Episode 33: Overture (with the Internet History Podcast!)
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Brian have ever had to cancel at episode, like mid episode because something was going wrong and he was .

just unrecovered real yes um actually the one that was the worst that I still released was, ironically enough, the the guy that invented the mp three and we right.

Welcome back to episode thirty three of acquired the show about technology acquisitions and ipos.

I'm then gilbert David .

resort and wear your hosts today. We've got a great guest with us, brian makola from the internet history podcast. We are a huge, huge fans of of brian's podcast here on acquired.

So super, super prompt have joining us today. We're doing a double episode, so you'll be able to hear a version of of this episode on on bryan's podcast as well. And today we will be talking about the valley shaping acquisition that happened in two thousand, three of yahoo acquiring overture.

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now without any further to do. Over to you, brian.

Uh, guys, thanks for a doing this cross over. So yeah, today we're going to we're going to be talking about an interesting acquisition story. Interesting in the sense that it's not just one company acquiring another because there's a huge major third player that comes into this story.

Um but we're gonna talk today about yahoo acquiring go to dot com, which at the time of acquisition was known as over to dot com. So to set the the acquisition of groundwork here, uh, go to that com was a company that came out of an incubator in the late one thousand nine hundred nineties and incubators were hot during the dot com era. And one of .

the hot ones again these days .

exact the invitation were talking about was called ideal lab, which was created by founded by a man, probably most of you know, by the name of bill gross. Um ideal lab B H. Generated a couple of different companies. Cars direct that com net zero, the free isp.

If you remember that for back in the day, the informal e toys that come came out of a lab, but probably the most successful uh company to be incubated, that idea lab was go to dot com and I believe this was one hundred percent bill growes brainstorm. What go to was was a glorified search engine where the results of a search were generated not by and algorithms m based on accuracy or what you were searching for necessarily, but was actually the results were generated by bid from advertisers. So if you went to go to that come and you searched for flowers, the number one search result would be brought up, paid for by an advertiser that had been the most for that ad.

So that the we are doing research for the show is just so crazy to even think about today. But there were no organic sea results. Everything you saw on go to that come. And then then later, overture will talk about how they shifted their product and business models. 嗯， was an ad IT would be like google, but without the organic search results, right?

I think they might have back fed some organic search results from somewhere else. They would have had to, especially at launch since they wouldn't had enough advertisers to cover everything. But yeah, IT was it's basically google, but all ads and which so basically .

google these days, right?

Yeah believe me, I from someone that still on a business that does a lot of gets a lot of my business from from a paid search, I I know what you're talking about. Um IT was controversial, especially at the time.

I mean, we're laughing looking back at IT now um but this was completely antithetical everything that people thought search should be um bill gross um announced and launched go to that com at the ted conference in one thousand nine ninety eight and a funny aside, listeners to my show know that i'm associated with ted i've been working for the last year so they don't mention bill growth by name but they do mention when you give a ted talk not to sell and bills. Ted talk in one thousand nine hundred and one thousand ninety eight was very controversial within the ted community because I was basically standing up and launching a new product that people were like. But this is not a world changing product. You just up they're selling us on your new startup. And so um it's sort of without naming him, they use that as an example of what to do these days.

Much cheaper than renting up was gone center yourself .

right exactly and not .

only want to a new product but a new product that was just ads.

right exactly. It's it's not a new product that's going to know cure malaria or something like um but one thing we have to say about go to is that IT was very quickly successful, which makes sense because if you think about IT, it's pure advertising and you we'll get to this later on.

But the the model google business model, which we now think of as the greatest advertising machine ever created by man, it's already present in this first version called go to dot com, with obvious caveat. But IT was immediately successful in the same way that google ad words product was almost immediately successful. There is a couple of things that I need to point out about how go to work.

First of all, we IT was a destination in and of itself. They called IT go to that com because bill gross wanted IT to be a shopping destination IT also, as we point IT out, um was all ads and IT was paid to play. Essentially if you were willing to pay one hundred dollars a click, you could be number one on every single keyword go to that com um as we'll get into later a google tweet that model later.

Um but as I pointed out, IT started out as a standalone destination, which was not very helpful to a overture sash go to business model because there were already existing properties that got wait more traffic yao L L exact places like that. So even though go to that com was successful, IT was not successful enough because IT wasn't scaling. So bill gross has the brilliant idea of syndicating.

The add model of go to this is when they change the name to over cheer because of, obviously, means making introduction. Go to slash. Overture begins cutting deals with every major search portal in about one thousand and ninety nine to two thousand, including al, yahoo, excite, you name IT.

At what started to happen is in your Normal yahoo or aol search results, you would see two, three, maybe four over true results at the top. Those would be the same ones that see if you went to go to slash overture, but they were just the little syndicated paid links. Now at the top, this model was unbelievably successful.

And IT was successful at a time when major search portal les needed some serious cash flow. Because by two thousand and to two thousand, one, the dot com bubble is bursting. And that means that a lot of the companies that places like yahoo were piggy backing on top of to make their money to sell the display ads that we're running against their portal pages and their search results.

We're going out of business. Uh yahoo especially I was just researching this uh for my book um in two thousand one um I believe the first quarter of two thousand one, they suddenly have to announce that their guidance for the quarter is going to be lower by twenty five percent. About a months later, they come back and they say, you know what, we're going to guide down another twenty five percent. So imagine this is how bad IT is in two thousand, and one that twice a public company has to lower guidance by twenty five .

percent within the same cord n imaginable today.

Well, we hope so.

Well, yeah, when people talk about how you, today's entrepreneurs, you haven't lived through the hard times, this is what they're talking about.

right? I I got some more great numbers for you. yahoo. We'll use the yahoo as an example because they're GTA come into the story now.

Their market cap at its peak was one hundred and twenty eight billion. By january of two thousand one, their stock Price had gone down from one hundred and fifty to four dollars and five cents. The market cap had gone down from one hundred and twenty eight billion to eleven billion.

That's a ninety two percent down from a thi. So when people talk about the carnage of the dcm bubble bursting of the nuclear winter, like we call IT, that's what we're talking about where, uh, sales are just evaporating overnight. Your high flying market cap .

is eviscerated the same time on our amazon IPO up. So the time was talking about, know when everybody was hit by this, amazon, ebay, all the you know even the companies that end up surviving and thriving to today, we're trading for pennies of what they once had been well .

into this crazy uh, time period where everybody's losing money. All these dot com companies are going away because that's what's exactly happening to yahoo is that they had written the pets dotcom, the toy's dotcom, the eye lage 点 com， all these docs that were willing to spend, spend, spend all their VC money in order to stand out from the crowd and hopefully have a flashy IPO, they're gone. So overnight, yahoo loses somewhere around sixty percent of of its advertising base into this breach, steps, overture and immediately, as I said, is super successful for its partners um basically by two thousand and one, all of the profits that yahoo is making is from its search a deal with overture.

Yeah we I mean, we sort of made fun to go to at the begin of the episode, but we shouldn't sort change the company and and bill gross here, I mean IT is brilliant what they do um from a business perspective. I mean they invented the paid search model and then had the insight when they didn't have enough traffic themselves as a destination, say. To marry that model with traffic search traffic that other portals had. I mean, he was he was these were really two brilliant observations from a business standpoint that burson and over your head.

So i'm going to quickly jump to the acquisition that we're talking about and then i'm going to cycle back to the third player that we're talking about here. Essentially, a it's obvious to anyone listening to the story that yahoo, if they're making all of their money from this deal with overture, maybe wants to acquire the company that is suddenly responsible for most of their revenue.

So in, uh, mid two thousand, three negotiations with overture bear fruit. And yahoo agrees to buy overture for one point four billion dollars, which was actually twenty five percent less than overture was asking for. So I want to make a quick point here.

Why is overture willing to sell on the cheap? Well, if you think about IT, they're in an unsustainable situation. They're making everybody tons of money, but they don't own any of the properties that are getting the traffic themselves.

So they're Operating a business that is incredibly reliant on their partners. If they were to lose, say, a ahoo or an MSN or an aol, which they do will talk about in a second. If they lose any of those major partnerships, they're basically out of the game.

So the reason that yahoo is able to come in and purchase a overtures on the trip is that yahoo knows that they sort of have overtures over a barrel. Yahoo is willing to pay a lot because he wants to lock down that revenue. But it's worth pointing out that for all the money that over two was making, people IT was basically in an untended ble situation and needed to be acquired by somebody.

So bryan, do you think that that's always a bad strategy to to um can have all of your potential exits? B partners that are there are direct competitors and I think that .

obviously doesn't put you in a good negotiating situation because because acquire can basically say you we're willing to buy you and save your life and if we walk away from this deal, we're killing you so it's let us save you or we're onna ill. So that's not a great negotiated at the same time.

there was one point four billion doll idea like that's a lot of money, especially for a company that was only founded five years earlier. And you're in the middle of the carnage of the tech bubble. I mean, absolutely, market that point, you say, I know eleven billion dollars is like a Riley .

yeah that's more than .

ten percent of their market cap. I say that in this era.

the two big acquisitions that made people stand up and take notice and be like, hey, maybe maybe the internet spaces and dead was this acquisition. And then the paypal acquisition.

Yep, yep.

And to be fair, this was a fifteen percent bump over over where over ture was currently trading.

right? Because over two was a public company at that point. I think we forgot to point that out. All right. So I want to smash cut now over to the third player in the story, which is google, because if you're listening to this, you're thinking, well, what we're talking about is basically google's business model, which is paid search.

What people forget about the google story is that google did not have a revenue model for a very long time. Their original business model, when they took their money from sqa and cleaner, perkins was basically to syndicate search results. So again, we're in an era where there are seven or eight major search players, and i'm saying search and quotes because a lot of them weren't doing search, they were more portals. But search was a component of what the portal les were offering people. So google original business model was to basically offer the search results to the seven, eight players and get licensing deals for providing the service.

And it's crazy you think about how different the world was back then. I couldn't be wrong on this, but i'm pretty sure that the way google did that was to the google search appliance, which was actually a piece of hardware that the that their partners would install in their data centres for friends yeah for friends .

of silicon valley, they made a box.

Well, so now if you're google in two thousand one and you are sort of hunting around for a business model because really that, that licensing your search results to seven, eight players doesn't really scale very well. It's a it's a decent business. It's not a multibillion dollar.

And if you're google in two thousand one, you're looking over at overture and you're seeing that overture is having incredible success in what is the central your space and they're doing IT via a business model that is pretty obvious. Um as an example, uh two thousand one is the first year that google actually is profitable. And in two thousand one its revenues were eighty five million dollars.

In that same year, overture had revenue of two hundred and eighty eight million. And at that point overture was growing faster, was growing as revenues faster. So google does what is the obvious thing in retrospect and probably even at the time they say, hey, maybe let's uh let's give this uh, overture model a try.

Um the original version of Edwards that the google launched was basically cpm IT was they were still text base ads and they were put at the top of search results but they were glorified banner ads even though they were text. Um basically advertisers paid um per thousand viewers um for the ads that showed up. One thing that we haven't point IT out is that overture has pioneered paying per click cpc um which advertisers love because it's much easier to measure results versus measuring on a cpm basis.

So google first experiments by doing Edwards at the top and you know ford or a coker whoever would would pay by the thousand viewers and then they start to introduce what overtures doing. So they're putting search results on a cost per click basis at the top, and then later on the side, as were more familiar with. But they do two things that overture hadn't done too.

Huge innovations. Number one, overture always had editors. So if you submitted and add to overture and you say I want to advertise for flowers, they would have to make sure that you really were a flower business.

They would have to make sure that the ad was opposed tic. They would have to make sure know they approve your your text and other things. Well, we know google as you, the the company of engineers, where there is no problem that can't be solved by maths and some decent engineering.

So they don't want to do this editorial stuff. And so they create an automated system where where, as with overture, you would summer your ad and you would take a day or two for the adding of live. Google created an automated system where you would, a bit on keywords, submit your ad, and the algorithms would make sure that the ads were cool and your ad would be running within the hour.

They also targeted small advertisers. Overture was still in this sort of display ad business, sort that the traditional add business, you're chasing big brand advertisers. And google said, hey, if you've got a credit card, I don't care who you are through fifty dollars at us and you can run some ads and see if this works for you. So google goes after small advertisers and basically creates the modern search advertising marketplace that we're familiar with today.

And they by going there after those small advertisers, they really created a new market too. Because you know, if you're coke, you can go to deploy one hundred million dollars on on billboards around the country and you can buy these grand advertisements. But if if you're using search ads and you you have metrics s on the number of people clicking through for the first time, there's a real market for direct response advertising and not just brand awareness ads.

right? And it's a different type of advertiser where it's more direct response advertising as as opposed to brand advertising, which traditionally still is in the display business as opposed to the search business. That's even true to this day to a largest.

Um so um the second t innovation is it's not just paid to play. You can't go into a key word, be willing to pay one hundred dollars per click and be guaranteed at the top. Google of course, being google again, to have this sense that, hey, it's a win, win, win for everybody.

We want to have the most relevant ads so that the ads will almost be useful to a searcher, not an annoyance to a search. So they introduced this key innovation of the click response rates affect the bidding process for the keywords. So it's not just the person that pays the highest gets the top. It's some combination of the person willing to pay the highest and the person whose ads gets clicked on the most and thus making that add probably the most relevant.

Yeah and and we'll circle back and talk more about this later in the episode in the analysis. But this is a super key point for two reasons. One that allows google, through their system, actually optimized revenue, not just the amount of money that people would spend on a given auction, the way the revenue will be, the amount of money spent on A C, P, C, add times the number of people who click.

So I optimizing for also people who click the optimize revenue. And then the second key point is that this is a really hard math problem and hard data problem that google is going to need a lot of engineering and technology to solve. And we will see that come back later.

right? And I think that it's worth underlining that. And google actually is able to make more money by this model because by making IT more relevant if you do the math and it's too too complicated to go into here, but actually ends up making google more money because they're getting more money from the ads that are clicked on the most yeah and brian.

is this the point that google uh introduces that that other innovation of um lowering the Price of the bid to just above the second highest .

bitter yes um in the overture model, if you were away willing to pay fifty cents and the number two bitter was willing to pay ten cents when you got clicked on, you still paid that fifty cents which sounds crazy and IT was and so one of the things that really one people over from overture to uh google Edwards and and I can speak from experience because I was one of these very at the time was okay on google model, if I pay fifty cents, my competitor bids ten.

They click on my ad, i'm only paying eleven sense. I'm only paying just over what the second person was bidding. I don't have to do anything to do that to automatically done forming.

which really I mean, that starts to feel like google being a real enduring company, right, making these these decisions that, that really bring the marketplace efficiency in in line with know where the market actually is and not just saying, was this a smash and grab job for cash now, but really work. We want to have this advertiser relation for a long time indeed.

So lets let me pick up the story. It's figure of two thousand two, that the modern Edwards, as we know, IT with the change to costa click and with this quality score on ads, is introduced february of two thousand two. And one of the executives that is brought in to lead the ad team at this point is a, uh, Young lady by the name of sherill sander and Sherry, as we know.

basically feel like i've heard of her somewhere.

makes her early career by the success of Edwards. Um but let's go back to um the yahoo over to google uh triangle here because yahoo had preexisting relationship with google. Google had been since two thousand two providing the search results for yao.

People always forget this. Yahoo was never technically a search change. IT started out as a human power directory. And through the mid to late nineties, that was differentiated. You search engines just didn't really work very well. And so yahoo sort of made its name by saying, if you come to us, go through our directory, you're going to find what you want to look for because we've taken the time, like actual human beings taking the time to sort this out for you.

And they were touting the fact that they were a media company and and their primary revenue driver at that point, at least a little before, was the banner ads that they were putting on their own first party media content, right?

They they did a lot of things to try to intu ce eat commerce. There was yahoo shops and things like that. But yeah, there are still eighty percent of their of their business, as we discussed, where people buying banner ads, especially the the dot com companies, by being so yahoo already has this preexisting relationship with google, and google has seen that overture has created this incredible business by syndicating these paid search results.

So around two thousand, two google starts to do the same thing. I remember there's still these multiple players. They're still still is the biggest player at this point.

Yahoo is the biggest portal at this point. And so google is starting to shop around this idea that, hey, we can syndicate our ad words in the same way that overtures does. And so the first person that they go to to try to cut a deal like this is yahoo, who they have this preexisting relationship with.

And so that is really when yahoo starts to get the idea of maybe IT itself needs to get into the search game. As we're saying, search was not their business. They were basically selling ads against I balls. Thus we're calling them portal sites. Um but an interesting thing is, is that since yahoo and google have this relationship, yahoo is able to take a look at google internals and so in the same way that I can see on its bottom line, all the money that is making with overture IT can see when google is similarly having incredible success syndicating its Edwards um the big deal that google is able to pull off is when IT steals well from overture. Overture had been providing those paid links at the top of a well search results.

Uh google sweats in and steels that business from overture to the tune of about one hundred million dollars at least that was the deal guaranteed revenue that they had to offer to a but again, because yahoo has this relationship with google, IT can see that the al deal is instantaneously extremely successful for google. This is around the same time, if you guys might remember the summer of two thousand two, that yahoo first tries to buy google before they make the overture to overture. They try to buy google for three billion dollars and are rebuffed, which is interesting because at that point, google revenue was probably only about two hundred and forty million dollars a year, and yahoo yearly revenue was eight hundred and thirty seven million.

It's starting to recover in this period from the dog contest. A CEO by the name of Terry semel comes in and basically doubles down on the display advertising business and and turning. Yahoo into a media destination.

Um so yahoo stock crisis only about seven dollars a share. And so the five billion purchase Price that google wanted, yahoo is offering three billion. Google once five billion, would essentially admit that yahoo was going to spend basically its entire market cap to swing the deal. Definitely would not have been A A merger of equals. IT would have been basically google taking over yahoo by proxy.

wow.

So ahoo does not get to buy google. And so in its mind, IT has to do the next best thing. Overture is obviously uh, the business model that google has copied and is having success with. So why can't yahoo just go ahead by overture by another company, get into the search game and basically replicate the business model that google is having success with that IT has copied from overture?

Sounds great. What could go wrong?

What could go wrong? And so this is essentially what happens. Um the first thing that yahoo purchases is ink to me. So that gives them what a lot of people the time thought was a search engine that was equivalent equality to google, or at least the second best search engine on the planet at that point.

So they buy inked to me in late two thousand two, at relative bargain, the acquisition was two hundred and fifty seven million. And so then on top of that, they turned around and pay the one point four billion for the search ad pioneer overture. So those are two big acquisitions.

Remember yahoo market cap is under ten million at that point. But um it's a lot less than a what google has been asking for, right? So the acquisition goes through and it's immediately a big win for overture because overnight or are a big win for yahoo because overnight acquiring overtures r triples yahoo's profits.

Um in two thousand four, its revenue doubled and the profit more than tripled by bringing in by bringing overtures search, add business in house and IT actually immediately has a positive impact on yahoo's stock, which goes from sixteen dollars a share the day that the overture deal was announced, two thirty seven dollars a share about a year later. And there's an I were onic quote from Terry semel around the acquisition where he says we got into search to change the game. It's ironic because most of us thought that yahoo was a search engine, but as we're discussing, in reality, they never were.

So yahoo plan here is to integrate these two things, to bring the search engine in house, to marry IT, to overtures existing paid search business, and beam. They can replicate everything that google has rapidly seen success with. And there was, you know, some presidents for this, because, remember, google used to be the search results for yahoo.

So basically you swap out ink. To me, that's relatively simple. This seems reasonable, right? The problem was integrating the overture search, a search ads business. If your yahoo and your existing business for your entire life is this display ad network where you've got hundreds of salesmen and basically, you had been in the game for a long time of just getting eyeballs to your site, people coming for horoscopes, for maps, for a your checking, your email and things like that, all the sudden you basically have to up and the culture of the company and say, we're in this engineering based search business and IT turns out that that was the problem of the acquisition, that IT was a huge, on some level, technical headache to to integrate the overture business into yahoo. But more than anything else, IT was a cultural headache, a cultural clash of trying to change yahoo business model.

basically midstream. So many thoughts holding my tongue analysis.

Let me let me rap this up then and explain why the acquisition we can say was not entirely successful. Um they bring an overture and the overtures team conflicts with the existing yahoo engineering team. The overture business model conflicts with the existing yahoo display ad business model.

People don't get along. People aren't executing or or let's just say that teams are moving in different directions. Not everyone's rowing the boat in the same way.

At some point in two thousand and five, they fire the original overtures CEO that was brought in with the acquisition. And here's another name that you might recognize. Guess who they bring in to try to save the overture business. Uh, the integration of the overture business.

A hint. We did an episode about his company being required.

IT was a Young gentlemen by the name .

of jeff we who .

we know are more familiar with as linton CEO um and and winner did have success in integrating the intimate search um just swapping them out that had been done before um but he had an incredibly difficult time putting the overtures a business together with the search business. There was this huge uh project called project panama that yahoo promised for years and years and years would launch and IT would be just as easy to use as Edwards.

All you had to have was a credit card. I'll have the automated system will do the ad scoring so that um we're going to reward people for the most times they're clicked on the ad relevance, that sort of thing basically everything that uh google had done with Edwards project panama was supposed to do the same thing, only Better, of course um but they never really pulled that off. I believe that project panama was announced in late two thousand four or early two thousand five.

Panama does not actually launched to the publi C2Companies wil ling to buy ads unt il feb ruary of two tho usand sev en so lon g aft er goo gle hea d IPO um by two tho usand sev en win d pro ject pan ama lau nches yah oo sal es tha t yea r wer e alm ost sev en bil lion dol lars so in the int ervening yea rs um the y hav e bee n suc cessful at tur ning the ir bus iness aro und and and mak ing som e mon ey off of sea rch. But the problem was they were not as successful as google who in two thousand seven reported revenue of sixteen point six billion dollars. So because of the integration issues, because of the cultural issues, by the time they that yahoo finally realizes its dream of building Edwards based off the acquisition of overtures and ink, to me, it's too late.

Google has already run away with the surf crown. IT has by far the largest uh, measure of the search market overall and yahoo is basically and also ran. And by the way, even when he launched project panel was not that Green.

And for acquired listeners, bryan's previous episode of the internet history podcast was an interview with gary flake, which is really, really exceptional if you a chance to go listen to that. And um brand and gary, we're discussing this notion of uh a multi sided marketplace as a living, breathing ecosystem.

So when the went through um there were customers on one side of the ecosystem and searches on the other side of the ecosystem and then A A third party, which is the the actual search providers. And this is an interesting take away for for other businesses that, that will be analyzing in the future. But when they decided to put a lot of the overture, engineers sora on pause to go in and start will become project.

You really like slow down the fuel into the ecosystem and the machine stops, stops working. So you can just tell your customers, like, hey, bear with us for two years while we build A A, A Better widget here for you guys. I mean, google very, very much took that opportunity to swoop in and and then you're kind of starting from a not quite a cold start problem, but anybody who started a marketplace from scratch knows that how how inefficient and how rough they are first and and by kind of going and and hitting the reset button for project really cost them a lot of ground in those intervening years.

absolutely well. And there's one more twist of the story before we can start to get into analyzing all of this. Remember, and everyone acknowledges this, google basically copies overtures business. Edwards was a not a direct copy of what overtures was doing, because clearly google did IT Better. But everyone noticed, including overture, that google had basically copy them.

And so even before yahoo acquired overture, overture suit google for either copyright infringement, IP infringement ment or something, it's actually a little mercy because IT turns out that yahoo, who had acquired overture at this point, eventually settles with google. If IT was a slam dunk case, why would you settle with a competitor that basically has in your eyes, your business model is having great success with IT? Uh, in the end, before yahoo, before google, sorry, goes public.

In two thousand and four, they settle the litigation with overture, slash ahoo and yahoo gets. And we were talking about this over email. The numbers were not sure about, I believe, something like four hundred million dollars of google stock Price IPO google stock.

The only numbers that i'm sure about, and then you can cut in and cracked me if you, if you know more, is that I believe at some point in two thousand and five, after a google goes public, yahoo sells four point two million shares of google, pocketing nearly a billion dollars, which very much boosted its bottom line in that year. So there's further irony in the same all along. Google is still helping keep a yahoo a flow.

Yeah, basically because yahoo has so much google stock. But this is something that's always puzzled me, is why would I know why google would want to settle? They want to have this litigation to go away.

They're about to go public. But why would overture slash yahoo have settled? The best that I can figure is that the patents that overture originally had weren't that good.

I found in Stephen levy's book about google called in the plex, I found a quote from bill gross where he's talking about the patterns before overture itself goes public. He apparently they hadn't nailed down many patterns. And bill gross says that they're rushing to to patent everything they can.

I don't know why they had done this before. And the quote is we pended everything else. We could think of a bunch of obscure things, like the way we could accept the bids. But these were silly patterns. The real patterns would have been worth billions.

Interesting because in in several places that referred to these patterns, they they talk about the quote, essential components related to the features and innovations surrounding our replacement products and our pay for performance search strategies. And IT seems like I don't know, maybe they are a didn't fully think IT through and like you're saying, patented a lot of the less valuable stuff, but there was failure to see the the forest through the trees there.

I in my conversation with gary flake, I also got the impression, sion, that yahoo just thought I could do IT Better know who are these, who are these upstarts at google. Um we're yahoo. We've been in this game since one thousand nine ninety five.

Um we've got more money. We've got more the talent, engineering talent. We've got more resources. So maybe IT was a question of they didn't think that the patterns were that strong and hate, by the way, it's not going to matter anyway because we're going to kill these guys soon.

Yeah.

yeah no, it's it's also kind of a fun a aside little mining texian. What's old is new again. It's like, this is like the og version of instagram stories. You know if you can't, if you can beat him copy on well .

and there's always that none of us are lawyers or at least I don't think either you are lawyers um you but the whole idea of you know there are some things that are fairly obvious so that it's not like you have to go hostel industrial secrets or something in order to copy a business model. You there there are certain things like bidding that are are fairly obvious to people. So yeah, I just would have to speculate that maybe the case was was not that's strong. And so pay ahoo settles gets uh decent chunk of a google stock and then they think it's not going to matter because they're gonna do Better than google eventually anyway.

Yeah and one thing that that I think is is worth separating out a little bit here is overture nailed the product model for the first time somebody had a performance you know, for pay search model that that totally turned the industry on its head. But that was really the product model. They were A B to b provider.

They try to be A B to c provider but couldn't get the traffic to their their search engine. And google was the one that sort of ended up nAiling the business model by stealing the product model from what overture I created and then building that actual will be to see business that that um you know has incredibly outsize returns. And I think this is probably a well known well research thing.

But I really just occurred to me that if you think about the value chain and everyone that ends up contributing to the ultimate search results that you see or the ultimate um you know social stories that you see on facebook, the biggest companies that that command the most market captain and capture the most value are these B2C com panies. And if you're deciding you know swing and miss on B2C wit h go to tha t com, we're going to be overture and A A B to b provider. You may have pioneer the best product, but you're settling for a smaller opportunity in being A B to b provider.

Um if you're in a single industry like that, I I could see making a case for um B2B hav ing pot entially lar ger ups ide if you 're ser ving mul tiple ind ustries. But you search was this brand new thing. And the only thing the only companies that they could serve where the the surge tensions themselves. So they naturally had to be smaller than the the combined value, the search engine and the way that they were positioned, you know, smaller than any single search engine or any any h or the largest single search engine in any way.

way well. And then that's the original sin of go to overture anyway because remember, the reason they were in a precarious situation is because they didn't actually own the underlying properties that that we're generating the traffic. They thought they solve that problem by hooking up with yahoo. The problem is, is that google did such a good job at being everybody's favorite search engine, of being the best in search, that by the time they if we give them credit and say they eventually got their act together by two thousand and seven is way too because everyone has already learned to uh, google IT. And at that point, yahoo as a search destination was was significantly less in market share than google was totally.

And this is a really great transition into acquisition category. So for listeners that are new to the show, we assign a category to every acquisition. And those buckets are people, technology, product, business line, asset or other.

And I think so when we look at this, this acquisition, IT was really a vertical in yahoo buying a horizon onal and overture and and h overtures, obviously trying to serve many surge engines with their technology um yahoo buying them to integrate with their one surge engine. And you know these are sort of hard because the let's assume that a lot of the value created by overture was by summing across all the different customers. Well, as soon as they get access by yao, it's pretty easy to see that, boy, for if you're prioritizing for the vertical for yahoo, you don't want them serving all these other customers.

But the the issue was like even if you're going to take that value destruction hammer and do that because you believe that the the synergy in the sum of the parts created by that acquisition is Better than all the the previous value by serving all those customers for for overture. Um they actually didn't pick. And the issue is I think the acquisition category ominous sign is the problem is they acquire a technology and they also acquire a business line and try to keep both going. So you know, they they had the technology that they were integrating into project pana, but they also had this business line in over to continue to serve other customers like you gotta pick one and you got to go hard to a strategy.

Yeah, i'm going to i'm going to say something similar for me. I'm i'm technology category, but my take on IT was yahoo acquired a technology. They just acquire a you know I was going to say bad technology, but the reality is IT wasn't bad in enough itself.

IT was just bad relative to google. Um IT was orders of magnitude less powerful um and not get into in what would you happen otherwise and take team a little bit about the importance of the technology that I referred to earlier. But um but yeah for me this is clearly a unattempted technology acquisition.

IT is if I if it's time for me to try and i'd say I I degree with attempted technology acquisition, I don't know if this is a category though. It's it's an aspirational uh, acquisition because in the same in the same way that that google had looked across at overture and said, hey, there's golden them their hills. Yahoo has looked over at google and said, there's gold them their hills.

And guess what, it's search. Again, we can't underlying enough that what essentially yahoo fails to do is that IT fails to recognize, just like everyone else did, that there was actually money to be made in search and that yahoo should have been in the search business and was in the search business. That's essentially the main reason why people first came to open the first place.

But so they look over its aspirational. They're looking over at google. They're saying, shoot, they're playing in our ball game. It's the game that we should be winning. We're going to win at this. So it's an it's an acquisition where there they're looking over the fence, looking at their neighbor and deciding to build a pool and in ground pool as snazzily the drive.

Yeah, it's almost like they wanted to build a new business line in search but rather than you know taking the um market cain and cost pain of just acquiring google h which they should have done, um they decided instead well will buy these couple other players and search these technologies and build ourselves into this new business line and and clearly .

failed miserably. What you know a more a more recent analogy would be google looking over at facebook and saying, wow, socials wear at that yeah and they did make several attempts to become a social media company. To their credit, they didn't drive their business into the ground to do IT. But in essence, that's the same thing that we're looking at here is looking at the Young upstart coming up behind you, seeing that they've created this amazing business and and trying to to copy that business or get into that business at the very oh.

that's not that hard.

Yeah and I think the huge take away that the thing that like we forget today in the world of you, but my job is professionally to try and start new startups. And so all the time i'm going well, let me go. You see what keywords are going for in this category right now as my very first step. And you know in the absence of that world existing, we we completely forget that um IT was not apparent that a marketplace for search ads was gonna be an incredibly lucrative business.

And so if you look at the steps um steps that yahoo took as a business kind of growing up um program has this really great peace um about a about yahoo called what happened to yahoo and sort of points out that um you know they went from things web directory and then they had to become grown up and the whether they did that was say what you know where we sort of directionally point right now. That's A A big company and they decided media where you know we're going to be a media organization and even though they included search, they were like, well, searches is sort of just a way to get people to the site. But really were a media company that that you know sells these these banner at impressions and then google comes along and and you know, they sort of accidentally discover the incredible power of of of having really, really good search for the first time.

And then overture discovers the the that sort of a second innovation, the first being actually very good search using the payment inc. Our algorithm, the second being the sort of business model of selling paid search s. And oh my god, it's it's tens or hundreds times more valuable than anybody thought I was going to be. Then yahoo very quickly has to try and figure out how do we pull in about face and get into this new really big business. It's even bigger than, you know the media business that we thought we were trying to get .

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If you guys are okay with that, I think this is a great point to jump to what would have happened otherwise because i've been eating all episode to bring this up. Um so and the and the ultimate point of P G S post that the bryant sent to us is that yahoo wasn't an engineering centric culture and google was and that to win its surge you needed to be have really excEllent engineering and technology. And this is sort of what i've been referring to along. I want to make an argument here in what would have happened other what is that had maybe not the overture acquisition specifically, but had yahoo not gone down this path with trying to build panama and compete directly with google, um we would not have seen any or at least they would look very different um any of the great startups that emerged out of the web, two data right after this and then even into today with their B N B and uber um because the most important thing to me that comes out of yahoo's attempts to compete with google is hadoop.

And for a listener who aren't super familiar either with what he do is or the history of IT, when I was referring to the really hard math and engineering problems that google had to solve their both the organic search results and manage the data to deliver the best search results for what people are looking for, but also deserve the best ads that requires orchestrating just this huge, huge amount of data um and so google invented two things that allowed that one was the google file system and um the second was this computation period m called my produce that allowed google to basically Operate on this huge amount of data that they were storing in the in the google file system. So yahoo when they then try to compete with google, they basically fund this open source project called her doop um which was trying to recreate google had publish papers about how they are doing this but they are trying to recreate these technologies that really had founded sort of the coin go big data, the world in paradigm and dug cutting was a researcher, uh, who was who was building hideo and yahoo funds him to this period in the mid two thousands and its hadoop that really then enables facebook to do all of the data work that they do to create the news feed. That enables you an uber when you order a uber for IT to get, you know, you to get match to a driver whose two minutes away, that enables when you search on airbnb for you to find the best property. This technology that gets open sourced with all of google core technology innovation. And I think without this battle wouldn't wouldn't have just emerged for free for for the community to to innovate on yeah.

that's a great point. And this is also kind of a not a tech theme but a company theme that google has. They often will will write a research paper about a new method or new paradigm they've discovered.

And then there's these open source projects that that um you come out around IT and those things are are a lagging what google has developed internally by about three years. So the the for anyone who sort of worked at google and worked outside of google, I I ve had no over again. Oh, man, yeah. I wish we had this tool that we had a google IT was like this, but on stair oids, and it's interesting to hear about you, the announcement of TensorFlow was after they had a very similar machine learning system at google for about three years before announcing at anything.

I mean, docker, the same thing. Google was running on containers long before docker existed.

yep. And so it's it's really like I think one of the teams of the sacristan is how the hacked you supposed to compete with A A company that is that engineering centric and has built that far into the future relative to other companies.

Well, my counterfactual would maybe go away to answering that because if if were speculating about what would happen if yahoo had never purchased overture, then I would speculate maybe they would have been more motivated to double down on their existing successful display business. What if what if they seed uh, search advertising to to google, which we know only goes so far because there's this whole universe of existing brand advertising that is more suit to display.

What if instead of double click being purchased by google, yahoo doubles down on display and IT purchases double click? And then in the world of mobile that we now live in, where display is more suited to mobile advertising, would yahoo have been in a stronger situation to be a major player in the next paradise? And the mobile .

paradise I H touches on a few things here that the I love that idea that um if you are, are if you missing the current round, then you're actually a Better position to take on the next round. You know that the um iphone being in a Better apple being in a Better position than microsoft to go in the mobile because they nothing to lose where as windows was hugely successful and was hard to move into a mobile m factor.

Sort of the same analogy of if if yahoo had really just totally lost the search at war, would they be in a Better spot for the the display war? And for for listeners not familiar with double click, that's basically the the off property google ad network. So when you're going to a publisher like new york times and you see an ad there that's provided by an add network um that probably provided somewhere in the the the chain of of google and double click uh which they acquire delivering that ad off of the the search page so yeah, brian, that's a super interesting. What would have happened otherwise like yahoo punting on on you paid search all together .

and just maybe throw on the tales, say, yeah you know just give us Edwards will put him at the top and uh our core competence competency is something that IT turns out google had to chase when google buys double click IT is to explain and beyond just uh search add and into the the broader internet advertising arena in general. So if if if yahoo had just thrown in the tail there, seated the game at that point and then gone back to its core competency, then maybe that we would have seen a situation where google knocking on yahoo's door asking to acquire them some time.

And if you look at, you know what, even, even today, I think I was looking at these numbers maybe six months ago, and I think so. Google makes about ninety three dish percent of their their revenue from from advertising, and about eighty percent of that is search as and about twenty percent of that is display ads.

It's interesting that like you know, even though google spend all that time sort of chasing the the display yds business, their real cash cow is and continues to be search at. So could could yahoo, uh, do something really meaningful or could they have done something really meaningful in the display side? Only history knows well.

of course famously you know um yeah he's kind like I don't know what the right analogy is here always the brides made never the brighter just what but they famously attend to acquire facebook as well. Um that's resorts after this. And um really interesting to think about you know display and more uh impression based advertising. Let's say opening IT up beyond um just display is really much closer to yahoo core competency than search and performance based advertising, which of course is what facebook does. Or in a in large mount .

that was the exactly sort of the the counterfactual dream that I was not that I have any vested interest or love for yahoo， but in a world where um like you said, impression based ads are more important or growing more important every day. Um could yahoo still be a major player had they had they stayed? Um you know in that core competence.

Well I think matter what was um what's cool about this uh this acquisition in this period of history and you know why we're doing in on both of our shows is a not so what I mean acquisition itself most people have forgotten but like this really was the crossed roads of history. I mean the amount of things that both happened and didn't happen because of this, uh really shaped you know every major platform that emerged ever since yeah .

yeah IT absolutely did. And we also um you know there's there's two major innovations here and one of them google came up with, one of them didn't. And you know one is the pay drink algorithms m to actually have good search on the and two is the business model of search.

And that business model was over to his innovation. While we're talking about counterfactual a little bit. Um brian, you'd mentioned on your your last episode with a with gary flake that yahoo never had any power over customers since they never had a first party offering IT.

IT would seem that there's their business model ways to make this not a big deal. Like you look at microsoft know until recently, they never made hardware. But um you know boy did they they come and um uh power over um all the OEM that were installing windows.

Do you think that the the way to stay in a good position when you're a horse zonal provider like this is not to let any of your customers uh, get too large on their own? Or do you think it's that you do have to have a credible first party offering? Or maybe if that you are so big that you're never trying to sell? What do you think the um the way that batch could have solved that problem would have been?

Yeah said you said yahoo had to be any, but yeah, I I don't think so because this I the answer to your question, no matter how many ways I could twist my presto logic to trying to make that happen, what fundamentally overture was in was a platform business. And so without A A platform of its own, IT was never sustainable in the end.

I I mean, I see where where you're saying there's got to be some sort of a world where um you you supply the ammunition to all sides and you're just neutral arbitrage. The middle. Um but that would never happen because of the politics involved.

The next time um the three year deal with A L L was up for the next time the deal with yahoo was up because your partners at the very least are always onna try to pay less and at the very least they're gonna play. If you try to play each other off each other um you know you're going to pass one guy off and then maybe they leave your network. I just don't see a scenario unless unless overtures had been lucky and had been earlier.

And so IT had the larger market cap. So IT could have started buying off its or buying up its its partners um by being late, by being smaller. I just don't see any scenario where they would ever be able to relax. They would always be a shifting standard that they were standing on. And and I I just don't see you could ever worked.

Yeah, yeah, yeah. alright. Any anybody have anything before we move into tech themes, not the world .

like deep in. You see you wanted to kick IT off then .

yeah you know I I actually don't really have one right now like I think talked to be we've been .

doing that for fifteen looking here at my list .

of tech themes and know I talked about that talked about that.

talked about that. Well, I thing I want to put in there, which is a little bit to take them a little bit just like a rumination as I was thinking about this. Um you know we talked to in our last acquired episode, we had brad stone on and we talked about 日本人 d and um probably by the time we post this on the acquired show， we will have done the snaps chat I P O is this week uh and we're going to do uh sort of real time reaction to that.

So I suspect this episode will come out after the ad um but I think these three episodes together sort of form sort of a series here and acquired about kind of the nature of competition and um the importance of sord sustainable defensible competitive advantages. You know I am thinking about in uber indeed how he we talked about with brad how the sort of idea of like scorching the earth versus building a mote um that a the right sharing companies have all taken and and then certainly we snap. We haven't recorded that episode yet.

There's lots of discussion and conservation in the market about what is what is snap mote. Does that have a does that have one or is IT as ben thomson um you know, pursuing the digital bradman's strategy of just constant um undefended ble product innovation. But this you know google I think, is really an example and maybe one of the best we've had on the show of an incredibly sustainable, defensible competitive advantage.

And we see at at, at work here between you over her had the best. The head star had figured out the business model, but then google came in and just eat their lunch and sustained that. Why was that? I mean, I think i'm tempted to say IT was the technology and that's why I get all excited about you know G F S and my produce and and who do you put that comes out of IT? Um but I think it's even more than that. I think it's using that technology to create this platform that is matching supply and demand and both users on one side and producers and advertisers on the other side, producers of content and advertisers just in a fundamentally Better way um than than other people are capable of. But I know curious what .

you guys think. Yeah David, it's like, you know it's um I think we touched a little bit earlier on IT, but the the the reason that they have a long term defensively is I think is related to that. Um you know the whatever the second person was willing to pay off and extrapolate out real far IT looks like everybody is getting a good deal.

It's a continued feeling that me as a customer when i'm as a searcher, when I go to search on google, yeah, there's a bunch of ads. But it's it's you know either they are relevant there there most of the time relevant or uh, other times, I can very quickly get to the organic search like I feel like there's a free service out there that's really good or getting a good deal and many times as an advertiser and brian, you can please shut some more light on this. Um I give money to google and I get more value out of IT. Like I feel like i'm getting a good deal and over and over again, I I think that um these enduring companies are made when everybody in the ecosystem looks at IT like, hey, this is this is not a zero some game thing here like everybody's doing well by this thing existing. I think .

that's a great point. And if you think about just to jump in real quand, then i'm curious brand you're thought on as advertised her in, but amazon works the same way, right? Like as a consumer, you're like, yeah, i'm getting a great deal here.

I'm getting you know a Better Price, more selection, more convenience. And as a seller on the marketplace, I think you also feel like you're probably getting a pretty good deal um in terms of the volume, you're going to be able to a service anywhere else versus he would look at something like uber. And and uber certainly, you know has still as potential to be an incredible company and a dominant in platform. However, I think there's a whole on the drivers side. And right now, like I don't feel like drivers on uber feel like they're getting a great deal.

Yeah michelin point and then brand that the love here thoughts. This always comes down to the network effect of fly wheel, the ecosystem. They're all slightly different. They are for a slightly different things. But when you back at them all together, IT really comes down to the engine for continuing to grow those things is incentive alignment. And for everybody on each side to IT keeps hate IT but feel like a getting a good deal being in their own personal selfish incentives to continue to poor resources and time and effort into that platform. And and google definitely had that going on here.

Well, I know again to to mention that the gary flake episode that I did, he to him, that was the miracle that you create a marketplace where everyone like they're coming away Better off. And and I want to point out in a way that was super important that maybe we don't remember, I some of the shine has come off of the google halo and ensuing twenty years or so, but I guess the shine has come off of tech companies in that time too.

But it's easy to forget how much everyone thought google was this Angel in the early days don't be evil as their mono um when people you know every time in the internet history advertising was indeed ced people complained but then grudging, accepted IT um google already had this reputation of all my god IT just works um there that don't be evil people and when they introduce add to us IT doesn't feel terrible IT feels like google intended IT felt like, yeah these are ads but they're not waco animations flashing taking over my screen. They're just you know text ads off to the side and by the way, um they're useful when I decide, you know I searched for flowers, but valentine's day is coming up well, let me take a look. Those actually.

And so the fact that they did make that, that key change to make the ads relevant fit into the opinion everyone had of a google, the good feelings everyone had about google IT fit their mo. And so I think that no, we shouldn't overlook how important that was at the time that that sense of good feelings that in engendered um but then the the ultimate story here, this is where I bring in my personal experiences as as an advertiser. Um my first start up uh when I was twenty two in college um I bought an ad on go to before I was even over to and I paid forty dollars and I paid forty dollars and got eighty dollars back within twenty four hours and you know I that's an amazing event in the life of any business person where you think if every time I ve spent forty I get eighty. I'll do this all day every day for the rest of my .

life like you've learned that a turn let into gold.

right? So like that was the magic of paid search of of, like we said, the greatest advertising engine ever, ever devise my man for reasons that other people have talked about because you're at the point of intention and things like that. Um but then that business, my first company was actually built on Edwards and the reason was not that um oh when I used adverts for the first time, IT was more magical.

That was the same magic but the difference was that's where the traffic was. So even though for years and years and years I still probably maintain a certain budget on overture and eventually yahoo. Um that business was built on google.

IT was built on Edwards because IT was a business that the the best way to market the product was um direct marketing at the point of intention. IT was a web base product and so you know I was never gna buy ads on TV or a magazine. Um I was always going to buy ads online.

And most of the audience in my mind, that felt like ninety percent of the audience, even though I don't think google market shares ever surpassed seventy percent or something like that, but IT felt to me the audience that mattered in the same way that people talk today about the for APP development with IOS vers android, the money he is really in IOS. For whatever reason, IOS users spend more than than android users. IT always felt that way that the money was with google, that the market, the, the, the, my customers were on google. And that's why that my first company was built on google.

which is just such a great real world illustration of the fly away, right? Like more customers bring more advertisers, which gives more money to google, which h for. And all the data generated by both further improve the search results, which bring more customers, which bring more advertisers.

Yes, yeah. I shameless plug g here I for listeners interested in in like real zoom ing in on a network effects and fly wheels. Um the David I mentioned a few a few episodes ago the talk that I gave that so tweet that or maybe put on the website or something but i'll definitely ban our twitter so so go check out if you want to hear me ramble about network effects and fly wheel ecosystems for a while. Um IT feels like we're we're drifting aggressively toward rendering .

conclusion you guys you .

guys first so did I end up being A A good deal? And I think the the way that we talk about these things on acquired is uh was IT a uh IT in the long run, did IT end up being worth IT and strategically a good decision and a good use of capital for the acquiring company to buy the inquiry and for a variety of reasons. No, I think there was big integration failure.

There was lack of clarity on why they were making the position internally because they try to have IT both ways by being its own business and by integrating IT. Yahoo really wanted to be a media company, not a tech company. He got to the tech company game kind of late.

And if we look at what they are today, it's still a media company. I mean, you've bought up all these other media companies, tumbler and flicker. And you know the things that do well are stocks and h sports. None of these are are their search business. And at the end of they get day, they're getting sold to verizon.

I mean, I think maybe I would call this successful if they had managed to get more out of the patterns, maybe some kind of like rev share on an imperative unity with google, where they can actually make money from each and every one of of google searches through that license or or something. I don't think that's the best way for a company make money or the most noble way, but IT IT seems like a way that they could gotten something Better out of, out of this deal. And gonna call this A A D, because I while not being a total failure, this did not help yahoo compete in what would eventually become entirely .

good's market. Yeah, I am. I'm going to give two grades here. I sometimes exercise my room to do um i'm going to grade to yahoo. And yeah, I am with you like d like this was the wrong thing to do like uh, everything about IT was wrong.

Um they should have just like essentially sold themselves to google um but regardless, like trying to acquire all these mismatch companies and rebuild panama like we're gonna be google at their own game. Even there were not a technology company culture wise wasn't gonna, but i'm going to say like a plus plus plus for the status of a system because I you know I know i've said this several times on this episode by lake. I can't underscore enough how important hadoop and all of the technology and all of the people who come out of yahoo efforts with panama um become in the next fifteen years of tech.

And know we talked about jeff winner, we talked about the importance of deep the technology um and then you know hordle works in cloud era directly, you know come out of those people as well. Um but there's actually you know even even another set of companies. Um what's APP would not have happened, I don't think without project panama because brian act on and Young com.

Um you know they worked on project c panama. Yahoo that's where. And then they left and they started WhatsApp. So um the list just goes on and on. It's almost like a paypal mafia type moment.

Well actually in people forget that that yahoo was a huge player in in web two point o in web technologies is coming back. I mean that with the flickr acquisition, delicious acquisition, you know they made a stab there. This is almost an a side. They made a stab there at at a very important moment in time um remaining relevant and and um providing support for a lot of people um that would go on to do things that that create the world that we know today.

Yeah and that what makes IT and you mention you ve been store butterfield who's you know founder cy of slack. Now it's it's both so sad for yahoo that they had this talent and these these technologies within the company and and now they're part of horizon. Um uh but also just so great for innovation in the ecosystem that these people pass through there and and met one another. And you know I think that's the the magic of silicon valley, right? Is these um these interactions that you can't foreseer between technologies and people and companies, you know lead to this innovation that takes the world in new places.

Well, my grade is going to end up being a sea, and i'll explain why in a second. It's partially uh, grading on a curve because the intentionality of the acquisition is to buy the pieces that will allow you to copy the greatest advertising machine, as we said over time now in the history of the world.

So if if if that's your intention to to create to put the pieces together that that will create um what what we now know to be google, then absolutely a plus you got to make that acquisition. It's an f in terms of how IT turned out because you in the end, like they say, don't bring a knife to a gun fight. If you failed to bring, if you failed to bring engineers to an engineering battle, then you you're never gonna have a chance of success.

The reason i'm going to give IT a see is because of the fact that yahoo existed as long as I did because remember, they're coming out of the bubble. Their entire business model is evaporating overnight. I think you know their revenues were about a billion dollars around two thousand one and then um know as high as seven billion dollars by the end of the decade.

The fact that google made billions and billions and millions more than them does not hide the fact that they were able to sputter along even if they were not able to successfully copy the model that that acquisition still allowed google to be a big enough player that that microsoft wants to buy them for. What was that thirty five billion or something um and and kept them going as a multibillion dollar profitable concern all the way into the second part of this decade, got them to twenty years as an independent company. So i'm going to give IT a see because I did do its intention, which was saved the company shift to the new way of doing business, survive the dot com bubble and and remain a player. They are not a player. They didn't become the player that google became, but the the acquisition did allow them to get this far.

That's that's that's a great point.

Yeah lot of shareholder value for a lot years there that I I glazed over and saying they didn't be google and then so devizes like there there's fifteen years in the middle weren't so bad.

right? Um with that, should we move on to carve out?

Yeah let's do IT, let's do IT. I've got a quick, easy read that is A I would say fun but it's IT IT might make you uh take a hard look at things. It's a my buddies get married in september, and he sent me some of the stuff he was he was reading and he loved this one article.

The secret to love is just kindness. And this is a bunch of of research done over about a twenty year period by doctor James gottman. Actually here at at the university of washington um from research a research conducted with couples. And there's a lot of really good stuff in there.

If you're in a relationship, not relationship, like whether you're looking at your relationship with someone romantically or if its other people in your life, coworkers, friends, family, it's a lot of really interesting just observations about the way people who are together for extended periods of time interact. And here's here's one quick little quote from IT that i've found really fascinating. Having a conversation sitting next to their spouse wants to their bodies, like facing off with the saber tooth tiger.

Even when they were talking about pleasant or mundane facets of their relationships, they were prepared to attack and be attacked. The center heart rates soaring and made them more aggressive to, or each other. And this is a, this is talking about this sort of two different types of couples that that from all these years of research, there are sort of the ones that that succeeded in, the ones that failed.

And the ones that failed years before they failed were exhibiting these like intense biological signs of of, you know heart racing when they were around each other. Yet we're exhibiting a complete sort of like calm stone face demeanors to the world. So you imagine um trying to read a person that you are around extremely often and having that internal internal turmoil in both of you biologically, but representing IT as as a very emiko relationship is that the findings are super fascinating and highly recommend you go read IT for whatever purpose your .

life that sounds that sounds especially dangerous as a recommendation because if you're interrelationship and you read this and you're like, uh I am identifying .

with that problem. No, I assumed in there on the on the sort of one of the most crazy negative comments to the piece. But really the goal is IT IT. Turns out that every the secret to love in all forms truly is kindness. And I think, you know, there can only be again by more people, whether you with you and your partner or you and the people around you reading IT.

yeah. Well, this discussion is judged up memories and and emotions turmoil for me, because I have a lot of experience with the doctor godmanis work. His research basically forms the core of this really famous course, a gsp at the business code and ford that I talking, that almost everybody takes called touchy feel. And it's basically one of the most intense, it's certainly the most intense experience that you go through.

E G S V and and I did and you get put in these groups of of twelve people, you and eleven other people and then you send in a room um once a week for six hours at a time with with a food break in between and and you just sort of talk and uh I see what happens but but you prepare for IT reading reading dr. Ams research anyway, it's it's a really cool experience and had a big impact on me and generations of people that have gone through gsp. Cool with that money is really quick a as my friends know and many my friends know and and other folks, my wife, Jenny and I on a extended a trip through out europe right now, which is why i'd been an I A recording remotely for the next few and we just visited berlin last week and i'd never been before, but I was blown away.

Such a cool city and the fact that everything was just destroyed in in world war I and and seeing this you incredible architecture of sort of mother new building and growth in the ruins of the old city and culture is there we we got to meet with the bunch really cool startups there. Great taxi. Um can't recommend IT highly enough if you have a chance to visit brin. Lot of cool stuff going on there.

Uh, my car vote for you in particular is I hope you get to go a to via soon.

Oh, we went to via a right afterworld a so different, but also very cool.

right? What I like about that is that I actually does have A A, A center, a core of the city that survive that wasn't completely bombed into runs, but then its environs is sort of like that modern modern ist architecture that that berlin is so famous for. So um but my larger um take away aside from um I I recommend everyone check out the internet history podcast because so good.

I think a compliments compliments this one in the sense of that this show looks at at history from sort of an analytical angle, from a strategic angle, from a sort of an MBA angle um and the internet history podcast is trying to look at IT one hundred percent from a historical angle. I'd like to call of my interview episodes oral histories, where I just people sit down and and tell me how they did the stuff that they did. And there was gonna a book coming out sometime next year with norton.

Currently called how the internet happened and i'm basically gone to be using what i've learned from the podcast to tell the story of tech um from from the nets cape IPO through the uh launch of the iphone. However, plugged aside shame with plug aside. Because i'm coming here from the history angle, I thought I come to the table with a history book.

It's one of the my favorite ite books that i've ever read. And I basically only read history. It's called the dark, the dark valley, a panorama of the one thousand nine thirties by peers brennan on.

And the reason that of, first of all, it's just amazing one way or another. I read IT maybe twenty years ago now, but the one thousand nine hundred thirties is obviously the the decade of the great depression, the nazis coming to power, the prey lude to world war two. And I always thought of this book as wow.

Can you imagine what I would be like to live in interesting times? You know that that private, you shouldn't wish to live in interesting times. Well, i'm not making the analogy to today that where you're living in a new thousand nine hundred and thirties, but I do think that the that book is probably more relevant now that we're definitely living in in interesting times to say at least. So i'm recommending the dark valley a panorama a of the nineteen thirties by peers.

Brendan.

very cool. And and we can say to we've we've talked about brand show you on our show several times in the past, but IT is so good. And if if you like our show or if you like brand show, I think I says for A A natural counterpoint to one another .

like two hands clasping the great .

work that bran does over over the hp you well thank .

you about well, brian.

thank you so much for coming on. Um we really appreciate IT an absolute pleasure .

because I again doing the history angle I went have told the story and actually I probably would have gone into much of detail. So the the ability to flex my muscles a bit and analyze is a lot of fun. So it's been fantastic.

And a boy I to say I was I was awesome having your your diligent and research and kind of academic historical approach here on the episode today.

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listener, is that's IT. Feel free to join us on the slack. I look, last night were four hundred and seven strong. So come join us and and talk all things, uh M A I P O S tech and strategy.

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