Seinfeld

Seinfeld, which ended three decades ago, has been watched by 72 million Americans so far THIS YEAR. Behind that incredible stat is an equally incredible business story: obsessive creators, perfect market timing, an ownership structure that aligned incentives for the long term…all of which created a sitcom that became number one by breaking all the rules. Sponsors: Many thanks to our fantastic Fall '26 Season partners: Sierra https://link.acquired.fm/sierraAnthropic https://link.acquired.fm/claudeSentry https://link.acquired.fm/sentryWorkOS https://link.acquired.fm/workosLinks: Sign up for email updates https://www.acquired.fm/email, get our takeaways and research photos from each episode, and vote on future topics! The Acquired Seinfeld Companion PDF https://library.acquired.fm/episodes/seinfeld.pdfTop of the Rock: Inside the Rise and Fall of Must See TV https://www.amazon.com/Top-of-Rock-audiobook/dp/B007Z96F9E/ref=sr_1_1?dib=eyJ2IjoiMSJ9.96EnQqJI1ZBiR0uUQbRjK5hWVdpNOcJtHaS1TSiZ2zonE_CtW-Vfr_X0L47k32hErPE2820k3g7YHAzYlsQ0Z3jtiGNR5cUlnIYhB693O7XwQNlSajnV6j0emf_bvmpDXi2kB5j6FbNLPElJ7lYyx8Ygp_NX8NRfHtaqzkLKnqBaZczWWAoJCkioLvFwrJDbKyIHskoFRLQDNEax7AaZoJzXTnx5PKv6_XDnsoXnbxo. CJy8pS3e0_yB8d0edQQ1WJcS-1W-8mjcFYwi47FTXnM&dib_tag=se&keywords=top+of+the+rock&qid=1790742346&sr=8-1 by Warren LittlefieldComedian https://www.imdb.com/title/tt0328962/?_ssoLoop=1The Seinfeld Chronicles: An Unnecessary Data Exploration https://seinfeld.visualisingdata.com/ by Andy KirkWorldly Partners' Seinfeld Study by Arvind Navaratnam https://worldlypartners.com/businesshistoryJerry Seinfeld's 2017 Harvard Business Review Interview https://hbr.org/2017/01/lifes-work-jerry-seinfeldAll episode sources https://www.acquired.fm/episodes/seinfeld#sourcesCarve Outs: Seinfeld https://www.imdb.com/title/tt0697734/ - "The Marine Biologist" https://www.imdb.com/title/tt0697729/Seinfeld https://www.imdb.com/title/tt0697717/ - "The Jacket" https://www.imdb.com/title/tt0697713/Seinfeld https://www.imdb.com/title/tt0697685/ - "The Dinner Party" https://www.imdb.com/title/tt0697684/The Seinfeld Chronicles: An Unnecessary Data Exploration https://seinfeld.visualisingdata.com/ by Andy KirkBuck's of Woodside https://buckswoodside.com/Tin Can https://tincan.kids/More Acquired: Get email updates https://www.acquired.fm/email and vote on future episodes! Join the Slack http://acquired.fm/slackCheck out the latest swag in the ACQ Merch Store https://www.acquired.fm/store!00:00:00 Start 00:00:55 Intro 00:04:52 Jerry Seinfeld's Stand-Up Origins (1954-1988) 00:16:16 NBC Pitches a Late-Night Special (1988) 00:21:35 Enter Larry David (1988) 00:35:04 Fin-Syn Rules & The Castle Rock Deal 00:52:45 Making the Pilot & Test Screening Disaster (1989) 01:04:24 Rick Ludwin Saves the Show (1989-1990) 01:10:17 Adding Elaine & "No Hugging, No Learning" 01:28:41 Season 2 & Defying Network Notes (1991) 01:35:56 The Structural Mechanics of Seinfeld 01:45:11 Season 4 & "The Contest" (1992) 01:57:09 Moving to Must See TV Thursdays (1993) 02:07:28 Anatomy of a Production Week & The Harvard Lampoon Writers 02:15:44 The Syndication Cash Cow (1995) 02:28:36 Larry Leaves, Cast Salaries & Season 9 (1996-1997) 02:42:13 Jack Welch's Brunch Offer & Jerry Walks (1997) 02:55:04 The Finale & Final TV Economics (1998) 03:11:21 The Modern Streaming Era & Netflix's Massive Deals 03:17:38 Analysis 03:30:00 7 Powers 03:34:00 Quintessence 03:41:49 Carve-Outs + Outro ‍Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.

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

• 0:01Ben Gilbert?

  So David, I bought a DVD player for research for this episode.

• 0:05David Rosenthal?

  No way. Did you buy the box set?

• 0:07Ben Gilbert?

  Because there is some stuff, like facts about the pilot, that are only available in the DVD commentary and don't exist anywhere online. So I had to go on eBay, buy a copy of the Seinfeld DVDs and buy a brand new DVD player here in 2026 to view it.

• 0:28David Rosenthal?

  Do they even sell those on Amazon anymore?

• 0:29Ben Gilbert?

  They do. Sony makes them. They're like, I don't know, a hundred bucks or something, but...

• 0:33David Rosenthal?

  Sony, there you go. Appropriately. Distributors of Seinfeld.

• 0:37Ben Gilbert?

  That's right. All right. Should we do it?

• 0:39David Rosenthal?

  Let's do it.

• 0:57Ben Gilbert?

  Welcome to the fall 2026 season of Acquired, the podcast about great companies, well, usually companies, anyway.

• 1:05David Rosenthal?

  Usually. The podcast about great business assets.

• 1:09Ben Gilbert?

  And the stories and playbooks behind them. I'm Ben Gilbert.

• 1:13David Rosenthal?

  I'm David Rosenthal.

• 1:14Ben Gilbert?

  And we are your hosts. Today, listeners, we are taking a giant left turn. David and I were staring at each other, poring over our usual topic list, and we decided that we only wanted one criteria for selecting this one. What episode would we have the absolute most fun making? And can we do something different and fresh for Acquired? And we found something we are very pumped about, the business of Seinfeld, the show Seinfeld. We both had just read this astonishing stat that Seinfeld, in the first six months of this year, in 2026, has been watched by 60 million Americans, which is about 20% of

• 1:58Ben Gilbert?

  the entire US population.

• 2:00David Rosenthal?

  This show went off the air almost 30 years ago.

• 2:02Ben Gilbert?

  So I reached out to Nielsen to verify this. Not only is it true, they said that if you update it through the end of August, that number is up from 60 million to 72 million Americans.

• 2:15David Rosenthal?

  Wow. That's almost the same audience size as the Seinfeld finale when it aired.

• 2:21Ben Gilbert?

  This is a show that finished making new episodes nearly three decades ago, and yet we are all still watching it. So why? Netflix's 2019 deal for Seinfeld, which was reported at well more than $500 million over five years, was the largest sum that a streamer has ever paid an outside studio to license a series that's no longer in production. $100 million plus per year, decades after they are done making new episodes. And everything, the way the economics break down, the way that it is owned and structured, is essentially a complete accident of history. Seinfeld managed to be one of the last shows of the old world, where everyone watched the same thing at the same time, while at

• 3:05Ben Gilbert?

  the same time also having a foot in the new world, just as the internet was taking off. And the story is really an entrepreneurial one, of obsession, of craft, of a team that created the number one show in America by doing everything completely different than the way it had ever been done before and defying all conventional wisdom. It is one of the best examples we have ever studied on Acquired, where the creators, Jerry Seinfeld and Larry David, were such big believers that their product was excellent that they didn't care what anyone else thought or what the numbers looked like at first, and how a small, passionate, early fanbase with a slow burn went on to become their greatest

• 3:47Ben Gilbert?

  asset. Today, listeners, we do an experiment here on Acquired, the business of Seinfeld.

• 3:53David Rosenthal?

  Let's do it.

• 3:54Ben Gilbert?

  So listeners, as always, you can find the visuals, charts, and illustrations of key concepts from this episode in our companion PDF at library.acquired.fm. You can join the email list at acquired.fm/email. That's where we will send all the behind-the-scenes photos that we found in research, past episode corrections, and vote on future episode topics, acquired.fm/email. Come talk about this with us and the whole community in Slack after you listen at acquired.fm/slash/Slack. And before we dive in, we want to thank our brand new presenting partner, Sierra.

• 4:28David Rosenthal?

  Yes. Sierra helps the great companies of the world build better customer experiences and drive stronger business outcomes with AI.

• 4:36Ben Gilbert?

  That's S-I-E-R-R-A, Sierra. So with that, this show is not investment advice. David and I may have investments in the companies that we discuss, and this show is for informational and entertainment purposes only. David, where do we begin?

• 4:52David Rosenthal?

  Well, naturally, even though this is an episode about Seinfeld the show, not Jerry Seinfeld the person, we have to start with Jerry himself.

• 5:00Ben Gilbert?

  Yes.

• 5:01David Rosenthal?

  So Jerry is born in 1954 in Brooklyn to a Jewish family. And when he's young, the family moves out to a small town on Long Island named Massapequa. Actually, I've spent a fair amount of time in my childhood in Massapequa. It is definitely suburban Long Island, not a lot of interesting culture going on there.

• 5:23Ben Gilbert?

  Great.

• 5:24David Rosenthal?

  But, but Jerry's father, Cal Seinfeld, was known in the family and amongst his friends for just always being a funny guy, always telling great jokes, as Jerry would talk about it later. He had the funny gene, and Jerry definitely did too.

• 5:44Ben Gilbert?

  Yeah, Jerry insists that comedy is a gene, right?

• 5:47David Rosenthal?

  Yes. Yeah, yeah. He thinks his kids have it. He knows his dad had it.

• 5:50Ben Gilbert?

  And that it can't be taught.

• 5:51David Rosenthal?

  Yep.

• 5:52Ben Gilbert?

  Obviously, you can work really hard and hone in and develop more material, but the like instinct is actually genetic.

• 5:57David Rosenthal?

  Yep. Yep. He's always making his friends and family laugh. And right around the same time, when he's about 12 years old, he falls in love with an album, with a record, not a music album, not one of the, you know, great bands there at the time, the 60s, 70s, but with Bill Cosby's stand-up comedy album. Why is there air?

• 6:23Ben Gilbert?

  This used to be a big thing, these comedy records.

• 6:25David Rosenthal?

  Yeah, this was a big thing. Stand-up albums on vinyl.

• 6:29Ben Gilbert?

  It's funny, today we all tune into Netflix to watch the big stand-up special that just dropped. Albums were doing that same thing 50-plus years ago.

• 6:38David Rosenthal?

  Yep, totally. So after high school, Jerry goes to Queens College in New York, actual New York City, where he majors in communications and theater. And he sets up for himself. He's really into comedy. He sets up an independent study where he studies stand-up comedy, like his heroes. So he goes out to the comedy clubs in New York, he writes papers for college, analyzing various comedians' sets, and then ultimately, he himself goes onstage as part of his college studies to get experience, try out being a stand-up comic. And it's just like what he's born to do.

• 7:14Ben Gilbert?

  And it seems like from every interview he's given, and Jerry has given a lot of interviews.

• 7:19David Rosenthal?

  We'll get into why Jerry has given a lot of interviews later in the episode.

• 7:23Ben Gilbert?

  Yes. He basically said, I had one goal. I mean, it's since middle school, high school, become a successful stand-up comedian. That's it. I didn't have like specific goals around other things I wanted to do, some sort of like career progression, something I wanted to rise toward, family hobbies. Like, I had no goals around anything other than become a successful stand-up comedian.

• 7:46David Rosenthal?

  Yep. So at age 22, after Jerry graduates from Queens College, he goes into his career. He makes his stand-up comedy debut at the famous Catch a Rising Star Comedy Club on the Upper East Side in Manhattan in 1976. And just like he did in college in his independent study, he like does the same thing. He tapes himself, he analyzes his own performances, he's performing night after night after night. I mean, this is a level of obsession that is necessary for Jerry to become who he is, but it's also not that uncommon in the stand-up industry. Like, this is what you do. If you are going to dedicate yourself to the craft,

• 8:29David Rosenthal?

  you are every night performing, analyzing, just meticulously refining every word, every syllable, every movement that comes out of your mouth and your body.

• 8:40Ben Gilbert?

  And stand-up is this thing that is unique among any sort of performance, be it entertainment, music, sports, where you get a real-time scorecard from the audience.

• 8:54Ben Gilbert?

  On something that is entirely within your control, and you might have just come up with it that morning. Let's say you're singing and you manage to write a song and perform it. This is sort of a long process. Usually it involves other people arranging the music or other musicians playing with you. In stand-up, it's you and your material, delivered through your instrument, with a real-time, brutally honest feedback from the audience, whether they're laughing or not. It is as raw as it comes.

• 9:23David Rosenthal?

  Yeah, it is a solo act. He compares it to being a solo athlete, but it's like the most extreme feedback and spotlight version of an athletic performance.

• 9:33Ben Gilbert?

  Yep.

• 9:34David Rosenthal?

  So this is what Jerry does night after night after night. Pretty quickly, Jerry becomes a success as a stand-up. And that leads him to other opportunities in comedy and specifically in television. So in 1979, three years after he begins his comedic career, he gets a call from Hollywood. They want him to come out to LA and join a sitcom, a show named Benson, which I'm sure none of you listening remember. So he's going to get this recurring role on this sitcom. You know, great, he's going to make a lot more money than just playing in the clubs. It's going to be steady work, et cetera, et cetera. Well, he's in three episodes and then his character gets dropped from the show. Doesn't, uh, doesn't work out exactly as he planned.

• 10:17Ben Gilbert?

  Which is the common experience in television.

• 10:20David Rosenthal?

  Yep. But this becomes very, very important to Jerry and to the eventual show Seinfeld, because despite this disappointment with Benson, during that first brief stint that Jerry has in LA, he performs in local comedy clubs, performs stand-up on the nights and weekends around LA, where one night he gets spotted by the legendary talent manager, George Shapiro, who along with Shapiro's partner, Howard West, were like the most legendary comedian talent managers slash agents in the business. They had gotten Andy Kaufman, the recurring role on Taxi, that sitcom that was a huge hit.

• 11:04David Rosenthal?

  They were placing their comics on The Tonight Show, which was filming out there in LA at the time with Johnny Carson, getting them exposure nationally. It was all this flywheel between stand-up and TV that was happening.

• 11:16Ben Gilbert?

  And what Jerry is watching here is, oh, that's how you become successful as a comic, to make money? And it's kind of like the next rung in the ladder. But it's not like what he wants is to be in sitcoms. His calling is stand-up and sitcoms are the thing that the industry sort of has for you.

• 11:37David Rosenthal?

  Yep. Well, it also becomes a self-reinforcing flywheel for your stand-up act, because once you're on TV, whether it's sitcoms or like a regular spot on The Tonight Show, you get national exposure, then you can tour with your stand-up routine. And people in cities all across America will know you. They'll buy tickets to your shows. Like, that's the way you hit it big in stand-up. So, once Jerry is signed with Shapiro and West, they get him the big break, a spot on The Tonight Show with Johnny Carson. So Jerry talks about this. He trains like he's training for the Olympics to go on for, I think it was five minutes? A five-minute set?

• 12:16Ben Gilbert?

  And he always talks about how you're taking most of the best material out of your 40-minute set to create that idealized six minutes, to just put your absolute best foot forward.

• 12:27David Rosenthal?

  Yep. So he goes around to clubs and he'll do like the five-minute set as he's practicing for months, just to get it down to go on stage for five minutes. Does it like 200 times in clubs, come off, get the next guy on. He starts jogging to get in shape. He's playing the Superman theme on his Walkman. So in 1981, the appearance happens and it's a hit. Johnny loves him. Famously, while Jerry is performing, Johnny flashes him an okay sign from the desk. So everybody knows it's going well. And that leads to regular bookings on Tonight Show. And then that leads to Letterman wanting to book Jerry and other variety shows and all sorts of opportunities.

• 13:07Ben Gilbert?

  And this is where Jerry learns discipline, because if you spend five years creating your 40-minute act and then you get six minutes on Carson, you do your six minutes, then you get invited back pretty quick. The next six minutes in your act, they're not your best six minutes. They're your second best. Then your third, then your fourth. And he said he remembers watching other comedians just kind of churn out. Once they got through their material, they stopped being invited back on the show. And so he picked up this discipline of writing for hours a day, keeping steno pads or these yellow legal pads where he would write everything all the time, everything he was observing in the world, so that he could avoid that horrible fate of irrelevancy, of stop being invited back.

• 13:50Ben Gilbert?

  If you always are developing material and you kind of always do need to be on this treadmill of developing material, then you keep getting the opportunity.

• 13:58David Rosenthal?

  And you can see how this, you know, leads into Seinfeld eventually.

• 14:02Ben Gilbert?

  Yep.

• 14:02David Rosenthal?

  But yeah, this is the big difference between stand-up comics and like musical acts.

• 14:06Ben Gilbert?

  We're all happy to go to a concert and hear Taylor Swift shake it off again and again and again, every tour. That's like exactly what the fans want is to play the hits. You don't want to go see stand-up and see them tell the same joke again. You kind of get it once and then it's over.

• 14:19David Rosenthal?

  So eventually this leads to Jerry getting another sitcom opportunity. He gets considered for the lead in a pilot show for ABC called Past Imperfect.

• 14:31Ben Gilbert?

  Yep.

• 14:31David Rosenthal?

  And there's a new production company. It's a hot ticket. Things are looking promising for this show. Ultimately, the production company decides to go with somebody else, because Jerry doesn't have enough sitcom acting experience.

• 14:47Ben Gilbert?

  Just acting experience, period.

• 14:49David Rosenthal?

  Being a stand-up is not at all the same thing as being a great actor on a sitcom. These are two very different skillsets, even though the same people are doing it a lot at this point in time.

• 14:58Ben Gilbert?

  Yep.

• 14:59David Rosenthal?

  But losing the show doesn't matter that much to Jerry, because his stand-up act is killing it, thanks to all this exposure he's getting on the late-night shows. So he's touring basically every week. And he was so popular that he was making on average about $25,000 a week from the clubs that he was playing.

• 15:20Ben Gilbert?

  Wow.

• 15:20David Rosenthal?

  Across the country. So call it like a million dollars a year that Jerry's making just from his stand-up touring here in the mid 80s.

• 15:29Ben Gilbert?

  I didn't realize that before the show. Cause the life of a stand-up, when you're playing in comedy clubs, you get paid in stage time. They're like, you should be grateful to get an audience to test your material. When you go on Carson, I don't think you get paid, at least not anything material.

• 15:43David Rosenthal?

  Significant, yep.

• 15:44Ben Gilbert?

  And so it's this like building a brand around yourself, using the clubs and then using TV shows and then using the late-night shows so that you can tour. That's the first time you're like actually getting paid doing this form of art. And there's not that many people at any given time who are touring headlined artists, comedians, making a living.

• 16:06David Rosenthal?

  No, Jerry is in rare air here. And this is going to become super important, because this is why he has leverage with NBC, which is going to come up here in just a sec. So Shapiro and West, his managers, are like, okay, Jerry's a big star. He's making tons of money. We're making tons of money as his agent, but like, he can do more. They start going to NBC. In fact, George Shapiro starts writing letters, starts a letter-writing campaign to Brandon Tardikoff, who is the president of NBC Entertainment at the time, saying, "You've got this guy, Jerry, this comic. He's regularly coming on The Tonight Show. He's doing great.

• 16:50David Rosenthal?

  Don't you think he needs a show of his own?" Jerry actually has a great quote on this. He says, "Imagine you have this kid who's been on The Tonight Show like 30 times and on Letterman 30 times. He's on your network all the time. Presentable fellow, seems to do well. Nobody ever thought, why don't we talk to this young man? Maybe we can do some business, do a show." So finally, in November of 1988, Shapiro succeeds in convincing Brendan Tardikoff and the powers that be at NBC that, okay, maybe we should consider this, this Jerry guy. So they schedule a meeting to discuss it. But it's not with NBC's comedy department. So the comedy department at NBC means sitcoms. They control the sitcoms.

• 17:35David Rosenthal?

  They're not thinking of Jerry as sitcom material. They're thinking of him as late-night material, where he's obviously already doing great. Can he do specials for us? Which is the direction this ends up going. And, you know, I think probably in the back of their minds, they're also thinking like, hey, can this guy be a, be a host? You know, Johnny Carson's getting older. It would be a few years later that Johnny would retire. And then there's the whole, you know, Jay Leno, David Letterman drama and the succession. But like- This is a couple of years away. You know, maybe Jerry Seinfeld deserves to be in this mix.

• 18:05Ben Gilbert?

  You mentioned specials. There were network comedy specials, like Bob Hope would get these specials where he would go and do these routines. So it wasn't like, hey, we're going to pitch you a whole new format called Jerry Seinfeld Does Stand Up on TV. That was a thing.

• 18:19David Rosenthal?

  Yep. So on November 2nd, 1988, at 5:15 PM, local time in Los Angeles, NBC finally takes the meeting. And Jerry shows up, George Shapiro, manager's there, Brendan Tardikoff, president of NBC Entertainment, Warren Littlefield, who's head of primetime for NBC, and then Rick Ludwin, who heads the specials department, the variety and specials department that they're thinking about Jerry for. So Jerry says of the meeting, "We sat in there, we chatted about, oh, what do you think you want to do? Would you be interested in a talk show?" And we kind of settled on doing a special in the Saturday Night Live time slot, one week when Saturday Night Live wasn't airing.

• 19:00David Rosenthal?

  So NBC says, "Come back with a script for what you want to do for the special, and we'll make it."

• 19:05Ben Gilbert?

  I always like when they ask Jerry, "So what do you want out of this meeting?" And he has some comment like, "Oh, I actually hadn't really given that thought. Success as a comedian is getting this meeting. So I'm like in this room. I'm excited to be in this room with you right now."

• 19:19David Rosenthal?

  I'm just happy to be here.

• 19:21Ben Gilbert?

  So NBC, at the time, is in this pretty interesting place. They had just recently figured out who they were. In the late 70s and early 80s, they did not have a cohesive strategy. It was the classic, "We're making anything and everything for everyone." But they turned it around in the mid 80s. So Brendan Tardikoff, who you mentioned was the president of NBC Entertainment, had developed this philosophy to try to appeal to urban audiences aged 18 to 49 with smart content. And it worked. They're becoming the number one network. In 1986, GE comes in and buys the company. And they had two big messages. Keep in mind, this is GE, so.

• 20:02David Rosenthal?

  GE, like Jack Welch's GE, General Electric, yeah.

• 20:06Ben Gilbert?

  One, you need discipline in your business. You got to pay attention to costs and ensure that everything that you do aligns with your chosen strategy. You can't just be haphazard. And the NBC guys kind of know this at this point. And two, things are changing. Viewers have way more choices with cable. They're not just going to watch whatever you put on by default. So you need to quickly develop great shows, and if they're not great, get rid of them, that are aligned with your business strategy and the audience you want to reach and the advertisers you're trying to reach, and stop doing everything else. So of course, NBC kind of looks at, hey, this is already kind of working for us. Let's build a real business strategy around it. Hey, this is a very valuable demographic, urban audiences, 18 to 49, who want to watch smart content.

• 20:51Ben Gilbert?

  That's a great business to sell to advertisers. This is obvious now, but at the time, that was pretty novel.

• 20:58David Rosenthal?

  Well, it was also novel, I think, for a broadcast network to just have a corporate strategy, period. It's like, the other networks and NBC before this point in time, they were just like, we're the broadcast networks. America watches what we put on TV. GE coming in and saying, "No, we're General Electric. I'm Jack Welch, Mr. Black Belt Six Sigma, greatest CEO in American history," until it all fell apart. But you know, at this point in time, you need a corporate strategy.

• 21:24Ben Gilbert?

  Yes.

• 21:25David Rosenthal?

  It's tied to revenue and profits.

• 21:27Ben Gilbert?

  Yes.

• 21:28David Rosenthal?

  Everything that GE does.

• 21:30Ben Gilbert?

  So the perfect thing to do is sign Jerry Seinfeld to a development deal.

• 21:34David Rosenthal?

  Yes. Now, there's just one problem, though, walking out of this meeting when Tardikoff and Littlefield and Ludwin, they're like, "Yeah, whatever you want to do. Just come back. We'll come back with a script. We'll make it." Jerry has never written a script in his life for anything, and especially not a TV show. But Jerry knows one guy, one of his old New York stand-up buddies, who does have some experience with script writing that might be useful for this special here for NBC. So three days later, after this meeting in LA, Jerry flies back to New York and he goes looking for that guy,

• 22:17David Rosenthal?

  Larry David, late at night, after the sets at Catch a Rising Star, where Larry was a regular as a stand-up comic.

• 22:26Ben Gilbert?

  And they got to know each other well during this period where they're just both constantly going up, trying new material. You don't go on till 9:00, 10:00, 11:00 PM. So you're like friends with the other comics just sitting in the bars, chopping it up.

• 22:36David Rosenthal?

  As Jerry was coming up as a kid out of Queens College, Larry David was one of the established comics that he looked up to. But their careers had gone in very different directions here by the end of the 80s. Who was Larry David here in November of 1988? The answer is, he is nobody. And he's not even like a promising, young, nobody who has potential and talent like Jerry. He's 41 years old. He's single. He's broke. He lives in subsidized artist housing. His stand-up routine has, I think the term that people used to describe him at the time was, he was a comics comic, meaning that he was appreciated by other comics, but his humor did not exactly land with audiences.

• 23:21Ben Gilbert?

  And he had basically been chewed up and spat out of the industry.

• 23:24David Rosenthal?

  Jerry said, you know, "They always just sort of had like a comedic resonance, the two of them, and had known each other for a long time." But Larry has had this, kind of like George Costanza, eclectic string of failures that lead to this moment. So the stories about Larry before Seinfeld, you probably already know them. You just know them as George Costanza stories. So Larry had actually moved to LA, not for a sitcom, but because he got a job on a show called Fridays.

• 23:54Ben Gilbert?

  That's right. It was an SNL knockoff, right?

• 23:57David Rosenthal?

  Yes. I didn't know anything about this. ABC, here in the late 70s, early 80s, was jealous of Saturday Night Live on NBC. So they decide that they're going to just do a wholesale knockoff of Saturday Night Live. And the only two things they're going to change is, one, they're going to film in LA instead of New York. And two, they're going to do it on Fridays instead of Saturday. So they call the show Fridays.

• 24:21Ben Gilbert?

  And they're going to fish in the exact same talent pool.

• 24:23David Rosenthal?

  Yep. Yep. They also can't get the best talent out of New York, who's interested in this kind of stuff, because they're going to SNL. So they get Larry David to come out for this. They get a eccentric, young comic named Michael Richards. You may have heard of him. Fridays lasts, I think, three seasons and then gets canceled. But fortunately, SNL says, "You know, we could use some extra writing talent around here. Everybody who is a writer on Fridays will offer you a one-year trial." So Larry, he just needs a job. He needs a paycheck. He comes on for one season at SNL. The entire season, he gets only one skit that he writes included on the show.

• 25:05David Rosenthal?

  And famously, in Saturday Night Live history, one day Larry is so frustrated that what he's writing is not getting on the show, he flies into a rage, yells at all the producers, and screams that he's quitting, and he walks out of the set. And then he's freaking out. He's like, "Oh, shoot. I don't have a job. I'm not going to be able to pay my rent. What am I going to do?" He's so worried, so worried. He goes home. He explains the situation to his next-door neighbor in his apartment in artist subsidized housing there in New York, who is named Kenny Kramer. And Kramer, the real-life Kramer, says, "Larry, why don't you just go back in tomorrow and pretend like nothing happened?"

• 25:50David Rosenthal?

  So Larry does.

• 25:51Ben Gilbert?

  Which he does. And you might be thinking, "I feel like I've heard this story before." George Costanza does this on a Seinfeld episode. This is the first of many, many, many examples where what you see in Seinfeld is just things that happened in Larry and Jerry's and eventually other writers' lives. But this is the early stew of what would become Seinfeld, is mining their own lives for stories.

• 26:14David Rosenthal?

  Yes. And most specifically Larry's, because Jerry's life is exciting. There's Hollywood and stuff. Funny stuff is happening to Larry.

• 26:25Ben Gilbert?

  Yes.

• 26:25David Rosenthal?

  Also, this is going to become so important once Jerry brings Larry into this project with NBC.

• 26:33David Rosenthal?

  Larry did this and things like this during the one-year period where he was working at NBC. NBC hated this guy. To the extent he had any reputation, it was as a loser and somebody who like could not function in any sort of corporate environment and NBC wanted nothing to deal with.

• 26:51Ben Gilbert?

  And he turned out to be a genius.

• 26:53David Rosenthal?

  A genius.

• 26:54Ben Gilbert?

  And one of the best comedians and writers that the world has ever seen.

• 26:57David Rosenthal?

  Yeah, yeah. So during that ill-fated year for Larry at SNL, he also intersects with a young woman on the cast named Julia Louis-Dreyfus.

• 27:07Ben Gilbert?

  Who also had a very short stint at SNL and kind of churned out of it.

• 27:11David Rosenthal?

  Yep, I think she lasted two or three years, but they bond over, you know, not getting any airtime or their material on the show. So back to this night here in early November 1988, when Jerry goes looking for Larry at Catch a Rising Star, this is what's on his mind. Hey, my buddy Larry has experience writing this kind of stuff, Fridays, SNL, he's been on TV, he can help me flesh out what we can do with this opportunity. So he finds Larry, they go out for a walk together. Jerry explains to Larry what's going on and they stop at a Korean deli there in the Upper East Side, Lee's Market, which was right near the comedy club. And when they're in the deli, they can't help themselves, these are two comics together.

• 27:56David Rosenthal?

  They start making jokes about all the products here on the shelves in this Korean deli. Larry makes a quip about Korean jellies and Jerry looks at some fig bars and says, it looks like somebody made these in their basement. And the words come out of Jerry's mouth and Larry turns and looks at him and says, this is it. This is what the show should be. This is the kind of dialogue that we should do on the show, you know, two guys, just just talking like this. They're both excited, inspired by this. They said, okay, okay, great, let's meet up again tomorrow night after our sets. So the next night, they meet up again, they go to the West Way Diner on 9th Avenue, it's around midnight. And Jerry says to Larry, you know, I've been thinking about what we came up with last

• 28:39David Rosenthal?

  night, you know, the number one question I get asked, I'm sure you get asked too, you know, be in stand-ups is, where do you get your material? And Larry says, bingo, that's how we set up the show so that we can do that kind of dialogue on the show. The premise will be, how do stand-up comedians get their material? Jerry says, yes, yes, great. They, the comedians, they get their material, they do this. And he's just gesturing with his hands to themselves there at the table in the coffee shop, hanging out with his friends. And at that moment, Seinfeld is born.

• 29:12Ben Gilbert?

  Which you'll notice, nowhere in there did David say the words, "a show about nothing." That has nothing to do with how the show Seinfeld is born. Later on in the show, this is, Seinfeld is so meta, they would do a season arc where Jerry and George are creating a show called Jerry and pitching NBC about the show. That is a show about nothing. And then, of course, that gets co-opted to be like, oh, Seinfeld in real life is a show about nothing, but no.

• 29:42David Rosenthal?

  No, no, the premise is, the show is about how stand-up comedians get their material.

• 29:46Ben Gilbert?

  Yes. And so this leads Jerry to believe, okay, whatever format this takes, I'm playing myself. And I'm not just playing someone named Jerry, I'm playing someone with my sensibilities, with my observational humor about the world. I'm not going to cast myself into a character that is super different. I don't want to do that. I'm not acting. I mean, we all know Jerry can't act, so.

• 30:09David Rosenthal?

  Yeah, Roseanne Barr, the comic who did Roseanne, like, she's not playing Roseanne Barr on Roseanne, she's playing a sitcom character.

• 30:16Ben Gilbert?

  It's a slightly different Jerry Seinfeld. I mean, the version on the show is in a little shoebox apartment and this guy was making a million dollars a year flying around. So there are differences, but still, it's, it's pretty true to personality.

• 30:27David Rosenthal?

  And again, you can see how this all takes shape because nobody's thinking about a sitcom here. This is a one-off special that they're gonna do.

• 30:35Ben Gilbert?

  Right.

• 30:36David Rosenthal?

  So that brings us to the next month, December 1988, when Jerry returns to NBC in Los Angeles to meet again, this time bringing both a pitch for the idea, for the script, and a partner, Larry. And NBC, as you might expect, doesn't exactly like either of them, or especially at least doesn't like Larry. But nonetheless, the two of them, Jerry and Larry, walk out of that meeting with probably the most valuable TV deal that has ever been made in all of television history. But before we tell that story, now is a great time to thank our brand-new presenting partner this year, Sierra.

• 31:19Ben Gilbert?

  Yes. All of the leaders of the world's most important companies today are wrestling with the same question. In a world where everyone has access to the same intelligence, what is my competitive advantage and what is the right way to turn AI into revenue for our company?

• 31:37David Rosenthal?

  That's where Sierra comes in. First, your customer relationships are your competitive advantage. When you deploy Sierra's AI agents, every interaction adds to your understanding of that customer, deepening the relationship and generating insights that compound over time. Second, you should pay for outcomes, not tokens, like an insurance claim paid or a sale closed or a customer retained. Sierra's pricing model is quite novel in that way.

• 32:05Ben Gilbert?

  Sierra is already the leading platform for customer service agents, everything from account signup to troubleshooting, subscription management. They work with over 40% of the Fortune 50, one in three of the world's leading banks, and five out of the 10 largest healthcare companies. And their agents can also handle complex workflows that generate revenue too. So think about appointment booking in healthcare or refinancing a loan in financial services, things that can take weeks or months and span across voice, chat, email, and WhatsApp conversations.

• 32:36David Rosenthal?

  And they just introduced a new product, personas. Instead of every AI agent sounding the same, you know, polite but slightly robotic, you can give your agent a distinct voice and personality, tailoring its tone, humor, even the rhythm of how it speaks to your brand.

• 32:51Ben Gilbert?

  And great brands should have a recognizable character to them. And your company's agents should match that same character that you have worked hard to create.

• 33:00David Rosenthal?

  How an agent speaks impacts customer trust. And Sierra told us that one of the largest telecommunications companies in the world just introduced a new voice and persona for their Sierra agent. And the rate it solved customers' problems increased by nearly 50%, 5-0.

• 33:17Ben Gilbert?

  So to find out how you can build standout customer experiences that grow your business with AI, visit sierra.ai/acquired and just tell them that Ben and David sent you. So David, Jerry and Larry, they've got a TV deal, right? There's a show?

• 33:34David Rosenthal?

  Well, right, so Jerry and Larry have this TV deal that would go on to become, you know, arguably the most valuable television deal in history. But NBC isn't sure about the idea and they definitely aren't sure about Larry. Why on earth do they go through with this? Well, one, as we talked about, this whole, you know, comedians crossing over into television is currently hot, so they're motivated to do it, it's part of their corporate strategy, which he.

• 34:00Ben Gilbert?

  In general, you're probably gonna get eyeballs if you bring in a, a brand name, star, a star in a show.

• 34:05David Rosenthal?

  Young male comic, you want your young male audience, you know, in urban areas, et cetera, et cetera, great. But two, more important, at the end of the day, this is just a one-off 90-minute special that they're talking about here as a commitment. This is not a big deal. Like, if it doesn't work, it doesn't work. They decide in the meeting, great, okay, fine, let's call this thing Seinfeld's Stand-Up Diary.

• 34:30Ben Gilbert?

  Oh, I never caught this.

• 34:31David Rosenthal?

  Yeah.

• 34:32Ben Gilbert?

  There's a name before the name before the name.

• 34:34David Rosenthal?

  That was the original working name for the show when it was still in this conception as a one-off special that was gonna be about how Seinfeld got his material. And then the premise was gonna be, at the end of the special, you would see him onstage doing his stand-up material.

• 34:50Ben Gilbert?

  Ah.

• 34:51David Rosenthal?

  That he got throughout the episode.

• 34:53Ben Gilbert?

  Ah, okay, what's the name again?

• 34:55David Rosenthal?

  Seinfeld's Stand-Up Diary.

• 34:57Ben Gilbert?

  Okay. This is so fun to see how like, all the rough edges get sanded off, so it eventually becomes the thing we know.

• 35:03David Rosenthal?

  Totally, totally. Okay, so, the deal. What's the deal? Why is it so valuable? How much is NBC gonna, gonna pay these guys? Well, actually, NBC isn't gonna pay them anything.

• 35:17David Rosenthal?

  Directly, because at the time NBC could not legally own the show. Thanks to rules from the FCC at the time, broadcast networks were prohibited from actually owning the content that they broadcast on the networks, a set of rules called Financial Interests in Syndication, or FinCEN.

• 35:43Ben Gilbert?

  Yes, so time for a little history lesson, listeners. So today, you know about these like media conglomerates. But before that, the TV networks were entirely separate companies than the production studios. So NBC was its own thing, totally separate from Universal. CBS, just a broadcast network, nothing to do with Paramount. ABC, separate from Disney. So the networks, ABC, CBS, NBC, right when TV production started in the 50s, they need to hire the production studios to make stuff for them to broadcast on their networks. Some of these studios were very large, like Paramount, or Universal, or Warner Brothers, or Disney. Some of them were really small, like MTM Entertainment, which is named after the Mary Tyler Moore Show.

• 36:27David Rosenthal?

  Yep, or Desi Lu, or Desi Arnaz, and Lise L Ball.

• 36:29Ben Gilbert?

  Yes.

• 36:30David Rosenthal?

  Interestingly, the big guys, the big Hollywood studios getting into making TV, we talked about on our Disney series, it was Walt Disney that started doing that. Originally, the Hollywood studios kind of boycotted TV because they were worried about it as a threat to the film business. Walt was the first one who was kind of the visionary, said, no, no, no, these broadcasters, there's so much money that's going to be made here as television sweeps the nation, and we're going to be the best arms dealer for them.

• 36:57Ben Gilbert?

  And if we flash all the way forward, way more money was in TV than movies.

• 37:02David Rosenthal?

  Way more, way more money in TV.

• 37:04Ben Gilbert?

  Walt was incredibly right. When you look at where the cash gushers are in the entertainment industry, you know, over the last 40, 50 years, it's come from TV, not from movies.

• 37:14David Rosenthal?

  It's kind of, you know, one of these jokes in Hollywood that we really learned about studying for this episode of, you know, all the glamour goes to the movie stars, and the movie directors, and the movie executives. The richest people in town were always the TV guys.

• 37:27Ben Gilbert?

  Yep, yep. Okay, so back to the, call it 60s. The way that the deals worked between the networks and the studios were called deficit financing. And this is crazy that this is how it works, but it is. The networks would not fund all the production costs of the show. So they would greenlight something, find the production company to make it, and say, we'll pay you 60 to 80% of what it costs to make the show, because we're-

• 37:54David Rosenthal?

  Like in this case, this special with Seinfeld and Larry David.

• 37:57Ben Gilbert?

  Right, because historically, these networks are cash conscious, and so they'd rather save 20 to 40% of the budget of the show, and we'll give up some future upside, but, you know, that's okay.

• 38:08David Rosenthal?

  Right. Well, in return, the production company would own the show.

• 38:10Ben Gilbert?

  Yes. So because NBC is not totally covering the costs, they're leaving this deficit, they just get a license to the show to air it on their airwaves, once, twice, very limited license. But that meant that the studio was still in the hole for the rest of the funding to make the show. But, you know, it is sort of fair. The studio gets to own the rights to that show in the future, to monetize it when there's things like international ways that they could license it, or merch, or later home video, or the eventual huge cash cow of syndication, or reruns of the episodes on other networks, or on cable channels, or something like that in the future.

• 38:50Ben Gilbert?

  But then the networks started including one deal term that was very, very favorable to the networks. They overreached, and they demanded a large cut of the future syndication revenue, even though they were not fully funding the cost to produce the shows.

• 39:08David Rosenthal?

  Ah, I didn't realize-

• 39:10Ben Gilbert?

  Back in the 60s.

• 39:11David Rosenthal?

  That there was a period in the 60s where the networks could own syndication, right?

• 39:16Ben Gilbert?

  Yes. So studios, of course, as you would expect, complained to the government, and they say, this is ridiculous. Like, they're not funding the whole thing, but they're making it so we can't make money now, and we can't make money in the future? So in 1970, the FCC issued the thing that you mentioned, David, the Financial Interest in Syndication Rules, or FinCEN. And these rules prevented the networks from owning a financial interest, which mostly meant from participating in the future syndication of shows that they were buying from the studios. So this created a true separation between networks that aired the shows and the studios who make the shows. You've got a buyer, you've got a seller, it's very clean.

• 39:55David Rosenthal?

  Yep, yep.

• 39:56Ben Gilbert?

  But then, by the late 1980s, flash forward, I don't know, 20 years or so, the networks are now the ones complaining. Cable shows up, and a lot of the consumer attention is leaving the network and going to cable. And the networks argued, well, we need more latitude in operating our businesses to effectively compete and make profits. You might remember this from our Disney episode, where we talked all about what opened the door for Disney to eventually buy ABC. So by 1993, the networks won, FinCEN is repealed. The net of this is, networks actually can produce their own shows from 1993, 4, 5 onward.

• 40:36David Rosenthal?

  Yep, which means that they'll own those shows in perpetuity.

• 40:39Ben Gilbert?

  Yes. But here where we are in the Seinfeld story, 1989, it is like the tail end of the FinCEN era. And the way it works is NBC is not allowed to own the actual intellectual property of the show. They must say, hey, go find a production company, make the show, and then we will pay you 80-ish% of what it costs to make it in order for the right to air it on our airwaves.

• 41:04David Rosenthal?

  Yep, and that dynamic back in that era had set up this incredible entrepreneurial ecosystem, where you had these independent production companies and the creators they work with, who got actual ownership of the shows and the syndication rights. It's almost like Silicon Valley startups, this like capitalistic entrepreneurial incentive to go make these amazing things. And Seinfeld is one of the last ones out of this system.

• 41:29Ben Gilbert?

  And it had power law dynamics, where just like the venture capital industry, most shows fail, but for the shows that succeed, they succeed massively. And the cap tables are like a bunch of individuals, or a small production company. It's not like all the profits just go into a big network the way that they do today. So you actually could have literally exactly like Silicon Valley power law outcomes to individuals on a cap table.

• 41:57David Rosenthal?

  Yep. So, back to Seinfeld, and Jerry, and Larry, and this meeting with NBC. When NBC says, we will promise you, we are going to make what you are pitching us, that is an extremely valuable commodity that they are giving Jerry and Larry, because they're saying, yeah, yeah, you know, go get a production company, and you work out your own deal with them, but we'll make it. Usually, it's reversed. The production companies are making pilots and concepts for specials and scripts-

• 42:28Ben Gilbert?

  Right.

• 42:29David Rosenthal?

  That they're pitching to networks and desperately trying to get the green light to air them. NBC is now saying to the individual creators, to Jerry and Larry, you go find your own production company, cut your own deal with them, we guarantee we'll make it. This is like-

• 42:45Ben Gilbert?

  Free money.

• 42:46David Rosenthal?

  To use a Silicon Valley analogy, it's like if you're investing in a Series A, and somebody has already guaranteed that they're going to market up 10x in a Series C afterwards.

• 42:55Ben Gilbert?

  Right. You write this check, and then there's another check waiting right here for you.

• 42:59David Rosenthal?

  Yep. So Jerry and Larry, and the agents Shapiro and West, they're just given the golden goose here. So this is where that very nice production company, back when Jerry was being considered to be cast for that ABC pilot, comes back into the picture. Castle Rock. And Jerry says to George Shapiro, all right, great, well, why don't we just use those guys from last year? They seem nice enough. And boom, Castle Rock becomes the production company. Now, Castle Rock, you might know of it, or you might just know of it from watching Seinfeld episodes and seeing their title card at the end of the screen. Ben, what's the awesome history of Castle Rock?

• 43:43Ben Gilbert?

  All right, so we're going to go back slightly pre-Castle Rock. In 1982, Columbia Pictures, the-

• 43:51David Rosenthal?

  Major Hollywood film studio, yep.

• 43:54Ben Gilbert?

  Gets bought for $750 million by, longtime listeners will know this-

• 44:02Ben Gilbert?

  Coca-Cola.

• 44:03David Rosenthal?

  The Coca-Cola Company acquired episode crossover.

• 44:07Ben Gilbert?

  Coke is trying to get into the movie business. They just had a new CEO, Roberto Goizweta, take the helm and is trying to diversify.

• 44:17David Rosenthal?

  And I think part of the rationale here is like, oh, hey, Coke products in movie theaters, films, and then product placements in movies. What if we just own a studio? There can be some efficiencies here, some diversification, as you say, you know, sure, whatever.

• 44:32Ben Gilbert?

  Maybe. Okay, so that's Columbia and Coca-Cola. A few years after Coke buys Columbia, Castle Rock Entertainment is formed in 1987 by five partners, including Rob Reiner.

• 44:46David Rosenthal?

  The successful young actor and director. He'd been on All in the Family and directed Spinal Tap, I think, and The Princess Bride.

• 44:53Ben Gilbert?

  Yes.

• 44:53David Rosenthal?

  Great movies.

• 44:54Ben Gilbert?

  And the idea is to be a studio by artists, for artists, really talent friendly, flexible, and easy to work with.

• 45:02David Rosenthal?

  Yep. And funded by the big bucks from the Coca-Cola Company.

• 45:08Ben Gilbert?

  This is the craziest thing. So Castle Rock is just this little thing with five partners that needs to get off the ground.

• 45:14David Rosenthal?

  Independent production company in the Silicon Valley style we were just talking about.

• 45:17Ben Gilbert?

  Right, it could end up being very, very valuable because they're going to own the forever rights to any downstream revenue after the first run on television of any shows that they make and any of the movies they make. But for now, it's just five guys. They find their way through Columbia Pictures to Coca-Cola, and Coca-Cola invests $30 million at founding of Castle Rock. So the studio that funded and created Seinfeld was itself Coca-Cola money.

• 45:46David Rosenthal?

  Amazing. Why do you think Jerry drinks Diet Coke in Seinfeld?

• 45:51Ben Gilbert?

  So at formation, Castle Rock is owned 60% by its founders, 40% by Coca-Cola, and part of this deal is that Columbia would get to be the distributor of any films and TV shows that Castle Rock made.

• 46:06David Rosenthal?

  Yep.

• 46:07Ben Gilbert?

  Which doesn't matter that much right now, but later on, you need a distributor in order to sell the syndication for reruns anywhere where you're going to put reruns. So it's kind of a nice thing to put in the contract right now. Hey, we get to be the distributor down the line of anything you make. In November 1989, right around the same time that Seinfeld is kind of getting started here, Sony buys Columbia from Coke, which means the distribution rights that Columbia had goes to Sony.

• 46:36David Rosenthal?

  To Sony, yep.

• 46:38Ben Gilbert?

  In addition to a minority stake in Castle Rock itself. Sony did get the minority stake of Castle Rock, but they don't control it. So that distribution right goes with Columbia to Sony.

• 46:52David Rosenthal?

  Yep.

• 46:53Ben Gilbert?

  But the actual IP ownership stays with the independent Castle Rock.

• 46:57David Rosenthal?

  Mm-hmm. And this is all going to become very, very important to the financial incentives behind Seinfeld as we go here.

• 47:04Ben Gilbert?

  Yes. So taking a step back here, you're probably like, why don't I need to know all of that? And what's the bigger picture here? Just think about the incentives. If you're Castle Rock and you own the rights, all of your returns are super backloaded. If you make a show, like, great, I'm going to make a show for $500,000 an episode. You're only getting paid $400,000 an episode by a network to buy that show from you.

• 47:32David Rosenthal?

  Right, you have the rights to lose money on every episode that you make.

• 47:35Ben Gilbert?

  Right, every episode you make, you're like, oh, boy, I hope this does well. But you just keep losing more and more and more money every single episode. You don't make money until five plus years down the line. Again, much like the venture business, when that show goes into syndication, or the foreign rights get sold, or merch becomes big, or home video becomes big. And same for those distributors. The distributor doesn't do anything when a Castle Rock is selling a show to an NBC. So that whole apparatus of Castle Rock and Sony is just sitting there on their hands saying, so when do we get to stop losing money? Meanwhile, the networks are sort of in this rental business where they are renting content to show it.

• 48:17Ben Gilbert?

  I think the contracts usually say, we get to show it once and show ads against it on a big night of television in primetime. We also get to show it one more time, maybe next summer or something, when there's nothing on the schedule. But after that, all the rights revert to the IP owner, to the studio. And so the whole business of network is just, we're going to rent content that we are legally not allowed to own, and we're going to bet that we can sell more ads than it costs us to rent. So they run a like, very short-term business while the studios and distributors run a very long-term business.

• 48:49David Rosenthal?

  I think it's just like Silicon Valley. They're betting on the equity value in the long run.

• 48:53Ben Gilbert?

  Yes.

• 48:54David Rosenthal?

  So back to Seinfeld's stand-up diary here. Larry and Jerry having the guarantee that NBC is going to make this thing is so valuable to any production company they work with because the idea is this is going to be a one-time special, and it's guaranteed to be made by the networks. So any production company that comes and works with them to make this thing, it's going to air right away on NBC, maybe it'll do a summer rerun on NBC, and then it's theirs. They get it to go sell it to HBO or Showtime or whoever, sell it internationally, run the whole business model on the backend right away, guaranteed, no need to pitch the networks, no need to put capital into developing pilots that might not get picked up, et cetera, et cetera. Awesome.

• 49:38Ben Gilbert?

  Yep. But you don't know how big it's going to be. Like, is this thing going to be worth anything to sell to other networks and syndication?

• 49:44David Rosenthal?

  Sure, sure.

• 49:44Ben Gilbert?

  Probably not. It's a one-time special.

• 49:46David Rosenthal?

  Right, nobody's thinking about this as a sitcom. It's a special. But what this allows is Jerry and Larry, via Shapiro and West, the managers, the agents, to negotiate huge percentage of the backend, essentially the equity in this piece of content with the production company.

• 50:04Ben Gilbert?

  Ah, because nobody thinks it's going to be worth that much, and there's no risk.

• 50:09David Rosenthal?

  There's no risk. Jerry and Larry have all the leverage. They could take this to literally any production company in Hollywood.

• 50:15Ben Gilbert?

  Right.

• 50:16David Rosenthal?

  And so choosing Castle Rock, they can essentially write the deal terms. So it's never come out exactly what the deal terms are, you know, sort of the cap table, essentially, of Seinfeld the show, because the only people who really know are Jerry and Larry and Castle Rock and then Shapiro and West. But it's reported that Jerry and Larry each own 15% of the show, which is huge. And spoiler alert, Seinfeld is going to make billions and billions and billions of dollars. And Jerry and Larry are going to get 15% each of that.

• 50:53Ben Gilbert?

  And they have this very clever way of dealing with it in interviews because someone will say something like, you've made X hundred million dollars. And they never quite deny it. They say, that's preposterous. That's an insane number. That's a ridiculous number. And it's true, it is a ridiculous number, the hundreds of millions of dollars that end up coming out of this. But it's not, they're not saying it's wrong. Or even when they do say it's wrong, they're not saying by how much. So someone throws out, it seems like you might have made over $600 million, and they go, oh, that's not the right number.

• 51:25David Rosenthal?

  Right, right, right.

• 51:27Ben Gilbert?

  But you didn't say that it wasn't in the ballpark. So it's just one of these funny, it's admirable, the way that they handle it, because it's so true to form.

• 51:34David Rosenthal?

  Yes, yes. But this is why this crazy, unlikely stand-up special ends up becoming the most valuable deal probably in the history of television for these guys.

• 51:43Ben Gilbert?

  So as best we can kind of figure out by what's been publicly reported, ballpark it at 65-ish% left for Castle Rock. The interesting thing to know is usually the way a distribution deal works, because remember Sony owns the distribution right eventually, that usually looks like 15% off the top. So that's like, everyone gets diluted down 15% because whoever Sony manages to sell it to, they get the first percent off the top. And we've seen different numbers, we've seen 15, we've seen 30. There's lots of reason to believe it's 15.

• 52:18David Rosenthal?

  So simplifying this a little bit, you can essentially think of the water flow of Seinfeld's billions of dollars of syndication profits as 15% to Sony, 15%-ish, a little less because of the Sony dilution, each to Jerry and Larry, 5%-ish to Wes Shapiro, and then 50%-ish to Castle Rock and its successors, shall we say, as we go along here. So, once all these various parties are in place, they need to go, you know, write the script for this thing. So Larry and Jerry, they go off, they start working on the script. But they have a tough time coming up with 90 minutes worth of stand-up material to do

• 53:01David Rosenthal?

  the expose, if you will, on how it gets into comedian sets for the special. 90 minutes of stand-up material is a lot of stand-up material.

• 53:10Ben Gilbert?

  It's an eternity. It's really hard to be funny for 90 minutes.

• 53:13David Rosenthal?

  So as they're working on it, they're banging their heads against the wall. They also realize that there does need to be some kind of semblance of a story, I put story in quotes, or you know, some situations to get the characters into the scenes where the conversations would happen that would lead to the stand-up material. So Larry floats an idea. What if we just do this as a standard 30-minute sitcom pilot? Which a standard 30-minute sitcom is only 22 minutes of actual content. You know, 22 minutes, great. Like, that is a manageable amount of stand-up material that we can come up with for this thing. And doing it as a sitcom here, that'll give us some story reasons, enough situation, situation

• 53:55David Rosenthal?

  comedy sitcom, to get the characters into the scenes, so we can say the dialogue, et cetera, et cetera. And the way that will make it all fit is Jerry, what you want to do anyway, like you said, Ben, you just play yourself in the sitcom to end in the stand-up. So the script for this first pilot that they come up with, the first initial script that they're going to pitch back to NBC, is that Jerry is supposed to go on The Tonight Show, you know, NBC tie-in, Tonight Show. But he doesn't have any new material, so he needs to pull his act together, and he's hanging out with his friends, particularly his Larry-like friend, George, to get the material. And then at the end of the episode, Jerry's going to perform it on The Tonight Show.

• 54:37David Rosenthal?

  They go back to NBC, they pitch the new version, and they have a new title for what this is to reflect the shift from a 90-minute special into a pilot, essentially, for a sitcom. They're going to change it from Seinfeld Stand-Up Diary to The Seinfeld Chronicles. It's going to be an ongoing chronicle of Jerry's stand-up material.

• 54:58Ben Gilbert?

  Which, if anyone like me now has the DVD box set, you can watch the original version of the pilot that airs, not the edited version later, that is actually called on screen, The Seinfeld Chronicles.

• 55:10David Rosenthal?

  Indeed, indeed. Once again, NBC, somewhat surprisingly, just says, okay.

• 55:18David Rosenthal?

  Jerry, Jerry has a great quote about this. He says, every step of the way, we were waiting for somebody to come in and say, you can't do this on network TV. But nobody did.

• 55:28Ben Gilbert?

  Cause it's just different than everything else that's on there. It's like a sitcom that's not a sitcom, really. We just needed to kind of like borrow from the sitcom format to accomplish our goal of how a comedian gets its material. And it's like, not even happening in the comedy department. It's happening through these late night people.

• 55:45David Rosenthal?

  Through the late night department, the specials department. This is part of why they say yes to this change in plans, because it actually makes their life easier. Previously, they were gonna have to fit a 90 minute special into the calendar. Wait, you're telling me now I only need to give you guys 30 minutes? Sure. Whatever you want to do. No problem.

• 56:03Ben Gilbert?

  So they sort of sail through NBC here.

• 56:05David Rosenthal?

  In a wholly unprecedented move, the net of this is that NBC's late night and specials department okays a sitcom pilot. This has never happened before. The show just stays in, in, in late night.

• 56:21Ben Gilbert?

  And just so listeners understand what we're talking about, the comedy department that has at this point, what, The Cosby Show, it has Cheers, it has like a bunch of hits. They've got a whole process for reviewing scripts and giving notes and working with the creators. And the late night department's just like, ah, it's really easy to say yes, because it's an even easier yes than the thing we already said yes to. And they just get to skip all the comedy department checklists and committees.

• 56:51David Rosenthal?

  So NBC says, okay. And Castle Rock, now the production company, and Jerry and Larry are like, well, all right, let's, uh, let's cast this thing. Let's go make a pilot. So Rob Reiner at Castle Rock suggests that they should look at a mostly Broadway actor at the time named Jason Alexander for the part of George. He felt, and Jerry and Larry certainly agreed that they needed a really polished, like, like, really, I mean, Jason Alexander is an incredible actor. They needed a really, really great actor to play opposite Jerry, because Jerry is not a great actor.

• 57:28Ben Gilbert?

  He was about to win a Tony a month later.

• 57:30David Rosenthal?

  Yes.

• 57:31Ben Gilbert?

  When Jason came in to read, they were like, this guy's unbelievable. He's perfect for it. Later on, Jason would sort of figure out, oh, this character is kind of Larry David. He's not exactly Larry David, but he's loosely based on him. He actually thought it was a Woody Allen character at first.

• 57:46David Rosenthal?

  Yes.

• 57:47Ben Gilbert?

  So he came in and sort of did a Woody Allen impression for George.

• 57:51David Rosenthal?

  Next, they need to cast Kramer, because Larry has decided to write his eccentric neighbor into the script here for the pilot, but he's not calling him Kramer just yet.

• 58:07Ben Gilbert?

  Kessler, is that right?

• 58:08David Rosenthal?

  Kessler, yes.

• 58:08Ben Gilbert?

  He's like, oh, I don't want to make it too on the nose. And also, if we call him Kramer, then like, we're gonna have to pay this guy or do some kind of rights situation. So they, they call him Kessler. The funny thing is, eventually they realize, and this is so Larry David and Jerry Seinfeld, they are looking at the page, they're saying the name out loud, and they just realize, no, of all the names we can think of, Kramer is actually the funniest name.

• 58:34David Rosenthal?

  It just sounds funny. Yes.

• 58:35Ben Gilbert?

  There's just something about it that sounds funny. And funny is the most important thing. Everything else is secondary to that. We have to go with funny. And so they name him Kramer.

• 58:47David Rosenthal?

  And then, of course, it's the best thing that ever happens to the actual Kramer, because he sets up Kramer's New York tours in New York City.

• 58:53Ben Gilbert?

  Right.

• 58:54David Rosenthal?

  So they need to cast the character. And Larry says, I know the perfect guy from my days back at Fridays, Michael Richards. And that's how Michael Richards joins the show.

• 59:04Ben Gilbert?

  George Shapiro has this great quote, "Michael Richards was standing on his head while he was doing his lines, a yoga pose." And Brandon Tartikoff goes, "Well, if you want funny, this is at the audition." This is how he's preparing to go in and audition for this role.

• 59:20David Rosenthal?

  Yeah. I mean, again, this is so off the wall compared to anything that would go through the normal process at NBC. So then they need to cast the fourth character, a woman, the character of Claire, the guy's regular waitress at the diner, played by Lee Garlington. There's no Elaine in the pilot. So cast Claire, they shoot the pilot, and then they bring the NBC executives in to screen it. And they're not sure.

• 59:53Ben Gilbert?

  Interestingly, the comment that really sticks out from this session is that some of the executives thought it was too New York and too Jewish.

• 1:00:02David Rosenthal?

  Yep. Which is quite ironic, because basically, the entire origins of American comedy are New York and Jewish.

• 1:00:12Ben Gilbert?

  But they didn't wear it quite on their sleeve, the way that Jerry did. I mean, this is, they named the show Seinfeld, and it has this like, I don't know how to put it other than this very Jewish type of humor, the sensibility, the timing, the observational humor, the persnickety-ness, the crankiness, the like, detail oriented, the obsession.

• 1:00:33David Rosenthal?

  It's a really good point. The Jewish tradition of comedy really was the main lineage of comedy in America. I mean, the Marx Brothers, George Burns, like, basically, everybody that came out of vaudeville was, was Jewish. But they changed their names, they didn't wear it on their sleeves, it wasn't as obvious. I think the thing the NBC executives didn't realize is that here by the late 80s, it kind of didn't matter anymore. Everybody knew Woody Allen was Jewish. He was the biggest name in comedy.

• 1:00:57Ben Gilbert?

  The other point in this is, nobody knows anything.

• 1:01:00David Rosenthal?

  Yeah.

• 1:01:00Ben Gilbert?

  It's Seinfeld, right? It would go on to become Seinfeld, and they're like, eh, I don't know.

• 1:01:06David Rosenthal?

  Yep.

• 1:01:07Ben Gilbert?

  So they test it. They're like, we should proceed with our standard testing and feedback.

• 1:01:11David Rosenthal?

  We'll recruit a test audience to watch this thing.

• 1:01:13Ben Gilbert?

  Right. The practice at the time, and I know this is super interesting, they would cold call, they did, a research department would cold call a bunch of houses to recruit 400 households to watch a unused channel on their cable system at a certain time. And if you knew to tune in, and you had the right hardware, you would tune in, and then you would see the pilot pop on. And then I think there's like, nothing else afterwards. You're like, just watching this one channel at this one time. The researchers then convene these people or call them and ask them a standard set of questions. It tested horribly.

• 1:01:48David Rosenthal?

  Horribly, yes.

• 1:01:49Ben Gilbert?

  Like, the network executives were just a foreshadow of how people in the world saw it. Some of the most infamous comments that came out of this is, one, you can't get too excited about going to the laundromat.

• 1:02:04David Rosenthal?

  Which is where most of the pilot takes place with Jerry and George at a laundromat.

• 1:02:08Ben Gilbert?

  And Jerry and George have this whole discussion about what it means that this girl who's coming into town wants to see Jerry when she's there, and is she gonna stay with him? And like, how much should they read into it? And like, when he greets her at the airport, are they supposed to hug? Is she gonna hug him? Like, just over analyzing the crap out of this situation. But they're having the conversation while in a laundromat, which is where a lot of the, the feedback sort of focused. The other quotes include, Jerry's loser friend George isn't a forceful character. Jerry needs a stronger supporting cast. And why are they interrupting the standup for these stupid stories?

• 1:02:46David Rosenthal?

  Yep.

• 1:02:47Ben Gilbert?

  If the viewers liked anything about it, it was actually just Jerry's standup. But even that didn't test that strong. The recommendation from the research department to NBC was, if you're gonna air this, and then if you're gonna greenlight this, and you're gonna do something with Jerry, it should be standup, and it should be better than this.

• 1:03:04David Rosenthal?

  Yeah. My favorite quote from the pilot research report was, "No segment of the audience was eager to watch the show again, and the overall pilot performance was rated as weak."

• 1:03:16Ben Gilbert?

  And Jerry and Larry did not see this memo for several years, but once it was brought to their attention, they hung it on the wall of the bathroom.

• 1:03:24David Rosenthal?

  Yes, that's right, in the bathroom in their production office on the set.

• 1:03:28Ben Gilbert?

  So they do air it.

• 1:03:29David Rosenthal?

  They do air it in a time and day slot where the network notoriously burns off not very promising pilots. They air it on July 5th, 1989. Not a lot of people tuning into television on July 5th in America. And with that, 99 times out of 100 in history, that would have been the end of the Seinfeld Chronicles, would have gotten put out to pasture with many, many, many other failed pilots. NBC does not pick up the show for a season run that fall in 1989. Instead, NBC picks up two other sitcoms over Seinfeld and all

• 1:04:14David Rosenthal?

  the other pilots that they ran, The Nut House and Sister Kate.

• 1:04:19Ben Gilbert?

  You probably don't remember them.

• 1:04:20David Rosenthal?

  Yes, exactly. Just to prove your point, Ben, that nobody knows anything. That would have been the end, except that back in the late night and specials department at NBC, they keep thinking about this Seinfeld thing. I mean, they love Jerry, they want to do something with Jerry, and they're like, yeah, I mean, everybody was worried it was too Jewish, it was too New York, but.

• 1:04:44David Rosenthal?

  But I'll be damned if it's not funny. Like, it was just funny.

• 1:04:47Ben Gilbert?

  And even though most people didn't like it, there was a small group of people who completely got it.

• 1:04:53David Rosenthal?

  Yep.

• 1:04:53Ben Gilbert?

  It's like any successful startup. You're not trying to be a seven for everyone. You're trying to be a 9.9 for a very small group of people that you can then figure out how to get those super fans to tell their friends. There were people at NBC that were like, this is the future. This is what we need to do. We need to be in business with Jerry Seinfeld and this brand of comedy.

• 1:05:16David Rosenthal?

  And it was Warren Littlefield in primetime and Rick Ludwin in specials. And so the two of them come together and they hatch a last ditch plan to give their little baby another chance. They decide, well, since we've been doing this out of specials, what if we just cancel one of the other one-off specials that we were gonna do and use that budget to place an order, a season quote unquote order for this show that we love? So they cancel one two-hour Bob Hope special that they were planning to do on NBC that fall. And instead, they use that budget. They call up Jerry and Larry and say, great

• 1:05:58David Rosenthal?

  news. We are ordering a season of The Seinfeld Chronicles. Jerry says, uh, great. What's the order? Four episodes.

• 1:06:13David Rosenthal?

  Making it, I believe, the smallest first season order in television history.

• 1:06:19Ben Gilbert?

  And didn't you talk to Warren Littlefield about this?

• 1:06:22David Rosenthal?

  Yes, yes. So the quote from Warren about how this conversation went down, he says, I called Jerry to tell him the good news. There was a long silence over the line. Jerry finally asked me, has any show in the history of television ever succeeded with just four episodes? And Warren says, I didn't know. And that's exactly what I told him.

• 1:06:43Ben Gilbert?

  Probably not. If anybody knows, it's probably the head of primetime at NBC.

• 1:06:49David Rosenthal?

  Yep. Jerry's telling Larry in the background as they're having this conversation. And Larry famously reacts to this with, ah, it's fine. I think four episodes is all I got in me anyway. It's the ultimate Larry David line.

• 1:07:02Ben Gilbert?

  Larry David would go on to be the head writer of 135 Seinfeld episodes.

• 1:07:08David Rosenthal?

  Yep, yep. So they've got the order.

• 1:07:12Ben Gilbert?

  And Jerry has later said in other interviews that he and Castle Rock were looking around for other buyers because they assumed that NBC was out, which is a fair assumption. Fox actually made an offer and guaranteed 24 episodes. But Jerry wanted that NBC imprimatur of a real network.

• 1:07:31David Rosenthal?

  Well, Fox was also a startup network at this point in time. It was not Fox that you know it today as one of the major broadcast networks in the US.

• 1:07:39Ben Gilbert?

  Jerry has phrased it as it wasn't the major leagues and I wanted to be in the majors. And so they went with NBC's four-episode deal instead.

• 1:07:46David Rosenthal?

  Yep. So they get the order and NBC's like, we trust you, but there's some problems with this show. In particular, the worst scoring demographic in the pilot was women.

• 1:08:02Ben Gilbert?

  Yep.

• 1:08:03David Rosenthal?

  Women don't relate to this show at all. And usually what we do here at the network is we just add a character from that demographic group to the episode. So I know you guys have got Claire the waitress.

• 1:08:14Ben Gilbert?

  She needs to be hanging out of a member of the group.

• 1:08:16David Rosenthal?

  Yep. Which leads to the network's, I think, one, I think, one good creative note in the history of Seinfeld, which makes the whole show work. You need a girl in this thing. But before we tell the story of Elaine, now is a great time to talk about our good friends at Anthropic.

• 1:08:37Ben Gilbert?

  Yes, the makers of Claude. And David, I want to start with that research memo about the pilot.

• 1:08:45David Rosenthal?

  Yes. Viewers didn't really like the cast of supporting characters. They thought the scenes of Jerry and his friends just hanging around were boring. Not good.

• 1:08:53Ben Gilbert?

  Yeah. But in 1989, they weren't wrong. I mean, there wasn't really anything to come back for yet. The show that people couldn't stop watching, that it would eventually become, was really built out over those nine seasons of shared history. So all the things you know, Vandalay Industries, Festivus.

• 1:09:10David Rosenthal?

  Yes.

• 1:09:11Ben Gilbert?

  Every single time that Newman walks in and goes, hello, Jerry. All of it gets so much funnier the more you see.

• 1:09:19David Rosenthal?

  Yep. And Anthropic just did the same thing with Claude. For most people, every conversation with an LLM has been like the Seinfeld pilot. You explain what you're working on, how you like things done. And the next time you sit down, it has no idea who you are again. Now, their new memory functionality carries across chat and cowork, so all of that accumulates no matter where you're working in Claude. And for teams in Slack, Claude Tag does this for your whole team. One Claude in the channel that's read every thread, knows the standing instructions, and can notice things nobody asked it about.

• 1:09:54Ben Gilbert?

  So the value basically just keeps building the more you use it. A conversation with Claude isn't disposable anymore. It carries into the next one. And so if you want to learn more about how Claude can help transform your chats into tangible, memorable work, check out claude.ai/acquired. And if you are inquiring about enterprise usage, just tell them that Ben and David sent you.

• 1:10:17David Rosenthal?

  So adding Elaine.

• 1:10:19Ben Gilbert?

  Yes. Arguably makes the show. I mean, when you watch the pilot, you're like, oh, yeah, there is a giant ingredient missing. And it's not just because the couch is weird and Jerry's apartment's weird and like, there's an Elaine-shaped hole in the show.

• 1:10:32David Rosenthal?

  Totally. Elaine makes the show. And it's not just NBC's note of you need a girl. It's so much more than that. I mean, yes, adding a female character gives Seinfeld a lot more appeal to more demographics than the pilot did. But the character of Elaine is also this incredible act of subversion to the network. Because by you need a girl in it, NBC meant give Jerry a love interest. And that is not what Larry and Jerry are doing with Elaine. And I think it's really what establishes what Seinfeld the show is.

• 1:11:12Ben Gilbert?

  Yes. Because if you look at every other sitcom, I bet NBC felt like they didn't even need to give the full note. Give Jerry a female friend who will have an on-again, off-again, is there a flame here? And then eventually end up together and give the viewers what they want.

• 1:11:31David Rosenthal?

  It's Sam and Diane in Cheers. It's Ross and Rachel, blah, blah, blah.

• 1:11:35Ben Gilbert?

  Eventually Jim and Pam. Like, this is the formula. And the way that Jerry and Larry chose to interpret the note is literally, but we're not going to do any of that other stuff.

• 1:11:46David Rosenthal?

  Yeah, we're just gonna need a girl. So George Shapiro, the talisman, has a great quote about this, about what you need a girl means. He says, the network wanted Jerry and Julia to be married or dating. That was normal network thinking. Fortunately, we had two creators who didn't give a crap. Jerry and Larry felt strongly that Jerry and Julia shouldn't have a relationship, and they were ready to walk away from the show because of it.

• 1:12:10Ben Gilbert?

  And the way that they pulled this off is Elaine is a former love interest.

• 1:12:14David Rosenthal?

  Yes.

• 1:12:14Ben Gilbert?

  Like, they've already had a relationship and it didn't work, and they broke up. And so viewers, you don't even need to take your minds there because we already told you it's not going to work. There is one episode where they explore it.

• 1:12:25David Rosenthal?

  The Deal. Yes.

• 1:12:27Ben Gilbert?

  Incredible episode. But then after that, I think that's the end of a season. They come back the next season. The whole thing is forgotten. They don't take it anywhere. These characters are not a love interest, period.

• 1:12:37David Rosenthal?

  That episode, The Deal, where the two of them re-explore the romantic relationship, is even more subversive to the network. Because they do it, Larry and Jerry do that episode, and then they just never mention it again. There's no resolution. There's no, they continue, they didn't continue. There's no development. There's no relationship. It's just, eh, that didn't happen.

• 1:12:59Ben Gilbert?

  This show would go on to be number one by throwing out the playbook entirely and going straight off of the thing that Jerry and Larry wanted to make with no reverence for the roles that you were supposed to do to get to number one.

• 1:13:13David Rosenthal?

  Exactly. So this is why, you know, when I said that the Elaine character makes Seinfeld what it is. What is Seinfeld? It is a merging of stand-up and the sitcom, just like the whole development of the show. This is what it's leading to. Like a sitcom, Seinfeld the show has continuity of characters, places, relationships, across episodes, across seasons, across years of the show. You get to know these characters. You know the apartment. You know the coffee shop.

• 1:13:44Ben Gilbert?

  You know George just can't help himself.

• 1:13:46David Rosenthal?

  Yeah, yeah, yeah.

• 1:13:47Ben Gilbert?

  Every time, you can count on them to do the wrong thing, to see the temptation and to give into the temptation. And by creating these consistent characters, it helps have a framework for those jokes.

• 1:13:59David Rosenthal?

  What does stand-up comedy not have? Continuity, consistency. That doesn't exist in the stand-up world. Okay, now flip it on the other side. Like, stand-up, Seinfeld doesn't have any development of these characters and places and relationships. Jerry is always Jerry. George is always George. Elaine is always Elaine. You could tune in in any episode. There's no development of the relationship, the characters, they never learn anything. The places don't change. The apartment is the same. The coffee shop is the same.

• 1:14:29Ben Gilbert?

  It's a situational comedy.

• 1:14:31David Rosenthal?

  But the situation is static.

• 1:14:32Ben Gilbert?

  Or I would say the characters are static. The characters are vessels.

• 1:14:37David Rosenthal?

  Yes.

• 1:14:37Ben Gilbert?

  For humorous situations, whereas they call them sitcoms before that, but really what they were were these.

• 1:14:44David Rosenthal?

  They were dramas with jokes.

• 1:14:46Ben Gilbert?

  Yes. And Seinfeld drops that and just creates situations that are inherently funny with characters that are static versus needing to insert isolated jokes to sort of like lighten the mood of a dramatic situation that has a beginning, middle, and end.

• 1:15:04David Rosenthal?

  And those dramatic situations, as we were pointing out with the, you know, the network note, sort of the unsaid subtext of you need a love interest, are almost always either romantic relationships or family relationships. And they develop over the course of the show and the characters grow and learn and change and come together. Seinfeld is so radical by saying, absolutely not, we are not doing any of that.

• 1:15:31Ben Gilbert?

  So one of the writers that I talked with for research is Jeff Schaefer, and he wrote for the show in the later years. His comment to me was, the plot itself has to be funny when you retell it. Like, that's how they know they're on to something is if literally describing the situation is the humorous part. And the best illustration of this is how Seinfeld episodes end. They don't resolve the plot in a satisfying way. It's just like stand-up.

• 1:15:59David Rosenthal?

  Right, there's no consequences, it's just funny.

• 1:16:01Ben Gilbert?

  Right. So the characters find themselves in a tough situation, but there's sort of no funny arc remaining after that. That's okay, the show just ends. Freeze frame, bum, bum, bum, bum, bum, bum, bum. You don't get to know how they get out of the jam. There's no continuity into the next episode. They start fresh next episode. It's literally a stand-up act, but the people are in the situations instead of the jokes being purely verbal.

• 1:16:24David Rosenthal?

  Yep. You led me right into the perfect Jerry quote about this. He says, "I personally believe that what Larry and I brought to the sitcom format, a 22-minute format, was a stand-up comedian's structural sensibility. We didn't really have time to tell what the characters were all about because we had jokes to do. We weren't really storytellers, we became that, but only through that lens, the jokes."

• 1:16:50Ben Gilbert?

  It's so true.

• 1:16:51David Rosenthal?

  Yep.

• 1:16:51Ben Gilbert?

  And the thing that makes it so universally appealing is that the characters they developed, we see ourselves in these characters. They represent a side of ourselves. We've all wanted to grab the aclair from the top of the trash can, but we have restraint. We're real people who move around the world, we're complex, we have multi-dimensions. But Seinfeld represents wish fulfillment. George has no restraint. George is an avatar of our worst qualities. You know, Elaine has a lot of them. Kramer has our most insane qualities. And the recognition of this very basic human element in these characters is surprisingly timeless and durable.

• 1:17:34David Rosenthal?

  So all of this comes together and crystallizes during this kind of first-season timeline in Larry's famous rule for the show. There's only one rule.

• 1:17:46Ben Gilbert?

  Which I've heard, this is not a stated rule, this was more sort of like something that bubbled up later that they realized they all had a shared understanding around. But Jerry, Larry, the writers, everyone had this ethos, for sure.

• 1:17:56David Rosenthal?

  Yep. No hugging, no learning. What you get is the, the exact opposite of every other sitcom that had ever been made to this point.

• 1:18:05Ben Gilbert?

  Right. The characters never hug and make up. There's no, in Full House, you know how the end of every episode would be Danny sitting down on the bed explaining some law of life to his daughters? And, you know, you did a bad thing, but you learned your lesson. Seinfeld is, you did a bad thing, you got caught, you lied about it, you dug yourself into a deeper hole, you learned nothing.

• 1:18:29David Rosenthal?

  We end the episode, you do it again the next time.

• 1:18:31Ben Gilbert?

  Yep. Right. No one ever learns from their mistakes. And it provides this, like, perfect substrate for the jokes to happen, these insane situations that they get themselves into. And I think, I was trying to reflect back on all this. I think Jerry and Larry viewed it as respect for the audience, that we don't need to spoon-feed you what emotions you should be having, and you don't need to hug and make up and like put a bow on everything. You get it, you're in on the joke with us, the joke's over. You're a smart person who can figure it out. And at first, that leads to a very niche audience. That is not a recipe to have a breakthrough season one, or two, or three, but that will

• 1:19:14Ben Gilbert?

  earn the respect of some small group of people who are obsessed with it.

• 1:19:18David Rosenthal?

  You're so right. I think that's exactly how they thought about it. And it's so ahead of its time, and it's why Seinfeld is still so watchable and relevant today. Because TV, sitcoms, all that, other, you know, the hugging, the learning, the emotional arcs, it was all fake. It was all just fake. And eventually, thanks to cable and then the internet, audiences en masse eventually just kind of came to see that for what it is of, it's fake. And Seinfeld was being like, great, we're not going to give you the fake stuff.

• 1:19:52Ben Gilbert?

  We're going to give you something that you actually see in your life, too, that feels more like real life.

• 1:19:57David Rosenthal?

  Yeah, your friends and your family, they don't grow, they don't change.

• 1:20:00Ben Gilbert?

  Right. Right. The funny thing about all of this is, they got the green light for these four episodes, but Jerry and Larry did not think that NBC would actually put them on the air.

• 1:20:12David Rosenthal?

  Yes. The, the story I heard on this was, they literally thought about these four episodes as, we are making this for the dinner party that we're going to host with our friends, and then after the dinner party, we're all going to gather around a TV and we'll pop in the tape of these episodes and we can say, look at what we made. It never made it on the air, but look at how good it is.

• 1:20:31Ben Gilbert?

  And the fact that that's what they made, and then that's what succeeded, gave them this, like, terrifying amount of autonomy from the network, because they did it 100% their way, 100% the thing that they wanted to make, and that's what people actually wanted. Which, if you're trying to exercise any measure of control as the network, that train has left the station.

• 1:20:51David Rosenthal?

  Yeah, yes. The inmates were running the asylum from the get-go.

• 1:20:56Ben Gilbert?

  Yes.

• 1:20:56David Rosenthal?

  Especially with, you know, Larry running the show. So NBC, amazingly, does put it on the air. And the scheduling team comes to Castle Rock and to Larry and Jerry and says, if you're willing to wait and have this run over the summer, you know, and summer is usually the traditional downtime for, for networks where they don't have first-run shows going.

• 1:21:20Ben Gilbert?

  Mostly reruns.

• 1:21:21David Rosenthal?

  Yep. We could run it after Cheers reruns in the summer. Now, you might say, why, why is NBC a broadcaster doing Cheers reruns? The networks would get the right to rerun each episode once over the summer.

• 1:21:36Ben Gilbert?

  And they would get the right to box out syndication for a certain period of time.

• 1:21:40David Rosenthal?

  Yep. So Castle Rock and Jerry and Larry are like, no brainer, we're going to roll this thing after Cheers. Now, in the meantime, throughout the spring of 1990, ABC had launched another show called The Marshall Chronicles. Nothing like Seinfeld, but everybody started worrying, oh no, if we now launch The Seinfeld Chronicles over the summer, we're going to look like a me-too about The Marshall Chronicles over on ABC. And so this is how The Seinfeld Chronicles gets shortened to just Seinfeld.

• 1:22:14Ben Gilbert?

  Drop the "the," it's cleaner.

• 1:22:16David Rosenthal?

  It's cleaner. Yes, yes. So Seinfeld goes on the air, Thursday, May 31st, 1990, premiering after the summer rerun of Cheers. And critically, that very same month, Brendan Tartikoff leaves NBC. He was the head of the entertainment portion of the network. So he didn't run like sports or news or anything like that, but everything within entertainment, dramas, comedy sitcom, late-night specials, all reported up to Tartikoff. His successor is chosen, Warren Littlefield.

• 1:22:55David Rosenthal?

  One of the two primary champions of Seinfeld just became president of entertainment at NBC. Which means that when it comes to the next critical decision point in the young Seinfeld show's life cycle here of whether it's going to get an actual season in the fall, going to get picked up for real finally. It's now Warren Littlefield's decision to make. So the new episodes air throughout June and July. And Littlefield, of course, he loves the show. He wants to support it. And Rick Ludwin, the specials department head is right there, too. But they know they've got resistance in the network. And yes, Littlefield can make the decision, but they gotta build consensus here.

• 1:23:41David Rosenthal?

  So Warren pulls over a guy from NBC Research named Preston Beckman and says, "You know, the folks at Nielsen, the ratings company, I want you to go talk to Nielsen and see if you can get custom reports made for each airing of these new Seinfeld episodes. And I want you to get reports by city, by metro area for each of these episodes so that we can have some data of whether this thing only plays in New York or whether it's universal." So Beckman does, he goes to Nielsen, he gets these custom reports and it comes back. There is no difference in audience retention from the Cheers reruns

• 1:24:24David Rosenthal?

  to staying with Seinfeld in any major metro area. The same percent retain in New York as they do in Chicago or Houston or Seattle or San Francisco. And that percentage is pretty high. It's not 100%. Nobody retains 100% from Cheers, but it's like, high. Most of the audience that is watching the Cheers reruns sticks around and watches Seinfeld. So they're like, all right. I mean, the audience is not big yet for this. It wouldn't be big for a while, but there's something happening here. And, and there is something universal to this show. It's not just New York where this is playing.

• 1:25:05Ben Gilbert?

  Yep.

• 1:25:06David Rosenthal?

  So end of the summer rolls around and now the decision has to be made at the network. What is the fall lineup going to be? What are the new shows that NBC is going to pick up? And Warren has a quote that's in his memoir, which is great. He says, "I walked up to the scheduling board and grabbed the magnetic card that said Seinfeld. I took it off the fringes of the board where we had our backup shows and I put it right smack at the center. This is our future." Rick Ludwin smiled. Now that's the way it's in the memoir.

• 1:25:42Ben Gilbert?

  Success has many fathers.

• 1:25:45David Rosenthal?

  The reality is, I think probably because of all the internal politicking and horse trading for the schedule for the fall of the new season, they end up only picking up Seinfeld as a mid-season replacement. So half a season. We'll give you 13 episodes, not a full season order of 22-plus episodes. We're not going to run it in the fall, but we will slot you in when we inevitably cancel one of the other shows in the spring. It's a half-hearted pickup.

• 1:26:14Ben Gilbert?

  So NBC comes to Jerry into Castle Rock and says, "Great. Here's a 13-episode order." Larry goes to Jerry and goes, "I don't accept this. I'm out of material."

• 1:26:26David Rosenthal?

  Yeah.

• 1:26:27Ben Gilbert?

  Like, what, what, what else could we possibly do? I've already put, I've mined my entire life for all the best crazy situations that we could possibly put into these five episodes. I'm basically scraping the bottom of the barrel here.

• 1:26:41David Rosenthal?

  Yes, yes.

• 1:26:42Ben Gilbert?

  Obviously, that wasn't true because there was way, way, way more material that Larry would go on to create. But it is illustrative of, okay, they, they gotta bring in some fresh talent because these guys are not out experiencing the world anymore. Their head's down writing a TV show. They need writers who are out observing the minutia of the world to come and work with them.

• 1:27:05David Rosenthal?

  Yes, totally. It's also unbelievably unlikely that this happened. By the time Seinfeld gets picked up for this first half-season order, it's over 18 months since they made the pilot.

• 1:27:21Ben Gilbert?

  Right.

• 1:27:21David Rosenthal?

  And over a year since the pilot aired. But because of the way it came up in NBC and through the specials department and the belief that these guys had in it to keep metering out little chances to it, it broke through.

• 1:27:36Ben Gilbert?

  Yep.

• 1:27:37David Rosenthal?

  So after they get the pickup, Littlefield and Ludwin already kind of have a sense from Larry and Jerry that they aren't going to take any more notes from NBC. So they make another NBC executive do it for them. They draft another guy to come be the, be the hatchet man, essentially.

• 1:27:58Ben Gilbert?

  To give notes that you know are not going to be taken. It's a giant waste of time.

• 1:28:01David Rosenthal?

  Yes. A guy named Perry Simon. And Perry has a great quote in Warren's memoir about this. "Larry and Jerry came into my office, and Rick Ludwin was there, too. I tried to wing typical network notes. Hey, you know, we need a little more story. A little more of this, a little more of that. Larry and Jerry were incredibly gracious. Let us work on this. We'll come back to you." And then they walked out the door and I knew that they were just like, F that. As in, we're not listening to a word that those guys are going to tell us ever again. Perry continues, "And now I think, thank God, whatever they were doing, they were doing it right. It's a good thing they didn't listen. Incredible."

• 1:28:41Ben Gilbert?

  All right. So what were these sort of early episodes? What did, what did season two have in it?

• 1:28:45David Rosenthal?

  There's some good stuff in there. They do the revenge where George quits his job and then comes back the next day like nothing happened.

• 1:28:51Ben Gilbert?

  I guess Larry found some more stuff in his life to mine for material.

• 1:28:55David Rosenthal?

  Yes. They do the jacket, which is one of my personal favorites.

• 1:29:00Ben Gilbert?

  Oh, where Jerry has to flip the suede jacket inside out to go out in the rain and then...

• 1:29:04David Rosenthal?

  With Elaine's terrifying father, yeah.

• 1:29:06Ben Gilbert?

  Won't walk with him.

• 1:29:07David Rosenthal?

  Another episode that happened to Larry in real life.

• 1:29:11Ben Gilbert?

  Cause Larry was dating Richard Yates's daughter.

• 1:29:14David Rosenthal?

  Yes.

• 1:29:15Ben Gilbert?

  And the character is based on Richard Yates.

• 1:29:17David Rosenthal?

  Yes, just like Elaine's dad in the TV show.

• 1:29:19Ben Gilbert?

  I see.

• 1:29:20David Rosenthal?

  And then the big moment, the Chinese restaurant. That's in that first half-season.

• 1:29:26Ben Gilbert?

  They never leave the lobby of the Chinese restaurant in this entire episode. That must've been so frustrating for the network executives to get the script and be like, "Are you kidding me? This is a single set sitcom? And not only is it a single set, you're not even going to use the set that we built you on the soundstage? You know, this isn't free. Like, we have to build a completely new restaurant set for you to go shoot this episode in."

• 1:29:50David Rosenthal?

  And it's totally absurd what you're doing.

• 1:29:52Ben Gilbert?

  Basically, nothing's going to happen all episode because it's just people making phone calls from a payphone, getting mad at the guy who won't let you get a seat. Is there really enough to move a story forward here in 22 minutes? And it turns out, it was brilliant.

• 1:30:03David Rosenthal?

  Yeah, a defining moment for the show. But this episode, in production, NBC is freaking out about it. So they consider shutting down production that week of the show, which they would do from time to time with other shows. I mean, the relationship usually of the network with the show is the network can do whatever they want. And they don't like something, they, they shut down production that week. So Rick Ludwin goes out for a walk with Larry around the lot and explains, "Hey, we got some concerns about this one. What are you guys doing?"

• 1:30:37Ben Gilbert?

  And the network has real-time data coming in from their ad sales force because they're talking about episode plots to advertisers, trying to get them hooked on advertising. And imagine you have to arm your sales force with the whole episodes in the lobby of a Chinese restaurant. It's not good for NBC.

• 1:30:58David Rosenthal?

  Well, foreshadow, imagine you have to arm your sales force with the whole episode is about being the master of your domain. We'll get to that one in a minute. But yeah, so that, you know, Rick takes Larry out on this walk around the lot and Larry just blows up. He just lets him out. He's like, this is what the show is. This is, this is my vision. If you don't like it, I quit. Fine. You don't want to make it? Show's over. And nobody did this. No creator would. Usually the network says, "We don't like it." Oh, okay, whatever you want.

• 1:31:27Ben Gilbert?

  It's interesting because like, this is why Seinfeld succeeded. But the lesson here isn't be a blowhard and abrasive to everyone and insist that your vision is the correct vision and take no notes ever... dot, dot, dot, success. That's not, for most people in most situations, that is failure. But it just so happened that these two were comic geniuses and, and were right. And then absolutely worked their tails off to refine these stories with a team of writers to produce just some of the absolute funniest material ever seen on television at the time. But like, what is the lesson?

• 1:32:04David Rosenthal?

  You hit the nail on the head. I was actually talking to Warren, to Littlefield about this in research because I sort of asked, nobody ever made a show like this again. Why not? It was so clearly successful. It was the right way to do it. And, you know, there's all sorts of reasons, bureaucracy and people's careers and politics, et cetera, et cetera. But he also made the really good point, like, not every creator is Larry David and Jerry Seinfeld. Like, if you're gonna let a genius be a genius, you need to be sure you're working actually with a genius. And most people are, are not.

• 1:32:38Ben Gilbert?

  Occasionally out there, there's a Nathan Fielder or a Tim Robinson. But like, most people with these totally ludicrous, absurdist ideas are wrong.

• 1:32:50David Rosenthal?

  It's yet another parallel with Silicon Valley, right?

• 1:32:53Ben Gilbert?

  Yeah.

• 1:32:54David Rosenthal?

  Most founders are wrong, but some founders are right.

• 1:32:57Ben Gilbert?

  Yep. And when they're right, they're really right.

• 1:32:59David Rosenthal?

  Yep. So season two, the first full half-season here is great creatively. I mean, the finale is the episode, The Bus Boy, where Larry introduces the interweaving storylines that all intersect and resolve at the end in a grand finale.

• 1:33:19Ben Gilbert?

  Yeah, so this becomes a hallmark of Seinfeld. Typically in sitcoms, there's an A story where it opens on the A story. That's like 60, 70% of the story and there's a B story. And you kind of flip back and forth and like, maybe they rely on each other, but it's pretty separate. What they figured out in Seinfeld, and in particular, I think The Bus Boy, that season two finale is where they really catch their stride on it. They would give each character a storyline. So you have four concurrent storylines, which means you have to be really efficient in your storytelling. There could be no wasted words, no wasted minutes. And as the episodes progress, the storylines start to be interwoven in unexpected and surprising ways. And then they almost always converge at the end in

• 1:34:03Ben Gilbert?

  like a violent, unexpected blow up that's unfortunate for everyone and ruins all of their lives concurrently, and then cut to credits.

• 1:34:11David Rosenthal?

  Yep.

• 1:34:12Ben Gilbert?

  And that became this like, real winning formula for them, which is hard. And David, you and I know this is hard. As you're structuring story-

• 1:34:20David Rosenthal?

  It's really hard.

• 1:34:21Ben Gilbert?

  You're kind of like squinting from it, from all these different ways, especially as the story gets larger and larger. You're like, God, how do I introduce this here, but then pay it off later, but then not spoil it in the middle? And we're not even doing comedy, we're just doing storytelling here.

• 1:34:33David Rosenthal?

  We're doing nonfiction storytelling.

• 1:34:35Ben Gilbert?

  Yes, yes. It is an incredibly specialized skill to be able to not spoil the interwoven place where the storylines converge, but make them all funny along the way and make all the payoff happen at all the right time. But it's a thing they figured out that no one else ever did before.

• 1:34:56David Rosenthal?

  I think I can tell you why. This is how every truly great stand-up routine-

• 1:35:02Ben Gilbert?

  Oh, yeah.

• 1:35:04David Rosenthal?

  This is where they're coming from. This is the DNA of the show.

• 1:35:06Ben Gilbert?

  The callbacks to the other jokes.

• 1:35:08David Rosenthal?

  Yeah, yeah. At the end of a truly, truly great stand-up routine, there's a moment where you realize that everything throughout the whole 20 minutes or 60 minutes, all was interwoven and building to this moment.

• 1:35:20Ben Gilbert?

  Yes.

• 1:35:21David Rosenthal?

  And that's what they do with the TV show.

• 1:35:23Ben Gilbert?

  No situation is there for filler, nothing wasted.

• 1:35:27David Rosenthal?

  Yep.

• 1:35:27Ben Gilbert?

  So that sort of takes us to, what else makes this show different? We've talked about the fact that they are despicable characters, which is not like, novel now. A lot of people figured out, you know, we can put Michael Scott on TV, deeply flawed characters who aren't just like, oh dad, that never learn from their mistakes.

• 1:35:46David Rosenthal?

  That's thanks to Seinfeld that-

• 1:35:47Ben Gilbert?

  Right, right.

• 1:35:48David Rosenthal?

  People can do that now.

• 1:35:49Ben Gilbert?

  You know, they're neurotic. Every situation that they're in is largely their own fault for getting into it. It's super relatable, but there's a lot of structural things about the show also, like the interwoven plotlines, that make it unique and that are difficult to pull off, and that were just novel. So, a typical sitcom that has a two-act structure has seven scenes. That's it, in 22 minutes. Seinfeld, first of all, was two to three times as many, so you'd have 14 to 25 scenes per episode, but they just threw out the act structure.

• 1:36:26David Rosenthal?

  Right.

• 1:36:27Ben Gilbert?

  Plots often don't resolve-

• 1:36:28David Rosenthal?

  There's not acts, yeah.

• 1:36:29Ben Gilbert?

  Yes. On the set, they, actually Larry originally wanted it to be single cam instead of a multi-cam setup, to basically resemble a movie. And for anyone who's unfamiliar, multi-cam is sort of a proscenium-style show where you have sets and you have four cameras, and they're all catching the same action. You might be able to get away with only running the action once, because you're catching it from every angle, and you're just lighting it. It's gonna be really bright, but you're lighting it from every angle, so that any of the four cameras at any given time kind of works.

• 1:37:02David Rosenthal?

  Yep, it's like theater.

• 1:37:03Ben Gilbert?

  Single cam is probably more expensive, because you have to run the action multiple times. You probably have to relight it every time you're shooting it from a different angle. So if you're shooting character A, and then the next run-through, you're gonna shoot character B. There's a pause and relight step. It has kind of a more cinematic feel. NBC was able to push back enough to say, we're not doing single cam for the show. But they brought in a lot of single-camera elements to it. So it did have more filmic lighting. It often used a pretty high number of location shoots for a sitcom, where they would actually not shoot it on the stage that had the sets that were pre-built for Jerry's apartment, for the coffee shop.

• 1:37:45David Rosenthal?

  Think about the number of Seinfeld scenes that are out on the street, or in Central Park, or in an airport, or in some other location.

• 1:37:51Ben Gilbert?

  Right. And that adds all this expense of packing up the whole cast and crew and getting them out there, especially when you're shooting every week. They borrowed a lot from cinema that was uncommon on TV at the time. It's not overacted. I think in a lot of sitcoms, when I watch them today, anything pre-Seinfeld, I'm like, oh my God, it's so overdone. Like, stop selling me on your fake emotion. Seinfeld is not that. In fact, Jerry can barely act, and he's laughing through the entire thing, but since it's the situation that's funny, it totally plays. And I think Jerry's chuckle kind of like, is a cue for you to laugh along with him.

• 1:38:23David Rosenthal?

  Oh man, the scenes with Jerry Stiller, who plays Frank Costanza, George's dad, are just, they're so good. All the other actors are just, they're cracking up and you can tell.

• 1:38:33Ben Gilbert?

  God, he's so good, Jerry Stiller. There's no artificial laugh track. So this is like a purity thing for Larry and Jerry as stand-ups. If they didn't earn the laugh, they're not putting a fake laugh in.

• 1:38:46David Rosenthal?

  Right, from the live audience that was there.

• 1:38:49Ben Gilbert?

  Every single laugh you hear on Seinfeld is the live audience laughing at that joke.

• 1:38:54David Rosenthal?

  Yes, even for the scenes that were recorded off-set, they would play them on video screens to the live audience when they were there for the taping, and then record the laughter from the screens.

• 1:39:06Ben Gilbert?

  Yes, which has two jobs. One is record the laugh, but two is, they need to know if those jokes are funny, and they need to change the episode if it's not. It's like a real-time feedback mechanism, because these guys come from stand-up.

• 1:39:20David Rosenthal?

  Yep, exactly.

• 1:39:21Ben Gilbert?

  And then the last one that I didn't really realize until last night, I was watching a bunch of episodes, and my wife and I were talking about this, it was kind of this lightbulb moment for me. Seinfeld episodes are not live camera switched. They are edited in post.

• 1:39:39David Rosenthal?

  Hmm.

• 1:39:40Ben Gilbert?

  So normally what would happen is, at a sitcom, you'd be sitting in a proscenium, there'd be a live audience, the actors are on the stage, there's someone at a control board, saying, camera A, camera B, camera C. Okay, now back to camera A, camera B, go in for the two-shot, great cut to camera B, like they're directing it.

• 1:39:56David Rosenthal?

  Right.

• 1:39:57Ben Gilbert?

  In Seinfeld, they do some live switching, but that's kind of to get a feel. All of the real work is done in post, which gives them the flexibility to do two things. One, to make all the cuts much tighter. The scenes can be shorter, and you can get more scenes in and more situational jokes. And two is, it lets you tell jokes you couldn't otherwise do. So if you think about the episode, The Contest, where David, you mentioned being master of your own domain, there is a joke where, the way the joke is told is they're cutting to each of those characters, and you're seeing them lay in bed, and they're either restless and they can't sleep, or they're sleeping like a baby. And that's

• 1:40:40Ben Gilbert?

  the joke, as it cuts around. That's impossible to do in a live-switch show, because there's no way to make those cuts in front of a live audience. You have to just go record all the material, and then have a whole step after that of sitting there in a editing bay, making the cuts be the jokes.

• 1:41:01David Rosenthal?

  And of course, that adds production complexity and expense. It's kind of a way to get closer to the single cam, more film-like ethos.

• 1:41:09Ben Gilbert?

  That's exactly right. It's hard, but these guys are nutjobs, they're obsessives, they're purists, and so they want all the flexibility and pacing of editing a movie, while also getting the benefit of what you would get with a live audience at a play, that laughed and let you know if the joke is landing or not. And so they kind of threaded this needle and invented a novel production process to get the best of both worlds.

• 1:41:31David Rosenthal?

  Yep, yep. So, at the end of that half-season, mid-season replacement, Seinfeld does get picked up for a real first full season, season three of the show.

• 1:41:43Ben Gilbert?

  Still with kind of a cult following-

• 1:41:45David Rosenthal?

  Exactly.

• 1:41:45Ben Gilbert?

  But it's starting to catch.

• 1:41:46David Rosenthal?

  Still on Wednesday nights, they're not on Thursday nights yet. But even at the end of season three, that first full season, Seinfeld was the 42nd-ranked show on television. Seinfeld's got this cult following, all this creative juice, but certainly not the centerpiece for the network. But season three would be the last time that that would be true, and really that any of the actors in the show, be they leads or guest stars, could live a normal life ever again. But before we tell the story of how Seinfeld finally caught on and became the Seinfeld that you know it today-

• 1:42:30David Rosenthal?

  Now is a great time to thank our good friends at Sentry.

• 1:42:34Ben Gilbert?

  Yes, that is S E N T R Y, like someone standing guard.

• 1:42:40David Rosenthal?

  Which is exactly what Sentry does for developers. Sentry helps teams debug everything from errors to latency issues, basically any software problem, and fix them before users get mad.

• 1:42:53Ben Gilbert?

  So David, I want to talk about the whale.

• 1:42:56David Rosenthal?

  My favorite episode. We're gonna spoil it.

• 1:42:59Ben Gilbert?

  The show gave us the single best root cause analysis story ever put on television.

• 1:43:05David Rosenthal?

  Absolutely.

• 1:43:05Ben Gilbert?

  Perfect illustration of why you need Sentry decades before Sentry was invented.

• 1:43:10David Rosenthal?

  I love it.

• 1:43:11Ben Gilbert?

  In the episode where George pretends to be a marine biologist, he wades out to the beached whale that is in front of a crowd and comes back holding a golf ball that he pulled out of its blowhole. And he says, "The sea was angry that day, my friends."

• 1:43:26David Rosenthal?

  The actual root cause of the golf ball being in the blowhole of the whale is Kramer from way earlier in the episode when he was hitting golf balls into the ocean. Nobody in the audience connected those two storylines until George pulled out the Kramer golf ball.

• 1:43:48Ben Gilbert?

  And that is exactly what a real software outage postmortem feels like.

• 1:43:53David Rosenthal?

  Yes.

• 1:43:55Ben Gilbert?

  There is the hero of the story who gets paged in the middle of the night and that they tried to fix the issue, but then there's the golf ball, some small change that shipped a long time ago that nobody mentally connected to the thing that is currently on fire. The hard part is not noticing the whale on the beach. It is realizing that, ah, it is actually the golf ball causing the issue.

• 1:44:21David Rosenthal?

  Yep, yep. And that is what Sentry does. It takes the thing your users are yelling about and traces it back to the exact change that started it. Which release, who was impacted, and the very commit, or very golf ball with the developer's name on it. Then all that context goes straight into whatever writes the fix, whether it's Claude Code, or Cursor, or Sentry's own agent Seer, which finds the issue and opens the PR for a human to review.

• 1:44:52Ben Gilbert?

  This is why 200,000 organizations run on Sentry, whether it's a solo side project or the engineering teams at Anthropic, Vercel, Linear, or GitHub. You can learn more about where software gets fixed at sentry.io/acquired. Or click the link in the show notes and just tell them that Ben and David sent you.

• 1:45:11David Rosenthal?

  All right. So here we are now in the fall of 1992, heading into season four, the second full Seinfeld season. The show is this cult hit.

• 1:45:23Ben Gilbert?

  It's maybe a little more than that. Season three averaged 18 million viewers per episode.

• 1:45:27David Rosenthal?

  Yep, but it still hasn't cracked the Nielsen top 30.

• 1:45:30Ben Gilbert?

  Which is crazy, though. I gotta interrupt you. The 18 million, that's not in the Nielsen top 30. Today, you would never, ever, ever see 18 million people watching a single thing, no matter how good a show is, other than like NFL and NBA games. I mean, there were four networks. That's what you watched.

• 1:45:48David Rosenthal?

  No internet, baby.

• 1:45:50Ben Gilbert?

  Phones, podcasts, short form video. I mean, cable had just started coming up, but most of America's attention is still on one of those four broadcast networks in primetime. So 18 million viewers an episode not cracking the top 30 is nuts.

• 1:46:04David Rosenthal?

  I mean, I think we're still a year away from the Mosaic web browser, right? 1992?

• 1:46:10Ben Gilbert?

  Yep.

• 1:46:11David Rosenthal?

  Yeah. There's no competition.

• 1:46:13Ben Gilbert?

  Yep.

• 1:46:13David Rosenthal?

  It's a great time to be in television.

• 1:46:15Ben Gilbert?

  Yep.

• 1:46:16David Rosenthal?

  Meanwhile, though, NBC, the network, has a problem. Because Cheers, the anchor of its whole comedy lineup, is on its final season. And Warren and the whole crew, the executives there, don't know what they're gonna do to replace it. So Time Magazine ran an article from this time. NBC, the one-time kingpin of primetime, has seen its fortunes turn sour almost overnight. Its biggest hit of the 80s, The Cosby Show, took an early retirement last spring. The network's last remaining top 10 hit, Cheers, will call it quits at the end of the season.

• 1:47:00David Rosenthal?

  Highly regarded younger shows like Seinfeld have not lived up to ratings expectations. The network is desperately in need of a miracle. And then on top of that, so Seinfeld is running on Wednesday nights currently. You're going into season four. ABC, a competitor, moves their big new comedy hit sitcom, Home Improvement, to compete directly against Seinfeld in the Wednesday night slot. So for the first time, Seinfeld not only has to prove that it can get a bigger audience, but it has to do so against a big challenge, a direct competition in the same time slot from another network.

• 1:47:45Ben Gilbert?

  Yep.

• 1:47:46David Rosenthal?

  And Home Improvement kicks its butt.

• 1:47:50Ben Gilbert?

  Yep.

• 1:47:51David Rosenthal?

  So by mid-season, Home Improvement is pulling 28% share of audience in its time slot. And Seinfeld is down at 17.

• 1:48:01Ben Gilbert?

  Not great and doesn't feel to me like the future of the network. I mean, the 17%, if you're thinking, ooh, 17% versus 28%, they're like a close second or something like that. They got so much of it for free.

• 1:48:14David Rosenthal?

  Yeah.

• 1:48:14Ben Gilbert?

  It's like, if you're gonna turn on your TV, there's four options, more or less, that people are actually watching in this time slot. So it should be very competitive.

• 1:48:22David Rosenthal?

  Yep. Larry and Jerry, though, and especially Larry, they don't care. Like, they're not making the show for the ratings. So this season, season four, they just go on like an all-timer. So they start with, I think the first season-long meta-arc, ends up becoming a show-long meta-arc, where they have NBC, a fictional NBC, ask Jerry in to pitch a TV show.

• 1:48:53Ben Gilbert?

  Called Jerry.

• 1:48:53David Rosenthal?

  Called Jerry.

• 1:48:55Ben Gilbert?

  With his other name.

• 1:48:56David Rosenthal?

  Yeah.

• 1:48:56Ben Gilbert?

  Because they don't want to call it Seinfeld.

• 1:48:58David Rosenthal?

  And he and George come up with the idea of a show about nothing to pitch it to NBC. That's the first episode of season four. That then continues off and on throughout the whole season.

• 1:49:08Ben Gilbert?

  And the off and on is important because each of these episodes still can stand on its own. You don't have to be invested in the story, the multi-episode, season-long arc, in order to get it.

• 1:49:20David Rosenthal?

  Yep. Episode seven of season four is The Bubble Boy, another classic.

• 1:49:26Ben Gilbert?

  I'm not sure you could make that now. Like, if that was actually a news story right now, making fun of the Bubble Boy that everyone is writing articles about is completely off limits.

• 1:49:38David Rosenthal?

  Well, speaking of completely off limits, that brings us to the critical midpoint of the season, where everything changes. Episode 11.

• 1:49:51Ben Gilbert?

  Isn't the outing also in season four?

• 1:49:53David Rosenthal?

  Yes, but later, after episode 11.

• 1:49:55Ben Gilbert?

  Ah, I see.

• 1:49:56David Rosenthal?

  Also so good.

• 1:49:57Ben Gilbert?

  Not that there's anything wrong with that.

• 1:49:58David Rosenthal?

  Not as good as episode 11. Not that there's anything wrong with the outing. But it's not as good as episode 11.

• 1:50:06David Rosenthal?

  The contest. So, oh, man, we've alluded to this, but for anybody listening who hasn't seen or heard of this episode, this is the master of your domain episode with the four characters making a bet to see who can go the longest.

• 1:50:25Ben Gilbert?

  The episode opens. George walks into a diner. And the opening line that he gives Jerry, Elaine, and Kramer in the booth is, "My mother caught me."

• 1:50:39David Rosenthal?

  I can't even keep it together, just talking about the episode.

• 1:50:42Ben Gilbert?

  They don't need to do much from there. They go the entire episode without saying what they are having a contest to try not to do. There's just this giant unstated elephant. You know exactly what the elephant is the entire episode. And yet, it's perfect. It doesn't break any rules, but they break all this new comedic ground.

• 1:51:08David Rosenthal?

  So apparently, like all, or almost all, great Seinfeld episodes, this actually also happened to Larry.

• 1:51:17Ben Gilbert?

  Of course it did.

• 1:51:19David Rosenthal?

  And Larry, even Larry was scared of this episode. He would've been thinking, nah, we can't do it. It's too much. But finally here by season four, they've got enough confidence and enough, you know, just no fear attitude. Larry's talking to Jerry and says the idea. And Jerry says, "That's funny. Let's do it." So they write the episode, the two of them, in secret. Usually what they would do in their office on the, on the set, Larry and Jerry's office that they shared together, they had a whiteboard. So if you watch the Seinfeld reunion on Curb Your Enthusiasm, it's in the office, you can see the whiteboard. And on the whiteboard, they have all the plot points for all the characters and the candidates, et cetera, et cetera.

• 1:52:04David Rosenthal?

  So anybody could come in their office, the other writers, the NBC executives, they'd see what's on the whiteboard. They didn't put this one on. They just wrote it in secret. I don't know if they put decoys. That would be even better.

• 1:52:18Ben Gilbert?

  Word did get out, though.

• 1:52:19David Rosenthal?

  Well, so the story continues. So they have it in secret all throughout the writing process. And then it gets to the table read. So the way the week would work was the cast would do a table read of the script first, and then do some rehearsals, and then they would shoot the episode. This is pretty close to filming. Like, you're well into production week at this point. They bring out the script. And NBC is just like, oh, my God.

• 1:52:48Ben Gilbert?

  We're gonna talk about the full schedule, the weekly schedule of making a Seinfeld episode in a few minutes. But know this, when you're at the table read, you are six days from shooting the episode for real in front of a live audience in studio.

• 1:53:02David Rosenthal?

  Yep. You're pretty close to the point of no return, or as close as Larry and Jerry could engineer getting.

• 1:53:08Ben Gilbert?

  Yes.

• 1:53:08David Rosenthal?

  Before revealing what they were doing. So the Broadcast Standards Department at NBC, which is the in-house censor that is responsible for keeping all of NBC's programming up to broadcast standards, rules. They, of course, hear about this right away. They're just losing their minds. And the woman who runs this department, her name is Dr. Roz Weinman in New York. She calls up Warren and is just apoplectic. And Warren's like, well, you know, Seinfeld, it's the guys. They don't say the word. It's funny. And somehow, I don't know if she was a fan of the show, and she got it. She said, well. All right, we're going to keep a close eye on this.

• 1:53:53David Rosenthal?

  Like, we could pull the plug at any time. But in this case, with this show, it might be enough that this show has a pact with its audience that we can get away with this. This is unbelievable.

• 1:54:05Ben Gilbert?

  Because broadcast standards really has two jobs. One is, are we literally going to fall afoul of any FCC regulations where we will get in trouble as a network? Two is, is there going to be any blowback on our network where it hurts our brand? People don't like us anymore, advertisers run, things like that. And if you're not running afoul of one, because no words are coming out of your mouth, then it's really just about-

• 1:54:32David Rosenthal?

  The question is only number two, yeah.

• 1:54:33Ben Gilbert?

  Right. Do we think the audience will love or hate this? And I think it's a big risk, but a very perceptive one to be like, Seinfeld actually has cultivated an audience where this is entirely okay, especially done this artfully.

• 1:54:46David Rosenthal?

  Yep, yep. So broadcast standards lets it through. And then sales calls up, and they're like, are you out of your mind? We have to, we have to tell the advertisers what their spots are going to run against. And Warren says, all right, well, let's let them keep going. We'll get a rough cut of the edit before we have to put it on air. So the rough cut comes in, they give it to sales, sales shares it with the advertisers. They come back and they say, we've got a bunch of advertisers that are going to pull out, they're not okay with this. We're going to have to cut the rates for this episode to backfill to get enough people in last minute, enough new sponsors to fill the episode.

• 1:55:30David Rosenthal?

  Warren says, okay, how about this? There are these cable networks out there, MTV's out there, they've got this same kind of audience, they're killing it with a bunch of alcohol companies as sponsors, and Nike's sponsoring them. What if you guys go to all the advertisers on MTV and say, hey, we've got an opportunity to get you into Seinfeld this week? Which they do, and they fill the episode. And that's how sales allows it to go through. For all the advertisers that didn't pull out, the regular sponsors that stuck with the episode, they end up having leather-bound copies of the script printed, autographed by the cast and sent out as a thank you for sticking with us.

• 1:56:14David Rosenthal?

  And then the episode airs, there's no protest. It's great. It becomes the first catchphrase moment for the show. Master of my domain, are you master of your domain?

• 1:56:27Ben Gilbert?

  Yep.

• 1:56:28David Rosenthal?

  It completely changed the rules for Seinfeld.

• 1:56:33Ben Gilbert?

  And it cemented Seinfeld as a watercooler conversation show.

• 1:56:37David Rosenthal?

  Yes.

• 1:56:38Ben Gilbert?

  This was something you were going to share with your friends.

• 1:56:39David Rosenthal?

  You sure as hell were going to talk about this the next day.

• 1:56:42Ben Gilbert?

  Yeah.

• 1:56:43David Rosenthal?

  So, many years later, in 2009, TV Guide did a ranking of the greatest television episodes of all time. This episode was ranked number one.

• 1:56:57Ben Gilbert?

  Yeah, of course. So had they moved to Thursdays yet at this point?

• 1:57:00David Rosenthal?

  No, no, they're struggling. They're getting the pants beaten off of them by Home Improvement here on Wednesday nights. This is like the crucible moment for the show. So right after this is when NBC makes the decision. They say, all right, this is magic. We were right about this show, that it's just special. We're going to have to bet on this. We're going to make this our future. We're going to move it to Thursday, right now. We're going to air it after Cheers. And then when Cheers goes off the air after this season, Seinfeld is taking our top slot.

• 1:57:36Ben Gilbert?

  If it performs.

• 1:57:37David Rosenthal?

  If it performs, yeah.

• 1:57:38Ben Gilbert?

  This is the audition.

• 1:57:39David Rosenthal?

  Yep.

• 1:57:40Ben Gilbert?

  Which, of course, Larry David, he's furious about this.

• 1:57:43David Rosenthal?

  Yes, yes.

• 1:57:45Ben Gilbert?

  His quote is, if they didn't watch us on Wednesdays, I don't want them watching us on Thursdays. We've earned this weird niche audience that is our people, and you're just about to blast us out to the mass public?

• 1:57:59David Rosenthal?

  Yeah.

• 1:58:00Ben Gilbert?

  Just going to go right from Cheers into Seinfeld? They're going to get hit by a mental bus?

• 1:58:03David Rosenthal?

  Yes. Famously, that was Larry's reaction. And equally famously, this is why they were such a great partnership. Jerry's response to NBC about the move to Thursday night was, thank you very much, we will take the new time slot.

• 1:58:18Ben Gilbert?

  Yeah, good business decision.

• 1:58:21David Rosenthal?

  Yes, yes.

• 1:58:22Ben Gilbert?

  It is interesting, thinking about Larry's reaction here. So part of it is like, just this purist, because he's a purist in so many ways. And he's got the element of George Costanza. He's not as pathetic as George is.

• 1:58:34David Rosenthal?

  No.

• 1:58:35Ben Gilbert?

  I think that's a fair, George, they've amped up the pathetic dial to 11. But he does have the sort of duality in him that George has, which is thinking he's the greatest thing to ever watch planet Earth. And George is not, but Larry kind of is. But coupled with extreme self-consciousness, self-loathing and self-doubt.

• 1:58:55David Rosenthal?

  Yes.

• 1:58:56Ben Gilbert?

  And so, to tell Larry David, like, we're going to promote you to this giant spot, it's like, no, no. If people truly loved us, they would have sought us out and found us. I don't need these people who aren't going to do work to watch my excellent, perfect television show.

• 1:59:11David Rosenthal?

  Right.

• 1:59:12Ben Gilbert?

  And I think it is true, you know, we think about this for acquired a lot. I think there's a business strategy angle to growing slowly through word of mouth. It makes you more durable when you grow slowly through word of mouth and have a core of extreme fandom versus quick mass exposure. It's like, the quicker you go up, the quicker you go down. Whereas I think Seinfeld, taking four seasons across five years to break through, is part of the durability. There was like a real core to explode out from.

• 1:59:50David Rosenthal?

  Absolutely, that is all true. And, once you make the contest, you can't go back.

• 1:59:57Ben Gilbert?

  That's true.

• 1:59:58David Rosenthal?

  You've got to go to Thursday night.

• 1:59:59Ben Gilbert?

  Yep.

• 2:00:00David Rosenthal?

  You've got to be in the big leagues.

• 2:00:01Ben Gilbert?

  Yep.

• 2:00:02David Rosenthal?

  It is a landmark moment.

• 2:00:03Ben Gilbert?

  Okay, so I never understood why Thursday nights were such a great business before, or why this was such a big deal for TV. People would always talk about the Thursday night lineup, and I grew up watching Friends. When I watched Seinfeld, it was more in reruns, because I was born, literally, the month that the pilot came out. So, to me, the whole arc was basically before I was of Seinfeld-watching age. I've now seen every episode, but mostly in reruns. So, for me, Friends was the anchor NBC show on Thursday night, and I kind of knew Thursday was the biggest night, but why, right? Why is it different than Tuesday? I get why it's different than Friday. Friday's a weekend, Saturday and Sunday are kind of about sports, or going out, or living your life, but like, why are we discriminating between days of the week?

• 2:00:45Ben Gilbert?

  It was your last chance to reach audience before the weekend.

• 2:00:50David Rosenthal?

  Yep.

• 2:00:51Ben Gilbert?

  So, if you're launching a movie that's going to come out on Friday, you need to be advertising. If you're launching a product where you want to drive people to stores over the weekend, if you're trying to hit consumer messaging before some set of weekend activities, Thursday night was your last shot at it, and it was the most important for recency bias to land a message.

• 2:01:10David Rosenthal?

  If you're NBC itself, and you want to advertise that week's NFL matchup, yes, it is the most important night. And, the Thursday night lineup on NBC was more profitable than all of the other nights combined.

• 2:01:30Ben Gilbert?

  What?

• 2:01:31David Rosenthal?

  Yes.

• 2:01:32Ben Gilbert?

  It's that outsized?

• 2:01:33David Rosenthal?

  Yes, it was that outsized. Now, part of that, too, was just because NBC was such a powerhouse on Thursday night. That's where their marquee shows lived.

• 2:01:41Ben Gilbert?

  But wow, because you have the same amount of ad inventory you are selling each weekday-

• 2:01:48David Rosenthal?

  Yep.

• 2:01:49Ben Gilbert?

  -night. And Thursday's rates were high enough that it dwarfed the sales for all those other nights. Wow.

• 2:01:59David Rosenthal?

  Yes.

• 2:02:00Ben Gilbert?

  Combined.

• 2:02:01David Rosenthal?

  Yes. So Seinfeld moving into this hallowed time slot is huge, huge. And, boy, does it work. So, the first week that Seinfeld moves to Thursdays in February of 1993, NBC, by the way, had had the Super Bowl in January 1993. They used promos during the Super Bowl to announce the Seinfeld move to Thursday night. So they went big.

• 2:02:31Ben Gilbert?

  And had they coined it must-see TV yet?

• 2:02:34David Rosenthal?

  No. So they rolled out that must-see TV slogan for Seinfeld as the anchor moving into Thursday nights.

• 2:02:43Ben Gilbert?

  And it was what, Seinfeld, Cheers had ended, so I guess Frasier was, the spinoff was just starting, I think Wings-

• 2:02:49David Rosenthal?

  Right.

• 2:02:50Ben Gilbert?

  -Mad About You.

• 2:02:51David Rosenthal?

  There's a whole sub-drama of Wings was the golden child from the comedy department at NBC. So the actual sitcom department, they were always trying to push Wings over Seinfeld.

• 2:03:01Ben Gilbert?

  But NBC did something really smart here, branding the night as must-see TV and creating like a network identity around NBC, rather than just marketing the shows themselves. So you actually ended up with this affinity for the network.

• 2:03:15David Rosenthal?

  I mean, for me, growing up, NBC meant something because of this. Like, none of the other networks meant anything. They just had stuff that I watched on them.

• 2:03:24Ben Gilbert?

  And that continued. I mean, if I think about what came after Seinfeld, Friends, The Office, in between the two, you had Will and Grace around the time of The Office, and later you had 30 Rock, Parks and Rec.

• 2:03:37David Rosenthal?

  Yep, yep.

• 2:03:38Ben Gilbert?

  There was like this whole-

• 2:03:39David Rosenthal?

  NBC comedy powerhouse.

• 2:03:40Ben Gilbert?

  Yes.

• 2:03:41David Rosenthal?

  Yep.

• 2:03:42Ben Gilbert?

  And a lot of it using SNL talent.

• 2:03:43David Rosenthal?

  Yes.

• 2:03:44Ben Gilbert?

  Which is also NBC.

• 2:03:45David Rosenthal?

  Which is also technically true of Seinfeld.

• 2:03:47Ben Gilbert?

  Yes.

• 2:03:49David Rosenthal?

  So back to the actual move here in February of 1993, when Seinfeld moves from Wednesday to Thursday, the show's ratings rise 57%, and it goes from the 45th most popular TV show on air to the 5th in one week. Now, obviously, a huge part of that is the power of the time slot, but it's also like, after the contest, it changes everything. You can't go back.

• 2:04:12Ben Gilbert?

  And the thing that was shocking, even to everyone at the network, was if you put something after Cheers, it's going to get good ratings, but it's going to be a drop-off from Cheers to that show, it's just a matter of how much drop-off. Seinfeld actually gained audience over Cheers, that they retained the Cheers audience and then new people tuned in just to see the next Seinfeld episode.

• 2:04:34David Rosenthal?

  This is the punchline. I mean, now here, at the big leagues, first run, Thursday nights, it retains all the audience, and then by the end of the season, it's bigger. It's crazy.

• 2:04:46Ben Gilbert?

  It's the new anchor show.

• 2:04:47David Rosenthal?

  It's the new king.

• 2:04:48Ben Gilbert?

  Larry is asked about this in 1993, the LA Times does an interview, because I think viewership hit an average of 30 million viewers per episode by this point. And Larry's quote is, "This probably means that a catastrophe is imminent. Something terrible will emerge from this. I don't really know how to account for it."

• 2:05:06David Rosenthal?

  Oh man, oh man. Well, a catastrophe was not imminent because, you know, the season continues. They just keep crushing it. The outing.

• 2:05:15Ben Gilbert?

  Yep.

• 2:05:16David Rosenthal?

  Episode 17, not that there's anything wrong with that. Episode 20 is the Junior Mint.

• 2:05:20Ben Gilbert?

  Oh, of course.

• 2:05:20David Rosenthal?

  Which really starts to foreshadow the absurdity that would come into Seinfeld in later years.

• 2:05:26Ben Gilbert?

  This is a great example of the concept of the episode is a joke in itself. Like the absurdity of Jerry and.

• 2:05:34David Rosenthal?

  Kramer, Jerry and Kramer.

• 2:05:35Ben Gilbert?

  Get invited to observe a surgery from like a balcony above the OR. And they're eating Junior Mints and one of the Junior Mints gets fumbled and actually ends up falling into the patient.

• 2:05:50David Rosenthal?

  Oh.

• 2:05:51Ben Gilbert?

  Which fun fact, using the cameras at the time, the cameras would not have picked up a Junior Mint. So they actually used a York peppermint patty.

• 2:05:58David Rosenthal?

  That's right.

• 2:05:58Ben Gilbert?

  For the slow motion tumble.

• 2:06:00David Rosenthal?

  Great trivia, great trivia. And the cultural relevance, the catchphrases, beginning with master of my domain, master of your domain. After that, we get yada, yada, yada, double dipping, shrinkage, Festivus, I mean, on and on. These are all words and phrases that Seinfeld invented. And all this is hitting here as we head into 1994, 1995.

• 2:06:29David Rosenthal?

  Right as the internet is coming online.

• 2:06:31Ben Gilbert?

  That's right. According to the book Seinfeldia, which is a great read. There were a bunch of early online communities about Seinfeld.

• 2:06:39David Rosenthal?

  Analyzing each episode, the week it comes out. It was crazy. Steve Case would talk about, head of AOL, that AOL's main competition was Seinfeld. They would never see AOL connection numbers dip, except when Seinfeld was airing. And then they would go right back up as everybody came on AOL to talk about Seinfeld.

• 2:07:00Ben Gilbert?

  And you know who's talking about stuff on the internet? Urban, well-educated, affluent, young males.

• 2:07:07David Rosenthal?

  Yeah. I mean, it was the most perfect timing ever that you could imagine for this type of show to have that moment of cultural relevance with the contest, move to the marquee slot on Thursday nights on NBC, and then have the internet hit, all in quick succession.

• 2:07:27Ben Gilbert?

  It's amazing. So this is all going really well, but what's going on inside is basically killing the people who are making it. I mean, the obsession that is going into this, the like every word and the writing and the rewriting and this obsession with the joke, nothing else matters. It is these like real auteurs that attracted other people as psychotic as them to obsess with them. And they needed to, because at this point, Jerry and Larry, after five years of existing in writing a television show, they're not experiencing the real world anymore.

• 2:08:09Ben Gilbert?

  So they need to keep bringing in young writers because they need to mine those people's brains for stories that happen to them. They need to find like many Larry and Jerry's who still live in New York, hopefully, so they get some element of that. But what ends up being an amazing bed to recruit from is the Harvard Lampoon, where it's these young comics, super smart, except that they actually are experiencing the world. So every year, for a while, they were bringing in a completely fresh crop of writers because they would basically steal all the best material from everyone's life and then move on to the next one. I mean, Festivus was a thing from someone's life. George's whole thing about, is he going to put a tip in the jar when they're not looking? Because he doesn't get credit for the tip. That's a thing from someone's life.

• 2:08:53Ben Gilbert?

  You kind of need all this fresh blood to come in and get material. Okay, so how did it work to actually produce the weekly Seinfeld episode? Thank you to Alec Berg and David Mandel for talking us through this. They were writers on the show. And then there's some great interviews with Jason Alexander that share a lot of the detail too. So the typical sitcom schedule would start its life on a Monday with rehearsals leading up to a Friday shoot. And on Seinfeld, they realized, well, actually, we could start the week on Wednesday and shoot the following Tuesday. And when the actors go home for the weekend, that means we can get some extra time coming in and rewriting the episode to make it better, which is fine, since then they weren't married, they didn't have kids, like they had no personal life to speak of.

• 2:09:38Ben Gilbert?

  They were obsessed with this, so that's just what they did. So day one, it starts with a table read. Everyone is there. There's producers, writers, NBC executives, Castle Rock representatives. And as Jason Alexander put it, they would then have a go big pow wow after the table read. They would give their notes, then Larry would quit. Then the notes would be thrown away, then Larry would agree to stay, and then he would come back tomorrow.

• 2:10:03David Rosenthal?

  Sounds about right.

• 2:10:04Ben Gilbert?

  So that's day one. And the actors start trying to do some rehearsing, but it's all going to change so materially and they kind of know it. So they're not taking that rehearsal that seriously. It's just like familiarizing themselves with the material. So Larry and Jerry would then go do a bunch of rewrites overnight. The scripts don't really have stage direction. It's just dialogue because they're comedians. That's, that's what they write. And so then the actors had to figure it out. So Seinfeld had this really unique collaborative way where the actors would stay on set, even when it wasn't their scene, so they could work through it together and they could trade. Say, oh, actually, I think it'd be more funny if Kramer's at the fridge right now with the door open going through, or then maybe George is and try to figure out the blocking together.

• 2:10:47David Rosenthal?

  Yep.

• 2:10:47Ben Gilbert?

  So then day three, more full rewrite overnight, more rehearsing, still just internal to the team. The network's not there yet. The actors, they're there, the writers, Larry, Jerry. This becomes more or less the shape of the final script. Then at the end of the day, NBC and Castle Rock come in, they watch a full run through, they give their notes. As Jason Alexander says, Larry would quit.

• 2:11:09David Rosenthal?

  Yeah.

• 2:11:09Ben Gilbert?

  Their notes would be diminished and Larry would come back. Day four is camera block day. So this is when the cameramen come in and start learning their shots. Who's taking what? The episode is sort of finalized enough to figure out what shots do we need and which cameras are we assigning? And it's a very difficult thing because it's not like the four cameras just sit there and don't change. Let's say you're camera one, you're responsible for a wide shot. It comes off you and goes to camera three. You have five seconds to scramble, shift, zoom, get a two shot on two characters. Because then when it flips back to you, that's where you're supposed to be.

• 2:11:45David Rosenthal?

  Yep.

• 2:11:46Ben Gilbert?

  So it's this like real ballet and art. So they all rehearse as a unit, the cameraman and the actors, because the next day, they're in front of a live audience.

• 2:11:54David Rosenthal?

  Yep.

• 2:11:55Ben Gilbert?

  On day four also, especially as the show got bigger and they were doing more on location filming, where they'd shoot outside the permanent sets, the coffee shop and Jerry's apartment. They do things like go to the fake New York street on a different lot to do the sort of outdoor street shots or actual filming locations, like the cemetery where George visits Susan.

• 2:12:18David Rosenthal?

  Oh, boy.

• 2:12:19Ben Gilbert?

  Yeah. Then day five is rehearsal in the morning. Then you bring in the live audience to film in the afternoon. They'd run the entire show in chronological order. And if there's any scenes that were not on those permanent sets, because the audience is just sitting there in front of the coffee shop and Jerry's apartment in, in big bleachers, they would bring down a screen so the audience could watch a rough cut of what was shot outside. And that way they could record those laughs, just like we talked about earlier. If they didn't get a laugh, do you know about what they would do, David? If they, if it wasn't going as expected? Even with the live audience there, they would pause production. They would huddle all the writers and the actors and the director on stage.

• 2:13:00Ben Gilbert?

  They would bring out a live band who was just like waiting on set to entertain the audience. And they also had like comics and stuff warm up the audience. And they would huddle and try and figure out like a better joke.

• 2:13:11David Rosenthal?

  Yeah.

• 2:13:11Ben Gilbert?

  Or how to rewrite it live. The best example of this is in The Marine Biologist.

• 2:13:17David Rosenthal?

  Yeah.

• 2:13:17Ben Gilbert?

  So the episode is supposed to end with George walking into the ocean. And if you've seen this episode, that is not the end.

• 2:13:24David Rosenthal?

  This is the best story.

• 2:13:25Ben Gilbert?

  It's so good. They bring down the screen to show the on-location shot. George walks into the ocean. Audience is kind of confused. There's been like a lot of buildup, but there's no joke here. So they all huddle, they come up with this idea for George to have the additional scene in the booth where he does a monologue. And then he finally produces the golf ball out of his pocket, which is of course tying in a plot from earlier in the episode where Kramer's hitting golf balls into the ocean and that golf ball turns out to be lodged in a whale's blowhole in George's storyline, which is why the whale needed a marine biologist in the first place that George was pretending to be.

• 2:13:57David Rosenthal?

  So it's so good.

• 2:13:58Ben Gilbert?

  Larry goes off after their huddle and he writes a full page monologue on the spot, which Jason Alexander tells Larry, yeah, I can do that. I'm a Tony Award winning actor. Like I'm a theater actor.

• 2:14:11David Rosenthal?

  Yeah.

• 2:14:12Ben Gilbert?

  This is, put me in, coach. Like this is what I do. Give me a monologue.

• 2:14:15David Rosenthal?

  It's already late at night here at this point in time. So yeah, he memorizes it, performs it on the spot. It's incredible.

• 2:14:21Ben Gilbert?

  It's the first time it's ever been read. There was no rehearsal when George goes, the sea was angry that day, my friends.

• 2:14:27David Rosenthal?

  Oh, so good.

• 2:14:28Ben Gilbert?

  It gets this giant laugh. And then of course, when the laugh finally dies down after he produces the golf ball, Kramer looks at him and goes, that a titleist?

• 2:14:37David Rosenthal?

  Yeah.

• 2:14:39Ben Gilbert?

  Hole in one, huh?

• 2:14:40David Rosenthal?

  Oh.

• 2:14:42Ben Gilbert?

  So this happens and then the next day, they come in for a table read.

• 2:14:48David Rosenthal?

  Yep.

• 2:14:49Ben Gilbert?

  Isn't that insane?

• 2:14:50David Rosenthal?

  Nonstop.

• 2:14:52Ben Gilbert?

  In parallel to this entire process is the pre-production where all the writers are, you know, some paired up in groups of two, but often just alone in their own offices, writing the next week's episode, the week after that, the week after that, and then.

• 2:15:07David Rosenthal?

  And Larry and Jerry are working with them and getting it ready for the table read.

• 2:15:10Ben Gilbert?

  But like, how are they working with them? Because they're also full time.

• 2:15:13David Rosenthal?

  That's the point.

• 2:15:14Ben Gilbert?

  Yeah. In a, in a seven day work block to produce the current episode. It's crazy that, no wonder they're just kind of like looking over outlines of the next week and the week after and why it requires so much rewriting week of is because it really hasn't gotten, especially Jerry's, attention yet.

• 2:15:31David Rosenthal?

  Yeah, the Seinfeld star is burning brighter and brighter and brighter and consuming everybody within it in the fusion reactor at its core.

• 2:15:43Ben Gilbert?

  Yes.

• 2:15:44David Rosenthal?

  Which is a good time to flip back over to the business side of Seinfeld. Because also, right at this time, after the move to Thursday night, after the huge success, after the internet starts to come online, Seinfeld hits syndication.

• 2:16:05Ben Gilbert?

  So Jerry's quote to the LA Times here is, we'll be in syndication next year and that will probably help us further, the same way it helped Cheers. Most people are still just now discovering our show. Most of the audience watching the show on Thursdays have not seen us before. They're new to us. There's 60 some odd episodes they haven't seen.

• 2:16:24David Rosenthal?

  Yep. Ooh, boy, and where those 60 episodes gonna be worth a lot of money to the ownership group that we discussed earlier in the episode. Cause Seinfeld is basically the most perfect syndication show ever created. Because of the no hugging, no learning element, no character development, no relationship development. You can tune in anytime to any episode in any order. Doesn't matter, you're gonna get a full entertaining experience.

• 2:17:00Ben Gilbert?

  And because these characters are just kind of vessels that you don't really need to invest in their storyline. They're just like mirrors of the worst part of ourselves. The situations provide the comedy. And so it's a very internationally relatable show too, in a way that not all comedy has.

• 2:17:19David Rosenthal?

  Yep, yep, totally. So why now and what exactly is this business of syndication? There's sort of a magic unofficial number for TV shows back in this time of 100 episodes. That was when you entered into syndication.

• 2:17:34Ben Gilbert?

  And the 100 episode thing kind of stems from you have a large enough number of episodes to demonstrate that people liked the show and there was familiarity with it, or you wouldn't have continued. And that there's a big body you can license to someone to show it. Cause they don't want to buy your 10 episodes. That's not interesting. They want to buy a big block of them. And so syndication, for those not familiar, is basically anytime a show gets licensed to another distribution option besides the primary first run TV network. And essentially those options are international, off network, which this is the biggest one for the longest time. I did not understand how this worked.

• 2:18:14Ben Gilbert?

  When NBC buys a show, they're buying it directly from Castle Rock. But once that enters syndication and the reruns are going constantly, that has nothing to do with NBC.

• 2:18:26David Rosenthal?

  Yes.

• 2:18:27Ben Gilbert?

  That is just the local affiliates. And the local affiliates, you know, it starts with a K or a W. It's a four letter station that's broadcast over the air in your city.

• 2:18:36David Rosenthal?

  Yep, and it might be a NBC or an ABC or CBS or a Fox station.

• 2:18:40Ben Gilbert?

  Right.

• 2:18:41David Rosenthal?

  But they only take the network's programming during primetime or sporting events, et cetera, et cetera.

• 2:18:46Ben Gilbert?

  The rest of the time, they have to go find their own programming. So either they need to make it or they need to go buy it directly. And there's like a thousand of them. And so this is where Sony actually does something. This is where the distributor matters.

• 2:19:01David Rosenthal?

  They earn their keep now.

• 2:19:03Ben Gilbert?

  For off network syndication, what you're really trying to figure out is how many of these individually owned local TV stations are willing to buy my 100 episodes and at what rate? And so that is how off network works. Then there's off network cable, same thing, but to cable stations. Fortunately, there's many fewer cable stations than there are local TV affiliates. And then in the far future, but it didn't happen yet, is a subscription video on demand or streaming, which would become a very, very valuable part of syndication. But the interesting thing about the TV business is just how large off network syndication and streaming syndication could be relative to the original first run business.

• 2:19:47Ben Gilbert?

  Because if you think about, what does it actually cost to make a Seinfeld episode in season one? Probably less than half a million dollars, probably less than $400,000. You're not paying the stars that much yet. Production costs aren't actually that high. And so then what's NBC gonna pay for it? $300,000?

• 2:20:05David Rosenthal?

  Right, 80% ish of whatever that number is, not a lot of money.

• 2:20:09Ben Gilbert?

  So let's look at season two, for example, 12 episodes. That probably costs somewhere in the five to six million dollars to produce, which means that's somewhere in the four ish million dollars for NBC to buy. It's actually like kind of a small thing. But those 12 episodes, when they're sold later in syndication can fetch huge sums of money, especially if it runs for a long time, because the rights can be sold over and over and over again. And the most important thing is that group, David, that you were pointing out, that sort of cap table of who owns the show, it's a totally different split from who makes the money the first time around.

• 2:20:51Ben Gilbert?

  The first time around, there's all these people you're paying on salary, especially the actors. The second time around, the people who are participating in all the syndication, it's that whole waterfall of who actually owns the show.

• 2:21:02David Rosenthal?

  Yep, and this is back to why Larry and Jerry got the most valuable deal in television history. Cause they got huge amounts for creators in that backend waterfall.

• 2:21:16Ben Gilbert?

  Yep.

• 2:21:16David Rosenthal?

  And then that backend waterfall would be billions and billions of dollars. And this is where it all starts.

• 2:21:21Ben Gilbert?

  At least reportedly, again, this is like a funny thing about doing this versus covering public companies. It's like, we're relying on some reporting done by a few news outlets over the years, but I think we have to take that at face value.

• 2:21:31David Rosenthal?

  Yes, but assuredly billions of dollars have gone through this waterfall. So yeah, we sort of joked about Sony slash Columbia earning their keep in this first syndication cycle, which is just for local broadcast affiliates. They can't take it to cable yet. Sony sells the show to a record 224 local TV stations across America.

• 2:21:58Ben Gilbert?

  Out of the thousand TV stations total. So basically one station in every market of the country, taking the exclusive local rights.

• 2:22:06David Rosenthal?

  And that generated an aggregate sum of $500 million in revenue, actually over $500 million in revenue in a single event here in 1995. And that was just for the first five year syndication window and only on local TV affiliates, not even on cable yet.

• 2:22:25Ben Gilbert?

  Yeah.

• 2:22:26David Rosenthal?

  And it turned out that those local affiliate stations that were paying all that money for Seinfeld, actually were getting a pretty good deal. Because all of a sudden, reports start popping up as Seinfeld enters into syndication, where stations that would run Seinfeld reruns would end up winning the time slot in their local market. They would beat live programming on other stations at the same time. So like, let's say you're, you know, local affiliate TV station in Buffalo, New York. You decide that you're gonna run Seinfeld reruns during a particular time slot

• 2:23:10David Rosenthal?

  when the other stations in town are running local news. Seinfeld beats the local news.

• 2:23:15Ben Gilbert?

  It's the audience of people who never got to watch it on network, because it only ever aired twice. Like you missed a big episode. Let's say you missed the contest. You were working the first night and then you weren't around because you were doing summer travel or whatever. The only chance to catch it is in syndication. And that's a thing that everyone talked about. That could be a marketing event if you were a local TV station, trying to drive a bunch of attention. We're gonna air that episode.

• 2:23:40David Rosenthal?

  Right, you could market that you are gonna be running the contest on Tuesday night at 11 or something like that. I mean, that's, it sounds way more compelling than local news to me.

• 2:23:51Ben Gilbert?

  Or whatever other local programming. I mean, I think Wheel of Fortune, there were a lot of like game shows that would be, I think the phrase is first run syndication, that would skip the network altogether and be produced directly to sell to the local affiliates. Actually Oprah was this.

• 2:24:06David Rosenthal?

  Yes, we talked about this on our Oprah episode.

• 2:24:08Ben Gilbert?

  Yep.

• 2:24:09David Rosenthal?

  And just to make it even more fitting, that same year in 1995, when Seinfeld hits syndication, is when FinCEN gets repealed. So the door is now slammed that no other shows are gonna have these dynamics, because the networks now are gonna own their own shows. And this is gonna play out over broadcast television a little bit. And it's gonna play out big time in the streaming era.

• 2:24:38Ben Gilbert?

  Which if you're Castle Rock, it's a good time to cash in your chips, because you have this super valuable library, which you own, you actually own it, and it's guaranteed to make all this money in the future. And the regulation that was in place that let you make future shows, you have no idea if you're gonna be able to sell the next hit show to NBC. They probably should make it in-house themselves. So this is a very good time to sell the company.

• 2:25:04David Rosenthal?

  Yep, so Castle Rock sells itself to Ted Turner and TBS here as this is all going down.

• 2:25:12Ben Gilbert?

  It's a little earlier, December 93.

• 2:25:14David Rosenthal?

  Yes, but it was when, when it was announced that the FinCEN rules were gonna get repealed, even though it went into effect in 1995, Castle Rock sells to Turner.

• 2:25:21Ben Gilbert?

  It was $100 million in cash for Castle Rock's owners, plus another 300 million or so in paying off the outstanding debt. So the total out of pocket that Turner paid for Castle Rock, which owns that huge share of Seinfeld's profits and a bunch of other great stuff, was about 400 million. What an unbelievable steal to get the Castle Rock library for that.

• 2:25:46David Rosenthal?

  And of course, that happened before the actual sales of the first syndication cycle for Seinfeld.

• 2:25:51Ben Gilbert?

  Right, right.

• 2:25:52David Rosenthal?

  Ooh, also, isn't there a wild story that Steve Bannon was an investment banker on that deal? And took some of his commission in equity on the Seinfeld waterfall?

• 2:26:05Ben Gilbert?

  The details are a little bit murky on this, but I have seen it reported that Steve Bannon still gets royalties from Seinfeld syndication.

• 2:26:14David Rosenthal?

  Yeah, because, because of this deal. Wow, wow. So Turner and TBS buys Castle Rock. And then they turn around and sell to Time Warner in all this consolidation that's happening. The net of which is that Castle Rock and the largest ownership slug of the Seinfeld waterfall ends up in the Warner Brothers library. All right, so Ben, you said now is a great time to sell. In the moment, yes, for Castle Rock.

• 2:26:51David Rosenthal?

  But actually, even if they had no viable future business.

• 2:26:56Ben Gilbert?

  From Finson ending.

• 2:26:57David Rosenthal?

  From Finson ending, they should have waited because the value of the Seinfeld waterfall, once syndication hit, was about to become way more than the $400 million that they paid for it.

• 2:27:08Ben Gilbert?

  I'll spoil the ending for everyone. We're pretty sure that Castle Rock, if you work through the whole waterfall, made somewhere between $2 and $2.5 billion on Seinfeld syndication over the years, but they captured almost none of that because they sold the entire entity. And so it was actually Turner and then Warner Brothers, the IP's ultimate resting place, that would have received the lion's share of those proceeds. So I will revise my previous statement. Castle Rock absolutely should not have sold, but no one could have known that Seinfeld would go six syndication cycles and be as relevant as ever three decades later.

• 2:27:52David Rosenthal?

  Yep. But importantly, Sony keeps the distribution rights. We'll come back to that when we get to streaming in a little bit.

• 2:28:00Ben Gilbert?

  Yep.

• 2:28:01David Rosenthal?

  So that was the business story of Seinfeld from 1993 to 1995, culminating in that first syndication sales cycle where Sony generates an astounding $500 million in revenue that hits the, so to speak, cap table.

• 2:28:17Ben Gilbert?

  Right. Sony gets there, cut off the top of that, but then there's probably 400 plus, maybe 425-ish million dollars that then flow through to everyone else who owns the Seinfeld IP just for this first cycle of syndication to the off-network affiliates to watch around the US.

• 2:28:35David Rosenthal?

  And then the next year, in 1996, Larry leaves the show.

• 2:28:43Ben Gilbert?

  Honestly, it's hard to blame anyone after walking through the intense pace that they'd been working at for six years now.

• 2:28:50David Rosenthal?

  Well, yes. And yes, I think that is the reason Larry left the show. He was totally burned out. He'd gotten married at this point. He was ready to move on with his life. But putting that aside, now that you know the economic history of the show, Larry leaving in 1996, of course, makes sense.

• 2:29:09Ben Gilbert?

  Right. Why stay?

• 2:29:10David Rosenthal?

  Everybody just got the payday in 1995 from syndication. He's in the money. And he's not just in the money with a one-time payout now, he's in the money forever.

• 2:29:20Ben Gilbert?

  And it's not like he was making a lot. I don't think. Again, we have no access to these private contracts, but in general, a non-acting creator, lead writer is not drawing a giant paycheck on a per-episode basis in making a show. You own the show, so you're expected to make your money on the backend, which is going to happen whether or not he makes any new episodes.

• 2:29:45David Rosenthal?

  Again, to use a startup analogy here, this is like, the company went public and the lockup ended.

• 2:29:51Ben Gilbert?

  Yeah, that is the right way to...

• 2:29:52David Rosenthal?

  Yep.

• 2:29:53Ben Gilbert?

  There's a lot more value you could build, but eh, other people can build it too.

• 2:29:56David Rosenthal?

  You're gonna have a life-changing event.

• 2:29:58Ben Gilbert?

  Yes. But for the show, this is brutal because everyone else was kind of just an input to Larry in the writer's room. And Larry was like, we heard him referred to as the CPU. He would be the one that ultimately would come in on weekends, do the rewrites. You could get a script most of the way there, and you could always be confident that Larry would make it great. Without Larry, they need an entirely new process.

• 2:30:22David Rosenthal?

  Right. And like Jerry was there as the co-processor, but he's also starring in the show.

• 2:30:28Ben Gilbert?

  Oh, Jerry was not available to play Larry's role because you can't have a lead writer who is also running the whole show as producer and the lead actor and doing all those rehearsals that we talked about. So what this leads to is more people are involved in the writing process and they just need more hours. So now all the writers are coming in on weekends, not just Larry like the old days. And when we were talking to Alec Berg about this, who was a writer on the show, he told us that he looked at his calendar at one point and realized that he had come into the office every day for some amount of time for 56 days.

• 2:31:03David Rosenthal?

  Yeah. What was the story? Like they would go watch the Super Bowl and then they'd all go back to the office after?

• 2:31:08Ben Gilbert?

  Yeah. Jerry would run a suite for everyone at the Beverly Hills Hotel and then back to the office.

• 2:31:12David Rosenthal?

  So it's a Herculean task after Larry leaves. Castle Rock and by extension NBC keep upping Jerry's salary, like the amount that he was being paid per episode for all of his duties. First to $500,000 an episode, and then by the ninth and what would end up being the final season of the show, to an unprecedented $1 million per episode?

• 2:31:38Ben Gilbert?

  Per episode?

• 2:31:39David Rosenthal?

  Per episode.

• 2:31:41Ben Gilbert?

  For one person who also owns the show.

• 2:31:44David Rosenthal?

  Who also, yes, gets all that backend that we were talking about.

• 2:31:47Ben Gilbert?

  The tenor of my voice should not be anything around like surprise or didn't earn it, but it's just like to underscore, these are separate things getting paid as the person making the show slash acting in it and the ownership.

• 2:31:59David Rosenthal?

  Yep. The show, though, I mean, look, you can argue whether seasons eight and nine are as good as the Larry seasons.

• 2:32:07Ben Gilbert?

  They're certainly different, but they're more ambitious.

• 2:32:09David Rosenthal?

  They are more ambitious. Yeah. The only way that they could find to sort of move past Larry was to try and do bigger stuff.

• 2:32:16Ben Gilbert?

  And there's some classics. I mean, true all-timers in there. The Bizarro Jerry, the Chicken Roaster, the Kenny Rogers episode.

• 2:32:24David Rosenthal?

  Yes.

• 2:32:25Ben Gilbert?

  The Andrea Doria.

• 2:32:26David Rosenthal?

  Muffin Tops, is that in there?

• 2:32:28Ben Gilbert?

  The Pothole.

• 2:32:29David Rosenthal?

  Van Buren Boys.

• 2:32:30Ben Gilbert?

  Yep. Yada, yada, yada.

• 2:32:32David Rosenthal?

  Yep.

• 2:32:33Ben Gilbert?

  You're right. Muffin Tops, The Summer of George. I mean, this is season eight.

• 2:32:37David Rosenthal?

  Again.

• 2:32:37Ben Gilbert?

  They're firing on all cylinders. Season nine, The Butter Shave, The Voice.

• 2:32:41David Rosenthal?

  The Butter Shave!

• 2:32:43Ben Gilbert?

  Serenity Now is season nine.

• 2:32:45David Rosenthal?

  Ah, that's right. Yeah, Jerry's still got a bigger role.

• 2:32:48Ben Gilbert?

  The slicer, the dealership, the reverse peephole, the wizard. These are all season nine.

• 2:32:54David Rosenthal?

  Yeah. Yeah. So creatively, definitely different, but still excellent. Ratings and ad sales-wise, though, for NBC.

• 2:33:03Ben Gilbert?

  That's changed quite a bit.

• 2:33:04David Rosenthal?

  The show definitely does not miss a beat with Larry leaving. So in 1996, Seinfeld makes $150 million of profits for NBC after paying ad agency commissions and all the production fees that they're paying to Castle Rock for whatever it is, 80% of the actors' salaries and sets and the production, all that. In 1997, the show makes $200 million in profits for NBC.

• 2:33:30Ben Gilbert?

  So that's the revenue they got from advertising minus the cost of paying Castle Rock for the show is $200 million.

• 2:33:38David Rosenthal?

  And I think also the cost of commissions to ad agencies for the advertising. I think it was actual profits.

• 2:33:45Ben Gilbert?

  Because to put that in context, NBC's entire profit during that era was about $1 billion a year. So 20% of the network's profits were coming from Seinfeld directly.

• 2:33:56David Rosenthal?

  And probably more than that because those directly attributable numbers actually understate the value of Seinfeld because the way NBC would sell their ads, let's say you were General Motors, you wanted to place a $30 million ad buy for Seinfeld that season. You can't do that. The only way you can get $30 million worth of media on Seinfeld is to buy $200 million of media on primetime at NBC that season.

• 2:34:28Ben Gilbert?

  Bundling, baby.

• 2:34:28David Rosenthal?

  Bundling. Yeah, exactly. Exactly. Then there's all the value that Seinfeld delivers in terms of launching other shows or propping up other shows, just like Cheers did for Seinfeld.

• 2:34:37Ben Gilbert?

  Right. So it's how much revenue did it catalyze and then also that it served as a launchpad for other shows.

• 2:34:45David Rosenthal?

  That sets up the 1997 cast renegotiation of their salaries.

• 2:34:52Ben Gilbert?

  Because they haven't been making anything near where Jerry was, and they have no backend. It's not like the cast of the show owns the show like the creators do. They're paid actors, they're employees.

• 2:35:03David Rosenthal?

  They just get their union guild standard residuals in the show, which is peanuts. I think Jason Alexander has been quoted as saying that each of them, probably lifetime in standard guild residuals from Seinfeld, got quarter million dollars or so.

• 2:35:18Ben Gilbert?

  But they were making good salaries at this point.

• 2:35:20David Rosenthal?

  Yes.

• 2:35:20Ben Gilbert?

  Early on, it was nothing, but then by this point, I think it was $160,000 per episode that they were making, now that they were big stars in the number one show.

• 2:35:30David Rosenthal?

  But they start getting pretty nervous because they're like, no, this show's days might be numbered. Like, we don't know how long Jerry can keep this going, how long Jerry will want to keep this going. Larry's already left. They're both rich beyond anyone's dreams here. They realize that after the eighth season, they kind of have a now or never moment where they need to hold out and negotiate for much higher salaries.

• 2:35:56Ben Gilbert?

  Which is incredibly awkward because the relationships between the actors and Larry and Jerry was always fantastic on set.

• 2:36:04David Rosenthal?

  Yes.

• 2:36:05Ben Gilbert?

  It is notoriously a very professionally-run show. There's no drama between people. Whenever issues came up, they would resolve them and move on and try to get to the root of it.

• 2:36:14David Rosenthal?

  And they would actually help each other with their acting, which other TV shows, like there was an unwritten rule that actors didn't give notes to other actors.

• 2:36:20Ben Gilbert?

  Right. So it creates this big awkwardness of we're all gonna hold out.

• 2:36:25David Rosenthal?

  Right. I mean, at the end of the day, Jerry holds all the cards because he's the one who decides whether the show continues and how.

• 2:36:33Ben Gilbert?

  Right.

• 2:36:33David Rosenthal?

  Nonetheless, they get it all done at the deadline for the ninth season. And Jerry supports the cast by telling NBC and Castle Rock that he will agree to come back for a ninth season in 1997 into 1998, but only if the whole rest of the cast also signs on. Like, he's not going to come back if they aren't able to sign all three of the other cast members, too.

• 2:36:55Ben Gilbert?

  Yep.

• 2:36:56David Rosenthal?

  So they reach a deal, $600,000 per episode for each cast member for one season, plus an option to extend that same deal for a second next season, hypothetical 10th season, if the show comes back, which is all dependent on Jerry.

• 2:37:18Ben Gilbert?

  Yes. So on season nine, the cast effectively did secure what they had set out to do. It wasn't like the highest number that they originally asked for, but it did get them the amount of money where they don't need to work again.

• 2:37:32David Rosenthal?

  Yes.

• 2:37:32Ben Gilbert?

  Because all of them are extremely typecast now. It's like the worst thing as an actor to be on a number one show in an extreme role, like any of these roles.

• 2:37:43David Rosenthal?

  And not have backend.

• 2:37:44Ben Gilbert?

  And not have made your entire rest of your life's income from that show. Cause this is hard to get other parts. So at 600K an episode, that's $14,400,000 for each of Julia, Michael and Jason in that season. Good. Like, yeah, not what it would be if you had backend, but like you could live your, the rest of your life on that when you may have cut off your ability to make big money from acting ever again in the future. So with Jerry now at a million dollars an episode, each of them at 600,000, that means that the cost per episode of talent is 2.8 million, which now means that the cost of each episode is, I don't know, three and a

• 2:38:29Ben Gilbert?

  half million dollars, but NBC is absolutely happy to pay this because

• 2:38:34David Rosenthal?

  As we talked about.

• 2:38:35Ben Gilbert?

  Giant advertising profits. Yeah. So 70, 80 million in, in production costs for the season. Okay. We're going to make 200 million directly from ad sales, let alone all the other secondary benefits that come from it.

• 2:38:47David Rosenthal?

  Yep. And we should note here too, that Jerry's $1 million per episode salary made him the highest paid TV actor in history at that point here in season nine.

• 2:39:00Ben Gilbert?

  Yep. Without backend.

• 2:39:01David Rosenthal?

  Yep.

• 2:39:02Ben Gilbert?

  Just from the per episode fees.

• 2:39:03David Rosenthal?

  Just from the per episode fees. So all of this leads here at the end of 1997 to Jack Welch inviting Jerry Seinfeld to brunch to discuss a hypothetical 10th season. Jack Welch.

• 2:39:24Ben Gilbert?

  The CEO of the conglomerate, General Electric, which is at the time thought to be the best run company in America, in the world.

• 2:39:32David Rosenthal?

  Yep. And I think the most valuable company by market cap in the world at this point in time. Yes. It is worth Jack Welch's time to take this extremely seriously and invite Jerry Seinfeld to brunch.

• 2:39:43Ben Gilbert?

  And talk about a potential season 10.

• 2:39:46David Rosenthal?

  Yes.

• 2:39:47Ben Gilbert?

  But listeners, before we tell that story, now is a great time to tell you about one of our favorite companies, WorkOS. You have heard us talk about this all season. Once you find product market fit, the fastest way to grow is upmarket and enterprises won't buy your product until you have gotten enterprise requirements like single sign-on, SCIM, that's S-C-I-M, permissions, audit logs. WorkOS gives you all of those as drop-in APIs.

• 2:40:13David Rosenthal?

  But the twist now is that it's not just your customers, employees who need to get into your app anymore. It's their agents, which brings me to Kramer. In the classic, season eight, episode, The Bizarro Jerry, Kramer wanders into an office and just starts working there without ever being hired. When he, Kramer, finally does get fired, quote unquote, for sloppy work, he says, I don't even really work here.

• 2:40:43Ben Gilbert?

  This, listeners, is the situation for most agents today. People just hand out shared API keys to an agent or borrow human login credentials with full permissions, but obviously with very little accountability. It's really not that different from Kramer managing to get an employee badge.

• 2:40:59David Rosenthal?

  Yes. So WorkOS built the right infrastructure for this, a signup form for agents. It's called auth.md and it's an open protocol. You publish one plain text file to your domain. auth.md tells any agent how to register, what your service offers and what it's allowed to do. An agent reads it, signs up on the user's behalf and walks away with its own access token scoped exactly to what it needs and nothing more.

• 2:41:27Ben Gilbert?

  A real world example is Neon, the database company that Databricks bought for a billion dollars. More than 80% of their databases are created by agents, not people. An agent reads neon.com/auth.md, spins up a database scoped to that project, and a human claims it later with one link.

• 2:41:45David Rosenthal?

  Nice and clean and much more secure.

• 2:41:49Ben Gilbert?

  Auth used to mean proving you are you. Now it means proving your agent is allowed to do this specific thing as you right now with limits. That's how you get in the door with enterprises now. And it's why OpenAI, Anthropic, Cursor, Perplexity, and hundreds of other AI startups build on WorkOS. You can learn more at workos.com/auth-md and just tell them that Ben and David sent you.

• 2:42:13David Rosenthal?

  All right. So Jack Welch invites Jerry to brunch at the end of 1997. They set it up in the then CEO of NBC, Bob Wright's apartment in New York City, on the 38th floor of the Trump Tower. In attendance from the NBC GE side are Jack Welch and Bob Wright, the NBC CEO. Helping prepare for the meeting were Warren Littlefield, president of entertainment, and Don Olemeyer, who is NBC's head of LA operations, which is the, you know, location of the operations of the show of Seinfeld, since it's filming in LA, which I still can never get over that Seinfeld was filmed in LA, but.

• 2:42:57Ben Gilbert?

  Even some of the exterior shots of the apartment are recreations of New York buildings in LA.

• 2:43:06David Rosenthal?

  I know, I know. I don't like to think about it because it feels wrong.

• 2:43:11Ben Gilbert?

  Right.

• 2:43:11David Rosenthal?

  So that's the GE NBC side. And then Jerry is obviously there and George Shapiro and Howard West, the talent managers, agents are, are there too. They settle down to brunch and the NBC GE team brings out slides, like presentation slides. Jack Welch starts giving the presentation to Jerry Seinfeld over brunch, making a presentation arguing that the show has not yet reached its peak. It can go higher. It can get bigger. You can do more. Jerry, we have the data. The audience wants you back. It's not over. You haven't reached the top.

• 2:43:57Ben Gilbert?

  Wow.

• 2:43:57David Rosenthal?

  Jack concludes his pitch to Jerry with this line. You know, Jerry, I go all over the world. Everybody who talks to me, they only want to know one thing. Is Jerry Seinfeld coming back for another season?

• 2:44:17Ben Gilbert?

  And that line about it hasn't peaked, that is one of the things that is going through Jerry's mind. In addition to like exhaustion and having really not started his life because he's just been doing this for 10 years.

• 2:44:29David Rosenthal?

  Yeah. He's 43 years old at this point in time.

• 2:44:31Ben Gilbert?

  Right. There is the concern that the show will keep going past its peak and he doesn't want to see it. So the only way to go out on top is to go out before you reach your peak because you're not going to time it perfectly.

• 2:44:44David Rosenthal?

  Yep. Yep. Yep. All that's going through his mind. So Jerry starts demurring after Jack's pitch, sales job here. He's not outright declining, but he's making noises. It's like, ah, gosh, I appreciate it, Jack. But I don't know that I really can, can keep it going. He said, all right, well, don't make a decision now. Don't make a decision now. The meal ends. Everybody stands up. Jack says, Jerry, come over here for a minute. I want to talk to you one-on-one.

• 2:45:16David Rosenthal?

  He takes Jerry Seinfeld to a corner of the room.

• 2:45:21David Rosenthal?

  Jack takes out a piece of paper and he starts writing some numbers down on the paper. He writes down $5 million.

• 2:45:32David Rosenthal?

  22. 22 episodes. $110 million. He hands it to Jerry, says, this is a firm offer for your salary for next season. $5 million an episode.

• 2:45:51Ben Gilbert?

  If you come back and do a 10th season.

• 2:45:53David Rosenthal?

  Jerry is already the highest paid TV actor in history at $1 million. And Jack Welch is handing him a piece of paper. Not, not, not just like GE executive Jack Welch, Mr. Operational Efficiency Six Sigma Black Bell.

• 2:46:11David Rosenthal?

  People are replaceable. Go listen to our Home Depot episode about how cost focused Jack Welch and GE is, is making Jerry an offer, a firm offer to 5X his already record salary.

• 2:46:25Ben Gilbert?

  That 110 million is 11% of NBC's total profit for the year.

• 2:46:30David Rosenthal?

  Yes.

• 2:46:31Ben Gilbert?

  That is being offered to him.

• 2:46:33David Rosenthal?

  As salary to Jerry.

• 2:46:35Ben Gilbert?

  Yes.

• 2:46:35David Rosenthal?

  Not as like budget for the show.

• 2:46:37Ben Gilbert?

  Who already has the backend and the show.

• 2:46:39David Rosenthal?

  This is how valuable Seinfeld is to NBC, to GE. So Jerry says, well, all right, thank you. I'll get back to you.

• 2:46:49Ben Gilbert?

  Keep in mind, listeners, that Seinfeld is the only show in history from this last season to ever command over a million dollars a minute for advertising rates, a feat only previously accomplished by the Super Bowl.

• 2:47:02David Rosenthal?

  Yep. Yep. So the group disperses and Jerry says to Howard and George,

• 2:47:12David Rosenthal?

  let's go for a walk. They go for a walk in Central Park. They stop and they sit down on a bench at 81st Street and Central Park West. And Jerry looks at George, looks at Howard and says, guys, when I was 21 years old, I sat on this same bench with my dad when I told him that after college, I was going to go into stand-up comedy as my career. And he thought it was a great decision. He backed me all the way. He said he wished he could have done it.

• 2:47:50David Rosenthal?

  So what do you think we should do? Howard looks at Jerry and he says, "Gosh, if it's me, I'd love to do one more season."

• 2:48:01Ben Gilbert?

  Hmm.

• 2:48:02David Rosenthal?

  George looks at Jerry and he says, "If it's me, I think it'd be great to go out while we're on top." Howard says, "You're the guy making the show. It's your call." Couple of days later, December 26th, 1997, day after Christmas, The New York Times runs an article.

• 2:48:28Ben Gilbert?

  Oh, they run this article on A1 in the top-left corner of the paper.

• 2:48:33David Rosenthal?

  Yep.

• 2:48:34Ben Gilbert?

  Front-page news.

• 2:48:36David Rosenthal?

  "Seinfeld Says It's All Over and It's No Joke for NBC." The article reads, "Seinfeld, the most popular television comedy of the 1990s and the centerpiece of the most profitable night in television history, will stop production at the end of this season, Jerry Seinfeld, the show's creator and star, said yesterday." Yesterday being Christmas Day, 1997. "Mr. Seinfeld said his decision did not hinge on money. Instead, he wanted to follow the tradition of stand-up comedians and leave the stage with the audience wanting more." Jerry would later say about the decision, "I thought about the audience. How are they feeling?

• 2:49:21David Rosenthal?

  Where are they? I was trying to perceive it like a comedian on the stage. When you've been on the stage for a pretty long time, and nine years is a healthy run, and they're still screaming, if you can get off, they'll scream even louder. They'll never forget you." That was the best business decision that Jerry Seinfeld ever made. Because on the surface, and at the time, and for a long time after, the narrative around this is like, "Oh, man. Jerry, gosh, he was so burned out, and it was comedic timing, it was artistic, it was personal, but man, it was a terrible business decision to walk away

• 2:50:05David Rosenthal?

  from $5 million an episode."

• 2:50:08Ben Gilbert?

  And you're about to make the argument that it's because they went out on top that syndication went nuts? Is that what I'm hearing?

• 2:50:16David Rosenthal?

  That's the argument I want to make, is that actually, it was the best business decision that Jerry Seinfeld ever made.

• 2:50:25Ben Gilbert?

  Okay, so let's explore that. So in the hypothetical world where they do season 10, season 11, Jerry's making hundreds of millions of dollars out of each one. They're good, but like, it's getting tired, kind of jumps the shark. You believe that there would not be the staying power to go through six syndication runs at very high-dollar amounts, including recently, here in 2026 with Netflix. Maybe, I could see that.

• 2:50:54David Rosenthal?

  I think so. I think this is-

• 2:50:56Ben Gilbert?

  It's the taste left in people's mouths.

• 2:50:58David Rosenthal?

  It's the taste left in people's mouth, and the reason that three decades later, Netflix has paid $1 billion to the cap table of Seinfeld this decade-

• 2:51:10Ben Gilbert?

  Over a decade.

• 2:51:11David Rosenthal?

  Over a decade, is because of the cultural relevance of Seinfeld. And it's Jerry's quote, it's Jerry's quote. "If you can get off that stage when they are still screaming, they'll never forget you." And by our estimates, Jerry, so far, has earned somewhere around 3/4 of $1 billion from ongoing syndication sales, DVD sales, all backend deals of Seinfeld over the past 30 years. And yeah, my argument is that a huge part of that value was set up and protected by Jerry's decision here at Christmas 1997 to end the show, go out on top.

• 2:51:53David Rosenthal?

  Because if you look at the data, over the 28 years since Seinfeld ended, and the 31 years since it first entered syndication, not only has Seinfeld never gone off the air, interest, viewership, basically has remained constant. As in, like, very, very, very high.

• 2:52:15Ben Gilbert?

  There are many times the number of people, I've seen estimates of 3X to 5X, who have watched Seinfeld since it went off the air compared to when it was on the air.

• 2:52:23David Rosenthal?

  Right, right, right. So if you take that, the majority of Seinfeld's audience have come after that Christmas decision.

• 2:52:31Ben Gilbert?

  Hmm. It's an interesting hypothesis. A different hypothesis was put forward by the Harvard Business Review. This is, listeners, David and I read this quote, I want to say like, a decade ago-

• 2:52:43David Rosenthal?

  Yeah.

• 2:52:43Ben Gilbert?

  And have referenced it a dozen times since, because we think it's like, one of the all-time greatest business quotes.

• 2:52:49David Rosenthal?

  No doubt it is.

• 2:52:50Ben Gilbert?

  And it is delightful that we get to do an episode on Seinfeld and bring it up.

• 2:52:55David Rosenthal?

  So I've got the whole thing here. Somehow, Jerry ended up getting interviewed by Harvard Business Review in 2017, when he was doing one of the promotional cycles for comedians in cars getting coffee. The HBR interviewer says, "So, you cut off the show when it was so successful, really as a result of the fact that you were burned out. Why didn't you try to come up with a more efficient, more sustainable way to make the show? What would McKinsey have said if they'd come in and said, 'There's a better way to do this'?" And Jerry says, "Who's McKinsey?" The interviewer says, "Well, McKinsey's a big consulting firm." Jerry says, "Are they funny?" The interviewer says, "No." Jerry says, "Then I don't need them."

• 2:53:39David Rosenthal?

  The interviewer says, "No interest in efficiency," or, and Jerry says, "No, no! If you're efficient, you're doing it the wrong way. The right way is the hard way."

• 2:53:48Ben Gilbert?

  Well, for him, it's this extrapolation of the thing that he learned going on Carson when he was in his 20s, that if you don't just grind and find new material the hard way, and write, and think, and rewrite, and go through all the pain, then you're going to run out of material and you're going to become irrelevant. Like, you must go through the fire.

• 2:54:08David Rosenthal?

  And look, I think there's two things embedded in this McKinsey back-and-forth here that we love so much. One, for our purposes of the episode today, is the point that even in 2017, the consensus view was that this was a bad business decision that Jerry made. Two, more universally, Jerry is so absolutely right in what he says in response to the interviewer here, at least in any creative field, and I think any entrepreneurial pursuit is, by definition, a creative field. The efficient way is the wrong way. Like, if you're going to do the accepted, efficient, what McKinsey will tell you to do, you are going to get accepted, normal, efficient results.

• 2:54:53David Rosenthal?

  If you want outlier results, you need to take the hard way.

• 2:54:56Ben Gilbert?

  It's the Bezos-ism that he likes to invent and wander.

• 2:54:59David Rosenthal?

  Yep.

• 2:54:59Ben Gilbert?

  Without wandering, you cannot invent. They are intrinsically linked.

• 2:55:03David Rosenthal?

  Yep, yep. So, we're in the last season of the show. What happens next? Well, first off, the second syndication cycle kicks off. Sony goes to work again, and this time, they can add cable syndication in addition to local broadcast affiliates.

• 2:55:24Ben Gilbert?

  Which is the thing that has been true my whole life, which I said at the end of our last episode, which is, you can't turn on the TV without finding Seinfeld on some channel, be it broadcast or cable.

• 2:55:35David Rosenthal?

  So here's the amazing thing that happens. Remember, we told you in the last syndication cycle that Castle Rock got acquired by Turner, by TBS? When Sony goes out to bid the cable rights, TBS, Turner, makes an over-the-top bid of $1 million per episode for four years of cable rights, which is almost $200 million.

• 2:56:01Ben Gilbert?

  Wait, so TBS is buying the rights from themselves, but they have to go through Sony to do it? Because Sony owns the distribution rights?

• 2:56:09David Rosenthal?

  Yes! This is why the distribution rights remaining with Sony was so important to the business of the show, because it means that bona fide real bids always have to happen for Seinfeld rights.

• 2:56:26Ben Gilbert?

  I see, because if-

• 2:56:27David Rosenthal?

  TBS couldn't just say, "No, it's not going to market, we got it."

• 2:56:32Ben Gilbert?

  Fascinating.

• 2:56:33David Rosenthal?

  And then Turner, of course, gets acquired by Warner Brothers. So fast forward to today with the streaming rights, which we're going to talk about in one second. Warner Brothers can't say, "Ah, no, we're just going to keep Seinfeld on HBO Max."

• 2:56:47Ben Gilbert?

  The thing we own.

• 2:56:47David Rosenthal?

  The thing we own. No, no, it's got to go, it's got to go out to bid, because-

• 2:56:51Ben Gilbert?

  Sony has the right to distribute it.

• 2:56:53David Rosenthal?

  Yep.

• 2:56:53Ben Gilbert?

  Warner Brothers doesn't actually own the decision-making for, "Does it get to go on our service?" They have to make a bona fide bid in addition to others like Netflix and the free market for it.

• 2:57:04David Rosenthal?

  Free-market capitalism driving maximum shareholder value to the Seinfeld cap table.

• 2:57:11Ben Gilbert?

  All right, so what is the 1998 syndication fetch?

• 2:57:14David Rosenthal?

  So in total, across the renewed broadcast affiliate sales, cable now with TBS, and international, it brings in a reported $1.1 billion of total revenue here in 1998.

• 2:57:34Ben Gilbert?

  So for those keeping track at home, the show's not even over yet, and syndication has already fetched $1.6 billion.

• 2:57:41David Rosenthal?

  Sure, making that decision at Christmas time for Jerry go down a lot easier here when the second syndication cycle happens. Which brings us to the finale of the show. I think the thing that people don't realize about the Seinfeld finale and that I didn't realize until doing this research was that it's a thank you. It's a thank you to all the guest stars that made Seinfeld what it was over the years.

• 2:58:12Ben Gilbert?

  Yeah. So what is the finale? For those who haven't seen it or those who don't remember, on May 14th, 1998, they aired a special extended episode. They brought back Larry David to write it. He had been doing other projects for the last two years and the, the gang is put on trial for some sort of new law.

• 2:58:34David Rosenthal?

  Violating the Good Samaritan laws.

• 2:58:36Ben Gilbert?

  Where they watch someone get held up in a carjacking and they do not intervene to help. And they are bringing in dozens of past guest stars as character witnesses to attest to if these people are good people or not, which is just so perfect for the theme of the show. But when you're watching it, you kind of do think this might be a little excessive.

• 2:59:00David Rosenthal?

  Yeah, yeah.

• 2:59:01Ben Gilbert?

  This might be a little much. And the way it ends, spoiler alert. So like, stop this episode right now if you care about not knowing how Seinfeld ends. They are convicted and go to jail for violating this Good Samaritan law because the parade of Seinfeld guest stars over the years paint this very clear cut case that these are not good people.

• 2:59:23David Rosenthal?

  Yeah.

• 2:59:23Ben Gilbert?

  It's perfect and poetic. And also, at the same time, I completely get the public outrage at how much they didn't like it and how much they hate that these characters just all end up going to jail as the end of the episode.

• 2:59:36David Rosenthal?

  Yeah, yeah. The fact that nobody likes it doesn't really matter. If anything, it maybe kind of adds to the lore of the show because it's the ultimate, no, there's no, there's no point. Nobody learns anything. There's no development.

• 2:59:49Ben Gilbert?

  Yes.

• 2:59:50David Rosenthal?

  So much so that we're not even going to give you a satisfying finale.

• 2:59:53Ben Gilbert?

  And yet it is watched by 76.3 million viewers, which is 58% of all viewers that night. The finale ad rates eclipse the Super Bowl. So NBC sold 30 second spots for as much as $2 million. This is back in 1998. That is about 54% more than the $1.3 million you would pay for the same 30 second advertisement during the 1998 Super Bowl.

• 3:00:23David Rosenthal?

  Yeah. One of the advertisers during the finale is Apple, which is in the middle of their Think Different campaign.

• 3:00:31Ben Gilbert?

  Right.

• 3:00:31David Rosenthal?

  And they've run a special commercial where they add Jerry.

• 3:00:37Ben Gilbert?

  At the end.

• 3:00:37David Rosenthal?

  To the Think Different campaign.

• 3:00:39Ben Gilbert?

  He is the final black and white person that flashes up on the screen. And it's the only time they ever ran the Think Different with Jerry in there.

• 3:00:47David Rosenthal?

  Yep. So good.

• 3:00:48Ben Gilbert?

  Interestingly, this was not the highest or really even like close to the highest watched finale ever. MASH, Cheers, and The Fugitive were much higher numbers in their finale. But to me, the interesting thing is I've never watched a single episode of any of those shows and no one's paying anything to get the streaming rates to them now. They're not relevant. They didn't transcend generations. And there's something very, very interesting and intrinsic about Seinfeld that made it last, even though on the highest day of heat and light and attention on them, they actually weren't the biggest finale ever.

• 3:01:32David Rosenthal?

  Yep. And audience reception wise, the finale was not loved, at least. But again, it doesn't matter.

• 3:01:39Ben Gilbert?

  And to put a perfect comedic button on it, the joke that Jerry makes in the jail cell is the joke that opened the pilot, where they are talking about the second button on the shirt, even while they're sitting there in jail. And then the last perfect little piece of comedy is, David, did you watch the Curb Your Enthusiasm finale two years ago? Maybe 2024?

• 3:02:01David Rosenthal?

  No, no, I, I did not. But I did watch the, the Seinfeld reunion on Curb.

• 3:02:05Ben Gilbert?

  Oh yeah. Everyone should know that the, on Curb, they did a arc of four or five episodes that were fictional Larry David planning the Seinfeld reunion. In the finale, again, spoiler alert, if you've never seen the Curb Your Enthusiasm finale, give you three seconds to pause.

• 3:02:24Ben Gilbert?

  The finale is a trial, just like Seinfeld. Larry gets convicted. Larry goes to jail. He's sitting in the jail cell and someone walks in and he is a visitor and it's Jerry Seinfeld. And he opens up the door and he says, hey, turns out it's a mistrial, but you don't want to end up here. This isn't where it ends. You don't want this. Trust me. Nobody wants this.

• 3:02:52David Rosenthal?

  Yeah, yeah, yeah.

• 3:02:54Ben Gilbert?

  And it's a 25 year payoff from a joke that was set up in 1998.

• 3:02:59David Rosenthal?

  So good. So good. I have seen that clip. So good. Uh, all right. So I think, let's put a bow on the economics of Seinfeld's first run on NBC.

• 3:03:10Ben Gilbert?

  Ignoring all syndication.

• 3:03:11David Rosenthal?

  And no syndication, just the first run business for NBC. NBC in total made about $2 billion in cumulative advertising profit from Seinfeld during its run. But again, that vastly undercounts the actual value to NBC because of the dynamics of, well, you can't buy Seinfeld, you gotta buy.

• 3:03:32Ben Gilbert?

  Yeah.

• 3:03:32David Rosenthal?

  Primetime, et cetera, et cetera.

• 3:03:33Ben Gilbert?

  But no ownership because they rented it.

• 3:03:35David Rosenthal?

  Yep. Castle Rock takes a loss on the show by design.

• 3:03:39Ben Gilbert?

  That's right.

• 3:03:41David Rosenthal?

  By design, they lose money on nine years of Seinfeld.

• 3:03:46Ben Gilbert?

  Kind of like the first nine years of an early stage venture portfolio.

• 3:03:48David Rosenthal?

  Yeah, exactly. Exactly.

• 3:03:50Ben Gilbert?

  Although that's not fair because in years, what, six, they started participating in syndication.

• 3:03:55David Rosenthal?

  Right, right, right.

• 3:03:55Ben Gilbert?

  You're scoping this just to.

• 3:03:57David Rosenthal?

  No syndication, just the, just the first run. Columbia slash Sony, they're like a did not play.

• 3:04:03Ben Gilbert?

  They make $0. They spent $0.

• 3:04:05David Rosenthal?

  Again, by design. Cumulatively, Jerry made 50 to 60 million dollars in salary from all of his seasons of Seinfeld as the star, creator, co-writer, et cetera. Huge, huge, but peanuts compared to the backend. Larry's salary during the show, as we talked about, has never been reported, but it's safe to say much, much lower for Jerry's than only for seven seasons. The rest of the cast, we talked about, they're just employees. In total, they each probably made 25 million or so, kind of give or take. But of course, from a syndication standpoint, the business is just getting started.

• 3:04:42Ben Gilbert?

  Right. In some ways, the story here on our episode is over, but the business is barely started.

• 3:04:47David Rosenthal?

  So to date, Seinfeld has had a record six plus broadcast syndication cycles, more than any other show in history for broadcast syndication.

• 3:05:02Ben Gilbert?

  No other show ever got five, right?

• 3:05:04David Rosenthal?

  Not on broadcast affiliates, just on, you know, like cable.

• 3:05:08Ben Gilbert?

  TV land.

• 3:05:09David Rosenthal?

  TV land, et cetera. Over the decade of the 2000s, the show continues to do great. By 2010, the show had done $2.7 billion in total syndication revenue for all network and cable. Three years after that, by 2013, that figure is up to $3.1 billion. Along the way, they also start to drip out DVD home video releases. It's a great business model move. Only one or two seasons at a time over several years, followed by the complete box set at the end of it for true collectors. In total, DVD home video generates,

• 3:05:54David Rosenthal?

  we estimate, about another 500 million in revenue. So call it up to 3.6 billion total post airing revenue. There's actually a fun coda to the cast economics with the DVD releases. They hold out again to get backend in the DVD releases in order to come back for the commentary. I think this is part of why it takes so long to get the DVDs out.

• 3:06:20Ben Gilbert?

  Oh, interesting.

• 3:06:21David Rosenthal?

  And, you know, totally makes sense on their end, right? Like it's just the last point of leverage that they have. And it gets reported that each of the cast members get kind of like low tens of millions each out of the DVD sales. Along the way here, throughout the 2000s and into the 2010s, I think Jerry and Larry start to realize that basically their main economic job from now on is to be on a permanent book tour for Seinfeld, the show, like to be permanent ambassadors to the continued cultural relevance of the show.

• 3:06:56Ben Gilbert?

  Without being too on the nose. Like I'd say they both pursue their artistic passions and a secondary benefit to the work that they make is that it reinforces the relevance of Seinfeld. And like, you know, Curb reinforces Seinfeld, especially when you put the reunion of Seinfeld on Curb and Jerry doing his standup. He would be doing standup no matter what, but it definitely reminds people that the show Seinfeld exists.

• 3:07:24David Rosenthal?

  Well, I think all of these things are true. I think Larry and Jerry made the decisions to do what they did after the show, the activities and projects they pursued out of personal and artistic reasons. And kind of if you look at this like through the lens of our Disney flywheel from our Disney episodes, the way you maximize the value of IP in a flywheel is you generate lots of other IP around it, but you don't disrupt the core thing. And that's exactly what Jerry and Larry do. They never disrupt the sanctity of what Seinfeld is, but Jerry's stand-up, comedians in cars getting coffee, the stand-up specials, again, even Curb,

• 3:08:09David Rosenthal?

  these things never compete with Seinfeld. They only focus attention back on it.

• 3:08:14Ben Gilbert?

  Yep.

• 3:08:15David Rosenthal?

  And look like they're probably making at least as much money from the increased attention on Seinfeld as they are directly from any of those things, even Curb. I mean, Curb was great, but it was on HBO, so it didn't make a lot of money. Like Larry David made a fraction out of 25 years of doing Curb as he did from seven years doing Seinfeld.

• 3:08:35Ben Gilbert?

  Yeah. You know, we can't do this whole episode without bringing up the raging racist remarks that Michael Richards had in his stand-up.

• 3:08:44David Rosenthal?

  In 2006.

• 3:08:45Ben Gilbert?

  Let's just scope this to the business, because that's what this podcast is about. Aside from just how absolutely awful the comments were, it's a problem for the business.

• 3:08:56David Rosenthal?

  Totally. It puts the business model at risk.

• 3:08:58Ben Gilbert?

  Right. If you are a Seinfeld cap table member like Castle Rock and these folks, the goal is to keep this asset going, to keep people loving it. And if that could have spiraled into a boycott the show Seinfeld thing, and I think everyone had to toe a very tight, tight rope between, one, their feelings about the issue, two, their feelings about Michael as a friend of theirs, three, making sure to appropriately condemn, condemnable words, but four, make sure that Seinfeld is able to like be preserved as an asset as they go through that PR crisis.

• 3:09:37David Rosenthal?

  Even if it just creates some subconscious

• 3:09:40Ben Gilbert?

  Ick.

• 3:09:41David Rosenthal?

  Negative associations and ick for viewers, it's really, really sensitive, the value to perception here.

• 3:09:48Ben Gilbert?

  So it was interesting, kind of going back and watching a lot of the commentary on that. Jerry offers up things like, well, you know, a comedian on stage is not actually that person. It's sort of a person playing a role. But like, if you look at it from a pure comms and like business incentives perspective, you need to condemn the act enough to make people go, okay, good. Jerry doesn't have his hand in the sand here. He realizes how awful that was, but not condemn it so much to make people go, well, then I don't like Kramer either, and I don't want to watch Seinfeld because of that. So it's kind of interesting, the art of stewarding a business asset, it involves a lot of that, like tight rope walking.

• 3:10:31David Rosenthal?

  Yeah. A business asset that is where the value is so tied to the present day cultural relevance.

• 3:10:37Ben Gilbert?

  Yes.

• 3:10:38David Rosenthal?

  So, yeah, then there's the internet that's associated with all this, too. I mean, it's kind of amazing. Again, back to Seinfeld hitting its stride right as the internet was going mainstream. The meme-ability, the catchphrases, the gifs on the internet.

• 3:10:56Ben Gilbert?

  Oh, gifs, gifs.

• 3:10:58David Rosenthal?

  Gifs, gifs. Sorry.

• 3:11:01Ben Gilbert?

  It's like hearing a sour note.

• 3:11:02David Rosenthal?

  That's a meme-able moment right there.

• 3:11:04Ben Gilbert?

  Like an untuned piano.

• 3:11:06David Rosenthal?

  I'm sorry. I apologize. The gifs on the internet, you know, like the modern Seinfeld Twitter account, becoming one of the early big mainstream Twitter accounts, where the whole premise is, you know, Seinfeld episodes in the modern day. That's all part of it, too.

• 3:11:21Ben Gilbert?

  Yep.

• 3:11:21David Rosenthal?

  Which brings us to streaming.

• 3:11:23Ben Gilbert?

  Yes. So syndication is still a thing on broadcast networks and cable stations, but that's not where the big money is anymore. It's these streaming deals that really get started in 2015 with the Hulu deal. So that was a $150 million five-year deal.

• 3:11:41David Rosenthal?

  Yep. It would go up from there. So two years later in 2017, Jerry signs a personal deal with Netflix to bring comedians in cars getting coffee onto Netflix.

• 3:11:56Ben Gilbert?

  It was on Crackle, right? It was like a web series?

• 3:12:00David Rosenthal?

  It was on Crackle. Do you know what Crackle was?

• 3:12:02Ben Gilbert?

  I have no idea what Crackle was.

• 3:12:04David Rosenthal?

  Crackle was Sony's early in-house

• 3:12:07Ben Gilbert?

  Ah.

• 3:12:08David Rosenthal?

  web streaming network.

• 3:12:09Ben Gilbert?

  Got it.

• 3:12:10David Rosenthal?

  That's why it was on Crackle. And then that went away. So that sets the stage for this Jerry Netflix deal to bring comedians in cars over and to do two new stand-up specials for Netflix, because when the first renewal cycle comes around for Seinfeld streaming rights in 2019, Netflix does a landmark deal with Sony worth, reported well over $500 million for five years of worldwide exclusive streaming rights to Seinfeld. That is a huge amount of money.

• 3:12:44Ben Gilbert?

  And this is a result of Netflix had Friends and The Office, which I think became their top viewed shows, and they were losing them because Friends, it's so funny, all three of these shows were on NBC. Friends was produced, just like Seinfeld, in the Finson era, and it was produced by Warner Brothers, which is exactly where the rights are held for Seinfeld. So you might say Friends and Seinfeld are the same, but in the case of Friends, Warner Brothers also controls the distribution rights. Those were not ever owned by Sony. So HBO Max is about to become a thing. Warner Brothers is like, nope, Netflix, we'll take Friends back. We're going to use that on our streaming service because we

• 3:13:27Ben Gilbert?

  control the distribution rights. And The Office was produced after all the Finson stuff, so NBC actually owned it directly. And they go, nope, Netflix, we'll take that back. We're going to put that on what's about to come out and be called Peacock. So Netflix loses their top rerun sitcom shows. They need Seinfeld real bad, and Sony owns the distribution rights and is not coming out with a streaming service. So they're kind of the only ones to go to and say, gimme 180 episodes of people loving their 90s and 2000 sitcoms.

• 3:14:00David Rosenthal?

  Yep. So it all goes down that same year in 2019. Friends with HBO Max and The Office with Peacock, they have to announce like a dollar value for the deals that they do, because they have to calculate all the guild residuals to come out of it.

• 3:14:18Ben Gilbert?

  And I think the creators did have some backend there.

• 3:14:21David Rosenthal?

  Yes, yes.

• 3:14:21Ben Gilbert?

  Kind of suck to have backend in a deal where the distribution wasn't independently owned.

• 3:14:26David Rosenthal?

  Right.

• 3:14:26Ben Gilbert?

  Because it means that like, you just kind of have to trust that the invisible wall between the sides of the company exists and the value is the real fair market value.

• 3:14:35David Rosenthal?

  Yep. So they announced that the Friends deal is $425 million for five years, and the Office deal is $500 million for five years. But yeah, this is not real money.

• 3:14:46Ben Gilbert?

  So all three of these are in the same ballpark, but Seinfeld is the only one where there's actually a company paying another company.

• 3:14:51David Rosenthal?

  And then that brings us to this year with the 2026 Netflix renewal, reported as slightly lower than the original greater than $500 million deal, but this time it's exclusive for Netflix only in the US and Canada, not worldwide. So Sony is basically taking the bet here of, oh, we can start selling international streaming rights for Seinfeld separately and monetize those better, which they will begin selling shortly here.

• 3:15:22Ben Gilbert?

  Yep. In addition to that, they're still doing the other forms of syndication. So basic cable to Paramount for 45 million-ish. They had a full cycle four and a full cycle five and a full cycle six. So all told here, all the syndication ever, all the off-network and international and cable, the streaming, plus all the DVDs, this is around $5 billion to the cap table of Seinfeld from all of these deals. And it's real liquid cash changing hands every five years when they do a renewal cycle because Sony has no streaming service of their own.

• 3:16:02David Rosenthal?

  Yep. And all of that is just so far. I think at current course and speed, you can reasonably expect another billion plus in streaming rights to get stacked on top of that every decade from Netflix or whoever takes it next.

• 3:16:17Ben Gilbert?

  Assuming it stays this relevant, but you would think if it fell off in relevance, it would have happened by now.

• 3:16:23David Rosenthal?

  Yep. And it definitely hasn't. And then, you know, total, total revenue, you stack the $2 billion in profits for NBC from first run, you're at easily seven-plus billion dollars for this little TV show that shouldn't have gotten made.

• 3:16:38Ben Gilbert?

  And by my calculations, David, this thing probably in total, including everyone's salaries, even that crazy high last season, cost about $250 million to make.

• 3:16:51Ben Gilbert?

  And those costs stopped in 1998. So this is an asset that's now well above $7 billion in returns that keep stacking another billion dollars every decade. And all the costs were paid for 30 years ago.

• 3:17:07David Rosenthal?

  It really is like a Silicon Valley startup type story.

• 3:17:10Ben Gilbert?

  Yes.

• 3:17:10David Rosenthal?

  As a TV show. I mean, it's not Google or Facebook. We're not talking about trillions of dollars or Nvidia here. But that that level of investment would continue returning cash flows for that period of time of that magnitude.

• 3:17:24Ben Gilbert?

  And it's a 30x on its costs.

• 3:17:27David Rosenthal?

  Yeah, incredible.

• 3:17:28Ben Gilbert?

  That's the other thing is if you just divide 7 point something billion by 250 million, that's a 30x return.

• 3:17:35David Rosenthal?

  All right. Should we transition to analysis?

• 3:17:38Ben Gilbert?

  Yes. So one big thing I wanted to talk about is why is Netflix buying this? Like, why is this particular asset and this category of assets, Seinfeld, The Office, Friends, so valuable to a streaming service? Well, streamers need content to do two jobs. One is acquisition and the other is retention.

• 3:18:01David Rosenthal?

  Yep. These are awesome retention vehicles.

• 3:18:05Ben Gilbert?

  Yes. So acquisition is a totally different thing. That's what the new content is for. That's the like, super high polish thing you can market to get people to sign up for your service. And I think I'd be curious to get feedback from people in the entertainment industry. I think the reason why every show is like eight episodes now instead of 22 to 24 is because in broadcast, it was an ad-based business model. So you needed something on the air always. And then you needed to sell ads for eight minutes of every half hour.

• 3:18:45Ben Gilbert?

  And so you'd take 22, you'd take 24, you'd take 30 episodes if someone could make you 30 if it was a good show because it suits your business model. On streaming, the point of a new show is to get people to sign up for your service. And I'd be willing to bet that there's not a big difference between a great show with eight episodes and a great show with 20 episodes. How likely it is to get someone to sign up. And these things are expensive now. It's, you know, eight, $10 million per episode for some of these high polish ones. There's no way that the $10 million you spend on the 14th episode of a season is justified versus sinking it into the sixth episode of another show that you could do instead.

• 3:19:29Ben Gilbert?

  Once you kind of like wrap your mind around, oh, shows are now acquisition vehicles rather than ad inventory carriers, you sort of understand why shows are so different now than they used to be.

• 3:19:42David Rosenthal?

  Yep.

• 3:19:42Ben Gilbert?

  And the other thing, in addition to the fact that these seasons are really short, they're mostly not comedies.

• 3:19:47David Rosenthal?

  Yes.

• 3:19:48Ben Gilbert?

  It's really weird. Like, everything is a drama or

• 3:19:52David Rosenthal?

  spectacle.

• 3:19:53Ben Gilbert?

  Or a sci-fi. And I was really grappling like, why don't we see more Seinfelds now? Why are there so few things that look like this?

• 3:20:02Ben Gilbert?

  Part of it is I think that comedy doesn't travel internationally. And these businesses now, these streaming businesses are all scale economies businesses. So whatever you make, you want to expose it to the broadest number of people to justify its cost. And so it's really hard to greenlight something where like, you know, British humor doesn't translate. When they brought BBC's The Office over to the US, it bombed and they had to completely remake the show in order to make an appeal to an American audience. So I think that's part of why you get white lotuses, but you don't get Seinfelds anymore.

• 3:20:39David Rosenthal?

  It might also be kind of as you see in the Seinfeld story, when you're just doing comedy,

• 3:20:47David Rosenthal?

  it takes a while to get the audience hooked. You can't just like hook somebody right away with an incredible drama or a flashy sci-fi or something like that. Like, it's a slow burn and that just doesn't make sense in the acquisition side of the business model for streamers.

• 3:21:03Ben Gilbert?

  Right. It's not even obvious that I would sign up for a streaming service to get access to a new comedy. Like, I watched Tires because I was already a Netflix subscriber and it was awesome. But would I have gone to sign up for Netflix on my own just to watch Tires? I would have needed a pretty strong endorsement and people endorse comedies differently than they endorse dramas. Because you're like less, to your point, sucked into the story.

• 3:21:27David Rosenthal?

  Yep.

• 3:21:27Ben Gilbert?

  Now, flipping over to the other side, retention, that is Seinfeld's job these days. It is like the single perfect retention vehicle. I'm happy to subscribe to a service where worst case, if I'm surfing around and I can't find something, there's always Seinfeld.

• 3:21:45David Rosenthal?

  Ah, that's sweet, warm Seinfeld.

• 3:21:48Ben Gilbert?

  It's comfort food.

• 3:21:49David Rosenthal?

  Yes, exactly.

• 3:21:51Ben Gilbert?

  It's really weird because it started as this like jarring, crazy, daring show. And now it's comfort food.

• 3:21:59David Rosenthal?

  It's the chicken pot pie of Netflix.

• 3:22:01Ben Gilbert?

  And it's like a churn reducer in two ways. One, maybe I signed up for K-pop Demon Hunters.

• 3:22:08David Rosenthal?

  Yeah.

• 3:22:08Ben Gilbert?

  And then I realized Seinfeld's on there. Okay. Well, actually I got hooked on Seinfeld and I'm going to watch every episode of that while I fall asleep at night. So that's like one thing. But two, now that I know it's there, I'm just not going to cancel. I don't want to lose access to something that I think I theoretically at any given time might want and decide to watch.

• 3:22:28David Rosenthal?

  Yep.

• 3:22:29Ben Gilbert?

  So, yeah, that that is why it's so valuable to streaming services.

• 3:22:34David Rosenthal?

  Incredible retention tool for streamers.

• 3:22:36Ben Gilbert?

  So while we are on the topic of the weird incentives that fall out of subscription-based streaming versus advertising-based TV networks. This is a bit of a brain buster. Tell me if you agree with it or not.

• 3:22:51David Rosenthal?

  Okay.

• 3:22:53Ben Gilbert?

  NBC's 90s advertising business model incentivized attracting a more educated audience than streaming.

• 3:23:06David Rosenthal?

  Yep, I buy that because advertisers are willing to pay for audience demographics, whereas in the streaming world, everybody pays the same 12.99 or whatever it is a month. It doesn't matter who you are.

• 3:23:17Ben Gilbert?

  Right. In the streaming world, you're just a vehicle for your 12.99. There are lots of counter arguments to this that I'm open to, but it is sort of a interesting brain puzzle that streaming doesn't incentivize you to get the most valuable viewers.

• 3:23:34David Rosenthal?

  Well, you're happy to take the highest quality viewers.

• 3:23:36Ben Gilbert?

  You just want viewers, though.

• 3:23:37David Rosenthal?

  Viewers. You want everybody.

• 3:23:39Ben Gilbert?

  Differentiate.

• 3:23:40David Rosenthal?

  And, you know, look, streaming is historically subscription-based, but they're adding ad tiers now. Netflix is adding an ad tier.

• 3:23:47Ben Gilbert?

  Right. And those advertisers will care who the subscribers are.

• 3:23:50David Rosenthal?

  Yep.

• 3:23:51Ben Gilbert?

  Okay, so my, my big question for you in analysis, before we get to powers and quintessence. We opened the episode by saying this couldn't happen again today. That this was so anomalous, it needed to happen at the exact time that it happened with the exact people who made it. I have a list of things that I think couldn't happen today and I'm curious your thoughts on them.

• 3:24:16David Rosenthal?

  Great. I've got a list too. You want to trade back and forth?

• 3:24:18Ben Gilbert?

  Yeah, let's do it. So my first one, arguably the whole show. It was so creator-led with essentially no design by committee. I bet that's pretty hard to find today.

• 3:24:29David Rosenthal?

  Well, it's easy to find on YouTube or

• 3:24:33Ben Gilbert?

  Yes.

• 3:24:34David Rosenthal?

  podcasts, you know, creative media.

• 3:24:35Ben Gilbert?

  Completely outside the system.

• 3:24:36David Rosenthal?

  Completely outside the system. And it is almost impossible to find inside the system because the stakes are too high now. Somebody, executives at some organization are involved, whether it's the streamer or the production company or the studio. Right. Like, the budgets are so big. That was my point about the stakes are too high.

• 3:24:54Ben Gilbert?

  Right.

• 3:24:54David Rosenthal?

  Like, you want to make a TV show these days, you need a lot of freaking money. There's no way that something could start like Seinfeld back in the day with that budget, that, you know, set of episodes.

• 3:25:05Ben Gilbert?

  Right. I think Always Sunny did, but that's now 23 years old or something. Tires, I think, did. Tires was pretty low budget when it started.

• 3:25:13David Rosenthal?

  And it was like creator-led, independent. So yeah, I guess it can happen out there, but by and large, you want to make a TV show, you need a lot of money, which means you're going to have suits weighing in on what's going on.

• 3:25:24Ben Gilbert?

  Which is just going to make everything worse, those damn suits.

• 3:25:29David Rosenthal?

  Yep.

• 3:25:29Ben Gilbert?

  All right. Next for you.

• 3:25:30David Rosenthal?

  No doubt, the independent cap table and incentives associated with Seinfeld made it what it is today. The fact that Jerry and Larry, as creators, got this incredible deal and sort of set of circumstances that let them get huge backend from the production company. And then they made the show artistically what they wanted, but they were incentivized for the long run, always.

• 3:25:59Ben Gilbert?

  Yes.

• 3:26:00David Rosenthal?

  Made all the difference in the world.

• 3:26:02Ben Gilbert?

  It is probably impossible today to make a TV show.

• 3:26:08Ben Gilbert?

  That you in any way make $500 million from. I mean, you can make it in secondary ways. You can get famous from the TV show and then pick up sponsorships and get to invest in companies and stuff like that. But to truly own enough of a show's long-term economics to make hundreds of millions of dollars, I think that's over. That that would only exist in the creator world, like podcasts and YouTube. And it doesn't happen on TV. So the question is, why? Because both business models are totally viable. The old media networks one where you're like, I don't want to own the long-term upside. I just want to have profitable business today.

• 3:26:50Ben Gilbert?

  Or the one that the Netflix's of the world are doing where they do want to own all the long-term upside. And follow me on this. I think it's because the distribution that happens today is on tech companies at their core, not on media networks, which I think were capital constrained. Tech companies are very, very used to making big investments upfront, the way that you would make in software with very high margins when you get to scale. But obviously you're like way in the hole for a while until you get to scale. You know, Microsoft's a terrible business with 100 customers, but an unbelievable business with a billion customers. The modern media company wants to own all of that risk like a tech company and pay for

• 3:27:35Ben Gilbert?

  it upfront so they can own all the rewards later in the success case, which is the exact opposite of the traditional media business.

• 3:27:43David Rosenthal?

  Right, right.

• 3:27:44Ben Gilbert?

  Or the traditional networks business.

• 3:27:46David Rosenthal?

  You know, what's interesting, I sort of expected going into this research to hear over and over that, oh, NBC realized their great mistake in not owning any of the backend of Seinfeld and they let so much value walk. And it was this bitter lesson that especially once Finson was repealed, they never allowed something like that to happen again. That's the fact pattern. But actually, back in the day, the executives were fine with it. They were happy with the arrangement of, yeah.

• 3:28:16Ben Gilbert?

  Totally.

• 3:28:17David Rosenthal?

  You, production companies, you're essentially the VCs. You take the risk, you make money on the backend. We get this great stuff that we can put on our network.

• 3:28:25Ben Gilbert?

  And we have a one-year payback period on a multiple of our invested capital.

• 3:28:28David Rosenthal?

  Sell ad units. We're super happy. That works great.

• 3:28:33Ben Gilbert?

  Yeah. I think it comes down to tech companies are trained to seek operating leverage and attract investors that want operating leverage. And that was not a thing when media was distributed by networks. But now that's the ultimate end state of the media distributors being tech companies.

• 3:28:54David Rosenthal?

  And back in the day, they were, they were the only game in town, right? Like you were going to tune into NBC, ABC, or CBS, and then eventually Fox, too. That was it.

• 3:29:04Ben Gilbert?

  Yep. One other little piece of analysis before we get to seven powers. There's a very real argument here that Finson being repealed is one of the worst things to happen to the industry in the last several decades.

• 3:29:19David Rosenthal?

  Yep.

• 3:29:20Ben Gilbert?

  The networks start saying, we're going to pick from the in-house things that we've sort of come up with to hit the airwaves. It just means that you get bad stuff out there. Whereas if you have this like thriving free market of a whole bunch of independently-funded small studios coming up with things and you can buy from any of those, that's a much better world for content.

• 3:29:43David Rosenthal?

  Totally agree. And we heard that universally in the research, like, yep, those were the good days. Finson being repealed ended that.

• 3:29:50Ben Gilbert?

  Yep. And consolidated where content can come from.

• 3:29:52David Rosenthal?

  Yep.

• 3:29:53Ben Gilbert?

  Fortunately, the internet changed that and we have, you know, YouTube and the explosion of creator diaspora now.

• 3:30:00David Rosenthal?

  Yep. Powers, this is actually going to be really fun.

• 3:30:04Ben Gilbert?

  So let's see. Normally, the way we do this exercise is seven powers are the seven things that could give a company persistent differential returns or the ability to be more profitable than their nearest competitor on a sustainable basis. Who's the entity here? The Seinfeld cap table?

• 3:30:25David Rosenthal?

  Yeah, I think we should talk about it from the cap table's perspective.

• 3:30:29Ben Gilbert?

  And it's what lets Seinfeld, the asset of the show, even when it was being produced and today, be more valuable than anything that competes with it, other shows.

• 3:30:41David Rosenthal?

  Yep, yep.

• 3:30:42Ben Gilbert?

  Okay.

• 3:30:43David Rosenthal?

  I think counter positioning today might be the biggest one because it's the last of these huge retention tools left that is not captively owned by a streamer. So it can come to market in a way that Friends in the Office can't.

• 3:30:57Ben Gilbert?

  And you think that's counter positioning?

• 3:31:00David Rosenthal?

  Well, if you were to say Friends in the Office are its competitors, they are structurally hamstrung.

• 3:31:07Ben Gilbert?

  Right.

• 3:31:07David Rosenthal?

  By their ownership situations now.

• 3:31:09Ben Gilbert?

  If they did compete with Seinfeld to go to the free market and be able to go anywhere, it would hamstring their, their parent company.

• 3:31:15David Rosenthal?

  Their parent companies would be making value destructive decisions to do that.

• 3:31:19Ben Gilbert?

  Yep. At least based on their chosen current strategy of needing to have owned and operated streaming services.

• 3:31:26David Rosenthal?

  Yep.

• 3:31:27Ben Gilbert?

  Scale economies all, all over the place. I mean, the fact that the world has an install base of 100 million plus Seinfeld fans.

• 3:31:36David Rosenthal?

  Oh, I agree, but I would say this is network economies, not scale economies.

• 3:31:39Ben Gilbert?

  Oh, that we're all like.

• 3:31:40David Rosenthal?

  The fact that you know all the memes from Seinfeld is extremely valuable to me.

• 3:31:45Ben Gilbert?

  You're right. I don't think there's scale economies because the definition of scale economy is when I can do something that is more profitable to me for the same input than one of my competitors can do because I have more scale. But this asset doesn't actually make any decisions or, or do anything.

• 3:32:07David Rosenthal?

  Yeah. I mean, like the only.

• 3:32:08Ben Gilbert?

  Netflix has scale economies. When Netflix decides to pay $500 million, it can make better use of the Seinfeld content and be more profitable on that acquisition than smaller streaming services.

• 3:32:19David Rosenthal?

  Yep.

• 3:32:20Ben Gilbert?

  But yeah. Branding, maybe?

• 3:32:24David Rosenthal?

  Depends what you consider branding.

• 3:32:26Ben Gilbert?

  Right. Is the whole tenor of the show branding? Is it just the logo? Is the, like, I'd much rather watch Seinfeld than Big Bang Theory, but that's not because it's called Seinfeld and I trust Seinfeld more. It's because I think the intrinsic quality of the show is higher.

• 3:32:38David Rosenthal?

  Yep, yep. Uh, I don't think there's any switching costs here.

• 3:32:43Ben Gilbert?

  No.

• 3:32:44David Rosenthal?

  Can't even think of what that would be in this case. Uh, cornered resource, obviously they have the rights to Seinfeld.

• 3:32:50Ben Gilbert?

  And maybe that is the power. That might, it might just all be cornered resource.

• 3:32:53David Rosenthal?

  Cornered resource.

• 3:32:54Ben Gilbert?

  We have a thing that we can sell that other people can't sell and make a lot of money on it.

• 3:32:57David Rosenthal?

  Yep. And then the last one, process power.

• 3:33:00Ben Gilbert?

  Not today, but there was, if you change this exercise to what did Seinfeld have when it was being produced that other shows didn't have, it's absolutely process power in the way they were making it. It's absolutely cornered resource in Jerry and Larry and some of the other writers that they had too.

• 3:33:20David Rosenthal?

  I think there was process power clearly just to the act of making the show. I don't think Jerry or Larry individually, or if they were to come together again now, could repeat it. It was a magic moment. And in fact, the, the evidence is right there in, in Curb, right? Like Larry had to run Curb differently than Seinfeld. He couldn't do again what he did at Seinfeld. Curb was improvised. Larry couldn't create the, the scripts and, and all of the intense effort and alchemy and magic that went into every week of Seinfeld in the same way. You just couldn't do it.

• 3:34:00Ben Gilbert?

  All right. Should we bring this baby home and do quintessence?

• 3:34:03David Rosenthal?

  Let's do it. I know where you're headed.

• 3:34:05Ben Gilbert?

  So listeners, the way that we decided that we want to do our quintessence this time is to answer the question, what made Seinfeld such a ludicrously good TV asset to own?

• 3:34:16David Rosenthal?

  Yep.

• 3:34:16Ben Gilbert?

  What made it durable? What made it continue to get renewed for these really high rates three decades later? And yes, there are comps in The Office, which actually is my preferred thing to watch all like nightly. I grew up when it was on. And so it's like more for me and it feels more modern and blah, blah, blah. Friends is arguably more valuable, but is held captive. So Seinfeld is like the one free agent in the top tier that actually can go and trade on the free market.

• 3:34:46David Rosenthal?

  Yep. And look, of course, there's a whole list of these, most of which we talked about earlier in analysis, but I think if you were to ask Jerry, at least, it went out on top?

• 3:34:58Ben Gilbert?

  I think the driver is viewership begets viewership. So Seinfeld has been everywhere for the last three decades on a bunch of channels and streaming service. And because it has been omnipresent, there's so much demand today to watch it because we're so familiar. It is today's comfort food, even though when it launched, it was very uncomfortable.

• 3:35:26David Rosenthal?

  Hmm.

• 3:35:27Ben Gilbert?

  I mean, during my childhood, teenage years, college, adulthood, it was everywhere. And I have all the jokes memorized.

• 3:35:32David Rosenthal?

  Mm hmm. Always on every channel, every night. Yep.

• 3:35:35Ben Gilbert?

  It's passed from generation to generation that way. I talked to my dad about it. In fact, we were prepping for this episode and my three-year-old son is sitting on the couch with me because we had the DVD on. He was putting the DVDs in the DVD player and he goes, he points to the screen. He goes, is that Jerry Seinfeld? I was like, oh my God.

• 3:35:52David Rosenthal?

  That's awesome.

• 3:35:53Ben Gilbert?

  Passed it to another generation. And then we're watching the DVD like interviews afterwards and he points the screen and goes, there, there's Larry David. And I was like, I'm so proud of you right now.

• 3:36:03David Rosenthal?

  Wow. Good for him.

• 3:36:06Ben Gilbert?

  I know, right? But it's this thing, my parents liked it. I liked it. I like it. It's, it's so in the water in our society. There's a crazy stat from Nielsen in 2021. 41% of Seinfeld's then-current audience had either been toddlers or not born yet when the series ended in 1998.

• 3:36:27David Rosenthal?

  Amazing.

• 3:36:28Ben Gilbert?

  So you kind of have to just keep tracing it back. Like, I, I think you might be right that it's because it went out on top. But the reason, in my opinion, is because the 1995 and the 1998 syndication cycles were so successful and exploded out of the gate that it created this in-the-water-ness to Seinfeld.

• 3:36:54David Rosenthal?

  Yep. I think, I mean, look, at the end of the day, it's a stew of all of these things. But I don't know. I just think if they'd milked it for a few more years and quality had gone downhill, this thing is so hypersensitive to the aggregate cultural assessment and impression of it.

• 3:37:15David Rosenthal?

  That if at the end, it didn't have that like Greatest Show of All Time vibe in the culture.

• 3:37:23Ben Gilbert?

  Yeah.

• 3:37:24David Rosenthal?

  The engine wouldn't have continued like this.

• 3:37:26Ben Gilbert?

  Yeah, totally agree. We're and we're saying very similar things here. It's ultimately that coupled with quality, like the situational jokes that they set up just don't feel dated, even though a lot of these things could be solved with a cellphone. But the intrinsic quality of the situations they are in.

• 3:37:45David Rosenthal?

  Yep.

• 3:37:45Ben Gilbert?

  Still feels relevant today.

• 3:37:48David Rosenthal?

  Well, more than 20% of America agrees with you.

• 3:37:51Ben Gilbert?

  22%.

• 3:37:52David Rosenthal?

  There you go.

• 3:37:54Ben Gilbert?

  All right.

• 3:37:55David Rosenthal?

  Well, on this one, we've got some fun trivia that we should include here that didn't make the episode. Number one, the theme music.

• 3:38:05Ben Gilbert?

  Yes, that was mine.

• 3:38:07David Rosenthal?

  The bassline.

• 3:38:08Ben Gilbert?

  Boom, ba-donk, boom, boom, boom, boom, boom, boom, boom, boom, ba-donk. I wish I had like a baby, baby.

• 3:38:16Ben Gilbert?

  Bum, bum, bum, bum.

• 3:38:17David Rosenthal?

  Ben, tell everybody why the theme music is so distinctive.

• 3:38:23Ben Gilbert?

  So in the pilot on my DVD that I have, you can hear the original pilot with the original theme music, which is not what you are familiar with. The bass riff composed by Jonathan Wolfe is something completely different and it interferes horribly with Jerry's standup at the beginning. You it's just like it's tonally overlapping each other and you almost can't make out his words. So when Jonathan Wolfe got the call about it, he said, oh, I know exactly what I'm going to do. I'm going to treat Jerry's voice like the lyrics of a song.

• 3:39:04David Rosenthal?

  Yes.

• 3:39:05Ben Gilbert?

  And I'm going to compose around that, like he's kind of carrying the melody. And he even felt like there was a tempo that Jerry did stand up to, and it came in around 110 beats per minute, that like, that's how his jokes were told in that rhythm. So he didn't create a theme song. He created a theme song system where he could uniquely compose on a synthesizer in front of him that had the bass guitar riff, you know, mapped to a bunch of different keys and also all the little sounds, like all the mouth sounds that he makes. And he uniquely composes a theme for every episode that is slightly different, that

• 3:39:49Ben Gilbert?

  fits in around Jerry's jokes in the intro. And so he has this great quote on this, every monologue was going to be a variation of the theme. So whatever I did, I needed to architect it modularly so that it could be shiftable, changeable, like Lego music. It needed to not conflict with his voice.

• 3:40:07David Rosenthal?

  So great.

• 3:40:07Ben Gilbert?

  So great.

• 3:40:08David Rosenthal?

  And so distinctive. I mean, it's part of what makes the show.

• 3:40:13Ben Gilbert?

  Yes. It's so different at the time, too. Of course, like everything else, the network execs hated it because it wasn't like anything else on the market.

• 3:40:19David Rosenthal?

  Of course. That's a signal of quality when the network executives hate it. All right, that's number one. Number two, this has come up on acquired before. Julia Louis-Dreyfus is, yes, from that Louis-Dreyfus family, the very large French commodities trading family.

• 3:40:42Ben Gilbert?

  Yeah. Big, multi-generational business.

• 3:40:44David Rosenthal?

  Has made an appearance before on acquired in the Ferrari episode because Julia's grandfather was one of Enzo Ferrari's first clients and raced his privately owned Ferrari 166, like the first cars that Enzo made in Le Mans at the, you know, beginning of Ferrari.

• 3:41:06Ben Gilbert?

  Amazing.

• 3:41:06David Rosenthal?

  All right, that's number two. Number three, NBC had a corporate relationship with Nike. And so any of the stars of any NBC sitcoms could just go to the Nike warehouse in LA and get all the swag they wanted. So how do you think Jerry Seinfeld started wearing Nikes?

• 3:41:30Ben Gilbert?

  Oh.

• 3:41:30David Rosenthal?

  On Seinfeld episodes?

• 3:41:32Ben Gilbert?

  Freebies.

• 3:41:33David Rosenthal?

  But yeah, we talked about this on the Nike episode that like, you know, they had their athlete strategy and then they got into entertainment and this was part of it. Jerry Seinfeld was one of the first, you know, or big parts of Nike's get into entertainment strategy.

• 3:41:46Ben Gilbert?

  All right.

• 3:41:47David Rosenthal?

  All right, that's what I got for trivia.

• 3:41:49Ben Gilbert?

  Carve outs?

• 3:41:50David Rosenthal?

  Carve outs. So I decided for this one appropriately enough, I gotta just do Seinfeld episode recommendations.

• 3:41:57Ben Gilbert?

  Perfect.

• 3:41:57David Rosenthal?

  So The Marine Biologist, number one by far, it's just the most like masterful piece of 22 minute episode crafting I've ever seen.

• 3:42:09Ben Gilbert?

  It's great.

• 3:42:09David Rosenthal?

  Couple of deep cuts that I'm partial to. One, the jacket, which I already mentioned. And two, the first Seinfeld episode I ever watched, I vividly remember this like it was yesterday. I was nine years old when this episode came out. I saw it air live on TV. I had a babysitter for the night. My parents were out. I got to stay up late and I had the TV on. It was the dinner party airing live, which is the episode with the black and white cookie. I will always, always remember Jerry eats a black and white cookie. He's talking to Elaine. He's like, Elaine, the world needs to look to the cookie. racial harmony here in the cookie. We what we could learn from the black and white cookie. And then in the end of the episode, he throws up due to food poisoning from the cookie.

• 3:42:56Ben Gilbert?

  Oh, Jerry.

• 3:42:57David Rosenthal?

  Oh, Jerry. All right, what you got?

• 3:42:59Ben Gilbert?

  For me, I have another Seinfeld related one. Everyone, if you have a browser open right now, go to seinfeld visualizing data.com. There is the most insane web project I've ever seen called The Seinfeld Chronicles, An Unnecessary Data Exploration by Andy Kirk. This is a book that it's a coffee table book that the author then put online that is a full data visualization of a zillion different ways you could slice and dice Seinfeld. What laughs happen when in each episode? What do the patterns look like?

• 3:43:42Ben Gilbert?

  How do they accrue to each character? It goes episode by episode. The thing's 121 pages showing when various characters got screen time. It walks through why he thinks the show worked, what makes it unique. But the most wild thing to note is it's all hand labeled. So it was him watching episodes on his couch with a spreadsheet open, granularly every five seconds, pausing and labeling who's on screen, who's getting laughs. I mean, the whole thing is astonishing that a human did this manually before AI.

• 3:44:19David Rosenthal?

  Wow. So I have The Marine Biologist up right now. There are 23 scenes in The Marine Biologist.

• 3:44:25Ben Gilbert?

  Yeah, it's crazy.

• 3:44:27David Rosenthal?

  There you go. Seinfeld and the internet made for each other.

• 3:44:31Ben Gilbert?

  My second carve out is Bucks in Woodside.

• 3:44:34David Rosenthal?

  Oh, yeah.

• 3:44:35Ben Gilbert?

  Incredible restaurant. David and I just went there for a meeting this week and I was reminded of just how special that place is, especially if you like Silicon Valley lore and ephemera. And I mean, they've got an Apple One up on the wall. They've got a signed Jensen jacket, the first one he ever wore on stage. It's like you just tour around the place and get a history of the tech industry, which is very fun.

• 3:44:57David Rosenthal?

  It's like a Silicon Valley version of Monk's Cafe, you might say.

• 3:45:01Ben Gilbert?

  Yes. And my last carve out is a company called Tin Can. My son is obsessed with it. He's three, but it's more for like five to 12 year olds. It is a phone. It's a landline with no screen that uses wifi that is built for kids so they can call pre-programmed numbers. And if they need to call 911 or an emergency contact or something, it stays, you know, plugged in in your house. It's like exactly the type of phones that we had when we were kids and just got to call other kids without all the smartphone stuff. The weird coda to this one is somehow I ended up being the first investor in this company.

• 3:45:43David Rosenthal?

  Oh, yeah.

• 3:45:43Ben Gilbert?

  It was a completely different company first. It's like my last check when I was a professional.

• 3:45:49David Rosenthal?

  You're like the NBC network executive.

• 3:45:52Ben Gilbert?

  Like it accidentally pivoted, turned into this company, became this like massive viral hit. They're on Good Morning America. It's the face of this movement around great ways for kids to communicate without screens. And my son is loving it. So forever I was just sort of sitting on like, at some point I should carve out Tin Can, but I don't want to be like too self promotional and promote a company I invested in. But this thing is just really fun, watching all these kids use it.

• 3:46:16David Rosenthal?

  Ah, so good.

• 3:46:18Ben Gilbert?

  All right. Well, listeners, if you want to listen to any other acquired episodes, you can do so on Spotify or Apple Podcasts. And we've got some thank yous.

• 3:46:28David Rosenthal?

  Yes, we do.

• 3:46:29Ben Gilbert?

  Thank you so much to our partners this season, Sierra. Sierra helps the great companies of the world build better, more human customer experiences. Sierra.ai slash acquired. WorkOS, start selling to enterprise customers with just a few lines of code and build authentication in minutes instead of months. WorkOS.com to Anthropic. Claude, thought with me a lot while I was researching this episode and it can think a lot with you too. Claude.ai slash acquired to Sentry. Application monitoring software considered not bad by millions of developers. Sentry.io slash acquired. You can click the link in the show notes to learn more about any of the sources, the

• 3:47:10Ben Gilbert?

  several dozen that David and I have between us, the books that we read, especially Seinfeldia by Jennifer Keishen.

• 3:47:16David Rosenthal?

  Yep.

• 3:47:17Ben Gilbert?

  Great, great book. All of that is linked in the show notes and a few people to thank in particular.

• 3:47:22David Rosenthal?

  Yes.

• 3:47:23Ben Gilbert?

  David, what you got?

• 3:47:24David Rosenthal?

  Yes, research thank yous. Well, speaking of books for the show, first and foremost to Warren Littlefield, NBC executive responsible for the decision to officially pick up Seinfeld. Warren spent a great amount of time with us, which was wonderful. He also wrote a fantastic oral history memoir of his time at NBC called Top of the Rock, which is well worth reading about Seinfeld, Friends, Mad About You, Cheers, all the great stuff from NBC from this era. Famously, right after Seinfeld ended, Warren got fired at NBC and went on to have an amazing second career as a producer.

• 3:48:05David Rosenthal?

  So he executive produced Fargo, The Handmaid's Tale, Dopesick, and now The Testaments, which is doing incredibly well. So great to talk to him. Alec Berg, Dave Mandell, and Jeff Schaefer, three of the writers behind some of the most legendary episodes on Seinfeld, especially the second half of the show. To Jeremy Zimmer, former head of the UTA Talent Agency, to Michael Litten, former chairman and CEO of Sony Pictures Entertainment, to our friend Ravi Nandan at A24, and Brian McAndrew's longtime television executive, first at ABC Capital Cities and then at Disney. And to our friend Jeremy Jafon for helping inspire this episode with his original recommendation

• 3:48:50David Rosenthal?

  that I made a carve out on our last episode of Jerry Seinfeld's movie comedian.

• 3:48:54Ben Gilbert?

  Thank you, Jeremy. I've got a couple. One to Arvind Navaratnam at Worldly Partners for his great mini study, this episode on Seinfeld, which is linked in the show notes. And then also to good friend of the show, Danny Passman, an entertainment lawyer who has spent his whole career around deals in this industry. If you like this episode, go check out other episodes on TV and entertainment. Taylor Swift, Oprah, way back in the day. More recently, much higher quality episode because we got better over time. Disney, part one and part two. And for a tie in on Coca-Cola.

• 3:49:31David Rosenthal?

  That's right.

• 3:49:31Ben Gilbert?

  You can visit library acquired.fm to get access to all the visuals associated with this episode, charts, tables, and illustrations. You can join the email list at acquired.fm slash email. That's where we will send out behind the scenes photos for research, episode corrections, and vote on future episode topics. And come talk about this episode with us and the whole community in Slack after you listen, acquired.fm slash Slack. With that, listeners, we'll see you next time.

• 3:49:58David Rosenthal?

  We'll see you next time.