Stratechery (with Ben Thompson)

Ben Thompson joins Acquired to discuss the business of Stratechery itself and celebrate 10 years (!) of the internet’s best strategy analysis destination. Even beyond Stratechery’s enormous impact itself on business and tech over the years, Ben’s work inspired a whole generation of business content creators — this show very much included — and it was super special for us to give the Acquired treatment to one of our own heroes. We cover the full history of Ben pioneering the subscription internet media business model (indeed SubStack’s seed round pitch was “Stratechery-in-a-box”), and how + why he’s evolved the business since and is now doubling down both on podcasting and a broader vision of the Stratechery Plus bundle… including for the first time content not made by Ben himself! Tune in and enjoy. *Links:* - John Gruber’s Daring Fireball: https://daringfireball.net - Ben’s very first Stratechery post: https://stratechery.com/2013/welcome-to-stratechery/ - Subscribe to Stratechery Plus: https://stratechery.com/stratechery-plus/ *More Acquired:* - Get email updates https://www.acquired.fm/email and vote on future episodes! - Join the Slack http://acquired.fm/slack - Check out the latest swag in the ACQ Merch Store https://www.acquired.fm/store! _Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions._

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

• 0:00David Rosenthal?

  Oh, market's got a nice bump today. You had a good feeling about Jerome?

• 0:04Ben Gilbert?

  Yes, I get these vibes from him, you know?

• 0:06David Rosenthal?

  I want Jerome to like, wake up on his 2021 side of the bed one day. Just be like, you know what? Times were good back then.

• 0:13Ben Gilbert?

  We caused cataclysmic damage that needed to get unwound at some point. But while it was up, it was all good.

• 0:19David Rosenthal?

  Do I really need to keep bringing down the hammer?

• 0:21Ben Gilbert?

  Let's take this FOMC meeting off.

• 0:24David Rosenthal?

  I'm gonna post a story on Instagram, just on a beach with a drink.

• 0:29Speaker 02

  Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Is it you? Is it you? Is it you? Sit me down, say it straight. Another story on the way. Who got the truth?

• 0:46Ben Gilbert?

  Welcome to season 11, episode 8 of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert and I am the co-founder and managing director of Seattle-based Pioneer Square Labs and our venture fund, PSL Ventures.

• 1:00David Rosenthal?

  And I'm David Rosenthal and I am an angel investor based in San Francisco.

• 1:06Ben Gilbert?

  And we are your hosts. Today, we are telling the entire history and strategy of Stratechery. And we are joined by the man himself, Ben Thompson, on the eve of Stratechery's 10-year anniversary. Stratechery is innocently billed on his website as "The Business Strategy and Impact of Technology." Stratechery, as Ben puts it, started as some guy in Taiwan with no access. Today, Stratechery is a powerhouse shaping the thoughts and conversation of the entire technology industry around the world at the highest levels. Ben has interviewed Mark Zuckerberg, Jensen Huang, Satya Nadella, Sundar Pichai, Rich Barton, Meredith Koppit-Levien of The New York Times, Pat Gelsinger of Intel, and John

• 1:48Ben Gilbert?

  Collison, and many, many more, many of which are regular readers. He is the father of aggregation theory, the most important business framework developed in the last 20 years. And Ben really pioneered the internet subscription newsletter business model. We sat down with him to talk about a bunch of his recent changes, going big into podcasting, bringing on co-hosts and expanding the empire, and even now launching a Stratechery property that he does not appear on at all.

• 2:17David Rosenthal?

  Regardless of what your business model is, regardless, even almost of what your content is, I don't think there's any creator, certainly not any business creator out there today, who doesn't directly or indirectly look to Ben and say, "You inspired me. You paved the way for what I do." I mean, we certainly feel that way. I feel that way.

• 2:37Ben Gilbert?

  David, I even feel like your and my friendship developed early on from reading Ben's pieces and sharing them with each other with our thoughts. We have these old email threads in 2014 of you and I discussing Ben's writing.

• 2:50David Rosenthal?

  Ah, totally. We might talk about that on the episode here.

• 2:53Ben Gilbert?

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

• 3:12David Rosenthal?

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

• 3:33Ben Gilbert?

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

• 3:55David 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.

• 4:13Ben Gilbert?

  And that's the real value. Trust has to be continuous now, which is why Vanta automates your security, your compliance, and the work to earn and prove trust. We're huge fans of Vanta over here, and literally hundreds of Acquired listeners have become Vanta customers at their companies over the years. So you can get $1,000 off Vanta at vanta.com/acquired. That's V-A-N-T-A dot com slash acquired for $1,000 off. And just tell them that Ben and David sent you. After this episode, come hang out with the other 13,000 smart, thoughtful members of the Acquired community at acquired.fm/Slack. We'll all be talking about it. Without further ado, this is not investment advice. This show is for informational and

• 4:54Ben Gilbert?

  entertainment purposes only. And now on to our interview with Ben. Ben Thompson, welcome to Acquired.

• 5:02Speaker 03

  Thank you. Happy to be here.

• 5:03Ben Gilbert?

  It's great to have you with us. We've done surveys over the years of our audience, and we say, what is the number one topic that you'd want to see us cover, or a person we should have on the show, and your name comes up many, many times. So excited to be doing this.

• 5:14Speaker 03

  You promised me I was number one. Now I feel like there's a bit of a letdown going on.

• 5:18Ben Gilbert?

  We asked who the number one was, and you were very high in the rankings.

• 5:21David Rosenthal?

  Well, we have another number one, though, that is very near and dear to our hearts. Ben was searching his email today, and he sent me an image over text that was very sweet. It was the first email between us, and it was about Stratechery.

• 5:33Speaker 03

  Okay, fine. I'll take that.

• 5:36Ben Gilbert?

  David and I, I think, got drinks, and we're talking about Uber. And it was your "Don't Blame Uber" piece from 2014.

• 5:42Speaker 03

  Yeah, well, it's kind of interesting in retrospect to think about that. I think that was about healthcare and rights and workers and things on those lines. It's pretty interesting. You could probably write a similar piece about easy money and the macroeconomic environment and lots of pieces. So, I mean, it's funny, I haven't thought about that piece in years and years. I usually have a very good memory of everything that I've written, but every now and then I will encounter a piece, whether someone linked to it, or it'll come up when I'm searching for. I mean, I'm the number one user of Strateg Research.

• 6:14Ben Gilbert?

  You built that for yourself.

• 6:15Speaker 03

  I completely forgot that. I wrote about that. And usually I go back and read them. I'm like, oh, that isn't bad. Sometimes I go back, like, I don't know about that one. But yeah, it is what it is. That is what happens. You've written thousands of posts over approaching 10 years now.

• 6:29Ben Gilbert?

  It's just prolific. It's interesting. I went back and just read the early days preparing for this. You have posts that you imported from a Tumblr in 2009 that are like all the way back in the back catalog.

• 6:39Speaker 03

  Yeah, I've started multiple blogs through the years. I thought they were relevant and interesting. And also, I think it's useful to have a back catalog when you launch. And that's something that I do when I launch podcasts now, is it's important to sort of establish the first time someone encounters you, that this isn't just a flash in the pan sort of thing. It's something that is interesting.

• 7:01Ben Gilbert?

  You mean like doing 30 episodes of Dithering before you released a single one?

• 7:05Speaker 03

  You know, in that case, we really wanted to figure out what that podcast should be. And then also working with Johnny can be a bit of perfectionist. So it took us that long to get the website looking just how we wanted it to. Guys, I don't know anybody else like that. There was a technical component that went into that as well, but I think it's good for both sides. It's good for the creator because if you can't have the discipline and sort of stamina to build up a back catalog, you're probably not going to have the discipline and stamina to keep going for a long time. So it's almost good internally to sort of get that done. But then also when someone encounters it and then they feel, wow, there's an excitement, not just an anticipation of new episodes that'll be down the road.

• 7:46Speaker 03

  But wow, there's already a whole bunch of stuff here for me to listen to. And if you like the first one, you can listen to a second one. And I think that sort of second one is super important. This is the point I've made about writing in general. Anyone can come up with one really good post or one really good podcast. I don't mean to say that dismissively. I think there's a lot of people out there with very smart insights. I think it's a very distinct skill and capability to come up with interesting things consistently. And the sooner you can demonstrate that to someone, the sooner they are going to take advantage of whatever means you have to follow or to subscribe or whatever it might be. Because it's not just a promise of consistency, but it's evidence of that. And I think that's really important to online businesses in general.

• 8:31Ben Gilbert?

  I think about that element a lot. I also think about every piece of content you create is a churn opportunity. David and I regularly look at each other mid-episode and we're like, okay, is this of acquired quality? Or is it actually net negative for us to release this episode? Because we've now reduced the average quality of a thing that someone comes to expect from us.

• 8:53Speaker 03

  Yeah, I mean, well, thanks for putting the pressure on me right up there. I better make sure this is interesting. But it's interesting because I would push back against that a little bit. And this is why the consistency part is important. I mean, there's an ongoing discussion. I think there's that new social network post news or something. And I just saw a thing on Twitter. I didn't actually follow through, but they want to do micropayments for articles, which I think are terrible. And There's a tendency in a lot of things to get overly indexed on the consumer, which kind of sounds wrong. Like, why wouldn't you want to give the consumer exactly what they want? But just to take the most obvious example, if a creator is not making money, well, the consumer may get what they want, which is free content, but they're not going to get it for very long. There is a short-term perspective versus a long-term perspective, which, well, no, by charging for this,

• 9:37Speaker 03

  I can do this over the long run. But from a microtransaction perspective, I think one of the issues is to create the piece of content is very time-consuming. And then, obviously, you get the free distribution on the backends. You have zero marginal cost on the back end. But the problem is you have a timing mismatch with microtransactions between when the payment's made and when the investment is made. And so you want to put a lot of time into an article and then hope it gets traction. So I can not just make money, but also repay what I'm doing from there. And I think that the way to think about publishing online is what are you selling? I think when you get in the trap of thinking you're selling a single episode or selling a single article, that's actually getting the incentives wrong. What I'm selling to my subscribers is consistency.

• 10:21Speaker 03

  And yes, certainly a quality bar. When I write something that I'm not happy with, I'm miserable for the next 24 hours. Or if it's the end of the week, I have to wait till next week, and that really sucks. Because I certainly have the drive and compulsion to make sure that what I put out is high-quality. But at the same time, there's an aspect of what I'm actually selling to my subscribers, and this is more of an implicit promise, but I think it's the reality, is the consistency and the regularity and the knowing that if something happens, you're going to be able to get my take on it. And I think that's where subscription pricing does make much more sense for content production. Because in this case, you're actually getting the money upfront. The money is funding the work, as opposed to the work being a speculative bid for the money.

• 11:04Speaker 03

  And one thing that I've pushed over time, and I'm very happy about, is trying to get people to sort of annual subscriptions. So I think my audience at this point is like 70% annual subscriptions. At 150 bucks a year, is that right? It's $12 a month, $120 a year. So you do get a $24 discount by being annual. You save on the straight fees. Yeah, it's like a $16 difference. So that certainly makes a big difference. But then also, I just think it's good for me and it's good for my customers to know that, look, I have a chance to make it up to you. Your internet media business about the business of technology.

• 11:42David Rosenthal?

  Is a very different business than our internet media business about the business of technology across a number of dimensions, right? There's obviously the business model, your primary business model versus our primary business model, you being subscriptions, us being advertising. But there's also the periodic nature of content. I think one of the reasons we feel such pressure on each episode is we're only dropping one, maybe two, episodes a month. How many pieces of content are you doing a week at this point?

• 12:09Speaker 03

  Well, less than I once did, believe it or not. Usually three written pieces, one interview, two Sharp Tech episodes and two Dithering episodes. So I guess that is eight pieces of content. When I first started the daily update, I was doing two free articles, five paid articles and a podcast. So that was eight. So I guess I'm doing more now, but revealing my secrets, podcasts are easier to do than writing. So it feels easier today than it was back then. It certainly is a lot. I don't think that will always be the shape of it forever. But yeah, there definitely is a lot more than two per month. So it's a fair pushback.

• 12:44Ben Gilbert?

  All right. So because this is acquired and I'm playing format police, David, I'm going to take us back to the beginning and we're going to try not to dwell too long because Ben, I know you've told your story elsewhere, but I think it's important for context. So you get this inkling of an idea that you can do this and you have an idea for a way to cover the intersection of strategy and technology in a differentiated way than has been done before. And you decide that you want to start doing it. I think you are still doing it while you're at Microsoft in 2014. Is that right, Ben?

• 13:14Speaker 03

  I had started tons of blogs through the years. I, in some respects, felt I had missed out because I'm the same age as folks like Ezra Klein and Matthew Iglesias. And, you know, I was writer for the school newspaper and, you know, I started a blog. I'm like, man, if I had sort of kept with it, you know, I could be doing what they do. And then John Gruber started during Fireball around 2003. And so there was some aspect of like, well, it's a bummer I missed out on that.

• 13:38Ben Gilbert?

  It's like the famous Mark Andreessen, you show up in Silicon Valley and you feel like, oh darn, it's already all happened.

• 13:43Speaker 03

  Without question. So certainly people pushed me, you should write again, you should do it. I think I did those Tumblr posts while I was at business school. And yeah, I mean, it was definitely something that I always wanted to do just from a personal self-interest perspective. But also, it's not enough to just want to do something. There needs to be a market, there needs to be an opportunity. The way I always put it is, there's lots of sites writing about the products, and Wall Street is writing about the financial results, but there's a big gap in the middle there. You know, like, what is the strategy that goes into the products? Like, what are the margins and the business models that undergird those products that drive to the financial results? How does company culture impact decision-making? Why do companies do stupid things? This is a common question in

• 14:28Speaker 03

  business school, and you would do these interviews, interview prep, when you're the first year doing second year students, then you're helping the first year students. And my favorite question was always, what's a decision or a product this company has made that you think is a bad idea, or you disagree with? And everyone would always have an answer to that. But the more interesting question is the follow-up question, which is, why did they do that? And what you would see is a lot of people, their answer really was because they're stupid. And the reality is, no one at these companies is stupid. A very popular choice back then is Microsoft making the Zoom players. Like, that's a dumb idea, blah, blah, blah. Well, why did Microsoft do that? It's not just useful for critique, but it's also useful for saying where companies should go. So I think probably

• 15:12Speaker 03

  Microsoft, either Microsoft or Facebook are probably my two biggest successes as far as an analyst. You know, I think particularly Microsoft, where I think I very clearly articulated what their issues were. And also, by understanding those issues, the sort of organization they were, the sort of capabilities they were, and not just the weaknesses that entailed, but also the strengths that entailed, where they should go, and the sort of strategy they should adopt. And that's basically the strategy they have adopted, and obviously, it's tremendously successful. But there's no one writing that sort of stuff back in 2013.

• 15:48David Rosenthal?

  One of the things we thought about a lot was, we are not journalists. And we came at this from having worked in the industries that we're talking about, and obviously, you did too, having been at Microsoft, Apple, and plenty of other places. Was that in your mind? Like, everybody you mentioned, Ezra Klein, Gruber's different, we'll talk about Gruber later, but they were journalists. They came out of the media, whereas we were all coming out of the industry.

• 16:13Speaker 03

  Yeah, it's interesting. I wouldn't classify either Klein or Glazier as journalists. I mean, they were bloggers. That's what they were. And they ended up as somewhat journalists, although I would say both of them, their best work has always been more analysis than journalism. I mean, maybe it's a stupid classification, but I think about journalists as sort of writing about what is happening at best, uncovering facts. Analysis is explaining why it happened, and opinion is some aspect of saying what you think should happen. You know, those have certainly gotten conflated over the years. That's probably a different discussion. But analysis and opinion, I think, do go together to some extent. But it's actually a line that I'm actually pretty

• 16:57Speaker 03

  careful about. I really try to not break news. That's actually an explicit choice on my side. I mean, it was an easy decision to make at the beginning because I knew no one. I had like 400 Twitter followers when I started. Everything that I wrote was self-generated, right? It was just my own insight, my own view of the situation. You didn't have any particular access? No access, a negative access. I sort of felt like it, partly because I couldn't write about Microsoft because I was some beyond there. I think that of my work experience, the Microsoft bit was certainly the most impactful, not just because of what I learned about Microsoft, but just what you learn about big companies, I think, in general. And it's very easy on the outside to anthropomorphize these companies and like a single entity sort

• 17:40Speaker 03

  of making decisions and doing what you want and doing what you don't. And the reality is, it's thousands and thousands of people. There's massive coordination problems. Everyone has a different take, different opinion, which is why the culture stuff is so interesting, which is why the broad, shared understanding of what a company is and is not capable of is so important to understanding why companies do what they do, because actually tends to be much more impactful than single individuals, and definitely single individuals below like the CEO level. And even then, what constrains a CEO's actions is a pretty significant thing. But they had to build a team to get apps for Windows 8. And so I was responsible for social media other than Facebook and Twitter.

• 18:24Speaker 03

  So I guess blogging. I was responsible for publishing. So the book publishers, Amazon, Kindle, things on those lines. I was responsible for lifestyle. So I really got to know the publishing industry very well, both on like the magazine side, the newspaper side, book publishing side. And all that was certainly useful learning for writing about those industries, but also very useful for understanding app store dynamics, developer dynamics. It was super fun, very busy, very hyped, trying to get stuff out the door, working with, you know, half-built SDKs and flying all over and working with developers. And then Windows 8 launched and it kind of sucked after that. But it was fun up until then. So I was at Microsoft and I remember my wife and I,

• 19:10Speaker 03

  it was our first ever trip to Hawaii. I think this was the winter of 2012 to 13. And sat down and talked about it. It was like, yeah, it's probably going to be time to move on pretty soon. I mean, ending at Microsoft was always a bit of an upset. I was always sort of an Apple person. That was my obsession. I wanted to work at Apple. I had the good fortune of being able to intern there. And I was at Apple University when Apple University had just started. And the original vision for Apple University was that it's going to be really focused on, Apple has this notion of like the top 200, although I think it's actually today more like top 300 or something. They go to this big company retreat. They're the ones that know all the future plans and everything that's going on. And that's really sort of the decision makers at Apple.

• 19:50Speaker 03

  And it's not necessarily by management position. Like there's ICs that are, you know, have no management responsibility, but are, you know, sort of part of that core. That was an amazing experience and really trying to figure out like what makes Apple. Apple sort of defining the culture. And it did seem problematic that it's very hard to write culture down. Cause then that's kind of a recipe, I think, for sort of ossification and getting sort of locked into something. What is interesting is it was written a lot about as this sort of Steve Jobs initiative. And, you know, I'm sure he okayed it, but he had basically no involvement at all. Tim Cook was very heavily involved. Like the whole Tim Cook doctrine thing that folks talked about when he took another earnings call, that was at Apple University first. Did you coin the Cook doctrine?

• 20:34Speaker 03

  No, I think Horace Dedjou did from a Simcoe. Oh, yeah. The reality is, is culture comes from doing and it doesn't come from saying. And there's an issue, like if you make decisions based on data, right? It's inherently backwards looking because the data has to be generated first. And I think there's analogy to culture along those lines that. And the concern about writing it down and getting focused on that is you're sort of locking yourself in. Like cultures are very, very powerful. It's the way that you coordinate a massive company and keep it going in the broadly same direction. Because there's so many things that you can't articulate. You can't articulate that this is the way we do things. If you did, you would be bogged down, like the transaction costs of communicating every little detail are massive.

• 21:18Speaker 03

  And so culture keeps you going in the right direction. But culture is also very dangerous because if you have to change direction, suddenly you realize you're in a straitjacket. And I do wonder if writing stuff down and saying this is the way we do things is actually like sewing the straitjacket. I'm not sure how that pays off.

• 21:36Ben Gilbert?

  Right. Culture and process accomplish the same goal in many cases. And so either it can be done in a process lightweight because the culture sort of facilitates it getting done. But then you have no processes to change something if the culture is no longer facilitating what you want to do.

• 21:50Speaker 03

  Yeah, I think that that's an interesting way to put it. Culture is probably the processes that can't be written down to some extent. Because it's just an understanding of this is how we do it. I left that summer feeling like this is not the right thing for me. You get to business school and you have to get a job. Everyone else is getting jobs and you feel, you know, and it was pretty tough for me.

• 22:08David Rosenthal?

  And you feel like what you do immediately after business school, like there's such weight to that career decision. And now you're just like, yeah, whatever. It's like a job.

• 22:16Speaker 03

  Well, I was hell bent on being in tech and I had lots of opportunities and offers. Obviously consulting was an option. It's interesting because I had a very non-traditional background, being an English teacher in Taiwan. You know, I built a sort of distributed presentation system for a group of schools here. So there was like some sort of like tech angle per se. But really I was just like an English teacher from Taiwan.

• 22:36David Rosenthal?

  Wait, you know, back to sort of the Ezra Klein, Matt Iglesias. You were kind of cut from that cloth before getting into tech, right? Like you were a poli sci major, right? You worked in politics.

• 22:45Speaker 03

  Yep. And honestly, a lot of that was my background and I grew up definitely blue collar. But my parents were ministers and you're in a small town of 2000. Like the pastor is like the most educated person around by and large. So there's an aspect, well. The alternative to working in the factory or on the farm is you go to college and you'd be like a professor or something. There just wasn't even any awareness of any sort of opportunities. And I think this is very not well understood by elites in general and people on the coast where it's not a lack of opportunity. It's a lack of even knowledge that there are opportunities elsewhere. And so for me, going to the University of

• 23:29Speaker 03

  Wisconsin was like this big act of rebellion and like, oh, I'm not going to go to a Bible college or I'm not going to go to whatever. And in retrospect, I had the grades and test scores to go somewhere, you know, I mean, Wisconsin is a great school, but I probably could have gone to an Ivy League school or I didn't even apply.

• 23:46David Rosenthal?

  That just wasn't on your radar screen.

• 23:48Speaker 03

  Not even on my radar screen, not on the radar screen of anyone around me. And I think this is a perspective that is probably not very well understood by a lot of our audience, I think, to say the least. And so I actually loved tech. I was very into it. I like, I was the first person I knew around me to get an email address to sort of be online.

• 24:06David Rosenthal?

  Did you get the internet at home before you went to college or was college your first experience with it?

• 24:10Speaker 03

  No, I pestered and pestered my parents to get internet. I mean, I think we started out with like a Juno account, which was just email only.

• 24:17David Rosenthal?

  Oh, wait, was Juno the one that was a D Shaw spin out?

• 24:20Ben Gilbert?

  Yes, that was an incubation at D Shaw when Bezos was there before Amazon.

• 24:25Speaker 03

  Yep. It was like a standalone client that was email only.

• 24:28David Rosenthal?

  And then it merged with Net Zero.

• 24:29Speaker 03

  Yep. So even in college, you know, I was super online. Me and my group of friends stayed in the dorms an extra year just because of the broadband connection. Broadband is used very loosely here. I think it's like two megabytes up and down. I worked at the student newspaper, which I loved. One of the things that I did at the newspaper was I took over the editorial section my senior year. And so we sat down, we had five things that we wanted to see happen. Well, first we decided, number one, editorials will only ever be about things that affect students. And what we did was, look, we're going to write an editorial every single day, Monday through Thursday. Friday, the whole page will be given away to guest columns. We're going to write an editorial every single day, no matter what, and we're going to write about these. Five issues.

• 25:11David Rosenthal?

  And did that mean you writing an editorial every single day?

• 25:13Speaker 03

  Well, so we had an editorial board, but it basically ended up me writing editorial every single day is what it came down to. Not every day, but the vast majority. And it's interesting because there is certainly, there's an echo of what I ended up doing with my career, right? This sort of daily hitting points, having to generate content. But it was number one, just from a practical perspective, it was fun and interesting and something I definitely enjoyed. And number two, it worked. Of our five sort of things, we had goals, we accomplished four of them.

• 25:44Ben 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.

• 25:58David 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.

• 26:12Ben 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.

• 26:22David 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.

• 26:39Ben 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.

• 26:55David 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.

• 27:12Ben 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?

• 27:21David 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.

• 27:32Ben Gilbert?

  So I want to go forward to you're leaving Microsoft. Give me the emotional moment where you're like, it feels like it could work. Like, I think there's something here. I think I have content market fit.

• 27:47Speaker 03

  Well, so to go to the back of the Y trip, there was an aspect about going to Microsoft's like, well, I should go to a place that is theoretically oppositional to everything I believe in. Right. And can I make changes at Microsoft, you know, very sort of arrogant. Really, I learned a lot from Microsoft as opposed to the other way around. I sort of signed up for it, knowing this is probably not where I was going to be long term. And after that trip is when I did start Stratechery, I wanted to figure out a way to get back to Taiwan at some point. My wife's from Taiwan and we enjoyed living here. Also, again, I just felt like there was this hole in opportunity. And I sort of looked at Gruber as someone that was like, well, he did it. But it was also pretty clear that an advertising based model was probably not going to work.

• 28:31Speaker 03

  I mean, that was obviously a regular theme of mine about the centralization of advertising under Google and Facebook and that world of starting a blog and throwing out some Google Ads was not going to be a viable one.

• 28:41Ben Gilbert?

  What made you think that? To my mind, at least, there is a very viable and robust alternative history where Stratechery is an advertising business model.

• 28:52Speaker 03

  Well, I think that I would have to have started much earlier. And I think Gruber's model is the right one where I think it is actually underrated. That I think he actually kind of invented native advertising because you read every piece of content that he writes and one of them just happens to basically be an ad. It's the same format, same content as what's there. And I would bet that the rate of consumption to encountering it for his ads are like higher than almost anything else out there. And obviously, Facebook does that at scale and it's all automated and self-serve. And you scroll through and there's different pieces of content you're issued in and some of them are ads.

• 29:26Ben Gilbert?

  But you didn't think you could do the same thing that John does.

• 29:29Speaker 03

  Well, I thought that was a possibility, a potential leg of the stool. But number one, I didn't know that I could do the same format. I mean, what works for him very well is because most of his stuff are short snippets and link out. It's very easy to check in and read everything. I ended up moving more towards longer pieces. I mean, I did experiment and play around with that format and it didn't seem right to me. And then also, just strategically, you could see where things were going. This idea that Users are going to Google, going to social media. And that's the best and most obvious place to put advertising. That's where the users are. There's understanding about them, all those sorts of things. You know, advertising is an ROI measurement.

• 30:13Speaker 03

  It's not just what's your return, but also how much work do you have to do to get it? And why would someone want to go to a small blog and put the effort of putting an ad there? It didn't seem like a very scalable possibility. And meanwhile, at the same time, there have been this new company that was founded called Stripe. And it seemed viable to me that if you thought through the idea, look, if I produce super highly differentiated content, that is something that is not going to appeal to the whole world, but to the people who like it, they'll really like it. And if you have that sort of audience, you should maximize your revenue per user. And the way to maximize your revenue per user is to charge them a subscription. And the tools were then becoming available to sort of do that.

• 30:55Ben Gilbert?

  Just to validate the point real quick, and David, this is my pushback on there being an alternative history where Stratechery could have been ad driven. For anybody who doesn't read Daring Fireball and doesn't know who John Gruber is that we're talking about, quick lesson, when Ben says that he invented the in-feed advertisement, you go to daringfireball.net, yes.net, and you see the same exact website that's been there for 10, close to 20 years at this point. And most of it is links out to other things. Some of it's long form, well thought through pieces, and some of it is sponsored posts. And I consumed, just like many other people, the entire feed in an RSS reader. And the sponsored posts would show up just like any other post in an RSS reader. Now, I think the set of people who are likely to use an RSS reader and who are likely to go directly to daringfireball.net as the place where they're intentionally typing in

• 31:39Ben Gilbert?

  a URL or clicking a bookmarks bar and going to it, that set of Apple nerds is far more likely to do that behavior than anybody else in the world. The world is shifting away from going directly to pages. And a lot of your readers are like, I'm just getting my news from Twitter and wherever else at this point, and I'm not doing the RSS thing.

• 31:57Speaker 03

  Yeah, I think the more niche you are, interestingly enough, that does pay off in subscriptions. It can also work well for advertising. I think Gruber was at the right place, the right time for Apple for sure, not just in terms of Apple's growth, but also the explosion of the App Store. There was a period where you would have lots of apps as those sort of featured things. And so it works great for him. Again, I did have sponsored posts a little bit when I did go independent because I figured I'd have multiple revenue streams.

• 32:25David Rosenthal?

  Ah, I didn't remember that. How long did you do that for?

• 32:28Speaker 03

  Like six months. Again, the ROI wasn't there for me either. I couldn't charge that much. And it was a big hassle and getting it arranged. And then also there's a lot of complicating factors, like pushing people to email was not a good fit for that. And so I started Stratechery pretty clear that subscriptions would be the core model. I was going to try lots of things to monetize.

• 32:48David Rosenthal?

  Clear to you though, but you pioneered that. I mean, there was no Substack. And I think in many ways, Substack was, I don't know the exact history, but probably modeled after you.

• 32:57Speaker 03

  Yeah, no, Substack's seed deck says Stratechery in a box. That was their pitch.

• 33:01David Rosenthal?

  So this was a big innovation.

• 33:03Speaker 03

  Yeah. I mean, I think like the subscriptions did exist, I think on Wall Street in particular, but they were generally like $20,000 and you would get all the hedge funds to subscribe and the banks. And that model still exists and is actually a very, very profitable one. But what I do think Stratechery innovated was sort of subscriptions at scale where you're charging a low price relative to $25,000 or $10,000 and you're doing it on a self serve basis. People sign up their credit card. And again, Stripe was a really important part of making this possible, but there were no real subscription tools. Like I had to actually hack it all together when I first started. There was like WordPress subscription tools, then there was Stripe and you had to glue them together. And it was sort of a big mess when I started. A year after I started a company called Memberful then

• 33:48Speaker 03

  launched, which I switched to them. That made things definitely much easier. And then obviously I have my own system now.

• 33:54Ben Gilbert?

  You've worked with it outside development agency to custom build software for which you are the only user to publish Stratechery now, right?

• 34:02Speaker 03

  Yeah, well, at the beginning, it was all me like I built my own page and I did all that integration myself and I'm not really a developer. So it was very hacky. Actually, one of my nightmares was when I watched the paid product. So I started Stratechery, I messed around with format a little bit at the beginning. Oh, actually, the real pioneer, who I should mention was Andrew Solven. And he had this manic posting schedule, like tens of posts a day. And he did have a team to help him on the daily dish. And he switched to a subscription when I think he left the Atlantic. And it was successful, like he quickly was doing a million dollars in revenue a year. But he sort of maintained that manic posting schedule that was kind of made sense in an advertising

• 34:45Speaker 03

  driven world where you want people always coming back and getting lots of impressions. And the paywall was super loose. It was like 30 posts and then you hit a paywall or something. And the reality is what happened was he burned out. I think he had some health issues and he ended up leaving. And it was funny because when he left, everyone's like blogging's dead. It's finished, was a failure. And I looked at him, I thought like, no, I think this was actually a huge success. One of the problems was he had this posting schedule and system. And then he tried to drop a paywall on top of it. And so when I thought about Stratechery, I wanted to do the opposite. Where I wanted a subscription to not feel like from a customer perspective that I was taking stuff away, but that I was giving them more, just from a psychological perspective.

• 35:27Speaker 03

  And so, once I realized I definitely want to do the subscription model, I started becoming super disciplined about never writing more than twice a week. This was back in 2013 when I was doing Stratechery. Because my plan was for subscribers, if they subscribe, they'd get more. And it would be like an exciting purchase as opposed to, oh, I'm hitting a paywall. This sucks.

• 35:46David Rosenthal?

  And your audience that you were building up before putting the paywall in would still keep getting the same.

• 35:51Speaker 03

  That's right. And so my initial model was still daring fireball like, where I figured, oh, I'd have big articles. And then if you subscribe, you're going to get a whole feed of a bunch of little stuff, my commentary on news articles. I built a new website, again, as a not very good web developer. And the metric I was paying attention to was people who visited the homepage on days I didn't post. Because to me, those were people that were hoping I had written and they wanted more from me. And I figured, classic, if I could just X, Y, Z of why, but I thought if I get 10% to this audience, that would be something that would be reasonable. And that metric was pretty high. I mean, I didn't appreciate then just how powerful social media was.

• 36:34Speaker 03

  And publishers bemoan social media, but those are publishers with old business models. If you have a new business model with a very low cost structure, social media is a godsend because you basically get free marketing. What a lot of people don't understand is, I think a lot of writers give away way too much content on Twitter and they're out there posting. It's like, why should I read your site when you're just telling me everything you think on Twitter? And the reality is, the power of social media is not that it gives you another platform. I have a platform. It's strecker.com. What it does do is give all my readers a platform to tell other people, wow, this site's really great.

• 37:06Ben Gilbert?

  Look how smart I am for having a take on this thing that Ben wrote, which you can read about on his website.

• 37:10Speaker 03

  Right. If you share something that's great, you get the likes and you get the retweets and you get the status of people feeling like, wow, this person is sharing good stuff. And that's really powerful. This is probably an angle, you mentioned the Marc Andreessen quote about I thought I was too late. In this case, it turned out I was early. I was the only person doing this sort of model out there. And there was still an era of 2013 Twitter, 2014 Twitter, where people would share links to something and it would break through if it was consistently good. This is also where the principle of having the second article be good is super important. You know, this is, I think, unique to the social media era where people follow a link to a site and they have paid no attention

• 37:54Speaker 03

  to what the site is. They don't even know what it is. It's basically a Twitter article for all intents and purposes. So I did want the site to be sort of visually distinct. So I did like a custom font, which back then was very rare. That was sort of a new thing. I had the orange, you know, there weren't very many orange sites back then. And I did a lot of these sort of hand drawings, which were very visually distinct.

• 38:13David Rosenthal?

  The Ben Thompson iPad hand drawing.

• 38:15Ben Gilbert?

  You're a good artist. The boats, even in the first post, the sailboats is quite good.

• 38:20Speaker 03

  Yeah, thank goodness for iPads and the ability to sort of edit endlessly. But the reason for that is, what I was really thinking about was, oh, hey, they follow an article like, wow, that's a good article. A day later, a week later, a month later, they follow another link. And like, wow, that's going, wait, I've been on this site before. It's triggering my memory. And that's really, I think, the key moment. It's like, oh, yeah, I'm going to follow this guy on Twitter, or I'm going to put this site in my bookmarks. So I'm going to put my RSS reader or whatever it might be. And that's sort of the key thing that I think you want to accomplish. This is one of my big criticisms of Substack. Well, I mean, it's interesting because Substack, I think, is achieving some degree of network effects where everyone's familiar with it. That your payment's already on file. All that stuff is true, but nothing visually about Substack is memorable.

• 39:05Speaker 03

  Every single site looks the same. And also, I'll be reading a post and I'll have to like, bring down the address bar and remember, who am I reading again?

• 39:12Ben Gilbert?

  The Kerning's also weird. This is a weird typography nit, but I'm like, it always looks slightly wrong to me when I'm reading the body text.

• 39:19Speaker 03

  Yeah, I agree. Stratechery, even the name, I know in many respects, it's a bad name for a word of mouth site to be a name that no one knows how to pronounce. But it's not an audio word of mouth site. It's a

• 39:31Ben Gilbert?

  Word of tweets.

• 39:32Speaker 03

  It's super memorable for good or bad reasons. It's one of those no exposure is bad exposure sort of things. More importantly, the URL existed, the Twitter handle existed. It didn't exist in Google search, so there was pluses or minuses. When did you come up with it? The name that I've always been the most jealous of is a Simcoe, again, to go back to Horace Deju. It has all those qualities with the advantage of being pronunciable and easily spellable. So in retrospect, I always make fun of the Stratechery name because it's easy to make fun of. But I do think there's a lot of positive qualities to it that are underappreciated from this memorability aspect. But there is an aspect where it is kind of hard to pronounce. And people are afraid to say it because they're worried they'll say it wrong. And if they say it, they don't know how to spell it.

• 40:17Speaker 03

  So it's not perfect by any means.

• 40:19Ben Gilbert?

  It is based on the Stratechery movie bit, right? Where it's supposed to be Stratechery?

• 40:24Speaker 03

  Yeah, so it's strategy and tech. And yes, there was the Stratechery bit. And so then I'm like, well, I should pronounce Stratechery. That was a terrible idea. I think I did that for like a month.

• 40:33Ben Gilbert?

  Didn't it even say on the website it's pronounced stratechery?

• 40:36Speaker 03

  Yeah, at the very beginning. Yeah. And then I quickly realized that was a very bad idea because it is strategy in text, which would be stratechery. Yeah, lots of poor decisions. It's very easy to look back and see all the good ones.

• 40:46Ben Gilbert?

  But this is how you build brands. The only way is to like do this stuff. I feel like every single time we talk to someone who built something in their own image from first principles with their ideas in a super opinionated way about how they wanted to sort of like birth their internet child into the world. It has all these really rough edges for a while.

• 41:05Speaker 03

  Yeah, and that applied to lots of pieces. I mean, I had my people visiting the homepage of days I didn't post. So in the meantime, once I left, I was really looking for a job at Microsoft where I could still blog.

• 41:15Ben Gilbert?

  Isn't that all jobs at Microsoft? You just kind of chill and you have plenty of time to blog.

• 41:18Speaker 03

  But I couldn't write about Microsoft. And also, it was getting a lot of attention. Again, I was surprised at how quickly it blew up. I mean, this is where the other Gruber story comes in where at appendicitis, I'm laying in a hospital bed getting ready for surgery and I'm like waiting around for a few hours. I had waited to email John because for the same principles at the beginning, I wanted to have a body of content, not just like an introductory post, say, oh, check out my new blog. How many emails does he get about that? Right? And so I waited a couple of months or a month or so and I emailed him and say, hey, been a big fan. He had just been on a podcast telling his origin story and he also worked at the student newspaper and XYZ. So I shared that, you know, I'm like, I relate to this. I regret not doing what you did back in 2003, but I'm giving it a

• 42:02Speaker 03

  shot now. Here's a few articles I'll be interested. And I heard nothing back. It did no response. And so, you know, I had my surgery. It was very successful. No problems. Couple of weeks later, I'm at Microsoft and I get an email from him pointing out that I'd made a grammatical error. I think it was something like jive, jive, like I used the wrong one. And he's like, I make this mistake all the time. He's like telling me the etymology of each one. And that's all the email said.

• 42:32Speaker 03

  No closing like, I love your work or just like, no, full stop. It was just explaining that I used the wrong word and what different words meant, what I probably meant to use. So I thought, well, he's probably going to post a link to the site. So I was very excited. So I'm like sitting on the analytics page and I'm sitting on during Fireball, seeing what he will post. And I was hoping for just a short link, right? He has all those short snippets. Instead, he, it's a full article and he starts out saying, all my readers should be reading this new site. And I've discovered, I've discovered, of course, College Stratechery. It's the best new site I've encountered in years. And then he lists like three articles. That I've discovered with the help of its author. Right. He's like, you should, this article, this article, this article. It's like 500 words of just the most glowing praise imaginable. And then he gets to the end, he's like, but for

• 43:17Speaker 03

  the first time, I disagree with Thompson. And then he spends another thousand words saying, well, I was wrong about something, which was fine. I mean, I think he was wrong. And there was the start of a beautiful friendship.

• 43:26Ben Gilbert?

  Do you remember numerically what happened to your traffic after that?

• 43:29Speaker 03

  So the thing I always was indexed on was Twitter followers because that was a very clear metric of people who had affirmatively decided that they wanted to know what I had to say. And I don't think it's the case anymore, but for a long time, my percentage of subscribers actually followed was a fixed percentage of my Twitter followers.

• 43:47Ben Gilbert?

  Huh. Paid subscribers were a fixed percentage, like people who subscribe to the daily update?

• 43:52Speaker 03

  Yeah. Which meant I knew my limiting factor on subscribers was awareness of who I was. So I had 500 Twitter followers when he posted that. And within 12 hours, I had 1500 Twitter followers. And that sounds very small. I mean, I have 200 and 1000 some followers now.

• 44:09Ben Gilbert?

  Tripling hour, hour over hour is a great rate to compound at.

• 44:12Speaker 03

  That's right. And also, it was a lot of people that were also bloggers or writers or influential. There was two step changes in Stratechery's growth. That was really the first one, for sure. The next day, I get reached out by the head of strategy at Microsoft or a week later is like, hey, can I, we have a meeting. I'm like, oh shit, I'm in trouble now. He gets summoned to the principal's office.

• 44:32Ben Gilbert?

  At least it's not the head of PR. That would have been way worse.

• 44:34Speaker 03

  So he ended up being with him. He wanted to hire me. He's like, look, I'll bump you up to level 65. You know, I kind of want to go back to Taiwan. Is this Kurt Delvenny? Who was the head of the strategy at the time? No, his name is Charlie Songhurst. Oh, yeah. So and I kind of sniffed him out. I knew he was probably leaving soon. He did end up leaving shortly after. He's like, no, go live in Taiwan, just fly back once a month, it'll be fine. But fortunately, I turned him down. But all this is a circuitous way to say, I did feel I needed to leave Microsoft. Like, this thing was taking off. It wasn't sustainable. Number one, I couldn't write about Microsoft. And it was stuff that people at the highest levels cared about. It wasn't like writing about the finer details of VPNs or something along those lines. And so I'm looking for a job, end up at Automattic, and that's where I met Matt.

• 45:17David Rosenthal?

  So you went looking for a job in your, like, heart of hearts? Were you hoping that you could someday not have a job?

• 45:22Speaker 03

  Without question. No, strictly was my plan.

• 45:24David Rosenthal?

  You just felt like you couldn't do it yet?

• 45:26Speaker 03

  Yeah, I mean, I had a family, like, I had business school debt. I needed to have a job that paid the bills. I wanted to find a job that would let me continue to do this. So Automattic worked out. It actually worked out even better because I was like hired as like a growth engineer or whatever, which I didn't really know anything about. But then the team I was on pivoted shortly after I was there to building like a new backend of WordPress. And so there was nothing for me to do. We didn't have a product out. But fortunately, there was a little bit of pushback internally because I was becoming this very visible blogger. It's like, what the hell? Like, this guy's working for us? I thought we weren't supposed to have. Because back then, Automattic was one of the few distributed companies because they lived where they wanted to. So as soon as I got the job, we moved back to Taiwan.

• 46:08Speaker 03

  And you weren't supposed to have a second job for sort of obvious reasons. And I think Matt did run some interference for me where he's like, no, don't worry, he's good. And the one thing I did do for Automattic is I went through a lot of the company, what they were doing. And I wrote this big strategy document about where they're at, what they should do. It had some impact, I think, on where they ended up going. You guys should buy Tumblr. Yeah, that was at the time when they were, it had been a very small company and at around that time, they decided to raise a lot of money and grow into being sort of a much bigger one. Again, I don't know how much impact I had. Matt says I had a big impact. He may be being generous. I don't know, but I kind of actually ended up working mainly directly with Matt and he mostly left me alone and then he would have a question or whatever and I would think about it and write something up and come back. Well, nominally being the

• 46:52Speaker 03

  growth engineer for this team that did not have a product in the market. So I owe automatic a lot, but it was also very stressful. I felt really guilty because I'm like, I'm really devoting all my energy and time to security and I'm getting paid by automatic. Just that was internally very stressful to me and you know, that wasn't the idea like, I mean, that sounds cliche, but I raise in a Midwest blue collar town. Like I'm getting paid far more than I ever made in any time in my life and I don't feel like I'm devoting all my time and energy to this company. That was very internally stressing. And so I got this job to be like a consultant for this company that wanted to expand to Asia Pacific. And I'm like, well, I can do this consulting job and then I can make sure tech area paid

• 47:35Speaker 03

  things. I couldn't do that while I was at automatic. Again, you couldn't have a separate paid job while being there.

• 47:39Ben Gilbert?

  And so you left automatic to go do this sort of potential consulting thing?

• 47:43Speaker 03

  Well, no, first I left automatic because I'm like, I need to build this subscription bit and this new website before I start this consulting job. So I left automatic. I'm working on building this. What happened was that consulting shop fell through. It just didn't materialize. No way. You burned the boats and then there was no car. So I watched the techery and again, the idea was you would log in, you get this much fuller experience. And I watched it and number one, I had something wrong with security certificate. So the first 24 hours, no one could make a purchase. And so I'm like up 36 hours straight. I barely slept for the week before, because I'm like finalizing the site. I stupidly had like reached out to like Kara Swisher at Recode. And so she had a pre-scheduled post that was going to announce I was going paid. And so like I

• 48:25Speaker 03

  had this stupid artificial deadline that made zero difference other than stroking my ego. And so it was awful. It was a horrible experience, but the worst thing was that the product sucked. It was super confusing. I didn't achieve my goal of having a good experience for non-paying customers that was ideally lure them in. And for paying customers, it didn't work well. And it was very janky and it sucked. It was really, really bad. So over the weekend, I'm just miserable and I know I screwed up and I burned my bridges and all this sort of thing. And I realized that, look, I messed up. The business model's right, the product's wrong. So over the weekend, I tore the whole thing out. I went back to the old website and I told the people that subscribed.

• 49:05Speaker 03

  I'm like, look, I appreciate you subscribing. The format's all wrong. What I'm going to do is for your subscription, I'm just going to email you. I'll email you once a day with the extra stuff that I promised you. And so I felt completely and utterly ass backwards in the email. I thought it would all be on the website. I've been thinking this whole time. I'm like, we have not talked about email once. Yeah. And my mentality has always been to check every website first and foremost, but it's like, look, I'll deliver you this extra stuff via email. And it will also be on the website on the sidebar and you'll, it'll be archived there, but you're going to get an email. And it worked out in the long run. In the short run though, I had a one day goal for new subscribers. Well, I guess a two day goal because the site wasn't operable for the first day.

• 49:45Speaker 03

  I had a one day goal, a one week goal and a one month goal, and I failed to reach all of them and failed pretty significantly, honestly, to reach all of them. And so I'm there, I've given up this six figure job, living in Taiwan, business school debt and an idea that I thought could work, but did not seem to be working very well. And it was very, very stressful. I mean, I stopped paying all my credit cards because especially back then Taiwan was very cash centric. So I needed to preserve cash. I was, you know, not sleeping. I also watched a podcast at the time, which was Exponent with James Allworth. So I'm writing, as I mentioned before, seven times a week, plus doing a podcast. I'm doing all the editing for the podcast, all the production, all this sort of stuff. And I thought I'm going to have to like go teach English again to like pay the bills at the same time.

• 50:31Speaker 03

  And then I think like the first month, when I tore all that out, I screw up the subscription. So I double charged a whole bunch of people. So I had to process all these refunds, do all this customer support and it was pretty tough. I launched in April. This is April 2014, 15? 2014. So next year will be 10 years of checkery, but nine years of it being my job. So fast forward to the summer, we're back in the States. My wife and I had planned a long standing trip. We're gonna go to Paris and leave the kids with my parents.

• 51:00David Rosenthal?

  You fast forward there a little bit, but you must have had some thoughts in those intervening months where you're like, well, shoot, I'm just gonna have to give up on all this, right?

• 51:06Speaker 03

  Yeah, but like, there was certainly a pride factor. I couldn't bail on it. Like, I mean, no one thought I would succeed. I had lots of people reach out, be like, hey, Ben, I love you, but subscriptions are not a thing on the internet. It's not gonna work. And a lot of people intact, especially VCs.

• 51:19Ben Gilbert?

  Which is weird, because they always know exactly what's right.

• 51:22Speaker 03

  No, they're very conventional wisdom driven, I think, in general.

• 51:26Speaker 03

  So I can still picture, I was sitting at the kitchen table at my parents' house in Wisconsin, and you looked at the numbers, and my May subscribers were more than April, June was more than May, and July was on pace to be more than June. And we're still talking like a couple hundred, not very many. Oh, and I'd also had like multiple levels. So some of the people had like this $300 level where I was supposed to like chat with them and have subscriber calls and all this sort of stuff.

• 51:50David Rosenthal?

  Everybody starts that way and then quickly gets rid of it.

• 51:53Speaker 03

  And I'm also trying to do like sponsored posts, really just an overwhelming amount of stuff. But I looked at those numbers, I'm like, I think it's going to work. And so I paid off all the credit cards that had been running up for the last few months. My wife's like, should we cancel the trip? Like, no, we're not canceling this trip. You know, she was very mad at me. She's like, you threw away this six-figure job. And so I didn't want to tell her how poorly things were going.

• 52:14David Rosenthal?

  You didn't give her access to the analytics?

• 52:16Speaker 03

  No, of course not. And I'm like, no, we're not canceling our trip. Things are going great. And so we flew to Paris, ran the credit cards all back up again, of course. And in Paris, I remember, I would wake up every morning at 4:00 AM, sit in the bathroom and write a daily update, and then my wife would wake up and we sort of like go out for the day. And that ended up being true. It just sort of kept increasing. I mentioned there was two big step changes, the Gruber one being the first one. In November, I actually ended up reaching 1,000, which is my one-year goal. So I hit my one-year goal. Much earlier than I expected, you know, one year, a hundred dollars a year, a hundred thousand dollar run rate.

• 52:50Ben Gilbert?

  Funny thing about exponential growth, you miss the early goals, but you nail the later ones.

• 52:53Speaker 03

  Yeah, I don't think exponential growth really applies in my business, but maybe more so at the beginning, there's more of an exponential curve. I mean, the problem with a word of mouth business and exponential growth is people run out of people to talk to. And so that's the limiting factor.

• 53:06Ben Gilbert?

  Right, it's only the new subscribers give you the exponential.

• 53:10Speaker 03

  Right, there's a little bit of exponential with every new subscriber because they will tell new people, but networks get exhausted. And so it's more than linear, but it's, if you zoom out, it's really linear is the way this sort of growth works. But, so what happened was in November, I put a little post out, first I simplified my model, I said, no more of this 300 level, cheap level, one price and one product, that's all you're getting. And then number two, I'm like, hey, I got a thousand subscribers, business model works, you know, this is definitely going to be my job sort of going forward. And in the next 24 hours, I got 250 new subscribers. By far the biggest step change in my subscriber growth.

• 53:46David Rosenthal?

  Did all the VCs email you again and say, Ben, you're a genius. Will you please come talk to our portfolio companies?

• 53:51Speaker 03

  I was right about my metric of people visiting the homepage in days I didn't subscribe. What I was wrong about is that the vast majority of people thought I would fail and go out of business, they didn't want to lose their money. And so they didn't subscribe. But once it was clear I would be an ongoing entity, then like, oh, okay, I guess my money will be safe and so I will now subscribe. I was right about the market, I just, I didn't understand that psychological aspect. One of the things I think is great for sort of the, I went back to Substack, make it easy to pay. I think the real great thing for Substack and Substack writers today, it's not just that it's easy to pay, but people aren't scared to give their money to some random writer on the internet. And they were previously and now they're not.

• 54:34Speaker 03

  And I think that's really great and something I'm very proud of.

• 54:37Ben Gilbert?

  Wait, so what was it about yours where they suddenly became not afraid?

• 54:40Speaker 03

  Because I had a thousand subscribers, I was making a hundred thousand dollars a year.

• 54:43David Rosenthal?

  It was that they thought that before they knew that you were secure, that you might just stop writing and then they would have paid you and then they would get nothing for it.

• 54:50Speaker 03

  That's right. I think that that was really the case. And so then, since then, I've never had a growth explosion like that since that 25% growth in one day, but it's been sort of slow and steady since that point.

• 55:01David Rosenthal?

  That accidental email hack. How do you think about it now? You say you still think about Stratechery primarily as a website, but how do you think about email now? Like, obviously, it's a big part of what you do.

• 55:12Speaker 03

  Yeah, well, it is, but it's not. I mean, I think if you see the stuff that I've done, for example, now you can consume the daily update via a podcast or my articles via podcast. I think that's actually very much in line with my vision and view of Stratechery, which is this is a publication that I write and I will make it as easy for you to consume in the way you want to consume as possible. And back in 2014, that meant sending emails. And certainly, there's all the advantage of emails that everyone's talked about. It's a fee that everyone checks daily. You don't need permission to get into there. There's no algorithm. You know, it's funny, because I think once Substack came along, it became overwhelming and people started setting up rules to send other emails to a folder,

• 55:57Speaker 03

  which they never check. So you're back and started the same problem, a self-imposed algorithm, which is where podcasts is great. It's the same idea. It's a feed that people check that, I mean, it works through polling, but to people, it feels like push. And that's certainly a great thing from an independent publisher perspective, and I think in line with my vision. I mean, one of my criticisms of Substack was I think they were too email centric to start. Again, I think the web experience is important. It's super important for growth because that's where people find out about stuff is often via social media and sharing links. And email is a tactic. It's not a strategy. And at the end of the day, the strategy is about differentiation. It's about consistency. And I want it to be easy to use and fit in your life. And email was a way to do that. Again, sort of backed

• 56:42Speaker 03

  into now podcast a way to do that. You can get Stratech articles via SMS, which gives you a link and you can read on the website. Obviously, I've always had RSS. And I just want to make it as easy for you to access the content that you're paying for as possible because that sort of makes the whole thing go. And, you know, you mentioned churn. The beautiful thing about this model is, number one, from a writer perspective, all I really need to worry about is keeping my subscribers happy. And so like, you know, should this be a free article? Should it be paid? Well, you know what? If it should have been free, but it made it paid, that's fine. My subscribers feel like they got a great article that they paid for and they feel good about that. And that recurring revenue is really, really powerful. And then also, that's my marketing channel. It's them telling other people about that this is good and you should sort of check it out. And one of the things we

• 57:27Speaker 03

  do with Passport is a big way stuff spreads is people forwarding emails.

• 57:31Ben Gilbert?

  And Passport is the technology infrastructure you've built to enable other people to build Stratechery-like experiences if they're whitelisted by you. How's that work?

• 57:40Speaker 03

  No, it's just my stuff for now. I mean, obviously, we would love to make it broadly available. It's not all finished yet, and there's customer support issues and things that would entail that. But something that I would like to do. But one of the things we did with that is I link to myself a lot, which people make fun of, and deservedly so, because it's kind of a running joke between me and my readers. But a way I think about Stratechery is it's a live thing. It's an ongoing sort of journal of my attempt to understand the world, to understand technology. And sometimes I was right about something, and it's always fun to point back and say I was right. Sometimes I was wrong. It's like, why was I wrong? What mistakes did I make? Sometimes there's a trend, and it's like, well, this happened back then, and this happened here. And then, again, I think about it as being sort of a live thing, and so linking back to myself is a way to do that.

• 58:25Speaker 03

  It's also a great way to trigger that second article sensation, where you read an article, and then there's a link right there, and you go read another article. Wow, that was also really good. And then there's XYZ. So one of the things that I wanted to do with Passport was, how can I really leverage email forwarding to accomplish this? Especially when I'm linking to paid articles. So like, one of the things we do there is every link to myself in a Stratechery email is tokenized, and that token goes one link deep. So even if that email's forwarded to you, you can go read old stuff, so you get that second article sensation. Now, if you're in that second article, and you click another link, now you're going to paywall. And then you're going to realize, oh, I have to pay to get this. But there's all these little bits and pieces that the subscription model makes possible,

• 59:09Speaker 03

  which is really leaning into just serving your customers, trying to make it as good of an experience for them as it can be. And the other really important about subscriptions is there's always debates about, oh, people just write for clicks and blah, blah, blah, blah. And then the publishers or the editors will come back and say, no, we don't even show our writers their click numbers. Like, they don't know. All we want them to do is write content. And I think that's so foolish, because everyone wants feedback. They want affirmation. They want to know, did I do a good job? And if you don't even get access to your click numbers, where do you go? You go to Twitter. Like, what are people saying about me?

• 59:43Ben Gilbert?

  Right. You will find a way to figure out if you resonated or not.

• 59:47Speaker 03

  Right. And who's on Twitter? The biggest loudmouth, right? I'm one of the things I I worded on Twitter about Twitter very early on was I would be very engaged on Twitter. I'd be responding to people. And then suddenly it occurred to me, I'm responding to the same 10 people or 30 people or whatever it is, right?

• 1:00:02Ben Gilbert?

  So true.

• 1:00:03David Rosenthal?

  Yeah, you're engaging with 0.2% of your audience.

• 1:00:06Speaker 03

  Right. And so that's a fixed number. And meanwhile, I have a feedback mechanism, which is my subscriber number, which is going up, which means I know there's a huge number of people that like and appreciate and are sharing. And it's all dark matter. I don't know who they are. I don't know where they are, but they like what I'm doing. And I need to anchor on that, not worry about what the loudmouths of Twitter are saying. And so subscriptions give this feedback mechanism. And it's feedback mechanism for people that will never email you, that will never contact you, but they will pull out their credit card and they'll give you money. And I think that's so valuable and so positive from an incentive structure. Now, there is a downside where subscriptions are niche, right? And I do think you tend up, people will, if they dislike you, they can stop paying.

• 1:00:50Speaker 03

  And there is a worry and a challenge that you're not like pandering to your audience, whatever it might be. I think I'm kind of lucky because I was so early, because I was the only person in the space doing this sort of stuff. I got to a large enough audience size where I could not care. And if someone wants to cancel their subscription, I don't care. In fact, if someone comes back and if they are just over the top rude or disrespectful or insinuating things about me, I will not just cancel their subscription. I will refund them their entire purchase and say, please, just never come back.

• 1:01:21Ben Gilbert?

  Isn't that the nice thing about an approachable price point? You're like, actually, your dollars are insignificant to me because my number of subscribers is so much larger. It's very different than like if Apple decides to stop advertising on Twitter. It's like, oh, crap. Oh, oh, oh, I'm so sorry. I'm so sorry. Come back.

• 1:01:35Speaker 03

  Yep, that's exactly right. And again, would I have been able to do that when I had a very small number of subscribers? No, but I mean, it was easier back then because, I mean, I started in 2013 and the entire opinion of the tech press and Wall Street is that Apple was doomed because of course, well, crap with the Windows Mac, blah, blah, blah. So I had the lowest hanging fruit in the world to sort of pick, right? It'd be like, no, I don't think Apple's doomed, to be honest. You know, that's why I wrote that, why Klingrischen was wrong, because all the disruption people were like, you know, Apple's for sure screwed unless they go down market. I'm like, no, I don't think they need to go down market. And so that was great because it's not like I was writing anything that controversial. And so I didn't even run into any issues where people would try to hold it over me. And by the time I got into issues where that mattered and I was large enough that it didn't matter.

• 1:02:20Speaker 03

  So I think I was definitely fortunate in that regard.

• 1:02:23Ben 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.

• 1:02:36David 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?

• 1:02:53Ben Gilbert?

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

• 1:03:08David Rosenthal?

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

• 1:03:32Ben Gilbert?

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

• 1:03:51David Rosenthal?

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

• 1:04:21Ben 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. Can you share, like, what does the shape of the curve look like in terms of if you graph it on the X axis is time and on the Y axis is number of subscribers from the start of Stratechery to today? We talked about going up to 1,000 and then adding to 50 and that step change. And even if it's like relatively linear, has it sort of tapered off over time?

• 1:05:06Ben Gilbert?

  Like, are you saturating the world of tech people who care about business strategy?

• 1:05:13Speaker 03

  Yeah, it's interesting because there's been different periods where it actually, I thought it was starting to taper and then it actually accelerated. This is probably 2018, 2019, around there. Over the last couple of years, it has tapered off. It's not quite what it was, which is fine. In terms of the growth, it's tapered off.

• 1:05:28Ben Gilbert?

  I mean, it's subscription revenue. If it stays flat, you're in great shape.

• 1:05:31Speaker 03

  Yeah, well, and then also I raised prices a couple of years ago, which is the only time I've raised prices, and I still kind of mildly regret it. It's funny because everyone's like, always your price is too low, you should raise prices. That's definitely the absolute easiest way to increase revenue. I think the easiest thing for me to do would be to just keep doing what I'm doing and just raise the price a dollar a year, every year. And for sure, my revenue increase would very much outweigh my churn. I mean, honestly, the biggest change that happened when I did raise prices was it didn't affect growth at all, except that I had a lot more people switch to annual subscriptions because I like pre-announced it like, hey, if you want to get a year at the old price, which is great because I want people on annual subscriptions, as we sort of discussed at the beginning. So I could do that. I think my view on it has always been.

• 1:06:17Speaker 03

  I think of the internet in general, the markets are much larger than people think. I thought it was much larger than all the folks that are critical of my model thought, and it's been larger than I thought all along, right? I thought it would take five years to build or to launch as my business. It took a year and I would rather explore the edges of that market, how big it is, as opposed to sort of maximizing my revenue too soon. And so that's sort of number one. Number two is I do want to have an impact. I do want people to read. By definition, the larger your subscriber base, the more your sort of marginal customer is not aware of you, is not immersed in the space, their willingness to pay is going to be lower. And so when you start raising prices, you're going to hit a wall very fast, I think, as far as subscriber growth, sort of by definition. That's sort of number two.

• 1:07:00Speaker 03

  The sort of shift over the last couple of years has been, well, is this it? I've reached my natural base or whatever it might be, which is again massively larger than I ever expected. I just wanted to pay the bills.

• 1:07:12Ben Gilbert?

  Yeah, like tens of thousands of people that pay you to read your work and millions of people that I'm sure come to your website and read the free product. Like there is a real market for this.

• 1:07:23Speaker 03

  I would definitely push back on the millions. I think it's interesting because I do think, and this is an area where I do feel I got there in time, I think the ability to spread on social media on Twitter has really diminished. You know, Twitter famously really started devaluing tweets with links a few years ago, which I think has made the product much worse. I mean, that's how we ended up with all these threads because those spread more. Oh, threads, oh my God. Yeah, which all should be blog posts. So I think that has hurt it. The other thing that has hurt my growth frankly is releasing stuff as a podcast. So my subscribers love it. Half my subscribers now listen instead of read, which is amazing.

• 1:08:00Ben Gilbert?

  That's how I consume every single post.

• 1:08:02Speaker 03

  Yeah. And then the other good thing is people would churn because emails would build up and they'd look at their inbox, there'd be like 2000 emails and they're like, ah, why am I paying for this? Whereas an eight minute podcast just feels like I can knock this off real quick. So it's been very good for churn. But the problem is people don't share podcasts, right? You listen to a podcast, you go to the next podcast, you do XYZ. Whereas if you're reading something, it's super easy to tweet it or to forward the email.

• 1:08:27David Rosenthal?

  Click forward, yeah.

• 1:08:28Speaker 03

  Yeah, so I do think that might be the biggest issue on why my growth slowed down, to be honest, which is fine, it is what it is.

• 1:08:35David Rosenthal?

  And you're obviously leaning more into podcasts, right?

• 1:08:37Speaker 03

  I did face a decision this year, which is growth is somewhat leveled off. Do I raise prices and just sort of be happy with the base that I have? And I figured it'd be worth a shot to see if I can restart growth. In this case, by sort of working to increase and broaden the value of a Shakeri subscription and not just my own content. So I watched Dithering with Gruber, obviously he's now my podcast partner, a couple of years ago. That was like an add-on, so you pay extra and you get Dithering. And that was really on the, let me make more money for my best subscribers. As a way to raise prices on my best subscribers without explicitly raising prices, right?

• 1:09:12David Rosenthal?

  Was launching Dithering a business decision? Or just a, this is gonna be a fun thing with a good friend, or both?

• 1:09:18Speaker 03

  Oh, both. And then also I had this technology for paid podcasts, that was a way to do it. And so, yeah, we watched it. It's been successful. I mean, it has, you know, I think like from day one, we had like 10,000 subscribers. And then it's sort of leveled. That's, it's kind of like where we stuck, we didn't churn at all. But like, how do you grow a paid podcast? It's, we haven't done anything around free episodes and marketing, we will. But that was a de facto price raise on my best customers. And when I wanted to sort of explore this space, it's like, well, is my market as big as it can be? And is there a way to sort of go broader? I figured out the newsletter thing. Like, I think subscriptions make tons of sense for podcasts. Because people get so attached to a podcast, they get so attached to a particular host, and it becomes such a part of their routine to a much greater extent than reading,

• 1:10:03Speaker 03

  which is sort of more of an affirmative choice, I have to go read this. Whereas like, oh, this is in my podcast player, guess I'll listen to this next. And so I think it's a great product for subscription. But it's totally unclear, how do you actually build a podcast, particularly a paid podcast? It's really hard to get people to start to listen to it. And so in general, I think writers tend to succeed with podcasts because writing is a good marketing medium. Again, it spreads easily, you just pass a URL. So people have become familiar like, oh yeah, I'll try out your podcast because I like you as a writer. But if you're just a pure podcast, how do you sort of grow? And so what I've decided to do is Dithering is no longer going to be an add on. It's going to be a part of a Stratechery subscription. So now, again, your Stratechery subscription is worth more because you have this sort of extra piece and you got it for quote unquote free.

• 1:10:46Ben Gilbert?

  So you don't sell it separately at all?

• 1:10:48Speaker 03

  Well, it is available separately. Again, it's co-owned with John and some of his subscribers maybe don't like me, so they want to go subscribe. They can, but it's no longer as an add on to Stratechery. If you are a Stratechery subscriber, you get Dithering. It's part of your subscription. Watched a new podcast called Sharp Tech that, again, there's both free episodes and paid episodes. It's available to all Stratechery subscribers, so your subscription is worth more.

• 1:11:09Ben Gilbert?

  And so people are sort of opting in, just to make the point clear, because I've listened to every single episode of Dithering, including the back catalog before you launched. I started recently listening to Sharp Tech and of course Sharp China, which you're about to talk about. It seems to me that Sharp Tech and Dithering is sort of like, well, I get Ben and I get Ben's thoughts and I get a lot of the same thoughts. And I basically am picking whether I like Andrew or John better. And I'm also picking the format and duration of the episode.

• 1:11:34Speaker 03

  Yeah, right now, the bundle is kind of a joke because it's mostly just me, right?

• 1:11:40Ben Gilbert?

  Different flavors have been.

• 1:11:41Speaker 03

  I only have so many opinions. I have a lot of opinions, but I only have so many. So it's not in its long-term place now for sure. And it's very tricky because there is an extent to your point about if you release a bad episode of Acquired, you know, do you worry about churn? Am I diluting what Stratechery is to someone? It's no longer just an email. And now I'm reintroducing the possibility that people feel overwhelmed with content. And then they also feel like, oh, Ben's repeating himself all the time. I think there's a lot of underrated risks in doing what I'm doing. But number one, I think watching Sharp China was a good signal to my audience of what I do want to sort of accomplish going forward. Well, that's a collaboration with Bill Bishop, who writes Sinocism, and it's the first Stratechery product that I'm not on.

• 1:12:25Speaker 03

  But I think it's a important topic, understanding China. I think it's of a similar tone and quality level of what you should expect from Stratechery. Do I expect all Stratechery subscribers to listen to it? No, of course not. Some people like me. Specifically, and I'm not on there, so they're not going to be interested. But I think for a lot of folks, it's like, well, I keep hearing lots of news from China. Where do I go? I'm already a Shrek subscriber. There's this other product here. And if they become a regular Sharp China listener, I've now decreased my churn that much more for that sort of person. And I think, again, a big part of subscription is just churn management. It's like, I want to make sure this is a long time subscriber and you get that recurring revenue over time. As you might imagine, there are plans for other podcasts, you know, sort of be added in the long run.

• 1:13:09Speaker 03

  And we'll see what happens. I mean, growth has, I think, picked up over the last couple of months. So early indicators are that it's working, where I'm increasing the value and will make up for the cost. Would I make as much if I just raised the prices and didn't bring in the additional costs of paying for Andrew and other podcasters and things on those lines? Probably not. Again, the revenue maximizing thing for me would be to stay with Memberful and just write Shrek.

• 1:13:33David Rosenthal?

  And it's nice and simple.

• 1:13:35Speaker 03

  Yeah, but number one, I've always been worried about getting stale. I know I have critics I hear on Twitter who think I already am.

• 1:13:41David Rosenthal?

  But they're 0.2% of your audience.

• 1:13:43Speaker 03

  Well, who knows? They're very well on Twitter, right? Number two, one of the things I'm so proud about was Shrekery's. I was saying most well-known first Shrekery, but I'm so proud of the business model and that it exists. And the fact that Substack is out there and there's hundreds or thousands or how many people making their living doing this? And I feel responsibility for that in a very positive way. And I really want to get this working for podcasts. I think there's a similar opportunity. And so helping to help pioneer that is fun. Building software is fun, even though it's costing me a lot of money, as you might imagine. Producing new podcasts is fun. Figuring out this bundle thing is fun. How do you cross link stuff? Like, you know, if you listen to Shrekery episode, because we know who you are, because it's a unique feed to you, you could just add another podcast

• 1:14:26Speaker 03

  without having to sign in or do anything, like really smoothing out this experience of cross promotion. It's fun. And I think I'm fortunate enough that Shrekery has been successful enough that I can make choices that at least in the short term are more optimal for figuring stuff out and having fun, even if it's not revenue optimal. And obviously there's upside. Maybe it'll end up being a huge thing and I'll make much more money than I ever would have just doing Shrekery. But I do feel very fortunate that I can make that choice in the short to medium term.

• 1:14:58Ben Gilbert?

  Nice thing about having no outside shareholders. You're your own little Zuckerberg over there, ruling by fiat on whatever sounds most fun to you.

• 1:15:05David Rosenthal?

  You own no activist shareholders.

• 1:15:07Speaker 03

  No, for sure. I actually thought about building a Substack a few years before they launched. I actually had a team together and it ended up falling apart. But my big hesitation was always, I just wasn't sure if it would be venture scale. And from my perspective, if you have the stamina and capability to produce regularly, subscriptions are amazing ability to sort of bootstrap. And again, you're asking people to pay for the regular production of content. It's actually a very straightforward transaction and can be sort of very sustainable. How many of those are venture scale businesses? I think maybe not as many. And you're right, it comes with a bunch of compromises, comes with a bunch of trade offs. You have to optimize in certain ways. And I think venture is a phenomenal thing.

• 1:15:49Speaker 03

  I think I'm not anti-venture at all, just anti-venture for me personally. I don't think it would make much sense.

• 1:15:55David Rosenthal?

  I like the lifestyle, so lifestyle business for me. You were talking to two venture capitalists who have a business which is structured the same as yours. So I love that we've had this part of the conversation because I was really curious. I mean, selfishly for us, I'm curious your thoughts on, there are corporations that have large numbers of people that make products that are scalable. And then at the opposite end of the spectrum, there's being talent. You're a solo business, but your business is being talent in other people's productions. But the internet has enabled this whole new class of stuff like Stratechery, like acquired, like not boring, like what have you. How big do you think this third class of whatever it is we are can be? Is that part of what this experiment is?

• 1:16:35Speaker 03

  For sure. Like, I'm not passionate about like Meta's business prospect. I definitely have takes on it. You know, I think that's the other company I've mostly been pretty right about over the years, along with Microsoft are probably my two longstanding best calls. But I'm not like waking up in the morning, killing myself, like if their stock goes up or down, I don't really care.

• 1:16:53David Rosenthal?

  You're not going to go work at Meta?

• 1:16:54Speaker 03

  I'm not going to work at Meta. I think that's a pretty safe, I mean, if Meta wants to buy me for $100 million, I guess I'll earn out, but.

• 1:17:00David Rosenthal?

  You'll rest invest.

• 1:17:01Speaker 03

  Yeah, I will rest invest, yes. I mean, Mark, if you're listening. But what does get me super excited, I am really passionate about is this completely new arena of possibilities and I think new jobs that are made possible by the internet. And actually, one of the reasons I actually am in general favorable towards meta is I think they're an essential component in the broader ecosystem of niche businesses because if the entire world is your audience, how does the world find out about you? I'm lucky because I produce content that people want to talk about and so they share it for free on Twitter, right? If someone makes like a really cool new piece of clothing or accessory, like people aren't going to talk about that on Twitter, like you need a way to advertise. And I think that's what Facebook advertising has always been the best at and I think is

• 1:17:46Speaker 03

  really valuable. And so I am in general, a big defender of that because it actually is in line with what I am personally very passionate about, which are the economic opportunities made possible by the internet. What the internet does do in industry after industry, I think this applies to creative talent as much as anything else, is number one, there's always a barbell effect. You're either very large, you're very small. You're very large, you get scale, you get aggregation effects and then you can make massive investments or acquisitions, knowing you can immediately feed that to hundreds of millions or billions of people and get a payoff. Or you take advantage of the internet and open source software or whatever it might be, or different platforms and your cost structures are basically zero and you only need a thousand true fans. Like the thousand true fans was 100% true. That was my guiding vision and it ended up being the case.

• 1:18:31Speaker 03

  And so if you're stuck in the middle, which all the old publications were stuck in the middle, they weren't big enough to get aggregation effects, their cost structures were way too large to handle a fractured audience, they were all in trouble and got a lot of traction about saying they were doomed and then they were doomed. Right, like you were saying about, that's why they hate social media, but if you're on the low end of the barbell, like I was like, you love social media. No, that's right. It's an amazing asset. So that's number one, the internet has its effects. Number two, the internet has winner take all effects in specific markets. So it's going to be hard for someone to be a generalist tech and media analyst and do what I do. It's possible. I mean, there's people that are very good, but just because I got there first. But that doesn't mean there's only one.

• 1:19:16Speaker 03

  Analyst role available. There's a guy Neil Seibert, I think.

• 1:19:19David Rosenthal?

  Well, it's like an equity research department in a bank.

• 1:19:21Speaker 03

  Yeah, he writes about Apple and he very much mimicked his business after me. He was pretty early too. So he actually did a lot of stuff himself. He's done a really great job. He's been an independent Apple analyst for eight years or something like that, which is fine. He writes about Apple every single day. Believe me, there are people that want to hear about Apple every single day. And so that's an example where it seems like we're doing the same thing, but we're in different markets. This is what the internet makes possible is the key to success on the internet is you want to be the biggest fish in the pond. But the success metric is not competing with other fish. It's finding your own pond. The opportunity is broad. It's not deep. Like in each pond, there's probably only be one or two fishes that survive. Right. But there's an infinite number of potential ponds.

• 1:20:05David Rosenthal?

  You can define your pond in very specific parameters.

• 1:20:09Speaker 03

  I'm still surprised there's not someone that writes about Amazon every day. Like it's a massive sprawling business. There's so many things to write about. I think you'd probably make the same deal at Google. Casey Newton basically writes about social media every single day. It's been Christmas for him over there because of the Twitter stuff, but that's fine. I feel guilty writing about Twitter too often. It's very exhausting. I cover lots of other stuff. There's other things to talk about. And so I'm writing about it more than I want to, particularly yesterday. Like I really didn't want to write about Twitter. Obviously Twitter take on Apple is going to be, everyone's been anticipating it.

• 1:20:36David Rosenthal?

  Right. It's the Superbowl of Ben Thompson fans.

• 1:20:39Speaker 03

  I kind of have to write about it, right?

• 1:20:40David Rosenthal?

  Right.

• 1:20:41Speaker 03

  But Casey, like that's the expectation is that he write about social media. So he's written about Twitter every single day for like a month. And that's exactly what people want. And I'm glad he exists from my perspective. Hey, if you want Twitter coverage every single day, go read Casey. That's a great thing from my perspective, and I think that sort of defines this market. And so number one, I'm really proud that this business model for newsletters exists. I think it should exist for podcasts and I think part of that is just figuring out the mechanics of it. Like, how do you market? How do you grow stuff? I haven't done a good job marketing my paid podcasts, I would say, other than leveraging Chekery. But that's something number one we want to work on. Obviously there needs to be, should be some video stuff. Like there should be, you know, what's the ratio of free stuff to clips, to snippets, things on those lines.

• 1:21:26Speaker 03

  Actually experimented that more with Sharp China and Sharp Tech, where even if you're on the free feed, you're getting more clips and snippets. Also, I think that the technological aspect is important. It's funny, even free podcasts, it's like, oh, we're gonna have a guest on. Go listen to his podcast, go to your podcast player, search for XYZ. And it's like offloading this huge number of steps to the user, hoping they follow through and do it. Whereas we've built something where go to your show notes, click the link, boom, it's in your podcast player. Like, I think that's something that's gonna be important to sort of, you know, the sharing stuff is really tricky because people don't share podcasts naturally. So I wanna figure that stuff out. And it's gratifying, again, not just because it's fun and new and different than my day job, but also that is my passion.

• 1:22:10Speaker 03

  My passion is these sort of businesses, the internet, not just destroying old business models, but making new ones possible, and not just the big guys, but like for individuals as well. And so I'm very grateful and feel very fortunate that I sort of get to do both.

• 1:22:26Ben Gilbert?

  Yeah. I wanna switch gears and ask you about aggregation theory. There's a multi-pronged question here. So the business that you're running is far, far, far superior to a thing that I'm sure you've been asked a zillion times about. Why don't you write a book? You make $150 a year per subscription, at least that's what I pay for the full bundle, I think.

• 1:22:45Speaker 03

  No, you got a refund and a discount, $120.

• 1:22:48Ben Gilbert?

  All right, then I pay $120 a year.

• 1:22:49Speaker 03

  Yeah, dithering is now wrapped into a strategic subscription. So yes, I should be clear for anyone listening, you got a credit on your subscription. We did not issue refunds, but you did get a credit.

• 1:22:59Ben Gilbert?

  But that is to say, I have no idea what I'm paying. And there's some segment of your listeners that are so wildly price insensitive about what you do that it doesn't matter. So it's probably hard to price discriminate on them.

• 1:23:08Speaker 03

  Yeah, no one should look to me for pricing strategies because I know it's not optimal.

• 1:23:12Ben Gilbert?

  But anyway, my quick math was if you did $150 a year, and I know it's 120, and you assume some five-year lifetime on customers, and you compare that to like what you would make selling somebody a book once, which is what? $20 times 7% goes to the author. It's literally 500 times more revenue to you to do what you do versus writing a book. And on the other hand, there's something that you've become known for in aggregation theory and some other topics. Around the edges of it that sort of deserve a canonical work. It's sort of the modern Porter's five forces. It deserves a canonical notion rather than something that's been edited and revised and attached and rethought through. So have you thought about what form canonical Ben Thompson topics would take?

• 1:23:56Speaker 03

  Yeah, aggregation theory is the obvious one. I think the time to have written that book would probably be 2017. I mean, I was writing about the ideas of aggregation theory from the very beginning. It's hard to imagine, but back in 2013, again, like back then, people thought Apple was doomed. People thought the internet was inherently decentralizing.

• 1:24:15Ben Gilbert?

  Oh, it was not long after the Facebook IPO and it was a disaster.

• 1:24:18Speaker 03

  Yeah, Facebook was doomed. Well, then Microsoft was the other thing. I was able to come out of the gate with really four takes that were provide tons of content. Number one, Apple's not doomed. They're actually going to be doing very, very well. Number two, the internet is centralizing. It's not decentralizing. Everyone's understanding the dynamics are completely wrong. Again, today, everyone understands that, but it was, believe it or not, very controversial a decade ago. Number three, this is what Microsoft should do. Like, there actually is a clear path forward. They're not doomed to irrelevance. And then number four, Facebook is way more dominant and valuable than anyone thinks. And so that was, again, I said, I had lots of low hanging fruit to sort of pick.

• 1:24:56Ben Gilbert?

  Well, it's easy. You're being self deprecating here, obviously, but I think a big part of the reason, and this is behind Ben's question to you of, you know, it deserves canonical work. The reason these are accepted truths and realities now is in large part due to your work.

• 1:25:09Speaker 03

  It is a bit of humbling to be a writer because I think people would understand all those things had I not written it. I think at best they understand that maybe a few months or at best a year or two before it becomes common knowledge. And that's just the reality of the game. The edge you can provide is usually measured in sort of months or years or a very low number of years. I do think aggregation theory should be a book. It was probably, again, more pertinent at the height of all these sorts of things. Maybe it's still pertinent now, but number one, no, there's just a logistical issue. I write every day and to your point, I make way more money writing every day than I would writing a book. So that's number one. Number two, there's a fear factor, which is people think I'm very productive, but I, in reality, have daily deadlines

• 1:25:52Speaker 03

  that spur that productivity in the absence of those daily deadlines would terrify me in terms of a book. And number three, there's a second fear factor, which is a book is frozen in time. And if I were to have written an aggregation theory book a couple of years ago, I probably would have centered it on Netflix. And that ended up being wrong. It was wrong in another way that I wrote about where content is super important. That's how you break away from aggregators is having high diversion content. And I had the balance wrong between Netflix's aggregation effects versus the power of content. And so I'm very fortunate I didn't write that book, whereas now I was still wrong, but I have the medium and ability to come back and say, well, I was wrong. This is where I was wrong. What does this mean for Discovery Time Warner? What does this mean for Disney? What does this mean for the other platforms? So that is a fear factor.

• 1:26:37Speaker 03

  And then number four, I think there's an aspect, yeah, maybe it deserves a treatment, but stratechery is very much of the internet. And I think a nature of the internet is it's transient. It's not permanent. Again, another thing people got wrong. I think actually one of the biggest mistakes Twitter made, and it's understandable. No one could have seen this at the time, but Twitter should have had disappearing tweets from day one. It should have always been a just in the moment sort of social network. I think it would be a much better product. Honestly, I think they should still do it now. People experience it and think of it as a in the moment product and then are stuck with this archive that induces fear, induces ruin, and it reduces the frisson of what it's like to be on Twitter. That's a big reason why Twitter is not what it used to be because now people are scared.

• 1:27:19David Rosenthal?

  Well, to the aggregation theory point, I think I've heard you make this argument before, but articulating it the way you have over the years and revising it on stratechery is actually a better product than if you were to like have written a book five years.

• 1:27:32Ben Gilbert?

  Oh, I so disagree, David. It makes it really difficult to explain what it is to people. I'm like, okay, if I'm on the board of a company and I'm trying to like, explain to them that they need to reframe their thinking and think about aggregation theory. If someone's like, what's that? I'm like, I actually don't know what to send you. Like read these things in this order to watch this guy contradict himself and say what he got wrong. And then sort of take away what you think the modern interpretation is.

• 1:27:54Speaker 03

  I think you're both right. There should be a set in stone treaties. Honestly, there's just a matter of priority. I mean, I think again, it would be good to share and point to this thing and go read this. To be clear, I'm in the middle of massive self-realization right now for explaining why this is the case. So take everything I'm saying with a grain of salt. And the other thing is I'm just having more fun and more interested in building software and figuring out podcasts. And I would like to think, oh, a book is just really about my ego and putting it out there. So I'm not that sort of person. I just want to give back to the creative community. That's I said, I'm definitely in rationalization mode.

• 1:28:27David Rosenthal?

  You're definitely rationalizing.

• 1:28:30Speaker 03

  But no, I should write a book. I just haven't. I don't know if I ever will, but I agree that I should have by now written a book, but alas.

• 1:28:38David Rosenthal?

  One last quick question on aggregation theory. Obviously, you were building up towards it, even as you said at the time, I think. Was it one or two years you were doing Stratechery before you wrote the first post?

• 1:28:48Speaker 03

  This is actually an example of the power of branding. I wrote articles that were basically aggregation theory well before I wrote aggregation theory. But giving it a term and coining it is what made it stick. And actually, some of those articles that I wrote before, there's one, I think it was called like economic power in the age of abundance.

• 1:29:07David Rosenthal?

  Doesn't have the same ring to it.

• 1:29:09Speaker 03

  I think it's a better articulation of our aggregation theory in many respects. I wrote it in 2014, I think. And yeah, number one, doesn't have a good ring to it. Number two is one of my least read articles up to that date. Just no one got it or understood what I was talking about. And it's a weird thing as a writer. Like, there's things that I'm thinking about now, or that I know I will write about, but it's not the right time. And that's something you just learn over time, where you can be too early as a writer, too. This kind of goes back to like, I didn't know how to communicate, right? Like, I remember I was in, um, there was some meeting at Microsoft, and we walked out, and my manager's like, Ben, you're the only person in the room that actually understood the issue and what we should do. And absolutely everyone, no one understands what you're talking about, and people are kind of annoyed at you. And he's like, the problem is, we

• 1:29:53Speaker 03

  want to get to H, but everyone in that room is on A. And you cannot talk about H. You have to talk about B, and then C, and D. It is JR, yes. And it's funny, because that applies to writing online, too. Number one, sometimes I'm wrong, so it's good to wait, or to be sort of sure. But number two, there's an aspect where there's just the right time and place for things. There's always stuff I'm sort of thinking about. And one thing I've learned is it's definitely better to To write about something, a current event, which is bad from a book perspective because I'll write an article that actually has some key insights, but it's talking about some event that happened like 2015, which no one remembers or cares about. But in the nature of my business, that is actually much better for helping people grok it, get it, spread it, share it, those sorts of things.

• 1:30:37Speaker 03

  So there is a bit where the incentives of my business do work against timeless pieces in a certain respect.

• 1:30:43David Rosenthal?

  Okay, so when you hit publish, though, on aggregation theory, did you think it could be what it became?

• 1:30:50Speaker 03

  I did know, you know, I thought about the name. Obviously, I was inspired by Clay Christensen disruption theory. That was sort of one of the things, but I had written a number of articles going up to that, that were clearly building to that point. So there's one about Airbnb, there's one about Netflix, there's one about just websites and publications. And then aeration theory was sort of short and sweet because it was basically distilling what was in those previous articles into one thing. I felt very confident I had a thing and I wanted to have a definitive piece that was doing what it was and needed to have a name. So that's what that was.

• 1:31:27David Rosenthal?

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

• 1:31:34Ben 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.

• 1:31:44David 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.

• 1:32:05Ben 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.

• 1:32:17David 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.

• 1:32:28Ben Gilbert?

  Well, Ben, I have one more section that I want to do, which is you do all this analysis on companies and you have this very enviable position of getting to comment on and critique their strategies after they announce them or an event after they do them. And I want to play a game where I give you a company. And I'm curious, either if you were the CEO or you were giving advice to the CEO, what would you do strategically? And I think an interesting place to start, we talked about on a bunch on this episode, is Meta. You are the new CEO of Meta. What do you do over the next five years?

• 1:32:59Speaker 03

  Well, I think Meta is actually doing a fair number of things that they should. Now, the Apple changes were very devastating and they're structurally devastating. And so they deserved a significant haircut on their valuation because of that. But I also think they were moat enhancing in the long run, where I question whether any other company is ever going to build a top of the funnel advertising product that will be competitive with Meta, assuming they can keep their audience. It appears that they've done a good job limiting the sort of the TikTok threat. TikTok's growth has sort of flattened out over the last few years. So I think they're actually in good shape. What I do worry about is this is a company that's always been growing. It's really hard for those companies to shift to more of a scarcity mindset. I mean, they weighed off 11,000 people, which only brings

• 1:33:44Speaker 03

  them back like nine months. They probably need a lot smaller, but it's also very destructive to company culture and morale. Do they still have the people that they need to pull that off? Those are probably some of the bigger questions. And obviously, any aggregator is dependent on having that audience. But I do think that the network effects of their products are still underrated. I mean, everyone has in their head that they're shrinking and actually every product they have is still growing, which I think is underappreciated. So number one, I think they're kind of broadly on the right track. Number two, I would acquire Shopify and I would take the FTC and Justice Department to court when they sue to stop it. I think they need to close the loop on e-commerce and advertising. And again, I think that'd probably be bad generally, but I think it'd be very good for Meta. So I

• 1:34:27Speaker 03

  would do that. As far as the metaverse stuff, I think it's a bad idea. It's very hard to talk about the metaverse because it's like, what are the prospects versus, is it XYZ? I do think that it's It's not just a bad idea because it's taking so many resources and attention, I think, from Mark Zuckerberg. But also, I just don't think innovation is necessarily born of mass expenditures in large companies. We sort of skipped over a period of experimentation and ecosystem building that in the long run perhaps would be consolidated into a couple of companies. But instead it's just one monolith, sort of trying to brute force this sort of bit. And the reality is, is Facebook is a services company, it's a social network and everything about their strategy works against that.

• 1:35:09Speaker 03

  To succeed, they not only need to sell headsets, they need to sell headsets at sufficient scale and into friend networks such that people can social network on the headsets. And so their place of winning is even further away than I think people think. And so I don't think strategically it's the best thing for them to be doing. And I've been pretty anti them doing from day one. They bought Oculus, I said it was bad. And again, it's very hard to distinguish between, well, what are the prospects of this? Versus zooming out and should they even be doing this? But I think the market is overly down on Meta, in part because the branding was too successful. This is still a powerhouse in social media and advertising. And the bout of money they're spending on the Metaverse is, all things considered, not that much.

• 1:35:54Speaker 03

  They're still, you know, have a $5 billion profit a quarter. So yeah, I would double down on what they are and I would consolidate, not acquire Shopify and spend three years fighting out in court because I think the payoff would be worth it.

• 1:36:07Ben Gilbert?

  All right, the second one, rather than going with another big American tech company, I want to go with one that's an acquired fan favorite and one that's very close to home for you, TSMC. Any change to what TSMC is doing now if you became CEO tomorrow?

• 1:36:23Speaker 03

  Not really. It's a very complicated situation, to say the least, for lots of reasons, not just political, but technological. I think probably doing what they're doing broadly, it makes sense. Yeah, I don't know, I've read a ton about them and where they are. And you could talk about maybe some of the pricing stuff. They were pretty slow to raise prices, even in the face of shortages. They've been much more aggressive about that over the last little bit, which seems reasonable to me. It is opening the door for when and if a competitor comes along to undercut them in that regard. I think they're probably blessed by the weakness of their competition. But the long-term risk is obviously number one, just the geopolitical risk. The reality is, is TSMC. A core to their model, essentially to the model of being so flexible, being so adaptive,

• 1:37:08Speaker 03

  of incorporating new equipment, of accommodating hundreds and hundreds or thousands of customers, is all their engineering is in one place. And that place is Taiwan, and that has geopolitical risk. And from TSMC's perspective, I think that's just a reality. You can't really hedge against that. And so if anything, yes, they're building these fabs in the US, I think largely for political reasons. And sure, do that if the Taiwanese government feels that's what needs to be done to keep the US on board, keep the US happy, build a couple in Japan, because Japan is a future ally. But I think you do have to sort of double down on Taiwan and roll the dice that nothing happens. I don't think it's a hedgeable risk, the China

• 1:37:47Speaker 03

  risk. The other risk is the Moore's loss or running out. I mean, EUV has another five, six years, and then it's not super clear what's after that.

• 1:37:59Ben Gilbert?

  How can you get smaller than one, Ben? You just have one nanometer in this?

• 1:38:02Speaker 03

  Yeah, there is visibility to under one, but-

• 1:38:05Ben Gilbert?

  Isn't it like two molecules wide? Or two, what is it, two atoms?

• 1:38:08Speaker 03

  Uh, it's very small. I'm not sure if it's quite that small, but it's ridiculously small. So obviously, I would imagine they're investing heavily in, they've been doing this, like advanced packaging, like multiple chips on the chiplet sort of approach. AMD is doing that. Intel's now doing that. And getting really good at that stuff is going to be super important. I mean, actually, one thing I do like about the Japan investment is their trailing edge. I think they're 28 nanometer fabs, which is really where China is making a lot of progress, because there's no real economic reason to build trailing edge fabs. The whole idea is you build it once, it's long since depreciated, and you're still making money selling cheap chips out of that fab. But I don't know, maybe there's something in the trailing edge.

• 1:38:47Ben Gilbert?

  More things need chips, and they don't all need the leading edge.

• 1:38:50Speaker 03

  That's right. The economics of it are very difficult. I mean, the reality is, that's why China's filling the gap, because that's all they can really make economically. You don't just jump to the leading edge. You have to sort of build your way up. And so China has a motivation and an economic rationale. And a lot of the chips that they're manufacturing go right into products that are already made in China. And so they're filling in that gap. You know, that's something that would be beneficial. But at the end of the day, TSMC is Taiwan, and that's going to always be the biggest risk. And I'm not sure there's really much they can do about that.

• 1:39:18Ben Gilbert?

  Okay, last one, Amazon. David and I did seven hours of amazon.com and then a big AWS episode. And I mean, at least my big takeaway was it is day two. And day two is about becoming a profitable company where the big sell story of tomorrow is realized today. And you got to lean into that. And that means lots of changes in how they organize, how they innovate, and what markets they choose to enter. And I'm sort of curious for your take on, is Amazon a day two company? And then the same question, if you were to become CEO, what would you do?

• 1:39:51Speaker 03

  I think there's an analogy to like, real life. When you're young, you're like, I'm never going to become an old fogey like those old people. And then you get old like me, and the people around you that are trying to still be young are just kind of pathetic. And actually, being old is kind of great. My kids are fairly independent. They can take care of themselves. I can go out with friends. You know, obviously, I have more means than I did when I was younger. And I'm a big advocate of, just in general, living in the present and embracing who you are and where you are at your life stage. And I think that's good personally. And I think you're spot on. That's also true from a company perspective. You can't be a startup forever. And it's bad to. I wrote about from day two to one day or something about Amazon, when Bezos

• 1:40:35Speaker 03

  sort of like reasserted control a few years ago, like, no, we're gonna do one day delivery. And there's been too much time spent trying to squeeze our suppliers for profits and margins. And no, we need to get back to this. And in retrospect, that was the seed of Amazon's kind of disastrous last few years, which was they dramatically over invested in their logistics network, their cost structure got completely out of control, they over hired. And it's probably a good example, and maybe it was a precursor of what we saw with Jeff Bezos personally, of sort of losing track of where you are in life and what actually makes sense, and trying to be young forever. So I agree with you broadly with that bit about Amazon.

• 1:41:18Ben Gilbert?

  Do you think that applies to AWS too? Or is that different?

• 1:41:21Speaker 03

  Realistically, the challenge for AWS is number one, what's going to happen with the real dry up in startup formation and easy money in that space, a lot of which went to Amazon. They're sort of the default choice for startups. Number two, you know, Microsoft's sort of bread and butter has been, look, you've been working us for a long time. We're going to package it at like, suddenly you're not just paying for on-premise windows. It also includes Azure credits and we're going to be able to contribute that to our numbers. And now you can sort of move pieces over and we'll help you do it, which I think is exactly what they should do. It's been a very smart strategy. But I think that the issue in any market is, it's like me, all the initial easy stuff is like, there's lots of low hanging fruit. But then the largest part of the market is still the part of the

• 1:42:06Speaker 03

  market that's sort of always been there and isn't necessarily fast moving. And Microsoft is just really cleaned up in that market. We're the known entity. We can help you move over. And I think from Amazon, building up the support capabilities and rationalizing their offerings. I mean, it's weird because Amazon benefits because they have so many features, right? AWS is the Microsoft word of cloud providers in that they have an absolute absurd number of features and the interface is pretty terrible. But every single customer is completely dependent on one of those features. And if that feature is not there, then they can't go away. And that actually ends up being their moats.

• 1:42:43Ben Gilbert?

  We were researching the episode and we were talking to longtime AWS veterans to sort of understand the mental framework to talk about them today. And that became very clear that AWS doesn't deprecate features. Amazon will kill stuff, kill a fire phone, kill local delivery for food. They'll call all kinds of stuff. But in AWS land, if a customer is depending on something, AWS's long-term enterprise value is determined by customers believing that Amazon will continue to support them forever. They don't deprecate services, even when those services end up flipping upside down on the unit economics, and they have to like, maintain a costly service that they never figured out how to optimize.

• 1:43:19Speaker 03

  Right. And every time a customer does something custom for AWS, it's a lock-in, right? I mean, everyone fantasizes about this world where, you know, like every time it comes up, whether it be, you know, containers, or you have all these, you know, IBM's is like talking about doing this when they acquired Red Hat, we're going to make it so you can be cloud agnostic, right? Right. And then it just turns out that, well, cloud agnostic, but this one little piece of me would be better. Right. And then you wake up and, you know, of course I wanted passports to be cloud agnostic. Well, passport's not moving off AWS. I can promise you that. And so, yeah, it's the Microsoft strategy. Amazon has a lot of old Microsoft people in it. A ton. It's really interesting to consider like the different cultures between Seattle and

• 1:44:03Speaker 03

  San Francisco. Seattle just is a platform town. Like Microsoft was the originator. Microsoft's always been the best platform administrator. All that backwards compatibility that you want to make fun of from a user perspective is essential to building this foundation that people trust and that locks them in. And they're happy to be locked in because they don't want to go change it anyway. Right? And Amazon does this with AWS. Obviously Microsoft is doing that with Azure. And the Silicon Valley companies are just very, very bad at that. Right? Like no one trusts Google, right? No one trusts Facebook. Silicon Valley is much more consumer focused. Even the SaaS companies, those are consumerized enterprise technology. The whole idea is, don't worry, you never need to pay for an upgrade. We're upgrading on the back end all ourself. But

• 1:44:46Speaker 03

  that means like they will remove stuff because it's one thing to remove an API that a piece of software depends on versus removing a feature that, yeah, maybe your customers are annoyed, but it's not actually breaking like what they operate on. And it's just pretty interesting to see those differences, which I do think there's a geographic aspect to it. I mean, geography is what saved Microsoft because when Microsoft was in the dumps, if they were in Silicon Valley, all their best talent would have left and not to work for other companies. But all their best talent had kids, they had families, they didn't want to work for Amazon. Those people are maniacs. And so they stayed at Microsoft and they were miserable and they bitched and they wrote snarky blog posts about the company. But then when Nadella came in and sort of refocused the company, they had

• 1:45:28Speaker 03

  this foundation of talent that the HPs of the world, the yahoos of the world had long since lost.

• 1:45:35Ben Gilbert?

  Well, Ben, this has been awesome. Thank you for joining us and celebrating the almost 10 year anniversary of Stratechery with us. What is the easiest path for everyone who right now is listening to this in a variety of podcast players? You've got Spotify and Overcast and Apple Podcasts. What is the easiest way for them to opt into the Stratechery universe?

• 1:45:53Speaker 03

  Well, I mean, if you go to Stratechery, you can click any of the podcasts are on the side, you subscribe. I mean, it's funny, like the, how does the funnels work, right? Do you just go to Stratechery and read and follow and I'll lure you in? Well, you go direct. Maybe we'll put a link in the show notes. Yeah, yeah, yeah. We use the show note link. $12 a month, $120 a year. You not only get Stratechery, but you also get the update. You get Stratechery interviews. We didn't talk about interviews. That's actually been an interesting evolution of Stratechery.

• 1:46:19Ben Gilbert?

  Yeah, you're a primary source now. What's going on?

• 1:46:22Speaker 03

  Well, that was a challenge, right? Because I started out, I had no access. I didn't know anyone. And in some respects, I miss those days. I still remember the first time I had a company very angry at me and called me in. And it was Twitter, actually, because I had teased out their results that their direct response program was failing. This was like years ago. And they got super mad. In my next update, I'm like, well, it's possible this. And I kind of like walked it back a little bit. And the next quarter it came out and they're like, yeah, we're gonna need to, I don't know if they took it right down, but it was a big thing. And they said like, it's not working out. And I was totally right. And I was so mad that I kind of walked it back a little bit. But I'm glad it happened because when I started out, no one cared. No one paid any attention. Now people care and sort of paid attention. And so I'm glad I was right on that one. It sort of gave me

• 1:47:05Speaker 03

  courage going forward. But what is interesting about feedback from companies is everyone like from COO down or VP down, they always push back. And they're like, no, you got this wrong. You don't understand X, Y, Z. I never get pushed back from CEOs, even when I'm wrong. And what I've come to realize is CEOs are surrounded by people telling them what they want to hear. That's their incentives, right? The reason why the VP is attacking me is because he's worried I'm gonna make the VP look bad in front of the CEO, right? That's the concern. Whereas the CEOs, like, they're so thirsty for any sort of feedback that's outside of that rotten incentive structure that's just inherent in any corporation. And so sometimes they know they have more information than I do. They're aware that there's

• 1:47:49Speaker 03

  things that I don't know, but they're grateful to have sort of the different point of view. And so over time, I transferred having no access to having total access, right? I can reach out to basically anyone.

• 1:47:59Ben Gilbert?

  And just for people who haven't, let's just go through the lineup. You've had this year, Mark Zuckerberg on, you've had Jensen from Nvidia, you've had, I'm trying to think of some of your early big ones. You had Rich Barton on from Zillow, and I think he credited you with, you convinced us to start buying houses. You convinced us into open door.

• 1:48:13Speaker 03

  I don't know if I know much of the politics, whoever.

• 1:48:17Speaker 03

  So I was trying to figure out like, what do I do with this access? I didn't want to become a reporter and I thought, you know, it's just important to me personally, for my own pride, that my takes are my takes. I'm not getting fed them from someone else. And so what I ended up going with was interviews and part of this was a product bit. I had, now you can listen to check it via podcast. So if I had an interview, there's a good reason to try the product out to get it. So there was, there was a product angle. But also I'm like, my whole take is I'm not exclusive. I don't have exclusive information. What I'm selling is my personal analysis. And so if I'm talking to a CEO, I don't want the sense to be Ben's just parroting what a CEO says.

• 1:48:58Speaker 03

  So if a CEO wants to talk to me, it has to be on the record and it's going to be the full transcript and the full interview is going to be available to my subscribers. And I want my subscribers to have all the same information I do. And so when I write, it's me, it's coming out of my brain. It's sort of unique to me. And I think it's worked out pretty well. It's a change. Like instead of me writing four days a week, I'm basically writing three days a week plus an interview. It's not just CEOs. I think actually often the better interviews are with like other analysts or people in different spaces. This also solved the, how do I cover startups? Because part of not being a reporter and being independent is public companies have to disclose a lot of data and, and they have earnings calls and they have presentations and things along those lines. With a startup, you don't have access to very much of that and you don't know how much is blowing smoke,

• 1:49:41Speaker 03

  how much is not. So now I am doing like interviewing founders where I say upfront, look, this is completely subjective. I'm not going to verify what they say. I'm not going to do XYZ. It's their chance to tell their story, what their business is going to be XYZ. And so that's a way to sort of cover that space, given the limitations in the way Shetekri operates. And so that's one of the products. It's not a standalone thing, which I think is better. It's still part of Shetekri. I thought about should be a standalone product, but I think there's an aspect of, I don't want there to ever be any sense that that's a driver of my bottom line. I want to be able to say that I think the metaverse is probably a bad idea. That's really tricky, right? Like, I mean, the Mark Zuckerberg one, obviously, it's a huge get. I think that his

• 1:50:25Speaker 03

  interviews with me are, I'm biased, but I think are light years better than he does anywhere else.

• 1:50:30Ben Gilbert?

  You and Eli had the best interviews with him of this whole last cycle.

• 1:50:33Speaker 03

  Right. He thinks I'm fair, whereas he thinks a lot of other journalists aren't. But what's the line between that and being like, you favor Facebook? Because that's not the case at all. Number one, it doesn't drive subscriptions. I always make them free, to be clear. Like, no one's going to have to pay to get access to that, because you shouldn't subscribe to Shetekri because you want to read Mark Zuckerberg. That's not a reason. But then it was really annoying because Facebook had that bad earnings call and their stock went down. And I'm like, crap, I'm gonna need to write an article about why this reaction's unwarranted. They're actually fine. It's gonna be like, three weeks after I just had Mark Zuckerberg gone, it's gonna be a relatively positive article. But that's like where you build up your reputation over years, right? And sometimes you can't always

• 1:51:13Speaker 03

  be depositing. Sometimes you do a withdrawal. Me writing Meta myths was a withdrawal on my reputation. Yes, it didn't look great that I just got an interview with Mark Zuckerberg and then I wrote a positive article, a contrarian positive article about Meta three weeks later. But I hope I've built up enough sort of credibility with my audience over the last nine years, that they believe that, no, that I would have written that article with or without that interview.

• 1:51:40Ben Gilbert?

  You're also unabashed about your incentives. You're like, look, everyone, my incentives are to have as many people subscribed for as long as possible. My incentive is not, I think I'm gonna be Mark Zuckerberg's best friend, so I'm really hoping that he invites me on his PJ and we get to hang out.

• 1:51:53Speaker 03

  Yeah, well, it's tough, because like I said, I'm super positive on Meta's advertising product, because that's aligned with my passion. So I do find the Zuckerberg ones the most challenging, just because I generally have a contrarian opinion. About meta overall, and it's generally positive. So I'm super wary about that. I also feel like I get more interesting stuff out of him than most other interviewers. So I want to do that. And sure, it's a feather in my cap to interview him, but I definitely don't want that to ever be perceived as. The reality is interviews don't drive subscriptions. And so I do it because, again, I want to push the tech product. I want people to use my podcast product. And then it's a different kind of work. As you guys know, preparing for interviews is a lot of work. It's also different than necessarily like writing an article.

• 1:52:38David Rosenthal?

  Oh, for sure. We could not be writers.

• 1:52:40Speaker 03

  Yeah, you can't stay the same forever. You can't be like the startup forever, right? I can't be the guy on the outside forever, which I was when I started, like with my chip on my shoulder. And I'm just some dude in Taiwan, giving his opinions about Apple. That worked for me and I'm not that person anymore. And it'd be sort of dishonest to present that I am. The reality is I probably have the best access of anyone in tech. I can literally contact basically anyone and get access to them. And it's more honest to my product and what I do to lean into that, I think, than to pretend it's not the case.

• 1:53:13Ben Gilbert?

  All right. So listeners, click the link in the show notes, go experience the Stratechery Cinematic Universe, not just a guy in Taiwan, giving his opinion on Apple.

• 1:53:21Speaker 03

  More coming, hopefully.

• 1:53:22Ben Gilbert?

  Love it. With that, after you finish this episode, come hang out in the Slack with 13,000 other smart, kind, clever, curious members of the acquired community, acquired.fm/slash/Slack. Get some sweet acquired merch. We now officially have live the ACQT. We've got market size unconstrained with the original AWS logo.

• 1:53:43David Rosenthal?

  Oh, we gotta do a collab with Ben on acquired Stratechery t-shirt for the merch store.

• 1:53:49Ben Gilbert?

  Oh, that's a good point. I have a Stratechery t-shirt. I almost wore it for recording this episode. I also have a framed aggregation theory. I didn't want a fanboy in front of Ben, but on my desk, I have a framed aggregation theory illustration. So I don't know, check out Ben's merch store too. We'll put a link to that in the show notes. But the other great acquired merch that dropped a couple of weeks ago is the benchmark tee that in the benchmark style, of course, says there's always room at the top. If you want to listen to the Acquired LP Show and get more Acquired crammed in before the holiday season, got some good stuff, search Acquired LP Show in the podcast player of your choice. And with that, listeners, we hope you have a wonderful holiday season. I believe we still have one more episode coming after this. Oh yeah, we've got something special coming.

• 1:54:34Ben Gilbert?

  We've got a little fun holiday acquired present for everybody. Yes. And with that, listeners, we'll see you next time. We'll see you next time.