2018 Holiday Special
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Ben, how are you? I am at home. Well, actually, I'm at PSL, but I'm in the home city of Seattle. Where are you? I am coming at you from Austin, Texas, doing a little pre-holiday vacation. It's been super fun and relaxing. And you're just rolling with your iPad, right? And you're podcasting from an iPad? Yeah.

Yeah, rolling with listeners, LPs, we had about half an hour of trying to get technology to work here. You are not supposed to tell anybody about that. Dang it. See, this is for LPs. We're letting everybody know how this hostage is made.

Yeah, we are. We talked about sort of doing our holiday spectacular as part of the main feed that we've done the last few years, but it actually fits much better into the category of stuff we do as the LP show, particularly because it lets us sort of like foreshadow a lot more stuff about sort of early thinking about next season and kind of doesn't really make sense as a main show anyway. Yeah.

Yeah, totally. And especially given my technology issues right now and it's the holidays and we're kicking back, we thought it would be perfect for all of you LPs. Yeah. Thanks for joining us. Well, should we dive into Holiday Special 2018? Let's do it. Ho, ho, ho.

Ho, ho, ho. Indeed. Well, first, it's been a big 2018 for Acquired. We'll talk about that in a minute. But should we talk about a couple of things we're thinking about for season four and five in 2019? Yeah, for sure. Oh, you've thought about season five? Yeah.

Oh, yeah, man. I'm thinking two steps ahead. You haven't shared that Google Doc with me yet. No, I just predict that we won't be able to fit everything we wanted in the season four. That's probably fair. Perfect.

Particularly, I think one thing we are for sure going to do is we will be live on the scene as hopefully some big IPOs are coming our way in 2019. Man, the doors are about to bust open. We're going to get Uber. We're going to get Lyft. Do you see today Pinterest is contemplating a 2019 IPO? Yeah.

I saw that. That's been in the works for a while. Potentially Slack as well. We may even see an Airbnb IPO in 2019. Well, they have a CFO now, right? Yeah, from Amazon. Well, I think we'll get into this in tech themes later, but I think how those IPOs perform, I think will dictate a lot of the way the rest of the tech landscape looks.

Oh, my God. I mean, it's such a like, you know, as we're sitting here at the end of end of 2018, the markets are getting crushed. The window, the proverbial IPO window is definitely not open right now. But I think all these, at least many of these companies are going to have to go public next year. So, dude, the drama, interesting to watch. The drama of Uber and Lyft filing on the same day was just too much for me. I know it was great.

It was great. I love how people were blowing up in the Slack about it too. Yeah, that was cool. So that's one. Other themes that were kicking around, one that we think could be super fun that we're probably going to try and do in season four is companies that were, we need a good succinct way to put this, but sort of like companies that were high-flying companies at one point in time and super well-known that like,

ended up not living up to their potential or kind of coming, falling back down to earth. I hate to say like fails because like a bunch of these companies and companies we're thinking about aren't quite failures per se, but, um, but there's, you know, something happened or I think it'll be fun to dig into like, was, were there some strategic decisions that the companies got wrong? Was there anything they could have done about it? Like what, how did, how did these situations arise? Yeah.

Yeah. And it's also hard to say failed when they created a bunch of value along the way that they just weren't able to sort of hold on to and capture. Because I think we've had some feedback from listeners that I think is really apt. That is, on this show, we talk a lot about value capture after value creation. And, you know, we grade things on were they good for the acquirer? You know, were they good for shareholders of that company that IPO'd? And

The show, I think we're shifting a little bit to the lens of like, what was sort of the impact on the world of these companies doing these things? And we're not going to change our grading or anything like that. But it's been an interesting point that people have brought up to us a few times where it was like, were we better off or not? Because these companies existed and grew. And in particular, as we think about companies that went up and down,

you know, taking that sort of external perspective on, on what did it mean for the world that they existed? Yeah, totally. So, um, that will be a fun one. Um, you can imagine a couple of the companies we're thinking about, we don't have anything to announce just yet, but we're working on some hopefully great guests to join us for those. Yeah. Also LPs, if you feel like you have something in that category too, feel free to reach out. Um, or, or if you want to, uh, um, intro us to someone to have on for, for those categories, I think that'd be super interesting.

Yeah, especially I think these types of shows will be great for guests, too, because if guests are willing to talk honestly about it, the experience, because like, you know, it's going to be like getting in the heads of the people running these companies is just to be so interesting. Yeah. And it gives them a chance to the way that I'm at least in the emails that I've sent David, the way that I think we're teeing it up is a way to sort of like tell the story from from their perspective and sort of set the record straight a little bit.

Yeah. Um, so that's, that's kind of number two on our minds that we're thinking about. Um, and then, uh, I think the, the other thing I've had such a blast. I don't know if you have been doing our China miniseries in season three. Yeah. I've learned so much.

so much and I feel like we've only scratched the surface so this isn't going to be an official theme per se but I think just an ongoing part of Acquired now is we're trying to keep a more global lens on the companies we cover and definitely we want to do more Chinese companies and maybe even broaden beyond that plenty of interesting companies being built and exited in India and other places around the world

Well, as an excellent listener Wenbin wrote in to us with an unbelievable response to the Tencent episode, the last line is, Chinese internet is a parallel universe. And I think that is definitely something that we've realized along the way. Yeah.

Totally. And like, it's still, you know, I've said this a bunch of times along the way, but it still amazes me, like, how little I knew about China Tech before starting this and how little I feel like people in the West still know about these companies. Dude, I felt like a year and a half ago when we first started talking about, oh, maybe we should do a season on China at some point, or maybe somewhere between a year and a year and a half ago, I thought I was like making a...

sort of contrarian, not contrarian prediction, but like, like I was, we were thinking about something that like a lot of people weren't thinking about, you know, but you look at like ByteDance and Tencent and these companies that you're like, oh my God, they're, yeah, yeah. So I've definitely had a lot of fun doing it. And it was almost embarrassed that like, I didn't pay any attention to them before.

Yeah. Yeah. Well cut yourself some slack, but we've, hopefully we've made up for it. We've now done, uh, you know, 40 hours of research between us into them or something. Yeah. Probably more. Yeah. Probably more. Um, cool. So that's, that's what's on our minds. Um, but definitely please shoot us notes, you know, email acquired FM at gmail.com or in the Slack or, or on Twitter. Um, you know, we definitely want to hear what

would like to hear both on the main show and here on the LP show, which we're going to continue growing and evolving throughout 2019. Indeed. All right. Well, you want to dive into 2018 in review? Yeah, let's do it. I mean, speaking of, I think the biggest thing for 2018 is we launched our LP program in Kimberlite. Yeah, this has been incredibly fun.

not only because like it fits really well, David, one of the reasons why we like set out to do this in the first place was, um,

for like you and I to get a chance to like catch up more. Cause we get, you know, busy with life and don't end up talking about stuff. And I think it was a great forcing function to get us to, um, learn the same things and talk about the same things. But like, it really was constrained to the structure of what acquired is. And LP show kind of gives us like an opportunity to talk more about, you know, other things. And I think, um,

uh, I was looking back at an, the original email string and I was tweeting about this the other day that like you and I were sending to each other, which by the way, somehow it took us eight months from when we recorded the pilot to when we actually recorded the, we forgot that. Yeah. We like killed it for six months and then, and then resurrected it. Um, one of the things, there was like three bullet points when I was like, when we were resurrecting it, that I wrote out that were, uh, um, let's do a show every couple of weeks, uh,

The second one was like, let's have, or no, it was let's stick with the name acquired and have the rigid structure. And then the second one was let's have guests every once in a while when it makes sense. And then the third one was, and we can do other episodes too, where we talk about other stuff that aren't acquisitions. And like it, it only took us two and a half years or three years to actually come around to that third bullet point.

And, and I mean, I don't think either of us could have predicted how much the main show would grow. And, um, you know, I've said this many times, both on the show and just, uh, friends and, um, you know, everybody in my life, like acquired starting, it was like one of the most unforeseen, like most positive things like in my life and in my career that, uh, I ever

I ever could have imagined. And that's great. But what came with that was like the main show. We, I don't know about you, but I feel like so much pressure every episode to like live up to the standard, you know? It's so funny. I was just talking with someone who's starting a podcast a couple hours ago. And I was like, one of the things you'll find is that you'll find ways because you know, it's, it's the natural human thing to do to make every episode better, but then you'll never be willing to take a step back and,

And like for in our case, that's turned into long episodes. Uh, so it's like better and we've added more. Um, but I also think it like we're, you know, we never do less research than we previously did, or we never sort of like, um, um, you know, care less about the sort of quality of, of audio. Of course I say that and you're on like AirPods or something right now, but yeah, right. Yeah. But that's part of why we launched the LP show. Uh, uh,

Not to, not to just to like, you know, give our LPs, you know, a lower quality experience, but like, we feel like we have all this other stuff we want to talk about. Yeah. Like the holiday episode. Yep. And I think a lot of you know this, but, but the LP show is, uh, we are dogfooding, uh, something that David and I came up with in, uh,

or May and you flew up here and we talked about that, that we're working on inside PSL called Kimberlite. And so the reason you're going to Kimberlite.fm, we are the first and only current customer of, of this product we're working on. So it's been, I mean, thank you to all of you for, for helping us sort of dog food this idea. And it's also really helping sort of steer the strategic direction of what that company should be for David and I to really feel like, what is it, you know,

What is it like to be a customer of this company and what are the things that we want out of it and really help us to shape like, you know, how does this really carve out its own identity in the market and build this way that all podcasts can be sort of seamlessly and really nicely supported by the people who listen.

who listen to them and, and sort of care about it most. Um, and you know, I, I think there's a lot more that it can be over time than just bonus content, but, um, it's, it's been, uh, I think a really successful first, first angle for, for the company. Yeah, totally. Well, and I'm super excited in 2019 to have, um, Kimberly come to her first third party podcast, uh, and, uh, and see what other podcasters do with it. Um, but it's also cool. Like,

especially in this episode and reviewing 2018, like I think the, the first seeds of the idea for this actually came out of our collaboration with nine, nine, six, uh, for, um, uh, for our Xiaomi episode, when we started the China mini series, I remember chatting with Zara about like this,

the state of podcasting and podcasting, the ecosystem and apps. And we were talking about Shimalaya in China and like why something like that hasn't happened here. And then that just got, you know, Ben and I sort of riffing back and forth on like, why is podcasting still stuck in the stone age, you know, from a, both from a monetization perspective and also just from a like industry and infrastructure development, even though it's taking off with consumers and, you know, that's led us here. Yeah.

And to paint one interesting picture for you guys that is kind of in the decks that we're working on, podcasting has this super unique quality to it where there's something like 600,000 podcasts, and I think maybe 300,000 of them are active, where there's an incredibly long tail of niches with incredibly high affinity listeners. And so when you compare podcasting against...

Yeah.

but could definitely be, you know, very meaningful to helping to grow the podcast and make it better if they were able to get support on an ongoing basis from their listeners. And I think it doesn't just apply to sort of long tail podcasts. It applies sort of to the, to networks too, who can really build some listener programs like this, but it's a really powerful sort of thing about this medium is that it's a, it's a collection of, you know, a hundred thousand niches where people are, are passionate about each of the niches that they're, they're sort of in. Yeah.

Yeah. Yeah. I mean, I think one of the, one of our theses in the beginning that sort of led us down this path too, is like a lot of people out there start thinking about podcasting as like social media. And we're like, it's actually not social. Like it's social amongst the like things like our Slack Slack group, like other people who care about the same podcast you care about, but like, you don't really care what podcasts your friends listen to. Like what,

what you care about is other people who are passionate about the topic that you're listening to. And those may or may not be your friends in real life. Yeah, it's it is definitely true that podcasts are spread by word of mouth. But it is also true that I frequently am told to listen to podcasts that I couldn't care less about and don't like very close friends of mine are like, Oh, have you listened to, you know, this recent

uh, murder mystery show. And I'm like, dude, I didn't even listen to cereal. Like that's just not my jam. And I, people think it's like crazy as someone who's into, into podcasting, but it really is sort of like a pick your own, uh, um, you know, pick your own flavor. And you, um, you know, unlike a Facebook newsfeed that is perfectly tailored to make your brain light up, there's nothing to make your, your, your brain light up and you have to craft that, that, uh, um, that stew on your own. But, um, I do think it's that same sort of thing where, um,

I don't quite know where I'm going here, but yeah, David, you raise a great point. It's not your friends necessarily that recommend the best content to you, but there is amazing content for you no matter who you are out there.

Yeah, totally. Anyway. So those are all the kind of forces that have pushed us towards what's ended up being, you know, the LP program being the first, uh, dogfooding for, for Kimberlite, but like what, what can be a platform that can enable, enable podcast hosts as the kind of centers of these niche communities, um, to engage deeper with, uh, with their fans. And, um,

So much more to come in Gimbalite in 2019. If you guys have ideas as sort of, you know, subscribers to this new program of stuff you could see getting value out of and would really enrich the experience, please send them our way.

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What else do we do? Yeah. Other stuff we did in 2018. So we moved to seasons, which I think was great, has enabled us to do a whole bunch of stuff. Throughout season two and season three, we made 20 shows, 20 main shows in 2018, two of which, kind of engaging with your audience front, like these just totally blew my mind and were some of the coolest experiences, again, I think I've had in my entire life,

our January meetup in San Francisco and then our Venmo live show in October. Wait, the meetup in San Francisco was in January of this year? Yeah, it was in January of this year. Oh my God. It feels like forever ago. I know, doesn't it? 2018 has been long.

Oh man. Yeah. Um, but like, oh, it was so, so cool that so many of you guys came out and joined us and, uh, um, really like it was such a different feel. Venmo live show is one of the coolest experiences of my life. Like we definitely need to do more of those. That was so fun to, to meet so many people. So, so fun. We will definitely be doing more of those in 2019. Um, let's see. So we did that. Um,

uh we had our two uh mini series themes in season two we did kind of funding and fundraising which i feel like was um it was like okay it was like an interesting sort of you know first start to mini series we did the rec room episode and then i think we could sort of put the soft bank episode in that category in retrospect maybe i don't think we meant that in retrospect yeah we definitely did not um

But I'm so glad we did the, like we've talked about, we did the China miniseries in season three. Like, so like, I think that when we thought about doing miniseries and themes, like that's what we were hoping that it could like be something that took us in a new direction that just added a ton to the show. Yeah. Yeah. And speaking of that, we, we definitely changed it up with, uh, uh, you know, acquired started, uh,

There's a tricky balance in any project or business or creative work where you want to stay true to the thing that made what you were doing interesting in the first place, but you also want to find the right ways to expand. And so we started with acquisitions that actually went well. And it was that snarky and it was that sort of like take on most of the time they don't. And the joke that we have is like, oh, we ran out of those. And so we started doing all acquisitions. But like...

I think there's just a lot of more interesting stories in a lot of the ones that are sort of on the margin. And of course, we still have lots of A's and A pluses, but it's interesting to get to be a little more critical. So then the next step was IPOs. And we were like, can we still be who we are and do IPOs? Turned out, yes. And then we were on the Tesla episode. And I'm like,

The Tesla IPO is not the story here. And I think, David, you sort of had the realization of like, maybe what we just do is we tell the interesting stories of companies from founding until today. And like, sometimes they center around an event, but for these companies, Tesla, Alibaba, Netflix, Tencent, like those ones,

that sometimes across two episodes just deserve to have their whole story told. And it's not really like a built like the Facebook IPO, like that was a build up to, you know, this this moment of crisis in a company history and how they solved it. And some of these other ones, you know, like Netflix's IPO was sort of like a little bit of a blip along the way or 10 cents IPO. And what's really interesting is just to understand the broader context of the company.

Yeah, I'm so glad we did that too. I don't know how many more companies there are that weren't that prolific. I just emailed you about one, so I think we'll keep finding them. I think we will. I think that's also been such a cool thing that we've found along the way with Acquired. Yes, we have expanded our scalability

as we've gone throughout the show. But these veins to mine are so much deeper, I think, than we thought initially. Man, how many tech acquisitions are there out there? Well, actually, it turns out there are a lot of interesting stories. PowerPoint, an episode we did in 2018, was one of my favorite episodes. It

And most people didn't even know PowerPoint was an acquisition. Yeah, those are definitely the coolest ones to find. And I still think... I haven't actually listened to the episodes, but the topic... I haven't listened to the episodes in years, but the topics of PA Semi and Authentic, I love those episodes. And we don't do them as much recently because I think...

Um, we've definitely enjoyed these sort of like epics, you know, long stories of, of companies that are household names. But, um, I mean, Apple's advantage in, in, uh, a lot of the things they do around security and around, uh, um, chipset, which is a huge differentiator for them came from these little technology acquisitions. So we, we should do some more of those.

Yeah, we need to... That's actually a good point. I feel like our roadmap, even with our potential new theme for season four of high flyers that fell back to earth, we're still in the headline company category, but it's fun to... We should make sure we carve out some time, quote unquote, some time for a couple shows in 2019 that are in the PowerPoint or the PA Semi category. Yep. All right.

What that brings us to should in true holiday special tradition, should we each talk about our favorite episode of 2018? We should, but you can't pick mine.

that's the only rule okay well that's good because i have two that i'm debating between and uh if one of them is what you do then i'll do the other one all right perfect um well mine was almost certainly there's tesla maybe an exception uh a carousel i think oh yeah uh

That story is sort of... The story of Recode getting acquired by Vox is sort of potentially less interesting than some of these mega-behemoth, world-changing organizations that we've talked about. But...

I feel like I had to level up my game. And I think we've talked about this a bunch. You feel the same way talking with Kara and learning from Kara. And, you know, she she's a legend. And she is she has done so many interviews that she is so fun to interview because she is able to have banter and speed and talk over you without.

stepping on you without undoing your point um and she's able to sort of uh be so comfortable uh conversing quickly and in like a very intellectual way without um um what in a way that's good for conversation and good for radio and i think that's such a rare ability um and just you know super fun to do

That was, I feel like we're, we're appropriately gushing on this episode about acquired year and review in 2018. But yeah, that was, I a hundred percent agree sitting in the red chair with Kara, you know, interviewing her on acquired was like,

top five, one of my best like career experiences in life. Like, um, it was just so surreal. Um, so surreal, man, 2018, it was a huge year for acquired. Like, um, it was, we should also say like, we, in putting this on here, we didn't have it in the script, but 2018 was also a huge year for, uh, sort of my realization about our listeners that, uh,

Yeah. We once a week text each other. We have the dopest listeners or like the most amazing listeners that people email us that were just like, that is such an amazing insight. Or you're right. We did. That is a broader way to think about that than we've been thinking about. Or people that are saying like, hey, I actually was involved in that deal and you were mostly right except for this thing. Or I work at this...

are you guys are so smart and i think it's sort of it's it's changed the way that david and i think about the podcast um where like i regularly i think i'm telling you like hey our listeners are smarter at least than i am so like we can we don't have to like quite put a bow on this thing we can leave it messy and like leave to listeners to figure out and not sort of gloss over or sugarcoat anything because i think like um

You know, it's just so awesome to have a relationship with so many of you that Acquired has let us do. Yeah, 100%. I mean, even...

look no farther than our last episode, Tencent, which I'm going to do as my favorite episode of 2018, because, of course, Recode was my other one. Recency bias. I was thinking the same thing. It's 100% recency bias. But yeah, Bernard helping us out, LP listener and listening to the show since day one and host of the Analyze Asia podcast.

if he hadn't pointed us, you know in the direction of 10 cent story and and um Matthew brennan and some of the other resources out there like That episode wouldn't have been anywhere near as good as it was. Yeah um and uh And and and you know again recency bias aside, which is definitely at play here um, I I chose it as my my uh, one of my two favorites for 2018 just because like

I knew so little about the company and the story before we started researching the episode. And like, I feel like I came away with like, just like totally floored at the journey that Pony Mon, his co-founders went on and, and Martin Lau and building the company along the way, like the innovation in, in,

in business models. And, and also I think like I talked about on the episode, like, um, I feel like with that episode, things really clicked for me with this whole, like, you know, I feel like for a couple of years in tech, there's been this debate about like copying, not copying, you know, there was started with all the Chinese copycat companies. And then there was Instagram copying Snapchat with stories. And, um,

And I feel like Tencent, their story shows... There's a lot of levels there. There's nuance there. There's a lot of nuance there. But the key is...

taking something that is a good idea and adapting it in the right way to like the right audience base, you know? And like, that is, that's not copying, you know, that's like, that is real like hard work and innovation. And, um, I just came away with like so much, um, so much appreciation for, um, for them as a company and, and, and everything that they've done. Yeah. Yeah, for sure.

Cool. Should we move on to tech themes? Yeah. Yeah, so we wanted to talk about sort of some of our favorite tech themes and things we learned in 2018. And this doesn't have to be from Acquired. I think this minor more going to be from actually my work at Pioneer Square Labs and sort of outside Acquired life. Yeah. And I'll start, David. So there's something that is...

If you're a venture capitalist and you hear this sort of tech theme, you're going to be like, well, yeah. And if you're a CEO, if your business is sort of coming up with ideas and starting companies and evaluating ideas, this is beat you over the head obvious. But it's sort of one of my 2019 New Year's resolutions is to be better at thinking about businesses structurally and strategically rather than

building a better widget and and a better mousetrap and the thing is so with the background as a product manager before that sort of being an uh uh engineer and having a cs degree um my inclination particularly as like one of these very finicky people that's been following apple forever and and prioritizes the user experience and thinks about about that and sort of

first and foremost UX and then everything else I do. I have a tendency to sort of just believe the best product will win. And there is this great tweet that I saw recently that was, I can't remember who it was, but first time entrepreneurs think about building the best product and second time entrepreneurs think about building the best go-to-market and distribution.

And that's sort of wrapped up in here where I am pretty good at evaluating sort of other people's ideas on the surface, whether there's network effects and whether they're doing something different and better rather than just building a better mousetrap. But in my own ideas, it's often so difficult to think about how is this...

like structurally different. And when I say that, I mean, like when you get to step one, what asset do you have as a company, which gives you greater leverage over suppliers in a way that other people aren't dealing with suppliers in the world, or, you know, maybe it's not suppliers, but just throwing out an example, like, you know, the, the Facebook's of the world that, that David, I know you're going to talk about aggregation theory, the Facebook's of the world that, that, um, you know, that,

really changed the game didn't do so because it was like a better product than before they they created something that changed the way that like the entire ecosystem had to function because they had so much power and leverage in that ecosystem and i think um not to make myself sound uh like too um like passive or good you know think about other people because i'm like definitely not but the um

I think I tend to think about what's best for the user with the PM background. But oftentimes, if you're not careful, that can come at the expense of what's best for the company. And so I definitely am becoming very aware of this notion of like, hey, you have to figure out how to flip an industry on its head in order to build a really big defensible business. Yeah.

Yeah. Well, and I feel like the true magic in startups and tech comes when you nail both, right? Like actually, I think Tencent's a really great example. Like they did, even though they copied, you know, some of the core concepts behind their products, like they added some really key

product innovations. And like everybody says about them that we found in our research, like they are very, very good product organization. Like they have top rate PMs and product minded engineers. And like, they're, they're very, very good at product. But they married that with like a complete,

new a completely new innovation and on business model with with freemium and micro transactions and and that like it was it was both of those like having a really great product that fit the On the on the most recent exponent which is back They were talking about the jobs to be done framework like the I feel like you can reach out like

did great on the, on the jobs to be done, you know, from a product standpoint. Um, but then also like just completely shifting the business model, like made it so that, so that like all the other hundreds of copiers out there or hundreds of competitors that they had, you know, it was very difficult to compete with them. Yep. Very much agree. Yeah. Cool. That's a great one. Um, you want to, you want to keep going or should, uh, sure. Yeah. Cause I've only got three in here. I may as well keep going.

So this is controversial because there's many counterexamples to it. And you can say, you know, yes, there are. There are basically no new breakthrough consumer apps.

And this is something I sort of realized last year. And I think, David, you and I talked about it on the main show, where at one point I was looking at my phone and I was looking at the home screen. And I'm like, there's no apps here that have been built in the last year. Every single thing that I use every day... We talked about this on last year's holiday special. Yeah. And so...

To put a really fine point on that, and of course, you know, there's Robin Hood and there's, you know, a bunch of different things. TikTok. Yeah, yeah. Well, so, but TikTok is part of my counter example. There is this awesome tweet by Mike Murphy that says 11 of the 20 most downloaded apps on iPhone, I think this is in the US, this year were made by three companies. 20% of them were by Facebook. Yeah.

So five of the 20. And I went through and looked at it and I was like, okay, like, let me look, uh, uh, at this little chart. And, um, um, if you go to my Twitter, twitter.com slash Gilbert, you can see this tweet. And I just pulled out, uh,

each of the like length of each of these companies, how long they've been around. So Google with five apps is 20 years old. Facebook with four apps is 14 year old years old. Snap has Bitmoji and Snap. They're seven years old. And then you, you look at each of these, it's still a top 20. I know it's shocking, right?

Totally shocking.

major mainstream iOS apps that are just like a startup in a garage working on something that goes crazy right now. This frontier is settled. Like we are in the late stage of mobile and it really shows. I mean, if you look at like Netflix is from a few years ago, Netflix is old enough to drink.

you know, Netflix, Amazon, Pandora can buy cigarettes. I mean, this, this is a, or Jules, I guess, cause Altria anyway, the, um, this frontier is settled. Yeah.

Yeah, I was thinking about that too. We'll get into that. I want to get into that in predictions. But yeah, what does that mean for startups, for venture? And I think the most interesting question is, that is true. I 100% agree that is true right now, end of 2018. Will that still be true next year? When...

And how does that change? Um, yeah, is, uh, is an interesting thing to think about. Yeah, totally agreed. Um, um, all right. So here's my, my third one. It's a little out there and I think, uh, it's contributing to the rise of podcasting. So obviously I've been living in this space a lot and doing a bunch of research on it. Um,

Something like 50 million Americans now listen to podcasting every single week. And the average amount of time is six and a half hours, which is about an hour a day. So it ends up being largely commute time. 70 million Americans listen monthly. Like it's become a totally mainstream activity. Rise in audio books is dramatically up. And I've been sort of thinking a lot about like what is driving this?

uh, had a really good conversation with, uh, Mike Maples Jr. A few months ago where he was like, Oh, I, I don't think it's connected cars. Like a lot of people think it is. I think it's AirPods. And in particular that the real explosions is going to come from AirPods, uh,

when AirPods sort of get genericized the way that sort of like little USB chargers have, or maybe USB speakers, where like you go to the CVS checkout counter and there's a $9 sort of unbranded AirPods ripoff. And I was thinking more about that of like, what is the sort of societal trend that is driving this uptick of...

audio listening. And I think one of them is that we as humans are skating to a place where we are deeply unsatisfied if our language center of our brain is not always stimulated. And I'm not a neurologist, so I don't actually know what the language center is. But I was thinking about the other day, like when I'm in an Uber or an elevator for like five seconds or more, I take out my phone and I scroll through it.

And there's a there's you can stimulate the like language part of your brain through looking at something. But a lot of times you're not able to look at something. So like when you're walking around the grocery store or when you're walking to work or when you're driving to work or when you're in the shower, like you still have that same urge. That is the urge of like pull out my phone and do something that takes two minutes. But.

like you can't actually pull out your phone and do it. And so I think the rise in sort of audio consumption from smartphones is actually the same phenomena that is people pulling out their phones in elevators, even though it's like an eight second elevator ride, it's just sort of using a different sense. And it's, it's, uh, there's a negative view where you're like, wow, people are just way overstimulated and can't deal with not being overstimulated. Um, or

Or there's sort of also a positive view where like, wow, we're able to access so much more information in perfectly consumable chunks than we ever were before.

Yeah. Interesting. And of course the tree flies, you know, somewhere in the two. Uh, but it's funny. I was thinking about this too, uh, being on vacation this week, uh, here in Texas, I was going through a, I was driving through hill country just outside Austin, which is a beautiful, beautiful part of the world and part of Texas. And, uh, um, you know, I was on this beautiful drive and I had, uh, I had a podcast on, I had the Tyler Cowen podcast on and I was, I was sitting there thinking, I was like,

I really should just turn this off and enjoy the scenery. I compromised. I listened. I was going into the town of Wimberley and I listened to a podcast on the way in and then I did silence on the way back. Yeah, totally agree. Is it weird being in silence and

well yeah it's so like um actually one of the things uh one of the reasons i uh did this trip uh because it's been such a big 2018 and uh and i think i need to do more of this is like um i was i was listening to um the uh tony fidel was on the 996 podcast uh which was super fun because we did the nest episode uh earlier this year um so super fun to listen to him on 996 and uh

he was saying that like he realized at some point in his career that like he needed to like

create time for himself that was like where he wasn't like in a meeting he wasn't doing something but he also wasn't like sleeping he was like doing the equivalent of you know he was like going surfing or going for a run or like going for a long drive like you know if you don't have that like you lose the ability to um like your brain like works subconsciously on problems you know and if you're constantly stimulated like you're you're losing that you know um

So anyway, but I totally agree. Like the positive side is we have access to so many more. Like I was listening to the Tyler Cowen episode with Daniel Kahneman. Like, how great is that? You know, like that, that rivals, you know, a beautiful scenic view.

Yep. I mean, it cuts both ways. We got to make more space. We got to figure out how to be more intentional about creating more space to think or meditate or even just like work out problems in our head, like work out things that you would otherwise never come to because you keep cutting off your thought process. Yeah. Great theme. That's it for me. That's it for 2018.

All right. Mine, my first one, we already touched on a bit in your first theme, is I have kind of the power that happens when you can align your product model and your business model. And I feel like this is something that I've definitely taken from Acquired this year, particularly from Netflix and Tencent. Like if you're, if you can have, if you can build a company where you're

um, you know, your TAM is large and all of that. Uh, but, but the model of how your product works and your business model are like completely aligned. That's when like serious magic happens. And like Netflix with the subscription based business model and, and the new Netflix with content production and content acquisition and debt financing of that, you know, sort of got the, the capital aspect of their model, the, uh,

product aspect of their model and then the business model, how they interact with customers. Like it all works in harmony, you know, and it drives one another. And similarly with Tencent, with the social platforms and the communication platforms and the content that they plug

into it and then the content that they have partners plug into it plus the freemium business model like again it all works in concert are there are there examples of successful companies where the business model i'm trying to tease out exactly what you mean by this where the business model and the product model don't fit well well i think we're gonna we may enter be entering a time a period where um

the advertising business model, uh, there's a lot of questions about whether that's aligned with the product business model of Google and Facebook. Um, and, uh, uh, you know, certainly there's, there's friction there right now. Um, uh, but, but podcasting is another, you know, a great example. Like we were talking about at the top of the show and with Kimberly, like, I don't think advertising is aligned with the

what makes podcasting great you know um it's about niche communities many of which are like very small but very passionate and like the last thing that you want if you have take acquired for example we would never have a casper mattress advertised on this show yeah that's true that's true yeah because as we've thought about our our sponsorships it's been much more about like

It's actually kind of funny listeners to get inside the, like if it's to be on the phone, we're talking with potential sponsors. It's very much like a sort of what can you bring to our audience rather than like, how can you enrich the show rather than yeah. Yeah. Like there's, there's so many things that we wouldn't want to have advertising on the show. Cause we're like it, it, you know, it either cheapens it or is not what people are here for or yeah. Theoretically David with an infinitely, uh,

um, efficient marketplace. You could always have advertisements that provide value though. You could in theory, right? Um, and in theory, that's what Google and Facebook are. Um, but yeah, I mean, I don't know, maybe, maybe that is very well aligned and these are just externalities that we're seeing now that are, that are negative, but, um, uh, but I think it's an open question. Yeah. Well, here's one, here's an example of that, that this is what I was thinking about that ended up actually being fine. But when we were transitioning office to a, um,

to a subscription model, it ended up being fine because most of the enterprise agreements were sort of bought on pseudo-subscription anyway because you buy these three-year agreements. But Office definitely faced a lot of backlash. And I think when Adobe switched, they definitely faced a lot of backlash of like, come on, can't I just buy it? Can't I please just buy this thing? I don't care about all the new versions and features you add. I don't want any of that. Can I just buy it? And over time, they've sort of...

convince people that subscription is actually better because you do actually want the upgrades. You do actually want all the security stuff. You do actually, you know, you wanted all your devices without paying whatever. But like that felt really misaligned to a lot of users at first. Mm hmm.

Well, actually, maybe this is really the lesson here is that like when you can have alignment, it's it's fantastic. And it's like maybe the most powerful thing in business. But getting that alignment and then keeping that alignment takes a lot of work and it doesn't just happen. And once you have it, it doesn't always stay aligned. Yeah, I think because the world changes. That's a great point.

Yeah. Okay. So that was one. Um, that's why I thought that one would go quickly, but, uh, but this is great. I mean, this is the point of, you know, the LP to get this banter. Um, okay. Uh, next theme that, uh, this is not from acquired, but just from my own life. I feel like I've finally this year internalized via a few things happening. Um, one of which definitely being started

wave. I've finally internalized that venture and startups is a very, very long-term business, very long term. And like, that's one of those things that like is intellectually, everybody knows, like you were saying, I think your first name, Ben, but like until you feel it,

like it was only this year that I really felt that. Um, and like, and, and so one of it was starting wave and just having to like face, um, uh, the re the realities of like, okay, what is, what is the trajectory of wave in our business going to look like? It's going to look like given the stage we're investing, you know, right. As companies are being formed, um,

It's going to look like we're going to raise fund one. We're going to make a bunch of investments, but not too many because we want to be concentrated and hands-on and all that. And then those investments, we're not going to have a good read on how well they are or aren't doing for several years. And for the ones that are going to work really well, they're not going to exit for...

a decade plus, you know? So that means we're, again, if Wave continues to be successful, like we're gonna be on fund three, four, five before our big winners, hopefully from fund one, start coming to fruition. And the other thing that made me realize this very viscerally this year is I joined, I first joined Madrona in 2010,

And when I joined, we were just finishing investing out of a 2005 fund. So you joined five years into the fund lifetime. Five years into the fund lifetime. We were starting to invest out of our next fund. Yeah, so the initial capital had all been committed or been invested and it was just there for follow-ons.

Yep, just there for follow-ons. But that was like the vintage of companies that we were really working with and sitting on boards of and helping build were companies out of that fund, which was raised in 2005. That fund...

It wasn't until this year, until 2018, that that fund started generating real serious liquid returns, like 13 years later, you know, and eight years after I joined Madrona. Wow. And so just living that period of time and not even the full, you know, only two thirds of that, that period of time for that fund, you know, I was just like, that's when it hit me that like, oh, wow, this is such a long term business.

Yeah. It's funny. I was thinking about the other day. So when you were starting Wave, you were effectively signing up for like a 20-year commitment to a job that you can't quit, which is crazy to think about in the way that sort of the millennial job market works.

Yeah, totally. And, um, uh, and, and the three of us were, I mean, uh, and, uh, no, I mean, nobody should feel sorry for us. It's like the best job in the world. Yeah. Right. Yeah. Um, but it is, it's just so, it's so different. And, and, you know, the same, the same thing goes for being an entrepreneur. Um, you know, I mean, the time,

Lines are, you have a little more control and, and a little shorter because it's just your one company. Whereas in a VC fund, you know, you have the whole portfolio that you have to see through. Um, but, but it's still like, you know, it's not an order of magnitude shorter that you're setting yourself up for. Yep.

Absolutely true. So let's see. That's one related also more from from Wave and from my other experiences this year outside of Acquired. I feel like I also just learned a ton about about people in business relationships this year, which makes sense from, you know,

starting a firm and starting a fund and fundraising. But then also the type of investing we do, Wave, where we're investing so, so early as companies are getting started. David, what do you mean people and relationships? I'm curious, what area are you thinking about there? Well, I'm thinking about what goes into building a really great

business relationship and partnership, you know, and, and from the, the, you know, courting period and evaluation on both sides, um, you know, again, very viscerally like this year, Riley and Sarah and I, my, my two partners at wave, you know, we made the commitment, uh, to, to build and run wave, uh, for, you know, 20 years, like you were saying, um, and, uh, and like we had, uh,

we had to all, you know, um, feel out each other and like, think about like, it really is. It's, it's like a marriage, you know? And, um, uh, it's like a marriage that you can't get divorced from. And, um, and, uh, so, so anyway, I feel like I have a bunch of like little points here, but it does. Um, the macro point is just like realizing how, um, you know, how complex, uh,

these things are. Um, and, and, and that also like a marriage, like it's not, it's not like you go through the evaluation period, you know, you decide to do it and then everything's just like hunky dory, you know, like you have to work at it. It takes work, um, and a great business relationship. Um, so, so that's, that's the, the meta theme. And then a couple of little things that would, you know, sort of sub points I have are like one, it,

in the courting phase, every interaction is a data point. Like every email, every conversation, every phone call, every like, you know, the negative way to look at this is that you're always like, you know, judging and being judged, which is true. But like, but I think it's more that like,

It's, again, kind of like dating. Like, as you're spending more time with somebody, you're seeing what they're like and, like, how they behave. And that's the best indication of how they're going to continue to behave in the business relationship. So, ideally, you're, you know, investing in people that you've known for a very long time and have a lot of data on. But sometimes, you know, there's these really time-sensitive things that come across your desk. Yep.

How do you make sure to not overfit to the data that you're seeing and index off of just a handful of interactions with someone? Oh, well, in the third time I talked to them, they did this one thing and I didn't like that. So I'm done. Like, how do you how do you sort of resist the temptation to, you know?

Well, I think that's what, um, that's, that's, that's part of it too, is like, uh, trying to be more aware. I've come away from this year trying to be more aware of like, what's the context that I'm interacting with this person, uh, in like, um, like again, take out and take a fundraising round. Like say there's a hot company you're raising around and, uh, you know, wave is one of the partners they're considering for their, for their fundraise. Like how are

obviously there's both sides are feeling a lot of pressure. Um, like if you can sort of take a step back and be like, okay, this is a high pressure situation. Um, how is the person on the other side of the table behaving right now? Cause that's a pretty good indication of how they're going to behave in other high pressure situations of which there will be many, you know, if you choose to partner and build a company together. Okay. So that's one. And then, um, and then the, the,

flip side of that to wrap up my themes here. I feel like through the process of raising

raising the fund for wave and fundraising ourselves. Again, I think I've talked about this before. I developed so much more empathy for entrepreneurs and what it's really like going out and fundraising. But one little lesson I took away from that, that I, I hope I will remember for the future is by and large, everybody we interacted with in the fundraising process was great. And,

And, and I'm so thankful for all the time that everyone gave us, whether they invested or not, but there were some, the worst experiences were there were some people in groups who just took a lot of time without a clear process. And like, there was, they were interested, but like, there was no, there was no deadline of like getting to a decision. And it was unclear what the process was to get a decision. They were just taking time and time and time. And like, I, I,

hope I will never let that happen again. Like what I want to be the future is like, if I ever sensed that happening again, I will just cut off all time I will spend with those people. And like, either they'll make a decision or not, but like,

The worst is when you just keep investing time with no clear direction. Yeah, it's funny. So for folks listening, I spend most of my time, kind of 80% of my time at any given point driving sort of a PSL studio project and then 20% on sort of the PSL ventures side. And it's happened a couple of times recently where I wasn't able to articulate clear process because I was like, I don't know. I don't want to hold...

There's not a process that I'm going to be willing to hold ourselves to. And then I realized, what's the probability that I'm able to like get us over the line to want to make an investment in this company? And I'm like, you know what? It's less than 25%, less than, you know, 15% in the other scenario or some smaller percent. And I was like, I should just pass and it's going to hurt because I've been super excited and like,

We've had a great relationship so far and I keep wanting to learn more and it's a space I'm curious about. So I'm intellectually curious and want to take a bunch. And I'm, but I'm like,

doing them such a disservice if I neither can communicate a clear process that I'm willing to commit to, you know, and could totally just keep going when it's less than a 50% chance. And, you know, no one should feel sorry for VCs, but that is sort of the hard part, I think, is like...

It costs you nothing. It costs the VC nothing to keep going, and it costs the entrepreneur everything. And I think you have to be really mindful of that when you're in those interactions. Yeah. And it was so... That's one of the reasons why I think it was so good to experience that, you know, myself as a VC. It was like, again, one of the many things that hopefully gave me a little more empathy for entrepreneurs through this process.

We have our next section about talking about our personal 2018s.

I feel like I've covered mine. Yeah, I think we both did a lot of that. Yeah, yeah. So we jump into... Do you want to give... What might be interesting for listeners is give a quick 30 to 60 second update on Wave and on PSL. Like, David, how many investments did you guys make this year? What's the fun side? We talk about our... Great idea. We talk about...

at a high level, but like, I don't, have you made a fifth investment? Have you made a fourth investment? I haven't even caught up. Yeah, we, um, well, so we, we closed, we fully closed, uh, the fund and finished fundraising in June of 2018. Um,

And we had made one investment before then. That was Alma, which Dan Hill, who we had on the show, on the LP show, is the CEO. They're doing great. They're having an amazing Q4. If you haven't donated yet to causes you want to donate to for 2018, please consider Alma. It's a great way to do it. We made three more investments for the rest of the year. So we did four that we're super excited about. And yeah, that's great. It's kind of,

That was sort of the pace we were hoping for. We want to do four to six per year. Our goal, many things we took advice from Greg McAdoo, who's an advisor to us, who was a senior partner at Sequoia for a long time.

and first board member of Airbnb. And he advised us, he said, you know, if you really want to do true early stage company building and try and be a great partner to entrepreneurs, you really can't do any more than one or two investments per partner per year. So that's the, we've taken that to heart. And that's our pace that we're shooting for. And so are the other three sort of quiet for now? Yeah.

Um, well, one is company called basis, which, uh, uh, publicly launched, uh, I guess about six weeks ago. Um, they're a mental health marketplace, uh, started by, uh, an early employee from Uber and a, uh, clinical and research psychologist from Stanford, um, which we're excited about. They're very early. Um, the, uh,

Other two, one, well, I'm not sure if our most recent one is announced yet or not. So I'll err on not talking about it. But another one I'm going to talk about more later in the episode. All right, I'll hold, I'll hold.

How about PSL? Yeah, so we're now three years and two months old. We raised, I think originally, well, we raised, I know originally, $12.5 million for the first studio, which we created

created nine companies out of in 2016 and 2017. Um, and then this year we've been working out of PSL studio two, which is a $15 million, um, studio. And when the way that the studio model kind of works is we raise money and we spend it on all of our employees working on ideas all the time. So like there's 25 people that are full-time employees at PSL. Um, we kill nine out of the 10 things that we work on. So the, uh, um,

You know, the ones that survive often benefit from all the fruits of the labor and the learnings of the things that we killed. So then this year we spun out five companies. So what is that? That's nine and five is 14. So we've got 14 companies.

Is that right? That's cool. So your base is increasing. It is. And there's one, there's actually one, I was like, I thought we had 13 spin outs. There's one that we killed actually while it was in the earliest stages of a fundraise after a spin out because we learned about a extremely litigious competitor that was likely to, you

uh soak up all of the seed round money we had just raised whether they had a case or not so um oh god we had some great great intel from uh uh you know investor and psl and let us know that we should stay away from that so um well you probably saved yourselves a lot of um a lot of stress and headache yeah

Yeah, yeah. So super excited about the, you know, 2019. We're hoping to, you know, do even more companies. And on the venture side, we closed PSL Ventures and announced it in April. And we've invested in three companies outside of studio companies. And just very excited about that.

You know, there really is actually, there's a lot of places you need to be careful, but there's actually a lot of, dare I say, synergies between having the venture arm and the studio arm. Yeah.

The least of which is when we make an investment out of the venture's arm, like we kind of have a lot of expertise in studio. So if someone wants to grab like, you know, Peter, a world-class digital marketer for a couple hours and whiteboard something together, Sean, this like amazing PhD data scientist, like they kind of just can't. And it's just sort of value creating for everyone involved. So I think 2019 for us is really going to be about, and for me specifically, in addition to Kimberlite is how do we get...

How do we find even more efficiencies in the model to be able to continue the super high quality bar on the companies that we work on and also be able to do more of them? Because I think we've been super pumped so far. You don't know when you spin a company out sort of how high quality it is. You can evaluate it on its own background of the team, quality of the idea, customer pull, all those things. But you don't really know much like

you know, investing in early stage companies for a while. And so our companies are well over 200 people now, jet closings, you know, doing super well, closed a $20 million round earlier this year. And, you know, it's just from all perspectives right now, at least Knock on Wood seems to be working. So fired up to kind of keep honing the model. Yeah.

And how many people are at PSL now? About 25. We're going to grow that by a couple, but about 25. That's crazy. That's crazy. I mean, I remember when I was just before you guys, when you started. It feels like yesterday. It does. Both yesterday and a long, long time ago. Which is funny because it was the same month that we started Acquire in October of 2015 was when we started PSL. Oh, man. Man. A great month. I know.

I know. Cool. Let's back to the traditional holiday format. Let's review quickly our the predictions we made last year in 2018. This was embarrassing going through. We'll start with with the the Bitcoin bet that that Ben, I think you proposed that

Yeah. You beat me. You, you won. Big thank you though, to, uh, Michael Donders on Twitter, uh, fan and listener for reminding, um, uh, us and, and the world that, uh, uh, of the bed and that Ben won. Out of the two of us, I won, but it still was pretty far off. So the, um, uh,

Bitcoin was at 18,000. David predicted it would go to 28,000. I didn't disagree that it might go to 28,000, but that it would end up down at 2,000. And here we are at 3,400. So didn't quite hit the floor that I thought it was going to, but...

Directionally correct. We were just about at the top of the market, or at least of that cycle for Bitcoin and crypto in our last holiday special. Also, similarly, both being wrong, Amazon HQ number whatever. Two and a half. One and a quarter and another quarter. Yeah.

Yeah, we were both wrong. I think I said Toronto. You said Toronto. Yeah, I said Texas. Yeah, both wrong. Both wrong. What a weird way that that ended. In fairness, the reason that I thought Toronto was the same reason they ended up in D.C. I was sort of politically motivated, but did not actually think about leaving the country or doing the headquarters near Waterloo for CS students.

Yeah. Um, let's see individual predictions. I had a super, super bland one where I was like, aggregation theory will continue. Do you want the win on that? Or do you just want me to make fun of you? I guess it did. Like, I don't even think I deserve a win on that. I bought the poster. I bought, uh, Ben had like a cafe press store and I now have a framed poster of aggregation theory in my office.

Oh, no way. Yeah. I didn't know he started a store with merch. That's awesome. Yeah. It was like a little, I think, I don't know if it's still up, but it was like a little thing before the holidays. That's awesome. We should put it in the acquired museum. Yeah, of course. And then I had another, also not that controversial one, but, but

But then I really believed in it and continue to. I felt like with the window I had, it's funny, I'm re-listening to last year's holiday special. I couldn't talk about Wave publicly yet because we weren't done fundraising. So it was very funny listening to it. If we had the LP show, would you have been able to? Like, is this publicly in the eyes of the SEC? That's a good question. I think I probably would have been able to.

Uh, if it's, well, I wouldn't have been able to, but they're just because people paid $5 a month, it doesn't mean they're accredited though. Like it's a, can you, well, you can't do anything that could in any way be construed as solicit publicly soliciting for fundraising, um, or else you would have to file like a public company. Um, and so like, and the reality is it's more that,

I probably could have talked about it. There's probably a lot of things you could do. It's just like, would the SEC go after you? And like very likely no, but that's just not a risk you want to take. Right. Right. Right. So anyway, from starting wave, I've kind of had this whole view into like, I feel like there's a lot of disruption happening in the venture ecosystem. And yeah,

In some ways, that feels obvious to participants within it. I don't know if you feel that way, Ben, but I expect you do. For sure. But I feel like the broader tech public is not really aware of this yet. And I think it has for sure continued to happen in 2018 and will continue to happen in 2019 and beyond, is that the traditional venture firms, they have abandoned...

true early stage investing. Like they do not do seed investing anymore. Or if they do, it's not in a way where they're like joining a board and really being a hands-on partner to companies like they used to. Um, and,

And mostly that's just driven by their fund sizes have gotten so big that they can't, like writing a $2 million check when you're a billion dollar fund, you can't justify like partner board time on that. Yeah. And the way that shows up to entrepreneurs is that series A now means post product market fit and seed and pre-seed are really where you sort of go when it's not yet proven, which is why you have these series A's that are like multiple dozens of millions of dollars of evaluation. Like a series A now,

means like, well, we're raising on a 20 to 80 or something. You know, it's, it's, it's a lot different than, uh, um, you know, yeah. And that's because it, you know, five, 10 years ago, those were series B's or even series C's. Um, and, uh, all,

All the pre-product market fit investing is now done by this whole new universe of firms, of which Wave is one, PSL is one. But it's not the traditional Sandhill folks, by and large. So, very interesting. Yeah, they're all in South Park. Particularly given what we've chosen to do. Truly.

All right. I don't know if this came true or not. I had mega consolidation continues in 2018. I suppose it did. I should like find some CB insights or pitch book data to figure out like if, if mega mergers, you know, continued on the uptick they were on. It sure felt like it. Yeah. Yeah.

What, I mean, I guess T-Mobile and Sprint happened this year. Yeah. I don't think it's closed yet, though, has it? No, there was a lot, I don't know, actually. There was a lot outside of tech, too, like DuPont and Dow found ways to sort of like recombine and then re-split up again. Yeah, I guess, yeah, I don't remember what the prediction was, nor do I have data to resolve it, so we'll just say that was a prediction last year.

I also said we'll see a smaller private path like social network or social networks rise in response to Facebook. I don't think this happened this year. I think it might happen next year. Yeah, I totally agree with that.

Speaking of, should we move on to 2019 predictions? Let's do it. So I do think there will be an IPO stampede. And I do think, and this I think maybe there's a hair of contrarian in here. Get your boots and spurs on. It will go well. And that will keep tech valuations high. I think there's a lot of people that are sort of sitting on their hands waiting for... They see a high valuation on a fundraise or they see...

I mean, that's really that's very often the thing. And or they see someone maybe not have a lot of traction, but raise a lot of money based on doing something previously that made them a superstar. Mm hmm.

And sort of calling for the end of the bubble. And I find myself doing this a lot too. But I do think that if we see three, four, five of these companies go out, go public, their household brand names, people buy the stock and the stock holds for three, six, 12 months, like that's,

I think the window stays open for a long time and the sort of high valuations for companies and very founder friendly time to be starting a company continues for a while. I think this will sort of keep that era extended if we see sort of Uber, Lyft, Slack and all those companies do well in their IPOs.

Yeah. I, I totally, I agree with the key factor being if they do well and, and stay and hold in the IPOs. Um, if not, then tech is in for a world of hurt, I think, but, um, but if they do, then like, yeah, like so much capital is going to be tilled back into the ecosystem. Um, you know,

you know, like let's take Uber, say Uber, you know, I don't know, you, you could argue about what, what market cap they'll go out of, but say they go out at a hundred and they stay at a hundred billion. Like that's, uh,

takes SoftBank out, even just the early stage investors, let's assume they have, I don't know, 30% of the company now after dilution. That's $30 billion in returns going back into the ecosystem. Yeah, and if they're distributing those to LPs, those LPs are probably inclined to continue funding the asset class. Yep, yep, 100%. Yeah.

All right. I got a few others in sort of a lightning round way. Uh, I think SpaceX will continue to stay private and do so indefinitely. This was a lot cooler of a prediction last week before they were announcing that they were raising $500 million from the private market. I think they will continue to have access to private cash flows and who knows, maybe even be profitable in the near future. Um, it seems like they've got a really, really great customer in the U S government and a set of other governments too. And I don't think Elon wants to run two public companies. So I think, uh,

we will see SpaceX staying private for a long time. Um, I think the lion King will be the highest grossing movie internationally of all time. Uh, I don't know how to measure that opening weekend or box office, you know, while it's in theaters or what the deal is, but I think that is just going to be a smash hit that continues the trend. Are you, are you, uh, are you counting both movies together? Is it two? No, well, the, the, the original. Oh no, I think it's going to be, no, of course not. Yeah.

I think the getting back to startup land, I think the rise of the startup studio will continue that we're sort of in an era where there's a lot of startup studios doing really great work right now. Particularly, we saw a spotlight. Forbes had a great piece on Atomic.

and their model and the success that they've had with hymns. So PSL, a few years ago, we felt like we were sort of early on this wave and beta works had done it. Well, science had done it well. Um, but you know, there are sort of dozens of studios out there now and it's become sort of a popular model for, for starting companies that I really think, um, um, we'll, we'll sort of, uh,

not only seem... This is my 2018 prediction coming true. All these new early stage company, you know, capital and formation partners. That it is, yeah. I mean, I really think, you know, granted it's worked well sort of in a great economic climate to be doing this, but I think...

I'm curious to see if it ends up following the accelerator trend where like there's a thousand flowers but sort of only a few bloom and I think I'm also curious to see like what

Right now, we only can count sort of a handful of the big household name successes that sort of came out of studios on one hand. So you sort of have Bitly, Dollar Shave Club. You can kind of put Dog Vacay in there. Hames is doing great. Hopefully, PSL has a few here soon. But I'm curious to see like... Man, I forgot Dollar Shave Club came out of sight. Yeah. Yeah.

Yeah. So I'm curious to see, like, are there a bunch at the sort of Series A level now where in the next year we'll really see it kind of explode with a lot of the seeds that have been planted from studios now? And if not, I'm also curious to see, like, is there sort of consolidation in the studio space the same way there was in the accelerator space? Interesting. Yeah.

I think in terms of spaces that I think we'll see a lot of new startups and funding, I think digital health is one. David, you mentioned a basis, and I think there's a lot of great companies up here in Seattle too that are

are taking sort of doctors online with different ways of providing care that's better and more continuous that I'm super excited about. You stole one of my themes. Sorry. I totally agree. No, it's okay. More verticalized machine learning applications. So like we have a company at PSL that we haven't sort of announced yet, but is, I think...

no-brainer use of machine learning for sort of very primitive data that's making me realize, wow, like...

We're trying to do a bunch of really fancy stuff with machine learning and AI that there's still a lot of very low-hanging fruit, and you can create really powerful, verticalized machine learning companies. I also think, so I forecasted earlier that I think the app wave is over and that mobile as a platform is settled.

Despite the fact that I think mobile is, I'm shocked by the amount of innovation that we've seen cross-platform, but primarily on the desktop side and productivity apps this year. So I've been using Superhuman and it's scary, but like I'm still going to use the workflow, but it's super powerful. Airtable has sort of

change the game for a lot of people journal is a smaller one um there's a launch by a friend that's a really really cool sort of like note-taking and organization um and search app across a bunch of your services um and so there's a lot of these are powered by electrons so we're seeing desktop apps that are sort of framed in websites kind of like slack i mean that's a oversimplified version of it but i think that's enabling a lot of this sort of cross-platform um

stuff that comes at, in some ways, the expense of the trueness to platform. But we are seeing a lot of really interesting innovations in cross-platform productivity and people rethinking sort of the basic Microsoft Office model of productivity.

Two more. One, I think we'll see continued explosion in creative tools. Webflow and Sketch have just been really powerful in the last year or two. And then, of course, the wave of podcasts will continue. And I think the trope... How could you not think that? The trope of podcasting, you can't make investments in podcasting that will be venture scale. I think the continued growth in podcasting from a...

spend perspective but more importantly an attention perspective it will be a very investable category so um you know really excited about the future of podcasting yeah duh

Obviously, I agree. As do, hopefully, all of you as our LPs. All right. My 2019 predictions, I have just a few. And amazingly, many of them are similar to yours, Ben. We should spend less time together. One, we spend a lot of time together, which is great. But we do spend a lot of time together. Okay.

I think we are going to see, we've really already started to see a backlash against Instagram in the US.

I think, uh, Kevin and Mike leaving, uh, Facebook and the company, um, was maybe a harbinger of things to come. And, uh, uh, Ben, I don't know if you saw, um, well, Osprey just announced that he's quitting Facebook and Instagram and WhatsApp. Huge. Yeah. Um, and I think like, uh,

A lot of people now, I don't know if this is going to spread beyond the, you know, uh, tech, you know, hardcore people into the mainstream, but I think a lot of people have been looking the other way as they've been like, you know, Oh, there are all these problems on Facebook, but Instagram and like forgetting that, you know, willfully forgetting that Facebook owns and controls Instagram. Um, uh,

I think that's starting to change. And I think that leads to what we were talking about earlier. I think there may be an opportunity right now, as weird as it feels to say, I think there's an opportunity for a new social network in the US because I don't think Snap is going to realize it. Now, that may mean Snap gets acquired by somebody. But of course, there's the weird control and ownership structure there, which may make that difficult.

But yeah, I think there's an opportunity and I think it'll be really interesting again, recency bias, but to see if, if like, if, if the thesis is that what has caused all these issues with the existing social networks and Facebook and all their properties is the advertising business model. Is somebody going to be willing to try the 10 cent business model in the U S and couldn't work here? I think that'll be very interesting to see.

Okay, so that's one. Two, I think both on the stock market and in public perception, like tech as a whole is very down right now. And obviously Facebook and to a certain extent Google, you know, kind of leading the charge down there or the fall down.

I predict though that Amazon is going to, even though they've been dragged down with tech and with the broader stock market over the last month or so, I think Amazon's going to emerge at the end of 2019 even bigger and stronger than they are now.

for a lot of reasons. One of the things I'm excited that they're working on is my next prediction, similar to yours, is I think, yes, digital health is going to be a big, big wave coming. It's already here, but we're in the early phases. And I think there are going to be a lot of big companies, both marketplaces and non-marketplace companies built in digital health. And I think it's really interesting that obviously Amazon agrees and has the big initiative with our

pathway and JP Morgan there. And what's cool about healthcare is like, it's so big. There's so many areas to disrupt that, you know, there's the insurance part of the system, there's the healthcare delivery part of the system. So I think that's going to be a big wave and that continues to crest in 2019. And I think we'll see our first major exit, either an IPO or an M&A in that space. Now, maybe might be one medical might be Oscar, you know,

Could be any one of a number of other companies, but I think we're going to see our first big splashy exits there. And then a sort of addendum to that in a different sector that I think is a little farther behind, the wave is not ready to crest yet, but I hope it will be soon, is energy and climate. And

Other than Elon Musk companies, there really haven't been a lot of successful entrepreneurial endeavors in the

in energy and climate related things. We're going to have Doug Rand on for an LP episode. So Doug is the co-founder of boundless and worked in the, um, in the white house and the Obama administration on a bunch of, of, of really interesting policy initiatives. And he laid out for me the other day in a way that was so beautiful. I cannot repeat. And like, it was just so well thought out of why, uh, why there isn't a good capital structure for funding, um,

what used to be called clean tech companies, but is, is sort of now like, how do we solve the climate crisis? And he's just incredibly thoughtful on it. So I think, um, awesome. Yeah. Let's have him on and talk about this. So my thesis on this right now is that like,

I think the companies that are going to work and scale and make an impact are just not going to look at all like what energy companies, quote unquote, or clean tech companies look like. It's going to be things like scooters. It's going to be things like Tesla. You know, it's going to be, uh, be products that the by-product of which is, you know, better, cleaner energy consumption. Um, but, but I don't know. It'd be great to talk to experts on that. Yeah, we will need it.

Yeah, we certainly, certainly do. So, okay. Should we move on to carve outs and wrap this up? We should. And I'm going to give mine in a lightning round because I'm going to do some Kimberlite customer development in a couple of minutes and got a phone call.

Love it. So, uh, book of the year for me was reading e-boys. I think I mentioned on the show, it's no surprise to anyone that a book about benchmark was very interesting to me. Um, article, uh, the new American aristocracy. This was a amazing long read. If you have time over the holidays, I can't recommend it enough. Um, and really talks about, uh,

Uh, in some ways the sort of sad polarization of the U S um, but it really highlights something that I hadn't thought a lot about, which was that, um, it's not the 0.1%. It's sort of the other 9.9%, um, that, that, uh, are sort of the new American aristocracy. And it, it highlights a lot of really painful truths, um, and forces you to look in the mirror a lot. So I think, um, yeah, definitely, definitely worth reading that piece. Uh,

My podcast of the year is I listened to song exploder season two, which is my covers, my beautiful dark twisted fantasy, the album by Kanye West. It is sort of the history and deep analysis of, of that album. My song splitter or dissect. Oh, sorry. Dissect. Did I say song? I did say song split. Also a great podcast, but I mean, dissect similar. Also. Yes. Yeah. Yeah.

I can't remember if a moment apart by Odessa came out in 2017, or if that was actually my carve out last year, if it was, then they're more recent release. Loyal is awesome, but I cannot get enough of Odessa. Um, my, my TV or movie there was black Panther. That was potentially also one of my albums of the year. Uh, the soundtrack is just incredibly good. And, uh,

my app of the year is interesting. Like I still use all the apps from last year because that's how this works. Um, but if I had to pick sort of like ones that I think entered my life this year that made it a lot better, the moment camera app is really awesome because you can kind of similar to how lied, which is another awesome, uh, camera app for people who are sort of computational photography nerds. Um, you can shoot raw on your phone, which is really cool. Um,

And I have the Moment case on my phone so I can snap on different lenses. So like I have a telephoto lens for my phone that I take on vacation and use with the iPhone X's other telephoto lens to get like a 4x. And then you don't need a DSLR. Exactly, exactly. That's awesome. Really, really cool stuff there. I also have been using the Weatherline app, which is awesome to see weather sort of visualized linearly throughout the day on an hour-by-hour basis.

And then recently I've been using auto sleep a lot. And I think that that is going to be, I was talking to a friend at rise science the other day, a sleep company out of Chicago. And I really believe, I don't think it's one of my 2019 predictions is that there's going to be like a dominant tech wave of sleep tech, but I really do think there's, there's going to be a lot of amazing progress made in the next, next few years in that. And I think that's part of a part of digital health. Yep, for sure.

For sure. And so if you wear your Apple Watch to sleep, it's super easy to track your sleep with auto sleep and have been noticing some really interesting patterns. Nice. I got to get that.

Yeah. All right. Those are mine. David model. I'll go over to you. Lighting round for me. Yeah. Uh, my book of the year, uh, also did this as a carve out earlier in the year, uh, the broken earth trilogy by Nora Jemison. So, so good. Uh, all three books. Fantastic. Again, the only trilogy ever that consecutive years back to back to back one that you go award. Um, our

article mine just came out recently this is so good uh ben did you see the um the article about uh uh it was an npr story so it's better to listen to it than read the article of charles berkeley and uh his friendship with uh oh yeah chinese immigrant in in iowa so so good oh my god i cried so much reading that or listening to it it's so good um

podcast. My podcast of the year is the 996 podcast. Amazing. Zara and Hans just started it in January in 2018 and already is one of my top

They've just done such a great job with it this year. Um, music, uh, I discovered 2018. Uh, I'm way late to the bandwagon here. I discovered tiny desk concerts this year. Oh yeah. So great. So great. Um, specifically to, I, I really loved or, um, St. Paul and the broken bones and Tyler, the creator, uh, both fantastic tiny desk podcast, but really you can't go wrong with any of them, um, on YouTube. Uh,

Movie of the year. I mean, I got to be in agreement with you. Black Panther just like killed it. Yeah. So, so good. So, I mean, that was like,

could not have been just a better movie or like summed up the moment we're in like better than black Panther. So good. Um, app of the year, I promised I would talk about our fourth portfolio company, uh, is for me was steady health, which is, uh, still in beta. Um, so unfortunately not, uh, open. Oh, I think I mixed up basis and study earlier when I said, okay, cool.

Well, Basis is also digital health in a way. It is. It's digital mental health. Steady is, this is our second investment of the year. I'm so excited about this company. And it was my app of the year because I got to beta test it. So Henrik Bergeron, the CEO, was a second-time entrepreneur. His first company, my partner Sarah acquired when she was head of M&A at Drop.

Dropbox and that he was a group product manager at Dropbox. He's a type one diabetic, has been diabetic his whole life or his whole adult life. And he started Steady Health and he

There's this new technology called continuous glucose monitors, which is a patch that you wear on your arm, and it measures the blood sugar level every five minutes. And there are medical device companies that make these, but they're still very dumb. And so Steady is like a whole platform, digital health platform created around this for your

your blood sugar for diabetics. I'm not diabetic, but I wore it and demoed it anyway. And basically once you, once you're measuring and you have insight into your blood sugar on every five minute basis, like, and then you see it on your phone and on the platform, nothing has changed my behavior more than, than, than seeing this and having access to this data. It's just incredible to see the real time impact of what you eat on your blood sugar.

uh, when you exercise, how much sleep you get, all these things. Um, and, and obviously blood sugar isn't the only vital sign, but it's like such an important piece of your health that is heretofore just been like a black box to so many people. Um, and, uh,

I cannot wait for this to be available to more people. Like it was, it was literally life changing to get to demo this for two weeks. Dude, what the heck? Like I was a quantified self nerd 10 years ago and like now it's called digital health and it's hot again. What's old is new again. So true.

So true. All right. Well, get on to customer development. Happy holidays to all of you LPs. And thank you so much for being part of a part of this journey with us. Truly. It's, um, yeah, we were guessing earlier in the episode about what a big 2018 it's been, but, um, uh, it's just so, it's so crazy that, you know, we have hundreds of you with us, like, and we're just so appreciative. It's been, uh, it's been such a great ride.

Awesome. All right. See you guys. See you next time in 2019.