Android

Ben & David examine Google’s 2005 purchase of Android for a rumored $50M, undeniably one of the best technology acquisitions of all time. But will it top the list of these tough graders? Tune in to find out. Sponsors: Vanta: https://bit.ly/acquiredvantaServiceNow: https://bit.ly/acquiredservicenow26Legora: https://bit.ly/acquiredlegoraStatsig: https://bit.ly/acquiredstatsig26 More Acquired! Get email updates https://www.acquired.fm/email with hints on next episode and follow-ups from recent episodesJoin the Slack http://acquired.fm/slackSubscribe to ACQ2 https://pod.link/acquiredlpMerch Store https://www.acquired.fm/store! © Copyright 2015-2026 ACQ, LLC Topics covered include: Welcome new listeners! We quickly review the show format for newbies. Community spotlight: Patagonia on a Budget https://www.producthunt.com/books/patagonia-on-a-budget from community member Matt Morgante (@mattm on Slack)Andy Rubin’s career trajectory https://www.linkedin.com/in/andy-rubin-1224a965 and what made him “born to start Android"The undeniable “cool factor” of the Danger Sidekick in the early/mid-2000’s, including fans such as Larry Page, Sergey Brin http://finance.yahoo.com/news/first-time-larry-page-sergey-151548560.html and… Turtle from Entourage https://www.youtube.com/watch?v=mRT0CIjUckI Android’s original ambition to build an operating system for… digital cameras https://www.dpreview.com/articles/0013837043/android-was-originally-designed-for-camerasWebTV founder Steve Perlman is pretty much the best friend ever http://www.bloomberg.com/news/articles/2011-07-27/steve-perlmans-wireless-fix Google’s own perspective on Android as their “best deal ever http://venturebeat.com/2010/10/27/google-exec-android-was-best-deal-ever/"The Android team’s reaction http://www.androidcentral.com/android-pre-history to Steve Jobs unveiling the iPhone in January 2007, and redesigning the initial launch hardware Announcing Android and—equally importantly—the Open Handset Alliance (“OHA”)The much-talked-about "mobile holy wars", between Android’s “open” platform and Apple’s “closed” platform The less-talked-about US carrier wars with the iPhone + AT&T in one camp, and everyone else in the Google / OHA camp (including “Droid Does https://en.wikipedia.org/wiki/Motorola_Droid”)A quirk of history: HTC at one point acquires a majority share in Beats, resulting a short-lived period of Beats-branded Android phones https://www.google.com/search?q=htc+sensation+beats&source=lnms&tbm=isch&sa=X&ved=0ahUKEwiy74frz5HPAhWr54MKHXz1Dh0Q_AUICSgC&biw=1440&bih=835 (still available on Amazon https://www.amazon.com/HTC-Unlocked-Smartphone-Front-Facing-Speakers/dp/B0078LXM40!)The real battleground for Google in the mobile platform wars: the economics of “default search” (briefly known thanks to the Oracle/Java lawsuit against Google http://www.bloomberg.com/news/articles/2016-01-22/google-paid-apple-1-billion-to-keep-search-bar-on-iphone) Google’s detour into smartphone hardware with the acquisition (and subsequent divestiture) of Motorola The “fork-ability” of Android via the Android Open Source Project (versus “Google Android”), and the rise of Xiaomi, Cyanogen, Kindle Fire and other platformsThe ecosystem economics of the Android business for Google “Defensive” versus “offensive” acquisitions, and protecting Google’s core search business Could (or would) Google have built an Android-like platform without acquiring Android the company (or having Andy Rubin)? Framing the technology world’s shift to mobile within (surprise) Ben Thompson’s Aggregation Theory https://stratechery.com/2015/aggregation-theory/The current “moving up the stack” of the competitive playing field as the mobile landscape matures Grading: Android versus Instagram? Followups: Waze launches Carpool http://www.wsj.com/articles/google-takes-on-uber-with-new-ride-share-service-1472584235 in the Bay Area. Much consternation ensues on the Uber board http://www.wsj.com/articles/alphabet-executive-david-drummond-leaves-uber-board-1472510812. Hot Takes: The iPhone 7 (and AirPods) announcement The Carve Out: Ben: Business Adventures https://www.amazon.com/Business-Adventures-Twelve-Classic-Street-ebook/dp/B00L1TPCKW by John Brooks, Bill Gates’ favorite business book https://www.gatesnotes.com/Books/Business-AdventuresDavid: Ezra Edelman's fantastic 5-part ESPN documentary on O. J. Simpson, O. J.: Made in America http://www.espn.com/30for30/ojsimpsonmadeinamerica/None 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.

• 0:00Speaker 00

  We should have like a fighter jet fly by, if you guys heard that at all.

• 0:04David Rosenthal?

  The Seahawks game's starting.

• 0:05Speaker 00

  Oh, nice. That is a cool plane.

• 0:09David Rosenthal?

  Not a Concorde, though.

• 0:10Speaker 00

  No.

• 0:27Speaker 00

  Welcome back to episode 20 of Acquired, the podcast about technology acquisitions. I'm Ben Gilbert.

• 0:33David Rosenthal?

  I'm David Rosenthal.

• 0:34Speaker 00

  And we are your hosts. Today's episode is one that's been coming for a long, long time. It's a cornerstone of all of computing today. Google's 2005 acquisition of Android.

• 0:47David Rosenthal?

  I'm speechless.

• 0:49Speaker 00

  Yeah, it's interesting. I mean, 2005, when you think about the numbers, doesn't feel that long ago. But when you think about the first time you saw an Android phone and heard about Google was working on it, it seems like the iPhone hadn't come out yet, right?

• 1:04David Rosenthal?

  Yeah, this was pre iPhone. Before iPhone was just a glimmer in Steve Jobs' eye.

• 1:09Speaker 00

  Yeah.

• 1:10Ben Gilbert?

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

• 1:29David Rosenthal?

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

• 1:50Ben Gilbert?

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

• 2:12David Rosenthal?

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

• 2:30Ben Gilbert?

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

• 2:58Speaker 00

  So to all of our new listeners, welcome. We were featured on New and Noteworthy in iTunes over the past, looks like a week or two, and about doubled our subscriber base. So thanks so much for everyone trying us out and giving us a shot. I think what I want to do is go over the format of the show, since a lot of you are new, and talk about what we'll cover today in kind of reviewing and grading Google's Android acquisition. So the first thing is something sort of newish that we're trying called Community Showcase. And we felt it was important, since we have so many listeners who are working on projects and building things, a lot of entrepreneurs, and we like to, on each episode, talk about

• 3:43Speaker 00

  something that one of those people is working on. So that will do our Community Showcase. Then we go into Acquisition History and Facts, where David takes us through-

• 3:52David Rosenthal?

  What actually happened?

• 3:53Speaker 00

  Yeah.

• 3:53David Rosenthal?

  What happened and when?

• 3:54Speaker 00

  Yeah. And then, then we get into the Acquisition category, where we decide if it's a people acquisition, technology, product, business line. We recently added Asset to our categories, or the ever so famous-

• 4:05David Rosenthal?

  All encompassing Other.

• 4:07Speaker 00

  Yes. Then we talk about what would have happened otherwise, what tech themes this illustrates for us. We then formally give the grade of our acquisition from the episode. Then we have some, some follow-ups and a, a section called The Carve Out. This is where, where David and I grab something from our lives that we've seen with a book, or a piece of software, or- Anything in the media that we think is either related or completely unrelated to the topic at hand.

• 4:35David Rosenthal?

  Just something fun that strikes our fancy. The other thing that we sometimes do now is hot takes.

• 4:41Speaker 00

  Hot takes.

• 4:41David Rosenthal?

  If something big in the M&A world or otherwise happened in the past week or two, we'll do a quick discussion.

• 4:47Speaker 00

  We will.

• 4:48David Rosenthal?

  So that's the show.

• 4:49Speaker 00

  Indeed. All right, so our community showcase this week, listener Matt, I might butcher this, Morgante, released a book called Patagonia on a Budget. It's on Product Hunt right now. If you search on Amazon for Patagonia on a Budget, you can, you can find it. And it's how to have your adventure in Patagonia on $30 a day. And there's a ton of cool photographs in there. I, I should, I should go pick up a copy because it looks, looks super cool.

• 5:14David Rosenthal?

  Patagonia is awesome. That brings us to also for our new listeners, our Slack community. So we have a community channel on Slack. And if you'd like to join it, there's lots of great discussion going on on there. Just go to our website, acquired.fm, and there's a signup form there. And then you can hang out with the community throughout the week.

• 5:37Speaker 00

  Yeah. And if you, if you want us to show off what you're working on, drop a link in and we'll, and we'll check it out. So on to this week's topic. David, you want to hit it with the acquisition history and facts?

• 5:47David Rosenthal?

  As always Ben. So Android, as Ben mentioned, this one has been a while coming. We've had a lot of requests for this. We've been saving it and we felt was time to finally dive in here. There is so much to unpack here, so we'll get into it. October 2003, Android is a startup company just founded in Palo Alto by Andy Rubin, Rich Miner, Nick Sears, and Chris White. And Andy Rubin, the CEO, was basically born to start this company. So Andy's career started at Carl Zeiss, the, the camera lens, camera technology and camera lens manufacturing company. Then he moved to Apple.

• 6:32David Rosenthal?

  At Apple, he met a bunch of folks. This was during the John Sculley era.

• 6:37Speaker 00

  Wow, I did not know he was at Apple.

• 6:38David Rosenthal?

  He was at Apple, yep, there for a couple of years. And he and a bunch of other people spun off from Apple and started a company called General Magic. Which not a lot of people remember, but this was a spinoff from Apple, actually went public itself. And the whole, they never launched a product, but what they were doing was they were building essentially a tablet, like a personal communicator, you know, sort of a POM competitor. And a lot of that tech, I believe, ended up in the Newton.

• 7:11Speaker 00

  They went public?

• 7:12David Rosenthal?

  It was a public company. Yep. And then it ended up going bankrupt.

• 7:15Speaker 00

  Wow.

• 7:15David Rosenthal?

  It was super ambitious at the time. I believe also, some of the technology that they developed there became the standard for USB. Lot of really cool stuff happened there. So he went from Apple to General Magic. And then a bunch of General Magic alums went and started a company called Web TV, which you probably do remember. And Web TV was part of, this was in the kind of mid to late 90s, vision that a lot of people in technology had at the time, that the internet was not going to happen on computers in a big way. It was going to happen on your TV.

• 7:54Speaker 00

  That's right.

• 7:55David Rosenthal?

  So this was a set top box, like your cable box.

• 7:57Speaker 00

  This is in the era that Microsoft's making the bet that they should do MSNBC, like a technology enabled television channel joint venture.

• 8:04David Rosenthal?

  This is the AOL Time Warner days, like, it's all new media, old media, eyeballs, like, it's the eyeball economy. So Web TV ends up getting acquired by Microsoft. And Andy and the team go up to Seattle, work at Microsoft. I don't know if they actually ever came up to Seattle. But they build Microsoft TV, which, as we know now, was an abject failure. But shortly thereafter, Andy leaves and he starts a new company called Danger. So Danger was founded in the, in the late 90s, I believe, after Andy left Microsoft. And they made a little device called the Sidekick. And this was sort of...

• 8:49David Rosenthal?

  Rim already existed. So there were BlackBerrys out there, but this was the first consumer focused smartphone, really.

• 8:57Speaker 00

  Yeah, and it had like celebrities where it had a cool factor because they would show their danger and, you know, photo shoots and like this, this was a thing. You, you wanted to have one of these.

• 9:06David Rosenthal?

  I remember the first time that I started hearing about, about the sidekick in danger was watching Entourage.

• 9:14Speaker 00

  Oh, man.

• 9:15David Rosenthal?

  And it was like, everybody on Entourage had a sidekick. I think there's actually a, a episode where this was a plot point. The turtle like gets a sidekick and like it's, you know, he's super cool. I can't remember exactly, but.

• 9:27Speaker 00

  It's so recognizable too, that the way that it spun out. I mean, the, the industrial design was crazy, unique and super cool.

• 9:35David Rosenthal?

  Yep. See, but I mean, there was very little on the market like this. Like I said, there were smartphones. They existed, but this was like the Windows mobile days. There was BlackBerry. It was for business people. And, and, and then the sidekick comes out and it's the first time like, oh, we can bring this technology to consumers as well.

• 9:54David Rosenthal?

  So Andy was the CEO of Danger and then he ends up leaving relatively early on in the life of the company.

• 10:05David Rosenthal?

  Oh, by the way, supposedly Larry Page and Sergey Brin were huge sidekick users as well.

• 10:13David Rosenthal?

  And so he ends up leaving and starting a new company that he calls Android. And the vision for Android is.

• 10:19Speaker 00

  This is post-acquisition?

• 10:21David Rosenthal?

  No, no, this is pre-acquisition of Danger. Danger doesn't end up getting acquired by Microsoft until 2008.

• 10:27Speaker 00

  Oh, wow.

• 10:27David Rosenthal?

  Much later. But in 2003, Andy leaves and starts Android. And whereas Danger was a sort of full stack company, they were making the hardware, they were making the software that went on the sidekicks. They were dealing with carriers, everything. Android is, is an operating system company.

• 10:50David Rosenthal?

  And they want to take Linux and essentially make it into a, an operating system capable of running on mobile devices. And the first sort of, we now know Android runs on so many devices today. The first target market that they're going to go after is digital cameras.

• 11:08Speaker 00

  That's right. That's right. I remember reading that and I think what they assessed that it's not a big enough market.

• 11:13David Rosenthal?

  Yeah. Which is interesting because like it was a huge market at the time. I mean, this was 2003. Everybody had the, you know, point and shoots. And it would be interesting to know like what thought process they went through and deciding that that wasn't big enough. But fortunately they made the right call.

• 11:29Speaker 00

  Yep.

• 11:30David Rosenthal?

  And quickly pivot into focusing the device on mobile phones.

• 11:35Speaker 00

  Yeah. I wonder, it didn't, you know, hindsight's 2020, but I don't think it was apparent in 2003 that point and shoots would go away and become part of phones. Like, could you, is there a world where you see that maybe the other way around that you're like, we should build a really great camera because at some point cellular technology will become, you know, lightweight enough that we can put it in.

• 11:57David Rosenthal?

  Into the camera.

• 11:58Speaker 00

  Yeah.

• 11:58David Rosenthal?

  Yeah. It would certainly have been hard to imagine cameras on phones, to the extent they even existed then, getting good enough that you could

• 12:08Speaker 00

  Right.

• 12:08David Rosenthal?

  Actually take real pictures on it.

• 12:09Speaker 00

  Yeah. I don't think I had a camera phone until 2005 or six.

• 12:16David Rosenthal?

  Yep. Later than this time period.

• 12:18Speaker 00

  They were just horrendous.

• 12:18David Rosenthal?

  Oh, they were awful. Awful. I mean, even the first iPhone in 2007, like the camera was part of it, but it wasn't like that was a big selling point. And contrast that now with

• 12:29Speaker 00

  I literally

• 12:30David Rosenthal?

  How huge the camera is on the iPhone.

• 12:31Speaker 00

  I literally just pre-ordered a form factor that I don't want because the camera is better. Like I, the plus is too big for me and I just, I, you know, I had this weird realization that wow, I use this thing more as a camera than a phone.

• 12:46David Rosenthal?

  Maybe Andy and team were like more right than they thought at the time. Anyway, getting back on track. So as far as we know, they never raised any venture capital at Android. But Steve Perlman, who had been the CEO of Web TV and who had been at General Magic with Andy, and Andy had worked for him at both places. At one point, there's in the lore of pre-Google Android, apparently Andy was running low on cash. And Steve shows up at the office at Android with an envelope with $10,000 in cash in it. And he just gives it to Andy.

• 13:22Speaker 00

  And he refuses to take a share in the company. Andy tries to give him shares for it and he says, no, no, this is just for you.

• 13:30David Rosenthal?

  He's just giving him the cash. What a good friend.

• 13:33Speaker 00

  I know.

• 13:34David Rosenthal?

  That's awesome.

• 13:34Speaker 00

  I know.

• 13:35David Rosenthal?

  Steve, will you be our friend?

• 13:38David Rosenthal?

  So, so that happens. They're working away on this operating system. And as we mentioned a minute ago, Larry and Sergey had been big Sidekick fans. They had actually met Andy back in, back in the day when he was working on Danger. And July 2005 comes along and Google ends up just acquiring Android. Before they've shipped anything, they're a long way away from shipping anything. Deal terms not announced. This was a small team, hadn't raised any venture in Palo Alto. Rumored to be about $50 million. And what's interesting is that many years later, David Lawrie, who was at one point head of Google's corporate development in 2010.

• 14:22David Rosenthal?

  He's being interviewed and he calls this Google's, quote, "best deal ever." So they've acquired this company. It's Andy and team. They're working on this operating system. Immediately, you know, Google had just gone public a year before. Lots of rumors start circling about what Google is up to here. You know, are they working on the G-Phone? You know, this is kind of like the G-Drive that we talked about.

• 14:44Speaker 00

  That's right.

• 14:45David Rosenthal?

  With Google Docs, the Rightly acquisition. For years, people are speculating what is going on here, what is going on here, and there's no G-Phone. Andy and team are working away for years. And so, pretty much, nothing happens until 2007. And then in January 2007, the world changes.

• 15:07Speaker 00

  Yep.

• 15:08David Rosenthal?

  Steve Jobs announces the iPhone.

• 15:11Speaker 00

  The breakthrough internet communications device where nobody really understands what he's talking about.

• 15:16David Rosenthal?

  It's a phone. It's an iPod. It's a breakthrough internet communications device. One of the best, one of the best product launches and speeches and presentations of all time.

• 15:30Speaker 00

  Yep.

• 15:31David Rosenthal?

  So that happens in January 2007. Meanwhile, Andy and team within Google had been working on the operating system and they'd been working with hardware partners about what the phones that they would ultimately bring to market would look like. And they were working with HTC. And they had a prototype and it looked a lot like the Palm Trio. If you remember that, it was not a touchscreen. It had BlackBerry-like keys on it.

• 15:56Speaker 00

  Right.

• 15:58David Rosenthal?

  I'm not sure if it had a stylus. It may. And so then they watched the iPhone announcement, which, you know, at the time, it was amazing. Like, I lined up for the first iPhone. Like, I couldn't wait to get it. But like-

• 16:10Speaker 00

  I lined up for the first iPhone and didn't buy one. I was young and did not have any money and it was like, I couldn't pay for the data plan, but I wanted to be part of it.

• 16:20David Rosenthal?

  That's amazing. So I was lucky. I had just graduated from college when it came out that summer, literally. And this was the first cellphone I bought. Like, I went off my parents' plan, got my own plan, just so I could get an iPhone.

• 16:32Speaker 00

  That's right, because they launched special iPhone plans that didn't include family plans.

• 16:36David Rosenthal?

  Because it was, we'll get back to this, it was an exclusive with AT&T. And, which becomes quite important later. So this happened and, you know, consumers were dying to get this thing. I think people were calling it the God phone. But this is also the time Steve Ballmer is saying, like, you know, literally laughing about it, like, a lot of- Corporate tech and big companies are really discounting the transformative power that the iPhone's about to have here.

• 17:05Speaker 00

  And meanwhile, there was a great story about a bunch of RIM employees that were sitting around that watched the keynote and said it was fake. They were like, there is literally no way to do this. We've tried, this is not, you can't get scroll performance like that. You can't make it, you can't make a screen like that. And it's amazing how you can get Steve Ballmer dismissing it, while simultaneously the BlackBerry guys don't even believe it's possible to do that stuff.

• 17:34David Rosenthal?

  It's interesting to look at the spectrum of reactions here. You've got Steve Ballmer, who just dismisses it. The BlackBerry guys are in denial. And the Google reaction, so there's an engineer later, an interview later with Google engineer Chris Tesalvo, who was working on Android at the time, and he said, quote, "What we had suddenly looked just so 90s." It's one of those things that is so obvious when you see it. And they realized that they had to go back to the drawing board immediately, that this was game changing.

• 18:07Speaker 00

  Wow.

• 18:08David Rosenthal?

  So this was January 2007, and they had these prototypes that were pretty far along with HTC.

• 18:14Speaker 00

  And had they started the Open Handset Alliance?

• 18:17David Rosenthal?

  That comes in a minute. But they scrap everything. They realize, hey, the world has changed. We now need to compete with the iPhone. So later that year, in November, Google, and it's interesting the timing here, we don't know when they were originally planning to do this, but they ended up doing it in November. So after the iPhone had launched, they have a big event, and they announce the Android operating system. And they also announce, equally importantly, the Open Handset Alliance. And so the Open Handset Alliance, they have HTC, Sony, Samsung, Sprint, T-Mobile, and Qualcomm. So like the whole phone ecosystem, the whole stack.

• 18:57Speaker 00

  Manufacturer, they're the operating system, they have the carriers.

• 19:00David Rosenthal?

  Yep. And this is for all of these players in the ecosystem. If they don't realize already, this is the only way they're going to do it. Stand up to Apple is they all need to work together and there needs to be this open operating system tying it all together, which becomes Android. So they announced both at the same time. And what's super interesting is as part of the announcement, they also have the $10 million Android challenge. So they make it super clear, Google does, that Android is an open operating system. And that means two things. One, it's open source. So anybody can use it. And later on, this leads to forks of Android like Cyanogen, like the Kindle Fire.

• 19:38Speaker 00

  Xiaomi as an entire company.

• 19:40David Rosenthal?

  Become super important later. But that's it's completely free. Anybody can take the Android software and do whatever they want with it. The other part of open that Google really focuses on is developers can develop for the platform. So this was before the iPhone iOS was not yet open to developers.

• 19:56Speaker 00

  WWDC in July or in June of 2008 is when Apple got walked back there. You can make web apps and announce the App Store.

• 20:04David Rosenthal?

  Yep. And Steve Jobs would initially was, you know, his posturing was, we don't want developers. We want to control everything of the software stack. And hard to imagine what the iPhone would be like today, if there were not third party developers.

• 20:19Speaker 00

  Not successful.

• 20:21David Rosenthal?

  Well, it's interesting. I mean, Google kind of pushes them towards this with when they make Android open and developers start to realize the massive reach with, you know, there are however many computers there are PCs there are in the world and web browsers, but there's a lot more phones.

• 20:38Speaker 00

  Yeah.

• 20:38David Rosenthal?

  And they can reach this huge consumer base. So this really is sort of like, Google's kind of putting a flag in the ground and saying, hey, we're open. That means two things. We're open to the entire hardware and supply chain ecosystem, but much more importantly, in the long term, we're open to developers. So that was, that was November 2007. But remember, they realized like they couldn't compete with the iPhone. So they end up not shipping the first Android phone until almost a year later in October 2008. And that's when the HTC Dream slash in the US, the T-Mobile G1.

• 21:18David Rosenthal?

  Uh, is the first Android phone, the, the much vaunted, anticipated Google phone.

• 21:24Speaker 00

  And that's still.

• 21:24David Rosenthal?

  Comes out.

• 21:25Speaker 00

  That's still at a keyboard, right?

• 21:26David Rosenthal?

  Still at a keyboard, so it was a touchscreen. Um, and it had a, it had a scroll wheel on it.

• 21:33Speaker 00

  That's right.

• 21:33David Rosenthal?

  Uh, and physical hardware buttons, which were part of Android for a long time. Um, and then it had a slide out, full QWERTY keyboard, uh, much like, uh, much like the sidekick that slid out, uh, horizontally from the device.

• 21:47Speaker 00

  Huh.

• 21:47David Rosenthal?

  Super interesting. So it doesn't really look anything like the iPhone. It's kinda its own thing. Um, but this is, this is the first, uh, the first Android phone that finally comes to market. So with T-Mobile, made by HTC. Um, and it comes out sort of just in time for the holidays of 2008. Doesn't really make much of a splash. You know, at this point, the iPhone, um, you know, the growth in iPhone shipments by today's standards are slow. But at the time it was like completely taking off. Clear that this was a hit.

• 22:21Speaker 00

  And I remember Steve Jobs on stage saying that their goal for the, I think it was their goal for the first year of the iPhone was to capture 1% of phones. I, I don't think he said smartphones, that he intentionally.

• 22:34David Rosenthal?

  I think he, I believe it was intentionally.

• 22:36Speaker 00

  Cause they, they didn't want to acknowledge that smartphones were a category, much like they never acknowledged netbooks or.

• 22:42David Rosenthal?

  Right.

• 22:42Speaker 00

  I think like it's, it's amazing. Looking back like their, their hope was to get 1%. And I think that's, that's kinda what they tracked actually that, that first year, but then the explosion after that never could have predicted.

• 22:53David Rosenthal?

  And then, and then the market just completely exploded. So, um, so it wasn't actually then until around the holiday season of 2009. That Google, you know, who, who knows how much Google drove this, but essentially the rest of the wireless phone industry ecosystem, except for Apple. Realized they have a big problem.

• 23:14Speaker 00

  Yep.

• 23:14David Rosenthal?

  A big, big problem because the iPhone is on its way, you know, at this point, uh, 3G has been launched. So, uh, that was one of the big things with the original iPhone. Oh, like it's great, but like it's slow.

• 23:26Speaker 00

  And 3G was out, but Apple, it was one of those things where Apple had been working on the iPhone for so long that the only thing they could get to market by July of 2007 was an, an edge.

• 23:36David Rosenthal?

  Was edge, yep.

• 23:37Speaker 00

  And then what, uh, oh, eight.

• 23:38David Rosenthal?

  Quote, 2.5G.

• 23:40Speaker 00

  That's right.

• 23:40David Rosenthal?

  Remember Ben?

• 23:41Speaker 00

  That's right.

• 23:42David Rosenthal?

  And by 2009, Apple then opened up iOS to developers. So that wasn't even an advantage anymore. And, and the amount of, so remember iPhone was still exclusive to AT&T at this point in the US. And AT&T is just raking in subscribers at this point, becoming, it was already, I believe it was already the largest phone network before the iPhone. And at this point, you know, Verizon, Sprint, T-Mobile have huge, huge issues.

• 24:15Speaker 00

  Yeah, that's gotta be one of the best partnership or exclusivity agreements in the history of the American corporation is, is AT&T strapping itself to the iPhone as a rocket.

• 24:25David Rosenthal?

  Yep.

• 24:26Speaker 00

  I mean, the, the thing that paints it in my mind for how, like, how big a deal that was, is how big a deal the opposite was. Like how widely anticipated the Verizon iPhone was. And when the Verizon iPhone came out, how crazy all my friends went that were non AT&T with all this incredible pent up demand for it.

• 24:43David Rosenthal?

  Which, which is interesting that by holiday 2009, there's finally been enough time in the product cycle that Verizon, Google, everybody else, all the handset makers, realize they gotta do something. And so Verizon launches the Droid in 2009.

• 24:59Speaker 00

  And they paid Lucasfilm every single time the word Droid was mentioned.

• 25:04David Rosenthal?

  Isn't that amazing?

• 25:04Speaker 00

  It's at the bottom of every magazine ad. It's, it's so awesome that they were like, yeah, screwed. It's worth it.

• 25:10David Rosenthal?

  It's total, it's worth it. And, and I mean, this was, in a lot of ways, this was a phone ahead of its time.

• 25:15Speaker 00

  Yep.

• 25:15David Rosenthal?

  But the whole positioning was against the iPhone here. It was, the, the campaign was called Droid Does. And this was like the, you know, the old Mac and PC campaigns, but in reverse. It was like, well, your iPhone doesn't do X, but Droid does.

• 25:28Speaker 00

  That's right. And that, that, this is like the full swing of the, the smartphone wars heating up where now we've sort of settled into this place where, you know, Android's got about 80% of the people, iPhone's got about 20% of the people, but iPhone people pay, you know, for apps and, and much more so than Android people. And it's interesting how it's reached this almost like, like not a peace treaty, but like, it's, it's like, we thought there was going to be one winner. In the smartphone wars and it was going to be a crazy five year thing and one person

• 25:55David Rosenthal?

  We thought it was going to be Microsoft and Apple all over again.

• 25:58Speaker 00

  Right, right. And it's interesting how we've reached this equilibrium where like the world exists in a multi-platform way, kind of sustainably for at least this, this set of years.

• 26:07David Rosenthal?

  This moment in time, yep.

• 26:08Speaker 00

  And, and then the, the, in that initial droid does thing, they, they intentionally, like, it was confusing to people that you could get an Android, but it wasn't from Google and it wasn't called an Android.

• 26:23David Rosenthal?

  Yep.

• 26:23Speaker 00

  And so I think it was like an intentional move to say, you know what? We're just gonna like, just like lean into that. The phone's going to be called a droid. It's the main one we're going to market. We're not going to have Android be a consumer brand.

• 26:35David Rosenthal?

  Yep.

• 26:35Speaker 00

  And it was amazing how, how many people-

• 26:37David Rosenthal?

  And important to remember too, who made the, the droid? It was Motorola, which we'll get to in a sec.

• 26:43Speaker 00

  Oh, yeah, yeah. But as, I guess my point is like, it's amazing how it was in most people's lexicon to ask, do you have an iPhone or a droid?

• 26:50David Rosenthal?

  Yeah. It wasn't Android, it was a droid.

• 26:52Speaker 00

  Yeah.

• 26:54David Rosenthal?

  So yeah, everything you're, you're saying Ben, I mean, this was like, these were the holy wars of mobile that, that got kicked off with the droid. And, um, and, uh, so basically from 2010 to kind of 2012 ish, there's just this race where everybody who's not Apple in the ecosystem is racing to copy Apple and then try and surpass if they can, but even just get to parity. And that's, you know, towards the end of that time, that's when you see Samsung really emerging. I mean, they were the most shameless, just literally ripped wholesale, everything from the iPhone, but it worked.

• 27:29Speaker 00

  And so fast, like two months after Apple would announce something like, some team at, at Samsung would get to it, work all night and then they'd rush it to market and then they'd announce that it exists. And then like, you know, there'd be, maybe you could get them from the supply chain, maybe you couldn't, but like, they put a stake in the ground that like, yes, Samsung has this too. And you see it all the way through like Touch ID, like they had-

• 27:52David Rosenthal?

  Slide to unlock, like there was a big fight about that.

• 27:55Speaker 00

  Yep, yep.

• 27:57David Rosenthal?

  And to the bitterness involved here. So Steve Jobs is towards the end of his life at this point. And, and the Walter Isaacson biography that comes out, which is this incredible book, he has this quote in there, he says, "I will spend my last dying breath if I need to, and I will spend every penny of Apple's 40 billion in the bank." Funny that at the time, Apple only had 40 billion in the bank. Like, that's cute, right? "To right this wrong, I'm going to destroy Android because it's a stolen product. I'm willing to go thermonuclear war on this." This is incredible. But this was, this was the height, you know, and so

• 28:40David Rosenthal?

  that comes out and then, and then Vic Gondor-

• 28:43Speaker 00

  I miss that guy.

• 28:44David Rosenthal?

  Incredible. It's amazing like how much the world has changed, though, from his vision, you know, when he was alive, and how different things are now, you know, like the famous quote, like, if you see, that Steve said-

• 28:57Speaker 00

  If you see a stylist, we blew it. Did you hear the interview with Tim Cook a couple of weeks ago that they asked, they, I forget who did it, but in Apple's recent little PR rush, they asked Tim Cook about that exact thing, and they're trying to push him on the point that like, are you guys blowing it? And, and Tim starts with, "Well, first of all, it's a pencil, not a stylist."

• 29:16David Rosenthal?

  Love it.

• 29:17Speaker 00

  I love Apple marketing.

• 29:20David Rosenthal?

  What would Steve have said? But Tim isn't Steve, which is the point, and Apple is not.

• 29:28Speaker 00

  Tim did recently, you know, the last couple of years, refer to the Android ecosystem as a toxic hell stew. Or I think he pointed out, it was like a quote ripped from a writer that they put up on the stage at Apple.

• 29:39David Rosenthal?

  So, you know, Google doesn't just like, take this lying down, they, you know, they strike back. And, and so Vic Gondotra, who is a longtime exec at, at Google, and I believe founder of or in charge of Google Plus at one point, that was, that was a low mark on, on his, his time there. But at, at I O, Google's big conference in 2010-

• 30:04David Rosenthal?

  Vic's asked about this and Steve's quote and Apple's feelings about it. And he says, if Google did act, this is a quote, if Google did act, we faced a draconian future, a future where one man, one company, one device, one carrier would be our only choice. That's a future we don't want.

• 30:22Speaker 00

  Yeah, it's a very noble way to approach.

• 30:25David Rosenthal?

  It's like the famous Apple 1984 commercial. It's like, Apple is now the man talking on the screen and Google and Android is throwing the hammer at it.

• 30:36Speaker 00

  Yeah, if you can find a way to position yourself as an underdog, even if you have a monopoly in search and are one of the largest technology companies in the world, by God, you should do it.

• 30:43David Rosenthal?

  Absolutely. I mean, they're literally out Apple-ing Apple at Apple's own game here. And so it was a war. And at the time, so many, everybody in the press, everybody in the tech world was, is Android going to win? Is iOS going to win? What's going to happen? What should I? And startups, at the time, our portfolio companies, and as we were talking to new investments, it's like, well, what are you going to develop for? Like, it was a big question then, because it was really hard to develop for both.

• 31:14Speaker 00

  Right. I guess it's probably a good time to say for new listeners, David's a VC here at Madrona Venture Group. We're recording out of their offices this weekend. And I'm over at Pioneer Square Labs, just down the street, and we're a startup studio. So it's probably helpful to have some context on like.

• 31:28David Rosenthal?

  Who we are and what we're doing. And a couple other side notes that, one that is more a quirk of history, but is just too fun not to talk about here. In August of 2010, HTC acquires a majority stake in Beats, Beats Audio. And as a result of that, from 2011 to 2012, 2013-ish, you can still go buy these things on Amazon, which is amazing. We will link to this in the show notes. There are Beats branded Android phones out there on the market, HTC phones.

• 32:05Speaker 00

  I kind of want to buy one and bring it to my next meeting at Apple, pretending it's like my phone and see what happens.

• 32:12David Rosenthal?

  That would be amazing. Total quirk of history. I mean, HTC was bundling Beats headphones with their Android phones for a while when they were selling them. Hard to imagine that in today's world of Beats being part of Apple.

• 32:28Speaker 00

  I know.

• 32:29David Rosenthal?

  Also makes me realize just like, just how small the technology world is. I feel like we talk about this a lot on the show, but like, whether it's, you know, Mark Laurie, you know, had worked at Amazon and Amazon had acquired his last company and then he's vowing to destroy them. Or, you know, all the companies that came out of PayPal or Photoshop and Pixar that came out of Lucasfilm. Like, it's really a, it's a small world in this, in this corner of the economy here.

• 32:54Speaker 00

  It is. And the other, it's funny, these are like, not, I guess they're sort of tech themes, like themes of the show. It, it's funny how long things seem in our mind and how short they were in number of years. Like when Apple launched the iPhone in 2007, Android had not been announced yet and they were not at war. They were so friendly that like Eric Schmidt was on Apple's board.

• 33:21David Rosenthal?

  Yeah, came onstage in, in, at the launch of the iPhone and talked about how Google was going to be an integral part of the iPhone.

• 33:29Speaker 00

  And it was. I mean, Google Maps was a huge, like, that was a tent pole feature of-

• 33:33David Rosenthal?

  Not to mention Google Search, which we will get into in a minute.

• 33:36Speaker 00

  Indeed. But it's incredible how fast these companies became at each other's throats and completely separated. I mean, if you, the, the way that companies are direct competitors, like if you go back 20 years, Apple and Microsoft are direct competitors and hate each other and Google's like, like this benevolent, you know, hands off, we serve all group. And in a very, in very short order, from 2007 to 2009, it became Apple and Google at each other's throats. And fast forward to today, where like, Microsoft services are all over all these platforms. And like, Apple's partnering with Microsoft on a lot of things.

• 34:14Speaker 00

  And another crazy example, like, Apple launching this big enterprise partnership with IBM, like how fast the world changes.

• 34:22David Rosenthal?

  And you were in the middle of this. I mean, you were one of the original folks on office for iPad.

• 34:27Speaker 00

  I was, I was, yeah, that was a, that was a heck of a project.

• 34:30David Rosenthal?

  So we'll get more into this in a minute, but I think it was, I mean, this is a little flash forward to tech themes for me. But I think the reason this was happening was like- All these big tech companies realized all of a sudden that this was the opening of a new frontier and a new market, the mobile market that was going to be literally the biggest market that technology and maybe the world had ever seen.

• 34:53Speaker 00

  Yeah.

• 34:54David Rosenthal?

  I mean, because Apple becomes the world's most valuable company during this time period. So all these companies are realizing that you're going to have, you know, first a couple hundred million people in the United States and then a billion people around the world and then, and then multiple billions of people and ultimately every person in the world, when we get to the end state, you know, still a couple of years hence from now, is going to be coming online, buying a smartphone, having access to technology for the first time. And, you know, as friendly as Apple and Google were before this, all of a sudden it's a race to go capture this market. But I think the mistake that they made is, or at least that, um, I don't know that it was a mistake, but the fight that they were fighting at first wasn't the right fight. They were fighting for the like hardware layer.

• 35:39Speaker 00

  Right.

• 35:40David Rosenthal?

  And.

• 35:40Speaker 00

  Well, was, the question is, was Google doing that at first? Like, why, why did Google? So this is, this is sort of as we transition from the, the history and facts into more of like our analysis portion. Where we are today, it's very clear that the reason that Android needs to exist is to prevent Apple from being the front door for users to use Google services. Like, Google can't afford to give up that control, number one, in case, you know, people are going to use other services instead of Google services, namely Google Search, where all their money comes from, or all the revenue comes from.

• 36:14David Rosenthal?

  Yep.

• 36:14Speaker 00

  And secondarily, there is an agreement that gets signed with people who are sending traffic to Google. And I may as well just come out and start with this number right now. Thirty-four percent of Google Search revenue from their, their AdSense, right?

• 36:31David Rosenthal?

  Well, it's Edwards. So what Ben's referring to, one of the, for our new listeners, one of the things that we love on this show is lawsuits, not targeted at us, but between the companies that we cover, because all sorts of really interesting things come out in lawsuits. And in, over the last few years, Oracle has been waging a lawsuit against Google for Google's and Android's use of Java in creating, and Java's APIs in creating Android. And one of the things that came out in that lawsuit is how much money Google pays Apple for having Google search as the default search on the iPhone. And it's pretty incredible.

• 37:13Speaker 00

  Yeah, the amazing thing, David and I were like looking, poring over the lawsuit and thinking about this, it's not a flat fee. Like, Apple gets 34% of all the search revenue that comes from their platform.

• 37:26David Rosenthal?

  Yeah, somewhere in the neighborhood of 34%. It was at one time around that. It's a lot of this part of the lawsuit, Google freaked out about and had sealed, but for a moment, it was public how this worked.

• 37:37Speaker 00

  So in 2015, estimates from Goldman Sachs are that Google did about $15 billion of revenue from their mobile search. And so Apple has about 18% of the global market share. So if you kind of figure out what that comes to, it's about $918 million by that calculation, or as released in these documents, about $1 billion that Google paid to Apple for Apple to be using or directing people to Google search. So then you start thinking about, okay, the strategy for Android, as it is today, is very clearly to basically get free customers, basically get people that are already Google's customers to directly

• 38:21Speaker 00

  interface with Google and search. And that way, Google doesn't have to pay that revenue split to anybody else for access to those users.

• 38:28David Rosenthal?

  And this is something I didn't really realize until we started doing the research for this episode, but is kind of mind blowing if you think about it. Like, A, Apple is getting a percentage of AdWords, Google AdWords revenue that happens on the iPhone. Like, that's crazy, one. But two, like, it all makes sense for Google now. Like, to the extent that people use Android phones or use the Chrome browser on the iPhone instead of Safari, or any one of a number of ways that people are searching on platforms that are owned by Google versus, or at least controlled by Google, versus other platforms where they have to pay out, you know, revenue shares.

• 39:13David Rosenthal?

  Like, it's just a, it's a no-brainer.

• 39:15Speaker 00

  Yeah, like, the case for, like, basically, Google is a company that makes money when people search and then click on ads. Like, that is, that is, they do all these other things, but that's the red butter.

• 39:23David Rosenthal?

  And if people search on properties that are not Google, even indirectly, like, they're searching on Google, but they're doing it in the Safari browser.

• 39:29Speaker 00

  Yep.

• 39:29David Rosenthal?

  Google has to pay a tax every time that happens.

• 39:33Speaker 00

  Yeah, and so their, Google basically is, is, uh, the entire reason that Android exists is so that Google doesn't need to pay for access to their own existing customers. And what mobile did was it inserted this new wedge into, you know, Google already had this relationship where everybody, you know, opened up their computer and Google was their, their homepage and they would search, or it was built into browsers through all these agreements they had cut. Mobile opens this opportunity for, all of a sudden, there's this whole new platform with, with all these people that have switched over to it and all these people that are...

• 40:09David Rosenthal?

  Coming online for the first time.

• 40:10Speaker 00

  For the first time, yeah. And not only does Google have to make sure that those places don't use their competitors, smaller, smaller as they may be, but they actually have to pay to get the, you know, pay a cut of their revenue for the, the privilege of being the, the default search there. So, when you kind of take a step back, like, the, the strategy for Android, the strategy for the, the reason Chrome exists, like, these things are all the same. And it's to make sure that no one else is inserted between the revenue generated by clicking on ads from search and their customers.

• 40:45David Rosenthal?

  And it's interesting, right? Like, uh, Wall Street and plenty of other... Analysts that are looking at Google, they always throw stones at Google and they say like, oh, come on, like this company can't succeed at anything except AdWords. Like, none of their products make any money. Android doesn't make any money. YouTube doesn't make any money, as we talked about, which I still feel good about our grade on YouTube, but Chrome doesn't make any money.

• 41:09Speaker 00

  We give it a C for the record.

• 41:10David Rosenthal?

  Yep. But, but the reality is things like Android, things like Chrome are huge economic value to, to Google.

• 41:21Speaker 00

  Yeah. Yeah, it's, I mean, it's a, it's providing defensibility to Google's business.

• 41:27David Rosenthal?

  Yep.

• 41:28Speaker 00

  And so to, to, to carry out that calculation a little, a little bit. So then if you run the flip side of that, since Google has 80% market share, so you look at the 80% of people that are searching on phones and generating that, that $15 billion of, of Google search revenue a year right now. If you take that 34% that they don't have to pay out to other people, Android is effectively saving them $4 billion a year just on that because Google doesn't have to pay for that traffic.

• 41:59David Rosenthal?

  Which is pretty incredible.

• 42:00Ben Gilbert?

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

• 42:14David Rosenthal?

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

• 42:28Ben 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.

• 42:38David 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.

• 42:56Ben Gilbert?

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

• 43:12David Rosenthal?

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

• 43:29Ben 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?

• 43:38David 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. All right, two things real quick to wrap up history and facts, and then we'll move on to acquisition category. One, I mentioned Motorola earlier. So Google makes this move that is in some ways completely brilliant and in other ways completely boneheaded, where they buy Motorola in August of 2011 for $12.5 billion. And they say at the time that the primary driver of this was Motorola's patent portfolio. And this is the brilliant part of it. Apple, Oracle, as we've

• 44:21David Rosenthal?

  already talked about, Microsoft, many others, the phone companies, there starts to be a lot of litigation happening in this space and people are enforcing patents and defending patents. And Google, being a much younger company than these other firms, didn't have the kind of patent bench strength that they did. So Google buys Motorola, very old company, gets all of their patent portfolio, and that helps defend Google in things like the Oracle case. But the second part of the deal was, oh, well, now we're going to have a unified stack within Google from operating system up through the hardware. We're going to make these incredible phones. Didn't happen.

• 45:02Ben Gilbert?

  Didn't go so well.

• 45:03David Rosenthal?

  Didn't happen. So they end up selling the assets of Motorola to Lenovo for $2.9 billion, a lot less than 12.5. But to the extent they save themselves from multiple billion-dollar judgments against them. May have been successful. The other interesting thing that's going to become very relevant as we do the analysis here. In 2010, a company in China is founded called Xiaomi, which I presume a lot of our listeners are familiar with, but for those who aren't, this is, you know, people refer to this as the quote unquote "Apple of China."

• 45:36Speaker 00

  And if you've seen that written, that's X-I-A-O-M-I.

• 45:40David Rosenthal?

  Yep. And, and so at this point, uh, sitting here in September 2016, Uber, I believe, is the most highly valued private company, technology company in the world. Xiaomi, I believe, is the second valued at somewhere, I believe, between 40 and 50 billion dollars in their last financing. And Xiaomi is interesting, like they, much like Samsung and others, you know, uh, have been accused of just copying the iPhone. But what Xiaomi did, uh, has done, Samsung was completely reliant on Google. Um, you know, they just made the hardware and then they had some software, you know, skins, quote unquote, that they would put on top of Android, but it's running Google Android.

• 46:23David Rosenthal?

  Xiaomi, as we talked about, completely forked Android, um, have taken over, have their own branch of Android that they fully control. There's a startup called Cyanogen, uh, that has also done the same thing, that only distributes the operating system.

• 46:38Speaker 00

  And Kindle Fire does the same.

• 46:40David Rosenthal?

  Kindle Fire, Amazon does this with Kindle Fire. And Xiaomi basically leveraged open source Android to, uh, compete with Apple. And so they make beautiful, uh, relatively low cost devices, sell them in China, they're wildly popular, um, and they run a version of Android that Xiaomi has completely locked down and controls.

• 46:59Speaker 00

  And this is a good time to, um, to draw the line between what is the Android open source project and what is Android as licensed from Google. So, um, you can get, uh, Android absolutely for free from Google, um, and it comes with all the services that, that Google does, Google Maps, Gmail, uh, most importantly, access to the Play Store and all the apps in there. Or you can go get the source code yourself and you can fork it and you can, uh, you can just use Android's source code. But the major disadvantage there is you don't have access on your platform to the Play Store and you don't have access to all these services. So you really have to not only go

• 47:42Speaker 00

  and build that yourself, all those, you know, a mail app.

• 47:45David Rosenthal?

  Or plug in other partners.

• 47:46Speaker 00

  Right, right. But you actually have to build an entire new developer ecosystem. Like, Amazon has to go around and convince everyone to submit to the Amazon App Store and the Google Play Store. And that, you know, requires a little bit of work from each developer. Generally worth it, but you kind of have this new cold start problem. And so what Google sort of has an advantage here is for people who care about, for manufacturers that care about having access to all the apps in the Play Store and all those services, they're just going to roll with stock Android and then Google gets to make sure that you don't change any of the search or services away from them.

• 48:22David Rosenthal?

  Yep. All right. Sorry, that was a long one. There is so much to cover here with Android.

• 48:28Speaker 00

  Yeah, David, do you think that, so we've kind of talked about like what the point of Android is right now. Do you think that was the strategy when they acquired it and when they started getting into the mobile game? Like, why was mobile going to be important to Google in 2005?

• 48:40David Rosenthal?

  I don't, I don't know, but I don't think there was any way anyone could have foretold what was going to happen, you know, in this market. I think this was a great buy by Google of a really talented team working on some really cool technology that had a lot of potential. But, I mean, well, Google probably knew about the iPhone because Eric Schmidt was on Steve Jobs's board at Apple. But I don't think anybody really could have figured out exactly how this was going to play out. But, but major, you know, Google has done an amazing job with Android in terms of shepherding it through this wildly complex, you know,

• 49:23David Rosenthal?

  gyrations in the market that, by the way, completely killed BlackBerry. So like, a company that was many multibillion dollar company that was the leader in smartphones just decimated, gone.

• 49:35Speaker 00

  Yeah.

• 49:36David Rosenthal?

  You know, and, and Microsoft in a lot of ways, too. You know, obviously, Microsoft is having a resurgence now and didn't, wasn't destroyed. But they were like one of the leading mobile operating system providers. And now that's gone. Google really has done a great job shepherding this.

• 49:55Speaker 00

  Yeah. That's a great point. All right. Do you want to move on to acquisition category?

• 50:00David Rosenthal?

  Absolutely.

• 50:01Speaker 00

  Awesome. I am going to go with technology here. Other choices, people, product, business line, asset or other. I don't think, my initial inclination was product, but this was so early that what they were acquiring was not a complete product and not something they could go to market with. And something that didn't have its own independent, fully fleshed out strategy.

• 50:23David Rosenthal?

  Yep.

• 50:24Speaker 00

  And what they were really buying was kind of this core, core technology that has actually,

• 50:31Speaker 00

  no one else really went out and tried to build that. Like it clearly is a difficult piece of technology to build because.

• 50:37David Rosenthal?

  Surprising though, too, because like clearly it's difficult, but it was, it itself was based on Linux. Somebody else could have also taken Linux and you know, the Android team was a super small team when, hadn't raised any VC when Google bought it.

• 50:50Speaker 00

  Yeah. And now there's no incentive to go out and build anything else because like if you were going to build anything else, you'd have the cold start problem on all those services.

• 50:57David Rosenthal?

  Well, everybody's already on iOS and Android. So.

• 51:00Speaker 00

  Right. But it is interesting how you know, Google has this core technology and access to services that it licenses out. And the, I guess it's a free license, but at the very core of that is this technology that they acquired.

• 51:15David Rosenthal?

  Yep. I basically gave my answer to this earlier, which, which I won't repeat all of it, but I completely agree. This was a technology acquisition when they bought it. And then Google has done just this incredible job of shepherding it through. You know, I actually wrote down that it was a technology acquisition with a little bit of some great talent when they bought it. But over time, this has gone from a technology to a product, to a business line, and now an asset at Google. And it's really been under the, under the stewardship of the whole company.

• 51:50Speaker 00

  And it's amazing how it's an asset of defensibility. I mean, really the, the core thing they get from, from Android, in my opinion, is making sure they don't lose access to all of those people searching. And for as many of these interesting moonshots as Google is working on and self-driving cars truly could be a very different business for them and a very big and profitable one that actually rivals search. Like Google makes money from having a marketplace of ads when you search. And you know, sometimes on other websites. And I think that when you boil it down. They bought defensibility and more importantly, like it was a cheap buy. What they did was invest 10 years into building a entire, you know, arm of their business to provide

• 52:35Speaker 00

  defensibility.

• 52:38David Rosenthal?

  Totally agree. Should we move on to what would have happened otherwise?

• 52:41Speaker 00

  Yeah. Yeah. So I was thinking about this one earlier and my core question is, I guess it's two. Could and would Google have built themselves into the position that they're in today if they had not made the Android acquisition?

• 52:59David Rosenthal?

  Ah, interesting. We usually think about what would have happened otherwise from the startups perspective.

• 53:05Speaker 00

  Where's that company going to land?

• 53:06David Rosenthal?

  Which here I think is an interest is an easy question to answer because there's no way, the playing field was so massive here as this market evolved, there's no way a small independent company could have had this scale of impact. So I don't think Android, it probably would have been bought by somebody else or failed on its own. But, but yeah, for Google, could they have done this without buying Android?

• 53:31Speaker 00

  Like, did they, in, in, let's say hypothetically, they had the foresight to know that the world would be the way it is today.

• 53:38David Rosenthal?

  Which again, they knew what Apple was up to.

• 53:40Speaker 00

  Yep. And, and they, they knew they would need a competitive mobile operating system, or maybe even actual phones to make sure that they owned that customer relationship to funnel people to search. Then you have a build or buy decision and 50 million is a, is like, you know, like, let's say they were going to staff a team to go and build basically Android in-house. It feels like it's close.

• 54:09David Rosenthal?

  Yeah.

• 54:09Speaker 00

  Like, it feels like this was not an outlandish.

• 54:13David Rosenthal?

  Well, and especially back then, I mean, Google was the darling of Silicon Valley. Like, everybody wanted to work there. They'd just gone public.

• 54:20Speaker 00

  Yeah.

• 54:22David Rosenthal?

  Certainly, they could have done it. The question I think is, would they have? You know, they, they bought Android.

• 54:30David Rosenthal?

  At least part of it was, you know, Larry and Sergey were sidekick fans, right? And they knew Andy. And Google's M and A strategy has always been about acquiring really talented teams and having those people come into Google and see what they do.

• 54:47David Rosenthal?

  And in this case, they hit it out of the park. Would, would anyone at Google have been enough of a champion and visionary about what was going to happen to do this? Otherwise?

• 54:57Speaker 00

  Did you need an Andy Rubin to kind of be at the helm of that?

• 55:00David Rosenthal?

  And like, you know, like we said in the beginning, I mean, Andy was born to start this company. I mean, his whole career to this point, you know, I mean, as Steve Jobs says, you know, you can only connect the docs, dots looking backwards, not forwards, but looking backwards. I mean, it's hard to imagine anyone more qualified or who had been thinking about this problem about how do you create a really compelling mobile computer and operating, you know, system and experience than Andy?

• 55:28Speaker 00

  Yeah, you're right. And the thing that keeps tugging at me is you could see a very classic Microsoft way to go about this where, where Google says, okay, we gotta have phones. We're not going to make the phones. We're going to make the operating system. We're going to charge for the operating system. But Android already had this whole open source thing going on. And they said, you know, we're going to be completely open source. We, uh, they hadn't figured out the like, you know, license package with Google services.

• 55:54David Rosenthal?

  Built on Linux.

• 55:55Speaker 00

  But like, what was that? Yeah, built on Linux. Was that a forcing function to make Google go into this business strategy of give it away for free? Or would Google have arrived at this give it away for free business strategy on their own if they hadn't acquired Android? And one thing that just popped in my head is you could make the case that, well, compared to the insane business that searches, they shouldn't be in the business of selling individual software licenses, right? But they're doing it with Google Apps. Like if you're a, it's this like tiny portion of their revenue, but they, they haven't like totally shied away from the traditional business model of, of like a.

• 56:33David Rosenthal?

  Yeah. And it's, I mean, if you think about the grade that we gave Google Docs, which is a big part of Google Apps. I can't remember exactly what it was, but it was, it was not an A.

• 56:42Speaker 00

  Yeah.

• 56:44David Rosenthal?

  We haven't graded Android yet, more to discuss, but I'm pretty confident I'm going to be higher than I was on Google Docs.

• 56:50Speaker 00

  Yeah. Yeah, I guess that my, the question in my mind that I don't think we can really answer is,

• 56:59Speaker 00

  yeah, would, would Google have done this very unique open source approach to, to grow insanely quickly and get on everyone's, uh, or get on, you know, 80% of the world's smartphones without acquiring Android?

• 57:12David Rosenthal?

  Yeah. Well, listeners, if any of you were at Google at this time,

• 57:18Speaker 00

  Yeah.

• 57:18David Rosenthal?

  uh, let us know. Uh, we'd love to, uh, we'd love to know.

• 57:22Ben 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.

• 57:36David 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?

• 57:52Ben 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.

• 58:07David 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.

• 58:31Ben 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.

• 58:50David 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.

• 59:20Ben Gilbert?

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

• 59:45David Rosenthal?

  Okay, tech themes?

• 59:48Speaker 00

  We can't go an episode without bringing up Ben Thompson and Stratechery, but you have to own the front door to the customer in this day and age.

• 59:56David Rosenthal?

  And the reason, Ben and I were talking about this before the show too, I mean, I think the reason why that's important in the current, you know, internet information economy that we live in is what the internet has done is it has made distribution free. And in the old world, this is, you know, not taking credit for this, this is Ben Thompson's insight here, you know, in the old industrial world, distribution was really hard. And so you had to aggregate distribution. And if you controlled distribution, the customer was your, your surf, basically in your kingdom.

• 1:00:27Speaker 00

  Yep.

• 1:00:28David Rosenthal?

  But now distribution's free and anybody can build anything. Like we were saying, anybody could have built something on top of Linux, a mobile operating system.

• 1:00:37David Rosenthal?

  So in that world, you need to win the customer and you need to have the best customer experience.

• 1:00:41Speaker 00

  Yep.

• 1:00:42David Rosenthal?

  Yep. That is one of mine too. And I think the, um, the spin that I had on that was, um, if you think about what Microsoft was trying to do at that point in time with Windows Mobile, um, you know, the, the Microsoft way of thinking, uh, which is, is evolving now, but, but certainly still at that point in time was like, we control everything you need to distribute a computing experience to a customer. You know, we have a deep relationship with Intel. We have all the software developers that can make our own proprietary operating system. We don't use open source.

• 1:01:24David Rosenthal?

  And we have relationships with all the carriers, uh, the phone carriers, and we can push this stuff out into market and that's great and people will use it, you know, especially corporate customers because they need it, but like Windows Mobile, especially in that day and age sucked. I believe I had one of those devices at one point in time and it was very frustrating. And, and. They didn't approach it from this way that, you know, Ben, you're talking about, that we're talking about now of like, oh, hey, like, we can just take Linux and build this, you know, and let's build something awesome on top of it.

• 1:01:56Speaker 00

  Right.

• 1:01:57David Rosenthal?

  So that's one, the other one that I wanted to talk about that I referenced earlier was

• 1:02:03David Rosenthal?

  thinking about how the mobile market has played out. It's interesting to see like, you kind of see this in technology that like the area of competition and like what's interesting kind of moves up the stack. So in, you know, in the old PC world, it was like the hardware, you know, was it, you're gonna buy a Mac or you're gonna buy a PC?

• 1:02:24Speaker 00

  Right.

• 1:02:24David Rosenthal?

  And then in the beginning of the phone world, as we talked about, it wasn't really so much about the hardware, whether you're gonna buy, because Google wasn't, and Android wasn't competing in hardware, but it was the services, you know, are you gonna buy an Android phone that has Google services baked into it? Or are you gonna buy an Apple phone that has Apple services? And that Google can still participate in that, but they're paying the Apple tax. What's interesting is I think now that the, you know, the great mobile holy wars are pretty much over as far as we think. I mean, who knows what will happen in the future? The level of competition has kind of further elevated up the stack to the application layer, you know, and like now it's like,

• 1:03:04David Rosenthal?

  and, and well, services, some services, right? But like not core level services, not like operating system level stuff, you know? It's like, are you gonna use Uber or Lyft? Are you going to spend your attention in Snapchat or in Facebook or in Instagram? You know, these are the, these are where money is being made today, and this is where the, the playing field exists. You know, it's not at the level of the operating system anymore. And it's just, you know, and people talk. I think this is kind of a red herring, at least in not in China.

• 1:03:42David Rosenthal?

  But people have talked about like moving even further up into being on top of the messenger ecosystem. And maybe we'll see that happen, you know, and people are talking about bots and Slack bots.

• 1:03:50Speaker 00

  Right. We're on the early, early stage of the hype cycle on those.

• 1:03:53David Rosenthal?

  Early stage of the hype cycle. But it is definitely a theme that you see in technology that like this level of play keeps getting further pushed up the stack.

• 1:04:01Speaker 00

  Yep.

• 1:04:03David Rosenthal?

  Okay.

• 1:04:04Speaker 00

  Totally agreed. Well, I think it's time to grade the acquisition before I throw out my grade. A couple of, uh, here's my, here's my reasoning and logic. So Android makes money for Google in two ways. One is advertisements supplied by Google and shown on, uh, on Android phones. And the other is revenue Google takes from its mobile app store, Google Play. And, uh, we haven't talked much about that yet. That's a, that's a non-trivial amount of money.

• 1:04:30David Rosenthal?

  Yep.

• 1:04:31Speaker 00

  If, uh, since we're, we're going off of the, the data that Oracle opened up in this lawsuit. It's, uh, reported that they had $31 billion of, uh, of revenue per year from Android. And so we, we've seen the estimate that 15% of that, or $15 billion of that is from mobile search revenue. Between, um, iOS and Android largely on, uh, I guess. So it'd be about 12, $12 billion of that because it's all, all from Android. And then you have like, uh, the rest of that is, you know, there's some amount from the, the actual phones that they're selling. Cause Google sells the, the Nexus phones. But then a lot of that, that top line, um, you know, 10 to 15 billion dollars of it is, is from the, the Google Play Store. And Google keeps 30% of that.

• 1:05:16Speaker 00

  So let's say three to $4 billion a year is, uh, is made from, from the actual Play Store. So that in itself, much like how the, the app store for Apple is a great business. You know, compared to their, their other businesses, it's, it's not, um, you know, it's not, not insane, but, um, that in itself would, you know, on a 50, $50 million acquisition would be great. But the, the thing that I think Android really did is, um, ensure that Google was safe for the next decade or two. As the world changed out from under them. And they were at great risk of, uh, losing access to their customers. And they, um, they engineered a strategy here where.

• 1:05:57Speaker 00

  They not only, you know, went and got a lot of those customers kind of back and then made sure that as they transitioned to mobile, they, they stayed with direct access to Google, but and actually even tighter since they never owned the operating system on desktop, but really were the, the primary place to go for the developing world as people came online for the first time. And so I think Google's core asset marches on and is well protected and this is an A+.

• 1:06:27David Rosenthal?

  Yeah.

• 1:06:30David Rosenthal?

  For me, the question about grading this is a question of whether this is an A or an A+. No doubt this was, you know, $50 million for something that has achieved, even, even though it didn't start this way, but over time achieved everything that we've talked about in this episode for Google. Absolutely fantastic. You know, as, as David Lawrie said, you know, perhaps Google's best deal ever.

• 1:06:55Speaker 00

  Yeah. The Goldman number says $22 billion of profit last year from the Android division.

• 1:07:00David Rosenthal?

  Yeah. Incredible. The thing that I'm wrestling with a little bit is in, in trying to determine whether to give the plus or not is this was in many ways, again, I don't think they saw it this way at the time, but this was a defensive acquisition. This was not an offensive acquisition.

• 1:07:21Speaker 00

  Yep.

• 1:07:21David Rosenthal?

  And I'm comparing it with Instagram, which is kind of our gold standard here. Instagram is so much simpler than Android.

• 1:07:28Speaker 00

  I would still say defensive, though.

• 1:07:30David Rosenthal?

  Well, it's interesting, right? Like defensive, yes, existentially, as I guess Android was in some ways too, but not really because people were still going to keep using Google services, whether it was on a Google property or not. Like this was just like preventing them from paying the 30 whatever percent tax.

• 1:07:49David Rosenthal?

  And and lots of other things, too. But Instagram was much more about like, oh, we're gonna up level the playing field now. Like I was talking about in tech themes, like, we're gonna move up the stack. I don't know, I'm struggling with that. Like, part of me feels like I wanna, uh, just the, you know, the like, bold part of me wants to like reward offensive acquisitions and forward thinking acquisitions. Not that Android wasn't, you know, more than defensive.

• 1:08:14Speaker 00

  I would still say that that Instagram was was not a, uh, a bold, offensive, forward thinking. Like, ultimately, they they sell attention to advertisers and they were at risk of losing.

• 1:08:25David Rosenthal?

  Yep, which is the same thing that advertised that Facebook sells.

• 1:08:29Speaker 00

  Yeah, Facebook and Instagram and Google all do the same thing.

• 1:08:33David Rosenthal?

  They all sell attention to advertisers.

• 1:08:35Speaker 00

  Yep. And, uh, I think they they, it was interesting, like, Facebook's move was defensive in that they wanted to make sure that they captured Instagram's attention and could sell that to advertisers, too. Google knew that they were gonna keep getting the attention, but basically wanted to save their margin.

• 1:08:49David Rosenthal?

  A new, a new, yep. And platform on which to do it. Yeah, I'm struggling. I think it's an A plus.

• 1:08:58Speaker 00

  He says in a very defeated tone.

• 1:09:00David Rosenthal?

  Defeated, I'm limping into the A plus here, Ben. But which makes me think, I don't wanna be limping into the A plus, I wanna be charging into the A plus, you know?

• 1:09:10Speaker 00

  Okay, what acquisition ever is an A plus?

• 1:09:13David Rosenthal?

  Instagram.

• 1:09:14Speaker 00

  I mean, Android has already made a lot more money for Google than Instagram has for Facebook.

• 1:09:19David Rosenthal?

  But I think that I think this is what I'm having a hard time with, and maybe it's just semantics, but like, Android has saved Google a lot of money. Instagram has made Facebook a lot of money.

• 1:09:32Speaker 00

  Yeah, I'll buy in on that. Yeah, yeah. Yeah, Android is effectively a margin saver.

• 1:09:38David Rosenthal?

  Yep. Whereas Instagram is like, this is a new revenue engine for, for Facebook.

• 1:09:48Speaker 00

  Yeah, presuming that Google would have gotten the queries from all the new people that were lighting up and basically like new people coming online for the first time.

• 1:09:56David Rosenthal?

  All right. Here's what I'm going to say. Android is my new gold standard for defensive acquisitions and is an A plus in that regard. I still like to play offense more than defense.

• 1:10:05Speaker 00

  Yep. All right. It's interesting because at the time, we just keep going back to this. I don't think it was defensive when they bought it. But what, what it ends up turning out to be is the most, one of the most incredible defensive plays of all time.

• 1:10:16David Rosenthal?

  All right. On that note.

• 1:10:18Speaker 00

  On that note.

• 1:10:20David Rosenthal?

  Let's move quickly into follow ups.

• 1:10:23Speaker 00

  Yeah.

• 1:10:23David Rosenthal?

  So sticking with Google, a couple of episodes, we covered Waze. This is one of those quirks of history on our show that I think we, I think we spoke to soon here. We, we are going to have to do a full follow up episode on, on this, maybe, maybe on automotive technology generally at some point. But within the last couple of weeks, uh, Google and Waze announced that they are now doing ride sharing within Waze. Competing, the product is slightly different, but competing with Uber and Lyft too, but competing with Uber. Interestingly of which, Google is a major shareholder in Uber.

• 1:11:03David Rosenthal?

  And David Drummond, uh, Google's head of corp dev and chief legal officer was on Uber's board and resigned after this happened. What do you think?

• 1:11:14Speaker 00

  Yeah. I mean, it shows that, uh, I mean, we, our assertion with the ways episode was that mostly they were using ways data, but not like doing massive reinvestments in that product to make Google Maps better and potentially, provide data for their self-driving car stuff. And what they're showing now is that they're actually using.

• 1:11:35David Rosenthal?

  They're playing offense, not just defense.

• 1:11:37Speaker 00

  To introduce new products and try new things. And, um, you know, not only is it a new thing that, that is interesting. It's, it's probably the most interesting new thing that they're doing that they're rolling out through, and they've chosen ways.

• 1:11:50David Rosenthal?

  And they've chosen ways. Yeah. Super interesting. Not Google Maps.

• 1:11:53Speaker 00

  Yeah. The question is like, so when they. So they're going to do their car sharing through Waze. Right now their self-driving cars are much more of an independent thing. Does that mean that they do a self-driving car service rolled out through Waze instead of through other?

• 1:12:07David Rosenthal?

  Well, I wonder here too, how much the fact that Google is a huge shareholder in Uber, and David Drummond was on Uber's board, played into the decision to do this through Waze here. Like, oh, you know, this is this company that, you know, is still standalone, they're based in Israel, and Waze had rolled out ride-sharing in Israel long ago. The news was that they brought it to San Francisco.

• 1:12:30Speaker 00

  Right.

• 1:12:32David Rosenthal?

  You know, so this is sort of like our independent division doing this, you know, not related to Google corporate, you know, it's sort of like a head fake here. Had, if Google were not an investor in Uber, would they have rolled this out through Google Maps?

• 1:12:46Speaker 00

  Huh. I don't know. And really, the question is, is it actually that much different than what already existed in their Israeli product, and then they just decided like, yeah, we'll try it here too. Because is it actually as big a deal as the press and we are now making it out to be?

• 1:13:02David Rosenthal?

  Well, Uber thinks it's a big deal for sure.

• 1:13:04Speaker 00

  Yeah. Yeah, it's true. Yeah, to continue our mention from earlier about how fast things change, like, friends become enemies very quickly when things like this happen.

• 1:13:16David Rosenthal?

  As we saw with Apple and Google, yep.

• 1:13:18Speaker 00

  Yep. So who does-

• 1:13:19David Rosenthal?

  New markets create a lot of competition.

• 1:13:22Speaker 00

  In five years, who is Uber using as their maps provider on Android?

• 1:13:27David Rosenthal?

  100% Uber.

• 1:13:28Speaker 00

  Yeah.

• 1:13:29David Rosenthal?

  I mean, actually, a lot of Uber driver rides that I take now, the drivers are using the native Uber navigation and not switching over to Waze or Google Maps.

• 1:13:38Speaker 00

  But isn't it still, like, you still need the core maps product underneath, even if their navigation is-

• 1:13:43David Rosenthal?

  Yeah, but Uber bought, oh, I'm blanking on who they bought, but they bought some assets from- Nokia, I believe. I believe they brought-

• 1:13:50Speaker 00

  The Here Maps, they're part of that conglomerate, yeah.

• 1:13:52David Rosenthal?

  Yep. All right, uh, quick hot take, uh, not an acquisition, but we thought it'd be fun to talk about, especially given the content of this episode. Apple's big event, launching the iPhone 7 and, uh, and AirPods. Or no, Airba-

• 1:14:08Speaker 00

  Uh, AirPods, yeah.

• 1:14:09David Rosenthal?

  AirPods, yeah.

• 1:14:10Speaker 00

  I mean, we're just seeing like the full maturation of, of mobile. Like, it's interesting to see phones are where laptops were 10 years ago. And, um, you know, it starts to open the question for what's next. Like, I got excited, I bought one, that, of course, that was gonna happen. It's, it's gonna be an incredible product. All the changes that are made are largely incremental, except for their continued, uh, breakthrough, advancements with the, the, uh, cameras, which I'm super excited about. I heard another interesting point, that this could be Apple's soft foray into VR capture, that-

• 1:14:43David Rosenthal?

  Because of the dual camera system on the Plus?

• 1:14:45Speaker 00

  Yeah, yeah, that, that's something that's kinda going, um, unset a little bit is, uh, you know, A- Apple just launched a phone that'll be in, you know, hundreds of millions of people's hands that has two cameras. And they, they can kinda do some interesting things with software with that later. Who knows?

• 1:15:03David Rosenthal?

  Yeah.

• 1:15:03Speaker 00

  But, uh-

• 1:15:04David Rosenthal?

  Wait, so here's what's really interesting to me about the Apple event, um, last week. And I'm really surprised that people aren't talking about this, or maybe just not people I'm following are talking about this. You know, Apple is super secretive about their roadmap, what they do, they don't talk about anything. But they do drop these hints, you know, and if you look, if you listen closely to what they're saying, it's usually not a surprise what they end up doing. And I was really struck when they were talking about AirPods, um, and talking about the removal of the headphone jack, and everybody's focusing on, you know, the courage, right? And like, yeah, that was probably a poor choice of words, um, but, uh-

• 1:15:46David Rosenthal?

  But here's what I think they're saying. I think they're saying like, we are moving with our, maybe it's the next iPhone, maybe it's two down the road, or maybe this happens incrementally. We're moving to a world where there are no wires. You know, there's, there's no cord to your earphones. There's no power cord. There's nothing tethering you. And that means that the device is actually kind of secondary. And if you look at the AirPods, you know, double tap to activate Siri, like we're moving to a world where computing is just on you, part of you, around you all the time. People have been talking about this, you know, this is part of what Amazon is doing with Alexa.

• 1:16:26David Rosenthal?

  But that to me was a really strong message from Apple that coming soon, Siri, which we've done our episode on Siri, and we are, Ben and I are very skeptical of Apple on this, like Siri is going to control your computing experience. It may or may not be through a screen.

• 1:16:44Speaker 00

  Yeah, expect more chips and AirPods 2 and AirPods 3 and then an AirPod 7. Get excited because you won't need a phone.

• 1:16:50David Rosenthal?

  Yep.

• 1:16:50Speaker 00

  And we'll go from there.

• 1:16:52David Rosenthal?

  We'll go from there. All right. That's our hot take. Carve out.

• 1:16:55Speaker 00

  Yeah, mine's quick. Reading a really cool book right now. It's called Business Adventures by John Brooks.

• 1:17:00David Rosenthal?

  Oh, so good.

• 1:17:01Speaker 00

  It's a short vignettes, maybe like 20 to 30 pages each that are stories of incredible things that happened in business over the last 100 years. The first couple are awesome. The 1962 stock market crash, talking about the impact of the fact that trades were happening at a higher velocity than could be printed out. So no one knew what price they were buying things for when they put in a buy order and a sell order on, on some of these crazy crash days. And the second chapter that I'm on right now is the, the colossal failure of the Ford Edsel.

• 1:17:34David Rosenthal?

  Oh, that's a good one.

• 1:17:35Speaker 00

  And the kind of history and how that came to be. And just super great and really nice if you're doing a lot of short flights or something like that where you can go knock out 30 pages, but then you won't pick it up again for, you know, a month or something and don't want to forget. They're very kind of bite sized.

• 1:17:51David Rosenthal?

  This is a great book, recommended to me a while back by my buddy Matt Nierlinger, who's at, at AVP, which is a growth VC firm in, in San Francisco. This, I believe, is one of Bill Gates' favorite books and I think his favorite business book.

• 1:18:06Speaker 00

  Yeah, he's endorsed it on the cover.

• 1:18:08David Rosenthal?

  Hard to beat that. Mine is also quick. It is the ESPN OJ documentary. It is so good. Have you seen this, Ben? No, but you were telling me about it. You gotta, everybody's gotta watch this. It is a five-part documentary series. Jenny, my wife and I are in the midst of watching it now. We're through the first three parts. So good. I'd say it's like, it's like 30 to 40% about OJ and the rest, the majority of about like, what was going on in America, you know, from the civil rights movement in the 60s up through the 90s and you know, and then specifically like in LA, race relations in LA, the police in LA.

• 1:18:52David Rosenthal?

  You know, I mean, this is where NWA was, you know, there's so much deep history here that's not, people know about, but like, this is just such a fantastic job covering it. Also, I didn't realize like, for people who've kind of been in my age, OJ just like, it's the trial, right? Like, that's all we think about him. But he was an incredible football player. Like, way, like, head and shoulders above everybody else. So, really great to watch. Highly recommend to everybody. All right, listeners. Now is a great time to talk about one of our favorite companies, Statsig.

• 1:19:28Ben 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.

• 1:19:39David 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.

• 1:19:59Ben 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.

• 1:20:12David 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.

• 1:20:23David Rosenthal?

  All right, that's what we got for you.

• 1:20:25Speaker 00

  If you aren't subscribed and you want to hear more, you can subscribe from your favorite podcast client. And if you feel so inclined, we would love a review on iTunes. And if you want to share this episode, tweet about it, put it on Facebook, tell your coworkers. Yeah, really appreciate it as a listener. Thanks so much.

• 1:20:41David Rosenthal?

  Thanks to you, everybody. We'll see you next time.

• 1:20:43Speaker 00

  See you next time.