The Lyft IPO

Call it the playoffs. Call it the Olympics. Call it March Madness. No matter which sports analogy you borrow, it falls short of capturing what Lyft's IPO yesterday kicked off in the tech world. A generational changing of the guard from the FAANG to the APLUSS (Airbnb, Pinterest, Lyft, Uber, Slack, Stripe). A breaking of the liquidity dam that's kept capital, technology and talent locked up in a small number of Silicon Valley winners for longer than ever in history. And most importantly, a public market avenue for investing in the largest single market created since the advent of the internet. Acquired is live on the scene recounting and analyzing the history of Lyft (and ridesharing broadly) in every exquisite detail! Sponsors: Vanta: https://bit.ly/acquiredvantaServiceNow: https://bit.ly/acquiredservicenow26Legora: https://bit.ly/acquiredlegoraStatsig: https://bit.ly/acquiredstatsig26 More Acquired! Get email updates https://www.acquired.fm/email with hints on next episode and follow-ups from recent episodesJoin the Slack http://acquired.fm/slackSubscribe to ACQ2 https://pod.link/acquiredlpMerch Store https://www.acquired.fm/store! © Copyright 2015-2026 ACQ, LLC Links: Lyft’s S-1: https://www.sec.gov/Archives/edgar/data/1759509/000119312519059849/d633517ds1.htmDonate to Homobiles: http://bit.ly/2TM40nAÂ http://bit.ly/2TM40nA%C3%82Carve Outs: Ben: Bill Gurley on "Runnin' Down a Dream" https://www.youtube.com/watch?v=xmYekD6-PZ8David: "Cricket Fever" on Netflix: https://www.netflix.com/title/80222770

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

• 0:01David Rosenthal?

  I don't know about you, but I've literally like, I've been like, I've had trouble sleeping the last couple of nights.

• 0:06Ben Gilbert?

  Dude, I woke up early this morning.

• 0:07David Rosenthal?

  I woke up at, yeah, I woke up at 6:30 and like, went for, I ran down here to the office and like, I spent all last night and all today just like, getting hype.

• 0:31Ben Gilbert?

  Welcome to season four, episode four of Acquired, the podcast about technology, acquisitions and IPOs. I'm Ben Gilbert.

• 0:39David Rosenthal?

  I'm David Rosenthal.

• 0:40Ben Gilbert?

  And we are your hosts. Well, David, as Vince Vaughn once said to Owen Wilson in Wedding Crashers, "It's wedding season, kid."

• 0:51Ben Gilbert?

  The IPO floodgates are open and we are here with the very first one of 2019, the Lyft IPO.

• 0:58David Rosenthal?

  I am so excited.

• 0:59Ben Gilbert?

  I know. Well, obviously, this is an important moment for Lyft and ride sharing broadly, but what it represents for the entire technology industry is possibly even greater, that the good times can continue. We've had a serious drought in big tech IPOs over the last few years with most of these companies opting to famously, "Stay private longer." There was significant risk that the public markets do not value these unicorns as highly as the late-stage private investment market has been. If Lyft had not overcome its last private valuation, we'd be seeing a lot of articles right now about how valuations for startups across the board would drop and times could get tough.

• 1:40Ben Gilbert?

  Now, we've still got a lot more IPOs ahead and we've just seen one day of trading, but from what we know where we sit today, people in the technology ecosystem everywhere can breathe easy.

• 1:52David Rosenthal?

  Yeah, the signs are good. I mean, this is, this is huge. We've never seen anything like this before. This is a whole generation of, of tech companies that are all gonna go public, all, all in the next, you know, probably two months here.

• 2:06Ben Gilbert?

  And, and seriously pent up demand. I mean, all these companies, the, the full A+ as, as David and I were joking about.

• 2:13David Rosenthal?

  You've heard of Fang, now the, the A+.

• 2:17Ben Gilbert?

  What is it? Airbnb, Pinterest, Lyft, Uber, Slack, you know, all from different sort of eras of tech over the last decade, decade and a half. All raising so much in the private markets and here all in the next six months, all really IPO-ing.

• 2:33David Rosenthal?

  Yeah, here they are. Playoff atmosphere.

• 2:35Ben Gilbert?

  Indeed.

• 2:36David Rosenthal?

  Let's get to it.

• 2:37Ben Gilbert?

  Well, I do have to say, the limited partner bonus show that we've been doing, the one that we did with David's partner, Sarah, was so timely and so awesome. Because Sarah used to run corp dev at Airbnb and before that at Dropbox. So on the heels of the Airbnb Hotel Tonight deal that now, funnily enough, feels sort of like old news. We got her inside take on Airbnb's strategy with mergers and acquisitions, how to build corporate development functions within companies. And we speculated just a bit on where they might be going with Hotel Tonight. So if you want to listen to that and many other great LP episodes and become a limited partner, you can do that in literally 10 seconds, and I promise you, literally 10 seconds,

• 3:21Ben Gilbert?

  with just two taps. And you can listen to the show right here in whatever podcast player you use for all of your podcasts listening. So you can click the link in the show notes, or you can go to kimberlite.fm/acquired to join. And David, I'm not kidding, 10 seconds and you can join and listen right here, so.

• 3:40David Rosenthal?

  That's awesome. Man, the people behind that Kimberly company are really talented.

• 3:46David Rosenthal?

  Spoiler, that's, well, us, but mostly Ben.

• 3:53Ben Gilbert?

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

• 4:12David Rosenthal?

  Yep, your risk surface changes every week now. A vendor turns on an AI feature, or someone writes in a new model without telling IT, and your posture is different than it was last week, let alone at your last audit. Vanta's own research found that around 70% of companies have this quote-unquote "shadow AI" running with no security review at all.

• 4:33Ben Gilbert?

  Right, and that's where Vanta comes in. They're the leading agentic trust platform, meaning they've built the thing that closes the gap, and the way that they close that gap is Vanta Agent. Think of it as a GRC engineer, that's Governance, Risk and Compliance, except that it's software and it doesn't sleep. It finds the issues, drafts the fixes, and cuts the time that you'd spend on vendor assessments in half.

• 4:54David Rosenthal?

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

• 5:13Ben 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. So, to set the stage for David here, as he dives into the history and facts, we sit here on Saturday, March 30th, the day after the Lyft IPO. The company raised $2.3 billion in its IPO, priced with a market cap, or basically a

• 5:57Ben Gilbert?

  valuation at the top of their expected range, which they had already increased once on their roadshow, of $24 billion, and closed its first day of trading up above $26 billion. So David, how on earth did we get here?

• 6:13David Rosenthal?

  I am so excited to tell the story and all the stories behind this. So, we're going to tell the History of Lyft and how Lyft, a company that became Lyft, Zimride, that transformed into Lyft, how it got here, how peer-to-peer ride sharing became an industry. It's hard to believe now, but just, just about seven short years ago, it did not exist and is now one of the largest technology-enabled markets in the entire world. What we are not going to talk about on this show is the history of Uber, which is quite different. We will save that for the Uber IPO show, which is coming later this

• 6:55David Rosenthal?

  season, hopefully. And Uber started differently. It was not peer-to-peer ride sharing to start, and it wasn't until 2013, after Lyft was around, when they pivoted into that. But we'll get into it. We have a long story to tell. It is a story of transformation, metamorphoses, story of betrayal, a story of good and evil. Basically, your typical acquired episode. So here we go. It's a, it's a nonfiction thriller. Indeed. Oh, man, this is a thriller. Okay, so we begin our tale in the 1990s with two young men who are growing up at complete opposite ends of the country, but would one day be drawn together by fate. And on the one side of the country on the West Coast,

• 7:40David Rosenthal?

  we have Logan Green, who's growing up in Culver City in Los Angeles, and his parents are sort of leftover hippies. His parents are a doctor and a veterinarian, but they're pretty, they're pretty activists. And previously, they had helped organize farm labor unions, and they really encouraged their, their children and Logan to take, you know, that kind of outlook on life. And Logan really takes after them. But unlike them and their activist roots, he's, he's pretty introverted and focused. And so Logan, growing up, he teaches himself how to code. He's really interested in computers and coding. And in eighth grade, this is typical

• 8:20David Rosenthal?

  of him, he asks his parents to move the family television out of the living room and into the garage because it is too distracting from what he is trying to learn to code and accomplish in life.

• 8:33David Rosenthal?

  Amazing.

• 8:34Ben Gilbert?

  I can't say that was me.

• 8:35David Rosenthal?

  Yeah, definitely not me either. I was like, can we move the TV into my room? And that's why he is the CEO of Lyft and we are doing acquired. Yeah, we do a podcast. So in high school, this is amazing. Logan ends up getting a part-time job. He's learned how to code. He gets a part-time job working for a company in Los Angeles called Uwink. Now, what is Uwink? Uwink is the third or fourth, maybe even farther along, company from Nolan Bushnell, the founder and CEO of Atari, who hired Steve Jobs, who then went on and started Chuck E. Cheese.

• 9:15Ben Gilbert?

  I had no idea that, that, one, I have no idea that Uwink was a Nolan Bushnell company. But two, I remember when I was an intern at Cisco and moved out to California and went to Mountain View for the first time and was walking down, I think it's Castro Street or Castro Avenue. And you see like, basically see like, all the Web 2.0 logos that you're used to seeing on your browser just sort of like jump back, physical signs on each side of the sidewalk. And I remember the Uwink building. I didn't think I have a picture in front of the Uwink building because it's just so, it just felt so like emblematic of the whole Web 2.0 time period.

• 9:48David Rosenthal?

  That's amazing. That's amazing. Well, it started down in LA because Nolan, after Atari, I believe when he started Chuck E. Cheese and moved down to LA. And it's incredible. Nolan hires, you know, first Steve Jobs and then Logan Green. And so Logan, this was in high school. He had his driver's license at this point. He, his high school was in Santa Monica and Uwink's headquarters was in Playa del Rey, which if you know LA, Playa del Rey is not far from Santa Monica. I think it's about five or six miles. It's also on the west side of LA. But if you know LA traffic or LA traffic before Lyft and Uber, it was a nightmare to get over there, a beast.

• 10:31David Rosenthal?

  And so, so Logan has his high school car, an old 1989 740 Volvo that his parents gave him when he got his license. Classic, classic old hippie car. And so he's spending all of this time after school commuting over to his job in Playa Del Rey and he's like, he's just sitting there and he's like, this is insane. All of this traffic, all of this time wasted, all of this gas wasted, all this environmental impact. This is crazy. And he starts thinking that maybe he can make a difference and maybe he should dedicate himself, once he grows up, to eliminating traffic. And as we will see, that is what he, that's what he does and makes a big dent in it.

• 11:14David Rosenthal?

  So he goes off to college at UC Santa Barbara, about two hours north of LA. And initially, he majors in computer science, but eventually he switches to economics and he's really all in on this mission to solve traffic. He decides he is going to leave his car at home and commit to only commuting back and forth from LA to Santa Barbara with public transit. And this is like insane. I mean, it makes total sense to drive from LA to Santa Barbara. People do it all the time. So it's actually like, kind of a huge pain that he does this. And his sophomore year in college, he learns about Zipcar. Zipcar had just been, been started a few years before and he tries to get them to come to UCSB. They refuse and he reaches out to them. And so he says, okay, great.

• 11:58David Rosenthal?

  Well, I'll start my own car sharing program at UCSB. So he, he convinces, this is going to become a theme here. He convinces the university to buy a small fleet of Toyota Priuses. And then Logan basically reverse engineers the entire way that the Zipcar system works. So if you remember at the time, you had a card that was like a proxy card. Oh yeah, you hold it up to the windshield. You hold it up to the windshield and then that unlocks the, the door. So, so Logan like reverse engineers this and he installs these on the, the University of Santa Barbara's Priuses that they had, that they had bought. And he gets like a couple thousand students at the university to start using it. Pretty awesome.

• 12:39David Rosenthal?

  But there's one thing, though, that that's not helpful for us. This is great for getting around Santa Barbara for students, but when they go home for breaks and when Logan's going home to LA, you can't just like take one of these Priuses down to LA. And so he has to find, find other ways to get around his lack of a car. So he tries, he goes on Craigslist and Craigslist has a portion, has a board called Ride Sharing, which is meant for this purpose. And it's, you know, people saying like, hey, I'm going from Santa Barbara to LA or wherever. And like, you know, if you want to come in and join me and like pitch in for gas, like, we can do it. So Logan tries this a couple of times, but he's like a serious introvert and is really uncomfortable doing this. So he realizes this kind of isn't,

• 13:21David Rosenthal?

  isn't the best way, isn't the best way to do it. So ever the missionary here, he takes the next step. He's still a student at UCSB. He joins the Santa Barbara Public Transit Board, like the municipal authority that governs public transit in the city of Santa Barbara.

• 13:39Ben Gilbert?

  I'm assuming he's like the youngest ever or something.

• 13:41David Rosenthal?

  He is the, he becomes the youngest board member ever. And he thinks, okay, maybe this is the way that I can accomplish my mission and solve these problems. And it turns out it's not. All he learns is basically a bunch of depressing stuff. One, he learns that 70% of the cost of every public transit ride in the city is subsidized by the city. So if, you know, people talk about Lyft losing money on every ride today, most municipalities, public bus systems and train systems lose money on every ride.

• 14:12Ben Gilbert?

  Yeah.

• 14:12David Rosenthal?

  And, and it's super hard to get stuff done, try new things, or even incremental innovations on, on the existing system. So the next year, this is the summer before his senior year, he and his best friend from high school, guy named Matt Van Horn, they decide.

• 14:29Ben Gilbert?

  No way.

• 14:30David Rosenthal?

  Yes.

• 14:30Ben Gilbert?

  That Matt Van Horn?

• 14:32David Rosenthal?

  That Matt Van Horn, best friends from high school in Santa Monica, they decide they're going to do a big international trip on their junior year summer before coming back for senior year. And initially they want to go to Cuba, but Matt's mom, at this point in time, it was illegal to go to Cuba if you were a US citizen. Matt's mom basically bribes them to go to Africa instead. So they go, they spend, I don't know if it was a month or two months in Africa. And while they're in Africa, they go to Zimbabwe and they see this thing that just like to Logan for his mission, just like blows his, you know, 21 year old mind. He's used to all this traffic in the US and in Zimbabwe, which is this incredibly poor country at the time, almost nobody actually owns a car, but people get around the country

• 15:16David Rosenthal?

  and the cities super easily by their unlicensed drivers, unlicensed taxi drivers who own or at least operate minivans. And they just like have the minivan and the people come up to them like, hey, I'm going here. They get in the car, they wait until they fill up the minivan and then they drive and they drop people off along the way. It's kind of like a line, you know? It's like a line. And, uh, and everybody pays a little bit and like the system works. There's no organization, like there's no app, there's no booking. It just sort of organically works. And so Logan's like, man, like Matt, like this is super cool. Maybe there's a way.

• 15:56Ben Gilbert?

  I know, I know I'm like throwing you off here, but like we both just for listeners sake, for people who don't know who Matt Van Horn is, can you, can you tell us that? So we don't just leave everyone hanging.

• 16:03David Rosenthal?

  No, no, I was gonna bring it up with them. Cause Matt actually, but not oft talked about, becomes the third co-founder of Zimride, of the company that would become Lyft. But he does not go full time. Instead, Matt was at the University of Arizona. Instead, after graduation, he joins DIG and he becomes a relatively early employee at DIG and then an executive at PATH. And remember PATH, PATH was so good. It's too bad it didn't work.

• 16:33Ben Gilbert?

  Still could.

• 16:34David Rosenthal?

  Still could. I think it's shut down now, right?

• 16:36Ben Gilbert?

  Well, another one could.

• 16:38David Rosenthal?

  Another one could. Yeah. Yeah. Private social network.

• 16:41Ben Gilbert?

  And Matt now runs June Oven, right?

• 16:44David Rosenthal?

  June Oven. Yep. He is the CEO and co-founder of June Oven.

• 16:48Ben Gilbert?

  So moral of the story, everyone should take a trip to Zimbabwe in college.

• 16:52David Rosenthal?

  Well, I think that and tech theme we often talk about here on Acquired, that is going to become super obvious through this episode and the Uber episode. It's a small world out there.

• 17:01Ben Gilbert?

  Yeah.

• 17:02David Rosenthal?

  It's all the same people and are very incestuous in all of these industries and sub industries. So Matt and Logan, they come back from their adventures in Zimbabwe. And Logan starts his senior year at UCSB. And this idea is percolating in his head, so much so, he decides he's gonna, he hasn't figured out how to, how exactly to do this by the time graduation rolls around in summer 2006. But he takes a job at the university, working as a sustainability coordinator, just so he can stay there and kind of keep percolating on all this. Meanwhile, on the other side of the country, in a, in a very, very different environment

• 17:43David Rosenthal?

  from, you know, leftover hippie parents in, on the west side of LA and then certainly Santa Barbara, in Greenwich, Connecticut, another young man is growing up, a man named John Zimmer. No relation to Zimride.

• 18:01David Rosenthal?

  No, no really relation, soon to be a relation to Zimride, but no relation to Zimbabwe.

• 18:05Ben Gilbert?

  Yeah, can we just like, for a quick moment, pause here and recognize, so this only came out when I was doing the research. How crazy is it that Lyft's previous name was Zimride? And that has zero to do with the fact that one of the co-founders is John Zimmer? And it has everything to do with the fact that the other co-founder went to Zimbabwe?

• 18:24David Rosenthal?

  And also, totally ironic that, you know, compared to its Lyft's big rival Uber, Lyft does not operate internationally, or it does in Canada, does not operate intercontinentally, despite having started in Zimbabwe spiritually. Yes, so John Zimmer is growing up in Greenwich, Connecticut, which for, I think, most of our audience probably knows, but for those who don't, Greenwich, Connecticut is basically ground zero for hedge fund managers and is one of, if not the wealthiest zip code in the United States. And for some reason, it's like a moth's to a flame of like hedge fund managers to, to living in Greenwich, Connecticut.

• 19:07David Rosenthal?

  It's a suburb of New York in, of New York City. And so John's growing up there, surrounded by all this incredible, incredible wealth, like ridiculous wealth. But for whatever reason, like that doesn't like have a huge attraction to him, at least at that, at that moment. His dad is an executive at Dixie Cups, the, uh, which is incredible. It took me a little bit of digging to find that. I was trying to figure out, like, what did his family do? So like, you know, they're, they're super comfortable. They're well off, but they're not, you know, in the same league as, uh, in terms of wealth as all these hedge fund.

• 19:41Ben Gilbert?

  Cups had been flying off the shelves. I mean, things were, times were good.

• 19:44David Rosenthal?

  Yeah. He's a marketing executive at Dixie Cups. Maybe a lot of that ends up influencing, uh, influencing Lyft later. We'll see. So John, though, just like Logan, is equally as focused on what he wants his life mission to be and, and learns it, uh, just as early in life. But instead of traffic and transportation, he wants to work in hotels. Like seriously, that's his dream when he's in like middle school and high school is hotels. Ironically, he did not start Airbnb.

• 20:19Ben Gilbert?

  But that's a different type of, uh, you know, you can see the parallel to hospitality and, and, uh, and sort of experience crafting.

• 20:25David Rosenthal?

  Yeah. And this isn't just, I'm not just like making this up. This isn't just, you know, after the fact, so like, oh yeah, like I wanted to do hotels. In high school, he goes to the Hyatt Regency in, uh, in Greenwich, the hotel there. And he basically talks the man, forces the manager there into giving him a job, even though he's underage. So they have to like call up their lawyers and find a way for like, allow him to work because he so desperately wants to work there, even though he's not yet 18.

• 20:52Ben Gilbert?

  This is like the, uh, this is the equivalent of, uh, of putting the TV in the garage.

• 20:56David Rosenthal?

  Exactly. This is, this is his equivalent. Um, so he goes there and he, he ends up, he answers the phone. So like this is guests calling from rooms with like, hey, I've got a problem in my room. Like come fix it. This is people calling to make reservations, et cetera. Like, most people would hate this job. John loves this job and he loves it so much that when it comes time to go to college, he applies to go to Cornell, which is a great school, of course, and, and. Close by, but most importantly, Cornell has the best hotel management program in probably the entire world. As an undergrad, you can major in hotel management at Cornell. And not only does John do that, he ends up graduating number one in his class. This dude

• 21:37David Rosenthal?

  is like really, really good at hotels, which is incredible. But while he's there, though, he, he takes this class at Cornell called Creating Green Cities and Sustainable Futures. And I don't know if this was in the hotel management school or broadly, more broadly. Did you like look up the curriculum or something? I did, yeah.

• 21:58David Rosenthal?

  I actually did, yeah. And he realizes as part of this class that transportation within cities is this like, you know, really inefficient and big problem that is contributing to all this pollution and all these problems within cities. And yet, at the same time, there is this emerging mega, mega, mega trend in the whole world of urbanization and people around the world continuing to move to cities and that this is going to get even more problematic. And this kind of light bulb goes off in John's head and he says, oh, wow, this is a huge problem. Everything I've learned about hotel management, and literally, you know, he knows a lot. He's number one in his class at hotel management at the best school in the world

• 22:38David Rosenthal?

  for it, is that the key to success in hotels is occupancy rates. And he's like, and I'm looking at like transportation in cities and I'm thinking about these cars. And the thing about cars is 90 some odd percent of rides are one person in one seat in a car that's typically seats, you know, five or seven people. Yeah, huge waste. How do I bring everything I've learned about occupancy rates in hotels? What if I move that over to transportation? Could I make a big impact here? Yeah, there's, there's just stale inventory everywhere. Yeah, indeed, indeed. It's kind of amazing that he didn't start Airbnb.

• 23:15David Rosenthal?

  That's another episode to come. So this is all percolating in John's head, but he's also not quite ready to, he doesn't know what the right, right thing is to do, right angle of attack. So senior year rolls around and he ends up doing what, you know, all Ivy League students at the time, myself included, did is you go work on Wall Street and become an investment banking analyst.

• 23:40Ben Gilbert?

  And so glorious, glorious, noble cause of applying the most brilliant minds to, well, you know, a training ground.

• 23:48David Rosenthal?

  It is, it is a training ground and I, you know, I don't regret for a minute that I did it. And I think John probably doesn't either because it's the summer of 2006 when he graduates and he goes to work as an investment banking analyst at Lehman Brothers.

• 24:03Ben Gilbert?

  And Great reputation. I mean,

• 24:06David Rosenthal?

  Fantastic firm. And really at that moment Lehman was really on the rise.

• 24:11Ben Gilbert?

  Yep.

• 24:11David Rosenthal?

  Setting itself up for a big fall to come, to come shortly, which we'll get into. So John goes off, he's working on Wall Street at Lehman Brothers in New York City. Logan is, you know, back from Zimbabwe. He's graduated. He's working as a sustainability coordinator at UC Santa Barbara. How on earth did these two guys get together? So Logan, he's realizing as he's thinking about this and he's thinking about Craigslist rideshare section and he realizes the big problem is trust. Like, how do I trust when I get in a car with somebody that they're not gonna, you know, do something bad? And likewise, if I'm driving, how do I trust that the person who gets in my car is not gonna do something bad?

• 24:55Ben Gilbert?

  Which frankly, looking at how big ridesharing is today, and there have been some horrific incidents, but like percentage wise, it is remarkable how it basically goes off without a hitch.

• 25:06David Rosenthal?

  It's incredible. And that was not the case on Craigslist ride sharing. So that fall in 2006, Logan sees an announcement that changes everything. And that announcement that changes everything for lots of people is that Facebook, which was the hottest company, hottest startup in the world at that time, and certainly especially hot with college students and recent college graduates, announces that they are going to open up their platform and invite developers onto it and have their first API and allow people to make apps that include the social graph. And so inspiration strikes, hits Logan, and he immediately realizes this is it.

• 25:51David Rosenthal?

  This is what is going to crack this problem and solve trust with ride sharing. Is that if you build the app, if you build the application on top of Facebook, you can see who you're riding with and see people's real identities and see who your mutual friends are, and you can message back and forth beforehand. And that might be exactly the wedge that he needs to to crack the problem.

• 26:14Ben Gilbert?

  I remember how crazy it was. So first of all, it was like very easy in 2012 to create a, I know I'm pulling forward it here a little bit, but like the ease to create an account, because I think the only way to create an account was logging in with Facebook at that point. And how crazy it was that like it sort of made sense on other apps where I'm like, okay, I can see who else is using this app that's my friend. It was, for whatever reason, it felt like the next step further that I could see what mutual friends I had in common with the driver. Like when someone was picking me up, I was like, it was, it was the most wonderfully sort of humanizing thing to see like, oh, you have two mutual friends with this person that's picking you up. It is, it instantly takes you to a place where you're going to

• 26:59Ben Gilbert?

  treat the experience completely differently than you would a random stranger.

• 27:02David Rosenthal?

  Completely differently, not just in terms of trusting that nothing bad is going to happen. Like, that's the worst case scenario, but there's also, you know, how is this person going to behave in my car? There's, well, yeah, there's upside opportunities. You know, people end up meeting.

• 27:16Ben Gilbert?

  So how do you know?

• 27:16David Rosenthal?

  Developing friendships, you know, relationships, getting married, like all this stuff in cars via via ZimRides. But yeah, there's also like, is this person going to trash my car? You know, are they all this stuff? Logan sees this, he says, this is the opportunity. He quickly builds and launches an app on the Facebook platform called Carpool. It's a Facebook app called Carpool and he decides to call the platform behind the app ZimRides. Cause he's like, yeah, the inspiration came from Zimbabwe. Like this is what I'm doing. ZimRides. Great.

• 27:49Ben Gilbert?

  And this was 2008?

• 27:50David Rosenthal?

  This was end of 2006.

• 27:52Ben Gilbert?

  End of 2006. Okay.

• 27:53David Rosenthal?

  The company isn't officially started yet. He's just calling the platform ZimRides. He teams back up with Matt Van Horn, the buddy from, from the trip to Zimbabwe. Matt's at Arizona and they start working on this remotely together. And then in the next spring, in May of 2007 is when Facebook publicly launches the, they had announced that they were opening up the API in the fall of 2006. They publicly launched the platform. I think this was the first F8. It must've been the first F8 when they do this.

• 28:22Ben Gilbert?

  Yeah, I think so.

• 28:23David Rosenthal?

  And, and Logan had, he'd gotten early access to the APIs and built the app. And Carpool slash ZimRide is featured as one of the first apps when Facebook launches the Facebook platform. It's incredible.

• 28:36Ben Gilbert?

  And it just goes to show the power of being there on launch day at one of these platforms or on one of these platforms. I mean, you look at the people that were initially featured as who to follow on Twitter before they built any algorithms around that. And it's like Chris Saka and Ashton Kutcher and like some of these people still have these just unbelievable followings from, from getting juiced in that early era.

• 28:58David Rosenthal?

  Yeah. I mean, shoot, in a lot of ways acquired benefited from this. Like we weren't at the beginning of podcasting, but we started acquired before the, you know,

• 29:06Ben Gilbert?

  We beat the most recent rush at least.

• 29:08David Rosenthal?

  Most recent wave and we got featured on a bunch of podcast players and you know, that, that growth rate compounds, it turns out. So ZimRide is featured as one of the first launch apps for the Facebook platform. When this happens, a good friend of Logan's from middle school back in LA named John Siegel, he sees that his buddy Logan has done this. He's like, this is so cool. He posts it on his Facebook wall. Turns out that John Siegel is mutual friends with John Zimmer.

• 29:40Ben Gilbert?

  That's how they came together?

• 29:41David Rosenthal?

  On the East Coast. This is incredible. So

• 29:44Ben Gilbert?

  Where did you find this?

• 29:45David Rosenthal?

  They had met. Zimmer talks about this. He does a lot of interviews. So Zimmer and Siegel had met while studying abroad, I believe in Spain in college. They'd gone to different colleges. Siegel hadn't gone to Cornell. And Zimmer comes home one night. He's just started at Lehman. And I guess he's a couple of months into Lehman. He's probably just started in his group finished training at Lehman. And he comes home one night and he sees this post on Siegel's wall and he's like, this has got to be fate. Like, I've been thinking about this. I know how to like operationally attack this problem. It's all about occupancy rates. I've been thinking about carpooling. My name is John Zimmer. This company is called

• 30:24David Rosenthal?

  ZimRide. It has to be fate. So Zimmer pings Siegel that night and he asks him to introduce him to Logan. And Siegel does. They start talking, I believe over Facebook to start. A couple of weeks later, Logan flies out to New York City. They meet in person and they jam and they just, they hit it off and they decide, all right, we're going to work together. Now Logan's still working as a sustainability coordinator at UCSB. And obviously Zimmer's still in his analyst program at Lehman Brothers. They're not thinking about starting this as like a real company. It's like a side project. Like, great. Like, we're both thinking about this. Like, let's do it. So they, they stay working on it part time. This is a total

• 31:08David Rosenthal?

  aside, but like, this sounds crazy today in 2019. But this stuff happens. Like Jenny and I have good friends who got married because they met on Jenny's Facebook wall. So like, it's incredible, the kind of stuff that happened

• 31:22Ben Gilbert?

  Totally.

• 31:23David Rosenthal?

  back in the day. And it was right around the same time, too.

• 31:25Ben Gilbert?

  One tidbit I found that I'm curious if you know the origin of it, since you dug into this so much. In the S1, they revealed that even before it was ZimRide, in 2007, the company was incorporated as Bounder Web Inc.

• 31:36David Rosenthal?

  Yes, I saw that.

• 31:38Ben Gilbert?

  Do you know what Bounder Web?

• 31:39David Rosenthal?

  I couldn't figure out what that came from. So, you know. Logan and John, you know, if you're listening, hit us up. I'd love, uh, yeah. Hit us up [email protected] or in the. Also, congratulations. Yeah, also congratulations. All right. So they're working on it part time and Matt Van Horn, like he's still involved too. He's the third co-founder, but Matt decides that he's going to stay part time. Uh, he's going to be essentially an advisor and he goes, as we said, to work on, work at Dig and then Path and, and now June. Uh, but he's been involved with the company, you know, the whole time. So the three of them, they decide, you know, they have to decide go to market strategy. They have the tech, they have the kind of product concept, but

• 32:21David Rosenthal?

  where are they going to start? Well, the natural place is college campuses, right? Like that's where, A, that's where Facebook started and that's where Facebook's, you know, user base primarily is college campuses and recent grads. Two, Logan works at a college and three, they both, you know, recently graduated. So like, okay, we're going to focus on, focus on college campuses. And that's where some people have cars, other people don't have cars. It would be nice to be able to, to put those together. To do ride sharing and. A lot of cost sensitivity. Totally, totally. So they launch, uh, they choose Cornell as the first school that they're going to launch at. I don't know why they didn't do Santa Barbara. Maybe like Logan was worried about people finding out when he was working there. Unclear, but they

• 33:06David Rosenthal?

  choose Cornell and within six months, they've signed up 20% of the student body that is actively using this. And, and the real use case is around breaks. So like school goes on break and like you're driving back from Ithaca where Cornell is to Boston or New York or Philadelphia or wherever. Yeah. Load up your car and, you know, share the gas money. Randomly, they then get a bunch of other schools that start using it. Apparently the University of Wisconsin La Crosse, uh, they didn't do any marketing there. Just like, you know, popped up. Found it and started. Network effects. Man, it's a thing. So the. They're doing this, they start doing at schools that they really want to get adoption at.

• 33:50David Rosenthal?

  They start doing these crazy marketing stunts. They go out and they buy a frog suit and a beaver suit. Like, I don't, I think they were just suits. I don't think they were specific college mascots. But then like, they would go to campuses on the weekends and parade around with signs advertising Zim Ride while dressed up in these animals.

• 34:10Ben Gilbert?

  You seem like the type of people that would put pink mustaches on cars for sure.

• 34:14David Rosenthal?

  Yeah, you can see where the DNA comes from. And one, one, one time they do this, Zimmer does this back at Cornell. He's, he's on a recruiting trip for Lehman and he goes a couple of days early. He dresses up in a beaver suit, does this. And then when they do with the info session, he's there with like a managing director in his group and this girl comes up to him and is like, didn't I see you running around campus in a beaver suit the other day? And John's like, uh, yeah, let's talk about that outside. Which is, uh, which is hilarious, but it works. And so they're trying to land on the business model for this.

• 34:55David Rosenthal?

  And what they decide is they're gonna go, once they get adoption at college campuses, they decide they're gonna go to these colleges directly and ask the colleges to basically buy a license from them to set up Zim Rides as the official car share on campus. So like, don't work with Zipcar or don't do what UCSB did where you buy a bunch of Priuses yourself, you know, have it be the sharing economy, even though it wasn't called that yet, and just buy a license from us to operate your own version of, of Zim Rides, which they do and schools pay them like $10,000 each. And at the time, they're like, woo-hoo, $10,000, great.

• 35:31Ben Gilbert?

  Real business.

• 35:32David Rosenthal?

  Yeah. Turns out that was not the right business model, but we'll get to that in a minute. So they do this for basically a year from 2007 to 2008.

• 35:43David Rosenthal?

  Gets into 2008 and Zimmer is coming to the end of his analyst program at Lehman Brothers and he's trying to decide, you know, am I going to go work in private equity like all my other analyst classmates who are staying in Wall Street? You know, am I going to go full time on this ZimRides thing? It seems like it's really working. What should I do? Two things happen that help him make his decision. One, ZimRides gets its first institutional investment. Ben, do you know who the first institutional investor in ZimRides was? There was an angel investor beforehand, the VP of Finance at eBay, Sean Agarwal, who is still the chairman of Lyft's board today.

• 36:23Ben Gilbert?

  Interesting.

• 36:24David Rosenthal?

  But who was the first institutional investor?

• 36:27Ben Gilbert?

  Uh, is it before Floodgate?

• 36:30David Rosenthal?

  This is years before Floodgate.

• 36:32Ben Gilbert?

  Huh. Oh yeah. Cause that was like 2012 or something. I don't know.

• 36:36David Rosenthal?

  It was Facebook. So

• 36:39Ben Gilbert?

  No way.

• 36:39David Rosenthal?

  Yeah. So not only did, again, to the power of launching on these platforms, not only did ZimRides launch on the Facebook platform, Facebook, about a year later, had started the Facebook Fund.

• 36:52Ben Gilbert?

  That's right.

• 36:52David Rosenthal?

  And they invested $250,000 in ZimRides to help support it because it was this, you know, growing app on the platform. And they announced the investment onstage at F8 2008.

• 37:05Ben Gilbert?

  Whoa. Did they hold that for a while? Whatever happened to that?

• 37:08David Rosenthal?

  So unclear. It appears it actually was a grant and not an investment. So I don't know that they got

• 37:14Ben Gilbert?

  Wow.

• 37:14David Rosenthal?

  equity for it. Yeah.

• 37:16Ben Gilbert?

  I want that kind of funding.

• 37:17David Rosenthal?

  Yeah. Bad move by Facebook. So unclear. I don't know whether they got equity or warrants or just what, but pretty funny. So once they get the money and Zimmer's like, okay, we got $250,000. Like, that's a lot of money. Maybe I can do this. Before he makes his final decision though, he meets up with a good friend's mother who works in the Lehman Brothers building in Manhattan at another finance firm in the building. And she hears about, she must've heard about what he was thinking about it and said like, I gotta sit this kid down and set him straight. She sits him down and she's like, John, like, are you thinking about what you're doing? You're about to leave a sure thing like Lehman

• 38:00David Rosenthal?

  Brothers for this crazy carpooling startup out in Los Angeles? Now, this is July 2008.

• 38:09David Rosenthal?

  And he's like, yeah, I mean, that is like extreme, but you know, I really want to do this. I'm gonna, I'm gonna do that. And three months later,

• 38:17Ben Gilbert?

  This story with different-

• 38:19David Rosenthal?

  Lehman Brothers goes bankrupt.

• 38:20Ben Gilbert?

  Whoa, that's right. I was gonna say even before that, I mean, this, this exchange of sure thing for stupid risk, like this is on 10 acquired episodes.

• 38:28David Rosenthal?

  10 acquired-

• 38:29Ben Gilbert?

  We see this over and over and over and over again.

• 38:31David Rosenthal?

  But literally, this-

• 38:32Ben Gilbert?

  The timing, oh my-

• 38:32David Rosenthal?

  Such a sure thing, like this august, you know, Wall Street institution, Lehman Brothers been around forever, like, literally three months later, Lehman goes under financial crisis, happens.

• 38:43Ben Gilbert?

  Far too big to fail.

• 38:45David Rosenthal?

  Far too big to fail, indeed. So, but Zimmer's mind's made up before then, he naturally uses Zimride to carpool across the country from New York out to Palo Alto. He and Logan decide they're both gonna relocate to Palo Alto, they're gonna make this a real startup, they're gonna follow in Facebook's footsteps, you know, they have all this, you know, now money and mentorship and help from Facebook. Funny story about that, which I will, will come back to perhaps later in the episode. As they move into, I think they get a temporary office for a while, but they settle into, they, they decide they're gonna get an apartment in Palo Alto that they're gonna both live and work out of. And it turns out that it is next door to Marissa Meyer's house. And so their windows-

• 39:30Ben Gilbert?

  No way.

• 39:31David Rosenthal?

  -look out over Marissa Meyer's backyard. And Marissa, of course, at the time was one of the senior executives at Google, who had been there since basically the very beginning, and was not yet, but would become the CEO of Yahoo.

• 39:44Ben Gilbert?

  Neighbor friends? Like, what's the, what happens here?

• 39:47David Rosenthal?

  Well, so they talk about, you know, they'd see and hear, you know, all these Silicon Valley parties that would happen in, in her backyard, uh, next door. They'd be like, they'd look out the windows and try and figure out like who's out there and dream about someday they could, uh, they could, you know, reach those same heights. They do. It just takes a while. So they basically operate this way for the next two years, which is crazy. So like they have the 250K from Facebook and the little bit of angel money from Sean Agarwal, but that's it. And they're not making that much money from these universities. So the two of them don't take a salary for in total for those

• 40:27David Rosenthal?

  whole first two years that they go full time on this. They eventually raise a seed round, as you alluded to Ben, from floodgate, from Anne Miraco there in 2010. But that's two years later. And then they would raise a series A in 2011. I think, and Anne talks about this. I think part of the reason that they were able to raise that seed round was just that Anne and the other investors kind of looked at them and were like, well, these guys are like, you know, cockroaches. They just don't die. We'll invest in that. It is incredible how small the beginnings were here.

• 41:02Ben Gilbert?

  So both the floodgate round and then I can't remember who led the series A, but both those were Mayfield. Okay. Into the Zimride concept of

• 41:10David Rosenthal?

  Into Zimride. Yep.

• 41:11Ben Gilbert?

  Recurring revenue from universities.

• 41:13David Rosenthal?

  Yep, they were. They were. This is before Lyft. So not long after the series A that Mayfield does in 2011, Logan and John, you know, they're, they're excited. They just raised an A and things are going well. But if they're like really honest with themselves, they're not setting the world on fire here. Growth is slowing. They've saturated universities at this point. They've opened up the product for corporate customers, but that's not that compelling. Like ride sharing back and forth to campuses for breaks is a great use case. But like ride sharing to work every day.

• 41:50Ben Gilbert?

  It's also not daily. Like, I mean, they're not building habit here. It's a, you know, low frequency event.

• 41:55David Rosenthal?

  Exactly. Exactly. So then they were like, okay, well, we'll, as part of the series A, we'll open this up to everyone. So you don't have to be part of a campus or a corporate network anymore. But then they run back into the Craigslist problem all over again. It's like, I don't know these people. Am I going to get in a car with them?

• 42:12Ben Gilbert?

  Yep.

• 42:12David Rosenthal?

  So by mid 2012, six months ish after their, six, eight months after their series A, they realize the problem here is with the market, not the product, and they need to do something different to solve it.

• 42:25Ben 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.

• 42:39David 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.

• 42:53Ben 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.

• 43:03David 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.

• 43:21Ben 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.

• 43:37David 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.

• 43:54Ben 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?

• 44:03David 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. Okay, so what happens next? Here is the official lore of how Lyft begins.

• 44:20Ben Gilbert?

  I always like official lore.

• 44:22David Rosenthal?

  Yeah, we'll start with the official lore.

• 44:24Ben Gilbert?

  Great.

• 44:25David Rosenthal?

  So it's summer 2012. John and Logan have come to this realization. They talk to the company. They say, here's what we're gonna do. We're gonna hold an internal hack day to come up with new ideas and like, open your mind. Like, they're, you know, they must be inspired by Odeo and how Twitter started here.

• 44:43Ben Gilbert?

  Yeah.

• 44:44David Rosenthal?

  And open your mind. We'll discuss ideas. We'll vote on what we want to do. Three ideas come out. The first one is called On My Way, which would be an app if you're traveling to alert friends that you were going to see, like where you are, kind of like a safety thing, like so that friends could track you as you're traveling on your smartphone at this time. Feels like a feature. Yeah, yeah, feels feels like a feature, feel like a feature that might be part of Lyft and Uber someday. Two, the the second idea they have is called Journey. And what Journey, the vision is, people using Zimride to go on these road trips together, having these social experiences. Journey would be an app that you could document a trip with like photos and videos and music

• 45:27David Rosenthal?

  that you listen to and like share a memory of a trip, you know.

• 45:32David Rosenthal?

  I think there's still room for that. Well, I guess people use the Instagram for this now. Well, first Snapchat stories, but like, I mean, I guess like you could argue, maybe this could have been stories, you know, not an obviously terrible idea. But the clear winner when the company votes is the third option, Zimride Instant. Lyft is a little catchier. Lyft is a little catchier, but Zimride Instant, you know, of course Uber, as we refer to, and not just Uber, but a company called Taxi Magic and a company called Cabulous, all of which we will cover on the Uber IPO episode. You know, they're of course around. They're doing trips within cities, but it's more like taxis. They're using licensed limo

• 46:14David Rosenthal?

  drivers to do this. It's not peer to peer. It's not car sharing, but it's an experience that people love. It's just very expensive. And so they're like, yeah, Zimride Instant. What if we did this in a peer to peer car sharing way and we use our network of drivers on Zimride, but we just do it instant? Brilliant idea. Inspiration has struck. Incredible, you know, entrepreneurial moment. And so of course they decide to do this. They build and launch an MVP app in three weeks. They're gonna call it Zimride Instant, but they have an intern, a design intern, that's spending the summer with them, named Harrison Bowden, who still works at Lyft today as a designer. He's like, Zimride Instant, like, that's not too good. We need a new

• 46:57David Rosenthal?

  name. How about we call it Lyft and we'll Lyft, L I F T dot com. And the app like, that's gonna be hard to get the domain name, but let's just change the I to a Y. And like, it looks cool. Anyway, let's call it Lyft. And brilliant. And the rest is history. Sidecar. So Harrison, sidecar, Freudian slip there. Sidebar, Harrison also designs the first logo. Do you know what color Lyft's first logo was? Yes, Sea Foam green.

• 47:24Ben Gilbert?

  Yeah, it's funny. I dug up, in preparing for this episode, I dug up my first Lyft receipt.

• 47:30David Rosenthal?

  Oh, no way. That's awesome.

• 47:31Ben Gilbert?

  When they were expanding to Seattle. Yeah, it was, they hadn't yet gone with the pink. What was pink was the pink balloon, but the LYFT, which that logo mark has not changed, was was green, not pink. Or Sea Foam green, I should say.

• 47:42David Rosenthal?

  Yeah. I would love to hear why they chose Sea Foam green. But anyway, and this, this is the legend. This is the lore. And even in the Lyft S1, there's a founder's letter from Logan and John in there. And in it, I quote here, "In 2012, we launched Lyft and pioneered the idea of on-demand peer-to-peer ride sharing. In those early days, we were told we were crazy to think people would ride in each other's personal vehicles. One billion rides later, we're able to look back on an industry that has been defined by the products Lyft pioneered."

• 48:20Ben Gilbert?

  Wow, it's like, it's a humble brag, a little bit of shade, a little bit of, you know, subtweeting or whatever you want to call it.

• 48:27David Rosenthal?

  Yes. And certainly, certainly referring to Uber there. And, you know, that

• 48:32Ben Gilbert?

  Appropriately so.

• 48:33David Rosenthal?

  Paragraph, that paragraph is not incorrect. And Lyft and the former Zimride deserve all the credit in the world for doing that and, and creating 1 billion rides over the last seven years. However, that's not quite the whole story. And that's what we're here at Acquired to talk about. So Ben, do you want to hear?

• 48:53Ben Gilbert?

  The story at Rosenthal has the real truth.

• 48:55David Rosenthal?

  Do you want to hear the real story of how peer-to-peer ride sharing started?

• 48:58Ben Gilbert?

  Come on.

• 49:00David Rosenthal?

  Love it. Okay. So you may have heard of a company called Sidecar. You may even remember a company called Sidecar.

• 49:06Ben Gilbert?

  Of course.

• 49:07David Rosenthal?

  And by the way, this, this story that we're about to tell is, I think, certainly the best story in this episode, probably going to be the best story this season, may even be the best story of all time and acquired. I'm so excited here.

• 49:22Ben Gilbert?

  Yeah, baby.

• 49:23David Rosenthal?

  So, okay, Sidecar, you know, some people who, who remember Sidecar was a peer-to-peer ride-sharing competitor from about this time. And they may remember, yeah, Sidecar was first, weren't they? Didn't, didn't Sidecar invent this concept of ride-sharing? Well, yes and no. Let's talk about Sidecar. Okay. So Sidecar was started by a guy named Sunil Paul, who's still around here in San Francisco, in September of 2011. Now, remember, it's summer 2012 when the Lyft hack day happens. And Sunil is a super interesting dude. He had been an original AOL guy, like way back in the day, and working out of Washington DC, where AOL was based.

• 50:05David Rosenthal?

  And then after AOL, he started a company called Freeloader with a guy named Mark Pincus, which might raise, perk up the ears of some of our listeners. Mark, of course, was later the founder and CEO of Zynga. And Sunil did not co-found Zynga with Mark, but was an initial investor and was actually a board member of Zynga for a long time. After that whole ride-in-in-between, he started a company called Brightmail that got acquired for about $400 million. So yeah, he's done a lot of stuff in the valley. He finds himself by 2009. He is teaching at Singularity University here in, here in Silicon Valley. And he has two students in his class. Sam and Jessica have an idea that they're all kind of working on

• 50:46David Rosenthal?

  in the class together to start a peer-to-peer car-sharing company. And that ends up becoming Getaround, which is still a, you know, large and very successful car-sharing company today. And, and we were actually small seed investors back at Madrona. And I remember working with Sam and Jessica, the very early days. This was super fun.

• 51:07Ben Gilbert?

  The distinction being that you drive that car rather than riding in that car.

• 51:10David Rosenthal?

  Yes, you own a car, you put it on the platform and then somebody can rent that car from you that they then drive. So it's basically it's Zipcar with cars that people own instead of cars that Zipcar owns. And it's a great idea, still works really well. And Sunil was so excited about this because he's been, he had actually been thinking about this for a long time, going back to his freeloader days. And it was also percolating around in his head. He had actually filed for a patent back in 2002 and was granted a patent for the system and method for determining an efficient transportation route that he was thinking about for car sharing and ride sharing

• 51:51David Rosenthal?

  within cities. So Sunil's like so excited that Sam and Jessica are working on this. He says, I want to be your first investor. I want to invest and I want to be executive chairman of the company. And Sam and Jessica are like, yeah, like, that's like a lot of, a lot of equity and a lot of control that you want. And they were worried about him parachuting in and wanting to take over as CEO, which he probably did want to do. And so they say, thanks, but no thanks. And they reject his offer to invest. And Sunil gets really angry about this. And so he writes about all this later. We'll link to his, his bunch of Medium posts about all this history. And he's like, you know, it's totally the wrong thing to do. And like, I was just so, you know, upset about it. So he's like, I'm going to spite them. I'm going to go start my own company doing

• 52:36David Rosenthal?

  this. Wow. And it's, he's like, super honest in these blog posts. So he does that. He works on it himself for a while, competing with Getaround. He eventually decides, you know, there are challenges to the market. He's not doing as well at it as he could. He decides he needs to, he needs to do something else. And so what he wants to do instead is to build, you know, he sees the rise of smartphones. He wants to build a city transit smartphone app. So essentially what like Google Maps on your phone has become today and what he had his, part of what he had that initial patent for. So he reaches out, he finds a team of computer science students in Michigan, at the University of Michigan, who are also working on this. He goes out, he flies

• 53:18David Rosenthal?

  out there. He convinces them to come out to San Francisco and start this company with him, including the CEO of the company from Michigan, Jahan Kana, who becomes CTO of Sidecar. And so they start this company. And right around the same time, A friend tells Sunil about this crazy thing that's happening in San Francisco that he might want to pay attention to because it's pretty related to what he's working on. And he says, there's this, there's this group here in the city that has started recruiting ordinary people to take their cars and drive around at night and pick up people, other

• 53:59David Rosenthal?

  people who request rides from them to get to where they're going, out to bars or home from bars. And like, of course, there's Uber out there, but this is just like ordinary people doing it. And it's working like super, super well. And Sunil's like, oh yeah, like, I'm really interested in that. Like, tell me more. You should take a look. Yeah. Maybe we should take a look. He's like, oh yeah. Like, so what's the service called? It's called Homobils. Yes, you heard that right. It's called Homobils. And the motto of Homobils is mows getting hoes where they need to goes. And this is the most incredibly amazing San Franciscoy thing that probably has ever been created. It just, I love this.

• 54:44David Rosenthal?

  This is so great. Lay it on us. So, okay. So, you know, San Francisco today, you come here in 2019 and like, it's all techified and yuppies and, you know, there's, there's Lyft and there's Uber and there's Airbnb and everything that's taken over the city. But like, San Francisco was the birthplace of, you know, counterculture. Like, in the 60s, this was, you know, sex, drugs and rock and roll. And we've talked about this on this great book about the old San Francisco called Season of the Witch. So Homobils was born out of that, not out of the tech world. It was started in 2010 by Lenny Breedlove, who was a punk rocker and LGBTQ icon here in San Francisco. And as he tells it, he was going to FemCon in

• 55:28David Rosenthal?

  Oakland in the, in the summer of 2010, and he was driving some babes to the conference. And he says, he got there and all of a sudden, this is, this is his words, this is quote, he says, "All of a sudden, the butches and trans guys who saw me..." Wanted to drive and all the babes and drag queens who wanted rides, wanted rides. And then I realized this was a serious need that had to be filled. And this is awesome, but like, this actually was, this is such a serious need because even in San Francisco, which is, you know, one of the most tolerant and liberal and forward thinking cities in the country, if you were a drag queen, or even not, just, you know,

• 56:13David Rosenthal?

  just gay.

• 56:14Ben Gilbert?

  And any member of an at-risk population.

• 56:16David Rosenthal?

  Any member of an at-risk population, and you were out at night, you were at a gay bar, you were somewhere else, and you were trying to get home, or you were trying to get to another place, taxis wouldn't pick you up. And even Uber, like, you could get in an Uber, but you might still have issues. I mean, this happens all the time still, like, you know, people get assaulted, people get attacked, people get raped.

• 56:36Ben Gilbert?

  It's terrible.

• 56:37David Rosenthal?

  And, you know, if you're part of an at-risk population, this is like a serious worry in your life. And so Breedlove started, thought, I can do something about this. He started this organization called Homobiles. And the concept was if you were, you know, felt you needed a safe chariot from getting one place to another, you could text Homobiles and they would dispatch, you could both drive for Homobiles, and then they would dispatch somebody to come pick you up and take you, you know, in a safe way to where you need to go. And of course, legally, you couldn't pay because they weren't a taxi company, but you could donate to your driver and to Homobiles. And turns out, that worked great.

• 57:19David Rosenthal?

  And Homobiles, at this point, by 2011, had become a big thing in the LGBTQ community in San Francisco. And it turns out, they had invented peer-to-peer ride sharing. So.

• 57:30Ben Gilbert?

  That's so interesting, because they get none of the credit for it.

• 57:33David Rosenthal?

  Nobody, nobody knows. The only way I found out about this was Sunil writes about it in his Medium posts. And if you Google Homobiles, you'll find some articles here in San Francisco about it. But even in, we use a lot of, friend of the show Brad Stones, the upstarts, a lot of the research reporting he did, he mentions Homobiles in a footnote, but nobody talks about, they were the first ones to actually pioneer peer-to-peer ride sharing.

• 57:59Ben Gilbert?

  And doing it for just an extreme need. I mean, this isn't, you know, I gotta get to work in the rain. This is an extreme need.

• 58:05David Rosenthal?

  Yeah, this is like, I might die on my way home if I don't have this service. So Sunil, as he says, okay, great. Well, I gotta try this. So he writes, this is a quote from his Medium post, "I took Homebills to the airport for a trip to New York. It cost me $20 for a trip that normally costs $50 in a taxi. Wow. This system was cheaper than taxis, never mind Uber. Homebills had been in the press, yet hadn't been shut down. It seemed to be operating in a gray area of regulation by taking donations. We wondered, can we create a scalable, technology-enabled version of Homebills that could allow us to create our shared ride vision?"

• 58:46Ben Gilbert?

  Ah, I love the

• 58:47David Rosenthal?

  So that's it. That's what they do. They take the Homebills operating model, which is individual, regular people, not commercially licensed drivers, driving for the platform, and then individual, regular people via a dispatch service that they build an app version of, summoning them to pick them up. And then the payment is a donation. And for listeners, if you remember back to the early days of Lyft and Sidecar, when it started, it was not a payment because the regulation

• 59:18Ben Gilbert?

  All-donation-based.

• 59:18David Rosenthal?

  It was all donations. So Sidecar takes the entire operating model from Homebills, marries it up with the app interface, the smartphone app interface of Uber, and then they start, they launch in February 2012 in San Francisco, and literally the biggest market opportunity since Facebook is born. Like, what an incredible story. So, of course, Sidecar would go on to raise a bunch of money, along with Lyft and Uber. They would launch in 10 cities, but ultimately, they couldn't keep up in the war of capital that we're about to get into.

• 59:53Ben Gilbert?

  David, do you know my, my personal history with Sidecar?

• 59:56David Rosenthal?

  I know you have one. Let's, let's hear it.

• 59:58Ben Gilbert?

  Yeah, so I know Sidecar well and loved the service and was a big user in kind of the early days. And I, when I worked at Microsoft, I worked on a couple of companies on the side, one of which was called Red Ride, that I started with a few friends, actually at a startup weekend here in Seattle. And it was, it was still a side project because we had day jobs, but fairly advanced. It was basically the kayak for ride sharing, which some other great companies are trying to do now. But as we sort of got toward the end of realizing that we weren't going to start it as a, you know, all quit our jobs venture, we were talking with Sidecar and Sunil about an aqua hire. And ultimately, I decided not to. But, you know, what could have been?

• 1:00:40David Rosenthal?

  What could have been? You could have been, well, you could have been part of what happened when Sidecar ultimately did shut down. They got acquired by GM for the assets, not the operating company, because GM simultaneously invested $500 million in Lyft and acquired Sidecar. I believe they wanted the team and the patent. So remember Jahan Khanna, who's, you know, from Michigan, he goes back to Michigan, to GM as part of the acquisition. He stays there about a week, and then he leaves and joins Uber, where he's still to this day. And so Jahan, do you know what he's doing at Uber now? He is head of product for new modalities, which is bikes and scooters.

• 1:01:20Ben Gilbert?

  Wow. Always on the cutting edge.

• 1:01:23David Rosenthal?

  And Fred, and Andrew Chapin, who was an executive at Uber at the time and is now co-founder and CEO of Wave's portfolio company, Basis, was, was a big part of hiring, hiring John and bringing him back and bringing him into Uber. So, okay, back to automobiles quickly, though. This is, this is amazing. They are still around today, and they are still super important in the LGBTQ community. So, you know, even with Lyft and Uber, you know, as advanced as they are today, like, this is still an issue for at-risk populations. You know, you don't know, even though you can see the profile of your driver when they come to pick you up, you don't know what they're, what they think, how they behave, especially towards non-normative people like this. And so they're still giving rides at night. They're also, though, they do a lot of, they drive people to

• 1:02:08David Rosenthal?

  To and from major life events like surgeries and they provide emotional support during that time, right before you're about to go into something, you know, life changing. So it's actually now a nonprofit, it's a 501(c)(3). And this is crazy. It still is done by dispatch. They don't have a smartphone app and they've been trying to raise money to have enough resources to build an app. They've been trying to do it for years. And so we felt like Ben and I talked about this before the show. We felt it was important to kind of pay homage to, to this organization that started this incredible industry that now has resulted in, you know, one and soon to be two massive IPOs. So we're going to make a $2,000 donation from acquired to Homemobiles and we're going to put a link in the show notes in case

• 1:02:50David Rosenthal?

  anybody else wants to too. And, and we think it would be super cool if the acquired nation could help them get enough resources to finally build an app.

• 1:02:58Ben Gilbert?

  Yeah, let's build an app. I'm sure, I wonder if there's, there's, uh, there's probably some in kind donations that they could use too. But yeah, super, super pumped to be doing this, David. And I think glad that you broke our normal, uh, structure of, of not discussing anything before the show to keep it all a surprise. So we could, uh, could talk about and do this one.

• 1:03:16David Rosenthal?

  Yeah, we really, really wanted to do this. So definitely encourage, uh, other, uh, other parts of the acquired family to help too. Okay. So back to the story. So Lyft, you know, we had just told the canonical version of how Lyft came out of Zimride, uh, you know, and that may be true. There was a hack day and, you know, they did decide to work on Zimride Instant and they did launch it in as Lyft. But, um, before the hack day, after Sidecar had launched in February of 2012, Zimride definitely sees what's going on with them and sees them start to get a bunch of traction. So, and, and in fact, Sunil and Sidecar, they saw, you know, cause they, they had, uh, you know, uh, God mode, uh, for these, uh, for these, uh, platforms was not yet illegal. They could see

• 1:04:01David Rosenthal?

  everyone who was signing up for the service and how they were using it and where they were going. They saw that actually Logan and John and Zimride board members were all like super actively using the Sidecar app in the couple of months before they started Lyft. So by the time the hack day rolls around that summer, you know, everyone at Zimride definitely knows everything about how Sidecar works, definitely knows, you know, the donation model, whether they know, knew it came from Homemobiles or not. They now know exactly how the operational model works. And so when they launched Lyft, you know, they copy it all, but they do, to their credit, they do it a lot better. And there are two reasons why they, why they do it better. One, which we alluded to earlier, they have the existing network of drivers and supply

• 1:04:45David Rosenthal?

  from the Zimride product that they can onboard onto Lyft pretty quickly and easily.

• 1:04:51Ben Gilbert?

  It's like rule number one in, in creating a marketplace product. It's like, how do you cheat and bootstrap one side of the market?

• 1:04:56David Rosenthal?

  Yep, yep, totally. So they've got the hack to bootstrap one side of the market and people hadn't realized yet, but would come to be known that there's a kind of magic density in ride sharing networks that are related to time that you have to wait as a rider for a pickup. If that time is more than a couple of minutes, people will abandon the service. And so by being able to bring like a huge portion of a huge network of supply.

• 1:05:21Ben Gilbert?

  Get over that tipping point.

• 1:05:22David Rosenthal?

  You get over that tipping point a lot faster. And so that was a major help to Lyft. The other thing that they realized, and listeners will probably remember this, they realized that like, this is still kind of a crazy idea. And so they have to do a couple of things to A, make people comfortable doing this, you know, getting in cars with strangers, but also B, raise awareness that you can't even do this. So they do three things.

• 1:05:45Ben Gilbert?

  Here we go.

• 1:05:46David Rosenthal?

  Here we go, here we go. First, in the app, as a rider, when you sign up, they tell you to sit up front. Don't sit in the back like a taxi. You're getting, you know, this is Lyft is your friend with a car.

• 1:05:55Ben Gilbert?

  This is ride sharing. You're not.

• 1:05:56David Rosenthal?

  Ride sharing.

• 1:05:57Ben Gilbert?

  Yeah.

• 1:05:58David Rosenthal?

  Yeah, sit up front, be friendly. And number two, as part of being friendly, give your driver a fist bump on the way in and out.

• 1:06:06David Rosenthal?

  I thought this was so weird back in the day.

• 1:06:09Ben Gilbert?

  God, yeah.

• 1:06:10David Rosenthal?

  And, you know, you could maybe argue whether one and two helped them win or not, but certainly.

• 1:06:15Ben Gilbert?

  Differentiation there at least.

• 1:06:16David Rosenthal?

  Yep. Certainly the third thing they did helped them win big time. So they already had this supply hack, this distribution hack on the supply side. They needed something though, to get demand within San Francisco and future cities that they launched. And so they came up with kind of a crazy idea. And here's where the frog in the beaver suit costume DNA comes back. A few years earlier, John Zimmer had found out about this crazy, this, this company in San Francisco that made these funny, you know, bumper protectors. If you're parking on the street in San Francisco, just like in New York, like it's super tight parking, people hit your bumper all the time. And this, you know, ironic hipster company in San Francisco had made a bumper protector that looked like a fuzzy mustache.

• 1:07:00David Rosenthal?

  And so you could put a mustache on your car. It was called a car stash. And so as a joke, Zimmer had started buying a bunch of these and giving them to employees and investors back at Zimride. But then when they're launching Lyft and they realize they gotta like, get people aware of the service and onboard demand, they're like, oh, great. Every driver who signs up for the service, we're gonna make them put a big fuzzy pink mustache on their cars. And so like, summer 2012.

• 1:07:26Ben Gilbert?

  Totally free too.

• 1:07:27David Rosenthal?

  Totally free.

• 1:07:28Ben Gilbert?

  You're not allowed to really put a billboard on, I mean, I guess you could wrap the cars, but like, you know, this is, this stands out way more than that.

• 1:07:35David Rosenthal?

  Way, way, way more. And, you know, it's kind of like when scooters launched, whoa, scooters will come back in a minute, but the scooters are sitting on the sidewalk. Here, you've got cars driving around the city with this fuzzy pink mustache. And I remember this, like, I remember coming down to San Francisco at the time, like, what is with all these cars driving around with pink mustaches? And the word of mouth, like, it was real. And Lyft started to really, really, really take off.

• 1:08:00Ben Gilbert?

  And so in this, at this time, it was differentiation from sidecar, right? Because Uber hadn't launched UberX yet, so it was, it was competing against them.

• 1:08:08David Rosenthal?

  Yep, it was competing against sidecar, but it was really competing against non-consumption.

• 1:08:13Ben Gilbert?

  Right, right. Yeah, it's, it's, it makes you go, what's the deal with the mustache? And then you, yeah, it's basically, it's actually, it's funny, it's not really competitive differentiation. It's more just category awareness.

• 1:08:25David Rosenthal?

  Yep, totally, totally. It was probably the last thing on their minds was competing with sidecar at the same time. But speaking of competition, Uber is out there. You know, Uber's been around since 2009 at this point. They're doing limo licensed driver pickups via an app, basically dispatch for, for limo drivers and black car drivers via an app. They start seeing this happening and they're like, oh, crap. Like, Uber is expensive and they're making lots of money and there's tons of demand for it. But all of a sudden, here's this substitute product out there on the streets that is massively undercutting us on price. Like, we gotta do something. So now this is like, people don't remember this, but Uber.

• 1:09:10David Rosenthal?

  They they're like, they're really mad because, you know, they're Uber. They have all the reputation. They're so aggressive, but like they have been operating within the law. And, you know, technically, this peer-to-peer ride-sharing thing, it's in a gray area, but it's not explicitly legal. And so Uber gets super pissed and they start lobbying and they try and shut down.

• 1:09:29Ben Gilbert?

  I remember this from Brad's book.

• 1:09:31David Rosenthal?

  Yep, yep. So they work really hard for about a year to try and get Lyft and Sidecar shut down as being illegal. And they're being super principled. They're like, you know, we operate legally and like, they're not operating legally and regulators should shut them down. Turns out, though, it doesn't work, probably partially because the regulators hated Uber because they were so aggressive, kind of on pushing the rules within the existing licensed driver industry. And so this is great. The next year, April, it wasn't until April 12th, 2013, when Uber, Uber had already launched Uber X, but it was still licensed drivers driving Priuses instead of black cars.

• 1:10:16David Rosenthal?

  They pivot Uber Uber X into being a direct competitor with Lyft and Sidecar doing peer-to-peer ride-sharing. And they announce it, Travis releases a white paper entitled, "Principled Innovation: Regulatory Ambiguity Around Ride Sharing Apps." And there's the money quote in there. This is so perfect. He says a couple paragraphs in, "In the face of this challenge," the challenge being from these, you know, un- unlicensed peer-to-peer ride-sharing apps, Uber could have chosen to do nothing. "We could have chosen to use regulation to thwart our competitors. Instead, we chose the path that reflects our company's core. We choose to compete."

• 1:10:58Ben Gilbert?

  Boy, that is a very different. Then the entire tone of the Lyft S1 that's about sustainability and good for the world and great for riders and great for drivers and really like everyone, kumbaya and hug. We choose to compete.

• 1:11:11David Rosenthal?

  We choose to compete and compete. They did. So they repurpose.

• 1:11:16Ben Gilbert?

  And you know that that white paper was mostly for employees. Like that was a rallying cry.

• 1:11:20David Rosenthal?

  It was a rallying cry, 100%. So they repurpose UberX, which again already existed, but was not true peer-to-peer car sharing. They repurpose it that April into peer-to-peer car sharing and the fight is like on. And so it becomes, it was already clear at this point, but then once Uber enters the market, like, everybody realizes very quickly that this is it. Like, this is the biggest market that anyone has seen in Silicon Valley in a long, long time. It's big. You know, Airbnb was around at this point and was quite big, but Airbnb is quite big because it's a winner-take-all winner in a market for, you know, home sharing, which is quite large. Ride-sharing dwarfs the market for Airbnb. It's

• 1:12:04David Rosenthal?

  just not a winner-take-all market. So the competition that this unleashes and the behavior that this unleashes in Silicon Valley is just incredible.

• 1:12:12Ben Gilbert?

  And let's talk about this. I was going to talk about it in tech themes, but it's worth just touching on it briefly. And we talked at length with Brad Stone about this and, and the episode that we did with him. At what episode was that? Is it Amaz?

• 1:12:25David Rosenthal?

  Uh, no, it was when we, um, it was.

• 1:12:26Ben Gilbert?

  Oh, Didi. Uber and Didi, yeah. And he makes this really great point that the network effect with Airbnb is super strong across markets. So it becomes winner-take-all, where when you're traveling and you're used to using Airbnb and the last two vacations you took, you're going to use it on the next one. So wherever Airbnb, you know, there's going to be ultimately sort of one, one platform there. However, with Uber, the, or ride-sharing or Lyft, whatever, when you are using it, 98% of it is going to be in one city because it's something you use generally where you live. And so it's not really that big a deal for market by market to be owned by, by different players,

• 1:13:07Ben Gilbert?

  particularly internationally, where, I mean, it kind of makes sense for, you know, Seattle and San Francisco to have the same provider, but what?

• 1:13:16David Rosenthal?

  But not that.

• 1:13:18Ben Gilbert?

  Yeah. But like, what, like, there's, there's very little that Lyft here versus the ride-sharing company in China could, could even share to be, to be valuable as a cross-market network effect. And so this quickly becomes, to your point, David, even within a country, even within a city, something that there's going to be multiple players in.

• 1:13:39David Rosenthal?

  And and people also didn't realize this for a long time, but you know, I think we'll talk about this in tech themes for where we've gotten to now. Because that's the case, it also means it's not a winner take all market locally, because you can, as a company, as a corporate entity, get enough resources from winning in various markets that you can still compete. It's like, whereas if you're trying to compete with Airbnb, there's no oxygen in the room. Whereas there's enough oxygen in the room, you know, internationally, that you can still compete locally. And that's why, you know, you haven't seen Uber crowd out lift fully, or vice versa.

• 1:14:15Ben Gilbert?

  And another way to put that is, to your point about the tipping point, as long as, okay, taking one step back, we're really in tech themes now, but taking one step back, thinking about marketplace assign business models, where the supply side is undifferentiated, and I don't care who picks me up, I just need to get there, versus marketplace assist, which is, the platform provides a bunch of different options, like Airbnb does, and I get to pick which option I want from the supply side. In this marketplace assign, which ride sharing falls into, because supply is undifferentiated, the services are relatively undifferentiated, as long as there's something within three, four minutes of where I'm trying

• 1:14:56Ben Gilbert?

  to leave from, and it can sufficiently get me where I'm trying to go to for approximately the same price. And so you do end up in this place where, as long as there's enough supply for a given, a given geo, then, you know, there can be multiple players, because both drivers and riders can multi home.

• 1:15:17David Rosenthal?

  Yep, totally. But nobody knew this, just yet. People are thinking, like, oh, this is going to be a winner take all market. And like, who are we gonna back? So, the fundraising race is on. All three companies, Sidecar, Lyft, and Uber, start raising massive amounts of money. Sidecar not as much, and that's mostly why they end up shutting down. But Uber starts raising the most amount of money. And not only that, they, with part of what they do with the money, they've also realized the magical kind of three minute pickup time threshold. They start doing this thing called slogging, which is an acronym for like supply, long-term operations, growth, or something like that.

• 1:16:00David Rosenthal?

  But really what it means is that, and all the companies are doing this, they send out employees and contractors to order rides on their competitors' platforms. They get in the car and then they try and convince the driver to switch to their platform.

• 1:16:15David Rosenthal?

  Because the density of of supply is is kind of the most important factor here.

• 1:16:19Ben Gilbert?

  Yeah, and not only that, they they and I think Uber was more famous for doing this, but ordering rides and then cancelling them on on competitors' platforms just to.

• 1:16:28David Rosenthal?

  Yeah, to be clear, Lyft and Sidecar, we're doing this.

• 1:16:32Ben Gilbert?

  Yes, but we're built a brand around doing it.

• 1:16:34David Rosenthal?

  Yes, Uber built a brand around doing it and and they're they're much more successful and particularly in the capital raising. So a year later, very quickly, an eternity in this market, but very quickly in absolute time, Lyft is on the ropes, like Lyft is about to die.

• 1:16:50Ben Gilbert?

  And what year, what year is this?

• 1:16:51David Rosenthal?

  This is 2014.

• 1:16:53Ben Gilbert?

  Yeah.

• 1:16:53David Rosenthal?

  Everybody's spending huge and huge amounts of money, like there's the slogging going on, but like also everybody's subsidizing rides and incentivizing drivers just to get density and compete with one another. And at this point in time in 2014, Uber had raised 30 times the capital as Lyft, which was the next best capitalized competitor. And so, I mean, I remember this so clearly, like I'm sure listeners do too, like orthodoxy and the prevailing point of view in Silicon Valley was this is winner take all, Uber has won, Sidecar is is about to die and Lyft is, you know, gonna go the same way. And there's no point in investing in anybody except Uber right now.

• 1:17:34Ben Gilbert?

  I definitely felt this way. I mean, I can remember thinking like Uber is such a clear winner, anyone trying to compete to fool's errand. It's amazing that they lost the, you know, the enormous amount of money they've already raised.

• 1:17:45David Rosenthal?

  Yeah. Totally. And you know, honestly, Lyft feels the same way, too. So they actually initiate merger talks with Uber. Lyft goes to Uber and waves the white flag. And so Zimmer, and at this point in time, Andreessen Horowitz has invested in Lyft, and Andreessen partner John O'Farrell, they go out to dinner with Travis Kalanick and Emil Michael, who's his number two at Uber at the time. And they say, we want to merge, and they ask for 18% of the combined company. And that is exactly how Travis and Emil react. They're like, we're gonna win. You're not getting anywhere near that amount. Like, maybe

• 1:18:28David Rosenthal?

  we would consider something a lot smaller. They counter with 8%.

• 1:18:34Ben Gilbert?

  Which is still, actually, at that time, it's almost surprising with those two personalities that they came back with 8% instead of 1.

• 1:18:42David Rosenthal?

  Yeah. And equally surprising, and this is like such a defining moment for Lyft, equally surprising that Lyft doesn't take that. But they don't. So the two sides can't reach an agreement. And Lyft decides to keep going. But they can't raise from VCs because all the VCs are like, I'm investing in Uber or nobody. So they go out and they raise $250 million from the hedge fund COTU management, which COTU is now a big player in investing in especially late-stage startups. But this was one of the first private company investments they make.

• 1:19:18Ben Gilbert?

  You got to wonder here, like, is their philosophy, and we're going to talk about IPO narratives here in a little bit, but are they thinking that this isn't winner-take-all? Or are they thinking, we're going to take a flyer, that these guys are going to be the one?

• 1:19:31David Rosenthal?

  I don't know. I wish I knew. We'll have to, folks at COTU, get in touch with us, and we'll have you on the LP show, and we'll talk about this. The, I don't know what their thesis was at the time, because it was really contrarian at this point in time. Side note, though, like, for Uber, and we'll talk about this on the Uber show to come, this was the best, one of the best things that ever happened to Uber. Because had they acquired Lyft... Lyft at this point in time, they for sure would have been regulated as a monopoly by this point. Like the fact that another viable second player in the market was allowed to continue in the US, like especially given everything that happened at Uber later, there's no way that regulators wouldn't have totally cracked down on them.

• 1:20:16Ben Gilbert?

  It's a great point.

• 1:20:17David Rosenthal?

  So anyway.

• 1:20:17Ben Gilbert?

  It's like how Bing is the best thing that's ever happened to Google.

• 1:20:19David Rosenthal?

  Totally, totally. It absolutely is true. So after this, when Uber's like super annoyed at this point, like these guys, they keep hanging around. Things get like, things were already ugly. Things get super ugly, like, like probably the ugliest, like certainly I've ever, not that I was part of this, but that I've ever seen in business. So in 2013, back a couple, back a year earlier, Lyft had acquired this company called Cherry. Do you remember Cherry, Ben?

• 1:20:55Ben Gilbert?

  I don't.

• 1:20:56David Rosenthal?

  Cherry was an on-demand car washing company. So you could order a car wash while your car was parked in the parking lot. A crew would show up and wash your car. And then you would come out of, you know, work or the grocery store, wherever you were to a clean car. Cool, right? Cool idea.

• 1:21:19David Rosenthal?

  Turns out there's not like that much demand for car washing, but like really innovative stuff that these guys pioneered on the operations front. And Lyft had acquired Cherry in 2013 because it wasn't viable as a business, but they're like, yeah, like these guys are like really talented. And the CEO of Cherry had risen up through Lyft and at this point become the COO of Lyft. So like the number three executive behind Logan and John. And that guy's name was Travis Van der Zandt, which this is gonna, this is gonna ring some bells also for listeners. So

• 1:21:57David Rosenthal?

  Travis, Travis VZ, not Travis Kalanick, he's the COO of Lyft. And he brings a ton of innovations that he did at Cherry into Lyft. So like driver onboarding, city launching, like he massively improves the efficiency of Lyft's operations. But he's kind of cut from a different cloth as Logan and John. He's not, he's not, uh, he's not the mission-driven founder here.

• 1:22:21Ben Gilbert?

  He's a little more, a little more Uber.

• 1:22:23David Rosenthal?

  A little more Uber. Uh, and, uh, and he sees in 2014, as all this is going on, he sees the pendulum is swinging Uber's way. He believes, just like everyone else in the valley, that there's no way Lyft can compete. Um, so he does two things. He goes to the Lyft board and tries to stage a coup. Uh, he goes to board members and he says, I don't think John and Logan can run this company effectively. You should fire them and make me the CEO. And the first thing I would do as CEO is I would go re-initiate merger talks with Uber and land this plane. And, um, simultaneously, while he's doing that, he actually goes to Uber, uh, while he's working at Lyft and he, um, he, he kind of rogue, totally goes rogue

• 1:23:06David Rosenthal?

  and, uh, says, hey, I know we just shut down merger talks, but like, uh, we might want to reopen those. And, um,

• 1:23:14Ben Gilbert?

  We, the royal we.

• 1:23:16David Rosenthal?

  The royal we, yeah. And now, again, like this, this is really bad, of course, but like, you can sort of see how this could, you could get

• 1:23:24Ben Gilbert?

  Crazy times can call for crazy, crazy measures.

• 1:23:27David Rosenthal?

  Right. Like this is, you would have to believe you were, you would have to be utterly insane to think that any other course of action was, um, you know, was viable here.

• 1:23:38David Rosenthal?

  Logan and John, though, of course, find out about all this and, uh, you know, they are utterly insane in their conviction and mission-driven zeal for the company. Uh, and so they fire Travis immediately. Um, and guess what? Couple of weeks later, Travis ends up joining Uber.

• 1:23:57Ben Gilbert?

  So how does this work? And like, is this because non-competes are illegal in California? So like you just can?

• 1:24:03David Rosenthal?

  That's, that's how this works. However, of course lawsuits abound. So Lyft immediately sues, uh, both Travis Vander Zandt and Uber. Uber turns around and counters sues Lyft for supposedly hacking into their systems and stealing their information. Uh, eventually everything settles, um, uh, out of court because everybody realizes like, we got bigger fish to fry than

• 1:24:29Ben Gilbert?

  Right. We got all these guns pointed at each other and there's like a, you know, an alien invasion happening above us.

• 1:24:33David Rosenthal?

  Exactly. Exactly. Well, alien invasion that we are invading each other.

• 1:24:38Ben Gilbert?

  Self-inflicted.

• 1:24:38David Rosenthal?

  But this is not the battlefront that we're gonna

• 1:24:40Ben Gilbert?

  Right, right.

• 1:24:41David Rosenthal?

  And so now, Ben, do you know what Travis Vander Zandt is doing now?

• 1:24:47Ben Gilbert?

  I believe he's the CEO of Bird.

• 1:24:51David Rosenthal?

  Yes, he is. He left Uber, I believe in 2017, and started and is the CEO of Bird, the scooter company. It is incredible how incestuous all of this is. Incredible. But yeah, and Travis Vander Zandt, I mean, again, like, two sides to every story. He is incredibly talented and, you know, a visionary for transportation and operations. Like, when he started Bird, nobody was doing scooters, and now they're everywhere. So, anyway, that's the backdrop to 2014.

• 1:25:31David Rosenthal?

  And coming into 2015, Lyft is basically out of money. So they're at the

• 1:25:40Ben Gilbert?

  This is like the story of Lyft is like they're out of money and at the end. And then, oh, something happens and then they're out of money and they're at the end.

• 1:25:47David Rosenthal?

  And then, and then oh, something happens. Well, so the 2015 version of this is they end up getting hooked up. So Logan and John are out there trying to raise money from anybody. They know they can't raise from VCs. They've raised from Co2. They're talking to any other alternative source of capital. They end up convincing Rakuten, the Japanese e-commerce company, to invest. In March of 2015, Rakuten invests $530 million. And Rakuten is, at IPO, the largest shareholder in Lyft, larger than any VCs, much, much larger than Logan and John. And it, you know, that saves the company totally that time. And then they add some more money in. This is, you really can't make this stuff up.

• 1:26:32David Rosenthal?

  I remember when this happens. They add more money into the round from acquired supervillain Carl Icahn.

• 1:26:41Ben Gilbert?

  No way. He's in this too?

• 1:26:43David Rosenthal?

  Carl Icahn. He's back. He is like, we gotta have Carl on the show at some point. We for sure do.

• 1:26:53Ben Gilbert?

  Yeah. And that, that one we'll do in person. Carl, we'll come to you.

• 1:26:55David Rosenthal?

  We, we will for sure come to you. So, um, listeners might remember Carl from, from Netflix. And, uh, what was the other episode he was in?

• 1:27:05Ben Gilbert?

  Marvel.

• 1:27:06David Rosenthal?

  And Marvel. Yes.

• 1:27:07Ben Gilbert?

  And Blizzard? Was he also in Activision Blizzard?

• 1:27:11David Rosenthal?

  Another one too. Anyway, uh, incredible.

• 1:27:14Ben Gilbert?

  Activist investor Carl Icahn.

• 1:27:16David Rosenthal?

  Activist investor. And, and what's great is so Mark Andreessen and Carl Icahn had had this huge beef, like Twitter beef. Uh, and, um, and Andreessen was the largest VC in Lyft at the time. And here's Carl Icahn coming in. And I think, I think Mark was quoted in, in the New York Times saying like, yeah, I mean, we disagreed, but like, I never said he wasn't smart.

• 1:27:39David Rosenthal?

  This is great. Uh, so Carl Icahn comes in, they invest a hundred million dollars, uh, in, as part of this round. And that keeps the company going for another year. And then the, the next year in 2016, they're running low on, on cash again. And, uh, they get GM, General Motors to invest $500 million. That keeps, uh, that keeps the company going.

• 1:28:04Ben Gilbert?

  Which GM made like a quick, uh, I don't know, like 750 million or something. Cause that was in what 2016 we're in.

• 1:28:12David Rosenthal?

  2016.

• 1:28:13Ben Gilbert?

  So they, they turned 500 million into like one and a quarter or something over a few years.

• 1:28:17David Rosenthal?

  Yeah, or maybe even more than that. I'm not, I'm not totally sure. They are, I believe, the third largest shareholder, second or third largest shareholder in Lyft at this point.

• 1:28:26Ben Gilbert?

  That's right.

• 1:28:27David Rosenthal?

  Yeah. Which is incredible. But still like, you know, still Uber just keeps growing and growing and growing. And, you know, this is the point where Uber is valued at $70 billion. You know, is taking over the world. They're taking over China. Um, and so the summer of 2016, even though Lyft has managed to hang on. They had, the New York Times reports that Lyft hires catalyst Frank Quattrone, Frank Quattrone's firm, the investment banker, to sell the company, again, to try and sell the company. And they go and they talk to everybody. They talked to GM who just-

• 1:29:00Ben Gilbert?

  Frank Quattrone of, of the Amazon episode fame who, with Bill Gurley, took, took Amazon public.

• 1:29:05David Rosenthal?

  Yes, indeed. And so they go talk to General Motors, who just invested and said, hey, you should, you know, should buy the company. They talked to Apple. Apple's working on self-driving cars. They talked to Google. They talked to Amazon. They talked to, they go talk to Didi in China. They go back to Uber. Nobody bites. Nobody wants to buy the company.

• 1:29:23Ben Gilbert?

  And this is, this is the era where like the rumors are really starting to swirl around Apple and Project Titan that had rumored to be over a thousand people working on a, some sort of car.

• 1:29:32David Rosenthal?

  Yeah. It was, you know, this is how much the sentiment was against Lyft at this point in time. Even though all these people knew how important this market was, viewed transportation as integral to the future. I mean, literally, in the case of GM, like, is the company. Nobody wanted to buy them. The problem was the valuation. So as part of the GM round, the company was valued at $5.5 billion. And so that was just too high. Nobody was willing to pay that to buy it. Later in the summer, this is, this is truly the low point for Lyft. Didi, which had been-

• 1:30:07Ben Gilbert?

  It just keeps going.

• 1:30:08David Rosenthal?

  It's just like the body blows. The, Didi, Didi, the Chinese ride sharing giant, had been a Lyft partner, international partner, and had been fighting Uber tooth and nail, as we talked about on the Brad Stone episode, in China. And it was at the end of, end of 2016 that they merged with Uber. And so here's like Lyft's like big international partner now is getting into bed with Uber. And-

• 1:30:37Ben Gilbert?

  It feels very Amazon Whole Foods Instacart.

• 1:30:40David Rosenthal?

  Indeed, indeed. And so, so it was just really bad. Lyft's market share is down to 20% in the US and falling. And heading into 2017, it's like, all right, this might be it.

• 1:30:54Ben Gilbert?

  And for a reference check on folks, I don't flashing forward, but it's now 39% or at least in December of 2018 was 39% in the US.

• 1:31:02David Rosenthal?

  Yep. So doubled since then. And so what is it? What happens?

• 1:31:06Ben Gilbert?

  Yeah. So what happened, David? Why? How did Lyft double their market share and turn the ship around?

• 1:31:11David Rosenthal?

  Well, as we say so often, as I say so often here on Acquired.

• 1:31:14Ben Gilbert?

  What external forces could have come into play?

• 1:31:17David Rosenthal?

  History turns on a knife point. It was it. Lyft was dead. They were, they were, you know, Uber had the boot on their throat.

• 1:31:27David Rosenthal?

  And then, you know, one of the greatest unforced errors in business history, series of unforced errors happens, starting in January 2017 with the delete Uber controversy, which of course we'll get into.

• 1:31:42Ben Gilbert?

  Oh, it was just the start.

• 1:31:43David Rosenthal?

  It was just the start. Ultimately culminates.

• 1:31:46Ben Gilbert?

  It's like, what is this little water coming through the dam? If I poke on it a little bit, what's going on back there?

• 1:31:50David Rosenthal?

  Yeah. Yeah. And ultimately culminates in Travis Kalanick getting fired by the Uber board as CEO in June of 2017. And throughout all of this, this is the, this is the lifeline for Lyft and they start regaining market share. In October of 2017, Google via capital G invests a billion dollars in Lyft. And Google had been an early, earlyish investor in Uber and their big partner. And the self-driving, you know, future was going to be Waymo and Uber. And so this about face of Google turning their back on Uber and investing in Lyft was a huge, huge turning point.

• 1:32:33Ben Gilbert?

  And it says a lot too here where

• 1:32:38Ben Gilbert?

  I believe Alphabet or, you know, via capital G owns, I think, a little over 5% of the company at IPO. And GM owns close to 8% at IPO. And you can just see the sort of sentiment reflected there where GM earlier put in half a billion dollars. And Alphabet later puts in a billion dollars and yet GM has the greater percentage because.

• 1:33:04Ben Gilbert?

  The valuations were dramatically different at these times. The sentiment around the company had totally, totally changed throughout all of this Uber insanity, which we will cover on their episode.

• 1:33:14David Rosenthal?

  Yeah, totally. And so much so that I don't think it was the alphabet round, but the last round of funding that Lyft raises privately before before the IPO yesterday was at a $15 billion valuation.

• 1:33:28Ben Gilbert?

  Yeah.

• 1:33:28David Rosenthal?

  What a turnaround from nobody will buy the company, we are dead to $15 billion to IPO to darling of Wall Street. So, real quick, yeah, market share, as Ben said, just rises starting in January 2017, goes from 20% in the US to just under 40% now. People are switching. And although I feel like it's mostly stabilized now, but they hit a Lyft hits a billion rides in September 2018. In November 2018, they acquire Motivate, which operates the city bike share in New York City, and they launched scooters. Side note, scooters are mentioned

• 1:34:12David Rosenthal?

  159 times in the Lyft S1.

• 1:34:17Ben Gilbert?

  Yeah, I think the only the only category of things that are mentioned more are autonomous vehicles.

• 1:34:22David Rosenthal?

  Yeah. And they do $8.1 billion in bookings in the full year of 2018, 2.2 billion in net revenue. Friday, March 1, 2019, they filed their S1. This Thursday, March 27, they priced their IPO at $72 a share or a $24 billion market cap. And as we said at the top of the show yesterday, Friday, March 29, they become the first unicorn, well, not the first unicorn, but the first of the big, big, you know, A-plus companies of the current generation to come out and be public and are finish the day trading at a $26.6 billion market cap.

• 1:35:04David Rosenthal?

  What a story.

• 1:35:05Ben Gilbert?

  Ooh, and here we are at the end of the story, but at the beginning of the analysis.

• 1:35:12Ben Gilbert?

  David and I were like, do you think we can keep this episode like around like maybe an hour, hour 10?

• 1:35:15David Rosenthal?

  No way.

• 1:35:16Ben Gilbert?

  We're sort of like, uh, what do we not talk about?

• 1:35:19David Rosenthal?

  Yeah. Thanks for bearing with us, listeners. But, um, you know, these stories are too good not to share.

• 1:35:25Ben Gilbert?

  Yeah. 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.

• 1:35:40David 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?

• 1:35:56Ben 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.

• 1:36:11David Rosenthal?

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

• 1:36:35Ben Gilbert?

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

• 1:36:54David Rosenthal?

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

• 1:37:24Ben Gilbert?

  Truly insane numbers, and that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at lagora.com/acquired and just tell them that Ben and David sent you. So before we sort of dive into some other stuff here, like I want to highlight a few other key facts. One is, at time of IPO, they're now 4,700 employees, several hundred of which are working on autonomous vehicles. They don't sort of disclose specifically, but mentions that in the IPO or in the S1.

• 1:38:08Ben Gilbert?

  Their take rate is rising pretty dramatically. So if you look at their, you know, revenue per ride is up, but if you look at the take rate, the sort of main driver of why revenue per ride is up, it's risen from the beginning of 2017 to around 20%, up closer to 30%. It's something like 28% now. So what this is really proving is, you know, they're, because they now have loyal customers, they're able to leverage that into the supply side and gain basically power over their drivers and up their take rate there. And I think, you know, it, they talk a lot about, you know, rides per active rider is going up and revenue per ride is going, or rides per active rider is going up and thus

• 1:38:53Ben Gilbert?

  revenue per ride is growing up. A lot of the revenue per ride going up is really attributable to, to this, this increased take rate over time. And so much so that their, their per quarter, like if you look at how down and out they were in 2016, $14, per quarter, they were generating $14 of revenue, which is after the take rate. This is sort of, you know, the amount that they get after paying out to drivers. If you look at last quarter, it was $36 per quarter. So, you know, they're, they have a lot of levers at their disposal, and I don't want to index too hard on, hey, it's just the take rate, because it's definitely not. But it's incredible how they, they really righted the ship and started turning everything

• 1:39:34Ben Gilbert?

  in this direction of, you know, people are staying loyal, they're using it more often, we're able to go acquire more customers, although I'd say that's sort of the smaller, the smallest of the drivers. But, you know, 14 to 36 over the course of... Two and a half, three years on a per quarter basis for revenue is huge.

• 1:39:55David Rosenthal?

  Yeah, totally.

• 1:39:57Ben Gilbert?

  So, so David, where I want to go from here is, why don't we talk about the narratives? So we added this section after history and facts. That is sort of the bull and the bear narratives. So we used to talk about, you know, what, um, these ones are hard to grade because you don't necessarily know, like, we're too close to it, but it was something we had to talk about now. But in lieu of that, like, it is interesting to talk about what are the stories that that people are talking about that that make this something you, you know, you want to get in on? And what are the stories that people are talking about that make you go, oh?

• 1:40:35David Rosenthal?

  Yeah.

• 1:40:35Ben Gilbert?

  And I think, uh, um, you know, as, as is, uh, normally the case here, why don't we dive in on, on bulls first? So David, what are, what are people saying that makes this a something that you should be super interested in right now?

• 1:40:47David Rosenthal?

  Well, I mean, um, number one, the scale and the growth. So $8 billion of bookings, you know, of, of commerce transacted of, of, um, transactions created is incredible. In since mid 2012, so less than seven years. And increasing leverage on the take rate side and net revenue of over $2 billion, uh, growing incredibly fast. That is very, very exciting, especially to public market investors that are not seeing that kind of growth anywhere else. So I think that's one.

• 1:41:27David Rosenthal?

  Two, you know, if you read the left S1, they talk about how they're not just a ride sharing company. They're a transportation as a service company and they're building a, a multimodal platform, as they say. Now that's a lot of buzzwords, but like one. I think this started to crystallize for the industry when Dara did come in and take over as CEO of Uber. And Dara, of course, the current Uber CEO came from Expedia. And Expedia, bringing that mindset of like, this isn't about one product. This is about where you start your search for travel at Expedia and for transportation for Uber and Lyft. And so this is what the Motivate acquisition was about. This is what, why scooters are

• 1:42:12David Rosenthal?

  mentioned 159 times in the S1. The opportunity here isn't just as big as, as ride sharing is, it is all of transportation that they think they can take on. And, and that's incredibly exciting, too. And then I think finally, the, the, the third piece of the, of the bull case is, you know, Lyft does include a cohort analysis in its S1 as most companies.

• 1:42:36Ben Gilbert?

  Which is not required, but is becoming more and more popular and is sort of truly the way to analyze these things.

• 1:42:42David Rosenthal?

  Yeah. And if companies don't in their S1s, you should be very suspicious these days. And the cohorts are expanding. So if you look at the cohort of 2015 customers, customer rider customers that came into Lyft in 2015, they are doing more, the cohorts are expanding. They are doing more volume of transactions and dollars worth of transactions in 2018 than they were in 2015. Like, that's, that's, you know, usually you see cohorts deteriorate over time. If people use it less as they churn.

• 1:43:12Ben Gilbert?

  Yep.

• 1:43:12David Rosenthal?

  Expansion is, is rare and extremely powerful.

• 1:43:17Ben Gilbert?

  Yep. So a couple other things that I want to touch on here. This is the pure play bet. If you want to sort of have some exposure to ride sharing and really domestic ride sharing, you know, Uber's in Uber Eats. They have, they're effectively a holding company for all these other international operations. They themselves operate internationally. You know, if you want to bet as a, it's not quite pure play because it's multimodal, but if you want to bet transportation in the US, this is a, you know, this is the, the way to do that without mixing in that sort of basket of other things. The other thing, and it's, you can't be a bull here without knowing the bear case first. As has been much, much covered all over the place, the company is losing a lot of money. And, you know, they,

• 1:44:01Ben Gilbert?

  I think, David, check me on my math here, but they, they lost almost a billion dollars last year.

• 1:44:06David Rosenthal?

  I think that's right. Yep.

• 1:44:08Ben Gilbert?

  And, you know, so, so you gotta look at that and go, uh, and, and we'll, we'll talk more, I think about that in the bear case, but they talk a lot about autonomous vehicles and you, and you know, they've got hundreds of people working on it. They're spending a lot, a lot of money on it right now. I think it's something like, um, I don't have it right in front of me, but they, uh, uh, you know, it, Lyft believes that they can materially flip their economics to become a profitable company when self-driving comes into play and they intend to be a leader in that space. And so I think if, if, uh, if you believe that too, uh, then there is reason to believe that, uh, that they could get profitable. They do list it as a key risk that they're not

• 1:44:53Ben Gilbert?

  profitable and may never be. So that of course is a

• 1:44:56David Rosenthal?

  Love to see that.

• 1:44:58Ben Gilbert?

  A little bit of a dangerous, uh, proposition. You know, the, the other thing

• 1:45:01David Rosenthal?

  Oh, come on. We don't value companies on the discounted sum of future cash flows anymore. That's so, you know, old school.

• 1:45:09Ben Gilbert?

  It is, it is, it is scary that the public markets are looking more and more like seed investors where people are valuing on a multiple of revenue instead of a, a multiple of, of earnings, um, or perhaps just buying in on a, on a story, or perhaps valuing growth of our profitability. Like, these are things that you typically see in the earlier stages of a company. Uh, in the acquired Slack, there was talk of a seed PO, um, that, uh, that is becoming more and more common. Um, you know, no comment there, but I do think, uh, one other thing for me on the bull case is, uh, uh, you know, Uber's bleeding seems to have stopped, uh, but I think for a lot of people, um, Uber's brand is, is solidified as, at the very best, highly transactional, at the very least, a lot worse than that. And Lyft, over

• 1:45:54Ben Gilbert?

  and over and over and over again, in their S1, beats the drum, um, and, and did all throughout their roadshow on being a sustainable company, on being a company that sort of Does write by its people, be it riders or drivers, that I'm just pulling up an email that they sent to riders shortly before their, I think actually yesterday during their IPO. And it's titled, "For Once, The Good Thing, The Right Thing, The Business Thing Can All Be The Same Thing." And they sent this to all of their riders. I mean, they are doubling down hard on-

• 1:46:31David Rosenthal?

  And didn't they have a blog post and Twitter campaign yesterday about being a responsible corporate citizen as now a public company?

• 1:46:40Ben Gilbert?

  I'm sure.

• 1:46:41David Rosenthal?

  Yeah.

• 1:46:42Ben Gilbert?

  I'm sure.

• 1:46:43David Rosenthal?

  The anti-Uber.

• 1:46:44Ben Gilbert?

  Yes.

• 1:46:45David Rosenthal?

  Or anti how Uber is perceived by some people.

• 1:46:47Ben Gilbert?

  Yeah. And you know, the other reason why, there's sort of a pure financial analysis here too, that's, I think there was a lot of fear that late-stage private investors were not being rigorous and that the public markets, when you apply more sort of rigorous discounted cash flows, or I don't know exactly how people are modeling this one out, but would not be able to continue the valuation rise on a round-by-round basis. But that, at least from pricing and trading yesterday, appears to not be a big concern.

• 1:47:22David Rosenthal?

  And I would say, one last piece on the bull piece, which we really should have put in the history and facts, but has been a big change really, really since the delete Uber campaign. Lyft has been hiring incredible people here in Silicon Valley. And like, this isn't talked about as much of, you know, I think on the nationwide and Wall Street type narratives around the IPO, but like, we feel it and we see it here. Like, lots of great people who Riley and Sarah worked with at Airbnb and elsewhere, and you know, our friend Preet at Lyft, like are really, really talented people-

• 1:47:56Ben Gilbert?

  Yeah.

• 1:47:57David Rosenthal?

  -who were not working at the company during, you know, the earliest days of Lyft and during the, you know, the down days, that are coming there and doing incredible things. So like, there's a, there's a strong talent story around the company too.

• 1:48:10Ben Gilbert?

  Yep. Yep. And I think there's, you know, there is much more analytical and sort of financially, fundamentally oriented analysis. And we've been putting those in the Slack and can continue to put those in the Slack over time. But I think the key takeaway for us here is that the way that the company has positioned itself with its riders and drivers, the leverage that they're starting to see, where they actually do have a little bit of pricing power in the marketplace, the differentiation that they have and the talent that they have, as well as the sort of wind at their back from growth over the last few years, makes it a super interesting company and, you know, not in a winner take all industry.

• 1:48:55David Rosenthal?

  Yep. And, you know, to put a fine point on the bull case, you know, we can debate the merits of valuing public companies on a revenue multiple versus a profit multiple. But it is, you know, it does happen. And certainly it happens in the SaaS world. You know, Lyft's valuation is not crazy at IPO. So where they finished trading yesterday, they are trading at a 12x revenue multiple of last year, 2018's net revenue. Now typically you would trade on a forward revenue multiple. I don't know what they're projecting for 2019 net revenue. So that's what they should trade off of. But presuming there's continued growth, they will be trading at a less than 10x forward net revenue multiple. That's not crazy.

• 1:49:38Ben Gilbert?

  No. David, let's do a whole LP show on this. This is a good, we'll do that in the next few weeks and have, maybe have a public equities investor on too.

• 1:49:46David Rosenthal?

  Yeah, that'd be fun. Okay. Should we shift to the, to the bear case?

• 1:49:49Ben Gilbert?

  Yes. This is the largest ever net loss for a company entering the public markets for the first time, full stop.

• 1:49:56David Rosenthal?

  Boom. And so there's that. And then there's, there's a, you know, that's the headline. I think there's a, as a marketplace investor too, you know, this was one of the things that stood out to me, reading the S1. I don't care as much about Net income losses, because that's how tech companies work. Like you invest a lot in fixed costs as you're growing.

• 1:50:18Ben Gilbert?

  Engineers and you know, product and, and you know, operations and infrastructure to do stuff.

• 1:50:26David Rosenthal?

  Yep. All the, you know, read any Ben Thompson article. He talks about this all the time and I think he's totally, he is totally right, which is this is how software and the tech industry works. Incredible investments in fixed costs, but then as you scale revenues, those costs are fixed. Your variable costs are much lower and so you will become wildly profitable, ala Google and Facebook and whatnot over time. Airbnb, what have you. The scary thing about Lyft is that there, when you do the math and add up all their variable costs relative to their net revenue. They are, they are losing money on a variable, variable basis too. So not only are they not paying down their fixed costs, they are each, each dollar of revenue that comes in is, is even ignoring fixed costs.

• 1:51:10David Rosenthal?

  You know, a net negative for them. And so the way you, with the way you look at this is you add up their cost of goods sold, the COGS, their line item, the cost item for operations and support. And their cost, their line item for sales and marketing, because sales and marketing, you're having to spend to acquire and retain drivers and riders. It's a variable cost as is operations and support. And obviously as is COGS, when you add all those three line items up for 2018 on their income statement, it is larger than net revenue. And that's a scary place to be.

• 1:51:44David Rosenthal?

  Now, certainly the rebuttal to that is that we are in such a large market and growing so fast that we're spending so much on sales and marketing. That yes, that is true, but like we need to spend to realize the full totality of the opportunity.

• 1:52:00Ben Gilbert?

  Right. That the, the spend is in sales and marketing is primarily for speed purposes, for expansion. And when we back down sales and marketing just to a rate where the market is at steady state, all of our unit economics look good.

• 1:52:15David Rosenthal?

  Yep, yep. And actually, John and Logan, in some of the interviews they did yesterday around the IPO, and they were asked this question, they said this, they were like, you know, we're doing the thing that we think, you know, we should responsibly be doing as managers of this company, which is investing for future growth, and that the future is so bright that we need to do this. Now, of course, the other piece of the bear case here is like, you need to spend this much on sales and marketing because you're locked in a knife fight, in a bazooka fight with Uber. And so you're still-

• 1:52:44Ben Gilbert?

  Does the market ever actually hit steady state without you spending aggressively and subsidizing every ride?

• 1:52:49David Rosenthal?

  Exactly, exactly. So this is, I think this is the biggest bear narrative on the company, and will probably weigh on Uber as well. Now, one thing, though, if you look at sales and marketing expense as a percentage of net revenue, it is declining for Lyft. So that's a really good sign. So in the fourth quarter of 2018, it was 32.7% of net revenue they spent on sales and marketing. They spent over 40% in the third quarter. So like, they are growing while spending less proportionally. So that's a good sign. But it's still concerning.

• 1:53:26Ben Gilbert?

  Yep. And I think, David, I appreciate your thoughtfulness as a marketplace investor. There are many articles that are quoting people who have expertise in various things that, well, I'll just give you one that is much less kind than you are here. Hubert Horan, a transportation expert who has long been a critic of Uber and Lyft, suggests that they have nothing in the document that suggests how this could be fixed. I mean, nothing. And so I think, just to fully represent what the bears are saying, it's that when you read the S1, people do believe that this will never turn right side up.

• 1:54:10David Rosenthal?

  Well, it's not now and they are public, so.

• 1:54:14Ben Gilbert?

  Yeah, it is interesting. I mean, I thought a lot about so this sort of subsidizing every ride concept. I wrote a piece on Geekwire years ago. I think I'm four years into it at this point of how I sold my car and went full Uber and basically did all the cost modeling. And I can't remember what it was, but I saved somewhere between $5,000 and $8,000 a year, even if I'm aggressively taking Ubers and lifts everywhere and just not having a car living in the city. And, you know, Zipcar or Car2Go for longer weekend trips, whatever it is. And I can't help but wonder, like, that cost difference feels too big. Like,

• 1:54:56Ben Gilbert?

  it does feel like if you don't have a car and are ride sharing everywhere, it shouldn't be that dramatically different than owning a car. Other like that these pricing inefficiencies sort of work themselves out and the market becomes more efficient over time. And so it does feel like, you know, how is it that I can get from Seattle to Bellevue for, you know, $16, you know, in a ride sharing situation? Like, I understand the economic argument for like, well, your car is just sitting there for most of the time. So it makes sense that you're way overpaying for it and insurance and all this other stuff. But like, it is crazy, the degree to which it saves money for me personally. And you got to just wonder,

• 1:55:36Ben Gilbert?

  like, are we in a, are we being overly subsidized here? And how long will that go on? And, you know, are we now subsidized from the public markets?

• 1:55:48David Rosenthal?

  Yeah, right. Almost assuredly, yes. You know, the true cost of your ride to Bellevue is more than $16.

• 1:55:57Ben Gilbert?

  Yeah.

• 1:56:00David Rosenthal?

  Okay. What would have happened otherwise? I feel like we explored so many paths along the way. Lift would die.

• 1:56:08Ben Gilbert?

  Yeah. I mean, all these companies would die. They needed.

• 1:56:13Ben Gilbert?

  Is 2.3 billion going to be enough? Like, are we going to have to see additional public offerings from all these companies? Or I should say Uber and Lyft, or just on this episode? Do you think in the next 18 months, we'll see additional public offerings to get more cash and to lift when they feel that the wind is at their backs for a good time to do another issue?

• 1:56:35David Rosenthal?

  Well, and I think this is, you know, Zoom filed to go public last week as well, and we can't wait to cover that one. Everybody's so excited, they're profitable. It's the rare tech unicorn that is profitable. So, um, yeah, is this the normal? Like, I, good question.

• 1:56:53Ben Gilbert?

  Yeah. There's actually a really good, I'm gonna, this is in tech themes, but since we're heading there anyway. There was a finance professor cited by the Wall Street Journal that said that 83% of US listed IPOs that took place during the first three quarters of 2018 lost money in the 12 months leading up to their debut. The Journal goes on to note that the previous record for the statistic was that when 81% of stock market debutantes were unprofitable. So, wow.

• 1:57:25Ben Gilbert?

  Previous record 81%, this was 83% of the first quarters, three quarters of 2018. That's a lot of companies going profitable, sorry, going public that are unprofitable.

• 1:57:34David Rosenthal?

  Yeah. We're in a new world. It's also hard to square that with the, these companies are staying private longer. You would think if you're staying private longer, you would also get to profitability by the time you go out to go public. I mean, I understand all the arguments, especially as a venture investor, why growth is better. But, um, yeah, it's a, it's a brave new world we live in.

• 1:57:58Ben Gilbert?

  Yeah. For how long? That's the question. You know, what, shouldn't the, this is a good philosophical question, but should the public markets exist in a fairly risk mitigated way so that individual investors don't lose their shorts? I mean, this is why we have a creditation for private investors. You know, should? Should 83% of companies that are creating offerings for the United States public be doing so unprofitably? Or have we reached a point where we're now using the public markets for something that is suboptimal?

• 1:58:33David Rosenthal?

  Well, a philosophical debate for another day, but I would just say that risk and return are inversely correlated, and that is a law of finance. So, you know, if you want high return, you need to take high risk.

• 1:58:47Ben Gilbert?

  Yep.

• 1:58:48David Rosenthal?

  So, all right.

• 1:58:49Ben Gilbert?

  Tech themes. All right, so I'm just going to roll through five here real quick that were listed in the S1. There's something kind of cool about the fact that the S1s, you know, they list out all these risk factors that are just like, it's great to read how honest everyone has to be and upfront everyone has to be. But then they also list like, hey, what are the, what are the key trends and themes that have enabled you to do what you're doing? So they talk about sharing versus ownership, on-demand services, flexible work, their mission-driven brand appeal, which I do think is actually on the rise. I feel strongly that people care more than ever about the work that they're doing and need that to motivate them intrinsically.

• 1:59:29David Rosenthal?

  Well, it certainly has made a huge difference in attracting talent for them and writers in the wake of, you know, the delete Uber fiasco.

• 1:59:37Ben Gilbert?

  Absolutely. And multimodal transportation. And, and I think one that they, they don't list in there that is, is super interesting to me is these companies became possible because the iPhone 3G or 3GS

• 1:59:53David Rosenthal?

  Yes.

• 1:59:54Ben Gilbert?

  Launched with an embedded GPS that could be used by third-party applications and do things like summon a car to you wherever you are and, and in total create like a close to half a trillion dollars in value or, or, I mean, am I over? No, it's like half a trillion to a trillion if you add up all these companies internationally that all basically do this thing of bring a car to me right now when I push this button. Like crazy that, that, that adding that sensor and API to smartphones just enabled all this to happen.

• 2:00:31David Rosenthal?

  Totally, totally. I mean, I guess that's one thing, that's the only thing I'll highlight because we talked about so many along the way and history and facts, but you know, Logan and John, and Logan in particular, thought that the wave they were going to ride that would enable Zimride was social.

• 2:00:52David Rosenthal?

  But the real wave that enabled Lyft was mobile. And, you know, not to discount, you know, that social wave is big and to what and they're very interrelated, but yeah, like you just can't underscore how big the mobile computing and smartphone wave was and, you know, ride sharing being only one industry of half a trillion plus dollars worth of value unlocked by it.

• 2:01:22Ben Gilbert?

  Yep. Yep. It's a great point.

• 2:01:25David Rosenthal?

  And it locked by sensors, GPS, and if you think about Instagram, cameras.

• 2:01:31David Rosenthal?

  Features on smartphone hardware. Yeah.

• 2:01:35David Rosenthal?

  Okay.

• 2:01:36Ben Gilbert?

  All right. I've got a few here. Two points I might want to make in one point of discussion. So this one, we said Craigslist like five to six times earlier this episode. There are so many companies founded by slicing off a piece of Craigslist. And I think it's really interesting that there's large businesses on their own on Craigslist, but when you add more trust, safety and efficiency to the marketplace by making it a vertically specific application, rather than whatever is happening on Craigslist, they can become a massive business. And so ride sharing, while big on Craigslist, wasn't as big as it could have been because, you know, you couldn't see who was picking you up. It didn't have all

• 2:02:18Ben Gilbert?

  these, you know, vertical specific features and sort of real timeness necessary to, to enable that application. And so I think we'll continue to see even more companies that are something that used to exist on Craigslist, but are a vertical slice that it has, has unique functionality.

• 2:02:35David Rosenthal?

  Totally.

• 2:02:36Ben Gilbert?

  Um, we've talked about this one before, uh, both on the main show, especially in this era of, uh, of, uh, seed POs, but, um, um, I guess it's more like an I seed O, like an initial seed. I guess that's, I don't know what the right terminology there is, but seed staged style storytelling, uh, in, in your IPO, you're always storytelling and, and, you know, had a great, great, uh, um, you know, the art of pitching, uh, limited partner show too, where, you know, you're just always, always storytelling.

• 2:03:09Ben Gilbert?

  So much of this S1 is about the problem with the world as it is today and a little bit less about Lyft's particular solution. Like you read through all the pros, um, in like the first, I don't know, 25% of it. And you're like, okay, like I get all the stuff that's wrong. Like, can you please talk about your product and your solution? Like, I understand the trends. I understand, you know, why things need to get better. I, it's, it's, it's really this huge narrative of beating the drum of there's all these problems in the world. We're going to be the ones to fix them all eventually. Sure. Yeah. Let's talk about this stuff that we're doing right now and how it's going.

• 2:03:45David Rosenthal?

  Mm hmm. I mean, yeah, it's a, it's a marketing document and S1s always have been, but like in recent years, people have really embraced the fact that they're a marketing document.

• 2:03:56Ben Gilbert?

  There's a quote in there that like, come on guys, there's a quote that says, "The land devoted to parking in the United States could fill an area larger than the state of Connecticut." It's like, okay. And like,

• 2:04:11David Rosenthal?

  So great.

• 2:04:13Ben Gilbert?

  Yeah. All right. So one discussion I wanted to have with you before we sort of go into, uh, value creation, value capture, and then grading is was it a good idea or not for Lyft to go first? And is it, on top of that, is it even better that Lyft has IPO'd before we've even seen Uber's S1?

• 2:04:35David Rosenthal?

  I mean, it's my answer to this, I've been thinking about this is yes, from every angle. Certainly yes for Lyft, because do the game theory otherwise. Uber comes out first, they're bigger, they're monster, it does great. Uber comes out first, does great, then Lyft comes out second and nobody pays attention. Uber comes out first and does terribly, then Lyft still like is going to do terribly because everybody's like, you know, so definitely from Lyft's perspective, better to go first. From Uber's perspective, actually better for Lyft to go to go first, right? Because Uber gets to see the reaction to Lyft, which has been very positive.

• 2:05:18David Rosenthal?

  And now they can tailor their pitch accordingly. And I think, you know, I was joking with with the friend yesterday. I think the happiest people yesterday in San Francisco were not Lyft employees, but Uber employees. Because they're like, oh, man, if Lyft is worth $26 billion, like, how much is Uber worth, worth, you know, a lot more than that, we will find out.

• 2:05:42Ben Gilbert?

  Yep, I completely agree with all of that. All right, so this was a section that we have, and I think we'll keep fairly brief here. That was brought up by listeners several times over the last year. That is, hey, you guys often talk about, was a transaction good for the acquirer? Or was a transaction good for the company that IPO'd and raised that money? But like, less about was it good for the world? And not enough about the ratio between value creation and value capture. And so I think we thought it was important, particularly in this one, where there's so much discussion around minimum wage and around the contractor versus employee relationship.

• 2:06:24Ben Gilbert?

  To talk about this, because I think less so much on the value creation versus value capture side. I think Lyft has figured out a phenomenal way to capture the value they're creating. But it is interesting to try and think about sort of like net value for the world. Is it a good thing? And, you know, are the masses sort of receiving enough value versus the company receiving a lot of value? And David, like, I'll turn it over to you. How do you feel about?

• 2:06:56Ben Gilbert?

  Where Lyft sits in this relative to a lot of other companies that are also sharing economy companies and then sharing economy companies broadly.

• 2:07:04David Rosenthal?

  Totally. This is such a complicated question.

• 2:07:08Ben Gilbert?

  Yeah.

• 2:07:09David Rosenthal?

  And, you know, the cop out, we will talk about this now and give some answers, but like deserves a way more airtime than we have for it now. As a marketplace investor and a true believer in marketplaces, which I am, you know, I believe in economics and I believe in the concept of expanding the efficient frontier and that what these marketplaces are doing relative to the status quo is expanding the price at which supply meets demand for, or expanding the point on the curve where this demand and supply curves meet. And when you do that, it is better for all participants in the economy. So like, I truly believe that. And I think ride sharing is that case too, you know. Now, drivers are

• 2:07:54David Rosenthal?

  very upset and have about a lot of things and have perspectives on that. But if you look at, you know, how economically how taxi drivers did in the previous system versus how drivers on ride sharing platforms do, I suspect it is marginally more positive on ride sharing platforms. Now that said, obviously there are problems and there are unintended intended consequences of all these platforms, you know, from Airbnb to Rover to Lyft and Uber. A super interesting thing though, again, back to the best thing for Uber happening was that they didn't buy Lyft because otherwise they would be regulated as a monopoly. Lyft being a viable second player in the marketplace keeps either Lyft

• 2:08:38David Rosenthal?

  or Uber from exploiting drivers. And so like, you could say like, you know, we were talking about subsidizing your ride to Bellevue, like that's a net economic gain to drivers. And that is happening because there is viable competition. Like this is how economics works. This is the value of competition in the marketplace. So like on a, while certainly I recognize all the problems and unintended consequences, I think net on the whole, like if you believe in economics and Adam Smith, like it's working as it, you know, should, which does not mean there are problems.

• 2:09:16Ben Gilbert?

  Right. And to paraphrase a little bit, you're basically arguing that, look, if there's people that have a problem, but can't find anybody to satisfy that problem, and then you introduce an efficient marketplace where suddenly people who have that problem can pay for it being satisfied, and then somebody can make money by satisfying that need, then you've created net new, you know.

• 2:09:41David Rosenthal?

  Yeah. Well, before ride sharing.

• 2:09:43Ben Gilbert?

  Creating efficient markets.

• 2:09:44David Rosenthal?

  There were two problems with the city transportation marketplace. One was with the taxi system. One was just, it was hard to access for demand. So the ride sharing innovations have made the market much bigger by expanding the ease with which demand can access it. But also, for supply, there was a middleman, like the taxi companies and the medallion companies were middlemen that were taking economic rents in the market. And they don't exist anymore. So net, it is, you know, the versus a driver that was working for a taxi company, or a driver who is driving on Lyft and Uber, more of the

• 2:10:27David Rosenthal?

  economic value should be flowing directly to the drivers in this more streamlined system.

• 2:10:31Ben Gilbert?

  That's kind of interesting. We should do an analysis or some, I'm sure somebody has, like, if you go aggregate all the taxi companies, were they taking more than 28% of a vig?

• 2:10:43David Rosenthal?

  Mm-hmm.

• 2:10:44Ben Gilbert?

  I would assume.

• 2:10:46David Rosenthal?

  They must, well, yeah, I don't know. It would be, we should, I'm sure there've been studies doing the math.

• 2:10:52Ben Gilbert?

  Yeah.

• 2:10:52David Rosenthal?

  But even just if, I think they would have had to have been because the cost of medallions, like in New York City, or any city, was so high. So you had to be paying back those fixed costs as a taxi company operator.

• 2:11:03Ben Gilbert?

  Right. Right, right.

• 2:11:09Ben Gilbert?

  The only point that I want to make here is that what has been just striking and amazing to me is that if you are someone, let's say you're immigrating to the United States and you're plopped down into a city where you don't know anyone, it is unbelievable that you can go and make a wage by walking into a Lyft's or Uber's office, renting, you know, having the full service, car lease, rental, whatever that apparatus is, and then boom, you're off, sort of making a living wage, and some would argue that, of course, but, having a job instantly, even if you, you know, none of your skills translate from whatever

• 2:11:51Ben Gilbert?

  you were previously doing, I do think that is-

• 2:11:55David Rosenthal?

  And compare that to the taxi system where that was not the case.

• 2:11:59Ben Gilbert?

  Yep. Yep. It's totally amazing.

• 2:12:02David Rosenthal?

  Totally amazing. Okay, cool.

• 2:12:05Ben Gilbert?

  Okay, so the way that we grade-

• 2:12:08David Rosenthal?

  Let's bring this one on home.

• 2:12:10Ben Gilbert?

  Yeah. Is, rather than just issuing, hey, it was an A, what do you have to believe five years from now, or 10 years from now, whatever, for this to be an A+, and what happens that makes it less than that? And I think, just to be quick about this, I think if they can figure out, first of all, if, so there's a chance autonomy hurts them more than it helps them, if the advent of autonomous vehicles just introduces relationships with car manufacturers that disintermediate Uber, Lyft, you know, a lot of these providers, but let's say that they play nice with this ecosystem, and that Uber, or that Lyft actually

• 2:12:52Ben Gilbert?

  comes out with their own self-driving vehicles, and, oh my gosh, they currently are giving, what, 72% of the ride to the drivers. The business looks a lot different if they have autonomous vehicles, obviously. The question is, you know, in the next two, three years before autonomy comes, which could be, who knows, a decade or more, you know, are they going to be able to get profitable? And I think-

• 2:13:25Ben Gilbert?

  They need to do a lot more than just get a little profitable in order for the enterprise value to be fulfilled. So I think it's can the big pivot for me is does autonomy actually help lift and get them to a place where at infinitum, you know, many, many years from now, they're a wildly profitable company.

• 2:13:45David Rosenthal?

  Yep. Yeah, I think I would reduce it even further. Like, forget autonomy. Maybe it happens, maybe it doesn't. I think actually I thought that the one of the interviews that John and Logan did yesterday was quite thoughtful about autonomy and also in relation to what we were just talking about with value creation and value capture. Even as autonomy comes, it's going to be useful for some use cases and will still need human intervention. Like, the driver isn't going anywhere anytime soon for the majority of use cases.

• 2:14:20Ben Gilbert?

  Yeah.

• 2:14:21David Rosenthal?

  Whether that driver is in the car or driving, monitoring it virtually from a command center or, you know, what have you. So autonomy is like a who knows how it will impact the business. And but I think the simple, the simple, the A plus case is they solve the concerns of the bear, the bears, which is like they they get unit economic profitable.

• 2:14:45Ben Gilbert?

  Yep. Yep. Yep.

• 2:14:49David Rosenthal?

  And then I think the downside cases, they don't. And they're this this competition with Uber is too intense and everybody keeps losing money.

• 2:15:00Ben Gilbert?

  Very fair. I will say operationally, a plus IPO, like the way that they actually, you know, they needed to access the public, public markets for for capital and they did so in a highly non dilutive way and in a way that got cash into the company and a way that propels every bit of the company forward with a lot of momentum. So, you know, I don't think they could have asked for it to go more smoothly than it went.

• 2:15:25David Rosenthal?

  Totally, totally agree.

• 2:15:28David Rosenthal?

  All right.

• 2:15:29Ben Gilbert?

  Carvouts.

• 2:15:29David Rosenthal?

  Well, yeah, listeners, that was our, we'll move to carve out this. But that was a, that was a lot. Thanks for bearing with us. We, we know that was a lot, but you know, just underscore again, like this is such a huge moment for Silicon Valley, like both lift itself, this whole market of peer-to-peer ride sharing and as the first of the, you know, this generation of companies to, to come out and operate in the public markets. So.

• 2:15:57Ben Gilbert?

  Very much a perfect storm here.

• 2:15:59David Rosenthal?

  We, we couldn't help ourselves from digging in deeply. So thanks for bearing with us.

• 2:16:03Ben Gilbert?

  Yeah. Yeah. Yeah. All right. My carve out is, uh, I, I had two choices and I'm going to go with this one because I mentioned Bill Gurley earlier. Uh, Bill Gurley is a tremendous venture capitalist, one of the best of all time at, at Benchmark. Um, he has a talk up on YouTube that he recently gave, um, called Runnin Down a Dream, How to Succeed and Thrive in a Career You Love. It is one of the best. If, if you are a college student, if you're getting your MBA, you know, if you're, um, even if you're just thinking about a career transition, it is one of the

• 2:16:43Ben Gilbert?

  most thoughtful and amazing talks about, uh, the world that we live in today and how you can work collaboratively with your peers to build knowledge and, uh, and, and leverage that knowledge. And I, and he gives these three amazing stories and they're, um, I'm not going to say who they're about because it's wonderful how he reveals them and, and story tells the whole thing. But these three very unrelated, non-tech, uh, uh, sort of use cases and stories about, um, people who were artists and visionaries and, um, sort of pursued their dream and, and became the best in their field, the thing that they were doing. And it is, it is just really well done. So, um, I really enjoyed it and I think

• 2:17:28Ben Gilbert?

  you will too. And we'll put a link in the show notes.

• 2:17:30David Rosenthal?

  Cool. I can't believe I hadn't heard of that yet. I'm going to run, not walk to go, to go watch that. Um, uh, so great. Uh, my carve out also in video format, very different, lighthearted. Uh, I got recommended on Netflix. Uh, love the Netflix algorithms. Cricket Fever, which is a documentary they did on, uh, have you seen this in your feed?

• 2:17:56Ben Gilbert?

  No, but I'm just worried that you're gonna get it recommended something on YouTube and I'm gonna lose you.

• 2:18:00David Rosenthal?

  I'll never emerge again. Cricket Fever about the sport of cricket and about the Mumbai Indians in the, which is one of the premier teams in the India Premier League cricket, which is, I've always been sort of fascinated by cricket, but in 2008, the India Premier League, the IPL, launched. It is a new form of short-form cricket called T20. It is much more exciting and fast-paced than traditional cricket. Matches last two to three hours and it's incredible. They have like cheerleaders and fireworks and like.

• 2:18:39Ben Gilbert?

  It's like the XFL of cricket.

• 2:18:41David Rosenthal?

  It's the XFL of cricket, but the IPL is now the sixth most valuable sports league in the world and rising quickly. And it's so exciting and fun to watch. And so this documentary that Netflix did follows the Mumbai Indians, which are owned by the family of the founder of Reliance, the, I believe, the wealthiest man in India. And throughout the season, it's just so fun.

• 2:19:09Ben Gilbert?

  Wow. All right. Well, I get it. Well, obviously you'll put it in the show notes. I'll have to check it out.

• 2:19:14David Rosenthal?

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

• 2:19:23Ben 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.

• 2:19:33David 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.

• 2:19:54Ben 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.

• 2:20:06David 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.

• 2:20:17Ben Gilbert?

  Well, listeners, if you aren't subscribed and you like what you hear, you should. We'll be gloriously covering all of the big upcoming IPOs. And if you want to go deeper on what it's like to build a startup, get interviews with expert operators and VCs, and explore some of David and my personal investment theses, you should consider becoming a prestigious Acquired Limited partner. You can click the link in the show notes or go to kimberlite.fm/acquired. And seriously, as I mentioned at the top of the show, I promise you will be overjoyed with how buttery smooth it is to get more acquired right there in your favorite podcast player.

• 2:20:51David Rosenthal?

  Ben is multi-talented and a great product manager in addition to everything else.

• 2:20:57Ben Gilbert?

  Thanks, David. All right, listeners, with that, we will see you next time.

• 2:21:01David Rosenthal?

  We'll see you next time.