Special: An Acquirer’s View into M&A with Taylor Barada, head of Corp Dev at Adobe

Ben & David are joined by special guest Taylor Barada https://www.linkedin.com/in/taylorbarada, VP and Head of Corporate Development & Strategic Partnerships at Adobe, to discuss how large tech acquirers approach buying companies. This episode is full of great insights for startups & entrepreneurs who might find themselves navigating the M&A process, as well as anyone curious about the craft of dealmaking and the strategic approach of large acquirers. Sponsors: Vanta: https://bit.ly/acquiredvantaServiceNow: https://bit.ly/acquiredservicenow26Legora: https://bit.ly/acquiredlegoraStatsig: https://bit.ly/acquiredstatsig26 More Acquired! Get email updates https://www.acquired.fm/email with hints on next episode and follow-ups from recent episodesJoin the Slack http://acquired.fm/slackSubscribe to ACQ2 https://pod.link/acquiredlpMerch Store https://www.acquired.fm/store! © Copyright 2015-2026 ACQ, LLC Topics covered include: How conversations begin between startups and acquirersThe importance of building a relationship with acquirers over time and "investing in lines, not dots https://bothsidesofthetable.com/invest-in-lines-not-dots-611f36491d73#.v1gltychy” (just like raising VC)The often under-appreciated role of culture fit between acquirers and acquisition targets How entrepreneurs should evaluate acquirers throughout the M&A process Two examples of successful acquisitions Taylor completed at Yahoo in Citizen Sports https://techcrunch.com/2010/03/17/yahoo-acquires-citizen-sports/ and IntoNow https://techcrunch.com/2011/04/25/yahoo-intonow/The M&A process at large technology acquirers, from initial conversations to LOI, due diligence and the definitive merger agreement The relative roles of Corp Dev, business/product owners and executive sponsors in the M&A processCommon mistakes startups (and VC’s) often make in the M&A processDifferent “categories” of M&A that acquirers think about, and the relative risks & opportunities of “core" acquisitions vs transformative new businesses What percentage of deals Adobe looks at actually happen, and the importance of being willing to say noM&A as a tool for strategy, and the different M&A cultures & approaches at different companies Tech themes Taylor and Adobe think about as part of their M&A strategyEvaluating the longterm success of deals and the importance of the M&A integration function Followups: Ben & David’s quick take on Instagram Stories http://blog.instagram.com/post/148348940287/160802-stories! The Carve Out: Ben: Why the Concorde failed http://www.vox.com/2016/7/19/12195452/concorde-supersonic-flight-fail by VoxDavid: Simone Biles https://en.wikipedia.org/wiki/Simone_Biles, the greatest gymnast of all time http://www.newyorker.com/magazine/2016/05/30/simone-biles-is-the-best-gymnast-in-the-worldTaylor: Mindset by Carol Dweck https://www.amazon.com/Mindset-Psychology-Success-Carol-Dweck-ebook/dp/B000FCKPHG, Shoe Dog by Phil Knight https://www.amazon.com/Shoe-Dog-Memoir-Creator-Nike-ebook/dp/B0176M1A44/ref=sr_1_1, Originals: How Non-Conformists Move the World by Adam Grant https://www.amazon.com/Originals-How-Non-Conformists-Move-World-ebook/dp/B00XIYGCDO/ref=sr_1_1None this week… coverage of Instagram Stories http://blog.instagram.com/post/148348940287/160802-stories to come next time!

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

• 0:16Speaker 00

  Welcome to episode 18 of Acquired, the podcast where we talk about technology acquisitions. I'm Ben Gilbert.

• 0:23David Rosenthal?

  I'm David Rosenthal.

• 0:24Speaker 00

  And we are your hosts. Today, we have a very special episode that kind of breaks the mold of the show. We had an opportunity that we absolutely couldn't pass up. And even though we're not covering a single specific deal, we think this is going to be a super, super interesting episode for listeners out there. So David, you want to tell them about our guests?

• 0:45David Rosenthal?

  Yeah, we have, we are lucky to be joined by a special guest today, Taylor Barada, who is the VP and Head of Corp Dev, Corp Strategy, and Strategic Partnerships at Adobe. So, welcome, Taylor. Thanks for joining us.

• 1:00Speaker 02

  Yeah, excited to be here, guys. Thanks for having me.

• 1:02David Rosenthal?

  Of course, quick background on Taylor. He joined Adobe in 2013. Before that, he was the VP of Business at Zynga. And before that, he was also relevant to our show, Head of Corp Dev at Yahoo. He has a JD MBA from Northwestern, and after Northwestern, spent a couple of years at Bain before getting into the deal making world. And perhaps most interestingly, you are the first guest on our show who is a former professional athlete. Taylor played professional soccer, or probably more accurately, football in England. Maybe we'll get into that. Lots of deal making in that world.

• 1:40Speaker 02

  Yeah, exactly. No, I would say that looking back on it, I didn't have the language at the time, but there was no real US scene when I came out of college. And so effectively, I became an independent solo soccer entrepreneur, had to go kind of figure out how to insert myself into the European game. And it was an amazing life experience, but not always the easiest.

• 2:04Speaker 00

  Yeah, man, that could be like a whole separate episode, probably not of this podcast, but I'm sure it's a, it's a cool story.

• 2:09David Rosenthal?

  So what we thought we'd do for this episode is kind of stick to our typical structure, but instead, as Ben mentioned of talking about one acquisition in particular, we just thought we'd use it as a vehicle to tailor, get your insights kind of from the inside of being in corp dev and how you think about deals and acquisitions as you're, as you're going through them. So we have a bunch of questions, but I thought we'd start with sort of the acquisition, history and facts section as usual. And I think the, the best way to kick off would be something, you know, that probably most of our listeners are curious about, and I'm curious about. How do conversations typically

• 2:53David Rosenthal?

  start between corp dev and startups, you know, either when you're approaching startups or when they're approaching you? What's, what's the beginning of the story usually look like?

• 3:04Speaker 02

  Yeah, it's funny. I mean, I think the, you guys even doing this, this podcast and this focus is, I think, filling a nice gap and need because it's not something I spent a ton of time thinking about because at some point it's just sort of natural and it seems very fluid and relationship driven and, and not some big moment of, you know, hey, we're for sale, although, you know, those things do happen, but.

• 3:31David Rosenthal?

  Yeah.

• 3:31Speaker 02

  It can be very sort of mystical and seem like this dark, black art that, you know, and I find sometimes that entrepreneurs, when it feels that way, they tend to pull back and be very reserved because they're not sure what they can and can't say, and they don't want to say the wrong thing and all of which is totally fair. And so on our end, what I've always done individually, when I've been a deal lead, and then what the culture I try to create on our group is that you remember that the process is fluid and it's hard to know which ones are going to actually go the distance and lead to a deal and which ones aren't. The valley is, we all talk about and sort of the broader technology industry outside of the valley is incredibly small. And so because of that,

• 4:16Speaker 02

  it's, it's very relationship oriented and.

• 4:20Speaker 02

  Because of that, the way these conversations often start is is just literally a connection and intro like, hey, you guys are in this space. This company is doing interesting things. You know, you guys should should just get to know each other. I've always liked, after stumbling across it some point in the last couple of years, Mark Suster's blog post on investing in lines, not dots. And, you know, I think his concept is is that it's very hard to make a decision when you only have one point in time. But when you've had connections over time and you have the benefit of sort of seeing people say what they're going to go do and then hopefully go do it or something something

• 5:01Speaker 02

  better, it develops credibility and you have time to sort of process and have a perspective so that on how it fits in. And and so oftentimes, it's as simple as that. We get introduced, we sort of say, hey, you should you should talk to someone. There absolutely is the the other sort of 20% case where some company has been going off in a space that we haven't been tracking or a company that we haven't necessarily focused on that decide they either get the stereotypical inbound strategic interest from someone else in the space and they decide that they want to, you know, talk to others and see if they, you know, want to want to sell or they want to sell to us or frankly, sell to the highest bidder, that type of thing.

• 5:45Speaker 02

  And we'll get those calls, we'll take those calls and we will sometimes do those. But those are, that's a high bar. And we try hard to develop relationships so that sort of 80% of it is more strategy-driven, more relationship-driven, and there's broader perspective in a broader context that's developed over a long period of time.

• 6:01Speaker 00

  Yeah, and in that original kind of introduction, when someone says, hey, you know, this company is a newer company, they're playing around in sort of a similar space or similar customers segment to you guys. What's the context for starting that relationship? Is it is it a partnership or is it just like, you know, let's not play any games? We sort of know that there might be some acquisition at some point in the future or, you know, what's the incentive for that entrepreneur to kind of start that conversation?

• 6:31Speaker 02

  Yeah, look, you can waste an enormous amount of time if you just, you know, run around the valley talking to all the big companies, right? That's not your job. Your job is to build value for customers and at some point you're going to be able to monetize that value either through an IPO or the sale of the company. And with, you know, that as context, I think sometimes you get into a scenario of like, well, and I've had, I've had introductions where a VC was an investor in a company, tried to make an introduction for us and the entrepreneur told the VC who was on his board, like, why would I even take that meeting? I'm not trying to sell the company, you know that. And I've always found that kind of humorous because the whole point is, you know, it's like, it's like the old saying of, you know, when you want money, ask for advice.

• 7:14Speaker 02

  When you want, you know, advice, ask for money and that whole thing. It's like, if you're like calling us asking to be sold, it certainly can happen, but, you know, if your first interaction is that, it's, it puts an awful lot of weight on that interaction and doesn't need to be that way. And I think it also ignores the, the point which I always make, and when we sort of talk about it over time as, as things develop is that if you're smart as a seller, you should, you're going to have a fiduciary duty to get the highest value you can for the business when it comes to that time. So that's just, that just is. But at some point, once the deal takes place, you and the team will be working there.

• 7:58Speaker 02

  And so is it a place where, where you think your vision cannot just sort of go and get parked, but hopefully can be accelerated and it's not an, an end as much as it is a beginning? And is it, are you, are they the type of people that you want to work with? Do they see the world the same way? And those things, sometimes you think like, oh, that doesn't matter. We're just going to sell the highest bidder. It's like, well, yes, of course we get that, everyone gets that, but it doesn't mean that you should ignore all other stakeholders, all other factors. And the way you've sort of sussed those out and frankly, due diligence on us and other, other places and try to see whether it feels right is by getting to know people over time.

• 8:41Speaker 02

  So I actually think it's best when it's explicitly not around a specific conversation. It's certainly fine if there is a specific partnership that seems very interesting with the big company, but those also can be. Colossal waste of time. Every small company thinks that every big company is the keys to the kingdom and a partnership with them will unlock everything. But oftentimes, they take a very long time to get done. Once they're done, they take a very long time to mature. And the ones that are truly game changing for startups are few and far between. And so it doesn't mean you shouldn't do them. It just means you have to be pragmatic about

• 9:21Speaker 02

  what you should expect from them. And so if there is a partnership you want, we oftentimes, you know, act as sort of a concierge into this wildly complex 15,000 person company, which we sort of know how to navigate. And from the outside, it's probably extremely hard to figure out who to get to if you want to talk about a partnership around one particular product line. So we can definitely do that. But like I said, I think it's best oftentimes if it's much more open ended. And it's just, hey, we're in this space, would love to meet, you know, this VC that we're, we both know, thought we should, we should get to know each other and, you know, not looking for funding, not looking to sell, but, you know, would love to, love to grab coffee and just talk about what we're doing.

• 10:02David Rosenthal?

  It's amazing, you know, as, as we're talking about this and, and even as we were preparing for the episode, like how much this mirrors the process of raising venture capital too, which, to be honest, I mean, it's an education for me. I never really thought about that, but we coach our companies when they're thinking about raising around, you know, all the time, you know, you're always raising, you're not always closing, but you're always raising because of this very, you know, it takes time to build relationships and VC investors, as you point out, you know, the Shester blog post is great about wanting to invest in, needing to invest in lines, not dots. And occasionally there'll be a dot that, you know, is so compelling, you have to invest in, or it would seem for you guys, you have

• 10:44David Rosenthal?

  to buy. But it takes time to build these relationships. What, what do you think, you know, as, as you're doing that, maybe talk a little bit about kind of the importance of culture and that relationship and the people fit. I know it's something that's really important to you and Adobe. You know, what are, how are you assessing that when you're talking to entrepreneurs?

• 11:07Speaker 02

  I'd say Adobe, it's uniquely important to us and we've walked away from, you know, extremely large deals, you know, north of a billion dollar because we didn't feel like the culture fit was there. And part of it just has to do with how we think about what we're doing and what we think has made us an enduring business over 30 years in a really dynamic space. And, um, you know, the company has morphed from, you know, postscript and printing tools and things like that, you know, into desktop publishing and then creative tools and now into marketing and, um, and now we're sort of-

• 11:43David Rosenthal?

  Photoshop itself was an acquisition a long time ago.

• 11:45Speaker 02

  Yes, yeah. Again, that's somewhat unique and then it was, my understanding was it was a couple guys and a product, but yes, the nascent piece was there and then they built around it.

• 11:56Ben Gilbert?

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• 13:43Speaker 00

  You know, you talk about the qualities that you look for when you're acquiring someone to be a culture fit. How does that impact the outcome of the acquisition? And is there like anything specifically that you sort of look for as, okay, this is going to be, this is going to make this outcome financially successful for Adobe because this person has X mindset?

• 14:05Speaker 02

  Yeah, I think it's definitely related. I mean, I always say, you know, we don't care about winning the press release. You know, you create value and one of the reasons why valuing companies is art, not science, in a strategic acquirer scenario versus a private equity or whatnot is that like, look, it's and even in private equity, this is really true if you get down to it is that, you know, your valuation comes become because of a present value of your future cash flows. Like what drives those future cash flows is what you actually go do in the market together.

• 14:37Speaker 00

  Yeah.

• 14:38Speaker 02

  And inevitably, we're not like a holding company that's just going to buy great properties and let them roll. We were trying to have a point of view around the market and say, hey, look, we can come together and maybe it's not one and one equals three, but you know, there's some sort of element of that overused word of synergy. And we're looking for leverage and looking for a perspective that we can accelerate the vision of the entrepreneur, but also frankly, accelerate our own vision and hopefully even broaden it at times, just as we did when we went from creative to marketing with the Omniture acquisition. Excuse me, and so it's the reason it's so important is that if you have an incredible

• 15:21Speaker 02

  strategy and incredible vision, we all know it's meaningless. It's about execution. Like, big companies are no different than startups in that effect. Execution creates value. Strategy is what allows you to have the opportunity to get into that mode, but you gotta go do it. And I think the one last thing, and you know, we've touched on this a little bit when we were catching up before the call, is that the, to me, if I had to pick one hallmark that gives me a sort of good, positive, early indicator that we're on the right track, is when I start to see through the back and forth and comparing notes on the strategy and the vision, that this concept of accelerating the entrepreneur's vision around where they're going is there, but it's not, that's not the only thing. The

• 16:06Speaker 02

  other thing is they actually start to embrace the broader vision that we have and say, you know what, I actually think I can expand your vision, and I want to get in, and if I could, if I could work with you guys on that, I could do something bigger. And so oftentimes, you'll see over time that the deals that work really well, and where it particularly works well for the founders or, you know, CEOs, is where they end up loving the concept of getting inside a bigger company, and maybe they're really dyed-in-the-wool product people, and all this raising money and all this other stuff is, you know, part of what they have to do, but it's not what they love, and all of a sudden, they're unleashed, and they get to just go do what they, they want, and spend all of their energy there.

• 16:48Speaker 02

  And so, whether it's here, or, you know, two of the smaller deals I did while I was at Yahoo, one was for a company called Citizen Sports, founder named Mike Kearns. I founded that company with another guy named Jeff Ma, who's well-known from the Bringing Down the House days, and all that, from MIT. But, so Mike came in and just did phenomenally well, and then another was a company called Intenow, that was founded and spun out by a guy named Adam Kahong. And those two guys stuck around Yahoo for Mike just left about a year ago and I think Adam's still at Yahoo and they rose to be two of Marissa's SVPs of product and these were smaller acquisitions, so it's not like

• 17:33Speaker 02

  they came in the door doing that, but they had a real passion for sort of online media and where it could go and sort of not just what they were doing with their product, but what you could do if you applied some of the principles of social and mobile to the broader Yahoo business. And we've seen the same thing here at Adobe and I think it's a classic sign that things will work out quite well.

• 17:57David Rosenthal?

  It's really cool to hear you talk about that. We had in one of our early episodes, we had Kurt Del Benny from Microsoft on and we talked about the Accomplice acquisition. And he talked about this very fact that one of the things that Microsoft is thinking about now in terms of M and A is just what you're talking about, about the people and the culture fit. Since Kurt's now leading the LinkedIn acquisition, which is much bigger and more complex, but for Javier at Soltero at Accomplice, he's now running all of Outlook and exactly mirrored these themes. Let's move on. So we sort of break acquisition history and facts into two parts and my favorite part is sort of the stories of the acquisition

• 18:40David Rosenthal?

  sort of is what we've been talking about here, but I bet a lot of our listeners will be really curious about like, what's the process? Once you've realized that there's a relationship here that could bear fruit, what are the steps in the process when you're actually working through a deal at that point, from LOI to term sheet to definitive agreements? What are the key milestones for you guys?

• 19:05Speaker 00

  And what specifically are you looking for? Is it cool? Financial? Check. Cool. There's no lawsuits against them. Check. Cool. Your product is growing with users. Check. Those sorts of things.

• 19:15Speaker 02

  Yeah. Look, ultimately, you're going to do a deal if it makes...

• 19:21Speaker 02

  You know, strategic sense, the technology product fit is there and the financials you think makes sense for your shareholders, right? And for us, the fourth one that I would put that over, you know, sort of cuts across all of that is just the people that, as we've already talked about. So the hard part about the deal is these are all, even though we have a quote-unquote process in every large acquirer that is sort of a repeat player, right? And so all the places that I've been and done this role are definitely in that. And, you know, the other ones are people like you've mentioned, so Microsoft, Oracle, Facebook, et cetera. Repeat players absolutely have a process and there's different flavors and each company

• 20:05Speaker 02

  has different places where different types of decisions either take place or which parts of the org are responsible for them. So there's definitely a number of different ways to do it. But it's, you know, every deal is its own, you know, sort of perfect snowflake. They're all snowflakes, so they're deals and there's unbelievable, you know, correlations from them. And when you get into the grain or, you know, everyone has decided we're going to make this happen, it becomes kind of a machine and the legal side and the diligence side starts to take on a life of its own and that really does happen. So I would say in general, this is tough because on the outside, when you, particularly

• 20:48Speaker 02

  if you're not going through a hardcore sort of auction process and have hired a bank or whatever, but it's a, it's a place where you sort of think, well, look, we're not really for sale, but they seem to be interested, so I'm open to doing this, but I don't want to sort of waste all my bandwidth and emotional energy and sort of exploring this, how would we do it? So typically, there's usually an early meeting, you know, with a, someone in the business unit that's responsible for the product area that's, where there is the strategic interest in the overlap and trying to get an understanding for the product vision, the product technology, you know, maybe a bit of a demo, some, a little early point of view on numbers. And I think sometimes it can be tough to decide, you know, when do you share what?

• 21:32Speaker 02

  And I, you know, we're always fine if a entrepreneur... You know, feels like they want to get an NDA in place before they share some financials and things like that. We, we tend to try to um make sure that we kind of have, have checkpoints like, you know, if we get um someone who's trying to sort of take a read on the market because they're about to do a fundraising round, they just figure they better think about it and they want to talk to a handful of people that are sort of the logical um fits for that business and say they decide we're, we're one of them and then, you know, sort of check in with us. You know, we will oftentimes do at least one call without an NDA where we just sort of say, you know, tell us the story and uh we'll go through that. So there's sort of a high level business product check early on.

• 22:17Speaker 02

  And then at some point you start to kind of um have a feel for the financial um side as well um as you go through that. Um, the biggest milestone you'll find with large acquirers is kind of the LOI or that, or, or the term sheet and that, that almost always, um, and I truly mean almost always, um, includes a no shop provision, you know, of some period of time. Um, you know, typically sort of forty five to sixty days, sometimes thirty days. Those are the types of things where once you get to that stage, you'll have a lawyer involved and they can advise you what is quote unquote market.

• 22:52Speaker 00

  Just like a venture financing. It's funny how many parallels.

• 22:55Speaker 02

  You're gonna have, yes, you're gonna have your lawyer and they're gonna be able to tell you what's market. They'll educate you on what the business ramifications are of what is being done. Um, every big company um has slightly nuanced ways of doing things and because we are repeat players and the lawyers are repeat players, there's certain things where, you know, it's basically like, yeah, we're not, you know, we're not gonna do that because of the precedent of it and, and that type of thing. So um oftentimes those are, but they, you know, depending on um, you know, where the leverage lies, depends on how much those things get negotiated by the buyer or the seller, again, exactly like a venture round in that respect. And then um, and then once you get through that, that's when you see the circle of knowledge on both sides expand, but particularly on the buy side.

• 23:39Speaker 02

  Sometimes it can be overwhelming because then we're gonna, you know, jump in and do a. You know, a day minimum, oftentimes two or three days of kind of a deep dive, take us through the business, you know, beginning to end, um, in terms of go through the product, go through the go to market, you know, go through the financials, go through the operations, go through the technology, architecture, et cetera. Um, and then, um, you know, that's when you build, build out a, you know, a very detailed data room. And, um, you know, I think with the super early stage companies, sometimes you'll run into some issues where, you know, they didn't have their house in order, they didn't get good legal advice early enough on, and, you know, maybe they were working with a couple of outside agencies and they didn't have them sign intervention assignment agreement, that type of stuff. Those like, those are,

• 24:23Speaker 02

  at this point, the, I saw that more 10 years ago than I do today. I think the, the breadth of, you know, startup legal advice and sort of, you know, smart, experienced angels as well, certainly the venture community, you just, people tend to have a pretty buttoned up shop, particularly if they're venture backed. And, um, and things are pretty clean. But if you're outside of the valley and maybe the company was lucky enough to grow, you know, bootstrapped or whatever, and they kind of just made it all work, every now and then you'll run across things where they didn't have their house in order. And then it's, it's rarely a deal killer, but it usually is end up being something you gotta sort of work around. So you drive through that. At some point, you put in place a definitive agreement where, you know, our lawyers will put together a, an acquisition agreement,

• 25:08Speaker 02

  um, depending on if it's a share purchase or an asset purchase, uh, et cetera. And, um, and you kind of go back and forth on that and, um, you know, try to get it finalized. And ultimately, deal, deals are announced once the definitive agreement has, has been signed. And then there's a question of, is it a simultaneous sign and announce, um, and close, meaning, you know, we signed it, we sent the money, we own it. Or is there a split sign and close where, you know, we sign it, we announce it, and then there's 30 days to meet X, Y, Z closing conditions before, you know, we would actually close. Um, you'll see both.

• 25:41Speaker 00

  Yeah, and you mentioned throughout all these steps, there was one point in there where the business owner talks with the company they're acquiring and compares vision and strategy and digs in with CorpDev. How involved is the business owner throughout the entire process? Are they in every single meeting? Are they in that first meeting? Is it the business owner that first contacts that company? What is their role and what is the role of CorpDev throughout the entire acquisition process?

• 26:10Speaker 02

  Yeah, it's critical. So, I mean, one thing to know is you can't ignore CorpDev. In many ways, they're going to be your guide and your partner throughout this. And I truly view it as a much more collaborative thing. If you're gonna get a deal done eventually, it's gonna be because everyone thinks it makes sense and you're able to get together at a valuation that everyone feels good about, right? So, I very much try to make it clear to people and make sure that our deal leads make it clear that no one can quote-unquote "make you do anything you don't want to do." So, that is one thing, I think, out of the gates to kind of demystify the whole process and take a little pressure off. The relationship with the business owner is critically important.

• 26:51Speaker 02

  I mean, the language I use, and again, every company has sort of slightly different ways of thinking about this, but I think of it as there's an executive sponsor and there's a business owner. Oftentimes, you will see, particularly if a company's kind of got some VC intros and things like that, they will be really focused on like trying to get in to meet the CEO or get to meet the, you know, the head of the whole business unit.

• 27:17Speaker 00

  I've never been guilty of that.

• 27:18Speaker 02

  Yeah, and like, and it's fine. Like, everyone gets it. You know, it's the old thing of come in high and work down and blah blah. And it's, sometimes it can be fine. Other times, it's, it can be either off-putting or even, you know, sort of counterproductive in that if you get in front of them too early before the business owner in CorpDev have been able to kind of frame it and suss out in combination with you, sort of, your business well enough that then we can effectively translate and help people understand why this is exciting, why this matters. They might take one meeting and be like, eh, I wasn't that interested. And then, and then it creates this uphill battle where CorpDev and the business owner are like, nah, nah, nah, nah, nah. We gotta spend a little more time on this. This one's interesting, right? And so trusting-

• 28:03Speaker 00

  I've seen it played out. It's so true.

• 28:05Speaker 02

  So even if you've got like this perfect, hey, my venture guy says he is like golfing buddies and best friends with the CEO or whatever, right? It's, it's just a card you, you, I generally just sort of say, play it straight up, play it open and then treat the corp dev person and the business owner as people that are your partners to figure out whether this makes sense. Not, you know, not someone who you gotta kind of like micromanage the thing. Ultimately, it's, it's not like a enterprise software or SaaS. You're going into an IT group, they've got a need for a widget, you've got a widget, you're gonna sell them on why is yours is the best and then, you know, wham, we're done. Like, get it done, right?

• 28:49Speaker 02

  It just, it's, it's, it's, it's a very subtle collaborative, collaborative dance where you're, where both sides are evaluating each other and getting to know each other and you can't, I mean, it's, it's sort of overblown to say it's a marriage, but look, you're, you're, you're selling your baby that you put heart and soul into creating. You wanna find out if we're good stewards of it, if, if our visions align and you should care about those.

• 29:13David Rosenthal?

  It's so funny going back to the parallels with venture. I mean, it just keeps coming up, but like, we see companies make this mistake with us all the time is, you know, they come in, they meet with one partner and, you know, that relationship is progressing at a natural pace. And then, you know, in the worst case, the founder, CEO, or, but oftentimes, one of the other venture backers or somebody will come in and talk to another partner and it's called, we call it partner shopping and like, nothing will kill a deal faster than that.

• 29:42Speaker 02

  Yeah. Yeah, and there's less issue with that here because we, we're not a partnership. There's a, there's a natural organizational structure to a big company.

• 29:50David Rosenthal?

  But you're still going to somebody I think has influence, but actually has no context on the relationship and back to that being the most important thing, can totally see how that can blow up deals.

• 30:00Speaker 02

  Yeah, exactly. It really blows up deals and that's the other thing why I say like, there's almost no misstep that you can't get over if actually it makes business sense.

• 30:09David Rosenthal?

  Right.

• 30:10Speaker 02

  And that's the other reason why I say getting people in the mind space of like, You're building a great business, like you're gonna get the eggs that you deserve. And we're looking for a collabor- collaboration to figure out whether we're the right home for it, right? It's like, it takes all the pressure off, because the real answer is you don't need to micromanage and overmanage. Like, we do this off all the time, and if we're approaching it with that mindset, like, we're gonna together to figure it out, right? Because the rigest reason people do that is because they're in like, value optimization mode. In the back of their mind, they think, I gotta maximize value. And it's like, yeah, totally. That's, it is literally in the bylaws, it's your fiduciary responsibility, right? And we get it, and so it's part of that.

• 30:52Speaker 02

  But if you, if you overmanage that and overplay it at the wrong, wrong times,

• 30:59Speaker 02

  it just, it comes across awkward. And again, if it actually makes sense, you're probably gonna recover from it. So even if you do, it's not that big a deal. Like I said, I like, I've never not done a deal, but I've had deals where it was much harder to get there. Because, you know, we, someone figured out some way to get in front of either the CEO or some, you know, some other head of a business here or something earlier than we probably would have ideally wanted. Or sometimes it comes in that way, and that's fine too. But then it's like, you know, people gotta do your job. The, where, to bring that whole thread back around to the core question, you know, that you asked, I think it was Ben. The business owner or that sort of head of product is actually an extremely important relationship as well. Like, you should have a sense of where, you know, if you were king for day and ran that business,

• 31:44Speaker 02

  where would you think that, you know, you, the startup that you run fits in? And then, how do you figure out who's responsible for that part of the business? And that's absolutely just as important a relationship. I would never say, you know, only focus on that relationship and ignore corp dev. But I would also never say, focus on corp dev and don't worry about that relationship. You, you kinda have to have both, and sometimes. Again, it's this probably also is like the venture. It's very organic and wherever you have an in, you know, in a warm intro, take the warm intro and then, and then ask the questions of, you know, hey, should I talk to someone in corp dev or whatever? I have business unit partners who are very sophisticated of sponsored deals many times. And they, part of the job of running a good, you know, being a good product manager,

• 32:28Speaker 02

  let alone a kind of business unit, you know, product owner or GM, is understanding the outside market and knowing the ecosystem that you're in. So they should be out there meeting startups and stuff. So oftentimes they will meet someone and they'll hand it off and say, you know what, I've met with this guy once or twice for coffee. I kind of like where he's headed. You should like, nothing to do here. I'm not looking to do it. He's not looking to sell, but I just kind of want to get him on corp dev's radar. Can you meet with them? That type of thing. Other times we're, you know, we've partnered with the business unit to develop a strategy. And overall, and we kind of know the spaces that we're sort of particularly interested in. We'll find, find the relationship or a company and we'll get intros and we'll pass them through. I think that is one difference between the VC and M and A world is that sourcing is not some big magical thing.

• 33:14Speaker 02

  You know, we, every now and then we'll find something that we didn't expect because we've made an extra effort to, you know, get out and beat the bushes. But we're out there in the market. There's only so many acquirers. People will find us nine out of 10 times.

• 33:29David Rosenthal?

  If you, if you're lucky as a VC firm, you also are in that position. Most of us aren't that lucky, but.

• 33:36Ben Gilbert?

  All right, listeners. Now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team and deploying them is no longer the hard part.

• 33:50David Rosenthal?

  Yeah. The hard part is knowing what permissions they have, what employees are using them for, or what decisions AI is making. AI security for an enterprise at scale is not a small concern. Like the risks are real.

• 34:04Ben Gilbert?

  Exactly. And the challenge with AI is governing it, securing it, measuring it, and making sure that it actually delivers value. That is why ServiceNow built the AI control tower.

• 34:14David Rosenthal?

  Yep. AI Control Tower gives enterprises a single place to see, manage, govern, and optimize AI across the entire business. And it works with any AI, not just theirs. Every device on your network, every permission across every system, every AI agent, visible and secure in one place.

• 34:32Ben Gilbert?

  And ServiceNow can do this because they've spent more than 20 years building the operational backbone of the enterprise. The workflows, governance, approvals, security controls, and institutional knowledge that power how work actually gets done across IT, HR, customer service, finance, and security.

• 34:48David Rosenthal?

  ServiceNow already runs more than 100 billion workflows annually and trillions of transactions for more than 85% of the Fortune 500. So when companies need a place to govern AI at enterprise scale, they're building on a platform at the center of how their business already operates.

• 35:05Ben Gilbert?

  And in a future that isn't going to be one AI, it's going to be thousands of AI agents working across every function of the company. But the question is, who's managing them all?

• 35:14David Rosenthal?

  So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely, at scale, go check out servicenow.com/acquired and tell them that Ben and David sent you. The next category that we talk about on the show is acquisition category. And so every deal that we look at, we assign, we say, was this a product acquisition, or a business line acquisition, or a people acquisition? We're curious on your end, like, do you guys do the same thing? Or is it more organic, like, as you're looking at different companies and then they tend to fall? Like, are you guys thinking, like, yep, this is definitely an aqua hire? Or like, oh, this could be like a huge business line acquisition? Or, you know, how is that going through your heads?

• 35:59Speaker 02

  Yeah, I mean, look, there's industry store standard lingo, you know, aqua hires, tech and talent deals, you know, like, you know, whatever sort of business acquisitions or product acquisitions, those types of things are definitely, those are, I've heard those used, we've used those all the time. We don't get too hung up on it. You know, one construct I've used inside of our business is, you know, from my Bain days, I had a respect for some of the profit from the core analysis and they'd done, there was actually a book written a number of years ago called Profit from the Core and they'd done analysis of like 2,000 companies and growth initiatives, both M&A and otherwise. And the concept was that once you understand what your core business is as a large scale

• 36:43Speaker 02

  company, understanding the business that drives the most profits and is sort of the most enduring, from a perspective of, you know, who is the customer, what's the channel of the market, what's the geography you're playing in, what's the business model and what's the product, anytime you change one of those five things, you're like a one-step adjacency further from the core and it creates risk. And actually, they showed through analysis of all these different companies that, you know, once you got, I think it was one-step adjacency was maybe about a 30 to 40% chance of success, but once you got out like three or four of those things changed, you dropped off to like 10% chance of success. It doesn't

• 37:26Speaker 02

  mean that you don't take, you know, things that are multi-step adjacencies because sometimes those are where the biggest opportunities are, but you have to make sure that they're worth the risk. Otherwise, you're just leading to sort of undisciplined diversification and you have no better chances of success than just, you know, a private equity investor or a holding company and probably less because it's not really how your business has been set up to focus, you know, the resources of the company on, right? So, something like Amature, we've gone back and looked at that, you know, in hindsight and that was probably a four-step adjacency in many ways. It was, you know, SaaS, completely new product, it

• 38:05Speaker 02

  was an enterprise selling motion, which we didn't have in mature fashion at that point. And in the business model in terms of, you know, recurring revenue was new because we hadn't moved to that with the creative side of the business. It was after that that we moved from Creative Suite to Creative Cloud. So that was, in hindsight, a very risky big bet. Yeah. But it was a large, big business that had, was the market leader, had real momentum and so you could make that bet and then if you, you know, focused on the rest of the things that you could control, you know, it's ended up being a, you know, $2 billion plus, you know, it's on the road to being more than that business force. And so you... It's not that you don't do those things, but you do them for the right reasons.

• 38:47Speaker 02

  And so as you think about that, you know, things that are in your core, like meaning we're already in that part of the business. That's where we're more likely to look for, you know, some tech and talent, you know, smaller kind of deals. Or we look for like a little bit of a core expansion where it's kind of like a one step, you know, adjacency where maybe we get a new product with a bit of a business around. It's been proven in the market, but it's not scaled yet. We bring that in and we scale it. The marketing cloud in many ways, after the Omniture acquisition, there were a number of other add on acquisitions that were done to broaden out the product portfolio. And then sell through the same channel. In the enterprise space in particular, you've seen that, you know, year after year.

• 39:27Speaker 02

  Once it's extraordinarily and perhaps not even appreciated how unbelievably hard it is to build a, you know, you know, true, you know, large scale enterprise sales force. And the companies that have done that, that's such an unbelievably huge investment over, you know, like probably a decade to get there. That then it's a question of, you know, how do you maximize the throughput of that channel every year? And so finding additional products to put in the salesperson's bag is a big part of it. So on the B to B sort of enterprise side, that's a big deal. You know, in the consumer side, it's, it's a slightly different element in terms of particularly, you know, all the networks and everything. With the social networks and platforms we've seen have changed the dynamics there a bit.

• 40:12Speaker 02

  But you know, historically, that was a little bit of Yahoo's original strategy was, okay, we have this portal. Let's just keep adding on things, right? That was before my time at Yahoo, but it was, you see the approach driven by the business strategy. And I think that's at Adobe, that's in my personal sort of belief is that it has to be a strategy driven process. And so the categorization of what you're going after is driven by what you're trying to accomplish strategically.

• 40:37Speaker 00

  Cool, cool, cool. Moving on to our next segment, we always talk about what would have happened otherwise. And it's the part where we try and figure out, you know, if this deal didn't go through with other acquirers, or you know, would that company have grown on their own? And I feel like a good question to to kind of dive into there is, what percentage of deals that you look at actually end up happening?

• 40:58Speaker 02

  Yeah, it's very low. I mean, very low. And it's a question of what look at means, right?

• 41:05Speaker 00

  Yeah.

• 41:05Speaker 02

  You know, we've historically done sort of four to 10 plus deals a year. I mean, I think actually, the market strategy is our, our, our sort of strategic umbrella is big enough to do meaningfully more than that. But we've kind of intentionally focused on a strategy that says, we, you know, we're going to make, we're going to make sure that the ones we do are going to work. And Adobe's, I mean, I have, we've had bankers come in and be like, what are you guys doing? How you do it? And because everyone around the valley is sort of saying that, you know, the ones you're doing seem to be working. And I think a lot of it is just the willingness to say no. And that starts, you know, starts at the top. And we have a CEO, Sean Toney Ryan, who, you know, I describe as having

• 41:50Speaker 02

  founder level passion for, he's been here 19 years, he's been CEO nine. You know, no different than a founder who just feels it in their bones and feels that level of passion for protecting the mission and the vision and, you know, that we're going after. And what that means is it's a very high bar on what makes it through the Rubicon of strategy fit, tech fit, team fit, financial expectations, etc. And so you have to be willing to say no. And, and in order to make sure that you, you know, you get the right ones, you have, you have to be careful that doesn't make you risk a verse and not moving quick enough and fast enough. But I wouldn't even know how to put a percentage on it, but I would probably say sub 10%.

• 42:34Speaker 02

  A lot of things have to align to make a deal happen, both on both the seller and the buyer's side. You know, so you're probably looking at plus or minus a thousand inbounds a year. I mean, we probably get two to five emails a day with, hey, would you be interested in checking this out? That sort of thing.

• 42:51Speaker 00

  Yeah.

• 42:51Speaker 02

  And a lot of those, a lot of those, yeah, I mean, a lot of those are the answers. And it's probably, again, no different than VC. For us, it's just like, hey, that's not a fit, but appreciate you thinking of us. And we try hard to give quick answers and quick no's if we just don't think it's worth it. And we don't window shop. You know, if we take a meeting, it's because we think it could be interesting.

• 43:12Speaker 00

  That's awesome, and that's a great lead in. The next segment that we usually do is tech themes where we look around and we try and figure out, you know, what technology themes or themes in the industry and the world does this represent to you? And I think a really good kind of twist on themes here is what, you know, how has, how have you tackled M and A differently at the different companies you've been at? And how have you guys, you know, taken a different kind of strategic or organizational approach between each one?

• 43:44Speaker 02

  Yeah, again, M and A is a tool. I mean, you know, I've always joked that if I ever do something noteworthy enough that requires a memoir at some point, and this stuff makes it in, it would be like, it's not about the deal. Okay, that would be, you know, there's the whole book with Lance Armstrong back in the day. It's not about the bike. It's like, it's not about the deal. I mean, the deal itself is mechanical. And if, if, if you love that world, and there's people who do, and frankly, it's a fascinating, fun world on a lot of levels. If you love that world, I mean, those are the folks that end up in banking. And I have tons of respect for those guys because I think their jobs are really, really hard. And they only get paid if things get done. So, and then they oftentimes get a bad rap and there's, you know, I think there's a lot of great ones out there.

• 44:29Speaker 02

  But the, it's just a tool. And so the question is, what is your strategy? If you sort of tie that back to your core question of like, how are things a little bit different at different companies? I'd say at Yahoo, we were going in a lot of different directions when I got in there. We were, because it was oh eight, oh nine, when I, when I joined and, you know, there was a little, I found at times, things were bubbling up bottoms up in terms of people being entrepreneurial and trying to get things going at the business level, business unit level. And there wasn't, we were going through, it was kind of a restructuring and there wasn't as much of a clear, hey, we gotta go do this tops down.

• 45:10Speaker 02

  And then you'd, you'd get the inevitable, hey, we got a call and supposedly Google's looking at buying this. And I was like, so, like, that's not a strat, like, doing what your competitors are doing is not a strategy, right? So, we, we spent time around getting alignment around strategy. We spent time around locking in the concept of from a process perspective of an executive sponsor so that, so that you got the alignment early, tops down on strategy. And then it made sure that when we were spending time on things, it, it tied to that. But frankly, I mean, Yahoo had a reputation, we worked hard on this, but it was just a little bit of the reality. At some point in the, of the culture was, you know, we had a reputation for being a little bit slow. And so we tried hard to make sure that we were transparent with entrepreneurs around the different hoops

• 45:55Speaker 02

  and stuff we were going to have to jump through together so that they could feel in control of it. And we could feel like we were in it together instead of it just feeling like this monolithic bureaucratic thing. And it wasn't, it wasn't that, but it was, it was just a nature of sort of how things got done in that culture and sort of where they were. And the culture of the company affects the process. At Zango, I mean, we had, the company had been founded like three years before. I mean, Mark's an incredibly aggressive, dynamic entrepreneur.

• 46:21Speaker 02

  If he believed it made sense and we could convince him that we could go do it. So I mean, I remember working on a deal and you know, we found out that some entrepreneurs had spun off from one company that we thought was interesting and gone and done something else. And you could just tell from talking to the guy that had been left behind was that the real creative juice had walked out the door. And and so it was basically like you got off the phone and it was like being in a movie. It was like find those guys, you know? And so someone on the team got them, someone on the team got them on the phone. We literally like two hours later, we had them on the phone and I was like, can you come to San Francisco tomorrow? And they were like, no, like, are you crazy? And I was like, great, we'll be there at one o'clock.

• 47:02Speaker 02

  And we like hopped on a plane and went down and like, it was, it was sort of like, it was this incredible, you know, it was fun because you felt like you were going to go make it happen immediately. Um, it was that type of time in that company. And from a strategy perspective, we were trying, we, we had, we had the sort of tiger by the tail in terms of, you know, what was happening with social and everything we had, we knew the categories that we needed to add from a social gaming perspective. You needed to find the teams to go do them because we didn't have enough people in the house to do it. It was that type of voracious growth. And so it made strategic business sense to try to move that fast. Um, and part of it was just again, the culture at the top. I, it's just, look, I, I guess my point is the culture of the company, the strategy

• 47:45Speaker 02

  of the company, where it is in the arc of its growth will define what process it creates and how it goes, it goes about it. And then also what it, um, what it sort of means. And you know, at Adobe, um, we have these bigger arcs that we're working against and, um, you know, the thing, the, from a corporate strategy perspective, um, what we've been focused on for, for several years are sort of three big trends. Um, one is, um, I, as I sort of say, everyone in both the consumer and the enterprise side has been dealing with, it's just this unbelievable wave of mobile. And like, uh, you know, how do you get it to the point where it's truly a tailwind? There's only a handful of companies I think have really cracked the code.

• 48:28Speaker 02

  Facebook, the pivot they did, and I was there at Zanga when they were trying to figure that out and it, you know, neither one of us. Really had it working for us. They figured out how to make it work for them. And you know, it really took their business to another heights. And it's like every year when Mary Meeker, now at Kleiner Perkins, formerly Morgan Stanley, comes out with that internet report and that there's that slide where she shows the percentage of time spent on the internet shifting to mobile. And every year it like outpaces the trend line from the year before. And it's like, how do you get it to the point where that's truly a tailwind? So that that is just naturally making your business, you know, exceed expectations. So that was one. It's like make mobile a tailwind across our entire business.

• 49:10Speaker 02

  Second was it's obvious when you look at the consumer internet that the last 10 years have been around unlocking network effects, right? Through social networks, marketplace business models, platform business models. There's a interesting opportunity, I think, in the in the sort of SaaS based enterprise to look at unlocking similar network effects. And the way you do that is by making data and content like really strategic assets. And historically, enterprise software has largely been, you know, we're tools. You know, we'll sell you a tool and you do whatever you want with with that tool. Whereas consumer platforms look at data and content as the strategic assets that are that are sort of theirs.

• 49:51Speaker 02

  And there's a hybrid approach that I think you're starting to see emerge in the in B2B businesses as well, where customers certainly have their own data, but they blend it with network level data from the from the technology providers as well. And so those are some big trends that we've been openly pursuing. And I really sort of came from outside in analysis of what was happening, not just in our own space, but actually what's happening across the broader landscape, including the consumer world that I'd sort of seen at Yahoo and Zanga.

• 50:22Speaker 00

  Yeah, that's great. It's really cool.

• 50:26Ben Gilbert?

  All right, listeners. Now is a great time to talk about a new partner of ours here on Acquired, Logora, the agentic operating system that is redefining how the world's best legal teams work.

• 50:39David Rosenthal?

  Yep, it's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Logora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry?

• 50:55Ben Gilbert?

  So the founders did exactly what great founders do, operate with obsessive customer focus. They embedded inside a massive law firm for months. They sat with the lawyers just watching how the work really gets done.

• 51:11David Rosenthal?

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

• 51:34Ben Gilbert?

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

• 51:53David Rosenthal?

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

• 52:24Ben Gilbert?

  Truly insane numbers. And that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at logora.com/acquired and just tell them that Ben and David sent you.

• 52:49Speaker 00

  The kind of next section before, I guess, our last section before we do carve outs is

• 52:56Speaker 00

  the conclusion. And this is where we decide, you know, usually just David and I, did this acquisition go well? Do we call it an A like Instagram or, you know, on down the line?

• 53:05David Rosenthal?

  Hard to argue with that one.

• 53:06Speaker 00

  Yeah.

• 53:08Speaker 00

  Do you guys have any kind of internal process where you look back and, or even just isolated examples of like, what you look for and success metrics of yes, that was a good acquisition and we should do more things like this?

• 53:20Speaker 02

  So one of the things that our team's responsible for under me is, is the M and A integration function. And I've always felt like that's a critical to be combined in the same, same group because otherwise it breeds a behavior that sort of feels like, hey, we're just responsible for banging out the deal. Doesn't matter if you throw it over the wall and someone else will integrate it, that type of thing. I always myself have thought of the job as a growth job. It just happens that a deal is part of it and you have to partner with the entrepreneur and partner with the business owner and sort of be CEO of that growth opportunity until someone else can truly take the mantle that will be responsible for running that business.

• 54:00Speaker 02

  And if you think about it that way, there's little things where you put a little extra amount of care and attention into, you know, things like retention packages. And even though the entrepreneur is telling you that this person's critical, you're actually sensing that maybe that's more for historical reasons and they don't understand that in the bigger company, once they're inside this person who's been their right-hand person from an operational perspective, there's like three other functions that are going to serve that purpose for them. And they're actually less important. So you kind of underweight, you sort of talk to them and collaborate to figure out how actually you want to maybe reward them more at the time of the deal, but actually put a little more retention for someone else that's going to, their importance is going to go up post-acquisition. Those types of nuances.

• 54:42Speaker 02

  If you're not focused on the integration when you're, when you're doing the deal, you just do things differently. And, and so that's important. And so by having the integration function in there, we We make sure that they're in our weekly meetings and we share learnings and it's sort of part of the culture. So to me, it starts with culture inside the group, which is, you know, it's a growth leader function, not kind of a deal function. So that's one. From a formal sort of postmortem evaluation process, we commit to reporting out to, you know, our CEO and CFO as well as the board every year, every quarter. We do a report for two years

• 55:26Speaker 02

  after a deal that reports against basic, you know, key, key value drivers and metrics. You know, there, as you might imagine, there's financial one, there's a product one, there's sort of employee retention, depending on sort of how many people we're trying to retain, that type of stuff. And, excuse me, we try to make sure that, you know, we're being hard on ourselves and, you know, not just greens across the board, but we're being honest about, you know, where things are sort of yellow and red. And every once in a while, we'll do a more formal deep dive postmortem if something hasn't gone well. Nothing ever, these things are really hard. And as I alluded to earlier with the statistics from the profit from the core, I always joke that in general, you know, this is not NBA

• 56:11Speaker 02

  free throw shooting. It's much more Hall of Fame baseball hitting, you know, meaning, for those that aren't sports fans, it's not 70, 80, 90%. It's probably plus or minus, you know, 30% is not all bad. And our track record at Adobe is actually dramatically higher than that. And every now and then, it's like you make lemonades out of lemons where things didn't work out like you expected them to, but you had the right team and the culture fit and the product to build from, and you went in a slightly different direction. And that's okay, too, right? And that goes back to why culture fit is important. It says if things go wrong and the market plays out differently, you can still create value. There are definitely companies that have meaningful hundreds of millions of dollars

• 56:53Speaker 02

  bets that are effectively swing and misses and complete write downs. And we haven't had that. And I think a lot of it has to do with the culture of focusing on thinking about the long range before you even do the deal. So the postmortem and evaluation is important, but it's more the fact that you know you're going to be doing it and you know that that's what we all care about. And that's what sort of changes the upfront.

• 57:18David Rosenthal?

  I love that as a, as a way to, to wrap it too, that, you know,

• 57:24David Rosenthal?

  culture is, is, you know, what's going to drive, you know, things are, it's interesting to, to think about, back to this analogy with venture, like, the happiest day of the next two years of your company is going to be when you close that round, like, and then the real hard work starts. And, you know, it's, it's the entrepreneurial drive that's going to keep founders engaged when, you know, life is, is quite challenging and, and I'm sure that's the same, you know, after an acquisition inside the company and kind of gets back to, if it's not the right culture fit, you're not going to have that drive to keep going.

• 58:05Speaker 02

  A hundred percent. And, and it can be sad too, because you see it where, I mean, entrepreneurs who sell something and it doesn't fit, and it ends up withering on the vine or being killed or dies inside a big company, you meet those guys later, or, you know, women, and it's like, they can't be more bitter. Something they, they poured their life into, they feel wasn't,

• 58:28Speaker 02

  respected and honored and whatnot. And, and sometimes, you know, the market plays out differently and they, they get that and that's that. But if a big company through bureaucracy or missteps or lack of culture fit or whatever, you know, destroys, destroys the, the labor of love that every startup is, that's like, that's just such a tragedy, right? And it's, and yet, and yet in, in, in turn, the legacy that accrues to the founder when something had, is phenomenally successful post-acquisition, is, you know, is enormous and you see that, right? And, and, and so that's why I think this, this,

• 59:11Speaker 02

  the fit and, and people being aligned and going about things the same way just matters so much. Because what you said about that kind of moment in time, hey, celebrate it, you got the money in the bank. And then when you do us, selling the company, it's literally, it's not just the money in the company's bank, it's usually the money in the entrepreneur's bank account. So it's worth celebrating, it's awesome, it's amazing. We always love to celebrate with, with them, but it's like, that's why we test so much in the culture thing is like, yeah, it's day, literally it's day one, it's the beginning, not the end. And if you aren't fired up about that, By the way, it's okay if you're not, you just gotta be honest about it early on. Cause if you try to pretend like, oh yeah, I'm in it for the long haul. I'm so excited with this vision. It's like, we'll figure that out.

• 59:53David Rosenthal?

  And then you piece like, that's when you're gonna be bitter, right?

• 59:56Speaker 02

  You can't fake passion.

• 59:59David Rosenthal?

  Yep, totally.

• 1:00:00Speaker 00

  So true in so many walks of life.

• 1:00:03David Rosenthal?

  Let's move, but real quick, uh, we do have a follow up. We want to make sure we cover this week, uh, that I will just mention briefly, but, uh, Instagram. So, uh, Taylor, one of the things we do is, um, if something new happens, uh, on one of the deals we've covered in the past, uh, we call it out on the show, um, and in this case, relevant to two episodes we've had in the past, Instagram launched stories. So we covered Instagram as one of our early shows and then we covered Facebook's failed acquisition of Snapchat, um, and super interesting to watch what's happening with Instagram stories.

• 1:00:38Speaker 00

  Yeah, I don't want to dive too much into this because it's not, not the dedicated episode for it, but, um, you know, Facebook is very scared of Snapchat. Snapchat doesn't have the global penetration that Facebook does. So there's, you know, plenty of, of, uh, opportunity to defend international turf there, but they very well should be afraid of Snapchat because of the, the engagement that they're getting and, and the kind of, it's the first place that, that people check and where a lot more activity happens than Instagram. And it's really interesting to see Facebook after having some failed attempts to launch Facebook branded platforms to disrupt, uh, um, Snapchat.

• 1:01:15David Rosenthal?

  Yep.

• 1:01:15Speaker 00

  Uh, instead saying, you know what? All these kids are already on Instagram, even though Instagram is about that one perfectly curated crafted photo. Let's see if we can throw this, this completely other paradigm into this and, and see if Instagram can be the one hub for that, that generation.

• 1:01:31David Rosenthal?

  And I feel like this might even, this might merit a future episode.

• 1:01:34Speaker 00

  Yeah, yeah.

• 1:01:34David Rosenthal?

  If you want to hear that, let us know on email or Slack.

• 1:01:39David Rosenthal?

  But let's, uh, let's move on quickly to carve outs. Taylor, did, uh, do you want to go first?

• 1:01:45Speaker 02

  Absolutely. So the, my three most recent reads, I'm, by the way, I read constantly. I'm sort of, my, my family, my, my wife is definitely much more of a perjurer. And I think if I moved entirely to a Kindle, she'd be happy. But I tend to not only like to read books, but then sort of see them around the house. It just kind of makes me happy. I grew up in one of those households. And so it's just, it's just part of, part of the life and part of, you know, uh, sort of embracing everything that's out there to be learned. And you can, I feel like you can never have enough time to get through them all. But the three most recent ones I've read and actually loved all three. One was Mindset by Carol Dweck, which talks about the, the growth versus fixed mindset.

• 1:02:24Speaker 02

  And just phenomenal. And I'd like, look, the basic concept you can, you can embrace and understand in 30 seconds. You know, it's the, the concept of are you approaching life, you know, with this feeling that everything is fixed? And you just got whatever talents you were given in life and that is what it is. And you have to sort of expose those, but not, uh, you know, you, you don't have a chance to grow. Or do you believe that actually, you know, you have what you have, uh, but it's basically irrelevant. And the question is, you know, what are you, you know, what are you going to, going to grow towards through, through hard work and effort? And what was fascinating about reading the book is when you describe it the way you just did, anyone who's sort of in, you know, ambitious type A entrepreneur, or, you know, like, like those of us on this podcast are, you are,

• 1:03:09Speaker 02

  I'm sure thinking, well, I'm, I'm a growth person. I'm always trying to get better and it's great. And I read this book and it was very humbling to, to sort of realize that in some parts of your life, you were completely growth oriented. In other ways, you had intrinsically in sort of had this concept of, of a fixed mindset that, oh, well, I just, I have talent in that or I don't. And so thinking deeply about that for yourself, for your kids, if you're a parent, for your team, if you're a leader, I thought was incredibly powerful.

• 1:03:37Speaker 00

  Yeah, wow. I was having drinks with a friend the other night and he asked me, so are you more of a routine person or are you like flexible to do whatever? And it was so interesting that, you know, in the work that we do at Pioneer Square Labs, we're super flexible. If it's like, hey, you gotta fly down to LA in two days because, you know, the opportunity for this company is to meet with someone there, doing that, or if it's your marketing today or your product today, like all over the place and schedule changes all the time. But in my personal life, like I need to wake up at the same time and have the exact same morning routine every morning or else I'm not myself. And it's amazing how, how different we can be in different aspects of our lives when we think of ourselves as either a routine person or a growth person or whatever it is. And it's not necessarily unilateral across the board.

• 1:04:21Speaker 02

  Yeah, no, totally. That actually, I mean, that makes me think of another one, which, you know, if you're, if you're exploring all the podcasts and this one is, I think, literally you're near the top of the charts, but I've definitely been enjoying Tim Ferriss' one and I think his focus on routines and the questions around morning routines and stuff just fascinates me because I, I'm probably, there's things where I'm somewhat routine oriented, but there's a lot of things where I rebel against it and don't want to commit to an absolute strict routine. And because I kind of like the dynamic that you described of like being ready for the most important thing and hop on the plane and, you know, go do that. And, and it's fascinating to sort of think about how important routines and

• 1:05:04Speaker 02

  systems are to success. That's another one I would find. I'll, before I turn it over, I'll just flag the other two. The second would be Shoe Dog about Phil Knight from Nike and unbelievable entrepreneurial journey and just an incredibly revealing memoir that I really just found illuminating, inspiring and awesome. But it also, to me,

• 1:05:29Speaker 02

  You know, for you, for, for you, David, on the venture side, it will give you, you'll, you will come away reading this book, you'll feel like, like you're doing God's work. Because I think we, I think we underestimate how we, this concept that, that capital's almost available from anywhere and that, you know, you guys in the venture community, and actually I have Adobe Ventures under me as well, so we, we do this here and there is that, you know, where it's like, we're competing to be the ones who provide capital to the right businesses or whatever. And it's like, there was this point in time where like, businesses that, you know, are now like changing the world, literally couldn't get capital. It was just insane. Like, reading this story, and I'm not talking about a short period of time, like, for like, I can't remember, like, seven, eight, almost 10 years. He was

• 1:06:12Speaker 02

  like, on a shoestring and like, trying to get these bank loans. It was just crazy. It just, it was, it blew your mind. So it was, that was, that one was phenomenal.

• 1:06:21Speaker 00

  David is doing God's work, let's be clear.

• 1:06:24Speaker 02

  Yeah, no, yeah, exactly, exactly. And then the last would be Originals by, by Adam Grant. And, you know, that was just, you know, sort of focusing in on creativity and sort of what are the hallmarks of people? And how do, you know, how do they go about that? And how do you be original? And who are the originals and stuff? And so, you know, as I said, I think one of the fun things about software and internet is it, it gives a lot of clay for, for, for all of us to play with. And, you know, you can, you can absolutely be an original if you, if you want to go be. So, those three, those three have been a lot of fun. The last, the last, probably even two or three weeks, I've kind of churned through all of them.

• 1:07:06David Rosenthal?

  That's awesome. The Originals, I hadn't heard of that. I have to add it to my list. Maybe I'll go next, real quick, because it picks up on a couple of those themes from a, from a disparate angle. We, we started the episode on a sports topic, so I can't end it on one. I can't not end it on one, given that it's the Olympics right now. And my carve out is if you haven't seen, everybody's got to go watch Simone Biles, the women's gymnast. I mean, she is, this girl is like, the most dominant athlete in her sport I think I've ever seen. She's like, she makes Michael Jordan look like he's in the D-league, you know, would be the, the, the comparison. And she just, just now, just won the individual all-around gold medal in the Olympics by

• 1:07:52David Rosenthal?

  An enormous margin.

• 1:07:53Speaker 00

  Yeah, I've never seen the person who is best in their sport be so far ahead of the entire pack.

• 1:08:00David Rosenthal?

  Yeah, incredible. And one of the, I was watching an interview with her, or reading an interview with her. And one of the things that was said in it, it reminds me of the mindset, Taylor, of your carve out. When she was a little younger, I mean, she's still only 19, but when she was a little younger, she didn't really have a lot of confidence in herself and would say, oh, well, I just, I'm not as good as the other girls. You know, and like, and now that she is like the most dominant athlete that's ever lived in the sport. Pretty inspiring. So that's mine for the week.

• 1:08:31Speaker 00

  Yeah.

• 1:08:31David Rosenthal?

  Love it.

• 1:08:32Speaker 00

  Mine's a quickie. I, for those of you who listen to the Alaska Airlines episode, know that I have a thing for airplanes. And there's this incredible video on Vox, it's only 10 minutes long, on the history of the Concorde, how it came to be, how that was funded, what the other supersonic airplane undertakings were, and why we don't have supersonic flight today. So if that's, for airplane nerds out there, you probably know it all, but it's just a really well put together, a little 10 minute video. And it's thrilling. So I highly recommend going and checking it out.

• 1:09:06David Rosenthal?

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

• 1:09:12Ben Gilbert?

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

• 1:09:23David Rosenthal?

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

• 1:09:43Ben Gilbert?

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

• 1:09:56David Rosenthal?

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

• 1:10:07Speaker 00

  That's all we've got.

• 1:10:08David Rosenthal?

  Awesome. That's a wrap. Thanks, everybody, for listening and, most importantly, huge thank you to Taylor for joining us.

• 1:10:14Speaker 00

  Yeah, Taylor, where can our audience find you?

• 1:10:16Speaker 02

  Um, yeah, no, I'm, you know, I'm here at Adobe, so feel free to drop me a line at [email protected] if you have something you think we should be looking at. I'm also on Twitter at just Taylor Barada and, you know, LinkedIn as well, so feel free to reach out and, you know, happy to chat.

• 1:10:34Speaker 00

  Awesome. And, listeners, if you like the show, rate us on iTunes, tweet this up to, tweet this episode to your friends, share it wherever you see fit, and thanks so much for listening.

• 1:10:43David Rosenthal?

  We'll see you next time.