with, with Microsoft's applications. And even if the user experience, which in my opinion of their cloud applications is still below Google's, they're at least able to tell that story to the enterprise and, and Google has won out.

• 30:38David Rosenthal?

  And what's really, what's really interesting here is that, um, I don't think anyone would argue that, you know, the cloud versions of Word and Excel and PowerPoint are, you know, great or beating, you know, a resurgent or beating Google Docs. But what is it? Doesn't matter.

• 30:52Speaker 00

  Yeah, it's the wrong battleground.

• 30:54David Rosenthal?

  It's the wrong battleground. You know, Microsoft is still capturing the majority of the value in productivity. Google is capturing almost zero right now in terms of the dollars being spent by enterprises and individuals on productivity. And Amazon is just taking a tax on everybody else.

• 31:12Speaker 00

  Yep. God, this is such a good case study in incentives. I mean, I think like, if I'm ever struggling to understand a business, taking a step back and saying, what is every party incentivized to do? Brings instant clarity. Microsoft is a productivity company, operating system productivity company. And

• 31:32Speaker 00

  You know, operating system broadly defined, that will become something much more cloud oriented. Google is an advertising company and it's not like this low end disruption was coming from the company that represents the future of productivity. It was coming from an advertising company looking for their next thing. So when push comes to shove, Microsoft needs to defend their castle. And they weren't defending it against a productivity upstart. They were defending it against an advertising company that was looking at it as sort of an afterthought. So my opinion, the atrophy of Google Docs in fighting that war or in fighting whatever war they should be fighting where it's going is largely because they have problems to think about in the future of their advertising business.

• 32:16Speaker 00

  What it means as they transition from desktop to mobile. And I mean, we've even gotten into Android yet at all. And I think you kind of stay away from there, but like

• 32:24David Rosenthal?

  Future episode.

• 32:24Speaker 00

  Yeah, they have advertising problems that they need to address that are more serious.

• 32:30David Rosenthal?

  It's a great point. I mean, think about it this way, like you're Larry Page, Jeff Bezos and Steve Ballmer and then Satya Nadella. Like what, how much is productivity on your mind? Like what percentage of your mind share does that occupy? Jeff Bezos, probably zero.

• 32:51David Rosenthal?

  And Larry Page, you know, I don't know, 10%, right? Like, and Ballmer and then Nadella, like, you know, 90%? Who's going to win?

• 33:01Speaker 00

  Right. Right?

• 33:04David Rosenthal?

  Or who, maybe not who's going to win, but who's going to, who's got their back against the wall? And has the most at stake to make sure that they give it their best shot.

• 33:15Speaker 00

  It's true.

• 33:16Ben 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.

• 33:29David 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. Ligora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry?

• 33:46Ben 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.

• 34:01David 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. Ligora'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.

• 34:25Ben Gilbert?

  And they recently launched Ligora 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.

• 34:44David Rosenthal?

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

• 35:14Ben 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 ligora.com/acquired and just tell them that Ben and David sent you.

• 35:39Speaker 00

  All right, what would have happened otherwise?

• 35:43David Rosenthal?

  Well, it's hard to say. This actually is a really interesting one. Had these companies, let's take Rightly for instance. Had that been an independent company, launched publicly, and let's say they built Google Docs, what would that look like?

• 36:01Speaker 00

  Yeah, it's interesting in thinking about the incentives, like then would we have had a true low-end disruption event? Where, you know, you have a true new productivity company going after an old dinosaur? Or is... were they still fighting an unimportant battle?

• 36:19David Rosenthal?

  Yep. And let's look at, you know, let's look at Box and Dropbox here, because these are the closest comps we have.

• 36:27Speaker 00

  Would rightly have gone into storage, maybe. Is that interesting?

• 36:30David Rosenthal?

  Or, you know, I mean, storage that Box and Dropbox obviously did. You know, today, who knows what will happen in the future, but I think with both of those companies.

• 36:43Speaker 00

  Apple should buy Dropbox.

• 36:45David Rosenthal?

  Well, there's history there.

• 36:48Speaker 00

  Well, it's a different person making that decision now.

• 36:52David Rosenthal?

  Yes. We're referring to Steve Jobs famously offered to buy Dropbox for a billion dollars, I believe? Something around that?

• 37:01Speaker 00

  Uh, and then...

• 37:02David Rosenthal?

  I don't know that it was ever disclosed.

• 37:03Speaker 00

  First he called it a feature, not a, not a company. And then when he came back with his tail between his legs, then Drew Houston told him that, you know, politely declined.

• 37:14David Rosenthal?

  But again, who knows what the future holds, but sitting here, March 2016, do we think Box or Dropbox could ever be a company at the scale of Microsoft or Google or Amazon? Personally, I think that's hard to see.

• 37:30Speaker 00

  Yeah. Yeah. Oh, man. If, if, if it does go that direction, you know, it's, it's Box going the Microsoft route and Dropbox pioneering some new... Well, they need, they need consumers to pay, which is a really hard thing to do for utility file storage, thing like that, but...

• 37:49David Rosenthal?

  But if a mythical Rightly or Upstartle still existed.

• 37:55Speaker 00

  Yeah.

• 37:57David Rosenthal?

  Would that be more of a contender than a, um, a storage focused company?

• 38:01Speaker 00

  Yeah, I mean, I mean, perhaps what happens is Dropbox buys Upstartl and then you have a, a true, you know, the Microsoft equivalent of OneDrive and Word Online.

• 38:13David Rosenthal?

  Yep.

• 38:13Speaker 00

  And that is sort of the, the productivity stack.

• 38:16David Rosenthal?

  Clearly Dropbox has, uh, you know, had these thoughts as well. I mean, they bought Mailbox and they bought several other companies.

• 38:23Speaker 00

  God, that is a company that's not good at acquisitions.

• 38:27David Rosenthal?

  Future episode.

• 38:28Speaker 00

  Yeah. All of Dropbox's body is buried. Uh, that's mean. Yeah.

• 38:34David Rosenthal?

  Yeah. Yeah. All right. Um, I already did my tech theme. When you want to talk about Ben?

• 38:41Speaker 00

  Um, yeah, I'd, I'd written down that I wanted to, to draw the, the parallel to classic low and disruption. So I think, uh, I think we've beat that one pretty good.

• 38:51David Rosenthal?

  All right. Should we do conclusion?

• 38:54Speaker 00

  Yeah. Yeah. And then we've got one more section that we're adding on.

• 38:59David Rosenthal?

  Yes. We'll get to that in a minute.

• 39:00Speaker 00

  Yeah.

• 39:01David Rosenthal?

  Stay tuned.

• 39:02Speaker 00

  Yeah. So

• 39:08Speaker 00

  we gave YouTube, I gave YouTube a C. Um, and that's, that's become a money pit for Google, at least to, um, you know, I think it's a relatively break even business, but God, is that thing expensive to run.

• 39:20David Rosenthal?

  Yep.

• 39:20Speaker 00

  This not terribly expensive to run. Um, not terribly expensive.

• 39:25David Rosenthal?

  To buy.

• 39:26Speaker 00

  To buy. Um, probably expensive from a manpower perspective, like it, uh, it probably just takes a lot of, uh, a lot of engineers to, to keep this thing going and develop it. But.

• 39:36David Rosenthal?

  But given, I mean, Google does make money on.

• 39:39Speaker 00

  Yeah. So I think, I think the business unit of, of, uh, Google Apps for Business is, is, uh, self sustaining, you know?

• 39:49Speaker 00

  I'm gonna also give it a C, but more because I think it is a distraction for Google and less because I think it's it's not expensive in terms of dollars. I think it's expensive in terms of opportunity cost of attention.

• 40:06David Rosenthal?

  Yeah. Interesting. So you're making an argument, not this specific argument, but a a sort of category argument that by acquiring these companies and taking a productivity focused strategy for several years, adopting that at at Google.

• 40:31David Rosenthal?

  It was actually a major distraction from either their core strategy within search or or finding another sort of, you know, leg of the stool that would be a better fit with their core capabilities as a company versus trying to go down a path that they really weren't equipped to succeed in.

• 40:52Speaker 00

  Yeah, I mean, I think at the end of the day, Google was looking for a second huge business, much like for Microsoft, they had Windows and then they had Office. And

• 41:05Speaker 00

  there's some argument that it contributes to their existing business, but they were going after selling productivity tools. And that just didn't become a huge business for them. I mean, it's a it's a decent business. I think it's a self sustaining business. It's a profitable business, but it's not a Google scale business.

• 41:26David Rosenthal?

  It's not a huge business.

• 41:27Speaker 00

  Right. And and I think for many years, that was where they were focusing energy. When really, you know, there's there's a a big potential problem with with their their current business as things go more mobile. And now they're looking at all these other moonshot opportunities. And I think for a long time, they thought productivity could be a second huge business for them.

• 41:51David Rosenthal?

  Yeah.

• 41:54David Rosenthal?

  So I was gonna give this acquisition a B for many of the reasons you initially started talking about, well, you know, it wasn't a huge success, but they didn't spend a lot of money and it does, it is, it's not losing a lot of money for them or consuming a lot of capital like YouTube.

• 42:13David Rosenthal?

  But I think I'm convinced by your argument because for technology companies where you operate in this battlefield every day where there's this huge fog of war and it's very, you know, uncertainty is a way of life. The sort of one resource that you have that's most important for startups and big companies alike, even Apple and Google and Microsoft and Amazon is your focus.

• 42:44David Rosenthal?

  And this was a pretty major dilution of focus for Google for a long time. Obviously, they've been very, very successful in things like search and Android and many others. But that resource is very precious and for both of us working with startups, you know, this is what we coach founders all the time, you know, focus, focus, focus. This is the most important thing. It's all that you have as a startup.

• 43:11David Rosenthal?

  I think I'm convinced, Ben. I'm gonna go B minus.

• 43:17Speaker 00

  Still more generous than me. All right, so we have a new section and this is a section where we talk about things that media or a movie or a TV show or something we're reading or a book or a new publication or something we find fascinating. And in, in true lingo, we're calling this the carve out. So I will start with my carve out from this week and actually we'll call it since the last episode.

• 43:53Speaker 00

  Bill Simmons launched The Ringer. And for those of you who are not subscribed to The Ringer, it's totally sports focused, but it's really the kind of crown jewel of the Bill Simmons media empire. I think after Grantland, after his, for those of you who don't know, Bill Simmons partnered with ESPN to launch Grantland, which was incredible long-form content about sports. And it was like the most incredibly well-written prose about sports you could ever read that would take you on this journey and make comparisons to pop culture and an event that happened 50 years ago and truly relatable. And Bill Simmons is a gift as a writer. And we saw him launch a podcast.

• 44:37Speaker 00

  And finally, The Ringer, which is the thing that has, it's starting as an email newsletter and a website, but it's a very small staff and it's a kind of a new media publication that Bill Simmons has launched after the tumultuous shutdown of Grantland by ESPN. As, you know, it's probably made sense. It's a very expensive property. But I'm going to read a quote from the first email that went out, Bill introducing The Ringer. And he does this great little section where he talks about all the names that it could have been. And this is just one of the reasons why he's a great writer to read. But he's talking about several of the names and the paragraph ends with, Upper Echelon? Sounds like a hedge fund. Barnstorm?

• 45:22Speaker 00

  Sounds like a horse that would be favored to win the Kentucky Derby. Side Two? Too insider. Grant World? Too ludicrous. F Off ESPN? Too easy.

• 45:32David Rosenthal?

  Too easy.

• 45:34Speaker 00

  And I think just rarely, rarely do you ever get a startup talking about like their ridiculous naming meeting. The first email includes the classic photograph of the whiteboard with all the potential names crossed off. It's just like, it's some of the most relatable writing. Even if you're not a sports person, it's just incredibly entertaining and a ropesian.

• 45:51David Rosenthal?

  I love it. I love it. My, well, I should say too, the, the, part of the inspiration for the carve out was my wife Jenny introduced me to two of Slate's podcasts, The Political Gab Fest and The Culture Gab Fest, both of which are excellent and, and they both do a segment like this. So shout out to Slate and, and thank you to them. So my carve out for the week is, is something that I think will, it picks up on a lot of themes from our show, going back to our very first episode. And I just finally finished, crossed off my reading list, Creativity, Inc., which is the Pixar book by Ed

• 46:36David Rosenthal?

  Catmull. It is fantastic. One of the best books I've read, certainly this year, but in the, in the past few years, best nonfiction books. And ordinarily, I'm pretty, I'm pretty tough on sort of business books. And they can often be trite and repetitive. This was none of those things. And I think listeners, if you enjoy our show, you will love this book. And then the one thing I would say from it, there, there are just so many good stories from, you know, Steve Jobs stories to all the Pixar history, but, and just general management lessons and startup lessons. But my

• 47:20David Rosenthal?

  favorite part of it is talking about the creative process and managing that creative process, which obviously Pixar is so good at. And the, the, one of the points that Ed makes in, in, in the book is that it is always a struggle. You know, even at Pixar, they've done this so many times. And there's this temptation for them, even within the company, to, to make it, you know, easier, to make it rinse and repeat to, you know, they, why do they have to struggle every time? But if you don't have that struggle, you know, you don't get something great. And I think that is so applicable to startups. Like I see it with the companies that I work with, you know, every day there are good times and bad times. But even the companies where to the

• 48:05David Rosenthal?

  outside world, it looks like it's all. I'll use my least favorite phrase of up and to the right because it's always to the right, but it looks like it's all up as it goes to the right. You know, inside like it's up and down every single day. And there are periods of just huge existential challenges. And, and one of the book talks about like every Pixar film and every Disney film since, since the acquisition has just had, you know, if you don't have this crisis, you know, it's very hard to make something great.

• 48:35Ben Gilbert?

  Amen to that.

• 48:37David Rosenthal?

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

• 48:43Ben Gilbert?

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

• 48:54David Rosenthal?

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

• 49:14Ben Gilbert?

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

• 49:27David Rosenthal?

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

• 49:38Ben Gilbert?

  Listeners, we'll leave you here. Thanks for tuning in this week. Visit us on iTunes, write a review if you like the show, tell your friends, and see you next time.