Episode 8: Acompli, Sunrise, and Wunderlist (w/ Kurt DelBene)
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And seven years ago.

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Welcome to episode number eight of acquired and then gilbert.

i'm David .

rosenthal and we are your hosts today. We have a very special episode. We have A A guest at microsoft, a curdle. Benny.

yeah. We are very lucky to have curt of any with us today. Uh been a great friend and mentor to uh both of us in different ways and actually both of us at madrona too so curt started his career actually at the very famous and renown the bell ABS um and spent five years there and then went to booth at NBA um chicago.

I went to the short stint of machinery after that and then went to microsoft and had an over twenty year career microsoft that um culminated when ben was there in um in curbing the president of office what he wasn't until december twenty thirteen and and then afterwards he went to to health care about gov and did instant there helping launch obama care. And after that ended up with us for a little while. We are really lucky to have an epidural as a venture partner and and then last ring uh could return to microsoft and is the evp of corporate strategy and planning. So thank you care for gracing us.

Hey, it's good to be here and good talk, you guys. Again, just one little correction on health care dog. I came in after the launch to help them prepared.

You did and and and for listener's, I had the privilege of waking up early early one morning and coming into here um kr talk about that at madrone. IT is absolutely fascinating to hear how to mop up a gigantic software project like that and getting all the right people on the bus, all the right um consultants and contracting firms that that are putting that whole thing together. IT is a crit that that looked like an absolute .

belly well is IT was a super reward, super chAllenging. So maybe we can do this future podcast just on that is a good.

interesting topic. You need to you needed to get some good r and r. So you went to a venture firm yeah ten months afterwards.

So today with her um we're going to talk about hopefully very typical acquisition and we're actually gona lump a few in here. But the main focus is going to be a complete, which is now um the mobile outlook on I O S and android. Um so i'm going to run through quickly.

We're going to do a company and and then was sprinkle in little bit of both sunrise and wonder list, which are also um office productivity apps that microsoft all required in the past eighteen months or so. Um and and so i'm going to run to quickly the acquisition history and facts, a company founded April twenty thirteen by heaven solter, O J. J.

Wang and Kevin the hindrickson. Um is interesting how year was C M. U. Engineer and then an early employee. Netscape a half year spent three and a half years at at the m where before kind of coming back to his productivity routes and founding a company which um I was A A user from from day one when he launched in wanted to invade and thought I was on my iphone and thought I was just a great um if you know the first mobile APP that combined mall and calendar all in .

one APP the magic that outlook have been doing .

for so many years and no no really I old is new again there is seven point three million seven series a from red point um LED by red point where have you or had been in N E A R after bm where uh and Harrison metal and police is uh then about eighteen months later, uh microsoft acquire the company in december tony fourteen for reported two hundred million dollars. interesting. There's actually a everybody knew this acquisition was gna happen because microsoft read a blog post about IT and IT leaked about two weeks before the acquisition actually actually went live.

Yeah, not a shining moment.

not a shining moment. But but IT was successfully acquisition happening, about twenty five employees all based on difference eco. They all joined microsoft.

Um David, that was only I think like seven eight months after launch. Nine months may be I think launched April of IT was eighteen .

months less than eighteen months after the founding of the company. Um and ah so was very quick and this was right after uh dropbox had acquired mailbox. Uh so the era of email mobile email acquisition .

become the IOS male upwards have yes um .

shortly there after uh microsoft um then acquire the calendar APP sunrise in february twenty fifteen um and then in june of twenty fifteen, microsoft acquired wonder list the to do list APP what I know um probably has a soft spot her heart knowing how much he loves lists and IT is a great APP I joked when that happened I think with current that microsoft trying to buy my entire .

I found home screen exactly.

So what you have to tell us at the end what you're using these days.

I am still using .

all of these .

critics.

And yes, so with that, what's happens since then? Um in gel the same time right after um the wonderful st acquisition, uh homier was actually promoted uh within microsoft to be the corporate VP running all of outlook. So not not just the outlook mobile ipod outlook on desktop as well.

Shortly there after after that sunrise, a calendar was rolled into outlook wonder list has has remained independent today but has been announced that further integrations may be coming on that front. So maybe cure can not lights on that. But with that here, we'd love to hear of how you thought about about all of these products.

sure. So the first thing I should say is the acquisition happened during my a time away from microsoft, but I know the whole history edited. The corporate strategy team was, which I live now, was intimately involved in the in the acquisition.

So and I obviously know the space super world. I spent a toner time in office. So when I saw what happen, I said, okay, this what makes complete sense um this is an exam. I think there are different reasons that crossing nix acquisition says. I'm sure there are for all companies there places where we look at our position in a particular area and say we need a technology, we need a particular product.

There are other cases where we opportunities, ally, look at uh, a product or company that's doing well on a space and said, wow, we can see and a janci to the business that we have. And so we want to um uh we want to acquire the company to kind of build build out that A J. And see there are some more rare cases where we will do IT to get a particular set of talent.

You know we see a team that super, super good. Um but I think that tends to be the exception. This one was the was kind of, I would say, a strategic acquisition.

If you think about the journey that office has been on, uh, the core competency has been on the desktop. You know the office sweet and I buy this up. I mean both the windows PC and um kind of leading productivity on the mac as well.

And so coming from that core as other uh O S S became popular, particular in the mobile space. Um uh the t actually was a corporate strategy effort with the team with the S G. Team as well.

He said, okay, this is clearly a place where we've got out to make an acquisition or build ourselves, but we need to have um A A great APP for the core office three sixty five scenarios and those are email, contacts, uh calendar and to do and so we said, do we want to make or do we want to buy? And as there is somebody out there that we would love to have and a really just said, okay, what would if we do want to acquire, what would that look like? What would that look like to make IT internally um and other candidates there, that would would be great first to quiet. So that's what kinda gotten started on the path and a kind of went from there.

cool. Thanks god. I think it's one of the things that you read a lot about these days as microsoft shifting from the windows and office company to A A move first, cloud first company. And you know I think that from a high level, first of all, as as a consumer and and just from the public perception of microsoft these days, everyone is loving that.

I mean the whole focus on build a really great cross platon experience, have you're the same data with you everywhere, access to the same services um you know the same core office services that you know and love huge value profit consumers as you guys transition to um these free mobile apps that are on platforms that you don't own. Um how do you look at that as sort of um the the revenue future of microsoft? And how does that replace the the giants of your was selling windows and an office box software.

The giants of your I love that. I think there's a couple ways to look at IT. Uh, the first thing is he have to recognize that office three sixty five. The cloud versions of exchange, share point and skype for business are strong in rapidly growing revenue streams for microsoft. You buy themselves.

So in some sense, it's always been the case that when you buy exchange, you get a client experience um that goes with that you know go all the way back to the exchange clients in uh the midd nineties. There's always a client that team with IT and that model has stayed. And so again, looking at a company particular, they were really developing a very fast leadership position in terms of downloads, in terms of monthly active users.

Uh, that was very appealing to us. And so uh, I think um just that's a natural to some when IT comes to mobile, you've IT to have a certain free experience and then you can think about having a paid experience incremental to what the expectation in the market of what is free. So in the case of email, you know the expectation is you're gonna have a single client that work against your free mall but will also work against your enterprise mail.

You can think about features that you've put behind a firewall, you know a pay firewater. We do that by having uh, certain tears within office, three, sixty five and then there's certain tears within the client two, which is also available in subscription. So we think about there's a certain free thing, that free piece that you want to give everybody.

There is a certain set of features that can be made available as ads. Um there are particular areas where that works well. So h features where to communicate to somebody else. You've got to have a paid one that didn't work very well because you want to have a common capability across the across all the people using the service.

But things like enterprise features like uh um retention policies and uh anything around usage analysis, success or those are all features where people will pay for pay extra for them, but you don't have to build in into the core product. So we definitely see the ability to come to tear things that way. The other thing you have think about is people have multiple devices.

You know, they have A P C, they have an android phone, they have a windows phone, they have A A mac and iphone. And so you have to think about the client experience as being a single set of client experiences that go across all those different devices. And if you can package those together into a subscription, then you can sell the value proposition of the entire subscription regardless of what uh, device you happen to have.

But then again, you still have to think about we need to have a letter leadership position in all of the devices that people find popular. And so we want to have office be the best experience regardless of whether you're on an IOS device, whether you're on an android device. We love to, to have you think of windows is your home, but we need to have a great experience regards the devices that you use.

I think um you know this is something that uh microsoft and you have really done a great job with. I mean, am going back to the origin of office three sixty five then when you were working at microsoft, you're working on office. I pad, right?

I was. I was. That was so much fun.

Well, we find we did get around .

the shipping that and you know the importance of IT, you know as a consumer, no, it's not about my experience with my male client or with excel or with word on on a particular device. Now it's about how that works in concert across all of the areas where i'm doing my computing. A A related area that i'm curious if you guys thought about with the accompany ple acquisition in the strategy is something went touched on the unified inbox.

When I remember in my first job uh in finance out of college, um I had obviously outlook was working in a bank ah and all of my work email was on outlook on my computer, on my workstation. And the iphone had just launched and I loved IT because if then I could get my gmail at work. Uh and and now know the concept of having different in boxes, uh for me at least, is something I think we're probably most of our listeners is um something that we we wouldn't even think about anymore IT. Was that um was that part of the strategy here too?

Yeah, I think that a company does a great job of giving you a single unified inbox. Windows phone also on its client also can you can link together, couple in boxes together. But if you go all the way back to when outlook was first created, um IT was a total different. Look at what has historically been separate products for email versus calendar that we had scheduled plus those of you holder in your a blog sphere, listeners will remember schedule classes and became a verbs with so popular and in fact.

still still echoes around the hallways of microsoft about sending .

us plus around exactly every time I correct them, and I call IT, it's a meeting request. Schedule plus is long since dead, but this notion that things come together and become unified IT really just falls how people expect to use the product. So when you start building a bunch of meeting request capability in the schedule plus, all a said, that starts to look a lot like email.

And so outlook, uh an underground mcDonald who is the the kind of the father of a outlook way back when he was called, ran as a red and stinky. He had this idea that you want to bring these different mail and calendar um and tasks all together and do a single user experience, which clearly has been born out um early on the versions outlook or not up to the task. Gray, I will say retrospect that there was a period of time when outlook was called look out because you wanted to stay away from IT because I was pretty slow um when I first happened.

But it's become rule the leader in this integrated set of products and and I think that's happening mobile devices as well because those scenarios are so deeply integrated together. Um I think you find calendar deeply integrated. That's why sunrise got integrated to task management, actually is a little bit different.

And so we think that there's you, if anything, the mobile, uh, the paradigm and mobile is different applications for different use cases. And so it's not necessary the case that what you do for the PC is what makes sense to do on a mobile device as well. And I can tell there any particular plans to take wonder list deeply integrated with the company where the scenario cross over problem makes a lot of sense. But then you know the personality needs to be preserved to those different applications um and we think their big applications and of themselves .

yeah and it's a great lead into you know we're talking about integration of sofa right now. Let's talk about integration of people. How what were the different options you guys looked at for how you could integrate the teams in terms of location, in terms of hierarchy um in terms of you know focusing on retention and what decisions did you guys make um with primarily the a complete team?

It's a really is a great question. But IT is super, super important for us to retain the both the particular talent, the fact that there are team as well um but also the personality of the of the organization itself. So IT is not this uh this get integrated into the collective and you are just part of microsoft. We were really, really hard um to keep the teams separate while we take the opportunity of being part microsoft to be an accelerant to the objectives of of the team. And so a lot of folks, uh these teams come on and they're just super excited about being able to leverage the the the read the microsoft to do more great things.

And unless unless i'm mistaken, all of these teams are still in their original location. That's one of them .

are in redmen, right? IT doesn't make much sense to have everybody come uh to redmond. It's not necessary.

We are already abroad um company that has locations everywhere. And so there's not a need from that perspective. And you know there's no purpose of movie.

They have cool locations. They have homes where their family are. And so in most cases, we actually don't relocate them um and that's definitely in the case here as well. The wonderful guides are in germany and they love me in there, and we're just as happy to have them there as well. I mean, the nature software is IT is a global business now and so we can definite accommodate that.

The other thing that we've tried to really do is figure out how do we take advantage of the the uh skills that the team has and the vision that they have. That's why you see harvie become the leader of, uh, outlook overall. And that's just a recognition that, hey, these guys did something very incredible and we want to make sure that we take advantage of that as much as humanly possible and so that we definitely look for cases like that as well.

I mean, the third thing I would say is the trickiest aspect of IT from our perspective is we have um places where we want to drive synergy between uh, their product and other products at microsoft. And that's a very, very tRicky piece because these guys all come in um with an a set of plans that they have in place that they want to accomplish. And if you divert them too far from that mission, you can ruin what special that you you did the acquisition for in the first place.

And so we try to be really, really careful for a nature. We always get the baLance right there. Sometimes when we over index on the integration and we find that we lose a little of the secret sauce because the product starts coming out more slowly and the innovation doesn't come through as well.

And we're learn and all the time too. And so um i'm not sure we always get IT right. I actually think of these acquisitions that we're talking about, we we set the baLance pretty well.

yeah. And I I can speak that I just put out a tweet couple days ago sort of asking about who's using outlook iphone. And I got a response from someone I knew on the team over there and you know that his response was something on the lines of um let me know how you like IT we move fast and I want feedback here and IT seems like that team and I I not certain, but I think he was at microsoft preacher sation. So IT seems like some of that DNA sort of lead into the existing team and and kind of lights fire.

Yeah even simple things like if you if use outlook for um for iphone, there is a way actually for either platform, you can give user feedback on the product directly from within the product from the context that you're you're in and it'll bundle up everything that IT knows about what you're trying to do and basically send IT directly to us. And so that's a place where, you know we'd love to take those learnings of how they got that, that three sixty feedback loop and really, really intensively follow IT and collect the data. So as as your friends said, they they can move superfast .

yeah and from a leadership prospect, everyone, when you have people that have made their whole career and their their life's work outlook and then you do acquisition like this and and the leadership of of the broader outlook becomes someone from this new and outside team, know how do you how do you make sure that lands .

organizationally? Well, IT, actually, it's not as hard as you might think. The probably the biggest chAllenges if you you've got particular people who were in line for that job or a job in specific. It's you know I think it's a misconception that people at microsoft are are not um you know are not open or embracing of of new things that come in. I'm not actually even sure if it's misconception is definitely not the case.

And so when a new team I come this comes in and and incompletely in particular or any of these products and ized wonderful it's like is the overall view is, oh my gosh, this is a fantastic thing. What's what's bring them in? Let's embrace them as a team.

Let's learn from them, and we all do great things together. So it's not as hard as you might think. Um absent the timer particular positions where somebody from the entering team might get a get a position that somebody else might have thought they .

were in line for when I mean, I remember when how have you was promoted to to corporate VP and hearing and hearing about IT in the press but then also hearing friends of microsoft talk about IT. You know so often, you know you see you know we see looking at lots acquisitions, the CEO or the management team of the target company. And up there was some meaningless bp title at the inquiry. It'll stay for eighteen months until they're best and then they're gone and under their next thing. And this is a major, major role of microsoft um and really was you know I don't know, promotion is the right word giving that he was CEO of a company but but a real recognition of a scope um that uh that that really was was much broader than than just the accompany .

mobile ap e and IT was IT truly was a recognition that he has skills that we want to leverage more broadly than just within the a conflict team per say. And it's working out really.

really well. Actually, I was going to bring this up later but the heavy route in the blog post announcing the acquisition um he he read he read these these senses here that that already said eighteen months ago, we started building a team in a product around the idea that we could make mobile email Better.

Today, that journey continues as part of a larger organization with the technology, talent and market reach that will help us take the the vision of a company to hundreds of millions of mobile users across the world. And I just thought when I read that as we are researching this episode, you see some version of that in every acquisition that gets announced. Oh yeah, we're we're going to get the scale and the resources that are really going to enable us to impact many more users. Um and usually it's pretty holo, but here um you know I could do to you and and the microsoft for really um giving giving them that in truth but but it's really rare to see the team embraced this as much as as um as haier in the accompany team .

have yeah no, I I appreciate that that really was the intention. There is a bit of a scale difference too, though, because there are a billion users of office across the planet. And so if you were somebody who wanted to see your vision get delivered, just think about IT just in the context of business users that say.

Hey, i'm running office. And now microsoft says we have a great outlook client for iphone and for android. You're basically just sanctioning that product is being the product that they should use.

Now the great thing about a company is IT had a huge user base in or quickly growing user base um from a strong core. And so we were both able to take advantage of that in terms of getting a stronger footprinting mobile all right there. But there you know hoyer was right in terms of the leverage that came uh from just announcing IT and starting to um distributed with the office. accelerate. And we gave a big boost and we took advantage of the boost that they gave us as well.

I'm curious, as you were when you made the acquisition, did have years background from netscape and then from the m where especially um did that play? And do IT did you um did did you microsoft to see him as potential leader when you when you bought the company?

And was that a factor? But we definitely look at the the specific talent as part of our new delicious process. I would not say that we there are times when we actually do look for town as the as I discuss earlier, town as the primary reason for doing an acquisition.

The primary reason for this acquisition was they had a great product in in a space that we thought was super complimentary to us. And so no, that's the reason to do IT there. But we definitely look at the talent um and figure out how do we retain those key people along the way.

Um the other thing that I would say is there's this whole question that often comes up at least at microsoft and i'm sure elsewhere is there are times when you think you can buy the second best or the third best person, your uh product or company. And there are times when you know you just need to buy the best. And this is a case of all three of those in the case where we wanted to buy the leader in the space. And in that sense of that, your first and foremost a goal and you believe you've got a great team, then the acquisition kind of rights itself, it's IT just makes IT on a sense and and IT works out super well. And that's what kind of what .

happened this case. I want to push on that a little bit. Why is IT so important to have the absolute best clients wonder list and outlook outlook for iphone and and sunrise? I guess that i'll eventually just be an outlook when those are are free products that can access both microsoft services and other services. And the money is made on office three sixty five subscriptions, which can also be access by a variety of clients.

is a good question. I think, above all, we now live in a world where individual poll of applications is in particular categories like email, is incredibly important and in some ways more important than the push that can happen for microsoft, saying this is our solution for email. And so that's a big piece of IT. So when you we that's .

a big minds that yes.

IT is IT is it's not you know there are places where we think we can quote and quote, make the market by driving innovation, you know, defining innovation, delivering on IT and making a category. I think share point was probably an example of that. And the other places where other people are establishing what that category looks like, particularly on um foreign factors like mobile.

And you just recognized IT and say, you know this is a place where we we just want to get the best. Um the other thing is you always want to give yourself every advantage to do well. And in that case, if you're also having to come overcome the fact that there's a leader in front of you that got incredible and user poll, you know, IT is just not worth settling for that second best APP.

it's true. And if you're if you're kind of following in the footsteps there, I mean, the client APP is really the front door of the consumer experience. So I guess there's always that risk that, that, that client can start prioritizing a different service. You don't know that customer relationship at that point unless you you're the leader with the the client interface.

Yeah, I think that's a different kind of acquisition, which isn't unheard of there sometimes when you can acquire an application. And I don't think we ever do that. I can't think of the case where we have ever acquired anything purely for the sake of getting IT out of the hands of a competitor or keeping IT.

For me, being independent, IT is a kind of nice byproduct in some cases were we think there's a good reason to have this application. And by the way, we'd rather the other guy didn't have IT. But I don't think I can think of a single time when that has been um a predominant reason. Uh, it's kind of a nice the above us.

if you will. It's really interesting that you say that the last episode we did uh was on youtube here. And one of the really cool things about youtube is there is all of this publicly available information about um about the company and about the acquisition because of the lawsuit, the victim and and youtube and and ultimately google lawsuit and it's interesting. Airmen testified that were one of the key reasons, both both for the acquisition and for the Price they paid for. Youtube was the opposite of what you're saying was to keep IT out of other people's hands.

really then you say whose hands they want to keep IT out of?

Uh, he I don't believe he named specific a competitors but implied that there were other very large technology companies .

I I stand by. I can't think of an acquisition that we've done for that reason. You know at the heart of the the other thing I would say is you know microsoft is a we are a product in the technology driven company.

And what we're trying to do with the each product groups is what is the you know the the dominant me, if you will, about the discussions that we have. It's like if you own the office business, are you part of the team? You're always thinking about your own product and how do you make IT stronger? How do you make IT Better?

You're not thinking about how you use IT as a chess move, how you would make an acquisition to be a chess move to keep something out of somebody else's reach. I know ban you were there. Can you have you do you remember ever having such an acquisition now?

Now I was there, and I can't imagine to like the just thinking about the rest of the office for ipad team, like if we had bought one of the weird kind of like office clues for ipad that we are looking at a sort of like the not doing so well but decent competitive landscape and like tried to bring them into the team that that would have been really missed up. yes.

You know the other thing about IT is, is there's a certain amount of risk and acquisition period. And so everything you want, everything go for you because there's always gonna be things that that help mess IT up when you when you bring IT in.

So um you know having some ulterior motive, which is pulled out of someone's hands versus being LED by what you want to proactively and positive ly do with the product IT just doesn't seem like a very good calculus to me. But maybe that's what really had in mind when you thought you too. I don't know. You know, IT seem to work out for him pretty well.

So well, we created that one not super highly.

right?

Yeah, we gave me to see, at least I did. Wow.

you guys are tough graders.

Youtube, ten years later, a break even business.

We have lost a lot of money on that business.

I guess that is true. And uh, is he break even on an annual basis, including advertisements?

Uh, as far as our research could .

determine and I I know that space a .

lot of a lot of coggs in that business, both on the technology and on the content and talent side. All right listeners.

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Let's move on. Um two uh we're gna do a two other um categories that we like to do on the show or our segments. Um first is a ben and I both and and curry, you're welcome to join into. We assign a category to each acquisition we're looking at and the the categories be typically use our people, technology, product and business line we give ourselves and out of an other um but then you want to go yeah absolutely .

this is a product acquisition. Um there's nice things that came along with IT, but um oh the outlook web access APP was just not good. And as someone that was at microsoft and using IT for a quite a while, I was getting a lot of encysted mail in irm.

So I had um that that old uh outlook web access instead of my phone just to read the encrypted mal and then I i'd get out there as fast as I could and i'm like written for the home city. I'm trying so hard and he was you know IT was a shame seeing all these other really great new clients out there. And this is right when mailbox and a complete were popped up and um you know useless, it's for a lot of my male.

So I mean even just doesn't exchange user at madrona IT was IT was uh really frustrating because all my friends who are working to start up so we're using male box or the gmail APP and and they were great and and look like .

IT IT came not a moment to suit. I think that for me, a company I was using IT before the opposition, I was using IT after the acquisition. I thought a super impressive of the turnaround time from from going from um being a acquisition where they were trying to work out exactly what IT was going to turn into, what the time lines we're going to look like and what the people we're going to look like.

You can kind of like IT always figure out that will take like six months or so l within two months, IT shipped as outlook for iphone. And like all the news stories were kind of funny that, oh, they're just slept a new label on IT. Maybe they did.

but who care is IT was great. It's a really good point at at some point, you don't want to mess with success and instead of legal things you've got to do to make IT a microsoft product. But that's and that's probably what took the time. But you know keep giving people what they love.

So i'll go next. And h, i'm curious and then and and particularly current may may beat me up for this one, but i'm going to go out of the box on this one i'm going to call IT an other. Um and and I rode down um combo meal ah because I not only because I was multiple acquisitions, you include sunrise and wonder alist, but I actually think there are elements of this that as there are in every acquisition but here that they're really hit on every um every category. We've talked about a lot of them already.

Um I I would say the reason for this is that was really a revitalization of a business line, not a creation of a new one but a rethinking of um of an entire business line in this case being outlook at as part of the broader office um uh future on on in a mobile first cloud, first world and um you know part of that is technology um and part of that big part of that is people as we've talked about and product as well. yes. So I am going go to cobo.

You I think there's something to do that. I mean, there is clearly, I would say it's proenza product acquisition because that was we had in mind something very specific. We want acquire, but there's clear the energies with the other parts of the office business and so in in office products.

So think about the fact when you download a piece of email that has an attachment, you want to fire up word to read that attachment. There's a way of of kind of brink linking those snares together, that kind of ghost torture, your combo meal theory. But he also said you you need to establish your footprint on mobile devices and the first workload, if you will, that the people use.

Or the first three, I would say, or the three that we we acquired in these acquisitions. And so in that sense as well, IT wasn't reenergized the businesses also. So I guess I would I think there's something to that. It's it's a maybe it's a como meal um that has at its heart a uh a product deal um maybe we call that a happy meal.

That is interesting. You you talk about the the key scenario on mobile there. It's like, you know now office is a full productivity week and a mobile lightweight productivity sweet and those are dramatically different applications.

I love the framing to the curd of of workload and what's your mobile worker od? And um I I think the office mobile apps of word and powerpoint and excEllent great, but I almost never use them. Um my mobile workload is email calendar to do yeah um no I think that's .

right at the usage. We find that the applications are primarily used for great viewing, which the fidelity of of viewing in in our applications is Better than others.

Um and then light editing, which means you know their scenario is like I mentioned, if you're you're reading reading a document word and there's a set of comments that or ad revisions that you've got to um take a look at and react to and edit with others who are working on the document. It's those consist scenarios for which you would use word, excell and powerpoint. Powerpoint you know presenting power presentation able works really well, but you have to rethink the scenario. It's not just that you imagine um you doing the same thing on a mobile device that you do on your test top, just different.

Um let's move on to to I want to make sure we have enough time for my favorite part of the show, which is our um our our technology themes segment and and court so what we do here is a each of us talks about and and again, you're please join in would love to get your thoughts you know of what does this acquisition or these acquisitions highlight for you in terms of the the eternal truth is about our business and and technology and and bena.

I usually take a start up bent on this bit of the um i'm curious when you're taking you know having been in a big tech company for so long, having done a stemp with us, you know in the venture world what what teams are. So maybe maybe then and I will go first give you a little time to think about IT. Um but you know for me i'll go because h this be quick.

We really already touched on IT. But one big theme that all of these acquisitions highlight for me is, is at the court, I think you said I know innovation is distributed its global today. Um you know a company is in different cisco sunrise was in new york city.

Wonderful is in berlin. We haven't talked about IT yet but uh and it's not in the same group. But microsoft also recently acquired swift key, another part of your strategy to take over my iphone um but uh there in london and and and don't know about swifty, but the plan with with all of the previous acquisitions is keep these teams where they are. And I think in a world of in the a consequence of this mobile first cloud, first world is know with github, with slack, with drop ox, with a and yes with you know office and escape um you know innovation can come from red men and mountain view and sometimes is go in seattle but also brilliant and also uh london and also new york um and what what's important isn't isn't so much the the location. It's about the quality, the process um and I think about when we talked with ad freeze about and how important IT was keep the bunch culture but they had to move them down the street red today they would have stayed in chicago.

The one for me is you know translating thing that we heard about over, over, over again five years ago of one level up the stack. So know it's it's been out of the new cycle recently that is bring your own device because we all know that, yes, the bio d world is here to stay. And people choose their own hardware, bring their own hardware of works and for a long time and kind of still a nightmare for IT folks.

I think we've taken one step further on the stack and is really bring your own client and to the extent possible for, except for i'm certain very secure applications, um the consumer expectation is that I choose the view in which my data is presented to me and i've view that data that is from a service that is Mandates. So either you choose your own service as a consumer and now you choose off for three, six, five or drop box or know a variety of different male male services or like you work company in that company has set of services. You don't necessarily assume that, that set of services comes with the Mandate at set of clients. And you sort of expected I choose my own software to consume those services. And I think for me like that, the reason why I think that um this was so important, as you know, if if there are three best in class applications that people aren't to choose to consume their services um it's kind of great to on the unified experience and and be able to provide all the the best connections .

between the two or the three possible yeah this is really important you know um certainly the desktop Operating system wars have been over for a long time but you know the mobile Operating system or is over two and nobody one like the the the points of interest and um dynamicism in in computing technology, our technology meeting consumers in products these days.

It's not you know IOS or android or windows or mac or platforms or even browser versus versus desktop versus mobile. It's um it's really shifted to the apple layer um and IT may soon shift to the messaging layer. We'll see.

Now I think there's something of what all of you said, and I think those those are all correct things. Um for me I don't it's hard for me in this one. The thing that if there's a theme for me, it's that good products rise to the top inevitably.

And you look at one of these products like a company like sunrise um like wonder list, and you just look at to me say, wow, this is a great product and you know it's that excited that we all have when we when we download a new APP and IT just IT changes how you changes how you work and changes how you work with others exceed or in each case of these, these were products like that. So as a theme, I think IT is these products well crafted by creative artists that do not really think deeply about how the user uses them. Have that passion.

Um they went out and they you know they get that opportunity to to be in met you know tens and hundreds of millions of of users across the planet. So that that's one theme that just seems like that recurring, that excitement that you get when you see a product like this that's really well done. And to have that those teams succeed by part of the acquisition, I think, is one key part of IT.

And then the second one for me is just that we are constantly learning of what the best way to execute these kinds of acquisitions is, and we constantly get Better added. And I think we, as a company, took another step at getting Better at IT with these acquisitions. Zing, how do we keep the people energized? Um how do we as as you said, David is a global world and let's keep the teams where their families are and where they are.

It's not about bringing you more to um and so we continually get Better, Better as well. And consistent with that is you know where bunch of engineers and product people and we just love to you know you get these talented teams, you bring him in and again, park this. Getting Better is to having them become a leadership positions to in our company and help us all get Better in the little Better products as well.

Yeah really interesting. I is initially question that comes to mind and just thinking about some previous microsoft acquisitions and then um the the world that exists today, microsoft is a company that has a diverse portfolio of business, is across many different customer segments from enterprise to consumer and um kind of all the way of the chain. Not all these businesses have aligned priorities.

I mean, for windows is to have all applications be best in class and first on windows. And for, you know, office is to have the best possible integrated experience across all platforms. How do you, when you do an acquisition like this, make sure that the leaders of all those organizations and that all the organizational priorities, a lion around spending, you know what comes to in total near half billion dollars on um a projectile ity sweet that for IOS when when you're a windows you know an executive over windows yeah .

well you come in with a set of premises that are the fundamentals about what the fundamental assumptions under which you're making the acquisition. And in this case, for these apps, IT was clear across the platform, was a key part of the acquisition premise. And so in that sense, wanted has to be champion by the leader of that particular product group.

So glu in this case and there has to be strong support there and IT has to be champion by the C. E. O.

As well. And so such a has to look at the acquisition and say, you know, I like this acquisition. And Terry marrion, I understand this doesn't specifically help you. I think that indirectly helps you by making um our services strong and making windows and outlook uh for windows a great experience that also works on mobile devices and this reliant .

testers head of windows, right?

Yeah Terry, Terry leads a windows. But there's always a balancing that happens and you go into IT not thinking that there's us, there may not be as strong of value proposition for some of the businesses as others. And any time you have a company that is as large as ours and there, we're not the only one of the size, there's always going to be this balancing of priorities that comes out.

The thing that you have to that we are pushing towards is don't let that balancing the priorities mean that you're mediocre in everything. And you really have to say that, for example, and cheese business for for office to be the leading productivity solution on the planet, we've got to have a great story around cross platform. And so you really do its excEllence for all. It's not about the balancing out at some mediocre level where .

nothing is great. That's a really good way, I think.

about IT. Thanks, kirt. Should we should we wrap up? Yes.

yeah, yeah. I render our grades. yeah. Before I do that, I I have a question for for car. So you know this acquisition is typically too pretty too early for the ones we usually do on the show.

And usually we like to see a little bit of proof in the putting that you can like look at some spread sheet and see, hey, you know, they have bought the company for this much. And IT turns out. there.

There's a lot of other answer lary value, but we can definitely attribute this value gain to the acquired property. And there was A A multiple er on the value of the acquisition for the acquire post acquisition. Great queen math, nice to justify you.

We can look at instagram being a multibillion dollar business inside of facebook right now, be acquired for a billion and go great investment. guys. How with this business, I know it's definitely too early to say for sure.

One way another, I think we need to wait a few years. But you know, how do you look at the success metrics? S of, you know, we dropped to some number of hundreds of millions of dollars on this, this sweet of applications. What are you looking for from a financial perspective on on a return? And how do you how could you possible measure that?

You can't and and we don't look for a financial measurement on everything that we do. In fact, we are very explicit have set of net rics that are around performance and others that are around are we making progress in our category or you know so called power metrics. So do we have strength among users and using our products? And this one, the metrics around these products are all in that latter category.

It's all about how many people are using a loving the product and you can't even draw the indirect you know mathematical connection to greater office sales, and we don't even try. So we said polls that are for these products that are around how many month we active users do we want to have? What's the level of engagement that we want to have the products because we have confidence in the premise that if those are strong users, IT will pull true um sales of office.

Now the place where we due to some measurements is around customer sentiment about no do you what fraction of the office users are also using a mobile clients. You can also make a measured of what the value is of a customer that is both the user of the core office applications and the users of the mobile applications as well. Or do they use one drive, for instance? And we do find that the value of those customers are higher because they're more highly engaged users of office. And so that if you if you want to come up with a mathematical equation, I suppose you could we don't tend to look at at that way, but we do tend to do this in conjoined analysis of of uh, you know if of the connections of the different products today. What that implies about the strength of that person, that particular user as .

a customer. fascinating.

That is very cool and know it's great to you know, I think this is one of the reasons why we started this show is to talk about stuff like this. You know it's so OPEC what um what acquires are looking for and what happens to company's post acquisition.

And it's ah it's thank you for that and and it's it's um great to great to get that inside into how you know we talk about categories of acquisition and we're thinking more from the theoretical perspective. But but yeah, what really is the you know the measurement that you guys are using for different kinds. Acquisition .

definitely differs .

by acquisition .

grades, then grades. So i'm going to allow myself a plus or minus factor. That's the tolerance in which my grade can go up or down um in notches over time since we're kind of early and i'm not rated to be plus right now with A A two notch variations. So can go go to an a or b minus but it's solid and a or b um i'm .

going to go um i've been thinking about this for the whole episode. I'm gonna give this an a and i'm going to say that because i'm thinking about this in contrast to we didn't an episode on theory and then and I were both we were both quite quite harsh in our judgment of of that um and and I and one of the reasons is clearly virtual assistance and voice based computing is a major paradise that is important for technology company is going forward.

You hamza, but but um apples really not done so great on that. And I think about in contrast um office and and microsoft having been the leader in productivity and when these acquisitions were made, really you know um I think I think microsoft is under a lot of threat from a lot of different areas from google dogs to startups like ever note to the other male and calendar clients and task alist south air of which they were several. And here we are several years later. And I am one hundred percent and apple guy and I love my cloud services and drop acts and slack. Um and you are looking .

at a google dock right now.

and i'm looking at a google dock and 那个 uh you know i've joked about at several times with microsoft basically owns my productivity on my iphone。 I use wonder list every single day, all day. I use outlook for IOS every single day, all day. And the calendar features are are the real different .

tie or for IT. I use swiping.

And and and I I contrast that with with syria, and I just think it's been a huge, huge win. So a lot of work to do to keep IT up. But good job.

Good, right? Well, i'll take those. I think i'll take those and go grab a beer to celebrate. But I hope you, I hope you ask me back and um then we can celebrate you change your great to and thank you.

Thank you. Sorry.

it's spent and see you guys.

Easy you, lazy you, easy you who got to.

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