Episode 18: Special—An Acquirer’s View into M&A with Taylor Barada, head of Corp Dev at Adobe
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who got. The true got. Easy you, easy you with you see me down, say.

Welcome to epo de eighteen of acquired the podcast where we talk about technology .

acquisitions.

I'm been gilbert David, and we are your hosts today. We have a very special episode that kind of breaks them all of the show. Um we had opportunity that we absolutely couldn't pass up. And even though we're not covering a single specific deal, um we think this is going to be a super, super interesting less episode for listeners out there. So David, you want to tell them Better?

Guess yeah, we have we are lucky to be joined by a special guest today, Taylor barrett, who is the VP and head of corp. Dev corp. Strategy and strategic partnerships at adobe. So welcome, Taylor, or thanks for joining us.

Yeah, excited. Be here, guys.

Thanks for help me course. Quick background on tailor. He joined to do be in twenty thirteen before that he was a VP of business at singa and before that he was also relevant to our show had of court div at um he is A J D M B A from north western h and after north western spent a couple years at being before getting into the deal making world and perhaps most interestingly, and you are the first guest on our show who is a former professional athlete, uh Taylor a played professional soccer or probably more accurately football in england. Maybe we'll get into that lots of deal making in .

that yeah exactly. know. I would say that looking back on, I didn't have the language at the time, but the there was no real us seen when I came out of college.

And so effectively, I became a independent solo soccer entrepreneur. Had to go kind of figure out how how to insert myself into the the european game. And IT was an amazing life experience, but not always easiest.

Yeah, man, that could be like a whole separate episode bring out of this pod cats, but i'm sure to as a cool story.

So what we thought we do for this episode is construct to our typical structure um but instead has been mention of talking about uh, one acquisition in particular. We just thought we use IT as a vehicle to tailor gate your insights kind of from the inside of being in corp. Devan how you think about deals um and acquisition as you as you're going through them.

So we have a bunch of questions, but thought we start with sort of the acquisition history, in fact, section as usual. And I think the the best way to kick off would be something you know that probably most where listeners are curious about. And i'm curious about how do conversations typically start between corp and startups? You know, either when you're approaching startups or when they are approaching you, what's what's the beginning of the story usually look like.

yeah funny. I mean, I think the you guys even doing this, this podcasting, this focus is, I think, feeling a nice a gap and me because it's not something I spend a ton of time thinking about because at some point, IT is sort of natural and IT seems very fluid in relationship driven, not some big moment of you, hey, warfare sale know those things do happen.

But yeah and he can .

be very sort of mystic and seem like this dark black art that I find sometimes that entrepreneurs, when IT feels that way, they tend to pull back in and be very reserved because they're not sure what they can can't say and they want was say the wrong thing and all which is totally fair. And so um on our and what i've always done individually when i've been a deal leader than what the culture actually create on our group is that you remember that the process is fluid, is hard to know which ones are going to actually go the distance and lead to a deal in which ones aren't.

Um the valley is we all talk about and or the broader technology industry outside of the valley is incredibly small and so um because of that is its very relationship oriented and because of that, the way these conversations often started is just that literally a connection in enjoy like k you guys are in this space, these companies doing interesting things. You guys should just get to know each other. Um i've always liked after study across at some point in last couple years, mark sisters bob post on investing in lines, not dots.

And I think this concept is, is that it's very hard to make a decision when you only have one point in time. But when you've had connections over time and you have the benefit of sort of seeing people say what they're going to to go do and and hopefully go do IT or something something Better IT developed credibility. And um you have time to sort of process and have a perspective and on how IT fits in.

And and so often times it's as simple as that. We get introduced, we start say should talk to someone. There absolutely is the the other sort of twenty percent case where some companies been gone off in a space that we haven't been tracking or a company that we haven't so focused on that decide they either get the stereotypical in bound strategic against ers from from someone else in the space.

And um they decide that they want to talk to others and see if they want want to sell or they want to sell to us or Frankly, sell of the highly bitter that type of thing. And we'll get those calls, will take those calls and we will sometimes to do those, but those are that's a high bar um and we try hard to develop relationships. So that sort of eighty percent of IT is more strategy driven, more relationship driven in his broader perspective in a broader context that's developed over long period.

Yeah and in that original kind of introduction, when someone's hey you know um this companies A A newer company, they're playing around and sort of a similar space or similar customer segment to you guys.

Um what's the context for starting that relationship? Is that is that a partnership? Or is IT just like, you know, let's not playing the games? We sort of know that there might be some acquisition at some point in the future or you what's the incentive for that for her to kind of start that conversation?

yeah. Look, you can waste an enormous about the time if you just run around the value talking to all the big companies, right? That's not your job. Your jobs to build value for customers and the time some point you're going to be able to modernized that value either through an IPO or the sale of the company. And with you know, that is context.

I think sometimes you get into a scenario of like, well, and i've had i've had introductions where a VC was an investor in a company try to make an interjection for us and the entremets told the VC who was on his board like why would I even take that meeting? I'm not trying to sell the company, you know that. And i've always found that kind of humorous because the whole point is it's it's like the odd saying of know when you want money, ask for advice.

When you want know advice, ask for money and that whole thing, if if you're like calling us asking to be sold, um IT certainly can happen but um you know of your first interaction is that IT uh IT puts an af a lot of weight on that interaction and doesn't need to be that way. I think IT also ignores the the point which I always make. Um and when we sort of talk about IT over time is as things develop, is that if you're smart as a seller, you should you're going have a fiduciary duty to get the highest value you can for the business when IT comes that time.

So that, that just is. But at some point, once the deal takes place, you and the team will be working there. And so is that a place where where you think your vision cannot just sort of go and get part, but hopefully can be accelerated and its not um in in end as much as IT is beginning and if is that the you order the type of people that you want to work with, do they see the world the same way and um those things sometimes you think that all that is a matter where is going to say hi ebit ter and like yes, of course we get that everyone gets that.

But um IT doesn't mean that you should ignore all other stay holders, all other factors. And um the way you've sort of suss those out and Frankly do diligence on us, another other places and try to see whether IT feels right is by getting no people over time. So I actually think it's best when it's explicit, not around a specific conversation.

It's certainly fine if there is a specific partnership that seems very interesting with the big company, but those also can be classical waste. The time every small company thinks that every big companies is the keys to the kingdom in a partnership with them will unlock everything. But often times, they take a very long time to get done.

Once they're done, they take a very long time to mature in the ones that are truly game changing for startups are few and far between. And so IT doesn't mean I shouted link do them. That just means you have to be pragmatic about what you should expect for them.

Um and so if there is a partnership you want, we often times you act this sort of a concise into this wildly complex fifteen thousand percent company um which we sort of to know how to navigate. And from the outside, it's probably extremely hard to figure out who to get to if you want to talk about the partnership around one particular decline. So we can definitely do that. But like I said, I think it's best often times if it's much more open ended and just hey, we're in the space would love to me you know this VC that we both know um thought we we should get to know each other and not looking for funding, not looking to sell. But you would love to grab coffee and just talk about what we do.

It's amazing you as as we're talking about this and even as we are preparing for the episode, like how much this means the process of raising venture capital too um which to be onest and it's an education for me。 I'd never really thought about that.

But we coach our companies when they're thinking about raising around, you know all the time, you know you're always raising, you're not always closing, but you're always raising because of this very you know that takes time to build relationships and um VC investors as you point out, you know the sitter by post is great about wanting to invest in needing to invest in lines, not dots. And occasionally it'll be a dot that you know is so compelling you have to invest inner IT would seem for you guys you have to buy. But um IT takes time to build these relationships.

What what do you think you know as as your. Doing that maybe talk a little bit about kind of the importance of culture and that relationship and the people fit. I know it's something that's really important to you and adobe. You what is how are you assessing that when you're talking .

entrepreneurs? I'd say adobe is uniquely important to us, and we've walked away from you extremely large deals north of billion dollars because we didn't feel like the culture fit was there in part of IT. Just has to do with how we think about what we're doing and what we think has made us in enduring business over thirty in a really dynamic space. And um the company has morphed from, you know post script and printing tools and things like that into that stop publishing and then creative tools and now into marketing.

Now long time ago, yes, yes, that again, that's somewhat unique.

And then I was my understanding was IT was a couple guys on a product, but yes, to the recent piece was there and then they built around IT.

How does that you know you talk about um the qualities that you look for when you're requiring someone to be a culture fit. How does that impact the outcome of the acquisition? And is there like anything and specifically that you sort to look for as okay, this is going to be you know this is going to make this outcome financially successful for adobe because this .

person has x mindset yeah um I think it's definitely related. Now I say you know we don't care about winning the press release um you create value and one of the reasons why valuing companies is art, not science in a strategic acquire scent versus a private equity what not is that like look at an even in private quality.

This is really true if you get down to IT is that you know your valuation comes become because of a present value of your future cash flow, like what drives those future cache fes, what you actually go doing the market together. And inevitably, we're not like a holding company that she's going to buy great properties and let them roll. We we are trying to have a point of view around the market and say, hey, look, we can come together and maybe it's not one and one equals three.

But you know there's some sort of element of um that overused word of synergy, gy. And we're looking for leverage and looking for a perspective that we can accelerate the vision of the entrepreneur but also Frankly, accelerate our own vision and hopefully and broadly at times, just as we did when we went from you creative to marketing with the ometraco visit. Excuse me then.

So it's the reason it's so important is that if you have an incredible strategy and incredible vision, we all know it's meaningless. It's about execution, like big companies are no different than startups that effect execution creates value. Strategy is what allows you to have the opportunity to um get into that mode, but you got to go to do IT.

And I think the one last thing and um with touching this a little bit when we are catching up before the calls, the to me, if I to pick one hallmark that gives me a sort of good positive early indicator that we're on the right track is when I start to see through the back and forth and comparing notes on the strategy and the vision that this concept of accelerating the entrepreneurs sion around where they're going is there. But it's not that's not the only thing. The other thing is they actually start to embrace the broader vision that we have um and say, you know what, I actually think I can expand your vision and I want to get in and if if I can if I can work with you guys on that, I can do something bigger.

And so often times you'll see over time that the the deals that work really well and where IT particularly works well for the founders, you know, ceos is where they end up loving the concept of getting inside a bigger company. And maybe they are really died in the whole product. People in all this raising money and all other stuff is, you know, part of what they have to do, but it's not what they love.

And always they're unleashed and they get to just go do what they they wanted, spend all of their energy there. And if so, whether here or you know, to the smaller deals I did, well, I was at yahoo. One was for company called citizen sports, found any mike turns and found in that company with another guy, jeff mar who well known from the bringing down the house days um and all that M I T but um uh so might come in and just did phone only well and then another was company called into now um that was founded and spin out by a guy, adam khan.

And those two guys stuck around yahoo for might just left about a year ago and I think I am think still I still I ahoo and they rose to be two of mrs. S V P of product and these were smaller acquisitions. So it's not like they came in the door doing that.

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

It's really coolly who you talk about that we had in one of our early episodes, we had curt delvin I from microsoft time and we talked about the accompany acquisition and he talked about this very fact that you know, one of of the things that microsoft is thinking about now in terms of mines is just what you're talking about about the people in the culture of the central courts.

Now leaving the link in acquisition but um which is much bigger and more complex but but for heavier h saltario at at the company, you know he's now running all of outlook um and now exactly where these teams let's move on if we so we sort of break acquisition history in facts in the two parts. You and my favorite part is sort of the stories of the acquisition, sort of what we've talking about here. But I bet a lot of our listeners would be really curious about like what's the process you know, once you've realized that there's a relationship here that could bear fruit, what is the what is the steps in the process when you're actually working through a deal at that point from l yi determination to the definitive agreements, what are the key miles down? Guys, what specifically .

here are you're looking for? Is that cool financial check? cool.

There is no lawsuit against them. Check call their their product is growing with users. Check those sorts of things.

Yeah um look, you have ultimately you're gonna a do a deal. You know if that makes you strategic sense. Um the technology product fit is there and um in the financials you think makes sense for your shadow ers, right? And um for us, the fourth one that I would put that over unix are cuts across all of that is just the people that as we've already talked about.

So um the hard part about the deal is these are all even that we have a quote process in every um large acquire um that is sort of a repeat player, right? So of all the places that i've done and done this role um are definitely in that. And you know the other ones are people like you ve mention some microsoft or a goal facebook acta.

Um repeat players absolutely have a process and there's different flavors in each company has has different places where different types of decisions either take place or which parts of the org are responsible for them. There's definitely a number of different ways to do. Um but it's um you know every deal is is its own you know sort of perfect snowflake.

There are also no flex, so their deals and there's unbelieved correlations from them. And when you get into to the grain or you know um everyone has decided were going to make this happen, IT becomes kind of a machine and the the legal side in the diligent side starts to take on a life of its own and that really does happen. So um I would say in general, this is tough because on the outside, when you particularly, you're not going through a hard core sort of auction process higher to bank whatever.

But it's it's a place where you sort of think well, but we're not really for sale, but they seem to be interested. So i'm open to doing this, but I don't want to sort of waste all my um then within emotional energy and sort expLoring this. How would do we do IT? So typically um there's usually an early meeting um with a someone in the business unit um that's responsible for the area that that where there is the strategic consist in the overlap and trying to get an understanding for the product vision, the product technology.

Maya, bit of a demo, a little early point of view on numbers. And I think sometimes that can be tough to decide when do you share what um and in the world, always fine if the feels like they want to get in india in place before they share some financials and things like that. We we tend to try to um make sure that we can have have checked wings like you know, if we get a um someone who's trying to sort of take a read on the market because they're about to do a fund raising round and they just figure they Better think about IT and one talk to a handful people that are sort of the logical fits for that business and say they decide where one of them and then no sort of checking with us.

You know we will often times to do at least one call without in india where we just sort of say tells the story and we will go through out. So there's sort of a high level business product check early on and then someone you start to kind of um have a fuel for the financial side as well as you go through that. Um the biggest milestones you're fine with large requires is kind of the L I or the term sheet and that that almost always um and I truly mean almost always um includes a no shop provision, you know some period of time um in typically sort of forty five to sixty days, sometimes thirty days. Those are the types of the things where once you get to that stage, you'll have a layer involved and they can advise you what is a quite market.

Just something so funny party you're going to have yes.

you're going to have your lawyer. They're onna. Tell you what's market. Educate you on what the business verification are of what is being done. Every big company has slightly numbed ways of doing things. And because we are repeat players and the lawyers are repeat players. There are certain things where you know it's basic, like yeah, we're not we're not going to do that because of the president of IT in that type of thing.

So um often times those are but big, you know depending on um know where the leverage lies depends on how much of those things get negotiated by the buyer the seller again, exactly like adventure round in that respect and then um and once you get through that, that's when you see the circle of knowledge on both sides expand, but particular on the buyside, sometimes you can be overwhelming because when then we're gonna jump in and do IT you know a day minimum, often times two or three days of kind of a deep dive. Take us through the business, you know beginning to end in terms of go through the product to go through to go to market. You go through the financials, go through the Operations, go through the technology architecture um and then um you know that's when you build build out of you know a very detailed data room.

And um you know I think with the super early stage companies, sometimes you run in this some issues where they didn't have their house in order, they didn't get good legal advice early enough on. And you maybe they were working with a couple of outside agencies and they didn't have them sign and action sign an agreement that of itself like those are at this point. The I saw that more ten years ago than I do today.

I think the the breath of start up legal advice and sort of smart, experienced Angels as well, certainly the ventures community, you just people tend to have a pretty button up shop, particularly if their venture back and um and things are pretty clean. But if you're outside of the valley and maybe the company was luck enough to grow books dropped, whatever the kind of just met all work everyone, then you'll run across things where they didn't have their house in order and then it's it's rarely a deal killer, but I usually is in up being something you ve got to walk around. So drive through that at some point.

You put in place a definitive agreement where you know our lawyers will put together an acquisition agreement depending on if its share purchase or asset purchase h eeta. And um you kind of go back and forth on that and try to get a finalized and ultimately deal deals are announced once the definite agreement has been signed. And then there's a question of as a simultaneous sign and amounts and close, meaning you know we signed IT, we send the money we own IT? Or is there split signing clothes where we sign IT? We announced IT and then there's thirty days to meet X, Y, Z closing conditions before we would actually close. You'll see both.

Yeah and you mentioned throttle steps. There was one point. There were the business owner um talks with the company they are requiring you know compares vision and strategy and and dixon with with corp dev.

How involved is the business owner throughout the entire process? Are they in every single meeting? Are they in that first meaning?

Is that the business owner that first contact that company? What is their role and what is the role of corp. Death throughout the entire acquisition process?

Yeah, it's critical. So I mean, one thing to know is you can ignore corp t of um in many ways they are going to be your guide in your partner throughout. That is my truly view IT as a much more collaboration. If you're gonna get a deal done eventually, it's gonna because everyone thinks that makes sense and you're able to get together at a evaluation that everyone feels good about, right? So I very much try to make IT clear to people you know and make sure our deal leads, make a clear that no one can can make you do anything you don't want to do.

So that is one thing I think out of the gates to kind of dismissed fy the whole process and and ticket little pressure of um the relationship with the business owner is critically important, I mean in the language I use um and again, every company is sort slightly different ways of thinking about this. But I think that is there's an executive sponsor and there's a business owner. Often times you will see, particularly if a company's kind of got some VC and rows and things like that, they will be really focused on like trying to get in in to meet the CEO or get to meet the you know the head of the whole business and then the of that yeah and like in this fine, like everyone gets a it's the old thing of come and high and work down and bob and sometimes IT can be fine.

Other times it's IT can be either off putting or or even even counter counter productive in that if you get in front of them too early before the business owner in corp. Have been able to kind of frame IT and suss out in combination with you sort of your business well enough that then we can effectively translate and help people understand why this is exciting, why this matters. They might take one meeting like if I was not that and then and then I created this appeal battle where corp.

ed. Up in the business like we're got to spend more time on this. This one's interesting, right?

And so trusting, it's so true.

So even if you got like this perfect hey, my venture guy says he is like golfing bodies and best friends with the sea yeah whatever right?

It's it's just a car you I generally to sort say play a straight up, play IT open and and treat the corporate person um in the business owner as people that are your partners to figure out whether this makes sense um not um you know not someone who you got a kind of like micromanage because ultimately it's not like a enterprise software. Sor SaaS, you're going in IT group, you've got a need for a widget. You've got a widget.

You're going to Solomon wise, yours is the best. And then where and we're done like get IT done, right? It's it's it's a very subtle collaborate, collaborate dance where where both sides are valuing each other and getting to know each other. And you can mean it's sort of overblown to say it's a marriage, but look, you're selling your baby that you put heart and soul into creating. You want to find out of our good stewards of IT if if our visions alive and you should care about that.

So funny going back to the parallels with sure. I mean, they just keep coming up. But like we see companies make this mistake with us all the time is, you know, they come in, they meet with one partner and you know that relationship is progressing at a natural pace. And then you know, in the worst case, the founder CEO, or but often times one of the other venture backers, if somebody will come in and talk to another partner and we call a partner shopping and like nothing will kill a deal faster .

than that yeah and there's less issue of that here because we're not a partnership. There's there's a natural organizational structure to a big company .

to to somebody think has influence but actually has no context on the relationship. And yeah back to that being the most important thing, can totally see how that can blow up deals.

Yeah exactly really blows s up deals. That's the other thing why I say like there's almost no misstep that you can't get over if actually IT makes business sense. And that's the other reason why I say getting people in mind space of like you're building a great business like you're gonna get the exit you deserve.

And we're looking for a long collaboration to figure out whether the war they are right home for IT, right? It's like IT takes all the pressure off because the really answer is you don't need the micro management over manager like we do this off all the time. And if we're approaching with that mindset, we're going to together to figure that out, right? Because the rigger gest reason people do that is because they're in like value optimization mode in the back of their mind, they think I got a maxim value and it's like, yeah totally that's IT is literally in the bylaws.

It's your fedex ing responsibility, right and we get IT and and so it's part of that. But if you if you over manage that and overplay IT at the wrong wrong times, um is IT comes across awkward. And again, if IT actually makes sense, you're probably gonna recover from IT. So even if you do, it's not that big deal.

Like I said, like i've never not done a deal, but i've had deals where IT was much harder to get there because you with someone figured out some way to get in front of either the some other head of a business here or something earlier than we probably would have ideally want IT or sometimes IT comes in that way and that's fine too. But then it's like, you know people got to do a job where to bring that whole thread back around to the core question. Us, I think was been um the business owner or that's what a head of product is actually extremely important relationship as well.

Like you should have a sense of where you if you were king for day and ran that business, where would you think that you you the start up that you run fits in? And then how do you figure out who's responsible for that part of the business? And that's absolutely just as important relationship.

I would never say you only focus on that relationship and ignore corp ta, but I would also never say focus on corp. Dev and don't worry about that relationship. You can't have to have both. And sometimes again, it's this probably also like adventure. It's very organic.

And whereever you haven't in you know, in order montral take the warmonger o and then and then asked the question, you know, hey, should I talk to someone in court ever, whatever I have business unit partners who are very sophisticated of sponsor deals many times. And they part of a job of running a good, being a good product manager, or let alone know business product owner or G, M, is understanding the outside market, knowing the ecosystem they are in. So they should be out there, meeting starts themselves, so often times they will meet someone and they're hand IT off.

And so you know what? I met with this guy once, twice for coffee. I kind of like, where is headed? You should like nothing to do here. I'm not looking to do IT. He's not looking to sell, but I just kind of want to get him on corp designator.

Can you meet with them that everything other times were we've partner with the business partner to develop a strategy and um over overall and we kind of know the spaces that we're so particular and said and we will find find the relationship our company and we get in rose and i'll pass them through. I think that is one difference between the V C. In the M N.

A world is that sourcing is not some. Big magical thing. Um you know we every now and then will find something that we didn't expect because we have made the next effort to you get out and beat the bushes.

But um we're out there in the market. There's only so many inquires. Um people find us nine out of ten times if .

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next category that we talk about on the show is, is acquisition category. And so every deal that we look at, we assign, we say this product acquisition or business line acquisition or people acquisition. Um we're curious on your and like do you guys do the same thing? Or or is IT more organic like as you're looking at different companies and then they tend to fall like you like you guys thinking like if this is definitely acquire or like all this could be like a huge business line acquisition or know how was that going through your heads?

Yeah I mean but there there's industry store standard lingo. You acquire s tech talent deals whatever verbs sort of business acquisitions or product acquisition. Those touching things are definitely those heard those use we've use those all the time. Um we don't get too hung up on IT.

You know one construct i've used inside of our businesses, you know from my brain days I had a respect for some the profit from the core um analysis and the'd done um there is actually a book written a number years ago called profit the core and they have done analysis like two thousand companies and growth initials both ema and others SE and the concept was that once you understand what your core businesses as a large scale company, understanding the you know the business that drives the most profits in a sort of that the most a enduring um from the perspective of who's the customer, what's the channel, the market um what's the jagga you're playing in um what's the business model and what's the product any time you change one of those five things here like a one step adjacency further from the core and IT creates risk and actually they show through analysis of all these different companies that once you got um I think that was one step of janci was maybe about a thirty forty percent chance of success but once you got out like three or four of those things changed um you dropped off to like ten percent chance of success um IT doesn't mean that you don't take you know things that are multi step jazan cities because sometimes those aware the biggest opportunities are, but you have to make sure that they're worth the risk. Otherwise you're just leading to sort undisciplined diversification and you have no Better chances of success than just you know a private equity investor or holding company. And probably last because it's not really how your businesses been set up to focus um um the resources of the company on, right.

So um something like all mature, we've gone back and looked at that you in high insights and that was probably four step jacana y in many ways. Sas completely new product. Um IT was an enterprise selling motion, which we didn't have in a mature fashion at that point.

And in the business model, in terms of recurring revenue was new because we had to moved to that with the creative side of the business with IT was after that, that we move in, create swe, create a cloud. So that was a in hindside of very risky big bet, yeah. But IT was a large big business that had was the market leader had real momentum.

And so you could make that that and then if you you know focused on the rest of the things that you could control, you know it's ended up being a know um two billion hour plus on the road to being more than that a business force. And so you you is not that you don't do those things, but you do them for the right reasons. And so as you think about that, things that are in your core, like meaning we're R T in that part of the business, that's where we're more likely to look for, you know, some talent, talent, you know, smaller kind of deals or we look for like a little bit of a core expansion or it's kind of like one step adjacency.

Where may we get a new product without a bit of a business around has been proven in the market, but it's not scale yet. We bring that and and we scale the marking in many ways after the ometraco quisisana number of other ad on acquisitions that we're done to broaden out the product portfolio and then sell through the same channel um in the enterprise space in particular. Um youve you've seen that you know year after year that once it's extraordinary and perhaps not even appreciate help and unbelievably hard IT is to build a you know uh you know true you know large scale enter Price sale source and the companies that have done that that's such an unbelievable huge investment over know what probably a decade um to get there that then it's a question of you know how do you maximized the through quit of that channel every year.

And so finding additional products to put in the sales person's back is a big part of IT. On the B2B sor t of ent erprise sid e, that's a big deal. Um you know the consumer side, it's it's a slightly different element in terms in in particularly you know all the networks, everything with the social networks and platforms we've seen have changed the dynamics there a bit.

But you know history, ally, that was a little bit of office original strategy was we have this portal was just keep adding on things right before my time I are. But you see the approach driven by the business strategic, I think that's ea doby. That's my personal sort of belief, is that IT has to be a strategy driven process. And so the catechizing of what you're going after is driven by what you're try to accomplish, strategic.

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

Yeah it's very low mean um very low and is a question of what look at means right right?

yeah.

You know we've historically done sort of for the ten plus deals year. I think I think actually, the market strategies are our our sort of strategic umbrellas big enough to do meaningly more than that.

But we have kind of intentionally focused on a strategy that says we you know, we're going to make we're going to make sure that the ones we do, we're gonna work and I do this and I have we've at bankers come in and be like, what are you guys doing? How you do IT? Because everyone around the valley is sort of saying that, you know, the ones you're doing seem to be working.

And I think a lot of is just a willingness to say now and that starts, you know, starts at the top. And we have a CEO charting iran, who you know I describe as having found her level passion for he's been her nineteen years. He's been seven, nine you no different than a founder who who just feels IT in their bones and and feels that level of passion for protecting the mission in the vision and you know that we're going after.

And um what that means is that a very hyborian what makes IT through the the rebeca of strategy fit tech, fit team, fit financial expectations eta. And so you have to be willing to say no. And um in order to make sure that you have to get the right ones, you we have to be carefully.

That doesn't make you risk converse in not moving quick and often fast enough. But I would even know how to put a percentage on, but I would probably save some ten percent. A lot of things have to a line to make a deal happen, both on on both the seller and the bier side. So you're probably looking at plus or minus one thousand in bounds a year. And we probably to the five emails A A day with him, would you check out everything?

And there are a lot of those.

a lot of those. Yeah I mean, a lot of those the answer is this problem again, a different VC for us. It's just like, hey, that's not a fit but appreciate you think and to listen, we try hard um to give quick answers and quick nose if if we just don't think it's it's worth and we don't lend the shop you if we take a meeting because we think IT could be interesting.

that's awesome and that's a great lead. And the the next segment that we usually do is tech themes where we look around and we trying to figure out. Um you know what technology themes are, themes in the industry and the world. This is represent to you, I think uh a really good um kind of twist on themes here is what you know how how is how have you tackled eminent differently at the different companies you've been at and how have you guys, ed um know, taking a different kind of strategic organizational approach between .

each two one yeah um again, M I is a tool. I mean, you know I ve always joked that if if I ever do something not worthy enough that requires a member, what are at some point um and this stuff makes IT in IT would be like it's not about the deal that would be there is the whole book and just start back in the day. It's not about the bike.

It's like it's not about the deal and the deal itself is mechanical. And if if if you love that world and there's people to do and in Frankly, it's it's a fascinating fund world on a lot of levels. If you love that world and those of the folks that end up in banking, and i've chance to respect for those guys because I think their jobs are really, really hard and they only get paid if things get done.

no. So and then they go often time to get a bad rap. And there I think there's a lot of great ones out there, but the uh it's just a tool.

And so the question is what is your strategy? Um if you sort tie that back to your core question, like how are things a little bit different companies? Um i'd say yahoo. Um we were going on a lot of different directions when I got in there.

We were because IT was eight or nine when I when I joined and you know there was a little I found at times things were bubbling up, bottoms up in terms of people being entrepreneurs try to forget things going at the business level, business unit level um and there wasn't um we are going through kind of a restructure and there wasn't as much of a clear, hey, we got to go to this top down and then you'd get the inevitable hey, we got a call and supposedly google looking buying this and I was like, so like that's not a straw. Like doing what your computer doing is not a strategy, right? So we spent time around getting alignment around strategy.

We spent time around locking in the concept of from process perspective of an executive sponsor. So so you got the alignment early tops down on strategy and then IT made sure that when we were spending time on things IT tied to that. Um but Frankly, mean ya who had a reputation and we worked hard on this, but he was just a little bit reality, some point of the culture. We had a reputation for being a little bit slow.

And so we tried hard to make sure that we were transparent with entremets around the different hoops and stuff we will have to jump through together so they could feel in control of IT and we could feel like we were in IT together instead of IT just feeling like this model ethic bureaucratic thing and IT wasn't IT wasn't that but IT was IT was just a nature of sort of how things got done in that culture and where where they were. Um and the culture of the company affects the process as ano mean we had company had been founded like three years before mean Marks and simply aggressive, dynamic entrepreneur. If he believed that made sense and we could convince him that we could could do that.

So may I remember working on a deal and know we found out that some montreal neurons had spun off from one company that we have always interesting in gonda. Something else. And he just tell from talking to the guy that they left behind was that the real creative juice had walked out the door and and so I was based like, you got off the phone and was like being in a movie.

I was like, fine, those guys, you know. And so someone of the team got the someone on the team got them on the phone. We little like a two hours later, we had him on the phone and I was like, can you come to sanford is go tomorrow and they were like, no.

Like, are you crazy? And I was like, great, we'll be there one o'clock and we like hopped on a plane and went down and like was sort of like, he was this incredible if he was fun because you felt like you were going to go to make IT happen immediately. Um IT was that time book time in that company? And from a strategy perspective, we were trying we had sort of tiger about the tail in terms of know what was happening with social and everything we we knew the categories that we needed to add.

From the social game perspective, you need to find the teams to go doing because we don't have enough people in how to do IT was that type of vicious growth. And so IT made strategic business sense to try to move that fast. In part that was just, again, in the culture of the top.

I IT just look, I guess my point is the culture of the company, the strategy, the company where IT isn't the art of its growth, will define what process that creates and how IT goes. IT goes about IT. And then also what IT um what IT sort of means know what to do be um we have these bigger arks that we're working against.

And um you know the thing the from corporate strategy perspective, what we've been focused on for for several years are sort of three big turns. One is, as I sort say, everyone in both the consumer and the enterprise side has been dealing with, which is this unbelievable wave of mobile. And like how do you get IT to the point where is truly a tail? And there's only a handful of companies, I think of really crack the code, facebook, the pivot they did.

I was there at saying that when they were trying to figure that out, you're need to one of us um really had IT working for us. They figured out how to make IT work for them. And um no IT really took their business to other heights.

And like every year when mary meeker, now a client, perkins formally more instantly comes out with that internet report and that there is that slide where SHE shows the percentage of time spent on the internet. Shifting to mobile in every year is like outpaces the trend from the year before. And like how do you get IT to the point where that's truly a tAiling so that that is just naturally making your business you know exceed expectations.

So that was one is like make mobile a tail when across our entire business. Um second was its obvious um when you look at the consumer internet that the last ten years have been Brown, unlocking network effects right through social networks, marketplace business models, platform business models. There's a interesting opportunity, I think, in in the source sass base enterprise to look at unlocking similar network affects.

And the way you do that is by making data content like really strategic assets and historical enterprise software has largely been we're tools. We will sell your tool and you do whatever you want with with that tool. Um where is consumer platforms? Look at data content as the strategic assets that are that are sort of theirs.

And there's a hybrid approach that um I think you're starting to see emerge in the in B2B bus inesses as wel l whe re um cus tomers cer tainly hav e the ir own dat a, but they blend IT with um network level data from the from the technology providers as well. And so those are some big trends that we've been openly pursuing. And um I really sort came from outside in analysis of what was happening not just in our own space but actually was happening across the border landscape, including ing the consumer world that i'd started to seeing .

a hanger yeah that's great. It's really cool. The the kind of next section before I our last section before we we do car bouts as um the the conclusion and this is where we decide. You usually just dave and I did this acquisition go. Well, do we call IT an a .

like instagram line?

Do you guys have any kind of internal .

process where you look back and or or even just isolated examples of like what you look for and and success metrics of, yes, that was a good acquisition, and we should do more things like this.

So one of the things that our teams are responsible for the miss is the ami immigration function. And i've always felt like that's a critical to be combined in the same, same group because otherwise, IT breeds a behavior that sort feels like, hey, we're just responsible for being out the deal yeah a lot if you throat over the wall and someone also integrated that everything I always myself have thought of the job as a growth job IT just happens that a deal is part of IT and you have to partner with the entrepreneur, with the business owner and sort of b CEO.

That growth opportunity until someone else can truly take the mental that will will be responsible for running that business. And if you think about that, that way, there's little things where you put a little extra amount of care and attention and of things like retention packages. And even though the entrepreneurs telling you that this person's critical, you're actually sensing that maybe that's more for historical reasons and they don't understand that in the bigger company wants they are inside this person who has been the right hand person.

From Operational perspective, there's like three other functions that are going to serve that purpose for them. And they're actually less important to you to underweight. You sort talk to them and collaborate to figure out how actually you want maybe reward them more at the time of the deal, but actually put a little more retention for someone else.

That's their importance is going to go up post acquisition those types of new, new answer. If you're not focused on the integration, when you when you're doing the deal, you just do things differently. And um and so that's important.

And so by having the integration function in there, we um we make sure that you they are in our weekly meetings and that we share learnings and its sort of part of the culture. So to me, IT starts with cultures inside the group, which is you know it's a growth leader um function, not kind of a deal functions. That's one from a formal sort of post moral evaluation process we commit to reporting out to in our CEO and CFO as well as the board every year, every quarter.

We do a report for two years after a deal that reports against basic you key key value drivers and metrics. S as you want to imagine, there's financial one there. There's a product one.

There's sort of employee retention depending on on sort of how many people were trying to retain that type of stuff. And excuse me, we try to make sure that we're being hard on ourselves. You not just Greens across the board, but we're being honest about you where things are sort yellow and red. And every once in a while, we will do a more formal deep dive host morning if if something hasn't gone as well. Um know nothing ever these things are really hard.

And um as I looked to earlier with the statistics from the profit from the core um I was joke that in general you know this is not N B A free throw shooting it's much more holy fame baseball hitting meaning yeah for those aren't sports fans it's not seventy eighty ninety percent it's probably plus or minus you thirty percent is is not all bad. And um our track adobe is actually terrain ally hired that every now and then. It's like you make lemons out of lemons worth the things didn't work out you expected into.

But you have the right team in the culture fit in the product to build from any went or slightly direction. And that's okay too, right? And that goes back to White culture.

Fit is important, IT says. If things go wrong in the market place out differently, you can still create value. There are definitely companies that have meaningful hundreds of million doll bats that are effectively swinging messes and completely right doing. And we haven't had done, I think a lot of IT has to do with um the culture of focusing on thinking about the long range before you even do the deal. So the post board of and evaluation is important, but it's more the fact that you know you're going be doing IT, you know that that's what we all care about and that's what what sort .

change is the upfront I love that as a as a waited to a rapid too that you know um culture is a IT is is you know what's going to drive uh you know things are it's interesting the two think about back to this analogy. Gy with venture like the happiest day of the next two years of your company is gonna when you close that rounds like and then the real hard work starts and you know it's it's the entrepreneur drive that's gna keep founders engaged when we know life is is quite chAllenging and and i'm sure that's the same you know after an acquisition inside the company and kind of gets back to um if it's not very culture, but you're not going to have that drive to keep .

going hundred percent and IT can be sad too because you see IT where mean entrepreneurs who sell something and IT doesn't fit and that is a wither on the vine or being killed or dies inside a big company. You meet those guys later or we are women and like they can't be more bitter, something they they poured their life into, they feel wasn't respected and honor and and what not.

And sometimes you know the market plays out differently and they they get that and that's that. But if a big company through bureaucracy or missteps or lack of culture fit whatever you know, destroy, destroys the the labor of love that every start up is, that is such a tragedy, right? And it's and in in in turn, the legacy that creese to the founder when something had is phenomenal.

Ccea ful post acquisition is, you know, is enormous. And you see that right and and uh and so that's why I think this is the fit and and people a line and going about things the same way just matter so much um because what you said um about that kind of moment time he celebrated got the money in the bank. Um and when you do uh sell in the company, it's literally it's not just the money in the company's bank.

It's usually the money in the trees neural bank account. So it's worth celebrating. Its awesome ates amazing.

We always want to celebrate that with them, but it's I like that's why we test so much of my concern. Thing is like, yeah, it's day literally it's day one. It's the beginning, not the end. And if you aren't fired up about that, by the way, it's OK. If you're not, you just got to be honest about IT early on because if you try to pretend like i'm in for the long visions.

like figured that out and you .

can't fake passion.

yep, totally so true .

and so many walks of life.

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

I don't want to die too much into this because it's not the dedicated episode for IT. But um you know facebook is very scared of Snapchat snapp chat doesn't have the global penetration that facebook does. Others you know plenty of of the opportunity to fend international turf there but the very well should be afraid to Snapchat because the engagement that they're getting in the kind of it's the first place that, that people check and where a lot more activity happens in instagram. And it's really interesting to see facebook after having some failed attempts to launch facebook ranted platforms to disrupt chh, instead saying.

you know what, all these kids are .

already on instagram, even though instagram about that one perfectly curated, crafted photo. Let's see if we can throw this this completely other paradigm into this and and see if instagram can be the one hub for that that generation.

And I feel like this might merit a future episode. Yeah if you want to hear that, let us know on the mel's lack um but let's be going quickly to car belts. Um Taylor did um do you want to go first?

Absolutely my three most recent reads, I by the way, I read constantly, i'm sort of my my family, my wife is definite much more of a pressure. And I think if if I moved entirely to kindles, she's be happy. But I tended not only like to read books, but then sort of see them around the house that just kind of makes me happy.

I grew up in one of those households, and so part part of a life and part of, you know, sort of embracing everything is out there to be learned. And you can feel like you can never have enough time to get them. But the three most recent ones i've read and actually loved all three. One was mindset by Carol dweck, which talks about the the growth versus fixed mindset and just phenomenal.

And i'd like, look, the basic concept you can you can embrace and understand and thirty seconds, the concept of our approaching life, you know what this feeling that everything is fixed and you just got whatever talents you were given in life and that is where IT is and you have to sort of expose those but not, uh, you know, you don't have a chance to grow or do you believe that actually you know you have what you have but it's basically well and the question is, know what you know what are you going to going to grow towards through through hard work and effort um and what was fastened by reading the book is when you describe as the way you just did, anyone who sort of the ambitious type I entrepreneur or like those of us on this podcast or you are i'm sure thinking i'm i'm a growth person. I'm always trying to get Better. great.

And I read this book and was very humbling to sort of realized that in some parts of your life you were completely growth oriented in otherways. You had intrinsically and sort of had this concept of of a fixed mindset that all you know, I just I have talent that or I don't and and so thinking deeply about that for yourself, for your kids, with your parent, for your team, if you your leader, I thought was incredibly powerful. Yeah wow.

I always haven't drinks with the um friend the other night and he asked me, so are you more of her routine person or are you like flexible to do whatever? And IT is so interesting that um in the work that we do, a por square labs were super flexible.

If it's like he you got to fly down L A in two days because you the opportunity for this companies to meet with someone there doing that or if fits your marketing today or your product today, like all over the place and schedule changes all the time. But in my personal life, like I need to wake up at the same time and have the exact same morning routine every morning early am not myself. And it's amazing how how different we can be in different aspects of our lives. And we think of ourselves as either routine person or a growth person or or whatever is and it's not necessarily unattentive across the board.

Yeah no tally that actually I mean that that makes me think another one which um you know if if you're expLoring all the podcast and this one is I think literally you're near the top of the charge. But i've definitely been enjoying time fairs one and his focus on routine and the questions are rn morning routines and stuff just fascinate me because I am probably there's things where i'm somewhat routines, but there's a lot of things right rebel against you and don't want to commit to an absolute string routine um and because I kind of like the dynamic that you described of like being ready for the most important thing and hop on the plane and you know get to that and and uh it's fascinating to sort of think about uh, how important routines and systems are a success.

That's another one I fly um before I turned out I just fly the the other two the second would be shoe dog about um fill night um from nike and unbelieved a entremets al journey and um just an credibly revealing the more that I really we just found illuminating, inspiring and awesome but is also to me for for you, David, on the venture side you will give you you will come away reading this book. You will feel like like you're doing god's work. So I think we I think we underestimate how we this concept that the capital is almost available from anywhere and that, you know, you guys in the venture community, actually, I have a dobe ventures under me as well.

So we do this here and there is a it's like we're competing to be the ones who would provide capital of the right businesses, whoever. And like there was this point time where like businesses that you I are now like changing the world literally couldn't get capable, just insane like reading this story. And i'm not talking about a short period time like for like.

I can't really like seven, eight, almost ten years. He was like on a shoestring and like trying to get these bank loans. IT was just crazy, just IT was a blue, your mind. So I was that was that one was phenomenal.

David is doing that to work.

let's be clear. Yes no yeah exactly exactly. And then the last would be originals by by adam grant. And you know that was just sort of focusing on creativity and sort of what are the hallMarks of people and how you how do they go about that um and how do you be original and who are the originals and stuff. And so as I said, I think one of fun things about software and that is IT gives a lot of clay for for for all of us to play with. And um you you can you can absolutely be an original if you if you want to go be so those three, those three have been a lot of fun the last last probably in two, three weeks of to turn to all that.

Also the originals hadn't heard that have to added to my list. Maybe i'll go next real because IT picks up on a couple of those themes from a from a disperate angle. We we started the episode on a sports topic, so I can't ended on one. I can't not ended on one given that it's the olympics right now and my car boat is you haven't seen everybody's going to go watch the moon bias the women's Jimmy SHE is this girl is like the most dominant athlete in her sport I think i've ever see and he is like SHE makes Michael Jordan like like he's in the delay you know would be the a the the the comparison. And he just just now just won the um individual around gold metal in the olympics by an enormous margin .

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

You incredible. And one of the I was watching an interview with her, reading uh an interview with there and um uh one of the things that uh was said in IT IT reminds me of the mindset Taylor of your car about um when he was a little Younger when he is still only nineteen but when he was a little Younger shouldn't really a lot of confidence in herself and would say, oh well just i'm not as good as the other girls you and like now that he is like the most dominant at ley that's ever lived in the sport, pretty inspiring. So and as mind .

for the week. And yeah.

love IT mds a quickly. For those of you who listen to the alaska lines episode, know that I have a thing for airplanes. And there's this incredible video on vox is only ten minutes long on the history of the concord, how IT came to be, how that was funded, what the other supersonic um airplane undertakings were and why we don't have supersonic flight today. So if that's for airplane near's out there, you've probably IT all, but it's just a really well put together a little ten minute video and it's it's thrilling. So highly recommend go and check in IT out.

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That's what we got. awesome. That's a rap. Thanks, everybody for listening and most importantly, huge. Thank you to Taylor for joining us.

Yeah Taylor, where can our audience find you?

Yeah no, i'm here at the dome, so feel free to drop me a line a barta at a dob t com if you have something you think we should be looking at. Um i'm also on twitter or just Taylor berta and linked in as well. So feel free to reach out and you know happy to chat awesome .

and listeners if you like to show, read us on itunes, tweet this up, tweet this episode your friends and share IT wherever you see fit and thanks so much for listening.

We'll see .

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next time .

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